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[NORFOLK SOUTHERN LOGO]
November 8, 1996
Dear Conrail Shareholder:
On November 4, 1996, we furnished you with a proxy statement soliciting
your proxy to vote AGAINST a proposal of the Conrail Board of Directors to
amend Conrail's charter to "opt out" of Subchapter E of Chapter 25 of the
Pennsylvania Business Corporation Law. A special meeting of shareholders to
vote on the "opt out" charter amendment had been previously scheduled by the
Conrail Board for November 14. On November 6, however, the Conrail Board
announced that the November 14 special meeting was being cancelled and was now
expected to be held in mid-December. According to Conrail, the record date for
the rescheduled meeting will be December 5.
In light of this change and an increase in the amount payable in the cash
tender offer by a wholly owned subsidiary of Norfolk Southern from $100 per
share to $110 per share for up to all outstanding Conrail shares, we are
providing you with a supplement to our November 4 proxy statement. Please read
the attached supplement carefully.
We continue to urge you to protect your investment in Conrail by voting
AGAINST Conrail's proposal to "opt out" of the Pennsylvania Fair Value
Statute and AGAINST its proposal to adjourn the special meeting of
shareholders. PROTECT YOUR INTERESTS AND VOTE THE ENCLOSED GOLD PROXY CARD
TODAY.
Sincerely,
/s/ David R. Goode
David R. Goode
Chairman, President and
Chief Executive Officer
If you have any questions, please call our
proxy solicitor:
GEORGESON
& COMPANY INC.
CALL TOLL FREE: 800-223-2064
Banks and Brokers call: 212-440-9800
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SPECIAL MEETING OF SHAREHOLDERS
OF
CONRAIL INC.
-----------------
PROXY STATEMENT SUPPLEMENT
OF
NORFOLK SOUTHERN CORPORATION
-----------------
SOLICITATION OF PROXIES
IN OPPOSITION TO THE PROPOSED AMENDMENT TO THE
ARTICLES OF INCORPORATION OF CONRAIL INC.
-----------------
INTRODUCTION
This Proxy Statement Supplement (this "Supplement") is furnished by
Norfolk Southern Corporation ("Norfolk Southern") and relates to a Special
Meeting of Shareholders of Conrail Inc. ("Conrail" or the "Company") to vote
upon Conrail's proposal (the "Amendment Proposal") to amend its Articles of
Incorporation to "opt out" of Subchapter E (the "Fair Value Statute") of
Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended,
and at any adjournments, postponements or reschedulings thereof (the "Special
Meeting"). This Supplement amends and supplements, to the extent set forth
herein, the Proxy Statement of Norfolk Southern, dated November 4, 1996,
which was first mailed to Conrail Shareholders on or about November 4, 1996.
Capitalized terms used in this Supplement and not otherwise defined in this
Supplement shall have the respective meanings assigned to such terms in
Norfolk Southern's November 4, 1996 Proxy Statement. This Supplement is first
being mailed to Conrail Shareholders on or about November 8, 1996.
RECENT DEVELOPMENTS
THE SPECIAL MEETING
On November 6, 1996, Conrail publicly announced that the Special Meeting,
which previously had been scheduled for November 14, 1996, is now expected to
be held in mid-December. According to Amendment No. 4 to a Statement on
Schedule 14D-9 filed by Conrail with the SEC (the "Schedule 14D-9") on
November 6, 1996 relating to the CSX Tender Offer, the record date for the
Special Meeting has now been set at December 5, 1996. Norfolk Southern is
soliciting proxies from Shareholders to vote AGAINST both (i) the Amendment
Proposal and (ii) Conrail's proposal to adjourn (the "Adjournment Proposal")
the Special Meeting, if necessary, to permit Conrail to further solicit
proxies in the event that there are not sufficient votes at the time of the
Special Meeting to approve the Amendment Proposal. In addition, on November
4, 1996, Conrail filed with the SEC an amended preliminary Proxy Statement
(as amended, the "Conrail Proxy Statement").
The proxy cards previously furnished to you by Norfolk Southern remain
valid for Shareholders entitled to vote at the Special Meeting. Nonetheless,
new GOLD proxy cards are being provided to you with this Supplement to vote
AGAINST both the Amendment Proposal and the Adjournment Proposal.
THE NORFOLK SOUTHERN REVISED OFFER
On November 7, 1996, Norfolk Southern announced that the Norfolk Southern
Cash Offer by Atlantic Acquisition Corporation, a wholly-owned subsidiary of
Norfolk Southern, for all outstanding Shares was being increased from $100
per Share to $110 PER SHARE, NET TO THE SELLER IN CASH, without interest
thereon (the "Norfolk Southern Revised Offer"). The Norfolk Southern Revised
Offer will
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expire at 12:00 midnight, New York City time, on Friday, November 22, 1996,
unless extended. The terms of the Norfolk Southern Revised Offer are set
forth in a supplement dated November 8, 1996 to the Norfolk Southern Offer to
Purchase, which is being mailed to Shareholders.
THE AMENDED CSX/CONRAIL MERGER AGREEMENT
The following description is based upon the Schedule 14D-9, as well as an
amendment to a Schedule 14D-1 filed by CSX, each as filed with the SEC on
November 6, 1996, and the following description is qualified in its entirety
by reference to the full text and exhibits of such filings.
On November 5, 1996, the Company and CSX entered into an amendment to the
CSX/Conrail Merger Agreement (the "Amendment"). The Amendment effects certain
changes to the CSX/Conrail Merger Agreement. Other than as amended by the
Amendment, the provisions of the CSX/Conrail Merger Agreement remain the
same.
Pursuant to the Amendment, CSX has amended the CSX Tender Offer for 19.9%
of the outstanding Shares to increase the price to be paid to $110 per Share,
net to the seller in cash. The Amendment further provides that the per Share
cash consideration to be paid in the CSX/Conrail Proposed Merger, if any,
will be $110. The provision of the CSX/Conrail Merger Agreement providing
that 60% of the outstanding Shares will be exchanged for CSX's common stock
at a rate of 1.85619 shares of CSX's common stock for each Share remains
unchanged. Based on the closing sale price of CSX common stock as reported on
the Composite Tape on November 7, 1996, the stock component of the
consideration to be paid in the CSX/Conrail Proposed Merger had a value of
$82.14 per Share.
In addition, the Amendment provides that the Company will not convene,
adjourn or postpone the Special Meeting without CSX's prior consent, and such
consent will not be unreasonably withheld. In the event that the matters to
be considered at the meetings of the shareholders of the Company and CSX to
be held to consider the CSX/Conrail Proposed Merger are not approved, from
time to time the Company or CSX, as applicable, may, and will at the request
of CSX or the Company, as applicable, duly call one or more meeting(s) of
shareholders for such purposes. Subject to the foregoing, the Amendment
further provides that the Company shall convene any such shareholder meetings
as soon as practicable after receipt of any request to do so by CSX (and, in
the case of the Special Meeting, as soon as practicable after December 5,
1996).
REASONS TO VOTE AGAINST THE AMENDMENT PROPOSAL
The Conrail Board of Directors has announced that it intends to hold the
Special Meeting, currently expected to be held in mid-December, and intends
to solicit votes to approve the Amendment Proposal and the Adjournment
Proposal. Norfolk Southern believes that there is no reason for Shareholders
to "opt out" of the Fair Value Statute which protects their ability as
Shareholders to receive the best value for their Shares. Norfolk Southern
believes that Shareholders can best protect their interests and maximize the
value of their investment by voting AGAINST both the Amendment Proposal and
the Adjournment Proposal.
Set forth below are several reasons to vote AGAINST the Amendment
Proposal.
THE NORFOLK SOUTHERN REVISED OFFER REPRESENTS A SUPERIOR VALUE FOR
SHAREHOLDERS.
Norfolk Southern believes that the consummation of the Norfolk Southern
Revised Offer would be more beneficial to the Company and the Shareholders
than the Company being acquired by CSX. Advantages of the Norfolk Southern
Revised Offer, as compared to the CSX Acquisition Proposal, include:
o Superior Price. The price per Share offered to Shareholders in the
Norfolk Southern Revised Offer ($110) is substantially higher than
the blended per Share price being offered in the CSX Acquisition
Proposal ($93.28), based on the closing sale price of CSX common
stock on the Composite Tape on November 7, 1996. In fact, the price
per Share in the Norfolk Southern Revised Offer represents a 17.9%
premium over the blended per Share price of the CSX Acquisition
Proposal.
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o More in the Near Term. Under the CSX Acquisition Proposal, a
maximum of 40% of the outstanding Shares would be exchanged for
cash in the near term and the remaining 60% of the Shares would not
be exchanged or converted until the back-end CSX/Conrail Proposed
Merger is consummated, which could take a year or longer. Under the
Norfolk Southern Revised Offer, up to 100% of the Shares could be
tendered and exchanged for cash upon the closing of the Norfolk
Southern Revised Offer.
o Greater Amount of Cash. The Norfolk Southern Revised Offer pays
cash for 100% of the outstanding Shares. Under the CSX Acquisition
Proposal, only 40% of the outstanding Shares could be exchanged for
cash in the CSX Tender Offer and CSX/Conrail Proposed Merger. The
remaining 60% would be exchanged for CSX shares only after the
completion of the second step CSX/Conrail Proposed Merger.
o Greater Certainty of Payment. Norfolk Southern is prepared to
establish a voting trust under which it would acquire for cash 100%
of the Shares pursuant to the Norfolk Southern Revised Offer and
the Proposed Norfolk Southern/Conrail Merger without waiting for
approval by the Surface Transportation Board (the "STB") of Norfolk
Southern's acquisition of control, which could take a year or
longer. In contrast, CSX is only prepared to acquire for cash 40%
of the Shares pursuant to the CSX Tender Offer without approval of
the STB and has conditioned its obligation to exchange CSX shares
for the remaining 60% of the Shares upon receipt of such approval.
o Continued Equity Risk. More than half (60%) of the consideration
offered under the CSX Acquisition Proposal consists of stock. The
value you would receive for your Shares in the back-end CSX/Conrail
Proposed Merger would fluctuate with the value of the CSX shares.
Completing the back-end CSX/Conrail Proposed Merger could take a
year or longer. Accordingly, the value of the consideration you
would receive under the CSX Acquisition Proposal would be subject
to market fluctuations and could diminish. Further, because the
CSX Exchange Ratio lacks a collar or other value protective device,
there is no limit to how far the value of the stock component of
the consideration could decrease.
YOU HAVE NOTHING TO GAIN FROM APPROVING THE AMENDMENT PROPOSAL.
o The Fair Value Statute Protects Shareholders. We believe that
Conrail deliberately has not opted out of the Fair Value Statute
previously because of the protection it provides to Shareholders.
If you opt out of the Fair Value Statute now, you will give up
an important layer of Shareholder protection. You would give up
a valuable choice. The Fair Value Statute provides that upon a
person acquiring 20% or more of the voting shares of a registered
Pennsylvania corporation such as Conrail, a shareholder thereof
may make a written demand on the acquiring person for the payment
of cash in an amount equal to the "fair value" of each voting share
as of the date on which the control transaction occurs. The Fair
Value Statute provides for a judicial appraisal procedure and defines
"fair value" to be not less than the highest price per share paid
by the acquiror during the 90-day period ending on and including the
date on which the acquiror acquired 20% of the voting shares plus any
possible control premium. The practical effect is that the Fair Value
Statute places a floor upon the consideration that Shareholders can
receive in a control transaction or in an acquisition of the
Company by an acquiring person. Norfolk Southern believes that it
would be unwise for Shareholders to opt out of a protective statute
that could result in Shareholders receiving a higher price for
their Shares.
A VOTE AGAINST THE AMENDMENT PROPOSAL WILL HELP PRESERVE YOUR OPTIONS AND
YOUR ABILITY TO MAXIMIZE THE VALUE OF YOUR SHARES.
o By voting against the Amendment Proposal, Shareholders can preserve
their flexibility to pursue alternatives to maximize the value of
their Shares. In particular, a vote against the Amendment Proposal
would help preserve the existence of the Norfolk Southern Revised
Offer. Because, if the Amendment Proposal is approved, CSX can
acquire 40% of the Shares for cash and because Conrail has granted
CSX a lock-up option to purchase 15,955,477 Common Shares under
certain circumstances, including if CSX purchases the
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Shares under the CSX Tender Offer, CSX would be in a position to
bring its interest in Conrail to a majority voting interest.
Consequently, CSX could itself cause the CSX/Conrail Proposed
Merger to be approved without the vote of any other Shareholder,
thereby acquiring Conrail by purchasing from Shareholders only
40% of the Shares for cash. The Norfolk Southern Revised Offer
provides cash for up to 100% of the Shares.
YOU CAN TAKE TWO IMMEDIATE STEPS TO HELP OBTAIN THE MAXIMUM VALUE FOR YOUR
SHARES:
o Return your GOLD proxy card and vote AGAINST both the Amendment
Proposal and the Adjournment Proposal; and
o Make your views known to Conrail's Board of Directors.
By taking these steps, you will preserve the Shareholder protections which
you currently enjoy and will send a clear message to Conrail's Board of
Directors that it should take actions which maximize the value of your
investment by removing any obstacles to the Norfolk Southern Revised Offer.
CERTAIN LITIGATION--RECENT DEVELOPMENTS
On November 4, 1996, just before the scheduled hearing on Norfolk
Southern's motion for a temporary restraining order, Conrail informed the
District Court Judge hearing the motion that earlier that day the Conrail
Board of Directors had adopted a resolution which effectively responded to
Norfolk Southern's motion by extending the Distribution Date (the
"Resolution"). As a result, the Distribution Date did not occur on November
7, 1996. Under the Resolution, the Distribution Date will occur ten days
after a party other than CSX acquires more than 10% of Conrail's Shares. CSX
provided the Court with a letter indicating its consent to the Resolution.
On November 7, 1996, the District Court, at Plaintiffs' request,
rescheduled a hearing on the Plaintiffs' motion for a preliminary injunction
from November 12, 1996 to November 18, 1996. At such hearing, the Plaintiffs
will seek to enjoin (i) the CSX Tender Offer from expiring on November 20,
1996 and (ii) CSX from acquiring Shares pursuant to the CSX Tender Offer.
* * *
NORFOLK SOUTHERN CORPORATION
Dated: November 8, 1996
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ADDITIONAL INFORMATION
If your Shares are held in the name of a bank or broker, only your bank or
broker can vote your Shares and only upon receipt of your specific
instructions. Please instruct your bank or broker to vote AGAINST the
Amendment Proposal and the Adjournment Proposal by executing the GOLD proxy
card today. If you have any questions or require any assistance in voting
your Shares, please call:
GEORGESON
& COMPANY INC.
Wall Street Plaza
New York, New York 10005
Call Toll Free: 800-223-2064
Banks and Brokers call: 212-440-9800
<PAGE>
PROXY
PROXY SOLICITED ON BEHALF OF
NORFOLK SOUTHERN CORPORATION FOR THE
SPECIAL MEETING OF SHAREHOLDERS OF CONRAIL INC.
The undersigned hereby constitutes and appoints David R. Goode, Henry C.
Wolf and James C. Bishop, Jr., and each or any of them, as true and lawful
agents and proxies with full power of substitution in each to represent the
undersigned, and to vote all shares of common stock, par value $1.00 per
share ("Common Shares"), of Conrail Inc. ("Conrail") which the undersigned
would be entitled to vote if personally present, at the Special Meeting of
Shareholders (the "Special Meeting") of Conrail to be scheduled by the Board
of Directors of Conrail relating to the proposals set forth below, currently
expected to be held in mid-December, and at any adjournments, postponements
or reschedulings of such Special Meeting, on all matters coming before the
Special Meeting. The Conrail Board of Directors had previously scheduled, and
subsequently cancelled, a special meeting of shareholders with respect to the
proposals set forth below for November 14, 1996.
You are encouraged to specify your choice by marking the appropriate box
on the reverse side of this card. This Proxy when properly executed will be
voted in the manner directed herein by the undersigned shareholder. IF NO
DIRECTION IS MADE WITH RESPECT TO THE VOTING OF COMMON SHARES, THIS PROXY
WILL BE VOTED AGAINST THE PROPOSALS DESCRIBED BELOW. The persons listed above
cannot vote your Common Shares unless you sign and return this card.
(Continued on the reverse side)
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(Continued from the reverse side)
[X] Please mark your vote as in this example
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
NORFOLK SOUTHERN CORPORATION STRONGLY RECOMMENDS A VOTE AGAINST BOTH OF THE
FOLLOWING PROPOSALS:
1. The Proposal of the Conrail Board of Directors to approve an amendment
to Conrail's Articles of Incorporation which would cause the provisions
of Subchapter E of Chapter 25 of the Pennsylvania Business Corporation
Law of 1988, as amended, to no longer be applicable to Conrail, and to
authorize the Board of Directors of Conrail, in its discretion, to
direct certain executive officers of Conrail to file or not file such
Articles of Amendment if the Board determines such action to be in the
best interests of Conrail.
AGAINST [ ] FOR [ ] ABSTAIN [ ]
2. The Proposal of the Conrail Board of Directors to adjourn the Special
Meeting.
AGAINST [ ] FOR [ ] ABSTAIN [ ]
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
Dated: ,1996
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Signature(s) (Title, if any)
---------------------------
Signature if held jointly
Note: Please sign exactly as name
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
<PAGE>
INSTRUCTION
PROXY SOLICITED ON BEHALF OF
NORFOLK SOUTHERN CORPORATION
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF CONRAIL INC.
CONSOLIDATED RAIL CORPORATION
MATCHED SAVINGS PLAN (THE "PLAN")
VOTING INSTRUCTIONS
TO: FIDELITY MANAGEMENT TRUST COMPANY
The undersigned hereby instructs the Fidelity Management Trust Company to
vote (or cause to be voted) all shares of Series A ESOP Junior Convertible
Preferred Stock (the "ESOP Preferred Shares") and common stock, par value
$1.00 per share (the "Common Shares") of Conrail Inc. ("Conrail") under the
Plan at the Special Meeting of Shareholders (the "Special Meeting") to be
scheduled by the Board of Directors of Conrail relating to the proposals set
forth below, currently expected to be held in mid-December, and at any
adjournments, postponements or reschedulings of such Special Meeting, on the
Proposals relating to, among other things, the amendment of the Articles of
Incorporation of Conrail and the adjournment of the Special Meeting, and on
all other matters coming before the Special Meeting. The Conrail Board of
Directors had previously scheduled, and subsequently cancelled, a special
meeting of shareholders with respect to the proposals set forth below for
November 14, 1996.
You are encouraged to specify your choice by marking the appropriate box
on the reverse side of this card. IF FIDELITY MANAGEMENT TRUST COMPANY DOES
NOT RECEIVE THIS INSTRUCTION CARD, MARKED TO SHOW YOUR INSTRUCTIONS TO
FIDELITY MANAGEMENT TRUST COMPANY, BY TWO DAYS PRIOR TO THE SPECIAL MEETING,
THE ESOP PREFERRED SHARES AND COMMON SHARES ALLOCATED TO YOUR PLAN ACCOUNT,
TOGETHER WITH A PERCENTAGE OF ESOP PREFERRED SHARES AND COMMON SHARES NOT
ALLOCATED TO ANY PARTICIPANT'S ACCOUNT UNDER THE PLAN, WILL BE VOTED BY
FIDELITY MANAGEMENT TRUST COMPANY IN THE SAME PROPORTION AS THOSE FOR WHICH
FIDELITY MANAGEMENT TRUST COMPANY RECEIVED INSTRUCTIONS FROM PARTICIPANTS.
In its or their discretion, the proxy or proxies are authorized to vote
upon such other matters as may properly come before the meeting.
(Continued on the reverse side)
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(Continued from reverse side)
[X] Please mark your instructions as in this example
PLEASE MARK, SIGN, DATE AND RETURN THE
INSTRUCTION CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
This Instruction card when properly executed will result in Fidelity
Management Trust Company voting your ESOP Preferred Shares and Common Shares
(or causing such shares to be voted) in the manner directed herein by the
undersigned participant in the Plan.
NORFOLK SOUTHERN CORPORATION STRONGLY RECOMMENDS A VOTE AGAINST BOTH PROPOSALS:
1. The Proposal to approve an amendment to Conrail's Articles of
Incorporation which would cause the provisions of Subchapter E of
Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as
amended, to no longer be applicable to Conrail, and to authorize the
Board of Directors of Conrail, in its discretion, to direct certain
executive officers of Conrail to file or not file such Articles of
Amendment if the Board determines such action to be in the best
interests of Conrail.
AGAINST [ ] FOR [ ] ABSTAIN [ ]
2. The Proposal to adjourn the Special Meeting.
AGAINST [ ] FOR [ ] ABSTAIN [ ]
Dated: ,1996
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---------------------------
Signature(s) (Title, if any)
---------------------------
Signature if held jointly
Note: Please sign exactly as name
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
