AMENDMENT NO. 2 TO
TRANSACTION AGREEMENT
THIS AMENDMENT NO. 2 TO THE TRANSACTION AGREEMENT (this
"Amendment"), dated as of June 1, 1999, by and among CSX
CORPORATION, a Virginia corporation ("CSX"), CSX TRANSPORTATION,
INC., a Virginia corporation, for itself and on behalf of its
controlled Subsidiaries (collectively, "CSXT"), NORFOLK SOUTHERN
CORPORATION, a Virginia corporation ("NSC"), NORFOLK SOUTHERN
RAILWAY COMPANY, a Virginia corporation, for itself and on behalf
of its controlled Subsidiaries (collectively, "NSR"), CONRAIL
INC., a Pennsylvania corporation, for itself and on behalf of its
controlled Subsidiaries (collectively, "CRR"), CONSOLIDATED RAIL
CORPORATION, a Pennsylvania corporation ("CRC"), and CRR HOLDINGS
LLC, a Delaware limited liability company ("CRR Parent").
WHEREAS, the parties have previously entered into that
certain Transaction Agreement, dated as of June 10, 1997, as
amended by Amendment No. 1 to Transaction Agreement, dated as of
August 22, 1998 and the System Support Operations Agreement dated
as of May 15, 1999, relating to Section 2.3 hereof (the
"Transaction Agreement");
WHEREAS, the parties are on the date hereof consummating
the Closing (as defined in the Transaction Agreement) and
entering into various documents and instruments to effectuate the
same, including Ancillary Agreements ("Closing Documents");
WHEREAS, in connection with the parties' preparations for
the Closing, the parties have identified certain provisions of
the Transaction Agreement for which the Parties desire to clarify
their understandings and agreements with respect to such
provisions and to make interim provisions with respect to certain
Transaction Agreement matters which are currently in dispute;
WHEREAS, the parties have determined that it is in the
best interests of their respective companies to amend the
Transaction Agreement as set forth in this Amendment;
WHEREAS, it is the intent of the parties that, except as
expressly amended hereby, the Transaction Agreement shall remain
unamended and in full force and effect;
NOW, THEREFORE, the parties hereby amend the Transaction
Agreement as follows:
SECTION 1. References; Interpretation.
(a) Unless otherwise specifically defined herein, each
term used herein which is defined in the Transaction Agreement
has the meaning assigned to such term in the Transaction
Agreement. Each reference to "hereof", "hereunder", "herein" and
"hereby" and each reference to "this Agreement" and each other
similar reference contained in the Transaction Agreement shall
from and after the date of this Amendment refer to the
Transaction Agreement as amended hereby.
(b) The parties hereby expressly agree that the
Closing is being consummated, and the Closing Documents are being
delivered, pursuant to and in furtherance of the Transaction
Agreement and shall be interpreted as such consistent with the
terms of the Transaction Agreement and in furtherance of the
terms of the Transaction Agreement to the greatest extent
possible. Therefore, in the event of any inconsistency between
the terms of the Transaction Agreement and any Closing Document,
the terms of the Transaction Agreement shall prevail, except to
the extent such Closing Document provides otherwise.
SECTION 2. Transportation Contracts.
(a) The beginning of the first sentence of Subsection
2.2(c)(iii) of the Transaction Agreement is amended to read as
follows:
"(iii) The following decision rules shall be
applied on an annual basis with tentative settlements
to the extent required by subsection (c)(ii) on a
quarterly basis 90 days after the end of the quarter
and an annual true-up 90 days after the end of the
year:"
(b) Subsection 2.2(c)(iii)(C)(aa)(x) of the
Transaction Agreement is hereby amended and restated in its
entirety by deleting the existing provision and inserting the
following:
"(x) If the origin station is Local to NSR
and the destination station is on the NYC Allocated
Assets and Local to CSXT, then the allocation shall be
on a joint line basis between NSR and CSXT with the
interchange to be negotiated between NSR and CSXT and
the revenues to be split based upon an ICC Docket 28300
mileage prorate with a minimum division of 25% to each
of NSR and CSXT; and"
(c) Subsection 2.2 (c) (iii) (C) (bb) (x) of the
Transaction Agreement is hereby amended and restated in its
entirety by deleting the existing provision and inserting the
following:
"(x) If the origin station is Local to CSXT
and the destination station is on the PRR Allocated
Assets and Local to NSR, then the allocation shall be
on a joint line basis between CSXT and NSR with the
interchange to be negotiated between CSXT and NSR and
the revenues to be split based upon an ICC Docket 28300
mileage prorate with a minimum division of 25% to each
of CSXT and NSR; and"
SECTION 3. FELA Matters.
(a) Section 2.8(c) of the Transaction Agreement is
hereby amended and restated in its entirety by deleting the
existing provision and inserting the following:
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"(c) Except for liabilities that are the
responsibility of any Person pursuant to any of the
Ancillary Agreements, all liabilities associated with
the handling and disposition of FELA Claims ("FELA
Liabilities") of CRR, CRC and their Affiliates shall be
allocated as follows: (i) FELA Liabilities that arise
from incidents or exposures occurring prior to the
Closing Date shall be Retained Liabilities; (ii) to the
extent FELA Liabilities arise from incidents or
exposures occurring in part prior, and in part on or
after, the Closing Date, that portion of the FELA
Liability arising prior to the Closing Date shall be
Retained Liability; and, (iii) to the extent FELA
Liabilities arise from incidents or exposures occurring
on or after the Closing Date, they shall be the
responsibility of the party then employing the injured
employee. Notwithstanding the provisions of the
foregoing sentence, if any single incident occurring
between the Control Date and the Closing Date results
in FELA Liability which exceeds CRC's insurance
coverage by $10 million or more, the amount by which
such liability exceeds $10 million in excess of CRC's
insurance coverage shall be a PRR Allocated Liability
if the incident occurred on or relates primarily to PRR
Allocated Assets and shall be a NYC Allocated Liability
if the incident occurred on or relates primarily to NYC
Allocated Assets. CRC will obtain insurance, in form
and amount satisfactory to the parties hereto,
indemnifying PRR and NYC against the liability to which
either may be subject under this paragraph.
(b) Section 8.15 of the Transaction Agreement is
hereby deleted in its entirety and the following is substituted
therefor:
"Section 8.15. Administration of Actions.
After the Closing Date, (a) NYC shall have exclusive
authority and control over the investigation,
prosecution, defense and appeal of all Actions relating
primarily to NYC, the NYC Allocated Assets, the NYC
Allocated Liabilities or a Retained Liability (except
for Retained Liabilities for which the monetary claim
is more than $500,000 or injunctive relief is sought)
which arose at the location of a NYC Allocated Asset,
or with which a NYC Allocated Asset is most
significantly involved (each, an "NYC Action"), and may
settle or compromise, or consent to the entry of any
judgment with respect to, any such NYC Action without
the consent of CRC, NSC or PRR and (b) PRR shall have
exclusive authority and control over the investigation,
prosecution, defense and appeal of all Actions relating
primarily to PRR, the PRR Allocated Assets, the PRR
Allocated Liabilities, or a Retained Liability (except
for Retained Liabilities for which the monetary claim
is more than $500,000 or injunctive relief is sought),
which arose at the location of a PRR Allocated Asset or
with which a PRR Allocated Asset is most significantly
involved (each a "PRR Action"), and may settle or
compromise, or consent to the entry of any judgment
with respect to, any such PRR Action without the
consent of CRC, CSX or NYC.
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"Notwithstanding the foregoing, neither NYC
or PRR may settle or compromise, or consent to the
entry of any judgment with respect to, any such Action
without the prior written consent of the other if such
settlement, compromise or consent to such judgment (i)
includes any form of injunctive relief binding upon
such other party or CRC or (ii) does not include as an
unconditional term thereof the giving by the claimant
or plaintiff to such other party or CRC and any
Affiliates of CRC subject to such Action of a full and
final release from all liability in respect to such
claim or litigation. After the Closing Date with
respect to an Action not covered under clauses (a) and
(b) of the foregoing sentence (including Actions
relating to Retained Liabilities), the handling,
administration and disposition of such Actions shall be
the joint responsibility of CSX and NSC and the costs
thereof shall be Corporate Level Liabilities. In
assigning joint responsibility for the administration,
handling and disposition of Actions to CSX and NSC,
hereunder it is not the parties' intent that CSX and
NSC will actually administer, handle and dispose of
such Actions jointly, but rather that CSX and NSC will
agree on the most practical and efficient arrangements
with the objective of eliminating unnecessary
duplication of effort and minimizing overall costs.
The costs and expenses of the administration and
handling of such Actions shall be Corporate Level
Liabilities; provided that salaries and overheads
associated with the salaries of full time employees of
CSX or NSC while engaged in investigation or handling
such Actions shall be the responsibility of the
employing party and are Corporate Level Liabilities
only to the extent that they are covered by insurance
or are otherwise reimbursable by CRR or CRC pursuant to
a separate agreement with CSX or NSC.
"The provisions of this Section 8.15 shall
apply except as may be otherwise provided in a separate
agreement among CRC, CSX and/or NSC and except as may
be provided by action of the CRC Board."
(c) Section 8.16 of the Transaction Agreement is
hereby deleted in its entirety and the following is substituted
therefor:
"Section 8.16. Administration of FELA
Claims. (a) Except as provided pursuant to separate
agreement between CSX and NSC, the administration,
handling and disposition of FELA Claims (whenever made)
that arise from incidents or exposures occurring prior
to the Closing Date shall be (i) the responsibility of
the parent of the party operating the Allocated Asset
where the incident or incidents giving rise to the FELA
Claim occurred, or (ii) the responsibility of the
parent of the party operating the Allocated Asset most
significantly involved if the FELA Claim arises from an
incident or incidents occurring at multiple locations
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on Allocated Assets, or (iii) the joint responsibility
of CSX and NSC if the FELA Claim arises from an
incident or incidents occurring at unknown locations or
a location not otherwise covered by clauses (i) or (ii)
of this sentence. In assigning joint responsibility
for the administration, handling and disposition of
FELA Claims to CSX and NSC under the foregoing clause
(iii), it is not the parties' intent that CSX and NSC
will actually administer, handle and dispose of such
actions jointly, but rather that CSX and NSC will agree
on the most practical and efficient arrangements with
the objective of eliminating unnecessary duplication of
effort and minimizing overall costs. The costs and
expenses associated with the administration, handling
and disposition of FELA Claims that arise from
incidents or exposures occurring prior to the Closing
Date shall be borne by CRR; provided that salaries and
overheads associated with the salaries of full time
employees of CSX or NSC while engaged in investigation
or handling such FELA Claims shall be the
responsibility of the employing party and are Corporate
Level Liabilities only to the extent that they are
covered by insurance or are otherwise reimbursable by
CRR or CRC pursuant to a separate agreement with CSX or
NSC; provided, further that the party responsible for
the administration of FELA Claims which are Retained
Liabilities shall, before agreeing to any single
settlement of a FELA Claim or group of related FELA
Claims, involving a payment of more than $1 million,
obtain the written consent of the other party. Failure
of either party to respond to such a request for
consent within fourteen days of receipt of such request
shall be deemed to constitute consent."
SECTION 4. CRC Pension Plan Matters.
(a) Section 6.3(c) of the Transaction Agreement is
hereby amended by inserting the following after the word
"Percentage":
", as adjusted to reflect any Separation
Costs required to be borne by CSX or NSC pursuant to
Section 6.2(i) and to reflect any timing differences in
the transfers of assets and liabilities to CSX and NSC
pension plans based on actual investment experience."
(b) Section 6.3(c) of the Transaction Agreement is
further amended by deleting the last sentence thereof and
replacing it with the following:
"The Consolidated Rail Corporation Pension Fund
Investment Committee shall approve the manner and
amounts to be transferred to CSX and NSC pension plans
with respect to transfers of employees to CSX and NSC
payrolls and this Section 6.3(c)."
SECTION 5. Insurance Matters. Section 2.11 of the
Transaction Agreement is hereby deleted in its entirety and the
following is substituted therefor:
"2.11 Insurance Proceeds: Except as otherwise
provided in this Agreement, the proceeds of any
insurance recoveries from insurance carried by CRR,
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CRC or their respective Affiliates on or prior to the
Closing Date and third party recoveries in the nature
of insurance or indemnity covering Assets, Retained
Liabilities or Allocated Liabilities, which are
received on or after the Closing Date, shall accrue to
the benefit of and be held by or paid over to CRC, NYC
or PRR in proportion to the obligation each bears under
this Agreement for the particular Liabilities to which
the recoveries are applicable."
SECTION 6. Confirmation of Transaction Agreement. In
all respects not inconsistent with the terms and provisions of
this Amendment, the Transaction Agreement is hereby ratified,
adopted, approved and confirmed.
SECTION 7. Miscellaneous. The provisions of Article
XI of the Transaction Agreement are hereby expressly incorporated
by reference into this Amendment, and each provision thereof
shall have the same force and effect as if fully set forth herein
(except to the extent such provision is amended, modified,
supplemented, altered, rescinded or superseded by this
Amendment).
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IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date and year first
above written.
CSX CORPORATION
By: /s/ X. X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President and Treasurer
CSX TRANSPORTATION, INC.
(for itself and on behalf of its
controlled Subsidiaries)
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President - Law &
General Counsel - CSX
Corporation, authorized
agent for CSX
Transportation, Inc.
NORFOLK SOUTHERN CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman and Chief
Operating Officer
NORFOLK SOUTHERN RAILWAY COMPANY
(for itself and behalf of its controlled
Subsidiaries)
By: /s/ X. X. Xxxxxxx
Name: X. X. Xxxxxxx
Title: Senior Vice President -
Operations
CONRAIL INC. (for itself and on behalf
of its controlled Subsidiaries)
By: /s/ Xxxxxxx X'Xxxxx
Name: Xxxxxxx X'Xxxxx
Title: President and Chief
Executive Officer
CONSOLIDATED RAIL CORPORATION
By: /s/ Xxxx XxXxxxxx
Name: Xxxx XxXxxxxx
Title: Chief Financial Officer
CRR HOLDINGS LLC
By: /s/ X. X. Xxxxx
Name: X. X. Xxxxx
Title: Co-Chairman and Company
Chief Executive Officer
