SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 23, 1997
CSX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of
incorporation or organization)
2-63273 62-1051971
(Commission (I.R.S. Employer
File No.) Identification No.)
One James Center, 901 East Cary Street, Richmond, VA 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(804) 782-1400
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ITEM 5. OTHER EVENTS
On June 23, 1997, CSX Corporation (the "Company") and Norfolk Southern
Corporation ("Norfolk Southern") issued a joint press release, a copy of which
is attached hereto as Exhibit 99, announcing the filing on June 23, 1997, with
the Surface Transportation Board of their formal application for control of
Conrail Inc. ("Conrail).
That application includes the definitive Transaction Agreement, dated as
of June 10, 1997, among the Company, CSX Transportation, Inc. Norfolk Southern,
Norfolk Southern Railway Company, Conrail, Consolidated Rail Corporation and CRR
Holdings LLC ("Transaction Agreement"), to which are annexed various schedules
and exhibits, and which (a) elaborates the understandings contained in the
Agreement, dated as of April 8, 1997, between the Company and Norfolk Southern -
already filed with the Commission - and (b) specifies among other things, (i)
certain of the routes and assets of Conrail over which the Company and Norfolk
Southern (including affiliates) will have operating and other rights, and (ii)
certain other Conrail routes and assets to be used and/or operated by the
Company and Norfolk Southern (including affiliates) on a joint or shared basis.
The Transaction Agreement and certain schedules thereto are attached hereto as
Exhibit 10 and are incorporated herein by reference.
The joint application, by which the press release is qualified, is a
public document, available for review in its entirety at the office of the
Surface Transportation Board, located at 1925 K Street, NW, Washington, D.C.
20423-0001.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following exhibits are filed as a part of this report.
10 Copy of the Transaction Agreement, dated as of June 10,
1997, by and among the Company, CSX Transportation, Inc.
Norfolk Southern, Norfolk Southern Railway Company,
Conrail, Consolidated Rail Corporation and CRR Holdings
LLC, with certain schedules thereto.
99 Joint press release issued by the Company
and Norfolk Southern on June 23, 1997.
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Signature
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
CSX CORPORATION
By: MARK G. ARON
Mark G. Aron
Executive Vice President - Law and
Public Affairs
Date: July 8, 1997
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<PAGE>
EXHIBIT LIST
Exhibit Description
10 Copy of the Transaction Agreement, dated as of June 10, 1997, by and
among the Company, CSX Transportation, Inc. Norfolk Southern,
Norfolk Southern Railway Company, Conrail, Consolidated Rail
Corporation and CRR Holdings LLC, with certain schedules thereto.
99 Joint press release issued by the Company and Norfolk Southern on
June 23, 1997.
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<PAGE>
Exhibit 10
TRANSACTION AGREEMENT
by and among
CSX CORPORATION,
CSX TRANSPORTATION, INC., NORFOLK SOUTHERN CORPORATION,
NORFOLK SOUTHERN RAILWAY COMPANY, CONRAIL INC.,
CONSOLIDATED RAIL CORPORATION and
CRR HOLDINGS LLC
Dated as of June 10, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. . . . . . . . . . . . 1
Section 1.2. Other Definitive Provisions. . . . . 15
ARTICLE II
DESIGNATION AND ALLOCATION OF ASSETS
AND LIABILITIES
Section 2.1. Conveyance of Assets.. . . . . . . . 16
Section 2.2. Allocation of Certain Assets . . . . 16
Section 2.3. System Support Operations; Dispatching 24
Section 2.4. Transition Period Accommodation. . . 27
Section 2.5. Trackage, Haulage, Shared Asset and Other
Operating Agreements . . . . . . . . 30
Section 2.6. Equipment. . . . . . . . . . . . . . 30
(a) Locomotive Equipment. . . . . 30
(b) Rolling Stock Equipment . . . . 31
(c) Work Equipment. . . . . . . . . 32
(d) Assignment. . . . . . . . . . . 32
(e) Lease of Equipment. . . . . . . 32
(f) Equitable Adjustment. . . . . . 33
Section 2.7. Inventory at Altoona and Hollidaysburg 33
Section 2.8. Allocated and Retained Liabilities . 34
Section 2.9. Other Liabilities. . . . . . . . . . 35
Section 2.10. Interline Accounts and Allocation. . 36
Section 2.11. Insurance Proceeds . . . . . . . . . 37
ARTICLE III
CLOSING AND CLOSING DATE
Section 3.1. Closing. . . . . . . . . . . . . . . 37
Section 3.2. Pre-Closing Actions. . . . . . . . . 37
Section 3.3. Closing Deliveries . . . . . . . . . 37
ARTICLE IV
CRR PARENT, CRR AND CRC GOVERNANCE AND FUNDING
Section 4.1. Pre-Control Date Matters . . . . . . 39
Section 4.2. Post-Control Date CRC Governance . . 40
Section 4.3. Post-Closing Date CRC Funding. . . . 41
Section 4.4. Post-Control Date CRC and Other
Distributions. 41
Section 4.5. Operating Fees, Interest Rentals and
Base Rent. . . . . . . . . . . . . . . 42
ARTICLE V
NYC and PRR GOVERNANCE AND CONDUCT
Section 5.1. NYC Governance . . . . . . . . . . . 42
Section 5.2. PRR Governance . . . . . . . . . . . 43
Section 5.3. NYC and PRR Actions. . . . . . . . . 43
Section 5.4. NYC and PRR Distributions. . . . . . 43
Section 5.5. Actions. . . . . . . . . . . . . . . 43
ARTICLE VI
EMPLOYEE MATTERS
Section 6.1. Employees of CRR and CRC . . . . . . 43
Section 6.2. Employee Related Liabilities . . . . 44
Section 6.3. Non-Agreement Employee Benefit Plans 46
Section 6.4. Residual Liability . . . . . . . . . . 47
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1. CSX.. . . . . . . . . . . . . . . . 48
(a) Organization and Good Standing. 48
(b) Authority . . . . . . . . . . . 48
(c) Enforceability. . . . . . . . . 48
(d) No Violation. . . . . . . . . . 48
(e) No Approvals. . . . . . . . . . 48
Section 7.2. NSC.. . . . . . . . . . . . . . . . 49
(a) Organization and Good Standing. 49
(b) Authority . . . . . . . . . . . 49
(c) Enforceability. . . . . . . . . 49
(d) No Violation. . . . . . . . . . 49
(e) No Approvals. . . . . . . . . . 49
ARTICLE VIII
COVENANTS
Section 8.1. Conduct of Business. . . . . . . . . 50
Section 8.2. Best Efforts . . . . . . . . . . . . 50
Section 8.3. Further Assurances; Consents . . . . 50
Section 8.4. STB Approval . . . . . . . . . . . . 51
Section 8.5. Other Approvals. . . . . . . . . . . 52
Section 8.6. INTENTIONALLY OMITTED. . . . . . . . 52
Section 8.7. Risk of Loss; Forced Disposal. . . . 53
Section 8.8. Public Statements; Public Filings. . 53
Section 8.9. Restructuring of CRC . . . . . . . . 53
Section 8.10. Provision of Corporate Records . . . 55
Section 8.11. Access to Information. . . . . . . . 55
Section 8.12. Production of Witnesses and Individuals 56
Section 8.13. Confidentiality. . . . . . . . . . . 56
Section 8.14. Privileged Matters . . . . . . . . . 57
Section 8.15. Administration of Actions. . . . . . 58
Section 8.16. Administration of FELA Claims. . . . 59
Section 8.17. Tax Matters. . . . . . . . . . . . . 60
Section 8.18. Committees . . . . . . . . . . . . . 60
Section 8.19. Chicago Gateway Access . . . . . . . 60
Section 8.20. Car Hire and Car Service . . . . . . 61
ARTICLE IX
CONDITIONS PRECEDENT TO THE CLOSING
Section 9.1. Conditions Precedent to Obligations. 61
ARTICLE X
INDEMNIFICATION
Section 10.1. Indemnification. . . . . . . . . . . . 62
Section 10.2. Indemnification Procedures . . . . . . 62
Section 10.3. Remedies . . . . . . . . . . . . . . . 63
ARTICLE XI
MISCELLANEOUS
Section 11.1. Amendment. . . . . . . . . . . . . . . 64
Section 11.2. Extension; Waiver. . . . . . . . . . . 64
Section 11.3. Notices. . . . . . . . . . . . . . . . 64
Section 11.4. Interpretation . . . . . . . . . . . . 65
Section 11.5. Entire Agreement . . . . . . . . . . . 65
Section 11.6. Parties in Interest. . . . . . . . . 66
Section 11.7. Governing Law. . . . . . . . . . . . 66
Section 11.8. Counterparts . . . . . . . . . . . . . 66
Section 11.9. Assignment . . . . . . . . . . . . . 66
Section 11.10 Severability . . . . . . . . . . . . 67
Section 11.11. Lack of Control; Effect on CRR and its
Controlled Subsidiaries. . . . . . . 67
Section 11.12. Dispute Resolution . . . . . . . . . 67
Section 11.13. CRC Status . . . . . . . . . . . . . 68
Schedule 1
Assets
Attachment I
Attachment II
Schedule 2
Major Decisions
Schedule 3
Preservation of Fair Access to Chicago Gateway
Schedule 4
Schedule of Trackage Rights, Haulage,
Shared Assets and Other Operating Agreements
Exhibit A
Form of Operating Agreements
Exhibit A-1 (CSXT Operating Agreement)
Exhibit A-2 (NSR Operating Agreement)
Exhibit B
Form of LLC Agreements
Exhibit C
Form of Trackage Rights Agreements Exhibit C-1 (NSR on CSXT) Exhibit C-2 (CSXT
on NSR)
Exhibit D
Form of CSX/NSC Haulage Agreements
Exhibit E
Form of Capital Contribution, Assignment And Assumption Agreements
Exhibit F
Tax Allocation Agreement
Exhibit G
North Jersey Shared Assets Agreement
Exhibit H
South Jersey/Philadelphia Shared Assets Agreement
Exhibit I
Detroit Shared Assets Agreement
Exhibit J
Ashtabula Interlocking Agreement
Exhibit K
CP-Mounds Interlocking Agreement
Exhibit L
Warsaw Interlocking Agreement
Exhibit M
Crestline Interlocking Agreement
Exhibit N
Buckeye Interlocking Agreement
Exhibit O
Mike Interlocking Agreement
Exhibit P
Bucyrus Interlocking Agreement
Exhibit Q
CP 138 Interlocking Agreement
Exhibit R
Short Interlocking Agreement
Exhibit S
Berea Interlocking Agreement
Exhibit T
Ashtabula Access Agreement
Exhibit U
Seneca Yard Access Agreement
Exhibit V
Ford (Rockport) Switching Agreement
Exhibit W
GM Parma Switching Agreement
Exhibit X
Indianapolis Switching Agreement
Exhibit Y
GM Lordstown Switching Agreement
Exhibit Z
Lorain Switching Agreement
Exhibit AA
Fairlane Switching Agreement
Exhibit BB
Crawfordsville Switching Agreement
Exhibit CC
Sidney Switching Agreement
Exhibit DD
Sandusky Switching Agreement
Exhibit EE
Upper Sandusky Switching Agreement
Exhibit FF
Indiana Harbor Belt Agreement
Exhibit GG
Monongahela Access and Use Agreement
Exhibit HH
Park Manor Temporary Lease Agreement
Exhibit II
NSR and CSXT Construction Rights Agreement
Exhibit JJ
NSR Buckeye Construction Rights Agreement
Exhibit KK
NSR Field-Belmont Construction Rights Agreement
Exhibit LL
Erie Deed of Easement
Exhibit MM
Fort Wayne-Chicago/Streator Line Exchange Agreement
Exhibit NN
Piqua Yard Agreement
Exhibit OO
Elizabethport Yard Access Agreement
Exhibit PP
Agreement for Assignment of CRC Rights
Exhibit QQ
CSXT Eastwick Construction Agreement
Exhibit RR
Agreement for Assignment of CRC Rights
(Northeast Corridor)
Exhibit SS
Agreement for Assignment of Chicago Rights
<PAGE>
TRANSACTION AGREEMENT
TRANSACTION AGREEMENT, dated as of June 10, 1997 ("Agreement"), by
and among CSX CORPORATION, a Virginia corporation ("CSX"), CSX TRANSPORTATION,
INC., a Virginia corporation, for itself and on behalf of its controlled
Subsidiaries (collectively, "CSXT"), NORFOLK SOUTHERN CORPORATION, a Virginia
corporation ("NSC"), NORFOLK SOUTHERN RAILWAY COMPANY, a Virginia corporation,
for itself and on behalf of its controlled Subsidiaries (collectively, "NSR"),
CONRAIL INC., a Pennsylvania corporation, for itself and on behalf of its
controlled Subsidiaries (collectively, "CRR"), CONSOLIDATED RAIL CORPORATION, a
Pennsylvania corporation ("CRC"), and CRR HOLDINGS LLC, a Delaware limited
liability company ("CRR Parent").
WHEREAS, CSX and NSC have entered into a letter agreement dated as
of April 8, 1997 (the "April 8 Agreement").
WHEREAS, pursuant to the April 8 Agreement, CSX and NSC have jointly
acquired all of the outstanding capital stock of CRR through CRR Parent, in
which CSX and NSC each owns a 50% voting interest.
WHEREAS, CSX and NSC are seeking the approval of the STB to
undertake the transactions contemplated by this Agreement and the April 8
Agreement.
WHEREAS, pursuant to the April 8 Agreement the parties wish to
provide herein for the governance and operation of CRR and its Affiliates and
for the basis pursuant to which CRR's assets and liabilities will be allocated
to or shared by CSX and its Affiliates, on the one hand, and NSC and its
Affiliates, on the other hand, after the Closing Date (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the
following terms have the meanings set forth below:
"AAC" means Atlantic Acquisition Corporation, a Pennsylvania
corporation and a wholly owned Subsidiary of NSC.
"AAR" means the Association of American Railroads.
"AAR Car Service Rules" means the Code of Car Service Rules/Code of
Car Hire Rules contained in AAR Circular OT-10 as promulgated in the Official
Railway Equipment Register.
"AAR Depreciated Value" means depreciated value as determined in
accordance with Rule 107 of the Office and Field Manuals of the AAR Interchange
Rules adopted by the AAR Technical Services Division, Mechanical Section,
Operations and Maintenance Department.
"Action" shall mean any action, claim, suit, arbitration, inquiry,
subpoena, discovery request, proceeding or investigation by or before any
Governmental Entity or forum or authority having jurisdiction over the matter
involving or related to CRR, CRC or their respective Affiliates, the Assets, the
Retained Liabilities or the Allocated Liabilities, but shall exclude FELA
Claims.
"Affiliate" means, with respect to a specified Person, any Person
that directly or indirectly controls, is controlled by or is under common
control with, the specified Person or any trust for the benefit of such Person
or any entities controlled by such Person; provided that, for the purposes of
this Agreement, (a) NYC shall not be an Affiliate of CSX and its Subsidiaries or
NSC and its Subsidiaries, (b) PRR shall not be an Affiliate of NSC and its
Subsidiaries or CSX and its Subsidiaries and (c) CSX and NSC and their
respective Subsidiaries shall not be Affiliates of CRR or CRR Parent and their
respective Subsidiaries and vice versa.
"Allocated Assets" means the Assets to be transferred at the Closing
to either NYC ("NYC Allocated Assets") or PRR ("PRR Allocated Assets").
"Allocated Liabilities" means the Liabilities of CRR, CRC or their
respective Affiliates to be assumed at the Closing by either NYC ("NYC Allocated
Liabilities") or PRR ("PRR Allocated Liabilities").
"Amended and Restated Voting Trust Agreement" means the Voting
Trust Agreement among CSX, NSC, CRR Parent, Green and Deposit Guarantee
National Bank, dated as of April 8, 1997.
"Ancillary Agreements" means the Equipment Agreements, the CSXT
Operating Agreement, the NSR Operating Agreement, the NYC LLC Agreement, the PRR
LLC Agreement, the CRR Holdings LLC Agreement, the Trackage Rights Agreements,
the CSXT/NSR Haulage Agreements, the Tax Allocation Agreement, the Shared Assets
Agreements and the Other Operating Agreements.
"April 8 Agreement" has the meaning set forth in the preamble to
this Agreement.
"Assets" means any and all of CRR's, CRC's or their respective
Affiliates' right, title and interest in and to all of the rights, properties,
assets, claims, Contracts and businesses of every kind, character and
description, whether real, personal or mixed, whether tangible or intangible,
whether accrued, contingent or otherwise and wherever located, owned or used
primarily by such party. On the Closing Date, all Assets will be either (i) NYC
Allocated Assets, (ii) PRR Allocated Assets or (iii) Retained Assets.
"Base Inventory" has the meaning ascribed thereto in Section 2.7.
"Base Rent" has the meaning set forth in the CSXT Equipment
Agreement and the NSR Equipment Agreement.
"Books and Records" means the books, files and records (including
computerized databases and records) of CRR, CRC or their respective Affiliates
and includes the NYC Books and Records and the PRR Books and Records.
"Capital Contribution, Assignment and Assumption Agreements" means
the instruments (including quitclaim deeds or other instruments transferring
title to real estate) pursuant to which the Allocated Assets and the Allocated
Liabilities will be transferred at the Closing to NYC or PRR, as the case may
be, substantially in the form attached hereto as Exhibit E.
"Closing" has the meaning ascribed thereto in Section 3.1.
"Closing Date" has the meaning ascribed thereto in Section 3.1.
"Co-Chairmen" means the co-chairmen of the CRC Board after the
Control Date, being the CSX Co-Chairman and the NSC Co-Chairman.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time or any successor United States federal tax
statute. References to a specific section of the Code shall include a reference
to the corresponding provisions of any such successor United States federal tax
statute.
"Communications Team" has the meaning ascribed thereto
in Section 2.2.
"Continuing CRC Management" means employees (regardless of craft,
position or classification) of CRR, CRC or their respective Affiliates (other
than NYC, PRR and their respective Subsidiaries) who are determined to be
Continuing CRC Management pursuant to Section 6.1(c), which employees will
consist of the following categories: (a) employees performing general and
administrative functions for CRR, CRC or their respective Affiliates (other than
NYC, PRR and their respective Subsidiaries), (b) employees performing interim
general, administrative or technical functions for CRR, CRC or their respective
Affiliates (other than NYC, PRR and their respective Subsidiaries) (including
employees performing such functions at CRR's headquarters office building and
information technology center in Philadelphia, PA) which functions CSX and NSC
shall identify prior to the Closing Date and shall agree are necessary for an
interim period after the Closing Date in accordance with Section 2.4, (c)
employees operating, managing or performing work at the SSO Facilities, and (d)
employees (other than those described in clauses (a), (b) and (c) above)
operating, managing or performing work on Retained Assets that are to be
operated pursuant to the Shared Assets Agreements.
"Contracts" means any contract, lease, loan agreement, deed,
easement, license, reversion, mortgage, security agreement, trust indenture or
other agreement or instrument to which any of CRR, CRC or their respective
Affiliates is a party or by which any of them is bound or to which any of the
Assets is subject.
"Contracts Team" has the meaning ascribed thereto in Section 2.2.
"Control Date" means the effective date on which CSX and NSC are
authorized by the STB to exercise control over CRR.
"Corporate Level Liabilities" means the following Liabilities of
CRR, CRC or their respective Affiliates: (a) Environmental Liabilities that are
designated as Corporate Level Liabilities pursuant to Section 2.8(b)(iii); (b)
all Liabilities (except as specified in Section 2.8(b)(i) or (ii), Section
2.8(c) or Section 2.9) associated with the handling and disposition of Actions
arising prior to the Closing Date; (c) all Liabilities (except as specified in
Section 2.8(b)(i) or (ii), Section 2.8(c) or Section 2.9) associated with the
handling and disposition of Actions arising on or after the Closing Date and
that do not relate predominantly to Allocated Assets; (d) all Liabilities
(except as specified in Section 2.8(b)(i) or (ii), Section 2.8(c) or Section
2.9) associated with the handling and disposition of Actions arising on or after
the Closing Date designated as Corporate Level Liabilities pursuant to Section
2.8; (e) Employee Related Liabilities that are designated as Corporate Level
Liabilities pursuant to Article VI; (f) all Taxes accruing for periods prior to
the Closing Date, including in respect of tax leverage transactions; (g) Taxes,
if any, associated with the designation, allocation and transfer of the Assets
as contemplated in this Agreement; (h) Liabilities under leases (including
without limitation lease termination costs) that arise prior to the Closing Date
(other than the lease Liabilities in respect of the CRC headquarters office
building in Philadelphia, PA, or the information technology center in
Philadelphia, PA, or the Altoona, PA or Hollidaysburg, PA shops); (i)
Indebtedness (other than intercorporate Indebtedness of direct or indirect
Subsidiaries of CRR the capital stock, or similar interests, of which is
included in the Allocated Assets, which will be treated as agreed to by the
parties prior to the Closing); (j) all Liabilities associated with the handling
and disposition of FELA Claims made prior to the Control Date and all
Liabilities associated with the handling and disposition of FELA Claims made on
or after the Control Date and designated as Corporate Level Liabilities pursuant
to Section 2.8(c); (k) all employee costs not otherwise allocated under this
Agreement; (l) all Liabilities arising prior to the Closing Date not otherwise
allocated under this Agreement; (m) transition costs not the sole responsibility
of CSX, CSXT, NYC, NSC, NSR or PRR and not otherwise allocated under this
Agreement; and (n) all Liabilities incurred with respect to Continuing CRC
Management, the SSO Facilities and the Retained Assets, except where this
Agreement (including the Schedules and Exhibits hereto) or the Ancillary
Agreements may expressly designate the Liability in some other manner.
"Corporate Memorabilia" means all corporate memorabilia, antiques,
artifacts, charters and art owned by CRR, CRC or their respective Affiliates,
wherever located.
"CRC" has the meaning set forth in the preamble to this Agreement.
"CRC Board" means the Board of Directors of CRC.
"CRR" has the meaning set forth in the preamble to this Agreement.
"CRR Holdings LLC Agreement" means the Limited Liability Company
Agreement of CRR Holdings LLC, dated May 21, 1997, as amended from time to time.
"CRR Industries" means CRR Industries, Inc., a Pennsylvania
corporation and a wholly owned Subsidiary of CRR.
"CRR Parent" has the meaning set forth in the preamble to this
Agreement.
"CRR Shares" means the shares of Common Stock and Series A ESOP
Convertible Junior Preferred Stock of CRR.
"CRR Stay Bonus Program" means either the Conrail Inc. Stay Bonus
Program, Classes 8 And Below, or the Conrail Inc. Stay Bonus Program Classes
9-11, both to be entered into pursuant to Attachment A to the Third Amendment.
"CSX" has the meaning set forth in the preamble to this
Agreement.
"CSX Co-Chairman" has the meaning ascribed thereto in Section 4.2.
"CSX Directors" has the meaning ascribed thereto in Section 4.2.
"CSXT" has the meaning set forth in the preamble to this
Agreement.
"CSXT Equipment" means the Equipment subject to the CSXT
Equipment Agreement.
"CSXT Equipment Agreement" means the agreement to be entered into
between NYC and CSXT in a form to be agreed by CSX and NSC, to provide CSXT with
the right to use, operate and maintain certain of the Equipment which NYC has
the right to use and operate pursuant to the NYC Equipment Agreement.
"CSXT/NSR Haulage Agreements" means the agreements pursuant to which
CSXT and/or NSR will provide haulage services for the
other, in substantially the form attached hereto as Exhibit D; each CSXT/NSR
Haulage Agreement shall be in respect of a Route identified on Item 2 of
Schedule 4 and shall incorporate the terms set forth therein.
"CSXT Operating Agreement" means the agreement to be entered into
between CSXT and NYC, substantially in the form attached hereto as Exhibit A-1,
to provide for the use, operation and maintenance by CSXT of certain of the NYC
Allocated Assets after the Closing Date.
"Damages" means all assessments, losses, damages, liabilities, costs
and expenses, including without limitation interest, penalties and attorneys'
and consultants' fees.
"Distribution" means any dividend or other distribution with respect
to any shares of capital stock or similar equity interests.
"Employee Related Liabilities" means Liabilities to be designated
as NYC Allocated Liabilities, PRR Allocated Liabilities or Corporate Level
Liabilities pursuant to Article VI.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, whether
now or hereafter in effect, relating to human health, the environment or to
emissions, discharges, or releases of pollutants, contaminants, hazardous or
toxic materials or substances or wastes into the environment, including, without
limitation, ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, hazardous or toxic
materials or substances or wastes or the cleanup or other remediation thereof.
"Environmental Liabilities" means any and all Liabilities arising in
connection with or in any way relating to any Asset (or formerly held Asset) and
which arise under or relate to matters covered by any Environmental Laws.
"Equipment" means all freight car rolling stock, cabooses, trailers,
containers, end of train devices, locomotives and Work Equipment of CRR, CRC or
their respective Affiliates, whether owned or leased.
"Equipment Agreements" means the NYC Equipment Agreement, the PRR
Equipment Agreement, the CSXT Equipment Agreement and the NSR Equipment
Agreement.
"Fair Market Rental Value" has the meaning set forth in the CSXT
Operating Agreement, the NSR Operating Agreement, the CSXT Equipment Agreement
and the NSR Equipment Agreement.
"FELA Claim" means a claim made under the Federal Employers
Liability Act, as amended from time to time. A FELA Claim shall be considered
"made" upon the earliest to occur of the following: (i) the claimant's employer
has received or prepared a written report (including, in the case of an alleged
occupational injury, a questionnaire) of the claim or of the incident from which
the claim arises; or (ii) the claimant's employer has received written notice of
the claim from the claimant or the claimant's attorney; or (iii) an action,
claim or suit asserting the claim has been filed and properly served on the
claimant's employer. For the purposes of this definition (i) the term "written
report" shall include reports which are electronically prepared or transmitted,
and (ii) the term "employer" shall include the employer currently responsible
under the Federal Employers Liability Act for the claim or cause of action being
asserted and such employer's attorney.
"FF&E" means all furniture, fixtures, computers, office supplies and
equipment (other than Equipment and system stock- piles of supplies and
inventory) of CRR, CRC or their respective Affiliates.
"Governmental Entity" means any federal, state, local or foreign
court, administrative agency or commission or other governmental or regulatory
authority or commission or any arbitration tribunal.
"Green" means Green Acquisition Corp., a Pennsylvania corporation
and a wholly owned Subsidiary of CRR Parent.
"Indebtedness" means, when used with reference to a specified
Person, at any date, without duplication, (a) all obligations of such Person for
borrowed money, including, without limitation, all principal, interest,
premiums, fees, expenses, overdrafts and penalties with respect thereto, (b) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable, (d) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (e) all payment
obligations under capitalized leases and (f) all indebtedness of any other
Person of the type referred to in clauses (a) to (e) above directly or
indirectly guaranteed by such Person.
"Indemnified Party" means a Person who requires or requests
indemnification under Article X.
"Indemnifying Party" means a Person who is required or requested to
indemnify another Person under Article X.
"Interest Rental" has the meaning set forth in the Shared Assets
Agreements.
"Inventory Team" has the meaning ascribed thereto in Section
2.2.
"IRS Submission" has the meaning ascribed thereto in Section
8.9.
"Liabilities" means any and all debts, liabilities and obligations
of any kind whatsoever, whether or not accrued, contingent or reflected on a
balance sheet, known or unknown, absolute, determined, determinable or
otherwise, including, without limitation, those arising under any law, rule,
regulation, action, order or consent decree of any Governmental Entity or any
judgment in any Action of any kind or award of any arbitrator of any kind and
those arising under any Contract. At the Closing Date, all Liabilities of CRR,
CRC or their respective Affiliates will be either (i) NYC Allocated Liabilities,
(ii) PRR Allocated Liabilities or (iii) Retained Liabilities.
"Locomotive Team" has the meaning ascribed thereto in Section
2.6.
"Major Decisions" means any of the items identified on Schedule
2 hereto.
"Merger" means the merger of a subsidiary of Green with and into
CRR pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger by and
among CRR, CSX and Green dated as of October 14, 1996 and as amended as of
November 5, 1996, December 18, 1996, March 7, 1997 and April 8, 1997 and as may
be further amended from time to time in accordance with its terms and the terms
of this Agreement.
"NSC" has the meaning set forth in the preamble to this
Agreement.
"NSC Co-Chairman" has the meaning ascribed thereto in Section
4.2.
"NSC Directors" has the meaning ascribed thereto in Section 4.2.
"NSR" has the meaning set forth in the preamble to this
Agreement.
"NSR Equipment" means the Equipment subject to the NSR
Equipment Agreement.
"NSR Equipment Agreement" means the agreement to be entered into
between PRR and NSR, in a form to be agreed among CSX and NSC, to provide NSR
with the right to use, operate and maintain certain of the Equipment which PRR
has the right to use and operate pursuant to the PRR Equipment Agreement.
"NSR Operating Agreement" means the agreement to be entered into
between NSR and PRR, substantially in the form attached hereto as Exhibit A-2,
to provide for the use, operation and maintenance by NSR of certain of the PRR
Allocated Assets after the Closing Date.
"NYC" means New York Central Lines LLC (or such other name as may
be specified by CSX), which will be organized on or prior to the Closing
pursuant to Section 3.2 as a Delaware limited liability company and a wholly
owned Subsidiary of CRC.
"NYC Action" has the meaning ascribed thereto in Section 8.14.
"NYC Allocated Assets" means the Assets identified on Item 1 of
Schedule 1 hereto and the Transportation Contracts allocated to NYC pursuant to
Section 2.2(c) (unless CSX and NSC in their discretion agree that any such
Assets shall not be NYC Allocated Assets) together with the Unallocated Assets
designated as NYC Allocated Assets prior to the Closing Date pursuant to Article
II, including any cash benefit in lieu of such Assets pursuant to Section 8.7.
"NYC Allocated Liabilities" means the Liabilities designated as
NYC Allocated Liabilities pursuant to Section 2.8 or Article VI, together with
all Liabilities allocated to and the responsibility of NYC under any Ancillary
Agreement.
"NYC Books and Records" shall mean the books, files and records
(including computerized databases and records) of CRR, CRC or their respective
Affiliates that relate principally to the NYC Allocated Assets or NYC Allocated
Liabilities and are necessary or useful for the operation of the business in
respect thereof.
"NYC Equipment Agreement" means the agreement to be entered into
between CRC and NYC, in a form to be agreed among CSX and NSC, to provide NYC
with the right to use, operate and maintain certain of the Equipment allocated
to NYC pursuant to Section 2.6(e)(i).
"NYC LLC Agreement" means the Limited Liability Company Agreement
of NYC, substantially in the form attached hereto as Exhibit B.
"NYC Restructuring" has the meaning ascribed thereto in Section
8.9.
"Operating Fee" has the meaning set forth in the CSXT Operating
Agreement and the NSR Operating Agreement.
"Other Operating Agreements" means the agreements to be entered
into between and among CRC, NYC, PRR, CSXT and/or NSR, substantially in the
forms attached hereto as Exhibits J through RR, providing for various operating,
access, construction and other matters. The Other Operating Agreements are
listed in Item 4 of Schedule 4 hereto.
"PBCL" means the Pennsylvania Business Corporation Law of 1988, as
amended from time to time.
"Pennsylvania Control Transaction Law" means Subchapter E of
Chapter 25 of the PBCL, as amended from time to time.
"Percentage" means, in the case of CSX, 42% and, in the case of
NSC, 58%.
"Person" includes any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company or other legal entity or organization.
"Pooled Assets" means all Unallocated Assets for which no
allocation methodology is provided for in Section 2.2(a) through (i), including
the Assets identified on Item 4 of Schedule 1.
"Privileged Information" has the meaning ascribed thereto in
Section 8.14.
"Privileges" has the meaning ascribed thereto in Section 8.14.
"PRR" means Pennsylvania Lines LLC (or such other name as may be
specified by NSC), which will be organized on or prior to Closing pursuant to
Section 3.2 as a Delaware limited liability company and a wholly owned
Subsidiary of CRC.
"PRR Action" has the meaning ascribed thereto in Section 8.15.
"PRR Allocated Assets" means the Assets identified on Item 2 of
Schedule 1 hereto and the Transportation Contracts allocated to PRR pursuant to
Section 2.2(c) (unless CSX and NSC in their discretion agree that any such
Assets shall not be PRR Allocated Assets), together with the Unallocated Assets
designated as PRR Allocated Assets prior to the Closing Date pursuant to Article
II, including any cash benefit in lieu of such Assets pursuant to Section 8.7.
"PRR Allocated Liabilities" means the Liabilities designated as
PRR Allocated Liabilities pursuant to Section 2.8 or Article VI, together with
all Liabilities allocated to and the responsibility of PRR under any Ancillary
Agreement.
"PRR Books and Records" shall mean the books, files and records
(including computerized databases and records) of CRR, CRC or their respective
Affiliates that relate principally to the PRR Allocated Assets or PRR Allocated
Liabilities and are necessary or useful for the operation of the business in
respect thereof.
"PRR Equipment Agreement" means the agreement to be entered into
between CRC and PRR, in a form to be agreed among CSX and NSC, to provide PRR
with the right to use, operate and maintain certain of the Equipment allocated
to PRR pursuant to Section 2.6(e)(i).
"PRR LLC Agreement" means the Limited Liability Company Agreement
of PRR, substantially in the form attached hereto as Exhibit B.
"PRR Restructuring" has the meaning ascribed thereto in Section
8.9.
"Radio Licenses" has the meaning ascribed thereto in Section
2.2.
"Required Approvals" has the meaning ascribed thereto in
Section 7.1.
"Restructuring" means either the NYC Restructuring or the PRR
Restructuring, as the context requires.
"Retained Assets" means the Assets identified on Item 3 of
Schedule 1 hereto (unless CSX and NSC in their discretion agree that any such
Assets shall not be Retained Assets) together with the Unallocated Assets
designated as Retained Assets prior to the Closing Date pursuant to Article II,
including (a) Equipment that is not included in the Allocated Assets, (b) the
SSO Facilities and (c) the Pooled Assets not designated as Allocated Assets
pursuant to Section 2.2(j).
"Retained Liabilities" means the Liabilities designated as
Retained Liabilities pursuant to Section 2.8 (including, without limitation, all
Corporate Level Liabilities), together with all Liabilities allocated to and the
responsibility of CRR, CRC or their respective Affiliates under any Ancillary
Agreement.
"Rolling Stock Team" has the meaning ascribed thereto in
Section 2.6.
"Route" means the rights and Assets used to provide transportation
service along a railroad line connecting two or more stations and consisting of
one or more tracks (together with associated sidings, side tracks, signaling,
land and other related facilities).
"Ruling" has the meaning ascribed thereto in Section 8.9.
"Separation Costs" means labor protection costs, including
dismissal allowances, displacement allowances and the cost of administering,
arbitrating and litigating such labor protection provisions, severance
(including payments under severance agreements), personnel relocation expenses
and all other dismissal expenses and stay bonuses, including any payment
intended to reimburse for excess parachute excise tax imposed under Section 4999
of the Code with respect to such dismissal expenses or stay bonuses.
"Service" has the meaning ascribed thereto in Section 8.9.
"Shared Assets Agreements" means the agreements between and among
CRC, NYC, PRR, CSXT and/or NSR, substantially in the forms attached hereto as
Exhibits G through I, providing for the operation of certain Retained Assets for
the benefit of CSXT and NSR. The Shared Assets Agreements are listed in Item 3
of Schedule 4 hereto.
"Shared Assets Areas" means (a) the North Jersey shared Asset
facility to be covered by the Shared Assets Agreement substantially in the form
attached hereto as Exhibit G, (b) the South Jersey/Philadelphia shared Asset
facility to be covered by the Shared Assets Agreement substantially in the form
attached hereto as Exhibit H and (c) the Detroit shared Asset facility to be
covered by the Shared Assets Agreement substantially in the form attached hereto
as Exhibit I.
"SSO Facilities" means the CRR or CRC system support operations
facilities described in Item 3(B) of Schedule 1 (including equipment and other
Assets associated with such facilities) used as of the date hereof by CRR and
CRC or their respective Affiliates to provide support functions benefiting the
CRC rail system as a whole, including: (a) the customer service center in
Pittsburgh, PA; (b) the crew management facility in Dearborn, MI; (c) the system
maintenance-of-way equipment center in Canton, OH; (d) the signal repair center
in Columbus, OH; (e) the system freight claims facility in Buffalo, NY; (f) the
system non-revenue billing facility at Bethlehem, PA; (g) the system rail
welding plant at Lucknow (Harrisburg), PA; (h) the system road foreman/engineer
training center at Philadelphia and Conway, PA; (i) the CRC police operations
center at Mt. Laurel, NJ; and (j) such other facilities providing system-wide
support functions as CSX and NSC shall identify and agree upon prior to the
Closing Date.
"STB" means the Surface Transportation Board or, if there shall be
no Surface Transportation Board, any federal agency which is charged with the
function of approving combinations by rail carriers or persons controlling them,
or of other arrangements between such rail carriers, and granting exemptions
from other laws with respect thereto or regulating other specific functions with
respect to the context in which such term is employed or any successor entity
thereof.
"Subsidiary" means, when used with reference to a specified
Person, any corporation or other organization, whether incorporated or
unincorporated, of which at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such Person or by any one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries; provided that CRR Parent and any Person in
which CRR Parent owns, directly or indirectly an interest (it being assumed for
the purposes of this Agreement that CRR Parent does not own, directly or
indirectly, an interest in either CSX or NSC) shall not be a Subsidiary of
either CSX or NSC.
"Surviving Corporation" means the surviving corporation of the
Merger.
"Tax" or "Taxes" means taxes of any kind, levies or other similar
assessments, customs, duties, imposts, charges or fees, including, without
limitation, income taxes, gross receipts, ad valorem, excise, real or personal
property, sales, use, payroll, withholding, unemployment, transfer and gains
taxes or other governmental taxes imposed by or payable to the United States, or
any state, local or foreign government or subdivision thereof, and in each
instance such term shall include any interest, penalties or additions to tax
attributable to such Tax or Taxes. The term "Tax" or "Taxes" shall not include
any payment intended to reimburse the recipient for an excess parachute excise
tax imposed under Section 4999 of the Code.
"Tax Allocation Agreement" means the agreement to be entered into
among Green, CRR, CRC, CRR Industries, PRR and NYC, substantially in the form
attached hereto as Exhibit F, pursuant to which the rights and obligations
relating to Tax matters involving the operations of CRR, CRC, PRR and NYC shall
be allocated.
"Tax Returns" means all returns, information returns, statements,
certifications, reports or other documentation relating to Taxes.
"Third Amendment" means the third amendment, dated March 7, 1997,
to the Merger Agreement.
"Third Party Claim" has the meaning ascribed thereto in Section
10.2.
"Trackage Rights Agreements" means the agreements pursuant to
which CSXT and NSR will grant trackage rights to the other, in substantially the
form attached hereto as Exhibit C; each Trackage Rights Agreement shall be in
respect of a Route identified on Item 1 of Schedule 4 and shall incorporate the
terms set forth therein.
"Transaction Expenses" means, with respect to a specified Person,
all of such Person's fees and expenses, including, without limitation, filing
fees and fees and expenses of legal counsel, depositaries, dealer managers,
proxy solicitors, information agents, printers, investment bankers or advisors,
financing sources, accountants, public relations advisors and other consultants
and advisors incurred in connection with the acquisition of CRR Shares, the
Merger, the April 8 Agreement, this Agreement, the Ancillary Agreements and the
transactions contemplated herein and therein.
"Transportation Contracts" means Contracts between rail carrier(s)
and a Person or Persons relating to the purchase of transportation services as
specified in 49 U.S.C. ss. 10102(9)(A) and (B); provided that, if a
Transportation Contract covers service between more than one pair of points, the
provisions governing service between each pair of points shall be treated as a
distinct Transportation Contract.
"Unallocated Assets" means Assets which are not as of the date of
this Agreement identified on Schedule 1 hereto as Allocated Assets or Retained
Assets.
"Valuation Date" has the meaning set forth in the CSXT Operating
Agreement, the NSR Operating Agreement, the CSXT Equipment Agreement, the NSR
Equipment Agreement and the Shared Assets Agreements.
"Voting Trust" means the voting trust for the shares of capital
stock of CRR or CRC created under the Amended and Restated Voting Trust
Agreement.
"Work Equipment" means track machinery, non-revenue rolling stock
dedicated to track maintenance (such as ballast and tie cars), other mobile
equipment (such as backhoes, bulldozers and the like), other engineering
equipment and automobiles and trucks assigned to CRC system and staff functions
(automobiles and trucks assigned to Allocated Asset locations shall be included
in the Allocated Assets).
"Work Equipment Team" has the meaning ascribed thereto in Section
2.6.
Section 1.2. Other Definitive Provisions. When used in this
Agreement in respect of a Liability or an Action, the terms "arise" or "arising"
mean that the circumstances giving rise to the Liability or Action have
transpired, whether or not such Action or Liability has been discovered,
asserted or accrued. When used in this Agreement, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
ARTICLE II
DESIGNATION AND ALLOCATION OF ASSETS
AND LIABILITIES
Section 2.1. Conveyance of Assets. On the Closing Date and upon the
terms and subject to the conditions set forth in this Agreement, (i) CRC and its
Affiliates shall contribute, assign, transfer, convey and deliver the NYC
Allocated Assets to NYC and NYC shall accept from CRC and its Affiliates all of
the right, title and interest of CRC and its Affiliates in all of the NYC
Allocated Assets, and (ii) CRC and its Affiliates shall contribute, assign,
transfer, convey and deliver the PRR Allocated Assets to PRR and PRR shall
accept from CRC and its Affiliates all of the right, title and interest of CRC
and its Affiliates in all of the PRR Allocated Assets. Except as expressly
provided in this Agreement, CSX and its Affiliates, on the one hand, and NSC and
its Affiliates, on the other hand, shall retain all their existing rights with
respect to the Assets.
Section 2.2. Allocation of Certain Assets. As soon as practicable
after the date hereof and in any event prior to the Closing Date, CSX and NSC
shall use their best efforts to designate the Unallocated Assets as either NYC
Allocated Assets, PRR Allocated Assets or Retained Assets. CSX and NSC shall
continue to monitor such designation up to, and shall update such designation as
of, the Closing Date. Such designation shall be as agreed between CSX and NSC in
accordance with the following guidelines (which shall not, unless CSX and NSC
otherwise agree, affect Assets already designated as Allocated Assets or
Retained Assets pursuant to Schedule 1 hereto):
(a) Unallocated FF&E shall be designated as follows: (i) all FF&E
located in or along Allocated Assets shall be designated in the same manner as
such Allocated Assets, (ii) all FF&E located in or along Retained Assets shall
be designated as Retained Assets and (iii) all FF&E not designated pursuant to
clause (i) or (ii) above shall be designated as NYC Allocated Assets or PRR
Allocated Assets by value in proportion to CSX's and NSC's respective
Percentage.
(b) On or prior to the Closing Date, CSX, NSC and CRR shall take an
inventory of all Corporate Memorabilia, and CSX and NSC shall value the
principal items or categories, engaging an appraiser if they cannot agree on the
value thereof. One half of the Corporate Memorabilia by value shall be
designated as NYC Allocated Assets and the other half shall be designated as PRR
Allocated Assets by the mutual agreement of CSX and NSC. If CSX and NSC have not
agreed on the particular items or categories of Corporate Memorabilia to be
designated as NYC Allocated Assets and PRR Allocated Assets, respectively, they
will alternate selecting Corporate Memorabilia having a value of 5% (as near as
may be) of the total value of all of the Corporate Memorabilia, with the party
having first choice selected by lot.
(c) The parties recognize the importance of assuring that the
acquisition of CRC does not create shipping disruptions for CRC customers and
hence are hereby making arrangements to carry out CRC's Transportation Contracts
in the manner hereinafter set forth.
(i) All CRC Transportation Contracts in effect as of the Closing
Date ("Existing Transportation Contracts") shall remain in effect through their
stated term and the obligations thereunder shall be carried out thereafter by
CSXT utilizing NYC Allocated Assets and NSR utilizing PRR Allocated Assets, or
pursuant to the Shared Assets Agreements, as the case may be.
(ii) CSXT and NSR shall allocate the responsibilities to serve
customers under the Existing Transportation Contracts in a manner to achieve
reliability and proper service to the customers, and the revenues and expenses
associated with the Existing Transportation Contracts and related services shall
be allocated and accounted for between CSXT and NSR in accordance with the
Percentage Division to the extent that the performance of contracts allocated by
Percentage Division departs from the Percentage Division.
(iii) The following decision rules shall be applied on an annual
basis with tentative settlements to the extent required by subsection (c)(ii) on
a quarterly basis 60 days after the end of the quarter and an annual true-up 90
days after the end of the year:
(A) For purposes of this Subsection (c), "Local" means a station
that is not Dual and is served solely by CSXT or NSR, and "Dual" means a
station with line-haul service by both, including service accessed by one
or the other through trackage rights or haulage, in each case as of the
date of this Agreement giving effect to the effectuation of the Closing.
For purposes of the definition of "Dual", the term includes (a) as to
commodities that are handled by rail before or after shipment by water,
all stations at which such commodities are handled in Ocean, Gulf and
Great Lakes port cities to which each of CSXT and NSR has line haul
service to any such station, and (b) as to intermodal service, all
intermodal facilities in any city in which each of CSXT and NSR has line
haul service to any intermodal facility. Further, references to "Off Line"
stations in this Subsection (c) do not include a situation where such
station is Local or Dual to NSR or CSXT or a third railroad whose sole
connection is with CSXT or NSR.
(B) In addition, for purposes of this Subsection (c) only, the
phrase "Percentage Division" shall mean 50% CSXT - 50% NSR.
(C) Revenues shall be allocated as follows:
(aa) Where the Existing Transportation Contract calls for
transportation from an origin station located on the PRR Allocated
Assets, the allocation shall be solely to NSR, except as follows:
(x) If the origin station is Local to NSR and the
destination station is on the NYC Allocated Assets and Local
to CSXT, then the allocation shall be on a joint line basis
between NSR and CSXT with the interchange to be negotiated
between NSR and CSXT and the revenues to be split 30% to NSR,
30% to CSXT, and the remainder to be based upon a mileage
prorate; and
(y) If, notwithstanding its location on the PRR
Allocated Assets, the origin station is Dual and the
destination station is on the NYC Allocated Assets and Local
to CSXT, then the allocation shall be solely to CSXT. (bb)
Where the Existing Transportation Contract calls for
transportation from an origin station located on the NYC Allocated
Assets, the allocation shall be solely to CSXT, except as follows:
(x) If the origin station is Local to CSXT and the
destination station is on the PRR Allocated Assets and Local
to NSR, then the allocation shall be on a joint line basis
between CSXT and NSR with the interchange to be negotiated
between CSXT and NSR and the revenues to be split 30% to CSXT,
30% to NSR, and the remainder to be based an a mileage
prorate; and
(y) If, notwithstanding its location on the NYC Allocated Assets,
the origin station is Dual and the destination station is on the PRR
Allocated Assets and Local to NSR, then the allocation shall be solely to
NSR.
(cc) Where the Existing Transportation Contract calls for transportation
where at least one of the origin and destination stations is Dual or which is
located in a Shared Assets Area or located on or accessed from the tracks of the
former Monongahela Railway or Waynesburg Southern Railway ("MGA") (collectively,
a "Specified Station"), the following shall apply as to such Existing
Transportation Contract:
(x) If the other station is located on a PRR Allocated Asset and is
Local to NSR, then the allocation shall be solely to NSR;
(y) If the other station is located on an NYC Allocated Asset and is
Local to CSXT, then the allocation shall be solely to CSXT; and
(z) If the other station is a Specified Station, then CSXT and
NSR shall divide the allocation on the Percentage Division (by
revenue) annually.
(dd) Where the origin station is Off Line and the destination station
is within the former CRC territory, the following shall apply as to the Existing
Transportation Contract:
(x) If the destination station is located on an NYC Allocated Asset
and is Local to CSXT, the allocation shall be solely to CSXT.
(y) If the destination station is located on a PRR Allocated Asset
and is Local to NSR, the allocation shall be solely to NSR.
(z) If the destination Station is Dual or is located in a Shared
Assets Area or in MGA, CSXT and NSR shall divide the allocation on the
Percentage Division (by revenue) annually.
(ee) Where the origin station is within the former CRR territory and the
destination station is Off Line, the following shall apply as to the Existing
Transportation Contracts:
(x) If the origin station is located on an NYC Allocated Asset and
is Local to CSXT, the allocation shall be solely to CSXT.
(y) If the origin station is located on a PRR
Allocated Asset and is Local to NSR, the allocation
shall be solely to NSR.
(z) If the origin station is Dual or is located in
a Shared Asset Area or in MGA, CSXT and NSR shall divide
the allocation on the Percentage Division (by revenue)
annually.
(ff) Where the origin station and the destination
station are both Off Line, CSXT and NSR shall divide the
allocation on the Percentage Division.
(gg) As to any joint line Existing Transportation
Contract which involves either CSXT and CRC and NSR and CRC,
that Transportation Contract shall be treated, for the
purposes of the above rules, as if it involved an NSR or CSXT
Local origin or off-line destination (as the case may be) and
only that portion of the transportation over former CRC Routes
shall be governed by the foregoing.
(hh) Where, as of the Closing Date, CRC has a
proportional rate Existing Transportation Contract which
provides a through rate in combination with a separate
proportional rate CSXT or NSR transportation contract, the
separate CSXT or NSR transportation contract shall be
unaffected and only the CRC portion of the transportation
shall be governed by the foregoing.
(iv) There shall be a presumption that responsibility for the
performance of contracts shall follow the allocations referred to above
and that presumption, except in extraordinary cases, shall control in all
cases except those provided for in Sections 2.2(c)(iii)(C)(cc)(z),
2.2(c)(iii)(C)(dd)(z), and 2.2(c)(iii)(C)(ee)(z). Exceptions in those
cases just mentioned shall be made to promote the use of efficient routes,
high-quality service and consistency of service to customers, and in that
connection there shall be a presumption against dividing a contract
between a single destination and a single origin between the two carriers.
(v) In the case of a single Existing Transportation Contract which
covers multiple origin and destination pairs, allocation of revenue shall be on
the basis of each pair but CSXT and NSR shall cooperate as necessary to assure
that the shippers under such Existing Transportation Contracts receive the
benefits (e.g., volume pricing, refunds, etc.)to which they are entitled
thereunder, notwithstanding any division of responsibility in providing the
transportation.
(vi) Nothing in this Section 2.2(c) shall limit any right of the
parties to provide service to or enter into transportation contracts with
shippers with Existing Transportation Contracts.
(d) All Contracts granting any unrelated Person the right to bury
fiber optic cable longitudinally along Assets shall be designated as Retained
Assets (if any Assets in respect of which such rights are given are Allocated
Assets, NYC or PRR, as the case may be, will license or otherwise grant rights
to CRC or its Affiliates to maintain the subject matter of the Contracts
granting such rights), except where such rights relate only to either NYC
Allocated Assets or PRR Allocated Assets, in which case such Contracts shall be
designated in the same manner as such Allocated Assets; provided that NYC and
PRR shall, to the extent permitted under such Contracts that are designated as
Retained Assets, be given equal access to CRC's or its Affiliate's rights to use
capacity on such fiber optic cable and shall participate equally in any other
benefits of such Contracts.
(e) Promptly after the date hereof, CSXT and NSR each shall appoint
up to five members of a committee (the "Contracts Team"). The Contracts Team
shall meet and not later than January 1, 1998 shall negotiate an equitable
designation of all Contracts (other than Transportation Contracts and Contracts
otherwise allocated or designated under the terms hereof) based on the following
guidelines:
(i) Contracts that relate predominantly to either NYC Allocated
Assets, PRR Allocated Assets or Retained Assets will be designated in the
same manner as such Assets.
(ii) Contracts (A) that benefit CRC as a whole (such as unfilled
system purchase and supply Contracts), (B) that relate predominantly to
Retained Assets (such as certain intermodal terminal Contracts) or (C)
that the Contract Team cannot designate for whatever reason, shall be
Retained Assets and CRC shall, to the extent permitted under the relevant
Contract, subcontract its duties, obligations and rights under such
Contract to NYC or PRR by value in proportion to CSX's and NSC's
respective Percentage in accordance with the procedure set forth in
Section 8.5(b).
(f) Promptly after the date hereof, NSR and CSXT each shall appoint
up to five members of a committee (the "Communications Team"). The
Communications Team shall meet and not later than January 1, 1998 shall
negotiate an equitable designation of all radio licenses held or owned by CRR,
CRC or their respective Affiliates ("Radio Licenses") based on the following
guidelines:
(i) In general, Radio Licenses will be designated as PRR Allocated
Assets or NYC Allocated Assets depending on the designation of the
Allocated Assets to which the Radio Licenses most relate. The designation
of Radio Licenses will be made in such manner as to facilitate and permit
continued operations on the PRR Allocated Assets and the NYC
Allocated Assets substantially as conducted before the Closing Date.
(ii) Base Radio Licenses shall be designated and reissued on their
present frequencies to PRR or NYC, depending on whether the Allocated
Assets on or near which the base radio operates are NYC Allocated Assets
or PRR Allocated Assets. If the base radio is used for train operations on
a line that includes both PRR Allocated Assets and NYC Allocated Assets,
the Radio License shall be allocated in the same manner as the Allocated
Assets on which the base radio is located and the party allocated such
Radio License shall grant to the other party the right to operate a base
station and other needed radio equipment on that frequency.
(iii) Mobile Radio Licenses (such as those relating to engine
radios and end-of-train-devices) will be designated
as NYC Allocated Assets or PRR Allocated Assets giving effect to the
relative operating needs and existing systems of each of NYC and/or CSXT,
on the one hand, and PRR and/or NSR on the other hand.
(iv) Radio Licenses for which the Communications Team can not agree
upon the designation as PRR Allocated Assets or NYC Allocated Assets prior
to the Closing Date or that are required for CRC operations under the
Shared Assets Agreements will be Retained Assets and held by CRR for the
benefit of both NYC and PRR.
(g) In connection with its negotiations under Section 2.2(f), the
Communications Team also shall not later than January 1, 1998 negotiate an
equitable designation in accordance with CSX's and NSC's respective Percentage
of all Unallocated Assets that are signal and communications equipment or
facilities and leased communications services. This will include all signal and
communications equipment and facilities and leased services that are (i) used by
CRC system-wide, (ii) used in conjunction with the operation of both a Route
included in NYC Allocated Assets and a Route included in PRR Allocated Assets
(such as a microwave tower), or (iii) of a character that precludes such Assets
from being logically segregated and designated by Route. In making its
designation, the Communications Team shall consider, among other things, Asset
value and each party's relative ability to maintain current operations and
compatibility with existing equipment. Items for which the Communications Team
cannot agree upon the designation as PRR Allocated Assets or NYC Allocated
Assets prior to the Closing Date or that are required for CRC operations under
the Shared Assets Agreements will be Retained Assets and held for the benefit of
both NYC and PRR, although it is the intention of the parties that such signal
and communications equipment or facilities and leased communications equipment
(other than items required for CRC operations under the Shared Assets
Agreements) be designated to the extent possible as Allocated Assets.
(h) System stockpiles of inventory, material and supplies of CRR,
CRC or their respective Affiliates, regardless of location (other than such
Assets designated as PRR Allocated Assets pursuant to Section 2.7) are Pooled
Assets that shall be Retained Assets at the Closing Date unless otherwise
designated hereunder. Promptly after the date hereof, CSXT and NSR each shall
appoint up to four members of a committee (the "Inventory Team"). In addition to
its functions pursuant to Section 2.7, the Inventory Team shall not later than
January 1, 1998 determine whether and to what extent system stockpiles of
inventory, material and supplies of CRR, CRC or their respective Affiliates (i)
shall be designated as NYC Allocated Assets or PRR Allocated Assets (such
designation to be in proportion to CSX's and NSC's respective Percentage) or
(ii) shall be Retained Assets as to which NYC and CSXT, on the one hand, and PRR
and NSR, on the other hand, shall have access to in accordance with the
procedure to be determined by the Inventory Team pursuant to this Section
2.2(h). In making its identification and designation, the Inventory Team shall
specify that (i) inventory, materials and supplies acquired for the purpose of
fulfilling third-party Contracts shall be designated in the same manner as and
be applied to fulfill such Contracts and (ii) inventory, materials and supplies
held for maintenance of facilities that are included in Allocated Assets shall
be designated in the same manner as such Allocated Assets. System stockpiles or
portions thereof that are not specifically designated by the Inventory Team
shall be Retained Assets. The Inventory Team shall determine an appropriate
procedure for NYC and CSXT, on the one hand, and PRR and NSR, on the other hand,
to have access to all system stockpiles of inventory, material and supplies that
are Retained Assets by value in proportion to CSX's and NSC's respective
Percentage.
(i) Unless otherwise agreed upon by CSX and NSC prior to the
Closing, all computer software and associated data and engineering CADD systems
owned or used by CRR, CRC or their respective Affiliates which may be copied and
used by both NYC and PRR without the permission of, or payment to, any Person
shall be designated in the same manner as the hardware on which it is stored;
provided that PRR shall have the right to copy and to receive a non-exclusive
license of such computer software, rights, data, licenses and systems that are
designated as NYC Allocated Assets and NYC shall have the right to copy and to
receive a non-exclusive license of such computer software, rights, data,
licenses and systems that are designated as PRR Allocated Assets. Unless
otherwise agreed upon by CSX and NSC prior to the Closing, all computer software
and associated data and engineering CADD systems owned or used by CRR, CRC or
their respective Affiliates which may not be copied or used (or which may not be
copied or used without the permission of or payment to any Person) by both NYC
and PRR shall be Retained Assets, provided that CRR, CRC and their respective
Affiliates shall use their reasonable commercial efforts to assign, license or
otherwise make available on an equal basis to each of CSX, NSC or their
designees, upon request, the nonexclusive use of all or any portion of such
software, data, licenses and systems. Notwithstanding the foregoing, no party
shall be required to maintain any item of software on computer equipment
included in Allocated Assets, or be required to make license or other payments
for such software, for a period longer than 12 months.
(j) To the extent not otherwise agreed upon by CSX and NSC prior to
the Closing Date, all Pooled Assets shall be Retained Assets available for the
benefit of both CSXT and NYC, on the one hand, and NSR and PRR, on the other
hand in accordance with CSX's and NSC's respective Percentage. If CSX and NSC
agree prior to the Closing Date that specified Pooled Assets (or groups of
Pooled Assets) should be allocated to NYC or PRR, such specified Pooled Assets
shall, at the Closing, be designated as NYC Allocated Assets or PRR Allocated
Assets, as the case may be.
Section 2.3. System Support Operations; Dispatching. (a) The parties
recognize that each SSO Facility has been used by CRR and CRC to provide a
support function benefiting the CRC rail system as a whole (e.g., system-wide
crew management or signal repair support functions). It is expected that each of
CSXT and NYC, on the one hand, and NSR and PRR, on the other hand, may require
the use or benefit of or access to the functions and support provided by the SSO
Facilities for a period of time after the Closing Date. Accordingly, the SSO
Facilities shall be included in Retained Assets and will continue to be owned by
CRR, CRC or its Affiliates. Until a party terminates its use of an SSO Facility
as provided below, (i) the costs of operating such SSO Facility shall be
included in Corporate Level Liabilities and (ii) such SSO Facility shall be
operated for the benefit of both CSXT and NYC, on the one hand, and NSR and PRR,
on the other hand, based on their operating and administrative needs.
(b) Each of CSXT and NYC, on the one hand, and NSR and PRR, on the
other hand, shall have the right, upon six months' prior written notice, to
notify the other that it no longer needs the use of or access to all or any
specified portion of the functions performed at a particular SSO Facility. If
the party receiving such notice notifies the other party within thirty days of
receipt of such notice that it no longer needs the use of or access to all or
the same specified portion of the functions performed at a particular SSO
Facility, then the effective date of the notice sent by the receiving party
shall be deemed to be the same as that of the notice which it received from the
notifying party. If the notice relates to less than the entire SSO Facility, it
shall state with specificity the particular function(s) and/or Continuing CRC
Management position(s) covered by the notice. Notices may be given at any time
before or after the Closing Date and in each case shall specify an effective
date which shall be a date on or after the Closing Date that is not less than
six months after the date such notice is given. From and after the effective
date of a notice, all costs associated and incurred after the effective date of
such notice with the SSO Facility (or portion thereof) and Continuing CRC
Management positions identified in the notice shall cease to be Corporate Level
Liabilities and will be allocated entirely to and be the responsibility of the
party continuing to use the functions performed at the SSO Facility or portion
thereof. Costs associated with an SSO Facility (or portion thereof) or the
Continuing CRC Management employees performing work at that SSO Facility which
are not terminated by such notice but continue to be incurred for the benefit of
both parties will continue to be Corporate Level Liabilities. Notwithstanding
the foregoing, Separation Costs associated with Continuing CRC Management
employees after the Control Date shall be allocated and paid as provided in
Article VI.
(c) In the case of an SSO Facility as to which both CSXT and NYC, on
the one hand, and NSR and PRR, on the other hand, have discontinued use of the
entire SSO Facility by each giving six-month termination notices that have
become effective, CSX and NSC will cause CRC and its Affiliates to take such
action as may be appropriate to discontinue the use of or provide for the
disposition of such SSO Facility (which may include a disposition to NYC or
PRR), and costs associated with such SSO Facility between the effective date of
the second notice and such discontinuance or disposition shall be Corporate
Level Liabilities and the cash proceeds, if any, of such discontinuance or
disposition shall, subject to Section 4.4, be for the benefit of CRC.
(d) The full costs of maintaining and operating SSO Facilities shall
include all direct and indirect costs (excluding return on investment and system
overheads), compensation and benefits, purchased services, insurance, facility
costs and computer processing costs. CSX and NSC shall establish appropriate
accounting systems and controls designed to capture and track such costs.
(e) To facilitate the division of dispatching functions
currently performed for the five CRC operating divisions, NSC and CSX agree that
the territorial boundaries of the operating divisions will be changed and
dispatching functions will be assigned and transferred as follows:
(i) Dearborn division: The Dearborn division office building will be
included in PRR Allocated Assets. All dispatching functions at such
facility will be assigned to PRR and NSR except (A) those for dispatching
the Cleveland East, Cleveland terminal and other Dearborn division
segments included in the NYC Allocated Assets, which functions will be
assigned and transferred to NYC and CSXT, and (B) those for dispatching of
the Detroit Shared Assets Area which functions will be assigned and
transferred to CRC and will be relocated to a neutral site.
(ii) Indianapolis division: The Indianapolis division office
building will be included in NYC Allocated Assets. All dispatching
functions at such facility will be assigned to NYC and CSXT except those
for dispatching the Marion branch, the Cincinnati line, the West Virginia
secondary and other Indianapolis division segments included in the PRR
Allocated Assets, which functions will be assigned and transferred to PRR
and NSR.
(iii) Pittsburgh division: The Pittsburgh division office building
will be included in PRR Allocated Assets. All dispatching functions at
such facility will be assigned to PRR and NSR except those for dispatching
Pittsburgh division segments included in the NYC Allocated Assets, which
functions will be assigned and transferred to NYC and CSXT.
(iv) Philadelphia division (Mt. Laurel, NJ): The Philadelphia
division office building will be included in the Retained Assets. All
dispatching functions at such facility will be assigned to PRR and NSR
except (A) those for dispatching the Trenton line, the River line, the
Popes Creek secondary, the Herbert secondary, the Landover line and other
Philadelphia division segments included in the NYC Allocated Assets, which
functions will be assigned and transferred to NYC and CSXT, and (B) those
for dispatching the North Jersey Shared Assets Area and the South
Jersey/Philadelphia Shared Assets Area and segments included in the
Retained Assets, which functions will be assigned to CRC.
(v) Albany division: The Albany division office building will be
included in the NYC Allocated Assets. All dispatching functions will be
assigned to NYC and CSXT except those for dispatching the Southern tier,
including the Corning secondary, the New Jersey transit line, the Buffalo
line and other Albany division segments included in the PRR Allocated
Assets, which functions will be assigned and transferred to PRR and NSR.
The parties intend that the dispatching desks, equipment and similar
property associated with a dispatching function will, to the extent
practicable, follow the assignment of that function to the party
designated pursuant to clauses (i) through (v) above, to enable such party
to perform dispatching necessary in connection with the Assets allocated
to or used by such party. In addition, the parties recognize that interim
dispatching services may be required to be provided to each other for the
above Routes during a brief interim period (which shall be no longer than
reasonably necessary) and that the parties may charge reasonable fees for
such services.
Section 2.4. Transition Period Accommodation. (a) To the extent that
(i) the CRR headquarters office building in Philadelphia, PA or (ii) the CRR
information technology center in Philadelphia, PA (both of which are NYC
Allocated Assets) were used by CRR or CRC prior to the Closing Date for the
benefit of the CRR and CRC system as a whole, CSX will (or will cause CSXT or
NYC to) furnish and make available for the benefit of NSC or its Affiliates
access to and use of such NYC Allocated Assets (including, without limitation,
office and other space, equipment, computer systems, and data and other
information) as are necessary or convenient in order to reasonably accommodate
the needs of NSC, NSR and PRR for the services and functions performed at such
facilities for a transition period not to exceed (A) twenty-four months
following the Closing Date in respect of the CRR headquarters office building in
Philadelphia, PA and (B) six months following the Closing Date (extendable for
an additional six months at NSC's option) in respect of the CRR information
technology center in Philadelphia, PA. CSX may accommodate such needs of NSC,
NSR and PRR for such services and functions using premises in Philadelphia, PA
other than the premises referred to in clauses (i) and (ii) of this Section
2.4(a); provided that NSC consents to such arrangement, such consent not to be
unreasonably delayed or withheld. CSX, CSXT or NYC, as the case may be, shall
furnish and make available to NSC, NSR or PRR such NYC Allocated Assets at those
facilities as may be reasonably requested by NSC, NSR or PRR; provided that the
nature and scope of the use of such NYC Allocated Assets shall not be greater
than the nature and scope of the use of such NYC Allocated Assets for the
benefit of the CRR and CRC system prior to the Closing Date. CSX may charge NSC,
NSR or PRR, as the case may be, charges calculated at fair market value by CSX
and NSC for such use of such NYC Allocated Assets.
(b) To the extent that (i) the CRC car shop at Hollidaysburg, PA or
(ii) the CRC locomotive shop at Altoona, PA (both of which are PRR Allocated
Assets) were used by CRR or CRC prior to the Closing Date for the benefit of the
CRR and CRC system as a whole, NSC will (or will cause NSR or PRR to) reasonably
accommodate the needs of CSX, CSXT or NYC for the services and functions
performed at such facilities for a transition period not to exceed twenty-four
months following the Closing Date. NSC may accommodate such needs of CSX, CSXT
and NYC for such services and functions using premises other than the premises
referred to in clauses (i) and (ii) of this Section 2.4(b); provided that CSX
consents to such arrangement, such consent not to be unreasonably delayed or
withheld. NSC, NSR or PRR, as the case may be, shall furnish and make available
to CSX, CSXT or NYC such services and functions at those facilities as may be
reasonably requested by CSX, CSXT or NYC; provided that the nature and scope of
such services and functions shall not be greater than those which were provided
in respect of the NYC Allocated Assets by those facilities prior to the Closing
Date. NSC may charge CSX, CSXT or NYC, as the case may be, charges calculated at
fair market value by CSX and NSC for such services and functions.
(c) In complying with Section 2.4(a) and Section 2.4(b), (i) the
accommodating party will provide or make available the Assets or the services,
functions and systems of, and data and information from, the specified
facilities to the extent it can reasonably do so and (ii) if the accommodating
party so requests, the party accommodated will use its reasonable commercial
efforts to discontinue its need for such Assets or services, functions,
information, systems and data at the earliest time practicable following, but
not later than twenty-four months after, the Closing Date (or earlier time as
provided in Section 2.4(a) in respect of the information technology center in
Philadelphia, PA). Nothing herein shall preclude a party from agreeing to make
available the Assets or services, functions and systems of and information and
data from, its facilities to the using party after such maximum periods provided
for in Sections 2.4(a) and 2.4(b), but it shall not be required to do so.
(d) CSX will (or will cause CSXT or NYC to) make available to CRR,
CRC and their respective Affiliates the CRR headquarters office building and the
CRR information technology center in Philadelphia, PA (both of which are NYC
Allocated Assets) for use by those employees identified in clause (b) of the
definition of "Continuing CRC Management" in Section 1.1. Unless otherwise
agreed to by CSX and NSC, CRR, CRC and their respective Affiliates shall have
the right to use those facilities for such Continuing CRC Management employees
to perform such general, administrative and technical services and functions for
an interim period not to exceed (i) twenty-four months following the Closing
Date in respect of the CRR headquarters office building in Philadelphia, PA and
(B) six months following the Closing Date (extendable for an additional six
months at NSC's option) in respect of the CRR information technology center in
Philadelphia, PA. CSX may move such facilities to new premises or may move the
Continuing CRC Management using the facilities to new premises; provided that
NSC consents to such arrangement, such consent not to be unreasonably withheld
and; provided further that CSX and NSC agree on the new fair market value of
such facilities which will be Corporate Level Liabilities pursuant to this
Section 2.4(d). Until a party terminates its use of the support functions and
services of any such Continuing CRC Management employee as provided below, the
costs of employing such employee and the fair market value of related facilities
shall be Corporate Level Liabilities and such employee's services will be
available for the benefit of both CSXT and NYC, on the one hand, and NSR and
PRR, on the other hand, based on the operating and administrative needs of each.
(e) Each of CSX and NSC and their respective Affiliates shall have
the right, upon six months' prior written notice, to notify the other party that
the notifying party no longer needs the support functions and services provided
by any one or more of the Continuing CRC Management employees referred to in
Section 2.4(d). The notice shall state with specificity the particular
Continuing CRC Management position(s) covered by the notice. If the party
receiving such notice notifies the other party within thirty days of receipt of
such notice that it no longer needs the support functions and services provided
by the same (or more) continuing CRC Management employees as are included in the
first notice, then the effective date of such second notice shall be deemed to
be the same as that of the first notice. Notices may be given at any time before
or after the Closing Date and in each case shall specify an effective date on or
after the Closing Date, but not less than six months after the date such notice
is given. From and after the effective date of such a notice, all costs
associated with the Continuing CRC Management positions identified in the notice
shall cease to be Corporate Level Liabilities but shall be allocated entirely to
and be the responsibility of the party continuing to use the functions and
services provided by such Continuing CRC Management positions; provided that in
the case of Continuing CRC Management positions as to which both parties have
given termination notices that have become effective, all costs associated with
such Continuing CRC Management positions after the date the second termination
notice becomes effective shall be Corporate Level Liabilities. Notwithstanding
the foregoing, Separation Costs associated with all Continuing CRC Management
employees after the Closing Date shall be allocated and paid as otherwise
provided in Article VI.
Section 2.5. Trackage, Haulage, Shared Asset and Other Operating
Agreements. On the Closing Date and upon the terms and subject to the conditions
set forth in this Agreement, each of CRC, CSXT and NSR shall execute and
deliver, and the parties shall cause their respective Affiliates and NYC and PRR
to execute and deliver, the following agreements to which it is a party:
(a) The Trackage Rights Agreements: A Trackage Rights Agreement
covering each of the Routes listed in Item 1 of Schedule 4 and containing the
terms and provisions applicable to such Route as set forth in Item 1 of Schedule
4 will be executed by the parties designated in such Item 1.
(b) The CSXT/NSR Haulage Agreements: A CSXT/NSR Haulage Agreement
covering each of the Routes listed in Item 2 of Schedule 4 and containing the
terms and provisions applicable to such Route as set forth in Item 2 of Schedule
4 will be executed by the parties designated in such Item 2.
(c) The Shared Assets Agreements.
(d) The Other Operating Agreements (in respect of Other Operating
Agreements for which the relevant Exhibit hereto sets forth all or some of the
terms of an agreement rather than the form of agreement, the parties shall use
their best efforts to agree to the form of such Other Operating Agreements prior
to the Closing Date).
Section 2.6. Equipment. The parties intend that all Equipment will
be allocated between NYC and PRR (either as Allocated Assets or as Retained
Assets which are subject to the NYC Equipment Agreement or the PRR Equipment
Agreement) by series and condition such that NYC and PRR each receives Equipment
by value in proportion to CSX's and NSC's respective Percentage. Disputes
concerning such allocation shall be subject to binding arbitration under Section
11.12. After the Equipment has been allocated, the parties may agree in their
sole discretion to changes in the allocation giving consideration to other
factors. In furtherance of the foregoing sentence, the parties will appoint
representatives to various teams to consider appropriate adjustments to
allocations of Equipment as described below:
(a) Locomotive Equipment. Promptly after the date hereof, CSXT and
NSR shall each appoint up to three members of a committee (the "Locomotive
Team"). The Locomotive Team shall meet not later than January 1, 1998, to
consider an adjustment to the allocation of locomotive Equipment (including
appurtenances and assigned or related equipment such as locomotive radios) to
NYC and PRR, taking into consideration the following guidelines:
(i) The Locomotive Team shall agree upon parameters to be considered
in any adjustment to the allocation of locomotive Equipment to NYC and
PRR, including CRC's book value, actual numbers of locomotives,
horsepower, tractive effort, powered axles, ownership and encumbrances,
age and condition.
(ii) The CSXT appointees and the NSR appointees on the Locomotive
Team shall separately develop and present to each other proposals for
any adjustments to the allocation of locomotive Equipment to NYC and
PRR.
(iii) In its negotiations, the Locomotive Team may consider CRC yard
service, minimizing maintenance costs, enhancing reliability, and meeting
service needs. The Locomotive Team may consider trades of CSXT and NSR
locomotives to avoid the division of small groups of locomotive Equipment
and to minimize the number of different models each would have as a result
of the allocation.
(iv) If agreement is not reached prior to March 31, 1998, the
Locomotive Team will submit a list of disputed issues for resolution to the
chief operating officers of CSXT and NSR.
(b) Rolling Stock Equipment. Promptly after the date hereof, CSXT and NSR
each shall appoint up to four members of a committee (the "Rolling Stock Team").
The Rolling Stock Team shall meet not later than January 1, 1998 to consider an
adjustment to the allocation of rolling stock Equipment (including cabooses and
non-revenue rolling stock but excluding Work Equipment) to NYC and PRR, taking
into consideration the following guidelines:
(i) Consideration may be given to class and builder's lot, series
within a given AAR car type and AAR Depreciated Value. Consideration may
be given to splitting between NYC and PRR so as to minimize ongoing
maintenance and repair cost, facilitate the assignment of car reporting
marks, permit customary and efficient handling, movement and interchange
of rolling stock in compliance with the AAR Car Service Rules and other
applicable industry requirements.
(ii) All rolling stock Equipment that CSXT and NSR agree is either
(A) obsolete or (B) damaged beyond
economical repair necessary to return the same to service, may be
grouped in a separate category and allocated between NYC and PRR in
accordance with CSX's and NSC's respective Percentage (based on AAR
Depreciated Value).
(iii) Consideration will be given to traffic and service
requirements on the Routes comprising the Allocated Assets based on the
most current traffic information (including current and anticipated
traffic density, customer needs and transportation requirements).
(iv) Head-of-train-devices and end-of-train-devices may be allocated
between NYC and PRR based on current transportation needs and train starts
in respect of the NYC Allocated Assets and PRR Allocated Assets, as the
case may be.
(v) If agreement is not reached prior to March 31, 1998, the Rolling
Stock Team will submit a list of disputed issues to the chief operating
officers of CSXT and NSR.
(c) Work Equipment. Promptly after the date hereof, NSR and CSXT
each shall appoint up to three members of a committee (the "Work Equipment
Team"). The Work Equipment Team shall, not later than January 1, 1998, meet to
consider an adjustment to the allocation of all Work Equipment that is part of
the Unallocated Assets. The Work Equipment Team may allocate such Work Equipment
to NYC and PRR by value in proportion to CSX's and NSC's respective Percentage
based on category of equipment, then model, then age and then condition. If
agreement is not reached prior to March 31, 1998, the Work Equipment Team will
submit a list of disputed issues to the chief operating officers of CSXT and
NSR.
(d) Assignment. CSXT and NSR recognize that it may be desirable to
cause CRC to assign and transfer ownership of certain of the allocated Equipment
to NYC and PRR as part of the NYC Allocated Assets or the PRR Allocated Assets,
respectively, to the extent such transfer is consistent with existing leases and
financing agreements relating to such Equipment. If CSXT and NSR agree,
Indebtedness related to Equipment may also be assigned to and assumed by NYC and
PRR as part of the NYC Allocated Liabilities and the PRR Allocated Liabilities,
respectively.
(e) Lease of Equipment. Equipment that is allocated to NYC and PRR
as provided in this Section 2.6 will be made available to NYC and PRR as
follows: (i) Equipment that is included in the Retained Assets shall be leased
by CRC or its Affiliates to NYC or PRR, as the case may be, pursuant to the NYC
Equipment Agreement or the PRR Equipment Agreement and will thereupon be leased
or otherwise made available by NYC to CSXT and by PRR to NSR pursuant to the
CSXT Equipment Agreement or the NSR Equipment Agreement, respectively; and (ii)
Equipment that CSXT and NSR agree shall be assigned and transferred by CRC or
its Affiliates to NYC or PRR, as the case may be, will be included in the NYC
Allocated Assets or the PRR Allocated Assets, respectively, and will be leased
or otherwise made available by NYC to CSXT and PRR to NSR pursuant to the CSXT
Equipment Agreement or the NSR Equipment Agreement, respectively. Liabilities
arising from the ownership, operation and maintenance of Equipment shall be
borne by the parties as provided for in the relevant Equipment Agreements. If
the foregoing arrangements are impracticable in respect of any Equipment due to
the requirements of any Contracts relating to such Equipment, the parties will
negotiate other arrangements to achieve substantially the same effect.
(f) Equitable Adjustment. The parties recognize that the allocation
of Equipment in general and the allocation of Equipment that is collateral with
respect to Indebtedness may not reflect precisely CSX's and NSC's respective
Percentage and that an equitable adjustment may be required with respect to
Corporate Level Liabilities or otherwise to assure that each of NYC and PRR
receives the benefits and bears the costs of Equipment as nearly as practicable
in proportion to CSX's and NSC's respective Percentage. The Locomotive Team, the
Rolling Stock Team and the Work Equipment Team, assisted as necessary by CSX and
NSC accounting personnel, shall specify an appropriate adjustment mechanism
which may include, but need not include or be limited to, trades between CSXT
and NSR of locomotive Equipment, rolling stock Equipment and/or Work Equipment.
Section 2.7. Inventory at Altoona and Hollidaysburg. (a) As soon as
practicable before the Closing Date, the Inventory Team shall determine the Base
Inventory. "Base Inventory" (i) will consist of and mean all
rolling-stock-related and locomotive-related inventory and supplies (including
rolling-stock-related and locomotive-related system stockpiles) of CRR, CRC or
their respective Affiliates located at the Altoona and Hollidaysburg shops as of
a date at least thirty days prior to the anticipated Closing Date to be agreed
by the Inventory Team, and (ii) will exclude (A) all obsolete or damaged
material and supplies and (B) all inventory acquired for the purpose of
fulfilling third-party Contracts which inventory will follow and be applied to
fulfillment of such Contracts. The Inventory Team will code and group the items
of inventory, materials and supplies included in the Base Inventory as "new,"
"reconditioned," "re-usable," and the like, and will value the groups based on
CRC's material costs or other mutually agreeable methodology (excluding
additives and overheads). The sum of the values of the groups will be the value
of the Base Inventory.
(b) Rolling-stock-related and locomotive-related inventory and
supplies (including rolling-stock-related and locomotive-related system
stockpiles) of CRR, CRC and their respective Affiliates located at the Altoona
and Hollidaysburg shops as of the Closing Date will be included in the PRR
Allocated Assets. To the extent that, after the Closing Date, any work is
performed at the request and for the account of CSXT or NYC at the Altoona shop
or the Hollidaysburg shop pursuant to Section 2.4(b), CSXT and NYC will not be
charged for inventory and supplies used in such work up to an amount of
inventory and supplies equal to 42% of the total value of the Base Inventory,
but only to the extent that such work requires material and supplies of the
types included in the Base Inventory. Notwithstanding the foregoing, NSR or PRR
will separately charge CSXT or NYC for the fair market value of work performed
for the account of CSXT or NYC.
Section 2.8. Allocated and Retained Liabilities. The parties agree
that on and as of the Closing Date (x) NYC shall assume and agree to pay,
perform and discharge as and when due all of the NYC Allocated Liabilities, (y)
PRR shall assume and agree to pay, perform and discharge as and when due all of
the PRR Allocated Liabilities, and (z) CRC and its Affiliates shall retain and
pay, perform and discharge as and when due all of the Retained Liabilities. In
furtherance of the foregoing, the parties agree that, in addition to Employee
Related Liabilities that are designated as Allocated Liabilities or Retained
Liabilities under Article VI, the Allocated Liabilities and the Retained
Liabilities shall consist of the following:
(a) All Liabilities of CRR, CRC or their Affiliates, other than
Environmental Liabilities (which are expressly allocated pursuant to Section
2.8(b)), Corporate Level Liabilities (which are expressly allocated pursuant to
Section 2.8(f)), Employee Related Liabilities (which are expressly allocated
pursuant to Article VI), Liabilities referred to in Section 2.9 or Liabilities
expressly allocated to any Person pursuant to any of the Ancillary Agreements,
including Liabilities associated with the handling and disposition of Actions,
that (i) arise on or after the Closing Date and relate predominantly to NYC
Allocated Assets shall be NYC Allocated Liabilities, and (ii) arise on or after
the Closing Date and that relate predominantly to PRR Allocated Assets shall be
PRR Allocated Liabilities.
(b) Environmental Liabilities (other than Environmental Liabilities
expressly allocated to any Person pursuant to any of the Ancillary Agreements)
shall be designated as follows: (i) Environmental Liabilities that relate
predominantly to NYC Allocated Assets shall be NYC Allocated Liabilities; (ii)
Environmental Liabilities that relate predominantly to PRR Allocated Assets
shall be PRR Allocated Liabilities; and (iii) Environmental Liabilities that do
not relate predominantly to Allocated Assets shall be Corporate Level
Liabilities; provided that, in the case of Environmental Liabilities allocated
to either NYC or PRR pursuant to clause (i) or (ii) above, NYC or PRR, as the
case may be, will be reimbursed by CRC as amounts are expended by NYC or PRR, as
the case may be, in respect of an Environmental Liability to the extent of the
amount of the reserve existing in respect of such Environmental Liability as of
April 8, 1997, reduced by any payments made and charged against such reserve
prior to the Closing Date, except that NYC or PRR, as the case may be, will
repay the amounts under this Section 2.8(b) to CRC to the extent that they
receive the proceeds of any insurance recoveries in respect of an Allocated
Liability which exceed such Allocated Liability net of such payments made.
(c) All Liabilities (other than Liabilities expressly allocated to
any Person pursuant to any of the Ancillary Agreements) associated with the
handling and disposition of FELA Claims made on or after the Control Date shall
be NYC Allocated Liabilities, PRR Allocated Liabilities or Corporate Level
Liabilities based upon the final allocation under this Article II of the Asset
where the incident or incidents giving rise to the FELA Claim occurred, or, if
the FELA Claim arises from an incident or incidents occurring at more than one
location, based upon the final allocation under this Article II of the Asset
most significantly involved.
(d) Except as provided in Section 2.8(a), Section 2.8(b) or Section
2.8(c), all Liabilities associated with the handling and disposition of Actions
arising from incidents which occur in part prior to the Closing Date and in part
on or after the Closing Date shall be allocated as follows:
(i) that portion of the Liability which is fairly attributable to
incidents occurring prior to the Closing Date shall be Corporate Level
Liabilities; and
(ii) that portion of the Liability which is fairly attributable to
incidents occurring on or after to the Closing Date shall be NYC Allocated
Liabilities, PRR Allocated Liabilities or Corporate Level Liabilities
based upon the final allocation under this Article II of the Asset where
the incident or incidents giving rise to the Action occurred, or, if the
Action arises from an incident or incidents occurring at multiple
locations, based upon the final allocation under this Article II of the
Asset most significantly involved.
(e) Except as provided in Section 2.9(b) or Section 2.9(c), all
Liabilities incurred after April 8, 1997 relating to the Merger Agreement,
including without limitation Liabilities for CRR Shares, if any, that are put
pursuant to the Pennsylvania Control Transaction Law, shall be Retained
Liabilities.
(f) Except as provided in Sections 2.8(b) through (e), all
Liabilities that arise prior to the Closing Date and all Corporate Level
Liabilities shall be Retained Liabilities.
Section 2.9. Other Liabilities. (a) Each of CSX and NSC shall
bear its own Transaction Expenses.
(b) CSX shall bear and pay all of CSX's, CRR's, the Surviving
Corporation's and their respective Affiliates' Liabilities to current or former
CRR shareholders with respect to the handling (which CSX shall control) and
disposition (which CSX shall control) of claims pending on April 8, 1997 in
shareholder Actions pending on April 8, 1997 (other than Actions brought by NSC
or its Affiliates) together with all related litigation costs (which shall not
include CRR legal fees incurred prior to April 8, 1997).
(c) CSX's, Green's, CRR's and the Surviving Corporation's, on the
one hand, and NSC's and AAC's on the other hand, Liability with respect to the
handling (which shall be controlled by the liability bearing party) and
disposition (which shall be controlled by the liability bearing party) of
disclosure-based claims based on disclosures made prior to April 8, 1997 brought
by current or former CRR shareholders in connection with the Merger Agreement,
the Amended Second Offer (as defined in the April 8 Agreement) or the
transactions contemplated thereby based on the accuracy or completeness of
information supplied by such party, together with all related litigation costs
(which shall not include CRR legal fees incurred prior to April 8, 1997), shall
be borne solely by CSX or NSC, respectively.
Section 2.10. Interline Accounts and Allocation. (a) The parties acknowledge
that interline railroads often allocate certain assets and liabilities arising
from interline activities between and among themselves on the basis of AAR or
industry agreements and rules, including, without limitation, AAR rules for the
allocation of freight revenues and freight loss and damage claims. If any Asset
or Liability which is allocated under this Agreement to NYC or PRR would, in the
usual course of business under applicable AAR or industry agreement, rule or
practice, be allocated between or among participating interline railroads, then
the subsequent allocation of that Asset or Liability between or among NYC, PRR
and/or any railroad subsidiary of either CSX or NSC under that agreement, rule
or practice shall not in any manner be affected by this Agreement and the
parties shall accept and be governed by that subsequent reallocation under the
applicable AAR or industry agreement, rule or practice, notwithstanding any
provision of this Agreement which may be construed or interpreted to the
contrary, including, without limitation, the provisions of Section 2.2 and
Section 2.8. The parties shall also accept and be governed by any provision of
any AAR or industry agreement, rule or practice applicable to processes and
procedures for dealing with the circumstances underlying any such subsequent
reallocation (including without limitation the investigation and processing of
third party claims), notwithstanding any provision of this Agreement which may
be construed or interpreted to the contrary, including, without limitation, the
provisions of Section 8.14 and Section 10.2.
(b) If any dispute, controversy or claim arises with regard to the
subsequent reallocation of any portion of any asset or liability allocated under
Section 2.10(a), and the pertinent AAR or industry agreement, rule or practice
provides for arbitration, then the arbitration provisions of that agreement,
rule or practice shall, as to that subsequent reallocation, supersede any
provisions of this Agreement which may be construed or interpreted to the
contrary, including, without limitation, the arbitration provisions of Section
11.12.
Section 2.11. Insurance Proceeds. Except as otherwise provided in
this Agreement, the proceeds of any insurance recoveries from insurance carried
by CRR, CRC or their respective Affiliates on or prior to the Closing Date
covering Assets, Retained Liabilities or Allocated Liabilities, which are
received on or after the Closing Date, shall accrue to the benefit of and be
held by or paid over to CRC, NYC or PRR in proportion to the obligation each
bears under this Agreement for the particular Liabilities to which the insurance
recoveries are applicable.
ARTICLE III
CLOSING AND CLOSING DATE
Section 3.1. Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated in Article II and
Article VI (the "Closing") shall take place at a place to be mutually agreed by
CSX and NSC on the third business day following the date on which all of the
conditions set forth in Article IX shall have been satisfied or waived, or at
such other time, date and place as the parties shall agree upon (the "Closing
Date").
Section 3.2. Pre-Closing Actions. Prior to the Closing, CRR shall
cause CRC to establish NYC and PRR as wholly owned Subsidiaries of CRC and shall
cause CRC and NYC to enter into the NYC LLC Agreement and shall cause CRC and
PRR to enter into the PRR LLC Agreement.
Section 3.3. Closing Deliveries. At the Closing:
(a) CSX and CSXT shall deliver or cause to be
delivered to NSC the following documents:
(i) an executed counterpart of the CSXT Equipment Agreement;
(ii) an executed counterpart of the CSXT Operating
Agreement;
(iii) an executed counterpart of each of the Trackage Rights
Agreements to which CSXT or its Affiliates is to be a party;
(iv) an executed counterpart of each of the CSXT/NSR Haulage
Agreements to which CSXT or its Affiliates is to be a party;
(v) an executed counterpart of each of the Shared Assets
Agreements and Other Operating Agreements to which CSXT or its
Affiliates is to be a party; and
(vi) such other and further certificates, assurances and documents
otherwise necessary for the consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements.
(b) NSC and NSR shall deliver or cause to be delivered to CSX
the following documents:
(i) an executed counterpart of the NSR Equipment Agreement; (ii) an
executed counterpart of the NSR Operating Agreement; (iii) an
executed counterpart of each of the Trackage Rights
Agreements to which NSR or its Affiliates is to be a party;
(iv) an executed counterpart of each of the CSXT/NSR Haulage
Agreements to which NSR or its Affiliates is to be a party;
(v) an executed counterpart of each of the Shared Assets
Agreements and Other Operating Agreements to which NSR or its
Affiliates is to be a party; and
(vi) such other and further certificates, assurances and documents
otherwise necessary for the consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements.
(c) CRR Parent, CRR and CRC (for itself and, if applicable, as
CRR's successor entity) shall deliver or cause to be delivered to each of CSX
and NSC:
(i) the NYC Equipment Agreement executed by CRC and NYC;
(ii) a counterpart of the CSXT Equipment Agreement executed by
NYC;
(iii) the PRR Equipment Agreement executed by CRC and PRR;
(iv) a counterpart of the NSR Equipment Agreement executed by
PRR;
(v) a counterpart of the CSXT Operating Agreement executed by
NYC;
(vi) a counterpart of the NSR Operating Agreement executed by
PRR;
(vii) an executed counterpart of each of the Trackage Rights
Agreements, the CSXT/NSC Haulage Agreements, the Shared Assets Agreements
and the Other Operating Agreements to which CRC or its
Affiliates is a party;
(viii) the Tax Allocation Agreement executed by Green, CRR, CRC,
CRR Industries, PRR and NYC;
(ix) the NYC LLC Agreement executed by CRC;
(x) the PRR LLC Agreement executed by CRC;
(xi) a Capital Contribution, Assignment and Assumption Agreement
executed by CRC and NYC to effectuate the transfer of the NYC Allocated
Assets and the NYC Allocated Liabilities to NYC;
(xii) a Capital Contribution, Assignment and Assumption Agreement
executed by CRC and PRR to effectuate the transfer of the PRR Allocated
Assets and the PRR Allocated Liabilities to PRR; and
(xiii) such other and further certificates, assurances and
documents otherwise necessary for the consummation of
the transactions contemplated by this Agreement and the
Ancillary Agreements.
ARTICLE IV
CRR PARENT, CRR AND CRC GOVERNANCE AND FUNDING
Section 4.1. Pre-Control Date Matters. (a) Unless expressly
permitted in another agreement between CSX and NSC, neither CSX nor NSC will,
without the prior agreement of the other, agree to any modifications of the
terms and conditions of, or give any consent or waiver under, the Merger
Agreement, including without limitation under Section 4.1 of the Merger
Agreement. Without limiting the foregoing, neither CSX nor NSC will, without the
other's prior consent, agree to any determinations with respect to, direct CRR
to take any action with respect to, or object to or prohibit any action with
respect to CRR's employee stock ownership plan, pension plan, stock employee
compensation trust or any other CRR benefit plan, program, arrangement or other
contract, or any trust or other funding arrangement that is intended to be used
in whole or in part to provide or fund benefits under any CRR or CRC benefit
plans, programs, arrangements or contracts. In addition, CSX will consult and
agree with NSC prior to providing any notices to CRR under the Merger Agreement
and shall promptly provide NSC with copies of all written notices provided by
CSX to CRR or received by CSX from CRR under the Merger Agreement.
(b) Prior to the Control Date CRR shall be governed in accordance
with the terms of the Amended and Restated Voting Trust Agreement.
Section 4.2. Post-Control Date CRC Governance. CRR Parent shall vote
all of the shares in the capital stock of CRC and all of the parties shall take
all other necessary or desirable action within their respective control to
effectuate the following:
(a) Following the Control Date, the business and affairs of CRC
shall be managed under the direction of the CRC Board consisting of six persons
divided into two classes of three directors. Three directors shall be designated
by CSX (the "CSX Directors") and three directors shall be designated by NSC (the
"NSC Directors").
(b) Approval of the CRC Board shall be required for all Major
Decisions of CRC. The power of the CRC Board to approve such actions and
decisions shall be exclusive to the CRC Board, and no officer may take any such
action or make any such decision without the approval of the CRC Board. Any
action or decision of the CRC Board, whether at a meeting of the CRC Board or by
written consent, may only be taken if approved by a majority of CSX Directors
and a majority of NSC Directors.
(c) The CSX Directors may appoint by majority vote one Co-Chairman
(the "CSX Co-Chairman") and the NSC Directors may appoint by majority vote one
Co-Chairman (the "NSC Co-Chairman"). The Co-Chairmen shall preside at all
meetings of the CRC Board and shall have and perform such other duties as may be
assigned to them by the CRC Board.
(d) If the office of any CSX Director becomes vacant, the remaining
CSX Directors by a majority vote may appoint any qualified individual to fill
such vacancy, and such individual shall hold office for the unexpired term and
until his or her successor shall be duly chosen. If the office of any CSX
Director becomes vacant and there are no remaining CSX Directors, CSX may
appoint any qualified individuals to fill the CSX Directors vacancies by a
writing to such effect. If the office of any NSC Director becomes vacant, the
remaining NSC Directors by a majority vote may appoint any qualified individual
to fill such vacancy, and such individual shall hold office for the unexpired
term and until his or her successor shall be duly chosen. If the office of any
NSC Director becomes vacant and there are no remaining NSC Directors, NSC may
appoint any qualified individuals to fill the NSC Directors vacancies by a
writing to such effect.
(e) Any CSX Director may be removed either for or without cause
at any time, but only by CSX in a writing to such effect. Any NSC Director
may be removed either for or without
cause at any time, but only by NSC in a writing to such effect.
(f) In addition to the two Co-Chairmen of the CRC Board, the
officers of CRC may include a chief executive officer, one or more vice
presidents, a treasurer and a secretary, all of whom shall be elected by and
shall serve at the direction of the CRC Board.
(g) The parties agree to take all necessary action such that each of
CSX and NSC shall have rights identical to those set forth in paragraphs (a)
through (f) above with respect to the Boards of Directors and management of CRR
and each of its Affiliates in addition to CRC other than NYC and PRR.
Section 4.3. Post-Closing Date CRC Funding. (a) From and after the
Closing Date, CSX and NSC shall ensure that CRR, CRC and their Affiliates have
sufficient cash to satisfy the Retained Liabilities as they become due and any
operating and other expenses incurred by CRR, CRC and their Affiliates in the
conduct of their business consistent with this Agreement and the Ancillary
Agreements after giving effect to any Distributions received or to be received
from NYC and PRR. In furtherance of the foregoing sentence, following receipt by
CRR Parent of written notice from CRC of a CRC Board decision that CRC requires
such cash, CRR Parent shall provide such cash to CRC by capital contribution,
loan or advance to be made on the next business day following the expiration of
30 days after receipt of such notice, unless a later date is determined by the
CRC Board or another date is agreed in writing by CRC and CRR Parent.
(b) It is the intent of the parties that the economic burden of the
Corporate Level Liabilities will be borne, directly or indirectly, by CSX or NSC
in accordance with their respective Percentage.
Section 4.4. Post-Control Date CRC and Other Distributions.
Following the Control Date, subject to any legal and contractual restrictions,
the CRC Board shall cause CRC to make a Distribution to CRR Parent as soon as is
practical and in any event within 45 days after each fiscal quarter of all cash
received by CRC from operations and any dividends, interest or other cash
Distributions from any Person in which CRC has an interest which is in excess of
120% of the amount of cash reasonably contemplated by the CRC Board as being
necessary for the cash payment of CRC's operating expenses (net of receipts),
debt service, contingencies, budgeted capital expenditures and working capital
requirements (all of which shall take into account cash on hand and future
expected cash surpluses and cash requirements). Notwithstanding the foregoing,
no Distribution shall be made which would render CRC insolvent or which is
prohibited by the terms of any Indebtedness of CRC or its Affiliates.
Section 4.5. Operating Fees, Interest Rentals and Base Rent. The
parties anticipate that as of the Closing Date, the sum of the following amounts
will total seven hundred and fifty million dollars: (i) Interest Rentals payable
under the Shared Assets Agreements, (ii) Operating Fees payable under the CSXT
Operating Agreement and the NSR Operating Agreement and (iii) Base Rent payable
under the CSXT Equipment Agreement and the NSR Equipment Agreement. The parties
acknowledge that as of a Valuation Date, (i) the Interest Rentals, Operating
Fees and Base Rent shall be determined as set forth in the CSXT Operating
Agreement, the NSR Operating Agreement, the CSXT Equipment Agreement, the NSR
Equipment Agreement and the Shared Assets Agreements and (ii) the allocation
between CSXT and NSR of the Operating Fees and Base Rent payable under the CSXT
Operating Agreement, the NSR Operating Agreement, the CSXT Equipment Agreement
and the NSR Equipment Agreement shall reflect the then relative Fair Market
Rental Values of the NYC Allocated Assets, the PRR Allocated Assets, the CSXT
Equipment and the NSR Equipment as of the most recent Valuation Date (which
allocation, in the case of a Valuation Date that is also the Closing Date, shall
be a 58% allocation to NSR and a 42% allocation to CSXT).
ARTICLE V
NYC and PRR GOVERNANCE AND CONDUCT
Section 5.1. NYC Governance. From and after the Control Date, CSX
shall have exclusive authority to direct the appointment of the officers and
directors of NYC who shall in their discretion, but subject to the provisions of
this Agreement, direct the operation of NYC. Without limiting the foregoing but
subject to Section 5.3, CRC, in its capacity as the sole member of NYC, shall
follow CSX's directions with respect to the management and operation of NYC to
the extent that such directions are not inconsistent with the terms of this
Agreement, the NYC LLC Agreement or any applicable laws and do not involve the
transfer, sale, conveyance, distribution, pledge, hypothecation, encumbrance or
assignment of such membership interest (other than in connection with a
Restructuring).
Section 5.2. PRR Governance. From and after the Control Date, NSC
shall have exclusive authority to direct the appointment of the officers and
directors of PRR, who shall in their discretion, but subject to the provisions
of this Agreement, direct the operation of PRR. Without limiting the foregoing
but subject to Section 5.3, CRC, in its capacity as the sole member of PRR,
shall follow NSC's directions with respect to the management and operation of
PRR to the extent that such directions are not inconsistent with the terms of
this Agreement, the PRR LLC Agreement or any applicable laws and do not involve
the transfer, sale, conveyance, distribution, pledge, hypothecation, encumbrance
or assignment of such membership interest (other than in connection with a
Restructuring).
Section 5.3. NYC and PRR Actions. Notwithstanding anything to the
contrary contained in Section 5.1 or Section 5.2, unless it receives the prior
written consent of CSX and NSC to the contrary, CRC, as the sole member of each
of NYC and PRR, shall cause NYC and PRR respectively to enforce, to the fullest
extent permitted by law or Contract, their rights under the Ancillary
Agreements, including any right to receive payments or any indemnities
thereunder.
Section 5.4. NYC and PRR Distributions. The parties agree that, from
and after the Control Date, other than Distributions made by NYC and PRR
contemporaneously and in proportion to the respective Percentage of CSX and NSC,
NYC and PRR shall not be required, without the consent of CSX or NSC,
respectively, to make any Distributions to CRC or its Affiliates.
Section 5.5. Actions. CRC shall exercise its ownership interest in
NYC and PRR, respectively, and all of the parties shall take all other necessary
or desirable action within their respective control, in order to effectuate the
provisions of this Article V.
ARTICLE VI
EMPLOYEE MATTERS
Section 6.1. Employees of CRR and CRC. (a) On the Closing Date, or
as soon thereafter as any applicable labor agreements, statutes, regulations and
STB conditions, and implementing agreements thereunder, may permit or require,
each of CSX, NSC, NYC or PRR or their respective Affiliates shall make
employment available to CRR and CRC agreement employees pursuant to the
requirements and procedures under the said applicable labor agreements,
statutes, regulations, conditions and implementing agreements.
(b) Prior to the Closing Date, each of CSX and NSC and their
respective Affiliates shall comply with the Staffing Process Guidelines dated
June 1, 1997 as adopted by CSX and NSC.
(c) Not later than thirty days prior to the Closing Date, CSX and
NSC jointly shall determine the location, functions to be performed by,
resources and positions required by, and methodology for cost determination for
Continuing CRC Management. Each function shall be defined in terms of a
description of the function, the number of positions required to perform the
function and general descriptions of the nature of each function, including
whether it is intended to be performed on an interim or on-going basis. CSX and
NSC jointly may enter into one or more agency agreements by which CSX or NSC or
their respective Affiliates may perform any Continuing CRC Management functions.
(d) To the extent implementing agreements are required by STB-imposed conditions
in order to effect the transactions contemplated by Article II and Article VI,
each party agrees to use its commercially reasonable efforts to obtain
implementing agreements reasonably determined by the parties to be necessary to
effect such transactions. Where necessary to effect the transactions
contemplated by Article II and Article VI, the parties will jointly negotiate
(and if no agreement is reached will jointly arbitrate to reach an agreement) an
implementing agreement to which they will be parties with the employee
representative(s) of the appropriate craft or class of employees of each
carrier. Notwithstanding the foregoing, no party shall be required by this
Section 6.1(d) to agree to implementing agreements which it, in its reasonable
judgment, determines to be contrary to its business interests.
Section 6.2. Employee Related Liabilities. Employee Related
Liabilities shall be designated as follows:
(a) Separation Costs subsequent to the Control Date associated with
agreement employees at CRC's or its Affiliates' shops in Altoona and
Hollidaysburg shall be the responsibility of NSR. Separation Costs subsequent to
the Control Date associated with agreement employees at CRC's or its Affiliates'
headquarters in Philadelphia, technology center in Philadelphia, and customer
service center in Pittsburgh (notwithstanding its joint use as a SSO Facility)
will be the responsibility of CSXT.
(b) The on-going employee expenses related to Continuing CRC
Management after the Control Date shall be Corporate Level Liabilities; provided
that (i) each of CSX and NSC shall have the right pursuant to Section 2.3 to
discontinue use of a Continuing CRC Management function or a position related to
a SSO Facility and (ii) each of CSX and NSC shall have the right pursuant to
Section 2.4 to discontinue use of a function performed by, or a position
occupied by, an employee identified pursuant to clause (b) of the definition of
Continuing CRC Management. Notwithstanding the foregoing, Separation Costs
associated with Continuing CRC Management employees after the Closing Date shall
be allocated as otherwise provided in this Agreement.
(c) In each instance subsequent to the Control Date and subject to
the provisions of Section 6.2(a) above, (i) Separation Costs associated with CRC
agreement employees working jobs at or in respect of NYC Allocated Assets will
be the sole responsibility of CSXT, (ii) Separation Costs associated with CRC
agreement employees working jobs at or in respect of PRR Allocated Assets will
be the sole responsibility of NSR, (iii) for each CRC agreement employee working
a job at or in respect of Retained Assets, Separation Costs will be a Corporate
Level Liability, and (iv) Separation Costs associated with CRC or CRR agreement
employees working jobs at or in respect of two or more such properties (i.e.,
NYC Allocated Assets, PRR Allocated Assets and Retained Assets) will be treated
as the responsibility of CSXT, NSR, or as a Corporate Level Liability, depending
upon the Asset at or in respect of which the employee predominantly works.
(d) Subject to Sections 6.2(a) and (e), if an employee of CRR, CRC
or their respective Affiliates on the Control Date who is subject to any
protective conditions imposed by the STB pursuant to the transactions
contemplated by this Agreement or the Ancillary Agreements cannot obtain
employment with CRC, PRR, NYC, CSX, NSC or their respective Affiliates after the
Control Date, then the Separation Costs in respect of such employee shall be
included among Corporate Level Liabilities, NYC Allocated Liabilities or PRR
Allocated Liabilities on the basis of whether the employee performed the
preponderance of his or her service in the six months preceding the first day of
the month in which the Control Date occurred at or in respect of a Retained
Asset, an NYC Allocated Asset or a PRR Allocated Asset. The Separation Costs of
employees as to whom no reasonable determination can be made shall be Corporate
Level Liabilities, but shall be assigned on an alternating basis to NYC and PRR
for the purpose of administering the claims.
(e) If an employee of CRC, CSX, NSC, PRR, NYC or their respective
Affiliates who is subject to any protective conditions imposed by the STB
pursuant to the transactions contemplated by this Agreement or the Ancillary
Agreements moves his or her employment from one of such parties to another of
such parties on or after the Control Date (including any employee in respect of
whom the Separation Costs have already been allocated to one of CRC, PRR, NYC,
CSX, NSC or their respective Affiliates), responsibility for such employee's
Separation Costs arising thereafter shall be assumed by the new employer;
provided that any relocation costs shall be the responsibility of the first
employer.
(f) Separation Costs associated with employees who were employed by
CSX or NSC or their Affiliates on the day preceding the Control Date will be the
sole responsibility of such employer.
(g) Separation Costs associated with employees who are, as of the
Control Date, non-agreement employees of CRR or CRC (including payments to be
made by CSX, CRR or the Surviving Corporation under the Merger Agreement) shall
be Corporate Level Liabilities. Compensation and other expenses after the
Control Date associated with those non-agreement CRC employees who are not
designated as Continuing CRC Management and who are not employed by either CSX
or NSC, or their respective Affiliates, shall be Corporate Level Liabilities
until such time as such employees are no longer employed by CRC.
(h) Compensation and other expenses (excluding Separation Costs) for
agreement employees (other than Continuing CRC Management) working jobs at or in
respect of NYC Allocated Assets shall be the sole responsibility of CSXT.
Compensation and other expenses (excluding Separation Costs) for agreement
employees (other than Continuing CRC Management) working jobs at or in respect
of PRR Allocated Assets shall be the sole responsibility of NSR.
(i) Notwithstanding anything in this Section 6.2 to the contrary,
Separation Costs (other than payments made pursuant to the CRR Stay Bonus
Program) under CRR or CRC plans and agreements (including the Third Amendment)
for a CRC non-agreement employee who becomes employed after the Control Date by
CSX or its Affiliates or NSC or its Affiliates, which Separation Costs arise
subsequent to the date of such employment, will be borne by the employing party.
Section 6.3. Non-Agreement Employee Benefit Plans. (a) The employee
benefit plans, programs and policies which currently are provided to the
non-agreement employees of CRR, CRC or their respective Affiliates will continue
to be provided to the non-agreement employees of CRC and its Affiliates and to
non-agreement Continuing CRC Management on and after the Control Date, unless it
is determined jointly by CSX and NSC that such benefits shall be changed;
provided that CSX and NSC shall not make any changes in such plans, programs or
policies that contravene Attachment A to the CRR Disclosure Schedule delivered
in connection with the Third Amendment. The costs associated with such plans,
programs and policies shall be Corporate Level Liabilities, except that
Separation Costs shall be allocated and paid as otherwise provided herein. CSX
and NSC jointly may enter into one or more agency agreements with CRR, CRC or
their respective Affiliates for CSX or NSC to provide any of such benefits,
programs or policies.
(b) Any employee benefit plans, programs and policies for the
employees of NYC and its Subsidiaries shall be the sole responsibility of NYC
and included in the NYC Allocated Liabilities. Any employee benefit plans,
programs and policies for the employees of PRR and its Subsidiaries shall be the
sole responsibility of PRR and included in the PRR Allocated Liabilities.
However, notwithstanding the foregoing, NYC, PRR and CRC shall provide to each
other any information that is necessary to determine whether any benefit plan is
or continues to be tax qualified, and in the event that NYC, PRR or CRC
reasonably determines that the benefit plans of NYC, PRR and CRC, when
considered together, may cause one or more benefit plans to lose or fail to
obtain their tax qualification, NYC, PRR and CRC shall agree to appropriate
changes to prevent such loss of tax qualification.
(c) CSX, NSC and CRC agree to take any actions permitted by law
that are necessary or appropriate to determine the amount of excess assets in
CRC benefit plans and to allow allocation to CSX and NSC or their respective
Affiliates in proportion to their respective Percentage; provided that no such
transfer shall reduce the assets remaining in any CRC defined benefit plans to a
level that is less than 100% of the Liabilities for benefits on a termination
basis as reasonably calculated by Price Waterhouse employing usual and customary
methodology and assumptions and; provided further that no such transfer shall
reduce the assets remaining in any other CRC benefit plan to a level that is
less than 100% of the Liabilities for those other CRC benefit plans as
reasonably calculated by Price Waterhouse. CSX, NSC and CRC shall reach an
agreement as to the transfer of accrued benefits and related assets with respect
to employees that are transferred.
(d) Any Liabilities incurred prior to the Closing Date by CRR, CRC
or any of their respective Affiliates with respect to any employee benefit plan,
program, policy or arrangement, other than to the extent a Liability is funded
under a CRC benefit plan, shall be Corporate Level Liabilities.
Section 6.4 Residual Liability. The allocation of liabilities
associated with the employees of CRR, CRC or any of their respective Affiliates
hereunder is intended merely to assign primary responsibility for such
liabilities among the parties. Nothing in the Agreement shall be interpreted or
construed as a restriction or limitation of the duties and responsibilities of
CRR, CRC, their respective Affiliates and CSX with respect to employee-related
liabilities as set forth in the Merger Agreement and Attachment A to the CRR
Disclosure Schedule delivered in connection with the Third Amendment.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1. CSX. CSX represents and warrants to NSC, CRR and
CRR Parent as of the date hereof and as of the Closing Date as follows:
(a) Organization and Good Standing. CSX is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia.
(b) Authority. CSX has full corporate power and authority to execute
and deliver this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
corporate proceedings required to be taken by or on the part of CSX to authorize
CSX to execute, deliver and authorize the performance of this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby have
been duly and properly taken.
(c) Enforceability. This Agreement has been and each of the
Ancillary Agreements will be duly executed and delivered by CSX and, when duly
executed and delivered by NSC and (to the extent such agreement is not being
entered into as of the date hereof) CSX, will constitute the legal, valid and
binding obligation of CSX enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization and other
laws of general application relating to or affecting enforcement of creditors'
rights and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) No Violation. The execution and delivery by CSX of this
Agreement and the Ancillary Agreements will not violate in any material respect
any law, or in any material respect conflict with, result in any breach of,
constitute a default (or any event which with notice or lapse of time or both
would become a default) under the Articles of Incorporation or Bylaws of CSX or
any material Contract to which CSX is a party or by which it or its property or
assets is bound.
(e) No Approvals. Except for required approvals by the STB and
filings required under the Securities Exchange Act of 1934, as amended (the
"Required Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any Governmental Entity is
necessary for the consummation by CSX of the transactions contemplated hereby or
by the Ancillary Agreements, other than such filings, registrations,
authorizations, consents or approvals which, if not obtained or made, will not,
in the aggregate, materially adversely affect the ability of CSX to consummate
the transactions contemplated hereby or by the Ancillary Agreements.
Section 7.2. NSC. NSC represents and warrants to CSX, CRR and
CRR Parent as of the date hereof and as of the Closing Date as follows:
(a) Organization and Good Standing. NSC is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia.
(b) Authority. NSC has full corporate power and authority to execute
and deliver this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
corporate proceedings required to be taken by or on the part of NSC to authorize
NSC to execute, deliver and authorize the performance of this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby have
been duly and properly taken.
(c) Enforceability. This Agreement has been and each of the
Ancillary Agreements will be duly executed and delivered by NSC and, when duly
executed and delivered by CSX and (to the extent such agreement is not being
entered into as of the date hereof) NSC, will constitute the legal, valid and
binding obligation of NSC enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization and other
laws of general application relating to or affecting the enforcement of
creditors' rights and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court before
which any proceeding therefor may be brought.
(d) No Violation. The execution and delivery by NSC of this
Agreement and the Ancillary Agreements will not violate in any material respect
any law, or in any material respect conflict with, result in any breach of,
constitute a default (or any event which with notice or lapse of time or both
would become a default) under the Articles of Incorporation or Bylaws of NSC or
any material Contract to which NSC is a party or by which it or its property or
assets is bound.
(e) No Approvals. Except for the Required Approvals, no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any Governmental Entity is necessary for the consummation by NSC of the
transactions contemplated hereby or by the Ancillary Agreements, other than such
filings, registrations, authorizations, consents or approvals which, if not
obtained or made, will not, in the aggregate, materially adversely affect the
ability of NSC to consummate the transactions contemplated hereby or by the
Ancillary Agreements.
ARTICLE VIII
COVENANTS
Section 8.1. Conduct of Business. Except as provided for in this
Agreement or as otherwise consented to by CSX and NSC in writing, between the
Control Date and the Closing Date, the parties will use reasonable commercial
efforts to cause the Assets to be operated by CRR, CRC and their respective
Affiliates in the ordinary course consistent with past practice and in
compliance in all material respects with all applicable laws and regulations and
will use their reasonable commercial efforts to preserve intact the Assets, use
reasonable efforts to keep available the services of CRR's, CRC's and their
respective Affiliates' current officers and other key employees as a group and
preserve CRR's, CRC's and their respective Affiliates' relationships with those
Persons having business dealings with CRR, CRC and their respective Affiliates
to the end that their goodwill and ongoing businesses shall be unimpaired at the
Closing Date. Without limiting the foregoing, between the Control Date and the
Closing Date, the parties will use reasonable commercial efforts to ensure that
CRR, CRC and their respective Affiliates continue their maintenance and
improvement of Assets in the ordinary course in accordance with past practice
without discriminating between Assets on the basis of whether they are or will
be NYC Allocated Assets, PRR Allocated Assets or Retained Assets.
Section 8.2. Best Efforts. Subject to the terms and conditions of
this Agreement, each party agrees to use best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Ancillary Agreements. No party shall knowingly take any action in
contravention of, or which is inconsistent with, the transactions contemplated
by this Agreement.
Section 8.3. Further Assurances; Consents. (a) From time to time
after the Closing Date, each of the parties will execute and deliver such
further instruments and will take such other actions as CSX, on the one hand, or
NSC, on the other hand, may reasonably request in order to effectuate the
purposes of this Agreement and the Ancillary Agreements and to carry out the
terms hereof and thereof. To the extent that any consent or concurrence is
required under this Agreement by any party or its Affiliates, such consent or
concurrence shall not be unreasonably withheld.
(b) If any of the Allocated Assets cannot be transferred as
contemplated by this Agreement (other than Contracts which are dealt with in
Section 8.5), the parties will cooperate to make the Allocated Asset available
through whatever alternative arrangements will best carry out the purpose and
accomplish the intent of this Agreement, except that this requirement shall not
apply to Allocated Assets which cannot be transferred because of regulatory
constraints.
Section 8.4. STB Approval. (a) The parties will as expeditiously as
possible seek STB approval necessary for the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements. The parties will
use their reasonable best efforts to obtain such approvals, and no party will
take any position (at the STB or with any other Governmental Entity or
elsewhere) inconsistent with this Agreement and the Ancillary Agreements.
(b) Each of CSX and NSC shall (i) coordinate and cooperate with one
another to prepare and present to the STB, as soon as practicable, all
applications, petitions, notices, filings and other presentations in connection
with seeking all STB approvals, exemptions or other authorizations necessary to
consummate the transactions contemplated by this Agreement and by the Ancillary
Agreements, using, to the extent practicable, joint legal counsel and expert
witnesses, (ii) prosecute such applications, petitions, notices, filings and
other presentations with diligence, (iii) diligently oppose any objections to,
appeals from or petitions to reconsider or reopen any such STB approval, (iv)
take all such further action as in their judgment may facilitate obtaining a
final order or orders of the STB approving the transactions contemplated by this
Agreement and the Ancillary Agreements and (v) bear the burden, without
adjustment in the Percentage or other consideration, of any STB imposed
condition it accepts.
(c) Each of CSX and NSC shall coordinate and consult with one
another with respect to all settlements involving the STB approval process. The
parties further agree that, (i) any settlement or agreement pertaining to the
Shared Assets Areas and the Shared Assets Agreements will require the joint
approval of CSX and NSC; (ii) none of CRR, CRC nor CSX shall make any settlement
or agreement with respect to any PRR Allocated Asset without NSC's prior written
consent; (iii) none of CRR, CRC nor NSC shall make any settlement or agreement
with respect to any NYC Allocated Asset without CSX's prior written consent and
(iv) nothing contained herein shall require joint action for either CSX or NSC
to enter into any settlement or Transportation Contract with any shipper or
receiver of freight. CSX and NSC may act in their sole discretion in respect of
the matters set forth in this Section 8.4(c).
(d) If the STB, as a condition to its approval of the transactions
contemplated by this Agreement and the Ancillary Agreements, imposes a
non-standard condition which would materially reduce the benefits to either CSX
or NSC from the transactions contemplated by this Agreement and the Ancillary
Agreements, then the materially affected party may in its sole discretion (i)
accept such condition and proceed with the transactions contemplated by this
Agreement and the Ancillary Agreements, or (ii) appeal such condition to the
courts and postpone the Closing Date for up to thirty months (and its election
under this Section 8.4(d)) until final action on its appeal, and (iii) if such
appeal is unsuccessful, reject the condition and proceed in accordance with the
terms of the Amended and Restated Voting Trust Agreement.
Section 8.5. Other Approvals. (a) The parties shall as expeditiously
as possible use their reasonable best efforts to obtain any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity (other than the STB which is covered by Section 8.4) or private Person
required to be obtained or made by the parties or their respective Affiliates to
effectuate the purposes of this Agreement or the Ancillary Agreements and the
transactions contemplated herein and therein, which actions shall include,
without limitation, furnishing all information required under or in connection
with approvals of or filings with any such Governmental Entity or private
Person. Each party shall reasonably cooperate with each other in connection with
the foregoing. CRC will use reasonable commercial efforts to transfer and assign
to NYC and PRR all Contracts which are to be transferred pursuant to Article II,
it being understood that CRC shall not seek any consents of any third party
unless requested to do so by NYC, in the case of a Contract that is a NYC
Allocated Asset, or PRR, in the case of a Contract that is a PRR Allocated
Asset, and in no event shall CRC be obligated to make payments to third parties
in order to obtain such consents.
(b) All Contracts and rights which are Allocated Assets and are not
transferred pursuant to Section 8.5(a) shall be handled in accordance with the
following procedure: (i) CRC or its Affiliates shall continue to be bound
thereby and to hold the rights thereunder and (ii) NYC, in the case of a
Contract that is a NYC Allocated Asset, and PRR, in the case of a Contract that
is a PRR Allocated Asset, shall pay, perform and discharge fully all of the
obligations of CRC or its Affiliates thereunder from and after the Closing Date.
CRC or its Affiliates shall, without further consideration therefor, pay, assign
and remit promptly to NYC or PRR, as appropriate, all monies, rights and other
consideration received in respect of such performance. CRC or its Affiliates
shall exercise or exploit the rights and options under all such Contracts only
as reasonably directed by NYC, in the case of a Contract that is a NYC Allocated
Asset, and PRR, in the case of a Contract that is a PRR Allocated Asset, and at
NYC's or PRR's expense.
Section 8.6. [Intentionally Omitted.]
Section 8.7. Risk of Loss; Forced Disposal. (a) In the event of any
loss or damage to or destruction of, prior to the Closing, any or all of the
Allocated Assets by fire or other casualty, the title to and other rights
associated with such Allocated Assets shall nevertheless pass to NYC or PRR as
provided for herein without any liability or obligation on the part of any of
the parties or their respective Affiliates as a result of such loss, damage or
destruction and without any adjustment of the Percentage; provided, however,
that at the Closing, CRC shall transfer to NYC or PRR, as the case may be, CRC's
or its Affiliates' rights to any proceeds of any casualty insurance policies
covering such damage or destruction plus the net proceeds, if any, actually
collected by CRC or its Affiliates under the provisions of the casualty
insurance policies, if any, covering such loss, damage or destruction.
(b) If any of the Allocated Assets are disposed of by CRR, CRC or
their respective Affiliates because of conditions imposed by the STB prior to
the Closing, in lieu of the transfer of such Allocated Assets, CRR, CRC or their
respective Affiliates shall deliver to NYC or PRR, as the case may be, the
benefit of any net after-tax consideration attributable to any such Allocated
Assets received by CRR, CRC or their respective Affiliates pursuant to such
disposition.
Section 8.8. Public Statements; Public Filings. Any written news
releases prior to the Closing and any other disclosure required to be filed
prior to the Closing with any Governmental Entity (other than routine
information and filings with the Securities and Exchange Commission) pertaining
to this Agreement, the Ancillary Agreements or the transactions contemplated
hereby or thereby will be subject to prior review by both CSX and NSC prior to
release.
Section 8.9. Restructuring of CRC. (a) It is the parties' intent
that, at some time after the Closing Date, CRC will transfer PRR or the assets
and liabilities of PRR to NSC, transfer NYC or the assets and liabilities of NYC
to CSX or otherwise separate PRR (for the benefit of NSC) and NYC (for the
benefit of CSX) from CRC in the most efficient manner for U.S. federal income
tax purposes (the transaction separating PRR from CRC for the benefit of NSC
hereinafter referred to as the "PRR Restructuring", and the transaction
separating NYC from CRC for the benefit of CSX hereinafter referred to as the
"NYC Restructuring"). A Restructuring shall not be consummated unless (i) CRC
obtains a private letter ruling from the Internal Revenue Service (the
"Service") substantially to the effect that such Restructuring qualifies as a
tax-free transaction (except with respect to gain or income required to be
recognized with respect to intercompany items or excess loss accounts pursuant
to regulations under Section 1502 of the Code or with respect to gain or income
recognized in the Restructuring under Section 356 or Section 361 of the Code as
the result of the receipt of "other property or money" within the meaning of
such sections, provided that the amount of such gain or income recognized by CRR
or its Affiliates is not substantial) under the Code (the "Ruling"), or the
parties otherwise agree to proceed with such Restructuring on the basis of an
opinion of tax counsel generally to the same effect, (ii) any required approval
of the STB is obtained, (iii) Tax indemnities mutually satisfactory to CSX and
NSC have been agreed to and (iv) the conveyance of the CRR Parent interests is
structured in a way to ensure to the mutual satisfaction of CSX and NSC that
after a Restructuring, NSC (in the case of the PRR Restructuring) and CSX (in
the case of the NYC Restructuring) continue to hold their respective Percentage
of the equity and 50 percent of the vote with respect to the Retained Assets and
the Retained Liabilities and NSC (in the case of the PRR Restructuring) has no
continuing interest whatsoever in NYC and CSX (in the case of the NYC
Restructuring) has no continuing interest whatsoever in PRR. In addition, a PRR
Restructuring shall not be consummated if, based upon the written opinion of
outside tax counsel to CSX, such Restructuring would more likely than not impair
the ability to consummate a subsequent NYC Restructuring, and a NYC
Restructuring shall not be consummated if, based upon the written opinion of
outside tax counsel to NSC, such Restructuring would more likely than not impair
the ability to consummate a subsequent PRR Restructuring. The parties agree that
the application referred to in Section 8.4(b) shall not seek the authority to
effect any transaction referred to in this Section 8.5.
(b) CRC shall seek a Ruling at the request of either CSX or NSC or
both of them. If CRC seeks a Ruling at the request of either CSX or NSC or both
of them, after consultation with the party or parties requesting the Ruling, CRC
shall prepare the Ruling request and any supplements or materials relating
thereto that are required to be submitted to the Service in connection with the
Ruling request (each, an "IRS Submission"). Each IRS Submission shall be true
and correct in all material respects, and all material facts relating to the
requested Ruling shall be disclosed to the Service. CRC shall provide CSX and
NSC with a reasonable opportunity to review and comment on each IRS Submission
prior to the filing of such IRS Submission with the Service, and no IRS
Submission shall be filed with the Service unless the party or parties
requesting the Ruling have agreed in writing as to the contents of such IRS
Submission prior to such filing. CRC shall provide CSX and NSC with copies of
each IRS Submission as filed with the Service. Neither CRC nor its Affiliates or
representatives shall conduct any communications with the Service concerning the
Ruling request, including meetings or conferences with personnel from the
Service, whether in person, telephonically or otherwise, without notifying CSX
and NSC and giving CSX and NSC the opportunity to participate. CRC shall provide
CSX and NSC with copies of any correspondence between CRC and the Service with
respect to the Ruling request.
(c) If the requirements of clauses (i), (ii), (iii) and (iv) of the
second sentence of Section 8.9(a) are satisfied and no opinion meeting the
requirements of the third sentence of Section 8.9(a) is delivered with respect
to a Restructuring, NSC (in the case of the PRR Restructuring) and CSX (in the
case of the NYC Restructuring) shall have the right, consistent with the Ruling
(or opinion of counsel, if applicable), to exchange some or all of its interests
in CRR Parent for PRR (in the case of the PRR Restructuring) and NYC (in the
case of the NYC Restructuring). At the request of PRR (in the case of a PRR
Restructuring) or NYC (in the case of a NYC Restructuring) CRR Parent, CRR, CRC
and their respective Affiliates shall take all action necessary or convenient in
the reasonable opinion of PRR (in the case of a PRR Restructuring) or NYC (in
the case of a NYC Restructuring) to effect a Restructuring that is permitted
under Section 8.9(a).
Section 8.10. Provision of Corporate Records. As soon as practicable
after the Closing Date CRC shall (a) deliver to or to the order of NYC all NYC
Books and Records in the possession of CRC or its Affiliates and (b) deliver to
or to the order of PRR all PRR Books and Records in the possession of CRC or its
Affiliates; provided that Books and Records that relate to and are necessary for
the operation of both the NYC Allocated Assets and the PRR Allocated Assets will
be duplicated and included in both the NYC Books and Records and the PRR Books
and Records; and provided further that copies of Books and Records necessary or
useful to the operation of Shared Assets Areas, Continuing CRC Management, SSO
Facilities and other Retained Assets shall be maintained at CRC. Such NYC Books
and Records and PRR Books and Records shall be the property of NYC and PRR,
respectively, but shall be retained and made available readily to CRC for review
and duplication, subject to the limitations set forth in Section 8.11, until the
earlier of notice from CRC that such records are no longer needed by CRC and the
seventh anniversary of the Closing Date, but in all events until the tax year to
which the Books and Records pertain is closed or settled with the Service and/or
state tax authorities, unless a longer retention period is otherwise required by
law.
Section 8.11. Access to Information. From and after the Closing
Date, the parties shall afford (and CSX and NSC shall cause NYC and PRR to
afford) each other and each other's authorized accountants, counsel and other
designated representatives reasonable access and duplicating rights (with
copying costs to be borne by the requesting party) during normal business hours
and at such other times as may be agreed upon to all books and records and
documents, communications, items and matters, including computer programs and
data within each other's knowledge, possession or control relating to the
Assets, the Allocated Liabilities, the Retained Liabilities or the conduct of
CRC's and its Affiliates' businesses, insofar as such access is reasonably
required by a party or NYC or PRR and is consistent with applicable law (and
shall use reasonable efforts to cause persons or firms possessing relevant items
or information to give similar access). Items or information may be requested
under this Section 8.11 only for the following purposes: audit, accounting,
legal proceedings, litigation, tax preparation, transition planning and
implementation planning purposes, as well as for purposes of fulfilling
disclosure and reporting obligations. Information shall be provided pursuant to
this Section 8.11 in accordance with reasonable procedures established by the
parties in order to ensure compliance with the provisions of Section 8.13 and
8.14.
Section 8.12. Production of Witnesses and Individuals. From and
after the Closing Date, CRR Parent, CRC, NYC, PRR, CSX and NSC shall use
reasonable efforts to make available to each other, upon written request, their
respective officers, directors, employees and agents for fact finding,
consultation and interviews and as witnesses to the extent that any such person
may reasonably be required in connection with any Action in which the requesting
party may from time to time be involved relating to the transactions
contemplated by this Agreement and the Ancillary Agreements, the Assets, the
Allocated Liabilities, the Retained Liabilities or the conduct of CRC's and its
Affiliates' business. Except as otherwise agreed between the parties, the
parties agree to reimburse each other for reasonable documented out-of-pocket
expenses (but not labor charges, salary payments or overheads) incurred by the
other in connection with providing individuals and witnesses pursuant to this
Section 8.12.
Section 8.13. Confidentiality. The parties shall hold (and CSX and
NSC shall cause NYC and PRR to hold), and shall cause their respective officers,
employees, agents, consultants and advisors to hold, in strict confidence,
unless compelled to disclose by judicial or administrative process or, in the
opinion of its independent legal counsel, by other requirements of law, all
information furnished it by another party, NYC or PRR or their respective
representatives pursuant to this Agreement or the Ancillary Agreements (except
to the extent that such information can be shown to have been (i) available to
such Person on a non-confidential basis prior to its disclosure by the other
Person, (ii) in the public domain through no fault of such Person or (iii) later
lawfully acquired from other sources by the Person to which it was furnished),
and no Person shall release or disclose such information to any other person,
except its auditors, attorneys, financial advisors, bankers and other
consultants and advisors who shall be bound by the provisions of this Section
8.13. In the event that a subpoena, discovery or other request that arguably
calls for production or disclosure of such confidential information is received,
the Person receiving such request must promptly notify in writing the Person
whose information has been requested. The Person receiving such request shall
provide the Person whose confidential information has been requested, a
reasonable opportunity to review such information and to assert any rights it
may have with respect to the potential disclosure of such confidential
information. Each party shall be deemed to have satisfied its obligation to hold
confidential information concerning or supplied by the other parties, NYC or PRR
if it exercises the same care as it takes to preserve confidentiality for its
own similar information.
Section 8.14. Privileged Matters. (a) The parties agree that from
and after the Control Date CRC and its Affiliates will maintain, preserve and
assert all privileges, including, without limitation, privileges arising under
or relating to the attorney-client relationship (which shall include, without
limitation, the attorney-client and work product privileges) that relate
directly or indirectly to the Assets, the Allocated Liabilities or the Retained
Liabilities or CRC's and its Affiliates' business for any period prior to the
Closing Date ("Privileges"). CRC shall not waive any Privilege that could be
asserted under applicable law without the prior written consent of CSX and NSC.
The rights and obligations created by this Section 8.14 shall apply to all
information as to which, but for the transactions contemplated by this Agreement
and the Ancillary Agreements, CRC would have been entitled to assert or did
assert the protection of a Privilege ("Privileged Information"), including but
not limited to (i) any and all information generated prior to the Closing Date
but which, after the Closing, is in the possession of CSX, NSC, NYC or PRR (ii)
all communications subject to a Privilege occurring prior to the Closing Date
between counsel for CRC and any person who, at the time of the communication,
was an employee of CRC, regardless of whether such employee is or becomes an
employee of CSX, NSC, NYC or PRR and (iii) all information generated, received
or arising after the Closing that refers or relates to Privileged Information
generated, received or arising prior to the Closing.
(b) From and after the Control Date, upon receipt by CRC or any of
its Affiliates of any subpoena, discovery or other request that arguably calls
for the production or disclosure of Privileged Information or if CRC or any of
its Affiliates obtains knowledge that any current or former employee of CRC or
any of its Affiliates has received any subpoena, discovery or other request
which arguably calls for the production or disclosure of Privileged Information,
CRC shall promptly notify in writing CSX, NSC, NYC and PRR of the existence of
the request and shall provide CSX and NSC a reasonable opportunity to review the
information and to assert any rights it may have under this Section 8.14 or
otherwise to prevent the production or disclosure of Privileged Information. CRC
will not produce or disclose any information arguably covered by a Privilege
under this Section 8.13 unless (i) CSX and NSC have both provided their written
consent to such production or disclosure or (ii) a court of competent
jurisdiction has entered a final, nonappealable order finding that the
information is not entitled to protection under any applicable privilege.
(c) If there is a reasonable likelihood that the waiver by CRC of
any Privilege could expose CSX, NSC, NYC or PRR to Liability or could prejudice
the other party's position in pending or threatened litigation, otherwise
adversely affect CSX, NSC, NYC or PRR, CRC will promptly notify in writing CSX
and NSC prior to such waiver, and, at CSX's and NSC's request, CRC will assert
or preserve the Privilege, as applicable, if CRC's interests will not be
adversely affected by its assertion or preservation of the Privilege.
Section 8.15. Administration of Actions. After the Closing Date, (a)
NYC shall have exclusive authority and control over the investigation,
prosecution, defense and appeal of all Actions relating primarily to NYC, the
NYC Allocated Assets, the NYC Allocated Liabilities or a Retained Liability
(except for Retained Liabilities for which the monetary claim is more than
$500,000 or injunctive relief is sought) which arose at the location of a NYC
Allocated Asset, or with which a NYC Allocated Asset is most significantly
involved (each, an "NYC Action"), and may settle or compromise, or consent to
the entry of any judgment with respect to, any such NYC Action without the
consent of CRC, NSC or PRR and (b) PRR shall have exclusive authority and
control over the investigation, prosecution, defense and appeal of all Actions
relating primarily to PRR, the PRR Allocated Assets, the PRR Allocated
Liabilities, or a Retained Liability (except for Retained Liabilities for which
the monetary claim is more than $500,000 or injunctive relief is sought), which
arose at the location of a PRR Allocated Asset or with which a PRR Allocated
Asset is most significantly involved (each a "PRR Action"), and may settle or
compromise, or consent to the entry of any judgment with respect to, any such
PRR Action without the consent of CRC, CSX or NYC; provided that neither NYC or
PRR may settle or compromise, or consent to the entry of any judgment with
respect to, any such Action without the prior written consent of the other if
such settlement, compromise or consent to such judgment (i) includes any form of
injunctive relief binding upon such other party or CRC or (ii) does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
other party or CRC and any Affiliates of CRC subject to such Action of a full
and final release from all liability in respect to such claim or litigation.
After the Closing Date with respect to an Action not covered under clauses (a)
or (b) of the foregoing sentence (including Actions relating to Corporate Level
Liabilities), the handling, administration and disposition of such Actions shall
be the joint responsibility of CSX and NSC and the costs thereof shall be
Corporate Level Liabilities. In assigning joint responsibility for the
administration, handling and disposition of Actions to CSX and NSC, hereunder it
is not the parties' intent that CSX and NSC will actually administer, handle and
dispose of such Actions jointly, but rather that CSX and NSR will agree on the
most practical and efficient arrangements with the objective of eliminating
unnecessary duplication of effort and minimizing overall costs. The costs and
expenses of the administration and handling of such Actions shall be Corporate
Level Liabilities; provided that the salaries of, expenses incurred by and
overheads associated with full-time employees of CSX or NSC while engaged in
investigating or handling such Actions shall be the responsibility of the
employing party and shall not be Corporate Level Liabilities.
Section 8.16. Administration of FELA Claims. (a) The administration,
handling and disposition of FELA Claims (whenever made) that are Corporate Level
Liabilities shall be (i) the responsibility of the party controlling the
Allocated Asset where the incident or incidents giving rise to the FELA Claim
occurred, or (ii) the responsibility of the party controlling the Allocated
Asset most significantly involved if the FELA Claim arises from an incident or
incidents occurring at multiple locations on Allocated Assets, or (iii) the
joint responsibility of CSX and NSC if the FELA Claim arises from an incident or
incidents occurring at unknown locations or a location not otherwise covered by
clauses (i) or (ii) of this sentence. In assigning joint responsibility for the
administration, handling and disposition of FELA Claims to CSX and NSC under the
foregoing clause (iii), it is not the parties' intent that CSX and NSC will
actually administer, handle and dispose of such actions jointly, but rather that
CSX and NSR will agree on the most practical and efficient arrangements with the
objective of eliminating unnecessary duplication of effort and minimizing
overall costs. The costs and expenses of the administration, handling and
disposition of (A) FELA Claims made prior to the Closing Date and (B) all other
FELA Claims that are Corporate Level Liabilities, shall be Corporate Level
Liabilities and shall be borne by CSX and NSC in proportion to their respective
Percentages; provided that the salaries of, expenses incurred by and overheads
associated with full-time employees of CSX or NSC while engaged in investigating
or handling such FELA Claims shall be the responsibility of the employing party
and shall not be Corporate Level Liabilities; provided, further that the party
responsible for the administration of FELA Claims which are Retained Liabilities
shall, before agreeing to any single settlement of a FELA Claim or group of
related FELA Claims, involving a payment of more than $1 million, obtain the
written consent of the other party. Failure of either party to respond to such a
request for consent within fourteen days of receipt of such request shall be
deemed to constitute consent.
(b) The administration, handling and disposition of FELA Claims (and
the costs and expenses thereof) that are made on or after the Control Date and
that are NYC Allocated Liabilities pursuant to Section 2.8(c) hereof shall be
the responsibility of CSX. The administration, handling and disposition of FELA
Claims (and the costs and expenses thereof) that are made on or after the
Control Date and that are PRR Allocated Liabilities pursuant to Section 2.8(c)
hereof shall be the responsibility of NSC.
Section 8.17. Tax Matters. (a) From the date hereof until the
Closing Date, CRR and Green (i) shall timely and duly file, or cause to be
timely and duly filed, all Tax Returns of CRR, CRC and their respective
Affiliates required to be filed on or prior to the Closing Date and (ii) other
than Taxes being contested in good faith, shall timely pay, or cause to be
timely paid, all Taxes required to be paid by CRR, CRC or their respective
Affiliates. From the Control Date until the Closing Date, CRR and Green, with
respect to each of CRR, CRC and their respective Affiliates, shall not settle or
compromise any Tax Liability, agree to any adjustment to any Tax attribute,
change any method of accounting or make any election with respect to Taxes
without first obtaining the prior written consent of CSX and NSC. CRR and its
Subsidiaries agree to be included in a consolidated federal income tax return of
Green.
(b) From and after the Closing Date, the Tax Allocation
Agreement shall govern the rights and obligations of Green, CRR, CRC, CRR
Industries, PRR and NYC with respect to Tax matters involving the operations of
CRC, PRR and NYC.
Section 8.18. Committees. Within 90 days following the execution of
this Agreement, two committees shall be established by CSX and NSC: the "Buffalo
Committee" and the "Vickers Committee". Both committees shall consist of
representatives appointed by CSX and representatives appointed by NSC. The
Buffalo Committee will examine the CP-Draw drawbridge and interlocking in
Buffalo, New York and will investigate ways of minimizing or eliminating
conflict between CSX and NSC traffic flows through the area after the Closing
Date. The Vickers Committee will examine the Vickers crossing in Toledo, Ohio
and will investigate ways of minimizing or eliminating conflict between CSX and
NSC traffic flows through the area after the Closing Date. Within 90 days of
appointment, each such committee will prepare a report detailing options for
solving the traffic conflict problems, along with cost estimates for each such
option.
Section 8.19. Chicago Gateway Access. CSXT and NSR will preserve and enhance
the independent competitive capability of each to move traffic to and through
the Chicago Gateway (as defined in Schedule 3) by adhering to the
requirements of Schedule 3.
Section 8.20. Car Hire and Car Service. The parties recognize that
industry rules, including the AAR Car Service Rules, may pose problems with
respect to the payment and collection of car hire in connection with Equipment
that is included in Retained Assets and that is used or operated with the
Allocated Assets and with the Shared Assets Areas. The parties shall use their
reasonable best efforts and take all actions, including seeking changes in
industry rules, as may be necessary or appropriate to allow each party, in the
most favorable manner possible, to collect car hire on the Equipment allocated
to it pursuant to Section 2.6 hereof and to pay the car hire due for cars used
or operated with Allocated Assets and with the Shared Assets Areas.
ARTICLE IX
CONDITIONS PRECEDENT TO THE CLOSING
Section 9.1. Conditions Precedent to Obligations. The respective
obligations of CSX, NSC, CRR Parent, CRR and CRC to effect the transactions
contemplated by Article II shall be subject to the fulfillment or mutual waiver
at or prior to the Closing Date of the following conditions:
(a) No preliminary or permanent injunction or other order or decree
issued by a court of competent jurisdiction or any other legal restraint or
prohibition which prevents the consummation of the transactions contemplated by
this Agreement or the Ancillary Agreements shall be in effect and no statute,
rule or regulation shall have been enacted by any Governmental Entity
prohibiting the consummation of the transactions contemplated by this Agreement
or the Ancillary Agreements.
(b) The STB shall have issued a decision (which decision shall not
have been stayed or enjoined) that constitutes a final order approving,
exempting or otherwise authorizing, as of such date, consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements as may
require such authorization and neither party shall have exercised a right to
postpone pursuant to Section 8.4(c).
(c) Each of CSX and NSC shall have reasonably determined that it
has obtained sufficient labor implementing agreements so as to be authorized by
law to effect the transactions contemplated by Article II and Article VI.
ARTICLE X
INDEMNIFICATION
Section 10.1. Indemnification. (a) Subject to the provisions of this
Article X, CRR Parent and CRR jointly and severally shall indemnify, defend and
hold harmless the other parties and any director, officer, employee or agent of
any of them from and against any and all Damages asserted against, relating to,
imposed upon or incurred by any such Person, directly or indirectly, by reason
of or resulting from:
(i) the breach or nonperformance of any agreement of CRR Parent,
CRR, CRC or any of their respective Affiliates (other than NYC and PRR)
contained in or made pursuant to this Agreement or any of the Ancillary
Agreements; and
(ii) any Retained Liability.
(b) Subject to the provisions of this Article X, CSX and CSXT
jointly and severally shall indemnify, defend and hold harmless the other
parties and any director, officer, employee or agent of any of them from and
against any and all Damages asserted against, relating to, imposed upon or
incurred by any such Person, directly or indirectly, by reason of or resulting
from:
(i) the untruth or inaccuracy of any representation or warranty of
CSX, CSXT or their respective Affiliates contained in or made pursuant to
this Agreement or any of the Ancillary Agreements; and
(ii) the breach or non-performance of any agreement of CSX, CSXT or
their respective Affiliates contained in or made pursuant to this
Agreement or any of the Ancillary Agreements.
(c) Subject to the provisions of this Article X, NSC and NSR jointly
and severally shall indemnify, defend and hold harmless the other parties and
any director, officer, employee or agent of any of them from and against any and
all Damages asserted against, relating to, imposed upon or incurred by any such
Person, directly or indirectly, by reason of or resulting from:
(i) the untruth or inaccuracy of any representation or warranty
of NSC, NSR or their respective Affiliates
contained in or made pursuant to this Agreement or any of
the Ancillary Agreements; and
(ii) the breach or non-performance of any agreement of NSC, NSR or
their respective Affiliates contained in or made pursuant to this
Agreement or any of the Ancillary
Agreements.
Section 10.2. Indemnification Procedures. (a) If any Action shall be
threatened or instituted or any claim or demand shall be asserted against any
Indemnified Party in respect of which indemnification may be sought under the
provisions of this Agreement, the Indemnified Party shall promptly cause written
notice of the assertion of any such claim, demand or Action of which it has
knowledge to be forwarded to the Indemnifying Party. Such notice shall contain a
reference to the provisions hereof or of such other agreement, instrument or
certificate delivered pursuant hereto, in respect of which such claim is being
made. The Indemnified Party's failure to give the Indemnifying Party prompt
notice shall not preclude the Indemnified Party from obtaining indemnification
from the Indemnifying Party under this Article X unless the Indemnified Party's
failure has materially prejudiced the Indemnifying Party's ability to defend the
claim, demand or Action.
(b) If the Indemnified Party seeks indemnification from the
Indemnifying Party as a result of a claim or demand being made by a third party
(a "Third Party Claim"), the Indemnifying Party shall have the right to promptly
assume the control of the defense of any Action with respect to such Third Party
Claim, including, at its own expense, employment by it of counsel reasonably
satisfactory to the Indemnified Party. The Indemnified Party may, in its sole
discretion and at its own expense, employ counsel to represent it in the defense
of the Third Party Claim, and in such event counsel for the Indemnifying Party
shall cooperate with counsel for the Indemnified Party in such defense, provided
that the Indemnifying Party shall direct and control the defense of such Third
Party Claim or proceeding. The Indemnifying Party shall not consent to the entry
of any judgment, except with the written consent of the Indemnified Party, and
shall not enter into any settlement of such Third Party Claim without the
written consent of the Indemnified Party which does not include as an
unconditional term thereof the release of the Indemnified Party from all
Liability in respect of such Third Party Claim.
Section 10.3. Remedies. (a) Each party acknowledges and agrees that
the other parties would be irreparably damaged in the event any of the
provisions of this Agreement were not performed by it in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that each
party shall be entitled to an injunction or injunctions to prevent breaches of
such provisions and to specifically enforce such provisions, in addition to any
other remedy to which such party may be entitled, at law or in equity.
(b) In no event shall any party be liable to the other parties for
any consequential, indirect, incidental, punitive or other similar damages
including but not limited to lost profits for any breach or default, or any act
or omission arising out of or in any way relating to, this Agreement, the
Assets, the Retained Liabilities, the Allocated Liabilities, the Ancillary
Agreements, the transactions contemplated herein or therein or any matter or
theory concerning or relating to any of the foregoing, under any form or theory
of action whatsoever whether in contract, tort or otherwise.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Amendment. This Agreement may be amended by the
parties at any time by an instrument in writing signed on behalf of each
party.
Section 11.2. Extension; Waiver. At any time prior to the Closing
Date the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
Section 11.3. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given on the date delivered if
delivered personally (including by reputable overnight courier), on the date
transmitted if sent by telecopy (which is confirmed) or on the date received if
mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to CSX, CSXT or CRR Parent, to:
CSX Corporation
One James Center
901 East Cary Street
Richmond, Virginia 23219
Telecopy number: 804-783-1380
Attention: Mark G. Aron, Esq.
and Peter J. Shudtz, Esq.
CSX Transportation
500 Water Street
Jacksonville, Florida 32202
Telecopy number: 904-366-5436
Attention: P. Michael Giftos, Esq.
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy number: 212-403-2000
Attention: Pamela S. Seymon, Esq.
(b) If to NSC, NSR or CRR Parent, to:
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510
Telecopy number: 757-629-2750
Attention: James C. Bishop, Jr., Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telecopy number: 212-735-2000
Attention: Randall H. Doud, Esq.
(c) If to CRR or CRC, to:
Conrail Inc.
2001 Market Street
Philadelphia, PA 19103
Telecopy number: 215-209-4068
Attention: General Counsel
All notices regarding matters requiring handling within thirty days will be
given by overnight mail or confirmed telecopy.
Section 11.4. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.5. Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto and the Ancillary Agreements and other documents
and instruments referred to herein) and the Merger Agreement, collectively,
constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, except the April 8 Agreement to the extent the April 8
Agreement covers matters not addressed or amended hereby and the CRR Holdings
LLC Agreement; provided that it is the intent of the parties hereto that this
Agreement shall be an effectuation of the April 8 Agreement consistent with the
terms of the April 8 Agreement and that the provisions of this Agreement should
be interpreted to give effect to the April 8 Agreement; and provided further
that in the event of any inconsistency between the terms of this Agreement and
the April 8 Agreement this Agreement shall prevail; and provided further that
CSX and NSC agree that the fourth paragraph of Item III of Exhibit A to the
April 8 Agreement (at page two thereof) in respect of Lake Erie coal dock
capacity is rescinded and no longer in effect.
Section 11.6. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party and their respective
successors and assigns and is not intended to confer upon any other Person any
rights or remedies, except for the rights of an Indemnified Party as
contemplated by Article X.
Section 11.7. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof; provided, however, that the laws of the respective jurisdictions of
incorporation of each of the parties shall govern the relative rights,
obligations, powers, duties and other internal affairs of such party and its
board of directors.
Section 11.8. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
Section 11.9. Assignment. (a) Except as provided in Section 11.9(b), neither
this Agreement (including the documents and instruments referred to herein) nor
any of the rights, interests or obligations hereunder, shall be assigned by any
party, including by operation of law, without the prior written consent of the
other parties which may be withheld at the sole discretion of the relevant
party.
(b) Any party without the consent of the other parties may assign
all or any part of its rights and obligations under this Agreement to (i) any of
its controlled Subsidiaries or (ii) any successor in the event of a merger,
consolidation, sale of all or substantially all its assets, liquidation or
dissolution, if such assignee executes and delivers to the other parties hereto
an agreement reasonably satisfactory in form and substance to such other party
under which such assignee, which is reasonably satisfactory to the other party,
assumes and agrees to perform and discharge all the obligations and liabilities
of the assigning party; provided that any such assignment shall not relieve the
assigning party from the performance and discharge of such obligations and
liabilities.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted assignees.
Section 11.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, such provision is to be intended to be ineffective only to the most
limited extent possible in such context and the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 11.11. Lack of Control; Effect on CRR and its Controlled
Subsidiaries. (a) None of CSX, CSXT, NSC or NSR shall be liable for failing to
take any action which they are required to take under this Agreement if the time
when CSX, CSXT, NSC or NSR is required to take such action occurs prior to the
Control Date and such action requires the assistance or cooperation of CRR or
its Board of Directors, which assistance is requested but not provided;
provided, however, that CSX and NSC shall use their best efforts to obtain such
assistance or cooperation and, after the Control Date, will be required to take
such action if, as and when required by this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement (which term for purposes of this Section 11.11(b) shall include the
Exhibits and Schedules hereto and the Ancillary Agreements and other documents
and instruments referred to herein), except as expressly set forth in Section
3.2, neither CRR nor any of its controlled Subsidiaries shall be bound by the
terms of this Agreement (other than Section 8.17) or subject to any Liabilities
or obligations hereunder (other than under Section 8.17) at any time prior to
the Control Date. CRR and CSX shall continue to be bound by those terms of the
Merger Agreement that by their terms survive beyond June 2, 1997, including,
without limitation, Attachment A to the CRR Disclosure Schedule delivered in
connection with the Third Amendment; provided that in the event of any
inconsistency between the terms of this Agreement and the terms of such
Attachment A, the terms of such Attachment A shall prevail.
Section 11.12. Dispute Resolution. Any dispute, controversy or claim
(or any failure by the parties to agree on a matter as to which this Agreement
expressly or implicitly contemplates subsequent agreement by the parties, except
for matters left to the sole discretion of a party) arising out of or relating
to this Agreement, or the breach, termination or validity hereof, shall be
finally settled through binding arbitration by a sole, disinterested arbitrator
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitrator shall be jointly selected by the parties but, if the
parties do not agree on an arbitrator within thirty days after demand for
arbitration is made by a party, they shall request that the arbitrator be
designated by the American Arbitration Association. The award of the arbitrator
shall be final and conclusive upon the parties. Each party to the arbitration
shall pay the compensation, costs, fees and expenses of its own witnesses,
experts and counsel. The compensation and any costs and expenses of the
arbitrator shall be borne equally by the parties. The arbitrator shall have the
power to require the performance of acts found to be required by this Agreement
and to require the cessation or nonperformance of acts found to be prohibited by
this Agreement. The arbitrator shall not have the power to award consequential
or punitive damages. The arbitrator's award shall be binding and conclusive upon
the parties to the fullest extent permitted by law. Judgment upon the award
rendered may be entered in any court having jurisdiction thereof, which court
may order appropriate relief at law or equity. All proceedings relating to any
such arbitration, and all testimony, written submissions and award of the
arbitrator therein, shall be private and confidential as among the parties, and
shall not be disclosed to any other Person, except as required by law and except
as reasonably necessary to prosecute or defend any judicial action to enforce,
vacate or modify such arbitration award.
Section 11.13. CRC Status. The parties intend that after the Closing
Date CRC and its Affiliates shall be a rail carrier that performs transportation
services for the account of CSXT or NSR, as the case may be, or as agent or
subcontractor of CSXT or NSR, as the case may be.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CSX CORPORATION
By: /s/ John W. Snow
Name:
Title:
CSX TRANSPORTATION, INC. (for itself and
on behalf of its controlled
Subsidiaries)
By: ________________________
Name:
Title:
NORFOLK SOUTHERN CORPORATION
By: ________________________
Name:
Title:
NORFOLK SOUTHERN RAILWAY COMPANY (for
itself and on behalf of its controlled
Subsidiaries)
By: ________________________
Name:
Title:
CONRAIL INC. (for itself and on behalf of
its controlled Subsidiaries)
By: ________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CSX CORPORATION
By: ___________________
Name:
Title:
CSX TRANSPORTATION, INC. (for itself and
on behalf of its controlled
Subsidiaries)
By: /s/ A. R. Carpenter
Name: A. R. Carpenter
Title: President and CEO
NORFOLK SOUTHERN CORPORATION
By: ________________________
Name:
Title:
NORFOLK SOUTHERN RAILWAY COMPANY (for
itself and on behalf of its controlled
Subsidiaries)
By: ________________________
Name:
Title:
CONRAIL INC. (for itself and on behalf of
its controlled Subsidiaries)
By: ________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CSX CORPORATION
By: ________________________
Name:
Title:
CSX TRANSPORTATION, INC. (for itself and
on behalf of its controlled
Subsidiaries)
By: ________________________
Name:
Title:
NORFOLK SOUTHERN CORPORATION
By: /s/ David R. Goode
Name:
Title:
NORFOLK SOUTHERN RAILWAY COMPANY (for
itself and on behalf of its controlled
Subsidiaries)
By: /s/ David R. Goode
Name:
Title:
CONRAIL INC. (for itself and on behalf of
its controlled Subsidiaries)
By: ________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CSX CORPORATION
By: ________________________
Name:
Title:
CSX TRANSPORTATION, INC. (for itself and
on behalf of its controlled
Subsidiaries)
By: ________________________
Name:
Title:
NORFOLK SOUTHERN CORPORATION
By: ________________________
Name:
Title:
NORFOLK SOUTHERN RAILWAY COMPANY (for
itself and on behalf of its controlled
Subsidiaries)
By: ________________________
Name:
Title:
CONRAIL INC. (for itself and on behalf of
its controlled Subsidiaries)
By: /s/ Timothy O'Toole
Name:
Title:
<PAGE>
CONSOLIDATED RAIL CORPORATION
By: /s/ Timothy O'Toole
Name:
Title:
CRR HOLDINGS LLC
By: _________________________
Name:
Title:
<PAGE>
CONSOLIDATED RAIL CORPORATION
By: ________________________
Name:
Title:
CRR HOLDINGS LLC
By: /s/ John W. Snow
Name:
Title:
<PAGE>
SCHEDULE 1
ASSETS
Attached to and incorporated in this Schedule 1 are the following
attachments:
(i) Attachment I, which is the line segment allocation list identifying
each Route owned, operated or used by CRC and its Affiliates and
indicating as to each Route whether it is included in the NYC Allocated
Assets, the PRR Allocated Assets or the Retained Assets; and
(ii) Attachment II, which is a system map showing all Routes comprising
the CRC rail system and indicating by color coding the Routes which are to
be NYC Allocated Assets, PRR Allocated Assets and Retained Assets,
respectively; Attachment II is intended to show graphically the Routes
described in Attachment I.
ITEM 1 - NYC ALLOCATED ASSETS
The "NYC Allocated Assets" shall include all of CRR's, CRC's and their
respective Affiliates' right, title and interest in and to the following Assets:
(A) Routes and Assets Related to Routes. All Routes identified as NYC
Allocated Assets in Attachment I and Attachment II (i.e., those lines colored in
red and/or orange on Attachment II, except for those lines already owned by CSXT
or its Affiliates), together with the following Assets that are related to such
Routes (except as otherwise expressly provided in this Schedule 1 or the
Ancillary Agreements):
(1) the track structure (rails, ties, other track
material, grading, bridges, tunnels, culverts, etc.);
(2) the underlying right-of-way, operating and
non-operating, regardless of its width, and associated
structures and fixtures;
(3) except in the areas where the parties' respective Routes are
approximately equidistant from the Asset in question (where in
each case other arrangements are made pursuant to one or more
Ancillary Agreements), appurtenant yards, sidings, switch
tracks and repair or other maintenance facilities;
(4) real estate (whether or not used for operating purposes)
adjacent or in proximity to the Routes included in the NYC
Allocated Assets, or underlying, adjacent or in proximity to
those structures or facilities described in the preceding
clauses (2) and (3) and the following clause (5);
(5) signal, communications and computer facilities and
equipment on the right-of-way and (to the extent used to
operate the Routes included in the NYC Allocated Assets)
off the right-of-way;
(6) tools and supplies located on and along, and automobiles,
hi-rail cars and trucks assigned to, the Routes included in
the NYC Allocated Assets, including repair materials and local
repair equipment, except system stockpiles of inventory,
material and supplies and Work Equipment;
(7) Contracts (other than Transportation Contracts) relating to a
Route included in NYC Allocated Assets, including without
limitation trackage and other operating rights, public and
private grade crossing agreements, side track and industrial
track agreements, pipeline and wireline agreements, building
and yard maintenance agreements, leases, licenses, reversions,
longitudinal easements and other occupancy agreements, and the
rents, security deposits and profits arising therefrom or in
connection therewith;
(8) muniments of title, all original valuation maps, land
schedules, track charts, surveys, bridge and other drawings,
bridge inspection reports, environmental reports, permits,
signal and communications plans, other engineering
documentation, deeds (including such originals of acquisition
or out-conveyances as may be in CRC's possession), current
billing records (including billing addresses and, if in a
computer format, the data and the programs), real estate work
files, property tax records (and any computer database for
such records), and all other Books and Records relating to a
Route included in NYC Allocated Assets;
(9) mineral rights or easements of any sort held by CRR, CRC or
their respective Affiliates located on, over, across and/or in
the real estate or property heretofore described in this
paragraph (A); and
(10) royalties or other payments in respect of real estate or other
Assets heretofore described in this paragraph (A).
(B) Philadelphia Offices. The CRC headquarters office building
located at Philadelphia, PA, and the CRC information technology center building
located at Philadelphia, PA and all FF&E located at such facilities.
(C) Yards and Yard Access. The following CRC yards, land and yard
access tracks:
(1) Seneca Yard (Buffalo, NY) (subject to access and
use by NSR pursuant to Ancillary Agreement);
(2) 59th Street ("Panhandle") Yard site (Chicago, IL);
(3) Collinwood Yard (Cleveland, OH);
(4) Former "local yard" and intermodal terminal at
Buckeye (Columbus, OH);
(5) Buckeye Yard Lead track from the north limit of
"CP Buckeye" to "CP Darby" (Columbus, OH);
(6) West track between "CP 138" and "CP 136"
(Columbus, OH);
(7) Portion of Piqua Yard (Fort Wayne, IN) to be
agreed upon between NSR and CSXT;
(8) Hawthorne Yard (Indianapolis, IN) (subject to
access and use by NSR pursuant to Ancillary Agreement);
(9) North Bergen intermodal terminal (New Jersey);
(10) South Kearny intermodal terminal including APL leased areas;
however, NSR to have access to the APL leased terminal and NSR
to have the right to serve APL and any successor lessee to APL
using such leased premises;
(11) Greenwich Yard (Philadelphia), but excluding yard tracks and
areas used to support the movement of local freight (including
port traffic, but excluding intermodal) and to support the
movement of rail traffic to and from the ore pier, which
tracks and areas will be included in Retained Assets;
(12) Track from CP Field to Pier 122 (Greenwich Yard
area, Philadelphia);
(13) Stanley Yard (Toledo, OH);
(14) Elizabeth Yard (Trumbull Street Yard), but subject to use of
and access to two tracks by NSR to support E-Rail Intermodal
Facility as provided in Ancillary Agreements; and
(15) Manville Yard (subject to use by CRC, CSX and NSR
pursuant to Ancillary Agreements).
(D) Miscellaneous Property. The following Assets:
(1) Developable property west of CRC's Chemical Coast
Secondary in northern New Jersey in the vicinity of the
current CRC Elizabethport Yard (Trumbull St. Yard);
(2) Indianapolis Division headquarters building,
offices and land; and
(3) Albany Division headquarters building, offices and
land.
(E) Stock Ownership and Other Interests. The following
interests:
(1) 50% of the issued and outstanding capital stock in
Lakefront Dock & Railroad Terminal Company;
(2) 100% of the issued and outstanding capital stock
in St. Lawrence & Adirondack Railway;
(3) 50% of the issued and outstanding capital stock in
Albany Port Railroad Corp.; and
(4) 10.125% of the issued and outstanding capital
stock in TTX Company.
ITEM 2 - PRR ALLOCATED ASSETS
The "PRR Allocated Assets" shall include all of CRR's, CRC's and their
respective Affiliates' right, title and interest in and to the following Assets:
(A) Routes and Assets Related to Routes. All Routes identified as PRR
Allocated Assets in Attachment I and Attachment II (i.e., those lines colored in
green and/or yellow on Attachment II, except for those lines already owned by
NSR or its Affiliates), together with the following Assets that are related to
such Routes (except as otherwise expressly provided in this Schedule 1 or the
Ancillary Agreements):
(1) the track structure (rails, ties, other track material,
grading, bridges, tunnels, culverts, etc.);
(2) the underlying right-of-way, operating and non-operating,
regardless of its width, and associated structures and
fixtures;
(3) except in the areas where the parties' respective Routes are
approximately equidistant from the Asset in question (where in
each case other arrangements are made pursuant to one or more
Ancillary Agreements), appurtenant yards, sidings, switch tracks
and repair or other maintenance facilities;
(4) real estate (whether or not used for operating purposes) adjacent
or in proximity to the Routes included in the PRR Allocated
Assets, or underlying, adjacent or in proximity to those
structures or facilities described in the preceding clauses (2)
and (3) and the following clause (5);
(5) signal, communications and computer facilities and equipment on
the right-of-way and (to the extent used to operate the Routes
included in the PRR Allocated Assets) off the right-of-way;
(6) tools and supplies located on and along, and automobiles, hi-rail
cars and trucks assigned to, the Routes included in the PRR
Allocated Assets, including repair materials and local repair
equipment, except system stockpiles of inventory, material and
supplies and Work Equipment;
(7) Contracts (other than Transportation Contracts) relating to a
Route included in PRR Allocated Assets, including without
limitation trackage and other operating rights, public and
private grade crossing agreements, side track and industrial
track agreements, pipeline and wireline agreements, building and
yard maintenance agreements, leases, licenses, reversions,
longitudinal easements and other occupancy agreements, and the
rents, security deposits and profits arising therefrom or in
connection therewith;
(8) muniments of title, all original valuation maps, land schedules,
track charts, surveys, bridge and other drawings, bridge
inspection reports, environmental reports, permits, signal and
communications plans, other engineering documentation, deeds
(including such originals of acquisition or out-conveyances as
may be in CRC's possession), current billing records (including
billing addresses and, if in a computer format, the data and the
programs), real estate work files, property tax records (and any
computer database for such records), and all other Books and
Records relating to a Route included in PRR Allocated Assets;
(9) mineral rights or easements of any sort held by CRR, CRC or their
respective Affiliates located on, over, across and/or in the real
estate or property heretofore described in this paragraph (A);
and
(10) royalties or other payments in respect of real estate or other
Assets heretofore described in this paragraph (A).
(B) Altoona and Hollidaysburg Shops. The CRC car and locomotive repair shops
located at Altoona, PA and Hollidaysburg, PA and all rolling-stock-related and
locomotive-related inventory and supplies (including rolling-stock-related and
locomotive-related system stockpiles) located at such facilities (subject to
provisions of Section 2.7 of the Agreement) and all FF&E located on or at such
facilities.
(C) Yards and Yard Access. The following CRC yards, land
and yard access tracks:
(1) Ashtabula Harbor facilities (subject to access and use by CSX
pursuant to Ancillary Agreements);
(2) Rockport Yard (Cleveland, OH);
(3) Buckeye Hump Yard (Columbus, OH);
(4) East track between "CP 138" and "CP 136"
(Columbus, OH);
(5) the right of way east of and parallel to the single track portion
of the Columbus Line immediately north of "CP 136" (the current end of double
track), and the Clintonville Siding east of the single track portion;
(6) portion of Piqua Yard (Fort Wayne, IN) used by or for Triple
Crown Services Company, together with portion of Piqua Yard to be
agreed upon between NSR and CSXT;
(7) Croxton Yard (New Jersey);
(8) E-Rail intermodal facility (New Jersey);
(9) Morrisville intermodal facility;
(10) Airline Jct. Yard (Toledo, OH); and (11) Stanley E Yard
(Toledo, OH).
(D) Miscellaneous Property. The following CRC assets and
properties:
(1) Developable property east of CRC's Chemical Coast Secondary in
the vicinity of the E-Rail intermodal facility (northern New
Jersey);
(2) real estate comprising a portion of the right-of-way (east of the
current single track) between PRR's Clintonville Siding and the
north end of the double track at CP 136 on which NSR may
construct new track;
(3) real estate comprising a portion of the right-of-way on which the
Buckeye Yard lead track is located to enable NSR to construct a
parallel track to the Buckeye Yard lead track (Buckeye Yard,
Columbus, OH) (constructions to be governed by an Ancillary
Agreement);
(4) Pittsburgh Division headquarters building, offices and land;
(5) Dearborn Division headquarters building, offices and land; and
(6) All undeveloped property that is part of, adjacent to or in the
vicinity of Lincoln Yard (Detroit, MI).
(7) All real estate, trackage, track material and other Assets
comprising CRC's abandoned Danville Secondary, together with all
other Assets lying on, adjacent to or in the vicinity of the CRC
right-of-way between Schneider and Danville, IL, including
without limitation all Assets comprising such Danville Secondary
thereon or adjacent thereto necessary for construction of
connections at Schneider and Danville (excluding any NYC
Allocated Assets). (If NSR elects to restore the line between
Schneider and Danville, CSXT shall have the option to share in
the costs of the line restoration on a reasonable basis that is
mutually agreeable and, if CSXT elects so to share in such
restoration costs, CSXT shall be granted overhead trackage rights
on such line on a fair basis taking into consideration the cost
paid by CSXT for such restoration.)
(E) Stock Ownership and Other Interests. The following
interests:
(1) 16.67% of the issued and outstanding capital stock in The Belt
Railway Company of Chicago;
(2) 25.64% of the issued and outstanding capital stock in Peoria
and Pekin Union Railway Company;
(3) 100% of the issued and outstanding capital stock in TCV, Inc.
(which owns a 50% partnership interest in Triple Crown
Services Company); and
(4) 11.682% of the issued and outstanding capital
stock in TTX Company.
ITEM 3 - RETAINED ASSETS
The "Retained Assets" shall include all of CRR's, CRC's and their respective
Affiliates' right, title and interest in and to the following Assets:
(A) Routes and Assets Related to Routes. Routes within the Shared Asset Areas
identified as Retained Assets in Attachment I and Attachment II (i.e., those
lines colored in blue on Attachment II), together with the following Assets
within the Shared Asset Areas that are related to such Routes (except as
otherwise expressly provided in this Schedule 1 or the Ancillary Agreements):
(1) the track structure (rails, ties, other track material,
grading, bridges, tunnels, culverts, etc.);
(2) the underlying right-of-way, operating and non-operating,
regardless of its width, and associated structures and
fixtures;
(3) appurtenant yards, sidings, switch tracks and repair or other
maintenance facilities (including but not limited to Oak Island
Yard, auto terminals at Doremus Avenue, Greenville and Ridgefield
Heights);
(4) real estate (whether or not used for operating purposes) adjacent
or in proximity to the Routes included in the Retained Assets, or
underlying, adjacent or in proximity to those structures or
facilities described in the preceding clauses (2) and (3) and the
following clause (5);
(5) signal, communications and computer facilities and equipment on
the right-of-way and (to the extent used to operate the Routes
included in Retained Assets) off the right-of-way;
(6) tools and supplies located on and along, and automobiles, hi-rail
cars and trucks assigned to, the Routes included in the Retained
Assets, including repair materials and local repair equipment,
except system stockpiles of inventory, material and supplies and
Work Equipment;
(7) Contracts (other than Transportation Contracts) relating to a
Route included in Retained Assets, including without limitation
trackage and other operating rights, public and private grade
crossing agreements, side track and industrial track agreements,
pipeline and wireline agreements, building and yard maintenance
agreements, leases, licenses, reversions, longitudinal easements
and other occupancy agreements, and the rents, security deposits
and profits arising therefrom or in connection therewith;
(8) muniments of title, all original valuation maps, land schedules,
track charts, surveys, bridge and other drawings, bridge
inspection reports, environmental reports, permits, signal and
communications plans, other engineering documentation, deeds
(including such originals of acquisition or out-conveyances as
may be in CRC's possession), current billing records (including
billing addresses and, if in a computer format, the data and the
programs), real estate work files, property tax records (and any
computer database for such records), and all other Books and
Records relating to a Route included in Retained Assets;
(9) mineral rights or easements of any sort held by CRR, CRC or any
of their respective Affiliates located on, over, across and/or in
the real estate or property heretofore described in this
paragraph (A); and
(10) royalties or other payments in respect of real estate or other
Assets heretofore described in this paragraph (A).
(B) The "Retained Assets" shall include the SSO Facilities which shall
be as follows:
(1) the building and offices, together with underlying land, of the
Philadelphia Division headquarters located at Mt. Laurel, NJ
within the Philadelphia/South Jersey Shared Assets Area;
(2) the Customer Service Center building and offices, together with
underlying land, located at Pittsburgh, PA;
(3) use of the office space in the Dearborn Division headquarters
building (the building and land are included in the PRR Allocated
Assets) currently used for the crew management facility until the
crew management facility is discontinued;
(4) the system maintenance-of-way equipment center building located
adjacent to Canton Yard in Canton, OH on land included in the PRR
Allocated Assets;
(5) the signal repair center building located within Buckeye Yard at
Columbus, OH on land included in the PRR Allocated Assets;
(6) the offices of the system freight claims facility located at
Buffalo, NY on land included in the NYC Allocated Assets;
(7) the offices of the system non-revenue billing facility and land
located at Bethlehem, PA;
(8) the system rail welding plant building located at Lucknow
(Harrisburg, PA) on land at Harrisburg Yard that is included in
the PRR Allocated Assets;
(9) use of the offices located at Conway Yard, Pittsburgh, PA
(the building and land are included in the PRR Allocated Assets),
for the system road foreman/engineer training center until such
center is discontinued; and
(10) the police operations center offices and land at Mt. Laurel, NJ.
(C) 51% of the issued and outstanding capital stock in Indiana Harbor Belt
Railroad Co. (subject to provisions of Ancillary Agreement referred to in
Schedule 4, Item 4(E)(1)).
ITEM 4 - POOLED ASSETS
The "Pooled Assets" shall include the following Assets of CRR, CRC and
their respective Affiliates:
(A) Non-Operating property and improvements not in proximity to an Allocated
Asset or a Retained Asset.
(B) Employee benefit plans and Assets of such plans.
(C) System stockpiles of inventory, materials and supplies regardless of
location (other than those at Hollidaysburg and Altoona shops which shall be
subject to Section 2.7 of the Agreement).
(D) The following interests:
(1) 100% of the issued and outstanding capital stock in Merchants
Despatch Trans. Corp.;
(2) 100% of the issued and outstanding capital stock in CRC
Properties, Inc.; and
(3) 100% of the issued and outstanding capital stock in CRR
Investments, Inc.
However, if any of the Assets of the entities identified in clauses
(D)(1) through (3) above are part of the Routes included in the NYC Allocated
Assets (Item 1(A) above) or the PRR Allocated Assets (Item 2(A) above), then the
Assets of such entity will be designated as and included in the NYC Allocated
Assets or the PRR Allocated Assets, as the case may be; provided that if such
assets are valued at greater than $1 million, then there shall be an equitable
adjustment by way of a cash payment from NYC or PRR, as the case may be, to the
other equal to the CSX's or NSC's respective Percentage, as the case may be,
applied against the value of such Assets or failing such payment, by way of
including CRC cash equal to the value of such Assets in the NYC Allocated Assets
or the PRR Allocated Assets as the case may be.
(E) The following interests:
(1) 100% of the issued and outstanding capital stock
in CRR Industries, Inc.;
(2) 100% of the issued and outstanding capital stock
in Conrail Direct, Inc.;
(3) 100% of the issued and outstanding capital stock
in CG Projects, Inc.;
(4) 100% of the issued and outstanding capital stock
in PennCentral Comm. Co.;
(5) 100% of the issued and outstanding capital stock
in General American Ins. Co.; and
(6) 19.136% of the issued and outstanding capital
stock in Amtech Logistics Corp.
(F) CRC's rights and interests in and with respect to the following:
(1) Locomotive Management Services Partnership (a partnership with
General Electric relating to use of locomotives); and
(2) EMP (bilateral agreements relating to use of
containers by CRC, NSR and UP).
The parties intend that CRC's rights and interests with respect to LMS and EMP
will be shared based on their respective Percentage, that both CSXT and NSR will
participate therein and that, in the case of EMP, CSX will participate as a
partner.
NOTE: Notwithstanding any provision of this Schedule, to the extent an item
herein describes an Ancillary Agreement between the parties the form of which is
set forth as an Exhibit to this Agreement, such description shall be for
purposes of identification only, and the terms of such Ancillary Agreement shall
control.
<PAGE>
Conrail Line Allocation
Attachment I
All CRC lines are not listed herein. Lines listed include main line routes,
primary branch lines and other lines which may need clarification. Lines pertain
to allocated CRC ownership or where identified (TR) to assumed present CRC
freight rights. Customer access is attributed to the acquiror of the line on
which the customer is located, unless otherwise identified in the Transaction
Agreement. Lines not specifically listed are to be acquired by the
owner/acquirer of the CRC route/line to which they connect. In the case that a
line not listed connects to a line allocated to PRR and to a line allocated to
NYC, allocation will be determined at a later date.
NYC ALLOCATED ASSETS
Primary Route And Extension Acquisitions
NY/NJ to Cleveland - Water Level Route & Extensions
Segmt From To
1 South End N. Bergen Yd NJSelkirk/Albany Term. NY
1 Poughkeepsie NY New York City NY TR
1 Poughkeepsie NY New York City NY
1 New York City NY White Plains NY TR
1 Selkirk/Albany Term. NY
1 Selkirk NY Poughkeepsie NY
2 Selkirk/Albany Term. NY Syracuse NY
3 Syracuse NY Buffalo NY
3 Lyons Yard NY
4 Buffalo NY Ashtabula OH
5 Ashtabula OH Cleveland Terminal OH
5 Portion of Kinsman OH
Conn.
5 Portion of 44 I.T OH
5 All of 45 I.T.(including
Dock 22, 24, & 26 Lds) OH
5 Old Line
Lead(Cleveland) OH
40 Boston MA Selkirk/Albany Term. NY
41 Syracuse NY Adirondack Jct. PQ
41 Adirondack Jct. PQ Montreal (St. Luc) PQ TR
41 Woodard NY Oswego NY
41 Syracuse NY Hawk NY
41 Hawk NY Port of Oswego NY TR
43 Frontier Yard NY
43 Belt Line Branch NY
42 Buffalo Terminal NY Niagra Falls/Lockport NY
42 Lockport NY West Somerset NY TR
94 Syracuse NY NYSW/FL Connections NY
165 Boston Terminal MA
165 Selkirk/Boston Line MA MA Branch Lines MA
165 Selkirk/Boston Line MA MA Branch Lines MA TR
1 West 30th St. I.T. NY
1 Fremont Secondary NY
166 New York City NY Connecticut Branch
Lines TR
166 Connecticut Branch
Lines
166 Connecticut Branch
Lines (including Amtrak) TR
3 Churchville NY Wayneport NY
3 Mortimer NY Avon NY
3 Rochester Branch NY
Crestline to Chicago-Pennsylvania Route & Extensions
17 Crestline OH Dunkirk OH
17 Bucyrus Yard Track and
Connector OH
18 Dunkirk OH Fort Wayne IN
18 Decatur Sec. & Hunt I.T. IN
From NS via CR
19 Fort Wayne IN Warsaw IN
From NS via CR
20 Warsaw IN Chicago Terminal
(Clarke Jct.) IN
18 Adams IN Decatur IN
Berea to E. St. Louis Route & Extensions
21 Cleveland Terminal OH Crestline OH
122 Crestline OH Galion OH
22 Galion OH Ridgeway OH
23 Ridgeway OH Indianapolis IN
24 Indianapolis IN Terre Haute IN
25 Terre Haute IN Effingham IL
26 Effingham IL St. Elmo IL
27 St. Elmo IL E. St. Louis IL
27 Anderson IN Emporia IN
55 Columbus(CP138) OH Galion OH
55 Columbus(Hocking) OH Columbus(CP138) OH
55 Neil I.T. OH
83 Terre Haute IN Danville IL
151 Danville IL Olin IN
80 Pekin R.T IL
100 Indianapolis Terminal IN
99 Indianapolis IN Rock Island IN
100 Indianapolis IN Crawfordsville/
Bringhurst st IN
154 Indianapolis IN Shelbyville IN
105 HN Cabin IL Valley Jct. IL
106 St. Elmo IL Salem IL TR
98 Terre Haute IN Beehunter IN TR
28 Muncie(Walnut Street) IN New Castle R.T. IN TR
28 New Castle RT IN
28 Muncie I.T. IN
Columbus to Toledo Route & Extensions
53 Mounds Connector OH
53 Western Branch OH
53 Buckeye Yard Lead OH
53 Columbus OH Ridgeway OH
52 Ridgeway OH Blanchard OH
51 Blanchard OH Toledo Terminal OH
51 Toledo Terminal OH Woodville OH
(Caruthers Sec. and
I.T.)
51 Toledo Terminal OH Stonyridge OH
51 Main Freight Tk. & Wye OH
51 Stanley Yard and
Interlocking OH
51 Eastern R.T. OH
51 Lakefront Docks Lead
Tracks OH
Bowie to Woodzell, MD
90 Bowie MD Morgantown MD
90 Brandywine MD Chalk Point MD
NY/NJ to Philadelphia (West Trenton Line)
182 Manville Yard & Lead NJ
182 Drill Track Lead NJ
182 Philadelphia/Greenwich PA North NJ Terminal NJ
Yd.
182 Park Jct. PA Belmont PA
182 Phil PA CP-Field/CP-Gray PA
182 Eastwick PA Vicinity of CP- PA
Field/CP-Gray
Washington, DC to Landover, MD
33 Washington Terminal DC TR
33 Washington (RO) DC Landover MD
Quakertown Branch
130 Philadelphia Terminal PA Quakertown PA TR
Chicago Area
192 Porter IN Ivanhoe IN
190 Panhandle Stub IN South of 49th Street IL
190 Ivanhoe IN Westernmost point of IN
CR Ownership
Monongahela
113 Monongahela RR PA/ Subject
WV to joint
use
agreement
PRR ALLOCATED ASSETS
Primary Route And Extension Acquisitions
Segmt From To
NJ Terminal to Crestline - Pennsylvania Route & Extensions
10 North NJ Terminal NJ Somerville NJ
10 Somerville NJ Allentown PA
10 Little Falls NJ Dover NJ TR
10 Orange NJ Denville NJ TR
10 Dover NJ Rockport NJ TR
10 Rockport NJ Phillipsburg NJ
10 Phillipsburg PA E. Stroudsburg PA
10 Allentown Terminal PA
186 Orange NJ North Jersey TerminalNJ TR
170 North Jersey Terminal NJ Little Falls NJ TR
182 Bound Brook NJ Ludlow NJ TR
11 Allentown PA Reading PA
12 Reading PA Harrisburg PA
12 Harrisburg Terminal PA
13 Harrisburg PA Pittsburgh PA
13 Creekside PA Homer City PA TR
13 Conemaugh Line via Saltsburg PA
13 Pittsburgh PA W. Brownsville PA
113 Monongahela RR PA/ WV
13 Central City PA South Fork PA
13 Pittsburgh Terminal PA
13 Monongahela PA Marianna PA
14 Pittsburgh Terminal PA
14 Pittsburgh PA Salem OH
14 Salem OH Alliance OH
14 Beaver Falls PA Wampum PA
15 Alliance OH Cleveland Terminal OH
120 Mantua OH Cleveland Terminal OH
120 Portion of Kinsman OH
Conn.
120 Portion of 44 I.T. OH
(including Dock 20 Ld.)
16 Alliance OH Crestline OH
114 Alliance OH Omal OH
114 Rochester PA Yellow Creek OH
114 E. Steubenville WV Weirton WV
114 Steubenville Branches OH
Bridge
114 Pittsburgh Branches PA
45 Ashtabula OH Youngstown OH
162 Ashtabula Harbor OH Ashtabula OH
46 Niles OH Latimer OH
46 Alliance OH Youngstown OH
46 Gem I.T. - Lordstown OH
48 Youngstown OH Rochester PA
87 Allentown PA Hazelton PA
CP Harris PA Cloe PA TR
Cloe PA Shelocta PA
Tyrone PA Lock Haven PA TR
Cleveland to Chicago - Water Level Route
6 Cleveland Terminal OH Toledo Terminal OH
6 Elyria OH Lorain OH
159 Toledo Terminal OH Sylvania OH
7 Toledo Terminal OH Goshen IN
107 Elkhart IN Goshen IN
8 Elkhart IN Porter IN
Philadelphia to Washington (NEC) Route & Extensions
31 Philadelphia Terminal PA Perryville MD TR
31 Wilmington Terminal DE
32 Perryville MD Baltimore MD TR
32 Baltimore Terminal MD
32 Claremont R.T. MD
32 Loneys Lane Lead MD
32 Grays Yard MD TR
33 Balt. BayView MD Landover MD TR
33 Baltimore Terminal MD
33 Baltimore MD Cockeysville MD
33 Landover MD Union Station DC TR
34 Pocomoke MD New Castle Jct DE TR
34 Harrington DE Frankford/ DE
Indian River
131 Newark DE Porter DE TR
Michigan Operations (Excluding Joint Detroit Area)
50 Toledo Terminal OH Detroit Terminal MI
60 Detroit Terminal MI Jackson MI
61 Jackson MI Kalamazoo MI
62 Kalamazoo MI Elkhart IN
70 Jackson MI Lansing MI
71 Kalamazoo MI Grand Rapids MI
71 Kalamazoo I.T. MI
71 Comstock I.T. MI
156 Kalamazoo MI Porter IN TR
Eastern PA Lines & Extensions
37 Philadelphia Terminal PA Reading PA
37 Reading Terminal
37 Thorndale PA Woodbourne PA
37 Portion of Stoney PA
Creek Branch
37 West Falls Yard PA
37 Venice I.T. PA
136 Leola/Chesterbrook PA
Lines
137 Philadelphia PA Lancaster PA TR
Terminal
111 Lancaster PA Royalton PA TR
112 Lancaster PA Lititz/Columbia PA
Indiana Lines & Extensions
84 Anderson IN Warsaw IN
85 Warsaw IN Goshen IN
163 Marion IN Red Key IN
101 Layfayette I.T. IN Lancaster
Buffalo to NY/NJ Terminal Route & Extensions
44 NJ/NY Jct. NJ Suffern NY TR
44 Suffern NY Port Jervis NY
44 Port Jervis NY Binghamton NY
44 Binghamton NY Waverly NY
44 NJ/NY Jct. NJ Spring Valley NY TR
44 Paterson Jct. NJ Ridgewood NJ TR
38 Waverly NY Buffalo NY
88 Waverly NY Mehoopany PA
89 Sayre PA Ludlowville NY
93 Lyons NY Himrods Jct NY
95 Corning NY Himrods Jct NY
171 North Jersey Terminal NJ Paterson Jct NJ TR
171 Paterson Jct. NJ North Newark NJ
171 NJ/NY Jct. NJ North Jersey TerminalNJ TR
Buffalo to Harrisburg and South
35 Perryville MD Harrisburg PA
35 Carlisle PA Harrisburg PA
35 Wago PA York (area) PA
35 Harrisburg PA Shocks PA
36 Williamsport MD Harrisburg PA
39 Harrisburg PA Buffalo NY
39 Watsontown PA Strawberry Ridge PA
4 Ebenezer Jct. NY Lackawanna NY
91 Hornell NY Corry PA
91 Corry PA Erie PA TR
91 Youngstown OH Oil City PA
Cincinnati, OH to Columbus, OH to Charleston, WV
54 Columbus OH Cincinnati OH
54 Cincinnati Terminal OH
56 Columbus Terminal OH Truro OH
57 Truro OH Charleston WV
150 Charleston WV Cornelia WV
150 Charleston WV Morris Fork WV
Chicago South/Illinois Operations
193 Osborne IN Hartsdale IN
193 Hartsdale IN Chicago Heights IL
82 Hartsdale IN Schneider IN
81 Schneider IN Hennepin IL
97 Keensburg IL Carol IL
152 Schneider IN Wheatfield IN
Chicago Market
194 Western Ave Cicero/Elsdon IL
Operations/Loop
194 Western Ave. I.T. IL
194 Old Western Ave. I.T. IL
194 North Joint Tracks IL
194 Elevator Lead & Tri- IL
River Dock
195 Chicago IL Porter IN
196 Clarke Jct. IN CP501 IN
196 CP 509 IL Calumet Park IL
194 CR&I Branch IL
194 49th Street I.T. IL
194 75th Street IL 51st Street IL TR
197 Port of Indiana IN
196 Bernice I.T. IL
190 CP502 IN Osborne IN
CRC RETAINED ASSETS - DETROIT SHARED ASSETS AREA
Segmt From To
Detroit Line Gibraltar(MP20) MI CP West Detroit MI
Michigan Line CP Townline MI CP 15th Street MI
Part TR
North Yard Branch CP Bay City Jct MI North Yard MI
Sterling Secondary North Yard MI Sterling Yard MI
Junction Yard
Secondary CP Townline MI River Rouge Yard MI
Marsh Industrial River Rouge MI Tecumsah Yard MI
Track Yard
Lincoln Industrial Ecorse Jct. MI Carleton MI
Track
Term. East Ind. Mack Yard MI North Yard MI
Track
Term. West Ind. North Yard MI Fullerton MI
Track
Highland Park Ind. Fullerton MI West Belt Jct. MI
Track
Utica Industrial Sterling Yard MI Ford Utica Plant MI
Track
Forman Wye Track Fort St - MI NS Drawbridge MI
Rougemere
Overhead Rights West Belt Jct. MI Delray MI TR
on CSXT
Local Rights on Oak MI End of Track - W. MI TR
CSXT Detroit
Rights on Delray Connecting RR
CRC RETAINED ASSETS - SOUTH JERSEY/PHILADELPHIA SHARED ASSETS AREA
Segmt From To
NEC (Amtrak) Zoo PA Trenton NJ TR
Harrisburg Line Zoo PA Overbrook PA TR
(Amtrak)
Delair Branch CP Park PA Pavonia Yard NJ
West Chester Line Arsenal PA Media PA TR
(SEPTA)
Chestnut Hill W. N. Philadelphia PA Midvale PA TR
Line (SEPTA)
Midvale Yard/ PA
Midvale I.T.
Main Line (SEPTA) Market East PA Newtown Jct. PA TR
Chester Secondary Eastwick PA Essington PA
Chester Industrial Essington PA Marcus Hook PA
Track
Bordertown Pavonia NJ Trenton NJ
Secondary
Beasley's Pt. CP Brown NJ Palermo NJ
Secondary Part TR
Vineland Secondary CP Brown NJ Landis NJ
Millville Landis NJ Manumiskin NJ
Industrial Track
Manumuskin Ind. Manumuskin NJ WW RR Connection NJ
Track
Penns Grove Woodbury NJ Deepwater NJ
Secondary
Salem Running Woodbury NJ Swedesboro NJ
Track
Pemberton Ind. CP Jersey NJ Mt. Holly NJ
Track Part TR
Grenloch CP Brown NJ Bellmawr NJ
Industrial Track
Shell Industrial Shell NJ End of Track NJ
Track
Bustleton Ind. Holmes PA Bustleton PA
Track
Morrisville Line CP "MA" PA Morris PA
Fairless Spur Morrisville Yd.PA Fairless Works PA
Richmond Ind. Nice PA Pt. Richmond PA
Track
60th Street Ind. Essington PA End of Track PA
Track
Camden Running CP Brown NJ Pavonia NJ
Track Part TR
Philadelphia Belt PA TR
Line
Swanson St. IT South PA
Philadelphia
Port of Philadelphia PA
Pier I22 PA
Blue Line Wayne Jct. PA Nice PA
Connecting Track
CRC RETAINED ASSETS - NORTH JERSEY/NEW YORK SHARED ASSETS AREA
Segmt From To
NEC (Amtrak) Trenton NJ Penn Station NY NY TR
Raritan Valley Aldene NJ Bound Brook NJ TR
Line (NJT)
North Coast Line Rahway(Union) NJ Neptune Yard NJ TR
(NJT)
Bayonne Line (NJT) Bayonne NJ Greenville NJ TR
Southern Secondary Red Bank NJ Glidden NJ TR
(NJT)
Freehold Secondary Freehold NJ Farmingdale NJ TR
(NJT)
Lehigh Line CP Port Reading NJ Oak Island Yard NJ
Jct.
River Line CP Waldo NJ North Bergen NJ
Port Reading Bound Brook NJ PD Port Reading NJ
Secondary
Chemical Coast "PN" Oak Island NJ Perth Amboy NJ
Secondary
P&H Branch Lane NJ Hack NJ
Nave - Croxton Nave NJ CP-Croxton NJ
Running Tk.
Northern Running CP-Croxton NJ North Bergen NJ
Track
Marion Running Hack NJ CP-Croxton NJ
Track
National Docks Oak Island NJ Nave NJ
Secondary
Amboy Secondary South Amboy NJ Monmouth Jct. NJ
(Midway)
Bonhamton/Raritan Metuchen NJ Perth Amboy NJ
Ind. Tks.
Linden Industrial Carteret NJ Linden NJ
Track
Perth Amboy Center NJ
GSA Lead NS Lehigh Line NJ CSX Trenton Line NJ
Conn.
Reformatory Ind. Carteret NJ Chrome Yard NJ
Track
Elizabeth Ind. Aldene NJ Elizabeth NJ
Track
Hightstown Ind. Jamesburg NJ Hightstown NJ
Track
Toms River Ind. Lakehurst NJ Ciba NJ
Track
Meadows #1 Track NJ NJ
Port Newark/Port NJ NJ
Elizabeth Access
Auto Terminal Lead Ridgefield NJ NJ Heights
Greenville Yard Greenville NJ NJ
and Lead
ATTACHMENT II
[Attachment II - not provided in this filing - is a detailed map of the entire
Consolidated Rail Corporation (CRC) rail system, indicating by color coding the
Routes which are to be NYC Allocated Assets, PRR Allocated Assets and Retained
Assets, respectively; Attachment II is intended to show graphically the
Routes described in Attachment I.]
SCHEDULE 2
MAJOR DECISIONS
1. From and after the Control Date, except by resolution of the CRC
Board, none of CRR, CRC or any of their respective Affiliates (other than NYC
and PRR) shall (other than as is necessary or convenient in connection with a
Restructuring or is expressly set forth in this Agreement or the Ancillary
Agreements), in any single transaction or series of transactions, take or commit
to take any of the following actions:
(a) any action which would require or cause NYC or PRR to
declare, make or pay any Distributions;
(b) conduct any business other than, or engage in any transaction
not substantially related to and in the ordinary course of, the business of CRC
and its Affiliates (other than NYC and PRR) as contemplated under this Agreement
and the Ancillary Agreements (the "Continuing CRC Business");
(c) make any loans, advances or capital contributions to, or
investments in, any other Person except CRC's wholly owned Subsidiaries;
(d) acquire any business or assets, other than assets acquired
in the ordinary course of the Continuing CRC Business;
(e) consolidate with or merge into any Person or otherwise
engage in any business combination;
(f) issue, sell, adjust, split, combine, subdivide, reclassify,
transfer, pledge, redeem or otherwise acquire any shares of its capital stock;
(g) sell, transfer, lease, sublease, license or otherwise dispose of
any assets (including leasehold interests and intangible assets) not in the
ordinary course of the Continuing CRC Business or in excess of $100,000 in
aggregate value in any 12 month period;
(h) commit to or make any capital expenditure other than in
compliance in all material respects with the capital expenditure budget adopted
by the CRC Board from time to time;
(i) commence or settle any litigation for equitable relief or for an
amount in excess of $100,000 in any such commencement or settlement or series of
related commencements or settlements;
(j) form or participate in a joint venture or partnership
outside the ordinary course of the Continuing CRC Business or involving over
$100,000 in assets or over $100,000 in revenues;
(k) enter into or amend Contracts outside the ordinary course of the
Continuing CRC Business or with a notional value in excess of $100,000 or for a
period in excess of 12 months; provided that in respect of Contracts that are
Allocated Assets, CRC shall follow NYC's (in the case of Contracts that are NYC
Allocated Assets) or PRR's (in the case of Contracts that are PRR Allocated
Assets) reasonable instructions in respect of such Contracts and no CRC Board
approval shall be necessary for CRC to take such actions;
(l) create liens on or encumbrances of assets outside the ordinary
course of the Continuing CRC Business or with an aggregate net book value in
excess of $50,000;
(m) incur, assume, pre-pay, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for any
indebtedness for borrowed money except in the ordinary course of the Continuing
CRC Business;
(n) declare, make or pay any Distributions, other than Distributions
to CRC by its wholly owned Subsidiaries (other than NYC and PRR);
(o) appoint or terminate any executive management;
(p) enter into or amend any written employment
agreement or contract or employee benefit plan or employee policy;
(q) appoint or replace the independent auditors of CRR, CRC and
their respective Affiliates;
(r) unless required by law or a change in generally accepted
accounting principles in the United States, make any material change in the
accounting methods of CRR, CRC and their respective Affiliates;
(s) dissolve, liquidate or wind up CRR, CRC or their respective
Affiliates or commence a voluntary proceeding seeking reorganization or similar
relief;
(t) approve, enter into or perform any transactions with any
director, officer or employee of CRR, CRC or their respective Affiliates, or
with an Affiliate of CSX or NSC, respectively, or with any partner, family
member or other person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with any
such director, officer or employee;
(u) transfer, pledge, create a security interest, or otherwise part
with ownership or possession, in whole or part, of its membership interest in
NYC or PRR; or
(v) any other action that could be reasonably expected to have a
material impact on the performance, financial condition or prospects of CRR, CRC
or their respective Affiliates.
2. Except by resolution of the CRC Board, CRC shall not (other than
as is necessary or convenient in connection with a Restructuring) in its
capacity as the sole member of NYC and PRR, respectively, amend or restate the
NYC LLC Agreement or the PRR LLC Agreement, or suffer or permit NYC or PRR, as
the case may be, to take or commit to any of the following actions:
(a) declare, make or pay any Distributions;
(b) conduct any business other than, or engage in any transaction
not substantially related to and in the ordinary course of, the business of NYC
or PRR, as the case may be, as contemplated under the Transaction Agreement and
the Ancillary Agreements or the freight transportation business generally;
(c) consolidate with or merge into any Person or otherwise
engage in any business combination;
(d) issue, sell, adjust, split, combine, subdivide, reclassify,
transfer, pledge, redeem or otherwise acquire any interest in NYC or PRR, as the
case may be;
(e) sell, transfer, lease, sublease, license, exchange or otherwise
dispose of all or substantially all of their Assets, respectively (including
leasehold interests and intangible Assets);
(f) dissolve, liquidate or wind up or commence a voluntary
proceeding seeking reorganization or similar relief;
(g) enter into any agreement or arrangement with respect to, or
engage in, any transaction (i) between NYC or PRR, as the case may be, on the
one hand, and CRC or its Affiliates, on the other hand, and (ii) between the NYC
or PRR, as the case may be, on the one hand, and CSX or NSC and their respective
Affiliates, on the other hand, other than such a transaction which is on arm's
length terms;
(h) transfer, provide trackage or operating rights or otherwise
grant the right to use any railroad line (regardless of whether the grantor's
rights depend on ownership or trackage rights or a combination thereof) which is
part of any Main Line within the States of New Jersey or New York, or the area
within twenty-five miles of the city of Philadelphia, PA (or consent to any such
action by the "Operator" under the CSXT Operating Agreement or the NSR Operating
Agreement). As used in the preceding sentence, "Main Line" means a line of
railroad that has daily rail service, but does not include any branch line
connecting to a Main Line and does not include the Main Line that lies east of
the Hudson River and south of Selkirk, NY; or
(i) amend any material provision of the CSXT Operating Agreement,
the CSXT Equipment Lease, the NSR Operating Agreement or the NSR Equipment
Lease.
<PAGE>
<PAGE>
SCHEDULE 3
PRESERVATION OF FAIR ACCESS TO CHICAGO GATEWAY
(a) For purposes of this Schedule 3, the following terms shall have
the following meanings:
(i) "Chicago Area" means the geographic area in the States of
Illinois and Indiana located within a 100-mile radius of the office
building presently located at One First National Plaza in Chicago,
Illinois;
(ii) "Chicago Area Terminal Railroad" means any railroad,
whether currently in existence or later created, whose primary business is
the provision of terminal or switching services within the Chicago Area
including, without limitation, the Indiana Harbor Belt Line Railroad
Company, the Belt Railway Company of Chicago, the Baltimore and Ohio
Chicago Terminal Railroad Company and the Elgin, Joliet and Eastern
Railroad Company; and
(iii) "Chicago Gateway" means railroad lines and interchange,
dispatching and other related facilities necessary to the function of
carrying by railroad freight moving through the Chicago Area generally in
the direction from east to west or west to east, whether by interchange
between carriers in the Chicago Area or by single-line service between
points east of the Chicago Area and points west of the Chicago Area and
passing through the Chicago Area.
(b) If CSXT or NSR shall after the Control Date acquire, directly or
indirectly, ownership, or rights to exercise effective voting control, of any
voting stock in any Chicago Area Terminal Railroad (the "Interests"), the party
acquiring such Interests (the "Acquiror") shall, at the request of the other
party, sell or transfer to the other party, on terms and conditions
substantially the same on a pro rata per Interest basis as those governing the
Acquiror's acquisition of Interests, one-half of such newly acquired Interests,
provided, however, that if the Interests would give the Acquiror control, not
theretofore held, of a Chicago Area Terminal Railroad, the Acquiror's obligation
to sell or transfer shall attach to the lesser of (A) one-half of all the
Interests (not solely newly acquired Interests) it holds in that Chicago Area
Terminal Railroad, or (B) such portion of all the Interests (not solely newly
acquired Interests) it holds in that Chicago Area Terminal Railroad as necessary
to equalize the Interests of each party. The sale or transfer price for each
such Interest shall be the per Interest price paid by the Acquiror for the newly
acquired Interests.
(c) Neither CSXT nor NSR shall, following the Control Date, enter
into any arrangement with any Chicago Area Terminal Railroad, or any other
railroad operating in the Chicago Area related to the Chicago Gateway, under
which, in connection with the grant by such Chicago Area Terminal Railroad or
such other railroad of trackage rights or similar operating rights to either
CSXT or NSR, such Chicago Area Terminal Railroad or other railroad shall agree
not to grant trackage rights or similar operating rights to the other of CSXT or
NSR, with respect to such Chicago Area Terminal Railroad or the lines of such
other railroad related to the Chicago Gateway.
(d) Should CSX or CSXT enter into a transaction in which either one
shall be acquired by Burlington Northern Santa Fe Corporation ("BNSF"), or in
which CSX or CSXT acquires BNSF, or in which substantially all of the rail
operations of CSXT and BNSF shall be otherwise combined and put under common
control or be merged together in any manner, at the request of CSX and any
successor thereto made no later than one year following the consummation of such
transaction, NSR shall sell and transfer to CSXT or its successor, at fair
value, the Streator Line from Osborne, IN to Streator, IL (being the rail line
located between Osborne, IN, and Schneider, IN, and Wheatfield, IN, and Moronts,
IL), including all dispatching control with respect to said line. As used in
this subsection, the term "fair value" shall mean the fair market value as
determined by the parties by agreement or, failing agreement, as determined by
binding arbitration. Any such sale and transfer shall be subject to all
requisite governmental and regulatory approvals.
(e) Any dispute concerning the interpretation or application of this Schedule 3
shall be finally settled by binding arbitration pursuant to Section 11.12 of the
Transaction Agreement. In any such arbitration, the arbitrator(s) shall have the
authority to direct, subject to any required governmental or regulatory
approvals and in accordance with any contractual limitations on transfer or
assignment contained in any agreement with third parties (except one made in
contravention of this Schedule 3), CSXT, NSR or both to transfer to each other
ownership or control of voting stock in any Chicago Area Terminal Railroad, or
to direct the release by a party violating subsection (c) of any obligation of
exclusivity made in such violation, as are necessary to carry out the purposes
of this Schedule 3.
<PAGE>
<PAGE>
SCHEDULE 4
SCHEDULE OF TRACKAGE RIGHTS,
HAULAGE, SHARED ASSET AND OTHER OPERATING AGREEMENTS
ITEM 1 - TRACKAGE RIGHTS AGREEMENTS
All Trackage Rights Agreements referred to in Items 1.A and 1.B below will
be substantially in the form of the Trackage Rights Agreement attached
hereto as Exhibit C-1 (in the case of those referred to in Item 1.A.) or
C-2 (in the case of those referred to in Item 1.B.) and will be between
the operator of the involved rail line, the owner, and the tenant road.
Forms of addenda and/or assignments relating to the trackage rights
referred to in Item 1.A. are included with Exhibit C-1 and forms of
addenda and/or assignments relating to the trackage rights referred to in
Item 1.B. are included with Exhibit C-2. Unless otherwise provided herein,
a trackage rights tenant shall only have the right to enter on and exit
from the trackage rights lines at points other than the endpoints where
the tenant may make a connection with its existing railroad line and joint
CSXT/NSR lines ("Point of Permitted Entry or Exit"). If, in the opinion of
the tenant, a new or upgraded connection is required at a Point of
Permitted Entry or Exit other than the endpoints, or, if in the opinion of
the tenant, other upgrading, including but not limited to switches, power
switches, signals, communications, etc., is required for operational
efficiency, the landlord will, subject to its own operational needs,
cooperate and the tenant will be responsible for funding that
construction/upgrading at actual cost or a cost mutually agreed to by CSXT
and NSR. Where a tenant has access to 2-to-1 points via trackage rights,
the tenant may at its option access the points via haulage.
A. NSR on CSXT: CSXT will grant to NSR trackage rights on the
following rail lines which will be owned or operated by CSXT after the
Closing Date:
1. Junction - Hadley (Fort Wayne, IN): NSR rights to operate over and
share with CSXT the former CRC line between Junction and Hadley (the
crossing of the former Pennsylvania RR and NYC&SL west of Fort
Wayne).
2. Lafayette, IN - Crawfordsville (area): assignment of overhead
trackage rights on CSXT s Lafayette Crawfordsville, IN line to serve
2-to-1 shippers at Crawfordsville, IN, and to move overhead between
Lafayette and Indianapolis.
3. Crawfordsville, IN - Indianapolis (area): overhead trackage rights
on CRC's Crawfordsville - Indianapolis line to serve 2-to-1
shippers, the GM metal fabrication plant and the INRD via Hawthorne
Yard.
4. Indianapolis: overhead trackage rights on CRC's
Crawfordsville Branch from Woods to Washington Street in
Indianapolis to serve 2-to-1 shippers, the GM metal fabrication
plant and the INRD via Hawthorne Yard.
5. Indianapolis: overhead trackage rights on CSXT between Washington
Street and Pine in Indianapolis to serve 2-to-1 shippers, the GM metal
fabrication plant and the INRD via Hawthorne Yard.
6. Buffalo (CP 437) - Niagara Falls (Suspension Bridge):
overhead trackage rights on CRC s Belt Line Branch and Niagara Branch
to connect with, or with trackage of Canadian carriers at Suspension
Bridge.
7. Philadelphia(Park Jct.) - Anacostia Jct., MD: NSR is
assigned CRC s overhead trackage rights on CSXT.
8. Landover - RO (Alexandria, VA): overhead trackage
rights on CRC s Landover Line.
9. Cleveland, OH: overhead trackage rights on CRC s Short
Line from Quaker to Berea, OH.
10. Cleveland, OH: overhead trackage rights on CRC s Chicago Line
(allocated to CSXT) from CP 181 to Collinwood Yard for purposes of
interchange with CSXT.
11. Crestline, OH - Fort Wayne (Mike), IN: overhead trackage rights on CRC
s Fort Wayne Line (which is to be allocated to CSXT), with train limits
as follows:
- 8 total trains/day between Crestline and
Bucyrus
- 6 total trains/day between Bucyrus and Fort Wayne including
rights to serve 2-1 customers at Upper Sandusky.
NSR trains over the above limits are subject to negotiations
between CSXT and NSR for NSR contribution to CSXT investment needed for
additional capacity. NS will supervise the dispatching of the Ft. Wayne to
Crestline line until CSXT haulage over CRC Chicago Line between Berea and
Chicago is terminated. NS will control the Bucyrus interlocking
permanently.
12. Fort Wayne(Mike), IN - Chicago(Clarke Jct., IN): overhead trackage rights
on former CRC Fort Wayne Line (Ft. Wayne - Chicago, now NSR), with ten
total trains/day limit (limit does not apply in Fort Wayne terminal). NSR
trains over the above limits are subject to negotiations between CSXT and
NSR for NSR contribution to CSXT investment needed for additional
capacity. NSR will dispatch the line until CSXT haulage over CRC Chicago
Line between Berea and Chicago is terminated.
13. Porter - Gibson Interlocking, IN: overhead trackage rights on CRC s
Porter Branch.
14. CP Hocking - CP 138 (Columbus, OH): overhead trackage rights on CRC
Buckeye Line from "CP Hocking" to "CP 138".
15. Scioto - CP Mounds (Columbus, OH): overhead trackage rights on CRC
Western Branch from Scioto to "CP Mounds," including the Mounds
Connection.
16. CP Buckeye - CP Darby (Columbus, OH): overhead trackage rights on
Buckeye Yard Lead from "CP Buckeye" to "CP Darby".
17. CP 138 - MP 133.5 (Columbus, OH): overhead trackage rights on the CSXT -
assigned west track of the CRC Columbus Line from CP 138" to the vicinity
of Milepost 133.5 (point of new NS connection).
18. Parsons Yard - Scioto (Columbus, OH): overhead trackage rights on
CSXT between the south end of Parsons Yard (connection with
Watkins - Parsons transfer track) and Scioto.
19. Lima, OH - Sidney, OH: overhead trackage rights on
CSXT's Toledo Subdivision to serve 2-to-1 customers at Sidney.
20. Bound Brook, NJ - Woodbourne, PA: overhead trackage rights for
twelve total trains/day limit on CRC s Trenton Line for dimensional
trains until Pattenburg Tunnel on CRC s Lehigh line is cleared of
dimensional restrictions, not to exceed three years.
21. Piqua Yard - Mike Interlocking (Fort Wayne, IN): NSR overhead
rights to operate trains for Triple Crown Services Company
between Piqua Yard and Mike interlocking (Fort Wayne).
22. Muncie, IN - Indianapolis (area): overhead trackage rights on CRC s
Indianapolis Line, South Anderson Cutoff and part of Dow Secondary
to serve 2-to-1 shippers the GM metal fabrication plant and the INRD
via Hawthorne Yard.
23. Toledo Terminal: overhead rights on CSXT-controlled
portion of former Toledo Terminal Railroad.
24. Erie, PA: overhead trackage rights on CRC between
Downing Avenue and Wallace Street in Erie, PA, subject to
restriction against NSR use of CRC Chicago line main tracks.
25. CP Short - Parma, OH: overhead trackage rights on CRC Short Line
from CP Short to Parma to serve but not directly switch Parma
auto plant.
26. McCook - Franklin Park, IL: overhead trackage rights granted by
B&OCT.
27. Pine Junction, IN - McCook, IL: overhead trackage
rights on B&OCT.
B. CSXT on NSR: NSR will grant to CSXT trackage rights on the
following rail lines which will be owned or operated by NSR after the
Closing Date:
1. CP River (West Falls), PA - Abrams, PA: overhead
trackage rights on CRC s Harrisburg Line for dimensional traffic.
2. CP King (Norristown), PA - Woodbourne (CP Wood), PA: overhead
trackage rights on CRC s Morrisville Line for dimensional traffic
plus incidental rights on short portion of SEPTA s Norristown Line.
3. Berea, OH - CP 181 (Cleveland, OH): overhead trackage
rights on CRC s existing Chicago Line.
4. CP Short - CP 190 (Cleveland, OH) and Berea, OH - Lorain and
Fairlane, OH: overhead trackage rights on CRC's line allocated to
NSR and rights to serve 2-to-1 Ford Motor plants at Avon Lake and
Fairlane.
5. CP Hocking - Buckeye Yard: overhead trackage rights on
CRC Buckeye Line from "CP Hocking" to Buckeye Yard.
6. Bannon - Scioto, OH: overhead trackage rights on CRC
Western Branch from Bannon to Scioto.
7. CP 139 - Buckeye Yard: overhead trackage rights on CRC
Cincinnati Line from CP 139" to Buckeye Yard, via the Miami Lead.
8. CP 138 - MP 133.5 (Columbus, OH): overhead trackage
rights on the NSR-assigned east track of the CRC Columbus Line from CP 138
to the vicinity of MP 133.5 (point of new NSR connection).
9. CP Camp - CP 139 (Columbus): overhead trackage rights
on CRC Auburn Connection from "CP Camp" to "CP 139".
10. Bannon - Watkins Yard: overhead trackage rights on NSR from Bannon to
the south (RR east) end of NSR Watkins Yard (connection with Watkins -
Parsons transfer track).
11. Youngstown (Center St.) - Ashtabula Harbor, OH: overhead trackage rights
on CRC Youngstown Line to access Ashtabula Harbor facilities and the
Water Level Route.
12. Osborne, IN - Streator, IL: overhead trackage rights on CRC Kankakee Line,
Kankakee Secondary and Streator Secondary for up to 8 total trains/day to
connect with, or with trackage of other intersecting railroads. CSXT
trains over the above limits are subject to negotiations between CSXT and
NSR for CSXT contribution to investment needed for additional capacity.
13. Clarke Jct., IN - CP 501: overhead trackage rights on CRC's Fort Wayne
Line between Clarke Junction, IN and CP 501.
14. Pine, IN - Rock Island Jct. (Chicago, IL): CSXT overhead trackage rights
on CRC's Chicago Line (allocated to NSR).
15. CP Short - CP Belt, OH: CSXT overhead trackage rights to allow CSXT to
serve but not directly switch 2-to-1 Ford Motor Company plant at CP Belt,
OH.
16. Ecorse Junction - Delray (Detroit, MI): overhead trackage rights on
existing NSR tracks in the Detroit area from Ecorse Junction to Delray,
MI.
17. Bucyrus - Sandusky: overhead trackage rights on NSR between Bucyrus and
Sandusky to serve a 2-to-1 shipper at Sandusky, OH.
18. Brighton Park - Ash Street (Chicago IL): overhead trackage rights on
CRC's Western Avenue Industrial Track from crossover connection with
B&OCT at Brighton Park to Ash Street (Chicago, IL).
19. CP 509 - 63rd Street (Chicago, IL): overhead trackage rights on CRC's
Chicago line limited, in combination with NSR haulage of CSXT trains, to a
total of 6 trains/day in each direction between the above points for
trains entering or leaving NSR trackage at Clarke Junction up to a maximum
of three years.
C. CRC ASSIGNMENTS TO NSR/CSXT: CRC will assign to NSR and
CSXT existing CRC rights with respect to the Northeast Corridor as
follows (see Ancillary Agreement governing assignment of CRC rights as
to Northeast Corridor):
NEC RIGHTS/OPERATING DEFINITION
1. Zoo Tower - Penn Station trackage: Rights shall be
shared equally by NSR and CSXT and, in the event of an operating
conflict, trains will be scheduled alternately.
2. Baltimore - Zoo Tower Trackage: CSXT shall be limited
to 4 trains a day.
3. Landover - Baltimore: Rights will be shared equally by
NSR and CSXT and, in the event of an operating conflict, trains
will be scheduled alternately.
4. Washington Union Station - Landover, MD: Rights shall
be shared equally by NSR and CSXT and, in the event of an
operating conflict, trains will be scheduled alternately.
NEC RIGHTS/COMMERCIAL DEFINITION
1. Philadelphia (Zoo) - New York (Penn Station): Will be part of the
North Jersey Shared Assets Area and the South Jersey/Philadelphia
Shared Assets Area where NSR and CSXT will have equal customer
access.
2. Washington, D.C. - Philadelphia (Zoo): Will be
exclusive to NSR.
3. North of New York (Penn Station): Will be exclusive to
CSXT.
ITEM 2 - CSX/NSC HAULAGE AGREEMENTS
The Haulage Agreement referred to in Item 2.A.1 will be substantially in
the form of the Haulage Agreement included with Exhibit D and will be
between the operator of the involved rail line (and with the owner, if
appropriate) and the tenant road. The assignment of the Haulage Agreement
referred to in Item 2.A.2 will be in the form included with Exhibit D.
A. NSR Haulage for CSXT on NSR Lines:
1. Berea, OH - Chicago (63rd St.): Overhead haulage for
CSXT by NSR on CRC s Chicago Line for maximum of six merchandise
and/or intermodal trains/day each way to the Park Manor Yard at
63rd St. in Chicago, until CRC s Ft. Wayne Line (Ft. Wayne -
Chicago now NS) is upgraded, up to a maximum of 3 years.
2. Normal, IL - Lafayette, IN: Assignment to CSXT of
CRC's Haulage Agreement with NSR for 2-to-1 automotive traffic
only.
ITEM 3 - SHARED ASSETS AGREEMENTS
1. North Jersey Shared Assets Agreement among CRC, CSXT and NSR
(attached as Exhibit G), covering the following matters:
(1) North Jersey Shared Assets Area
(2) North Jersey CSXT/NSR Trackage
2. Philadelphia\Southern Jersey Shared Assets Agreement among CRC, CSXT
and NSR (attached as Exhibit H), covering the following matters:
(1) Philadelphia/South Jersey Shared Assets
Area
(2) Philadelphia/South Jersey NS/CSXT
Trackage
3. Detroit Area Shared Assets Agreement among CRC, CSXT and NSR
(attached as Exhibit I), covering the following matters:
(1) Detroit Shared Assets Area
(2) Detroit Dispatching
(3) NSR/CSXT trackage Rights - Detroit
ITEM 4 - OTHER OPERATING AGREEMENTS
A. INTERLOCKING AGREEMENTS (CSXT-Controlled) between CSXT and
NSR as to which the interlocking will be controlled by CSXT:
1. Ashtabula Interlocking (crossing of the existing CRC
Youngstown Line and Chicago Line at Ashtabula, OH)
2. CP-Mounds Interlocking (Columbus, OH)
3. Warsaw Interlocking (Warsaw, IN)
4. Crestline Interlocking (Crestline, OH)
B. INTERLOCKING AGREEMENTS (NSR-Controlled) between NSR and
CSXT as to which the interlocking will be controlled by NSR: 1.
Buckeye Interlocking (Columbus, OH)
2. Mike Interlocking (Fort Wayne, IN)
3. Bucyrus Interlocking (Bucyrus, OH)
C. INTERLOCKING SEPARATION AGREEMENTS between NSR and CSXT as to which the
interlocking will be "separated" (i.e., divided so that each operator is
not subject to the control of the other when making moves on the
operator's own lines through a point) prior to or as soon as possible
after the Closing Date:
1. CP 138 Interlocking (Columbus, OH)
2. Short Interlocking (Cleveland, OH)
3. Berea Interlocking (Berea, OH)
D. SWITCHING AND/OR YARD ACCESS AGREEMENTS between CSXT and
NSR:
1. Ashtabula - Agreement between NSR and CSXT providing for CSXT use of
and access to Ashtabula Harbor facilities owned by CRC, up to a
proportion of the total ground storage, throughput and tonnage
capacity of the facilities equal to the Percentage
2. Yard Access Agreement - Agreement between CSXT and NSR providing for
access by NSR to yard tracks in Seneca Yard at Buffalo, NY (yard to
be assigned to CSXT) sufficient for the origination and termination
of trains, at the end of the existing CRC Buffalo Line to be
assigned to NSR, for purposes of improved interchange with the South
Buffalo RR.
3. Ford (Rockport) - Agreement between NSR and CSXT providing for NSR
switching for CSXT at the Ford engine plant in Cleveland (located on
NSR portion of CRC lines in Cleveland).
4. GM Parma - Agreement between CSXT and NSR providing for CSXT
switching for NSR at Parma auto plant located on the CSXT Portion of
CRC in Cleveland.
5. Indianapolis Switching - Agreement between CSXT and NSR relating to
NSR's use of Hawthorne Yard providing that NSR will have sufficient
tracks and space for the arrival, departure and make-up of trains
and will have reasonable access to and from the designated tracks;
also providing for CSXT switching for NSR at 2-to-1 shippers in
Indianpolis, the GM metal fabrication plant, and the INRD.
6. GM Lordstown - Agreement between CSXT and NSR for switching at GM
assembly plant at Lordstown, OH.
7. Lorain Switching: Agreement between CSXT and NSR
providing for NSR switching for CSXT at Lorain/Avon Lake auto
plant located in Lorain, OH.
8. Fairlane Switching: Agreement between CSXT and NSR
providing for NSR switching for CSXT at Fairlane auto plant
located in Fairlane, OH.
9. Crawfordsville Switching: Agreement between CSXT and
NSR providing for CSXT switching for NSR at 2-to-1 customers
located in Crawfordsville, IN.
10. Sidney Switching: Agreement between CSXT and NSR providing for
CSXT switching for NSR at 2-to-1 customers located in Sidney, OH.
11. Sandusky Switching: Agreement between CSXT and NSR providing for
NSR switching for CSXT at a 2-to-1 customer at Sandusky, OH.
12. Upper Sandusky Switching: Agreement between CSXT and NSR providing
for CSXT switching for NSR at 2-to-1 customers at Upper Sandusky,
OH.
E. MISCELLANEOUS AGREEMENTS between NSR and CSXT:
1. IHB Agreement: Agreement among CRC, CSXT and NSR
covering matters relating to Indiana Harbor Belt.
2. Monongahela Agreement - Agreement among NSR and CSXT
providing for shared access to and joint use by CSXT of NSR
assigned, controlled, operated and maintained lines serving the Monongahela
coal fields' current and future facilities.
3. Temporary Lease Agreement between NSR or its designee
and CSXT providing interim use by CSXT of the Park Manor (63rd St.,
Chicago, IL) intermodal facility during the period of CSXT's interim
haulage between Chicago and Berea.
4. Letter Agreement providing for NSR and CSXT
construction projects:
(a) NSR construction of connection in eastern Cleveland, OH (granting to
NSR rights to construct a connection in eastern Cleveland to make
direct moves between NSR's Cleveland-Buffalo Line and the CRC's
existing Chicago
Line, using NSR rights over existing CRC Cleveland Short Line
to be assigned to CSXT)
(b) North of the current end of double track at CP 136 (Columbus, OH),
NSR will be assigned the right of way east of the single
remaining track and the Clintonville Siding (which is also east
of the single remaining track), with the right to connect these
two segments of track, at NSR's expense, at CP 136 and the
Clintonville Siding into a continuous track east of and parallel
to the single remaining track. Another new connection will be
constructed, at NSR expense, between the Clintonville Siding and
the existing NSR Bellevue - Portsmouth main line in the vicinity
of Milepost 133.5, where both the NSR and CRC rights of way are
parallel and level. CSXT shall, at its option and expense, have
the right to construct a connection from its assigned track
(i.e., the west located track of the right of way) to the new NSR
Clintonville Siding, so that both tracks can be utilized for
operational flexibility between the vicinity of Milepost 133.5 to
CP 138, under the control of the respective assignee of each
track.
(c) Construction of Junction - Hadley trackage (a line relocation
project underway in Fort Wayne will force NSR and CSXT to share the
former CRC line between Junction and Hadley (the crossing of the
former Pennsylvania RR and NYC&SL west of Fort Wayne); if NSR and
CSXT decide that capacity needs mandate an additional track, NSR and
CSXT will equally share the cost of constructing a new track between
Junction and Hadley on the north side of the existing track, and
ownership of the south track will revert to NSR and ownership of the
north track will revert to CSXT).
5. Construction at Buckeye Yard - Letter Agreement
providing for NSR to have the right to construct a parallel track to
the Buckeye Yard lead track (at
Buckeye Yard, Columbus, OH) in order to provide for the proper functioning of
Buckeye Yard.
6. Construction from Field - Belmont - Letter Agreement giving NSR the right
to reconstruct, own and control an additional track where practical
between Belmont and CP Field.
7. Deed of Easement between CSXT and NSR providing for
conveyance by CSXT to NSR of a free easement (for NSR relocation of
mainline in Erie, PA area) along existing CRC right of way through
Erie, PA (assigned to CSXT) to replace NSR right of way through streets
in downtown Erie at its expense. NSR will have trackage rights in Erie
to connect its route from Corry to its existing Buffalo - Cleveland
line if such connection can be achieved without using the CR Buffalo -
Cleveland line.
8. Letter agreement between NSR and CSXT providing that (i) NSR's existing
Fort Wayne - to - Chicago (former CRC line) line will be transferred to
CSXT as part of a like kind exchange transaction for the Streator line and
(ii) if CSXT were to merge with BNSF and if CSXT requests, then NSR would
transfer the Streator Line from Osborne, IN including the dispatching
control, for fair value.
9. Piqua Yard (Fort Wayne) - Letter Agreement between NSR and CSXT providing
for division of space in Piqua Yard and determine most efficient means of
utilizing the physical plant in Fort Wayne; Triple Crown Services Company
will retain its current space in Piqua Yard and the right to have NSR
operate its trains between Piqua Yard and Mike interlocking.
10. E-Rail Support Tracks - Letter Agreement between CSXT and NSR providing
for access by NSR to use up to two tracks located on NYC allocated
property of Elizabethport Yard (Trumbell St. Yard) for support of PRR's
E-Rail intermodal facility.
11. Agreement between CSXT and NSR providing for assignment of CRC rights over
CSXT lines to NSR (except as otherwise provided in the Transaction
Agreement) and for assignment of CRC rights over NSR lines to CSXT (except
as otherwise provided in the Transaction Agreement).
12. Letter Agreement between NSR and CSXT providing CSXT the right to
construct an Eastwick connection to provide a contiguous route through
Philadelphia, via CP Field and portions of CR's Harrisburg and Trenton
Lines to CP River and points north.
13. Letter Agreement among CRC, NSR and CSXT providing for assignment by CRC
of rights relating to the Northeast Corridor.
14. Letter Agreement between NSR and CSXT providing for (i) assignment to both
NSR and CSXT of CRC's trackage rights over BNSF to access BNSF's Willow
Springs Yard (Chicago), subject to approval of BNSF, and (ii) if such
trackage rights are assigned, CSXT's right to construct a connection in
the vicinity of Ash Street (Chicago) to enable CSXT to use these rights,
if necessary.
NOTE: Notwithstanding any provision of this Schedule, to the extent an item
herein describes an Ancillary Agreement between the parties the form of which is
set forth as an Exhibit to this Agreement, such description shall be for
purposes of identification only, and the terms of such Ancillary Agreement shall
control.
CSXT and NSR will cooperate with one another for the construction of various
connections and improvements of the involved carriers referred to in their
respective Operating Plans.
<PAGE>
Exhibit 99
CONTACTS: Thomas E. Hoppin Robert Fort
CSX Corporation Norfolk Southern Corporation
804-782-1450 757-629-2710
FOR IMMEDIATE RELEASE
CSX AND NORFOLK SOUTHERN FILE APPLICATION
FOR HISTORIC RESTRUCTURING OF EASTERN RAIL SYSTEM
Carriers Seek STB Approval for Division of Conrail System
WASHINGTON - June 23, 1997 - CSX Corporation (NYSE: CSX) and Norfolk
Southern Corporation (NYSE: NSC) today asked the Surface Transportation Board to
approve their acquisition of Conrail Inc. The proposed transaction would reshape
the eastern rail system and restore competition to the largest market in the
Northeast for the first time in more than two decades.
The two carriers filed an eight-volume application detailing nearly $1
billion in public benefits from the transaction, which will usher in a new era
of rail service and rail-truck competition. The 15,000-page application lists
dozens of service and infrastructure improvements that will deliver more
reliable and efficient service to thousands of customers.
In presenting the case for the most far-reaching railroad restructuring in
history, the companies said they will spend a combined $1.2 billion for capital
improvements. The money will be spent over three years for such things as track
improvements, added capacity, new or expanded freight terminals, clearance
projects, new automobile distribution centers.
The two carriers announced April 8 that they had reached an agreement to
acquire Conrail and operate its routes and assets in a $10 billion transaction,
with Norfolk Southern getting 58 percent and CSX 42 percent. Today's filing
starts the clock on the 350-day schedule the Surface Transportation Board (STB)
has set to consider the application.
In the application, the companies said their plan will create balanced
competition in the East, extend their reach into large new markets and replace
Conrail's monopoly with head-to-head rail competition. The companies said the
transaction will stimulate economic growth in the Northeast by improving
transportation options for industries throughout the region.
The restructuring will result in two well-matched rail systems with both
providing single-line service. CSX will operate more than 23,000 route miles in
23 states and Norfolk Southern more than 21,000 miles in 22 states.
"For the first time since the 1960s, we will have two balanced Class I
railroads competing throughout the eastern United States," John W. Snow,
chairman, president and chief executive officer of CSX, said in a statement
submitted to the Board. "This new era of competition will be between two
vigorous companies that have a proud record of seeking maximum efficiency and
good rates for customers."
--MORE--
<PAGE>
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David R. Goode, chairman, president and chief executive officer of Norfolk
Southern, said, "The transaction is by far the most pro-competitive railroad
restructuring in history. It will create two new Northeast/Southeast rail
systems that will do their utmost to best each other in the marketplace every
day. This will bring about a blossoming of rail competition the likes of which
the Northeast has not experienced in decades."
In support of their application, Norfolk Southern and CSX submitted to the
STB more than 2,300 letters from shippers, public officials and other railroads,
the strongest show of support ever for a railroad transaction.
"The elimination of the Conrail monopoly alone is a substantial public
benefit," the two railroads said in their application, noting that many
customers will benefit from more efficient routings and extended single-line
service that will eliminate delays and the costs of transferring shipments from
one rail carrier to another.
In addition, the projected diversion of traffic from congested highways to
rail will deliver significant benefits to the public. The two carriers estimated
that within three years the transaction annually will save 120 million gallons
of diesel fuel, eliminate more than a million truck trips, reduce truck traffic
on the nation's highways by more than 780 million miles, and save about $94
million in highway maintenance costs.
Detailing the planned capital investments, CSX estimated it will spend
more than $488 million for projects that include $83 million for Conrail route
improvements, $151 million in corridor upgrades, nearly $76 million for
expansion or improvement of intermodal and automobile facilities, more than $77
million for merchandise terminals, and the remainder in mechanical facilities
and other projects.
Norfolk Southern said it will spend about $729 million on major capital
improvements and equipment purchases. The projects include about $220 million
for expansion or improvements in intermodal facilities, $130 million for
corridor upgrades, about $70 million to improve existing Conrail routes, $30
million for new automobile facilities, about $100 million to improve mechanical
facilities, $26 million for track connections and $98 million for new equipment.
Other highlights of the joint application:
A huge increase in single-line service, providing shippers with
shorter transit times and more reliable service. For shipments of
automobiles, chemicals, agricultural commodities and other merchandise,
a projected 233,000 additional shipments will move on a single carrier
with no intermediate transfer.
A 15,000-shipment increase in single-line service for coal.
The return of competitive rail service to the New York/New
Jersey metropolitan area, the largest consumer market in the country,
for the first time in more than two decades.
--MORE--
<PAGE>
--3--
The transaction will affect employment through the creation, transfer and
elimination of certain positions over three years. CSX and Norfolk Southern
project that over that period they jointly will eliminate about 3 percent of the
nearly 73,000 positions at the three railroads. CSX and Norfolk Southern said
they expect the restructuring in the long run will boost rail transportation and
create new jobs in the industry.
CSX Corporation, headquartered in Richmond, Va., is an international
transportation company offering a variety of rail, container-shipping,
intermodal, trucking, barge and contract logistics management services. The
company's 18,500 route-mile rail system links 20 states in the East and Midwest.
Norfolk Southern is a Virginia-based holding company with headquarters in
Norfolk, Va. It owns a major freight railroad, Norfolk Southern Railway Company,
which operates about 14,300 miles of road in 20 states, primarily in the
Southeast and Midwest, and the Province of Ontario, Canada. The corporation also
owns North American Van Lines, Inc., and Pocahontas Land Corporation, a natural
resources company.
###
Additional information about the transaction can be found on the World Wide Web
sites of CSX (http://www.csx.com) and Norfolk Southern (http://www.nscorp.com).
