EXHIBIT 2.1
DISTRIBUTION AGREEMENT
by and among
CSX CORPORATION,
CSX TRANSPORTATION, INC.,
CSX RAIL HOLDING CORPORATION,
CSX NORTHEAST HOLDING CORPORATION,
NEW YORK CENTRAL LINES LLC,
NORFOLK SOUTHERN CORPORATION,
NORFOLK SOUTHERN RAILWAY COMPANY,
PENNSYLVANIA LINES LLC,
CONRAIL INC.,
GREEN ACQUISITION CORP.,
CONSOLIDATED RAIL CORPORATION,
CRR HOLDINGS LLC,
NYC NEWCO, INC.
and
PRR NEWCO, INC.
Dated as of [___________], 2004
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1. General.........................................................2
ARTICLE II
DISTRIBUTION AND RELATED TRANSACTIONS
Section 2.1 Transfer of Securities..........................................7
Section 2.2 Method of Transfer..............................................8
Section 2.3 The Mergers.....................................................8
Section 2.4 True Up.........................................................9
Section 2.5 Equipment Obligation Agreements.................................9
Section 2.6 Debentures.....................................................10
Section 2.7 Tax Allocation Agreement.......................................11
Section 2.8 Timing.........................................................11
Section 2.9 New Amendment to the 1997 Transaction Agreement................11
ARTICLE III
ADDITIONAL COVENANTS
Section 3.1 Cooperation Prior to the Closing...............................11
Section 3.2 Private Letter Rulings from the IRS............................12
Section 3.3 STB Approval...................................................12
Section 3.4 Cooperation Between the Parties Hereto.........................12
ARTICLE IV
INDEMNIFICATION
Section 4.1 CSX and CSXT Agreement to Indemnify............................13
Section 4.2 NSC and NSR Agreement to Indemnify.............................13
Section 4.3 CRR Parent, Green Acquisition, CRR and CRC Agreement to
Indemnify......................................................14
Section 4.4 Procedure for Indemnification..................................15
Section 4.5 Contribution...................................................16
Section 4.6 Scope..........................................................16
Section 4.7 Construction of Agreements.....................................16
-i-
Section 4.8 Remedies.......................................................17
ARTICLE V
CLOSING
Section 5.1 Closing........................................................17
Section 5.2 Conditions Precedent to the Closing............................17
Section 5.3 Further Assurances; Subsequent Transfers.......................18
ARTICLE VI
TERMINATION; AMENDMENTS; WAIVERS
Section 6.1 Termination....................................................19
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties.................................20
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment......................................................21
Section 8.2 Extension; Waiver..............................................22
Section 8.3 Notices........................................................22
Section 8.4 Interpretation.................................................23
Section 8.5 Entire Agreement...............................................23
Section 8.6 Parties in Interest............................................23
Section 8.7 Governing Law..................................................23
Section 8.8 Counterparts...................................................23
Section 8.9 Assignment.....................................................24
Section 8.10 Severability...................................................24
Section 8.11 Survival.......................................................24
Section 8.12 Confidentiality................................................24
Section 8.13 Fees and Expenses..............................................25
Section 8.14 Jurisdiction and Forum.........................................25
EXHIBITS
Exhibit A Equipment Obligation Agreements
-ii-
Exhibit B Equipment Obligation Agreements Amendments
Exhibit C Related Agreements
Exhibit D Form of Tax Allocation Agreement
Exhibit E New Amendment to the 1997 Transaction Agreement
-iii-
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (this "Agreement"), dated as of [_______], 2004 by
and among CSX CORPORATION, a Virginia corporation ("CSX"), CSX TRANSPORTATION,
INC., a Virginia corporation and wholly-owned subsidiary of CSX, for itself and
on behalf of its controlled Subsidiaries (collectively, "CSXT"), CSX RAIL
HOLDING CORPORATION, a Delaware corporation and wholly-owned subsidiary of CSX
("CSX Rail"), CSX NORTHEAST HOLDING CORPORATION, a Delaware corporation and
wholly-owned subsidiary of CSX ("CSX Northeast"), NORFOLK SOUTHERN CORPORATION,
a Virginia corporation ("NSC"), NORFOLK SOUTHERN RAILWAY COMPANY, a Virginia
corporation and a subsidiary of NSC, for itself and on behalf of its controlled
Subsidiaries (collectively, "NSR"), CRR HOLDINGS LLC, a Delaware limited
liability company ("CRR Parent"), GREEN ACQUISITION CORP., a Pennsylvania
corporation and a wholly-owned Subsidiary of CRR Parent ("Green Acquisition"),
CONRAIL INC., a Pennsylvania corporation and wholly-owned subsidiary of Green
Acquisition, for itself and on behalf of its controlled Subsidiaries
(collectively, "CRR"), CONSOLIDATED RAIL CORPORATION, a Pennsylvania corporation
and wholly-owned subsidiary of CRR ("CRC"), NEW YORK CENTRAL LINES LLC, a
Delaware limited liability company and a wholly-owned Subsidiary of CRC ("NYC"),
PENNSYLVANIA LINES LLC, a Delaware limited liability company and wholly-owned
subsidiary of CRC ("PRR"), NYC Newco, Inc., a Virginia corporation and
wholly-owned subsidiary of CSXT ("NYC Newco"), and PRR Newco, Inc., a Virginia
corporation and wholly-owned subsidiary of NSR ("PRR Newco").
WHEREAS, the Board of Directors of CRR Parent has determined
to transfer or cause to be transferred to CSX Rail and CSX Northeast all of CRR
Parent's NYC Shares (as defined herein) and CSX Rail and CSX Northeast are
willing to accept such transfer of all of CRR Parent's NYC Shares;
WHEREAS, the Board of Directors of CRR Parent has determined to transfer
or cause to be transferred to NSC all of CRR Parent's PRR Shares (as defined
herein) and NSC is willing to accept such transfer of all of CRR Parent's PRR
Shares;
WHEREAS, the parties hereto have obtained private letter rulings from the
Internal Revenue Service (the "Service") substantially to the effect that, among
other matters, the transfers of all of the NYC Shares and the PRR Shares to CSX
Rail and CSX Northeast and NSC, respectively, as contemplated by this Agreement
(such transfers, the "Distribution"), qualify as tax-free transactions under the
Code (as defined herein);
WHEREAS, in order to undertake the transactions contemplated by this
Agreement, the parties hereto have obtained the approval of the STB (as defined
herein);
WHEREAS, in order to undertake the transactions contemplated by this
Agreement, the Board of Directors of CRC has further determined that it is
appropriate and desirable, on the terms and subject to the conditions
contemplated hereby, for CRC to seek the Secured Holders Required Consent (as
defined herein), the Lease Consents (as defined herein) and the Debenture
Holders Required Consent (as defined herein) to the transactions contemplated by
this Agreement and to make the Exchange Offer (as defined herein);
WHEREAS, in connection with the transactions contemplated hereby, the
respective parties hereto shall enter into the Tax Allocation Agreement (as
defined herein) and the New Amendment to the 1997 Transaction Agreement (as
defined herein); and
WHEREAS, the parties hereto have determined that it is desirable to set
forth the principal transactions required to effectuate the Distribution and to
set forth other matters relating to the relationship and the respective rights
and obligations of the parties hereto prior to or following such transactions.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 GENERAL. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"ACTION" means any action, claim, suit, arbitration, inquiry, subpoena,
discovery request, proceeding or investigation by or before any Governmental
Entity or forum or authority having jurisdiction over the matter involving or
related to the transactions contemplated by the Agreement.
"AFFILIATE" means, with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by or is under common control
with, the specified Person or any trust for the benefit of such Person or any
entities controlled by such Person; provided that, for the purposes of Article
IV hereof (a) NYC shall be an affiliate of CSX and its Subsidiaries and not an
affiliate of CRR, CRR Parent or NSC and their respective Subsidiaries, (b) PRR
shall be an affiliate of NSC and its Subsidiaries and not an affiliate of CRR,
CRR Parent or CSX and their respective Subsidiaries, and (c) neither CSX, NSC
nor their respective Subsidiaries shall be affiliates of CRR, CRR Parent or
their respective Subsidiaries and vice versa.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"CLOSING" shall have the meaning ascribed thereto in Section 5.1.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor United States federal tax statute. References to a
specific section of the Code shall include a reference to the corresponding
provisions of any such successor United States federal tax statute.
"CSXT MERGER" shall have the meaning ascribed thereto in Section 2.3(a).
-2-
"DAMAGES" means all assessments, losses, claims, damages, Liabilities,
judgments, costs and expenses, including interest, penalties, attorneys' and
consultants' fees and any legal or other expenses incurred in connection with
investigating or defending any matter.
"DEBENTURE CASH PAYMENTS" means the cash payments to be made to the
holders of the Debentures tendered and accepted in the Exchange Offer.
"DEBENTURE CONSENT SOLICITATION" shall have the meaning ascribed thereto
in Section 2.6.
"DEBENTURE HOLDERS REQUIRED CONSENT" means the consent of the holders of a
majority of the aggregate principal amount of the Debentures voting together as
a single class pursuant to the terms set forth in the Debenture Consent
Solicitation.
"DEBENTURES" means the $550,000,000 principal amount of 9-3/4% debentures
of CRC due June 15, 2020 and the $250,000,000 principal amount of 7-7/8%
debentures of CRC due May 15, 2043 outstanding under the Indenture.
"DISTRIBUTION" shall have the meaning ascribed hereto in the recitals to
this Agreement.
"DISTRIBUTION DATE" shall have the meaning ascribed thereto in Section
5.1.
"EQUIPMENT OBLIGATION AGREEMENTS" means the pass-through trust agreements,
equipment trust agreements, lease agreements, trust indenture and security
agreements and participation agreements and other related agreements pursuant to
which the equipment trust certificates and pass-through certificates of CRC have
been issued, and pursuant to which CRC has acquired rights in equipment and
undertaken obligations in respect thereof, all as identified on Exhibit A
hereto.
"EQUIPMENT OBLIGATION AGREEMENTS AMENDMENTS" shall have the meaning
ascribed thereto in Section 2.5(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER" shall have the meaning ascribed thereto in Section 2.6.
"EXCHANGE OFFER EXPIRATION DATE" means the expiration date of the Exchange
Offer as such date may be extended pursuant to the terms of the Exchange Offer
as described in the Registration Statement.
"FMVS" means the fair market values of each of PRR and NYC.
"GOVERNMENTAL ENTITY" means any federal, state, local or foreign court,
administrative agency or commission or other governmental or regulatory
authority or commission or any arbitration tribunal, including, without
limitation, the Service and the STB.
-3-
"INDEMNIFIABLE LOSSES" means, with respect to any claim by an Indemnified
Party for indemnification pursuant to Article IV hereof, any and all Damages,
obligations, payments, costs and expenses (including, without limitation, the
costs and expenses of any and all Actions, demands, assessments, judgments,
settlements and compromises relating thereto and reasonable attorneys' fees and
expenses in connection therewith) suffered by such Indemnified Party with
respect to such claim.
"INDEMNIFIED PARTY" means a Person who is entitled to indemnification
under Article IV.
"INDEMNIFYING PARTY" means a Person who is required to indemnify another
Person under Article IV.
"INDENTURE" means the indenture, dated as of May 1, 1990, between CRC and
the Trustee, pursuant to which the Debentures were issued, as such Indenture has
been amended, modified or supplemented from time to time in accordance with its
terms.
"▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇" means ▇.▇. ▇▇▇▇▇▇ Chase & Co.
"LEASE CONSENT PAYMENTS" shall have the meaning ascribed thereto in
Section 2.5.
"LEASE CONSENTS" shall have the meaning ascribed thereto in Section
2.5(a).
"LIABILITIES" means any and all debts, liabilities and obligations of any
kind whatsoever, whether or not accrued, contingent or reflected on a balance
sheet, known or unknown, absolute, determined, determinable or otherwise,
including, without limitation, those arising under any law, rule, regulation,
action, order or consent decree of any Governmental Entity or any judgment in
any Action of any kind or award of any arbitrator of any kind and those arising
under any contract.
"MERGERS" shall have the meaning ascribed thereto in Section 2.3(a).
"NEW AMENDMENT TO THE 1997 TRANSACTION AGREEMENT" means the amendment to
the 1997 Transaction Agreement, to be entered into by and among CSX, CSXT, NSC,
NSR, CRR and CRR Parent, in the form attached hereto as Exhibit E.
"NEW DEBENTURES" means collectively the NYC Newco Debentures and the PRR
Newco Debentures proposed to be issued pursuant to the Exchange Offer, to be
fully and unconditionally guaranteed by CSXT and NSR, respectively, and whose
maturity dates, interest payment dates and interest rates are intended to be
identical in all respects to the corresponding Debentures, except for the
identity of the issuer and the aforementioned guarantees and the other terms,
conditions and covenants provided in the NYC Newco Indenture and the PRR Newco
Indenture, respectively, with such other changes as may be agreed to by CRC,
CSXT, NSR, NSC and CSX.
"NEWCO SHARES" shall have the meaning ascribed thereto in Section 2.1(a).
-4-
"1997 TRANSACTION AGREEMENT" means the Transaction Agreement, dated as of
June 10, 1997, and as now in effect, by and among CSX, CSXT, NSC, NSR, CRR, CRC
and CRR Parent.
"NSR MERGER" shall have the meaning ascribed thereto in Section 2.3(a).
"NYC ALLOCATED LIABILITIES" shall have the meaning ascribed thereto under
the 1997 Transaction Agreement.
"NYC MEMBERSHIP INTEREST" means all limited liability company interests of
NYC.
"NYC NEWCO DEBENTURES" shall have the meaning ascribed thereto in Section
2.6(c).
"NYC NEWCO INDENTURE" means the indenture, to be dated as of the
Distribution Date, by and among NYC Newco, CSXT (as guarantor), and The Bank of
New York, as trustee, pursuant to which the NYC Newco Debentures are expected to
be issued.
"NYC SHARES" shall have the meaning ascribed thereto in Section 2.1(a).
"PERSON" includes any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company or
other legal entity or organization.
"PROSPECTUS" means any prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement, and all other
amendments and supplements to the prospectus included in any Registration
Statement, including post-effective amendments and all material incorporated
therein by reference.
"PRR ALLOCATED LIABILITIES" shall have the meaning ascribed thereto under
the 1997 Transaction Agreement.
"PRR MEMBERSHIP INTEREST" means all limited liability company interests of
PRR.
"PRR NEWCO DEBENTURES" shall have the meaning ascribed thereto in Section
2.6(c).
"PRR NEWCO INDENTURE" means the base indenture and a first supplemental
indenture, to be dated as of the Distribution Date, by and among PRR Newco, NSR
(as guarantor) and The Bank of New York, as trustee, pursuant to which the PRR
Newco Debentures are expected to be issued.
"PRR SHARES" shall have the meaning ascribed thereto in Section 2.1(a).
"REGISTRATION STATEMENT" means the registration statement(s) filed by
certain of the parties hereto, including NYC Newco and PRR Newco, to register
under the Securities Act the New Debentures and the corresponding guarantees
pursuant to the Exchange Offer, including
-5-
the Prospectus which is part of such Registration Statement, amendments
(including post-effective amendments) and supplements to such Registration
Statement and all exhibits and appendices to any of the foregoing.
"RELATED AGREEMENTS" means those new agreements and amended agreements, as
set forth in Exhibit C, as shall be necessary and appropriate under the
Equipment Obligation Agreements or the Equipment Obligation Agreements
Amendments to provide payment flows to CRC after the Distribution to enable CRC
to satisfy its ongoing obligations under the Equipment Obligation Agreements.
"RULINGS" shall have the meaning ascribed thereto in Section 3.2.
"SEC" means the Securities and Exchange Commission.
"SECURED CASH PAYMENTS" means the cash payments to be made to holders of
equipment trust certificates and pass-through certificates set forth in Part I,
Sections I and II in Exhibit A hereto who consent in the Secured Holders Consent
Solicitation.
"SECURED HOLDERS CONSENT SOLICITATION" shall have the meaning ascribed
thereto in Section 2.5(a).
"SECURED HOLDERS REQUIRED CONSENT" means the consent of the holders of a
majority of the aggregate principal amount of each issue of equipment trust
certificates and each issue of pass-through certificates set forth in Part I,
Sections I and II in Exhibit A hereto pursuant to the terms set forth in the
Secured Holders Consent Solicitation.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICE" shall have the meaning ascribed thereto in the recitals to this
Agreement.
"STB" means the Surface Transportation Board or, if there shall be no
Surface Transportation Board, any federal agency which is charged with the
function of approving combinations by rail carriers or persons controlling them,
or of other arrangements between such rail carriers, and granting exemptions
from other laws with respect thereto or regulating other specific functions with
respect to the context in which such term is employed or any successor entity
thereof.
"SUBSIDIARY" means, when used with reference to a specified Person, any
corporation or other organization, whether incorporated or unincorporated, of
which at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its subsidiaries or by such Person and one or more of its
subsidiaries; provided that CRR Parent and any Person in which CRR Parent owns,
directly or indirectly, an interest (it being assumed for the purposes of this
Agreement that CRR Parent does not own, directly or indirectly, an interest in
either CSX or NSC) shall not be considered a subsidiary of either CSX or NSC for
purposes of this Agreement; provided further that, for purposes of Article
-6-
IV hereof (a) NYC shall be deemed a subsidiary of CSX and not a subsidiary of
CRR, CRR Parent or NSC, and (b) PRR shall be deemed a subsidiary of NSC and not
a subsidiary of CRR, CRR Parent or CSX.
"SUPPLEMENTAL INDENTURE" means the supplemental indenture to be dated as
of the Distribution Date, between CRC and the Trustee which is expected to set
forth the changes delineated in the Debenture Consent Solicitation, with such
further amendments as may be agreed by CRC, NSC, CSXT, NSR and CSX as necessary
or appropriate to permit the consummation of the Distribution and the other
transactions provided herein.
"TAX ALLOCATION AGREEMENT" means the Tax Allocation Agreement to be
entered into by and among the parties hereto, substantially in the form attached
hereto as Exhibit D.
"THIRD PARTY CLAIM" shall have the meaning ascribed thereto in Section
4.4(b).
"TRANSFER" means to assign, convey, transfer and deliver.
"TRUE UP" shall have the meaning ascribed thereto in Section 2.4.
"TRUSTEE" means The First National Bank of Chicago or any successor
thereto, as trustee pursuant to the Indenture.
ARTICLE II
DISTRIBUTION AND RELATED TRANSACTIONS
Section 2.1 TRANSFER OF SECURITIES. Until the Closing, NYC Newco and PRR
Newco shall conduct no business and shall have no assets or liabilities, except
as expressly provided for in this Agreement. Upon the terms and subject to the
conditions set forth herein, on the Distribution Date, the following shall occur
at substantially the same point in time:
(a) CRC shall Transfer the NYC Membership Interest and the PRR
Membership Interest to NYC Newco and PRR Newco, respectively, in exchange for
(i) the issuance by NYC Newco and PRR Newco of shares of common stock, par value
$.01 per share, of each of NYC Newco (the "NYC Shares") and PRR Newco (the "PRR
Shares", collectively with the NYC Shares, the "Newco Shares"), respectively,
which, after giving effect to such issuances, will represent 99.9% of each of
the NYC Shares and the PRR Shares then issued and outstanding, (ii) the New
Debentures issued to CRC by each of NYC Newco and PRR Newco, respectively and
(iii) the assumption of certain liabilities, including equipment obligations, by
each of NYC Newco and PRR Newco,
(b) CRC shall then Transfer the Newco Shares to CRR,
(c) CRR shall then Transfer the Newco Shares to Green Acquisition,
(d) CRC shall exchange the New Debentures and the Debenture Cash
Payments for the Debentures pursuant to the Exchange Offer (as provided below),
-7-
(e) Green Acquisition shall then Transfer the Newco Shares to CRR
Parent,
(f) CRR Parent shall then Transfer the NYC Shares to CSX Rail and
CSX Northeast, and the PRR Shares to NSC,
(g) CSX Rail and CSX Northeast shall then Transfer the NYC Shares to
CSX, which shall in turn Transfer the NYC Shares to CSXT,
(h) NSC shall then Transfer the PRR Shares to NSR,
(i) PRR shall be merged into PRR Newco and NYC shall be merged into
NYC Newco, and
(j) PRR Newco shall be merged into NSR and NYC Newco shall be merged
into CSXT.
Section 2.2 METHOD OF TRANSFER. The parties hereto agree that the
Transfers of the securities contemplated pursuant to Section 2.1 hereof shall be
effected by delivery by the transferor to the transferee of such good and
sufficient instruments of assignment, conveyance, transfer and delivery, in form
and substance reasonably satisfactory to CRC, CSX and NSC, as the case may be,
as shall be necessary to vest in the transferee good title thereto, free and
clear of any lien, encumbrance, security interest, claim or other restriction on
title or transfer whatsoever and without any liability attaching thereto.
Section 2.3 THE MERGERS.
(a) On the Distribution Date, immediately following the consummation
of the Distribution and the transfers described in Sections 2.1(e), (f), (g) and
(h), the parties shall file or cause to be filed Articles of Merger with the
State Corporation Commission of the Commonwealth of Virginia providing for
(a)(i) PRR to be merged with and into PRR Newco and (ii) PRR Newco to be then
merged with and into NSR and (b)(i) NYC to be merged with and into NYC Newco and
(ii) NYC Newco to be then merged with and into CSXT, in accordance with the
provisions of the Code of Virginia. The separate corporate existence of each of
(i) PRR and PRR Newco and (ii) NYC and NYC Newco shall thereupon cease and each
of NSR and CSXT, respectively, shall be the surviving entity. The transactions
contemplated by this Section 2.3 are sometimes herein referred to as the
"Mergers" and separately as the "NSR Merger" and the "CSXT Merger,"
respectively.
(b) By virtue of the Mergers and without any action on the part of
the holders thereof, the equity interests of NSR and CSXT outstanding
immediately prior to the Mergers shall automatically become an equal number of
equity interests of NSR and CSXT, respectively, as the respective surviving
corporation in the Mergers, and the equity interests of PRR, PRR Newco, NYC and
NYC Newco outstanding immediately prior to the Mergers shall be cancelled.
Accordingly, the parties hereto acknowledge and agree that there will be no
change in the respective capitalization of NSR and CSXT as a result of the
Mergers.
-8-
Section 2.4 TRUE UP. (a) If there shall have been any condition,
circumstance, event or occurrence occurring or existing, individually or in the
aggregate, that has resulted or could result in a change in the percentage
allocation to NYC of 42%, and to PRR of 58%, of the FMVs of NYC and PRR taken
together, then NSC and CSX may, in their sole discretion, discuss the means and
nature of the consideration to be paid or furnished such that the percentage
allocation to NYC is 42% and the percentage allocation to PRR is 58%, after
reviewing and analyzing the various applicable tax, financial and other business
concerns, and may seek to mutually agree in their respective sole discretion
upon such consideration that will permit an economically balanced solution
acceptable to the parties, taking into account NSC's and CSX's ongoing ownership
interest in CRC and CRR ("True Up"). The parties hereto agree that such True Up,
if agreed to in their respective sole discretion, shall be consummated on the
Distribution Date prior to the Distribution.
(b) If there shall not have been any condition, circumstance, event
or occurrence occurring or existing that, individually or in the aggregate, has
resulted or could result in a change in the percentage allocation to NYC of 42%,
and to PRR of 58%, of the FMVs of NYC and PRR taken together, then NSC and CSX
shall reconfirm in writing on or prior to the Distribution Date that (i) a True
Up is not required, (ii) the percentage allocation of the FMVs to NYC is 42% and
the percentage allocation of the FMVs to PRR is 58%, and (iii) it is the intent
of the parties that responsibility for the Retained Liabilities will continue to
be borne without change, indirectly, 42% by CSX and 58% by NSC. The parties
hereto agree that as of the date of this Agreement the percentage allocation to
NYC is 42% and the percentage allocation to PRR is 58%.
Section 2.5 EQUIPMENT OBLIGATION AGREEMENTS. The parties intend to seek
the Secured Holders Required Consent and the Lease Consents in connection with,
and to permit, the Distribution and certain of the other transactions
contemplated hereby. The parties shall seek such consents on the terms and
subject to the conditions set forth herein and/or on such other terms as may be
agreed by CRC, NSC and CSX as necessary or appropriate in order to facilitate
obtaining such consents, including without limitation, the amount of the Secured
Cash Payments and any payments required to obtain the Lease Consents (the "Lease
Consent Payments"). It is the intent of the parties that, in connection with
obtaining such consents, following the Closing, CRC shall remain directly
obligated with respect to all obligations evidenced by the Equipment Obligation
Agreements and on the Distribution Date, the respective parties shall enter into
the Equipment Obligation Agreements Amendments and the Related Agreements. In
order to obtain the Secured Holders Required Consent and the Lease Consents, the
parties shall undertake the following transactions:
(a) Prior to the Closing, on a timetable agreed by the parties to
most expeditiously lead to the Closing, CRC, in consultation with NSC and CSX,
shall (i) prepare a consent solicitation to seek the Secured Holders Required
Consent, pursuant to which CRC will solicit consents (as amended from time to
time, the "Secured Holders Consent Solicitation") to the amendments to the
Equipment Obligation Agreements identified in Part I, Sections I and II of
Exhibit B and/or such other amendments as may be agreed by CRC, NSC and CSX as
necessary or appropriate to permit the consummation of the Distribution and the
other transactions contemplated hereby and (ii) privately negotiate with the
lessor and other counterparties to CRC's equipment leases identified in Part II
of Exhibit B for their respective consents (the
-9-
"LEASE CONSENTS") to the amendments to the Equipment Obligation Agreements
identified in Part II of Exhibit B and/or such other amendments as may be agreed
by CRC, NSC and CSX as necessary or appropriate to effectuate the Distribution
and the transactions related thereto (the amendments contemplated by clauses (i)
and (ii) being collectively referred to herein as the "Equipment Obligation
Agreements Amendments"). Subject to the satisfaction of the conditions set forth
in Section 5.2 hereof, NSC and CSX shall ensure that CRC has sufficient cash to
make, and CRC shall make, the Secured Cash Payments and the Lease Consent
Payments at the Closing. CRC shall comply with all applicable laws or
regulations in connection with the Secured Holders Consent Solicitation.
(b) Subject to the satisfaction of the conditions of Section 5.2
hereof, on the Distribution Date, (i) CRC, in consultation with CSX and NSC,
shall execute and deliver the Equipment Obligation Agreements Amendments and may
request any other applicable parties to execute the same and (ii) CRC, NSR, PRR
Newco, CSXT and NYC Newco shall execute their respective Related Agreements and
any ancillary agreements thereto. The parties agree to execute and deliver all
reasonable and necessary opinions, officer's certificates and other documents in
connection with the execution of the Equipment Obligation Agreements Amendments,
the Related Agreements and any other ancillary agreements thereto.
Section 2.6 DEBENTURES. The parties intend to seek the Debenture Holders
Required Consent in connection with, and to permit, the Distribution and certain
of the other transactions contemplated hereby. It is the intent of the parties
that, in connection with obtaining such consent, prior to the Closing, CRC will
conduct a consent solicitation to seek the Debenture Holders Required Consent
(as amended from time to time, the "Debenture Consent Solicitation") and, in
connection therewith, prior to the Closing, CSXT, NYC Newco, NSR, PRR Newco and
CRC will conduct an offer to exchange New Debentures initially issued by each of
NYC Newco and PRR Newco for the Debentures on the terms and subject to the
conditions set forth herein and/or on such other terms as may be agreed by CRC,
NSC and CSX as necessary or appropriate in order to facilitate obtaining the
Debenture Holders Required Consent, including without limitation, the amount of
the Debenture Cash Payments (the "Exchange Offer"). The Exchange Offer shall be
on the basis that each holder of Debentures accepting the New Debentures in
exchange for such holder's Debentures must grant a consent in respect of the
Debenture Holders Required Consent. In connection with the foregoing, the
parties shall undertake the following transactions:
(a) Prior to the Closing, on a timetable agreed by the parties to
most expeditiously lead to the Closing, CRC, in consultation with NSC and CSX,
shall prepare a consent solicitation, which consent solicitation shall form part
of the Registration Statement, to seek the Debenture Holders Required Consent in
connection with the Distribution and certain other transactions contemplated
hereby and to the execution of the Supplemental Indenture. CRC shall comply with
all applicable laws or regulations in connection with the Debenture Consent
Solicitation.
(b) Subject to the satisfaction of the conditions set forth in
Section 5.2 hereof, on the Distribution Date, CRC shall execute and deliver the
Supplemental Indenture and such other necessary documents and request the
Trustee to execute the same. The parties agree
-10-
to execute and deliver all reasonable and necessary opinions, officer's
certificates and other documents in connection with the execution of the
Supplemental Indenture.
(c) Prior to the Closing, on a timetable agreed by the parties to
most expeditiously lead to the Closing, CSXT, NYC Newco, NSR, PRR Newco and CRC
will promptly prepare and cause to be filed with the SEC, Registration
Statements offering to exchange for each $1,000.00 principal amount of each
series of the Debentures $580.00 principal amount of the corresponding series of
New Debentures to be issued by PRR Newco (the "PRR Newco Debentures") and
$420.00 principal amount of the corresponding series of New Debentures to be
issued by NYC Newco (the "NYC Newco Debentures"), subject to the treatment of
fractional interests. The PRR Newco Debentures shall be fully and
unconditionally guaranteed by NSR and the NYC Newco Debentures shall be fully
and unconditionally guaranteed by CSXT. CSXT and NSR shall execute and deliver
the NYC Newco Indenture and the PRR Newco Indenture, respectively, setting forth
their respective guarantee obligations on the Distribution Date and any other
necessary documents ancillary thereto and shall request the respective trustees
to execute the same. Upon completion of the mergers set forth in Section 2.1(j),
the NYC Newco Debentures shall be assumed by and shall become the primary
obligations of CSXT and the PRR Newco Debentures shall be assumed by and shall
become the primary obligations of NSR. The respective guarantee obligations of
CSXT and NSR shall automatically cease to exist upon completion of the mergers
described in Section 2.1(j). Subject to the satisfaction of the conditions set
forth in Section 5.2 hereof, NSC and CSX shall ensure that CRC has sufficient
cash to make, and CRC shall make, the Debenture Cash Payments at the Closing.
The Exchange Offer will be registered under the Securities Act on the
appropriate form of Registration Statement and shall comply with all applicable
rules and regulations under the Exchange Act and with all other applicable laws.
As a result of such Exchange Offer and Debenture Consent Solicitation, the
parties hereto agree to make such additional filings pursuant to the Securities
Act or the Exchange Act as are necessary or appropriate. The parties shall also
take all such action as may be necessary or appropriate under state securities
or "Blue Sky" laws in connection with the transactions contemplated by this
Agreement.
Section 2.7 TAX ALLOCATION AGREEMENT. On or prior to the Distribution
Date, the respective parties hereto shall execute and deliver the Tax Allocation
Agreement.
Section 2.8 TIMING. All transactions to be consummated on the Distribution
Date under this Agreement shall be consummated at substantially the same point
in time at a single Closing.
Section 2.9 NEW AMENDMENT TO THE 1997 TRANSACTION AGREEMENT. On the
Distribution Date, the respective parties hereto shall execute and deliver the
New Amendment to the 1997 Transaction Agreement in the form attached hereto as
Exhibit E.
ARTICLE III
ADDITIONAL COVENANTS
Section 3.1 COOPERATION PRIOR TO THE CLOSING. As promptly as practicable
after the date hereof and through the Distribution Date, the parties hereto
shall use their
-11-
reasonable best efforts to take all actions necessary or advisable to make
effective as expeditiously as possible the transactions to be consummated on the
Distribution Date, including cooperating in good faith and using reasonable best
efforts to take, or cause to be taken, the actions set forth in Article II and
this Article III.
Section 3.2 PRIVATE LETTER RULINGS FROM THE IRS. Prior to the Closing, CRR
Parent, Green Acquisition, NSC and CSX shall use their reasonable best efforts
to take all actions necessary or advisable to ensure that the private letter
rulings obtained from the Service (collectively, the "Rulings") concerning
certain aspects of the transactions contemplated hereby remain in full force and
effect. Each of the parties hereto shall take all such further reasonable
actions which, in such party's judgment, may ensure that the Rulings remain in
full force and effect. All submissions to any Governmental Entity by any party
hereto relating to such matters shall only be made after prior consultation with
and approval by CSX, NSC and Green Acquisition (not to be unreasonably withheld
or delayed) as to the form and substance of such submissions, in accordance with
Section 3.4.
Section 3.3 STB APPROVAL. Prior to the Closing, the parties shall use
their reasonable best efforts to take all actions necessary or advisable to
ensure that the STB approval obtained for the consummation of the transactions
contemplated by this Agreement remains in full force and effect. Each of the
parties hereto shall take all such further reasonable action which, in such
party's judgment, may ensure that the STB approval remains in full force and
effect. All submissions to any Governmental Entity by any party hereto relating
to such matters shall only be made after prior consultation with the other
parties hereto and the approval by such other parties (not to be unreasonably
withheld or delayed) to the form and substance of such submissions, in
accordance with Section 3.4.
Section 3.4 COOPERATION BETWEEN THE PARTIES HERETO. In addition to the
actions specifically provided for elsewhere in this Agreement, each of the
parties shall: (i) coordinate and cooperate with one another to prepare and
distribute, if necessary, all documents described or referred to herein; (ii)
provide each of the other parties with a reasonable opportunity to review and
comment on any material related to the transactions contemplated by this
Agreement prior to the filing or submission of such material to any Governmental
Entity or other public use thereof, and no such material shall be filed with or
submitted to any Governmental Entity or otherwise publicly utilized unless all
parties hereto have approved (not to be unreasonably withheld or delayed) the
contents of such material prior to such filing or submission; (iii) provide each
of the other parties with copies of any such material as filed with or submitted
to any Governmental Entity or third party (provided, however, that for purposes
of this Section 3.4, "third party" shall not include a party's attorneys,
accountants or other retained advisors) and provide all of the other parties
with copies of any correspondence with any Governmental Entity or third party;
(iv) conduct no communications relating to the transactions contemplated by this
Agreement with any Governmental Entity or third party, including meetings or
conferences with personnel from such Governmental Entity or third party, whether
in person, telephonically or otherwise, without notifying all other parties and
giving such parties the opportunity to participate; and (v) use its reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement. Notwithstanding anything contained
in this
-12-
Agreement, the parties agree that no party shall be required to take any action
or agree to any term or condition which in such party's reasonable judgment
would materially adversely affect such party or materially decrease the proposed
benefits to such party associated with the Distribution.
ARTICLE IV
INDEMNIFICATION
Section 4.1 CSX AND CSXT AGREEMENT TO INDEMNIFY. Subject to the provisions
of this Article IV, from and after the Distribution Date, CSX and CSXT shall
jointly and severally indemnify, defend and hold harmless CRR Parent, NSC and
their respective Affiliates and Subsidiaries and any director, officer, employee
or agent of any of them from and against any and all Indemnifiable Losses
asserted against, relating to, imposed upon or incurred by any such Person,
directly or indirectly, by reason of or resulting from:
(a) the untruth or inaccuracy of any representation or warranty of
CSX, CSXT or any of their respective Affiliates or Subsidiaries contained in or
made pursuant to this Agreement or any of the Related Agreements;
(b) the breach or non-performance of any agreement of CSX, CSXT or
any of their respective Affiliates or Subsidiaries contained in or made pursuant
to this Agreement or any of the Related Agreements;
(c) the NYC Allocated Liabilities; and
(d) any untrue statement or alleged untrue statement of a material
fact contained in or incorporated by reference into the Registration Statement
or any amendment thereof, the Secured Holders Consent Solicitation or the
Exchange Offer (in each case as amended or supplemented if CSX, CSXT or their
Affiliates or Subsidiaries shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that CSX and CSXT shall not be liable in respect of the foregoing indemnity to
the extent that any such Indemnifiable Losses are caused by any untrue statement
or omission or alleged untrue statement or omission made in any such document in
reliance upon and in conformity with information furnished in writing on behalf
of CRR Parent or any of its Affiliates or Subsidiaries or NSC or any of its
Affiliates or Subsidiaries expressly for use therein.
Section 4.2 NSC AND NSR AGREEMENT TO INDEMNIFY. Subject to the provisions
of this Article IV, from and after the Distribution Date, NSC and NSR shall
jointly and severally indemnify, defend and hold harmless CRR Parent, CSX and
their respective Affiliates and Subsidiaries and any director, officer, employee
or agent of any of them from and against any and all Indemnifiable Losses
asserted against, relating to, imposed upon or incurred by any such Person,
directly or indirectly, by reason of or resulting from:
-13-
(a) the untruth or inaccuracy of any representation or warranty of
NSC, NSR or any of their respective Affiliates or Subsidiaries contained in or
made pursuant to this Agreement or any of the Related Agreements;
(b) the breach or non-performance of any agreement of NSC, NSR or
any of their respective Affiliates or Subsidiaries contained in or made pursuant
to this Agreement or any of the Related Agreements;
(c) the PRR Allocated Liabilities; and
(d) any untrue statement or alleged untrue statement of a material
fact contained in or incorporated by reference into the Registration Statement
or any amendment thereof, the Secured Holders Consent Solicitation or the
Exchange Offer (in each case as amended or supplemented if NSC, NSR or their
Affiliates or Subsidiaries shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that NSC and NSR shall not be liable in respect of the foregoing indemnity to
the extent that any such Indemnifiable Losses are caused by any untrue statement
or omission or alleged untrue statement or omission made in any such document in
reliance upon and in conformity with information furnished in writing on behalf
of CRR Parent or any of its Affiliates or Subsidiaries or CSX or any of its
Affiliates or Subsidiaries expressly for use therein.
Section 4.3 CRR PARENT, GREEN ACQUISITION, CRR AND CRC AGREEMENT TO
INDEMNIFY. Subject to the provisions of this Article IV, from and after the
Distribution Date, CRR Parent, Green Acquisition, CRR and CRC shall jointly and
severally indemnify, defend and hold harmless CSX, NSC and their respective
Affiliates and Subsidiaries and any director, officer, employee or agent of any
of them from and against any and all Indemnifiable Losses asserted against,
relating to, imposed upon or incurred by any such Person, directly or
indirectly, by reason of or resulting from:
(a) the untruth or inaccuracy of any representation or warranty of
CRR Parent, Green Acquisition, CRR or CRC or any of their respective Affiliates
or Subsidiaries contained in or made pursuant to this Agreement or any of the
Related Agreements;
(b) the breach or non-performance of any agreement of CRR Parent,
Green Acquisition, CRR or CRC or any of their respective Affiliates or
Subsidiaries contained in or made pursuant to this Agreement or any of the
Related Agreements; and
(c) any untrue statement or alleged untrue statement of a material
fact contained in or incorporated by reference into the Registration Statement
or any amendment thereof, the Secured Holders Consent Solicitation or the
Exchange Offer (in each case, as amended or supplemented if CRR Parent, Green
Acquisition, CRR, CRC or their Subsidiaries shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that CRR Parent, Green Acquisition, CRR and CRC and any of their
respective Subsidiaries shall not
-14-
be liable in respect of the foregoing indemnity to the extent that any such
Indemnifiable Losses are caused by any untrue statement or omission or alleged
untrue statement or omission made in any such document in reliance upon and in
conformity with information furnished in writing on behalf of CSX or any of its
Affiliates and Subsidiaries or NSC or any of its Affiliates and Subsidiaries
expressly for use therein.
Section 4.4 PROCEDURE FOR INDEMNIFICATION.
(a) If any Action shall be threatened or instituted or any demand
shall be asserted against any Indemnified Party in respect of which
indemnification may be sought under the provisions of this Agreement, the
Indemnified Party shall promptly cause written notice of the assertion of any
such demand or Action of which it has knowledge to be forwarded to the
Indemnifying Party. Such notice shall contain a reference to the provisions
hereof or of such other agreement, instrument or certificate delivered pursuant
hereto, in respect of which such Action or demand is being made. The Indemnified
Party's failure to give the Indemnifying Party prompt notice shall not preclude
the Indemnified Party from obtaining indemnification from the Indemnifying Party
under this Article IV unless the Indemnified Party's failure has materially
prejudiced the Indemnifying Party's ability to defend the demand or Action.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle, or compromise any Action or demand that is solely for money
damages, provided that in such event the Indemnified Party shall waive any right
to indemnity therefor hereunder and shall provide to the Indemnifying Party a
written release from all liability in respect of such Action or demand.
(b) If the Indemnified Party seeks indemnification from the
Indemnifying Party as a result of an Action or demand being made by a third
party (a "Third Party Claim"), the Indemnifying Party shall have the right to
promptly assume the control of the defense of any Action with respect to such
Third Party Claim, including, at its own expense, employment by it of counsel
reasonably satisfactory to the Indemnified Party. If the Indemnifying Party
elects not to assume the control of the defense of any such Third Party Claim
(which shall be without prejudice to its right at any time to assume
subsequently the control of such defense), the Indemnifying Party will
nonetheless be entitled, at its own expense, to participate in such defense. The
Indemnified Party may, in its sole discretion and, if the Indemnifying Party
shall have assumed the control of the defense of the Action, at its own expense,
employ counsel to represent it in the defense of the Third Party Claim, and in
such event counsel for the Indemnifying Party shall cooperate with counsel for
the Indemnified Party in such defense, provided that, if the Indemnifying Party
shall have assumed the control of the defense of the Action, the Indemnifying
Party shall direct and control the defense of such Third Party Claim or
proceeding. Without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld or delayed), the Indemnifying Party
shall not admit any liability with respect to, or settle, compromise or
discharge, any Third Party Claim or consent to the entry of any judgment with
respect thereto, except in the case of any settlement that includes as an
unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnified Party of a written release from all liability in respect of such
Third Party Claim. In addition, except as provided in the last sentence of
Section 4.4(a), whether or not the Indemnifying Party shall have assumed the
defense of the Third Party Claim, the Indemnified Party shall not admit any
liability with respect to, or settle, compromise or discharge, any Third Party
Claim or consent to the entry of any judgment with respect thereto, without the
prior written consent of the Indemnifying Party
-15-
(which consent shall not be unreasonably withheld or delayed), and the
Indemnifying Party will not be subject to any liability for any such admission,
settlement, compromise, discharge or consent to judgment made by an Indemnified
Party without such prior written consent of the Indemnifying Party.
Section 4.5 CONTRIBUTION. If the indemnification provided for in Sections
4.1(d), 4.2(d) or 4.3(c) is unavailable to an Indemnified Party or insufficient
to hold it harmless in respect of any Indemnifiable Losses (or Actions in
respect thereof) referred to therein (other than through the failure of an
Indemnified Party to follow the indemnification procedures set forth in Section
4.4), then each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Indemnifiable Losses (or Actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by each
of the parties hereto from the transactions contemplated by this Agreement. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each Indemnifying Party shall contribute to
such amount paid or payable by such Indemnified Party in such proportion as is
appropriate to reflect not only such relative benefits of the transactions
contemplated by this Agreement but also the relative fault of each of the
parties hereto in connection with the untrue statements or omissions which
resulted in such Indemnifiable Losses (or Actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by a party hereto and such
party's relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Each of the parties agrees
that it would not be just and equitable if contributions pursuant to this
Section 4.5 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 4.5. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 4.5, each director of the
parties hereto and each officer of the parties hereto who signed the
Registration Statement, and each Person, if any, who controls any of the parties
hereto within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the applicable
party to this Agreement.
Section 4.6 SCOPE. Notwithstanding any other provisions of this Article
IV, the provisions of this Article IV shall not apply to any indemnification
matters relating to taxes, all of which shall be governed exclusively by the Tax
Allocation Agreement.
Section 4.7 CONSTRUCTION OF AGREEMENTS. Notwithstanding any other
provision in this Agreement to the contrary, in the event and to the extent that
there shall be a conflict between the provisions of this Article IV and the
provisions of any other part of this Agreement or any exhibit or schedule hereto
(other than the Tax Allocation Agreement), the provisions of this Article IV
shall control, and in the event and to the extent that there shall be a conflict
between the provisions of this Agreement and the provisions of the Tax
Allocation Agreement, the provisions of the Tax Allocation Agreement shall
control.
-16-
Section 4.8 REMEDIES.
(a) In no event shall any party be liable to the other parties for
any consequential, indirect, incidental, punitive or other similar damages
including but not limited to lost profits for any breach or default or any act
or omission arising out of or in any way relating to this Agreement or the
Related Agreements or the transactions contemplated herein or therein or any
matter or theory concerning or relating to any of the foregoing under any form
or theory of Action whatsoever whether in contract, tort or otherwise.
(b) The remedies provided in this Article IV shall be cumulative and
shall not preclude assertion by any Indemnified Person of any other rights or
the seeking of any and all other remedies against any Indemnifying Party.
ARTICLE V
CLOSING
Section 5.1 CLOSING. Upon the terms and subject to the conditions of this
Agreement, the Distribution and the other transactions to occur at or prior to
the closing (the "Closing") shall, if not previously consummated, be consummated
at a time and location mutually agreed by the parties on the third Business Day
following the first date on which all of the conditions set forth in Section 5.2
shall have been satisfied or waived, or at such other time, date and place as
the parties shall agree (the "Distribution Date").
Section 5.2 CONDITIONS PRECEDENT TO THE CLOSING. The respective
obligations of the parties to effect the Distribution and the other transactions
to occur on the Distribution Date shall be subject to the fulfillment or waiver
(as provided below) on or prior to the Distribution Date of the following
conditions:
(a) no preliminary or permanent injunction or other order or decree
issued by a court of competent jurisdiction or any other legal restraint or
prohibition which prevents the consummation of the Distribution shall be in
effect and no statute, rule or regulation shall have been enacted by any
Governmental Entity prohibiting the consummation of the transactions to occur on
the Distribution Date;
(b) since the date of execution of this Agreement through the last
Business Day immediately preceding the Exchange Offer Expiration Date, there
shall not have been any condition, circumstance, event or occurrence occurring
or existing that, individually or in the aggregate, has resulted or could result
in a change in the percentage allocation to NYC of 42%, and to PRR of 58%, of
the FMVs of NYC and PRR taken together, or in the event that such change has
occurred, CSX and NSC shall have agreed on or prior to the Exchange Offer
Expiration Date to a True Up in accordance with Section 2.4; provided, however,
that this condition is for the sole benefit of each of CSX and NSC;
(c) (i) the Rulings from the Service referred to in Section 3.2
shall remain in full force and effect and (ii) there shall not have occurred any
change in, or interpretation of, any law, IRS policy, IRS procedure, or facts
that formed the basis of such Rulings (other than changes in the transactions
that are agreed upon by the parties) that affects adversely or could
-17-
affect adversely any significant aspect of the Rulings or the ability of NSC or
CSX to rely on such Rulings;
(d) the STB approval referred to in Section 3.3 and obtained by the
parties shall remain in full force and effect;
(e) CRC shall have obtained the Secured Holders Required Consent and
the Lease Consents on terms no less favorable to CRC, CSX and NSC and their
respective subsidiaries, or shall have received a decision of the STB on terms
no less favorable to CRC, CSX and NSC and their respective subsidiaries than are
as set forth in the Secured Holders Consent Solicitation and the Equipment
Obligation Agreements, establishing that such consents are not necessary to the
effectuation of the transactions contemplated hereby;
(f) CSXT, NYC Newco, NSR, PRR Newco and CRC shall have obtained the
Debenture Holders Required Consent, or shall have received a decision of the
STB, on terms no less favorable than are as set forth in the Debenture Consent
Solicitation, establishing that such consents are not necessary to the
effectuation of the transactions contemplated hereby;
(g) the parties shall have entered into the instruments of transfer
and distribution and the other agreements contemplated herein;
(h) since the date of the filings made to the Service or the STB,
there shall not have been any condition, circumstance, event or occurrence
occurring or existing that, individually or in the aggregate, has resulted or
could reasonably be expected to result in a material adverse effect on any of
the parties hereto involving or relating to the Distribution and the other
transactions to occur on the Distribution Date;
(i) each of the parties shall have delivered an officer's
certificate to the other parties to the effect that (1) the representations and
warranties of such party contained herein are true and correct in all material
respects on the date hereof and as of the Distribution Date as if made on and as
of the date hereof and as of the Distribution Date, (2) the conditions set forth
in subparts (g) and (h) above are satisfied with respect to such party and (3)
such party has satisfied in all material respects all covenants to be performed
by such party hereunder at or prior to the Distribution Date; and
(j) the conditions to the Exchange Offer shall have been satisfied
or jointly waived by CRC, CSXT and NSR.
The conditions described in this Section 5.2, other than the conditions
described in Section 5.2(j) above, may be asserted by either CSX or NSC
regardless of the circumstances giving rise to any such condition and such
conditions may only be waived by CSX and NSC acting jointly.
Section 5.3 FURTHER ASSURANCES; SUBSEQUENT TRANSFERS. Each of the parties
hereto will execute and deliver such further instruments of transfer and
distribution and will take such other actions as CRR, CSX or NSC or any of their
respective Affiliates may reasonably request, at CRR's, CSX's or NSC's
respective expense, in order to fully effectuate the purposes of this Agreement
and to carry out the terms hereof. Without limiting the generality of the
-18-
foregoing, at any time and from time to time after the Distribution Date, as
CSX, CRR or NSC or any of their respective Affiliates may reasonably request, at
CSX's, CRR's or NSC's respective expense, CRR Parent, Green Acquisition, CRR,
NSR and CSX will execute and deliver such other instruments of transfer and
distribution, and take such action as CSX, CRR or NSC or any of their respective
Affiliates may reasonably deem necessary or desirable and in form and substance
and upon terms and subject to the conditions acceptable to CSX, CRR or NSC, in
order to more effectively transfer, convey and assign to: (i) NYC Newco and PRR
Newco and to confirm NYC Newco's or PRR Newco's right, title to or interest in,
the NYC Membership Interest and PRR Membership Interest, respectively, (ii) NSC
and CSX Rail and CSX Northeast and to confirm NSC's and CSX Rail's and CSX
Northeast's right, title to or interest in the PRR Shares and the NYC Shares,
respectively, transferred pursuant to this Agreement, (iii) CRC that number of
shares of common stock, par value $.01 per share, which represents 99.9% of the
then issued and outstanding NYC Shares and PRR Shares and (iv) CRC that number
of NYC Newco Debentures and PRR Newco Debentures in a combined aggregate
principal amount equal to the aggregate principal amount of Debentures tendered
in the Exchange Offer (subject to Section 2.4 and to the treatment of fractional
interests, with NYC Newco Debentures equal to 42% and PRR Newco Debentures equal
to 58% of such combined aggregate principal amount).
ARTICLE VI
TERMINATION; AMENDMENTS; WAIVERS
Section 6.1 TERMINATION. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date:
(a) by CRC, NSC or CSX at any time after September 30, 2004 if the
Closing shall not have occurred by such date;
(b) by any of the parties if another party shall have breached or
failed to perform in any material respect any of its respective representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (1) would give rise to the failure of a condition
set forth in Section 5.2 and (2) cannot be or has not been cured within 30 days
after such defaulting party has received written notice from the other parties;
(c) by any of the parties if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise prohibits
the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable; or
(d) prior to the Exchange Offer Expiration Date, by any of the
parties upon any condition for such party's benefit becoming incapable of
satisfaction on or before the Exchange Offer Expiration Date.
Any termination under this Section shall be effective upon delivery of a
writing to such effect by the terminating party to all other parties. In the
event of any such termination pursuant to this Section 6.1, no party shall have
any liability of any kind to any other party;
-19-
provided, however, that Article IV and Section 8.13 shall survive such
termination and remain in full force and effect.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 REPRESENTATIONS AND WARRANTIES. Each party hereto represents
for itself (unless otherwise specified), as of the date hereof and as of the
Distribution Date as follows:
(a) Organization and Good Standing. Such party is duly organized,
validly existing and in good standing under its organizational documents and
under the laws of the state in which such party is organized.
(b) Authority. Such party has full corporate power and authority to
execute and deliver this Agreement, the Related Agreements and the Equipment
Obligation Agreements Amendments, as applicable, and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
corporate proceedings required to be taken by or on the part of such party to
authorize such party to execute, deliver and authorize the performance of this
Agreement, the Related Agreements and the Equipment Obligation Agreements
Amendments, as applicable, and the transactions contemplated hereby and thereby
have been properly taken.
(c) Enforceability. This Agreement has been and each of the Related
Agreements and the Equipment Obligation Agreements Amendments will be duly
executed and delivered by such party, as applicable, and when duly executed and
delivered by such party thereto (to the extent such agreement is not being
entered into as of the date hereof), will constitute the legal, valid and
binding obligation of such party enforceable in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other laws of general application relating
to or affecting enforcement of creditors' rights and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(d) No Violation. Except for (i) the required approval(s) by the
STB, (ii) the filing required under the Securities Act with respect to the New
Debentures and (iii) with respect to CRC, the Debenture Holders Required
Consent, the Secured Holders Required Consent, the Lease Consents and the
Equipment Obligation Agreements Amendments, the execution and delivery by such
party of this Agreement, the Related Agreements and the Equipment Obligation
Agreements Amendments and the consummation of the transactions contemplated
hereby and thereby, as applicable, will not violate any applicable law, or
conflict with, result in any breach of, constitute a default (or any event which
with notice or lapse of time or both would become a default) under, or give rise
to any penalty, detriment or right of termination under the articles of
incorporation or articles of association or bylaws, or such similar
organizational documents, as applicable, or any material contracts to which such
party is
-20-
a party or by which it or its property or assets is bound, including with
respect to CRC, any material commercial agreement or arrangement of CRC or its
Subsidiaries.
(e) No Approvals. Except for (i) the required approval(s) by the
STB, (ii) the filings required under the Securities Act with respect to the New
Debentures, and (iii) with respect to CRC, the Debenture Holders Required
Consent, the Secured Holders Required Consent, the Lease Consents and the
Equipment Obligation Agreements Amendments, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
Governmental Entity or third party is necessary for the consummation by such
party of the transactions contemplated hereby, other than such filings,
registrations, authorizations, consents or approvals which have been obtained or
made, or if not obtained or made, will not, in the aggregate, materially
adversely affect the ability of such party to consummate the transactions
contemplated hereby.
(f) Information Supplied. None of the information supplied or to be
supplied by such party specifically for inclusion or incorporation by reference
in (i) the Registration Statement will, at the time the Registration Statement
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or (ii) the Exchange
Offer or Secured Holders Consent Solicitation materials will, at the date such
materials are first mailed to the applicable recipients and at the time the
Exchange Offer and Secured Holders Consent Solicitation are consummated, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(g) Allocation of Fair Market Values. (i) NSC has determined as of
March 23, 2004, that the relative value of PRR is equal to 58% of the FMVs of
NYC and PRR taken together, and that as of the date of execution of this
Agreement there has not been any condition, circumstance, event or occurrence
occurring or existing since March 23, 2004 that, individually or in the
aggregate, has resulted in a change in the percentage allocation to NYC of 42%,
and to PRR of 58%, of the FMVs of NYC and PRR taken together.
(ii) CSX has determined as of May 4, 2004, that the relative
value of NYC is equal to 42% of the FMVs of NYC and PRR taken together, and that
as of the date of execution of this Agreement there has not been any condition,
circumstance, event or occurrence occurring or existing since May 4, 2004 that,
individually or in the aggregate, has resulted in a change in the percentage
allocation to NYC of 42%, and to PRR of 58%, of the FMVs of NYC and PRR taken
together.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 AMENDMENT. This Agreement may be amended by the parties at any
time by an instrument in writing signed on behalf of each party.
-21-
Section 8.2 EXTENSION; WAIVER. At any time prior to the Distribution Date
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
Section 8.3 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given on the date delivered if delivered
personally (including by reputable overnight courier), on the date transmitted
if sent by telecopy (which is confirmed) or mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to CSX, CSXT, CSX Rail, CSX Northeast, NYC Newco, NYC or CRR
Parent, to:
CSX Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
Suite 560
Washington, District of Columbia 20004-1703
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy number: ▇▇▇-▇▇▇-▇▇▇▇
CSX Transportation, Inc.
15th Floor, Speed Code C900
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopy number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy number: 212-403-2000
(b) if to NSC, NSR, PRR Newco, PRR or CRR Parent, to:
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510
Attention: General Counsel - Corporate
Telecopy number: ▇▇▇-▇▇▇-▇▇▇▇
-22-
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy number: ▇▇▇-▇▇▇-▇▇▇▇
(c) If to CRR or CRC, to:
Conrail Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy number: ▇▇▇-▇▇▇-▇▇▇▇
All notices regarding matters requiring handling within thirty days will be
given by overnight mail or confirmed telecopy.
Section 8.4 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. The word "including" as used herein shall mean "including,
without limitation," unless the context otherwise specifically requires.
Section 8.5 ENTIRE AGREEMENT. This Agreement (including the exhibits
hereto, the Tax Allocation Agreement, the Related Agreements and other documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
Section 8.6 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party and their respective successors and
assigns and is not intended to confer upon any other Person any rights or
remedies, except for the rights of an Indemnified Party as contemplated by
Article IV.
Section 8.7 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof; provided, however, that the laws of the respective jurisdictions of
incorporation of each of the parties shall govern the relative rights,
obligations, powers, duties and other internal affairs of such party and its
board of directors.
Section 8.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
-23-
Section 8.9 ASSIGNMENT.
(a) Except as provided in Section 8.9(b), neither this Agreement
(including the documents and instruments referred to herein) nor any of the
rights, interests or obligations hereunder, shall be assigned by any party,
except by operation of law, without the prior written consent of the other
parties, which consent may be withheld at the sole discretion of the relevant
party; provided, however, that the Mergers pursuant to Section 2.3 shall not
require any consent and that, upon consummation of the Mergers, CSXT and NSR
shall each succeed to and become bound by the terms and provisions of this
Agreement that were applicable to (i) NYC Newco and NYC and (ii) PRR Newco and
PRR, respectively.
(b) Any party, without the consent of the other parties, may assign
all or any part of its rights and obligations under this Agreement to (i) any of
its Subsidiaries or (ii) any successor in the event of a sale of all or
substantially all its assets, liquidation or dissolution; if such assignee
executes and delivers to the other parties hereto an agreement reasonably
satisfactory in form and substance to such other party under which such assignee
assumes and agrees to perform and discharge all the obligations and liabilities
of the assigning party; provided that any such assignment shall not relieve the
assigning party from the performance and discharge of such obligations and
liabilities (it being understood by the parties that a consolidation or merger
shall not be considered an assignment for purposes of this Section 8.9).
(c) Subject to the terms of this Section 8.9, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective permitted assignees.
Section 8.10 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
such provision is to be intended to be ineffective only to the most limited
extent possible in such context and the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 8.11 SURVIVAL. The representations, warranties, covenants and
agreements made in this Agreement or in any officer's certificate delivered at
the Closing shall survive the Distribution Date.
Section 8.12 CONFIDENTIALITY. Except as otherwise contemplated by this
Agreement, including Sections 3.2 and 3.3 hereof, the parties shall hold, and
shall cause their respective officers, employees, agents, consultants and
advisors to hold, in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the opinion of its independent legal counsel,
by other requirements of law, all information furnished it by another party or
their respective representatives pursuant to this Agreement (except to the
extent such information can be shown to have been (i) available to such Person
on a non-confidential basis prior to its disclosure by the other Person, (ii) in
the public domain through no fault of such Person or (iii) later lawfully
acquired from other sources by the Person to which it was furnished), and no
Person shall release or disclose such information to any other person, except
its auditors, attorneys, financial advisors, bankers and other consultants and
advisors who shall
-24-
be bound by the provisions of this Section 8.12. In the event that a subpoena,
discovery or other request is received that arguably calls for production or
disclosure of such confidential information, the Person receiving such request
must promptly notify in writing the Person whose information has been requested.
The Person receiving such request shall provide the Person whose confidential
information has been requested a reasonable opportunity to review such
information and to assert any rights it may have with respect to the potential
disclosure of such confidential information. Each party shall be deemed to have
satisfied its obligation to hold confidential information concerning or supplied
by the other parties if it exercises the same care as it takes to preserve
confidentiality for its own similar information. Until the Distribution Date, no
party hereto shall make any oral or written public statement, comment or press
release with respect to the transactions contemplated by this Agreement except
after prior consultation with and approval by the other parties hereto;
provided, however, that in the case of disclosures required by law or applicable
stock exchange requirements, the party making the required disclosure shall
provide each of the parties a reasonable opportunity to review and comment on
any material related to the transactions contemplated by this Agreement prior to
the filing or submission of such material.
Section 8.13 FEES AND EXPENSES. Except as otherwise provided in this
Agreement or the Tax Allocation Agreement, all costs and expenses incurred by
each party hereto in connection with entering into this Agreement and the Tax
Allocation Agreement and consummating such party's obligations hereunder and
thereunder including, without limitation, investment banking, legal, accounting,
audit and printing costs and expenses, shall be paid by the party incurring such
costs and expenses. Notwithstanding the foregoing, unless otherwise agreed by
NSC and CSX, CRC shall pay all of the costs and expenses, including the fees and
expenses of counsel, accountants, investment bankers and other consultants and
experts related to: (i) the petition for STB approval contemplated by Section
3.3 hereof; (ii) the Debenture Consent Solicitation and obtaining the consents
contemplated hereby; and (iii) the Secured Holders Consent Solicitation and the
solicitation of the Lease Consents and obtaining the consents contemplated
thereby; and (iv) the Rulings; provided, however, that with respect to any joint
counsel engaged in respect of subpart (i) herein and mutually acceptable to NSC
and CSX, each in their respective sole discretion, the fees and expenses of such
joint counsel shall be shared equally by NSC and CSX; provided further that,
each of NSC and CSX shall be solely responsible for the fees and expenses of
their respective legal counsel.
Section 8.14 JURISDICTION AND FORUM. The parties agree that the
appropriate and exclusive forum for any disputes between the parties arising out
of this Agreement or the transactions contemplated hereby will be any state or
federal court in the State of New York. Each party unconditionally and
irrevocably waives any objections which it may have now or in the future to such
jurisdiction including objections by reason of lack of personal jurisdiction,
improper venue, or inconvenient forum.
-25-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
CSX CORPORATION
By:
-------------------------------------
Name:
Title:
CSX TRANSPORTATION, INC.
By:
-------------------------------------
Name:
Title:
CSX RAIL HOLDING CORPORATION
By:
-------------------------------------
Name:
Title:
CSX NORTHEAST HOLDING CORPORATION
By:
-------------------------------------
Name:
Title:
NORFOLK SOUTHERN CORPORATION
By:
-------------------------------------
Name:
Title:
NORFOLK SOUTHERN RAILWAY COMPANY
By:
-------------------------------------
Name:
Title:
-26-
CONRAIL INC.
By:
-------------------------------------
Name:
Title:
CONSOLIDATED RAIL CORPORATION
By:
-------------------------------------
Name:
Title:
GREEN ACQUISITION CORP.
By:
-------------------------------------
Name:
Title:
CRR HOLDINGS LLC
By:
-------------------------------------
Name:
Title:
PENNSYLVANIA LINES LLC
By:
-------------------------------------
Name:
Title:
NEW YORK CENTRAL LINES LLC
By:
-------------------------------------
Name:
Title:
NYC NEWCO, INC.
By:
-------------------------------------
Name:
Title:
-27-
PRR NEWCO, INC.
By:
-------------------------------------
Name:
Title:
-28-