-----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, LzGVZUgVduA/yBrA6LTRW5Nuz8bbU/aD0nySfvtmL6vKzziSfa5AmdTssCNhFWnD xzyWcXWecdZ4rsSp7Fxpqg== 0000950172-97-000388.txt : 19970428 0000950172-97-000388.hdr.sgml : 19970428 ACCESSION NUMBER: 0000950172-97-000388 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19970425 SROS: NASD SROS: PHLX GROUP MEMBERS: CSX CORP GROUP MEMBERS: GREEN ACQUISITION CORP. GROUP MEMBERS: NORFOLK SOUTHERN CORPORATION 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 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42777 FILM NUMBER: 97587826 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 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: 97587827 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 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 14D1 AMENDMENT NO. 25 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- Schedule 14D-1 Tender Offer Statement (Amendment No. 25) Pursuant to Section 14(d(1) of the Securities Exchange Act of 1934 and Amendment No. 35 to Schedule 13D+ and Amendment No. 12 to Schedule 13D++ ---------------------- Conrail Inc. (Name of Subject Company) CSX Corporation Norfolk Southern 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 James C. Bishop, Jr. CSX Corporation Norfolk Southern Corporation One James Center Three Commercial Place 901 East Cary Street Norfolk, Virginia 23510 Richmond, Virginia 23219-4031 Telephone: (757) 629-2750 Telephone: (804) 782-1400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) With a copy to: Pamela S. Seymon Randall H. Doud Wachtell, Lipton, Rosen & Katz Skadden, Arps, Slate, Meagher & Flom LLP 51 West 52nd Street 919 Third Avenue New York, New York 10019 New York, New York 10022 Telephone: (212) 403-1000 Telephone: (212) 735-3000 - ---------------------- + of CSX Corporation and Green Acquisition Corp. ++ of Norfolk Southern Corporation SCHEDULE 14D-1 CUSIP No. 208368 10 0 - ------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CSX CORPORATION - ------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[X] (b)[ ] - ------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------- 4 SOURCE OF FUNDS BK, WC, OO - ------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ] - ------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION VIRGINIA - ------------------------------------------------------------------------- 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 17,775,124 Common Shares.* - ------------------------------------------------------------------------- 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [X] - ------------------------------------------------------------------------- 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) Approximately 19.9% of outstanding Shares.* - ------------------------------------------------------------------------- 10 REPORTING PERSON HC and CO - ------------------------------------------------------------------------- - ------------- * Excludes 8,200,100 Common Shares beneficially owned by Norfolk Southern Corporation which CSX Corporation may be deemed to beneficially own by reason of the CSX/NSC Letter Agreement referred to herein. Also excludes 15,955,477 Common Shares purchasable upon exercise of the Company Stock Option. See Section 13 of the Offer to Purchase, dated December 6, 1996, and all amendments thereto. SCHEDULE 14D-1 CUSIP No. 208368 10 0 - ----------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GREEN ACQUISITION CORPORATION - ----------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ----------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ] - ----------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION PENNSYLVANIA - ----------------------------------------------------------------------------- 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 17,775,124 Common Shares.* - ----------------------------------------------------------------------------- 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [X] - ----------------------------------------------------------------------------- 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) Approximately 19.9% of outstanding Shares.* - ----------------------------------------------------------------------------- 10 REPORTING PERSON CO - ----------------------------------------------------------------------------- - ------------- * Excludes 8,200,100 Common Shares beneficially owned by Norfolk Southern Corporation which CSX Corporation may be deemed to beneficially own by reason of the CSX/NSC Letter Agreement referred to herein. Also excludes 15,955,477 Common Shares purchasable upon exercise of the Company Stock Option. See Section 13 of the Offer to Purchase, dated December 6, 1996, and all amendments thereto. This Statement amends and supplements the Tender Offer Statement on Schedule 14D-1 filed with the Securities and Exchange Commission (the "SEC") on December 6, 1996, as previously amended and supplemented (the "Schedule 14D-1"), by Green Acquisition Corp. ("Purchaser"), a Pennsylvania corporation, CSX Corporation, a Virginia corporation ("Parent" or "CSX"), and Norfolk Southern Corporation, a Virginia corporation ("NSC"), to purchase all 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 associated common stock purchase rights, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 6, 1996, the Supplement thereto, dated December 19, 1996 (the "First Supplement"), the Second Supplement thereto, dated March 7, 1997 (the "Second Supplement"), and the Third Supplement thereto, dated April 10, 1997 (the "Third Supplement"), and the related Letters of Transmittal (which, together with any amendments or supplements thereto, constitute the "Second Offer") at a purchase price of $115 per Share, net to the tendering shareholder in cash. Capitalized terms used and not defined herein shall have the meanings assigned such terms in the Offer to Purchase, the First Supplement, the Second Supplement, the Third Supplement and the Schedule 14D-1. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Item 4 is hereby amended and supplemented by the following: (b) J.P. Morgan Securities Inc. and Merrill Lynch & Co. (collectively, the "Arrangers"), Merrill Lynch Capital Corporation ("MLCC") and Morgan Guaranty Trust Company of New York ("Morgan") have entered into a commitment letter with NSC, dated April 22, 1997 (the "NSC Bank Commitment Letter"), pursuant to which MLCC and Morgan have each committed to provide up to $500,000,000 of a total $7 billion in required borrowings pursuant to a new senior credit facility (the "New NSC Credit Facility") to finance NSC's requirements under the Second Offer and the Merger, to pay its portion of related fees and expenses, to refinance NSC's existing debt (including under the NSC Credit Agreement) and for general corporate purposes, including to support commercial paper issuances. It is anticipated that the Arrangers will arrange and/or syndicate the New NSC Credit Facility with a group of commercial banks (the "Lenders"). Morgan's and MLCC's obligations to make loans to NSC to fund the purchase price of Shares purchased in the Second Offer and the Merger are (and the Lenders' obligations will be) subject to the following conditions, among others: (i) approval of the CSX/NSC Voting Trust by all required governmental and regulatory bodies, (ii) the absence of a material adverse change in the consolidated financial condition, operations, assets, business or prospects of NSC and its subsidiaries or Conrail and its subsidiaries or with respect to financial, bank syndication or capital market conditions and (iii) the absence of any amendments or modifications to the Second Offer and the Merger Agreement which could, in the reasonable opinion of the Arrangers, impede or delay the Merger or otherwise materially adversely affect the Second Offer, the parties to the Second Offer or the Lenders. The New NSC Credit Facility will consist of two facilities, a $3.5 billion unsecured 364-day revolving credit facility (the "364 Day Facility") and a $3.5 billion unsecured five-year revolving credit facility (the "5 Year Facility"). Loans under the 364 Day Facility will bear interest at a rate per annum equal to, at the option of NSC, any of (i) the Eurodollar rate plus a margin depending upon NSC's senior unsecured long-term debt ratings of between .50% and .155%, (ii) an adjusted CD rate plus a margin depending upon NSC's senior unsecured long-term debt ratings of between .625% and .28%, (iii) the higher of (A) Morgan's prime rate or (B) the federal funds rate plus .50% (the "Base Rate") or (iv) a money market rate, and will mature 364 days from the closing under the New NSC Credit Facility (the "Closing Date"). The 5 Year Facility will mature five years after the Closing Date and loans thereunder will bear interest at a rate per annum equal to, at the option of NSC, any of (i) the Eurodollar rate plus a margin depending on NSC's senior unsecured long-term debt ratings of between .45% and .135%, (ii) an adjustable CD rate plus a margin depending on NSC's senior unsecured long-term debt ratings of between .575% and .26%, (iii) the Base Rate or (iv) a money market rate. The New NSC Credit Facility will also provide for a facility fee accruing on the total amount available or outstanding under the 364 Day Facility at a rate which will be, depending upon NSC's senior unsecured long-term debt ratings, between .15% and .045% per annum and a facility fee accruing on the total amount available or outstanding under the 5 Year Facility at a rate which will be, depending upon NSC's senior unsecured long-term debt ratings, between .20% and .065%. The New NSC Credit Facility will contain certain financial covenants as well as certain restrictions on, among other things, (i) indebtedness of subsidiaries, (ii) liens, (iii) mergers, consolidations and sales of assets, and (iv) transactions with affiliates. The financial covenants will require NSC to maintain a specified minimum consolidated net worth and maximum leverage ratios. The New NSC Credit Facility will contain certain representations and warranties regarding, among other things, corporate existence, power and authority, enforceability of the loan documents related to the New NSC Credit Facility, no conflicts, financial information, absence of material adverse change, absence of material litigation, compliance with certain laws and regulations, certain environmental matters, taxes, matters related to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and absence of material misstatements. In addition, the New NSC Credit Facility will contain certain covenants regarding, among other things, maintenance of corporate existence, maintenance of the business, maintenance of insurance, payment of taxes, delivery of financial statements and reports, compliance with laws, use of proceeds and continued ownership by NSC of certain specified subsidiaries. Events of default under the New NSC Credit Facility will include, subject (in certain instances) to customary notice and cure periods, material breaches of representations or warranties, failure to pay principal or interest, breach of covenants, cross default to certain other debt, material judgments, bankruptcy, failures to make payments required to be made under ERISA, and a Change of Control (to be defined in the agreement evidencing the New NSC Credit Facility). In connection with the New NSC Credit Agreement, NSC has agreed to pay the Arrangers and the Lenders certain fees, to reimburse the Arrangers and the Lenders for certain expenses and to provide certain indemnities, as is customary for commitments of the type described herein. It is anticipated that the indebtedness incurred by NSC under the New NSC Credit Facility will be repaid from funds generated internally by NSC and its subsidiaries, through additional borrowings, or through a combination of such sources. No final decisions have been made concerning the method NSC will employ to repay such indebtedness. Such decisions when made will be based on NSC's review from time to time of the advisability of particular actions, as well as on prevailing interest rates and financial and other economic conditions. The NSC Credit Agreement will be terminated in its entirety prior to, or concurrently with, the execution of the New NSC Credit Facility, and all outstanding loans under the NSC Credit Agreement, if any, will be then repaid. The foregoing description of the NSC Bank Commitment Letter is qualified in its entirety by reference to the full text of the Commitment Letter, a copy of which has been included as an exhibit hereto and is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. Item 11 is hereby amended and supplemented by the following: (b)(3) Commitment Letter, dated April 22, 1997, among Morgan Guaranty Trust Company of New York, J.P. Morgan Securities Inc., Merrill Lynch Capital Corporation, Merrill Lynch & Co. and Norfolk Southern Corporation. SIGNATURE After due inquiry and to the best of its 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: April 25, 1997 SIGNATURE After due inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. NORFOLK SOUTHERN CORPORATION By: /s/ JAMES C. BISHOP, JR. Name: James C. Bishop, Jr. Title: Executive Vice President-Law Dated: April 25, 1997 SIGNATURE After due inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. ATLANTIC ACQUISITION CORPORATION By: /s/ JAMES C. BISHOP, JR. Name: James C. Bishop, Jr. Title: Vice President and General Counsel Dated: April 25, 1997 SIGNATURE After due inquiry and to the best of its 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: April 25, 1997 EXHIBIT INDEX Exhibit No. *(a)(1) Offer to Purchase, dated December 6, 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 Identification Number on Substitute Form W-9. *(a)(7) Tender Offer Instructions for Participants of Conrail Inc. Dividend Reinvestment Plan. *(a)(8) Text of Press Release issued by Parent and the Company on December 6, 1996. *(a)(9) Form of Summary Advertisement, dated December 6, 1996. *(a)(10) Text of Press Release issued by Parent on December 5, 1996. *(a)(11) Text of Press Release issued by Parent and the Company on December 10, 1996. *(a)(12) Text of Advertisement published by Parent and the Company on December 10, 1996. *(a)(13) Text of Press Release issued by Parent on December 11, 1996. *(a)(14) Text of Advertisement published by Parent and the Company on December 12, 1996. *(a)(15) Supplement to Offer to Purchase, dated December 19, 1996. *(a)(16) Revised Letter of Transmittal. *(a)(17) Revised Notice of Guaranteed Delivery. *(a)(18) Text of Press Release issued by Parent and the Company on December 19, 1996. *(a)(19) Letter from Parent to shareholders of the Company, dated December 19, 1996. *(a)(20) Text of Press Release issued by Parent on December 20, 1996. *(a)(21) Text of Press Release issued by Parent and the Company on January 9, 1997. *(a)(22) Text of Press Release issued by Parent and the Company on January 13, 1997. *(a)(23) Text of Press Release issued by Parent and the Company on January 15, 1997. *(a)(24) Text of Press Release issued by Parent on January 17, 1997. (a)(25) Deleted. *(a)(26) Text of Letter issued by Parent and the Company dated January 22, 1997. *(a)(27) Text of Advertisement published by Parent and the Company on January 29, 1997. *(a)(28) Text of Press Release issued by Parent and the Company on January 31, 1997. *(a)(29) Text of Press Release issued by Parent on February 14, 1997. *(a)(30) Text of Press Release issued by Parent on March 3, 1997. *(a)(31) Second Supplement to Offer to Purchase, dated March 7, 1997. *(a)(32) Revised Letter of Transmittal. *(a)(33) Revised Notice of Guaranteed Delivery. *(a)(34) Text of Press Release issued by Parent on March 7, 1997. *(a)(35) Form of Summary Advertisement, dated March 10, 1997. *(a)(36) Letter from Parent to employees of the Company, published on March 12, 1997. *(a)(37) Text of Press Release issued by CSX and NSC on April 8, 1997. *(a)(38) Third Supplement to Offer to Purchase, dated April 10, 1997. *(a)(39) Revised Letter of Transmittal circulated with the Third Supplement. *(a)(40) Revised Notice of Guaranteed Delivery circulated with the Third Supplement. *(b)(1) Credit Agreement, dated November 15, 1996 (incorporated by reference to Exhibit (b)(2) to Parent and Purchaser's Tender Offer Statement on Schedule 14D-1, as amended, dated October 16, 1996). *(b)(2) Credit Agreement, dated as of February 10, 1997, by and among NSC, Morgan Guaranty Trust Company of New York, as administrative agent, Merrill Lynch Capital Corporation, as documentation agent, and the banks from time to time parties thereto (incorporated by reference to NSC's and Atlantic Acquisition Corporation's Tender Offer Statement on Schedule 14D-1, dated February 12, 1997). (b)(3) Commitment Letter, dated April 22, 1997, among Morgan Guaranty Trust Company of New York, J.P. Morgan Securities Inc., Merrill Lynch Capital Corporation, Merrill Lynch & Co. and Norfolk Southern Corporation. *(c)(1) Agreement and Plan of Merger, dated as of October 14, 1996, by and among Parent, Purchaser and the Company (incorporated by reference to Exhibit (c)(1) to Parent and Purchaser's Tender Offer Statement on Schedule 14D-1, as amended, dated October 16, 1996). *(c)(2) Company Stock Option Agreement, dated as of October 14, 1996, between Parent and the Company (incorporated by reference to Exhibit (c)(2) to Parent and Purchaser's Tender Offer Statement on Schedule 14D-1, as amended, dated October 16, 1996). *(c)(3) Parent Stock Option Agreement, dated as of October 14, 1996, between Parent and the Company (incorporated by reference to Exhibit (c)(3) to Parent and Purchaser's Tender Offer Statement on Schedule 14D-1, as amended, dated October 16, 1996). *(c)(4) Voting Trust Agreement, dated as of October 15, 1996, by and among Parent, Purchaser and Deposit Guaranty National Bank (incorporated by reference to Exhibit (c)(4) to Parent and Purchaser's Tender Offer Statement on Schedule 14D-1, as amended, dated October 16, 1996). *(c)(5) First Amendment to Agreement and Plan of Merger, dated as of November 5, 1996, by and among Parent, Purchaser and the Company (incorporated by reference to Exhibit (c)(7) to Parent and Purchaser's Tender Offer Statement on Schedule 14D-1, as amended, dated October 16, 1996). *(c)(6) Second Amendment to Agreement and Plan of Merger, dated as of December 18, 1996, by and among Parent, Purchaser and the Company. *(c)(7) Form of Amended and Restated Voting Trust Agreement. (c)(8) Deleted. *(c)(9) Text of STB Decision No. 5 of STB Finance Docket No. 33220, dated January 8, 1997. (c)(10) Deleted. *(c)(11) Text of opinion of Judge Donald VanArtsdalen of the United States District Court for the Eastern District of Pennsylvania as delivered from the bench on January 9, 1997. *(c)(12) Third Amendment to Agreement and Plan of Merger, dated as of March 7, 1997, by and among Parent, Purchaser and the Company. *(c)(13) Form of Amended and Restated Voting Trust Agreement. *(c)(14) Letter Agreement between CSX and NSC, dated April 8, 1997. *(c)(15) Fourth Amendment to Agreement and Plan of Merger, dated as of April 8, 1997, by and among CSX, Purchaser and the Company. (d) Not applicable. (e) Not applicable. (f) Not applicable. - ----------- * Previously filed. EX-99 2 EXHIBIT (B)(3) MORGAN GUARANTY TRUST COMPANY OF NEW YORK 60 Wall Street New York, NY 10260 J.P. MORGAN SECURITIES INC. 60 Wall Street New York, NY 10260 MERRILL LYNCH CAPITAL CORPORATION World Financial Center North Tower New York, NY 10281 MERRILL LYNCH & Co. World Financial Center North Tower New York, NY 10281 April 22, 1997 COMMITMENT LETTER Mr. William J. Romig Vice President Norfolk Southern Corporation Norfolk, VA 23510-2191 Dear Bill: You have advised us that Norfolk Southern Corporation ("NSC") intends to participate in the acquisition of Conrail, Inc. (the "Acquisition") by means of a joint cash tender offer in conjunction with CSX Corporation ("CSX") (the "Tender Offer") and subsequent merger (the "Merger"). We understand that you will require up to $7,000,000,000 of senior bank debt facilities (the "Credit Facilities") to finance the Acquisition, to refinance your existing bank facilities, to backstop NSC's commercial paper program, to pay related fees and expenses, and for general corporate purposes. You have requested us to arrange the Credit Facilities. J.P. Morgan Securities Inc. ("JPMSI") and Merrill Lynch & Co. ("ML&Co."; together with JPMSI, the "Arrangers") are pleased to advise you that we are willing to use our best efforts to arrange a syndicate of financial institutions (the "Lenders") to provide the Credit Facilities. In addition, Morgan Guaranty Trust Company of New York ("Morgan") and Merrill Lynch Capital Corporation ("Merrill") hereby severally commit that each will, or will cause an affiliate to, provide up to $500,000,000 of the Credit Facilities. Attached as Exhibit A to this letter is a Summary of Terms and Conditions (the "Term Sheet") setting forth the principal terms and conditions on and subject to which Morgan and Merrill are willing to make their respective portions of the Credit Facilities available. It is agreed that Morgan and Merrill will act as the sole agents for, and that JPMSI and ML&Co. will act as sole arrangers of, the Credit Facilities and that no additional agents, co-agents or arrangers will be appointed without the prior written consent of Morgan, JPMSI, Merrill and ML&Co. All aspects of the syndication, including decisions as to the selection of institutions to be approached and when they will be approached when their commitments will be accepted, which institutions will participate, the tiering and allocations of the commitments among the Lenders and the amount, timing and distribution of fees among the Lenders shall, in each case, be subject to mutual agreement of the Arrangers and NSC. You agree to assist JPMSI and ML&Co. in forming any such syndicate and to provide Morgan, JPMSI, Merrill, ML&Co. and the other Lenders, promptly upon request, all information deemed reasonably necessary by them to complete successfully the syndication, including, but not limited to, (a) an information package for delivery to potential syndicate members and participants and (b) all information and projections prepared by you or your advisers relating to the transactions described. You agree that any other financings during the syndication process will be subject to approval by Morgan, JPMSI, Merrill and ML&Co. You further agree to make your officers and representatives available to participate in information meetings for potential syndicate members at such time and places as Morgan, JPMSI, Merrill and ML&Co. may reasonably request. You represent and warrant and covenant that no written information and no information (written or otherwise) given at information meetings for potential syndicate members (collectively, the "Information") which has been or is hereafter furnished by or on behalf of NSC to Morgan, JPMSI, Merrill and/or ML&Co. in connection with the transactions contemplated hereby contained (or, in the case of Information furnished after the date hereof, will contain) as of the time it was furnished (or is furnished) any material misstatement of fact or omitted (or will omit) as of such time to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were (or will be) made, not misleading; provided, that the foregoing representation and warranty is made only to the best of your knowledge in the case of Information relating to Conrail, Inc. and its subsidiaries, which knowledge is principally based upon public disclosure by Conrail, Inc.; and provided, further, that, with respect to Information consisting of statements, estimates and projections regarding the future performance of NSC and Conrail, Inc. and their respective subsidiaries (collectively, the "Projections"), no representation or warranty is made other than that the Projections have been (or will be) prepared in good faith utilizing due and careful consideration and the best information available to NSC at the time of preparation thereof. You agree to supplement the Information and the Projections from time to time until the Closing Date (as defined in the Term Sheet) as appropriate, so that the representations and warranties in the preceding sentence remain correct. In arranging and syndicating the Credit Facilities, Morgan, JPMSI, Merrill and ML&Co. will use and rely on the Information and the Projections without independent verification thereof. Morgan's and Merrill's commitments hereunder are subject to the conditions that (a) after the date hereof there shall not have occurred (i) any material adverse change in the consolidated financial position, operations, assets, business or prospects of NSC and its subsidiaries or Conrail and its subsidiaries or (ii) any material change in or material disruption of financial bank syndication or capital market conditions that in the opinion of Morgan, JPMSI, Merrill or ML&Co. could materially and adversely affect the syndication of the Credit Facilities; (b) the offer to purchase for the Tender Offer (the "Offer to Purchase") and the merger agreement for the Merger shall be in the form previously delivered to Morgan and Merrill, except for any amendments or modifications thereto that could not, in the reasonable opinion of Morgan and Merrill, impede or delay the Merger or otherwise materially adversely affect the Acquisition, or the parties to the Acquisition or the Lenders (it being understood that any amendment or modification which (1) increases the purchase price per share, (2) decreases the minimum condition, or (3) removes the requirement that the poison pill or similar arrangements or any Pennsylvania statutory provision restricting the ability to consummate the Tender Offer or the Merger be inapplicable shall not constitute such an amendment or modification); (c) the voting trust referred to in the Offer to Purchase (the "Voting Trust") shall have been approved by all of the required governmental and regulatory bodies, including, but not limited to, the Surface Transportation Board; (d) the Voting Trust shall be reasonably acceptable in form and substance to Morgan and Merrill and shall contain no provisions which, in the reasonable opinion of Morgan or Merrill, could affect NSC's ability to perform its obligations with regard to the Credit Facilities. In addition, Morgan's and Merrill's commitment is subject to the negotiation, execution and delivery prior to June 1, 1997 of definitive documentation with respect to the Credit Facilities satisfactory in form and substance to Morgan, Merrill and their counsel. Such documentation shall contain the terms and conditions set forth in the Term Sheet and such other indemnities, covenants, representations and warranties, events of default, conditions precedent, and other terms and conditions (which in each case shall not be inconsistent with the Term Sheet) as shall be satisfactory in all respects to Morgan, Merrill and you. Matters which are not covered by the provisions of this letter and the Term Sheet are subject to the approval of Morgan, Merrill and you. You agree to pay all reasonable out-of-pocket expenses of the Agents and the Arrangers associated with the syndication of the Credit Facilities and the preparation, execution and delivery of this letter and the definitive financing agreements (including the reasonable fees and disbursements and other charges of counsel). You agree to indemnify and hold harmless of each of Morgan, JPMSI, Merrill, ML&Co. and each director, officer, employee, affiliate and agent thereof (each, and "Indemnified Person") against, and to reimburse each Indemnified Person, upon its demand, for, any losses, claims, damages, liabilities or other expenses ("Losses") to which such Indemnified Person may become subject insofar as such Losses arise out of or in any way relate to or result from the Acquisition, this letter or the financing contemplated hereby, including, without imitation, Losses consisting of legal or other expenses incurred in connection with investigating, defending or participating in any legal proceeding relating to any of the foregoing (whether or not such Indemnified Person is a party thereto); provided that the foregoing will not apply to any Losses to the extent they are found by a final decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct or such Indemnified Person. Your obligations under this paragraph shall remain effective whether or not definitive financing documentation is executed and notwithstanding any termination of this letter. Neither Morgan, JPMSI, Merrill, ML&Co. nor any other Indemnified Person shall be responsible or liable to any other person for consequential damages which may be alleged as a result of this letter or the financing contemplated hereby. This letter may not be changed except pursuant to a written agreement signed by each of the parties hereto. This letter shall be governed by, and construed in accordance with, the laws of the State of New York. This letter is delivered to you on the understanding that neither this letter nor any of its terms or substance shall be disclosed, directly or indirectly, to any other person except (a) to your employees, directors, agents and advisers who are directly involved in the consideration of this matter, (b) to Conrail, Inc. and CSX and their respective employees, directors, agents and advisers or (c) as disclosure may be compelled in a judicial or administrative proceeding or as otherwise required by law. All descriptions of and references to the Credit Facilities in any filing with a governmental authority or in any press release, advertisement or other public disclosure shall be subject to the prior review of each of Morgan and Merrill. If you are in agreement with the foregoing, please sign and return to Morgan the enclosed copies of this letter no later than 11:59p.m. New York time on April 23, 1997. This offer shall terminate at such time unless prior thereto we shall have received signed copies of such letters. We look forward to working with you on this transaction. MORGAN GUARANTY TRUST COMPANY MERRILL LYNCH CAPITAL OF NEW YORK CORPORATION By: /S/ PATRICIA LUNKA By: /S/ CHRISTOPHER J. BIROSAK Title: Vice President Title: Vice President J.P. MORGAN SECURITIES INC. MERRILL LYNCH & CO. By: /S/ DAVID A. NASS, JR. By: /S/ CHRISTOPHER J. BIROSAK Title: Vice President Title: Managing Director Accepted and agreed to as of the dated first above written: NORFOLK SOUTHERN CORPORATION By: /S/ WILLIAM J. ROMIG Title: Vice President and Treasurer SUMMARY OF TERMS AND CONDITIONS FOR NORFOLK SOUTHERN CORPORATION Borrower: Norfolk Southern Corporation ("NSC") Amount: $7.0 billion Purpose: To finance the purchase by NSC of a portion of the assets of Conrail, Inc. and its Subsidiaries, to pay related fees and expenses, to refinance a portion of the existing bank debt of NSC (including under the existing credit agreement), and for general corporate purposes, including a backstop for commercial paper issuance. Arrangers: J.P. Morgan Securities Inc. and Merrill Lynch & Co. (collectively, in such capacities, the "Arrangers"). Administrative Agent: Morgan Guaranty Trust Company of New York ("Morgan"). Documentation Agent Merrill Lynch Capital Corporation ("Merrill"). Lenders: Lenders, financial institutions and other entities acceptable to the Arrangers and the Borrower (the "Lenders"). Facility Description: Unsecured revolving credit facility; $3.5 billion 364-day; $3.5 billion five-year. Borrowing Options: Eurodollar, Adjusted CD, Base Rate, and Money Market. CD will be automatically adjusted for reserves and other regulatory requirements. Eurodollar adjustments for Regulation D will be charged by Lenders individually. Base Rate means the higher of Morgan's prime rate or the federal funds rate + 0.50%. Money Market Option Description: The Borrower may request the Administrative Agent to solicit competitive bids from the Lenders at a margin over Eurodollar or at an absolute rate. Each Lender will bid at its own discretion for amounts up to the total amount of commitments and the Borrower will be under no obligation to accept any of the bids. Any Money Market advances made by a Lender shall be deemed usage of the facility for the purpose of fees and availability. However, each Lender's advance shall not reduce such Lender's obligation to lend its pro rata share of the remaining undrawn commitment. Bid Selection Mechanism: The Borrower will determine the aggregate amount of bids, if any, it will accept. Bids will be accepted in order of the lowest to the highest rates ("Bid Rates"). If two or more Lenders bid at the same Bid Rate and the amount of such bids accepted is less than the aggregate amount of such bids, then the amount to be borrowed at such Bid Rate will be allocated among such Lenders in proportion to the amount for which each Lender bid at such Bid Rate. If the bids are either unacceptably high to the Borrower or are insufficient in amount, the Borrower may cancel the auction. Fees and Interest Rates: Facility Fee: A per annum fee, payable on each Lender's commitment irrespective of usage, calculated on a 360 day basis and payable quarterly in arrears and upon termination of the facility. The Facility Fee rate will vary according to the Pricing Level that corresponds to the Borrower's credit quality (see attached Pricing Grid). Margins: Margins for committed Eurodollar and CD Loans are set forth in the attached Pricing Grid. Reference Lenders: Three institutions representative of the Lenders. Interest Payments: At the end of each applicable Interest Period or quarterly, if earlier. Interest Periods: Syndicated Borrowings: Eurodollar Loans - 1, 2, 3, or 6 months. Adjusted CD Loans - 30, 60, 90, or 180 days. Non-Syndicated Borrowings: Money Market Eurodollar Loans - minimum 1 month. Money Market Absolute Rate Loans - min. 14 days. Drawdowns: Minimum amounts of $25 million with additional increments of $1 million. Drawdowns are at the Borrower's option with same day notice for Base Rate Loans, one business day's for Money Market Absolute Rate Loans, two business days for Adjusted CD Loans, three business days for Eurodollar Loans, and five business days for Money Market Eurodollar Loans. Prepayments: Base Rate Loans may be prepaid at any time on one business day's notice. Eurodollar and Adjusted CD Loans aggregating $25 million may be prepaid on three business days' notice, subject to the payment of breakage costs, if any. Money Market Loans may not be prepaid before the end of an Interest Period. Termination or Reduction of Commitments: The Borrower will have the right, upon at least three business days' notice, to terminate or cancel, in whole or in part, the portion of the facility in excess of aggregate outstanding borrowings, provided that each partial reduction shall be in a minimum amount of at least $25 million or any whole multiple of $1,000,000 in excess thereof. Representations and Warranties: Customary for credit agreements of this nature, with respect to the Borrower and its Substantial Subsidiaries, including but not limited to: 1. Corporate existence. 2. Corporate and governmental authorization; no contravention; binding effect. 3. Financial information, including unaudited proforma statements. 4. No material adverse change since December 31, 1996. 5. Environmental matters. 6. Compliance with laws, including ERISA and contractual obligations. 7. No material litigation. 8. Existence, incorporation, etc. of Substantial Subsidiaries. 9. Payment of taxes. 10. Full disclosure. 11. Regulatory restrictions on borrowing. 12. Not an investment company. Conditions to Initial Borrowing: Customary for credit agreements of this nature, with respect to the Borrower and its Substantial Subsidiaries, including but not limited to: 1. Absence of default. 2. Accuracy of representations and warranties. 3. Negotiation and execution of satisfactory closing documentation, including favorable legal opinions from counsel for Agents and Borrower. 4. Deal-specific requirements if any; regulatory approvals (excluding Surface Transportation Board ("STB") approval), licenses. 5. Termination of commitments and repayment of all amounts borrowed under the Credit Agreement dated February 10, 1997. 6. The agreement dated as of April 8, 1997 between CSX Corporation ("CSX")and the Borrower (the "Agreement") shall be substantially in full force and effect in the form provided to the lenders, and all obligations to be performed by each party thereto on or prior to the date of the initial borrowing shall have been performed in full. 7. If the long term debt securities of the Borrower are rated below BBB-by Standard & Poor's Corporation ("S&P") or below Baa3 by Moody's Investor Service, Inc. ("Moody's") at any time prior to the execution of definitive loan documentation, the Borrower and the Lenders will negotiate in good faith to amend the provisions of this Term Sheet (including without limitation by increasing the facility fee or the margins applicable to the loans, by determining new compliance levels for the financial covenants and by including additional financial or other covenants, or events of default) in a manner satisfactory to the Borrower and the Lenders. Conditions to All Borrowings: 1. Accuracy of representations and warranties, 2. Absence of default. Affirmative Covenants: Customary for credit agreements of this nature, with respect to the Borrower and its Substantial Subsidiaries, including but not limited to: 1. Information. 2. Payment of taxes and other obligations. 3. Maintenance of property; insurance. 4. Conduct of business and maintenance of existence. 5. Compliance with laws including ERISA, environmental regulations, and material contractual obligations. 6. Inspection of property, books and records. 7. Use of proceeds. Negative Covenants: Customary for credit agreements of this nature, with respect to the Borrower and its Substantial Subsidiaries, including but not limited to: 1. Mergers, consolidations, and sales of assets. 2. Negative pledge. 3. Subsidiary debt limitation, with appropriate baskets to be determined. 4. Transactions with affiliates. 5. Borrower will at all times own, directly or indirectly, Norfolk and Western Railway Company and Norfolk Southern Railway Company. 6. No material modification to the terms of the Agreement and to the arrangements with respect to the ownership and use of the assets of Conrail, Inc. by CSX and the Borrower. Financial Covenants: 1. Net Worth Test. Consolidated Book Net Worth (with appropriate adjustments for acquisition-related charges) must at all times exceed [ ] billion plus [25%] of Annual Net Income (if positive). 2. Leverage Test. On any date, Consolidated Total Debt of the Borrower and its consolidated Subsidiaries shall not exceed [ ]% of Total Capital. Total Capital shall be the sum of Consolidated Total Debt and Stockholders' Equity. Events of Default: Customary for credit agreements of this nature, with respect to the Borrower and its Substantial Subsidiaries, including but not limited to: 1. Failure to pay any principal under the Credit Agreement when due or interest or fees within 5 days. 2. Failure to comply with covenants (with notice and cure periods, where appropriate). 3. Representations or warranties materially incorrect. 4. Failure of the Borrower or its Subsidiaries to pay when due any other debt with an aggregate principal amount of $50 million or more. Cross default to other debt of the Borrower and its Subsidiaries with an aggregate principal amount of $50 million or more. 5. Change of ownership or control. 6. Other usual defaults with respect to the Borrower and Substantial Subsidiaries, including but not limited to insolvency, bankruptcy, ERISA, and judgment defaults. Increased Costs/Change of Circumstances: The credit agreement will contain customary provisions protecting the Lenders in the event of unavailability of funding, illegality, increased costs and funding losses. Indemnification: The Borrower will indemnify the Lenders against all losses, liabilities, claims, damages, or expenses relating to their loans, the Borrower's use of loan proceeds or the commitments, including but not limited to reasonable attorneys' fees and settlement costs (except such as result from the indemnitee's gross negligence or willful misconduct). Transfers and Participations: Lenders will have the right to transfer or sell participations in their loans or commitments with the transferability of voting rights in the case of participations limited to changes in principal, rate, fees and term. Assignments, which must be in amounts of at least $10 million, will be allowed with the consent of the Borrower, and/or, assignment will be allowed within the Lender Group and to Lenders' affiliates. Administrative Fee: As agreed upon by the Borrower and Morgan. Auction Fee: As agreed upon by the Borrower and Morgan. Required Lenders: Under each Credit Facility, Lenders holding 51% of the aggregate amount of the commitments under such Credit Facility. Rate and Fee Basis: All per annum rates shall be calculated on the basis of a year of 360 days (or 365/366 days, in the case of Base Rate Loans the interest rate payable on which is then based on the Prime Rate) for actual days elapsed. Expenses: Borrower will pay all legal and other out-of-pocket expenses of the Arrangers and the Agents related to this transaction and any subsequent amendments or waivers, including the fees and expenses of Davis Polk & Wardwell, special counsel to the Agents. Governing Law: State of New York. PRICING GRID FOR NORFOLK SOUTHERN COPRORATION 364-Day Facility (basis points per annum)
================================================================================================================================= LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI - --------------------------------------------------------------------------------------------------------------------------------- Basis for If the Borrower's If the Borrower's If the Borrower's If the Borrower's If the Borrower's If Levels Pricing senior unsecured senior unsecured senior unsecured long senior unsecured senior unsecured long I-V do long term debt is long term debt is term debt is rated at long term debt is term debt is rated at do not rated at least A by rated at least A- least BBB+ by Stan- rated at least BBB least BBB- by apply Standard & Poor's by Standard & dard & Poor's or Baa1 by Standard & Standard & Poor's or or A2 by Moody's. Poor's or A3 by by Moody's. Poor's or Baa2 by Baa3 by Moody's. Moody's. Moody's. - --------------------------------------------------------------------------------------------------------------------------------- Facility Fee 4.5 5.5 6.0 7.0 9.0 15.0 - --------------------------------------------------------------------------------------------------------------------------------- "Unused" Cost 4.5 5.5 6.0 7.0 9.0 15.0 - --------------------------------------------------------------------------------------------------------------------------------- LIBOR + 15.5 17.0 21.5 25.5 31.0 50.0 - --------------------------------------------------------------------------------------------------------------------------------- CD + 28.0 29.5 34.0 38.0 43.5 62.5 - --------------------------------------------------------------------------------------------------------------------------------- Base Rate + 0 0 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------------- "Used" Cost L + 20.0 L + 22.5 L + 27.5 L + 32.5 L + 40.0 L + 65.0 =================================================================================================================================
PRICING GRID FOR NORFOLK SOUTHERN CORPORATION 5 Year Facility (basis points per annum)
================================================================================================================================ LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI - -------------------------------------------------------------------------------------------------------------------------------- Basis for If the Borrower's If the Borrower's If the Borrower's If the Borrower's If the Borrower's If Levels Pricing senior unsecured senior unsecured senior unsecured long senior unsecured senior unsecured long I-V do not long term debt is long term debt is term debt is rated at long term debt is term debt is rated at apply. rated at least A by rated at least A- least BBB+ by Stan- rated at least BBB least BBB- by Standard & Poor's by Standard & dard & Poor's or Baa1 by Standard & Standard & Poor's or or A2 by Moody's. Poor's or A3 by by Moody's. Poor's or Baa2 by Baa3 by Moody's. Moody's. Moody's. - -------------------------------------------------------------------------------------------------------------------------------- Facility Fee 6.5 7.5 9.0 11.0 13.5 20.0 - -------------------------------------------------------------------------------------------------------------------------------- "Unused" Cost 6.5 7.5 9.0 11.0 13.5 20.0 - -------------------------------------------------------------------------------------------------------------------------------- LIBOR + 13.5 15.0 18.5 21.5 26.5 45.0 - -------------------------------------------------------------------------------------------------------------------------------- CD + 26.0 27.5 31.0 34.0 39.0 57.5 - -------------------------------------------------------------------------------------------------------------------------------- Base Rate + 0 0 0 0 0 0 - -------------------------------------------------------------------------------------------------------------------------------- "Used" Cost L + 20.0 L + 22.5 L + 27.5 L + 32.5 L + 40.0 L + 65.0 ================================================================================================================================
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