OPERATING AGREEMENT
dated as of June 1, 1999
by and between
PENNSYLVANIA LINES LLC
as Owner,
and
NORFOLK SOUTHERN RAILWAY COMPANY
as Operator
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS AND USAGE. . . . . . . . . . . . .. . 1
SECTION 1.1 Definitions and Usage. . . . . . . . .1
ARTICLE II - OPERATION OF ALLOCATED ASSETS . . . . . . . . . .1
SECTION 2.1 Operation of Allocated Assets. . . . . 1
SECTION 2.2 Term of Agreement. . . . . . . . . . . 1
ARTICLE III - OPERATING FEE AND CERTAIN EXPENSES . . . . . . .2
SECTION 3.1 Operating Fee; Supplemental Operating
Fees. . . . . . . . . . . . . . . . . .2
SECTION 3.2 Method of Payment. . . . . . . . . . . 2
SECTION 3.3 Late Payment . . . . . . . . . . . . . 2
SECTION 3.4 No Set-off, Counterclaims, etc.. . . . 2
SECTION 3.5 Tax Provisions . . . . . . . . . .. .3
ARTICLE IV - REPRESENTATIONS, WARRANTIES AND AGREEMENTS. . . .5
SECTION 4.1 Disclaimer of Warranties. . . . . . . 5
SECTION 4.2 Operator To Exercise Certain Rights. . 5
SECTION 4.3 Representations and Warranties of the
Operator . . . . . . . . . . . . . . . 6
SECTION 4.4 Representations and Warranties of the
Owner . . . . . . . . . . . . . . . . .7
ARTICLE V - LIENS, QUIET ENJOYMENT . . . . . . . . . . . . . .7
SECTION 5.1 Liens. . . . . . . . . . . . . . . . . 7
SECTION 5.2 Quiet Enjoyment. . . . . . . . . . . . 8
ARTICLE VI - SETTLEMENT ACCOUNT. . . . . . . . . . . . . . . .8
SECTION 6.1 Maintenance of Settlement Account. . . 8
SECTION 6.2 Payment of Settlement Account Balance. 8
SECTION 6.3 Confirmation of Settlement Account . . 8
ARTICLE VII - OPERATION; MAINTENANCE . . . . . . . . . . . . .9
SECTION 7.1 Operation and Maintenance. . . . . . . 9
SECTION 7.2 Modification.. . . . . . . . . . . . .10
Page
ARTICLE VIII - OBSOLESCENCE TERMINATION; ABANDONMENT . . . . 11
SECTION 8.1 Obsolescence Termination; Abandonment .11
SECTION 8.2 Conditions of Termination. . . . . . .11
ARTICLE IX - TERMINATION . . . . . . . . . . . . . . . . . . 12
SECTION 9.1 Termination. . . . . . . . . . . . .12
SECTION 9.2 Owner Assignment, Lease or Sale of
Allocated Asset . . . . . . . . . . .12
SECTION 9.3 Governmental Approvals . . . . . . . .12
SECTION 9.4 Severable Modifications. . . . . . . .12
ARTICLE X - LOSS, DESTRUCTION, CONDEMNATION, DAMAGE, ETC. . .13
SECTION 10.1 Replacement; Payment. . . . . . . . .13
SECTION 10.2 Applications During Event of Default.14
SECTION 10.3 Application of Article VII. . . . . .14
ARTICLE XI - INDEMNITIES . . . . . . . . . . . . . . . . . . 14
SECTION 11.1 Indemnity by Operator . . . . . . . .14
SECTION 11.2 Indemnity by Owner. . . . . . . . . .15
SECTION 11.3 Indemnification Procedures . . . . . .15
ARTICLE XII - ASSIGNMENTS. . . . . . . . . . . . . . . . . . 16
SECTION 12.1 Operator Assignments.. . . . . . . . .16
SECTION 12.2 Merger, Consolidation, Etc.. . . . . .16
SECTION 12.3 Owner Assignments.. . . . . . . . . .16
ARTICLE XIII - INSPECTION; MARKINGS. . . . . . . . . . . . . 16
SECTION 13.1 Rights to Information.. . . . . . . .16
SECTION 13.2 Markings. . . . . . . . . . . . . . .17
ARTICLE XIV - EVENTS OF DEFAULT. . . . . . . . . . . . . . . 17
SECTION 14.1 Events of Default.. . . . . . . . . .17
Page
ARTICLE XV - REMEDIES . . . . . . . . . . . . . . . . . . . .18
SECTION 15.1 Remedies. . . . . . . . . . . . . . .18
SECTION 15.2 Owner Rights.. . . . . . . . . . . . .19
SECTION 15.3 Exercise of Other Rights or Remedies.19
SECTION 15.4 Subject to Governmental Action. . . .19
ARTICLE XVI - RIGHT TO PERFORM . . . . . . . . . . . . . . . 20
SECTION 16.1 Right to Perform. . . . . . . . . . .20
ARTICLE XVII - RENEWAL OPTIONS . . . . . . . . . . . . . . . 20
SECTION 17.1 Renewal Notice. . . . . . . . . . . .20
ARTICLE XVIII - CERTAIN NOTICES AND INFORMATION. . . . . . . 21
SECTION 18.1 Notices . . . . . . . . . . . . . . .21
SECTION 18.2 Notice of Event of Default. . . . . .21
SECTION 18.3 Information Regarding Allocated
Assets . . . . . . . . . . . . . . . 21
ARTICLE XIX - CONFIDENTIALITY. . . . . . . . . . . . . . . . 22
SECTION 19.1 Confidentiality.. . . . . . . . . . .22
ARTICLE XX - MISCELLANEOUS . . . . . . . . . . . . . . . . . 22
SECTION 20.1 Dispute Resolution. . . . . . . . . .22
SECTION 20.2 Documentary Conventions.. . . . . . .22
Appendix
Appendix A: Definitions
OPERATING AGREEMENT
This OPERATING AGREEMENT (this "Agreement") is entered into
as of June 1, 1999, by and between Pennsylvania Lines LLC, a
Delaware limited liability company, as Owner and Norfolk Southern
Railway Company, a Virginia Corporation, as Operator.
ARTICLE I
Definitions and Usage
SECTION 1.1 Definitions and Usage. Unless the context
otherwise requires, capitalized terms used herein shall have the
respective meanings assigned to them in Appendix A to this
Agreement. Terms used, but not defined, in this Agreement or in
Appendix A shall have the respective meanings assigned to them in
the Transaction Agreement.
ARTICLE II
Operation of Allocated Assets
SECTION 2.1 Operation of Allocated Assets. (a) The Owner
hereby agrees with the Operator, and the Operator hereby agrees
with the Owner, that the Operator shall have the license, right
and obligation to use and operate the Allocated Assets for the
term referred to in Section 2.2 hereof on the terms and
conditions set forth in this Agreement. Except as otherwise
specifically provided in this Agreement, the Operator may use and
operate the Allocated Assets in such manner and for such purposes
as the Operator considers necessary or appropriate.
(b) The Owner hereby agrees that the Operator shall,
effective as of the Closing Date, have the right to receive and
retain for its own benefit and use and in its own name all
revenues, tolls, rents, receipts, issues, profits and income of
every character arising from or associated with the operation and
use of the Allocated Assets.
SECTION 2.2 Term of Agreement. Immediately upon the
execution hereof, without necessity of any further act or
evidence by either party hereto, the Allocated Assets shall be
deemed delivered by the Owner to the Operator for the Term and,
if the Operator elects to exercise its renewal option pursuant to
Article XVII hereof, for any Renewal Term, in either case, all
pursuant to the terms of this Agreement, unless this Agreement
shall have been earlier terminated in accordance with its terms.
ARTICLE III
Operating Fee and Certain Expenses
SECTION 3.1 Operating Fee; Supplemental Operating Fees.
The Operator shall pay to the Owner the Operating Fee commencing
on the first Payment Date and on each Payment Date thereafter for
the duration of the Term and any Renewal Term. Subject to any
applicable Governmental Action, the Operating Fee shall be
recalculated on each Valuation Date to reflect the Fair Market
Rental Value of the Allocated Assets then subject to this
Agreement. Supplemental Operating Fees shall be paid by the
Operator when due under the terms of this Agreement.
SECTION 3.2 Method of Payment. All Operating Fees and
Supplemental Operating Fees (to the extent Supplemental Operating
Fees are not paid directly by the Operator) shall be paid by the
Operator to the Owner at the Owner's office or at such other
place in the U.S. as the Owner shall specify to the Operator at
least five (5) Business Days prior to the date such payment is
due. Each payment of Operating Fees and Supplemental Operating
Fees shall be made by the Operator in immediately available funds
prior to 12:00 noon, New York time at the place of payment, on
the date when such payment shall be due.
SECTION 3.3 Late Payment. In the event any Operating Fees
or Supplemental Operating Fees shall not be paid on the due date
thereof to the Owner, the Operator shall pay to the Owner on
written demand, interest (to the extent permitted by Applicable
Law) on such overdue amount from the due date thereof (without
regard to any grace period) to the date of payment thereof at the
Overdue Rate.
SECTION 3.4 No Set-off, Counterclaims, etc. THIS AGREEMENT
IS A NET AGREEMENT. THE OPERATOR'S OBLIGATION TO PAY ALL
PAYMENTS OF OPERATING FEES AS AND WHEN THE SAME SHALL BECOME DUE
AND PAYABLE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT SHALL
BE ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE SUBJECT TO ANY
ABATEMENT OR DIMINUTION BY SET-OFF, DEDUCTION, COUNTERCLAIM,
RECOUPMENT, AGREEMENT, DEFENSE, SUSPENSION, DEFERMENT,
INTERRUPTION OR OTHERWISE, AND UNTIL SUCH TIME AS ALL AMOUNTS
REQUIRED TO BE PAID UNDER THIS AGREEMENT SHALL HAVE BEEN PAID,
THE OPERATOR SHALL NOT HAVE ANY RIGHT TO TERMINATE THIS AGREEMENT
OR TO BE RELEASED, RELIEVED OR DISCHARGED FROM ITS OBLIGATION TO
MAKE, AND SHALL NOT SUSPEND, REDUCE OR DISCONTINUE, ANY PAYMENT
OF OPERATING FEES FOR ANY REASON WHATSOEVER (EXCEPT AS MAY BE
EXPRESSLY PROVIDED HEREIN), including, without limitation:
(a) any default, misrepresentation, negligence,
misconduct or other action or inaction of any kind by the Owner
or any other Person, whether under or in connection with this
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Agreement or any other agreement relating to this Agreement or in
connection with any unrelated transaction;
(b) the insolvency, bankruptcy, reorganization or
cessation of existence, or discharge or forgiveness of
indebtedness of any Person referred to in clause (a) above;
(c) the invalidity, unenforceability or impossibility
of performance of this Agreement for any reason;
(d) any defect in the title, condition, design,
operation or fitness for use of, or any Lien or other restriction
of any kind upon, all or any part of any Allocated Asset, any
loss or destruction of, or damage to, any Allocated Asset or any
interruption in or cessation of the ownership, possession,
operation or use of any Allocated Asset for any reason
whatsoever;
(e) any restriction, prevention or curtailment of or
interference with any Allocated Asset or the use thereof or any
part thereof for any reason whatsoever, including, without
limitation, by any Governmental Authority;
(f) any Applicable Law now or hereafter in force;
(g) any failure to obtain any required Governmental
Action for a transfer of rights or title to the Owner, the
Operator or any other Person;
(h) any amendment or other change of, or any
assignment of any rights under, this Agreement, or any waiver or
other action or inaction under or in respect of this Agreement,
or any exercise or nonexercise of any right or remedy under or in
respect of this Agreement; and
(i) any other cause, circumstance, happening or event
whatsoever, foreseen or unforeseen, whether similar or dissimilar
to any of the foregoing.
The Operator hereby waives and hereby agrees to waive at any
future time at the request of the Owner, to the extent now or
then permitted by Applicable Law, any and all rights that the
Operator may have or that at any time hereafter may be conferred
upon it, by statute, regulation or otherwise, to terminate,
cancel, quit or surrender this Agreement other than in accordance
with the express terms hereof. Each Operating Fee payment shall
be final and the Operator agrees not to seek to recover all or
any part of any such payment (except for amounts paid to the
Owner which the Owner in good faith agrees have been paid in
error) from the Owner for any reason under any circumstance
whatsoever.
SECTION 3.5 Tax Provisions. (a) During the Term and any
Renewal Term, the Operator shall pay when due, all Taxes, other
than Excluded Taxes (as hereinafter defined), imposed on the
Owner, based upon the Allocated Assets or arising out of the use,
lease, possession or operation of the Allocated Assets during
that period. For purposes of this Section, (i) Owner shall
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mean the Owner and its Affiliates and (ii) Excluded Taxes shall
mean (A) all Taxes based, in whole or in part, on net income or
gross income (including, without limitation, any minimum tax) of
the Owner or which are in substitution for, or relieve the Owner
from, any Tax based upon or measured by the Owner's net income or
gross income, together with any interest, penalties, additions to
tax or additional amounts that may become payable in respect
thereof; (B) business and occupation taxes, and gross receipts
taxes (unless in the nature of a sales tax) of the Owner and
Taxes based upon the equity interests of the Owner; and (C)
interest, fines and penalties to the extent due to the acts or
omissions of the Owner in connection with Excluded Taxes. The
Operator shall not be required to pay any Tax it is obligated to
pay under the provisions of this Section 3.5 during the time it
shall reasonably and in good faith and by appropriate legal or
administrative proceedings contest the validity or amount
thereof.
(b) The Owner shall have the right and obligation, at
its own expense, to prepare and file all Tax returns required to
be filed by the Owner under Applicable Law. Prior to the Owner's
filing of any Tax returns for Taxes required to be paid by the
Operator under paragraph (a) of this Section 3.5, the Owner shall
provide such returns to the Operator for its review and approval,
which approval will not be unreasonably withheld or delayed.
(c) The Operator and its assignees and designees shall
have the right (but only to the extent the Owner shall have such
right, by contract or otherwise) to control at its expense any
audit or examination by any Governmental Authority, or any
judicial proceeding, relating to any Taxes required to be paid by
it under paragraph (a) of this Section 3.5.
(d) During the Term and any Renewal Term, the Operator
and any of its designees shall be entitled to claim federal,
state and local tax benefits (including, without limitation,
deductions and credits) arising out of Operator's expenditures in
the use, possession or operation of the Allocated Assets by the
Operator, or any of its respective assignees or designees, and
the improvements thereto, that the Operator, or any of its
designees is entitled to claim under federal, state and local
laws and regulations. These tax benefits include but are not
limited to: (i) deductions for depreciation or amortization
attributable to property (both tangible and intangible) owned by
the Operator, or any of its assignees or designees, including
improvements made to any of the Allocated Assets by any of them,
as well as expenditures made by any of them that are required to
be capitalized under sections 263 or 263A or some other section
of the Code; (ii) deductions for expenditures made by the
Operator, or any of its assignees or designees, deductible as
ordinary and necessary business expenses under section 162 of the
Code; (iii) deductions for losses attributable to property (both
tangible and intangible) owned by the Operator, or any of its
assignees or designees, deductible under section 165 of the Code;
and (iv) any federal, state or local credits applicable to the
use, lease, possession or operation of the Allocated Assets by
the Operator, or any of its assignees or designees, and
improvements thereto. The Owner is entitled to deductions for
Taxes of the Owner paid by the Operator under paragraph (a) of
this Section 3.5 and treated as rent paid by the Operator under
this Agreement and taxable income received by the Owner under
section 1.162-11(a) of the Income Tax Regulations.
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ARTICLE IV
Representations, Warranties and Agreements
SECTION 4.1 Disclaimer of Warranties. AS BETWEEN THE OWNER
AND THE OPERATOR, THE EXECUTION OF THIS AGREEMENT SHALL BE
CONCLUSIVE PROOF OF ACCEPTANCE BY THE OPERATOR OF EACH ALLOCATED
ASSET AS BEING IN COMPLIANCE WITH ALL REQUIREMENTS OF THIS
AGREEMENT. THE OWNER AND THE OPERATOR TAKE EACH SUCH ALLOCATED
ASSET "AS IS" AND "WHERE IS", AND THE OPERATOR ACKNOWLEDGES THAT
THE OWNER HAS NOT MADE, NOR SHALL BE DEEMED TO HAVE MADE, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION,
MERCHANTABILITY, DESIGN, QUALITY, DURABILITY, OPERATION OR
FITNESS FOR USE OR PURPOSE OF EACH SUCH ALLOCATED ASSET OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO EACH SUCH ALLOCATED ASSET OR OTHERWISE, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE, AS
BETWEEN THE OWNER AND THE OPERATOR, BY THE OPERATOR IN THE EVENT
OF ANY DEFECT OR DEFICIENCY IN ANY SUCH ALLOCATED ASSET, OF ANY
NATURE WHETHER PATENT OR LATENT, AND THAT THE OWNER SHALL NOT
HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO, except
that the Owner hereby represents, warrants and covenants that
each such Allocated Asset shall be free of Owner Liens on the
Closing Date and except as otherwise provided in the Transaction
Agreement. The provisions of this Section 4.1 have been
negotiated, and the foregoing provisions are intended to be a
complete exclusion and negation of any other warranties made by
the Owner, express or implied, with respect to any Allocated
Asset, whether arising pursuant to Applicable Law now or
hereafter in effect or otherwise. Nothing contained in this
Section 4.1 shall in any way diminish or otherwise affect any
right the Operator may have with respect to any Allocated Asset
against any third Person. The Owner shall not at any time be
required to inspect any Allocated Asset, and any actual
inspection by the Owner shall not be deemed to affect or modify
the provisions of this Section 4.1.
SECTION 4.2 Operator To Exercise Certain Rights. (a) The
Owner hereby authorizes the Operator, at the Operator's expense,
to exercise in the name of and on behalf of the Owner and the
Operator, as their interests may appear, the right and power to
deal with any third party lessor, lessee, licensor, licensee,
seller, manufacturer, shipper or any other Persons (including
agents and consultants thereof) with respect to any Allocated
Asset or who are party to any Assigned Rights (each a "Third
Party Provider") and the right to enforce (by legal action or
otherwise) against such Third Party Provider all rights, powers
and privileges of the Owner and to receive all benefits of the
Owner with respect to such Third Party Provider, under any
Contract, Assigned Right, express or implied warranty, indemnity
or otherwise; provided, that if an Event of Default shall have
occurred and be continuing (and until all Events of Default then
outstanding shall no longer be continuing) the Owner may
terminate the authority of the Operator under this Section 4.2.
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Any amount paid to the Owner or Operator pursuant to the
Operator's exercise of its authority under this Section 4.2 shall
be paid to the Operator. After the end of the Term or any
Renewal Term with respect to any Allocated Asset or after the
termination of this Agreement with respect to such Allocated
Asset pursuant to Article XIV, (a) the Operator shall have no
further rights, powers, privileges or benefits under this Section
4.2 and (b) all amounts payable by any Third Party Provider paid
with respect to periods arising thereafter shall be paid to, and
retained by, the Owner or any other Person as shall then be the
owner of the Allocated Asset as to which such payment is made.
(b) The Operator shall, with the Owner's prior
consent, have the right and power to execute and deliver on
behalf of the Owner, the extension, renewal, amendment or
modification of any Assigned Rights or any other Contract in
respect of the Allocated Assets.
(c) The Owner shall as expeditiously as possible use
its reasonable efforts to obtain or transfer to the Operator any
Governmental Action or the consent, authorization, or approval of
any private Person required to be made, obtained or transferred
to effectuate the purposes of this Agreement and the transactions
contemplated herein, which actions shall include furnishing all
information required under or in connection with such
Governmental Action or the approvals of, or filing with such
private Person.
(d) The Operator shall pay, perform and discharge
fully all of the obligations of the Owner or its Affiliates under
all Assigned Rights and Contracts that are Allocated Assets from
and after the Closing Date. Such payments shall be considered
Supplemental Operating Fees. The Owner or its Affiliates shall,
without further consideration therefor, pay, assign and remit
promptly to the Operator, as appropriate, all monies, rights and
other consideration received in respect of such performance. The
Owner or its Affiliates shall exercise or exploit the rights and
options under all such Contracts only as reasonably directed by
the Operator.
SECTION 4.3 Representations and Warranties of the Operator.
The Operator represents and warrants to the Owner as of the
Closing Date as follows:
(a) Due Organization, etc. The Operator (i) is a
corporation duly organized and validly existing under the laws of
the Commonwealth of Virginia, (ii) has the power and authority to
enter into and perform its obligations under this Agreement and
(iii) has obtained all Governmental Action required to use or
hold the Allocated Assets in accordance with this Agreement, and
to enter into and perform its obligations under this Agreement.
(b) Due Authorization, Non-Contravention, etc. The
execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action on the part of
the Operator, do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of
any Organic Document of the Operator or Applicable Law.
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(c) Due Execution. This Agreement has been duly
executed and delivered by the Operator, and constitutes the
legal, valid and binding obligation of the Operator enforceable
against the Operator in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting the 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.
SECTION 4.4 Representations and Warranties of the Owner.
The Owner represents and warrants to the Operator as of the
Closing Date as follows:
(a) Due Organization, etc. The Owner (i) is a limited
liability company duly organized and validly existing under the
laws of the State of Delaware, (ii) has the power and authority
to enter into and perform its obligations under this Agreement
and (iii) has obtained all Governmental Action required to enter
into and perform its obligations under this Agreement.
(b) Due Authorization, Non-Contravention, etc. The
execution, delivery and performance of this Agreement have been
duly authorized by all necessary company action on the part of
the Owner, do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of
any Organic Document of the Owner or Applicable Law.
(c) Due Execution. This Agreement has been duly
executed and delivered by the Owner, and constitutes the legal,
valid and binding obligation of the Owner enforceable against the
Owner in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization or other laws
of general application relating to or affecting the 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.
ARTICLE V
Liens; Quiet Enjoyment
SECTION 5.1 Liens. The Operator shall not directly or
indirectly create, incur, assume or suffer to exist any Lien
(other than Permitted Liens) on any Allocated Asset. The
Operator will promptly, at its own expense, take such action as
may be necessary duly to discharge any such Lien. The Operator's
obligations under this Section 5.1 with respect to any such Lien
on any Allocated Asset resulting from a claim arising prior to
the termination of this Agreement with respect to such Allocated
Asset shall survive such termination. The Operator agrees that,
upon the termination of this Agreement, the Allocated Assets
shall be returned to the Owner free and clear of Liens, other
than Owner Liens.
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SECTION 5.2 Quiet Enjoyment. Notwithstanding any other
provision of this Agreement, so long as no Event of Default shall
have occurred and be continuing, as between the Operator and
Owner, the Operator shall have the exclusive rights to
possession, control and use of all Allocated Assets and neither
the Owner nor any Person acting or claiming through the Owner
will take any action that shall interfere with the peaceful and
quiet enjoyment or the possession and use or nonuse of any
Allocated Asset by the Operator, and the Operator shall have the
right to possess and use or not use such Allocated Asset in its
sole discretion, subject always to the terms and conditions of
this Agreement. The foregoing is not intended to limit the
inspection rights of the Allocated Assets granted by the Operator
pursuant to Section 13.1 hereof.
ARTICLE VI
Settlement Account
SECTION 6.1 Maintenance of Settlement Account. The
Operator shall maintain a non-cash book account (the "Settlement
Account") to reflect amounts owed by the Operator to the Owner as
a result of transactions described in Sections 7.1(e), 8.1 and
10.1(a)(ii) hereof.
SECTION 6.2 Payment of Settlement Account Balance. The
Operator shall pay to the Owner an amount equal to the then
balance of the Settlement Account upon: (i) the sixth (6th),
twelfth (12th), eighteenth (18th) and twenty-fourth (24th)
anniversaries of the Closing Date, (ii) the expiration of the
Term (or, if earlier, the termination of this Agreement), (iii)
the sixth (6th) anniversary of the first day of each Renewal
Term, (iv) the end of each Renewal Term (or, if earlier, the
termination of this Agreement), and (v) thirty (30) calendar days
after the date on which a Substantial Allocated Asset (a) is not
repaired or replaced under Section 7.1(e) hereof, (b) is
abandoned, sold or otherwise disposed of under Section 8.1 hereof
or (c) suffers an Event of Loss and is not replaced under Section
10.1(a)(i) hereof (each, a "Settlement Account Payment Date").
SECTION 6.3 Confirmation of Settlement Account. Within
sixty (60) days of the crediting of an amount to the Settlement
Account, the Appraisal Procedure shall be used to confirm that
credits to the Settlement Account were based on the fair market
value of the relevant Allocated Assets consistent with the terms
of this Agreement. The Settlement Account shall be adjusted
consistent with the outcome of the Appraisal Procedure and the
payments made pursuant to Section 6.2 hereof shall reflect any
such adjustments.
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ARTICLE VII
Operation; Maintenance
SECTION 7.1 Operation and Maintenance. The Operator shall
at all times at its own expense during the Term and during any
Renewal Term:
(a) use the Allocated Assets in such manner and for
such purposes as the Operator considers necessary or appropriate
in connection with the operation of its business;
(b) keep and maintain such books, records and title
documents relating to the Allocated Assets, and the acquisition,
construction and installation of Modifications thereto and the
payment of the purchase price of such Modifications, as the
Operator considers appropriate consistent with the Operator's
customary business practices;
(c) maintain the Allocated Assets in accordance with
the Operator's customary practice;
(d) inspect, service, maintain, store, use, operate,
repair, replace, modify and improve the Allocated Assets in
compliance in all material respects with Applicable Law
(including all applicable environmental and occupational safety
laws), and in compliance in all material respects with all
applicable licenses and permits relating to the Allocated Assets
issued by any Governmental Authority; provided, the Operator may
in good faith by appropriate proceedings contest the validity or
application of any such Applicable Law in any reasonable manner
which does not involve any risk of the imposition of criminal
liability on the Owner, or any material danger of any fine,
penalty, or other imposition upon the Owner for which the
Operator has not acknowledged its obligation to indemnify the
Owner pursuant to this Agreement; and
(e) in case of any damage to any Allocated Asset,
other than damage constituting an Event of Loss, at its election,
in either case at its own expense, (i) repair such Allocated
Asset so as to restore its utility consistent with the Operator's
customary practice with respect to similar assets owned by the
Operator (as determined solely by the Operator) or (ii) replace
such Allocated Asset with an asset (which will become an
Allocated Asset) having a fair market value (as determined solely
by the Operator) equivalent to that of the damaged Allocated
Asset immediately prior to the damage (assuming, in either case,
such Allocated Asset was then in the condition and state of
repair required to be maintained by the terms of this Agreement),
with such alterations and additions as may be made at the
Operator's election pursuant to and subject to the conditions of
Section 7.2 hereof; provided, however, that the Operator need not
repair or replace any Allocated Asset to the extent that such
Allocated Asset is not necessary to the operation of the
Allocated Assets considered as a whole (as determined solely by
the Operator), in which event the Operator shall credit to the
Settlement Account the fair market value of such Allocated Asset
as of the date immediately prior to the damage (assuming such
Allocated Asset was then in the condition and state of repair
required to be maintained by the terms of this Agreement). Upon
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the crediting of the Settlement Account with the fair market
value of such Allocated Asset, such Allocated Asset shall no
longer be subject to this Agreement and the Owner shall convey to
the Operator or its designee, ownership of and title to such
Allocated Asset. Notwithstanding the foregoing, until payment by
the Operator to the Owner of the amount credited to the
Settlement Account on the next succeeding Settlement Account
Payment Date, such Allocated Asset shall be deemed to continue to
be subject to this Agreement solely for the purpose of
calculating the Operating Fee.
SECTION 7.2 Modification.
(a) The Operator shall at its expense make any
Modification to any Allocated Asset required (i) by Applicable
Law or in order to operate, maintain, service, store, or use such
Allocated Asset in accordance with Applicable Law, as soon as
practicable after any such requirement may arise or (ii) in order
for the Operator to comply with the provisions of this Agreement
(all such Modifications being referred to herein as "Required
Modifications"); provided, that the Operator may, so long as no
Event of Default shall have occurred and be continuing, in good
faith by appropriate proceedings contest the validity or
application of any Applicable Law in any reasonable manner which
does not involve any reasonably foreseeable risk of the
imposition of criminal liability on the Owner, or any material
danger of any fine, penalty or other imposition upon the Owner
for which the Operator has not acknowledged its obligation to
indemnify the Owner pursuant to this Agreement. The Operator at
its expense, from time to time, may make any Modification to any
Allocated Asset that the Operator in its discretion may deem
desirable in the proper conduct of the Operator's business (all
such Modifications which are not Required Modifications being
referred to herein as "Optional Modifications"); provided that
any construction of new trackage or facilities appurtenant to but
not located on such Allocated Assets shall, at Operator's
election, be deemed not to be Modifications hereunder and not
subject to this Agreement.
(b) Title to each Modification shall vest as follows:
(i) in the case of each (A) Required Modification
or (B) other Nonseverable Modification, whether or not the Owner
shall have financed or provided financing (in whole or in part)
for such Modification, the Owner shall, without further act,
effective on the date such Modification shall have been
incorporated into the modified Allocated Asset, acquire title to
such Modification free and clear of all Liens other than
Permitted Liens; or
(ii) in the case of each Severable Modification,
the Operator shall retain title to such Modification and the
Operator may (subject to Section 7.2(c) hereof) remove such
Modification at its expense at any time so long as the modified
Allocated Asset remains in or is restored by the Operator to the
condition required by this Agreement.
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Immediately upon title to a Modification vesting in the
Owner pursuant to this Section 7.2(b), such Modification shall,
without further act, become subject to this Agreement and be
deemed part of the applicable Allocated Asset for all purposes.
(c) Subject to compliance with Applicable Law, the
Operator may remove, at its expense, any Severable Modification;
provided, that the Operator, at its expense shall repair any
damage to the Allocated Asset from which a Severable Modification
has been removed caused by such removal; provided, further, that
in the event the Operator shall not have removed any Severable
Modification to which the Operator shall have title as provided
in Section 7.2(b)(ii) prior to the end of the Term or any Renewal
Term, title to such Severable Modification shall vest in the
Owner upon the expiration of such Term or Renewal Term.
ARTICLE VIII
Obsolescence Termination; Abandonment
SECTION 8.1 Obsolescence Termination; Abandonment. Except
as may otherwise be contemplated in this Agreement, the Operator
may not dispose of, or otherwise convey or transfer any interest
in the Allocated Assets to any Person. Unless an Event of
Default shall have occurred and be continuing, if the Operator
has determined that an Allocated Asset is uneconomic or surplus
to, or no longer necessary for, the Operator's operating
requirements as determined by the Operator in its sole judgment,
the Operator shall have the right, with the Owner's consent, to
abandon or sell or otherwise dispose of such Allocated Asset (as
agent for the Owner) in which event the Operator may retain the
sale proceeds (net of selling expenses), if any, received for
such Allocated Asset and shall credit to the Settlement Account
the fair market value (as of the time of the abandonment, sale or
other disposition) of such Allocated Asset (which, in no event,
shall be less than the sale proceeds, net of selling expenses,
received for such Allocated Asset). Upon the crediting of the
Settlement Account with the fair market value of such Allocated
Asset, such Allocated Asset shall no longer be subject to this
Agreement and the Owner shall convey to the Operator or its
designee, ownership of and title to such Allocated Asset.
Notwithstanding the foregoing, until payment by the Operator to
the Owner of the amount credited to the Settlement Account on the
next succeeding Settlement Account Payment Date, such Allocated
Asset shall be deemed to continue to be subject to this Agreement
solely for the purpose of calculating the Operating Fee.
SECTION 8.2 Conditions of Termination. As a condition to a
termination, abandonment or other disposition pursuant to this
Article VIII, any necessary Governmental Actions in connection
therewith shall have been obtained by and at the expense of the
Operator. Upon the Operator's request, the Owner shall cooperate
fully with the Operator in seeking and obtaining all necessary
Governmental Actions in connection with the termination or
abandonment of any Allocated Asset.
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ARTICLE IX
Termination
SECTION 9.1 Termination. (a) Unless the Operator exercises
its renewal option under Article XVII, upon termination of this
Agreement, the Operator shall, at its risk, cost and expense,
cause the Allocated Assets subject to this Agreement at such time
to be (i) free and clear of all Liens other than Owner Liens,
(ii) in compliance with the maintenance and operating provisions
of this Agreement, and (iii) otherwise capable of being
maintained, used and operated substantially in compliance with
Applicable Law for the operation of a railroad appropriate to
conditions existing at such time.
(b) Upon the termination of this Agreement, the
Operator will, at the Operator's expense, promptly and duly
execute and deliver to the Owner such documents and take such
further actions as the Owner may reasonably request in order to
effect the return of the Allocated Assets, including any Assigned
Right, to the Owner or its designee.
SECTION 9.2 Owner Assignment, Lease or Sale of Allocated
Asset. The Operator agrees that during the last year of the Term
or any Renewal Term, it will cooperate in all reasonable respects
with efforts of the Owner to lease, sell, assign or otherwise
transfer any Allocated Asset to any designee of the Owner.
SECTION 9.3 Governmental Approvals. The Operator shall
cooperate and assist the Owner, at the expense of the Owner, in
transferring or obtaining all Governmental Actions which may be
necessary for the Owner or its designee, as the case may be, to
operate, lease, purchase, assume or otherwise be a party to or
beneficiary of any returned Allocated Asset.
SECTION 9.4 Severable Modifications. At any time after the
Operator has notified the Owner that it has determined not to
renew this Agreement pursuant to Article XVII, or operational
responsibility for the Allocated Assets reverts to the Owner, the
Operator shall at the Owner's request, advise the Owner of the
nature and condition of all Severable Modifications owned by the
Operator pursuant to Section 7.2(b)(ii) hereof which the Operator
has removed or intends to remove from the Allocated Assets in
accordance with Section 7.2(c) hereof. The Operator may (and
shall, if so directed by Owner), at its sole cost, expense and
risk, remove from any Allocated Asset any Severable Modification;
provided, that any such Modification not removed pursuant to this
Section 9.4 shall be deemed to be part of the Allocated Asset to
which it relates for all purposes hereof and title to such
Modification shall thereupon vest in the Owner free and clear of
all Liens, other than Owner Liens.
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ARTICLE X
Loss, Destruction, Condemnation, Damage, etc.
SECTION 10.1 Replacement; Payment.
(a) Upon the occurrence of an Event of Loss, or an
event which with the passage of time would become an Event of
Loss, with respect to any Allocated Asset, the Operator shall:
(i) replace the Allocated Asset which suffered
the Event of Loss, with a replacement asset (which will become an
Allocated Asset) which has a fair market value equivalent to that
of the Allocated Asset which suffered the Event of Loss (as
determined solely by the Operator) immediately prior to such
Event of Loss (assuming such Allocated Asset was then in the
condition and state of repair required by this Agreement); or
(ii) the Operator may retain the sale proceeds, if
any, received for the Allocated Asset suffering the Event of Loss
and shall credit to the Settlement Account the fair market value
of such Allocated Asset immediately prior to such Event of Loss
(assuming such Allocated Asset was then in the condition and
state of repair required by this Agreement), which fair market
value in no event shall be less than the sale proceeds (net of
selling expenses) received for such Allocated Asset. Upon the
crediting of the Settlement Account with the fair market value of
such Allocated Asset, such Allocated Asset shall no longer be
subject to this Agreement and the Owner shall convey to the
Operator or its designee, ownership of and title to such
Allocated Asset. Notwithstanding the foregoing, until payment by
the Operator to the Owner of the amount credited to the
Settlement Account on the next succeeding Settlement Account
Payment Date, the Allocated Asset suffering the Event of Loss
shall be deemed to continue to be subject to this Agreement
solely for the purpose of calculating the Operating Fee.
(b) Upon compliance by the Operator with Section
10.1(a)(i), (i) this Agreement shall continue with respect to any
replacement Allocated Asset as though no Event of Loss had
occurred, (ii) the Owner shall convey "as is" "where is", free
and clear of all Owner Liens, without recourse or warranty
(except as to the ability and authority of the Owner to transfer
and convey such Allocated Asset free and clear of Owner Liens),
to the Operator or its designee all right, title and interest of
the Owner in and to the Allocated Asset being replaced by
executing and delivering to the Operator or its designee such
bills of sales and other documents or instruments as the Operator
or its designee may reasonably request to evidence such
conveyance, and (iii) the Owner shall assign to the Operator all
claims it may have against any other Person arising from the
event which gave rise to the replacement.
(c) Upon compliance by the parties with Section
10.1(a)(ii), the Owner shall convey "as is" "where is", free and
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clear of all Owner Liens, without recourse or warranty (except as
to the ability and authority of the Owner to transfer and convey
such Allocated Asset free and clear of Owner Liens), to the
Operator or its designee all right, title and interest of the
Owner in and to such Allocated Asset by executing and delivering
to the Operator or its designee such bills of sales and other
documents or instruments as the Operator or its designee may
reasonably request to evidence such conveyance.
SECTION 10.2 Applications During Event of Default. Any
amount that shall be payable to the Operator pursuant to this
Agreement arising out of any warranty, governmental award or
otherwise received in respect of any Allocated Asset shall not be
paid to the Operator or, if it shall have been previously paid to
the Operator, shall not be retained by the Operator but shall be
paid to the Owner, if at the time of such payment any Event of
Default shall have occurred and be continuing. In such event,
all such amounts shall be paid to and held by the Owner in trust
as security for the obligations of the Operator to make payments
under this Agreement or applied by the Owner toward payment of
any of such obligations of the Operator at the time due
hereunder. At such time as there shall not be continuing any
Event of Default all such amounts at the time held by the Owner
in excess of the amount, if any, that the Owner shall have
elected to apply as above provided shall be paid to the Operator.
SECTION 10.3 Application of Article VII. Article VII shall
not apply to any Allocated Asset after an Event of Loss has
occurred with respect to such Allocated Asset; provided, that the
foregoing shall not limit the obligations of the Operator under
Article VII hereof with respect to any replacement Allocated
Asset.
ARTICLE XI
Indemnities
SECTION 11.1 Indemnity by Operator. (a) The Operator
assumes and shall be fully responsible for all liabilities
attributable in any way to the Allocated Assets, or to operations
on or over the Allocated Assets, except for (i) Retained
Liabilities and any other liabilities with respect to which it is
the responsibility of any Person other than the Operator under
the terms of the Transaction Agreement and the Ancillary
Agreements to indemnify the Owner, and (ii) liabilities that
arise prior to the Closing Date referred to in Section 2.8(b)(ii)
or Section 2.8(c) of the Transaction Agreement; provided, that
for the purposes of this Section 11.1(a), the term "Ancillary
Agreements" as used in the parenthetical included in Sections
2.8(b) and 2.8(c) of the Transaction Agreement shall be deemed
not to include this Agreement. To that end, the Operator agrees
to and shall protect, indemnify and hold wholly harmless the
Owner and its directors, officers, employees and agents (each an
"Owner Indemnified Person") from and against any Damages arising
from or attributable to the liabilities assumed by the Operator
under the first sentence of this Section 11.1(a).
(b) Upon payment in full of any indemnity pursuant to
this Section 11.1, the Operator shall, to the extent of such
payment and so long as no Event of Default shall have occurred
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and be continuing, be subrogated to any rights of the Owner
Indemnified Person in respect of the matter against which such
indemnity was given (other than with respect to any insurance
policies carried by such Owner Indemnified Person).
SECTION 11.2 Indemnity by Owner. (a) The Owner shall be
fully responsible for all liabilities allocated to it under
Section 2.8(b)(ii) of the Transaction Agreement. The Owner shall
be fully responsible for all liabilities allocated to it under
Section 2.8(c) of the Transaction Agreement and shall, to the
extent not obtained by CRC as required by Section 2.8(c) of the
Transaction Agreement, obtain within 60 days after the Closing
Date insurance to cover such liabilities from and after the
Closing Date. To that end, the Owner agrees to and shall
protect, indemnify and hold wholly harmless the Operator and its
directors, officers, employees and agents (each, an "Operator
Indemnified Person") from and against any and all Damages arising
from or attributable to (i) Retained Liabilities and any other
liabilities with respect to which it is the responsibility of any
Person other than the Operator under the terms of the Transaction
Agreement and the Ancillary Agreements to indemnify the Owner,
and (ii) liabilities that arise prior to the Closing Date
referred to in Section 2.8(b)(ii) and Section 2.8(c) of the
Transaction Agreement; provided, that for the purposes of this
Section 11.2(a), the term "Ancillary Agreements" as used in the
parenthetical included in Sections 2.8(b) and 2.8(c) of the
Transaction Agreement shall be deemed not to include this
Agreement.
(b) Upon payment in full of any indemnity pursuant to
this Section 11.2, the Owner shall, to the extent of such
payment, be subrogated to any rights of the Operator Indemnified
Person in respect of the matter against which such indemnity was
given (other than with respect to any insurance policies carried
by such Operator Indemnified Person).
SECTION 11.3 Indemnification Procedures. (a) If any Action
shall be threatened or instituted or any claim or 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 claim, 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 claim 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 XI unless the Indemnified Party's failure has materially
prejudiced the Indemnifying Party's ability to defend the claim,
demand or Action.
(b) If the Indemnified Party seeks indemnification
from the Indemnifying Party as a result of a claim or demand
being made by a third party (a "Third Party Claim"), the
Indemnifying Party shall have the right promptly to 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. The
Indemnified Party may, in its sole discretion and at its own
expense, employ counsel to represent it in the defense of the
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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 the Indemnifying Party shall direct
and control the defense of such Third Party Claim or proceeding.
The Indemnifying Party shall not consent to the entry of any
judgment, except with the written consent of the Indemnified
Party, and shall not enter into any settlement of such Third
Party Claim without the written consent of the Indemnified Party
which does not include as an unconditional term thereof the
release of the Indemnified Party from all Liability in respect of
such Third Party Claim.
ARTICLE XII
Assignments
SECTION 12.1 Operator Assignments. Except as otherwise
provided in this Agreement, the Operator may not, without the
prior written consent of the Owner, and subject to any applicable
Governmental Actions, assign, transfer, sublease or otherwise
grant the right to use any Allocated Asset or its interest
therein or rights with respect thereto, including any Assigned
Right. Except as otherwise provided in this Agreement, the
Operator may, with the prior written consent of the Owner, and
subject to any applicable Government Actions, assign, transfer,
sublease or otherwise grant the right to use any Allocated Asset
or its interest therein or rights with respect thereto, including
any Assigned Right.
SECTION 12.2 Merger, Consolidation, Etc. The Operator,
without the consent of the Owner, may assign all or any part of
its rights and obligations under this Agreement to (i) any of its
controlled Subsidiaries or (ii) any successor in the event of a
merger, consolidation, sale of all or substantially all its
assets, liquidation or dissolution, if such assignee executes and
delivers to the Owner an agreement reasonably satisfactory in
form and substance to the Owner under which such assignee assumes
and agrees to perform and discharge all the obligations and
liabilities of the Operator; provided that any such assignment
shall not relieve the Operator from the performance and discharge
of such obligations and liabilities.
SECTION 12.3 Owner Assignments. The Owner shall not
transfer or assign any part of its right, title and interest in
this Agreement or any Allocated Assets used hereunder without the
prior written consent of the Operator.
ARTICLE XIII
Inspection; Markings
SECTION 13.1 Rights to Information. The Owner may at its
own expense, upon reasonable prior notice to the Operator during
the normal business hours of the Operator, no more frequently
than once in any calendar year, inspect the Allocated Assets and
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the books and records of the Operator relating to the maintenance
and performance of such Allocated Assets and make copies and
extracts therefrom, and may discuss such matters with the
Operator's officers. Upon the occurrence and during the
continuance of an Event of Default, the Owner may inspect such
books and records at any time, which inspections shall be at the
expense of the Operator. The Owner also shall have the right at
any time to obtain information regarding the condition and state
of repair of any Allocated Asset, compliance by the Operator with
Article VII hereof and the absence of an Event of Default.
SECTION 13.2 Markings. The Operator shall affix to certain
Allocated Assets agreed to by the Operator and Owner identifying
labels, plates or tags each setting forth such information as the
Operator and Owner may agree. The Operator covenants and agrees
to replace any such label, plate or tag which may be removed or
destroyed or become illegible, and the Operator shall indemnify
each Owner Indemnified Person against any liability, loss or
expense incurred by such Owner Indemnified Person as a result of
the failure to maintain such markings.
ARTICLE XIV
Events of Default
SECTION 14.1 Events of Default. Each of the following
events shall constitute an Event of Default (whether any such
event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or
regulation of any Governmental Authority):
(a) the Operator shall fail to make any payment of (i)
the Operating Fee when due and such failure shall continue
unremedied for a period of thirty (30) Business Days and (ii) any
Supplemental Operating Fees due under this Agreement and such
failure shall continue unremedied for a period of thirty (30)
Business Days; or
(b) the Operator shall fail to perform or observe any
other material covenant, condition or agreement to be performed
or observed by it under this Agreement and such failure shall
continue unremedied for a period of one hundred twenty (120)
Business Days after notice thereof shall have been given to the
Operator by the Owner; provided, that the continuation of any
such failure or breach (other than a failure or breach curable by
payment of money) for a period longer than such one hundred
twenty (120) Business Day period shall not constitute an Event of
Default if (i) such default is curable but cannot be cured within
such one hundred twenty (120) Business Day period and (ii) the
Operator is diligently pursuing the cure of such default;
provided, further, that any such failure or breach (other than a
failure or breach curable by payment of money) shall constitute
an Event of Default if such failure is not cured within the
earlier of the last Business Day of the Term and any Renewal Term
and four hundred fifty (450) days from the date notice thereof
has been given to the Operator; or
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(c) The Operator (i) shall commence a voluntary
Insolvency Proceeding, (ii) shall seek the appointment of a
trustee, receiver, liquidator, sequestrator, custodian or other
similar official of the Operator or any substantial part of the
Operator's property, (iii) shall acquiesce in or consent to any
such relief or to the appointment of or taking possession by any
such official in an involuntary Insolvency Proceeding commenced
against it, (iv) shall make a general assignment for the benefit
of creditors, or (v) shall fail generally to pay its undisputed
debts as they become due; or
(d) an involuntary Insolvency Proceeding shall be
commenced against the Operator seeking liquidation,
reorganization or other relief with respect to such Person or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, assignee, sequestrator, custodian or other
similar official of it or any substantial part of its property,
and such involuntary case or other proceeding shall remain
undismissed or unstayed for a period of one hundred twenty (120)
consecutive Business Days.
ARTICLE XV
Remedies
SECTION 15.1 Remedies. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be
continuing, the Owner may, at its option, declare by written
notice to the Operator this Agreement to be in default; and at
any time thereafter so long as such Event of Default shall not
have been remedied, the Owner may do one or more of the following
with respect to the Allocated Assets:
(a) sell the Allocated Assets at public or private
sale, as the Owner may determine, or otherwise dispose of, hold,
use, operate, lease to others or keep unused the Allocated Assets
as the Owner, in its sole discretion, may determine, all free and
clear of any rights of Operator;
(b) whether or not the Owner shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (a) above, the Owner, by written notice to the
Operator, may demand that the Operator pay to the Owner, and the
Operator shall pay to the Owner, any accrued but unpaid Operating
Fees (together with interest, if any, on such amount at the
Overdue Rate from such specified payment date until the date of
actual payment of such amount); or
(c) terminate this Agreement and the rights of the
Operator to use the Allocated Assets pursuant hereto.
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The Owner may exercise one or more remedies in respect of
certain Allocated Assets and one or more other remedies in
respect of other Allocated Assets.
No termination of this Agreement, in whole or in part, or
exercise of any remedy under this Article XV shall, except as
specifically provided herein, relieve the Operator of any of its
liabilities and obligations hereunder, all of which then
outstanding shall survive such termination, repossession or
exercise of remedy. In addition, the Operator shall be liable
for any and all Fees and Expenses and other costs and expenses
incurred by the Owner by reason of the occurrence of any Event of
Default or the exercise of the remedies of the Owner with respect
thereto. At any sale of any Allocated Assets or any part thereof
pursuant to this Article XV, the Owner may bid for and purchase
such property.
SECTION 15.2 Owner Rights. To the fullest extent permitted
by Applicable Law, each and every right, power and remedy herein
specifically given to the Owner or otherwise in this Agreement
shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and
every right, power and remedy whether specifically given herein
or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Owner,
and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Owner in the exercise of any
right, power or remedy or in the pursuit of any remedy shall
impair any such right, power or remedy or be construed to be a
waiver of any default on the part of the Operator or to be an
acquiescence therein. No express or implied waiver by the Owner
of any Event of Default shall in any way be, or be construed to
be, a waiver of any future or subsequent Event of Default.
SECTION 15.3 Exercise of Other Rights or Remedies. In
addition to all rights and remedies provided in this Article XV,
the Owner may exercise any other right or remedy that may be
available to it under Applicable Law or proceed by appropriate
court action to enforce the terms hereof or to recover damages
for the breach hereof.
SECTION 15.4 Subject to Governmental Action. The exercise
of any right or remedy provided for in this Article XV shall be
subject to any applicable Governmental Action.
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ARTICLE XVI
Right to Perform
SECTION 16.1 Right to Perform. If the Owner shall fail to
make any payment or perform under, or comply with, any contract,
lease, license or other agreement in respect of the Allocated
Assets to which the Owner is a party, the Operator may (but shall
have no duty to do so) make such payment or perform or comply
with such agreement, and the Operating Fee shall be reduced in
the amount of such payment and the amount of all expenses of the
Operator (including Fees and Expenses) incurred in connection
with such payment or the performance of or compliance with such
agreement.
ARTICLE XVII
Renewal Options
SECTION 17.1 Renewal Notice.
(a) The Operator shall have the option to renew this
Agreement twice. Not less than one (1) year before expiration of
the Term or the initial Renewal Term, the Operator may deliver to
the Owner a notice (the "Renewal Notice") of the Operator's
election to renew this Agreement in respect of all, but not less
than all, Allocated Assets for a renewal period of five (5) years
(or, if there has already been a renewal period, an additional
renewal period of five (5) years), or such other period of time
as the Owner and the Operator shall mutually agree (each such
period, a "Renewal Term").
(b) All terms of this Agreement shall continue in full
force and effect during each such Renewal Term.
(c) In the event the Operator elects to renew this
Agreement, the Renewal Term will commence on the day immediately
following the expiration of the Term or initial Renewal Term and
continue until the end of such Renewal Term.
(d) The Renewal Notice, once given, shall be
irrevocable and the option to renew this Agreement shall expire
if the Operator does not deliver the Renewal Notice by the times
provided in Section 17.1(a) hereof.
(e) Notwithstanding the foregoing, the Operator shall
have no right to renew this Agreement if any Event of Default
exists on the date of delivery of the Renewal Notice or the
commencement of the Renewal Term.
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ARTICLE XVIII
Certain Notices and Information
SECTION 18.1 Notices. Any notice expressly required by
this Agreement to be given to the Owner or the Operator shall be
deemed delivered on the date sent by registered mail, or by such
other means as the parties hereto may agree, and shall be
addressed to them as follows:
(a) If to Owner:
Pennsylvania Lines LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President-General Counsel
Copy to:
Senior Vice President Operations
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510
(b) If to Operator:
Senior Vice President Operations
Norfolk Southern Railway Company
Three Commercial Place
Norfolk, Virginia 23510-2191
Each party may from time to time change its address in this
Section 18.1 by written notice delivered to the other party.
SECTION 18.2 Notice of Event of Default. Promptly after an
executive officer of the Operator shall have actual knowledge of
the occurrence or existence of any Event of Default or any event
which, with the passing of time or giving of notice, would
constitute an Event of Default, the Operator shall so notify the
Owner and set forth in reasonable detail the circumstances
surrounding such event or Event of Default and shall specify what
actions the Operator has taken or intends to take to cure such
event or Event of Default.
SECTION 18.3 Information Regarding Allocated Assets. The
Operator shall promptly furnish the information at such times and
in such format as is regularly produced by the Operator
concerning the condition, maintenance and use of the Allocated
Assets as the Owner may reasonably request.
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ARTICLE XIX
Confidentiality
SECTION 19.1 Confidentiality. The parties hereto 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 the
other party hereto, or their respective representatives, pursuant
to this Agreement (except to the extent that such information can
be shown to have been (i) available to such party on a
non-confidential basis prior to its disclosure by the other
party, (ii) in the public domain through no fault of such party
or (iii) later lawfully acquired from other sources by the party
to which it was furnished), and no party shall release or
disclose such information to any other Person, except its
auditors, attorneys, financial advisors, bankers and other
consultants and advisors who shall be bound by the provisions of
this Section 19.1. In the event that a subpoena, discovery or
other request that arguably calls for production or disclosure of
such confidential information is received, the party receiving
such request must promptly notify in writing the party whose
information has been requested. The party receiving such request
shall provide the party 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
party hereto, if it exercises the same care as it takes to
preserve confidentiality for its own similar information.
ARTICLE XX
Miscellaneous
SECTION 20.1 Dispute Resolution. Except as otherwise
specifically provided for herein, any dispute, controversy or
claim (or any failure by the parties to agree on a matter as to
which this Agreement expressly or implicitly contemplates
subsequent agreement by the parties, except for matters left to
the sole discretion of a party) arising out of or relating to
this Agreement, or the breach, termination or validity hereof or
thereof, shall be settled in accordance with the provision of
Section 11.12 of the Transaction Agreement.
SECTION 20.2 Documentary Conventions. This Agreement shall
be governed by, and construed in accordance with, all the
Documentary Conventions.
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IN WITNESS WHEREOF, intending to be legally bound, the
parties hereto have each caused this Operating Agreement to be
duly executed as of the date first above written.
PENNSYLVANIA LINES LLC,
as OWNER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
NORFOLK SOUTHERN RAILWAY COMPANY,
as OPERATOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Chief
Operating Officer
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APPENDIX A
to Operating Agreement
DEFINITIONS AND RULES OF USAGE
Rules of Usage
The terms defined below shall have the respective meanings
set forth below for all purposes, and such meanings shall be
equally applicable to both the singular and plural forms of the
terms defined. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they
are in fact followed by such words or words of like import.
"Writing", "written" and comparable terms refer to printing,
typing, lithography and other means of reproducing words in a
visible form. Any instrument or Applicable Law defined or
referred to below or in any instrument that recites it is to be
construed in accordance with this Appendix means such instrument
or Applicable Law as from time to time amended, modified or
supplemented, including (in the case of instruments) by waiver or
consent and (in the case of Applicable Laws) by succession of
comparable successor Applicable Laws and includes (in the case of
instruments) references to all attachments thereto and
instruments incorporated therein; provided, that any reference to
the Bankruptcy Code shall mean the Bankruptcy Code as in effect
on the date of reference thereto and applicable to the relevant
case. References to any Person are, unless the context otherwise
requires, also to its successors and assigns. "Hereof",
"herein", "hereunder" and comparable terms refer to the entire
instrument in which such terms are used and not to any particular
article, section or other subdivision thereof or attachment
thereto. References to any gender include, unless the context
otherwise requires, references to all genders, and references to
the singular include, unless the context otherwise requires,
references to the plural and vice versa. "Shall" and "will" have
equal force and effect. References in an instrument to
"Article", "Section" or another subdivision or to an attachment
are, unless the context otherwise requires, to an article,
section or subdivision of or an attachment to such instrument.
Definitions
"Action" shall mean any action, claim, suit, arbitration,
inquiry, subpoena, discovery request, proceeding or investigation
by or before any Governmental Authority or forum or authority
having jurisdiction over the matter involving or related to any
Owner Indemnified Person, any Operator Indemnified Person or the
Allocated Assets.
"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 (a) NYC shall not be an Affiliate of CSX
and its Subsidiaries or NSC and its Subsidiaries, (b) PRR shall
not be an Affiliate of NSC and its Subsidiaries or CSX and its
Subsidiaries and (c) CSX and NSC and their respective
Subsidiaries shall not be Affiliates of CRR or CRR Parent and
their respective Subsidiaries and vice versa.
"Agreement" means this Operating Agreement, dated as of the
Closing Date, between the Owner and the Operator.
"Allocated Asset" means the assets identified in or pursuant
to the Transaction Agreement as the PRR Allocated Assets other
than (i) the assets identified in Item 2(E) of Schedule 1 to the
Transaction Agreement, and (ii) such items of inventory as may
subsequently be agreed to by the parties from time to time.
"Applicable Law" means, with respect to any Person or to any
Allocated Asset, all laws, ordinances, judgments, decrees,
injunctions, writs and orders of any Governmental Authority and
any Governmental Actions applicable to or having jurisdiction
over such Person or Allocated Asset.
"Appraisal Procedure" means a procedure whereby (i) an
independent third-party appraiser chosen jointly by the Owner and
the Operator determines the reasonableness of the fair market
value of the Allocated Assets credited to the Settlement Account
if the fair market value of the Allocated Assets exceeds $50,000
or determines the Fair Market Rental Value of the Allocated
Assets, or (ii) the reasonableness of the fair market value of
the Allocated Assets credited to the Settlement Account is
certified by an officer of the Operator if the fair market value
is $50,000 or less. The fees and expenses of the appraiser shall
be divided equally between the Owner and the Operator.
"arises prior" means that the circumstances giving rise to
the liability have transpired prior to the applicable date,
whether or not such liability has been discovered, asserted or
accrued prior to such date. If the circumstances giving rise to
a liability bridge the Closing Date, the parties will apportion
it to pre-Closing Date and post-Closing Date periods, with
disagreement being subject to the dispute resolution provisions
of Section 20.1 of the Agreement.
"Assigned Rights" means Contracts and rights included in the
Allocated Assets (including, but not limited to, transportation
contracts).
"Bankruptcy Code" means the United States Bankruptcy Code of
1978, as amended from time to time, and the rules and regulations
promulgated thereunder.
"Business Day" means any day other than a Saturday, Sunday
or other day on which banks are authorized or required to be
closed in New York, New York and Richmond, Virginia.
"Closing Date" is the date of this Agreement.
"Contracts" means any contract, lease, loan agreement, deed,
easement, license, reversion, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Owner is
a party or by which it is bound or to which any of the Allocated
Assets is subject.
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"Contractual Obligation" means, with respect to any Person,
any provision of any security issued by such Person or of any
Contract to which such Person is a party or by which it or any of
its property is bound.
"CRC" means Consolidated Rail Corporation, a Pennsylvania
corporation.
"CRR" means Conrail Inc., a Pennsylvania corporation.
"CSX" means CSX Corporation, a Virginia corporation.
"CSXT" means CSX Transportation, Inc., a Virginia
corporation.
"Documentary Conventions" means, with respect to the
Agreement and any instrument that states in substance that it is
governed by the Documentary Conventions, that, except as
otherwise expressly provided therein:
(a) Documentary Convention Survival. The
representations, warranties and agreements of the parties
contained or provided for in such instrument and the parties'
obligations under any and all thereof shall survive the execution
and delivery of such instrument and the expiration or other
termination of the Agreement and shall be and continue in effect
notwithstanding the fact that any party may waive compliance with
any other term, provision or condition of the Agreement.
(b) Documentary Convention Governing Law. Such
instrument shall become effective upon delivery and shall in all
respects be governed by, and construed in accordance with, the
laws (excluding principles of conflict of laws) of the
Commonwealth of Virginia applicable to agreements made and to be
performed entirely within such state, including all matters of
construction, validity and performance.
(c) Documentary Convention Counterparts. Except
as otherwise specifically provided in the Agreement, such
instrument may be executed by the parties thereto in separate
counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together
constitute but one and the same instrument. To make proof of
such instrument, it shall only be necessary to produce one
such counterpart executed by each party thereto. All signatures
need not be on the same counterpart.
(d) Documentary Convention Method of Payment.
All amounts required to be paid by any party to such instrument
to any other party, either thereunder or under the Agreement
shall be paid in such immediately available and freely
transferable Dollars as at the time of payment shall be legal
tender for the payment of public and private debts, by wire
transfer, or other method of payment acceptable to the payee, of
immediately available funds to the account of the payee as such
payee may specify by notice to the other parties.
-3-
(e) Documentary Convention Parties in Interest;
Limitation on Rights of Others. The terms of such instrument
shall be binding upon, and inure to the benefit of, the parties
thereto and their permitted successors and assigns. Nothing in
such instrument shall be construed to give any Person (other than
the parties thereto and their permitted successors and assigns
and as expressly provided therein) any legal or equitable right,
remedy or claim under or in respect of such instrument or any
covenants, conditions or provisions contained therein.
(f) Documentary Convention Table of Contents;
Headings. The table of contents, if any, and headings, if any,
of the various articles, sections and other subdivisions of such
instrument are for convenience of reference only and shall not
modify, define or limit any of the terms or provisions of such
instrument. To the extent of any inconsistency between the
headings and any text, such text shall govern.
(g) Documentary Convention Entire Agreement;
Amendment and Waiver. The Agreement, the other Ancillary
Agreements and the Transaction Agreement constitute the entire
agreement of the parties thereto with respect to the subject
matter thereof and supersede all prior written and oral
agreements and understandings with respect to such subject
matter. Neither the Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against
which the enforcement of the termination, amendment, supplement,
waiver or modification shall be sought and subject to any other
limitations on amendments set forth in the Agreement, the other
Ancillary Agreements and the Transaction Agreement. Any
amendment, modification or supplement to the Agreement shall be
subject to any applicable Governmental Action. No failure or
delay of any party in exercising any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the
exercise of any other right or power.
(h) Documentary Convention Severability. Any
provision of such instrument that shall be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
thereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by
Applicable Law, the parties to such instrument waive any
provision of law that renders any provision thereof prohibited or
unenforceable in any respect.
(i) Documentary Convention Payment on Business
Days. If any payment under such instrument is required to be
made on a day other than a Business Day, the date of payment
shall be extended to the next Business Day without any additional
interest for such extension period so long as payment is made on
such Business Day.
-4-
"Dollars" or "$" means dollars in the lawful currency of the
United States of America.
"Event of Default" has the meaning set forth in Section 14.1
of the Agreement.
"Event of Loss" means, with respect to any Allocated Asset,
the occurrence of any of the following events: (a) the loss or
theft of such Allocated Asset to the extent that such Allocated
Asset is not recovered within one hundred eighty (180) days of
such event or, if earlier, the expiration of the Term or any
Renewal Term, (b) the destruction of or damage to such Allocated
Asset or any part thereof to such extent as shall render repair
of such Allocated Asset uneconomical to the Operator or unfit or
unsuitable for its intended use, which destruction or damage is
an actual or constructive total loss, (c) the requisition of use
of such Allocated Asset for an indefinite period or for a stated
period in excess of one hundred eighty (180) days or, if earlier,
which ends later than the expiration of the Term or any Renewal
Term by any Governmental Authority under power of eminent domain
or otherwise, (d) the condemnation, confiscation, seizure or
requisition of title to such Allocated Asset by a Governmental
Authority, (e) any damage to such Allocated Asset which results
in an insurance settlement on the basis of an actual or
constructive total loss, (f) the prohibition by Applicable Law of
the use of such Allocated Asset by the Operator or any other
Person for a period of one hundred eighty (180) consecutive days
from the date of such prohibition or, if earlier, the end of the
Term or any Renewal Term. The date of occurrence of an Event of
Loss in respect of any Allocated Asset shall be deemed to be, (1)
in the event of damage to such item, the date of such damage, (2)
in the event of a condemnation or requisition of title by a
Governmental Authority, the date thereof, and (3) in the event of
an Event of Loss under clause (a), (c) or (f) of the first
sentence of this definition, the date of expiration of the period
referred to in said clause.
"Excluded Taxes" has the meaning set forth in Section 3.5 of
the Agreement.
"Fair Market Rental Value" means, as to the Allocated
Assets, the fair market rental value that would be obtained in an
arm's length transaction between an informed and willing lessee
and an informed and willing lessor, in either case under no
compulsion to lease, for the lease of the Allocated Assets,
disregarding the fact (if applicable) that the Allocated Assets
are subject to the Agreement and assuming that Article VII of the
Agreement shall have been complied with in all respects. Subject
to the foregoing, the Fair Market Rental Value as to the
Allocated Assets shall be such value determined in accordance
with the Appraisal Procedure.
"Fees and Expenses" means, with respect to any Person in
connection with any transaction or occurrence, the Person's
reasonable fees and expenses (including attorneys' fees and legal
expenses) for such transaction or occurrence.
"Governmental Action" means all authorizations, consents,
approvals, waivers, exceptions, variances, franchises,
permissions, permits and licenses of, and filings and
declarations with, Governmental Authorities.
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"Governmental Authority" means any federal, state,
municipal, county, local or foreign governmental Person,
authority or agency, court, regulatory commission, stock exchange
or other similar body.
"Income Tax Regulations" means the regulations promulgated
by the U.S. Department of the Treasury pursuant to the Code.
"Indemnifying Party" means a Person who is required or
requested to provide indemnification under Article XI of the
Agreement.
"Indemnified Party" means any Owner Indemnified Person or
Operator Indemnified Person.
"Insolvency Proceeding" means any case or proceeding under
bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws providing relief to debtors.
"Lien" means any lien, mortgage, encumbrance, pledge,
charge, lease, easement, servitude or security interest or any
interests similar to the foregoing, including those existing
under any conditional sales or other title retention agreement or
the filing of or agreement to deliver any financing statement
under the UCC.
"Modification" means, with respect to any Allocated Asset,
any modification, alteration, addition, upgrade or improvement to
such Allocated Asset.
"Nonseverable Modification" means any Required Modification
and any Modification which is not readily removable without
impairing the fair market value, residual value, condition,
remaining useful life or utility of the Allocated Asset to which
such Modification relates immediately prior to such Modification.
"NSC" means Norfolk Southern Corporation, a Virginia
corporation.
"NSR" means Norfolk Southern Railway Company, a Virginia
corporation.
"NYC" means New York Central Lines LLC, a Delaware limited
liability company.
"Operating Fee" means the operating fee agreed to from time
to time by the Owner and Operator based on the Fair Market Rental
Value of the Allocated Assets as set forth in a supplement to
this Agreement. The Operating Fee for the first six years of
this Agreement shall be as follows:
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June 1, 1999 through May 31, 2000 -- $163 million
June 1, 2000 through May 31, 2001 -- $168 million
June 1, 2001 through May 31, 2002 -- $185 million
June 1, 2002 through May 31, 2003 -- $203 million
June 1, 2003 through May 31, 2004 -- $227 million
June 1, 2004 through May 31, 2005 -- $246 million
"Operator" means NSR or any permitted successor or assign.
"Operator Indemnified Person" has the meaning set forth in
Section 11.2 of the Agreement.
"Optional Modification" has the meaning set forth in Section
7.2(a) of the Agreement.
"Organic Document" means, with respect to any Person, as
applicable, the certificate or articles of incorporation,
partnership agreement, limited liability company agreement,
certificate of formation, membership agreement, by-laws and all
other organizational documents of such Person.
"Overdue Rate" means the rate determined on the first
Business Day of each calendar month equal to the lesser of (i)
the prime rate set forth in The Wall Street Journal and (ii) the
maximum rate allowed by Applicable Law.
"Owner" means PRR, a Delaware limited liability company.
"Owner Indemnified Person" has the meaning set forth in
Section 11.1 of the Agreement.
"Owner Lien" means a Lien (i) which results from acts of, or
any failure to act by, or as a result of claims against, the
Owner, (ii) in favor of any taxing authority by reason of the
non-payment by the Owner, or (iii) which results from acts of, or
any failure to act by, the Owner in violation of its obligations
under the Agreement.
"Payment Date" means monthly in arrears on the 15th day of
each calendar month to cover the preceding calendar month's usage
or, if such day is not a Business Day, the next succeeding
Business Day.
"Permitted Liens" means, with respect to any Allocated
Asset,
(a) The respective rights and interests of the
Operator and Owner under the Agreement,
(b) Owner Liens,
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(c) Liens for Taxes which are not yet due or so long
as no Event of Default shall have occurred and be continuing are
being contested in good faith by appropriate proceedings which
suspend the collection thereof; provided, that such proceedings
shall not involve any material danger of the sale, forfeiture or
loss of such Allocated Asset or any part thereof or interest
therein or the reasonably foreseeable risk of imposition of any
criminal liability on the Owner or any other material liability
not indemnified against by the Operator,
(d) Liens of mechanics, materialmen, laborers,
employees or suppliers and similar Liens arising by operation of
law, in each case incurred by the Operator in the ordinary course
of business for sums that are not overdue for more than sixty
(60) days or so long as no Event of Default shall have occurred
and be continuing are being contested in good faith by
negotiations or by appropriate proceedings which suspend the
collection thereof; provided, that such contest does not involve
any material danger of the sale, forfeiture or loss of such
Allocated Asset or any part thereof or interest therein or the
reasonably foreseeable risk of imposition of any criminal
liability on the Owner or any other material liability not
indemnified against by the Operator,
(e) Liens arising out of any judgments or awards
against the Operator with respect to which (i) at the time an
appeal or proceeding for review is being prosecuted in good
faith, (ii) there shall have been secured a stay of execution
pending such appeal or proceeding for review, (iii) during such
proceeding there is not, and such proceeding does not involve,
any material danger of the sale, forfeiture or loss of such
Allocated Asset or any part thereof or any interest therein or
the risk of imposition of any criminal liability on the Owner or
any other liability not indemnified against by the Operator, and
(iv) if such Liens have specifically attached to any Allocated
Asset, the Operator has provided the Owner with security
reasonably satisfactory to the Owner, in the amount of such
claims,
(f) Liens, rights of way, easements and other rights
to use the Allocated Assets (including licenses for private
crossings) common in the railroad industry arising out of the
ordinary course of business of the Operator, and
(g) Liens consented to by the Owner.
"Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
"PRR" means Pennsylvania Lines LLC, a Delaware limited
liability company.
"Renewal Notice" has the meaning set forth in Section
17.1(a) of the Agreement.
"Renewal Term" has the meaning set forth in Section 17.1(a)
of the Agreement.
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"Required Modification" has the meaning set forth in Section
7.2(a) of the Agreement.
"Settlement Account" has the meaning set forth in Section
6.1 of the Agreement.
"Settlement Account Payment Date" has the meaning set forth
in Section 6.2 of the Agreement.
"Severable Modification" means any Modification which is not
a Nonseverable Modification.
"Substantial Allocated Asset" means (i) an Allocated Asset
with a fair market value in excess of $25 million or (ii) a group
of Allocated Assets that (a) are sold, transferred or otherwise
disposed of during any calendar year to the same Person
(including Affiliates of such Person) or the same group of
Persons (including Affiliates of such Persons) and (b) have an
aggregate fair market value in excess of $25 million.
"Supplemental Operating Fees" means all amounts payable by
the Operator pursuant to the terms of the Agreement, including
indemnities payable by the Operator pursuant to Section 11.1
hereof, other than the Operating Fee.
"Tax" means all taxes (including income, franchise, excise,
real and personal property, sales, use, payroll and withholding
and other taxes) imposed by any federal, state, local, foreign or
international taxing authority or Governmental Authority, whether
in the form of assessments, levies, imposts, duties, charges,
assessments, withholdings or otherwise, now existing or hereafter
created or adopted, together with all interest, penalties and
additions imposed with respect to such amounts.
"Term" means the period commencing on the Closing Date and
terminating on the 25th anniversary thereof.
"Termination Date" means the date on which the Term or any
Renewal Term, whichever is later, terminates.
"Third Party Claim" has the meaning set forth in Section
11.3(b) of the Agreement.
"Third Party Provider" has the meaning set forth in Section
4.2(a) of the Agreement.
"Transaction Agreement" means the Transaction agreement
among CSX, CSXT, NSC, NSR, CRC, CRR and CRR Holdings LLC dated as
of June 10, 1997.
"Valuation Date" means: (i) the Closing Date, (ii) the sixth
(6th), twelfth (12th), eighteenth (18th), and twenty-fourth
(24th) anniversaries of the Closing Date, (iii) the first day of
each Renewal Term; (iv) the sixth (6th) anniversary of the first
day of each Renewal Term, (v) a Settlement Account Payment Date
-9-
(if not already a Valuation Date pursuant to other clauses of
this definition), and (vi) such other dates as the parties hereto
may agree.
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