-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KrunSTNa3xnMdB8CLXyuaxsWRMX90XOhfWT7Sxl4CG1zBaQ7yzovFbFViGmU538s H3JU9H0qIzl01qvTozguHQ== 0000898822-96-000430.txt : 19961024 0000898822-96-000430.hdr.sgml : 19961024 ACCESSION NUMBER: 0000898822-96-000430 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961023 SROS: NYSE SROS: PHLX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONRAIL INC CENTRAL INDEX KEY: 0000897732 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 232728514 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42777 FILM NUMBER: 96647030 BUSINESS ADDRESS: STREET 1: TWO COMMERCE SQ STREET 2: P O BOX 41417 CITY: PHILADELPHIA STATE: PA ZIP: 19101-1417 BUSINESS PHONE: 2152094434 MAIL ADDRESS: STREET 1: P.O. BOX 41429 STREET 2: 2001 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19101-1429 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CSX CORP CENTRAL INDEX KEY: 0000277948 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 621051971 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: ONE JAMES CNTR STREET 2: 901 E CARY ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8047821400 SC 14D1/A 1 SCHEDULE 14D-1 AMENDMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ SCHEDULE 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 and Schedule 13D (Amendment No. 1) _______________ Conrail Inc. (Name of Subject Company) CSX Corporation Green Acquisition Corp. (Bidders) Common Stock, Par Value $1.00 Per Share (Title of Class of Securities) 208368 10 0 (CUSIP Number of Class of Securities) Series A ESOP Convertible Junior Preferred Stock, Without Par Value (Title of Class of Securities) Not Available (CUSIP Number of Class of Securities) Mark G. Aron CSX Corporation One James Center 901 East Cary Street Richmond, Virginia 23219-4031 Telephone: (804) 782-1400 (Names, Addresses and Telephone Numbers of Persons Authorized to Receive Notices and Communications on Behalf of Bidder) With a copy to: Pamela S. Seymon Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 This Statement amends and supplements the Tender Of- fer Statement on Schedule 14D-1 filed with the Securities and Exchange Commission on October 16, 1996 (the "Schedule 14D-1") by Green Acquisition Corp. ("Purchaser"), a Pennsylvania corpo- ration and a wholly owned subsidiary of CSX Corporation, a Vir- ginia corporation ("Parent"), to purchase an aggregate of 17,860,124 shares of (i) Common Stock, par value $1.00 per share (the "Common Shares"), and (ii) Series A ESOP Convertible Junior Preferred Stock, without par value (together with the Common Shares, the "Shares"), of Conrail Inc., a Pennsylvania corporation (the "Company"), including, in each case, the as- sociated Common Stock Purchase Rights, upon the terms and sub- ject to the conditions set forth in the Offer to Purchase, dated October 16, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amend- ments or supplements thereto, constitute the "Offer") at a pur- chase price of $92.50 per Share, net to the tendering share- holder in cash. Capitalized terms used and not defined herein shall have the meanings assigned such terms in the Offer to Purchase and the Schedule 14D-1. Item 4. Source and Amount of Funds or Other Consideration. (a)-(b) (i) The words "a credit facility that Par- ent will seek to obtain from one or more commercial banks" in the second sentence of the second paragraph under Section 10 of the Offer to Purchase are hereby deleted and replaced with the words "the credit facility (the "Facility") contemplated by the Commitment Letter, as described below". (ii) Section 10 is hereby further amended and supplemented by adding the following text after the second paragraph: The Commitment Letter. In connection with the Offer and the Merger, Parent has entered into a com- mitment letter, dated October 21, 1996 (the "Commit- ment Letter"), with Bank of America National Trust and Savings Association, BA Securities, Inc., The Bank of Nova Scotia, The Chase Manhattan Bank, Chase Securities Inc., NationsBank, N.A. and NationsBanc Capital Markets, Inc., pursuant to which, upon the terms and subject to the conditions set forth therein and in the Term Sheet (as defined below), Bank of America National Trust and Savings Association, The Bank of Nova Scotia, The Chase Manhattan Bank and NationsBank, N.A. (collectively, "Principal Agents") have agreed to provide a competitive advance and re- volving credit facility in an aggregate principal amount of $4,800,000,000 (the "Facility"), and each Principal Agent has committed to provide $1,200,000,000 of this amount. Proceeds of the Fa- cility will be used to finance purchase of Shares pursuant to one or more all cash tender offers, exer- cise of the Company Stock Option or otherwise and the Merger, to replace existing credit facilities used for commercial paper backup and, following the Merger, to provide working capital and for other gen- eral corporate purposes. The Commitment Letter in- cludes an attachment (the "Term Sheet") which sets forth the terms contemplated to be included in the definitive documentation with respect to the Facility (the "Credit Agreement"). Under the Commitment Let- ter, each Principal Agent has reserved the right to syndicate a portion of its commitment to one or more financial institutions acceptable to Parent, and, in connection therewith, Chase Securities Inc., BA Secu- rities, Inc., NationsBanc Capital Markets, Inc. and The Bank of Nova Scotia (collectively, the "Arrang- ers" and, together with the Principal Agents, the "Agents") have agreed to act as co-arrangers for the Facility and intend to commence syndication efforts immediately. Under the Facility, two borrowing options will be available: (i) a competitive advance option (the "CAF"), which will be provided on an uncommitted com- petitive advance basis through a competitive bid auc- tion mechanism, and (ii) a revolving credit option (the "Revolving Credit"), which will be provided on a committed basis. Under each option, amounts borrowed and repaid may be reborrowed subject to availability under the Facility. Up to the full amount of the re- maining commitments may be borrowed under either of the two borrowing options, so long as the total bor- rowed amount outstanding under the Facility does not exceed the amount of the Facility at any time. Each borrowing will be conditioned upon the delivery of a borrowing notice, the accuracy of representations and warranties and the absence of defaults. Events of default will include a material breach of representa- tions or warranties, failure to pay principal or in- terest, breach of covenants, cross acceleration, ma- terial judgments and bankruptcy, subject to customary notice and cure periods. Under the Facility, interest rates per annum for the outstanding loans will be determined as follows: (i) interest rates for the CAF will be obtained from bids selected by Parent and (ii) interest rates for the Revolving Credit will be based upon either LIBOR or an alternate base rate ("ABR") that will be the higher of The Chase Manhattan Bank's prime rate and the federal funds effective rate plus 1/2 of 1%, as selected by Parent. No spread will be charged on ABR -2- loans. The interest rate applicable to each LIBOR loan will be equal to LIBOR for the interest period applicable to such loan plus a margin, ranging from 14.0 to 35.0 basis points per annum, determined based upon Parent's credit ratings. Under the Facility, interest periods for out- standing loans will be determined as follows: (i) interest periods for the CAF will be determined per market availability, with fixed-rate auction ad- vances being for periods ranging from seven to 360 days; and (ii) under the Revolving Credit, the in- terest period on ABR loans will be three months, and the interest period on LIBOR loans will be either one, two, three or six months, at Parent's option. Interest will be payable at the end of the relevant interest period, but not less often than quarterly. Interest will be calculated on the basis of the ac- tual number of days elapsed over a 365/366-day year for ABR loans based on The Chase Manhattan Bank's prime rate, and over a 360-day year for all other loans. Under the Facility, prepayments of ABR loans will be permitted at any time without penalty. LIBOR Revolving Credit loans may be prepaid in whole or in part at any time, subject to compensation in respect of any redeployment costs if prepayment occurs other than at the end of an interest period. CAF loans will not be subject to prepayment. Under the Facility, mandatory commitment reduc- tion will occur in the event that any required gov- ernmental approval is denied or in the event that Parent elects to abandon the Offer and the Merger. Upon the occurrence of such event, the commitments would be reduced to the amount of loans outstanding at such time reduced by the amount of net proceeds from sales of the Shares, if any. Parent may opt to reduce the commitments under the Facility by giving notice thereof, provided that the aggregate Facility commitments at any time may in no event be less than the aggregate amount of the CAF advances and loans outstanding at such time. In the Commitment Letter, Parent has made cer- tain representations and warranties regarding infor- mation made available to the Agents. In addition, the Credit Agreement will include certain representa- tions and warranties regarding, among other things, -3- organization and powers, authority and enforceabil- ity, no conflicts, financial information, absence of material adverse change, absence of material liti- gation, compliance with laws and regulations and agreements, inapplicability of certain laws, taxes, ERISA and absence of material misstatements. In ad- dition, the Credit Agreement will include certain covenants regarding, among other things, maintenance of corporate existence, maintenance of ownership of railroad subsidiaries, maintenance of insurance, pay- ment of taxes, delivery of financial statements and reports, compliance with laws, use of proceeds, and certain limitations on debt, including limitations on indebtedness in excess of $4,000,000,000 for the pur- chase of Shares, limitations on additional unsecured indebtedness at subsidiaries (subject to appropriate thresholds and other customary terms) and a limita- tion on total debt (other than indebtedness incurred to finance the exercise of the Company Stock Option) as a percentage of total capitalization to a maximum of 65% prior to the Merger and 55% at or after the Merger. The Credit Agreement will also include cer- tain covenants regarding limitations on mergers or sales of all or substantially all assets and limita- tions on liens and sale/leaseback transactions. The Agents' commitments and agreements in the Commitment Letter are subject to (i) the reasonable satisfaction of the Agents with any material changes in the structure or terms of the Offer and the Merger prior to the execution of the Credit Agreement and all legal, tax and accounting matters relating thereto, (ii) the absence of any material adverse change since December 31, 1995, in or affecting the business, assets or condition (financial or other- wise) of Parent and its subsidiaries and the Company and its subsidiaries, taken as a whole, (iii) the absence of a material disruption of or material ad- verse change in financial, banking or capital market conditions that, in the Arrangers' reasonable judg- ment, would be likely to materially impair the syndi- cation of the Facility, (iv) the negotiation, execu- tion and delivery on or before November 30, 1996 of the definitive Credit Agreement in form satisfactory to the Agents and their counsel, (v) the Agents' sat- isfaction that, prior to and during the syndication of the Facility, there shall be no competing issues of debt securities or commercial bank facilities of Parent or the Company or any of their respective sub- sidiaries being offered, placed or arranged and (vi) -4- certain other conditions set forth in the Term Sheet. In addition, the Credit Agreement will include usual and customary cost and yield provisions. The Credit Agreement also include conditions to effectiveness including, but not limited to, the ab- sence of pending litigation or administrative pro- ceedings or other legal or regulatory developments that, in the reasonable judgment of at least three Agents, would be reasonably likely to prohibit the transactions contemplated by the Offer and the Merger or to result in a material adverse change in the business, assets or condition of Parent, the termina- tion of existing credit facilities of Parent used for the purpose of commercial paper backup, the consumma- tion of the Offer and other customary conditions to effectiveness for facilities and transactions of such type. In connection with the Commitment Letter, Parent has agreed to pay the Agents certain fees, to reim- burse the Agents for certain expenses and to provide certain indemnities, as is customary for commitments of the type described herein. The Credit Agreement will include an agreement by Parent to pay a facility fee to each lender under the Facility based on the aggregate amount of such lender's commitment under the Facility, whether used or unused, at a rate, ranging from 6.0 to 15.0 basis points per annum, de- termined based upon Parent's credit ratings. Assuming that the funds contemplated by the Com- mitment Letter and Facility described above are made available in accordance with the terms thereof, Pur- chaser expects that the condition set forth in sub- section (g) of Section 15 of the Offer to Purchase will be satisfied. The Commitment Letter is attached hereto as Exhibit (b)(1), and the foregoing summary description is qualified in its entirety by reference to such exhibit. (iii) On October 22, 1996, Parent issued a press release in which it announced that a group of banks had commit- ted to lend up to an aggregate of $4.8 billion to Parent to buy Shares pursuant to the Offer and to consummate the Merger. A copy of the press release is attached hereto as Exhibit (a)(9), and the foregoing summary description is qualified in its en- tirety by reference to such exhibit. -5- Item 9. Financial Statements of Certain Bidders. The words "cash provided by operating activities" in clause (i) of the first sentence of the second paragraph under "Certain Projected Financial Information" in Section 8 of the Offer to Purchase are hereby deleted and replaced with the word "revenues". Item 10. Additional Information. (b)-(c), (e) (i) Section 16 of the Offer to Purchase is hereby amended and supplemented by changing the date "January 15, 1997" to "January 18, 1997" in the second sentence of the first paragraph of the subsection entitled "STB Matters; Acquisition of Control". (ii) Section 16 is hereby further amended and supplemented by adding the following text after the first sen- tence of the first paragraph of the subsection entitled "STB Matters; Acquisition of Control": On October 18, 1996, Parent and the Company filed with the STB a Notice of Intent to File Railroad Con- trol Application, a Petition for Protective Order and a Petition to Establish Procedural Schedule. (iii) Section 16 is hereby further amended and supplemented by changing the words "plan to ask" to "have asked" in the third sentence of the sixth paragraph of the sub- section entitled "STB Matters; Acquisition of Control". (iv) Section 16 is hereby further amended and supplemented by adding the following text to the end of the third sentence of the sixth paragraph of the subsection en- titled "STB Matters; Acquisition of Control": contemplating a final order by the STB within 255 days of the filing of an application with the STB seeking approval of the Merger. (v) Section 16 is hereby further amended and supple- mented by changing the word "such" to "cash" in the forth sen- tence of the third paragraph of the subsection entitled "STB Matters; The Voting Trust". -6- Item 11. Material to be Filed as Exhibits. (a)(1) -- Offer to Purchase, dated October 16, 1996.* (a)(2) -- Letter of Transmittal.* (a)(3) -- Notice of Guaranteed Delivery.* (a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nom- inees.* (a)(6) -- Guidelines for Certification of Taxpayer Identi- fication Number on Substitute Form W-9.* (a)(7) -- Text of Press Release issued by Parent on Octo- ber 15, 1996.* (a)(8) -- Form of Summary Advertisement dated October 16, 1996.* (a)(9) -- Text of Press Release issued by Parent on Octo- ber 22, 1996. (b)(1) -- Commitment Letter, dated October 21, 1996. (c)(1) -- Agreement and Plan of Merger, dated as of Octo- ber 14, 1996, by and among Parent, Purchaser and the Company.* (c)(2) -- Company Stock Option Agreement, dated as of Oc- tober 14, 1996, between Parent and the Company.* (c)(3) -- Parent Stock Option Agreement, dated as of Octo- ber 14, 1996, between Parent and the Company.* (c)(4) -- Form of Voting Trust Agreement.* _____________________ * Previously filed. -7- SIGNATURE After due inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. CSX CORPORATION By:/s/ MARK G. ARON Name: Mark G. Aron Title: Senior Vice President Law and Public Affairs Dated: October 23, 1996 SIGNATURE After due inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. GREEN ACQUISITION CORP. By:/s/ MARK G. ARON Name: Mark G. Aron Title: General Counsel and Secretary Dated: October 23, 1996 EXHIBIT INDEX Exhibit No. Description (a)(1) -- Offer to Purchase, dated October 16, 1996.* (a)(2) -- Letter of Transmittal.* (a)(3) -- Notice of Guaranteed Delivery.* (a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(6) -- Guidelines for Certification of Taxpayer Identi- fication Number on Substitute Form W-9.* (a)(7) -- Text of Press Release issued by Parent on Octo- ber 15, 1996.* (a)(8) -- Form of Summary Advertisement dated October 16, 1996.* (a)(9) -- Text of Press Release issued by Parent on Octo- ber 22, 1996. (b)(1) -- Commitment Letter, dated October 21, 1996. (c)(1) -- Agreement and Plan of Merger, dated as of Octo- ber 14, 1996, by and among Parent, Purchaser and the Company.* (c)(2) -- Company Stock Option Agreement, dated as of Oc- tober 14, 1996, between Parent and the Company.* (c)(3) -- Parent Stock Option Agreement, dated as of Octo- ber 14, 1996, between Parent and the Company.* (c)(4) -- Form of Voting Trust Agreement.* _____________________ * Previously filed. EX-99 2 EXHIBIT (A)(9) [CSX Corporation Letterhead] CSX Receives $4.8 Billion Financing Commitment in Connection With Conrail Merger RICHMOND, Va., Oct. 22 /PR Newswire/ -- CSX Corpora- tion (CSX) (NYSE: CSX) today announced it has marked another important milestone in its proposed merger with Conrail Inc. (Conrail) (NYSE: CRR), completing arrangements for a 5-year, $4.8 billion bank facility in connection with the merger. Underwriters of the financing are NationsBank, BankAmerica, the Bank of Nova Scotia and Chase Manhattan Bank. Chase Securities Inc. has been selected as administrative agent. Each of the banks has agreed to commit $1.2 billion of the $4.8 billion financing with syndication to a consortia of leading financial institutions. John W. Snow, chairman and chief executive officer of CSX, said, "Completing this arrangement clearly underscores our commitment to the merger. We remain very excited about the prospects this combination offers to our customers, our share- holders and the public. "We are very encouraged by the early response we are getting from key constituents, including shippers and public officials. We are anxious to work with other carriers in the region, and so far have reached out in that regard to Norfolk Southern as the other leading carrier in the area. We are in- tent on reaching agreements with Norfolk Southern and other carriers and having them completed prior to filing our applica- tion with the Surface Transportation Board. We firmly believe this merger will vastly improve rail service east of the Mississippi," Snow said. CSX and Conrail last week announced their agreement to combine in a strategic merger. The merger will create the leading freight transportation and logistics company in the world with annual revenues of more than $14 billion, offering domestic and international customers rail, container-shipping, barge, intermodal and contract logistics services. The newly created transportation system will offer much more extensive single-line rail service opportunities to shippers and receivers in 22 states and will have a 29,645-mile system, covering territory from Chicago, Boston and New York to Miami and New Orleans. CSX Corporation, headquartered in Richmond, Va., is an international transportation company offering a variety of rail, container-shipping, intermodal, trucking, barge and con- tract logistics services. CSX's Internet address is http://www.csx.com CSX press releases available through Company News On- Call by fax, 800-758-5804, ext. 219563, or at http:// www.prnewswire.com/ -2- EX-99 3 EXHIBIT (B)(1) Execution Copy BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION BA SECURITIES, INC. THE BANK OF NOVA SCOTIA THE CHASE MANHATTAN BANK CHASE SECURITIES INC. NATIONSBANK, N.A. NATIONSBANC CAPITAL MARKETS, INC. October 21, 1996 CSX Corporation Commitment Letter CSX Corporation One James Center 901 E. Cary Street Richmond, VA 23219 Ladies and Gentlemen: We understand that CSX Corporation ("CSX") proposes to acquire all the issued and outstanding shares (the "Shares") of common stock and Series A ESOP Junior Convertible Preferred Stock of Conrail Inc. ("Conrail") pursuant to a merger agree- ment (the "Merger Agreement") providing for Shares to be pur- chased by CSX by means of one or more all cash tender offers (the "Tender Offers"), exercise of a stock option granted by Conrail (the "Conrail Stock Option") or otherwise for 40% of the Shares (on a fully diluted basis (excluding Shares that would be outstanding or issuable upon the exercise of the Con- rail Stock Option)) followed by a merger in which all the re- maining Shares will be converted to the right to receive shares of common stock of CSX and (to the extent that 40% of the Shares as calculated above have not theretofore been purchased) cash (the "Merger"; the Tender Offers, the Merger and any exer- cise of the Conrail Stock Option being collectively called the "Acquisition"). You have advised us that CSX will require a Competitive Advance and Revolving Credit Facility (the "Facil- ity") in an aggregate principal amount of $4,800,000,000 to finance the Acquisition and to replace existing credit facili- ties used for the purpose of commercial paper backup and, fol- lowing the Merger, for working capital and for other general corporate purposes of CSX. It is contemplated that the terms of the Facility will be as set forth in the Summary of Terms CSX Corporation -2- October 21, 1996 and Conditions attached as Exhibit A hereto and made a part hereof (the "Term Sheet"). Each of Bank of America National Trust and Savings Association, The Bank of Nova Scotia, The Chase Manhattan Bank and NationsBank, N.A. (collectively, the "Principal Agents") is pleased to advise you of its commitment to provide severally $1,200,000,000 of the Facility upon the terms and subject to the conditions set forth or referred to herein and in the Term Sheet. You hereby appoint BA Securities, Inc., The Bank of Nova Scotia, Chase Securities Inc. and NationsBanc Capital Mar- kets, Inc. (collectively, the "Arrangers", and together with the Principal Agents, the "Agents"), and the Arrangers hereby agree to act, as co-arrangers for the Facility. You hereby appoint the Principal Agents and the Principal Agents hereby agree to act in the capacities with respect to the Facility specified for each Principal Agent in the Term Sheet. Each Principal Agent and Arranger will perform all functions and exercise all authority customarily performed and exercised by it in such roles. Each Principal Agent reserves the right, prior to and after the execution of definitive credit documentation, to syn- dicate a portion of its commitment to one or more financial institutions reasonably acceptable to you which will become parties to such documentation pursuant to a syndication to be managed by the Arrangers (the Principal Agents and the finan- cial institutions becoming parties to such documentation being called the "Lenders"). The Arrangers intend to commence syndication efforts immediately, and you agree actively to assist the Arrangers in completing a syndication satisfactory to them. You represent that (a) all information made available by you or your autho- rized representatives is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained there- in not materially misleading in light of the circumstances under which such statements are made and (b) all financial pro- jections prepared by you or on your behalf and that have been or will be made available have been and will be prepared in good faith based upon assumptions believed by you to be reason- able. In arranging and syndicating the Facility, we will be using and relying primarily on such information and projections without independent verification thereof. CSX Corporation -3- October 21, 1996 As consideration for the agreements of the Agents hereunder, you agree to pay the fees provided for in the Term Sheet and the Fee Letter dated the date hereof and delivered herewith (the "Fee Letter"). Each Principal Agent's commitment hereunder and the Arrangers' agreements to perform the services described herein are subject to (a) the reasonable satisfaction of the Agents with any material changes in the structure or terms of the Ac- quisition prior to the execution of definitive documentation with respect to the Facility, and all legal, tax and accounting matters relating thereto, (b) the absence of any material ad- verse change since December 31, 1995, in or affecting the busi- ness, assets or condition (financial or otherwise) of CSX and its subsidiaries and Conrail and its subsidiaries, taken as a whole, (c) the absence of a material disruption of or material adverse change in financial, banking or capital market condi- tions that, in the Arrangers' reasonable judgment, would be likely materially to impair the syndication of the Facility, (d) the negotiation, execution and delivery on or before Novem- ber 30, 1996, of definitive documentation with respect to the Facility satisfactory to the Agents and their counsel, (e) the Agents' satisfaction that, prior to and during the syndication of the Facility, there shall be no competing issues of debt securities or commercial bank facilities of CSX or Conrail or any of their respective subsidiaries being offered, placed or arranged and (f) the other conditions set forth or referred to in the Term Sheet. CSX agrees (a) to indemnify and hold harmless each Agent and each of its affiliates and their respective officers, directors, employees, agent and advisors from and against any and all losses, claims, damages, liabilities and expenses aris- ing out of or in connection with this Commitment Letter or the transactions contemplated hereby; provided, however, that the foregoing indemnity will not, as to any indemnified party, ap- ply to losses, claims, damages, liabilities or expenses to the extent they have resulted from the wilful misconduct or gross negligence of such indemnified party and (b) to reimburse the Agents and their affiliates for all reasonable out-of-pocket expenses (including, without limitations reasonable syndication expenses and the reasonable fees, disbursements and other charges of counsel) incurred in connection with the arrangement of the Facility, the preparation of this Commitment Letter, the Fee Letter and the definitive documentation for the Facility or the other transactions contemplated hereby. No indemnified person shall be liable for any indirect or consequential dam- ages in connection with its activities related to the Facility. CSX Corporation -4- October 21, 1996 This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter, the Term Sheet nor any of their terms or substance shall be disclosed, directly or indirectly, to any other person, provided, that the foregoing restrictions shall cease to apply after this Commit- ment Letter has been accepted by you in accordance with the terms hereof. The reimbursement, indemnification and confidential- ity provisions contained herein and in the Fee Letter shall remain in full force and effect regardless of whether defini- tive financing documentation shall be executed and delivered and notwithstanding the termination of the Commitment Letter or the Principal Agents' commitments hereunder. This Commitment Letter and the Fee Letter are the only agreements that have been entered into among us with respect to the Facility and set forth the entire understanding of the parties with respect thereto. This Commitment Letter agreement may be executed in any number of counterparts (including by facsimile transmis- sion), each of which shall be an original, and all of which, when taken together, shall constitute one agreement. This Com- mitment Letter shall be governed by, and construed in accor- dance with, the laws of the State of New York. This Commitment Letter supersedes in full the Commitment Letter dated October 16, 1996 from The Chase Manhattan Bank and Chase Securities Inc. to you. CSX Corporation -5- October 21, 1996 If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by returning to us executed counterparts hereof and of the Fee Letter not later than 8:00 p.m., New York City time, on October 21, 1996, failing which the Principal Agents' commitments and the Arrangers' agreements herein will expire. Each of the undersigned is extremely pleased to have the opportunity to assist you in connection with this important financing. Very truly yours, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ Mark N. Hurley Title: Managing Director BA SECURITIES, INC. By: /s/ Mark S. Lies Title: Managing Director THE BANK OF NOVA SCOTIA By: /s/ James R. Trimble Title: Senior Relationship Manager CSX Corporation -6- October 21, 1996 THE CHASE MANHATTAN BANK By: /s/ J.M. Long Title: Vice President CHASE SECURITIES INC. By: /s/ Elizabeth B. Hughes Title: Managing Director NATIONSBANK, N.A. By: /s/ E. Turner Coggin Title: Senior Vice President NATIONSBANC CAPITAL MARKETS, INC. By: /s/ John N. Gregg, Jr. Title: Director Accepted and agreed to as of the date first above written: CSX CORPORATION By: /s/ G.R. Weber Title: Vice President and Treasurer EXHIBIT A CSX CORPORATION Competitive Advance and Revolving Credit Facility Summary of Terms and Conditions Borrower: CSX Corporation (the "Borrower") Acquisition: The Borrower will acquire all the issued and outstanding shares (the "Shares") of common stock and Series A ESOP Convertible Junior Preferred Stock of Conrail Inc. ("Conrail") pursuant to a merger agreement (as amended from time to time, the "Merger Agreement") providing for Shares to be purchased by the Bor- rower by means of one or met all cash tender offers (the "Tender Offers") exercise of a stock option granted by Conrail (the "Conrail Stock Option") or otherwise for 40% of the Shares (on a fully diluted basis (excluding Shares that would be outstanding or issuable upon the exercise of the Conrail Stock Option)) followed by a merger in which all the remaining Shares will be converted to the right to receive shares of common stock of the Borrower and (to the extent that 40% of the Shares as calculated above have not theretofore been purchased) cash (the "Merger"; the Tender Of- fers, the Merger and any exercise of the Conrail Stock Option being col- lectively called the "Acquisition"). Arrangers: BA Securities, Inc., The Bank of Nova Scotia, Chase Securities Inc. and NationsBanc Capital Markets, Inc. (collectively, the "Arrangers"). Administrative Agent: The Chase Manhattan Bank ("Chase") will act as sole administrative agent (in such capacity, the "Administra- tive Agent") for a syndicate of lead- ers arranged by the Arrangers (col- lectively, the "Lenders"). Documentation Agent: The Bank of Nova Scotia (in such ca- pacity, the "Documentation Agent"). Co-Syndication Agents: Bank of America National Trust and Savings Association and NationsBank, N.A. (in such capacities, the "Co- Syndication Agents"; and together with the Arrangers, the Documentation Agent and the Administrative Agent, the "Agents"). Facility: Competitive advance and revolving credit facility in an aggregate prin- cipal amount of $4,800,000,000 (the "Facility"). The Borrower will have the right to request the Arrangers to arrange an increase in the Facility for the purposes described below on terms and conditions to be agreed. Borrowing Options: Two borrowing options will be avail- able under the Facility: (i) a com- petitive advance option (the "CAF") and (ii) a revolving credit option (the "Revolving Credit"). The CAF will be provided on an uncommitted competitive advance basis through an auction mechanism. The Revolving Credit will be provided on it commit- ted basis. Under each option amounts borrowed and repaid may be reborrowed subject to availability under the Facility. Purpose: The proceeds of the Facility will be used to finance the Acquisition and to replace existing credit facilities used for the purpose of commercial paper backup. In addition, following the Merger the proceeds of the Facil- ity may be used for working capital and for other general corporate pur- poses. -2- Commitment Termination Five years from the date of execution and Final Maturity: of definitive credit documentation (the "Closing Date"). Availability: Subject to the second succeeding sen- tence, under the CAF, up to the full amount of the remaining commitments (less any amounts outstanding under the Revolving Credit) may be bor- rowed, repaid and reborrowed at the discretion of the Lenders, which may elect to bid in accordance with the Administrative Agent's standard pro- cedures for competitive advance fa- cilities. Subject to the next suc- ceeding sentence, under the Revolving Credit, up to the fall amount of the remaining commitments (less any amount outstanding under the CAF) may be borrowed, repaid and reborrowed subject only to applicable conditions to borrowing. Availability under each option will be reduced by usage under the other option on a dollar- for-dollar basis. Total outstandings under the Facility may not exceed the amount of the Facility at any time. Fees and Interest Rates: As per attached Annex I. Interest Periods: CAF -- per market availability: Fixed Rate Auction Advances: 7-360 days. Revolving Credit -- at the Borrower's option: LIBOR Loans: 1, 2, 3 or 6 months. Alternative Base Rate ("ABR") Loans: 3 months. Interest will be payable at the end of each interest period, but not less often than every three months. Mandatory Commitment In the event that any governmental Reduction: approval required for the Acquisition shall be finally denied, or in the -3- event the Borrower shall elect to abandon the Acquisition, the commit- ments under the Facility shall be reduced to an amount equal to the sum at such time of the aggregate princi- pal amount of loans outstanding under the Facility and the aggregate face amount of commercial paper outstand- ing and supported by commitments un- der the Facility. In the event that the Borrower sells any of the Shares, the Facility shall be reduced by the amount of the net proceeds of any such sales. Optional Commitment Upon at least three business days' Reductions: prior irrevocable written notice to the Administrative Agent, the Bor- rower may at any time in whole perma- nently terminate or from time to time in part permanently terminate, the commitments under the Facility; pro- vided, that the aggregate commitments of all Lenders may in no event be less than the aggregate amount of the CAF advances and loans outstanding. Optional Prepayments: LIBOR Revolving Credit Loans may be prepaid in whole or in part at any time at the Borrower's option, sub- ject, if prepayment occurs other than at the end of an applicable interest period, to compensation in respect of any redeployment costs. ABR loans may be prepaid at any time without penalty. CAF advances will not be subject to prepayment. Documentation: A credit agreement (the "Credit Agreement") for the Facility incorpo- rating the terms provided for herein and other customary non-economic terms and provisions as the Agents may reasonably specify in the context of the transactions contemplated hereby. Conditions to Usual for facilities and transactions Effectiveness: of this type, those specified below and others to be reasonably specified -4- by the Agents, including but not lim- ited to definitive documentation with respect to the Facility satisfactory in all respects to the Lenders, sat- isfactory legal opinions, delivery of financial statements and projections, accuracy of representations and war- ranties, absence of defaults, delivery of borrowing certificates, evidence of authority and compliance with applicable laws and regulations. The initial Tender Offer shall have been or shall simultaneously be con- summated in accordance with appli- cable law and the Merger Agreement. There shall be no pending litigation or administrative proceedings or other legal or regulatory develop- ments that, in the reasonable judg- ment of at least three of the Agents, would be reasonably likely to pro- hibit the Acquisition or to result in a material adverse change in the business, assets or condition (finan- cial or otherwise) of the Borrower, it being understood that the proposal for or the pendency of proceedings for approval of the Acquisition be- fore the Surface Transportation Board, or any administrative, judi- cial or other contest with respect to such approval process at the Surface Transportation Board, shall not vio- late this condition. The existing credit facilities of the Borrower used for the purpose of com- mercial paper backup shall have been terminated. Conditions to Each Delivery of borrowing notice, Borrowing: accuracy of representations and war- ranties and absence of debuts. Representations and To include organization and powers, Warranties: authority and enforceability, no con- flicts, financial information, ab- sence of material adverse change, -5- absence of material litigation, com- pliance with laws and regulations (including Federal Reserve margin regulations) and agreements, inap- plicability of Investment Company Act of 1940 and Public Utility Holding Company Act of 1931 taxes ERISA and absence of material misstatements. Financial Covenant: Total Debt (other than indebtedness the proceeds of which are used to purchase Shares pursuant to the Con- rail Stock Option) shall not exceed (a) at any time prior to the Merger, 65% of Total Capitalization (to be defined as Total Debt plus Total Shareholders' Equity) and (b) at any time on or after the consummation of the Merger, 55% of Total Capitaliza- tion. "Total Debt" will be defined as all short-term and long-term in- debtedness reflected on a consoli- dated balance sheet of the Borrower in accordance with GAAP. "Total Shareholders' Equity" will be defined as the amounts included under share- holders' equity on a consolidated balance sheet of the Borrower in ac- cordance with GAAP. Affirmative and Negative To include maintenance of corporate Covenants: existence, maintenance of ownership of railroad subsidiaries, maintenance of insurance, payment of taxes, de- livery of financial statements and reports, maintenance of records, com- pliance with laws, use of proceeds, limitation on indebtedness in excess of $4,000,000,000 for the purchase of Shares, limitations on additional unsecured indebtedness at subsidiar- ies (subject to appropriate thresh- olds and other customary terms), limitations on mergers and sales of all or substantially all assets, and limitations on liens and sale-lease- back transactions (which shall not apply to margin stock to the extent it exceeds 25% of the assets subject to such limitation and which will -6- permit the Borrower and its subsid- iaries to continue to utilize methods of railroad equipment financing as and to the extent customarily used by them.) Events of Defaults: To include material breach of repre- sentation or warranty, failure to pay principal or interest, breach of cov- enants, cross acceleration, material judgments and voluntary or involun- tary bankruptcy, subject to customary notice and cure periods. Cost and Yield Usual and customary, including but Protection: not limited to protection with re- spect to redeployment costs, changes in capital requirements or their in- terpretation, changes in circum- stances, reserves, illegality and taxes (including, without limitation, withholding tax gross-ups). Assignments and Lenders will be permitted to assign Participations: loans and commitments with the prior written consent of the Borrower (not to be unreasonably withheld), except that consent will not be required for assignments to another Lender or an affiliate of a Lender. Assignments will be in a minimum amount to be agreed (or the remaining amount of a Lender's commitment). Assignments will be by novation, such that the assignee will succeed to the rights and obligations of the assignor Lender. Assignments to any Federal Reserve Bank will be permitted with- out consent. Participations will be without restriction and participants will be entitled to yield and in- creased cost protection to the same extent as (but not more than) the participating Lender. Voting rights of participants will be limited to changes in amounts, rates, fees and maturity. Expenses and All reasonable out-of-pocket expenses Indemnification: of the Agents associated with (i) the -7- syndication of the Facility and (ii) the preparation, execution and deliv- ery and amendment, waiver, adminis- tration and enforcement of the loan documentation (including reasonable fees, charges and disbursements of counsel for the Agents and, in the case of enforcement, the Lenders) are to be paid by the Borrower. The Borrower will indemnify the Agents and the Lenders against, and hold them harmless from, all costs, expenses (including reasonable fees, charges and disbursements of counsel) and liabilities including those re- sulting from any litigation or other proceedings (regardless of whether the Agents or any Lender is a party thereto), related to or arising out of the Facility, the use of proceeds thereof or any other transactions contemplated hereby, except to the extent such costs, expenses and li- abilities have resulted from the wil- ful misconduct or gross negligence of the party seeking indemnification. Governing Law: New York. Counsel for the Agents: Simpson Thacher & Bartlett. -8- Annex I Facility Fee: A Facility Fee will accrue for the account of each Lender on the ag- gregate amount of such Lender's com- mitment under the Facility, whether used or unused, and will be payable quarterly in arrears based on the actual number of days elapsed over a 365/366-day year. The Facility Fee will commence to accrue on the Clos- ing Date and will cease to accrue on the final maturity of the Facility or any earlier date on which the commit- ments are terminated. The Facility Fee will accrue at the rates set forth in the applicable table below based upon the Borrower's senior unsecured non-credit-enhanced long-term debt ratings ("Ratings") by Standard & Poor's Rating Services, a division of The McGraw-Hill Companies Inc. ("S&P") and Moody's Investor Services, Inc. ("Moody's"). Interest Rates: Interest will be payable on the out- standing loans at the following rates per annum: (A) CAF: The rates obtained from bids selected by the Borrower; and (B) Revolving Credit: Rates based upon LIBOR or ABR, as selected by the Borrower. No spread will be charged on ABR Loans. The interest rate applicable to each LIBOR Loan will be equal to LIBOR for the interest period applicable to such Loan plus a Margin determined based upon the Borrower's Ratings by S&P and Moody's in effect from time to time, as set forth in the table below. Interest on LIBOR Loans will be pay- able at the ends of the relevant in- terest periods (but not less often than quarterly). Interest shall be calculated on the basis of the actual number of days elapsed over a 365/ 366-day year for ABR Loans based on the Administrative Agent's Prime Rate, and over a 360-day year for all other Loans. As used herein, (a) LIBOR means the London interbank offered rate for U.S. Dollars, adjusted for statutory reserves and (b) Alternate Base Rate, or ABR, means the higher of (i) the Administrative Agent's Prime Rate and (ii) the Federal Funds Effective Rate plus 1/2 of 1%. -2- Ratings Facility LIBOR All-in Drawn (S&P/ Fee (basis Margin (basis Costs (basis Moody's) points points points per * per annum) per annum) annum) Category 1 A/A2 or 6.0 14.0 20.0 Category 2 higher 7.0 13.0 20.0 Category 3 A-/A3 8.5 16.5 25.0 Category 4 BBB+/Baa1 10.0 20.0 30.0 Category 5 BBB/Baa2 12.5 22.5 35.0 Category 6 BBB-/Baa3 15.0 35.0 50.0 * In the event of a split rating, the higher of the two Rat- ings will apply for purposes of determining the relevant Category unless the Ratings differ by two or more levels, in which case a Rating one level below the higher Rating will apply for purposes of determining the relevant Cat- egory. -3- -----END PRIVACY-ENHANCED MESSAGE-----