Exhibit 10.2
Execution Copy
AMENDMENT NO. 2 TO
TRANSACTION AGREEMENT
THIS AMENDMENT NO. 2 TO THE TRANSACTION AGREEMENT (this "Amendment"),
dated as of June 1, 1999, by and among CSX CORPORATION, a Virginia corporation
("CSX"), CSX TRANSPORTATION, INC., a Virginia corporation, for itself and on
behalf of its controlled Subsidiaries (collectively, "CSXT"), NORFOLK SOUTHERN
CORPORATION, a Virginia corporation ("NSC"), NORFOLK SOUTHERN RAILWAY COMPANY, a
Virginia corporation, for itself and on behalf of its controlled Subsidiaries
(collectively, "NSR"), CONRAIL INC., a Pennsylvania corporation, for itself and
on behalf of its controlled Subsidiaries (collectively, "CRR"), CONSOLIDATED
RAIL CORPORATION, a Pennsylvania corporation ("CRC"), and CRR HOLDINGS LLC, a
Delaware limited liability company ("CRR Parent").
WHEREAS, the parties have previously entered into that certain
Transaction Agreement, dated as of June 10, 1997, as amended by Amendment No. 1
to Transaction Agreement, dated as of August 22, 1998 and the System Support
Operations Agreement dated as of May 15, 1999, relating to Section 2.3 hereof
(the "Transaction Agreement");
WHEREAS, the parties are on the date hereof consummating the Closing (as
defined in the Transaction Agreement) and entering into various documents and
instruments to effectuate the same, including Ancillary Agreements ("Closing
Documents");
WHEREAS, in connection with the parties' preparations for the Closing,
the parties have identified certain provisions of the Transaction Agreement for
which the Parties desire to clarify their understandings and agreements with
respect to such provisions and to make interim provisions with respect to
certain Transaction Agreement matters which are currently in dispute;
WHEREAS, the parties have determined that it is in the best interests of
their respective companies to amend the Transaction Agreement as set forth in
this Amendment;
WHEREAS, it is the intent of the parties that, except as expressly
amended hereby, the Transaction Agreement shall remain unamended and in full
force and effect;
NOW, THEREFORE, the parties hereby amend the Transaction Agreement as
follows:
SECTION 1. References; Interpretation.
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(a) Unless otherwise specifically defined herein, each term used
herein which is defined in the Transaction Agreement has the meaning assigned to
such term in the Transaction Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each reference to "this Agreement" and each other
similar reference contained in the Transaction Agreement shall from and after
the date of this Amendment refer to the Transaction Agreement as amended hereby.
(b) The parties hereby expressly agree that the Closing is being
consummated, and the Closing Documents are being delivered, pursuant to and in
furtherance of the Transaction Agreement and shall be interpreted as such
consistent with the terms of the Transaction Agreement and in furtherance of the
terms of the Transaction Agreement to the greatest extent possible. Therefore,
in the event of any inconsistency between the terms of the Transaction Agreement
and any Closing Document, the terms of the Transaction Agreement shall prevail,
except to the extent such Closing Document provides otherwise.
SECTION 2. Transportation Contracts.
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(a) The beginning of the first sentence of Subsection 2.2(c)(iii)
of the Transaction Agreement is amended to read as follows:
"(iii) The following decision rules shall be
applied on an annual basis with tentative settlements to the
extent required by subsection (c)(ii) on a quarterly basis 90
days after the end of the quarter and an annual true-up 90 days
after the end of the year:"
(b) Subsection 2.2(c)(iii)(C)(aa)(x) of the Transaction Agreement
is hereby amended and restated in its entirety by deleting the existing
provision and inserting the following:
"(x) If the origin station is Local to NSR and the
destination station is on the NYC Allocated Assets and Local to
CSXT, then the allocation shall be on a joint line basis between
NSR and CSXT with the interchange to be negotiated between NSR
and CSXT and the revenues to be split based upon an ICC Docket
28300 mileage prorate with a minimum division of 25% to each of
NSR and CSXT; and"
(c) Subsection 2.2 (c) (iii) (C) (bb) (x) of the Transaction
Agreement is hereby amended and restated in its entirety by deleting the
existing provision and inserting the following:
"(x) If the origin station is Local to CSXT and the
destination station is on the PRR Allocated Assets and Local to
NSR, then the allocation shall be on a joint line basis between
CSXT and NSR with the interchange to be negotiated between CSXT
and NSR and the revenues to be split based upon an ICC Docket
28300 mileage prorate with a minimum division of 25% to each of
CSXT and NSR; and"
SECTION 3. FELA Matters.
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(a) Section 2.8(c) of the Transaction Agreement is hereby amended
and restated in its entirety by deleting the existing provision and inserting
the following:
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"(c) Except for liabilities that are the
responsibility of any Person pursuant to any of the Ancillary
Agreements, all liabilities associated with the handling and
disposition of FELA Claims ("FELA Liabilities") of CRR, CRC and
their Affiliates shall be allocated as follows: (i) FELA
Liabilities that arise from incidents or exposures occurring
prior to the Closing Date shall be Retained Liabilities; (ii) to
the extent FELA Liabilities arise from incidents or exposures
occurring in part prior, and in part on or after, the Closing
Date, that portion of the FELA Liability arising prior to the
Closing Date shall be Retained Liability; and, (iii) to the
extent FELA Liabilities arise from incidents or exposures
occurring on or after the Closing Date, they shall be the
responsibility of the party then employing the injured employee.
Notwithstanding the provisions of the foregoing sentence, if any
single incident occurring between the Control Date and the
Closing Date results in FELA Liability which exceeds CRC's
insurance coverage by $10 million or more, the amount by which
such liability exceeds $10 million in excess of CRC's insurance
coverage shall be a PRR Allocated Liability if the incident
occurred on or relates primarily to PRR Allocated Assets and
shall be a NYC Allocated Liability if the incident occurred on or
relates primarily to NYC Allocated Assets. CRC will obtain
insurance, in form and amount satisfactory to the parties hereto,
indemnifying PRR and NYC against the liability to which either
may be subject under this paragraph.
(b) Section 8.15 of the Transaction Agreement is hereby deleted
in its entirety and the following is substituted therefor:
"Section 8.15. Administration of Actions. After the
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Closing Date, (a) NYC shall have exclusive authority and control
over the investigation, prosecution, defense and appeal of all
Actions relating primarily to NYC, the NYC Allocated Assets, the
NYC Allocated Liabilities or a Retained Liability (except for
Retained Liabilities for which the monetary claim is more than
$500,000 or injunctive relief is sought) which arose at the
location of a NYC Allocated Asset, or with which a NYC Allocated
Asset is most significantly involved (each, an "NYC Action"), and
may settle or compromise, or consent to the entry of any judgment
with respect to, any such NYC Action without the consent of CRC,
NSC or PRR and (b) PRR shall have exclusive authority and control
over the investigation, prosecution, defense and appeal of all
Actions relating primarily to PRR, the PRR Allocated Assets, the
PRR Allocated Liabilities, or a Retained Liability (except for
Retained Liabilities for which the monetary claim is more than
$500,000 or injunctive relief is sought), which arose at the
location of a PRR Allocated Asset or with which a PRR Allocated
Asset is most significantly involved (each a "PRR Action"), and
may settle or compromise, or consent to the entry of any judgment
with respect to, any such PRR Action without the consent of CRC,
CSX or NYC.
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"Notwithstanding the foregoing, neither NYC or PRR
may settle or compromise, or consent to the entry of any judgment
with respect to, any such Action without the prior written
consent of the other if such settlement, compromise or consent to
such judgment (i) includes any form of injunctive relief binding
upon such other party or CRC or (ii) does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such other party or CRC and any Affiliates of CRC
subject to such Action of a full and final release from all
liability in respect to such claim or litigation. After the
Closing Date with respect to an Action not covered under clauses
(a) and (b) of the foregoing sentence (including Actions relating
to Retained Liabilities), the handling, administration and
disposition of such Actions shall be the joint responsibility of
CSX and NSC and the costs thereof shall be Corporate Level
Liabilities. In assigning joint responsibility for the
administration, handling and disposition of Actions to CSX and
NSC, hereunder it is not the parties' intent that CSX and NSC
will actually administer, handle and dispose of such Actions
jointly, but rather that CSX and NSC will agree on the most
practical and efficient arrangements with the objective of
eliminating unnecessary duplication of effort and minimizing
overall costs. The costs and expenses of the administration and
handling of such Actions shall be Corporate Level Liabilities;
provided that salaries and overheads associated with the salaries
of full time employees of CSX or NSC while engaged in
investigation or handling such Actions shall be the
responsibility of the employing party and are Corporate Level
Liabilities only to the extent that they are covered by insurance
or are otherwise reimbursable by CRR or CRC pursuant to a
separate agreement with CSX or NSC.
"The provisions of this Section 8.15 shall apply
except as may be otherwise provided in a separate agreement among
CRC, CSX and/or NSC and except as may be provided by action of
the CRC Board."
(c) Section 8.16 of the Transaction Agreement is hereby deleted
in its entirety and the following is substituted therefor:
"Section 8.16. Administration of FELA Claims. (a)
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Except as provided pursuant to separate agreement between CSX and
NSC, the administration, handling and disposition of FELA Claims
(whenever made) that arise from incidents or exposures occurring
prior to the Closing Date shall be (i) the responsibility of the
parent of the party operating the Allocated Asset where the
incident or incidents giving rise to the FELA Claim occurred, or
(ii) the responsibility of the parent of the party operating the
Allocated Asset most significantly involved if the FELA Claim
arises from an incident or incidents occurring at multiple
locations on Allocated Assets, or (iii) the joint responsibility
of CSX and NSC if the FELA Claim arises from an incident or
incidents occurring at unknown locations or a location not
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otherwise covered by clauses (i) or (ii) of this sentence. In
assigning joint responsibility for the administration, handling
and disposition of FELA Claims to CSX and NSC under the foregoing
clause (iii), it is not the parties' intent that CSX and NSC will
actually administer, handle and dispose of such actions jointly,
but rather that CSX and NSC will agree on the most practical and
efficient arrangements with the objective of eliminating
unnecessary duplication of effort and minimizing overall costs.
The costs and expenses associated with the administration,
handling and disposition of FELA Claims that arise from incidents
or exposures occurring prior to the Closing Date shall be borne
by CRR; provided that salaries and overheads associated with the
salaries of full time employees of CSX or NSC while engaged in
investigation or handling such FELA Claims shall be the
responsibility of the employing party and are Corporate Level
Liabilities only to the extent that they are covered by insurance
or are otherwise reimbursable by CRR or CRC pursuant to a
separate agreement with CSX or NSC; provided, further that the
party responsible for the administration of FELA Claims which are
Retained Liabilities shall, before agreeing to any single
settlement of a FELA Claim or group of related FELA Claims,
involving a payment of more than $1 million, obtain the written
consent of the other party. Failure of either party to respond to
such a request for consent within fourteen days of receipt of
such request shall be deemed to constitute consent."
SECTION 4. CRC Pension Plan Matters.
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(a) Section 6.3(c) of the Transaction Agreement is hereby amended
by inserting the following after the word "Percentage":
", as adjusted to reflect any Separation Costs required to be
borne by CSX or NSC pursuant to Section 6.2(i) and to reflect any
timing differences in the transfers of assets and liabilities to
CSX and NSC pension plans based on actual investment experience."
(b) Section 6.3(c) of the Transaction Agreement is further
amended by deleting the last sentence thereof and replacing it with the
following:
"The Consolidated Rail Corporation Pension Fund Investment
Committee shall approve the manner and amounts to be transferred
to CSX and NSC pension plans with respect to transfers of
employees to CSX and NSC payrolls and this Section 6.3(c)."
SECTION 5. Insurance Matters. Section 2.11 of the Transaction
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Agreement is hereby deleted in its entirety and the following is substituted
therefor:
"2.11 Insurance Proceeds: Except as otherwise provided in
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this Agreement, the proceeds of any insurance recoveries from
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insurance carried by CRR, CRC or their respective Affiliates on
or prior to the Closing Date and third party recoveries in the
nature of insurance or indemnity covering Assets, Retained
Liabilities or Allocated Liabilities, which are received on or
after the Closing Date, shall accrue to the benefit of and be
held by or paid over to CRC, NYC or PRR in proportion to the
obligation each bears under this Agreement for the particular
Liabilities to which the recoveries are applicable."
SECTION 6. Confirmation of Transaction Agreement. In all respects
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not inconsistent with the terms and provisions of this Amendment, the
Transaction Agreement is hereby ratified, adopted, approved and confirmed.
SECTION 7. Miscellaneous. The provisions of Article XI of the
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Transaction Agreement are hereby expressly incorporated by reference into this
Amendment, and each provision thereof shall have the same force and effect as if
fully set forth herein (except to the extent such provision is amended,
modified, supplemented, altered, rescinded or superseded by this Amendment).
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date and year first above written.
CSX CORPORATION
By: /s/ GREGORY R. WEBER
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Name: Gregory R. Weber
Title: Vice President and
Treasurer
CSX TRANSPORTATION, INC., for itself
and on behalf of its controlled
Subsidiaries
By: /s/ PETER J. SHUDTZ
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Name: Peter J. Shudtz
Title: Vice President - Law &
General Counsel - CSX
Corporation, authorized
agent for CSX
Transportation, Inc.
NORFOLK SOUTHERN CORPORATION
By: /s/ STEPHEN C. TOBIAS
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Name: Stephen C. Tobias
Title: Vice Chairman and Chief
Operating Officer
NORFOLK SOUTHERN RAILWAY COMPANY,
for itself and on behalf of its
controlled Subsidiaries
By: /s/ J. L. MANETTA
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Name: J. L. Manetta
Title: Senior Vice President -
Operations
CONRAIL INC., for itself and on
behalf of its controlled
Subsidiaries
By: /s/TIMOTHY O'TOOLE
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Name: Timothy O'Toole
Title: President and Chief
Executive Officer
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CONSOLIDATED RAIL CORPORATION
By: /s/JOHN MCKELVEY
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Name: John McKelvey
Title: Chief Financial Officer
CRR HOLDINGS LLC
By: /s/ D. R. GOODE
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Name: D. R. Goode
Title: Co-chairman and Company
Chief Executive Officer
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