<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
CONRAIL INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------
<PAGE> 2
LOGO
December 24, 1996
Dear Shareholders:
Please be advised that the special meeting of shareholders, previously
scheduled for December 23, 1996, in connection with the proposed Conrail/CSX
transactions has been rescheduled for Friday, January 17, 1997, at 12:00 p.m.,
Eastern Standard Time, at The Main Auditorium at The Academy of Music, Broad and
Locust Streets, Philadelphia, Pennsylvania, to permit shareholders to consider
the amended terms of the Conrail/CSX merger.
The original terms of the merger-of-equals between Conrail and CSX provided
value to Conrail shareholders at the high-end of what has been paid in other
railroad business combinations. The modifications agreed to between Conrail and
CSX since then (including those agreed to last week) have increased the value to
be received by Conrail shareholders by more that $1.5 billion. In addition,
Conrail and CSX have agreed to cause 100% of such value to be provided to
shareholders as soon as practicable following shareholder approval early in
1997, without waiting for approval by the Surface Transportation Board. We
believe that the Conrail/CSX transactions provide extraordinary value to Conrail
shareholders -- value that would not have been available without the actions of
the Conrail Board of Directors.
Under the amended terms of the merger, each share of Conrail common stock
and ESOP preferred stock will be exchanged for (i) 1.85619 shares of CSX common
stock and (ii) $16 of CSX convertible preferred stock, the terms of which will
be set prior to the merger such that the securities would, in the opinion of
both Conrail's and CSX's financial advisors, trade at par on a fully distributed
basis.
The amended merger agreement also extends from July 13, 1997 to December
31, 1998 the period of time prior to which Conrail and CSX have agreed not to
discuss, approve, recommend or agree to any takeover proposal with a third
party, or withdraw or modify, or publicly propose to withdraw or modify, their
respective approvals or recommendations of the Conrail/CSX transactions.
CSX, through a subsidiary, has also commenced the second tender offer to
purchase up to an additional 18,344,845 of the outstanding Conrail shares. The
second tender offer is conditioned on the Conrail shareholders voting to opt out
of a Pennsylvania statute at the special meeting. Conrail is soliciting proxies
of Conrail shareholders in favor of opting out of such Pennsylvania statute
pursuant to a proxy statement dated November 25, 1996 and pursuant to the
enclosed Supplement dated December 24, 1996. The enclosed Supplement contains
important information which you should read carefully.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO OPT OUT OF THE PENNSYLVANIA
STATUTE.
AS DESCRIBED IN THE ENCLOSED PROXY STATEMENT, YOUR BOARD OF DIRECTORS HAS
ALSO UNANIMOUSLY REJECTED THE REVISED NORFOLK TENDER OFFER AND RECOMMENDS THAT
CONRAIL SHAREHOLDERS REJECT THE REVISED NORFOLK TENDER OFFER.
As soon as possible, please complete the enclosed WHITE proxy and return it
in the enclosed postage paid return envelope, to ensure that your shares will be
voted at the meeting. Voting your shares by proxy does not prevent you from
voting your shares in person should you decide to attend the special meeting.
YOU MUST BRING THE ENCLOSED BLUE ADMISSION TICKET TO BE ADMITTED TO THE
SPECIAL MEETING.
If you have any questions regarding the special meeting or need assistance
in voting your Shares or in obtaining a BLUE admission ticket for the special
meeting, please call:
D.F. KING & CO., INC.
1-800-549-6746 (TOLL FREE)
Sincerely,
LOGO
/s/ David M. LeVan
David M. LeVan
Chairman, President and
Chief Executive Officer
<PAGE> 3
CONRAIL INC.
2001 MARKET STREET
TWO COMMERCE SQUARE
PHILADELPHIA, PENNSYLVANIA 19101-1417
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
RESCHEDULED TO BE HELD ON JANUARY 17, 1997
------------------------
To Our Shareholders:
Notice is hereby given that a Special Meeting (the "Special Meeting") of
Shareholders of Conrail Inc. ("Conrail"), previously scheduled for December 23,
1996, has been rescheduled to be held at The Main Auditorium at The Academy of
Music, Broad and Locust Streets, Philadelphia, Pennsylvania, on Friday, January
17, 1997, at 12:00 p.m., Eastern Standard Time, for the following purposes:
1. 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
2. To adjourn the Special Meeting, if necessary, to permit further
solicitation of proxies in the event that there are not sufficient votes
at the time of the Special Meeting to approve the foregoing proposal.
Only those shareholders of record as of the close of business of December
5, 1996, which continues to be the record date for the Special Meeting, will be
entitled to vote at the Special Meeting. A majority of the outstanding shares of
Conrail Common Stock and Series A ESOP Convertible Junior Preferred Stock
entitled to vote, considered as a single class, is required for a quorum. For
purposes of any meeting of shareholders that has been previously adjourned for
one or more periods aggregating at least fifteen days because of an absence of a
quorum, the shareholders entitled to vote who attend such an adjourned meeting,
although less than a quorum, shall nevertheless constitute a quorum for the
purposes of acting on any matter set forth in this Notice.
December 24, 1996 By Order of the Board of Directors
/s/ James D. McGeehan
James D. McGeehan
Corporate Secretary
<PAGE> 4
IMPORTANT NOTICE
TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE COMPLETE,
DATE, SIGN AND PROMPTLY MAIL THE ACCOMPANYING WHITE PROXY IN THE RETURN ENVELOPE
WHICH HAS BEEN PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
ANY PERSON GIVING A PROXY AS PROVIDED HEREIN HAS THE POWER TO REVOKE IT PRIOR TO
ITS EXERCISE, AND SHAREHOLDERS WHO ARE PRESENT AT THE MEETING MAY THEN REVOKE
SUCH PROXY AND VOTE IN PERSON.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU DO NOT SEND IN OR COMPLETE THE
GOLD PROXY FROM NORFOLK SOUTHERN CORPORATION. IF YOU HAVE ALREADY DONE SO, YOU
MAY REVOKE THE GOLD PROXY BY COMPLETING AND RETURNING THE WHITE PROXY IN THE
ENCLOSED POSTAGE PAID RETURN ENVELOPE. ONLY YOUR LATEST DATED PROPERLY EXECUTED
PROXY WILL BE COUNTED. THOSE SHAREHOLDERS WHO HAVE TENDERED THEIR SHARES TO
NORFOLK CAN STILL VOTE THOSE SHARES BY COMPLETING AND RETURNING THE WHITE PROXY.
YOU MUST BRING THE ENCLOSED BLUE ADMISSION TICKET TO BE ADMITTED TO THE
SPECIAL MEETING.
2
<PAGE> 5
CONRAIL INC.
2001 MARKET STREET
TWO COMMERCE SQUARE
PHILADELPHIA, PENNSYLVANIA 19101-1417
------------------------
SUPPLEMENT TO PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
RESCHEDULED TO BE HELD AT
12:00 P.M. ON FRIDAY, JANUARY 17, 1997
------------------------
This Supplement (this "Supplement") to the Proxy Statement dated November
25, 1996 (the "Original Proxy Statement" and, as so supplemented, the "Proxy
Statement") is furnished in connection with the solicitation by the Board of
Directors (the "Board") of Conrail Inc., a Pennsylvania corporation ("Conrail"),
of proxies for use at a Special Meeting (the "Special Meeting") of shareholders
which has been rescheduled to be held at The Main Auditorium at The Academy of
Music, Broad and Locust Streets, Philadelphia, Pennsylvania, on Friday, January
17, 1997, at 12:00 p.m., Eastern Standard Time, and at any adjournments thereof.
This Supplement is being furnished in connection with the solicitation of
proxies for the purposes described herein and in the Original Proxy Statement.
This Supplement modifies and supersedes certain information included in the
Original Proxy Statement previously distributed to Conrail shareholders and
should be read in conjunction with the Original Proxy Statement. Capitalized
terms used but not defined in this Supplement have the meanings assigned thereto
in the Original Proxy Statement.
If you have any questions regarding the Special Meeting or the Proxy
Statement (including this Supplement), require an additional copy of the
Original Proxy Statement or the WHITE proxy or GREEN trustee instruction card or
need assistance in voting your Shares or in obtaining a BLUE admission ticket
for the Special Meeting, please call:
D.F. KING & CO., INC.
1-800-549-6746 (TOLL FREE)
------------------------
This Supplement is first being mailed to Conrail shareholders on or about
December 24, 1996.
<PAGE> 6
INTRODUCTION
This Supplement is being provided in connection with the recent amendment
to the terms of the Merger Agreement among Conrail, CSX and Green Acquisition
Corp., a subsidiary of CSX ("Purchaser"), as referred to below. This Supplement
amends and supplements, and should be reviewed carefully in conjunction with,
the Original Proxy Statement.
RECENT DEVELOPMENTS
AMENDED TERMS OF CSX TRANSACTIONS. On December 18, 1996, Conrail, CSX and
Purchaser entered into a Second Amendment to the Merger Agreement dated as of
December 18, 1996 (the "Second Amendment"). The Second Amendment provides, among
other things, for an increase in the value of the securities to be received in
the Merger and that the Merger will occur, prior to approval thereof by the
Surface Transportation Board ("STB approval"), as soon as practicable following
approval by the shareholders of Conrail and CSX of the matters related to the
Merger. Under the Second Amendment, in the Merger (assuming that the Second CSX
Tender Offer referred to below is fully subscribed and consummated in accordance
with its terms), each Share will be converted into the right to receive (a)
1.85619 shares of Common Stock, par value $1.00 per share ("CSX Common Stock"),
of CSX and (b) $16 in convertible preferred stock of CSX, the terms of which
will be set prior to the Merger such that such securities would, in the opinion
of certain financial advisors at such time, trade at par on a fully distributed
basis (the "CSX Preferred Stock" and, together with the CSX Common Stock, the
"CSX Merger Securities").
Under the Second Amendment, the Merger (which has now been structured for
tax reasons as two mergers with subsidiaries of CSX, with the second occurring
one day following the first (collectively referred to as the "Merger")) is no
longer conditioned on receipt of STB approval. Upon consummation of the Merger,
100% of the Shares will be held in the Voting Trust until STB approval is
received. As a result, Conrail shareholders will receive the Merger
Consideration whether or not STB approval is granted.
Following consummation of the Merger and until receipt of STB approval,
Conrail will continue to be operated by Conrail's existing management and Board
of Directors and will continue to be subject to the covenants relating to the
operation of its business contained in the Merger Agreement. During such period,
CSX has agreed to operate its railroad operations in the ordinary course of
business consistent with past practice, not to enter any new lines of business
in any material way, not to take any action that could reasonably be expected to
impair, or materially delay, STB approval and not to engage in any discussions
or negotiations or enter into any agreements with any third party regarding
concessions with respect to the STB approval process except jointly with Conrail
as described in the Offer to Purchase under "MERGER AGREEMENT; OTHER AGREEMENTS
- -- Merger Agreement -- Third Party Discussions".
The Second Amendment also extends to December 31, 1998 the period (the
"Exclusivity Period") during which each party has agreed that it will not
discuss, approve, recommend or agree to any takeover proposal with a third
party, or withdraw or modify, or publicly propose to withdraw or modify, its
approval or recommendation of the transactions contemplated by the Merger
Agreement. As described in the Original Proxy Statement, certain conditions to
the Norfolk Offer (as defined below) (including redemption of the Rights and
approval of the Norfolk Offer under Subchapter F of Chapter 25 of the PBCL) can
only be satisfied if the Conrail Board takes actions which under the Merger
Agreement it has agreed not to do during the Exclusivity Period.
On December 6, 1996, CSX and Purchaser commenced the Second CSX Tender
Offer for up to an aggregate of 18,344,845 Shares for $110 per Share, without
interest, which, if fully subscribed and consummated in accordance with its
terms, would result in CSX and Purchaser owning an aggregate of approximately
40% of the Shares on a fully diluted basis (after giving effect to the
17,860,124 Shares purchased by Purchaser pursuant to the CSX Tender Offer which
closed on November 21, 1996 (the "First CSX Tender Offer" and, together with the
Second CSX Tender Offer, the "CSX Tender Offers"). If the Second CSX Tender
Offer is not fully subscribed and consummated, then the Merger would have a cash
election component such that shareholders, upon consummation of the Merger,
would have received (including pursuant to the CSX Tender Offers) $110 in cash
per Share for an aggregate of 40% of the Shares on a fully diluted basis, and
CSX Merger Securities for each of the remaining 60% of the fully diluted Shares.
2
<PAGE> 7
The Second CSX Tender Offer is conditioned on, among other things, approval
of the Proposal at the Special Meeting.
The terms and conditions of the Second CSX Tender Offer and a summary of
the terms of the Merger Agreement, as amended by the Second Amendment, are set
forth in an Offer to Purchase dated December 6, 1996, together with a Supplement
to the Offer to Purchase dated December 19, 1996 (as amended or supplemented,
the "CSX Offer to Purchase"), which was filed by CSX as an exhibit to a Tender
Offer Statement on Schedule 14D-1 dated December 6, 1996 (as amended, the "CSX
Schedule 14D-1"), filed with the SEC and which has been mailed to Conrail
shareholders. The terms and conditions of the Norfolk Offer are set forth in an
Offer to Purchase dated October 24, 1996 (as amended or supplemented, the
"Norfolk Offer to Purchase"), which was filed by Norfolk as an exhibit to a
Tender Offer Statement on Schedule 14D-1 dated October 24, 1996 (as amended, the
"Norfolk Schedule 14D-1"). Conrail has filed a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to each of the Second CSX Tender Offer
and the Norfolk Offer (as amended or supplemented, the "Schedule 14D-9s"), which
state the Conrail Board's recommendation with respect to each offer as set forth
below under "Board Approval of Second Amendment and Recommendations". You should
consider all this information carefully. If you would like to receive additional
copies of any of this material, please call D.F. King at the numbers listed on
the first or last pages of this Supplement.
On December 23, 1996, the closing prices of Conrail Common Stock and CSX
Common Stock on the New York Stock Exchange Composite Tape were $99 7/8 and
$43 1/4, respectively.
BOARD APPROVAL OF SECOND AMENDMENT AND RECOMMENDATIONS. On December 18,
1996, the Second Amendment was approved by the Conrail Board and by the
disinterested members of the Conrail Board, with one abstention. Mr. David B.
Lewis advised the Conrail Board that, while he continues to support fully the
Second CSX Tender Offer and the Merger and to recommend that shareholders vote
in favor of the Proposal, he wished to abstain from the vote on December 18,
1996, approving the Second Amendment in light of the provision in the Second
Amendment extending the Exclusivity Period to December 31, 1998.
THE CONRAIL BOARD CONTINUES TO UNANIMOUSLY RECOMMEND A VOTE FOR THE
PROPOSAL.
On December 20, 1996, Conrail issued a press release stating that the
Conrail Board had rejected Norfolk's amended offer (as amended, the "Norfolk
Offer") for all outstanding Shares for $115 per Share, without interest.
The Conrail Board has also reaffirmed its determination that the
transactions contemplated by the Merger Agreement (including the Second CSX
Tender Offer and the Merger) (the "CSX Transactions") are in the best interests
of Conrail and that a sale of Conrail to Norfolk would not be in the best
interests of Conrail. The Conrail Board made such determination taking into
account all the Conrail constituencies affected by the proposed transactions,
the short-term and long-term interests of Conrail, the resources, intent and
conduct (past, stated and potential) of any person seeking to acquire control of
Conrail, and all other pertinent factors. ACCORDINGLY, THE CONRAIL BOARD HAS
UNANIMOUSLY RECOMMENDED IN THE SCHEDULE 14D-9s THAT SHAREHOLDERS OF CONRAIL WHO
DESIRE TO RECEIVE CASH FOR A PORTION OF THEIR SHARES TENDER THEIR SHARES
PURSUANT TO THE SECOND CSX TENDER OFFER AND THAT SHAREHOLDERS NOT TENDER ANY OF
THEIR SHARES PURSUANT TO THE NORFOLK OFFER.
Under the terms of the CSX Transactions, the aggregate value of the
consideration to be received by the Conrail shareholders has been increased by
over $1.5 billion from the value contemplated by the original terms of the CSX
Transactions, which was already at the high-end of what has been paid in other
railroad business combinations. In addition, by voting for the Proposal,
shareholders of Conrail who wish to receive cash for a portion of their Shares
will be able to have such Shares purchased by CSX pursuant to the Second CSX
Tender Offer (which will expire on January 22, 1997) and will facilitate the
consummation of the Merger and receipt of the CSX Merger Securities (which is
expected to occur early in 1997, if the Proposal is approved). If shareholders
vote FOR the Proposal, the CSX Transactions thus permit shareholders
3
<PAGE> 8
to receive the aggregate consideration for all outstanding Shares significantly
earlier than under the original terms of the CSX Transactions or under the
Norfolk Offer.
THE CONRAIL BOARD URGES SHAREHOLDERS TO VOTE FOR THE PROPOSAL.
NORFOLK AND SHAREHOLDER LITIGATIONS. On December 13 and December 20, 1996,
Norfolk moved for leave to amend its complaint against Conrail, certain of its
directors and CSX to add, among other things, claims that (a) the extension of
the Exclusivity Period provided for in the Second Amendment violated the
fiduciary duties of the Conrail Board and (b) CSX has, in effect, acquired more
than 20% of the Shares (within the meaning of the Pennsylvania Statute) by
virtue of the allegation that Shares owned by CSX should be aggregated with
Shares that could be voted by directors, senior executives and other officers of
Conrail and, accordingly, that CSX and Conrail's directors, senior executives
and officers are obligated to pay "fair value" in cash, to be determined
pursuant to the Pennsylvania Statute, to all shareholders of Conrail other than
CSX and its subsidiaries. A hearing on Norfolk's request for a preliminary
injunction based on these claims has been scheduled for January 9, 1997.
In the shareholder class action litigation against the defendants referred
to above, the plaintiffs amended their complaint on December 9, 1996 to include,
among other things, a claim similar to that described in clause (b) of the
preceding paragraph.
POSTPONEMENT, ADJOURNMENT OR CALLING A NEW SPECIAL MEETING. The Merger
Agreement provides that Conrail may not convene, adjourn or postpone the Special
Meeting without the consent of CSX, which consent may not be unreasonably
withheld. Notwithstanding this provision, pursuant to a December 17, 1996 order
by the United States District Court for the Eastern District of Pennsylvania,
Conrail will not postpone or adjourn the Special Meeting by reason of Conrail
and its nominees not having received sufficient proxies to assure approval of
the Proposal. If the Proposal is not approved at the Special Meeting, Conrail
intends, and at the request of CSX is required, to call one or more new special
meetings to seek approval of the Proposal as promptly as practicable thereafter,
as contemplated by the Merger Agreement. A new record date would be set for any
such other special meeting in accordance with the requirements of Pennsylvania
law and the NYSE.
VOTING INFORMATION, SOLICITATION OF PROXIES
AND ADMISSION PROCEDURES FOR SPECIAL MEETING
VOTING AND SOLICITATION INFORMATION. Enclosed for your convenience is a
duplicate WHITE proxy. If you have not already voted on the WHITE proxy or would
like to change your vote, please complete, sign, date and promptly return the
enclosed WHITE proxy in the enclosed envelope. Voting your Shares by proxy does
not prevent you from voting your Shares in person should you decide to attend
the Special Meeting.
IF YOU HAVE ALREADY RETURNED A WHITE PROXY CARD AND DO NOT WISH TO CHANGE
YOUR VOTE, NO FURTHER ACTION IS REQUIRED.
IF YOU WISH TO VOTE FOR THE PROPOSAL, YOU MUST DO SO ON THE WHITE PROXY AND
NOT ON THE GOLD PROXY YOU HAVE RECEIVED FROM NORFOLK TO ENSURE THAT YOUR VOTE IN
FAVOR OF THE PROPOSAL WILL BE PROPERLY RECORDED AT THE SPECIAL MEETING.
See "Voting Information and Solicitation of Proxies" in the Original Proxy
Statement for more information.
ADMISSION PROCEDURES. It is important to follow the following instructions
to be admitted to the Special Meeting.
IF YOU ARE A REGISTERED HOLDER (you hold the physical certificate), a
BLUE admission ticket is enclosed. Please present your BLUE admission
ticket along with proof of identification at the Special Meeting.
IF YOU HOLD YOUR SHARES THROUGH A BANK OR BROKER, please request from
your representative a BLUE admission ticket. Please present the BLUE
admission ticket along with proper identification including a statement
from your bank or broker showing evidence of your ownership in Conrail at
the Special Meeting.
4
<PAGE> 9
IF YOU ARE AN INSTITUTIONAL HOLDER, please notify Messrs. Conroy or
Zuccarrelli of Conrail's Investor Relations Department at (215) 209-5592 or
(215) 209-5323, respectively. They will place you on an attendance list and
issue you a BLUE admission ticket.
YOU MUST HAVE A BLUE ADMISSION TICKET TO BE ADMITTED TO THE SPECIAL
MEETING.
INFORMATION CONCERNING CERTAIN SHAREHOLDERS
AND CONRAIL OFFICERS AND DIRECTORS
RECORD DATE AND OUTSTANDING SHARES. The close of business on December 5,
1996 (the "Record Date") continues to be the time for determining shareholders
of record entitled to notice of, and to vote at the Special Meeting. As of the
close of business on the Record Date, there were issued and outstanding
82,244,375 shares of Common Stock and 7,303,920 shares of ESOP Stock. This
information updates, and corrects certain immaterial errors contained in,
certain earlier disclosures made by Conrail in the Original Proxy Statement and
in documents relating to the CSX Tender Offers and the Norfolk Offer relating to
the number of outstanding shares of Common Stock and ESOP Stock as of certain
prior dates. Accordingly, this section of the Supplement replaces in its
entirety the corresponding section of the Original Proxy Statement.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF. To Conrail's knowledge
based on the latest publicly available information, the only persons (or "group"
as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), who, as of the Record Date (except as
otherwise set forth below), owned beneficially more than 5% of any class of
Conrail's voting securities are listed in the following table (which also lists
the Employee Benefits Trust):
<TABLE>
<CAPTION>
TITLE OF AMOUNT AND NATURE OF PERCENT OF
CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------- ------------------------------------- --------------------------- ----------
<S> <C> <C> <C>
Common Stock CSX Corporation 17,860,124(1) 21.7%
One James Center
801 East Cary Street
Richmond, VA 23219
Common Stock FMR Corp. 7,621,404(2) 9.3%
82 Devonshire Street
Boston, MA 02109
Common Stock Wellington Management Company 4,119,510(3) 5.0%
75 State Street
Boston, MA 02109
Common Stock Mellon Bank, N.A. 3,444,500, 4.2%
Suite 3346 solely in its capacity as
Pittsburgh, PA 15258 trustee of the Employee
Benefits Trust(4)
ESOP Stock Fidelity Management Trust Company 5,646,125, 77.3%
82 Devonshire Street solely in its capacity as
Boston, MA 02109 Trustee of the ESOP(5)
</TABLE>
- ---------------
(1) Based on information set forth on the Amendment No. 10 to the Schedule 13D
filed by CSX with the SEC on December 6, 1996. These Shares represent
approximately 19.9% of Conrail's total voting securities as of the Record
Date.
(2) Based on information set forth on the Schedule 13F filed by FMR Corp.
("FMR") with the SEC on November 15, 1996. Assuming that all these Shares
owned by FMR were tendered pursuant to the First CSX Tender Offer, 23.45%
of these Shares (or 1,787,219 Shares) would have been purchased by CSX
prior to the Record Date and reflected in CSX's beneficial ownership set
forth above. These Shares
5
<PAGE> 10
represent approximately 8.5% (or approximately 6.5% assuming FMR tendered
all its Shares to CSX) of Conrail's total voting securities as of the
Record Date.
(3) Based on information set forth on the Schedule 13F filed by Wellington
Management Company ("Wellington") with the SEC on November 15, 1996.
Assuming that all these Shares owned by Wellington were tendered pursuant
to the First CSX Tender Offer, 23.45% of these Shares (or 966,025 Shares)
would have been purchased by CSX prior to the Record Date and reflected in
CSX's beneficial ownership set forth above. These Shares represent
approximately 4.6% (or approximately 3.5% assuming Wellington tendered all
its Shares to CSX) of Conrail's total voting securities as of the Record
Date.
(4) These shares represent approximately 3.8% of Conrail's total voting
securities as of the Record Date. The Employee Benefit Trust is listed for
information purposes only and does not represent a beneficial owner of more
than 5% of the Common Stock as of the Record Date.
(5) Shares of ESOP Stock are convertible into shares of Common Stock at any time
on a share-for-share basis, subject to certain antidilution adjustments. As
a result, ownership of shares of ESOP Stock is deemed to be ownership of an
equal number of shares of Common Stock. These shares of ESOP Stock
represent the unallocated shares of ESOP Stock contained in the ESOP. These
shares, together with the 1,657,795 shares of ESOP Stock allocated to
participants, constitute an aggregate of 7,303,920 shares of ESOP Stock,
which aggregate represents approximately 8.2% of Conrail's total voting
securities as of the Record Date.
OWNERSHIP BY THE ESOP AND EMPLOYEE BENEFITS TRUST. As set forth in the
table above, as of the Record Date, each of the ESOP and the Employee Benefits
Trust owns Shares representing approximately 8.2% and 3.8%, respectively, of
Conrail's total voting securities. As disclosed in the Original Proxy Statement,
the ESOP and the Employee Benefits Trust tendered substantially all of their
Shares, respectively, pursuant to the First CSX Tender Offer, and the Employee
Benefits Trust, pursuant to its terms, used substantially all the proceeds it
received from CSX pursuant to the First CSX Tender Offer to acquire 964,164
Shares in the market prior to the Record Date. To Conrail's knowledge, the ESOP,
pursuant to the authority and fiduciary responsibility of the Trustee, did not
use the proceeds it received from CSX pursuant to the First CSX Tender Offer to
purchase Shares prior to the Record Date. As set forth in the Original Proxy
Statement, Shares owned by the Employee Benefits Trust will be voted by the
trustee thereof in the same manner and proportion as the shares of ESOP Stock
for which valid instructions are received are instructed to be voted. The Trust
Agreement governing the ESOP provides that proxies for Shares that have been
allocated to individual participants pursuant to the ESOP will be voted in
accordance with that participant's direction as set forth on the GREEN trustee
instruction card that is enclosed herewith for participants. Participants cannot
vote their shares of ESOP Stock or instruct the Trustee as to how to vote their
shares of ESOP Stock by completing the enclosed WHITE proxy. The Trust Agreement
also provides that all shares of ESOP Stock that have not been allocated to an
individual participant, and all shares of ESOP Stock that have been so allocated
but as to which no valid voting instructions have been received by the Trustee
shall be voted in the same manner and proportion as are the shares of ESOP Stock
for which valid instructions are received.
OWNERSHIP BY MANAGEMENT OF VOTING SECURITIES. The following table sets
forth the beneficial ownership, as of the Record Date, of Common Stock and ESOP
Stock of each director, each of the six most highly compensated executive
officers of Conrail, and all directors and executive officers as a group. Unless
otherwise indicated, each such person has sole voting and investment power with
respect to such shares of Common Stock and sole voting power with respect to
such shares of ESOP Stock. The Trustee holds sole investment power with respect
to all shares of ESOP Stock. As of the Record Date, all Conrail directors and
executive officers as a group owned less than one percent (1%) of the aggregate
outstanding Shares. To the best of Conrail's knowledge, its directors and
executive officers intend to vote for the Proposal.
6
<PAGE> 11
<TABLE>
<CAPTION>
AMOUNT PERCENT
NAME OF INDIVIDUAL OR GROUP BENEFICIALLY OWNED OF CLASS
- ----------------------------------------------------------------- ------------------ --------
<S> <C> <C>
David M. LeVan................................................... 139,112(1) *
Chairman of the Board of Directors, President and
Chief Executive Officer
H. Furlong Baldwin............................................... 2,000 *
Director
Claude S. Brinegar............................................... 1,000 *
Director
Daniel B. Burke.................................................. 2,000 *
Director
Kathleen Foley Feldstein......................................... 700 *
Director
Roger S. Hilles.................................................. 2,362 *
Director
E. Bradley Jones................................................. 1,000 *
Director
David B. Lewis................................................... 919 *
Director
John C. Marous................................................... 612 *
Director
Gail J. McGovern................................................. 0 *
Director
Raymond T. Schuler............................................... 6,063 *
Director
David H. Swanson................................................. 449 *
Director
Bruce B. Wilson.................................................. 28,695(1) *
Senior Vice President-Law
Ronald J. Conway................................................. 34,665(1) *
Senior Vice President-Operations
Timothy P. Dwyer................................................. 12,469(1) *
Senior Vice President-Unit Trains Service Group
John P. Sammon................................................... 23,789(1) *
Senior Vice President-CORE Service Group
George P. Turner................................................. 43,937(1) *
Senior Vice President-Automotive Service Group
Executive Officers and Directors as a Group...................... 574,851(2) *
</TABLE>
- ---------------
* Less than one percent.
(1) For Messrs. LeVan, Wilson, Conway, Dwyer, Sammon and Turner, respectively,
includes options exercisable within 60 days to acquire 98,896, 0, 27,375,
0, 18,125 and 34,232 shares of Common Stock and 1,931, 1,910, 1,868, 1,634,
1,642 and 1,668 shares of ESOP Stock allocated to the accounts of each of
the named officers under the ESOP. Shares of ESOP Stock are convertible
into shares of Common Stock at any time on a share-for-share basis, subject
to certain antidilution adjustments. As a result, ownership of shares of
ESOP Stock is deemed to be ownership of an equal number of shares of Common
Stock.
(2) Includes (x) options exercisable within 60 days to acquire 351,660 shares of
Common Stock and (y) 35,405 shares of ESOP Stock allocated to the accounts
of individual officers under the ESOP. This number also includes shares
held by all officers of Consolidated Rail Corporation.
7
<PAGE> 12
------------------------
Your vote is extremely important. As soon as possible, please complete and
return the WHITE proxy (or GREEN trustee instruction card) in the enclosed
postage paid return envelope, to ensure that your Shares will be voted at the
Special Meeting. Any person giving a proxy as provided herein has the power to
revoke it prior to its exercise, and shareholders who are present at the Special
Meeting may then revoke such proxy and vote in person.
Your Board of Directors recommends that you do not send in or complete the
gold proxy from Norfolk. If you have already done so, you may revoke the gold
proxy by completing and returning the WHITE proxy in the enclosed postage paid
return envelope. Only your latest dated properly executed proxy will be counted.
Those shareholders who have tendered their Shares to Norfolk can still vote
those Shares by completing and returning the WHITE proxy.
Shareholders who wish to vote in favor of the Proposal should do so by
executing the WHITE proxy, and not by voting in favor of the Proposal on the
gold proxy, to ensure that your vote will be recorded at the Special Meeting.
YOU MUST PRESENT A BLUE ADMISSION TICKET TO BE ADMITTED TO THE SPECIAL
MEETING.
If you have any questions regarding the Special Meeting or the Proxy
Statement (including this Supplement), require an additional copy of the
Original Proxy Statement or the WHITE proxy or GREEN trustee instruction card or
need assistance in voting your Shares or in obtaining a BLUE admission ticket
for the Special Meeting, please call:
D.F. KING & CO., INC.
1-800-549-6746 (TOLL FREE)
December 24, 1996 By Order of the Board of Directors
/s/ James D. McGeehan
James D. McGeehan
Corporate Secretary
8
<PAGE> 13
PROXY
CONRAIL INC.
PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF CONRAIL INC. FOR THE
SPECIAL MEETING OF SHAREHOLDERS, JANUARY 17, 1997
The undersigned hereby constitutes and appoints Timothy T. O'Toole and Bruce B.
Wilson, and each or either of them, as true and lawful agents and proxies with
full power of substitution in each to represent the undersigned at the Special
Meeting of Shareholders of Conrail Inc. to be held on Friday, January 17, 1997,
at 12:00 p.m., Eastern Standard Time, at The Main Auditorium at The Academy of
Music, Broad and Locust Streets, Philadelphia, Pennsylvania, and at any
adjournments thereof, on all matters coming before said meeting. A participant
in the Consolidated Rail Corporation Matched Savings Plan (the "ESOP")
desiring that Fidelity Management Trust Company, as trustee under the ESOP (the
"Trustee"), vote shares of Conrail Inc. Series A ESOP Convertible Junior
Preferred Stock ("ESOP Stock") allocated to such participant's account should
so instruct the Trustee by completing the trustee instruction card that has
been provided to ESOP participants for such purpose. ESOP participants cannot
vote their shares of ESOP Stock or instruct the Trustee as to how to vote their
shares of ESOP Stock by completing this proxy card.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX ON
THE REVERSE SIDE OF THIS PROXY CARD. IF YOU SIGN AND RETURN THIS PROXY CARD BUT
DO NOT MARK ANY BOXES, YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. THE PERSONS LISTED ABOVE CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS PROXY CARD.
|SEE REVERSE|
| SIDE |
<PAGE> 14
2570
[X] Please mark your
vote as in this
sample
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
The Proposal to approve an amendment to Conrail Inc.'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 Inc.
The Adjournment Proposal to adjourn the Special Meeting, if necessary, to permit further [ ] [ ] [ ]
solicitation of proxies in the event that there are not sufficient votes at the time of
the Special Meeting to approve the foregoing Proposal.
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 SHARES, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS DESCRIBED ABOVE.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED POSTAGE PAID RETURN
ENVELOPE
</TABLE>
SIGNATURE(S) TITLE DATE
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> 15
CONRAIL INC.
SPECIAL MEETING ADMISSION TICKET
-------------------
SHAREHOLDER IDENTIFICATION CARD
Special Meeting of Shareholders, Friday, January 17, 1997, 12:00 p.m.
The Main Auditorium at The Academy of Music
Broad and Locust Streets, Philadelphia, Pennsylvania
YOU MUST BRING THIS CARD TO BE ADMITTED TO THE MEETING
<PAGE> 16
IT IS IMPORTANT TO FOLLOW THESE INSTRUCTIONS
TO BE ADMITTED TO THE MEETING
IF YOU ARE A REGISTERED HOLDER (you hold the physical certificate), an
admission ticket is enclosed. Please present your admission ticket along with
proof of identification at the meeting.
IF YOU HOLD YOUR SHARES THROUGH A BANK OR BROKER, please request from
your representative an admission ticket. Please present the admission ticket
along with proper identification including a statement from your bank or broker
showing evidence of your ownership in Conrail Inc. at the meeting.
IF YOU ARE AN INSTITUTIONAL HOLDER, please notify Messrs. Conroy or
Zuccarrelli of Conrail's Investor Relations Department at (215) 209-5592 or
(215) 209-5323, respectively. They will place you on an attendance list and
issue you an admission ticket.
YOU MUST HAVE AN ADMISSION TICKET TO BE ADMITTED TO THE MEETING.
<PAGE> 17
CONRAIL INC.
INSTRUCTION CARD SOLICITED BY
FIDELITY MANAGEMENT TRUST COMPANY
FOR THE SPECIAL MEETING OF SHAREHOLDERS, JANUARY 17, 1997
(ORIGINALLY SCHEDULED FOR NOVEMBER 14, 1996)
T As a participant in the Consolidated Rail Corporation Matched Savings Plan
R (the "Plan") whose Plan account has been credited with shares of Conrail
U Inc. Series A ESOP Convertible Junior Preferred Stock ("ESOP Preferred
S Shares") as of December 5, 1996, the undersigned hereby directs Fidelity
T Management Trust Company, as trustee of the Plan (the "Trustee"), to vote
E all such ESOP Preferred Shares at the Special Meeting of Shareholders of
E Conrail Inc. to be held on Friday, January 17, 1997, at 12:00 p.m., Eastern
Standard Time, at The Main Auditorium at The Academy of Music, Broad and
Locust Streets, Philadelphia, Pennsylvania, and at any adjournments
I thereof, as designated on the reverse side of this Instruction Card. The
N Trustee will vote the number of ESOP Preferred Shares credited to your Plan
S account as of December 5, 1996, (or such other record date as may be
T established by the Board of Directors of Conrail Inc.) as you instruct if
R your executed Instruction Card is RECEIVED by Midnight, January 15, 1997,
U at the address on the enclosed postage paid return envelope. The Trustee
C makes no recommendation to Plan participants as to how ESOP Preferred
T Shares credited to their Plan accounts should be voted. The voting
I instructions of each Plan participant are confidential and will not be
O revealed to the Company, or any proposed purchaser or their affiliates.
N
If you do not sign and return this Instruction Card, or if you sign and
return this Instruction Card but do not mark the boxes, ESOP Preferred
C Shares credited to your Plan account will be voted by the Trustee, together
A with unallocated ESOP Preferred Shares, in the same manner and proportion
R as the shares of ESOP Preferred Shares credited to participants' accounts
D for which valid voting instructions are received, unless otherwise required
by applicable law.
[SEE REVERSE
SIDE]
<PAGE> 18
2570
[X] Please mark your
instructions as in
this sample
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
The Proposal to approve an amendment to Conrail Inc.'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 Inc.
The Adjournment Proposal to adjourn the Special Meeting [ ] [ ] [ ]
THIS INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL
BE USED BY THE TRUSTEE TO DETERMINE HOW TO VOTE
ESOP PREFERRED SHARES CREDITED TO THE ACCOUNT OF
THE UNDERSIGNED PLAN PARTICIPANT AS DESCRIBED
HEREIN, UNLESS OTHERWISE REQUIRED BY APPLICABLE
LAW.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUCTION
CARD PROMPTLY USING THE ENCLOSED POSTAGE PAID
RETURN ENVELOPE
</TABLE>
SIGNATURE(S) TITLE DATE
Note: Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
<PAGE> 19
LOGO
LETTER TO PARTICIPANTS IN
THE CONSOLIDATED RAIL CORPORATION
MATCHED SAVINGS PLAN
December 24, 1996
Re: Consolidated Rail Corporation Matched Savings Plan (the "Plan")
Dear Plan Participant:
Enclosed with this letter is a Proxy Statement Supplement prepared by
Conrail Inc. (the "Company") in connection with the Special Meeting of the
Shareholders of the Company, regarding a proposed amendment to the Company's
Articles of Incorporation. The Special Meeting of Shareholders, originally
scheduled for November 14, 1996, and rescheduled to December 23, 1996, is now
scheduled for January 17, 1997.
As a participant in the Plan, you are entitled to instruct Fidelity
Management Trust Company ("Fidelity"), as Trustee of the trust established under
the Plan, as to the manner in which the shares of Conrail Inc. Series A ESOP
Convertible Junior Preferred Stock ("ESOP Preferred Shares") credited to your
Plan account as of the record date, December 5, 1996, are to be voted. The Trust
Agreement provides that Fidelity is to vote ESOP Preferred Shares credited to
participant accounts in accordance with participant instructions. The Trust
Agreement requires Fidelity to vote ESOP Preferred Shares credited to
participant accounts for which Fidelity does not receive instructions, and ESOP
Preferred Shares in the Plan not credited to participant accounts in proportion
to the instructions received from participants. Fidelity must follow the terms
of the Trust Agreement unless otherwise required by applicable law.
Proxy solicitation materials prepared by the Company have previously been
sent to you. In those materials the Company seeks to have shareholders vote for
the proposed amendment. You have also been sent proxy solicitation materials
prepared by Norfolk Southern Corporation seeking to have shareholders vote for
the proposed amendment. If you have not received all of the proxy solicitation
materials, please call Fidelity's Participant Services Group at 1-800-354-9727.
You are strongly encouraged to read the enclosed materials and all other proxy
solicitation materials carefully.
The procedure for instructing Fidelity concerning how to vote ESOP
Preferred Shares credited to your account was described in detail in the
Fidelity letter dated November 7, 1996. Please call Fidelity's Participant
Services Group at 1-800-354-9727 if you do not have a copy of that letter, or if
you need additional information concerning the procedure for instructing
Fidelity with respect to voting ESOP Preferred Shares credited to your account.
Enclosed for your convenience is an additional Green Trustee Instruction Card
and a return envelope. You must use the Green Trustee Instruction Card to
instruct Fidelity with respect to the Special Meeting votes. You may use the
enclosed card regardless of whether you intend to instruct Fidelity to vote for
or against the proposals, or to abstain. In order to instruct Fidelity, you must
send a properly completed, dated, and signed Green Trustee Instruction Form to
Fidelity's tabulation agent, Corporate Election Services, at P.O. Box 1150,
Pittsburgh, PA 15230-9954. DO NOT RETURN THE CARD TO FIDELITY. IT MUST BE MAILED
TO FIDELITY'S TABULATION AGENT.
The deadline for receipt of Green Trustee Instruction Forms by Fidelity's
tabulation agent is Midnight on January 15, 1997. If you have previously sent a
properly completed, dated, and signed Green Trustee Instruction Form to
Fidelity's tabulation agent, it is not necessary to send another form, unless
you wish to change your instructions to Fidelity. PLEASE NOTE THAT YOU CANNOT
INSTRUCT FIDELITY CONCERNING THE VOTE BY TELEPHONE OR FACSIMILE (FAXES).
<PAGE> 20
If you have additional questions concerning the Conrail proxy solicitation,
please call D.F. King at 1-800-549-6746. If you have additional questions
concerning the Norfolk Southern Corporation proxy solicitation, please call
Georgeson & Company, Inc. at 1-800-223-2064.
FIDELITY MAKES NO RECOMMENDATION TO PLAN PARTICIPANTS AS TO HOW TO VOTE
THEIR ESOP PREFERRED SHARES.
FIDELITY MANAGEMENT TRUST COMPANY,
as Trustee of the Consolidated Rail Corporation
Matched Savings Plan
