SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT
(AMENDMENT NO. 10)
PURSUANT TO
SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
AMENDMENT NO. 20
TO
SCHEDULE 13D
CONRAIL INC.
(NAME OF SUBJECT COMPANY)
CSX CORPORATION
GREEN ACQUISITION CORP.
(BIDDERS)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
208368 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
SERIES A ESOP CONVERTIBLE JUNIOR PREFERRED STOCK, WITHOUT PAR VALUE
(TITLE OF CLASS OF SECURITIES)
NOT AVAILABLE
(CUSIP NUMBER OF CLASS OF SECURITIES)
MARK G. ARON
CSX CORPORATION
ONE JAMES CENTER
901 EAST CARY STREET
RICHMOND, VIRGINIA 23219-4031
(804) 782-1400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
WITH A COPY TO:
PAMELA S. SEYMON
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 403-1000<PAGE>
This Statement amends and supplements the Tender Of-
fer Statement on Schedule 14D-1 filed with the Securities and
Exchange Commission on December 6, 1996, as previously amended
and supplemented, by Green Acquisition Corp., a Pennsylvania
corporation and a wholly owned subsidiary of CSX Corporation, a
Virginia corporation, to purchase up to an aggregate of
18,344,845 shares of (i) Common Stock, par value $1.00 per
share, and (ii) Series A ESOP Convertible Junior Preferred
Stock, without par value, of Conrail Inc., a Pennsylvania cor-
poration, including, in each case, the associated Common Stock
Purchase Rights, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated December 6, 1996, as
supplemented by the Supplement thereto, dated December 19,
1996, and the related Letters of Transmittal at a purchase
price of $110.00 per Share, net to the tendering shareholder in
cash. Capitalized terms used and not defined herein shall have
the meanings assigned such terms in the Offer to Purchase, the
Supplement and the Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION.
(e) On January 9, 1997, the Honorable Donald
VanArtsdalen of the United States District Court for the
Eastern District of Pennsylvania denied the motions of NSC and
the shareholder-plaintiffs for a preliminary injunction to
invalidate certain provisions of the Merger Agreement and to
enjoin the Pennsylvania Special Meeting scheduled for January
17, 1997, including on the basis of their contentions that the
Pennsylvania Control Transaction Law had been triggered by
Parent's purchase of Shares in the First Offer. Such ruling is
attached hereto as Exhibit (c)(11), and the foregoing summary
description is qualified in its entirety by reference to such
exhibit.
NSC and the shareholder-plaintiffs have appealed such
ruling to the United States Court of Appeals for the Third
Circuit and moved for an expedited appeal and an injunction
pending appeal, seeking to enjoin the Pennsylvania Special
Meeting scheduled for January 17, 1997.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(c)(11) Text of opinion of Judge Donald VanArtsdalen of the
United States District Court for the Eastern District
of Pennsylvania as delivered from the bench on
January 9, 1997.<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
CSX CORPORATION
By: /s/ MARK G. ARON
Name: Mark G. Aron
Title: Executive Vice President
-- Law and Public Affairs
Dated: January 13, 1997<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
GREEN ACQUISITION CORP.
By: /s/ MARK G. ARON
Name: Mark G. Aron
Title: General Counsel and
Secretary
Dated: January 13, 1997<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
*(a)(1) Offer to Purchase, dated December 6, 1996.
*(a)(2) Letter of Transmittal.
*(a)(3) Notice of Guaranteed Delivery.
*(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
*(a)(5) Letter to Clients for use by Brokers, Dealers, Com-
mercial Banks, Trust Companies and Other Nominees.
*(a)(6) Guidelines for Certification of Taxpayer Identifica-
tion Number on Substitute Form W-9.
*(a)(7) Tender Offer Instructions for Participants of Conrail
Inc. Dividend Reinvestment Plan.
*(a)(8) Text of Press Release issued by Parent and the Com-
pany on December 6, 1996.
*(a)(9) Form of Summary Advertisement, dated December 6,
1996.
*(a)(10) Text of Press Release issued by Parent on December 5,
1996.
*(a)(11) Text of Press Release issued by Parent and the Com-
pany on December 10, 1996.
*(a)(12) Text of Advertisement published by Parent and the
Company on December 10, 1996.
*(a)(13) Text of Press Release issued by Parent on December
11, 1996.
*(a)(14) Text of Advertisement published by Parent and the
Company on December 12, 1996.
*(a)(15) Supplement to Offer to Purchase, dated December 19,
1996.
_____________________
* Previously filed.<PAGE>
*(a)(16) Revised Letter of Transmittal.
*(a)(17) Revised Notice of Guaranteed Delivery.
*(a)(18) Text of Press Release issued by Parent and the Com-
pany on December 19, 1996.
*(a)(19) Letter from Parent to shareholders of the Company,
dated December 19, 1996.
*(a)(20) Text of Press Release issued by Parent on December
20, 1996.
*(a)(21) Text of Press Release issued by Parent and the Com-
pany on January 9, 1997.
*(b)(1) Credit Agreement, dated November 15, 1996 (incorpo-
rated by reference to Exhibit (b)(2) to Parent and
Purchaser's Tender Offer Statement on Schedule 14D-1,
as amended, dated October 16, 1996.)
*(c)(1) Agreement and Plan of Merger, dated as of October 14,
1996, by and among Parent, Purchaser and the Company
(incorporated by reference to Exhibit (c)(1) to Par-
ent and Purchaser's Tender Offer Statement on Sched-
ule 14D-1, as amended, dated October 16, 1996).
*(c)(2) Company Stock Option Agreement, dated as of October
14, 1996, between Parent and the Company (incorpo-
rated by reference to Exhibit (c)(2) to Parent and
Purchaser's Tender Offer Statement on Schedule 14D-1,
as amended, dated October 16, 1996).
*(c)(3) Parent Stock Option Agreement, dated as of October
14, 1996, between Parent and the Company (incorpo-
rated by reference to Exhibit (c)(3) to Parent and
Purchaser's Tender Offer Statement on Schedule 14D-1,
as amended, dated October 16, 1996).
*(c)(4) Voting Trust Agreement, dated as of October 15, 1996,
by and among Parent, Purchaser and Deposit Guaranty
National Bank (incorporated by reference to Exhibit
(c)(4) to Parent and Purchaser's Tender Offer State-
ment on Schedule 14D-1, as amended, dated October 16,
1996).
_____________________
* Previously filed.
- 2 -<PAGE>
*(c)(5) First Amendment to Agreement and Plan of Merger,
dated as of November 5, 1996, by and among Parent,
Purchaser and the Company (incorporated by reference
to Exhibit (c)(7) to Parent and Purchaser's Tender
Offer Statement on Schedule 14D-1, as amended, dated
October 16, 1996).
*(c)(6) Second Amendment to Agreement and Plan of Merger,
dated as of December 18, 1996, by and among Parent,
Purchaser and the Company.
*(c)(7) Form of Amended and Restated Voting Trust Agreement.
(c)(8) Deleted.
*(c)(9) Text of STB Decision No. 5 of STB Finance Docket No.
33220, dated January 8, 1997.
*(c)(10) Unaudited Pro Forma Financial Statements reflecting
the Transactions (incorporated by reference to
Parent's registration statement on Form S-4, regis-
tration number 333-19523).
(c)(11) Text of opinion of Judge Donald VanArtsdalen of the
United States District Court for the Eastern District
of Pennsylvania as delivered from the bench on
January 9, 1997.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
_____________________
* Previously filed.
- 3 -
EXHIBIT (c)(11)
Text of opinion of Judge Donald
VanArtsdalen of the United States
District Court for the Eastern District
of Pennsylvania as delivered from the
bench on January 9, 1997.
As I've always said in these matters, I think it's
important that they be decided promptly. I never won any con-
test in extemporaneous speaking. I try to explain the reasons
for whatever decision I make in this case as best I can on such
limited time to decide just exactly what's to be done here.
In these two cases, there is as we all know a share-
holders meeting of Conrail scheduled for January the 17th, 1997
which is next week. And that meeting is to decide whether Con-
rail should, as I call it, opt-out of subchapter 25E of the
Pennsylvania business corporation law whereby CSX may thereaf-
ter proceed by tender offer to acquire approximately 20.1 per-
cent more of Conrail voting stock in order to proceed with the
next step of the merger agreement between CSX and Conrail.
Plaintiffs in Civil Action 96-7167, which I will call
the Norfolk Southern or the NS Corporation plaintiffs, alleging
that they are Conrail shareholders seek by a preliminary in-
junction to prohibit the shareholders meeting from going ahead
until a partial summary judgment motion is decided that seeks
declaration that a controlled transaction has occurred by rea-
son of CSX's purchase of 19.9 percent of Conrail outstanding
stock pursuant to the original tender offer and along with ag-
gregating with various directors and officers stock control
alleging that they have formed a group pursuant to 15 Pennsyl-
vania CSA Section 2543, which is a part of the Pennsylvania
State Statue on controlling party transactions.
And thereby the plaintiffs contend that it triggers
the shareholders' rights to obtain fair value and a fair value
appraisal for their stock. Also they seek a preliminary in-
junction against enforcement of a revision to the merger agree-
ment that provided for what I call a no-shop, what some of the
witnesses have called no-shop, some have called it a lockout,
extension of the -- until I believe December 31st, 1998. It<PAGE>
was an extension of about 18 months beyond that which was in
the original merger agreement.
Now, the so-called Ferrara plaintiffs, which is the
other civil action, Number 96-7350, likewise seek an injunction
and a declaration that the so-called 720-day lockout provision
is invalid.
I specially set this hearing because I was advised
that there would be an application for a preliminary injunction
in light of the revised merger agreement which had been appar-
ently made public.
There are two, as everybody seems to recognize, two
distinct and discrete issues. One is the extension of the so-
called no-shop or lockout agreement until 12-31-98, which will
coincide with the termination date of the merger agreement it-
self, or what is often referred to as the so-called drop dead
date, whereby if the merger doesn't go through by that date,
then under certain conditions at least the agreement can be in
effect terminated.
And the second issue is whether any of the defen-
dants, that is, Conrail and its board of directors are liable
to pay fair share because of the triggering of the control
transaction as provided in the business corporation law.
As to the 720-day period no-shop or lockout period,
the arguments that have been made on the present motions are
essentially those or a rehash of the arguments which were made
at the prior hearing, in which I denied any relief by reason of
the period of lockout that was contained in the original merger
agreement. There is no essential difference, as I see it, even
though the new agreement as apparently opposed to the prior
agreement has a so-called "fiduciary duty opt-out" provision.
Beyond that the only change is that the agreement -- as to the
lockout provision, is that the agreement sets a final date for
completion of the merger and government approvals of 12-31-98,
and provides that the so-called lockout period shall continue
until that time.
I see no principled reason, and apparently neither
did Professor Coffee who testified at the prior hearing, as I
recall his testimony, as to why the lockout could not extend
for the full period of the contract, nor is there any reason to
think that any particular line of demarcation need be drawn so
far as the facts of this case presently before me are con-
cerned. After all, as it seems to me, and I think I expressed
this previously, that where a contract is entered into, it is
expected that the parties will act in good faith and will not
-2-<PAGE>
deliberately go out and attempt to shop the contract, if you
will, with some other party or to see if they can get a better
deal after having entered into a valid contract.
If by reason something occurs in the future by which
it could be determined that there was a fiduciary duty upon the
board of directors to go ahead and take some action by reason
of some offer that had been made, if the fiduciary duty so re-
quired it, I see no reason why that should make any difference
that it is not specifically set forth in the contract. After
all, if a contract imposes upon certain of the parties certain
fiduciary duties, it seems to me that then becomes practically
an unwritten term of the contract or the agreement. And there-
fore whether this one did not have such a fiduciary duty opt-
out and the earlier one did seems to me should make no differ-
ence. In addition to which there has been absolutely no show-
ing or no claim that any situation has arisen as yet or will or
is likely to arise in the future that would impose any sort of
a fiduciary duty upon the board of directors to disregard the
lockout or the no-shop provisions of the merger agreement.
In addition, defendants have taken no action pursuant
to that clause that I am aware of, or about which there has
been any testimony that would give rise to any basis for pres-
ently prohibiting the meeting of January 17th, 1997 going ahead
so far as the no-shop provision is concerned. In other words,
even if it could conceivably be that there was something in-
valid about that particular provision that would have nothing
to do as I see it with precluding the shareholders meeting
which is in no way to consider anything other than whether or
not they should opt-out of the 20 percent rule under the Penn-
sylvania business corporation law.
Now, there is a so-called controlling person or con-
trolling transaction problem. Plaintiffs contend that the fair
valuation provisions of 15 Pennsylvania CSA, I think it's Sec-
tion 2544 has been triggered. In other words, it's the conten-
tion of plaintiffs that there was a controlled transaction, and
therefore the argument seems to be that because there was a
controlled transaction at the meeting of January the 17th, 1997
which is presently scheduled should be enjoined from proceed-
ing.
As to the controlled transaction, the argument as I
understand it is that the shares acquired by CSX under its
original tender offer which was approximately 19.9 percent of
the voting shares should be aggregated with the shares held by
certain -- or perhaps all of the directors and certain of the
officers, who it is contended formed a group, and by aggregat-
ing those shares, the total number of shares presently held by
-3-<PAGE>
CSX and the group exceed 20 percent; therefore, controlled
transaction has taken place.
Formation of a group acting in concert, and that is
of course the contention here, that this is a group acting in
concert under Section 2543 would normally to me appear to be a
fact-specific matter and would not ordinarily be subject to
summary judgment and certainly would not be a proper basis for
a preliminary injunction.
However, on the basis of the evidence presented which
as I understand it is probably all of the evidence that would
be intended to be presented on this issue at any time, the
likelihood of success on the contention that there was a con-
trolled transaction is to me very doubtful. Although it may be
expected, it may fully be expected that the board of directors
and the officers will continue to support the merger, and to
the extent that they are called upon to vote their shares will
vote in its favor. But there is certainly no evidence that
there was any agreement, express or implied, that the individ-
ual -- that the officers and directors as individuals would
vote their own shares of stock in locked step with that of CSX.
In that regard the evidence is pretty clear that the
amendment to the merger agreement was negotiated and worked out
after very extension negotiations and at a truly arm's length
proceeding. It is clear from this that at least during those
negotiations CSX and the board of directors of Conrail and the
officers of Conrail were not acting as a group or in locked
step.
I do not find under the present facts that have been
established, at least as so far developed, that there has been
and established a controlled transaction. To do that I think
everybody agrees that they have to aggregate the shares of
stock originally purchased by CSX plus some stock held by some
one or more of the other directors and officers.
Even if there had been a controlled transaction; that
is to say, even if they had operated as a group within the
meaning of the statute, and I think everybody agrees that there
is no case law on the subject except for an opinion written by
Judge Gawthrop some years ago, and I'm not sure about the date
of that.
Although I don't think that it would really make any
difference, but I believe that that decision was before the
last amendments of the Pennsylvania business corporation law.
I don't believe that that would make any difference, because
the wording is substantially the same. But I think the facts
-4-<PAGE>
were somewhat different in that case, and I am not here to
judge the validity of the contentions made by the judge in that
particular case.
It does seem to me, however, that there does have to
be some sort of an agreement, express or implied, and I do not
find that the evidence establishes that at this particular time
under the facts that have been established. But even if there
had been, the statute has what I would call an inadvertence
escape valve under Section 2541B.
After the contention was first raised that there had
been a controlled transaction by reason of CSX purchasing 19.9
percent of the stock, CSX sold on the open market 85,000
shares. Now, I have tried somewhat roughly to calculate the
various methods by which and the different groups of plaintiffs
make different contentions as to who should be considered in
the group. But it seems to me no matter how liberally you com-
pute the plaintiff's figures, with CSX having divested itself
of 85,000 shares, the present number of shares and those shares
of the persons claimed to be members of the group would not at
the present time equal 20 percent, even including voting con-
trol over the ESOP and the EBT shares, as to which there is
some question as to the federal duties that are imposed by Fed-
eral Law on the trustees of such shares. Clearly, if inadver-
tent means unintentional in the subjective sense of the word,
clearly there never was an intention to obtain control or to
have a control transaction. The whole merger agreement with
the so-called two-tiered arrangement was carefully structured
not to be -- not to offend the, if you will -- if I may use
that expression -- the provisions of the Pennsylvania Business
Corporation Law which imposes certain rights upon the share-
holders to receive fair value if a controlled transaction takes
place. If they overlook the possibility of aggregation, I
think at best, that would have been negligence, which is by
some definitions of the word inadvertent, included within the
term of inadvertence.
It's clear, of course, that the number of shares they
bought were bought advertently. It's clear that they were
aware certainly, that officers and directors probably held some
shares of stock, although I don't know that there's any evi-
dence that there may or may not be, that they knew the exact
numbers at the time of the purchase.
Also, it has been argued and I think the record may
show that the 19.9 percent that was originally calculated was
in error through misinformation as to the number of shares that
were outstanding of Conrail at the time. And it has been ar-
gued and I have not been able to compute this accurately, but
-5-<PAGE>
at least it has been argued that if that were considered, that
part of it was considered inadvertence and if they had bought
only 19.9 percent of the stock that was actually outstanding as
of the time of the purchase, that no matter how you would ag-
gregate, it would still not reach the 20 percent limit.
In any event, the statute provides that if the -- if
there is an inadvertent going over the 20 percent limit, that
the fair value rights will not -- will not accrue if the con-
trolled transaction -- if the party having those shares of
stock divests itself of those shares as soon -- I think the
word is as soon as practical. I'm trying to find the terminol-
ogy there.
Now, CSX did, after it was called to their attention,
sell 85,000 shares and as I just read the briefs rather quickly
on that score, it would appear to me that to do so cost CSX
approximately $900,000. There is no one that has made any ar-
gument that they did not divest themselves of the stock as soon
as practical. Perhaps plaintiffs would like to make that argu-
ment, but I think another thing that must be borne in mind is,
even if there was some technical violation of the controlled
transaction problem, the purpose of that is to -- or one of the
purposes certainly, is that there be no votes taken by the con-
trolling parties under those circumstances, unless the other
shareholders have a right to obtain fair value.
And there has been no vote -- there was no vote taken
and at the proposed vote to be taken on January the 17th, it is
clear that no matter how you compute the matter, the shares of
stock, that CSX in combination with any other group of share-
holders that could be aggregated under any of the theories sub-
mitted by the plaintiffs, would not constitute 20 percent.
Consequently, I can see where there has been abso-
lutely no harm done by reason of the purchase of the CSX
shares, whether or not and as I say, it's my view from what has
been presented here, that it is not a controlled transaction.
But even if it were a controlled transaction and even if the
shareholders are entitled to receive fair value, that still
doesn't explain to me why the meeting set for January the 17th
should be enjoined or give any basis for an injunction against
it.
First of all, shareholders to have received fair
value and have no basis under the statute, as I see it, to ob-
ject to somebody acquiring more than 20 percent or any group
acquiring more than 20 percent of the shares of stock. Their
only right is to receive fair value. And to do that, they
must, as the statute says, object. And I don't know how that's
-6-<PAGE>
done, but that's what the statute seems to say. And to make a
demand to have the shares appraised for fair value.
And then there is a rather long -- a lot of statutory
requirements as to how that procedure would be required to take
place. No one has made any demand to receive fair value. No
one has objected, as I see it, but aside from that, there is a,
as is clear from the statute, there is a complete legal remedy
and I would see no reason therefore to enjoin the meeting that
is set for January the 17th.
In addition to -- in addition to that, the meeting
that is set for January 17th, one of the arguments that's been
made by the plaintiffs is, well, the meeting would be a nullity
and therefore, it should be enjoined. Well, if it's a nullity,
it's a nullity. But that doesn't mean -- therefore, I see no
harm that could occur to anyone in that event. I fail to see
how, if the meeting is held and if there's a vote and if it's
later determined that that's a nullity, I fail to see how the
shareholders would in any meaningful way have been harmed. Al-
though, some might have been disappointed if they personally
went to attend the meeting.
It is clear that Norfolk Southern, as a shareholder,
is seeking in every conceivable way to block this merger from
proceeding. And of course, to the extent that they do so
through legal and lawful means, there is nothing too wrong
about that nor are they to be -- is it to be criticized for
attempting to do so. However, there is no showing on this
record that Norfolk Southern, as a shareholder, would be harmed
in any way if the shareholders vote on the proposition to opt-
out of the provisions of the Pennsylvania Corporation Law pro-
ceeds on January the 17th.
Now, before a preliminary injunction may be granted,
as we all know, there must be first a finding of likelihood of
success. On the so called 720 day no-shop clause, it is my
evaluation at this point, that there is no likelihood at all of
success on that claim.
On the controlled transaction claim, I think that
it's unlikely that there would be -- they would be -- or that
the plaintiffs would be successful on that contention. Be-
cause, first, I think it's unlikely that there ever was a con-
trolled transaction and if there was, it was clearly inadvert-
ent, at least, if inadvertence means unintentional. And be-
cause there was a divesting of a sufficient number of excess
shares, so that there would no longer be a control group having
more than 20 percent of the stock. That there would be no harm
-7-<PAGE>
if the vote is taken on January the 17th and there is no show-
ing of any likelihood of harm occurring in the future.
Now, as to the harm to the parties, as I think I've
said several times, I can see no harm to the plaintiffs by this
meeting proceeding on January the 17th. It's conceivable that
it could amount, eventually amount to a nullity, but that would
not cause any legal harm as I see it.
As to the defendants, of course, anything that slows
up this progress and the progress of the merger is -- does
cause severe and substantial harm and injury. And clearly,
that is one of the things that the plaintiffs seek in this, by
these proceedings, is to impede or slow up the progress of the
merger. If I granted either preliminary injunctive relief or
granted the summary judgment as requested here, one of the
claims, as I understand it, is that I should preliminarily en-
join the hearing set for January 17th until the summary judg-
ment motion is decided.
Whatever order I make here or decide here, undoubt-
edly if granted, would be appealed. And of course, during the
appeal, I have no doubt that the plaintiffs would intend to
seek to have any injunctive relief continued during the course
of that appeal. And I think that the practical effect of that
might well be to so upset the timing of these -- of this merger
as to perhaps completely throw it off track.
In addition, before a preliminary injunction may be
given, there must be shown that there is no adequate legal rem-
edy. As I point out clearly under the controlled transaction,
there is a complete statutory legal proceeding and remedy, so
that there would be no reason to make any injunction as to
that.
As to the 720-day period during which it's agreed
that the Conrail board and directors will take no action toward
any other bid that might come in, at least until such time as
there is some showing that there is some other bid, it is clear
that it would not be appropriate to enter an injunction really
in affect, while all the -- as I see it -- the plaintiffs are
asking for is some type of declaratory judgment and I don't
think that that would be a proper situation to grant a declara-
tory judgment. I think it would be more in the nature of an
advisory opinion.
Consequently, to the extent that this is an applica-
tion for a preliminary injunction, the application will be de-
nied. To the extent that there is an application that I grant
-8-<PAGE>
summary judgment, the application for a grant of summary judg-
ment is also denied.
-9-
