PAGE 78
EXHIBIT 10(i), Page 1 of 44
AGREEMENT
---------
THIS AGREEMENT (hereinafter "Agreement" or "Master Agreement") dated the
27th day of July, 1999, by and between NORTH CAROLINA RAILROAD COMPANY
(hereinafter "NCRR"), a North Carolina corporation, and NORFOLK SOUTHERN
RAILWAY COMPANY (hereinafter "NSR"), a Virginia corporation:
WHEREAS, NCRR and Southern Railway Company (hereinafter "Southern")
entered into a lease dated August 16, 1895 ("the 1895 agreement");
WHEREAS, NCRR and Southern entered into certain supplements or
amendments to the 1895 agreement;
WHEREAS, Atlantic and North Carolina Railroad Company (hereinafter
"ANC"), as lessor, a North Carolina corporation, and Atlantic & East
Carolina Railway Company ("A&EC"), now a wholly owned subsidiary of NSR,
as lessee, entered into a Lease and Indenture dated August 30, 1939
("the 1939 agreement");
WHEREAS, ANC and A&EC entered into certain supplements or amendments to
the 1939 agreement, the last of which supplements provided A&EC the
option to continue the 1939 agreement through the end of 1994, and that
option was properly exercised;
WHEREAS, effective September 29, 1989, ANC was merged into NCRR;
WHEREAS, effective December 31, 1990, Southern changed its name to NSR;
WHEREAS, the 1895 agreement and the 1939 agreement (together, as
supplemented and amended, referred to herein as the "Old Leases") were
to expire on January 1, 1995 and December 31, 1994, respectively, and
have not been and will not be renewed and NSR has continued to operate
the property of NCRR under the provisions of federal and/or state law;
WHEREAS, while the parties had negotiated an agreement to extend the Old
Leases (the Lease Extension Agreement or "LEA"), the LEA was declared to
be invalid by the U.S. District Court for the Eastern District of North
Carolina for want of a quorum at the NCRR shareholders meeting called
for the purpose of approving the LEA on December 15, 1995 and the Court
entered an order enjoining the LEA. Before the LEA had been enjoined,
NSR made certain payments to NCRR under the terms of the LEA consisting
of payments as consideration for a release of certain claims for return
of personalty (the "Release Payment"), and payments of rental under the
LEA (the "Rental Payments"), and NSR has made additional payments to
NCRR pursuant to an order of the U.S. Surface Transportation Board (the
"Interim Payments");
WHEREAS, NCRR and NSR desire by these terms to provide for NSR's
continued use of the property of NCRR which was the subject of the Old
Leases for the operation of freight rail services thereon;
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EXHIBIT 10(i), Page 2 of 44
NOW THEREFORE, in consideration of the commitments and undertakings
recited below, the parties hereto do hereby covenant and agree as
follows:
Section 1. INDEX OF TERMS
TERM SECTION
---- -------
(a) NCRR-inclusive Preamble
(b) NSR-inclusive Preamble
(c) CSXT 2
(d) Old Leases 6
(e) Release Payment 6
(f) Rental Payments 6
(g) Interim Payments 6
(h) Cap 4
(i) Line of Road 24
(j) High Speed Passenger Trains 13
(k) Amtrak/NSR Direct Service Agreement 2
(l) Effective Date 27
(m) Period of Continued Occupancy 4
(n) Right of Way 15
(o) Return Date 18
(p) Designated Returned Property 18
(q) Designated NSR Facility Property 18
(r) Environmental Occurrence 24
(s) Contaminating Substance 24
(t) Leased Properties 24
(u) Trackage Rights Agreement 2
GENERAL PRINCIPLES OF INTERPRETATION
The following general principles will apply throughout this Agreement
unless specifically stated to the contrary:
(a) Safety considerations will be paramount;
(b) For any operating scenario, NCRR and NSR intend to jointly work to
make changes in a manner that will: (1) minimize capital and
operating costs, and (2) minimize disruption to existing service so
as to maximize the value of both freight and passenger services;
(c) Cross subsidization of costs will not occur between passenger and
freight operations or between NSR freight and third-party freight
operations, including but not limited to operating and maintenance
expenses and capital expenditures;
(d) All costs, including but not limited to operating and maintenance
expenses and capital expenditures, will be borne by the party
hereto who requests the expenditure or the addition to capacity;
and
(e) "Costs" or "expenses" will be defined by the PPC/Dispute Resolution
provisions hereof.
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EXHIBIT 10(i), Page 3 of 44
Section 2. RIGHTS GRANTED BY NCRR
(a) Subject to any applicable regulatory approval, NCRR hereby grants
to NSR, under the terms set forth in the attached Trackage Rights
Agreement of even date herewith, exclusive freight trackage rights
over the lines and properties of NCRR owned by NCRR as of the date
hereof, thereby extending to NSR the exclusive right to conduct
freight operations over the NCRR lines and properties, including
performance of local freight service on those lines and properties.
NCRR hereby also grants to NSR such operating rights over the lines
of NCRR as will permit continuation of the existing operations of
National Railroad Passenger Corporation ("Amtrak") over the lines
of NCRR pursuant to the "Basic Agreement" between Southern Railway
Company and The Alabama Great Southern Railroad Company and
National Railroad Passenger Corporation dated January 2, 1979, as
amended (hereinafter referred to as the "Amtrak/NSR Direct Service
Agreement" or the "Basic Agreement"), together with such additional
operating rights over lines of NCRR operated by NSR as may from
time to time during the term of this Agreement be required for the
continuation or modification of Amtrak's intercity rail passenger
service over the NCRR lines pursuant to the Basic Agreement and
Amtrak's franchise under federal law. It is the intent of the
parties, with respect to the operational facilities of NCRR
operated by NSR, that Amtrak and NSR shall continue to enjoy and be
able to fulfill their respective rights and obligations to each
other under the Basic Agreement (including the duty to make and the
right to receive payments thereunder) and under federal law for the
term of this Agreement. NCRR shall be consulted in advance of any
proposed extensions or modifications to the Basic Agreement that
could have a material effect upon the dispatching or maintenance of
the lines of NCRR operated by NSR or upon the facilities of NCRR
operated by NSR.
(b) NSR will fulfill freight common carrier duties of NCRR on the NCRR
segments for which NSR holds the exclusive freight trackage rights
from NCRR until such time as NSR's exclusive freight trackage
rights over the line or any segment thereof are terminated, and
until the federal Surface Transportation Board or any successor
agency has granted any approval that may be required by law for any
cessation of NSR's common carrier duties pursuant to Section 17
hereof.
(c) The exclusive freight trackage rights shall continue unless and
until there is initiation of service by a qualified third-party
freight operator on segments over which NSR ceases operations
pursuant to the terms and provisions set forth in Section 17
hereof.
(d) That interest in the portion of the "R" Line in Charlotte, North
Carolina which lies between the point of connection between said
"R" Line and CSX Transportation, Inc. ("CSXT") near 12th Street and
the easterly line of Second Street which remained a part of the Old
Leases upon their expiration will not be operated by NSR. Either
NSR or NCRR may seek discontinuance of its common carrier
obligation imposed by federal and state laws regulating the
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EXHIBIT 10(i), Page 4 of 44
operation of a railroad on such portion and each party will
cooperate with the other in any such proceedings. Nothing in this
Agreement shall be construed to affect the terms and obligations of
the agreement dated December 31, 1968 between NCRR and Southern
regarding certain property in Charlotte, North Carolina.
(e) The rights granted to NSR do not eliminate, modify or diminish the
rights of CSXT to operate and to serve customers between Fetner and
Raleigh (Boylan) or NSR's and CSXT's reciprocal operating rights
and obligations to each other relating thereto.
(f) Except as provided in Section 2(a), NCRR does not grant to NSR the
right to grant trackage or other rights to any carrier not at the
time of grant affiliated with NSR over the lines or property of
NCRR, and NCRR will not grant to others such rights on lines or
property over which NSR maintains the status of exclusive freight
operator without NSR's approval. Any grant of trackage or other
rights by NSR to a carrier affiliated with NSR shall not be
effective beyond the expiration of this Agreement, including
extensions or renewals, or with respect to segments over which NSR
ceases freight services hereunder the date of any cessation of NSR
service pursuant to Section 17 hereof. NSR will provide NCRR with
copies of any such proposed trackage or other rights documents not
less than 15 days prior to execution by NSR and its affiliate.
Section 3. TERM
(a) The term of the Agreement shall commence on the Effective Date and
end on December 31, 2014.
(b) NSR shall have the option to renew the Agreement for two additional
fifteen-year terms, provided NSR notifies NCRR in writing of its
intention to renew at least two years prior to the expiration of
the Agreement or, with respect to the second renewal period, two
years prior to the expiration of the first renewal period.
Section 4. COMPENSATION
(a) Beginning on January 1, 2000, and during the term of this Agreement
and any renewal thereof, or during any Period of Continued
Occupancy (as defined in this Section), NSR shall pay to NCRR an
"Annual Trackage Rights Fee." For the period January 1, 2000,
through December 31, 2000, the Annual Trackage Rights Fee payable
to NCRR shall be ELEVEN MILLION DOLLARS ($11,000,000).
(b) For each calendar year thereafter the Agreement continues in effect
and during any Period of Continued Occupancy, the Annual Trackage
Rights Fee shall be adjusted in accordance with the following
formula except that in no event will any increase or decrease in
such Annual Trackage Rights Fee for any year exceed an amount equal
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EXHIBIT 10(i), Page 5 of 44
to four-and-one-half percent (4-1/2%) of the Annual Trackage Rights
Fee applicable to the previous year (hereinafter the "Cap"). The
formula is:
For 2001 and subsequent calendar years the Annual Trackage Rights
Fee shall be an amount calculated by multiplying the prior year's
Annual Trackage Rights Fee by the "Factor" obtained by dividing the
Implicit Price Deflator for Gross Domestic Product ("IPD-GDP") for
the calendar year preceding the prior calendar year by the IPD-GDP
for the calendar year preceding that calendar year. For any given
calendar year, the denominator of the fraction used to calculate
the Factor will be the same as the numerator of the fraction used
to calculate the immediately prior year's Factor. The calculation
of the Factor to be applied to the immediately prior year's Annual
Trackage Rights Fee shall be carried out to five places to the
right of the decimal and rounded. Presently, IPD-GDP is developed
by the United States Department of Commerce, Bureau of Economic
Analysis and is reported in the publication of ECONOMIC INDICATORS
prepared for the Joint Economic Committee by the Council of
Economic Advisors. The denominator of the initial Factor will
utilize the IPD-GDP for 1998, as published in the December 1999
issue of ECONOMIC INDICATORS. The numerator will be the IPD-GDP
for 1999 as published in the December 2000 issue of ECONOMIC
INDICATORS.
(c) If during the term of this Agreement, including any renewal period,
the IPD-GDP is no longer published, the parties will attempt in
good faith to agree upon a replacement index, using the PPC/Dispute
Resolution procedures herein if necessary.
(d) The parties will renegotiate the Cap if over any seven consecutive
year period the average rate of inflation as measured by the IPD-
GDP exceeds four and one-half percent (4-1/2%) with the matter to
be resolved through the PPC/Dispute Resolution procedures herein if
the parties are unable to agree on a new cap.
(e) In no event will the Annual Trackage Rights Fee, through
deflationary adjusters, as applicable to the entirety of the NCRR,
go below ELEVEN MILLION DOLLARS ($11,000,000). In the event that
the Annual Trackage Rights Fee is adjusted under the provisions of
Section 17(d) of this Agreement, the $11,000,000 minimum Annual
Trackage Rights Fee set forth in the preceding sentence will be
adjusted by the same percentage used to adjust the Annual Trackage
Rights Fee pursuant to Section 17(d) hereof.
(f) In the event NSR does not extend the Agreement or at the end of the
extended terms, the payment provisions of the Agreement at that
time will continue to apply and payments may not be withheld by NSR
so long as NSR continues to operate over any portion of the NCRR
lines (other than the line between Pomona and Elm described in
Section 21(b) hereof) (referred to herein as a "Period of Continued
Occupancy").
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EXHIBIT 10(i), Page 6 of 44
(g) The Annual Trackage Rights Fee will be paid by NSR to NCRR, without
set-off or reduction, in monthly installments not later than the
15th day of each month. If any such payment is not paid within a
grace period of seven (7) days after such due date, a late payment
penalty charge shall be charged to NSR. The late payment penalty
charge shall be in the amount of one and one-half percent (1-1/2%)
per month (simple interest) for each month, or part thereof, after
such grace period as the Annual Trackage Rights Fee shall remain
unpaid. If owed, NSR will pay such late payment penalty charge
together with the Annual Trackage Rights Fee due. Nothing in this
Section 4 pertaining to or calling for the payment of the late
payment penalty charge or for an overdue payment of the Annual
Trackage Rights Fee shall be construed to be a waiver or acceptance
by NCRR for such payment to be overdue, and NCRR retains all rights
it has for payment of trackage rights fees.
Section 5. INTERIM COMPENSATION
Within three business days of the execution of this Agreement, NSR will
pay to NCRR one-half of the remaining compensation to be paid to NCRR as
back rental for the period ending December 31, 1999, pursuant to the
Memorandum of Understanding dated April 27, 1999, and shall pay the
remainder of such back rental not later than December 31, 1999.
Section 6. RELEASE
(a) For and in consideration of the receipt and retention of the
Release Payment by NCRR, NCRR hereby agrees that each and every
obligation NSR or A&EC may have under the Old Leases with respect
to or in any manner connected with the use, depreciation,
maintenance, repair, renewal, replacement or return to NCRR of (i)
locomotives and railroad cars and (ii) any other items of personal
property which are not customarily located or used on property
owned or determined to be owned by NCRR during any part of at least
10 months of any consecutive 12 month period during the 10 years
preceding the termination of this Agreement and any renewal will be
of no further force or effect, and NCRR hereby releases and
discharges NSR from all such claims relating to such property.
(b) For and in consideration of the receipt and retention of the Rental
Payments, the Interim Payments and the payments by NSR set forth in
this Agreement, NCRR hereby agrees that each and every obligation
NSR or A&EC may have to pay rent or other forms of periodic
compensation to NCRR for the use of NCRR's property under the Old
Leases and from January 1, 1995 through December 31, 1999 has been
fully satisfied and paid, and NCRR hereby releases and discharges
NSR from all claims for the payment of rent or other forms of
periodic compensation under the Old Leases.
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EXHIBIT 10(i), Page 7 of 44
Section 7. DISPATCHING
(a) NSR will dispatch all NCRR lines except for the segment between
Boylan and Fetner presently dispatched by CSXT and any segments for
which NCRR and NSR subsequently agree in writing that NSR will not
dispatch. NSR will dispatch the NCRR lines with the same diligence
and safety considerations as it dispatches lines of its ownership
with similar train densities and operating characteristics.
(b) NSR will exercise operational control over NCRR line segments which
NSR dispatches, including controlling all access to the property
within 25 feet of the tracks over which it has trackage rights. In
accessing such property, NCRR and those accessing such property
with permission from NCRR will be required by NCRR to comply with
all NSR safety, access, and insurance processes and procedures.
Except with respect to any access by NCRR in the ordinary course of
the management of its property, NSR may charge reasonable costs to
accommodate requests for such access.
(c) NSR will not dispatch any NCRR line segment on which a third-party
operator begins operations in accordance with the provisions of
this Agreement.
(d) NSR will not provide dispatching services on lines where passenger
speeds exceed 90 mph.
(e) NSR will give priority to scheduled passenger trains over freight
trains, and will establish priority protocols to be applied between
scheduled passenger trains as requested by NCRR.
(f) Should any dispute arise over NSR's dispatching of passenger
trains, or the priority they are given, NCRR will describe in
writing the method by which it seeks to have the passenger trains,
or freight trains affecting passenger trains, dispatched. If NSR
does not agree with the proposed method requested by NCRR, any
unresolved issues shall be resolved pursuant to PPC/Dispute
Resolution procedure herein.
(g) NCRR reserves the right to terminate NSR's contract hereunder to
perform dispatching for failure by NSR to abide by the PPC/Dispute
Resolution procedures herein or any decision made pursuant to such
procedures. NSR shall have 30 days from the date of any final
decision or award made pursuant to the PPC/Dispute Resolution
procedure to remedy such dispatching deficiencies and to document
such remedy to NCRR in writing. If the time periods are not
adequate for NSR to make the changes, such schedule shall be
reviewed and addressed pursuant to the PPC/Dispute Resolution
procedure herein.
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EXHIBIT 10(i), Page 8 of 44
Section 8. MAINTENANCE
(a) NSR will maintain the lines of NCRR over which it serves as the
exclusive freight operator.
(b) The standard of maintenance of any line segment shall be the FRA
track classifications as of July 1, 1999, consistent with timetable
and track profile speed restrictions and any other restrictions
therein that affect the speed of operation. The effective
timetables and track profiles are attached hereto as EXHIBIT A.
(c) Any routine slow orders in effect on January 1, 2000 will be
eliminated by October 1, 2000, and any routine slow orders
subsequently imposed will be eliminated within 90 days of
imposition. A list of show orders in effect will be provided on or
about January 1, 2000.
(d) In the event of slow orders necessitated by unusual events or
requiring major construction or capital expenditure, the
PPC/Dispute Resolution procedure will be employed to establish a
reasonable time frame for NSR to make the necessary repairs.
(e) NCRR will bear all initial and future costs for any upgrades it
requests.
(f) NSR will not maintain any NCRR line segment on which a third-party
operator begins operations under the provisions of the Agreement.
(g) NSR will not maintain any line on which passenger speeds exceed
90 mph.
(h) NSR will submit to NCRR in writing not less than 30 days in advance
a description of any changes it intends to make to the maintenance
levels affecting the lines of NCRR; if NCRR objects to such changes
the PPC/Dispute Resolution procedure described herein will be
utilized to review such proposed changes wherein such changes may
be approved as submitted by NSR or modified.
(i) NCRR reserves the right to terminate NSR's contract hereunder to
perform maintenance for failure by NSR to abide by the PPC/Dispute
Resolution procedures herein or any decision made pursuant to such
procedures. NSR shall have 270 days from the date of any final
decision or award made pursuant to the PPC/Dispute Resolution
procedure set forth herein to remedy such maintenance deficiencies
and to document such remedy to NCRR in writing. If the time
periods are not adequate for NSR to make the changes, such schedule
shall be reviewed and addressed pursuant to the PPC/Dispute
Resolution procedure herein.
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EXHIBIT 10(i), Page 9 of 44
Section 9. CAPITAL IMPROVEMENTS
(a) Capital Improvements at the Request of NSR:
(i) NSR may, at its sole cost, make capital improvements to the
property of NCRR to render the property more amenable to its
freight railroad operations.
(ii) Such improvements will not be made without the prior approval
of NCRR, which approval will not be unreasonably withheld.
(iii) NCRR shall own all capital improvements made by NSR to
the property of NCRR hereunder upon expiration or termination
of the Agreement, or with regard to improvements made to any
segment which NSR ceases to operate, upon the cessation of
service by NSR on such segment pursuant to Section 17 hereof.
(b) Capital Improvements at the Request of NCRR:
(i) NCRR (or NCRR on behalf of passenger operators) may, at its
sole cost, make capital improvements to the NCRR property.
(ii) All such capital improvements on lines over which NSR operates
or will operate shall be performed by NSR unless NSR has
expressly agreed to the contrary. However, if a shortage of
available manpower would delay implementation beyond a
reasonable completion date, NSR and NCRR agree to cooperate to
jointly seek concurrence from the appropriate labor
organizations representing NSR's employees, if such
concurrence is required, for such work to be done by qualified
contractors selected in accordance with the PPC/Dispute
Resolution procedure and to be engaged by NSR.
(iii) Payments required of NCRR under the terms of this
Agreement may be paid by NCDOT or by other passenger service
operators.
(iv) NSR will not be required to begin construction on any such
project(s) until all necessary capital funds are set aside for
the project, and mechanisms are in place to pay other costs or
expenses associated with the project identified in the
separate agreement required by the provisions of paragraph (f)
below.
(c) Any track, signal, bridge, or structure constructed on the lines of
NCRR, whether by NCRR (on its own behalf or on behalf of a
passenger operator) or NSR, must be built, maintained and operated
consistent with the following goals:
(i) Such construction must not interfere with or disadvantage NSR
freight operations or the utility or capacity of the line for
freight operations;
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EXHIBIT 10(i), Page 10 of 44
(ii) Such construction must not preclude eventual double-tracking
of the line between Greensboro and Raleigh;
(iii) Such construction must not preclude capacity expansion to
accommodate growth of intercity/regional passenger and freight
traffic; and
(iv) Access by NSR to its present and future customers on both
sides of the tracks on which NSR has or will have trackage
rights will be maintained at no cost to NSR.
(d) Should one party determine it has a need for additional capacity,
the additional capacity shall be added in consultation with the
other party utilizing the PPC/Dispute Resolution procedure, at the
cost and expense of the party that needs the capacity.
(e) Should NSR and NCRR mutually determine that each needs additional
capacity, the parties shall jointly plan, through the PPC/Dispute
Resolution procedure, for the necessary additional capacity to meet
the needs. The costs of such additional joint capacity will be
prorated on the relative additional capacity needs of the parties.
Best efforts shall be made in the planning process to achieve
economies of scale in the addition of such improvements, such that
both parties receive maximum value for their capacity investments
through capacity sharing.
(f) If NCRR adds shared trackage under the provisions hereof, or if
NCRR approves, makes or funds any other improvements which increase
freight or passenger utility/capacity or passenger speeds,
including but not limited to improvements to track, signals,
structures or the adding of super-elevation under provisions hereof
and including but not limited to the "Rail Impact" program
described in Section 12 hereof, NCRR, NSR (and any other
appropriate parties, including NCDOT) will enter into a separate
written agreement prior to the commencement of any construction.
NSR will dispatch and maintain the line segment as improved and
NCRR will reimburse NSR for any and all additional dispatching and
maintenance costs, including but not limited to costs of additional
employees required to dispatch and maintain the line on account of
such improvements, incurred by NSR, except as provided in Section
10 hereof. Any disputes over the causal relationship between such
construction projects and such additional dispatching and
maintenance costs billed to NCRR by NSR will be referred to the
PPC/Dispute Resolution procedure.
(g) NCRR and NSR will develop the design and phasing of double-tracking
and other investments for the line between Greensboro and
Charlotte, the cost of preparing such plans to be at NCRR expense,
so that freight and passenger services can both be accommodated and
so that any intermediate investments made will conform with a long-
term infrastructure plan.
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EXHIBIT 10(i), Page 11 of 44
(h) In advance of installing double track or other investments made by
NCRR, NCRR and NSR, at NCRR expense, will jointly conduct a study
to determine the additional capacity provided by such investments.
Should NCRR determine that additional passenger trains and/or
increased train speeds are desirable and that the funds are
available to make the necessary investments to increase passenger
train speed or capacity, NCRR will plan for the additional capacity
necessary to support more passenger service and/or greater speeds,
in conjunction with NSR through the PPC/Dispute Resolution
procedure.
(i) If NCRR adds dedicated separate infrastructure on the right-of-way
for passenger operations above 90 mph as required by Section 13
hereof, NCRR shall have such dedicated separate facilities
dispatched and maintained by a party other than NSR.
(j) NCRR and NSR will each keep the other informed of matters involving
present and prospective passenger and freight traffic on the line,
the operation of the line, or any other matter relating to the NCRR
lines with which they may be involved during the term of the
Agreement. In all matters involving NCDOT or regulatory bodies
where the parties' interests are in common, the parties shall work
cooperatively to accomplish the purposes of this Agreement in a
timely fashion.
(k) Any capital expenses or other improvements will abide by and be
subject to the principle of no cross subsidization between the
services operated on the lines.
Section 10. EASTERN SEGMENT TRACK IMPROVEMENTS
In order to promote economic development along the NCRR corridor and
greatly improve the current track condition of the line, the parties
agree to implement a project to upgrade the Raleigh to Morehead City
line segment in order to improve the condition of the segment closer to
the condition of other segments of the NCRR line.
NSR (under contract to NCDOT utilizing NCRR dividend proceeds from NCRR
interim compensation), agrees to perform work, such as a timber and
surfacing project, of up to $10 million on such segments of the NCRR
line between Boylan (Raleigh) to the Port Terminal (at Morehead City,
including the tracks maintained by NSR at the Port Terminal) as are
determined by NCRR to be most effective. Notwithstanding the provisions
of Section 9(f) hereof, to the extent that such work increases the FRA
classification of the following NCRR track segments, NCRR shall not be
responsible for reimbursing NSR for any additional dispatching or
maintenance costs, including any costs of any additional employees
required on account of such work:
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EXHIBIT 10(i), Page 12 of 44
Milepost EC 1.5 to EC 9.0;
Milepost EC 71.0 to EC 94.0;
Milepost H 119.7 to H 120.0;
Milepost H 126.0 to H 126.8.
NSR will begin implementation of the project within 60 days of the
finalization of the project scope and the availability of funding and
will complete the project as expeditiously as possible, with a date
certain for completion to be established by the PPC/Dispute Resolution
provisions herein.
Section 11. PROCESS FOR REVIEWING ADDITIONAL PASSENGER CAPACITY
ON NCRR LINES
(a) The NCRR trackage will be operated on a shared-use basis with
passenger operations for passenger or commuter trains with speeds
of 90 mph or less. NSR will present to NCRR its analysis of the
number of additional freight trains that could be operated on the
line as of January 1, 2000, without adding capacity to the NCRR
line. If NCRR does not concur, the issue will be resolved pursuant
to the PPC/Dispute Resolution procedure herein.
(b) NSR will have use of the freight capacity as determined above.
(c) NCRR will pay for any increased costs for operations, maintenance
or capital expenditures necessary to accommodate increasing the
number of passenger trains above that currently operated on NCRR
tracks, or to permit increased passenger speeds above the present
passenger train speeds, except for the additional passenger train
set permitted pursuant to Section 12(e) hereof.
(d) If any passenger service or any third-party passenger operations
are added to the NCRR line, the passenger service operator or other
third-party passenger operator will be required to make and pay for
capital improvements on the line adequate to assure that none of
NSR's capacity, either the capacity NSR is currently using or
unused capacity that is available to NSR, determined as described
above, is diminished or disadvantaged.
(e) All FRA regulations must be complied with in advance of initiating
any passenger operations in excess of 79 mph. The administrative
costs of obtaining such regulatory approval, including but not
limited to any expense of performing an environmental impact
statement or environmental assessment, if required to comply with
environmental regulations, shall be borne by NCRR.
(f) NCRR and NSR agree to cooperate in the following long range
planning studies, at NCRR's expense, to determine whether
additional capacity would be required to handle additional
passenger or commuter trains proposed on segments of NCRR:
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EXHIBIT 10(i), Page 13 of 44
(i) Passenger Train Studies:
NCRR and NSR agree to several studies that are designed to
allow NCRR to plan more effectively for the long-term
utilization of the valuable asset NCRR has in the NCRR right-
of-way:
(A) Passenger Train Transit Time Improvement:
These studies will include the following considerations
in its analysis of potential passenger service related
expenditures:
(I) Reduced passenger train stops and reduced duration
of stops;
(II) Reduced highway grade crossings, whether equipped
with active or passive warning devices;
(III) Increased speeds through towns and localities with
speed restriction ordinances;
(IV) Improvements to increase speed at various
restrictions, such as crossings with railroads at
grade;
(V) Improvements to reduce the required safety margins
or clearing times for passenger/freight and
passenger/passenger meets or passes;
(VI) Revisions to passenger train and freight train
schedules;
(VII) Reductions in transit times by using FRA-approved
tilt train equipment;
(VIII) Improvements to dispatching systems;
(IX) Improvements to signal systems; and
(X) Track improvements such as adding double track,
sidings, double power crossovers, turnouts and
curve improvements including super elevation of
curves.
NCRR will request NCDOT, not at NSR's expense, to
jointly work with appropriate NSR operations and
engineering staff to determine which investments
yield the highest returns in terms of speed and
capacity.
PAGE 91
EXHIBIT 10(i), Page 14 of 44
(B) Passenger Train Operating Speed Study (79 to 90 mph):
The study will address the safety and other issues
related to increasing maximum passenger speeds from 79
mph to 90 mph and the economic issues related to
installing cab signals and operating trains in cab signal
territory.
(C) High Speed Study (maximum speeds in excess of 90 mph):
The study will address what will be needed to safely and
economically transition toward separate freight and
passenger operations at the point when passenger train
speeds exceed 90 mph; the study will address interim
capital investments to assure that the investments are
made in conjunction with a long-term transition plan and
will continue to be useful in the ultimate plan; the
study will address safety issues related to migrating
from shared-use operations to separate operations for
passenger services operated in excess of 90 mph.
The study will also investigate whether it is possible
and desirable that incremental improvements may proceed
in such a way that portions of the Raleigh - Charlotte
route may achieve greater than 90 mph, with the required
separate track structure, while other segments remain at
less than 90 mph and continue as shared-use segments.
(ii) Alternative Routing Study:
NCRR and NSR will perform a joint study of the operational and
economic considerations involved in operating through freight
trains between Greensboro and Raleigh over other NSR routes
rather than over the NCRR route. NCRR will study, at NCRR
expense, the differences in the investment required, the
maintenance expenses, and the operations if the NCRR line
between Greensboro and Raleigh were operated with or without
through freight trains. NSR will determine, at NSR expense,
the capital investment required to upgrade any alternate route
to accommodate the through freight trains operated on the
NCRR route between Greensboro and Raleigh. Any decision by
NCRR or NCDOT to cooperate and/or participate in the cost of
NSR's use of the alternative route would be based on producing
the lowest net capital cost to the NCDOT and Triangle Transit
Authority (TTA) run passenger trains while still affording to
NSR existing levels of freight service capacity, and would
take into account community impacts on both lines. It is
understood that in the event that through freight trains are
operated over an alternate route, NSR will need to be able to
continue to serve present and future customers on the NCRR
line, including those which might be accessible only by
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EXHIBIT 10(i), Page 15 of 44
crossing TTA tracks. However, nothing in the Agreement will
serve to cause any delay in TTA and NSR continuing to work
together in making final plans and implementation of TTA
facilities and service.
(g) In connection with the studies referred to herein, NCRR and NSR
will employ analytical techniques to: (1) determine the impact of
passenger trains on the operations and capacity of NSR, and (2) to
determine the capital improvements that would be necessary to avoid
adverse impacts on NSR's freight operations or capacity. Any
capital improvements or other costs or expenses will abide by and
be subject to the principle of no cross subsidization between the
services operated on the lines.
(h) NCRR and NSR may engage consultants and outside experts to analyze
construction, maintenance or dispatching issues. Consultants may
be involved in data gathering, data analysis, and presentation of
recommendations, but NSR agrees that senior level NSR officers will
be involved in the decision-making process.
(i) Intercity passenger operations may use equipment such as tilt-train
equipment as long as the use of such equipment on NCRR commingled
with NSR operations is approved by FRA or FRA grants a specific
waiver or approval allowing operation of such equipment commingled
with NSR operations on the NCRR.
Section 12. IMPLEMENTATION OF THE NCDOT'S UPDATED "RAIL IMPACT" PROGRAM
(a) NSR agrees to implement the NCDOT's updated "Rail IMPACT" program.
(b) NSR and NCRR will reevaluate with NCDOT the elements included in
NCDOT's original Rail Impact program, to develop an updated program
of rail improvements totaling $20 million which will provide
increased passenger speeds while at the same time not adversely
impacting the freight operations of NSR.
(c) When funds for the updated Rail Impact program are available to
NCRR or NCDOT, NSR agrees to then implement as expeditiously as
possible.
(d) If a shortage of available manpower would delay implementation
beyond a reasonable completion date, NSR and NCRR agree to
cooperate to jointly seek concurrence from the appropriate labor
organizations representing NSR's employees, if such concurrence is
required, for such work to be done by qualified contractors
selected in accordance with the PPC/Dispute Resolution procedure
and to be engaged by NSR.
(e) NCDOT may add one daily passenger train set to operate at or below
a maximum speed of 79 mph to the line between Raleigh and Charlotte
subsequent to the completion of the construction of the updated
Rail Impact program.
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EXHIBIT 10(i), Page 16 of 44
Section 13. HIGH SPEED PASSENGER OPERATIONS
(a) NCRR may grant operating authority within the NCRR corridor for
intercity passenger trains to be operated in excess of 90 miles per
hour ("high speed passenger trains") only if such trains or
systems are operated on a dedicated separate new infrastructure.
(b) After approval by FRA, high speed passenger trains may use the
shared-use tracks for low speed access to and from stations and/or
for operations at conventional passenger train speeds in areas in
which adequate right-of-way for separate tracks is not available.
Section 14. OTHER PASSENGER OPERATIONS OVER NSR LINES
NSR will negotiate in good faith with NCDOT regarding passenger service
to Asheville, N.C., it being understood that NSR will not be responsible
for any capital and operating costs and/or expenses associated with or
related to such operations, and the addition of passenger trains to the
line will be accompanied by sufficient State investment to maintain
NSR's current or future freight capacity/utility and service standards
on the route, as determined by NSR.
Section 15. REGIONAL RAIL OPERATIONS WITHIN NCRR RIGHT OF WAY
(a) NCRR reserves the right to allow rail service such as that proposed
by the Triangle Transit Authority or other light rail operations on
separately dedicated infrastructure within NCRR's right-of-way,
consistent with the terms of this Agreement.
(b) If any FRA approvals or plan reviews are necessary, the passenger
operator would be responsible for obtaining such approvals or
reviews.
(c) NCRR will require the service provider to assure that reasonable
and efficient access by NSR to its present and future customers on
both sides of the track(s) over which NSR has trackage rights is
maintained at no cost to NSR.
(d) NCRR will require the service provider to have in place before
beginning operations, and to maintain at all times while such
operations are conducted, indemnity agreements and liability
insurance as described in Section 23 hereof.
(e) The proximity of light rail operations to NCRR tracks and the
related maintenance and operation issues shall be addressed under
the PPC/Dispute Resolution provisions herein and in conformity
with all federal regulations.
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EXHIBIT 10(i), Page 17 of 44
Section 16. TRAFFIC INFORMATION AND FORECASTS
Subject to the confidentiality provisions of Section 34 hereof, NSR and
NCRR will jointly examine traffic information and develop and share near-
and long-term traffic forecasts of freight and passenger traffic volumes
to evaluate safety, capacity and speed issues relating to the use of the
various segments for freight and passenger operations.
Section 17. CESSATION OF FREIGHT SERVICE ON ANY SEGMENT
(a) At any time during the term of this Agreement or any renewal
period, NSR may seek to abandon its operation over the segment
between Charlotte and Greensboro, or the segment between Greensboro
and Raleigh, or the segment between Raleigh and Morehead City, or
any two of those segments, or all three of those segments.
(b) No subdivision of the segments will be permitted, i.e., NSR may
seek to abandon its operations on the entire segment between
Charlotte and Greensboro or on the entire segment between
Greensboro and Raleigh or the entire segment between Raleigh and
Morehead City, or combinations of those segments, but it cannot
abandon service on any sub-segments of those segments unless agreed
to by NCRR, in NCRR's sole discretion.
(c) In the event of such abandonment of service on such segment or
segments, the following transition provisions shall apply to the
segment or segments being abandoned by NSR:
(i) NSR will continue to operate, dispatch, and maintain the line
until initiation of service by a qualified operator. A
qualified operator is one with demonstrated successful
experience in operation of railroad lines previously operated
by Class I railroads.
(ii) NSR will assure that if operation of the line is handed over
to a third-party operator, the line must retain for at least
a six-month period its maintenance level to then-current FRA
track classifications consistent with current timetable and
current track profile speed restrictions and any other
restrictions therein that affect the speed of operation,
consistent with any FRA track classification increases and/or
elimination of timetable or track profile speed restrictions
or other restrictions that affect the speed of operation
resulting from work performed pursuant to Section 10 hereof.
(iii) All conditions requiring routine slow orders will be
corrected in advance of the line being handed over to a third-
party operator. In the event of slow orders necessitated by
unusual events or requiring major construction or capital
expenditures which occur prior to the line being handed over
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EXHIBIT 10(i), Page 18 of 44
to a third-party operator, the PPC/Dispute Resolution process
will be employed to establish a reasonable time frame for NSR
to make the necessary repairs.
(iv) NSR will not be responsible for correcting slow orders
resulting from unusual events that occur subsequent to the
line being handed over to a third-party operator.
(v) NSR will assist NCRR in securing a qualified third party
operator. NSR's assistance to NCRR shall include but shall
not be limited to the following: (1) identify qualified
operators from previous experience with other operators,
(2) assist in preparation and review of the Request for
Proposal, and (3) assist in preparation of an operating
agreement with the third party.
(vi) Any business package offered to potential third-party
operators will be developed in consultation with significant
customers on the line and significant customers not on the
NCRR line which would be substantially affected (positively
or negatively) by a change in operators.
(vii) The third party operator will provide all service on the
line. NSR shall be entitled to negotiate haulage rights with
such third party for all or portions of the line at standard
eastern region haulage agreement rates and conditions
applicable at the time of haulage.
(viii) NSR will assist in seeking shipper satisfaction for any
transition to third party operation. NSR will provide
railroad cars to customers of the third-party operator on the
same basis it does for other third-party operators connected
to its line.
(ix) Prior to initiation of service by a third-party operator, NSR
will operate a rail flaw detector car over the line and will
replace any rails or rail segments determined to have
defects.
(ix) Each party shall cooperate with the other in obtaining any
necessary regulatory approval to accomplish any termination
of NSR trackage rights and initiation of trackage rights by a
third party operator.
(d) Should NSR cease operations over either the Charlotte/Greensboro
segment or the Greensboro/Raleigh segment, the annual trackage
rights fee will be subject to adjustment through the PPC/Dispute
Resolution procedures. The adjustment will be based on the
percentage of total car miles operated on each of the two segments.
PAGE 96
EXHIBIT 10(i), Page 19 of 44
Section 18. RETURN OF REAL PROPERTY
(a) Non-operating Property
(i) NCRR and NSR hereby agree that the term "Designated Returned
Property" as used herein means those non-operating properties
owned by NCRR and described on EXHIBIT B attached hereto and
incorporated herein by reference.
(ii) The Designated Returned Property will be released by NSR and
A&EC to NCRR as of January 1, 2000 or the date such property
is accepted by NCRR, whichever date is later, or a date as
otherwise agreed between the parties (the "Return Date").
NSR shall continue to have use of the Designated Returned
Property until the Return Date.
(iii) For each such parcel the Return Date of which is within
9 months of the date NSR provides NCRR with the information
described in Section 19 (e) hereof, NSR shall pay to NCRR
within thirty business days of the Return Date one-half (1/2)
of all rents received by NSR or A&EC for such parcel of
Designated Returned Property from January 1, 1995, through
the Return Date, subtracting any property taxes, assessments
of any type and normal maintenance paid or to be paid by NSR,
its parents or any affiliate and/or A&EC with respect to
Designated Returned Property applicable to the period from
January 1, 1995 to the Return Date.
(iv) Any parcel of Designated Returned Property that is released
by NSR or A&EC to NCRR shall be returned to NCRR free of any
obligation of NCRR, NSR or A&EC to operate that parcel as a
part of its or their line(s) of railroad unless otherwise
agreed between the parties.
(b) Operating Property:
(i) Operating property will be considered by the parties to have
been released from the leasehold or other interest of NSR or
A&EC to NCRR and to be subject to this Agreement and the
Trackage Rights Agreement as of the Effective Date.
(ii) From and after the Effective Date, NSR and A&EC will have no
ownership or leasehold interest in the properties of NCRR or
the right-of-way of NCRR, and will look solely to this
Agreement and to its rights and obligations under federal
and/or state law for its authority to operate upon or to
enter or remain upon the properties of NCRR.
(iii) On or before October 1, 2000, NCRR and NSR, through the ad
hoc property committee described in Section 19 hereof, shall
determine the properties (except the property discussed in
Section 7(b) hereof) which are necessary for NSR, by itself
PAGE 97
EXHIBIT 10(i), Page 20 of 44
or through an affiliate of NSR, to fulfill NSR's obligations
as operator of exclusive freight trackage rights under this
Agreement (the "Designated NSR Facility Property"). Upon
such determination, NSR shall provide to NCRR drawings of
Designated NSR Facility Property that depict the shape and
dimensions in feet of each such parcel of Designated NSR
Facility Property, and shall note, in feet, the distance of
the parcel to the nearest railroad milepost and also to the
center line of the main track. NCRR and NSR shall then enter
into a non-assignable (except as provided in Section 31)
license or other written agreement for the continued NSR
possession of such property for so long as (a) NSR has
exclusive freight trackage rights under this Agreement or
any renewal thereof, and (b) such property continues to be
needed by NSR for its identified purpose. Such license or
other written agreement shall be entered into consistent with
and subject to the terms and conditions of this Agreement and
the Trackage Rights Agreement as consideration for this
Agreement and without additional consideration to be paid to
NCRR by NSR. NSR shall be responsible for the management and
condition of such property and any ad valorem taxes,
assessments, and any other costs related directly or
indirectly to such property.
(iv) The parties acknowledge that there may be parcels which are
subject to leases to third parties which are located within
the limits of the right of way ( "3PL Parcels"). The parties
intend that 3PL Parcels be treated in a manner similar to the
Designated Returned Properties with respect to the allocation
of rentals, both those received between January 1, 1995 and
the date such parcels are returned to NCRR and those received
after such parcels are returned to NCRR, and with respect to
the duties of the parties regarding the return of such
parcels to the management of NCRR and the obligations to pay
property taxes and assume environmental responsibility,
except that the parties agree that the indemnity provisions
of Section 24(c) will not apply to such parcels.
Section 19. AGREEMENTS WITH USERS, LICENSEES AND/OR THIRD
PARTIES REGARDING THE RIGHT OF WAY
(a) NSR and NCRR shall cooperate with each other in the transition of
responsibility to NCRR, or shared responsibility between NCRR and
NSR, as outlined herein and in EXHIBIT C, of the management,
administration, and control of new and existing third party
license, lease and other agreements that concern NCRR-owned
property or right of way previously subject to the Old Leases.
(b) NCRR and NSR shall appoint an ad hoc property committee (the
"Committee" for purposes of this section) to address the orderly
transition of the management of such agreements, with a target date
of October 1, 2000 for completion of such transition.
PAGE 98
EXHIBIT 10(i), Page 21 of 44
(c) The Committee shall address the following types of existing NSR
agreements and any other agreements the parties agree must be
addressed:
(i) leases, licenses, wire line agreements, pipeline agreements,
and other longitudinal or perpendicular encroachments;
(ii) private and public grade crossing agreements and agreements
concerning public projects;
(iii) track lease agreements;
(iv) spur tracks owned by third parties;
(v) real property matters relating to trackage rights and other
operating agreements with other railroad companies (other
than with Amtrak and the agreement covering CSXT's operations
between Fetner and Raleigh (Boylan)), including operations
between Goldsboro and the CP&L lead;
(vi) agreements with Amtrak for stations, parking, or other
passenger facilities and related properties (other than
tracks, platforms, and signals).
(d) Within nine (9) months of receipt of the information from NSR
described in section (e) below, NCRR will request an assignment
from NSR of management of any active third party agreement,
terminate any such agreement, request NSR or A&EC to terminate such
agreement, substitute new agreements for existing agreements, or
request that NSR retain management responsibility for such
agreement for the remaining term of such agreement. If NSR
declines to accept such responsibility for a particular matter at a
particular time, the matter shall be addressed by the PPC/Dispute
Resolution procedure herein. It is the intention of the parties
that NCRR will assume responsibility for the management of all
properties of NCRR not needed by NSR in its freight operations, but
that the timing of such assumption will be subject to the agreement
of the parties on a case by case basis.
It is understood that it may be that parties to certain agreements
can no longer be readily located, and that such agreements may be
terminated by NSR by mailing notice to the last known address, if
any, of the party. The parties shall work cooperatively and in
good faith in reviewing the existing agreements. Rentals from
third party agreements other than rentals of Designated Returned
Properties or 3PL Parcels received by NSR from January 1, 1995
shall be divided as agreed by the Committee or if the Committee
fails to agree, the matter shall be resolved pursuant to the
PPC/Dispute Resolution procedure herein. As a general rule, the
parties agree that the party entitled to the rental of Designated
Returned Properties or 3PL Parcels shall from the date of such
entitlement be responsible for the management of such property, for
PAGE 99
EXHIBIT 10(i), Page 22 of 44
payment of any ad valorem taxes (if taxed as non-system property or
separately assessed as set forth in Section 26 hereof) and, as
between the parties, for any environmental harm to such property
not caused by the other party occurring after the Return Date and
any environmental reporting, if any, for such property.
(e) NSR shall be responsible for providing to NCRR file documents or
copies of the following records, if any, relating to Designated
Returned Property and 3PL parcels: (1) photocopies of all
applicable leases, licenses, or agreements relating to such
property, including supplements and assignments, correspondence,
and indexes or lists relating thereto; (2) the status of the rental
for any such property, including billing statements or rental
notice records for such rent; (3) the status of property taxes and
all other expenses for such property, (4) photocopies of non-
privileged materials found in the paper files of NSR's
Environmental Protection Department; and (5) photocopies of non-
privileged materials found in the paper files of the NSR Real
Estate and Contract Services Department for all such property. NSR
shall be responsible for providing to NCRR file documents or copies
of the above described records to the extent they are available for
all other agreements under Section 19(c) above. NSR shall use its
best efforts not to destroy such records of third party agreements
and records relating to any agreements. Neither NCRR nor NSR,
including their affiliates, shall be required to provide any
proprietary or licensed application software, including without
limitation any such software dealing with real estate.
(f) With respect to properties used by Amtrak, NSR and NCRR will work
together to seek Amtrak's acquiescence in any change of management
and control. Amtrak passenger station platforms shall be included
in Designated NSR Facility Property as set forth above unless
otherwise agreed between NCRR and NSR.
(g) Any dispute arising under this section if not resolved within
60 days of first being raised by either party shall be addressed
pursuant to the PPC/Dispute Resolution provision of this Agreement.
(h) If any agreement covers both NCRR property and properties owned by
NSR and/or A&EC, and NCRR determines that the agreement is to be
assigned, terminated or substituted with respect to the NCRR
portion of the property, the action taken by NCRR will only cover
the portion of the property owned by NCRR and rents, taxes and
other costs or services will be prorated appropriately.
(i) NSR and NCRR in contacts with third parties will make referrals to
the other party in a manner that is consistent with this Section 19
and in such a manner as to encourage timely and efficient handling.
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EXHIBIT 10(i), Page 23 of 44
Section 20. VERTICAL AND LATERAL CLEARANCES AND SUPPORT
During the term of this Agreement and any extension or renewals, NCRR
will not impair vertical and horizontal clearances and the structural
support of the track structures and other railroad facilities and
appurtenances thereto needed by NSR to conduct its freight operations,
consistent with the then current system-wide practices of NSR. Any
proposal by NCRR or those claiming rights through NCRR which will have
the effect of reducing any clearances or support present on the date
hereof will be submitted to the PPC/Dispute Resolution procedure for
resolution.
Section 21. OTHER PROPERTY ISSUES
(a) NCRR hereby releases all claims to Linwood Yard on the Effective
Date hereof.
(b) Upon termination of this Agreement, as an equal value exchange, NSR
will be granted by NCRR a permanent exclusive easement over a
continuous main track, satisfactory to both parties, with
connections, between Pomona and Elm and NCRR will be granted by NSR
a one-half interest, with connections, in Pomona Yard, the terms of
which shall be addressed according to the PPC/Dispute Resolution
provisions.
(c) All other property issues shall be deferred until the expiration or
termination of the Agreement. If a cessation of service by NSR
occurs on a segment pursuant to Section 17 hereof, all property
issues relating to such segment shall be resolved in connection
with such cessation. Each party agrees that in advance of
termination of the Agreement, or any proposed cessation of service
on a segment pursuant to Section 17 hereof, the parties will
negotiate in good faith regarding any interim access agreements
necessary for efficient operation of each party's terminal,
interchange, or yard facilities until the deferred property issues
are finally resolved.
Section 22. INDUSTRIAL DEVELOPMENT
NSR and NCRR will work cooperatively with the North Carolina Departments
of Commerce and Transportation and with regional economic development
interests to enhance economic development in the areas served by NSR on
the NCRR track segments. NSR will make special efforts on the eastern
segment of the line and will cooperate with industrial development
efforts to identify and secure long term railroad users to locate
adjacent to such NCRR line.
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EXHIBIT 10(i), Page 24 of 44
Section 23. LIABILITY
NCRR and NSR hereby establish or provide for future consideration of
certain criteria for liability, indemnity and insurance provisions and
other related financial considerations which will apply to the several
types of passenger operations which are currently or may in the future
be conducted on or near the tracks over which NSR has trackage rights,
and to establish a mechanism for handling future negotiations pertaining
to liability issues as contemplated herein, and for resolving any future
disagreements between the parties concerning such provisions. The term
"financial consideration" as used in this Section 23 relates to
financial agreements with Amtrak relating only to liability and
indemnity concerns. For example, the term "financial consideration"
shall not be deemed to include incentive payments provided to NSR for
performance of Amtrak passenger trains. The types of passenger
operations contemplated by the parties, and the criteria applicable to
each, are set forth below.
(a) Current or expanded Amtrak intercity passenger operations at
scheduled speeds at or below 90 mph.
Amtrak currently operates intercity passenger service on NCRR
tracks over which NSR has trackage rights, and in connection
therewith, Amtrak provides to NSR certain indemnities and financial
considerations related to those indemnities under its Basic
Agreement with NSR. (The "Basic Agreement" between Amtrak and NSR
shall be defined as the Agreement between Southern Railway Company
and The Alabama Great Southern Railroad Company and National
Railroad Passenger Corporation, dated January 2, 1979, as revised
effective June 1, 1999.) To the extent Amtrak operates intercity
passenger service on such tracks at scheduled speeds of 90 mph or
less, whether under a contract with NSR or a contract with NCRR,
and whether at its current or at some expanded future level, NSR's
rights and obligations pertaining to indemnity and related
financial considerations shall be those provided by Amtrak to NSR
under its Basic Agreement.
(b) High speed passenger operations
Passenger operations of any type at scheduled speeds in excess of
90 mph ("high speed" operations) will not be undertaken by NCRR or
any other operator on or in close proximity to the tracks on which
NSR has trackage rights, unless an appropriate type and level of
liability, indemnity and insurance protection covering such
operations has been agreed upon and implemented. Upon notice by
NCRR to NSR that NCRR proposes such high speed passenger
operations, NCRR and NSR shall, for a period not longer than six
months, attempt to agree on what constitutes "close proximity," and
on appropriate liability, indemnity and insurance protections for
the proposed high speed passenger operations. Upon failure to
agree within that six month period upon what constitutes "close
proximity" or upon types and levels of liability, indemnity and
insurance protection, the unresolved issues shall then be resolved
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EXHIBIT 10(i), Page 25 of 44
pursuant to the PPC/Dispute Resolution provisions of this Agreement.
NCRR and NSR agree that high speed passenger operations will require
different types and levels of liability and indemnity protection,
and that the liability, indemnity and insurance provisions of the
1998 Amended and Restated Operating Access Agreement Between
Norfolk Southern Railway Company and Northern Virginia Transportation
Commission & Potomac and Rappahannock Transportation Commission
(VRE Agreement) is one example of the types and levels of liability,
indemnity and insurance protection appropriate for high speed
operations.
(c) Additional passenger operations
No passenger operations other than those described in Sections 23
(a) and (b) above (for example, non-Amtrak intercity passenger
operations, commuter or light rail passenger operations) shall be
operated, whether by NCRR or any other party, on or in close
proximity to the tracks on which NSR has trackage rights, unless an
appropriate type and level of liability, indemnity and insurance
protection covering such operations has been agreed upon by all
parties. Upon notice by NCRR to NSR that such passenger operations
are proposed, NCRR and NSR shall, for a period not longer than six
months, attempt to agree, if necessary, on what constitutes "close
proximity," and on appropriate liability, indemnity and insurance
protection for the proposed passenger operations. Upon failure to
agree within that six month period upon what constitutes "close
proximity" or upon types and levels of liability, indemnity and
insurance protection, the unresolved issues shall then be resolved
pursuant to the PPC/Dispute Resolution provisions of this
Agreement. The principles set forth in subparagraphs (i) through
(iv) below shall be applied in determining liability, indemnity and
insurance obligations for such passenger operations, and to the
extent lawful under the laws of the State of North Carolina, shall
be applied without regard to the fault or negligence of any party:
(i) In case of an accident involving only the trains or equipment
of the operator of such passenger service, the operator shall
be solely responsible for all injuries to its employees and
passengers, all damages to track, equipment, lading or other
property, and for all liability to third parties.
(ii) In the case of an accident involving only the trains or
equipment of NSR, NSR shall be responsible for all injuries
to its employees, all damages to track, equipment, lading or
other property, and for all liability to third parties.
(iii) In case of an accident involving the trains of both NSR and
the operator of such passenger service:
1. NSR and the operator shall be separately responsible for,
and each shall separately bear, all liability for injuries
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EXHIBIT 10(i), Page 26 of 44
to its own passengers and employees, and for damages to
its own property, including property and lading in its
possession.
2. NSR and the operator shall be jointly responsible for and
shall equally bear all liability for injuries and damages
not covered in subparagraph (iii) 1 above.
(iv) Except as provided in Sections 23 (a) and (b) above, all
passenger operators shall provide and maintain commercial
liability insurance or equivalent protection sufficient to
cover the risks to which they are subjected by the provisions
of this Section 23 (c).
(d) Passenger operator qualifications
No passenger service of any type shall be operated unless the
proposed operator is fully qualified pursuant to federal law to
operate such passenger service. Amtrak will not be permitted by
NCRR to operate additional intercity passenger service trains on
the trackage over which NSR has trackage rights hereunder unless
NSR is first consulted regarding any such plans.
(e) Notice regarding matters in this section
Any notice given by NCRR to NSR with respect to new passenger
operations shall be in writing and shall specify that such notice
is being given pursuant to Section 23 of this Agreement.
(f) Cooperation in securing legislation
NCRR and NSR acknowledge and agree that the types and levels of
liability, indemnification and insurance protection the parties may
deem appropriate as they pertain to certain passenger operations
may not be possible without legislation. The parties agree that
should legislation be necessary to accomplish their goals, they
shall cooperate in seeking such legislation.
Section 24. ENVIRONMENTAL PROVISIONS
(a) Environmental Definitions
(i) "Environmental Occurrence" means (1) any violation of
applicable federal, state or local environmental laws,
regulations, administrative orders or judicial decrees, as
they apply to any part of the Leased Properties; (2) any
noise, vibration or the deposit, spill, discharge, or other
release of a Contaminating Substance on or from any part of
the Leased Properties; or (3) any failure to provide
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EXHIBIT 10(i), Page 27 of 44
information, make all appropriate submissions, and fulfill
all applicable legal obligations of the owner and/or operator
of the Leased Properties.
(ii) "Contaminating Substance" means oil, petroleum or any
substance declared to be hazardous or toxic or treated as a
pollutant or contaminant under any law or regulation now or
hereafter enacted or promulgated by any governmental
authority.
(iii) "Designated Returned Property" means those parcels identified
in EXHIBIT B.
(iv) "Leased Properties" means the properties leased to NSR and/or
A&EC that (1) were included within the leaseholds as of
December 31, 1994, under the 1895 Lease or the 1939 Lease
(including the Designated Returned Property and the Line of
Road); or (2) which then or thereafter became additions to
the properties leased under the 1895 Lease or the 1939 Lease
before the Effective Date.
(v) "Line of Road" means the property over which NSR is the
exclusive freight operator under the Trackage Rights
Agreement and this Agreement, as well as Designated NSR
Facility Property as determined pursuant to Section 18 of
this Agreement.
(b) Responsibility for Environmental Occurrences on the Leased
Properties During the Leasehold Period and Until the Effective
Date.
(i) NSR agrees to indemnify, defend and hold harmless NCRR and
its respective officers, directors, beneficiaries,
shareholders, partners, agents, and employees from all fines,
suits, procedures, claims, liabilities, damages (including
without limitation diminution in property value and other
economic loss) and actions of every kind, and all reasonable
costs and expenses associated therewith (including attorneys'
and consultants' fees) if NCRR is a named or charged party
arising from any Environmental Occurrence that occurred on
the Leased Properties during the leasehold period and until
the Effective Date.
(ii) If NSR's responsibility with respect to a specific parcel is
triggered by Section 24(b)(i), NSR reserves the right upon
written notice to NCRR to undertake site investigation,
cleanup and remediation itself in a reasonable and prompt
manner.
(iii) NCRR will provide NSR with reasonable access to any properties
of NCRR on which NSR takes action under Section 24(b)(ii) to
investigate, clean up or remediate environmental harm, or on
which NSR desires to undertake any other related action the
performance of which is rendered more efficient or less costly
when performed on such property, or which is needed by NSR to
access any such properties.
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EXHIBIT 10(i), Page 28 of 44
(c) Responsibility for Environmental Occurrences on the Designated
Returned Property On and After the Effective Date or Return Date
(i) NCRR agrees to indemnify, defend, and hold harmless NSR and
its officers, directors, beneficiaries, shareholders,
partners, agents, and employees from all fines, suits,
procedures, claims, liabilities, damages and actions of every
kind, and all reasonable costs and expenses associated
therewith (including attorneys' and consultants' fees) if NSR
is a named or charged party arising from any Environmental
Occurrence, other than an Environmental Occurrence for which
NSR is responsible under Section 24(d)(i) below, that occurs
on any Designated Returned Property after the Effective Date
or the Return Date, whichever comes later.
(ii) If an Environmental Occurrence for which NCRR is responsible
under Section 24(c)(i) is related to any Environmental
Occurrence for which NSR is responsible under Section
24(b)(i), NCRR will be responsible only to the extent that
contamination that was present prior to the Effective Date or
Return Date is exacerbated by the later Environmental
Occurrence.
(iii) If NCRR's responsibility with respect to a specific parcel is
triggered by Section 24(c)(i), NCRR reserves the right upon
written notice to NSR to undertake site investigation,
cleanup and remediation itself in a reasonable and prompt
manner.
(iv) NSR will provide NCRR, at no charge to NCRR, with reasonable
access to any property controlled by NSR on which NCRR takes
action under Section 24(c)(i) to investigate, clean up or
remediate environmental harm, or on which NCRR desires to
undertake any other related action the performance of which
is rendered more efficient or less costly when performed on
such property, or which is needed by NCRR to access any such
properties.
(d) Responsibility for Environmental Occurrences Resulting From NSR
Operations On and After the Effective Date
(i) NSR agrees to indemnify, defend, and hold harmless NCRR and
its officers, directors, beneficiaries, shareholders,
partners, agents, and employees from all fines, suits,
procedures, claims, liabilities, damages (including without
limitation diminution in property value and other economic
loss) and actions of every kind, and all reasonable costs and
expenses associated therewith (including attorneys' and
consultants' fees) if NCRR is a named or charged party
arising from any Environmental Occurrence that occurs on
property owned by NCRR on or after the Effective Date, but
only to the extent such Environmental Occurrence results from
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EXHIBIT 10(i), Page 29 of 44
the operations of NSR, its agents or any party with a direct
contractual relationship with NSR relating to NSR's operations,
including Amtrak under an Amtrak/NSR Direct Service Agreement.
(ii) NSR will be responsible for (1) overseeing its own
environmental operations, (2) responding to notices, claims,
lawsuits, or orders pertaining to environmental issues or
incidents arising out of its freight operations or Amtrak/NSR
Direct Services and occurring on or adjacent to the Line of
Road or adjacent properties, and (3) complying with and
performing all environmental obligations of the freight
operator of the Line of Road during the term of the Trackage
Rights Agreement and any renewals. NSR will not allow the
release, discharge or disposal of any wastes of any kind,
whether hazardous or not, on the properties of NCRR. For
purposes of the preceding sentence only, the agreement of NSR
not to allow the release, discharge or disposal of any wastes
on the properties of NCRR will not apply to the temporary
storage of wastes in tanks or containers or to the discharge
of waste water or other effluent subject to a valid permit
in accordance with all applicable environmental laws and
regulations. Should NSR inadequately perform any action
required under applicable environmental laws, rules,
regulations, ordinances or judgments, NCRR or its represen-
tative shall have the right to take whatever reasonable
corrective action NCRR deems necessary to perform the work,
at the sole expense of NSR.
(iii) NCRR will provide NSR with reasonable access to any
properties of NCRR on which NSR is required by this Section
24(d) to take action to investigate or remediate
environmental harm, or on which NSR is required hereunder to
take any other related action the performance of which is
rendered more efficient or less costly when performed on such
property, or which is needed by NSR to access any such
properties.
(iv) To the extent permitted by applicable laws and regulations,
the following will be provided to NCRR or to NSR within
30 days of the receipt or submission thereof by NSR or by
NCRR, as the case may be:
(A) Any administrative or judicial investigation, complaint,
order or demand filed, served on or delivered to NCRR or
NSR by any governmental agency at any time during the
term of this Agreement because of or arising from the
deposit, spill, discharge or other release of a
Contaminating Substance which occurred on any part of the
Leased Properties before the Effective Date, or the Line
of Road, or any parcel in which the other party has an
interest on and after the Effective Date;
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EXHIBIT 10(i), Page 30 of 44
(B) Notice of any claims, lawsuits or other actions against
NCRR or NSR at any time during the term of this Agreement
for injunctive relief or recovery of losses sustained
because of or arising from the deposit, spill, discharge
or other release of a Contaminating Substance which
occurred on any part of the Leased Properties before the
Effective Date, or the Line of Road, or any parcel in
which the other party has an interest on and after the
Effective Date;
(C) A copy of any analytical results, correspondence or
report pertaining to underground storage tanks, above
ground storage tanks, wetlands or any environmental
investigation of any part of the Line of Road, which is
submitted to NCRR or NSR by any third party (excluding
NCRR's or NSR's contractors and consultants, but
including governmental agencies) or submitted by NCRR or
NSR to any governmental agency at any time during the
term of this Agreement;
(D) A copy of the results of environmental tests performed by
or on behalf of a governmental agency at any time during
the term of this Agreement because of or related to any
deposit, spill, discharge or other release of a
Contaminating Substance occurring on any part of the Line
of Road; and
(E) A copy of all environmental reports, notices and
correspondence submitted by NCRR or NSR to any
governmental agency after the effective date of this
Agreement pursuant to any applicable federal, state, or
local law, ordinance or regulation pertaining to the Line
of Road at any time during the term of this Agreement.
(v) If there is an Environmental Occurrence which NCRR has a
reasonable good faith belief may constitute a risk of
liability, expense or criminal exposure to NCRR, NCRR will be
given full access to and opportunity to copy any relevant
environmental reports, studies or data pertaining to such
Environmental Occurrence in the possession of NSR (excepting
privileged communications with counsel for NSR), upon 30 days
prior written notice to NSR.
(d) Remediation Standards
No cleanup or remediation will be required pursuant to this
Agreement unless Contaminating Substances are present in amounts
requiring reporting to state or federal environmental agencies and
in amounts requiring cleanup or remediation under applicable
environmental laws and regulations. If a cleanup or remediation
work is required on any parcel of Leased Properties that is used
for non-residential purposes as of July 1, 1999, the indemnifying
party under Sections 24(b), (c) or (d) will not be required to meet
more stringent standards due to existing or possible future
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EXHIBIT 10(i), Page 31 of 44
development of the parcel for residential uses. The obligation to
indemnify for cleanup and remediation expenses or the undertaking
of such work shall not be increased based upon any development
requiring excavation of the surface or subsurface of the given
parcel for the construction of underground garages, basements, or
subsurface occupation. The parties agree that the cleanup standard
applicable to such parcel may be based upon a site specific risk
assessment, if such approach complies with applicable environmental
laws and regulations or is accepted by the environmental agency
having jurisdiction over the parcel.
(e) Retention of Rights
In addition to the rights conveyed by this Section 24, NCRR and NSR
each retains all statutory and common law rights and causes of
action against the other, including but not limited to its rights
under federal and state environmental laws, arising out of
Environmental Occurrences.
(f) Termination of Indemnification Obligations
(i) The parties' indemnification and defense obligations under
Sections 24(b), (c) and (d) of this Agreement arising out of
an Environmental Occurrence will terminate seven (7) years
after the party seeking indemnification has actual knowledge
or receives proper notice from the other party or a third
party of the Environmental Occurrence, and in any event such
obligations will terminate seven (7) years after the
termination of this Agreement and any extensions thereof. If
the party seeking indemnification for an Environmental
Occurrence submits a valid claim in writing to the other
party within this time period, the indemnifying party's
obligations under this Agreement will continue indefinitely
with respect to that Environmental Occurrence until the
matter is resolved. For purposes of this Section 24(f)(i),
any notice or claim must meet the following additional
requirements:
(1) In the case of a notice by either NSR or NCRR to each
other, it must refer to this Section 24(f)(i) and must be
delivered either by hand; by registered or certified
mail, return receipt requested; by next-day delivery,
with written evidence of receipt; or by fax, with
confirmation by registered or certified mail, return
receipt requested.
(2) It must specifically describe the suspected Environmental
Occurrence, the nature and scope of the contamination,
the property affected, any claims that have been made and
plans for investigation or remediation, to the extent
such information is available.
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EXHIBIT 10(i), Page 32 of 44
(ii) Unless the parties' obligations have terminated under
Section 24(f)(i), NCRR and NSR each agrees to waive and not
to assert as a defense to its indemnification obligations
under this Section 24 any statute of limitations, statute of
repose, laches or other time related defense with respect to
any Environmental Occurrence.
(g) Environmental Information for Designated Returned Property
With respect to the Designated Returned Properties, on or before
October 1, 1999, NSR will identify any contamination of which it
has knowledge and will provide to NCRR all information and reports
pertaining thereto, and NCRR will have the right to inspect such
properties before their return. Such right of inspection will
include the right to perform an environmental site assessment.
(h) Dispute Resolution
Any dispute arising under this Section 24, if not resolved within
90 days of being raised by either party, shall be addressed
pursuant to the PPC/Dispute Resolution provision of this Agreement.
Section 25. "REIT" COOPERATION
(a) NSR will cooperate with NCRR in maintaining NCRR's status as a Real
Estate Investment Trust ("REIT") for income tax purposes.
(b) NCRR and NSR intend that, to the extent permitted by law, the
payments by NSR for trackage rights be treated as rents from real
property for purposes of NCRR's continued qualification as a REIT.
Section 26. PROPERTY TAXES
(a) NSR shall continue to pay property (ad valorem) taxes assessed
against NSR as a result of the allocation of a portion of its
system value to the taxing jurisdiction in which NCRR owns property
over which NSR serves as the exclusive freight operator pursuant to
the Agreement.
(b) NSR: (i) shall be responsible for property (ad valorem) taxes, if
any, determined pursuant to the North Carolina General Statutes and
related rules and regulations of the North Carolina Department of
Revenue on Non-operating Property that is owned by NCRR and which
NSR has the exclusive right to use under the Agreement and
(ii) shall be responsible for any property taxes, assessments, or
liens with respect to Designated Returned Property not paid by NSR
or any of its subtenants/licensees for all periods prior to the
Return Date. NCRR shall be responsible for property (ad valorem)
taxes on all other Non-operating Property; provided, however, where
NSR has the non-exclusive right to use Non-operating Property under
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EXHIBIT 10(i), Page 33 of 44
the Agreement, then NSR shall be responsible for its pro rata share
of the property taxes on such property based on NSR's usage of such
property. For purposes of this Section 26, Non-operating Property
shall mean property that is appraised as non-system property by the
North Carolina Department of Revenue or separately assessed by the
local assessor as non-public service company property.
(c) NSR or NCRR will not be required to pay any tax it is obligated to
pay under the provisions of this Section during the time it shall
reasonably and in good faith and by appropriate legal or
administrative proceedings contest the validity or the amount
thereof.
(d) NSR and NCRR and their respective assignees and designees shall
have the right to control and defend at their expense any audit or
examination by any taxing authority, or any judicial proceeding,
relating to any taxes required to be paid by them respectively
under this Section.
(e) If during the term of the Agreement, including any renewal period,
the manner in which property (ad valorem) taxes are assessed
against railroads is changed, or if improvements are made by NCRR
or any other party hereunder that are not used by NSR and that
affect the amount of property taxes assessed against NSR, the
parties will attempt in good faith to agree upon any changes which
may be necessary to this Section 26, using the PPC/Dispute
Resolution procedures herein if necessary; it being the parties'
understanding that the amount of property taxes payable by NSR
under this Section 26 shall not be increased by property taxes
attributable: (i) to the portion of property owned by NCRR that is
not used by NSR or (ii) to expenditures or additions to capacity
that are not used by NSR.
Section 27. REGULATORY APPROVAL AND EFFECTIVE DATE
(a) The grant of trackage rights hereunder and any renewals are subject
to prior approval or exemption from prior approval by the Surface
Transportation Board ("STB") or any successor agency of the
undertakings of NSR herein, as may be required or appropriate under
49 U.S.C. Section 11323, or any successor federal legislation and
such approval or exemption action becoming final.
(b) After (i) all requisite governmental and corporate approvals for
this grant of rights have become effective or have been satisfied;
(ii) this Agreement and all associated documents have been fully
executed and delivered; and (iii) any court orders enjoining the
implementation of this Agreement have expired or are no longer in
effect, this Agreement and the Trackage Rights Agreement shall be
effective contemporaneously (the "Effective Date").
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EXHIBIT 10(i), Page 34 of 44
Section 28. RESOLUTION OF LITIGATION
NCRR and NSR agree that the STB compensation and federal court
proceedings will be voluntarily dismissed by the parties without
prejudice within twenty days of execution of this Agreement and all
necessary approvals have been obtained.
(a) NCRR and NSR agree that the STB compensation and federal court
proceedings will be voluntarily dismissed by the parties without
prejudice within twenty days of execution of this Agreement and all
necessary approvals have been obtained.
(b) Except with respect to (i) personal property claims released as set
forth in Section 6, "Release" and (ii) property claims resolved as
set forth in Section 21, "Other Property Issues," none of NCRR's
claims for improvements, additions, betterments, improvements to
real property, property rights, franchises or privileges under the
Old Leases are waived or affected by virtue of the execution and
delivery of this Agreement.
(c) The terms of the Old Leases create potential claims that NSR and/or
A&EC would owe and be obligated to deliver to NCRR additional
properties (hereinafter "Claims for Additions"). The parties
acknowledge that to the extent Claims for Additions exist, the
circumstance that such additional properties and/or rights may have
been acquired or now be held in the name of a company affiliated
with NSR or A&EC will not, of itself, be determinative of the issue
of whether the Claims for Additions are valid.
(d) No claim or demand contemplated by the Old Leases for the return of
real property and related railroad facilities otherwise to be
determined at the expiration or termination thereof may be made
until, and therefore each of them is postponed to, the termination
of this Agreement or any renewal (or any cessation of service over
a segment pursuant to Section 17 hereof with respect to such
segment). NCRR and NSR agree that nothing in this Agreement shall
abridge, estop, compromise, release or waive any such claims
deferred under this Agreement and that no defense of waiver,
latches, acquiescence, release, estoppel, or the like arising on or
after December 31, 1994 with respect to any such claims existing on
that date may be asserted by reason of NCRR's agreement not to
assert such claims at this time.
Section 29. POLICY PLANNING COMMITTEE/DISPUTE RESOLUTION
NCRR and NSR will establish a joint senior-level Policy Planning
Committee ("PPC" or "Committee").
The PPC will serve as a planning resource to the various issues which
are properly before it, including but not limited to dispatching
matters, maintenance levels and the implementation of third-party
operations on NCRR lines.
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EXHIBIT 10(i), Page 35 of 44
There will be three representatives from each of NSR and NCRR on the
committee. Those appointed shall be empowered to act within the
parameters of the committee's area of concern, subject to necessary
management approvals of expenditures.
The PPC will meet not less than twice a year on a scheduled basis. If
either party desires an additional meeting or meetings, it shall provide
a proposed agenda and a thirty-day notice to the other party. The other
party may either agree to the proposed meeting date or request a
fifteen-day extension, at which time the meeting will take place. The
parties will alternate sites of the scheduled meetings or may agree to
meet at a site convenient to both parties. The party requesting the
special meeting will travel to the other party's headquarters location.
Any special meeting may be held via telephone conference.
DISPUTE RESOLUTION - PPC
The PPC shall also address and attempt to resolve Disputes. As used in
this section, a "Dispute" is any controversy, claim, issue, or other
dispute between NCRR and NSR that arises out of, in connection with, or
in relation to this Agreement or the Trackage Rights Agreement, whether
it arises in contract, in tort, by statute, or otherwise. "Dispute"
includes, but is not limited to: (a) any failure to agree on matters as
to which this Agreement expressly or implicitly contemplates subsequent
agreement by the parties (except for any matters left to the sole
discretion of a party); (b) any question about the parties' relationship
under this Agreement or the Trackage Rights Agreement; (c) any question
about the interpretation, performance, breach, validity, scope,
duration, enforceability or termination of the provisions in this
Agreement or the Trackage Rights Agreement; and (d) any question of
arbitrability that arises under this Agreement or the Trackage Rights
Agreement.
If a Dispute between the parties cannot be resolved by the parties in
the ordinary course of business, that Dispute shall be resolved as
follows:
(a) The Dispute shall be submitted to the PPC for resolution. Either
party shall have the right to submit the Dispute to the PPC by
providing the other party with written notice to that effect in the
manner set forth later in this Agreement for the giving of notices.
The notice (the "Notice") shall describe the Dispute and indicate
that the party providing the Notice wishes to resolve the Dispute
pursuant to the dispute resolution provisions in this section. The
submitted Dispute shall be addressed at the next regularly
scheduled meeting of the PPC unless the party providing the Notice
declares that the Dispute is urgent and requests that a special
meeting be held to address the submitted Dispute, provided that the
party exercising that right has complied with the Notice
requirements for meetings and agenda items described above.
(b) If the PPC fails to resolve a Dispute properly submitted to it
pursuant to the provisions set forth above at the meeting scheduled
pursuant to the Notice (or if such meeting is not held, on or
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EXHIBIT 10(i), Page 36 of 44
before the date such meeting is scheduled to be held), the Dispute
shall then be submitted to NSR's Chief Operating Officer and NCRR's
President for resolution.
(c) If NSR's Chief Operating Officer and NCRR's President fail to
resolve a Dispute properly submitted to them pursuant to the
provisions set forth above within 90 days following the date the
meeting scheduled pursuant to the Notice is held (or, if such
meeting is not held, the date such meeting is scheduled to be
held), the Dispute shall then be arbitrated as set forth below.
DISPUTE RESOLUTION - ARBITRATION
Notice of Arbitration. Either NCRR or NSR shall have the right to
initiate arbitration of any Dispute not resolved as provided above by
providing a notice of arbitration to the other party in the manner set
forth later in this Agreement for the giving of notices. This notice
shall clearly describe the Dispute to be arbitrated and indicate whether
the party initiating arbitration wishes to submit the dispute to one
arbitrator or to three arbitrators.
Number of Arbitrators. If the party initiating the arbitration
indicates a desire to submit the Dispute to only one arbitrator, and the
party receiving the notice gives notice of its consent to the use of a
single arbitrator within ten business days in the manner set forth later
in this Agreement for the giving of notices, then one-arbitrator
arbitration shall be used. Otherwise, three-arbitrator arbitration
shall be used.
Arbitration Site. The arbitration hearing shall be conducted at a
neutral location of the arbitrator's or arbitrators' choosing.
Arbitration Rules. The arbitration shall be conducted pursuant to the
American Arbitration Association's Commercial Arbitration Rules (or
their successor) (the "Arbitration Rules"). The use of the Commercial
Arbitration Rules shall not require the actual submission of the Dispute
to the American Arbitration Association. The Arbitration Rules shall
apply except to the extent they are inconsistent with the requirements
of this Agreement. Other arbitration rules or any arbitration forum may
be used if agreed to by the parties.
Three-Arbitrator Arbitration. Under this procedure, the Dispute shall
be resolved by a panel of three arbitrators. These arbitrators shall be
knowledgeable about the subject matter of the Dispute. For example,
with regard to railroad operational matters, arbitrators knowledgeable
in Class I railroad operations and rail passenger operations shall be
selected. These arbitrators shall comply with the Code of Ethics for
Arbitrators in Commercial Disputes issued by the American Bar
Association and the American Arbitration Association. These arbitrators
shall not be current or previous employees of the parties, nor shall
they within the past ten years have received regular remuneration from
either party other than for arbitration services.
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EXHIBIT 10(i), Page 37 of 44
The party who submits the Dispute to arbitration shall select and
identify the first of these arbitrators in the notice of arbitration.
The other party shall identify the second in a notice to be given not
more than 45 days after it receives the notice of arbitration. Within
30 days of the second arbitrator's selection, the two arbitrators shall
select a third, from nominations by the parties or otherwise, and notify
the parties of the selection. If the two selected arbitrators cannot
agree on a third within 90 days of the notice of arbitration, the
parties shall submit the Dispute to the American Arbitration Association
and the third arbitrator shall be chosen in accordance with the
Arbitration Rules or, if those Rules provide no means to make the
selection, pursuant to the Federal Arbitration Act, currently codified
as 9 U.S.C. Sec. 1 et seq.
The decision of the majority of the arbitrators shall constitute their
award. Their award shall be rendered in writing within 90 days of the
selection of the third arbitrator unless otherwise agreed between the
parties, and it shall contain a brief description of the rationale for
the award. The award shall be final and binding on the parties.
One-Arbitrator Arbitration. Under this procedure, the Dispute shall be
resolved by a single arbitrator. The arbitrator shall be knowledgeable
about the subject matter of the Dispute. For example, with regard to
railroad operational matters, an arbitrator knowledgeable in Class I
railroad operations and rail passenger operations shall be selected.
The arbitrator shall comply with the Code of Ethics for Arbitrators in
Commercial Disputes issued by the American Bar Association and the
American Arbitration Association. The arbitrator shall not be a current
or previous employee of the parties, nor shall he or she within the past
ten (10) years have received regular remuneration from either party
other than for arbitration services.
The parties will meet by telephone within ten days of receipt of the
notice of arbitration and seek agreement on the identity of the
arbitrator. If the parties are unable to reach agreement on the
identity of the arbitrator within 30 days of the notice of arbitration,
either (i) the parties shall submit the Dispute to the American
Arbitration Association and the arbitrator shall be chosen in accordance
with the Arbitration Rules or, if those rules provide no means to make
the selection, pursuant to the Federal Arbitration Act, currently
codified as 9 U.S.C. Sec. 1 et seq., or (ii) either party may initiate
three-arbitrator arbitration to resolve the Dispute by resubmitting an
appropriate notice of arbitration.
The award shall be rendered in writing within 45 days of the selection
of the arbitrator unless otherwise agreed between the parties, and it
shall contain a brief description of the rationale for the award. The
award shall be final and binding on the parties.
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EXHIBIT 10(i), Page 38 of 44
General Provisions.
The decision of the arbitrator(s) shall be final and binding. Judgment
to enforce the decision or award of the arbitrator(s) may be entered in
any court having jurisdiction, and the Parties shall not object to the
jurisdiction of the North Carolina General Court of Justice for that
purpose.
All proceedings relating to any such arbitration, and all testimony,
written submissions and awards of the Arbitrator(s) therein, shall be
private and confidential as among the parties and shall not be disclosed
to any other person, except that NCRR or NSR may disclose them to third
parties if (1) the information is publicly available; (2) disclosure is
recommended or required under applicable laws, rules, or regulations,
including, without limitation, securities laws; or (3) disclosure is
reasonably necessary to prosecute or defend any judicial action to
enforce, vacate, or modify such arbitration award.
The arbitrator(s) shall resolve all questions of state law by application
of the substantive law of North Carolina. They shall not apply North
Carolina's choice of law rules.
The arbitrator(s) shall not be authorized to award punitive damages,
regardless of the otherwise applicable substantive law they apply to
resolve the Dispute. The Arbitrator(s) shall have the power to require
the performance of acts found to be required by this Agreement, and to
require the cessation or non-performance of acts found to be prohibited
by this Agreement.
In an appropriate case, either party (or both) may request a temporary
restraining order, preliminary injunction, declaratory judgment or other
interim measure from a court or administrative body of competent
jurisdiction while arbitration proceedings are pending. Such a request
shall not be deemed incompatible with an agreement to arbitrate or a
waiver of the right to arbitrate.
Each party shall pay the compensation, costs, fees and expenses of its
own witnesses, experts and counsel. The compensation and any costs and
expenses of the arbitrator(s) and all other costs of the arbitration
shall be equally divided between the parties.
In any judicial proceeding to enforce this Agreement to arbitrate, the
only issues to be determined shall be the existence (but not the scope)
of an agreement to arbitrate or the failure of NCRR or NSR to comply
with that agreement. All other issues shall be decided by the
Arbitrator(s), whose decision thereon shall be final and binding. There
may be no appeal of an order compelling arbitration except as part of an
appeal concerning confirmation of the decision of the Arbitrator(s).
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EXHIBIT 10(i), Page 39 of 44
No party to this Agreement shall initiate a lawsuit or any
administrative proceeding (a "lawsuit") against another party to this
Agreement if that lawsuit involves a Dispute that could otherwise be
arbitrated under this section, except to the extent that the lawsuit
seeks (i) to compel an arbitration permitted by this section; (ii) to
confirm (and have judgment entered on) or to vacate an arbitration award
made pursuant to this section; (iii) to stay the running of any statute
of limitations; or (iv) to prevent any other occurrence (including,
without limitation, the passing of time) that would give rise to a
defense such as laches, estoppel, or waiver that initiating a lawsuit
may be necessary to avoid. If a lawsuit is brought for the purposes
described in (iii) or (iv), no party shall pursue such litigation beyond
such action as is necessary to prevent prejudice to its cause of action
pending ultimate resolution by arbitration under this section.
If a third party initiates a lawsuit against a party to this Agreement
(the "Defendant"), and this gives rise to a Dispute, neither party to
this Agreement shall pursue a claim in the lawsuit against the other
without the other's consent except as provided in the preceding
paragraph.
The parties acknowledge that this Agreement is a "contract evidencing a
transaction involving commerce" as that phrase is used in the Federal
Arbitration Act at 9 U.S.C. Sec. 2. The parties agree that the
arbitrators shall be guided by the terms of the Agreement and the
General Principles set forth herein.
Section 30. NOTICES
Any notices given hereunder shall be effective if sent by registered or
certified mail (United States Mail) and addressed as follows:
If to NSR:
Senior Vice President-Operations
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510
If to NCRR:
President
North Carolina Railroad Company
3200 Atlantic Avenue, Suite 110
Raleigh, North Carolina 27604
or to such other official and/or address as any of the parties hereto
may specify in a written notice to the other parties hereto, sent as
stated above.
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EXHIBIT 10(i), Page 40 of 44
Section 31. SUCCESSORS AND ASSIGNS
Neither party hereto shall transfer or assign this Agreement, or any of
its rights, interests or obligations hereunder, to any person, firm, or
corporation which is not affiliated with such party without obtaining
the prior written consent of the other party to this Agreement;
provided, however, that neither party shall be required to obtain the
prior approval of the other party in connection with any assignment
effected by a merger, consolidation or corporate reorganization or other
transaction where substantially all of the rail assets and liabilities
of such party are brought under common control with the assets of
another party.
Section 32. MISCELLANEOUS
(a) Except to the extent controlled by federal laws and regulations,
this Agreement shall in all respects be governed by the laws of the
State of North Carolina.
(b) This Agreement, together with its attachments and exhibits,
contains all the agreements of the parties hereto and supersedes
any previous negotiations.
(c) There have been no representations made by or on behalf of the NCRR
or NSR or understandings made between or among the parties hereto
other than those set forth in this Agreement. This Agreement may
not be modified except by a written instrument signed by the
parties hereto.
(d) All obligations of the parties hereunder not fully performed as of
the expiration or earlier termination of the term of this Agreement
and any renewal shall survive such expiration or earlier
termination of the term hereof and any renewal.
(e) If any clause, phrase, provision or portion of this Agreement or
the application thereof to any party or circumstance shall be
invalid or unenforceable under applicable law, such event shall not
affect, impair or render invalid or unenforceable the remainder of
this Agreement or any other clause, phrase, provision or portion
hereof, nor shall it affect the application of any other clause,
phrase, provision or portion hereof to other parties or
circumstances.
(f) The section headings herein are for convenience of reference and
shall in no way define, increase, limit, or describe the scope or
intent of any provision of this Agreement.
(g) Neither party shall be liable to the other in damages nor shall
this Agreement be terminated nor a default be deemed to have
occurred because of any failure to perform hereunder caused by a
"Force Majeure." Each party will be excused from performance of
any of its obligations hereunder, except obligations involving the
payment hereunder of money to the other party or to a third party,
PAGE 118
EXHIBIT 10(i), Page 41 of 44
where such non-performance is occasioned by Force Majeure.
Force Majeure shall mean fire not caused by NSR operations,
earthquake, flood, explosion, a wreck not involving NSR trains,
strike, riot, insurrection, civil disturbance, act of public enemy,
embargo, war, act of God, inability to obtain labor, materials or
supplies, any governmental regulation, restriction or prohibition,
or any other similar cause beyond the party's reasonable control.
Section 33. INSPECTIONS AND RECORDS; AUDIT
(a) Audit and reporting records (including but not limited to payment
amounts, cost and payment calculations, real estate records,
engineering data, freight and passenger traffic data, etc.) will be
exchanged by the parties on a periodic basis.
(b) NSR will maintain written records of the delays to passenger and,
if any, commuter trains and NSR shall provide those records to NCRR
on a monthly basis. These records will include the length and
cause of delay, including those which are caused by circumstances
which are beyond the NSR control. NSR shall provide any
information in its possession on circumstances that cause delay
outside of NSR control.
(c) NSR will provide NCRR with the following annual reports, records or
documents on or before June 1 of the following year:
(i) Rail, signal, and bridge program maintenance improvements
reports showing improvements made on the NCRR lines during
the previous calendar year, including, without limitation,
the number of new ties installed, miles surfaced, and length
of new or used rail installed, by line segment;
(ii) Updated track profiles;
(iii) Previous calendar year's car loads originated and terminated
by station, and number of car miles by line segment (Raleigh-
Morehead City, Raleigh-Greensboro, and Greensboro-Charlotte)
as available in NSR's records or systems in use;
(iv) Scheduled program maintenance for the then-current calendar
year.
(v) Copies of the previous calendar year's annual reports filed
with the North Carolina Utilities Commission and the Surface
Transportation Board ("STB") or its successor (currently
designated as Form R1 for the STB);
(d) By January 1, 2000, and not less than every three years thereafter,
NSR will furnish to NCRR copies of the following records then in
use by NSR: (i) changes to valuation or similar maps of NCRR
PAGE 119
EXHIBIT 10(i), Page 42 of 44
including intersection points with other lines, and (ii) a bridge
inventory (including but not limited to date of construction, type,
and condition on the NCRR lines operated and/or maintained by NSR).
(e) Up to two NCRR designated inspectors may inspect NCRR trackage
operated by NSR not less than every two years, traveling by high
rail vehicle with NSR supervisors or other NSR-designated personnel
during their regular inspection trips, and over the track sections
routinely scheduled by NSR for inspection. It is the intention of
the parties that NCRR have the opportunity to inspect its lines in
their entirety annually, subject however, to NSR's availability to
schedule such inspection trips over a reasonable period of time in
order to minimize disruption of NSR operations and use of NSR
personnel.
(f) If NSR incurs costs or expenses associated with providing the
information required in this Section 33 other than for copies of
records and reports ordinarily maintained by NSR in the course of
its business, the allocation of such costs between the parties
shall be addressed by the PPC/Dispute Resolution provision of this
Agreement.
Section 34. CONFIDENTIALITY
(a) Except as may be otherwise agreed between NCRR and NSR, any
documents and records (the "information") shared between the
parties pursuant to this Agreement shall not be disclosed to third
parties without first obtaining the written consent of the party
providing the information to the other party hereto.
(b) NCRR or NSR may disclose the information to third parties if the
information is publicly available or if disclosure is recommended
or required under applicable laws, rules, or regulations,
including, without limitation, securities laws.
PAGE 120
EXHIBIT 10(i), Page 43 of 44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
WITNESS NORFOLK SOUTHERN RAILWAY COMPANY
/s/ Henry D. Light By: /s/ R. A. Brogan
----------------------------------
Title:
----------------------------------
WITNESS NORTH CAROLINA RAILROAD COMPANY
/s/ Najla J. Silek By: /s/ Sam Hunt
----------------------------------
Title:
----------------------------------
Subject to necessary corporate and governmental approvals.
PAGE 121
EXHIBIT 10(i), Page 44 of 44
EXHIBIT INDEX
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Exhibit No. Document
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A Timetable and Track Profiles as of July 1, 1999
B Designated Returned Properties
C Third Party Property/Agreement Request Chart
ATTACHMENT
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Trackage Rights Agreement