AMENDMENT NO. 1 TO
TRANSACTION AGREEMENT
THIS AMENDMENT
NO. 1 TO TRANSACTION AGREEMENT (this “ Amendment
”), is made and entered into as of January 17, 2006, by
and among KANSAS CITY SOUTHERN, a Delaware corporation (“
KCS ”), THE KANSAS CITY SOUTHERN RAILWAY COMPANY, a
Missouri corporation (“ KCSR ”), NORFOLK
SOUTHERN CORPORATION, a Virginia corporation (“ NS
”), and THE ALABAMA GREAT SOUTHERN RAILROAD COMPANY, an
Alabama corporation and Subsidiary of NS (“ AGS
”), with reference to the following facts:
A. KCS, KCSR, NS and AGS are parties to that
certain Transaction Agreement entered into as of December 1,
2005 (the “ Transaction Agreement ”), pursuant
to the terms of which the parties thereto have agreed to form a
joint venture for purposes of owning and operating certain
Assets.
B. The
Transaction Agreement and the related Company Agreement to be
entered into at Closing contemplated that KCS will make certain
capital improvements to the Line after the Closing and NS has
agreed to contribute certain amounts to the Company, among other
things, to pay for such improvements.
C. KCS
has determined those capital improvements to the Line set forth on
Exhibit D of the Company Agreement will be undertaken in
advance of the Closing as part of its 2006 infrastructure program
and irrespective of the transaction among the parties to the
Transaction Agreement. The parties have determined that it is in
the best interest of all parties for KCS to begin making such
capital improvements to the Line prior to the Closing. Further, the
parties have determined that, should all Required Governmental
Consents be obtained, including the approval of the United States
Surface Transportation Board, these capital projects should be
eligible to be reimbursed from the proceeds of the transactions
contemplated by the Transaction Agreement. In order to do so, the
Transaction Agreement and the form of Company Agreement attached as
Exhibit A hereto must each be amended such that KCS will be
reimbursed by the Company following Closing for making such capital
improvements to the Line prior to Closing.
NOW,
THEREFORE, with reference to the foregoing facts and in
consideration of the mutual agreements and understanding set forth
herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
Capitalized
terms used herein but not otherwise defined herein shall have the
meaning assigned to such terms in the Transaction
Agreement.
2.1
Section 1 of the Transaction Agreement is hereby amended by
inserting the following new definitions therein in the appropriate
alphabetical order:
“
Budget ” shall have the meaning given to that term in
the Company Agreement.
“
Business Plan ” shall have the meaning given to that
term in the Company Agreement.
“ Fiscal
Year ” shall have the meaning given to that term in the
Company Agreement.
“
Pre-Closing Capital Expenditures ” shall have the
meaning given to that term in the Company Agreement.
2.2
Section 2.2 of the Transaction Agreement is hereby amended by
deleting the first and second sentences thereof and inserting in
lieu thereof the following two new sentences:
“KCS and
NS shall cause the Company to use $260,000,000 (less any
Pre-Closing Capital Expenditures for which the Company reimburses
KCS pursuant to clause (b) of the following sentence) of the
proceeds from the sale of the NS Interest plus any interest earned
thereon from time to time (the “Capital Proceeds”) for
the capital expenditures anticipated to be made in accordance with
the Company Agreement and the Budgets (including any Rollover
Budgets) and Business Plans (as each such term is defined in the
Company Agreement) for the Company contemplated thereby. KCS and NS
shall cause at Closing (a) up to $40,000,000 of the proceeds
from the sale of the NS Interest to be paid to reimburse KCS for
capital expenditures other than Pre-Closing Capital Expenditures
made by KCS on the Line within the two-year period ending on the
Closing Date (none of which shall have been made in anticipation of
this Agreement) as presented on a schedule delivered to NS prior to
the Closing Date, which schedule shall be final and binding on NS
if it accurately sets forth expenditures made in accordance with
the principles expressed in this sentence (the different between
$40,000,000 and such reimbursement shall be the “Excess
Proceeds”), (b) up to $20,000,000 of the proc
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