<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
(AMENDMENT NO. 2)
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
SCHEDULE 13D
OF CSX CORPORATION AND
CSX TRANSPORTATION, INC.
(AMENDMENT NO. 6)
(PURSUANT TO SECTION 13(d) OF THE SECURITIES EXCHANGE ACT OF 1934)
SCHEDULE 13D
OF NORFOLK SOUTHERN CORPORATION
(AMENDMENT NO. 4)
(PURSUANT TO SECTION 13(d) OF THE SECURITIES EXCHANGE ACT OF 1934)
SCHEDULE 13D
OF WALTER G. RICH
(AMENDMENT NO. 5)
(PURSUANT TO SECTION 13(d) OF THE SECURITIES EXCHANGE ACT OF 1934)
DELAWARE OTSEGO CORPORATION
(NAME OF ISSUER)
DOCP ACQUISITION LLC
CSX CORPORATION
NORFOLK SOUTHERN CORPORATION
WALTER G. RICH
(NAME OF PERSONS FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.125 PER SHARE
(TITLE OF CLASS OF SECURITIES)
246244 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
PETER J. SHUDTZ
GENERAL COUNSEL
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 PERSONS FILING
STATEMENT)
WITH A COPY TO:
<TABLE>
<S> <C> <C> <C>
PAMELA S. SEYMON RONALD B. RISDON J. GARY LANE ERIC J. FRIEDMAN
WACHTELL, LIPTON, ROSEN & KATZ KELLEY DRYE & WARREN LLP GENERAL COUNSEL CORPORATE SKADDEN, ARPS, SLATE,
51 WEST 52ND STREET 101 PARK AVENUE NORFOLK SOUTHERN CORPORATION MEAGER & FLOM LLP
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10178 THREE COMMERCIAL PLACE 919 THIRD AVENUE
TELEPHONE: (212) 403-1000 TELEPHONE: (212) 808-7800 NORFOLK, VIRGINIA 23510-9241 NEW YORK, NEW YORK 10022
TELEPHONE: (757) 629-2600 TELEPHONE: (212) 735-3000
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
CALCULATION OF FILING FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$46,578,752 $9,316
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* FOR PURPOSES OF CALCULATING THE FILING FEE ONLY. THIS CALCULATION ASSUMES THE
PURCHASE OF AN AGGREGATE OF 2,117,216 SHARES OF COMMON STOCK, PAR VALUE $.125
PER SHARE, OF DELAWARE OTSEGO CORPORATION (THE "SHARES") AT $22.00 NET PER
SHARE IN CASH.
** THE AMOUNT OF THE FILING FEE, CALCULATED IN ACCORDANCE WITH RULE 0-11(d) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EQUALS 1/50TH OF 1% OF THE
AGGREGATE VALUE OF CASH OFFERED BY DOCP ACQUISITION LLC FOR SUCH NUMBER OF
SHARES.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
<TABLE>
<S> <C>
AMOUNT PREVIOUSLY PAID: $9,316 FILING PARTY: DOCP ACQUISITION LLC, CSX CORPORATION,
NORFOLK SOUTHERN CORPORATION AND WALTER
G. RICH
FORM OR REGISTRATION NO.: SCHEDULE 14D-1 DATE FILED: AUGUST 25, 1997
</TABLE>
================================================================================
<PAGE> 2
CUSIP No. 246244 10 7
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON DOCP
ACQUISITION LLC
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [X]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS) AF
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [
]
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION STATE OF NEW YORK
- ---------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 384,681.6
- ---------------------------------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
- ---------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 20.2%
- ---------------------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) OO
- ---------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
CUSIP No. 246244 10 7
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CSX CORPORATION
62-1051971
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [X]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [
]
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION COMMONWEALTH OF VIRGINIA
- ---------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 110,250(1)
- ---------------------------------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
- ---------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 5.8%
- ---------------------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) HC, CO
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes all shares beneficially owned by Walter G. Rich.
3
<PAGE> 4
CUSIP No. 246244 10 7
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NORFOLK SOUTHERN CORPORATION
52-1188014
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [ ]
(b) [X]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
[ ]
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
COMMONWEALTH OF VIRGINIA
- ---------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
384,181(1)
- ---------------------------------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
[ ]
- ---------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
20.2%(1)
- ---------------------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) HC, CO
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Only to the extent that NSC might or could, by reason of the NSC's
involvement in the arrangements with CSX and Mr. Rich set forth in the Offer
to Purchase, be deemed to be part of a group under Rule 13d-5(b)(1) of the
rules promulgated under the Securities and Exchange Act of 1934, as amended,
and thereby for the purposes of Section 13(d) of such Act be deemed
beneficially to own the 110,250 shares of the Company beneficially owned by
CSX Transportation, Inc. and the 273,931.6 Shares beneficially owned by Mr.
Rich.
4
<PAGE> 5
CUSIP No. 246244 10 7
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON WALTER G. RICH
###-##-####
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [X]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS) PF
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [
]
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION STATE OF NEW YORK
- ---------------------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 273,931
- ---------------------------------------------------------------------------------------------------------
8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ]
- ---------------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 14.4%
- ---------------------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN
- ---------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
This Amendment No. 2 to the Transaction Statement on Schedule 14D-1, and
Amendment No. 6 to the Schedule 13D of CSX Corporation, a Virginia corporation
("CSX"), and CSX Transportation, Inc., a Virginia corporation and wholly owned
subsidiary of CSX ("CSXT"), Amendment No. 4 to the Schedule 13D of Norfolk
Southern Corporation, a Virginia corporation ("NSC") and Amendment No. 5 to the
Schedule 13D of Walter G. Rich, (collectively, as amended, the "Statement")
relates to the offer by DOCP Acquisition LLC, a New York limited liability
company ("Purchaser") formed by CSX, NSC and Mr. Rich to purchase all
outstanding shares of common stock, par value $0.125 per share (the "Shares"),
of Delaware Otsego Corporation, a New York corporation (the "Company"), at a
price of $22.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in Purchaser's Offer to Purchase dated August 22,
1997 (the "Offer to Purchase") and in the related Letter of Transmittal. This
Amendment amends and supplements the amended Transaction Statement on Schedule
14D-1 and all such Schedules 13D filed prior hereto. Unless otherwise indicated
all capitalized terms used herein shall have the same meanings as set forth in
the Offer to Purchase.
ITEM 10. ADDITIONAL INFORMATION
Item 10 of the Statement is hereby amended by the addition of the
following:
On or about August 21, 1997, a second complaint respecting a purported
class action, captioned Bergman v. Walter G. Rich et al., Index No. 2110,
was filed in the Supreme Court of the State of New York for the County of
Otsego (the "Second Complaint"). The Second Complaint names as defendants
the Company and the members of the Company Board, including Mr. Rich, as
well as CSX and NSC. The allegations in the Second Complaint are along the
lines of those in the Complaint (see "SPECIAL FACTORS -- Certain Litigation
Relating to the Offer and the Merger" in the Offer to Purchase) and
substantially the same relief is sought. Purchaser, Mr. Rich, CSX, NSC and
the Company believe the claims in the Second Complaint are meritless. The
foregoing summary is qualified in its entirety by reference to the Second
Complaint, a copy of which has been filed with the Commission as an Exhibit
hereto and which is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
Item 11 of the Statement is hereby amended by the addition of the
following:
<TABLE>
<S> <C>
(c)(5) Complaint, dated August 21, 1997, captioned Bergman v. Walter G. Rich et al.,
Index No. 2110, filed in the Supreme Court of the State of New York for the
County of Otsego.
</TABLE>
6
<PAGE> 7
SIGNATURES
After due inquiry, and to the best of my knowledge, I certify that the
information set forth in this statement is true, complete and correct.
August 28, 1997
DOCP ACQUISITION LLC
By: /s/ MARK G. ARON
------------------------------------
Name: Mark G. Aron
Title: Authorized Person
By: /s/ JAMES C. BISHOP, JR.
------------------------------------
Name: James C. Bishop, Jr.
Title: Authorized Person
CSX CORPORATION
By: /s/ MARK G. ARON
------------------------------------
Name: Mark G. Aron
Title: Executive Vice
President -- Law and
Public Affairs
NORFOLK SOUTHERN CORPORATION
By: /s/ JAMES C. BISHOP, JR.
------------------------------------
Name: James C. Bishop, Jr.
Title: Executive Vice
President -- Law
/s/ WALTER G. RICH
--------------------------------------
WALTER G. RICH
7
<PAGE> 8
SIGNATURE
(SOLELY WITH RESPECT TO THE SCHEDULE 13D OF
CSX TRANSPORTATION, INC.)
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
August 28, 1997
CSX TRANSPORTATION, INC.
By: /s/ WILLIAM M. HART
------------------------------------
Name: William M. Hart
Title: Vice President -- Corridor
Development
8
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<S> <C>
(c)(5) Complaint, dated August 21, 1997, captioned Bergman v. Walter G. Rich et al.,
Index No. 2110, filed in the Supreme Court of the State of New York for the
County of Otsego.
</TABLE>
9
<PAGE> 1
- ------------- NOTICE OF ENTRY -------------
Sir: - Please take notice that the within
is a (certified) true copy of a
duly entered in the office of the clerk
of the within named court on 19__
Dated,
Yours, etc.,
GOODKIND LABATON RUDOFF & SUCHAROW LLP
Attorneys for
Office and Post Office Address, Telephone
100 PARK AVENUE
BOROUGH OF MANHATTAN NEW YORK, N.Y. 10017-5563
To
Attorney(s) for
- ------------- NOTICE OF SETTLEMENT -------------
Sir: - Please take notice that an order
of which the within is a true copy will be presented
for settlement to the Hon.
one of the judges of the within named Court, as
on 19
at M.
Dated,
Yours, etc.,
GOODKIND LABATON RUDOFF & SUCHAROW LLP
Attorneys for
Office and Post Office Address, Telephone
100 PARK AVENUE
BOROUGH OF MANHATTAN NEW YORK, N.Y. 10017-5563
To
Attorney(s) for
Index No. Year 19
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF OTSEGO
==============================================
KENNETH BERGMANN, JR., on behalf of himself
and all others similarly situated,
Plaintiff,
- against -
WALTER G. RICH, NORFOLK SOUTHERN CORP.,
ET AL.,
Defendants.
==============================================
SUMMONS & COMPLAINT
==============================================
GOODKIND LABATON RUDOFF & SUCHAROW LLP
Attorneys for Plaintiff
Office and Post Office Address, Telephone
100 PARK AVENUE
BOROUGH OF MANHATTAN NEW YORK, N.Y. 10017-5563
(212) 907-0700
==============================================
To
Attorneys(s) for
==============================================
Service of a copy of the within
is hereby admitted.
Dated
- ----------------------------------------------
Attorney(s) for
==============================================
<PAGE> 2
(ENDORSED) FILED
AUG 21, 1997
SUPREME COURT OF THE STATE OF NEW YORK ----------------------------
COUNTY OF OTSEGO OTSEGO COUNTY CLERK'S OFFICE
- ---------------------------------------
KENNETH BERGMANN, JR. on behalf of
himself and all others similarly Index No. 2110
situated,
Plaintiff, FILING DATE:
- against - Plaintiff designates
OTSEGO COUNTY
WALTER G. RICH, C. DAVID SOULE, as the place of trial
NILES F. CURTIS, MALCOLM C. HUGHES,
GORDON R. FULLER, RICHARD A. WHITE The basis of the venue
DAVID B. COMMON, DR. GERALD A. is the principal place of
GRAFF, ROBERT L. MARCALUS, EVERETT business of defendants
A. GILMOUR, CHARLES S. BRENNAR, and cause of action
HARVEY POLLY, NORFOLK SOUTHERN arose.
CORP., CSX TRANSPORTATION, INC.,
ALBERT B. AFTOORA, and DELAWARE
OTSEGO CORPORATION,
Defendants. SUMMONS
- -----------------------------------
TO THE ABOVE NAMED DEFENDANTS:
YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve
a copy of your answer on the Plaintiffs' Attorneys within 20 days after the
service of this summons, exclusive of the date of service (or within 30 days
after the service is complete if this summons is not personally delivered to you
within the State of New York); and in case of your failure to appear or answer,
judgment will be taken against you by default for the relief demanded in the
complaint.
Dated: New York, New York
August 21, 1997
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
Attorneys for Plaintiffs
100 Park Avenue, 12th Floor
New York, New York 10017
Telephone: (212) 907-0700
<PAGE> 3
DEFENDANTS' ADDRESSES:
DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
WALTER G. RICH
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
C. DAVID SOULE
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
NILES F. CURTIS
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
MALCOLM C. HUGHES
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
GORDON R. FULLER
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
RICHARD A. WHITE
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
DAVID B. COMMON
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
DR. GERALD A. GRAFF
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
ROBERT L. MARCALUS
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
-2-
<PAGE> 4
EVERETT A. GILMOUR
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
CHARLES S. BRENNAR
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
HARVEY POLLY
c/o DELAWARE OTSEGO CORPORATION
1 Railroad Avenue
Cooperstown, NY 13326
ALBERT B. AFTOORA
c/o CSX Corp.
901 East Cary Street
Richmond, Va 23219
CSX TRANSPORTATION, INC.
901 East Carey Street
Richmond, Va 23219
NORFOLK SOUTHERN CORP.
Three Comercial Place
Norfolk, Va 23510
-3-
<PAGE> 5
SUPREME COURT FOR THE STATE OF NEW YORK
COUNTY OF OTSEGO
- ------------------------------------
KENNETH BERGMANN, JR., on behalf of
himself and all others similarly Index No. 97-
situated,
Plaintiff, CLASS ACTION
COMPLAINT
- against -
WALTER G. RICH, C. DAVID SOULE,
NILES F. CURTIS, MALCOLM C. HUGHES,
GORDON R. FULLER, RICHARD A. WHITE,
DAVID B. COMMON, DR. GERALD A.
GRAFF, ROBERT L. MARCALUS, EVERETT
A. GILMOUR, CHARLES S. BRENNAR,
HARVEY POLLY, NORFOLK SOUTHERN
CORP., CSX TRANSPORTATION, INC.,
ALBERT B. AFTOORA, and DELAWARE
OTSEGO CORPORATION.
Defendants.
- ------------------------------------
Plaintiff, by and through his attorneys, alleges the following upon,
information and belief, except as to paragraph 2 which is alleged upon personal
knowledge:
The Parties
1. Plaintiff brings this action as a class action on behalf of himself and
all other stockholders of the Delaware Otsego Corporation (the "Company") who
are similarly situated, to enjoin defendants' efforts to take the Company
private at an unfair price and through an unfair process, in order to benefit
certain of the defendants at the expense of the Company and its shareholders,
without having first taken steps to maximize shareholder value.
<PAGE> 6
2. Plaintiff Kenneth Bergmann, Jr. is and has at all relevant times
owned shares of the Company's common stock.
3. Defendant Delaware Otsego Corporation is a thirty year old rail
company, which is the parent of the New York Susquehanna & Western Railway. It
maintains its principle place of business in Cooperstown, New York. Through its
subsidiaries, the Company operates a regional railroad freight system
consisting of 500 miles of railroad in New York, New Jersey and Pennsylvania.
Since the purchase of Conrail by CSX (defined below) and Norfolk (defined
below), the rails owned by the Company have become pivotal to prevent
competition in the New York area by certain Canadian rail lines.
4. Defendant Walter G. Rich ("Rich") is and has been at all relevant
times the President and Chief Executive Officer of the Company. As of May, 1997,
Rich owned approximately 274,431 shares, or 15.0% of the Company's shares.
5. Defendant CSX Transportation, Inc. ("CSX") is an international
transportation company with interests in rail, ocean container shipping,
barging, trucking, warehousing and distribution. CSX maintains a place of
business in Richmond, Virginia but does business in New York CSX owns 110,250
shares or 6.0% of the Company. Together with Rich, CSX controls approximately
21% of the Company's
-2-
<PAGE> 7
voting power, and constitutes the Company's largest voting block.
6. Defendant Albert B. Aftoora ("Aftoora") is a director of the Company
and a vice-president of corridor development of CSX.
7. Niles F. Curtis, Malcolm C. Hughes, Gordon R. Fuller, Richard A.
White, Dr. Gerald A. Graff, Robert L. Marcalus, Everett A. Gilmour ("Gilmour"),
Charles S. Brennar and Harvey Polly are directors of the Company (with Rich and
Aftoora, the "director defendants").
8. Defendant Norfolk Southern Corporation ("Norfolk") is an operator of
railways in Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana,
Mississippi, North Carolina, South Carolina and Tennessee. Norfolk's systems
carry raw materials, intermediate products and finished materials within the
southeast and the rest of United States and Canada. It maintains a place of
business in Norfolk, Virginia and does business in New York.
9. By virtue of their positions of control and voting power, CSX and the
director defendants (including Rich) are in a fiduciary relationship with
plaintiff and other public stockholders of the Company, and owe plaintiff and
other members of the Class (defined below) the highest obligations of good
faith, candor, loyalty and fair dealing. Norfolk owes plaintiffs and the Class
the obligations not to
-3-
<PAGE> 8
aid and abet violations of the fiduciary duties of Rich, CSX and Aftoora.
JURISDICTION AND VENUE
10. This court has jurisdiction over this action and the defendants.
Defendants, either personally or through their agents, inter alia, (a) transact
business in the State of New York; (b) committed a tortious act within the
State of New York; and/or (c) committed a tortious act without the State of New
York causing injury to Class members (as defined infra) within the State of New
York.
11. Pursuant to CPLR 503, venue is proper in this judicial district
since the cause of action arose here, and it is the principle place of
business of the Company.
CLASS ACTION ALLEGATIONS
12. Plaintiff brings this action behalf of himself and as a class
action, pursuant to CPLR section 901, on behalf of the Company's public
shareholders, and their successors in interest, who are or will be threatened
with injury arising from defendants' actions as more fully described herein
(the "Class"). Excluded from the Class are defendants herein and any person,
firm, trust, corporation, or other entity related to or affiliated with any of
the defendants.
4
<PAGE> 9
13. This action is properly maintainable as a class action.
14. The Class is so numerous that joinder of all members is
impracticable. There are approximately 1.8 million shares of the Company's
stock outstanding. The Company's shares are actively traded on the NASDAQ.
Members of the Class are scattered throughout the United States.
15. There are questions of law and fact which are common to the Class
and which predominate over questions affecting any individual Class member.
16. A class action is superior to other methods for the fair and
efficient adjudication of the claims herein asserted and no unusual difficulties
are likely to be encountered in the management of this class action. The
likelihood of individual class members prosecuting separate claims is remote.
17. Plaintiff is committed to the prosecution of this action and has
retained competent counsel experienced in litigation of this nature.
Plaintiff's claims are typical of the claims of other members of the Class and
plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
18. Plaintiff does not anticipate any difficulty in the management of
this litigation as a class action.
-5-
<PAGE> 10
BACKGROUND AND CLAIM FOR RELIEF
19. The Company's assets are significant to other railroads attempting to
prevent Canadian lines from obtaining a foothold in the northeastern portion of
the United States, and are thus extremely valuable.
20. In particular, since their purchase of Conrail, CSX and Norfolk's
purchase of the Company will help them overcome regulatory problems necessary
for approval of their Conrail purchase (the "Conrail Purchase"), and will
preclude the Company from voicing any complaints with the appropriate regulatory
authorities as to the Conrail Purchase.
21. The Company thus occupies a critical and valuable position.
22. On or about July, 1997, Rich filed a Form 13-D stating that the Company
was in discussions with CSX and Norfolk to purchase the Company.
23. At the time of this announcement, the Company's stock was trading at as
high as $24-1/4 per share.
24. On August 11, 1997, Gilmour, the Chairman of the board of directors of
the Company, announced that the Company had received an offer from a group
composed of Rich, CSX and Norfolk to take the Company private by purchasing the
remaining outstanding shares at $19.00 per share - less than the trading price
of the Company's stock (the "First Offer").
- 6 -
<PAGE> 11
25. Pursuant to the First Offer, CSX and Norfolk would buy 10% of the
Company or 20%, and Rich would buy the remaining 80%. The total value of the
initial offer was $34 million. CSX and Norfolk were to finance a portion of
Rich's purchase, while Rich was only to invest $3 million.
26. On or about August 18, 1997, the Company announced that it had entered
into a final Agreement and Plan of Merger (the "Merger Agreement"), which had
been recommended for approval by a special committee of the board, and approved
by the full board (the "Second Offer").
27. The Second Offer provides that Norfolk, CSX, and Rich will make a
tender offer for the outstanding shares of the Company at $22.00 per share and
then merge out the remaining public shareholders in a short form merger. The
total value of the transaction (the "Merger") is approximately $55 million.
28. On August 18, 1997, the Company filed a Form 8-K with the United States
Securities and Exchange Commission ("SEC"), appending the Merger Agreement.
29. The Merger Agreement was entered into without the defendants taking any
steps to maximize shareholder value, as they are obligated to do pursuant to
their fiduciary duties. The Merger does not provide shareholders with a fair
price.
30. Moreover, the Merger is conditioned on the following self-serving
terms, among others:
-7-
<PAGE> 12
(i) Rich maintaining his lucrative position with the newly
formed entity;
(ii) Rich being able to nominate a significant portion of the
board of the newly formed entity;
(iii) Rich's investment being subsidized by CSX and Norfolk (so
that Rich is personally only investing less than $3 million);
(iv) the Company's agreement that it will neither solicit nor
enter into discussions or negotiations with any other entity;
(v) CSX and Norfolk paying a significant portion of Rich's
counsel's fee;
(vi) the establishment of a Management Incentive Bonus Program,
to provide cash bonuses to operating management; and
(vii) commissions to be paid to Rich and other on-going managers
on certain asset dispositions of 7% of the gross consideration.
31. The purpose of the Merger is to enable the group to acquire one
hundred (100%) percent equity ownership of the Company and its valuable assets
for its own benefit at the expense of the Company's public stockholders, who
will be deprived of their equity investment and the benefits thereof including,
among other things, the expected growth in the Company's profitability.
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32. The Merger is the product of unfair dealing, and the price of $22.00
cash per share to be paid to Class is inadequate and unfair because, among other
things:
(a) the announcement of the Merger was made when the Company was
poised for significant future growth and earnings; and
(b) the group timed the announcement of the Merger to place an
artificial lid or cap on the market price for the Company's stock to enable
itself to acquire the stock at the lowest possible price. The price of $22.00
per share represents a discount from the market price on the day prior to the
announcement of the Merger ($23.00). It is also below the price that the stock
reached approximately two weeks ago ($24). Further, the price of $22.00 per
share is only marginally higher than the book value per share of the Company
($18.78). The price is also substantially below its fair value based on a
comparison of comparable railroads' trading multiples and acquisition multiples.
33. By reason of defendants' positions with the Company, along with their
ownership of the Company, defendants are in possession of non-public information
concerning the financial condition and prospects of the Company, and especially
the true value and expected future value of the Company and its assets, which
have not been disclosed to its public stockholders.
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34. The group, led by Rich, is intent on paying the lowest buyout price
to Class members, whereas it and the other defendants are duty-bound to maximize
shareholder value. The defendants have failed to insure that shareholder value
would be maximized and are acting to better the interests of the group at the
expense of the Company's public shareholders.
35. The proposed Merger is wrongful, unfair and harmful to the
Company's public stockholders, and represents an effort by the group to
aggrandize their own financial positions and interest at the expense of and to
the detriment of the Class. The Merger is an attempt to deny plaintiff and the
other members of the Class their right to share proportionately in the true
value of the Company's valuable assets, future growth in profits, and earnings,
while usurping the same for the benefit of the group on unfair and inadequate
terms.
36. Rich has breached his fiduciary duties of loyalty and due care by
proposing and/or agreeing to the Merger for his own personal benefit and at the
expense, and to the detriment of, the Company's public shareholders. CSX and
Norfolk Southern have aided and abetted Rich, and conspired with Rich, to
obtain 100% ownership of the Company's public stock for the benefit of the
group. CSX and Norfolk have, and will benefit from, the Merger since it will
deprive any other rail carrier from buying control of
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the Company, thereby obtaining direct access to the New York City area.
37. As a result of defendants' unlawful actions, plaintiff and the
other members of the Class will not receive their fair portion of the value of
the Company's assets and business and will be prevented from obtaining the real
value of their equity ownership of the Company. Unless the proposed Merger is
enjoined by the Court, defendants will continue to breach their fiduciary
duties owed to the plaintiff and the members of the Class, and the investor
group, let by Rich, will succeed in its plan described above, all to the
irreparable harm of the members of the Class.
38. Defendants' fiduciary obligations require them to:
(a) undertake an appropriate evaluation of any bona fide
offers, and take appropriate steps to solicit all potential bids for the
Company or its assets, consider strategic alternatives and otherwise maximize
shareholder value;
(b) act independently, including appointing a disinterested
committee and requiring a vote of a majority of the minority stockholders so
that the interests of the Company's public stockholders are protected; and
(c) adequately ensure that no conflicts of interest exist
between defendants' own interests and their
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fiduciary obligations to the public stockholders of the Company.
39. By virtue of the acts and conduct alleged herein, defendants
(aided and abetted by Norfolk) are not complying with their fiduciary duties
and are carrying out a preconceived plan and scheme to entrench themselves in
office and to protect and advance their own financial interests at the expense
of the Company and its public shareholders.
40. As a result of the foregoing, the defendants have breached
and/or aided and abetted breaches of fiduciary duties owed to the Company and
its shareholders.
41. Unless enjoined by this Court, defendants will breach their
fiduciary duties owed to plaintiff and the other members of the Class and may
benefit themselves in their corporate offices, all to the irreparable harm of
the Class, as aforesaid.
42. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) enjoining defendants from proceeding with the Merger;
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(c) ordering the defendants to carry out their fiduciary duties
to plaintiff and the other members of the Class;
(d) ordering defendants, jointly and severally, to account to
plaintiff and the other members of the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
(e) declaring that the defendants and each of them have
violated their fiduciary duties to the Class and/or aided and abetted such
breach;
(f) awarding plaintiff the costs and disbursements of the
action, including a reasonable allowance for plaintiff's attorney's fees and
experts' fees; and
(g) granting such other and further relief as this Court may
deem to be just and proper.
Dated: August 20, 1997
Lynda J. Grant, Esq.
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, NY 10017
(212) 907-0700
Attorneys for Plaintiff
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