-----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, VfWbsWaixhPmW1ao9ZyuTcNF1i3jMaa92e3t7kYzWk3OQT8ml3aLuHMhuIUwi2Xk 6Z/5jX6DOS/7kO6SArypxA== 0000898822-96-000518.txt : 19961122 0000898822-96-000518.hdr.sgml : 19961122 ACCESSION NUMBER: 0000898822-96-000518 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19961121 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: 96670479 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. 8 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. 8) _______________ 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 (the "Commission") on October 16, 1996, as previously amended and supplemented (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"), as supple- mented by the Supplement thereto, dated November 6, 1996 (the "Supplement"), and in the related Letters of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer") at a purchase price of $110.00 per Share, net to the tendering shareholder in cash. Capitalized terms used and not defined herein shall have the meanings as- signed such terms in the Offer to Purchase, the Supplement and the Schedule 14D-1. Item 6. Interest in Securities of the Subject Company (a)-(b) The Offer expired in accordance with its terms at 12:00 midnight on November 20, 1996. In connection therewith, on November 21, 1996, Parent issued a press release announcing, among other things, that, as of the Expiration Date, (1) based upon a preliminary count from the Depositary, a total of 76,629,202 Shares had been tendered under the Offer, of which approximately 50,497,768 had been tendered by notice of guaranteed delivery, (2) Purchaser accepted for payment 17,860,124 Shares at a price of $110 per share, representing approximately 19.9% of the outstanding voting Shares, (3) the preliminary proration factor is 23% for all Shares tendered and (4) payment for Shares accepted for payment is expected to commence promptly after the final proration factor is announced, which is expected to occur on or about November 27, 1996. A copy of the press release is attached as Exhibit (a)(23), and the foregoing summary description is qualified in its entirety by reference to such exhibit. Item 10. Additional Information (b) On November 20, 1996, the Voting Trust Agreement was executed and delivered, and Deposit Guaranty National Bank was appointed as the Trustee thereunder. A copy of the Voting Trust Agreement is attached as Exhibit (c)(9), and the foregoing summary description is qualified in its entirety by reference to such exhibit. (e) (i) On November 19, 1996, Judge Donald W. VanArtsdalen of the United States District Court for the Eastern District of Pennsylvania ruled from the bench that NSC's motion for a preliminary injunction relating to the Offer was denied. Such ruling is attached hereto as Exhibit (c)(8), and the foregoing summary description is qualified in its entirety by reference to such exhibit. (ii) On November 20, 1996, Parent and the Company issued a joint press release stating that the United States Court of Appeals for the Third Circuit rejected NSC's application for an injunction relating to the Offer pending an appeal by NSC of the November 19, 1996 decision by the United States District Court for the Eastern District of Pennsylvania. A copy of the press release is attached as Exhibit (a)(21), and the foregoing summary description is qualified in its entirety by reference to such exhibit. (f) On November 20, 1996, Parent and the Company issued a joint press release confirming that the two companies are meeting with the AFL-CIO to discuss the proposed Merger. A copy of the press release is attached as Exhibit (a)(22), and the foregoing summary description is qualified in its entirety by reference to such exhibit. -2- 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.* (a)(10) -- Text of Press Release issued by Parent on Octo- ber 23, 1996.* (a)(11) -- Text of Press Release issued by Parent on Octo- ber 30, 1996.* (a)(12) -- Text of Press Release issued by Parent on Novem- ber 3, 1996.* (a)(13) -- Supplement to Offer to Purchase, dated November 6, 1996.* (a)(14) -- Revised Letter of Transmittal.* (a)(15) -- Revised Notice of Guaranteed Delivery.* (a)(16) -- Revised Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* _____________________ * Previously filed. -3- (a)(17) -- Revised Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(18) -- Text of Press Release issued by Parent and the Company on November 6, 1996.* (a)(19) -- Text of Press Release issued by Parent and the Company on November 13, 1996.* (a)(20) -- Text of Press Release issued by Parent and the Company on November 19, 1996.* (a)(21) -- Text of Press Release issued by Parent and the Company on November 20, 1996. (a)(22) -- Text of Press Release issued by Parent and the Company on November 20, 1996. (a)(23) -- Text of Press Release issued by Parent on Novem- ber 21, 1996. (b)(1) -- Commitment Letter, dated October 21, 1996.* (b)(2) -- Credit Agreement, dated November 15, 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.* (c)(5) -- Complaint in Norfolk Southern Corporation, et al. v. Conrail Inc., et al., No. 96-CV-7167, filed on October 23, 1996.* (c)(6) -- First Amended Complaint in Norfolk Southern Cor- poration, et al. v. Conrail Inc., et al., No. 96-CV-7167, filed on October 30, 1996.* -4- (c)(7) -- First Amendment to Agreement and Plan of Merger, dated as of November 5, 1996, by and among Par- ent, Purchaser and the Company.* (c)(8) -- Text of ruling of Judge Donald W. VanArtsdalen of the United States District Court for the Eastern District of Pennsylvania on November 19, 1996. (c)(9) -- Voting Trust Agreement, dated as of October 15, 1996, by and among Parent, Purchaser and Deposit Guaranty National Trust. -5- 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: Executive Vice President- Law and Public Affairs Dated: November 21, 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: November 21, 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 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.* (a)(10) -- Text of Press Release issued by Parent on Octo- ber 23, 1996.* (a)(11) -- Text of Press Release issued by Parent on Octo- ber 30, 1996.* (a)(12) -- Text of Press Release issued by Parent on Novem- ber 3, 1996.* (a)(13) -- Supplement to Offer to Purchase, dated November 6, 1996.* (a)(14) -- Revised Letter of Transmittal.* (a)(15) -- Revised Notice of Guaranteed Delivery.* (a)(16) -- Revised Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* _____________________ * Previously filed. (a)(17) -- Revised Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* (a)(18) -- Text of Press Release issued by Parent and the Company on November 6, 1996.* (a)(19) -- Text of Press Release issued by Parent and the Company on November 13, 1996.* (a)(20) -- Text of Press Release issued by Parent and the Company on November 19, 1996.* (a)(21) -- Text of Press Release issued by Parent and the Company on November 20, 1996. (a)(22) -- Text of Press Release issued by Parent and the Company on November 20, 1996. (a)(23) -- Text of Press Release issued by Parent on Novem- ber 21, 1996. (b)(1) -- Commitment Letter, dated October 21, 1996.* (b)(2) -- Credit Agreement, dated November 15, 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.* (c)(5) -- Complaint in Norfolk Southern Corporation, et al. v. Conrail Inc., et al., No. 96-CV-7167, filed on October 23, 1996.* (c)(6) -- First Amended Complaint in Norfolk Southern Cor- poration, et al. v. Conrail Inc., et al., No. 96-CV-7167, filed on October 30, 1996.* (c)(7) -- First Amendment to Agreement and Plan of Merger, dated as of November 5, 1996, by and among Par- ent, Purchaser and the Company.* -2- (c)(8) -- Text of ruling of Judge Donald W. VanArtsdalen of the United States District Court for the Eastern District of Pennsylvania on November 19, 1996. (c)(9) -- Voting Trust Agreement, dated as of October 15, 1996, by and among Parent, Purchaser and Deposit Guaranty National Trust. -3- EX-99 2 EXHIBIT (A)(21) CONTACT: CSX Conrail Thomas E. Hoppin Craig R. MacQueen (804) 782-1450 (215) 209-4594 Kekst and Company Abernathy MacGregor Group Richard Wolff Joele Frank/Dan Katcher (212) 593-2655 (212) 371-5999 FOR IMMEDIATE RELEASE APPEALS COURT REFUSES TO ENJOIN CSX TENDER OFFER RICHMOND, VA and PHILADELPHIA, PA, Nov. 20, 1996 -- CSX Corpo- ration (CSX) (NYSE: CSX) and Conrail Inc. (Conrail) (NYSE: CRR) said today that they are pleased with the decision by the United States Court of Appeals for the Third Circuit rejecting Norfolk Southern's application for an injunction pending an appeal by Norfolk Southern of yesterday's decision by the United States District Court for the Eastern District of Pennsylvania. The District Court decision, announced last night, denied Norfolk Southern's motion for a preliminary injunction to block the purchase of Conrail shares by CSX in its $110 cash tender offer for 19.9% of Conrail shares outstanding. CSX and Conrail issued the following statement: "We are pleased that the U.S. Court of Appeals has let stand yesterday's District Court ruling. Despite Norfolk Southern's con- tinuing attempts to derail the merger of Conrail and CSX, we are committed to each other and to the great future of our combined companies." CSX Corporation, headquartered in Richmond, Va., is an inter- national transportation company offering a variety of rail, container-shipping, intermodal, trucking, barge and contract logis- tics management services. Conrail, with corporate headquarters in Philadelphia, Pa., operates an 11,000-mile rail freight network in 12 Northeastern and Midwestern states, the District of Columbia and the Province of Quebec. CSX's home page can be reached at http://www.CSX.com. Conrail's home page can be reached at http://www.CONRAIL.com. # # # EX-99 3 EXHIBIT (A)(22) CONTACTS: CSX CORPORATION CONRAIL INC. Thomas E. Hoppin Rudy Husband (804) 782-1450 (215) 209-4594 FOR IMMEDIATE RELEASE CONRAIL AND CSX BEGIN DISCUSSIONS WITH AFL-CIO ON PROPOSED MERGER RICHMOND, VA, AND PHILADELPHIA, PA, NOV. 20, 1996 -- Conrail and CSX confirmed that meetings have begun with the Transporta- tion Trades Department of the AFL-CIO to discuss the proposed merger between Conrail and CSX. Yesterday's meeting was a get- acquainted session to establish channels of communication. Further discussions are expected to be held as the merger pro- ceeds. The AFL-CIO previously announced that it had formed a coalition of rail unions to analyze the merger and to develop a formal position. CSX, headquartered in Richmond, Va., is an international trans- portation company offering a variety of rail, container- shipping, intermodal, trucking, barge and contract logistics management services. Conrail, with corporate headquarters in Philadelphia, Pa., operates an 11,000 mile rail freight network in 12 Northeastern and Midwestern states, the District of Co- lumbia, and the Province of Quebec. CSX's home page can be reached at http://www.csx.com. Conrail's home page can be reached at http://www.conrail.com. # # # EX-99 4 EXHIBIT (A)(23) CONTACT: CSX Kekst and Company Thomas E. Hoppin Richard Wolff (804) 782-1450 (212) 593-2655 FOR IMMEDIATE RELEASE CSX CORPORATION SUCCESSFUL IN TENDER OFFER FOR CONRAIL SHARES RICHMOND, VIRGINIA, NOVEMBER 21, 1996 -- CSX Corporation (CSX) (NYSE: CSX) today announced that its cash tender offer by its subsidiary for shares of Conrail Inc. (NYSE: CRR) at a price of $110 per share was oversubscribed. The offer expired at midnight Eastern time on Wednesday, November 20, 1996. Based on a preliminary count from the depositary for the offer, approximately 76,629,202 shares have been tendered, of which approximately 50,497,768 have been tendered by notice of guar- anteed delivery. CSX's subsidiary, Green Acquisition Corp., accepted for payment 17,860,124 Conrail shares sought in the offer, which represents approximately 19.9% of the outstanding voting shares of Conrail. The preliminary proration factor under the offer is 23% for all Conrail shares tendered. The final proration factor is expected to be announced on or about November 27, 1996, and it is expected that payment for the shares that have been accepted will commence promptly thereaf- ter. John W. Snow, CSX Corporation's chairman, president and chief executive officer, said, "With the successful completion of this tender offer, we move another step closer to completing the strategic merger of Conrail and CSX and realizing the sub- stantial benefits that this combination will bring." CSX Corporation, headquartered in Richmond, Va., is an interna- tional transportation company offering a variety of rail, container-shipping, intermodal, trucking, barge, and contract logistics management services. Conrail, with corporate headquarters in Philadelphia, Pa., op- erates an 11,000-mile rail freight network in 12 northeastern and midwestern states, the District of Columbia, and the Prov- ince of Quebec. Additional information regarding this announcement can be found on the companies' Web sites on the Internet. CSX's home page can be reached at http//www.CSX.com. Conrail's home page can be reached at http://www.CONRAIL.com. # # # EX-99 5 EXHIBIT (C)(8) THE COURT: First I want to thank all counsel very much for the very excellent briefs that have been submitted, the pleadings that have been submitted in this matter, the very fine presentations that have been made on behalf of their respective clients. I'm sorry that we are pressed for time and have been throughout this whole proceeding. That's the way preliminary injunction applications always seem to have to operate. This is an important matter. As I said, I think that even though I won't be citing a lot of cases or anything of that sort, I think that it's more important that I make the decision now so that the parties will have whatever appellate rights they may have and have them promptly. I say it is an important matter. Wasn't it Everett Dirksen who used to say "a billion dollars here and a billion dollars there and pretty soon you're talking about real money"? Well, that's what this case seems to be. First it's here in Federal Court because of claimed Williams Act violations. The purpose of the Williams Act as to tender offer, as I understand it at least, is to assure that there is adequate and fair and full information provided to shareholders so that they will be able to have an informed basis upon which to decide whether to tender their shares, hold their shares or perhaps sell them on the open market. Plaintiffs have presented evidence and arguments that certain of the information constituted either misstatements of fact or omitted information that it was necessary to make in order that the information that was provided was not mislead- ing. Most of those contentions, quite frankly, appear to me to be what is generally called nitpicking or insignificant matters. Even if there were questions about the original ten- der offer, I am convinced that the amendments that were pro- vided were clearly adequate to correct any deficiencies. Cer- tainly all of the shareholders have been literally deluged in the last few weeks with information about the proposed CSX Con- rail merger agreement and the CSX and competing Norfolk South- ern tender offers. In addition there has been significant coverage in the financial and news sections of many of the newspapers. Obviously I would concede of course that even though other information was provided in the papers and news media that the Williams Act does require that the tender offeror and the responding target corporation provide full and adequate infor- mation. And therefore if there were incorrect statements made in the tender offer or in the responding information by the target corporation, it would not necessarily be corrected because there was other public information to the contrary or that would have corrected those statements. -2- However it is hard for me to conceive of any inter- ested shareholder being misled in any way by the information provided by either CSX or Conrail in their respective public disclosures or lack of information. Although I agree that the persistent and repeated reference by both CSX and Conrail that the proposed merger will be a merger of equals is somewhat indefinite in its meaning, certainly any reasonable shareholder would recognize this ter- minology as being a statement of opinion and that the assertion could be made in good faith notwithstanding the rather obvious fact that if this merger proposal as contemplated in the merger agreement goes through, Conrail shareholders will have in aggregate less than a controlling interest and it apparently would be approximately one-third stake in the newly-merged corporation. Some of the information that plaintiffs contend must be included would indeed make the information so voluminous that shareholders would be inundated, and that has also been held to be improper. The tender offers that have been provided to the shareholders with the accompanying documents already take several hours of careful study to read, and that's without any of the attached exhibits. The only relief that ordinarily would be granted or could be granted would be to enjoin the tender offer going for- ward until and unless proper amendments were provided to the -3- shareholders, and to extend the period of time that the tender offer should remain open. Of course that is one of the primary things and that is what the plaintiffs seek by way of this preliminary injunc- tion. To do that, it seems to me, that such preliminary injunction would have to spell out in detail exactly what defi- ciencies would need to be corrected. And as I understand it, at least the primary contentions now are that it did not suf- ficiently spell out how Lazard & Freres and the other financial institution that provided an opinion as to a fair valuation or fair pricing reached their conclusions and that it did not con- tain sufficient information as to all of the factors that were taken into consideration and how they arrived at what the syn- ergies, what savings will be brought about by the synergies. I don't think that those details, since they do state in the information given what those total savings will be or what they are projected to be, it seems to me that going into further detail as to that would be certainly not required under the Williams Act. I am not convinced that the plaintiffs have estab- lished that they are likely to succeed on any of their Williams Act claims, particularly in light of all of the disclosures that have been made to the shareholders. -4- Therefore, the motions for preliminary injunction for violations of the Williams Act against the CSX tender offer going forward will be denied. I might add, of course, that most of the complaints about the information that has been given is the information that was provided by Conrail in its -- as a target in its responses, whereas the tender offer is actually being made by CSX. I'm not suggesting that that makes any particular differ- ence, but I think that it may have some significance as to whether or not the information provided by CSX complies with the Williams Act. There is also a question of irreparable harm. Now, it is my understanding that in Williams Act cases where there is a Williams Act violation that it is appropriate under cer- tain conditions to enjoin the tender offer going forward. So I don't think there need be shown any further irreparable harm ordinarily in an injunction based on Williams Act violations other than the violation itself. As I say, however, it is my conclusion that on the basis of all of the evidence that's been presented that there is no Williams Act violation and certainly it's not so clear that a preliminary injunction should be entered. Plaintiffs also seek to jettison the merger agreement proceeding because they claim that the board of directors of Conrail have violated their fiduciary duties to Conrail share- holders. Defendants counter by contending that all actions -5- they have taken and intend to take are strictly in accordance with the law. These claims of course are all based on state law and because Conrail's incorporated in and has its principal place of business in Pennsylvania, it seems clear and I believe everyone agrees that Pennsylvania corporate law applies as to the duties of corporate directors and the rights of the share- holders in this particular case. In substance, as I understand it, plaintiff's primary arguments are founded on the contention that the so-called two- tiered back-ended merger is illegal under Pennsylvania law because it unfairly coerces the shareholders to tender their shares to CSX -- or rather I believe it's actually Green Acqui- sition Corporation, but I'm using those two corporations inter- changeably. It coerces them to do so in fear that if they fail to tender their shares they will receive less consideration in the later exchange of CSX stock for Conrail stock. That is, that the back end portion or the 60 percent stock that would be exchanged -- of Conrail stock that would be exchanged in the back end of the deal would not be worth the amount that is presently offered for the front end which is $110 a share. Until the merger actually goes through, if it does, the actual amount or valuation of the back end cannot be accu- rately determined. CSX stock has apparently -- may advance or it may decline in the open market prior to the time that the exchange actually takes place. And we really have no way of knowing what that is. There are ways of valuing it as of -6- today's market value, and it would seem clear that if you apply today's market value and using the formulas that economists like to use of the value of money and so on, reducing it and so on, it would appear that the back end would not be worth the $110. That, however, as I see it does not make the matter inherently unfair, unlawful or coercive as that term is being used. By statute under the so-called Pennsylvania business corporation law that was enacted, most recently enacted or amended in 1990, the general duties of directors is set forth in Section 1712 which imposes a fiduciary obligation on direc- tors to perform their duties in a good-faith manner as direc- tors believed to be in the best interests of the corporation. I note that this duty is to the corporation; not necessarily to the shareholders. These duties must be performed with such care including reasonable inquiry, skill and diligence as a person of ordinary prudence under similar circumstances would exercise. In doing this, directors by statute may rely on information from officers and employees of the corporation which the directors reasonably believe to be competent and reliable, including also attorneys, CPAs and corporate commit- tees. The express fiduciary duties are further spelled out in subchapter B. Section 1715 expressly and perhaps uniquely provides that directors may consider all groups that may be -7- affected by their actions, including shareholders, employees, customers, communities in which the corporate offices and facilities are located and may consider both the short-term and the long-term interests of the corporation. I note in this regard that under the merger agreement and/or probably the Norfolk Southern which I'll refer to as NS tender offer Conrail will probably no longer exist as an independent stand-alone corporate enterprise. In addition, directors may consider the resources, intent and conduct, both past and potential, of any party seek- ing to acquire control. Section 1715(b) expressly provides that in considering the best interests of the corporation or the effects of any action, the directors are not required to consider the interests of any group, obviously including share- holders, as a dominant or controlling factor, nor does it spec- ify how those interests shall be quantified or weighed by the corporate directors. Section 1715(c) further qualifies directors' obliga- tions by expressly providing that the director's fiduciary duties shall not be deemed to require directors to, one, redeem any rights under or to modify or render inapplicable any share- holders' rights plans. I understand that as meaning that the directors cannot be compelled under the rubric of performing their fiduciary duties to redeem the so-called poison pill plan that will become applicable in this case if NS acquires more than 10 percent of Conrail stock. -8- This section to me says that the Court may not through a mandatory injunction compel a redemption of the poison pill as to Norfolk Southern. Notwithstanding that under the merger agreement the poison pill will not become applicable to CSX acquisition when it acquires more than 10 percent of the Conrail stock. Section 1715(c)2 provides that the directors' fidu- ciary duties shall not be deemed to require them to render inapplicable or make determinations under subchapter E relating to control transactions. In this case, the proposed opt-out of subchapter E insofar as applicable to the CSX-Conrail merger. In other words, the directors shall not be deemed to require them to render inapplicable the proposed opt-out of subchapter E insofar as applicable to this merger, and that would, I believe, include also the proposed tender offer by -- or the tender offer rather by NS. Subchapter F relating to business combinations between an acquiring party and the corporation acquired; again, one of the things that the plaintiffs want to have the Court enjoin. And also it does not require that subchapter F not be applicable to NS because the merger agreement will make inap- plicable subchapter F as to CSX. In other words, a I read the statute, they could make it applicable to their merger partner -- or they could make it inapplicable rather to their merger partner and not applicable to any other potential acquirer. -9- Section 1715(c)3 further provides that fiduciary duties do not require directors to act solely because of the effect such action might have on an acquisition or potential acquisition of control, or the consideration that might be offered or paid to shareholders in such an acquisition. And finally, Section 1715(d) states that absent breach of fiduciary duty, lack of good faith or self-dealing, any act by the board of directors shall be presumed to be in the best interests of the corporation. In determining whether the general standard of care of Section 1712 has been satis- fied, there shall be no greater obligation to justify or a higher burden of proof by a board of directors or individual directors relating to or affecting an acquisition or attempted acquisition of control than is applied to any other act by the board of directors. The statute goes on to say notwithstanding anything above, any act relating to an acquisition to which a majority of the disinterested directors shall have assented shall be presumed to satisfy the general standards of fiduciary care set forth in Section 1712, unless it is proven by clear and con- vincing evidence that the disinterested directors did not assent to such act in good faith after reasonable investiga- tion. I note that in this case the board of directors con- sists of 12 persons and all except one, Mr. LeVan, are under -10- and by statutory definition disinterested directors, and obvi- ously therefore that section of the statute is applicable in this case. Section 1716 reiterates that in considering the effects of any action, directors may consider the effects on stockholders, employees, suppliers, customers and the communi- ties in which the officers and/or facilities are located and all pertinent factors, and that no factor need be predominant. In this case there has not been shown any type of lack of good faith after a reasonable investigation by any director so far as I have been able to determine from the evi- dence that has been presented, including any of the exhibits that have been presented, and clearly if there is any evidence at all of such of which I say I find absolutely none on the present record, it has not been proven by clear and convincing evidence. Although there may be some argument that the direc- tors should have made some further inquiry, they have the right to rely on recommendations of corporate officers and those who negotiate on their behalf and by their committees by statute. For this reason alone, the grant of preliminary injunction as I see it may not be granted. Basically it seems to me that the plaintiffs are contending that the sole or at least the primary consideration by a board of directors in con- sidering a competing offer by potential acquirers of the control of a corporation should be which competitor offers the best short-range price or profit for shareholders. Clearly -11- Pennsylvania statutory law is expressly against such a contention. There have been allegations suggesting that the whole CSX-Conrail merger is being motivated by Mr. LeVan or because it would assure him by contract of certain higher personal income. I see nothing wrong with the merger agreement provid- ing who will be the main executive officers for the first few years after the completion of the merger, and I think the wit- nesses who testified explained very clearly why it was really important that they have this assurance in order that the merger should succeed. I can see why the directors of Conrail might very well want to be sure that their existing top executive officer would continue in top management in the merged corporation, and that the first board of directors at least will consist equally of former CSX and former Conrail board members. It seems clear that the Pennsylvania statutes to which I have referred were enacted with the decisions of the Delaware State Courts and particularly Unicol Corporation v. Mesa Petroleum Corporation, and Revlon, Incorporated v. MacAndrews and Forbes Holdings, Incorporated, that they had that clearly in mind and in order to exclude those in similar decisions that seem to mandate or suggest that the primary or perhaps only consideration in a situation where there is an attempted takeover or a rival competition for a takeover or a merger between corporations is what is the best financial deal -12- for the stockholders in the short term. And most of the evi- dence that has been presented in this case is based on the con- tention that somehow the offer that has been made by NS is a superior offer financially. Although those decisions may be fine for the share- holders whose only interest is that of a short-term financial investment to maximize their profits, it completely ignores the economic utility and value of corporations as a form of busi- ness enterprise that produces goods and services for the public and the national economy, in this case railroad services. Directors have the right to consider these matters, and by statute in Pennsylvania they have the right to consider all matters including not only the rights of shareholders and the financial interests of shareholders, but these other so- called constituencies. It also has not been established certainly by clear and convincing evidence that the financial deal for the Conrail shareholders under the merger agreement will inevitably or in the long run prove less valuable than the offer by NS, assuming that the NS offer could go through. There are practical problems with the Unicol and Revlon line of cases as I see it, aside from their myopic view that because stockholders are at least in theory the owners of the corporation that only their interests should be considered -13- or at a minimum must be given the highest priority and impor- tance. The primary practical problem is that it replaces the discretion of a corporate board of directors who hopefully are sophisticated practical business managers, and eventually under Unicol and those decisions place it in the hands of judges whose business judgment, however altruistic, is certainly apt to be less reliable than that of business managers. Other provisions of the Pennsylvania business corpo- rate law further confirm that the board of directors have wide discretion in how to react to so-called takeover bids, such as that of NS. Section 1502(a)18 provides that directors may accept, reject, respond to or take no action in respect of an actual or proposed acquisition, tender offer, takeover or other fundamental change or otherwise. The committee notes to this section say in part that this section is intended to make clear in conjunction with Section 1721(a) that in the first instance the decision to accept or reject the merger or other similar proposal rests with the directors. It is not intended that there by a manda- tory obligation to respond to a takeover proposal. It is intended to include among other things whether to adopt a poi- son pill plan and if a plan is or has been adopted, whether to redeem rights subject only to the general applicable business judgment rule. Section 2513 also provides that securities issued, such as stock, may limit the rights of shareholders who own or -14- offer to acquire a specified number or percentage of shares. The comment to Section 2513 states that the section intends to expressly validate the adoption of poison pills including flip- in and flip-over plans such as are apparent in the poison pill plan applicable to Conrail. I also note in this case that the so-called poison pill plan was adopted in 1989, long before the present situation came into being. Also the CSX-Conrail merger agreement was entered into before there was any NS proposal outstanding except that there had been some informal discussions, and it was known that NS might be interested. There is also a contention that somehow the CSX- Conrail merger unlawfully and unfairly coerces Conrail share- holders to tender their shares to Green Acquisition and to not offer the shares to Norfolk Southern's tender offer. So far as I can find, there is no case law, at least involving Pennsyl- vania state law, to support the so-called coercion theory of the type of merger proposed here. Stockholders of Conrail do have multiple options, and that is clear from the evidence. They may of course tender their shares and support the CSX-Conrail merger. If all tender their shares and the deal goes through as contemplated, share- holders would receive $110 in cash for 40 percent of their stock, and 1.85617 shares of CSX stock for each remaining share of Conrail stock. They could also tender their shares and sell 19.9 percent of their stock, if all tendered, at $110 per share -15- and then all or a majority of the shareholders could vote against the proposed opt-out of subchapter E. In the event I don't know what NS would do with the shares of stock which everyone agrees would be at a premium price based on the pre- mium of acquiring control. The evidence is clear that no one can really predict what will be the outcome of the proposed vote on opting out of subchapter E. It has been suggested somehow that it is illegal or unlawful or unfair, I'm not sure what, that the new acquirer, CSX, be allowed to vote on that opting out of chapter E. It seems to me that all shareholders, if they are share- holders of record on the record date have the right under the law to vote on that matter and therefore I can see nothing wrong with them being allowed to do so if they at that time have acquired shares of stock in Conrail. Shareholders have other options. They can do noth- ing, as the board of directors and some of the witnesses who testified do not intend to do, and could retain their shares. If all did so, then the initial acquisition would fail utterly. Of course it is generally believed, although there is no evi- dence to establish this, but I would assume that it is probably a correct prognostication that there will be enough shares ten- dered to make the 19.9 percent. Conrail shareholders may also tender their shares to NS and hope that NS would be able to get their contingencies finally met by reason perhaps of insufficient tenders to the -16- CSX offer. And if so, they might eventually receive $110 for all of their shares. Shareholders can also, of course, sell their shares on the open market and let others decide what is to the best financial advantage. With all of these options, some of which may be more profitable to them than others in the short term while others may, as some of the board of directors of both CSX and Conrail apparently hope and predict and anticipate may be more profitable in the long run. I do not see any coercion, but only several options, any of which will undoubtedly end up being a net return to most shareholders far in excess of whatever their original invest- ment may have been. Under our laws, ordinarily corporations are operated by a board of directors. And the board of directors have rights to enter into certain contracts subject to limitations in their charter and in the charter of the corporation, to the extent that they are within their corporate powers and pursuant to the corporate business. There is nothing that has been called to my attention that is alleged to be beyond the board of directors' rights in entering into the CSX-Conrail merger agreement, despite arguments to the contrary. Under doctrines of ordinary contract law where a law- ful contract is entered into there is a duty of fair dealing between the parties to carry out the terms of the agreement. -17- Although a breach of contract is not in itself unlawful in the sense of constituting a civil tort, a breach does make that breaching party subject to damages. In this case a break-up fee has been stipulated to, which may be analogous to an agree- ment for liquidated damages; that may or may not be too high, but that is certainly at this point purely a hypothetical situ- ation as I see it until someone attempts to assert the right to claim a break-up fee, and then it conceivably could be liti- gated as to whether that was excessive or so unreasonable as to not be a proper term in the agreement. Although a breach of contract is not a tort, there is a tort of interference with contract. I am troubled that everyone seems to assume that Conrail would have the right, in fact it is contended that it has a duty to breach the essential terms of the contract of merger, which as I see it was properly entered into and contains no terms that are prohibited by Penn- sylvania law, and that somehow they have the further right to sabotage the contract, that is that somehow the board of direc- tors have not only a right, but a duty to somehow sabotage the contract by supporting the NS proposal. As I see it, they would have this right and perhaps duty only if the terms of the agreement are illegal or contrary to public policy. And, as I pointed out, each of the alleged illegalities appear to be authorized or at least not prohibited under Pennsylvania statu- tory law. -18- I can find no principle difference between this and any other contract. I won't go into any examples that might be given, but it has been suggested that perhaps some different law should be applied to a merger situation because sharehold- ers are affected. Obviously any contract that is entered into by a corporation that extends into the future may affect the corporation's net profits or losses and also, thereby, have effects; sometimes very disastrous effects, sometimes very fine effects for the shareholders' financial well being. Basically the law of Pennsylvania leaves decisions such as what is best for the corporation to be that of the duly elected board of directors rather than by second guessing by the courts. In this case I am sure that the board of directors of Conrail are in fact in a far better position than the courts to decide what is the best interest of the corporation, which is the test in Pennsylvania. The shareholders themselves are in the best position to decide which of the several options are best for them. Finally, it has been suggested that the Pennsylvania statutes that provide board of directors with broad discretion in deciding mergers and how to react to takeover bids were enacted to prevent two-tier, back-end mergers and takeovers of the type that are here contemplated. That argument of course is a possible argument, but I think that I am bound to follow what are the clear wording of the statutes. I think that it is clear from the Pennsylvania statutes, which are not ambiguous -19- and have not been argued to be ambiguous, that it is up to the board of directors and they alone, so long as they act in good faith after reasonable investigation, as to what is in the best interest of the corporation. And that the directors have every right to favor one competing bid over another and particularly have the right to resist hostile takeovers by such methods as poison pills, shareholders' rights, making recommendations to shareholders, favoring one proposed corporate party over the other, and using stock options in favor of one corporation over another, and include extensive so-called break-up fees. And certainly it seems to me that it can agree not to stop their proposal after signing a merger agreement, which is essentially what as I see it is the arguments made that somehow this merger should be enjoined at this stage of the proceeding. Again, let me repeat I am unable to find that the plaintiffs are likely to succeed on any of the claims for which they seek preliminary injunctive relief. I do not find that the grant of a preliminary injunction would be in the best interest of the public. A preliminary injunction would not maintain the status quo, which is one of the things it is sup- posed to do, but would radically alter the position of the par- ties. I do not find that there has been irreparable harm; as I pointed out before, that probably would not be required if there was a Williams Act violation, but I do not find that they have shown the probability of success on any of the Williams Act claims. -20- One other feature, of course, of this action, so far as the state law claims are filed, it is said that they are filed as representative actions on behalf of the corporation. I think it's very questionable whether injunctive relief would be appropriate in any event, because it seems to me that in the normal situation where there is a claim that the directors have violated their fiduciary duties it's a claim for monetary dam- ages and not for equitable relief. That has not been argued in this case and I don't want to go into that at this time, but it is certainly a matter that would make it seem to me that it would be questionable whether equitable relief should be given. Therefore, for the reasons that I have stated, all requests and all present motions for preliminary injunctive relief will be and are denied. -21- EX-99 6 EXHIBIT (C)(9) VOTING TRUST AGREEMENT THIS VOTING TRUST AGREEMENT, dated as of October 15, 1996, by and among CSX Corporation, a Virginia corporation ("Parent"), Green Acquisition Corp., a Pennsylvania corporation and a wholly-owned subsidiary of Parent ("Acquiror"), and De- posit Guaranty National Bank, a national banking association (the "Trustee"), W I T N E S S E T H: WHEREAS, Parent, Acquiror and Conrail Inc., a Penn- sylvania corporation (the "Company"), have entered into an Agreement and Plan of Merger, dated as of October 14, 1996 (as it may be amended from time to time, the "Merger Agreement"; capitalized terms used but not defined herein shall have the meanings set forth therein), pursuant to which (i) Acquiror shall commence the Offer (and in certain circumstances a Second Offer) (collectively, the "Tender Offer") for shares of Common Stock of the Company (all such shares accepted for payment pur- suant to the Tender Offer or otherwise received, acquired or purchased by or on behalf of Parent or Acquiror, including pur- suant to the Option Agreement, the "Acquired Shares"), and (ii) the Company will merge with Acquiror pursuant to the Merger; WHEREAS, Parent, Acquiror and the Company have en- tered into a Stock Option Agreement, dated as of October 14, 1996 (as it may be amended from time to time, the "Option -2- Agreement") providing Parent and Acquiror the option to pur- chase 15,955,477 shares of common stock of the Company; WHEREAS, Parent and Acquiror wish (and are obligated pursuant to the Merger Agreement and the Option Agreement), simultaneously with the acceptance for payment of such Acquired Shares pursuant to the Tender Offer, the Option Agreement or otherwise to deposit such Shares of Common Stock in an indepen- dent, irrevocable voting trust, pursuant to the rules of the Surface Transportation Board (the "STB"), in order to avoid any allegation or assertion that the Parent or the Acquiror is con- trolling or has the power to control the Company prior to the receipt of any required STB approval or exemption; WHEREAS, neither the Trustee nor any of its affili- ates has any officers or board members in common or any direct or indirect business arrangements or dealings (as described in Paragraph 9 hereof) with the Parent or the Acquiror or any of their affiliates; and WHEREAS, the Trustee is willing to act as voting trustee pursuant to the terms of this Trust Agreement and the rules of the STB, NOW THEREFORE, the parties hereto agree as follows: 1. Creation of Trust -- The Parent and the Acquiror hereby appoint Deposit Guaranty National Bank as Trustee here- under, and Deposit Guaranty National Bank hereby accepts said -3- appointment and agrees to act as Trustee under this Trust Agreement as provided herein. 2. Trust is Irrevocable -- This Trust Agreement and the nomination of the Trustee during the term of the trust shall be irrevocable by the Parent and the Acquiror and their affiliates and shall terminate only in accordance with, and to the extent of, the provisions of Paragraphs 8 and 14 hereof. 3. Deposit of Trust Stock -- The Parent and the Ac- quiror agree that, prior to acceptance of Acquired Shares pur- chased pursuant to the Tender Offer, the Acquiror will direct the depositary for the Tender Offer to transfer to the Trustee any such Acquired Shares purchased pursuant to the Tender Offer. The Parent and the Acquiror also agree that simulta- neously with receipt, acquisition or purchase of any additional shares of Common Stock by either of them, directly or indi- rectly, or by any of their affiliates, including, without limi- tation, upon any exercise of the option provided for in the Option Agreement, they will transfer to the Trustee the cer- tificate or certificates for such shares. All such certifi- cates shall be duly endorsed or accompanied by proper instru- ments duly executed for transfer thereof to the Trustee or otherwise validly and properly transferred, and shall be ex- changed for one or more Voting Trust Certificates substantially in the form attached hereto as Exhibit A (the "Trust Certifi- cates"), with the blanks therein appropriately filled in. All -4- shares of Common Stock at any time delivered to the Trustee hereunder are called the "Trust Stock." The Trustee shall pre- sent to the Company all certificates representing Trust Stock for surrender and cancellation and for the issuance and deliv- ery to the Trustee of new certificates registered in the name of the Trustee or its nominee. 4. Powers of Trustee -- The Trustee shall be pres- ent, in person or represented by proxy, at all annual and spe- cial meetings of shareholders of the Company so that all Trust Stock may be counted for the purposes of determining the pres- ence of a quorum at such meetings. Parent and Acquiror agree, and the Trustee acknowledges, that the Trustee shall not par- ticipate in or interfere with the management of the Company and shall take no other actions with respect to the Company except in accordance with the terms hereof. The Trustee shall exer- cise all voting rights in respect of the Trust Stock to approve and effect the Merger, and in favor of any proposal or action necessary or desirable to effect, or consistent with the effec- tuation of, the Parent and Acquiror's acquisition of the Com- pany, pursuant to the Merger Agreement, and without limiting the generality of the foregoing, if there shall be with respect to the Board of Directors of the Company an "Election Contest" as defined in the Proxy Rules of the Securities and Exchange Commission, in which one slate of nominees shall support the effectuation of the Merger and another slate oppose it, then the Trustee shall vote in favor of the slate supporting the -5- effectuation of the Merger. In addition, for so long as the Merger Agreement is in effect, the Trustee shall exercise all voting rights in respect of the Trust Stock, to cause any other proposed merger, business combination or similar transaction (including, without limitation, any consolidation, sale or pur- chase of assets, reorganization, recapitalization, liquidation or winding up of or by the Company) involving the Company, but not involving the Parent or one of its subsidiaries or affili- ates (otherwise than in connection with a disposition pursuant to Paragraph 8), not to be effected. In addition, the Trustee shall exercise all voting rights in respect of the Trust Stock in favor of any proposal or action necessary or desirable to dispose of Trust Stock in accordance with Paragraph 8 hereof. Except as provided in the three immediately preceding sen- tences, the Trustee shall vote all shares of Trust Stock with respect to all matters, including without limitation the elec- tion or removal of directors, voted on by the shareholders of the Company (whether at a regular or special meeting or pursu- ant to a unanimous written consent) in the same proportion as all shares of Common Stock (other than Trust Stock) are voted with respect to such matters. In exercising its voting rights in accordance with this Paragraph 4, the Trustee shall take such actions at all annual, special or other meetings of stock- holders of the Company or in connection with any and all con- sents of shareholders in lieu of a meeting. -6- 5. Further Provisions Concerning Voting of Trust Stock -- The Trustee shall be entitled and it shall be its duty to exercise any and all voting rights in respect of the Trust Stock either in person or by proxy, as herein provided (includ- ing without limitation Paragraphs 4 and 8(b) hereof), unless otherwise directed by the STB or a court of competent jurisdic- tion. Subject to Paragraph 4, the Trustee shall not exercise the voting powers of the Trust Stock in any way so as to create any dependence or intercorporate relationship between (i) any or all of the Parent, the Acquiror and their affiliates, on the one hand, and (ii) the Company or its affiliates, on the other hand. The term "affiliate" or "affiliates" wherever used in this Trust Agreement shall have the meaning specified in Section 11323(c) of Title 49 of the United States Code, as amended. The Trustee shall not, without the prior approval of the STB, vote the Trust Stock to elect any officer, director, nominee or representative of the Parent, the Acquiror or their affiliates as an officer or director of the Company or of any affiliate of the Company. The Trustee shall be kept informed respecting the business operations of the Company by means of the financial statements and other public disclosure documents periodically filed by the Company and affiliates of the Company with the Securities and Exchange Commission (the "SEC") and the STB, and by means of information respecting the Company contained in such statements and other documents filed by the Parent with the SEC and the STB, copies of which shall be -7- promptly furnished to the Trustee by the Company or the Parent, as the case may be, and the Trustee shall be fully protected in relying upon such information. Notwithstanding the foregoing provisions of this Paragraph 5 or any other provision of this Agreement, however, the registered holder of any Trust Certificate may at any time with the prior written approval of the Company -- but only with the prior written approval of the STB -- instruct the Trustee in writing to vote the Trust Stock represented by such Trust Certificate in any manner, in which case the Trustee shall vote such shares in accordance with such instructions. 6. Transfer of Trust Certificates -- The Trust Cer- tificates shall be transferable only with the prior written consent of the Company. They may be transferred on the books of the Trustee by the registered holder upon the surrender thereof properly assigned, in accordance with rules from time to time established for that purpose by the Trustee. Until so transferred, the Trustee may treat the registered holder as owner for all purposes. Each transferee of a Trust Certificate issued hereunder shall, by his acceptance thereof, assent to and become a party to this Trust Agreement, and shall assume all attendant rights and obligations. Any such transfer in violation of this Paragraph 6 shall be null and void. 7. Dividends and Distributions -- Pending the termi- nation of this Trust as hereinafter provided, the Trustee -8- shall, immediately following the receipt of each cash dividend or cash distribution as may be declared and paid upon the Trust Stock, pay the same over to or as directed by the Acquiror or to or as directed by the holder of Trust Certificates hereunder as then appearing on the books of the Trustee. The Trustee shall receive and hold dividends and distributions other than cash upon the same terms and conditions as the Trust Stock and shall issue Trust Certificates representing any new or addi- tional securities that may be paid as dividends or otherwise distributed upon the Trust Stock to the registered holders of Trust Certificates in proportion to their respective interests. 8. Disposition of Trust Stock; Termination of Trust -- (a) This Trust is accepted by the Trustee subject to the right hereby reserved in the Parent at any time to direct the sale or other disposition of the whole or any part of the Trust Stock, but only as permitted by subparagraph (e) below, whether or not an event described in subparagraph (b) below has oc- curred. The Trustee shall take all actions reasonably re- quested by the Parent (including, without limitation, exercis- ing all voting rights in respect of Trust Stock) in favor of any proposal or action necessary or desirable to effect, or consistent with the effectuation of or with respect to any pro- posed sale or other disposition of the whole or any part of the -9- Trust Stock by the Acquiror or Parent that is otherwise permit- ted pursuant to this Paragraph 8, including, without limita- tion, in connection with the exercise by Parent of its regis- tration rights under the Merger Agreement. The Trustee shall be entitled to rely on a certification from the Parent, signed by its President or one of its Vice Presidents and under its corporate seal that a disposition of the whole or any part of the Trust Stock is being made in accordance with the require- ments of subparagraph (e) below. In the event of a permitted sale of Trust Stock by the Acquiror, the Trustee shall, to the extent the consideration therefor is payable to or controllable by the Trustee, promptly pay, or cause to be paid, upon the order of the Acquiror the net proceeds of such sale to the reg- istered holders of the Trust Certificates in proportion to their respective interests. It is the intention of this Para- graph that no violation of 49 U.S.C. Section 11323 will result from a termination of this Trust. (b) In each case under this subparagraph (b), with the prior written consent of the Company, in the event the STB by final order shall (i) approve or exempt the acquisition of control of the Company by the Acquiror, the Parent or any of their affiliates or (ii) approve or exempt a merger between the Company and the Acquiror, the Parent or any of their affili- ates, then immediately upon the direction of the Parent and the delivery of a certified copy of such order of the STB or other governmental authority with respect thereof, or, in the event -10- that Subtitle IV of Title 49 of the United States Code, or other controlling law, is amended to allow the Acquiror, the Parent or their affiliates to acquire control of the Company without obtaining STB or other governmental approval, upon delivery of an opinion of independent counsel selected by the Trustee that no order of the STB or other governmental author- ity is required, the Trustee shall either (x) transfer to or upon the order of the Acquiror, the Parent or the holder or holders of Trust Certificates hereunder as then appearing on the records of the Trustee, its right, title and interest in and to all of the Trust Stock then held by it (or such portion as is represented by the Trust Certificates in the case of such an order by such holders) in accordance with the terms, condi- tions and agreements of this Trust Agreement and not thereto- fore transferred by it as provided in subparagraph (a) hereof, or (y) if shareholder approval has not previously been ob- tained, vote the Trust Stock with respect to any such merger between the Company and the Acquiror, the Parent or any affili- ate of either as directed by the holder or holders of a major- ity in interest of the Trust Certificates, and upon any such merger this Trust shall cease and come to an end. (c) (i) Upon consummation of the Merger, the Trust Stock shall be canceled and retired and shall cease to exist in accordance with Section 2.1(c) of the Merger Agreement, and thereafter this Trust shall cease and come to an end. -11- (ii) In the event that the Merger Agreement termi- nates in accordance with its terms, Parent shall use its best efforts to sell the Trust Stock during a period of two years after such termination or such extension of that period as the STB shall approve and the Company shall reasonably approve. Any such disposition shall be subject to the requirements of subparagraph (e) below, and to any jurisdiction of the STB to oversee Parent's divestiture of Trust Stock. At all times, the Trustee shall continue to perform its duties under this Trust Agreement and, should Parent be unsuccessful in its efforts to sell or distribute the Trust Stock during the period referred to, the Trustee shall then as soon as practicable, and subject to the requirements of subparagraph (e) below, sell the Trust Stock for cash to eligible purchasers in such manner and for such price as the Trustee in its discretion shall deem reason- able after consultation with Parent. (An "eligible purchaser" hereunder shall be a person or entity that is not affiliated with Parent and which has all necessary regulatory authority, if any, to purchase the Trust Stock.) Parent agrees to cooper- ate with the Trustee in effecting such disposition and the Trustee agrees to act in accordance with any direction made by Parent as to any specific terms or method of disposition, to the extent not inconsistent with any of the terms of this Trust Agreement, including subparagraph (e) below, and with the re- quirements of the terms of any STB or court order. The pro- ceeds of the sale shall be distributed to or upon the order of -12- Parent or, on a pro rata basis, to the holder or holders of the Trust Certificates hereunder as then known to the Trustee. The Trustee may, in its reasonable discretion, require the sur- render to it of the Trust Certificates hereunder before paying to the holder his share of the proceeds. Upon disposition of all the Trust Stock pursuant to this paragraph 8(c)(ii), this Trust shall cease and come to an end. (d) Unless sooner terminated pursuant to any other provision herein contained, this Trust Agreement shall termi- nate on December 31, 2016, and may be extended by the parties hereto, so long as no violation of 49 U.S.C. Section 11323 will result from such termination or extension. All Trust Stock and any other property held by the Trustee hereunder upon such ter- mination shall be distributed to or upon the order of the Ac- quiror. The Trustee may, in its reasonable discretion, require the surrender to it of the Trust Certificates hereunder before the release or transfer of the stock interests evidenced thereby. (e) No disposition of Trust Stock under this para- graph 8 or otherwise hereunder shall be made except pursuant to one or more broadly distributed public offerings and subject to all necessary regulatory approvals, if any. Notwithstanding the foregoing, Trust Stock may be distributed as otherwise di- rected by Parent, with the prior written consent of the Com- pany, in which case the Trustee shall be entitled to rely on a -13- certificate of Parent (acknowledged by the Company) that such person or entity to whom the Trust Stock is disposed is not an affiliate of the Parent and has all necessary regulatory au- thority, if any is necessary, to purchase such Trust Stock. The Trustee shall promptly inform the STB of any transfer or disposition of Trust Stock pursuant to this Paragraph 8. (f) Except as expressly provided in this Paragraph 8, the Trustee shall not dispose of, or in any way encumber, the Trust Stock, and any transfer, sale or encumbrance in vio- lation of the foregoing shall be null and void. 9. Independence of the Trustee -- Neither the Trustee nor any affiliate of the Trustee may have (i) any of- ficers, or members of their respective boards of directors, in common with the Acquiror, the Parent, or any affiliate of ei- ther, or (ii) any direct or indirect business arrangements or dealings, financial or otherwise, with the Acquiror, the Parent or any affiliate of either, other than dealings pertaining to the establishment and carrying out of this voting trust. Mere investment in the stock or securities of the Acquiror or the Parent or any affiliate of either by the Trustee, short of ob- taining a controlling interest, will not be considered a pro- scribed business arrangement or dealing, but in no event shall any such investment by the Trustee in voting securities of the Acquiror, the Parent or their affiliates exceed five percent of their outstanding voting securities and in no event shall the -14- Trustee hold a proportion of such voting securities so substan- tial as to permit the Trustee in any way to control or direct the affairs of the Acquiror, the Parent or their affiliates. Neither the Acquiror, the Parent nor their affiliates shall purchase the stock or securities of the Trustee or any affili- ate of the Trustee. 10. Compensation of the Trustee -- The Trustee shall be entitled to receive reasonable and customary compensation for all services rendered by it as Trustee under the terms hereof and said compensation to the Trustee, together with all counsel fees, taxes, or other expenses reasonably incurred hereunder, shall be promptly paid by the Acquiror or the Par- ent. 11. Trustee May Act Through Agents -- The Trustee may at any time or from time to time appoint an agent or agents and may delegate to such agent or agents the performance of any administrative duty of the Trustee. 12. Concerning the Responsibilities and Indemnifica- tion of the Trustee -- The Trustee shall not be liable for any mistakes of fact or law or any error of judgment, or for any act or omission, except as a result of the Trustee's willful misconduct or gross negligence. The Trustee shall not be an- swerable for the default or misconduct of any agent or attorney appointed by it in pursuance hereof if such agent or attorney -15- has been selected with reasonable care. The duties and respon- sibilities of the Trustee shall be limited to those expressly set forth in this Trust Agreement. The Trustee shall not be responsible for the sufficiency or the accuracy of the form, execution, validity or genuineness of the Trust Stock, or of any documents relating thereto, or for any lack of endorsement thereon, or for any description therein, nor shall the Trustee be responsible or liable in any respect on account of the iden- tity, authority or rights of the persons executing or deliver- ing or purporting to execute or deliver any such Trust Stock or document or endorsement or this Trust Agreement, except for the execution and delivery of this Trust Agreement by this Trustee. The Acquiror and the Parent agree that they will at all times protect, indemnify and save harmless the Trustee, its direc- tors, officers, employees and agents from any loss, cost or expense of any kind or character whatsoever in connection with this Trust except those, if any, growing out of the gross neg- ligence or willful misconduct of the Trustee, and will at all times themselves undertake, assume full responsibility for, and pay all costs and expense of any suit or litigation of any character, including any proceedings before the STB, with re- spect to the Trust Stock of this Trust Agreement, and if the Trustee shall be made a party thereto, the Acquiror or the Par- ent will pay all costs and expenses, including reasonable coun- sel fees, to which the Trustee may be subject by reason thereof; provided, however, that the Acquiror and the Parent -16- shall not be responsible for the cost and expense of any suit that the Trustee shall settle without first obtaining the Parent's written consent. The Trustee may consult with counsel and the opinion of such counsel shall be full and complete au- thorization and protection in respect of any action taken or omitted or suffered by the Trustee hereunder in good faith and in accordance with such opinion. 13. Trustee to Give Account to Holders -- To the extent requested to do so by the Acquiror or any registered holder of a Trust Certificate, the Trustee shall furnish to the party making such request full information with respect to (i) all property theretofore delivered to it as Trustee, (ii) all property then held by it as Trustee, and (iii) all actions theretofore taken by it as Trustee. 14. Resignation, Succession, Disqualifications of Trustee -- The Trustee, or any trustee hereafter appointed, may at any time resign by giving forty-five days' written notice of resignation to the Parent and the STB. The Parent shall at least fifteen days prior to the effective date of such notice appoint a successor trustee which shall (i) satisfy the re- quirements of Paragraph 9 hereof and (ii) be a corporation or- ganized and doing business under the laws of the United States -17- or of any State thereof and authorized under such laws to exer- cise corporate trust powers, having a combined capital and sur- plus of at last $50,000,000 and subject to supervision or ex- amination by federal or state authority. If no successor trustee shall have been appointed and shall have accepted ap- pointment at least fifteen days prior to the effective date of such notice of resignation, the resigning Trustee may petition any competent authority or court of competent jurisdiction for the appointment of a successor trustee. Upon written assump- tion by the successor trustee of the Trustee's powers and duties hereunder, a copy of the instrument of assumption shall be delivered by the Trustee to the Parent and the STB and all registered holders of Trust Certificates shall be notified of its assumption, whereupon the Trustee shall be discharged of the powers and duties of the Trustee hereunder and the succes- sor trustee shall become vested with such powers and duties. In the event of any material violation by the Trustee of the terms and conditions of this Trust Agreement, the Trustee shall become disqualified from acting as trustee hereunder as soon as a successor trustee shall have been selected in the manner pro- vided by this paragraph. 15. Amendment -- Subject to the requirements of Sec- tion 1.9 of the Merger Agreement, this Trust Agreement may from time to time be modified or amended by agreement executed by the Trustee, the Acquiror (if executed prior to the Merger), the Parent and all registered holders of the Trust Certificates -18- (i) pursuant to an order of the STB, (ii) with the prior ap- proval of the STB, (iii) in order to comply with any order of the STB or (iv) upon receipt of an opinion of counsel satisfac- tory to the Trustee and the holders of Trust Certificates that an order of the STB approving such modification or amendment is not required and that the amendment is consistent with the STB's regulations regarding voting trusts. 16. Governing Law; Powers of the STB -- The provi- sions of this Trust Agreement and of the rights and obligations of the parties hereunder shall be governed by the laws of the State of Pennsylvania, except that to the extent any provision hereof may be found inconsistent with subtitle IV, title 49, United States Code or regulations promulgated thereunder, such statute and regulations shall control and such provision hereof shall be given effect only to the extent permitted by such statute and regulations. In the event that the STB shall, at any time hereafter by final order, find that compliance with law requires any other or different action by the Trustee than is provided herein, the Trustee shall act in accordance with such final order instead of the provisions of this Trust Agree- ment. 17. Counterparts -- This Trust Agreement is executed in four counterparts, each of which shall constitute an origi- nal, and one of which shall be held by each of the Parent and the Acquiror and the other two shall be held by the Trustee, -19- one of which shall be subject to inspection by holders of Trust Certificates on reasonable notice during business hours. 18. Filing With the STB -- A copy of this Agreement and any amendments or modifications thereto shall be filed with the STB by the Acquiror. 19. Successors and Assigns -- This Trust Agreement shall be binding upon the successors and assigns to the parties hereto, including without limitation successors to the Acquiror and the Parent by merger, consolidation or otherwise. The par- ties agree that the Company shall be an express third party beneficiary of this Trust Agreement. Except as otherwise ex- pressly set forth herein, any consent required from the Company hereunder shall be granted or withheld in the Company's sole discretion. 20. Succession of Functions -- The term "STB" in- cludes any successor agency or governmental department that is authorized to carry out the responsibilities now carried out by the STB with respect to the consideration of the consistency with the public interest of rail mergers and combinations, the regulation of voting trusts in respect of the acquisition of securities of rail carriers or companies controlling them, and the exemption of approved rail mergers and combinations from the antitrust laws. -20- 21. Notices -- Any notice which any party hereto may give to the other hereunder shall be in writing and shall be given by hand delivery, or by first class registered mail, or by overnight courier service, or by facsimile transmission con- fined by one of the aforesaid methods, sent, If to Purchaser or Acquiror, to: CSX Corporation One James Center 901 East Cary Street Richmond, Virginia 23219 Attention: General Counsel If to the Trustee, to: Deposit Guaranty National One Deposit Guaranty Plaza, 8th Floor Jackson, Mississippi 39201 Attention: Corporate Trust Department With a required copy to: Deposit Guaranty National Bank c/o Commercial National Bank in Shreveport 333 Texas Street Shreveport, LA 71101 Attention: Corporate Trust Department And if to the holders of Trust Certificates, to them at their addresses as shown on the records maintained by the Trustee. 22. Remedies -- Each of the parties hereto acknowl- edges and agrees that in the event of any breach of this Agree- ment, each non-breaching party would be irreparably and immedi- ately harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto (a) will -21- waive, in any action for specific performance, the defense of adequacy of a remedy at law and (b) shall be entitled, in addi- tion to any other remedy to which they may be entitled at law or in equity, to an order compelling specific performance of this Agreement in any action instituted in any state or federal court sitting in Philadelphia, Pennsylvania. Each party hereto consents to personal jurisdiction in any such action brought in any state or federal court sitting in Philadelphia, Pennsylva- nia. IN WITNESS WHEREOF, CSX Corporation and Green Acqui- sition Corp. have caused this Trust Agreement to be executed by their authorized officers and their corporate seals to be af- fixed, attested by their Secretaries or Assistant Secretaries, and Deposit Guaranty National Bank has caused this Trust Agree- ment to be executed by its authorized officer or agent and its corporate seat to be affixed, attested to by its Secretary or one of its Assistant Secretaries or other authorized agent, all as of the day and year first above written. Attest: CSX CORPORATION /s/ Rachel E. Geiersbach By/s/ William H. Sparrow Asst. Secretary Vice President - Financial Planning -22- Attest: GREEN ACQUISITION CORP. /s/ Alan A. Rudnick By/s/ Paul R. Goodwin Asst. Secretary CFO and Treasurer Attest: COMMERCIAL NATIONAL BANK, AGENT FOR DEPOSIT GUARANTY NATIONAL BANK /s/ Malcolm F. Stadtlander By/s/ Linda H. Trichel Trust Officer Linda H. Trichel Trust Officer No.________________ EXHIBIT A _______ Shares VOTING TRUST CERTIFICATE FOR COMMON STOCK OF CONRAIL NC. INCORPORATED UNDER THE LAWS OF THE STATE OF PENNSYLVANIA THIS IS TO CERTIFY that __________ will be entitled, on the surrender of this Certificate, to receive on the termi- nation of the Voting Trust Agreement hereinafter referred to, or otherwise as provided in Paragraph 8 of said Voting Trust Agreement, a certificate or certificates for __________ shares of the Common Stock, $1.00 par value, of Conrail Inc., a Penn- sylvania corporation (the "Company"). This Certificate is is- sued pursuant to, and the rights of the holder hereof are sub- ject to and limited by, the terms of a Voting Trust Agreement, dated as of October 15, 1996, executed by CSX Corporation, a Virginia corporation, Green Acquisition Corp., a Pennsylvania corporation, and Deposit Guaranty National Bank, as Trustee (as it may be amended from time to time, the "Voting Trust Agree- ment"), a copy of which Voting Trust Agreement is on file in the office of said Trustee at One Deposit Guaranty Plaza, 8th Floor, Jackson, Mississippi 39201 and open to inspection of any stockholder of the Company and the holder hereof. The Voting Trust Agreement, unless earlier terminated (or extended) pursu- ant to the terms thereof, will terminate on December 31, 2016, so long as no violation of 49 U.S.C. Section 11323 will result from such termination. -2- The holder of this Certificate shall be entitled to the benefits of said Voting Trust Agreement, including the right to receive payment equal to the cash dividends, if any, paid by the Company with respect to the number of shares repre- sented by this Certificate. This Certificate shall be transferable only on the books of the undersigned Trustee or any successor, to be kept by it, on surrender hereof by the registered holder in person or by attorney duly authorized in accordance with the provi- sions of said Voting Trust Agreement, and until so transferred, the Trustee may treat the registered holder as the owner of this Voting Trust Certificate for all purposes whatsoever, un- affected by any notice to the contrary. By accepting this Certificate, the holder hereof assents to all the provisions of, and becomes a party to, said Voting Trust Agreement. IN WITNESS WHEREOF, the Trustee has caused this Cer- tificate to be signed by its officer duly authorized. Dated: DEPOSIT GUARANTY NATIONAL BANK By_________________________ Authorized Officer -3- [FORM OF BACK OF VOTING TRUST CERTIFICATE] FOR VALUE RECEIVED ___________________ hereby sells, assigns, and transfers unto __________ the within Voting Trust Certificate and all rights and interests represented thereby, and does hereby irrevocably constitute and appoint ____________ Attorney to transfer said Voting Trust Certificate on the books of the within mentioned Trustee, with full power of substitu- tion in the premises. ___________________________ Dated: In the Presence of: ___________________________ -----END PRIVACY-ENHANCED MESSAGE-----