PAGE 1

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
-----------------------

FORM 10-Q

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from            to
----------    ----------
Commission file number 1-8339

NORFOLK SOUTHERN CORPORATION
-------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Virginia                                52-1188014
-----------------------------------     ---------------------------------
(State or other jurisdiction of         (IRS Employer Identification No.)
incorporation or organization)

Three Commercial Place
Norfolk, Virginia                         23510-2191
-----------------------------------     ---------------------------------
(Address of principal executive offices)            Zip Code

Registrant's telephone number, including area code   (757) 629-2680
----------------------

No Change
-------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  (X) Yes ( ) No

The number of shares outstanding of each of the registrant's classes of
Common Stock, as of the last practicable date:

Class                    Outstanding as of July 31, 1999
-----                   ---------------------------------
Common Stock (par value $1.00)     380,477,530 (excluding 21,627,902
shares held by registrant's
consolidated subsidiaries)

PAGE 2

INDEX
-----

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)

Page
----
Part  I.  Financial Information:

Item 1. Financial Statements:

Consolidated Statements of Income
Three Months and Six Months Ended
June 30, 1999 and 1998                           3-4

Consolidated Balance Sheets
June 30, 1999, and December 31, 1998               5

Consolidated Statements of Cash Flows
Six Months Ended June 30, 1999 and 1998          6-7

Notes to Consolidated Financial Statements      8-14

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations  15-26

Part II.  Other Information:

Item 3. Quantitative and Qualitative Disclosures
About Market Risk                                 27

Item 4. Submission of Matters to a Vote of
Security Holders                                  27

Item 6. Exhibits and Reports on Form 8-K               28-29

Signatures                                                          30

Index to Exhibits                                                   31

PAGE 3

PART I.  FINANCIAL INFORMATION
------------------------------

Item 1.   Financial Statements.
------    --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
($ in millions except per share amounts)
(Unaudited)

Three Months Ended   Six Months Ended
June 30,             June 30,
------------------   ----------------
1999        1998     1999      1998
----        ----     ----      ----

Railway operating revenues:
Coal                              $   298    $   316   $   580   $   639
General merchandise                   723        622     1,346     1,227
Intermodal                            173        141       298       279
-------    -------   -------   -------
TOTAL RAILWAY OPERATING
REVENUES                         1,194      1,079     2,224     2,145
-------    -------   -------   -------
Railway operating expenses:
Compensation and benefits             413        365       781       761
Materials, services, and rents        287        206       483       396
Conrail rents and services
(Note 3)                              51         --        51        --
Depreciation                          117        109       231       216
Diesel fuel                            48         45        85        93
Casualties and other claims            29         22        64        52
Other                                  51         39        94        83
-------    -------   -------   -------
TOTAL RAILWAY OPERATING
EXPENSES                           996        786     1,789     1,601
-------    -------   -------   -------
Income from railway
operations                       198        293       435       544

Equity in earnings of Conrail
(Note 3)                               22         50        49        82
Other income - net                      26         39        48        72
Interest expense on debt              (131)      (127)     (259)     (255)
-------    -------   -------   -------
Income from continuing
operations before income
taxes                            115        255       273       443

Provision for income taxes              38         68        84       124
-------    -------   -------   -------
Income from continuing
operations                        77        187       189       319
-------    -------   -------   -------
Discontinued operations (Note 4):
Loss from motor carrier
operations, net of taxes              --         --        --        (1)
Gain on sale of motor carrier,
net of taxes                          --         --        --        98
-------    -------   -------   -------
Income from discontinued
operations                        --         --        --        97
-------    -------   -------   -------

NET INCOME                    $    77    $   187   $   189   $   416
=======    =======   =======   =======

PAGE 4

Item 1.   Financial Statements. (continued)
------    --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (continued)
($ in millions except per share amounts)
(Unaudited)

Three Months Ended   Six Months Ended
June 30,             June 30,
------------------   ----------------
1999        1998     1999      1998
----        ----     ----      ----

Per share amounts (Note 6):
Income from continuing
operations, basic                 $ 0.20      $ 0.49   $ 0.50    $ 0.84
Income from continuing
operations, diluted                 0.20        0.48     0.50      0.83
Net income, basic                    0.20        0.49     0.50      1.10
Net income, diluted                  0.20        0.48     0.50      1.09

Dividends                            0.20        0.20     0.40      0.40

See accompanying notes to consolidated financial statements.

PAGE 5

Item 1.   Financial Statements. (continued)
------    --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
($ in millions)
(Unaudited)

June 30,     December 31,
1999           1998
-------      -----------

ASSETS
Current assets:
Cash and cash equivalents                    $   105         $     5
Short-term investments                            17              58
Accounts receivable, net of allowance
for doubtful accounts of $5 million and
$4 million, respectively                        716             519
Materials and supplies                            54              59
Deferred income taxes                            137             141
Other current assets                             158             131
-------         -------
Total current assets                     1,187             913

Investment in Conrail (Note 3)                  6,261           6,210
Properties less accumulated depreciation       10,869          10,477
Other assets                                      557             580
-------         -------
TOTAL ASSETS                           $18,874         $18,180
=======         =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                             $   810         $   600
Income and other taxes                           199             151
Other current liabilities                        239             225
Current maturities of long-term debt                           
(Note 5)                                        571             141
-------         -------
Total current liabilities                1,819           1,117

Long-term debt (Note 5)                         7,393           7,483
Other liabilities                               1,076           1,065
Minority interests                                 51              49
Deferred income taxes                           2,554           2,545
-------         -------
TOTAL LIABILITIES                       12,893          12,259
-------         -------
Stockholders' equity:
Common stock $1.00 per share par value,
1,350,000,000 shares authorized;
issued 402,059,998 shares and
401,031,994 shares, respectively                402             401
Additional paid-in capital                       320             296
Accumulated other comprehensive income                           
(Note 7)                                        (10)             (8)
Retained income                                5,289           5,252
Less treasury stock at cost, 21,627,902 
shares                                          (20)            (20)
-------         -------
TOTAL STOCKHOLDERS' EQUITY               5,981           5,921
-------         -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                  $18,874         $18,180
=======         =======

See accompanying notes to consolidated financial statements.

PAGE 6

Item 1.   Financial Statements. (continued)
------    --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in millions)
(Unaudited)

Six Months Ended
June 30,
----------------
1999        1998
----        ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                             $   189     $   416
Reconciliation of net income to net cash provided
by continuing operations:
Depreciation                                             239         222
Deferred income taxes                                     22           8
Equity in earnings of Conrail (Note 3)                   (41)        (82)
Nonoperating gains and losses on properties
and investments                                         (17)        (32)
Income from discontinued operations                       --         (97)
Changes in assets and liabilities affecting
operations:
Accounts receivable                                   (181)         19
Materials and supplies                                   7          (3)
Other current assets                                    23          27
Current liabilities other than debt                    211           6
Other - net                                            (26)        (30)
-------     -------
Net cash provided by continuing operations           426         454
Net cash used for discontinued operations             --          (2)
-------     -------
Net cash provided by operating activities          426         452

CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (Note 5)                               (536)       (472)
Property sales and other transactions                       40          31
Investment in Conrail                                       (2)        (33)
Investments, including short-term                          (90)        (73)
Investment sales and other transactions                    172          72
Proceeds from sale of motor carrier (Note 4)                --         200
-------     -------
Net cash used for investing activities            (416)       (275)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends                                                 (152)       (151)
Common stock issued - net                                   15          28
Commercial paper proceeds                                  173         129
Proceeds from long-term borrowings (Note 5)                584           4
Debt repayments                                           (530)       (135)
-------     -------
Net cash provided by (used for)
financing activities                               90        (125)
-------     -------
Net increase in cash and cash equivalents          100          52

CASH AND CASH EQUIVALENTS:*
At beginning of year                                         5          34
-------     -------
At end of period                                       $   105     $    86
=======     =======

PAGE 7

Item 1.   Financial Statements. (continued)
------    --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
($ in millions)
(Unaudited)

Six Months Ended
June 30,
----------------
1999         1998
----         ----

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts capitalized)                $   260     $   258
Income taxes                                         $     7     $    67

*    Cash equivalents represent all highly liquid investments
purchased three months or less from maturity.

See accompanying notes to consolidated financial statements.

PAGE 8

Item 1.   Financial Statements. (continued)
------    --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

1.   In the opinion of Management, the accompanying unaudited interim
financial statements contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly the
Corporation's financial position as of June 30, 1999, and results
of operations and cash flows for the six months ended June 30,
1999 and 1998.

Although Management believes that the disclosures presented are
adequate to make the information not misleading, these
consolidated financial statements should be read in conjunction
with:  (a) the financial statements and notes included in the
Corporation's latest Annual Report on Form 10-K and in subsequent
Quarterly Report on Form 10-Q, and (b) any Current Reports on
Form 8-K.

2.   Commitments and Contingencies

There have been no significant changes since year-end 1998 in the
matters discussed in NOTE 17, COMMITMENTS AND CONTINGENCIES,
appearing in the NS Annual Report on Form 10-K for 1998, Notes to
Consolidated Financial Statements, beginning on page 80.

In July 1999, NS announced that it had made a special incentive
program available to its 30,000 employees who are represented by
labor unions.  The program, which runs through early September,
provides an incentive to covered employees who remain available
for service throughout certain defined periods.  Employees can
earn a maximum incentive of $3,000, payable, to the extent
possible, in the form of contributions of NS Common Stock to each
employee's 401(k) account.  The total cost of the program will
depend upon the extent of employee participation and will be
reflected in NS' results of operations for the third quarter.

3.   Investment in Conrail and Operations Over Its Lines

Overview
--------
NS and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail),
whose primary subsidiary is Consolidated Rail Corporation (CRC),
the major railroad in the Northeast.  From May 23, 1997, the date
NS and CSX completed their acquisition of Conrail stock, until
June 1, 1999, Conrail's operations continued substantially
unchanged while NS and CSX awaited regulatory approvals and
thereafter devoted significant effort to prepare for the
integration of the respective Conrail routes and assets to be
leased to their railroad subsidiaries, Norfolk Southern Railway
Company (NSR) and CSX Transportation, Inc. (CSXT).  From time to
time, NS and CSX, as the indirect owners of Conrail, may need to
fund Conrail's cash requirements through capital contributions,
loans, or advances.

PAGE 9

Item 1.   Financial Statements. (continued)
------    --------------------

3.   Investment in Conrail and Operations Over Its Lines (continued)

Commencement of Operations
--------------------------
On June 1, 1999 (the "Closing Date"), NSR and CSXT began
operating the Conrail routes and assets leased to them pursuant
to operating and lease agreements entered into in accordance with
the Transaction Agreement between NS and CSX.

The Operating Agreement between NSR and Pennsylvania Lines LLC
(PRR), a wholly owned subsidiary of CRC, governs substantially
all nonequipment assets to be used by NSR and has an initial
25-year term, renewable at the option of NSR for two 5-year
terms.  Payments under the Operating Agreement are based on
appraised values that are subject to adjustment every six years
to reflect changes in such values.  NSR has also leased or
subleased for varying term lengths from PRR a number of equipment
assets at rentals based on appraised values.  NSR's payments to
PRR under the Operating Agreement and lease agreements currently
amount to approximately $340 million annually.  In addition, all
costs necessary to operate and maintain the PRR assets will be
borne by NSR.  CSXT has entered into comparable arrangements, for
the operation and use of other CRC assets, with another wholly
owned CRC subsidiary.

NSR and CSXT also have entered into agreements with CRC governing
other Conrail properties that continue to be owned and operated
by Conrail (the "Shared Assets Areas").  NSR and CSXT pay CRC
a fee for joint and exclusive access to the Shared Assets Areas.
In addition, NSR and CSXT pay, based on usage, the costs incurred
by CRC to operate the Shared Assets Areas.

As a result of these transactions, effective June 1, 1999, railroad 
route miles operated by NSR and railroad employees increased by
approximately 50 percent.  NSR and CSXT now provide substantially
all rail freight services on Conrail's route system, perform or
are responsible for performing most services incident to customer
freight contracts, and employ the majority of Conrail's former
work force.  Consequently, NSR began to receive all freight
revenue and incur all operating expenses on the Conrail lines it
now operates.

During the month of June, congestion and other inefficiencies
resulting from difficulties in NSR's integration of the new
routes and operations adversely affected second-quarter revenues
and expenses.  The higher expenses included service alteration
costs to meet the immediate needs of shippers, as well as higher
labor costs and equipment rents.  A long-term failure by NSR to
integrate successfully the portion of Conrail that it is now
operating could have a substantial adverse impact on NS'
financial position, results of operations, and liquidity.

PAGE 10

Item 1.   Financial Statements. (continued)
------    --------------------

3.   Investment in Conrail and Operations Over Its Lines (continued)

Accounting Treatment
--------------------
NS is applying the equity method of accounting to its investment
in Conrail in accordance with APB No. 18, "The Equity Method of
Accounting for Investments in Common Stock."  NS is amortizing
the excess of the purchase price over Conrail's net equity using
the principles of purchase accounting, based primarily on the
estimated remaining useful lives of Conrail's property and
equipment, including the related deferred tax effect of the
differences in tax and accounting bases for certain assets.  At
June 30, 1999, the difference between NS' investment in Conrail
and its share of Conrail's underlying net equity was
$4.0 billion, and the related amortization amounted to
$72 million annually.

Conrail's underlying net equity reflects liabilities recognized
by Conrail primarily for separations of nonunion employees and to
satisfy change-in-control obligations.

NS' investment in Conrail includes $187 million ($115 million
after taxes) of costs that will be paid by NS' railroad
subsidiary.  These costs consist principally of:  (1) contractual
obligations to Conrail employees imposed by the STB when it
approved the transaction and (2) costs to relocate Conrail
employees.  Most of these costs are expected to be paid in the
two years following the Closing Date; $60 million are classified
on NS' balance sheet as "Current liabilities."  However, certain
contractual obligations by their terms will be paid out over a
longer period and are classified as "Other liabilities" on NS'
balance sheet.  Through June 30, 1999, NS has paid $10 million of
these costs.

The liabilities recorded by NS and Conrail are based on estimates
of separation, relocation, and other labor-related contractual
obligations to Conrail employees.  These liability estimates, 
along with the fair value allocation, may be modified as more 
information becomes available.  As a consequence, amounts ultimately 
included in the allocation could differ from the original estimates;
however, any such differences are not now expected to be material
to NS' financial position, results of operations, or liquidity.
As definitive plans are determined and communicated, costs, if
any, for severing or relocating NS employees and for disposing of
NS facilities will be charged to operating expense.

Effective June 1, 1999, NS' consolidated financial statements
include the consolidated financial position and results of Triple
Crown Services Company (TCS), a partnership in which subsidiaries
of NS and PRR are equal partners.  As a result, NS' total assets
increased by approximately $140 million (including $121 million
of properties, mostly RoadRailer (RT) equipment), and NS' total
liabilities increased by approximately $130 million (including
$109 million of long-term debt).

PAGE 11

Item 1.   Financial Statements. (continued)
------    --------------------

3.   Investment in Conrail and Operations Over Its Lines (continued)

Related Party Transactions
--------------------------
"Conrail rents and services," a new line on the income statements
beginning June 1, 1999, includes:  (1) expenses for amounts due
to PRR and CRC for use of operating properties and equipment, 
operation of the Shared Assets Areas, and continued operation of 
certain facilities during a transition period; and (2) NS' equity 
in the earnings (or loss) of Conrail, net of amortization.

"Other current assets" includes $39 million due from CRC for its
vacation liability related to the portion of its work force that
became NS employees on the Closing Date.  NS increased its
vacation liability accordingly, and will pay these employees as
they take vacation.

"Accounts payable" includes $43 million due to PRR and CRC
related to expenses included in "Conrail rents and services," as
discussed above.

Until the Closing Date, NSR and CRC had transactions with each
other in the course of handling interline traffic.  Most of the
amounts receivable or payable related to these transactions have
been satisfied.

Summary Financial Information - Conrail
---------------------------------------
The following summary financial information for Conrail was
provided by Conrail's management and should be read in
conjunction with Conrail's audited financial statements included
as an exhibit to NS' Annual Report on Form 10-K for 1998 filed
with the Securities and Exchange Commission.

Conrail's operating results were significantly affected by the
integration of its routes and assets with those of NSR and
CSXT, effective June 1, 1999.  Conrail's results of operations
include freight line-haul revenues and related expenses
through May 31, 1999, but reflect its new structure and
operations for the month of June.  Conrail's major sources of
operating revenues are now from NSR and CSXT.  The composition of
Conrail's operating expenses has changed also.  Accordingly,
meaningful comparisons to 1998's results are difficult.

PAGE 12

Item 1.   Financial Statements. (continued)
------    --------------------

3.   Investment in Conrail and Operations Over Its Lines (continued)

Summarized Consolidated Statements of Income - Conrail
------------------------------------------------------

Three Months Ended      Six Months Ended
June 30,               June 30,
------------------      ----------------
1999        1998        1999      1998
----        ----        ----      ----
($ in millions)
(Unaudited)

Operating revenues        $   737     $   983     $ 1,653   $ 1,910
Operating expenses            798         777       1,568     1,544
-------     -------     -------   -------
Operating income
(loss)                     (61)        206          85       366
Other-net                     (23)        (20)        (45)      (43)
-------     -------     -------   -------
Income (loss) before
income taxes               (84)        186          40       323
Provision for income
taxes                        (21)         71          27       123
-------     -------     -------   -------
Net income (loss)       $   (63)    $   115     $    13   $   200
=======     =======     =======   =======

Note:  Conrail's results for the three months and six months ended
June 30, 1999, include $117 million of after-tax expenses,
principally an increase to certain components of its casualty
reserves based on a recently completed actuarial valuation.  
These items were considered in the fair-value allocation of NS'
investment in Conrail, and, accordingly, were excluded in
determining NS' equity in Conrail's net income.

Summarized Consolidated Balance Sheets - Conrail
------------------------------------------------

June 30,       December 31,
1999             1998
-------        -----------
($ in millions)
(Unaudited)

Assets
Current assets                     $    893          $  1,005
Noncurrent assets                     7,788             8,039
--------          --------
Total assets                    $  8,681          $  9,044
========          ========
Liabilities and stockholders'
equity
Current liabilities                $  1,048          $  1,207
Noncurrent liabilities                3,772             4,037
Stockholders' equity                  3,861             3,800
--------          --------
Total liabilities and
stockholders' equity           $  8,681          $  9,044
========          ========

PAGE 13

Item 1.   Financial Statements. (continued)
------    --------------------

4.   Discontinued Operations - Motor Carrier

During the first quarter of 1998, NS sold all the common stock of
North American Van Lines, Inc. (NAVL), its motor carrier
subsidiary.  Proceeds from the sale in that quarter were
$200 million, resulting in an $83 million pretax gain
($98 million, or $0.26 per share, after taxes).  The higher
after-tax gain was the result of differences between book and tax
bases and the realization of deferred tax benefits.  In the third
quarter of 1998, as a result of a purchase price adjustment, NS
recorded an additional $7 million ($0.02 per share) after-tax gain.

NAVL's results of operation and cash flows are presented as
"Discontinued operations" in the accompanying 1998 financial
statements.  NAVL's operations in the first quarter of 1998
generated revenues of $207 million and a loss of $1 million.

5.   Long-Term Debt

Term Notes
----------
In April 1999, NS issued $400 million of 6.2 percent, 10-year
term notes under its November 1998 $1 billion shelf registration
and received $396 million of net proceeds.

Equipment Trust Certificates
----------------------------
NSR issued equipment trust certificates in March and June 1999
and received $188 million of net proceeds.  The certificates
mature serially in the years 2000 through 2014, inclusive, and
carry a weighted-average interest rate of 6.6 percent.  Proceeds
were used to acquire locomotives and freight cars, and at June
30, 1999, $21 million of the proceeds were included in "Other
assets" and will be used later in the year to acquire additional
equipment.

Capital Lease Obligations
-------------------------
During the first six months of 1998, a rail subsidiary of NS
entered into capital leases covering new locomotives.  The
related capital lease obligations, totaling $127 million, were
reflected in the Consolidated Balance Sheet as debt and, because
they were noncash transactions, were excluded from the
Consolidated Statement of Cash Flows.

PAGE 14

Item 1.   Financial Statements. (continued)
------    --------------------

6.   Earnings Per Share

The following table sets forth the reconciliation of the number
of weighted-average shares outstanding used in the calculations
of basic and diluted earnings per share:

Three Months Ended      Six Months Ended
June 30,               June 30,
------------------      ----------------
1999          1998      1999        1998
----          ----      ----        ----
(In millions)

Weighted-average shares
outstanding               380           379       380         378

Dilutive effect of
outstanding options and
performance share units
(as determined by the
application of the
treasury stock method)      2             3         2           3
----          ----      ----        ----

Diluted weighted-average
shares outstanding        382           382       382         381
====          ====      ====        ====

There are no adjustments to "Net income" or "Income from
continuing operations" for the diluted earnings per share
computations.  The calculations above exclude options on 5 million
shares in the first quarter and on 7 million shares in the second
quarter because their exercise price exceeded the average market
price for Common Stock.

7.   Comprehensive Income

NS' total comprehensive income was as follows:

Three Months Ended     Six Months Ended
June 30,               June 30,
------------------     ----------------
1999        1998       1999      1998
----        ----       ----      ----
($ in millions)

Net income                 $  77      $ 187       $ 189      $ 416
Other comprehensive
income (loss)                (2)        --          (2)         1
-----      -----       -----      -----
Total comprehensive
income                 $  75      $ 187       $ 187      $ 417
=====      =====       =====      =====

"Other comprehensive income" is the unrealized gains and losses
on certain investments in debt and equity securities.

PAGE 15

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations.
-------------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations

In the following sections, NS provides data for corresponding periods
in 1998 and, in some cases, indicates the percent of variance between
the 1999 and 1998 data.  However, NS does caution that all such data
should be considered in light of the substantially different operating
contexts to which they relate.

COMMENCEMENT OF OPERATIONS OVER CONRAIL'S LINES

On June 1, 1999, NS' railroad subsidiary (NSR) began operating a
portion of Conrail's properties (NSR's new "Northern Region") under
various agreements with Pennsylvania Lines LLC (PRR), a wholly owned
subsidiary of Consolidated Rail Corporation (CRC) (see Note 3).  As a
result, railroad route miles operated by NSR and railroad employees 
increased by approximately 50 percent.  Second-quarter results reflect 
two months (April and May) of operating the former Norfolk Southern 
railroad system and NS' share of Conrail's earnings, and one month (June) 
of operating the new Norfolk Southern system, which includes the Northern
Region.

Moreover, during the month of June, system congestion and other
inefficiencies resulted from difficulties in the integration of the
new routes.  NSR has made progress in reducing congestion and
continues to work diligently to resolve the operational issues and
clear the backlog of cars causing the congestion.  This effort has
required additional labor and equipment resources, and the need for
such additional resources is expected to continue until the congestion
is cleared.  In addition, freight has been diverted from NSR, and in
some cases, NSR has incurred service alteration costs to meet the
immediate needs of shippers.  The resulting decrease in revenues and
increase in costs negatively affected NS' second-quarter results, and
NS' financial statements will continue to be so affected until the
operational issues have been resolved.

RESULTS OF OPERATIONS

Net Income
----------
Net income for the second quarter of 1999 was $77 million, down
$110 million, or 59 percent, compared with the second quarter of 1998.
For the first six months of 1999, net income was $189 million,
$130 million, or 41 percent below last year's results for continuing
operations.  "Discontinued operations" in 1998 included a $98 million
after-tax gain from the sale of NS' motor carrier subsidiary (see
Note 4).  The declines in net income from continuing operations were
largely attributable to lower income from railway operations and lower
Conrail earnings, including an estimated $91 million reduction to
operating income attributable to system congestion and related traffic
diversions arising from difficulties encountered in the commencement
of operations over a portion of Conrail's lines.

PAGE 16

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

Railway Operating Revenues
--------------------------

Second-quarter railway operating revenues were $1,194 million in 1999
and were $1,079 million in 1998.  For the first six months, railway
operating revenues were $2,224 million in 1999 and were $2,145 million
in 1998.  As shown in the table below, the improvements were due
entirely to higher traffic volume, largely the result of the
commencement of operations in the Northern Region.  The revenue per
unit variance for both periods included a $13 million favorable effect
that resulted from the consolidation of Triple Crown Services
Company's (TCS) June revenues (see Note 3).  Traffic diversions
related to June's operational difficulties resulted in an estimated
$40 million of lost revenues, principally in the general merchandise
commodity groups.

Second Quarter      First Six Months
1999 vs. 1998        1999 vs. 1998
Increase (Decrease)  Increase (Decrease)
-------------------  -------------------
($ in millions)

Traffic volume (carloads)      $  116                $   80
Revenue per unit                   (1)                   (1)
------                ------
$  115                $   79
======                ======

Revenues and carloads for the commodity groups were as follows:

Revenues
-----------------------------------------
Second Quarter           Six Months
1999       1998       1999       1998
----       ----       ----       ----
($ in millions)

Coal                          $  298     $  316     $  580     $  639
General merchandise:
Automotive                     187        145        347        283
Chemicals                      166        145        314        291
Paper/clay/forest              139        139        267        276
Metals/construction            126         98        220        189
Agr./consumer prod./govt.      105         95        198        188
------     ------     ------     ------
General merchandise              723        622      1,346      1,227
Intermodal                       173        141        298        279
------     ------     ------     ------
Total                   $1,194     $1,079     $2,224     $2,145
======     ======     ======     ======

PAGE 17

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

Carloads
-----------------------------------------

Second Quarter           Six Months
1999       1998       1999        1998
----       ----       ----        ----
(in thousands)

Coal                             340        327        640         658
General merchandise:
Automotive                     156        127        292         243
Chemicals                      114        102        213         204
Paper/clay/forest              112        117        215         233
Metals/construction            126         97        217         185
Agr./consumer prod./govt.       96         86        180         175
-----      -----      -----       -----
General merchandise              604        529      1,117       1,040
Intermodal                       425        375        771         742
-----      -----      -----       -----
Total                    1,369      1,231      2,528       2,440
=====      =====      =====       =====

Coal
----
Second-quarter coal revenues were $298 million, versus $316 million
last year, and were $580 million for the first six months, versus
$639 million last year.  Lower export and domestic metallurgical coal
traffic volume more than offset the combined effects of the Northern
Region traffic and increased utility coal tonnage.  In addition,
revenue yields continued to be affected by a change in the mix of
traffic:  increased utility coal shipments (especially new shorter-
haul business) and decreased export and domestic metallurgical coal
shipments.  Total tonnage handled was 35.0 million tons in the second
quarter, versus 33.7 million tons last year, and was 66.3 million tons
for the first six months, versus 67.7 million tons last year.  Export
coal tonnage fell 37 percent for the quarter and 35 percent for the
first six months, as the effects of adverse world economic conditions
and a strong U.S. dollar continued.  Domestic steel coal tonnage
declined 4 percent in the second quarter and 11 percent for the first
six months, largely reflecting increased imports of lower-priced steel
and plant closures in the second quarter of 1998.  Utility coal
tonnage increased 17 percent in the quarter and 10 percent for the
first six months, principally due to the handling of traffic in the
Northern Region.

Coal revenues for the remainder of the year are expected to continue
to be adversely affected by weak demand for export coal.  However,
with the addition of traffic in the Northern Region, total coal
revenues are expected to be higher than in the same period last year.

PAGE 18

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

General Merchandise
-------------------
Second-quarter general merchandise revenues were $723 million, versus
$622 million last year, and were $1,346 million for the first six
months, versus $1,227 million last year.  Traffic volume increased
14 percent for the quarter and 7 percent for the first six months,
principally due to the addition of traffic in the Northern Region and
to continued strength in automotive traffic.  Average revenue per unit
increased 2 percent in both periods, due to a longer average length of
haul and changes in traffic mix.

General merchandise revenues for the remainder of the year are
expected to be up almost 50 percent, versus the same period last year,
largely as a result of traffic in the Northern Region.

Intermodal
----------
Second-quarter intermodal revenues were $173 million, versus
$141 million last year, and were $298 million for the first six
months, versus $279 million last year.  Traffic volume increased
13 percent for the quarter and 4 percent for the first six months,
largely due to the addition of Northern Region traffic and to the
consolidation of TCS' June revenues.  Average revenue per unit
increased 9 percent in the quarter and 3 percent in the first six
months, due to the effects of consolidating TCS' revenues.

TCS provides door-to-door intermodal service using containers and
RoadRailer (RT) equipment, which can be pulled over the highways in
tractor-trailer configuration and over the rails by locomotives.  TCS
is a partnership in which subsidiaries of NS and PRR are equal
partners.  Prior to June 1, 1999, NS' revenues included only the
amounts for rail services it performed under contract for TCS.

For the remainder of the year, intermodal revenues are expected nearly
to double, versus the same period last year, reflecting the traffic in
the Northern Region and the consolidation of TCS' revenues.

Railway Operating Expenses
--------------------------
Second-quarter railway operating expenses were $996 million, up
$210 million, or 27 percent, compared with last year.  For the first
six months, railway operating expenses were $1,789 million, up
$188 million, or 12 percent.  Both increases were due to the
commencement of operations in the Northern Region and to an estimated
$60 million of additional costs arising from the operational
difficulties and resulting congestion.

"Materials, services, and rents" increased $81 million, or 39 percent,
in the second quarter, and $87 million, or 22 percent, for the first
six months, compared with the same periods last year.  The increases
resulted from additional costs due to the system congestion, including

PAGE 19

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

an estimated $29 million for alternate transportation to meet critical
customer needs and an estimated $8 million for equipment rents;
expenses related to the Northern Region; and the effect of the
consolidation of TCS.

"Conrail rents and services," a new category of expense, amounted to
$51 million and represented costs incurred in June associated with the
operation of a portion of Conrail's routes and assets.  This item
includes amounts due to PRR and CRC related to:  (1) use of their
operating properties and equipment, (2) CRC's operation of the Shared
Assets Areas, and (3) CRC's operation of certain transition
facilities.  Also included is NS' equity in Conrail's net loss in
June, plus additional amortization related to the difference between
NS' investment in Conrail and its underlying equity.

"Compensation and benefits" expense increased $48 million, or
13 percent, in the second quarter, and $20 million, or 3 percent, for
the first six months, compared with the same periods last year.  Both
increases were attributable to the 50 percent increase in NS' work
force in June, upon commencement of operations in the Northern Region,
and to an estimated $15 million of higher labor costs associated with
the operational difficulties and system congestion.  The effects of
these increases were mitigated by reduced incentive compensation
expenses.

"Other" expenses increased $12 million, or 31 percent, in the second
quarter, and $11 million, or 13 percent, for the first six months,
compared with the same periods last year.  The increases reflect
favorable property tax adjustments last year for which there was no
comparable adjustment in 1999 as well as higher travel costs this
year associated with the integration of the Northern Region.

"Casualties and other claims" increased $7 million, or 32 percent, in
the second quarter, and $12 million, or 23 percent, for the first six
months, compared with the same periods last year.  The increases were
largely attributable to:  (1) the commencement of operations in the
Northern Region and the resulting congestion, (2) settlement in the
first quarter related to an environmental site in Slidell, La., and
(3) damages to automobiles being transported in a train that derailed
in the first quarter.

"Diesel fuel" expense increased $3 million, or 7 percent, in the
second quarter, but decreased $8 million, or 9 percent, for the first
six months, compared with the same periods last year.  The increase
for the quarter was due to higher consumption in June attributable to
operations in the Northern Region, which more than offset lower
consumption in April and May that resulted from lower traffic volume.
The decrease for the first six months was due to a 23 percent decline
in the average price per gallon in the first quarter that more than
offset the increased consumption in the second quarter.

PAGE 20

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

The railway operating ratio was 83.4 percent in the second quarter,
versus 72.8 percent last year, and was 80.4 percent for the first six
months, versus 74.6 percent last year.  The operating difficulties and
related system congestion and traffic diversions are estimated to have
increased the railway operating ratio by about 7 percentage points and
3-1/2 percentage points for the quarter and first six months,
respectively.  The remaining increases in the railway operating ratio
were principally attributable to the change in traffic mix related to
increased resource-intensive traffic, such as automotive and
intermodal, and decreased coal traffic.

The railway operating ratio is expected to continue to show the
adverse effects of the system congestion and related traffic
diversions until the operating difficulties are fully resolved.
Moreover, NS' third-quarter railway operating expenses will include
amounts related to a special incentive program for its agreement
employees (see Note 2).

Equity in Earnings of Conrail
-----------------------------
As discussed above, beginning in June, NS' equity in Conrail's
earnings or loss and the related amortization is included in "Conrail
rents and services," a component of railway operating expenses.
"Equity in earnings of Conrail" includes amounts recorded through May
1999.  Due to this change in reporting coupled with lower Conrail
earnings, "Equity in earnings of Conrail" decreased significantly in
the second quarter and first six months of 1999 (see "Conrail's
Results of Operations, Financial Condition, and Liquidity," below).

Other Income - Net
------------------
"Other income - net" was $13 million lower in the second quarter and
was $24 million lower for the first six months, compared with the same
periods last year.  The second-quarter decrease was largely
attributable to the effect of favorable adjustments last year to
interest accruals on possible federal income tax liabilities resulting
from the settlement of the 1993 and 1994 tax-year audits.  The
unfavorable six-month comparison was due to lower gains from the sale
of properties and investments as well as to the effect of the
favorable adjustments last year.

Provision for Income Taxes
--------------------------
The effective income tax rate was 33.0 percent in the second quarter,
compared with 26.7 percent last year, and was 30.8 percent for the
first six months, compared with 28.0 percent last year.  Excluding NS'
equity in Conrail's after-tax earnings, the effective rates for 1999
were 37.6 percent for the second quarter and 36.2 percent for the
first six months, compared with 33.2 percent for the second quarter of
1998 and 34.3 percent for the first six months.  The higher effective
rates for both periods of 1999 resulted from the effects of favorable
adjustments to income tax expenses in 1998 upon settlement of the 1993
and 1994 federal income tax audits.

PAGE 21

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

Discontinued Operations
-----------------------
"Income from discontinued operations" for the first six months of
1998 included a $98 million gain from the sale of NS' motor carrier
subsidiary (see Note 4).

FINANCIAL CONDITION AND LIQUIDITY

June 30,      December 31,
1999            1998
-------       -----------
($ in millions)

Cash and short-term investments        $ 122            $  63
Working capital deficit                $ 632            $ 204
Current assets to current liabilities    0.7              0.8
Debt-to-total capitalization            57.1%            56.3%

CASH PROVIDED BY OPERATING ACTIVITIES is NS' principal source of
liquidity (see Consolidated Statements of Cash Flows on page 6).  The
decrease in "Net cash provided by operating activities" in the first
six months of 1999, compared with the same period last year, was
principally due to lower income from railway operations, mitigated by
lower income tax payments.  The large changes in "Accounts receivable"
and "Current liabilities other than debt" in this year's cash flow
statement principally resulted from the June 1 commencement of
operations in the Northern Region.  NS' working capital deficit of 
$632 million at June 30, 1999, included $400 million of notes due 
May 1, 2000.  NS has the capability to issue commercial paper to meet 
its more immediate working capital needs (see the discussion of financing 
activities, below).  In addition, NS has $600 million of capacity 
remaining under its November 1998 $1 billion shelf registration.

CASH USED FOR INVESTING ACTIVITIES increased substantially for the
first six months of 1999, compared with the same period last year that
included $200 million of proceeds from the sale of a subsidiary
(see Note 4).  Capital expenditures were 7 percent lower in the
current year; however, "Property additions" increased, reflecting a
change in financing methods:  in 1998, locomotives were acquired under
capital leases, which were excluded from the Consolidated Statements
of Cash Flows because they were noncash transactions; in 1999,
locomotives and freight cars were financed through the sale of
equipment trust certificates (see Note 5).

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES in the first six
months of 1999 included proceeds from the sale of 10-year notes and
equipment trust certificates (see Note 5).  "Debt repayments" in 1999
includes $499 million of reductions in outstanding commercial paper.
NS expects to issue commercial paper as working capital needs arise
and to repay such commercial paper as resources become available or by
issuing additional commercial paper.  In addition, PRR could advance
funds to NS.

PAGE 22

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

CONRAIL'S RESULTS OF OPERATIONS, FINANCIAL CONDITION, AND LIQUIDITY

As discussed above and in Note 3, effective June 1, 1999, NSR and CSXT
began operating most of Conrail's routes and assets in accordance with
operating and lease agreements with Conrail subsidiaries.
Accordingly, direct comparisons with 1998's results are difficult.

Conrail recorded a second-quarter net loss of $63 million, versus net
income of $115 million last year.  For the first six months, net
income was $13 million in 1999, versus $200 million in 1998.  Results
in 1999 included $117 million of after-tax expenses, principally based
on a recently completed actuarial valuation of certain components of
its casualty reserves.  Excluding the effects of these expenses,
Conrail's net income would have been down $61 million in the quarter
and $70 million for the first six months, principally due to costs
related to the wind-down of certain functions and lower income from
railway operations during the first five months of 1999.

Operating revenues were $737 million in the second quarter and
$1,653 million for the first six months, versus $983 million and
$1,910 million, respectively, for the same periods last year,
reflecting the change in operations.  Operating expenses (excluding
the expenses discussed above) declined $149 million in the second
quarter and $146 million for the first six months, reflecting the
change in operations, mitigated by the effects of transition-related
expenses.  It is expected that Conrail's operations for the remainder
of the year will generate a net loss, principally due to expenses
related to:  (1) the integration of its railroad system with those of
NSR and CSXT, and (2) wind-down of numerous functions that will not be
required to support NSR's and CSXT's operations after a transition
period.  The net loss is not expected to affect Conrail's ability to
operate its ongoing business activities for the benefit of NS and CSX
or its ability to meet its other obligations.

Conrail's working capital deficit was $155 million at June 30, 1999,
versus a deficit of $202 million at Dec. 31, 1998.  In addition to cash
flow from operations, the improvement in working capital resulted in
part from the reclassification of certain employee obligations,
partially offset by the reclassification of $250 million of long-term
debt to current liabilities, reflecting the maturity of the debt in
June 2000.  Conrail should continue to have sufficient cash flow to
meet its ongoing obligations, notwithstanding the change in the nature
of its operations.

YEAR-2000 COMPLIANCE

General
-------
In October 1995, NS initiated a project to review and modify, as
necessary, its computer applications, hardware, and other equipment to
make them Year-2000 compliant.  NS has engaged outside consultants and
independent contractors to assist with its Year-2000 project.  The

PAGE 23

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

progress of the project is reviewed regularly by NS' senior management
and by the Board's Audit Committee.  The project is organized into
three principal areas:  mainframe systems, nonmainframe systems, and
enterprise systems (operations and embedded processors), and for each
such system involves:  inventory, assessment, remediation, testing,
and implementation.  NS expects to have all business-critical systems
remediated, tested, and implemented in the third quarter of 1999.

State of Readiness
------------------
The inventory and assessment phases have been completed.  The
remediation phase is over 99 percent complete, and the testing and
implementation phases are about 65 percent complete.  The remaining
items to be addressed are principally purchased software products and
system integration testing.

For mainframe systems, all noncompliant business-critical applications
have been remediated, unit tested, and placed back into production
(implemented).  System integration testing is expected to be completed
in the third quarter of 1999.

For nonmainframe and enterprise systems, all business-critical
applications have been inventoried and assessed, and remediation is
over 99 percent complete.  For both types of systems, testing and
implementation are expected to be completed in the third quarter.

NS also has initiated formal communications with third parties having
a substantial relationship to its business (including other railroads,
significant suppliers, larger customers, and financial institutions)
to determine the extent to which NS may be vulnerable to any such
third parties' failure to achieve Year-2000 compliance.  Thus far, NS
has no information that indicates a significant third party may be
unable to provide goods or services or to request NS' services because
of Year-2000 compliance issues.  NS will continue to monitor the
progress of such third parties' Year-2000 compliance efforts and
develop contingency plans as warranted.

Cost
----
NS has allocated existing information technology resources and has
incurred incremental costs, mostly for contract programmers and
consultants, in connection with its Year-2000 compliance project.
Since the project began, Management estimates that up to 10 percent of
NS' in-house programming resources have been used for Year-2000
compliance efforts.  The effects of deferring other information
technology projects to accommodate the Year-2000 effort have been
minor.  Incremental costs incurred through June 30, 1999, which were
expensed, are immaterial to NS' results of operations.  Total
incremental costs are expected to be approximately $25 million.

PAGE 24

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

Contingency Plans
-----------------
In all areas, the project includes extensive testing to ensure that
remediation successfully addresses Year-2000 compliance.  NS has
established a series of initiatives to focus on business-critical
systems to ensure continued operations in the event of a Year-2000
problem.  In addition, contingency plans are being developed where
warranted.

Conrail
-------
NS is implementing its own information technology systems on the
portion of Conrail's routes and assets it is operating.  While some
systems are operational, others -- particularly the transportation
systems -- will be integrated geographically during the remainder of
1999.  Accordingly, some of Conrail's systems have been modified to be
compatible with NS' systems during the interim period.  Moreover, in
the Shared Assets Areas, some of Conrail's existing systems still are
being used, and, therefore, must be compatible with both NS' and CSX's
systems.  NS is continuing to work with Conrail and CSX to address
compatibility issues.

NS also is working with Conrail and CSX to ensure that certain Conrail
computer applications, hardware, and other equipment are Year-2000
compliant.  Conrail's core transportation system is being made
Year-2000 compliant, with a projected completion date for all
programming and testing of September 1999.  Conrail's other
information technology systems are expected to be replaced by NS and
CSX systems by Dec. 1, 1999.  A delay in replacing these systems,
which are not Year-2000 compliant, could result in their failure.
Conrail also has under way a project to inventory, assess, and
remediate all of its business-critical enterprise systems that will
continue to support its post Closing Date operations.  This Conrail
project is scheduled for completion in the third quarter of 1999.

Risks
-----
Failure to achieve Year-2000 compliance -- by NS, other railroads, its
principal suppliers and customers, and certain financial institutions
with which it has relationships -- could negatively affect NS' ability
to conduct business for an extended period.  Management believes that
NS will be successful in its Year-2000 compliance effort; however,
there can be no assurance that all NS information technology systems
and components will be fully Year-2000 compliant.  In addition, other
companies on which NS systems and operations rely may or may not be
fully compliant on a timely basis, and any such failure could have
a material adverse effect on NS' financial position, results of
operations, or liquidity.

PAGE 25

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

NEW ACCOUNTING PRONOUNCEMENT

In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral 
of the Effective Date of FASB Statement No. 133."  Because of this 
deferral, NS expects to adopt SFAS No. 133 effective Jan. 1, 2001.

LITIGATION

The Corporation and certain subsidiaries are defendants in numerous
lawsuits relating principally to railroad operations.

On Sept. 8, 1997, a state court jury in New Orleans returned a verdict
awarding $175 million in punitive damages against The Alabama Great
Southern Railroad Company (AGS), a subsidiary of Norfolk Southern
Railway Company, all of the common stock of which is owned by NS.
The verdict was returned in a class action suit involving some 8,000
individuals who claim to have been damaged as the result of an
explosion and fire that occurred in New Orleans on Sept. 9, 1987, when
a chemical called butadiene leaked from a tankcar.

The jury verdict awarded a total of nearly $3.2 billion in punitive
damages against four other defendants in the same case:  two rail
carriers, the owner of the car, and the shipper.  Previously, the jury
had awarded nearly $2 million in compensatory damages to 20 of the
more than 8,000 individual plaintiffs.

On May 21, 1999, AGS and four of the nine defendants reached an
agreement to settle this litigation.  The four remaining defendants
are not parties to the settlement agreement, and the litigation will
continue against those defendants.  Because it involves a class
action, the settlement is subject to final approval by the trial
court, and to possible appeals.

While the final outcome of this matter and other lawsuits cannot be
predicted with certainty, it is the opinion of Management, based on
known facts and circumstances, that the amount of NS' ultimate
liability is unlikely to have a material adverse effect on NS'
financial position, results of operations, or liquidity.

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements, within the
meaning of the Private Securities Reform Act of 1995, that are based
on current expectations, estimates, and projections.  Such forward-
looking statements reflect Management's good-faith evaluation of
information currently available.  However, because such statements are
based upon, and therefore can be influenced by, a number of external
variables over which Management has no, or incomplete, control, they

PAGE 26

Item 2.   Management's Discussion and Analysis of Financial Condition
------    -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

are not, and should not be read as being, guarantees of future
performance or of actual future results; nor will they necessarily
prove to be accurate indications of the times at or by which any such
performance or result will be achieved.  Accordingly, actual outcomes
and results may differ materially from those expressed in such forward-
looking statements.  This caveat has particular importance in the
context of all such statements that relate to Year-2000 compliance and
to the Conrail transaction, including the realization and the timing
of benefits expected to result from its consummation.

The forward-looking statements contained in this filing speak only as
of the date on which they are made, and the Corporation does not
undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date hereof.  If the
Corporation does update one or more forward-looking statements, no
inference should be drawn that the Corporation will make additional
updates with respect thereto or with respect to other forward-looking
statements.

PAGE 27

PART II.  OTHER INFORMATION
----------------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)

Item 3.   Quantitative and Qualitative Disclosures about Market Risk.
------    ----------------------------------------------------------

There has been no material change to the disclosures made under
the heading "Market Risks and Hedging Activities" on page 47 of the
Corporation's 1998 Annual Report on Form 10-K.

Item 4.   Submission of Matters to a Vote of Security Holders.
------    ---------------------------------------------------

Registrant's annual meeting of stockholders was held on May 13,
1999, at which meeting three directors were elected to the class for a
term of three years, the appointment of independent public accountants
was ratified, and the stockholder proposal was defeated.

The three nominees for directors were elected by the following
vote:

THREE-YEAR TERM
------------------------------------------------------------------
FOR             AUTHORITY WITHHELD
---             ------------------
Gerald L. Baliles      319,342,135 votes       9,088,730 votes
Gene R. Carter         323,820,777 votes       4,610,088 votes
Steven F. Leer         321,118,087 votes       7,312,778 votes

The appointment of KPMG LLP, independent public accountants, was
ratified by the following vote:

FOR:  325,950,419 shares              AGAINST:  1,228,778 shares

ABSTAINED:  1,251,668 shares

The stockholder proposal concerning elimination of bonuses and
other forms of incentive pay as a means of compensating any employee
of the Corporation was defeated by the following vote:

FOR:  18,647,863 shares               AGAINST:  266,763,100 shares

ABSTAINED:  5,848,211 shares

PAGE 28

Item 6.   Exhibits and Reports on Form 8-K.
------    --------------------------------

(a)  Exhibits:

10.1  Amendment No. 1, dated as of August 22, 1998, to the
Transaction Agreement, dated as of June 10, 1997, by
and among CSX Corporation, CSX Transportation, Inc.,
Norfolk Southern Corporation, Norfolk Southern Railway
Company, Conrail Inc., Consolidated Rail Corporation,
and CRR Holdings LLC, that agreement's having been
filed electronically as Exhibit 10 to Registrant's
Current Report on Form 8-K, dated June 23, 1997.

10.2  Amendment No. 2, dated as of June 1, 1999, to the
Transaction Agreement, dated June 10, 1997, by and
among CSX Corporation, CSX Transportation, Inc.,
Norfolk Southern Corporation, Norfolk Southern Railway
Company, Conrail Inc., Consolidated Rail Corporation,
and CRR Holdings LLC, that agreement's having been
filed electronically as Exhibit 10 to Registrant's
Current Report on Form 8-K, dated June 23, 1997.

10.3  Operating Agreement, dated as of June 1, 1999, by and
between Pennsylvania Lines LLC and Norfolk Southern
Railway Company.

10.4  Shared Assets Area Operating Agreement for North
Jersey, dated as of June 1, 1999, by and among
Consolidated Rail Corporation, CSX Transportation,
Inc., and Norfolk Southern Railway Company, with
exhibit thereto.

10.5  Shared Assets Area Operating Agreement for South
Jersey/Philadelphia, dated as of June 1, 1999, by and
among Consolidated Rail Corporation, CSX Transportation,
Inc., and Norfolk Southern Railway Company, with exhibit 
thereto.

10.6  Shared Assets Area Operating Agreement for Detroit,
dated as of June 1, 1999, by and among Consolidated
Rail Corporation, CSX Transportation, Inc., and 
Norfolk Southern Railway Company, with exhibit thereto.

10.7  Monongahela Usage Agreement, dated as of June 1, 1999,
by and among CSX Transportation, Inc., Norfolk Southern 
Railway Company, Pennsylvania Lines LLC, and New York
Central Lines LLC, with exhibit thereto.

27    Financial Data Schedule

PAGE 29

Item 6.   Exhibits and Reports on Form 8-K. (continued)
------    --------------------------------

(b)  Reports on Form 8-K:

A report on Form 8-K was filed on April 26, 1999, reporting
that on that date, NS would close the sale of a $400 million
offering of 6.20 percent Senior Notes due April 15, 2009.

A report on Form 8-K was filed on April 30, 1999, reporting
that NS had issued and sold $400 million aggregate principal
amount of its 6.20 percent Senior Notes due April 15, 2009.

PAGE 30

SIGNATURES
----------

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

NORFOLK SOUTHERN CORPORATION
-----------------------------------------
(Registrant)

Date:  August 11, 1999         /s/ Dezora M. Martin
-------------------      -----------------------------------------
Dezora M. Martin
Corporate Secretary (Signature)

Date:  August 11, 1999         /s/ John P. Rathbone
-------------------      -----------------------------------------
John P. Rathbone
Vice President and Controller
(Principal Accounting Officer) (Signature)

PAGE 31

INDEX TO EXHIBITS
-----------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)

Electronic
Submission
Exhibit
Number                             Description                 
----------      -------------------------------------------------

10.1          Amendment No. 1, dated as of August 22, 1998, to the          
Transaction Agreement, dated as of June 10, 1997.

10.2          Amendment No. 2, dated as of June 1, 1999, to the
Transaction Agreement, dated June 10, 1997.

10.3          Operating Agreement, dated as of June 1, 1999.

10.4          Shared Assets Area Operating Agreement for North Jersey,
dated as of June 1, 1999.

10.5          Shared Assets Area Operating Agreement for South
Jersey/Philadelphia, dated as of June 1, 1999.

10.6          Shared Assets Area Operating Agreement for Detroit,
dated as of June 1, 1999.

10.7          Monongahela Usage Agreement, dated as of June 1, 1999.

27            Financial Data Schedule (This exhibit is required to be 
submitted electronically pursuant to the rules and
regulations of the Securities and Exchange Commission 
and shall not be deemed filed for purposes of Section 11 
of the Securities Act of 1933 or Section 18 of the 
Securities Exchange Act of 1934.)

AMENDMENT NO. 1

to the

TRANSACTION AGREEMENT

by and among

CSX CORPORATION,

CSX TRANSPORTATION, INC.,

NORFOLK SOUTHERN CORPORATION

NORFOLK SOUTHERN RAILWAY COMPANY,

CONRAIL INC.,

CONSOLIDATED RAIL CORPORATION

and

CRR HOLDINGS LLC

Dated as of June 10, 1997

AMENDMENT NO. 1

THIS AMENDMENT NO. 1 dated as of August 22, 1998 is by and
among CSX CORPORATION, a Virginia corporation ("CSX"), CSX
TRANSPORTATION, INC., a Virginia corporation, for itself and on
behalf of its controlled Subsidiaries (collectively, "CSXT"),
NORFOLK SOUTHERN CORPORATION, a Virginia corporation ("NSC"),
NORFOLK SOUTHERN RAILWAY COMPANY, a Virginia corporation, for
itself and on behalf of its controlled Subsidiaries
(collectively, "NSR"), CONRAIL INC., a Pennsylvania corporation,
for itself and on behalf of its controlled Subsidiaries
(collectively, "CRR"), CONSOLIDATED RAIL CORPORATION, a
Pennsylvania corporation ("CRC"), and CRR HOLDINGS LLC, a
Delaware limited liability company ("CRR Parent").

WHEREAS, CSX, CSXT, NSC, NSR, CRR, CRC and CRR Parent have
entered into that certain Transaction Agreement dated as of June
10, 1997 (the "Agreement").

WHEREAS, The Parties to the Agreement have determined to
amend the Agreement to increase the size of the Board of
Directors of CRC under the Agreement as set forth herein.
Accordingly, the parties agree as follows:

SECTION 1.  Definitions.  Capitalized terms used in this
Amendment and not defined herein shall have the meanings assigned
to such terms in the Agreement.

SECTION 2.  Amendments of the Agreement.  The Agreement is
hereby amended pursuant to and in compliance with Section 11.1 as
set forth below:

(a)  The text of subsection 4.2(a) is hereby deleted in
entirety and the following substituted therefor:

"Following the Control Date, the business and affairs
of CRC shall be managed under the direction of the CRC
Board consisting of eight persons divided into two
classes of four directors.  Four directors shall be
designated by CSX (the "CSX Directors") and four
directors shall be designated by NSC (the "NSC
Directors")."

SECTION 3.  Effectiveness.  This Amendment shall become
effective as of August 22, 1998 (the "Amendment Date").

SECTION 4.  Integration; Confirmation.  On and after the
Amendment Date, each reference in the Agreement to "this
Agreement," "herein," "hereunder" or words of similar import, and
each reference in any Note or other document delivered in

- 2-

connection with the Agreement shall be deemed to be a reference
to the Agreement as amended by this Amendment, and the Agreement
as so amended shall be read as a single integrated document. 
Except as specifically amended by this Amendment, all other terms
and provisions of the Agreement shall continue in full force and
effect and unchanged and are hereby confirmed in all respects.

SECTION 5.  Counterparts.  This Amendment may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were
upon the same instrument.

SECTION 6.  Governing Law.  This Amendment shall be
construed in accordance with and governed by the law of the State
of New York.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.

CSX CORPORATION

By:  /s/ Paul R. Goodwin
Name:  Paul R. Goodwin 
Title: Executive Vice President - 
Finance and Chief Financial
Officer 

CSX TRANSPORTATION, INC.
(for itself and on behalf of its
controlled Subsidiaries) 

By:  /s/ Michael Ward
Name: Michael J. Ward 
Title: Executive Vice President -
Finance and Chief Financial
Officer 

NORFOLK SOUTHERN CORPORATION 

By:  /s/ S. C. Tobias
Name: S. C. Tobias 
Title: Vice Chairman and Chief
Operating Officer 

- 3 -

NORFOLK SOUTHERN RAILWAY COMPANY
(for itself and behalf of its controlled
Subsidiaries) 

By:  /s/ S. C. Tobias
Name: S. C. Tobias 
Title: Vice President and Chief
Operating Officer 

CONRAIL INC. (for itself and on behalf
of its controlled Subsidiaries) 

By:  /s/ Timothy O'Toole
Name: Timothy O'Toole 
Title: President 

CONSOLIDATED RAIL CORPORATION 

By:  /s/ Timothy O'Toole
Name: Timothy O'Toole 
Title: President 

CRR HOLDINGS LLC 

By:  /s/ S. C. Tobias
Name: S. C. Tobias 
Title:  Vice President

- 4 -

AMENDMENT NO. 2 TO
TRANSACTION AGREEMENT

THIS AMENDMENT NO. 2 TO THE TRANSACTION AGREEMENT (this
"Amendment"), dated as of June 1, 1999, by and among CSX
CORPORATION, a Virginia corporation ("CSX"), CSX TRANSPORTATION,
INC., a Virginia corporation, for itself and on behalf of its
controlled Subsidiaries (collectively, "CSXT"), NORFOLK SOUTHERN
CORPORATION, a Virginia corporation ("NSC"), NORFOLK SOUTHERN
RAILWAY COMPANY, a Virginia corporation, for itself and on behalf
of its controlled Subsidiaries (collectively, "NSR"), CONRAIL
INC., a Pennsylvania corporation, for itself and on behalf of its
controlled Subsidiaries (collectively, "CRR"), CONSOLIDATED RAIL
CORPORATION, a Pennsylvania corporation ("CRC"), and CRR HOLDINGS
LLC, a Delaware limited liability company ("CRR Parent").       

WHEREAS, the parties have previously entered into that
certain Transaction Agreement, dated as of June 10, 1997, as
amended by Amendment No. 1 to Transaction Agreement, dated as of
August 22, 1998 and the System Support Operations Agreement dated
as of May 15, 1999, relating to Section 2.3 hereof (the
"Transaction Agreement");

WHEREAS, the parties are on the date hereof consummating
the Closing (as defined in the Transaction Agreement) and
entering into various documents and instruments to effectuate the
same, including Ancillary Agreements ("Closing Documents");

WHEREAS, in connection with the parties' preparations for
the Closing, the parties have identified certain provisions of
the Transaction Agreement for which the Parties desire to clarify
their understandings and agreements with respect to such
provisions and to make interim provisions with respect to certain
Transaction Agreement matters which are currently in dispute;

WHEREAS, the parties have determined that it is in the
best interests of their respective companies to amend the
Transaction Agreement as set forth in this Amendment;

WHEREAS, it is the intent of the parties that, except as
expressly amended hereby, the Transaction Agreement shall remain
unamended and in full force and effect;

NOW, THEREFORE, the parties hereby amend the Transaction
Agreement as follows:

SECTION 1.  References; Interpretation.  

(a) Unless otherwise specifically defined herein, each
term used herein which is defined in the Transaction Agreement
has the meaning assigned to such term in the Transaction
Agreement.  Each reference to "hereof", "hereunder", "herein" and
"hereby" and each reference to "this Agreement" and each other
similar reference contained in the Transaction Agreement shall
from and after the date of this Amendment refer to the
Transaction Agreement as amended hereby.

(b)  The parties hereby expressly agree that the
Closing is being consummated, and the Closing Documents are being
delivered, pursuant to and in furtherance of the Transaction
Agreement and shall be interpreted as such consistent with the
terms of the Transaction Agreement and in furtherance of the
terms of the Transaction Agreement to the greatest extent
possible.  Therefore, in the event of any inconsistency between
the terms of the Transaction Agreement and any Closing Document,
the terms of the Transaction Agreement shall prevail, except to
the extent such Closing Document provides otherwise.

SECTION 2.  Transportation Contracts.  

(a)  The beginning of the first sentence of Subsection
2.2(c)(iii) of the Transaction Agreement is amended to read as
follows:

"(iii)  The following decision rules shall be
applied on an annual basis with tentative settlements
to the extent required by subsection (c)(ii) on a
quarterly basis 90 days after the end of the quarter
and an annual true-up 90 days after the end of the
year:"

(b)  Subsection 2.2(c)(iii)(C)(aa)(x) of the
Transaction Agreement is hereby amended and restated in its
entirety by deleting the existing provision and inserting the
following:

"(x)  If the origin station is Local to NSR
and the destination station is on the NYC Allocated
Assets and Local to CSXT, then the allocation shall be
on a joint line basis between NSR and CSXT with the
interchange to be negotiated between NSR and CSXT and
the revenues to be split based upon an ICC Docket 28300
mileage prorate with a minimum division of 25% to each
of NSR and CSXT; and"

(c)  Subsection 2.2 (c) (iii) (C) (bb) (x) of the
Transaction Agreement is hereby amended and restated in its
entirety by deleting the existing provision and inserting the
following:

"(x)  If the origin station is Local to CSXT
and the destination station is on the PRR Allocated
Assets and Local to NSR, then the allocation shall be
on a joint line basis between CSXT and NSR with the
interchange to be negotiated between CSXT and NSR and
the revenues to be split based upon an ICC Docket 28300
mileage prorate with a minimum division of 25% to each
of CSXT and NSR; and"

SECTION 3.  FELA Matters.  

(a) Section 2.8(c) of the Transaction Agreement is
hereby amended and restated in its entirety by deleting the
existing provision and inserting the following:

2

"(c) Except for liabilities that are the
responsibility of any Person pursuant to any of the
Ancillary Agreements, all liabilities associated with
the handling and disposition of FELA Claims ("FELA
Liabilities") of CRR, CRC and their Affiliates shall be
allocated as follows: (i) FELA Liabilities that arise
from incidents or exposures occurring prior to the
Closing Date shall be Retained Liabilities; (ii) to the
extent FELA Liabilities arise from incidents or
exposures occurring in part prior, and in part on or
after, the Closing Date, that portion of the FELA
Liability arising prior to the Closing Date shall be
Retained Liability; and, (iii) to the extent FELA
Liabilities arise from incidents or exposures occurring
on or after the Closing Date, they shall be the
responsibility of the party then employing the injured
employee.  Notwithstanding the provisions of the
foregoing sentence, if any single incident occurring
between the Control Date and the Closing Date results
in FELA Liability which exceeds CRC's insurance
coverage by $10 million or more, the amount by which
such liability exceeds $10 million in excess of CRC's
insurance coverage shall be a PRR Allocated Liability
if the incident occurred on or relates primarily to PRR
Allocated Assets and shall be a NYC Allocated Liability
if the incident occurred on or relates primarily to NYC
Allocated Assets.  CRC will obtain insurance, in form
and amount satisfactory to the parties hereto,
indemnifying PRR and NYC against the liability to which
either may be subject under this paragraph.            

(b)  Section 8.15 of the Transaction Agreement is
hereby deleted in its entirety and the following is substituted
therefor:

"Section 8.15.  Administration of Actions. 
After the Closing Date, (a) NYC shall have exclusive
authority and control over the investigation,
prosecution, defense and appeal of all Actions relating
primarily to NYC, the NYC Allocated Assets, the NYC
Allocated Liabilities or a Retained Liability (except
for Retained Liabilities for which the monetary claim
is more than $500,000 or injunctive relief is sought)
which arose at the location of a NYC Allocated Asset,
or with which a NYC Allocated Asset is most
significantly involved (each, an "NYC Action"), and may
settle or compromise, or consent to the entry of any
judgment with respect to, any such NYC Action without
the consent of CRC, NSC or PRR and (b) PRR shall have
exclusive authority and control over the investigation,
prosecution, defense and appeal of all Actions relating
primarily to PRR, the PRR Allocated Assets, the PRR
Allocated Liabilities, or a Retained Liability (except
for Retained Liabilities for which the monetary claim
is more than $500,000 or injunctive relief is sought),
which arose at the location of a PRR Allocated Asset or
with which a PRR Allocated Asset is most significantly
involved (each a "PRR Action"), and may settle or
compromise, or consent to the entry of any judgment
with respect to, any such PRR Action without the
consent of CRC, CSX or NYC.

3

"Notwithstanding the foregoing, neither NYC
or PRR may settle or compromise, or consent to the
entry of any judgment with respect to, any such Action
without the prior written consent of the other if such
settlement, compromise or consent to such judgment (i)
includes any form of injunctive relief binding upon
such other party or CRC or (ii) does not include as an
unconditional term thereof the giving by the claimant
or plaintiff to such other party or CRC and any
Affiliates of CRC subject to such Action of a full and
final release from all liability in respect to such
claim or litigation.  After the Closing Date with
respect to an Action not covered under clauses (a) and
(b) of the foregoing sentence (including Actions
relating to Retained Liabilities), the handling,
administration and disposition of such Actions shall be
the joint responsibility of CSX and NSC and the costs
thereof shall be Corporate Level Liabilities.  In
assigning joint responsibility for the administration,
handling and disposition of Actions to CSX and NSC,
hereunder it is not the parties' intent that CSX and
NSC will actually administer, handle and dispose of
such Actions jointly, but rather that CSX and NSC will
agree on the most practical and efficient arrangements
with the objective of eliminating unnecessary
duplication of effort and minimizing overall costs. 
The costs and expenses of the administration and
handling of such Actions shall be Corporate Level
Liabilities; provided that salaries and overheads
associated with the salaries of full time employees of
CSX or NSC while engaged in investigation or handling
such Actions shall be the responsibility of the
employing party and are Corporate Level Liabilities
only to the extent that they are covered by insurance
or are otherwise reimbursable by CRR or CRC pursuant to
a separate agreement with CSX or NSC.                   

"The provisions of this Section 8.15 shall
apply except as may be otherwise provided in a separate
agreement among CRC, CSX and/or NSC and except as may
be provided by action of the CRC Board."

(c)  Section 8.16 of the Transaction Agreement is
hereby deleted in its entirety and the following is substituted
therefor:

"Section 8.16.  Administration of FELA
Claims.  (a) Except as provided pursuant to separate
agreement between CSX and NSC, the administration,
handling and disposition of FELA Claims (whenever made)
that arise from incidents or exposures occurring prior
to the Closing Date shall be (i) the responsibility of
the parent of the party operating the Allocated Asset
where the incident or incidents giving rise to the FELA
Claim occurred, or (ii) the responsibility of the
parent of the party operating the Allocated Asset most
significantly involved if the FELA Claim arises from an
incident or incidents occurring at multiple locations

4

on Allocated Assets, or (iii) the joint responsibility
of CSX and NSC if the FELA Claim arises from an
incident or incidents occurring at unknown locations or
a location not otherwise covered by clauses (i) or (ii)
of this sentence.  In assigning joint responsibility
for the administration, handling and disposition of
FELA Claims to CSX and NSC under the foregoing clause
(iii), it is not the parties' intent that CSX and NSC
will actually administer, handle and dispose of such
actions jointly, but rather that CSX and NSC will agree
on the most practical and efficient arrangements with
the objective of eliminating unnecessary duplication of
effort and minimizing overall costs.  The costs and
expenses associated with the administration, handling
and disposition of FELA Claims that arise from
incidents or exposures occurring prior to the Closing
Date shall be borne by CRR; provided that salaries and
overheads associated with the salaries of full time
employees of CSX or NSC while engaged in investigation
or handling such FELA Claims shall be the
responsibility of the employing party and are Corporate
Level Liabilities only to the extent that they are
covered by insurance or are otherwise reimbursable by
CRR or CRC pursuant to a separate agreement with CSX or
NSC; provided, further that the party responsible for
the administration of FELA Claims which are Retained
Liabilities shall, before agreeing to any single
settlement of a FELA Claim or group of related FELA
Claims, involving a payment of more than $1 million,
obtain the written consent of the other party.  Failure
of either party to respond to such a request for
consent within fourteen days of receipt of such request
shall be deemed to constitute consent."

SECTION 4.  CRC Pension Plan Matters. 

(a)  Section 6.3(c) of the Transaction Agreement is
hereby amended by inserting the following after the word
"Percentage":

", as adjusted to reflect any Separation
Costs required to be borne by CSX or NSC pursuant to
Section 6.2(i) and to reflect any timing differences in
the transfers of assets and liabilities to CSX and NSC
pension plans based on actual investment experience."

(b)  Section 6.3(c) of the Transaction Agreement is
further amended by deleting the last sentence thereof and
replacing it with the following:

"The Consolidated Rail Corporation Pension Fund
Investment Committee shall approve the manner and
amounts to be transferred to CSX and NSC pension plans
with respect to transfers of employees to CSX and NSC
payrolls and this Section 6.3(c)."

SECTION 5.  Insurance Matters.  Section 2.11 of the
Transaction Agreement is hereby deleted in its entirety and the
following is substituted therefor:

"2.11  Insurance Proceeds: Except as otherwise
provided in this Agreement, the proceeds of any
insurance recoveries from insurance carried by CRR,

5

CRC or their respective Affiliates on or prior to the
Closing Date and third party recoveries in the nature
of insurance or indemnity covering Assets, Retained
Liabilities or Allocated Liabilities, which are
received on or after the Closing Date, shall accrue to
the benefit of and be held by or paid over to CRC, NYC
or PRR in proportion to the obligation each bears under
this Agreement for the particular Liabilities to which
the recoveries are applicable."

SECTION 6.  Confirmation of Transaction Agreement.  In
all respects not inconsistent with the terms and provisions of
this Amendment, the Transaction Agreement is hereby ratified,
adopted, approved and confirmed.

SECTION 7.  Miscellaneous.  The provisions of Article
XI of the Transaction Agreement are hereby expressly incorporated
by reference into this Amendment, and each provision thereof
shall have the same force and effect as if fully set forth herein
(except to the extent such provision is amended, modified,
supplemented, altered, rescinded or superseded by this
Amendment).

[The remainder of this page has been intentionally left
blank.]

6

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date and year first
above written.

CSX CORPORATION

By:  /s/ G. R. Weber
Name:  Gregory R. Weber
Title: Vice President and Treasurer

CSX TRANSPORTATION, INC.
(for itself and on behalf of its
controlled Subsidiaries) 

By:  /s/ Peter J. Shudtz
Name: Peter J. Shudtz
Title: Vice President - Law &
General Counsel - CSX
Corporation, authorized
agent for CSX
Transportation, Inc.

NORFOLK SOUTHERN CORPORATION 

By:  /s/ Stephen C. Tobias
Name: Stephen C. Tobias 
Title: Vice Chairman and Chief
Operating Officer 

NORFOLK SOUTHERN RAILWAY COMPANY
(for itself and behalf of its controlled
Subsidiaries) 

By:  /s/ J. L. Manetta
Name: J. L. Manetta
Title: Senior Vice President -
Operations 

CONRAIL INC. (for itself and on behalf
of its controlled Subsidiaries) 

By:  /s/ Timothy O'Toole
Name: Timothy O'Toole 
Title: President and Chief 
Executive Officer

CONSOLIDATED RAIL CORPORATION 

By:  /s/ John McKelvey
Name: John McKelvey
Title: Chief Financial Officer

CRR HOLDINGS LLC 

By:  /s/ D. R. Goode
Name: D. R. Goode
Title:  Co-Chairman and Company
Chief Executive Officer

OPERATING AGREEMENT

dated as of June 1, 1999

by and between

PENNSYLVANIA LINES LLC

as Owner,

and

NORFOLK SOUTHERN RAILWAY COMPANY

as Operator

TABLE OF CONTENTS

Page

ARTICLE I - DEFINITIONS AND USAGE. . . . . . . . . . . . .. . 1

SECTION 1.1  Definitions and Usage. . . . . . .  . .1

ARTICLE II - OPERATION OF ALLOCATED ASSETS . . . . . . . . . .1

SECTION 2.1  Operation of Allocated Assets. . . . . 1
SECTION 2.2  Term of Agreement. . . . . . . . . . . 1

ARTICLE III - OPERATING FEE AND CERTAIN EXPENSES . . . . . . .2

SECTION 3.1  Operating Fee; Supplemental Operating
Fees. . . . . . . . . . . . . . . . . .2
SECTION 3.2  Method of Payment. . . . . . . . . . . 2
SECTION 3.3  Late Payment . . . . . . . . . . . . . 2
SECTION 3.4  No Set-off, Counterclaims, etc.. . . . 2
SECTION 3.5  Tax Provisions   . . . . . . . . . .. .3

ARTICLE IV - REPRESENTATIONS, WARRANTIES AND AGREEMENTS. . . .5

SECTION 4.1  Disclaimer of Warranties.  . . . . . . 5
SECTION 4.2  Operator To Exercise Certain Rights. . 5
SECTION 4.3  Representations and Warranties of the
Operator . . . . . . . . . . . . . . . 6
SECTION 4.4  Representations and Warranties of the
Owner . . . . . . . . . . . . . . . . .7

ARTICLE V - LIENS, QUIET ENJOYMENT . . . . . . . . . . . . . .7

SECTION 5.1  Liens. . . . . . . . . . . . . . . . . 7
SECTION 5.2  Quiet Enjoyment. . . . . . . . . . . . 8

ARTICLE VI - SETTLEMENT ACCOUNT. . . . . . . . . . . . . . . .8

SECTION 6.1  Maintenance of Settlement Account. . . 8
SECTION 6.2  Payment of Settlement Account Balance. 8
SECTION 6.3  Confirmation of Settlement Account . . 8

ARTICLE VII - OPERATION; MAINTENANCE . . . . . . . . . . . . .9

SECTION 7.1  Operation and Maintenance. . . . . . . 9
SECTION 7.2  Modification.. . . . . . . . . . . . .10

Page

ARTICLE VIII - OBSOLESCENCE TERMINATION; ABANDONMENT . . . . 11

SECTION 8.1 Obsolescence Termination; Abandonment .11
SECTION 8.2  Conditions of Termination. . . . . . .11

ARTICLE IX - TERMINATION . . . . . . . . . . . . . . . . . . 12

SECTION 9.1  Termination.   . . . . . . . . . . . .12
SECTION 9.2  Owner Assignment, Lease or Sale of
Allocated Asset  . . . . . . . . . . .12
SECTION 9.3  Governmental Approvals . . . . . . . .12
SECTION 9.4  Severable Modifications. . . . . . . .12

ARTICLE X - LOSS, DESTRUCTION, CONDEMNATION, DAMAGE, ETC. . .13

SECTION 10.1  Replacement; Payment. . . . . . . . .13
SECTION 10.2  Applications During Event of Default.14
SECTION 10.3  Application of Article VII. . . . . .14

ARTICLE XI - INDEMNITIES . . . . . . . . . . . . . . . . . . 14

SECTION 11.1  Indemnity by Operator . . . . . . . .14
SECTION 11.2  Indemnity by Owner. . . . . . . . . .15
SECTION 11.3 Indemnification Procedures . . . . . .15

ARTICLE XII - ASSIGNMENTS. . . . . . . . . . . . . . . . . . 16

SECTION 12.1 Operator Assignments.. . . . . . . . .16
SECTION 12.2 Merger, Consolidation, Etc.. . . . . .16
SECTION 12.3  Owner Assignments.. . . . . . . . . .16

ARTICLE XIII - INSPECTION; MARKINGS. . . . . . . . . . . . . 16

SECTION 13.1  Rights to Information.. . . . . . . .16
SECTION 13.2  Markings. . . . . . . . . . . . . . .17

ARTICLE XIV - EVENTS OF DEFAULT. . . . . . . . . . . . . . . 17

SECTION 14.1  Events of Default.. . . . . . . . . .17

Page

ARTICLE XV - REMEDIES . . . . . . . . . . . . . . . . . . . .18

SECTION 15.1  Remedies. . . . . . . . . . . . . . .18
SECTION 15.2 Owner Rights.. . . . . . . . . . . . .19
SECTION 15.3  Exercise of Other Rights or Remedies.19
SECTION 15.4  Subject to Governmental Action. . . .19

ARTICLE XVI - RIGHT TO PERFORM . . . . . . . . . . . . . . . 20

SECTION 16.1  Right to Perform. . . . . . . . . . .20

ARTICLE XVII - RENEWAL OPTIONS . . . . . . . . . . . . . . . 20

SECTION 17.1  Renewal Notice. . . . . . . . . . . .20

ARTICLE XVIII - CERTAIN NOTICES AND INFORMATION. . . . . . . 21

SECTION 18.1  Notices . . . . . . . . . . . . . . .21
SECTION 18.2  Notice of Event of Default. . . . . .21
SECTION 18.3  Information Regarding Allocated 
Assets . . . . . . . . . . . . . . . 21

ARTICLE XIX - CONFIDENTIALITY. . . . . . . . . . . . . . . . 22

SECTION 19.1  Confidentiality.. . . . . . . . . . .22

ARTICLE XX - MISCELLANEOUS . . . . . . . . . . . . . . . . . 22

SECTION 20.1  Dispute Resolution. . . . . . . . . .22
SECTION 20.2  Documentary Conventions.. . . . . . .22

Appendix

Appendix A:    Definitions

OPERATING AGREEMENT

This OPERATING AGREEMENT (this "Agreement") is entered into
as of June 1, 1999, by and between Pennsylvania Lines LLC, a
Delaware limited liability company, as Owner and Norfolk Southern
Railway Company, a Virginia Corporation, as Operator.

ARTICLE I

Definitions and Usage

SECTION 1.1  Definitions and Usage.  Unless the context
otherwise requires, capitalized terms used herein shall have the
respective meanings assigned to them in Appendix A to this
Agreement.  Terms used, but not defined, in this Agreement or in
Appendix A shall have the respective meanings assigned to them in
the Transaction Agreement.

ARTICLE II

Operation of Allocated Assets

SECTION 2.1  Operation of Allocated Assets.  (a) The Owner
hereby agrees with the Operator, and the Operator hereby agrees
with the Owner, that the Operator shall have the license, right
and obligation to use and operate the Allocated Assets for the
term referred to in Section 2.2 hereof on the terms and
conditions set forth in this Agreement.  Except as otherwise
specifically provided in this Agreement, the Operator may use and
operate the Allocated Assets in such manner and for such purposes
as the Operator considers necessary or appropriate.

(b)  The Owner hereby agrees that the Operator shall,
effective as of the Closing Date, have the right to receive and
retain for its own benefit and use and in its own name all
revenues, tolls, rents, receipts, issues, profits and income of
every character arising from or associated with the operation and
use of the Allocated Assets.

SECTION 2.2  Term of Agreement. Immediately upon the
execution hereof, without necessity of any further act or
evidence by either party hereto, the Allocated Assets shall be
deemed delivered by the Owner to the Operator for the Term and,
if the Operator elects to exercise its renewal option pursuant to
Article XVII hereof, for any Renewal Term, in either case, all
pursuant to the terms of this Agreement, unless this Agreement
shall have been earlier terminated in accordance with its terms.

ARTICLE III

Operating Fee and Certain Expenses

SECTION 3.1  Operating Fee; Supplemental Operating Fees. 
The Operator shall pay to the Owner the Operating Fee commencing
on the first Payment Date and on each Payment Date thereafter for
the duration of the Term and any Renewal Term.  Subject to any
applicable Governmental Action, the Operating Fee shall be
recalculated on each Valuation Date to reflect the Fair Market
Rental Value of the Allocated Assets then subject to this
Agreement.  Supplemental Operating Fees shall be paid by the
Operator when due under the terms of this Agreement.

SECTION 3.2  Method of Payment.  All Operating Fees and
Supplemental Operating Fees (to the extent Supplemental Operating
Fees are not paid directly by the Operator) shall be paid by the
Operator to the Owner at the Owner's office or at such other
place in the U.S. as the Owner shall specify to the Operator at
least five (5) Business Days prior to the date such payment is
due.  Each payment of Operating Fees and Supplemental Operating
Fees shall be made by the Operator in immediately available funds
prior to 12:00 noon, New York time at the place of payment, on
the date when such payment shall be due.

SECTION 3.3  Late Payment.  In the event any Operating Fees
or Supplemental Operating Fees shall not be paid on the due date
thereof to the Owner, the Operator shall pay to the Owner on
written demand, interest (to the extent permitted by Applicable
Law) on such overdue amount from the due date thereof (without
regard to any grace period) to the date of payment thereof at the
Overdue Rate.

SECTION 3.4  No Set-off, Counterclaims, etc. THIS AGREEMENT
IS A NET AGREEMENT.  THE OPERATOR'S OBLIGATION TO PAY ALL
PAYMENTS OF OPERATING FEES AS AND WHEN THE SAME SHALL BECOME DUE
AND PAYABLE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT SHALL
BE ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE SUBJECT TO ANY
ABATEMENT OR DIMINUTION BY SET-OFF, DEDUCTION, COUNTERCLAIM,
RECOUPMENT, AGREEMENT, DEFENSE, SUSPENSION, DEFERMENT,
INTERRUPTION OR OTHERWISE, AND UNTIL SUCH TIME AS ALL AMOUNTS
REQUIRED TO BE PAID UNDER THIS AGREEMENT SHALL HAVE BEEN PAID,
THE OPERATOR SHALL NOT HAVE ANY RIGHT TO TERMINATE THIS AGREEMENT
OR TO BE RELEASED, RELIEVED OR DISCHARGED FROM ITS OBLIGATION TO
MAKE, AND SHALL NOT SUSPEND, REDUCE OR DISCONTINUE, ANY PAYMENT
OF OPERATING FEES FOR ANY REASON WHATSOEVER (EXCEPT AS MAY BE
EXPRESSLY PROVIDED HEREIN), including, without limitation:

(a)  any default, misrepresentation, negligence,
misconduct or other action or inaction of any kind by the Owner
or any other Person, whether under or in connection with this

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Agreement or any other agreement relating to this Agreement or in
connection with any unrelated transaction;

(b)  the insolvency, bankruptcy, reorganization or
cessation of existence, or discharge or forgiveness of
indebtedness of any Person referred to in clause (a) above;

(c)  the invalidity, unenforceability or impossibility
of performance of this Agreement for any reason;

(d)  any defect in the title, condition, design,
operation or fitness for use of, or any Lien or other restriction
of any kind upon, all or any part of any Allocated Asset, any
loss or destruction of, or damage to, any Allocated Asset or any
interruption in or cessation of the ownership, possession,
operation or use of any Allocated Asset for any reason
whatsoever;

(e)  any restriction, prevention or curtailment of or
interference with any Allocated Asset or the use thereof or any
part thereof for any reason whatsoever, including, without
limitation, by any Governmental Authority;

(f)  any Applicable Law now or hereafter in force;

(g)  any failure to obtain any required Governmental
Action for a transfer of rights or title to the Owner, the
Operator or any other Person;

(h)  any amendment or other change of, or any
assignment of any rights under, this Agreement, or any waiver or
other action or inaction under or in respect of this Agreement,
or any exercise or nonexercise of any right or remedy under or in
respect of this Agreement; and

(i)  any other cause, circumstance, happening or event
whatsoever, foreseen or unforeseen, whether similar or dissimilar
to any of the foregoing.

The Operator hereby waives and hereby agrees to waive at any
future time at the request of the Owner, to the extent now or
then permitted by Applicable Law, any and all rights that the
Operator may have or that at any time hereafter may be conferred
upon it, by statute, regulation or otherwise, to terminate,
cancel, quit or surrender this Agreement other than in accordance
with the express terms hereof.  Each Operating Fee payment shall
be final and the Operator agrees not to seek to recover all or
any part of any such payment (except for amounts paid to the
Owner which the Owner in good faith agrees have been paid in
error) from the Owner for any reason under any circumstance
whatsoever.

SECTION 3.5  Tax Provisions.  (a) During the Term and any
Renewal Term, the Operator shall pay when due, all Taxes, other
than Excluded Taxes (as hereinafter defined), imposed on the
Owner, based upon the Allocated Assets or arising out of the use,
lease, possession or operation of the Allocated Assets during
that period.  For purposes of this Section, (i) Owner shall 

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mean the Owner and its Affiliates and (ii) Excluded Taxes shall
mean (A) all Taxes based, in whole or in part, on net income or
gross income (including, without limitation, any minimum tax) of
the Owner or which are in substitution for, or relieve the Owner
from, any Tax based upon or measured by the Owner's net income or
gross income, together with any interest, penalties, additions to
tax or additional amounts that may become payable in respect
thereof; (B) business and occupation taxes, and gross receipts
taxes (unless in the nature of a sales tax) of the Owner and
Taxes based upon the equity interests of the Owner; and (C)
interest, fines and penalties to the extent due to the acts or
omissions of the Owner in connection with Excluded Taxes.  The
Operator shall not be required to pay any Tax it is obligated to
pay under the provisions of this Section 3.5 during the time it
shall reasonably and in good faith and by appropriate legal or
administrative proceedings contest the validity or amount
thereof.

(b)  The Owner shall have the right and obligation, at
its own expense, to prepare and file all Tax returns required to
be filed by the Owner under Applicable Law.  Prior to the Owner's
filing of any Tax returns for Taxes required to be paid by the
Operator under paragraph (a) of this Section 3.5, the Owner shall
provide such returns to the Operator for its review and approval,
which approval will not be unreasonably withheld or delayed.

(c)  The Operator and its assignees and designees shall
have the right (but only to the extent the Owner shall have such
right, by contract or otherwise) to control at its expense any
audit or examination by any Governmental Authority, or any
judicial proceeding, relating to any Taxes required to be paid by
it under paragraph (a) of this Section 3.5.

(d)  During the Term and any Renewal Term, the Operator
and any of its designees shall be entitled to claim federal,
state and local tax benefits (including, without limitation,
deductions and credits) arising out of Operator's expenditures in
the use, possession or operation of the Allocated Assets by the
Operator, or any of its respective assignees or designees, and
the improvements thereto, that the Operator, or any of its
designees is entitled to claim under federal, state and local
laws and regulations.  These tax benefits include but are not
limited to:  (i) deductions for depreciation or amortization
attributable to property (both tangible and intangible) owned by
the Operator, or any of its assignees or designees, including
improvements made to any of the Allocated Assets by any of them,
as well as expenditures made by any of them that are required to
be capitalized under sections 263 or 263A or some other section
of the Code; (ii) deductions for expenditures made by the
Operator, or any of its assignees or designees, deductible as
ordinary and necessary business expenses under section 162 of the
Code; (iii) deductions for losses attributable to property (both
tangible and intangible) owned by the Operator, or any of its
assignees or designees, deductible under section 165 of the Code;
and (iv) any federal, state or local credits applicable to the
use, lease, possession or operation of the Allocated Assets by
the Operator, or any of its assignees or designees, and
improvements thereto.  The Owner is entitled to deductions for
Taxes of the Owner paid by the Operator under paragraph (a) of
this Section 3.5 and treated as rent paid by the Operator under
this Agreement and taxable income received by the Owner under
section 1.162-11(a) of the Income Tax Regulations.

-4-

ARTICLE IV

Representations, Warranties and Agreements

SECTION 4.1  Disclaimer of Warranties.  AS BETWEEN THE OWNER
AND THE OPERATOR, THE EXECUTION OF THIS AGREEMENT SHALL BE
CONCLUSIVE PROOF OF ACCEPTANCE BY THE OPERATOR OF EACH ALLOCATED
ASSET AS BEING IN COMPLIANCE WITH ALL REQUIREMENTS OF THIS
AGREEMENT.  THE OWNER AND THE OPERATOR TAKE EACH SUCH ALLOCATED
ASSET "AS IS" AND "WHERE IS", AND THE OPERATOR ACKNOWLEDGES THAT
THE OWNER HAS NOT MADE, NOR SHALL BE DEEMED TO HAVE MADE, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION,
MERCHANTABILITY, DESIGN, QUALITY, DURABILITY, OPERATION OR
FITNESS FOR USE OR PURPOSE OF EACH SUCH ALLOCATED ASSET OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO EACH SUCH ALLOCATED ASSET OR OTHERWISE, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE, AS
BETWEEN THE OWNER AND THE OPERATOR, BY THE OPERATOR IN THE EVENT
OF ANY DEFECT OR DEFICIENCY IN ANY SUCH ALLOCATED ASSET, OF ANY
NATURE WHETHER PATENT OR LATENT, AND THAT THE OWNER SHALL NOT
HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO, except
that the Owner hereby represents, warrants and covenants that
each such Allocated Asset shall be free of Owner Liens on the
Closing Date and except as otherwise provided in the Transaction
Agreement.  The provisions of this Section 4.1 have been
negotiated, and the foregoing provisions are intended to be a
complete exclusion and negation of any other warranties made by
the Owner, express or implied, with respect to any Allocated
Asset, whether arising pursuant to Applicable Law now or
hereafter in effect or otherwise.  Nothing contained in this
Section 4.1 shall in any way diminish or otherwise affect any
right the Operator may have with respect to any Allocated Asset
against any third Person.  The Owner shall not at any time be
required to inspect any Allocated Asset, and any actual
inspection by the Owner shall not be deemed to affect or modify
the provisions of this Section 4.1.

SECTION 4.2  Operator To Exercise Certain Rights.  (a) The
Owner hereby authorizes the Operator, at the Operator's expense,
to exercise in the name of and on behalf of the Owner and the
Operator, as their interests may appear, the right and power to
deal with any third party lessor, lessee, licensor, licensee,
seller, manufacturer, shipper or any other Persons (including
agents and consultants thereof) with respect to any Allocated
Asset or who are party to any Assigned Rights (each a "Third
Party Provider") and the right to enforce (by legal action or
otherwise) against such Third Party Provider all rights, powers
and privileges of the Owner and to receive all benefits of the
Owner with respect to such Third Party Provider, under any
Contract, Assigned Right, express or implied warranty, indemnity
or otherwise; provided, that if an Event of Default shall have
occurred and be continuing (and until all Events of Default then
outstanding shall no longer be continuing) the Owner may
terminate the authority of the Operator under this Section 4.2. 

-5-

Any amount paid to the Owner or Operator pursuant to the
Operator's exercise of its authority under this Section 4.2 shall
be paid to the Operator.  After the end of the Term or any
Renewal Term with respect to any Allocated Asset or after the
termination of this Agreement with respect to such Allocated
Asset pursuant to Article XIV, (a) the Operator shall have no
further rights, powers, privileges or benefits under this Section
4.2 and (b) all amounts payable by any Third Party Provider paid
with respect to periods arising thereafter shall be paid to, and
retained by, the Owner or any other Person as shall then be the
owner of the Allocated Asset as to which such payment is made.

(b)  The Operator shall, with the Owner's prior
consent, have the right and power to execute and deliver on
behalf of the Owner, the extension, renewal, amendment or
modification of any Assigned Rights or any other Contract in
respect of the Allocated Assets.

(c)  The Owner shall as expeditiously as possible use
its reasonable efforts to obtain or transfer to the Operator any
Governmental Action or the consent, authorization, or approval of
any private Person required to be made, obtained or transferred
to effectuate the purposes of this Agreement and the transactions
contemplated herein, which actions shall include furnishing all
information required under or in connection with such
Governmental Action or the approvals of, or filing with such
private Person.

(d)  The Operator shall pay, perform and discharge
fully all of the obligations of the Owner or its Affiliates under
all Assigned Rights and Contracts that are Allocated Assets from
and after the Closing Date.  Such payments shall be considered
Supplemental Operating Fees.  The Owner or its Affiliates shall,
without further consideration therefor, pay, assign and remit
promptly to the Operator, as appropriate, all monies, rights and
other consideration received in respect of such performance. The
Owner or its Affiliates shall exercise or exploit the rights and
options under all such Contracts only as reasonably directed by
the Operator.

SECTION 4.3  Representations and Warranties of the Operator. 
The Operator represents and warrants to the Owner as of the
Closing Date as follows:

(a)  Due Organization, etc.  The Operator (i) is a
corporation duly organized and validly existing under the laws of
the Commonwealth of Virginia, (ii) has the power and authority to
enter into and perform its obligations under this Agreement and
(iii) has obtained all Governmental Action required to use or
hold the Allocated Assets in accordance with this Agreement, and
to enter into and perform its obligations under this Agreement.

(b)  Due Authorization, Non-Contravention, etc.  The
execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action on the part of
the Operator, do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of
any Organic Document of the Operator or Applicable Law.

-6-

(c)  Due Execution. This Agreement has been duly
executed and delivered by the Operator, and constitutes the
legal, valid and binding obligation of the Operator enforceable
against the Operator in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting the enforcement of creditors' rights and except that
the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before
which any proceeding therefor may be brought.

SECTION 4.4  Representations and Warranties of the Owner. 
The Owner represents and warrants to the Operator as of the
Closing Date as follows:

(a)  Due Organization, etc.  The Owner (i) is a limited
liability company duly organized and validly existing under the
laws of the State of Delaware, (ii) has the power and authority
to enter into and perform its obligations under this Agreement
and (iii) has obtained all Governmental Action required to enter
into and perform its obligations under this Agreement.

(b)  Due Authorization, Non-Contravention, etc.  The
execution, delivery and performance of this Agreement have been
duly authorized by all necessary company action on the part of
the Owner, do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of
any Organic Document of the Owner or Applicable Law.

(c)  Due Execution. This Agreement has been duly
executed and delivered by the Owner, and constitutes the legal,
valid and binding obligation of the Owner enforceable against the
Owner in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization or other laws
of general application relating to or affecting the enforcement
of creditors' rights and except that the availability of
equitable remedies, including specific performance, is subject to
the discretion of the court before which any proceeding therefor
may be brought.

ARTICLE V

Liens; Quiet Enjoyment

SECTION 5.1  Liens.  The Operator shall not directly or
indirectly create, incur, assume or suffer to exist any Lien
(other than Permitted Liens) on any Allocated Asset.  The
Operator will promptly, at its own expense, take such action as
may be necessary duly to discharge any such Lien.  The Operator's
obligations under this Section 5.1 with respect to any such Lien
on any Allocated Asset resulting from a claim arising prior to
the termination of this Agreement with respect to such Allocated
Asset shall survive such termination.  The Operator agrees that,
upon the termination of this Agreement, the Allocated Assets
shall be returned to the Owner free and clear of Liens, other
than Owner Liens.

-7-

SECTION 5.2  Quiet Enjoyment.  Notwithstanding any other
provision of this Agreement, so long as no Event of Default shall
have occurred and be continuing, as between the Operator and
Owner, the Operator shall have the exclusive rights to
possession, control and use of all Allocated Assets and neither
the Owner nor any Person acting or claiming through the Owner
will take any action that shall interfere with the peaceful and
quiet enjoyment or the possession and use or nonuse of any
Allocated Asset by the Operator, and the Operator shall have the
right to possess and use or not use such Allocated Asset in its
sole discretion, subject always to the terms and conditions of
this Agreement.  The foregoing is not intended to limit the
inspection rights of the Allocated Assets granted by the Operator
pursuant to Section 13.1 hereof.

ARTICLE VI

Settlement Account

SECTION 6.1  Maintenance of Settlement Account.  The
Operator shall maintain a non-cash book account (the "Settlement
Account") to reflect amounts owed by the Operator to the Owner as
a result of transactions described in Sections 7.1(e), 8.1 and
10.1(a)(ii) hereof.

SECTION 6.2  Payment of Settlement Account Balance. The
Operator shall pay to the Owner an amount equal to the then
balance of the Settlement Account upon: (i) the sixth (6th),
twelfth (12th), eighteenth (18th) and twenty-fourth (24th)
anniversaries of the Closing Date, (ii) the expiration of the
Term (or, if earlier, the termination of this Agreement), (iii)
the sixth (6th) anniversary of the first day of each Renewal
Term, (iv) the end of each Renewal Term (or, if earlier, the
termination of this Agreement), and (v) thirty (30) calendar days
after the date on which a Substantial Allocated Asset (a) is not
repaired or replaced under Section 7.1(e) hereof, (b) is
abandoned, sold or otherwise disposed of under Section 8.1 hereof
or (c) suffers an Event of Loss and is not replaced under Section
10.1(a)(i) hereof (each, a "Settlement Account Payment Date").

SECTION 6.3  Confirmation of Settlement Account.  Within
sixty (60) days of the crediting of an amount to the Settlement
Account, the Appraisal Procedure shall be used to confirm that
credits to the Settlement Account were based on the fair market
value of the relevant Allocated Assets consistent with the terms
of this Agreement.  The Settlement Account shall be adjusted
consistent with the outcome of the Appraisal Procedure and the
payments made pursuant to Section 6.2 hereof shall reflect any
such adjustments.

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ARTICLE VII 

Operation; Maintenance

SECTION 7.1  Operation and Maintenance.  The Operator shall
at all times at its own expense during the Term and during any
Renewal Term:

(a)  use the Allocated Assets in such manner and for
such purposes as the Operator considers necessary or appropriate
in connection with the operation of its business; 

(b)  keep and maintain such books, records and title
documents relating to the Allocated Assets, and the acquisition,
construction and installation of Modifications thereto and the
payment of the purchase price of such Modifications, as the
Operator considers appropriate consistent with the Operator's
customary business practices;

(c)  maintain the Allocated Assets in accordance with
the Operator's  customary practice;

(d)  inspect, service, maintain, store, use, operate,
repair, replace, modify and improve the Allocated Assets in
compliance in all material respects with Applicable Law
(including all applicable environmental and occupational safety
laws), and in compliance in all material respects with all
applicable licenses and permits relating to the Allocated Assets
issued by any Governmental Authority; provided, the Operator may
in good faith by appropriate proceedings contest the validity or
application of any such Applicable Law in any reasonable manner
which does not involve any risk of the imposition of criminal
liability on the Owner, or any material danger of any fine,
penalty, or other imposition upon the Owner for which the
Operator has not acknowledged its obligation to indemnify the
Owner pursuant to this Agreement; and

(e)  in case of any damage to any Allocated Asset,
other than damage constituting an Event of Loss, at its election,
in either case at its own expense, (i) repair such Allocated
Asset so as to restore its utility consistent with the Operator's
customary practice with respect to similar assets owned by the
Operator (as determined solely by the Operator) or (ii) replace
such Allocated Asset with an asset (which will become an
Allocated Asset) having a fair market value (as determined solely
by the Operator) equivalent to that of the damaged Allocated
Asset immediately prior to the damage (assuming, in either case,
such Allocated Asset was then in the condition and state of
repair required to be maintained by the terms of this Agreement),
with such alterations and additions as may be made at the
Operator's election pursuant to and subject to the conditions of
Section 7.2 hereof; provided, however, that the Operator need not
repair or replace any Allocated Asset to the extent that such
Allocated Asset is not necessary to the operation of the
Allocated Assets considered as a whole (as determined solely by
the Operator), in which event the Operator shall credit to the
Settlement Account the fair market value of such Allocated Asset
as of the date immediately prior to the damage (assuming such
Allocated Asset was then in the condition and state of repair
required to be maintained by the terms of this Agreement).  Upon

-9-

the crediting of the Settlement Account with the fair market
value of such Allocated Asset, such Allocated Asset shall no
longer be subject to this Agreement and the Owner shall convey to
the Operator or its designee, ownership of and title to such
Allocated Asset.  Notwithstanding the foregoing, until payment by
the Operator to the Owner of the amount credited to the
Settlement Account on the next succeeding Settlement Account
Payment Date, such Allocated Asset shall be deemed to continue to
be subject to this Agreement solely for the purpose of
calculating the Operating Fee.

SECTION 7.2  Modification.

(a)  The Operator shall at its expense make any
Modification to any Allocated Asset required (i) by Applicable
Law or in order to operate, maintain, service, store, or use such
Allocated Asset in accordance with Applicable Law, as soon as
practicable after any such requirement may arise or (ii) in order
for the Operator to comply with the provisions of this Agreement
(all such Modifications being referred to herein as "Required
Modifications"); provided, that the Operator may, so long as no
Event of Default shall have occurred and be continuing, in good
faith by appropriate proceedings contest the validity or
application of any Applicable Law in any reasonable manner which
does not involve any reasonably foreseeable risk of the
imposition of criminal liability on the Owner, or any material
danger of any fine, penalty or other imposition upon the Owner
for which the Operator has not acknowledged its obligation to
indemnify the Owner pursuant to this Agreement.  The Operator at
its expense, from time to time, may make any Modification to any
Allocated Asset that the Operator in its discretion may deem
desirable in the proper conduct of  the Operator's business (all
such Modifications which are not Required Modifications being
referred to herein as "Optional Modifications"); provided that
any construction of new trackage or facilities appurtenant to but
not located on such Allocated Assets shall, at Operator's
election, be deemed not to be Modifications hereunder and not
subject to this Agreement.

(b)  Title to each Modification shall vest as follows:

(i)  in the case of each (A) Required Modification
or (B) other Nonseverable Modification, whether or not the Owner
shall have financed or provided financing (in whole or in part)
for such Modification, the Owner shall, without further act,
effective on the date such Modification shall have been
incorporated into the modified Allocated Asset, acquire title to
such Modification free and clear of all Liens other than
Permitted Liens; or 

(ii) in the case of each Severable Modification,
the Operator shall retain title to such Modification and the
Operator may (subject to Section 7.2(c) hereof) remove such
Modification at its expense at any time so long as the modified
Allocated Asset remains in or is restored by the Operator to the
condition required by this Agreement.

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Immediately upon title to a Modification vesting in the
Owner pursuant to this Section 7.2(b), such Modification shall,
without further act, become subject to this Agreement and be
deemed part of the applicable Allocated Asset for all purposes. 

(c)  Subject to compliance with Applicable Law, the
Operator may remove, at its expense, any Severable Modification;
provided, that the Operator, at its expense shall repair any
damage to the Allocated Asset from which a Severable Modification
has been removed caused by such removal; provided, further, that
in the event the Operator shall not have removed any Severable
Modification to which the Operator shall have title as provided
in Section 7.2(b)(ii) prior to the end of the Term or any Renewal
Term, title to such Severable Modification shall vest in the
Owner upon the expiration of such Term or Renewal Term.

ARTICLE VIII

Obsolescence Termination; Abandonment

SECTION 8.1  Obsolescence Termination; Abandonment.  Except
as may otherwise be contemplated in this Agreement, the Operator
may not dispose of, or otherwise convey or transfer any interest
in the Allocated Assets to any Person.  Unless an Event of
Default shall have occurred and be continuing, if the Operator
has determined that an Allocated Asset is uneconomic or surplus
to, or no longer necessary for, the Operator's operating
requirements as determined by the Operator in its sole judgment,
the Operator shall have the right, with the Owner's consent, to
abandon or sell or otherwise dispose of such Allocated Asset (as
agent for the Owner) in which event the Operator may retain the
sale proceeds (net of selling expenses), if any, received for
such Allocated Asset and shall credit to the Settlement Account
the fair market value (as of the time of the abandonment, sale or
other disposition) of such Allocated Asset (which, in no event,
shall be less than the sale proceeds, net of selling expenses,
received for such Allocated Asset).  Upon the crediting of the
Settlement Account with the fair market value of such Allocated
Asset, such Allocated Asset shall no longer be subject to this
Agreement and the Owner shall convey to the Operator or its
designee, ownership of and title to such Allocated Asset. 
Notwithstanding the foregoing, until payment by the Operator to
the Owner of the amount credited to the Settlement Account on the
next succeeding Settlement Account Payment Date, such Allocated
Asset shall be deemed to continue to be subject to this Agreement
solely for the purpose of calculating the Operating Fee.

SECTION 8.2  Conditions of Termination.  As a condition to a
termination, abandonment or other disposition pursuant to this
Article VIII, any necessary Governmental Actions in connection
therewith shall have been obtained by and at the expense of the
Operator.  Upon the Operator's request, the Owner shall cooperate
fully with the Operator in seeking and obtaining all necessary
Governmental Actions in connection with the termination or
abandonment of any Allocated Asset.

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ARTICLE IX

Termination

SECTION 9.1  Termination.  (a) Unless the Operator exercises
its renewal option under Article XVII, upon termination of this
Agreement, the Operator shall, at its risk, cost and expense,
cause the Allocated Assets subject to this Agreement at such time
to be (i) free and clear of all Liens other than Owner Liens,
(ii) in compliance with the maintenance and operating provisions
of this Agreement, and (iii) otherwise capable of being
maintained, used and operated substantially in compliance with
Applicable Law for the operation of a railroad appropriate to
conditions existing at such time.

(b)  Upon the termination of this Agreement, the
Operator will, at the Operator's expense, promptly and duly
execute and deliver to the Owner such documents and take such
further actions as the Owner may reasonably request in order to
effect the return of the Allocated Assets, including any Assigned
Right, to the Owner or its designee.

SECTION 9.2  Owner Assignment, Lease or Sale of Allocated
Asset.  The Operator agrees that during the last year of the Term
or any Renewal Term, it will cooperate in all reasonable respects
with efforts of the Owner to lease, sell, assign or otherwise
transfer any Allocated Asset to any designee of the Owner.

SECTION 9.3  Governmental Approvals.  The Operator shall
cooperate and assist the Owner, at the expense of the Owner, in
transferring or obtaining all Governmental Actions which may be
necessary for the Owner or its designee, as the case may be, to
operate, lease, purchase, assume or otherwise be a party to or
beneficiary of any returned Allocated Asset.

SECTION 9.4  Severable Modifications.  At any time after the
Operator has notified the Owner that it has determined not to
renew this Agreement pursuant to Article XVII, or operational
responsibility for the Allocated Assets reverts to the Owner, the
Operator shall at the Owner's request, advise the Owner of the
nature and condition of all Severable Modifications owned by the
Operator pursuant to Section 7.2(b)(ii) hereof which the Operator
has removed or intends to remove from the Allocated Assets in
accordance with Section 7.2(c) hereof.  The Operator may (and
shall, if so directed by Owner), at its sole cost, expense and
risk, remove from any Allocated Asset any Severable Modification;
provided, that any such Modification not removed pursuant to this
Section 9.4 shall be deemed to be part of the Allocated Asset to
which it relates for all purposes hereof and title to such
Modification shall thereupon vest in the Owner free and clear of
all Liens, other than Owner Liens.

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ARTICLE X

Loss, Destruction, Condemnation, Damage, etc.

SECTION 10.1  Replacement; Payment.  

(a)  Upon the occurrence of an Event of Loss, or an
event which with the passage of time would become an Event of
Loss, with respect to any Allocated Asset, the Operator shall:

(i)  replace the Allocated Asset which suffered
the Event of Loss, with a replacement asset (which will become an
Allocated Asset) which has a fair market value equivalent to that
of the Allocated Asset which suffered the Event of Loss (as
determined solely by the Operator) immediately prior to such
Event of Loss (assuming such Allocated Asset was then in the
condition and state of repair required by this Agreement); or

(ii) the Operator may retain the sale proceeds, if
any, received for the Allocated Asset suffering the Event of Loss
and shall credit to the Settlement Account the fair market value
of such Allocated Asset immediately prior to such Event of Loss
(assuming such Allocated Asset was then in the condition and
state of repair required by this Agreement), which fair market
value in no event shall be less than the sale proceeds (net of
selling expenses) received for such Allocated Asset.  Upon the
crediting of the Settlement Account with the fair market value of
such Allocated Asset, such Allocated Asset shall no longer be
subject to this Agreement and the Owner shall convey to the
Operator or its designee, ownership of and title to such
Allocated Asset.  Notwithstanding the foregoing, until payment by
the Operator to the Owner of the amount credited to the
Settlement Account on the next succeeding Settlement Account
Payment Date, the Allocated Asset suffering the Event of Loss
shall be deemed to continue to be subject to this Agreement
solely for the purpose of calculating the Operating Fee.

(b)  Upon compliance by the Operator with Section
10.1(a)(i), (i) this Agreement shall continue with respect to any
replacement Allocated Asset as though no Event of Loss had
occurred, (ii) the Owner shall convey "as is" "where is", free
and clear of all Owner Liens, without recourse or warranty
(except as to the ability and authority of the Owner to transfer
and convey such Allocated Asset free and clear of Owner Liens),
to the Operator or its designee all right, title and interest of
the Owner in and to the Allocated Asset being replaced by
executing and delivering to the Operator or its designee such
bills of sales and other documents or instruments as the Operator
or its designee may reasonably request to evidence such
conveyance, and (iii) the Owner shall assign to the Operator all
claims it may have against any other Person arising from the
event which gave rise to the replacement.

(c)  Upon compliance by the parties with Section
10.1(a)(ii), the Owner shall convey "as is" "where is", free and

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clear of all Owner Liens, without recourse or warranty (except as
to the ability and authority of the Owner to transfer and convey
such Allocated Asset free and clear of Owner Liens), to the
Operator or its designee all right, title and interest of the
Owner in and to such Allocated Asset by executing and delivering
to the Operator or its designee such bills of sales and other
documents or instruments as the Operator or its designee may
reasonably request to evidence such conveyance.

SECTION 10.2  Applications During Event of Default.  Any
amount that shall be payable to the Operator pursuant to this
Agreement arising out of any warranty, governmental award or
otherwise received in respect of any Allocated Asset shall not be
paid to the Operator or, if it shall have been previously paid to
the Operator, shall not be retained by the Operator but shall be
paid to the Owner, if at the time of such payment any Event of
Default shall have occurred and be continuing.  In such event,
all such amounts shall be paid to and held by the Owner in trust
as security for the obligations of the Operator to make payments
under this Agreement or applied by the Owner toward payment of
any of such obligations of the Operator at the time due
hereunder.  At such time as there shall not be continuing any
Event of Default all such amounts at the time held by the Owner
in excess of the amount, if any, that the Owner shall have
elected to apply as above provided shall be paid to the Operator.

SECTION 10.3  Application of Article VII.  Article VII shall
not apply to any Allocated Asset after an Event of Loss has
occurred with respect to such Allocated Asset; provided, that the
foregoing shall not limit the obligations of the Operator under
Article VII hereof with respect to any replacement Allocated
Asset.

ARTICLE XI

Indemnities

SECTION 11.1  Indemnity by Operator.  (a)  The Operator
assumes and shall be fully responsible for all liabilities
attributable in any way to the Allocated Assets, or to operations
on or over the Allocated Assets, except for (i) Retained
Liabilities and any other liabilities with respect to which it is
the responsibility of any Person other than the Operator under
the terms of the Transaction Agreement and the Ancillary
Agreements to indemnify the Owner, and (ii) liabilities that
arise prior to the Closing Date referred to in Section 2.8(b)(ii)
or Section 2.8(c) of the Transaction Agreement; provided, that
for the purposes of this Section 11.1(a), the term "Ancillary
Agreements" as used in the parenthetical included in Sections
2.8(b) and 2.8(c) of the Transaction Agreement shall be deemed
not to include this Agreement.  To that end, the Operator agrees
to and shall protect, indemnify and hold wholly harmless the
Owner and its directors, officers, employees and agents (each an
"Owner Indemnified Person") from and against any Damages arising
from or attributable to the liabilities assumed by the Operator
under the first sentence of this Section 11.1(a).

(b)  Upon payment in full of any indemnity pursuant to
this Section 11.1, the Operator shall, to the extent of such
payment and so long as no Event of Default shall have occurred

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and be continuing, be subrogated to any rights of the Owner
Indemnified Person in respect of the matter against which such
indemnity was given (other than with respect to any insurance
policies carried by such Owner Indemnified Person).

SECTION 11.2  Indemnity by Owner.  (a)  The Owner shall be
fully responsible for all liabilities allocated to it under
Section 2.8(b)(ii) of the Transaction Agreement.  The Owner shall
be fully responsible for all liabilities allocated to it under
Section 2.8(c) of the Transaction Agreement and shall, to the
extent not obtained by CRC as required by Section 2.8(c) of the
Transaction Agreement, obtain within 60 days after the Closing
Date insurance to cover such liabilities from and after the
Closing Date.  To that end, the Owner agrees to and shall
protect, indemnify and hold wholly harmless the Operator and its
directors, officers, employees and agents (each, an "Operator
Indemnified Person") from and against any and all Damages arising
from or attributable to (i) Retained Liabilities and any other
liabilities with respect to which it is the responsibility of any
Person other than the Operator under the terms of the Transaction
Agreement and the Ancillary Agreements to indemnify the Owner,
and (ii) liabilities that arise prior to the Closing Date
referred to in Section 2.8(b)(ii) and Section 2.8(c) of the
Transaction Agreement; provided, that for the purposes of this
Section 11.2(a), the term "Ancillary Agreements" as used in the
parenthetical included in Sections 2.8(b) and 2.8(c) of the
Transaction Agreement shall be deemed not to include this
Agreement.

(b)  Upon payment in full of any indemnity pursuant to
this Section 11.2, the Owner shall, to the extent of such
payment, be subrogated to any rights of the Operator Indemnified
Person in respect of the matter against which such indemnity was
given (other than with respect to any insurance policies carried
by such Operator Indemnified Person).

SECTION 11.3 Indemnification Procedures.  (a)  If any Action
shall be threatened or instituted or any claim or demand shall be
asserted against any Indemnified Party in respect of which 
indemnification may be sought under the provisions of this
Agreement, the Indemnified Party  shall promptly cause written
notice of the assertion of any such claim, demand or Action of
which it has knowledge to be forwarded to the Indemnifying Party. 
Such notice shall contain a reference to the provisions hereof or
of such other agreement, instrument or certificate delivered
pursuant hereto, in respect of which such claim is being made. 
The Indemnified Party's failure to give the Indemnifying Party
prompt notice shall not preclude the Indemnified Party from
obtaining indemnification from the Indemnifying Party under this
Article XI unless the Indemnified Party's failure has materially
prejudiced the Indemnifying Party's ability to defend the claim,
demand or Action.

(b)  If the Indemnified Party seeks indemnification
from the Indemnifying Party as a result of a claim or demand
being made by a third party (a "Third Party Claim"), the
Indemnifying Party shall have the right promptly to assume the
control of the defense of any Action with respect to such Third
Party Claim, including, at its own expense, employment by it of
counsel reasonably satisfactory to the Indemnified Party.  The
Indemnified Party may, in its sole discretion and at its own
expense, employ counsel to represent it in the defense of the

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Third Party Claim, and in such event counsel for the Indemnifying
Party shall cooperate with counsel for the Indemnified Party in
such defense, provided that the Indemnifying Party shall direct
and control the defense of such Third Party Claim or proceeding.
The Indemnifying Party shall not consent to the entry of any
judgment, except with the written consent of the Indemnified
Party, and shall not enter into any settlement of such Third
Party Claim without the written consent of the Indemnified Party
which does not include as an unconditional term thereof the
release of the Indemnified Party from all Liability in respect of
such Third Party Claim.

ARTICLE XII

Assignments

SECTION 12.1  Operator Assignments.  Except as otherwise
provided in this Agreement, the Operator may not, without the
prior written consent of the Owner, and subject to any applicable
Governmental Actions, assign, transfer, sublease or otherwise
grant the right to use any Allocated Asset or its interest
therein or rights with respect thereto, including any Assigned
Right.  Except as otherwise provided in this Agreement, the
Operator may, with the prior written consent of the Owner, and
subject to any applicable Government Actions, assign, transfer,
sublease or otherwise grant the right to use any Allocated Asset
or its interest therein or rights with respect thereto, including
any Assigned Right.

SECTION 12.2  Merger, Consolidation, Etc.  The Operator,
without the consent of the Owner, may assign all or any part of
its rights and obligations under this Agreement to (i) any of its
controlled Subsidiaries or (ii) any successor in the event of a
merger, consolidation, sale of all or substantially all its
assets, liquidation or dissolution, if such assignee executes and
delivers to the Owner an agreement reasonably satisfactory in
form and substance to the Owner under which such assignee assumes
and agrees to perform and discharge all the obligations and
liabilities of the Operator; provided that any such assignment
shall not relieve the Operator from the performance and discharge
of such obligations and liabilities. 

SECTION 12.3  Owner Assignments.  The Owner shall not
transfer or assign any part of its right, title and interest in
this Agreement or any Allocated Assets used hereunder without the
prior written consent of the Operator.

ARTICLE XIII

Inspection; Markings

SECTION 13.1  Rights to Information.  The Owner may at its
own expense, upon reasonable prior notice to the Operator during
the normal business hours of the Operator, no more frequently
than once in any calendar year, inspect the Allocated Assets and

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the books and records of the Operator relating to the maintenance
and performance of such Allocated Assets and make copies and
extracts therefrom, and may discuss such matters with the
Operator's officers.  Upon the occurrence and during the
continuance of an Event of Default, the Owner may inspect such
books and records at any time, which inspections shall be at the
expense of the Operator.  The Owner also shall have the right at
any time to obtain information regarding the condition and state
of repair of any Allocated Asset, compliance by the Operator with
Article VII hereof and the absence of an Event of Default. 

SECTION 13.2  Markings.  The Operator shall affix to certain
Allocated Assets agreed to by the Operator and Owner identifying
labels, plates or tags each setting forth such information as the
Operator and Owner may agree.  The Operator covenants and agrees
to replace any such label, plate or tag which may be removed or
destroyed or become illegible, and the Operator shall indemnify
each Owner Indemnified Person against any liability, loss or
expense incurred by such Owner Indemnified Person as a result of
the failure to maintain such markings.

ARTICLE XIV

Events of Default

SECTION 14.1  Events of Default.  Each of the following
events shall constitute an Event of Default (whether any such
event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or
regulation of any Governmental Authority):

(a)  the Operator shall fail to make any payment of (i)
the Operating Fee when due and such failure shall continue
unremedied for a period of thirty (30) Business Days and (ii) any
Supplemental Operating Fees due under this Agreement and such
failure shall continue unremedied for a period of thirty (30)
Business Days; or

(b)  the Operator shall fail to perform or observe any
other material covenant, condition or agreement to be performed
or observed by it under this Agreement and such failure shall
continue unremedied for a period of one hundred twenty (120)
Business Days after notice thereof shall have been given to the
Operator by the Owner; provided, that the continuation of any
such failure or breach (other than a failure or breach curable by
payment of money) for a period longer than such one hundred
twenty (120) Business Day period shall not constitute an Event of
Default if (i) such default is curable but cannot be cured within
such one hundred twenty (120) Business Day period and (ii) the
Operator is diligently pursuing the cure of such default;
provided, further, that any such failure or breach (other than a
failure or breach curable by payment of money) shall constitute
an Event of Default if such failure is not cured within the
earlier of the last Business Day of the Term and any Renewal Term
and four hundred fifty (450) days from the date notice thereof
has been given to the Operator; or

-17-

(c)  The Operator (i) shall commence a voluntary
Insolvency Proceeding, (ii) shall seek the appointment of a
trustee, receiver, liquidator, sequestrator, custodian or other
similar official of the Operator or any substantial part of the
Operator's property, (iii) shall acquiesce in or consent to any
such relief or to the appointment of or taking possession by any
such official in an involuntary Insolvency Proceeding commenced
against it, (iv) shall make a general assignment for the benefit
of creditors, or (v) shall fail generally to pay its undisputed
debts as they become due; or

(d)  an involuntary Insolvency Proceeding shall be
commenced against the Operator seeking liquidation,
reorganization or other relief with respect to such Person or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, assignee, sequestrator, custodian or other
similar official of it or any substantial part of its property,
and such involuntary case or other proceeding shall remain
undismissed or unstayed for a period of one hundred twenty (120)
consecutive Business Days.

ARTICLE XV

Remedies

SECTION 15.1  Remedies. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be
continuing, the Owner may, at its option, declare by written
notice to the Operator this Agreement to be in default; and at
any time thereafter so long as such Event of Default shall not
have been remedied, the Owner may do one or more of the following
with respect to the Allocated Assets:

(a)  sell the Allocated Assets at public or private
sale, as the Owner may determine, or otherwise dispose of, hold,
use, operate, lease to others or keep unused the Allocated Assets
as the Owner, in its sole discretion, may determine, all free and
clear of any rights of Operator;

(b)  whether or not the Owner shall have exercised, or
shall thereafter at any time exercise, any of its rights under
paragraph (a) above, the Owner, by written notice to the
Operator, may demand that the Operator pay to the Owner, and the
Operator shall pay to the Owner, any accrued but unpaid Operating
Fees (together with interest, if any, on such amount at the
Overdue Rate from such specified payment date until the date of
actual payment of such amount); or

(c)  terminate this Agreement and the rights of the
Operator to use the Allocated Assets pursuant hereto.

-18-

The Owner may exercise one or more remedies in respect of
certain Allocated Assets and one or more other remedies in
respect of other Allocated Assets.  

No termination of this Agreement, in whole or in part, or
exercise of any remedy under this Article XV shall, except as
specifically provided herein, relieve the Operator of any of its
liabilities and obligations hereunder, all of which then
outstanding shall survive such termination, repossession or
exercise of remedy.  In addition, the Operator shall be liable
for any and all Fees and Expenses and other costs and expenses
incurred by the Owner by reason of the occurrence of any Event of
Default or the exercise of the remedies of the Owner with respect
thereto.  At any sale of any Allocated Assets or any part thereof
pursuant to this Article XV, the Owner may bid for and purchase
such property.

SECTION 15.2  Owner Rights.  To the fullest extent permitted
by Applicable Law, each and every right, power and remedy herein
specifically given to the Owner or otherwise in this Agreement
shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and
every right, power and remedy whether specifically given herein
or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Owner,
and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or
remedy.  No delay or omission by the Owner in the exercise of any
right, power or remedy or in the pursuit of any remedy shall
impair any such right, power or remedy or be construed to be a
waiver of any default on the part of the Operator or to be an
acquiescence therein.  No express or implied waiver by the Owner
of any Event of Default shall in any way be, or be construed to
be, a waiver of any future or subsequent Event of Default.

SECTION 15.3  Exercise of Other Rights or Remedies.  In
addition to all rights and remedies provided in this Article XV,
the Owner may exercise any other right or remedy that may be
available to it under Applicable Law or proceed by appropriate
court action to enforce the terms hereof or to recover damages
for the breach hereof.

SECTION 15.4  Subject to Governmental Action.  The exercise
of any right or remedy provided for in this Article XV shall be
subject to any applicable Governmental Action. 

-19-

ARTICLE XVI

Right to Perform

SECTION 16.1  Right to Perform.  If the Owner shall fail to
make any payment or perform under, or comply with, any contract,
lease, license or other agreement in respect of the Allocated
Assets to which the Owner is a party, the Operator may (but shall
have no duty to do so) make such payment or perform or comply
with such agreement, and the Operating Fee shall be reduced in
the amount of such payment and the amount of all expenses of the
Operator (including Fees and Expenses) incurred in connection
with such payment or the performance of or compliance with such
agreement.

ARTICLE XVII

Renewal Options

SECTION 17.1  Renewal Notice.

(a)  The Operator shall have the option to renew this
Agreement twice.  Not less than one (1) year before expiration of
the Term or the initial Renewal Term, the Operator may deliver to
the Owner a notice (the "Renewal Notice") of the Operator's
election to renew this Agreement in respect of all, but not less
than all, Allocated Assets for a renewal period of five (5) years
(or, if there has already been a renewal period, an additional
renewal period of five (5) years), or such other period of time
as the Owner and the Operator shall mutually agree (each such
period, a "Renewal Term").

(b)  All terms of this Agreement shall continue in full
force and effect during each such Renewal Term.

(c)  In the event the Operator elects to renew this
Agreement, the Renewal Term will commence on the day immediately
following the expiration of the Term or initial Renewal Term and
continue until the end of such Renewal Term.

(d)  The Renewal Notice, once given, shall be
irrevocable and the option to renew this Agreement shall expire
if the Operator does not deliver the Renewal Notice by the times
provided in Section 17.1(a) hereof.

(e)  Notwithstanding the foregoing, the Operator shall
have no right to renew this Agreement if any Event of Default
exists on the date of delivery of the Renewal Notice or the
commencement of the Renewal Term.

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ARTICLE XVIII

Certain Notices and Information

SECTION 18.1  Notices.  Any notice expressly required by
this Agreement to be given to the Owner or the Operator shall be
deemed delivered on the date sent by registered mail, or by such
other means as the parties hereto may agree, and shall be
addressed to them as follows:

(a)  If to Owner:

Pennsylvania Lines LLC
2001 Market Street
Philadelphia, Pennsylvania 19103
Attention: Vice President-General Counsel

Copy to:

Senior Vice President Operations
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510

(b)  If to Operator:

Senior Vice President Operations
Norfolk Southern Railway Company
Three Commercial Place
Norfolk, Virginia  23510-2191

Each party may from time to time change its address in this
Section 18.1 by written notice delivered to the other party.

SECTION 18.2  Notice of Event of Default.  Promptly after an
executive officer of the Operator shall have actual knowledge of
the occurrence or existence of any Event of Default or any event
which, with the passing of time or giving of notice, would
constitute an Event of Default, the Operator shall so notify the
Owner and set forth in reasonable detail the circumstances
surrounding such event or Event of Default and shall specify what
actions the Operator has taken or intends to take to cure such
event or Event of Default.

SECTION 18.3  Information Regarding Allocated Assets.  The
Operator shall promptly furnish the information at such times and
in such format as is regularly produced by the Operator
concerning the condition, maintenance and use of the Allocated
Assets as the Owner may reasonably request.

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ARTICLE XIX

Confidentiality

SECTION 19.1  Confidentiality.  The parties hereto shall
hold, and shall cause their respective officers, employees,
agents, consultants and advisors to hold, in strict confidence,
unless compelled to disclose by judicial or administrative
process or, in the opinion of its independent legal counsel, by
other requirements of law, all information furnished it by the
other party hereto, or their respective representatives, pursuant
to this Agreement (except to the extent that such information can
be shown to have been (i) available to such party on a
non-confidential basis prior to its disclosure by the other
party, (ii) in the public domain through no fault of such party
or (iii) later lawfully acquired from other sources by the party
to which it was furnished), and no party shall release or
disclose such information to any other Person, except its
auditors, attorneys, financial advisors, bankers and other
consultants and advisors who shall be bound by the provisions of
this Section 19.1.  In the event that a subpoena, discovery or
other request that arguably calls for production or disclosure of
such confidential information is received, the party receiving
such request must promptly notify in writing the party whose
information has been requested.  The party receiving such request
shall provide the party whose confidential information has been
requested, a reasonable opportunity to review such information
and to assert any rights it may have with respect to the
potential disclosure of such confidential information.  Each
party shall be deemed to have satisfied its obligation to hold
confidential information concerning or supplied by the other
party hereto, if it exercises the same care as it takes to
preserve confidentiality for its own similar information.

ARTICLE XX

Miscellaneous

SECTION 20.1  Dispute Resolution.  Except as otherwise
specifically provided for herein, any dispute, controversy or
claim (or any failure by the parties to agree on a matter as to
which this Agreement expressly or implicitly contemplates
subsequent agreement by the parties, except for matters left to
the sole discretion of a party) arising out of or relating to
this Agreement, or the breach, termination or validity hereof or
thereof, shall be settled in accordance with the provision of
Section 11.12 of the Transaction Agreement.

SECTION 20.2  Documentary Conventions.  This Agreement shall
be governed by, and construed in accordance with, all the
Documentary Conventions.

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IN WITNESS WHEREOF, intending to be legally bound, the
parties hereto have each caused this Operating Agreement to be
duly executed as of the date first above written.

PENNSYLVANIA LINES LLC, 
as OWNER 

By: /s/ James D. McGeehan

Name:  James D. McGeehan

Title:  Assistant Treasurer

NORFOLK SOUTHERN RAILWAY COMPANY,
as OPERATOR

By: /s/ Stephen C. Tobias

Name: Stephen C. Tobias

Title:  Vice President and Chief 
Operating Officer

-23-

APPENDIX A
to Operating Agreement

DEFINITIONS AND RULES OF USAGE

Rules of Usage

The terms defined below shall have the respective meanings
set forth below for all purposes, and such meanings shall be
equally applicable to both the singular and plural forms of the
terms defined.  "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they
are in fact followed by such words or words of like import. 
"Writing", "written" and comparable terms refer to printing,
typing, lithography and other means of reproducing words in a
visible form.  Any instrument or Applicable Law defined or
referred to below or in any instrument that recites it is to be
construed in accordance with this Appendix means such instrument
or Applicable Law as from time to time amended, modified or
supplemented, including (in the case of instruments) by waiver or
consent and (in the case of Applicable Laws) by succession of
comparable successor Applicable Laws and includes (in the case of
instruments) references to all attachments thereto and
instruments incorporated therein; provided, that any reference to
the Bankruptcy Code shall mean the Bankruptcy Code as in effect
on the date of reference thereto and applicable to the relevant
case.  References to any Person are, unless the context otherwise
requires, also to its successors and assigns.  "Hereof",
"herein", "hereunder" and comparable terms refer to the entire
instrument in which such terms are used and not to any particular
article, section or other subdivision thereof or attachment
thereto.  References to any gender include, unless the context
otherwise requires, references to all genders, and references to
the singular include, unless the context otherwise requires,
references to the plural and vice versa.  "Shall" and "will" have
equal force and effect.  References in an instrument to
"Article", "Section" or another subdivision or to an attachment
are, unless the context otherwise requires, to an article,
section or subdivision of or an attachment to such instrument.

Definitions

"Action" shall mean any action, claim, suit, arbitration,
inquiry, subpoena, discovery request, proceeding or investigation
by or before any Governmental Authority or forum or authority
having jurisdiction over the matter involving or related to any
Owner Indemnified Person, any Operator Indemnified Person or the
Allocated Assets. 

"Affiliate" means, with respect to a specified Person, any
Person that directly or indirectly controls, is controlled by or
is under common control with, the specified Person or any trust
for the benefit of such Person or any entities controlled by such
Person; provided that (a) NYC shall not be an Affiliate of CSX
and its Subsidiaries or NSC and its Subsidiaries, (b) PRR shall
not be an Affiliate of NSC and its Subsidiaries or CSX and its
Subsidiaries and (c) CSX and NSC and their respective
Subsidiaries shall not be Affiliates of CRR or CRR Parent and
their respective Subsidiaries and vice versa.

"Agreement" means this Operating Agreement, dated as of the
Closing Date, between the Owner and the Operator.

"Allocated Asset" means the assets identified in or pursuant
to the Transaction Agreement as the PRR Allocated Assets other
than (i) the assets identified in Item 2(E) of Schedule 1 to the
Transaction Agreement, and (ii) such items of inventory as may
subsequently be agreed to by the parties from time to time.

"Applicable Law" means, with respect to any Person or to any
Allocated Asset, all laws, ordinances, judgments, decrees,
injunctions, writs and orders of any Governmental Authority and
any Governmental Actions applicable to or having jurisdiction
over such Person or Allocated Asset.

"Appraisal Procedure" means a procedure whereby (i) an
independent third-party appraiser chosen jointly by the Owner and
the Operator determines the reasonableness of the fair market
value of the Allocated Assets credited to the Settlement Account
if the fair market value of the Allocated Assets exceeds $50,000
or determines the Fair Market Rental Value of the Allocated
Assets, or (ii) the reasonableness of the fair market value of
the Allocated Assets credited to the Settlement Account is
certified by an officer of the Operator if the fair market value
is $50,000 or less.  The fees and expenses of the appraiser shall
be divided equally between the Owner and the Operator.

"arises prior" means that the circumstances giving rise to
the liability have transpired prior to the applicable date,
whether or not such liability has been discovered, asserted or
accrued prior to such date.  If the circumstances giving rise to
a liability bridge the Closing Date, the parties will apportion
it to pre-Closing Date and post-Closing Date periods, with
disagreement being subject to the dispute resolution provisions
of Section 20.1 of the Agreement.

"Assigned Rights" means Contracts and rights included in the
Allocated Assets (including, but not limited to, transportation
contracts).

"Bankruptcy Code" means the United States Bankruptcy Code of
1978, as amended from time to time, and the rules and regulations
promulgated thereunder.

"Business Day" means any day other than a Saturday, Sunday
or other day on which banks are authorized or required to be
closed in New York, New York and Richmond, Virginia.

"Closing Date" is the date of this Agreement.

"Contracts" means any contract, lease, loan agreement, deed,
easement, license, reversion, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Owner is
a party or by which it is bound or to which any of the Allocated
Assets is subject.

-2-

"Contractual Obligation" means, with respect to any Person,
any provision of any security issued by such Person or of any
Contract to which such Person is a party or by which it or any of
its property is bound.

"CRC" means Consolidated Rail Corporation, a Pennsylvania
corporation.

"CRR" means Conrail Inc., a Pennsylvania corporation.

"CSX" means CSX Corporation, a Virginia corporation.

"CSXT" means CSX Transportation, Inc., a Virginia
corporation.

"Documentary Conventions" means, with respect to the
Agreement and any instrument that states in substance that it is
governed by the Documentary Conventions, that, except as
otherwise expressly provided therein:

(a)  Documentary Convention Survival.  The
representations, warranties and agreements of the parties
contained or provided for in such instrument and the parties'
obligations under any and all thereof shall survive the execution
and delivery of such instrument and the expiration or other
termination of the Agreement and shall be and continue in effect
notwithstanding the fact that any party may waive compliance with
any other term, provision or condition of the Agreement.

(b)  Documentary Convention Governing Law.  Such
instrument shall become effective upon delivery and shall in all
respects be governed by, and construed in accordance with, the
laws (excluding principles of conflict of laws) of the
Commonwealth of Virginia applicable to agreements made and to be
performed entirely within such state, including all matters of
construction, validity and performance.

(c)  Documentary Convention Counterparts.  Except
as otherwise specifically provided in the Agreement, such
instrument may be executed by the parties thereto in separate
counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together
constitute but one and the same instrument.  To make proof of
such instrument, it shall only be necessary to produce one
such counterpart executed by each party thereto.  All  signatures
need not be on the same counterpart.

(d)  Documentary Convention Method of Payment. 
All amounts required to be paid by any party to such instrument
to any other party, either thereunder or under the Agreement
shall be paid in such immediately available and freely
transferable Dollars as at the time of payment shall be legal
tender for the payment of public and private debts, by wire
transfer, or other method of payment acceptable to the payee, of
immediately available funds to the account of the payee as such
payee may specify by notice to the other parties.

-3-

(e)  Documentary Convention Parties in Interest;
Limitation on Rights of Others.  The terms of such instrument
shall be binding upon, and inure to the benefit of, the parties
thereto and their permitted successors and assigns.  Nothing in
such instrument shall be construed to give any Person (other than
the parties thereto and their permitted successors and assigns
and as expressly provided therein) any legal or equitable right,
remedy or claim under or in respect of such instrument or any
covenants, conditions or provisions contained therein.

(f)  Documentary Convention Table of Contents;
Headings.  The table of contents, if any, and headings, if any,
of the various articles, sections and other subdivisions of such
instrument are for convenience of reference only and shall not
modify, define or limit any of the terms or provisions of such
instrument. To the extent of any inconsistency between the
headings and any text, such text shall govern.

(g)  Documentary Convention Entire Agreement;
Amendment and Waiver.  The Agreement, the other Ancillary
Agreements and the Transaction Agreement constitute the entire
agreement of the parties thereto with respect to the subject
matter thereof and supersede all prior written and oral
agreements and understandings with respect to such subject
matter.  Neither the Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against
which the enforcement of the termination, amendment, supplement,
waiver or modification shall be sought and subject to any other
limitations on amendments set forth in the Agreement, the other
Ancillary Agreements and the Transaction Agreement.  Any
amendment, modification or supplement to the Agreement shall be
subject to any applicable Governmental Action.  No failure or
delay of any party in exercising any power or right under this
Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the
exercise of any other right or power.

(h)  Documentary Convention Severability.  Any
provision of such instrument that shall be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
thereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.  To the extent permitted by
Applicable Law, the parties to such instrument waive any
provision of law that renders any provision thereof prohibited or
unenforceable in any respect.

(i)  Documentary Convention Payment on Business
Days.  If any payment under such instrument is required to be
made on a day other than a Business Day, the date of payment
shall be extended to the next Business Day without any additional
interest for such extension period so long as payment is made on
such Business Day.

-4-

"Dollars" or "$" means dollars in the lawful currency of the
United States of America.

"Event of Default" has the meaning set forth in Section 14.1
of the Agreement.

"Event of Loss" means, with respect to any Allocated Asset,
the occurrence of any of the following events:  (a) the loss or
theft of such Allocated Asset to the extent that such Allocated
Asset is not recovered within one hundred eighty (180) days of
such event or, if earlier, the expiration of the Term or any
Renewal Term, (b) the destruction of or damage to such Allocated
Asset or any part thereof to such extent as shall render repair
of such Allocated Asset uneconomical to the Operator or unfit or
unsuitable for its intended use, which destruction or damage is
an actual or constructive total loss, (c) the requisition of use
of such Allocated Asset for an indefinite period or for a stated
period in excess of one hundred eighty (180) days or, if earlier,
which ends later than the expiration of the Term or any Renewal
Term by any Governmental Authority under power of eminent domain
or otherwise, (d) the condemnation, confiscation, seizure or
requisition of title to such Allocated Asset by a Governmental
Authority, (e) any damage to such Allocated Asset which results
in an insurance settlement on the basis of an actual or
constructive total loss, (f) the prohibition by Applicable Law of
the use of such Allocated Asset by the Operator or any other
Person for a period of one hundred eighty (180) consecutive days
from the date of such prohibition or, if earlier, the end of the
Term or any Renewal Term.  The date of occurrence of an Event of
Loss in respect of any Allocated Asset shall be deemed to be, (1)
in the event of damage to such item, the date of such damage, (2)
in the event of a condemnation or requisition of title by a
Governmental Authority, the date thereof, and (3) in the event of
an Event of Loss under clause (a), (c) or (f) of the first
sentence of this definition, the date of expiration of the period
referred to in said clause.

"Excluded Taxes" has the meaning set forth in Section 3.5 of
the Agreement.

"Fair Market Rental Value" means, as to the Allocated
Assets, the fair market rental value that would be obtained in an
arm's length transaction between an informed and willing lessee
and an informed and willing lessor, in either case under no
compulsion to lease, for the lease of the Allocated Assets,
disregarding the fact (if applicable) that the Allocated Assets
are subject to the Agreement and assuming that Article VII of the
Agreement shall have been complied with in all respects.  Subject
to the foregoing, the Fair Market Rental Value as to the
Allocated Assets shall be such value determined in accordance
with the Appraisal Procedure.

"Fees and Expenses" means, with respect to any Person in
connection with any transaction or occurrence, the Person's
reasonable fees and expenses (including attorneys' fees and legal
expenses) for such transaction or occurrence.

"Governmental Action" means all authorizations, consents,
approvals, waivers, exceptions, variances, franchises,
permissions, permits and licenses of, and filings and
declarations with, Governmental Authorities.

-5-

"Governmental Authority" means any federal, state,
municipal, county, local or foreign governmental Person,
authority or agency, court, regulatory commission, stock exchange
or other similar body.

"Income Tax Regulations" means the regulations promulgated
by the U.S. Department of the Treasury pursuant to the Code.

"Indemnifying Party" means a Person who is required or
requested to provide indemnification under Article XI of the
Agreement.

"Indemnified Party" means any Owner Indemnified Person or
Operator Indemnified Person.

"Insolvency Proceeding" means any case or proceeding under
bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws providing relief to debtors.

"Lien" means any lien, mortgage, encumbrance, pledge,
charge, lease, easement, servitude or security interest or any
interests similar to the foregoing, including those existing
under any conditional sales or other title retention agreement or
the filing of or agreement to deliver any financing statement
under the UCC.

"Modification" means, with respect to any Allocated Asset,
any modification, alteration, addition, upgrade or improvement to
such Allocated Asset.

"Nonseverable Modification" means any Required Modification
and any Modification which is not readily removable without
impairing the fair market value, residual value, condition,
remaining useful life or utility of the Allocated Asset to which
such Modification relates immediately prior to such Modification.

"NSC" means Norfolk Southern Corporation, a Virginia
corporation.

"NSR" means Norfolk Southern Railway Company, a Virginia
corporation.

"NYC" means New York Central Lines LLC, a Delaware limited
liability company.

"Operating Fee" means the operating fee agreed to from time
to time by the Owner and Operator based on the Fair Market Rental
Value of the Allocated Assets as set forth in a supplement to
this Agreement.  The Operating Fee for the first six years of
this Agreement shall be as follows:

-6-

June 1, 1999 through May 31, 2000 -- $163 million
June 1, 2000 through May 31, 2001 -- $168 million
June 1, 2001 through May 31, 2002 -- $185 million
June 1, 2002 through May 31, 2003 -- $203 million
June 1, 2003 through May 31, 2004 -- $227 million
June 1, 2004 through May 31, 2005 -- $246 million

"Operator" means NSR or any permitted successor or assign.

"Operator Indemnified Person" has the meaning set forth in
Section 11.2 of the Agreement.

"Optional Modification" has the meaning set forth in Section
7.2(a) of the Agreement.

"Organic Document" means, with respect to any Person, as
applicable, the certificate or articles of incorporation,
partnership agreement, limited liability company agreement,
certificate of formation, membership agreement, by-laws and all
other organizational documents of such Person.

"Overdue Rate" means the rate determined on the first
Business Day of each calendar month equal to the lesser of (i)
the prime rate set forth in The Wall Street Journal and (ii) the
maximum rate allowed by Applicable Law.

"Owner" means PRR, a Delaware limited liability company.

"Owner Indemnified Person" has the meaning set forth in
Section 11.1 of the Agreement.

"Owner Lien" means a Lien (i) which results from acts of, or
any failure to act by, or as a result of claims against, the
Owner, (ii) in favor of any taxing authority by reason of the
non-payment by the Owner, or (iii) which results from acts of, or
any failure to act by, the Owner in violation of its obligations
under the Agreement.

"Payment Date" means monthly in arrears on the 15th day of
each calendar month to cover the preceding calendar month's usage
or, if such day is not a Business Day, the next succeeding
Business Day.

"Permitted Liens" means, with respect to any Allocated
Asset,

(a)  The respective rights and interests of the
Operator and Owner under the Agreement,

(b)  Owner Liens,

-7-

(c)  Liens for Taxes which are not yet due or so long
as no Event of Default shall have occurred and be continuing are
being contested in good faith by appropriate proceedings which
suspend the collection thereof; provided, that such proceedings
shall not involve any material danger of the sale, forfeiture or
loss of such Allocated Asset or any part thereof or interest
therein or the reasonably foreseeable risk of imposition of any
criminal liability on the Owner or any other material liability
not indemnified against by the Operator,

(d)  Liens of mechanics, materialmen, laborers,
employees or suppliers and similar Liens arising by operation of
law, in each case incurred by the Operator in the ordinary course
of business for sums that are not overdue for more than sixty
(60) days or so long as no Event of Default shall have occurred
and be continuing are being contested in good faith by
negotiations or by appropriate proceedings which suspend the
collection thereof; provided, that such contest does not involve
any material danger of the sale, forfeiture or loss of such
Allocated Asset or any part thereof or interest therein or the
reasonably foreseeable risk of imposition of any criminal
liability on the Owner or any other material liability not
indemnified against by the Operator,

(e)  Liens arising out of any judgments or awards
against the Operator with respect to which (i) at the time an
appeal or proceeding for review is being prosecuted in good
faith, (ii) there shall have been secured a stay of execution
pending such appeal or proceeding for review, (iii) during such
proceeding there is not, and such proceeding does not involve,
any material danger of the sale, forfeiture or loss of such
Allocated Asset or any part thereof or any interest therein or
the risk of imposition of any criminal liability on the Owner or
any other liability not indemnified against by the Operator, and
(iv) if such Liens have specifically attached to any Allocated
Asset, the Operator has provided the Owner with security
reasonably satisfactory to the Owner, in the amount of such
claims,

(f)  Liens, rights of way, easements and other rights
to use the Allocated Assets (including licenses for private
crossings) common in the railroad industry arising out of the
ordinary course of business of the Operator, and

(g)  Liens consented to by the Owner.

"Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.

"PRR" means Pennsylvania Lines LLC, a Delaware limited
liability company.

"Renewal Notice" has the meaning set forth in Section
17.1(a) of the Agreement.

"Renewal Term" has the meaning set forth in Section 17.1(a)
of the Agreement.

-8-

"Required Modification" has the meaning set forth in Section
7.2(a) of the Agreement.

"Settlement Account" has the meaning set forth in Section
6.1 of the Agreement.

"Settlement Account Payment Date" has the meaning set forth
in Section 6.2 of the Agreement.

"Severable Modification" means any Modification which is not
a Nonseverable Modification.

"Substantial Allocated Asset" means (i) an Allocated Asset
with a fair market value in excess of $25 million or (ii) a group
of Allocated Assets that (a) are sold, transferred or otherwise
disposed of during any calendar year to the same Person
(including Affiliates of such Person) or the same group of
Persons (including Affiliates of such Persons) and (b) have an
aggregate fair market value in excess of $25 million.

"Supplemental Operating Fees" means all amounts payable by
the Operator pursuant to the terms of the Agreement, including
indemnities payable by the Operator pursuant to Section 11.1
hereof, other than the Operating Fee.

"Tax" means all taxes (including income, franchise, excise,
real and personal property, sales, use, payroll and withholding
and other taxes) imposed by any federal, state, local, foreign or
international taxing authority or Governmental Authority, whether
in the form of assessments, levies, imposts, duties, charges,
assessments, withholdings or otherwise, now existing or hereafter
created or adopted, together with all interest, penalties and
additions imposed with respect to such amounts.

"Term" means the period commencing on the Closing Date and
terminating on the 25th anniversary thereof.

"Termination Date" means the date on which the Term or any
Renewal Term, whichever is later, terminates.

"Third Party Claim" has the meaning set forth in Section
11.3(b) of the Agreement.

"Third Party Provider" has the meaning set forth in Section
4.2(a) of the Agreement.

"Transaction Agreement" means the Transaction agreement
among CSX, CSXT, NSC, NSR, CRC, CRR and CRR Holdings LLC dated as
of June 10, 1997.

"Valuation Date" means: (i) the Closing Date, (ii) the sixth
(6th), twelfth (12th), eighteenth (18th), and twenty-fourth
(24th) anniversaries of the Closing Date, (iii) the first day of
each Renewal Term; (iv) the sixth (6th) anniversary of the first
day of each Renewal Term, (v) a Settlement Account Payment Date

-9-

(if not already a Valuation Date pursuant to other clauses of
this definition), and (vi) such other dates as the parties hereto
may agree.

-10-

SHARED ASSETS AREA

OPERATING AGREEMENT

FOR

NORTH JERSEY

Dated as of June 1, 1999

By and Among

CONSOLIDATED RAIL CORPORATION,

CSX TRANSPORTATION, INC. and

NORFOLK SOUTHERN RAILWAY COMPANY

TABLE OF CONTENTS

Page

Section 1.  Definitions. . . . . . . . . . . . . . . . . . . . .1

(a)  AAR. . . . . . . . . . . . . . . . . . . . .1

(b)  Accounting Plan. . . . . . . . . . . . . . .1

(c)  Action . . . . . . . . . . . . . . . . . . .2

(d)  Adjacent Improvements. . . . . . . . . . . .2

(e)  Bill . . . . . . . . . . . . . . . . . . . .2

(f)  Billing Month. . . . . . . . . . . . . . . .2

(g)  Board of Managers. . . . . . . . . . . . . .2

(h)  Budgeted Capital Expenditures. . . . . . . .2

(i)  Capital Expenditure Budget . . . . . . . . .2

(j)  Capital Expenditure Statement. . . . . . . .2

(k)  CRC Administrative Office. . . . . . . . . .2

(l)  CRC Board. . . . . . . . . . . . . . . . . .2

(m)  CRC Train. . . . . . . . . . . . . . . . . .2

(n)  CRC Train Usage Percentage . . . . . . . . .2

(o)  CSX. . . . . . . . . . . . . . . . . . . . .3

(p)  CSXT Operating Agreement . . . . . . . . . .3

(q)  Damage(s). . . . . . . . . . . . . . . . . .3

(r)  Dispute Letter . . . . . . . . . . . . . . .3

Page

(s)  Excluded Taxes . . . . . . . . . . . . . . .3

(t)  Expense Statement. . . . . . . . . . . . . .3

(u)  GAAP . . . . . . . . . . . . . . . . . . . .3

(v)  General Manager. . . . . . . . . . . . . . .3

(w)  Governmental Entity. . . . . . . . . . . . .3

(x)  Interest Rental. . . . . . . . . . . . . . .3

(y)  Jointly-Operated Facility. . . . . . . . . .4

(z)  Lesser Insured Operator. . . . . . . . . . .4

(aa) Letter Agreement . . . . . . . . . . . . . .4

(bb) Liabilities. . . . . . . . . . . . . . . . .4

(cc) Nonseverable Improvement . . . . . . . . . .4

(dd) NSC. . . . . . . . . . . . . . . . . . . . .4

(ee) NSR Operating Agreement. . . . . . . . . . .4

(ff) NYC. . . . . . . . . . . . . . . . . . . . .4

(gg) Operating Budget . . . . . . . . . . . . . .5

(hh) Operating Plan . . . . . . . . . . . . . . .5

(ii) Operator . . . . . . . . . . . . . . . . . .5

(jj) Operator Consequential Damages . . . . . . .5

(kk) Operator's Expense Percentage. . . . . . . .5

(ll) Operator's Facility. . . . . . . . . . . . .5

-ii-

Page

(mm) Operator Train . . . . . . . . . . . . . . .5

(nn) Person . . . . . . . . . . . . . . . . . . .5

(oo) Program Maintenance. . . . . . . . . . . . .5

(pp) Program Maintenance Proposal . . . . . . . .5

(qq) PRR. . . . . . . . . . . . . . . . . . . . .6

(rr) Railcar. . . . . . . . . . . . . . . . . . .6

(ss) Reimbursable Expenses. . . . . . . . . . . .6

(tt) Renewal Term . . . . . . . . . . . . . . . .6

(uu) RoadRailer . . . . . . . . . . . . . . . . .6

(vv) Routine Maintenance. . . . . . . . . . . . .6

(ww) Severable Improvement. . . . . . . . . . . .6

(xx) Shared Asset Value . . . . . . . . . . . . .6

(yy) Shared Assets. . . . . . . . . . . . . . . .6

(zz) Shared Assets Area . . . . . . . . . . . . .7

(aaa) STB . . . . . . . . . . . . . . . . . . . . 7

(bbb) Switching and Yard Services . . . . . . . . 7

(ccc) Tax or Taxes. . . . . . . . . . . . . . . . 7

(ddd) Temporary Services. . . . . . . . . . . . . 7

(eee) Tier One Damages. . . . . . . . . . . . . . 7

(fff) Tier Two Damages. . . . . . . . . . . . . . 8

-iii-

Page

(ggg) Total Train Usage Percentage. . . . . . . . 8

(hhh) Transaction Agreement . . . . . . . . . . . 8

(iii) Usage Statement . . . . . . . . . . . . . . 8

(jjj) USOA. . . . . . . . . . . . . . . . . . . . 8

(kkk) Valuation Date. . . . . . . . . . . . . . . 8

(lll) Zone. . . . . . . . . . . . . . . . . . . . 8

Section 2.  Management . . . . . . . . . . . . . . . . . . . . .8

(a)  CRC Board. . . . . . . . . . . . . . . . . .8

(b)  General Manager. . . . . . . . . . . . . . .9

(c)  Employees. . . . . . . . . . . . . . . . . 10

(d)  CRC Responsibilities . . . . . . . . . . . 10

(e)  Impartiality . . . . . . . . . . . . . . . 10

(f)  Independent Contractors. . . . . . . . . . 10

Section 3.  Operations . . . . . . . . . . . . . . . . . . . . 10

(a)  Operator's Rights. . . . . . . . . . . . . 10

(b)  Use. . . . . . . . . . . . . . . . . . . . 11

(c)  Grant of Rights. . . . . . . . . . . . . . 11

(d)  Switching and Yard Services. . . . . . . . 13

(e)  Operating Protocols. . . . . . . . . . . . 13

(f)  Freight Traffic to Remain in Account of 
Each Operator. . . . . . . . . . . . . . . 13

-iv-

Page

(g)  Rates, Routes and Divisions. . . . . . . . 14

(h)  Shipper Bills. . . . . . . . . . . . . . . 14

(i)  Service Responsibility . . . . . . . . . . 14

(j)  Dispatching. . . . . . . . . . . . . . . . 14

(k)  Railcar Weighing . . . . . . . . . . . . . 15

(l)  Freight Claims . . . . . . . . . . . . . . 15

(m)  Freight Car Repairs. . . . . . . . . . . . 15

(n)  Train Services . . . . . . . . . . . . . . 15

(o)  Wrecking Service . . . . . . . . . . . . . 16

(p)  Admission of Third Parties . . . . . . . . 16

Section 4.  Equipment and Properties . . . . . . . . . . . . . 16

(a)  Procurement. . . . . . . . . . . . . . . . 16

(b)  Contribution of Locomotives by Operators . 16

(c)  Locomotive Service and Repair. . . . . . . 16

Section 5.  Maintenance. . . . . . . . . . . . . . . . . . . . 17

(a)  Routine Maintenance. . . . . . . . . . . . 17

(b)  CRC Program Maintenance. . . . . . . . . . 17

(c)  Maintenance Standards. . . . . . . . . . . 18

Section 6.  Capital Improvements . . . . . . . . . . . . . . . 18

(a)  Proposed Projects. . . . . . . . . . . . . 18

-v-

Page

(b)  CRC Board Approved Projects. . . . . . . . 18

(c)  Nonseverable Improvement Projects. . . . . 18

(d)  Severable Improvement Projects . . . . . . 19

(e)  Capital Improvements as Shared Assets. . . 20

(f)  Title to Severable Improvements. . . . . . 20

(g)  Noninterference. . . . . . . . . . . . . . 20

(h)  Switch Connections . . . . . . . . . . . . 20

(i)  Adjacent Improvements. . . . . . . . . . . 21

(j)  Operator's Facilities. . . . . . . . . . . 21

Section 7.  Accounting . . . . . . . . . . . . . . . . . . . . 21

(a)  Books of Record and Account. . . . . . . . 21

(b)  Financial Statements . . . . . . . . . . . 21

Section 8.  Costs and Budgets. . . . . . . . . . . . . . . . . 22

(a)  CRC Costs. . . . . . . . . . . . . . . . . 22

(b)  Employee Cost Reimbursement. . . . . . . . 22

(c)  Capital Expenditure Budget . . . . . . . . 22

(d)  Operating Budget . . . . . . . . . . . . . 23

Section 9.  Cost Sharing . . . . . . . . . . . . . . . . . . . 23

(a)  Accounting Plan. . . . . . . . . . . . . . 23

(b)  Usage Statement. . . . . . . . . . . . . . 24

-vi-

Page

(c)  Expense Statement. . . . . . . . . . . . . 25

(d)  Capital Expenditure Statement. . . . . . . 25

(e)  Bills. . . . . . . . . . . . . . . . . . . 25

(f)  Payment. . . . . . . . . . . . . . . . . . 26

(g)  Disputed Bills . . . . . . . . . . . . . . 26

Section 10.  Access. . . . . . . . . . . . . . . . . . . . . . 26

Section 11.  Liability . . . . . . . . . . . . . . . . . . . . 26

(a)  Operators' Sole Responsibility . . . . . . 27

(b)  Operators' Joint Responsibility. . . . . . 27

(c)  CRC Responsibility - Allocation and
Insurance. . . . . . . . . . . . . . . . . 27

(d)  Process. . . . . . . . . . . . . . . . . . 28

(e)  Indemnification. . . . . . . . . . . . . . 29

(f)  Specified Level Damages. . . . . . . . . . 29

(g)  Substance Abuse Exception. . . . . . . . . 31

(h)  Transaction Agreement. . . . . . . . . . . 31

(i)  Damages. . . . . . . . . . . . . . . . . . 31

Section 12.  No Partnership. . . . . . . . . . . . . . . . . . 31

Section 13.  Arbitration . . . . . . . . . . . . . . . . . . . 32

Section 14.  Term. . . . . . . . . . . . . . . . . . . . . . . 32

Section 15.  Force Majeure . . . . . . . . . . . . . . . . . . 32

-vii-

Page

Section 16.  Entire Agreement. . . . . . . . . . . . . . . . . 32

Section 17.  Amendment and Waiver. . . . . . . . . . . . . . . 33

Section 18.  Severability. . . . . . . . . . . . . . . . . . . 33

Section 19.  Remedies. . . . . . . . . . . . . . . . . . . . . 33

(a)  Entitlement to Certain Remedies. . . . . . 33

(b)  Preclusion of Certain Remedies . . . . . . 33

Section 20.  Interpretation. . . . . . . . . . . . . . . . . . 33

Section 21.  Headings. . . . . . . . . . . . . . . . . . . . . 34

Section 22.  Parties . . . . . . . . . . . . . . . . . . . . . 34

Section 23.  Assignment. . . . . . . . . . . . . . . . . . . . 34

(a)  Limitation . . . . . . . . . . . . . . . . 34

(b)  Successor. . . . . . . . . . . . . . . . . 34

Section 24.  Notices . . . . . . . . . . . . . . . . . . . . . 34

Section 25.  Governing Law . . . . . . . . . . . . . . . . . . 35

EXHIBIT A - Operating Protocols

-viii-

SHARED ASSETS AREA

OPERATING AGREEMENT

FOR

NORTH JERSEY

This SHARED ASSETS AREA OPERATING AGREEMENT
("Agreement") dated as of June 1, 1999, is by and among
Consolidated Rail Corporation ("CRC"), CSX Transportation, Inc.
("CSXT") and Norfolk Southern Railway Company ("NSR").

W I T N E S S E T H:

WHEREAS, all capitalized terms in this Agreement have
the respective meanings set forth in Section 1; and

WHEREAS, CSX owns all of the common stock of and
controls CSXT, NSC owns all of the common stock of and controls
NSR, and CSX and NSC jointly control CRC; and

WHEREAS, CSXT, NSR and CRC desire that the Shared
Assets shall be owned, operated and maintained by CRC and used by
or for the exclusive benefit of CSXT and NSR, and that CSXT and
NSR shall each have full and equal rights to use the Shared
Assets to provide competitive railway freight transportation
services to, from and between all places within the Shared Assets
Area.

NOW, THEREFORE, in consideration of the premises,
covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is
acknowledged, CRC, CSXT and NSR hereby agree as follows:

Section 1.     Definitions.   For purposes of this
Agreement, the following terms have the following meanings:

(a)  "AAR" means the Association of American Railroads.

(b)  "Accounting Plan" means the plan of accounting
adopted pursuant to Section 9(a).

(c)  "Action" means any action, claim, suit,
arbitration, inquiry, subpoena, discovery request, proceeding or
investigation by or before any Governmental Entity.

(d)  "Adjacent Improvement" means a capital
improvement, such as a spur, which provides access to customers
and local industries and which (i) is on property which is not
part of the Shared Assets and (ii) will be directly (without
intermediate connection to another railroad) attached to trackage
included within the Shared Assets.

(e)  "Bill" means a bill delivered by CRC to an
Operator pursuant to Section 9(e).

(f)  "Billing Month" means the calendar month for which
information is shown on a Usage Statement.

(g)  "Board of Managers" means any Board of Managers
which may be appointed by the CRC Board pursuant to Section
2(a)(ii).

(h)  "Budgeted Capital Expenditures" means capital
expenditures included on a Capital Expenditure Budget which has
been approved by the CRC Board.

(i)  "Capital Expenditure Budget" means a written
budget specifying proposed capital expenditures to be made by CRC
with respect to Shared Assets for the periods of time specified
in such budget, and the proposed sources of the capital required
to make such expenditures.

(j)  "Capital Expenditure Statement" means a statement
delivered by CRC pursuant to Section 9(d).

(k)  "CRC Administrative Office" means the
administrative office of CRC located at Philadelphia,
Pennsylvania, or at such other place designated by CRC in a
notice it delivers to CSXT and NSR.

(l)  "CRC Board" means the Board of Directors of CRC.

(m)  "CRC Train" means a train operated by CRC and
performing services pursuant to Sections 3(c) or (d).

(n)  "CRC Train Usage Percentage" means for an Operator
for a particular time period and Zone, the percentage obtained by
multiplying 100 by the quotient obtained by dividing (i) the
total number of loaded and empty Railcars in the account of such
Operator in CRC Trains, by (ii) the total number of loaded and
empty Railcars in the accounts of both Operators in CRC Trains,
during such time period in such Zone.

-2-

(o)  "CSX" means CSX Corporation.

(p)  "CSXT Operating Agreement" means the agreement,
dated June 1, 1999, between CSXT and NYC providing for the use,
operation and maintenance by CSXT of certain assets owned or
leased by NYC.

(q)  "Damage(s)" means all assessments, fines, losses,
damages, liabilities, and costs and expenses related thereto,
including, without limitation, interest, penalties and attorneys'
and consultants' fees and also expressly including, without
limitation, all liabilities arising after the effective date
hereof under the Federal Employers Liability Act, as amended, and
environmental laws.

(r)  "Dispute Letter" means a letter delivered by an
Operator pursuant to Section 9(g)(i).

(s)  "Excluded Taxes" means:  (A) all Taxes based, in
whole or in part, on net income or gross income (including,
without limitation, any minimum tax) of CRC or which are in
substitution for, or relieve CRC from, any Tax based upon or
measured by CRC's net income or gross income, together with any
interest, penalties, additions to tax or additional amounts that
may become payable in respect thereof; (B) business and
occupation taxes, and gross receipts taxes (unless in the nature
of a sales tax) of CRC and Taxes based upon the equity interests
of CRC; and (C) interest, fines and penalties to the extent due
to the acts or omissions of CRC in connection with such Excluded
Taxes.

(t)  "Expense Statement" means a statement delivered by
CRC pursuant to Section 9(c).

(u)  "GAAP" at any time means generally accepted
accounting principles in effect at such time.

(v)  "General Manager" means the chief executive
officer of CRC.

(w)  "Governmental Entity" means any federal, state,
local or foreign court, administrative agency or commission or
other governmental or regulatory authority or commission or any
arbitration tribunal.

(x)  "Interest Rental" means an amount representing a
fair periodic return on the Shared Asset Value as of the most
recent preceding Valuation Date as determined by such appraiser
as CSXT and NSR may select.  The Interest Rental for the first
six years of this Agreement shall be as follows:

-3-

June 1, 1999 through May 31, 2000 -- $14 million        
June 1, 2000 through May 31, 2001 -- $14 million
June 1, 2001 through May 31, 2002 -- $16 million
June 1, 2002 through May 31, 2003 -- $18 million
June 1, 2003 through May 31, 2004 -- $20 million
June 1, 2004 through May 31, 2005 -- $22 million

(y)  "Jointly-Operated Facility" means a facility or
yard which is operated by or for a rail carrier and one or more
other rail carriers.

(z)  "Lesser Insured Operator" means the Operator which
has the lesser (as between the Operators) amount of available
insurance benefits as specified in Section 11(f)(i)(A.1)(2).

(aa) "Letter Agreement" means the letter agreement
dated May 1, 1999 between NSC and CSX relating to the settlement
of certain matters.

(bb) "Liabilities" means any and all debts, liabilities
and obligations of any kind whatsoever, whether or not accrued,
contingent or reflected on a balance sheet, known or unknown,
absolute, determined, determinable or otherwise, including,
without limitation, those arising under any law, rule,
regulation, action, order or consent decree of any Govern mental
Entity or any judgment in any Action of any kind or award of any
arbitrator of any kind and those arising under any contract.

(cc) "Nonseverable Improvement" means a capital
improvement which is integral to the operation of the Shared
Assets and is not readily removable.

(dd) "NSC" means Norfolk Southern Corporation.

(ee) "NSR Operating Agreement" means the agreement,
dated June 1, 1999, between NSR and PRR providing for the use,
operation and maintenance by NSR of certain assets owned or
leased by PRR.

(ff) "NYC" means New York Central Lines LLC, a Delaware
limited liability company.

-4-

(gg) "Operating Budget" means a written budget
specifying estimated operating revenues and expenses and working
capital requirements of CRC with respect to the Shared Assets for
the periods of time specified in such budget.

(hh) "Operating Plan" means the plan for road train and
local train schedules and classifications and related operating
protocols for the Shared Assets Area as may be agreed to, and
modified from time to time, by CRC, CSXT and NSR.

(ii) "Operator" means either CSXT or NSR.

(jj) "Operator Consequential Damages" means
consequential, indirect, incidental or other similar damage,
injury or loss to an Operator.

(kk) "Operator's Expense Percentage" means for an
Operator the percentage obtained by multiplying 100 by the
quotient obtained by dividing (i) the total Reimbursable Expenses
(except for Interest Rental, Taxes, insurance costs and any other
CRC expenses not apportioned between the Operators on a usage
basis) payable by such Operator for a particular period, by (ii)
the total Reimbursable Expenses (except for Interest Rental,
Taxes, insurance costs and any other CRC expenses not apportioned
between the Operators on a usage basis) payable by both Operators
for such period.

(ll) "Operator's Facility" means a present, expanded or
new facility or yard which is owned or controlled exclusively by
an Operator.

(mm) "Operator Train" means a train operated by an
Operator and performing services in accordance with Sections 3(a)
and 3(c).

(nn) "Person" means any individual, corporation,
association, partnership (general or limited), joint venture,
trust, estate, limited liability company or other legal entity or
organization.

(oo) "Program Maintenance" means scheduled renewal of
track, signals, structures and other fixed facilities performed
by system or production gangs assembled to accomplish a specific
task or tasks.

(pp) "Program Maintenance Proposal" means a written
proposal prepared by CRC, CSXT or NSR which describes specific
Program Maintenance which the preparer of such proposal believes
is necessary or desirable to maintain the Shared Assets in a safe
operating condition to permit or facilitate (i) the performance
by CRC of its services pursuant to this Agreement, or (ii) the
use of Shared Assets by the Operators, and which specifies a
budget for such Program Maintenance.

-5-

(qq) "PRR" means Pennsylvania Lines LLC, a Delaware
limited liability company.

(rr) "Railcar" means, except as otherwise provided in
the Accounting Plan, each railroad freight car, locomotive,
caboose or other equipment (including RoadRailer  or comparable
bimodal freight hauling equipment in the account of either
Operator) furnished in substitution of railroad equipment, loaded
or empty, which an Operator originates, terminates, switches or
moves on or overhead to any Shared Assets, except that (i) a
single standard flat car not exceeding 96 feet in length
(excluding articulated flat cars) shall count as a single
Railcar, (ii) freight rail cars consisting of articulated units
bearing AAR Car Type Codes "Q" and "S" shall count as multiple
Railcars based on the second (numeric) digit of the Car Type Code
for such articulated units (by way of example, a car consisting
of AAR Car Type Code "S566" would be counted as five Railcars)
(or corresponding car type codes and digits if the AAR Car Type
Codes should be modified at any time during the term of this
Agreement), and (iii) a single unit of RoadRailer  equipment (or
comparable bimodal freight hauling equipment in the account of
either Operator) shall count as one-half (1/2) of a Railcar.

(ss) "Reimbursable Expenses" means the expenses shown
on an Expense Statement, minus the revenues, if any, shown on
such Expense Statement.

(tt) "Renewal Term" means the term of extension of this
Agreement under Section 14.

(uu) "RoadRailer " means bimodal freight hauling
equipment manufactured by or under license from "RoadRailer ", a
division of Wabash National Corporation, and capable of movement
over the highway when pulled by a tractor and on the rails using
locomotive power.

(vv) "Routine Maintenance" means day-to-day repairs to
track, signals, structures and other fixed facilities that are
not part of Program Maintenance.

(ww) "Severable Improvement" means a capital
improvement which is not a Nonseverable Improvement.

(xx) "Shared Asset Value" means at any date the value
of the Shared Assets, except leases and other contract rights
granted by either Operator to CRC, as of the most recent
preceding Valuation Date as determined by such appraiser as CSXT
and NSR may select.

(yy) "Shared Assets" means all tracks, lands,
easements, rights of way, structures, facilities, appurtenances
and rights related thereto, which CRC owns, leases or otherwise
has the right to operate over (including those segments over
which CRC or an Operator possesses operating rights pursuant to
Section 3(c)), and which are used for railway purposes in the
Shared Assets Area, including the properties, rights, equipment,
inventory and supplies, whether owned or leased, described or
referred to in Item 3A of Schedule 1 (including Attachments I and
II) of the Transaction Agreement, but excluding Operator's
Facilities.

-6-

(zz) "Shared Assets Area" means the geographical area
comprising the Shared Assets and Operator Facilities and
Jointly-Operated Facilities directly (without intermediate
connection to another railroad) attached to trackage included
within the Shared Assets, which is designated as the "North
Jersey" Shared Assets Area.

(aaa)     "STB" means the Surface Transportation Board
or, if there shall be no Surface Transportation Board, any
federal agency which is charged with the function of approving
combinations by rail carriers or persons controlling them, or of
other arrangements between rail carriers, and granting exemptions
from other laws with respect thereto or regulating other specific
functions with respect to the context in which such term is
employed or any successor entity thereof.

(bbb)     "Switching and Yard Services" means the
service of classifying and assembling trains for the account of
an Operator in Jointly-Operated Facilities; movement of loaded or
empty Railcars between yards and local industries; and switching
trains and Railcars at yards, terminals and local industries.

(ccc)     "Tax" or "Taxes" means taxes of any kind,
levies or other similar assessments, customs, duties, imposts,
charges or fees, including, without limitation, income taxes,
gross receipts, ad valorem, excise, real or personal property,
sales, use, payroll, withholding, unemployment, transfer and
gains taxes or other governmental taxes imposed by or payable to
the United States, or any state, local or foreign government or
subdivision thereof, and in each instance such term shall include
any interest, penalties or additions to tax attributable to such
Tax or Taxes.

(ddd)     "Temporary Services" means services provided
by CSXT or NSR employees in the operation, maintenance or repair
of any Shared Asset on an emergency basis with the prior approval
of the General Manager or senior CRC employee who is directly
responsible for the operation or maintenance of such Shared
Asset.

(eee)     "Tier One Damages" means those Damages
defined as Tier One Damages in Section 11(f)(i)(A.1).

-7-

(fff)     "Tier Two Damages" means those Damages
defined as Tier Two Damages in Section 11(f)(i)(B.1).

(ggg)     "Total Train Usage Percentage" means for an
Operator for a particular time period and Zone, the percentage
obtained by multiplying 100 by the quotient obtained by dividing
(i) the sum of the total number of loaded and empty Railcars in
the account of such Operator in CRC Trains and the total number
of loaded and empty Railcars in the account of such Operator in

Operator Trains, by (ii) the sum of the total number of loaded
and empty Railcars in the accounts of both Operators in CRC
Trains and the total number of loaded and empty Railcars in the
accounts of both Operators in Operator Trains, during such period
in such Zone.

(hhh)     "Transaction Agreement" means the Transaction
Agreement dated as of June 10, 1997, among CSX, CSXT, NSC, NSR,
Conrail Inc., CRC and CRR Holdings LLC.

(iii)     "Usage Statement" means a statement delivered
by CRC pursuant to Section 9(b).

(jjj)     "USOA" means the uniform system of accounts
prescribed for class I railroads by the STB or any successor
federal agency that shall succeed to the functions of the STB in
prescribing uniform systems of accounts for rail carriers;
provided, that if there shall be no STB and no such federal
agency, USOA shall mean such system of accounts as is generally
maintained by rail carriers consistent with GAAP as applied in
the rail industry.

(kkk)     "Valuation Date" means the date of this
Agreement and thereafter the sixth (6th), twelfth (12th),
eighteenth (18th) and twenty-fourth (24th) anniversaries of the
date of this Agreement and the first day of each Renewal Term.

(lll)     "Zone" means a designated geographic section,
or designated facilities, of the Shared Assets Area as
established and described in the Accounting Plan.

Section 2.     Management.

(a)  CRC Board.

(i)  The CRC Board shall manage the Shared Assets. 

(ii) The CRC Board may appoint a Board of
Managers, a committee, a CRC officer or other persons to have
such duties and authority with respect to the Shared Assets as
may be assigned to them from time to time by the CRC Board.

-8-

(iii) Any Board of Managers appointed by
the CRC Board shall be comprised of an equal number of
individuals (and their successors) nominated by CSXT and
nominated by NSR. 

(iv) The CRC Board shall remove from any Board of
Managers (A) at the direction of CSXT, any person who was
nominated by CSXT, and (B) at the direction of NSR, any person
who was nominated by NSR.

(b)  General Manager.

(i)  The General Manager shall not at any time
have been an employee of CSXT or NSR or any of their affiliates
unless otherwise agreed to by both Operators, and shall be
appointed by the CRC Board.

(ii) The General Manager shall manage and
supervise the owner ship, operation, maintenance and use of the
Shared Assets in accordance with directives and policies of the
CRC Board and this Agreement, subject to the authority of the CRC
Board, and through such Shared Assets Area superintendents and
other Shared Assets Area executives as are appointed by the
General Manager with the approval of the CRC Board.  The General
Manager shall report to the CRC Board.  The General Manager shall
perform his or her responsibilities on an impartial and
non-discriminatory basis as between CSXT and NSR.

(iii) The General Manager may be removed
from office prior to the expiration of his or her term at any
time by a majority of the CRC Board for any reason or for no
reason.   Upon the written request of CSXT or NSR to the CRC
Board, the General Manager shall also be removed from office
prior to the expiration of his or her term for serious
misconduct, which shall mean conduct that would make it
unreasonable to retain the General Manager, including but not
limited to conduct such as:  (A) violation of applicable alcohol
or drug use policies, (B) fraud, (C) embezzlement or other act of
dishonesty against CRC, CSXT or NSR or any of their customers or
suppliers, (D) activities willfully undertaken by the General
Manager which reflect adversely upon the reputation of CRC, CSXT
or NSR, (E) refusal to perform or substantial neglect of the
responsibilities assigned to the General Manager, (F) failure to
perform his or her responsibilities on an impartial and
non-discriminatory basis as between CSXT and NSR after 45 days'
written notice from an Operator describing such failure, (G) any
violation of any law or rule or regulation of any Governmental
Entity which results in serious adverse consequences to CRC, CSXT
or NSR, or (H) any material violation of any directive or policy
of the CRC Board or any statutory or common law duty of loyalty
to CRC.  If a majority of the CRC Board in response to such a
request of CSXT or NSR fails to direct the removal of the General
Manager, the dispute may be submitted by either Operator for
resolution by binding arbitration pursuant to Section 13,
provided, however, that in any such arbitration to resolve a
dispute under this Section 2(b)(iii), the hearing shall commence
no later than 30 days following the appointment of the arbitrator
and the award shall be rendered no later than 30 days following
the completion of the hearing.

-9-

(c)  Employees.  The General Manager and all persons
who operate and maintain the Shared Assets shall be employees of
CRC, except for CSXT or NSR employees who provide Temporary
Services and employees of Operators or independent contractors
which provide services pursuant to contracts or arrangements in
accordance with Section 2(f).

(d)  CRC Responsibilities.  CRC shall be responsible
for safely and efficiently operating, controlling and managing
the use of the Shared Assets, impartially as between CSXT and NSR
in accordance with directives and policies of the CRC Board, and
with responsible business practices which are consistent with
those used by CSXT and NSR in the operation of their businesses,
and are designed to achieve the lowest cost of the safe and
efficient operation, use and maintenance of the Shared Assets.

(e)  Impartiality.  CRC shall perform all of its
obligations pursuant to this Agreement on an impartial and
non-discriminatory basis as between CSXT and NSR, giving no
preference to either of them in providing Switching and Yard
Services, in the control of train dispatching over the Shared
Assets, or in any other way whatsoever.

(f)  Independent Contractors.  CRC may, at least to the
extent it may do so immediately prior to the date of this
Agreement, procure the use of equipment or facilities owned by
independent contractors, or services provided by independent
contractors (using their own employees), with respect to the
operation, maintenance and use of Shared Assets, including,
without limitation, accounting, computer and other administrative
services, and the furnishing of equipment and mechanical
services.  For purposes of this Section 2(f), independent
contractors may include CSXT or NSR.

Section 3.     Operations.

(a)  Operator's Rights.  CRC hereby grants to each
Operator full operating rights to operate its own trains (staffed
by a road crew) and equipment, with its own crews and equipment
and at its own expense, over any and all tracks included in the
Shared Assets, and to use all of the Shared Assets in connection
with the operation of such trains or equipment, for the following
purposes:

-10-

(i)  Movement by such Operator of trains
(staffed by a road crew) through the Shared Assets Area between
two geographical locations outside the Shared Assets Area;

(ii) Movement by such Operator of trains
(staffed by a road crew) between a geographical location outside
the Shared Assets Area and an Operator's Facility or a
Jointly-Operated Facility which is within the Shared Assets Area;

(iii)  Movement by such Operator of trains
(staffed by a road crew) between a geographical location outside
the Shared Assets Area and local industries which are within the
Shared Assets Area;

(iv) Movement by such Operator of trains
(staffed by a road crew) between Operator's Facilities or
Jointly-Operated Facilities which are within the Shared Assets
Area and local industries which are within the Shared Assets
Area;

(v)  Movement, handling, pick-up, set off,
switching, transfer and interchange of Railcars, blocks of
Railcars or trains (staffed by a road crew) to, from or at local
industries, Operator's Facilities or Jointly-Operated Facilities,
in connection with movements described in Sections 3(a)(i)
through (iv), to the extent provided for in the Operating Plan
agreed to and modified by the parties from time to time; and

(vi) such other purposes as may be agreed
upon by CRC, CSXT and NSR.

(b)  Use.  The crews of each train operated by an
Operator on Shared Assets shall be qualified under and shall
comply with applicable laws and regulations as well as the safety
and operating rules of CRC.

(c)  Grant of Rights.  Subject to reasonable
compensation and other terms established in the Accounting Plan,
and in each case for the purpose of Switching and Yard Services
performed by CRC pursuant to Section 3(d) and movement of
Operator Trains pursuant to Section 3(a):

(i)  CSXT hereby grants to CRC and NSR
overhead operating rights to operate CRC trains and NSR trains,
respectively, with their own crews, over the following CSXT rail
line segments:

(A)  the current CRC River line between CP2
and the Ridgefield Heights Auto Facility (including the right to
serve such Ridgefield Heights Auto Facility); and

-11-

(B)  such other CSXT line segments access to
and use of which by CRC and NSR are necessary to effectuate the
train operations and services contemplated by this Agreement.

(ii) CSXT hereby grants to CRC full operating
rights to operate CRC trains, with its own crews, over the CSXT
rail line segments within and through the area outlined on red on
Exhibit 6 to the Letter Agreement to access and serve on an
unimpeded basis (i) customers located on the real estate shown
outlined in red on Exhibit 6 and (ii) customers that are located
north or west of the area outlined in red and that are accessed
via track #283 or via #274.  Such trackage rights are subject to
relocation by CSXT or NYC, provided that CRC shall continue to
have the right to serve the customers referred to in the
foregoing sentence from the tracks to which such relocation is
made and to operate on an unimpeded basis over such relocated
tracks.  CRC shall have the right to switch, classify and store
up to (but not more than) twenty (20) cars at a time on tracks
designated from time to time by CSXT within the area outlined in
red on Exhibit 6, but solely with respect to service provided to
customers on the trackage rights described in this Section
3(c)(ii).

(iii)     NSR hereby grants to CRC and CSXT
overhead operating rights to operate CRC trains and CSXT trains,
with their own crews, over such NSR line segments access to and
use of which by CRC and CSXT are necessary to effectuate the
train operations and services contemplated by this Agreement.

(iv) NSR hereby grants to CRC full operating
rights to operate CRC trains, with its own crews, over the NSR
rail line segments within and through the area shown in green on
Exhibit 7 to the Letter Agreement to access and serve on an
unimpeded basis the customers located on the real estate shown in
green on Exhibit 7.  Such trackage rights are subject to
relocation by NSR or PRR, provided that CRC shall continue to
have the right to serve the customers referred to in the
foregoing sentence from the tracks to which such relocation is
made and to operate on an unimpeded basis over such relocated
tracks.  CRC shall have the right to switch, classify and store
up to (but not more than) twenty (20) cars at a time on tracks
designated from time to time by NSR within the area colored green
on Exhibit 7, but solely with respect to service provided to
customers on the trackage rights described in this Section
3(c)(iv).

(v)  CSXT hereby grants to CRC and NSR the
right to use Manville Yard for the purpose of basing local
trains, classifying and assembling trains and switching Railcars,
but not for the purpose of serving local industries located at
such yard.

-12-

When required by the CSXT Operating Agreement and the NSR
Operating Agreement, CSXT and NSR have obtained the consent of
NYC and PRR, respectively, for the grant of rights referred to in
this Section 3(c).  Notwithstanding any other provision of this
Agreement, each rail line segment identified in this Section 3(c)
shall be dispatched, maintained, operated and controlled by the
Operator which granted the rights with respect to such segment,
provided that such dispatching, maintenance, operation and
control shall be performed on an impartial and non-discriminatory
basis as between the Operators.  Trains operated by an Operator
pursuant to operating rights granted under this Section 3(c)
shall be governed by and subject to the Operating Plan.

(d)  Switching and Yard Services.

(i)  At the request of and as agent for each
Operator, CRC shall perform Switching and Yard Services required
by such Operator within the Shared Assets Area, including without
limitation any such services which such Operator may be
responsible for performing or having performed for a shipper or
other Person.

(ii) Except as otherwise provided in Section
3(a), and other than within an Operator's Facility, neither
Operator shall with its own equipment or with its own crews
perform any Switching and Yard Service within the Shared Assets
Area for itself or for any other Person.

(e)  Operating Protocols.  From time to time, NSR, CSXT
and CRC may mutually establish Shared Assets Area Operating
Plans, General Dispatching Guidelines, Car Movement Guidelines,
Switching/Blocking Requirements and other operating protocols and
rules concerning operations within the Shared Assets Area, for
the purpose of assuring timely train operations, fluid movement
of all railcars, equal and impartial handling of Operators'
trains and railcars, minimization in the number of empty cars in
the Shared Assets Area, and overall operating efficiency in the
Shared Assets Area.  The current Operating Protocols have been
agreed upon by NSR, CSXT and CRC and are set forth as Exhibit A
to this Agreement.  The Operating Protocols may be modified only
upon mutual agreement of all parties.

(f)  Freight Traffic To Remain in Account of Each
Operator.  Switching and Yard Services and other services
performed by CRC for either Operator under this Agreement shall
be performed as agent for, and for the account of, such Operator. 
All freight traffic and Railcars handled within the Shared Assets
Area, including traffic and Railcars handled by CSXT or NSR
pursuant to Sections 3(a) and 3(c), and traffic and Railcars
handled by CRC pursuant to Sections 3(c) and 3(d), shall at all
times remain in the waybill, car hire and revenue accounts of
either CSXT or NSR. 

-13-

(g)  Rates, Routes and Divisions.  Each Operator shall
have exclusive and independent authority to establish all rates,
charges, service terms, routes and divisions, and to collect all
freight revenues, relating to freight traffic transported for its
account to, from and within the Shared Assets Area (except those
Shared Assets Area line segments over which such Operator
possesses only overhead operating rights pursuant to Section
3(c)).  CRC shall not participate or appear in any rates, routes
or divisions relating to any freight traffic whatsoever to, from
and within the Shared Assets Area, and shall not be entitled to
or responsible for any freight charges relating to such freight
traffic.  CRC shall not quote or establish any rate or service
terms applicable to freight transportation services to, from and
within the Shared Assets Area, enter into transportation
contracts with any Person (other than an Operator) for freight
transportation services to, from and within the Shared Assets
Area, or undertake to perform any for-hire transportation
services directly, in its own name or for its own account for any
Person (other than an Operator).  The transfer or exchange of
freight traffic between CSXT and CRC, and between NSR and CRC,
within the Shared Assets Area shall not constitute an interchange
of freight traffic or freight rail cars for purposes of
determining rates, routes, divisions or interline settlements
relating to any such freight traffic.

(h)  Shipper Bills.  Neither Operator shall inform the
other or CRC of any rates or charges to shippers to which such
Operator provides freight transportation services in the Shared
Assets Area, and no copies of any shipper bill of lading or
waybill shall be given by such Operator to the other or to CRC
except to the extent that such documents are exchanged between
rail carriers in the usual course of interline shipments and
documenting.

(i)  Service Responsibility.  Each Operator shall at
all times be solely responsible for obtaining, supplying and
routing Railcars other than locomotives, for all Railcar
ownership costs (including per-diem charges and mileage
allowances) and for providing service to its shippers within the
Shared Assets Area pursuant to its transportation contracts or
other prices with its shippers, including interline accounting,
and all car hire and demurrage or detention charges associated
with Railcars in its account within the Shared Assets Area.

(j)  Dispatching.  CRC shall, from local locations or a
location agreed upon by CSXT and NSR, control the dispatching,
scheduling and movement of, and Switching and Yard Services for,
all trains (including Operator Trains and CRC Trains) over the
Shared Assets (other than Operator's Facilities, unless requested
to do so by the Operator thereof) without any discrimination at
any time in favor of or against either Operator, but in
accordance with written policies and priorities for categories of
freight, type of Railcar, size of train and train destinations
established from time to time by the General Manager and approved
by the CRC Board to achieve the maximum efficiency and lowest
aggregate Shared Asset costs of CRC and the Operators, provided,
however, that CSXT and NSR from time to time shall consider, and
in the sole discretion of each may adopt, mutually acceptable
arrangements giving each Operator one controlled route through
the Shared Assets Area to the extent practicable and, if the
parties fail to adopt mutually acceptable arrangements giving
either Operator such a controlled route, CRC shall control
dispatching, scheduling and train movements over the affected
Shared Assets as heretofore provided.  CRC shall also control the
dispatching, scheduling, movement and Switching and Yard Services
for all CRC Trains and Operator Trains over the current CRC River
Line between CP 2 and CP 5.  Dispatching, scheduling and movement
of trains performed by either Operator under this Section 3(j)
shall conform to the same standards of non-discrimination,
written policies and priorities applicable to the control of such
functions by CRC at other locations included within the Shared
Assets Area.

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(k)  Railcar Weighing.  All Railcars for the account of
an Operator which originate or terminate on Shared Assets and
which require weighing shall be weighed by and at the expense of
such Operator or its customer, and at no cost to CRC. 

(l)  Freight Claims.  The Operators shall agree among
themselves on the most fair, practical and efficient arrangements
for handling and administering freight loss and damage claims
with the intent that (i) each Operator shall be responsible for
losses occurring to lading either in its possession or in the
possession of CRC for the account of such Operator, and (ii) the
Operators shall follow relevant AAR rules and formulas in
providing for the allocation of losses which are either of
undetermined origin or in Railcars handled in interline service
by or for the account of both Operators.

(m)  Freight Car Repairs.  If any Railcars are bad
ordered while on the Shared Assets and must be set out from a CRC
Train or Operator Train, CRC shall promptly return such Railcars
to the Operator in whose account such Railcars reside in
accordance with such Operator's instructions.  CRC shall furnish,
at such Operator's expense, required labor and material to
perform, and shall perform, light repairs on such bad ordered
Railcars as necessary to make such Railcars legal and safe for
movement.  CRC shall bill such Operator for the costs of such
light repairs in accordance with the Field and Office Manuals of
the AAR Interchange Rules in effect at the time such repairs are
performed.  CRC shall bill directly to and collect from the
applicable Operator charges for repair items that, under the AAR
Interchange Rules, are the responsibility of the Railcar owner
and/or the handling line carriers.  Each Operator may rebill
charges for repair items that are the responsibility of the
Railcar owner and/or the handling line carriers.  If any such bad
ordered Railcar cannot be made legal and safe for movement by the
performance of light repairs, CRC shall, at such Operator's
expense, arrange for appropriate removal of the affected Railcar
in accordance with such Operator's instructions.

(n)  Train Services.  Actual costs incurred by CRC to
provide special services (other than services otherwise provided
for in this Agreement) at the request of an Operator with respect
to trains, locomotives and Railcars for the account of such
Operator, shall be paid by such Operator to CRC, provided that
the costs and terms of similar special services rendered to each
Operator shall be without discrimination between Operators as to
cost and terms, giving due allowance to any differences in the
costs of providing such services.

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(o)  Wrecking Service.  Wrecking service or wrecking
train service required in connection with services contemplated
by this Agreement shall be provided by CRC (or its designee) as
promptly as possible.

(p)  Admission of Third Parties. Notwithstanding any
other provision in this Agreement, no party may permit any Person
(other than a party hereto) to have access to, operate over or
use any Shared Asset without the prior approval of all parties,
which approval may be given or refused in the sole discretion of
each party.

Section 4.     Equipment and Properties.  

(a)  Procurement.  CRC shall procure, operate and
maintain all equipment, real property rights and improvements
thereon which are reasonably required for (i) CRC to operate the
Shared Assets, and (ii) the Operators to move trains over the
Shared Assets, in each case in accordance with this Agreement.

(b)  Contribution of Locomotives by Operators.  Upon
reasonable request by the General Manager, the Operators shall
furnish to CRC, through full-service lease or other mutually
satisfactory arrangements, locomotives reasonably required by CRC
for the performance of its obligations under this Agreement.  The
respective obligations of each Operator to furnish such
locomotives shall be based, insofar as reasonably practicable,
upon the Operator's CRC Train Usage Percentage during the
calendar month preceding such request for the Shared Assets Area
or Zone in which such locomotives are needed by CRC.  It is the
parties' intention that (i) the arrangements pursuant to which
such locomotives are furnished by either Operator to CRC shall
provide that heavy maintenance, repair and overhaul shall be the
responsibility of such Operator, (ii) locomotives furnished by
either Operator to CRC may, in order to permit maintenance,
repair and overhaul of such locomotive units, be exchanged for
other locomotive units furnished by such Operator, and (iii) the
respective obligations of each Operator to furnish such
locomotives upon request by the General Manager shall be adjusted
on at least a monthly or more frequent basis.

(c)  Locomotive Service and Repairs.  At the request of
an Operator, CRC shall furnish required labor and material to
perform, and shall perform, fueling and servicing of any
Operator's locomotive, as well as light repairs on any Operator's
locomotive as necessary to make such locomotive legal and safe
for movement.  CRC shall bill such Operator (or other owner of
such locomotive) for the costs of such fueling, servicing and
light repairs in accordance with industry practice in effect at
the time such fueling, services or repairs are performed.  If any
such locomotive cannot be made safe for movement by the
performance of light repairs, CRC shall, at the expense of such
Operator (or other owner of such locomotive), arrange for
appropriate removal of such locomotive in accordance with such
Operator's instructions.                

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Section 5.     Maintenance.

(a)  Routine Maintenance.

(i)  CRC shall be responsible for Routine
Maintenance when necessary or desirable to maintain the Shared
Assets in a safe operating condition, and to permit and
facilitate (A) the performance by CRC of its obligations pursuant
to this Agreement, and (B) the use of Shared Assets by the
Operators in accordance with this Agreement.

(ii) CSXT or NSR, directly or through their
respective affiliates, may perform the work which CRC performed
prior to the date of this Agreement when (A) CRC does not possess
the skills needed for such work, (B) CRC lacks the necessary
employees to do such work in a timely fashion, or (C) CRC does
not possess the equipment needed to do such work.  CRC and the
party performing the work shall agree to a reasonable fee for
such work prior to performance.  CRC, CSXT and NSR may agree to
have additional work performed either by CSXT, NSR or their
affiliates.

(b)  CRC Program Maintenance.

(i)  The General Manager shall prepare and
submit to the CRC Board a Program Maintenance plan concurrently
with the submission of an Operating Budget and the Capital
Expenditure Budget to the CRC Board.

(ii) Any of CRC, CSXT or NSR may at any time
deliver a Program Maintenance Proposal to the other two of them
and to the General Manager and each member of the CRC Board.  

(iii)  The CRC Board shall either (A)
approve any or all of such Program Maintenance Proposals and plan
with such changes as it deems appropriate, include the costs
thereof in a pending or amended Capital Expenditure Budget, and
direct the General Manager to cause the maintenance described in
approved Program Maintenance Proposals or plan to be performed in
accordance with Sections 5(b)(iv) and (v), or (B) disapprove any
or all of such Program Maintenance Proposals or plan.

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(iv) Program Maintenance shall be the
responsibility of CSXT and NSR pursuant to contracts or
arrangements with CRC, and CRC shall not perform Program
Maintenance, except for Program Maintenance which can be provided
by Persons other than CSXT or NSR at a lower cost to CRC than the
CSXT or NSR cost thereof.

(v)  CRC shall select, to perform each
Program Maintenance project or program, the Operator which CRC
reasonably determines will perform such project or program at the
least cost to CRC consistent with safe and efficient operations,
and taking into account scheduling considerations, based on
written proposals submitted by each Operator.

(c)  Maintenance Standards.  Unless otherwise
authorized by the CRC Board, the General Manager shall prepare
and submit to the CRC Board proposals (including the Program
Maintenance plan submitted pursuant to Section 5(b)) for the
performance of such Routine Maintenance and Program Maintenance
as is reasonably necessary to keep and maintain the Shared Assets
substantially in their condition as of the date of this
Agreement.  If the CRC Board fails either to approve or
disapprove by majority vote any such proposal within 45 days
after it was submitted to the CRC Board, the disagreement over
the propriety or need for any of the Routine Maintenance or
Program Maintenance included in such proposal may be submitted by
either Operator for resolution by binding arbitration pursuant to
Section 13.

Section 6.     Capital Improvements.  Except as
provided in Section 5, all capital improvements involving Shared
Assets shall be governed by the following provisions:

(a)  Proposed Projects.  Either Operator, CRC or the
General Manager may propose to the CRC Board from time to time
capital improvement projects.  Each such project shall be
reviewed by the CRC Board, which may approve or disapprove by
majority vote, or fail to approve, such projects.

(b)  CRC Board Approved Projects.  Each Operator shall
be responsible for an equal share of the initial budgeted funding
of each capital improvement project which has been approved by
the CRC Board and is included in an approved Capital Expenditure
Budget, except as provided in Section 6(c).  A final accounting
shall be made to adjust the initial budgeted funding to the
actual project cost as specified in the Accounting Plan.

(c)  Nonseverable Improvement Projects.

(i)  At the written request of an Operator
delivered to the other, each Operator shall, within 45 days of
the delivery of such request, submit to an arbitrator in

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accordance with Section 13 a written proposal with respect to a
Nonseverable Improvement project which was neither approved nor
disapproved by majority vote by the CRC Board within 45 days
after such project was proposed to the CRC Board (A) describing
any changes which such Operator proposes be made to such project
and specifying a schedule, budget and allocations between the
Operators of initial capital costs of such Nonseverable
Improvement, or (B) proposing that it not be made.

(ii) The arbitrator receiving the proposals
referred to in Section 6(c)(i) (A) shall consider (1) the degree,
if any, to which the construction, operation and use of such
Nonseverable Improvement would impair or interfere with the use
of Shared Assets by CRC or either Operator, or conflict with any
pending capital improvements included in an approved Capital
Expenditure Budget, and (2) the budget and allocations between
the Operators of initial capital costs of such Nonseverable
Improvement as proposed by each Operator, and (B) shall determine
within 45 days of such receipt which of such proposals shall be
implemented, or that such Nonseverable Improvement shall not be
made, and the CRC Board shall approve any proposal which such
arbitrator determines shall be implemented.

(d)  Severable Improvement Projects.

(i)  Each Operator shall have the unilateral
right to construct and exclusively fund any Severable Improvement
which was not approved by the CRC Board.

(ii)  Each Severable Improvement funded
exclusively by an Operator shall be used exclusively by that
Operator, which shall be solely responsible for maintaining such
Severable Improvement at its own expense, until such time that
the other Operator gives written notice that it desires also to
use such Severable Improvement, stating the amount which such
other Operator is prepared to pay to the Operator which initially
funded such Severable Improvement for the right to use such
Severable Improvement. 

(iii)  If the Operators are unable to
agree on the amount of such payment within 45 days after the
notice referred to in Section 6(d)(ii) was given, then at the
written request of an Operator delivered to the other after 45
days but before 60 days after such notice was given, each
Operator shall, within 15 days of the delivery of such request,
submit to an arbitrator in accordance with Section 13 a written
statement setting forth the proposed payment by the second
Operator, and the arbitrator shall within 45 days of such receipt
determine which of such proposed amounts shall apply, which shall
be binding on both Operators and paid promptly.

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(iv)  Such Severable Improvement shall
become a Nonseverable Improvement at the time such second
Operator pays the amount so determined and, thereafter,
maintenance and other costs associated with the operation of such
improvement shall be apportioned between the Operators as
provided in this Agreement.

(e)  Capital Improvements as Shared Assets.  Upon
completion, all capital improvements approved by the CRC Board
and all Nonseverable Improvements shall become part of the Shared
Assets owned by CRC subject to all provisions of this Agreement,
free and clear of all Operator liens.

(f)  Title to Severable Improvements.  Each Operator
shall retain title to all Severable Improvements exclusively
funded by such Operator.  At any time during the term of this
Agreement, an Operator may remove (at its sole expense) any
Severable Improvement which it exclusively funded, provided that
such Operator has repaired (at its sole expense) any damage to a
Shared Asset caused by such removal and has restored the related
Shared Assets substantially to their condition at the time such
Severable Improvements were made.  In the event an Operator shall
not have removed any Severable Improvement to which the Operator
shall have title prior to the expiration or termination of this
Agreement, title to such Severable Improvement shall vest in CRC,
free and clear of all Operator liens, upon such expiration or
termination.

(g)  Noninterference.  The construction, operation and
use
of Severable Improvements by an Operator shall not impair or
interfere with the use of Shared Assets by CRC or the other
Operator, nor shall any Severable Improvement conflict with any
pending capital improvements included in an approved Capital
Expenditure Budget.

(h)  Switch Connections.  CRC shall, upon the written
request of one or both Operators, provide for switch and turnout
connections from Shared Asset tracks to a private sidetrack owned
by a shipper or other Person, if such request:

(i) includes the commitment of the Operator or
both Operators making such request, or

(ii) is accompanied by a written undertaking
from such shipper or other Person, in each case satisfactory to
CRC, to pay to CRC all costs incurred from time to time by CRC to
provide for such switch and turnout connections within 30 days
after it delivers a bill for such costs to such Operator,
Operators, shipper or other Person.

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(i)  Adjacent Improvements.

(i)  In the event an Operator constructs,
acquires or funds the cost of an Adjacent Improvement (whether or
not such Adjacent Improvement is ultimately owned by such
Operator), the other Operator shall be entitled to share usage of
such Adjacent Improvement by giving written notice stating the
amount which such other Operator is prepared to pay to the first
Operator for such right.  If the Operators are unable to agree on
the amount of such payment within 45 days after such notice was
given, then at the written request of an Operator delivered to
the other after 45 days but before 60 days after such notice was
given, the matter shall be submitted for resolution by binding
arbitration pursuant to Section 13 and the provisions of Section
6(d)(iii) shall apply to determine the amount of such payment.

(ii) After the second Operator pays the
amount so determined, if the first Operator owns or has a
property interest in the Adjacent Improvement, the provisions of
this Section 6 shall be applied as if such improvement were a
Nonseverable Improvement.  If a shipper or another Person
unrelated to the first Operator owns such Adjacent Improvement,
the second Operator shall be entitled to share fully the rights
of the first Operator in connection with such Adjacent
Improvement in consideration of the initial payment.

(j)  Operator's Facilities.  The foregoing provisions
of this Section 6 shall not apply to any capital improvement
(including, but not limited to, a transloading facility or
automotive ramp) within an Operator's Facility or the current CRC
developable property encompassing current CRC Elizabethport Yard
(Trumbull Street Yard) or the CRC developable property east of
current CRC's Chemical Coast Secondary and adjacent to the E-Rail
intermodal facility (northern New Jersey).

Section 7.     Accounting. 

(a)  Books of Record and Account.  CRC shall keep
proper books of record and account, in which full and correct
entries shall be made of all CRC transactions, costs, expenses
and revenues in accordance with GAAP and the USOA, as modified by
the Accounting Plan.  All expense and revenue transactions
related to the Shared Assets Area shall be readily identifiable
by distinct accounting codes.

(b)  Financial Statements.  CRC shall deliver to each
Operator (i) within 30 days after the end of each calendar month,
a summary income statement and a summary balance sheet showing as
of the last day of and for such calendar month, major categories
of CRC revenue, expense, assets and liabilities, (ii) within 30
days after the last day of each CRC fiscal quarter, interim
financial statements as of and for the fiscal quarter ended on
such day, similar to statements described in Rule 10-01 of
Regulation S-X under the Securities Exchange Act of 1934, as
amended, as modified by the Accounting Plan, and (iii) within 30
days after the last day of each CRC fiscal year, statements of
income and cash flow and a balance sheet as of and for the fiscal
year ended on such day, prepared in accordance with GAAP and the
USOA, as modified by the Accounting Plan.

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Section 8.     Costs and Budgets.

(a)  CRC Costs.  CRC shall pay (and, except for
Excluded Taxes, CSXT and NSR shall, pursuant to Section 9,
reimburse CRC for) all of the costs and expenses to maintain its
ownership of the Shared Assets and to operate and maintain the
Shared Assets, including but not limited to all Taxes and
assessments, licenses, permits and any other governmental
authorizations required to own, operate and maintain the Shared
Assets, the principal of and interest and premium, if any, on,
and all other costs of, its indebtedness and all other costs of
its capital.

(b)  Employee Cost Reimbursement.  CRC shall reimburse
CSXT and NSR for the wages, pro rata portion of fringe benefits,
other direct employment costs (including additives) and other
actual employee-related costs of any CSXT or NSR employee,
respectively, who provides Temporary Services.

(c)  Capital Expenditure Budget.

(i)  The General Manager shall prepare and
submit to each member of the CRC Board at least 30 days prior to
the beginning of each CRC fiscal year, a Capital Expenditure
Budget for such fiscal year, specifying for such year the
schedule of Program Maintenance and Shared Asset capital
improvements to be performed and constructed for the benefit of
both Operators during such fiscal year and the months therein
during which such expenditures are proposed to be made, for
approval, or modification and approval, by the CRC Board.

(ii) The General Manager shall not permit any
capital expenditure to be made by CRC, CSXT or NSR except in
accordance with the Capital Expenditure Budget in effect from
time to time, Severable Improvements exclusively funded by an
Operator and emergency capital expenditures made (A) to preserve,
or to mitigate a serious diminution in, the value and usefulness
of a Shared Asset to CRC, CSXT and NSR, or (B) to prevent or
mitigate a serious disruption in the operation and use of the
Shared Assets by or for CRC, CSXT or NSR.

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(iii)     Any Capital Expenditure Budget may
be amended in writing at any time by the CRC Board.

(d)  Operating Budget.

(i)  The General Manager shall prepare and
submit to each member of the CRC Board at least 30 days prior to
the beginning of each fiscal year of CRC, an Operating Budget for
such fiscal year showing the budget amounts of revenues and
expenses for each month during such fiscal year, for approval, or
modification and approval, by the CRC Board.

(ii) The General Manager shall use all
reasonable efforts to prevent CRC expenses with respect to Shared
Assets for a period from exceeding the amounts shown on the
Operating Budget for such period.

(iii)     The General Manager shall give
prompt written notice to each member of the CRC Board of any
actual or, in the judgment of the General Manager, probable,
material change in the revenues, expenses or working capital
requirements shown on the Operating Budget for any period.

(iv) Any Operating Budget may be amended in
writing at any time by the CRC Board.

Section 9.     Cost Sharing.

(a)  Accounting Plan.  The parties shall develop and
implement a written plan of accounting containing a detailed
description, by category of cost and location, of the costs
associated with the management and operation of the Shared Assets
Area and the method by which such costs shall be fairly and
properly apportioned among the parties.  Such plan of accounting
may include separate accounting and sharing of costs for
particular Zones, and shall conform to the following general
principles:

(i)  Forty two percent (42%) of Interest
Rental shall be apportioned to CSXT and fifty eight percent (58%)
of Interest Rental shall be apportioned to NSR;

(ii) Locomotive ownership, lease, fueling,
light repair and servicing costs incurred by CRC within the
Shared Assets Area or each Zone (except costs incurred by CRC and
charged directly to an Operator pursuant to Section 4(c)) shall
be apportioned between the Operators on the basis of the CRC
Train Usage Percentages;

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(iii)  Crew compensation and other crew
costs incurred by CRC within the Shared Assets Area or each Zone
with respect to CRC Trains shall be apportioned between the
Operators on the basis of the CRC Train Usage Percentages;

(iv) General and administrative, supervisory
and overhead expenses incurred by CRC within the Shared Assets
Area or for functions related to the Shared Assets Area shall be
apportioned between the Operators on the basis of the CRC Train
Usage Percentages;

(v)  Dispatching and train control costs
(including, without limitation, labor, equipment, materials and
maintenance expenses) incurred by CRC with respect to the Shared
Assets Area shall be apportioned between the Operators on the
basis of the CRC Train Usage Percentages;

(vi) Police and other costs incurred by CRC
with respect to security within the Shared Assets Area shall be
apportioned between the Operators on the basis of the CRC Train
Usage Percentages;

(vii)  Damage paid by CRC pursuant to
Section 11(c) shall be apportioned between the Operators in
accordance with Section 11(b);

(viii)  All other costs incurred by CRC
with respect to the Shared Assets Area or each Zone (except Taxes
and insurance) shall be apportioned between the Operators on the
basis of the Total Train Usage Percentages;

(ix) Taxes (other than Excluded Taxes)
incurred by CRC with respect to the Shared Assets Area or each
Zone shall be apportioned between the Operators on the basis of
the Operator's Expense Percentages for the period to which such
Taxes relate; and 

(x)  Insurance costs incurred by CRC with
respect to Shared Assets within the Shared Assets Area or each
Zone shall be apportioned between the Operators on the basis of
the Operator's Expense Percentages for the period to which such
insurance costs relate;

If the parties are unable to agree on the terms and provisions of
the Accounting Plan, such disagreement may be submitted by either
Operator for resolution by binding arbitration pursuant to
Section 13.

(b)  Usage Statement.  CRC shall deliver to each
Operator prior to the last day of each calendar month, a written
statement showing for the prior Billing Month:

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(i)  the total number of loaded and empty
Railcars in the account of each Operator in CRC Trains which
performed Switching and Yard Services or operated directly
between customer facilities in each Zone; 

(ii) the total number of loaded and empty
Railcars moved by or for such Operator in Operator Trains which
operated overhead or directly to Jointly-Operated Facilities,
Operators' Facilities or customer facilities in each Zone;

(iii)      the calculation of the CRC Train
Usage Percentage and the Total Train Usage Percentage for each
Operator for each Zone,

and (A) all Railcars in a train shall be deemed to be on Shared
Assets when the first or last Railcar of such train is on Shared
Assets and (B) each time that a Railcar is removed from or added
to a train in the Shared Assets Area shall constitute a separate
movement of such Railcar.

(c)  Expense Statement.  Concurrently with the delivery
of each Usage Statement to the Operators, CRC shall deliver to
the Operators a statement showing (i) the expenses incurred by
CRC to own, operate and maintain the Shared Assets during the
Billing Month, (ii) the revenues, if any, derived by CRC from the
ownership and operation of the Shared Assets during such Billing
Month, and (iii) the Reimbursable Expenses for such Billing
Month, in each case computed in accordance with GAAP and the
USOA, as modified by the Accounting Plan.

(d)  Capital Expenditure Statement.  Concurrently with
the delivery of each Usage Statement to the Operators, CRC shall
deliver to the Operators a statement showing the estimated
Budgeted Capital Expenditures for the calendar month immediately
succeeding the calendar month in which such statement is
delivered.

(e)  Bills.  Concurrently with the delivery to the
Operators of a Usage Statement for a Billing Month, CRC shall
deliver to each Operator a bill (a "Bill") showing for such
Billing Month:

(i)  one hundred and two percent (102%) of
the amount of each Reimbursable Expense apportioned to such
Operator for such Billing Month under the Accounting Plan;

(ii) one-twelfth of fifty percent (50%) of
the annual amount of Budgeted Capital Expenditures approved by
the CRC Board; and

(iii) one-twelfth of the Interest Rental
apportioned to such Operator.

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(f)  Payment.  Each Operator shall pay to CRC the
amount shown on each Bill as being payable by such Operator, on
or before the 30th day after the date of such Bill regardless of
whether or not such Operator disputes the accuracy of any amount
or calculation shown on such Bill.

(g)  Disputed Bills.

(i)  Any dispute by an Operator of the
accuracy of any amount or calculation shown on any Bill shall be
described and specified in reasonable detail in a Dispute Letter
from such Operator to CRC and the other Operator within two years
after the date of such Bill.

(ii) Any amounts or calculations shown on any
Bill which are not disputed in accordance with Section 9(g)(i)
shall conclusively be deemed to be accurate and shall be binding
on each Operator and CRC.

(iii) CRC and both Operators shall
promptly endeavor to resolve the disputes described in each
Dispute Letter, and if they fail to agree to a resolution of such
disputes within 60 days of the delivery of such Dispute Letter to
CRC, then the firm of independent public accountants which has
been engaged as auditors for CRC shall be engaged to resolve such
disputes in accordance with GAAP and the USOA, as modified by the
Accounting Plan, and the written resolution of such disputes
signed by such accounting firm shall be binding on each Operator
and CRC.

(iv) Any adjustments to Bills which result
from the resolution of Dispute Letter disputes shall be reflected
as charges or credits on the first Bills delivered by CRC to the
Operators after such disputes have been resolved.

(v)  The fees in connection with the
resolution of any Dispute Letter disputes of the accounting firm
which has been engaged as auditor for CRC shall be paid fifty
percent (50%) by CSXT and fifty percent (50%) by NSR.

Section 10.    Access.  CRC shall give to each Operator
during normal CRC Administrative Office business hours, access to
inspect and make copies of any and all books of record and
accounts relating to this Agreement, all of which shall be
maintained by CRC at the CRC Administrative Office.

Section 11.    Liability.  Except as otherwise provided
in Section 3(l) (Freight Claims), Section 11(f) (Specified Level
Damages) and Section 11(g) (Substance Abuse Exceptions), the
responsibility between and among CRC, CSXT and NSR for all Damage
arising out of, incidental to or occurring in connection with
this Agreement shall be apportioned without consideration of
fault or negligence of any kind or degree in accordance with the
remaining provisions of this Section 11.  The provisions of this
Section 11 are intended to inure only to the benefit of the
parties hereto and their corporate successors and affiliates, and
not to create any benefits for any third parties.

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(a)  Operators' Sole Responsibility.  Except as
otherwise provided in Section 11(f) (Specified Level Damages) and
Section 11(g) (Substance Abuse Exceptions), each Operator shall
assume and bear all responsibility for Damage to its own trains,
locomotives and equipment, to Railcars and lading in its
possession or being handled for its account and for the death of
or injury to its own employees.

(b)  Operators' Joint Responsibility.

(i)  Train Usage.  Except as otherwise
provided in (1) Section 11(b)(ii) (First Year), (2) Section 11(a)
(Operators' Sole Responsibility), (3) Section 11(c)(i) (CRC
Damages Generally), (4) Section 11(c)(ii)(B) (No Reallocation for
Insurance), (5) Section 11(f) (Specified Level Damages), and (6)
Section 11(g) (Substance Abuse Exceptions), and subject to
Section 11(c)(ii)(A) (Net of Insurance), all Damage shall be
apportioned between the Operators in proportion to their
respective Total Train Usage Percentages in the Zone in which the
incident giving rise to such Damage occurred for the 12 calendar
month period immediately preceding the incident giving rise to
such Damage.

(ii)  First Year.  If an incident giving
rise to Damage for which the Operators are jointly responsible
under Section 11(b)(i) (Train Usage) occurs before June 1, 2000,
responsibility for such Damage shall be borne equally by the
Operators, with each being liable for one-half (1/2) of the
damages.

(c)  CRC Responsibility - Allocation and Insurance.

(i)  CRC Damages Generally.  Except as
otherwise provided in this Section 11(c), all Damages incurred by
CRC, including, without limitation, those Damages apportioned to
CRC under Section 11(f) (Specified Level Damages) shall be CRC
expenses, allocated as provided in Section 11(b) (Operators'
Joint Responsibility), and included in Expense Statements charged
to the Operators.

(ii) (A)  Net of Insurance.

(1)  Notwithstanding any other provision
in this Agreement (but subject to Section 11(c)(ii)(B) (No
Reallocation for Insurance)), all Damages (including without
limitation, loss or destruction of, or damage to, CRC's own
property) charged to the Operators, under the Expense Statements
or otherwise, shall be net of any CRC insurance.  It is the
intent of the parties (a) for CRC to look first to any insurance
proceeds available to it before attempting to recover any such
Damages from the Operators and (b) for the Operators' obligation
to make direct payment to CRC not to include any obligation to
make direct payment for any Damages covered by insurance procured
by or on behalf of CRC.

-27-

(2)  If and to the extent that CRC is an
insured under, or otherwise provided coverage under, an insurance
policy or policies each of which provides coverage for both CRC
and one Operator but not the other Operator, and regardless of
whether two or more of these policies shall be in existence or
have different deductible-retention amounts and/or limits of
recovery, then the amount of insurance proceeds deemed
"available" under Section 11(c)(ii)(A)(1) to which CRC shall look
before either Operator shall have any obligation for direct
payment shall, as to each Operator, be the maximum available
limit of the insurance providing coverage for both that Operator
and CRC.

(B)  No Reallocation for Insurance.  When
part of the apportioned Damage will be satisfied from insurance
coverage under this Section 11(c), and part paid directly by the
Operator, the insured portion of the Damage shall be apportioned
among or between CRC and the Operators (and consequently between
or among their insurers) in the same manner and amounts as it
would have been apportioned if the loss were not net of
insurance.   If any such allocation results in one party hereto
suffering a greater uninsured loss than the other(s) because of
differing deductibles or self-retentions, that difference in
coverage shall not be a basis for any reapportionment or
reallocation of Damage.

(d)  Process.  Each Operator shall be responsible for
the payment, handling, administration and disposition of all
Damage for which it bears exclusive responsibility under Section
11(a) (Operators' Sole Responsibility), and both Operators shall
have joint responsibility for the payment, handling,
administration and disposition of all Damage for which they are
jointly responsible under Section 11(b) (Operators' Joint
Responsibility) and Section 11(c) (CRC Responsibility -
Allocation and Insurance).  In assigning joint responsibility to
both Operators, it is not the intent of this Agreement that the
Operators will actually act jointly, but rather that the
Operators will agree between themselves on the most practical and
efficient arrangements for handling, administering, and disposing
of Damage for which they bear joint responsibility, with the
objective of eliminating unnecessary duplication of effort and
minimizing overall costs.

-28-

(e)  Indemnification.  Each party to this Agreement
covenants and agrees to (i) fully indemnify and save harmless the
other parties to this Agreement from and against any payments
which are the responsibility of such party under this Agreement,
and all expenses, including attorneys' fees and expenses and
other expenses of any court or regulatory proceeding, incurred by
such other parties in defending any claim that they are liable
for such payments, and (ii) defend such other parties against
such claims with counsel selected by such party and reasonably
acceptable to such other parties.

(f)  Specified Level Damages.

(i)  Damages Amount.  Section 11(a) (Operators'
Sole Responsibility) and Section 11(b) (Operators' Joint
Responsibility) shall apply directly only when the total amount
of all Damages resulting from a single incident is $25 million or
less.  Responsibility for Damages resulting from a single
incident for which Damages exceed $25 million shall be allocated
as stated in this Section 11(f)(i).

(A.1)     Tier One Damages Defined.  In this
Section 11(f), "Tier One Damages" for any incident
occurring during and between June 1, 1999 and May
31, 2000 shall, except as otherwise provided in
Section 11(g) (Substance Abuse Exceptions),
include the greater of:

(1)  $25 million of Damages; or

(2)  the lowest amount of Damages
which, when allocated among all parties,
results in an allocation to either
Operator of Damages in an amount equal
to all insurance benefits available to
that Operator (called the "Lesser
Insured Operator") which has the lesser
(as between the Operators) amount of
insurance benefits available to it,
including, without limitation, insurance
to which CRC looks under Section 11(c)
(CRC Responsibility - Allocation and
Insurance).  In determining insurance
benefits available to the Lesser Insured
Operator, both property and liability
insurance shall be considered but (I)
only to the extent benefits are actually
available in connection with that
incident and (II) they shall be
calculated separately (i.e., property
insurance benefits shall not be
considered in any determination of
available liability insurance benefits
and vice versa).

-29-

In this Section 11(f), "Tier One Damages" for any
incident occurring on or after June 1, 2000 shall,
except as otherwise provided in Section 11(g)
(Substance Abuse Exceptions), include only the
first $25 million of Damages incurred by the
parties, unless otherwise agreed by the parties.

(A.2)     Allocation of Tier One Damages.
Tier One Damages shall be allocated among the
parties as follows:

(1)  Any Damage for which each
Operator would otherwise be solely
responsible under Section 11(a)
(Operators' Sole Responsibility) shall
be allocated as provided in Section
11(a);

(2)  Any and all CRC Damages other
than those specified in preceding
Section 11(f)(i)(A.2)(1) (including,
without limitation, Damage to its
trains, locomotives and equipment,
whether owned or leased, to Railcars and
lading in its possession or being
handled for its account, and to the
property of any others, as well as any
Damage arising from or in connection
with the death of or injury to any
persons, including, without limitation,
its own employees) shall be allocated
and paid as provided in Section 11(c)
(CRC Responsibility - Allocation and
Insurance); and 

(3)  Any and all other Damages
shall be allocated as provided in
Section 11(b) (Operators' Joint
Responsibility).

(B.1)     Tier Two Damages Defined.  In this
Section 11(f), "Tier Two Damages" shall include
(1) those Damages allocated to Tier Two under
Section 11(g) (Substance Abuse Exceptions) and (2)
all of those Damages in excess of the aggregate
Tier One Damages calculated under Section
11(f)(i)(A.1).

(B.2)     Allocation of Tier Two Damages.
Tier Two Damages shall be allocated between or
among the parties hereto in proportion to their
respective fault or negligence in causing the
Damage.

(ii) Dispute Resolution.  Any dispute between or
among the parties hereto in determining their respective fault or
negligence in causing the Damage or otherwise relating to their
respective responsibilities for Damage arising out of, incidental
to or occurring in connection with any incident shall be
submitted for resolution by binding arbitration pursuant to
Section 13 (Arbitration).

-30-

(iii)     Amendment of Certain Amounts.  The
$25 million amount referred to in this Section 11(f) may be
adjusted every five years following the date of this Agreement
with the prior approval of all parties, which approval may be
given or refused in the sole discretion of each party.

(g)  Substance Abuse Exceptions.  Each Operator shall
assume and bear all responsibility for Damage to the extent
caused by acts or omissions of any of its employees while under
the influence of drugs or alcohol, and Sections 11(b) (Operators'
Joint Responsibility) and Section 11(f) (Specified Level Damages)
shall not apply to any such Damage.  If, but for the operation of
this Section 11(g), all or any Damages from an incident would
otherwise have been Tier One Damages under Section 11(f)
(Specified Level Damages), the portion of the Damages caused by
acts or omissions of any the employee(s) while under the
influence of drugs or alcohol shall be Tier Two Damages, and
allocated under Section 11(f)(i)(B.2) (Allocation of Tier Two
Damages), and the remaining portion of the Damages from that
incident shall be included in, and allocated under, Tier One or
Tier Two under the otherwise applicable provisions for Section
11(f)(i).

(h)  Transaction Agreement.  Section 2.8 of the
Transaction Agreement shall control any conflict between Sections
11(b) and (c) and said Section 2.8.

(i)  Damages.  As used in this Section 11 only, the
term "Damage(s)" shall exclude:

(i)  Operator Consequential Damages (which
are always borne by the Operator which sustained them); and

(ii) any claim by any party, in its own
right, against any other party for exemplary or punitive damages,
but not for allocation under this Section 11 of exemplary or
punitive damages claimed against that party by a third person not
a party hereto.

With regard to exemplary and punitive Damages the parties
acknowledge and agree that, with regard to the subject of this
Agreement, the intent and agreement of the parties is that no
party shall bring or recover any claim for exemplary or punitive
damages, in its own right,  against any other party, but that any
party will allocate, in accordance with this Section 11,
exemplary or punitive Damages from any claim against it by a
third person not a party hereto.

Section 12.    No Partnership.  Nothing in this
Agreement shall be construed to establish a partnership or joint
venture between or among CRC, CSXT or NSR or any of their
affiliates or associates.

-31-

Section 13.    Arbitration.  Any dispute, controversy
or claim (or any failure by the parties to agree on a matter as
to which this Agreement expressly or implicitly contemplates
subsequent agreement by the parties, except for matters left to
the sole discretion of a party) arising out of or relating to
this Agreement, or the breach, termination or validity hereof,
shall be finally settled through binding arbitration by a sole,
disinterested arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.  The
arbitrator shall be jointly selected by the parties but, if the
parties do not agree on an arbitrator within 30 days after demand
for arbitration is made by a party, they shall request that the
arbitrator be designated by the American Arbitration Association. 
The award of the arbitrator shall be final, binding and
conclusive upon the parties.  Each party to the arbitration shall
pay the compensation, costs, fees and expenses of its own
witnesses, experts and counsel.  The compensation and any costs
and expenses of the arbitrator shall be borne equally by the
parties.  The arbitrator shall have the power to require the
performance of acts found to be required by this Agreement, and
to require the cessation or nonperformance of acts found to be
prohibited by this Agreement.  The arbitrator shall not have the
power to award consequential or punitive damages.  Judgment upon
the award rendered may be entered in any court having
jurisdiction thereof, which court may award appropriate relief at
law or in equity.  All proceedings relating to any such
arbitration, and all testimony, written submissions and award, of
the arbitrator therein, shall be private and confidential as
among the parties, and shall not be disclosed to any other
Person, except as required by law and except as reasonably
necessary to prosecute or defend any judicial action to enforce,
vacate or modify such arbitration award.

Section 14.    Term.  This Agreement shall become
effective as of the date first above written and shall remain in
effect until the twenty-fifth (25th) anniversary of such date,
subject to the right of CSXT and NSR to agree prior to the
twenty-third (23rd) anniversary of such date to extend this
Agreement for a renewal period of five (5) years; and if so
extended, to agree prior to the twenty-eighth (28th) anniversary
of such date to further extend this Agreement for an additional
renewal period of five (5) years (each such period, a "Renewal
Term").

Section 15.    Force Majeure.  The obligations, other
than payment obligations, of the parties to this Agreement shall
be subject to force majeure (which shall include strikes, riots,
floods, accidents, Acts of God, and other causes or circumstances
beyond the control of the party claiming such force majeure as an
excuse for non-performance), but only as long as, and to the
extent that, such force majeure shall prevent performance of such
obligations.

Section 16.   Entire Agreement.  This Agreement and the
Transaction Agreement, including the other Ancillary Agreements
(as defined in the Transaction Agreement) constitute the entire
agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, except the letter agreement
dated April 8, 1997 between CSX and NSC to the extent such April
8, 1997 letter agreement covers matters not addressed or amended
hereby or in the Transaction Agreement or the Ancillary
Agreements (as defined in the Transaction Agreement); provided
that it is the intent of the parties that this Agreement shall be
an effectuation of such April 8, 1997 letter agreement consistent
with its terms, and that the provisions of this Agreement shall
be interpreted to give effect to such April 8, 1997 letter
agreement; and provided further that, in the event of any
inconsistency between the terms of this Agreement and such April
8, 1997 letter agreement, this Agreement shall prevail.

-32-

Section 17.    Amendment and Waiver.  Any amendment to
this Agreement must be in writing and executed and delivered by
CRC, CSXT and NSR, subject to any jurisdiction of the STB.  Any
waiver of any term or provision of this Agreement must be in
writing and executed and delivered by the party entitled to
enforcement of such term or provision.

Section 18.    Severability.  If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, such provision is
intended to be ineffective only to the most limited extent
possible in such context and the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.

Section 19.    Remedies.

(a)  Entitlement to Certain Remedies.  Each party
acknowledges and agrees that the other parties would be
irreparably damaged in the event any of the provisions of this
Agreement were not performed by it in accordance with their
specific terms or were otherwise breached.  It is accordingly
agreed that each party shall be entitled to an injunction or
injunctions to prevent breaches of such provisions and to
specifically enforce such provisions, in addition to any other
remedy to which such party may be entitled, at law or in equity.

(b)  Preclusion of Certain Remedies.  In no event shall
any party be liable to the other parties for any consequential,
indirect, incidental, punitive or other similar damages
including, but not limited to, lost profits for any breach or
default, or any act or omission arising out of or in any way
relating to this Agreement, under any form or theory of action
whatsoever, whether in contract, tort or otherwise.  The
foregoing is not intended to alter or limit the allocation of
responsibility for Damage as provided in Section 11. 

Section 20.    Interpretation.  This Agreement was
drafted jointly by CSXT and NSR, each of which was advised by its
own counsel and other advisors concerning all of the terms and
provisions hereof; accordingly, any ambiguity herein should not
be construed in favor of or against any of them.

-33-

Section 21.  Headings.  Headings of Sections and
paragraphs in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of any
term or provision of this Agreement.

Section 22.    Parties.  This Agreement shall inure to
the benefit of and be binding upon CRC, CSXT and NSR and any
successor of any of them by operation of law, and any assignee
agreed to by them in accordance with Section 23, and nothing in
this Agreement is intended or shall be construed to give any
other Person any legal or equitable right, remedy or claim under
or with respect to this Agreement or any term or provision
hereof.

Section 23.  Assignment.  

(a)  Limitation.  Except as provided in Section 23(b),
neither this Agreement (including the documents and instruments
referred to herein) nor any of the rights, interests or
obligations hereunder, shall be assigned by any party, including
by operation of law, without the prior written consent of the
other parties (except to a controlled subsidiary), which consent
may be given or refused in the sole discretion of each party. 

(b)  Successor.  Any party without the consent of the
other parties may assign all of its rights and obligations under
this Agreement only to any successor in the event of a merger,
consolidation, sale of all or substantially all its assets (but
only if such sale includes all routes and lines owned by such
party to access the Shared Assets), if such assignee executes and
delivers to the other parties hereto an agreement reasonably
satisfactory in form and substance to such other party under
which such assignee, which is reasonably satisfactory to the
other party, assumes and agrees to perform and discharge all the
obligations and liabilities of the assigning party; provided that
any such assignment shall not relieve the assigning party from
the performance and discharge of such obligations and
liabilities.

Section 24.  Notices.  Any notice given by CRC, CSXT or
NSR to the others under this Agreement shall be deemed delivered
on the date sent by registered mail, or by such other means as
they may agree, and shall be addressed to them as follows: 

-34-

(A)  If to CSXT:

Executive Vice President and 
Chief Operating Officer
CSX Transportation, Inc.
500 Water Street, J120
Jacksonville, Florida  32202

(B)  If to NSR:

Senior Vice President Operations
Norfolk Southern Railway Company
Three Commercial Place
Norfolk, Virginia  23510-2191

(C)  If to CRC:

President and Chief Executive Officer
Consolidated Rail Corporation
2001 Market Street
Two Commerce Square
Philadelphia, Pennsylvania  19101

and each of them may from time to time change its address in this
Section 24 by written notice delivered to the others.

Section 25.  Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without regard to principles of
conflicts of laws.

-35-

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in counterparts by their duly authorized
officials as of the day first above written.

CSX TRANSPORTATION, INC.

By:  /s/ Peter J. Shudtz

Title:    Vice President - Law and 
General Counsel - CSX
Corporation, authorized agent
for CSX Transportation, Inc. 

NORFOLK SOUTHERN RAILWAY COMPANY

By:  /s/ J. L. Manetta

Title:    Senior Vice President 
Operation 

CONSOLIDATED RAIL CORPORATION

By:  /s/ Timothy O'Toole

Title:  President

-36-

EXHIBIT A

OPERATING PROTOCOLS

Consolidated Rail Corporation
Shared Assets Area
Terminal Capacity Guidelines

Yard Operations 

o    Cars loaded or empty moving outbound to either parent*
company, which have been made up for train departure at
either a serving merchandise yard, Automotive Terminal or
jointly used Intermodal Facility will be considered
available at the published departure time for scheduled
trains and the later of 4 hours after notice to the parent
or actual available time (set time) for non-scheduled or
extra trains. Cars remaining available for departure in
excess of ten (10) hours will be subject to a charge of
$141.00 per car. Thereafter, for every eight (8) hours that
the same cars continue to remain on track, along with all
other cars of the same block codes within the originating
dispatch yard, will be subject to an additional charge of
$141.00 per car. 

o    Cars loaded or empty assembled for outbound train dispatch
to either parent company will be considered available at
published departure time for such scheduled trains. The
Shared Assets Areas management will provide four (4) hours
advance notice prior to set time on non-scheduled or extra
trains before they will be considered available for
departure. 

o    Management of Shared Assets Areas may refuse an inbound
train of the same category when a specific destination
terminal has been holding more than one (1) intermodal,
automotive, manifest or unit train of a parent for power
and/or crew beyond ten (10) hours of scheduled departure or
availability and conditions within the involved destination
terminal preclude the effective handling of the offered
inbound trains. 

o    Acts of God, Mainline blockages, labor strikes or other
causes to a cessation of consistent service beyond the
control of a parent company will be considered by the
management of the Shared Assets Areas as to the legitimacy
of any assessment. 

o    Opportunities for the Shared Assets Areas management to 

--------------------- 

*The term "parent" means CSXT and/or Norfolk Southern Railway Co.
("NSR") and is not intended to describe the legal relationship
between the parties. 

1 

consolidate - trains for the benefit of a specific Shared
Assets Area operation and the involved parent, as mutually
agreed by the parties, will not result in charges on cars
designated for the annulled train resulting from said
consolidation. 

o    An inventory of hold cars awaiting disposition within any
given Shared Assets Area territory should not exceed thirty
(30) cars per day for either CSXT or NSR individually. The
Shared Assets Areas management may elect to limit receipt of
inbound car flow from the delinquent parent for the affected
Shared Assets Areas territory, in accordance with the
guidelines for holding trains. Any loaded or empty car
including those in unit train consists carrying a "No Bill"
status more than twenty-four (24) hours will be assessed
$10.00 per hour in excess thereof. 

o    Trains inbound to the Shared Assets Area territory must have
proper car and train documents. If this information is
lacking, the Shared Area managers, at their discretion, may
hold trains outside the boundaries of the Shared Assets Area
until proper documentation is received. 

o    Regardless of company of employment, any qualified crew in
the Shared Area may operate any locomotive, regardless of
ownership, in that area for the purposes of
positioning/hostling or movement of light power between
yards. 

Held Trains 

o    In recognition of terminal fluidity and capacity
utilization, the Shared Assets Areas management can require,
in coordination with a parent's command center, an inbound
train to be held outside the boundaries of a Shared Assets
Area. 

-    Such notification must be given with enough notice for
the parent to chamber the train at a location that
minimizes disruption to operations. 

-    Decisions by the Director of Train Operations of Shared
Assets Areas management are final in this regard.
Neither parent may compel the Shared Assets Areas
management to accept trains. 

-    Similarly, the decision to hold out a train other than
temporary holds is recognized as a serious action,
which will be done only after all other alternatives
are exhausted. Data on these actions will be maintained
by Shared Assets Areas management and will be regularly
available for briefing to the Conrail's Board of
Directors at its pleasure. 

2 

Storage 

o    Neither parent company may store or pre-position cars on
Shared Assets Area's tracks, including yard and industrial
tracks to which they have access. Empty cars routed to the
Shared Assets Areas must have a customer destination
assigned, and must be loaded without beginning to accrue
charges as described in Conrail's Demurrage Tariff in effect
on May 1, 1999. When it is determined that cars cannot be
delivered to the customer within 60 hours of arrival, a call
will be made to the parent's operations center. After such a
call is made, except in extraordinary cases, these cars will
then be placed on the parent's first available outbound
train. 

o    CSXT and NS will independently establish such demurrage and
car storage arrangements with customers as each deems
proper. Should customers keep or store cars on SAA tracks
beyond the time at which charges would begin to accrue as
called for in Conrail's Demurrage Tariff in effect on May 1,
1999, then the parent road will be assessed $100 per car per
day to cover the operational cost of congestion and
inefficient use of Shared Assets Areas facilities. 

o    CSXT and NSR recognize that certain customers are currently
provided car storage within the Shared Asset Areas, and that
this storage may be essential to the functioning of the
business of these customers. CSXT, NSR and Shared Assets
will review current pools and by consent of all three
parties approve their makeup and location based on operating
efficiencies. Thereafter pools will be regularly reviewed
for the provision of such storage to avoid congestion. Any
request for additional car storage for any Shared Assets
Area customers must be approved by the Parents, who will
consider the availability of additional space with a view
toward assuring that operations in the Shared Assets Area
remain fluid and will not be affected by providing such car
storage. 

Interchange 

o    CSXT and NSR will not interchange cars to each other within
the Shared Assets Areas locations unless specifically
provided through separate agreements. No open interchanges
have been established except at industries. 

3

Blocking 

o    To ensure the equal and fair use of the Shared Assets
Area capacity by its parent companies, the following car
classification requirements will govern: 

-    Each parent company will be required to block inbound
trains for the Shared Assets Areas. Each parent will
make the number of blocks called for in the split-date
Operating Plan. Failure to comply with inbound blocking
requirements and execute appropriate setoffs (unless
otherwise directed by Shared Assets management) within
the Shared Assets Area will result in an assessment of
$50.00 per loaded or empty car. 

-    Management of the Shared Assets Areas will be required
to block outbound trains. Parent companies will receive
the number of blocks at each Shared Assets Area
terminal that is called for in the split-date Operating
Plan. 

-    Changes to the number of blocks made by or delivered to
a Shared Asset terminal may be made only by mutual
consent of all three parties. 

-    Parent companies, except by joint agreement, may not
compel the Shared Assets Areas management to make a
greater number of blocks at any terminal, beyond the
number of called for in the split-date Operating Plan.

-    Each parent may change the definition of its own
specific blocks originating at a Shared Assets Area
terminal. 

Hours of Service and Recrews 

o    Train crews on parent trains approaching a Shared Assets
Area must have sufficient time to terminate in or exit the
Shared Assets Areas before hours-of-service laws require
them to rest. Sufficient time is considered the trains
scheduled elapsed time to terminate in or pass through the
Shared Assets Area. The Shared Assets Areas management may
grant an exception if the train can make it to its
destination without undue disruption. 

o    Shared Assets Areas shall have the option to provide T&E
relief service for any road train on the hours-of-service
law, regardless of parent company. 

-    Such relief will be provided after coordination with
the appropriate parent's operations center indicating
the involved parent will provide no relief crew. 

4

-    Recrews will be at the sole cost and expense of the
parent whose train is recrewed at full cost plus a $500
surcharge. 

-    If specific trains frequently require recrews, Shared
Assets Areas management may request the parent to
change its schedule or slotting of subject train with
the right to repeatedly hold that train for a recrew
outside the Shared Assets Areas as set forth under the
"held trains" provision until such appropriate
adjustments are made to the non-conforming schedule. 

-    Data on trains recrewed will be maintained by Shared
Assets Areas management and will be regularly available
for briefing to Conrail's Board of Directors at its
pleasure. 

Charges 

o    The charges paid by either owner under these protocols will
be made to a Conrail "passive income" account, which will be
administered by Conrail. 

Changes 

o    These terminal capacity guidelines will be reviewed at the
request of any of the three parties (CSXT, NSR, and/or
CSAO). Proposed changes are subject to the arbitration
provisions of the Shared Asset Area Operating Agreements in
the event CSXT and NSR cannot agree. 

SHARED ASSETS AREA

OPERATING AGREEMENT

FOR

SOUTH JERSEY/PHILADELPHIA

Dated as of June 1, 1999

By and Among

CONSOLIDATED RAIL CORPORATION,

CSX TRANSPORTATION, INC. and

NORFOLK SOUTHERN RAILWAY COMPANY

TABLE OF CONTENTS

Page

Section 1.  Definitions. . . . . . . . . . . . . . . . . . . . .1

(a)  AAR. . . . . . . . . . . . . . . . . . . . . . . . . .1

(b)  Accounting Plan. . . . . . . . . . . . . . . . . . . .1

(c)  Action . . . . . . . . . . . . . . . . . . . . . . . .2

(d)  Adjacent Improvements. . . . . . . . . . . . . . . . .2

(e)  Bill . . . . . . . . . . . . . . . . . . . . . . . . .2

(f)  Billing Month. . . . . . . . . . . . . . . . . . . . .2

(g)  Board of Managers. . . . . . . . . . . . . . . . . . .2

(h)  Budgeted Capital Expenditures. . . . . . . . . . . . .2

(i)  Capital Expenditure Budget . . . . . . . . . . . . . .2

(j)  Capital Expenditure Statement. . . . . . . . . . . . .2

(k)  CRC Administrative Office. . . . . . . . . . . . . . .2

(l)  CRC Board. . . . . . . . . . . . . . . . . . . . . . .2

(m)  CRC Train. . . . . . . . . . . . . . . . . . . . . . .2

(n)  CRC Train Usage Percentage . . . . . . . . . . . . . .2

(o)  CSX. . . . . . . . . . . . . . . . . . . . . . . . . .3

(p)  CSXT Operating Agreement . . . . . . . . . . . . . . .3

(q)  Damage(s). . . . . . . . . . . . . . . . . . . . . . .3

(r)  Dispute Letter . . . . . . . . . . . . . . . . . . . .3

Page

(s)  Excluded Taxes . . . . . . . . . . . . . . . . . . . .3

(t)  Expense Statement. . . . . . . . . . . . . . . . . . .3

(u)  GAAP . . . . . . . . . . . . . . . . . . . . . . . . .3

(v)  General Manager. . . . . . . . . . . . . . . . . . . .3

(w)  Governmental Entity. . . . . . . . . . . . . . . . . .3

(x)  Interest Rental. . . . . . . . . . . . . . . . . . . .3

(y)  Jointly-Operated Facility. . . . . . . . . . . . . . .4

(z)  Lesser Insured Operator. . . . . . . . . . . . . . . .4

(aa) Letter Agreement . . . . . . . . . . . . . . . . . . .4

(bb) Liabilities. . . . . . . . . . . . . . . . . . . . . .4

(cc) Nonseverable Improvement . . . . . . . . . . . . . . .4

(dd) NSC. . . . . . . . . . . . . . . . . . . . . . . . . .4

(ee) NSR Operating Agreement. . . . . . . . . . . . . . . .4

(ff) NYC. . . . . . . . . . . . . . . . . . . . . . . . . .4

(gg) Operating Budget . . . . . . . . . . . . . . . . . . .4

(hh) Operating Plan . . . . . . . . . . . . . . . . . . . .5

(ii) Operator . . . . . . . . . . . . . . . . . . . . . . .5

(jj) Operator Consequential Damages . . . . . . . . . . . .5

(kk) Operator's Expense Percentage. . . . . . . . . . . . .5

(ll) Operator's Facility. . . . . . . . . . . . . . . . . .5

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Page

(mm) Operator Train . . . . . . . . . . . . . . . . . . . .5

(nn) Person . . . . . . . . . . . . . . . . . . . . . . . .5

(oo) Program Maintenance. . . . . . . . . . . . . . . . . .5

(pp) Program Maintenance Proposal . . . . . . . . . . . . .5

(qq) PRR. . . . . . . . . . . . . . . . . . . . . . . . . .5

(rr) Railcar. . . . . . . . . . . . . . . . . . . . . . . .6

(ss) Reimbursable Expenses. . . . . . . . . . . . . . . . .6

(tt) Renewal Term . . . . . . . . . . . . . . . . . . . . .6

(uu) RoadRailer . . . . . . . . . . . . . . . . . . . . . .6

(vv) Routine Maintenance. . . . . . . . . . . . . . . . . .6

(ww) Severable Improvement. . . . . . . . . . . . . . . . .6

(xx) Shared Asset Value . . . . . . . . . . . . . . . . . .6

(yy) Shared Assets. . . . . . . . . . . . . . . . . . . . .6

(zz) Shared Assets Area . . . . . . . . . . . . . . . . . .7

(aaa) STB . . . . . . . . . . . . . . . . . . . . . . . . . 7

(bbb) Switching and Yard Services . . . . . . . . . . . . . 7

(ccc) Tax or Taxes. . . . . . . . . . . . . . . . . . . . . 7

(ddd) Temporary Services. . . . . . . . . . . . . . . . . . 7

(eee) Tier One Damages. . . . . . . . . . . . . . . . . . . 7

(fff) Tier Two Damages. . . . . . . . . . . . . . . . . . . 7

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Page

(ggg)     Total Train Usage Percentage. . . . . . . . . . . 7

(hhh)     Transaction Agreement . . . . . . . . . . . . . . 8

(iii)     Usage Statement . . . . . . . . . . . . . . . . . 8

(jjj)     USOA. . . . . . . . . . . . . . . . . . . . . . . 8

(kkk)     Valuation Date. . . . . . . . . . . . . . . . . . 8

(lll)     Zone. . . . . . . . . . . . . . . . . . . . . . . 8

Section 2.  Management . . . . . . . . . . . . . . . . . . . . .8

(a)  CRC Board. . . . . . . . . . . . . . . . . . . . . . .8

(b)  General Manager. . . . . . . . . . . . . . . . . . . .9

(c)  Employees. . . . . . . . . . . . . . . . . . . . . . .9

(d)  CRC Responsibilities . . . . . . . . . . . . . . . . 10

(e)  Impartiality . . . . . . . . . . . . . . . . . . . . 10

(f)  Independent Contractors. . . . . . . . . . . . . . . 10

Section 3.  Operations . . . . . . . . . . . . . . . . . . . . 10

(a)  Operator's Rights. . . . . . . . . . . . . . . . . . 10

(b)  Use. . . . . . . . . . . . . . . . . . . . . . . . . 11

(c)  Grant of Rights. . . . . . . . . . . . . . . . . . . 11

(d)  Switching and Yard Services. . . . . . . . . . . . . 13

(e)  Operating Protocols. . . . . . . . . . . . . . . . . 13

(f)  Freight Traffic to Remain in Account of Each Operator13

-iv-

Page

(g)  Rates, Routes and Divisions. . . . . . . . . . . . . 13

(h)  Shipper Bills. . . . . . . . . . . . . . . . . . . . 14

(i)  Service Responsibility . . . . . . . . . . . . . . . 14

(j)  Dispatching. . . . . . . . . . . . . . . . . . . . . 14

(k)  Railcar Weighing . . . . . . . . . . . . . . . . . . 14

(l)  Freight Claims . . . . . . . . . . . . . . . . . . . 14

(m)  Freight Car Repairs. . . . . . . . . . . . . . . . . 15

(n)  Train Services . . . . . . . . . . . . . . . . . . . 15

(o)  Wrecking Service . . . . . . . . . . . . . . . . . . 15

(p)  Admission of Third Parties . . . . . . . . . . . . . 15

Section 4.  Equipment and Properties . . . . . . . . . . . . . 15

(a)  Procurement. . . . . . . . . . . . . . . . . . . . . 15

(b)  Contribution of Locomotives by Operators . . . . . . 16

(c)  Locomotive Service and Repair. . . . . . . . . . . . 16

Section 5.  Maintenance. . . . . . . . . . . . . . . . . . . . 16

(a)  Routine Maintenance. . . . . . . . . . . . . . . . . 16

(b)  CRC Program Maintenance. . . . . . . . . . . . . . . 17

(c)  Maintenance Standards. . . . . . . . . . . . . . . . 17

Section 6.  Capital Improvements . . . . . . . . . . . . . . . 18

(a)  Proposed Projects. . . . . . . . . . . . . . . . . . 18

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Page

(b)  CRC Board Approved Projects. . . . . . . . . . . . . 18

(c)  Nonseverable Improvement Projects. . . . . . . . . . 18

(d)  Severable Improvement Projects . . . . . . . . . . . 19

(e)  Capital Improvements as Shared Assets. . . . . . . . 19

(f)  Title to Severable Improvements. . . . . . . . . . . 19

(g)  Noninterference. . . . . . . . . . . . . . . . . . . 20

(h)  Switch Connections . . . . . . . . . . . . . . . . . 20

(i)  Adjacent Improvements. . . . . . . . . . . . . . . . 20

(j)  Operator's Facilities. . . . . . . . . . . . . . . . 21

Section 7.  Accounting . . . . . . . . . . . . . . . . . . . . 21

(a)  Books of Record and Account. . . . . . . . . . . . . 21

(b)  Financial Statements . . . . . . . . . . . . . . . . 21

Section 8.  Costs and Budgets. . . . . . . . . . . . . . . . . 21

(a)  CRC Costs. . . . . . . . . . . . . . . . . . . . . . 21

(b)  Employee Cost Reimbursement. . . . . . . . . . . . . 21

(c)  Capital Expenditure Budget . . . . . . . . . . . . . 21

(d)  Operating Budget . . . . . . . . . . . . . . . . . . 22

Section 9.  Cost Sharing . . . . . . . . . . . . . . . . . . . 22

(a)  Accounting Plan. . . . . . . . . . . . . . . . . . . 22

(b)  Usage Statement. . . . . . . . . . . . . . . . . . . 24

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Page

(c)  Expense Statement. . . . . . . . . . . . . . . . . . 24

(d)  Capital Expenditure Statement. . . . . . . . . . . . 24

(e)  Bills. . . . . . . . . . . . . . . . . . . . . . . . 25

(f)  Payment. . . . . . . . . . . . . . . . . . . . . . . 25

(g)  Disputed Bills . . . . . . . . . . . . . . . . . . . 25

Section 10.  Access. . . . . . . . . . . . . . . . . . . . . . 26

Section 11.  Liability . . . . . . . . . . . . . . . . . . . . 26

(a)  Operators' Sole Responsibility . . . . . . . . . . . 26

(b)  Operators' Joint Responsibility. . . . . . . . . . . 26

(c)  CRC Responsibility - Allocation and Insurance. . . . 27

(d)  Process. . . . . . . . . . . . . . . . . . . . . . . 28

(e)  Indemnification. . . . . . . . . . . . . . . . . . . 28

(f)  Specified Level Damages. . . . . . . . . . . . . . . 28

(g)  Substance Abuse Exceptions . . . . . . . . . . . . . 30

(h)  Transaction Agreement. . . . . . . . . . . . . . . . 30

(i)  Damages. . . . . . . . . . . . . . . . . . . . . . . 30

Section 12.  No Partnership. . . . . . . . . . . . . . . . . . 31

Section 13.  Arbitration . . . . . . . . . . . . . . . . . . . 31

Section 14.  Term. . . . . . . . . . . . . . . . . . . . . . . 31

Section 15.  Force Majeure . . . . . . . . . . . . . . . . . . 32

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Page

Section 16.  Entire Agreement. . . . . . . . . . . . . . . . . 32

Section 17.  Amendment and Waiver. . . . . . . . . . . . . . . 32

Section 18.  Severability. . . . . . . . . . . . . . . . . . . 32

Section 19.  Remedies. . . . . . . . . . . . . . . . . . . . . 32

(a)  Entitlement to Certain Remedies. . . . . . . . . . . 32

(b)  Preclusion of Certain Remedies . . . . . . . . . . . 33

Section 20.  Interpretation. . . . . . . . . . . . . . . . . . 33

Section 21.  Headings. . . . . . . . . . . . . . . . . . . . . 33

Section 22.  Parties . . . . . . . . . . . . . . . . . . . . . 33

Section 23.  Assignment. . . . . . . . . . . . . . . . . . . . 33

(a)  Limitation . . . . . . . . . . . . . . . . . . . . . 33

(b)  Successor. . . . . . . . . . . . . . . . . . . . . . 33

Section 24.  Notices . . . . . . . . . . . . . . . . . . . . . 34

Section 25.  Governing Law . . . . . . . . . . . . . . . . . . 34

EXHIBIT A - Operating Protocols

-viii-

SHARED ASSETS AREA

OPERATING AGREEMENT

FOR

SOUTH JERSEY/PHILADELPHIA

This SHARED ASSETS AREA OPERATING AGREEMENT
("Agreement") dated as of June 1, 1999, is by and among
Consolidated Rail Corporation ("CRC"), CSX Transportation, Inc.
("CSXT") and Norfolk Southern Railway Company ("NSR").

W I T N E S S E T H:

WHEREAS, all capitalized terms in this Agreement have
the respective meanings set forth in Section 1; and 

WHEREAS, CSX owns all of the common stock of and
controls CSXT, NSC owns all of the common stock of and controls
NSR, and CSX and NSC jointly control CRC; and

WHEREAS, CSXT, NSR and CRC desire that the Shared
Assets shall be owned, operated and maintained by CRC and used by
or for the exclusive benefit of CSXT and NSR, and that CSXT and
NSR shall each have full and equal rights to use the Shared
Assets to provide competitive railway freight transportation
services to, from and between all places within the Shared Assets
Area.

NOW, THEREFORE, in consideration of the premises,
covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is
acknowledged, CRC, CSXT and NSR hereby agree as follows:

Section 1.     Definitions.   For purposes of this
Agreement, the following terms have the following meanings:

(a)  "AAR" means the Association of American Railroads.

(b)  "Accounting Plan" means the plan of accounting
adopted pursuant to Section 9(a).

(c)  "Action" means any action, claim, suit,
arbitration, inquiry, subpoena, discovery request, proceeding or
investigation by or before any Governmental Entity.

(d)  "Adjacent Improvement" means a capital
improvement, such as a spur, which provides access to customers
and local industries and which (i) is on property which is not
part of the Shared Assets and (ii) will be directly (without
intermediate connection to another railroad) attached to trackage
included within the Shared Assets.

(e)  "Bill" means a bill delivered by CRC to an
Operator pursuant to Section 9(e).

(f)  "Billing Month" means the calendar month for which
information is shown on a Usage Statement.

(g)  "Board of Managers" means any Board of Managers
which may be appointed by the CRC Board pursuant to Section
2(a)(ii).

(h)  "Budgeted Capital Expenditures" means capital
expenditures included on a Capital Expenditure Budget which has
been approved by the CRC Board.

(i)  "Capital Expenditure Budget" means a written
budget specifying proposed capital expenditures to be made by CRC
with respect to Shared Assets for the periods of time specified
in such budget, and the proposed sources of the capital required
to make such expenditures.

(j)  "Capital Expenditure Statement" means a statement
delivered by CRC pursuant to Section 9(d).

(k)  "CRC Administrative Office" means the
administrative office of CRC located at Philadelphia,
Pennsylvania, or at such other place designated by CRC in a
notice it delivers to CSXT and NSR.

(l)  "CRC Board" means the Board of Directors of CRC.

(m)  "CRC Train" means a train operated by CRC and
performing services pursuant to Sections 3(c) or (d).

(n)  "CRC Train Usage Percentage" means for an Operator
for a particular time period and Zone, the percentage obtained by
multiplying 100 by the quotient obtained by dividing (i) the
total number of loaded and empty Railcars in the account of such
Operator in CRC Trains, by (ii) the total number of loaded and
empty Railcars in the accounts of both Operators in CRC Trains,
during such time period in such Zone.

-2-

(o)  "CSX" means CSX Corporation.

(p)  "CSXT Operating Agreement" means the agreement,
dated June 1, 1999, between CSXT and NYC providing for the use,
operation and maintenance by CSXT of certain assets owned or
leased by NYC.

(q)  "Damage(s)" means all assessments, fines, losses,
damages, liabilities, and costs and expenses related thereto,
including, without limitation, interest, penalties and attorneys'
and consultants' fees and also expressly including, without
limitation, all liabilities arising after the effective date
hereof under the Federal Employers Liability Act, as amended, and
environmental laws.

(r)  "Dispute Letter" means a letter delivered by an
Operator pursuant to Section 9(g)(i).

(s)  "Excluded Taxes" means:  (A) all Taxes based, in
whole or in part, on net income or gross income (including,
without limitation, any minimum tax) of CRC or which are in
substitution for, or relieve CRC from, any Tax based upon or
measured by CRC's net income or gross income, together with any
interest, penalties, additions to tax or additional amounts that
may become payable in respect thereof; (B) business and
occupation taxes, and gross receipts taxes (unless in the nature
of a sales tax) of CRC and Taxes based upon the equity interests
of CRC; and (C) interest, fines and penalties to the extent due
to the acts or omissions of CRC in connection with such Excluded
Taxes.

(t)  "Expense Statement" means a statement delivered by
CRC pursuant to Section 9(c).

(u)  "GAAP" at any time means generally accepted
accounting principles in effect at such time.

(v)  "General Manager" means the chief executive
officer of CRC.

(w)  "Governmental Entity" means any federal, state,
local or foreign court, administrative agency or commission or
other governmental or regulatory authority or commission or any
arbitration tribunal.

(x)  "Interest Rental" means an amount representing a
fair periodic return on the Shared Asset Value as of the most
recent preceding Valuation Date as determined by such appraiser
as CSXT and NSR may select.  The Interest Rental for the first
six years of this Agreement shall be as follows:

-3-

June 1, 1999 through May 31, 2000 -- $18 million
June 1, 2000 through May 31, 2001 -- $18 million
June 1, 2001 through May 31, 2002 -- $20 million
June 1, 2002 through May 31, 2003 -- $22 million
June 1, 2003 through May 31, 2004 -- $25 million
June 1, 2004 through May 31, 2005 -- $27 million

(y)  "Jointly-Operated Facility" means a facility or
yard which is operated by or for a rail carrier and one or more
other rail carriers.

(z)  "Lesser Insured Operator" means the Operator which
has the lesser (as between the Operators) amount of available
insurance benefits as specified in Section 11(f)(i)(A.1)(2).

(aa) "Letter Agreement" means the letter agreement
dated May 1, 1999 between NSC and CSX relating to the settlement
of certain matters. 

(bb) "Liabilities" means any and all debts, liabilities
and obligations of any kind whatsoever, whether or not accrued,
contingent or reflected on a balance sheet, known or unknown,
absolute, determined, determinable or otherwise, including,
without limitation, those arising under any law, rule,
regulation, action, order or consent decree of any Govern mental
Entity or any judgment in any Action of any kind or award of any
arbitrator of any kind and those arising under any contract.

(cc) "Nonseverable Improvement" means a capital
improvement which is integral to the operation of the Shared
Assets and is not readily removable.

(dd) "NSC" means Norfolk Southern Corporation.

(ee) "NSR Operating Agreement" means the agreement,
dated June 1, 1999, between NSR and PRR providing for the use,
operation and maintenance by NSR of certain assets owned or
leased by PRR.

(ff) "NYC" means New York Central Lines LLC, a Delaware
limited liability company.

(gg) "Operating Budget" means a written budget
specifying estimated operating revenues and expenses and working
capital requirements of CRC with respect to the Shared Assets for
the periods of time specified in such budget.

-4-

(hh) "Operating Plan" means the plan for road train and
local train schedules and classifications and related operating
protocols for the Shared Assets Area as may be agreed to, and
modified from time to time, by CRC, CSXT and NSR.

(ii) "Operator" means either CSXT or NSR.

(jj) "Operator Consequential Damages" means
consequential, indirect, incidental or other similar damage,
injury or loss to an Operator.

(kk) "Operator's Expense Percentage" means for an
Operator the percentage obtained by multiplying 100 by the
quotient obtained by dividing (i) the total Reimbursable Expenses
(except for Interest Rental, Taxes, insurance costs and any other
CRC expenses not apportioned between the Operators on a usage
basis) payable by such Operator for a particular period, by (ii)
the total Reimbursable Expenses (except for Interest Rental,
Taxes, insurance costs and any other CRC expenses not apportioned
between the Operators on a usage basis) payable by both Operators
for such period.

(ll) "Operator's Facility" means a present, expanded or
new facility or yard which is owned or controlled exclusively by
an Operator.

(mm) "Operator Train" means a train operated by an
Operator and performing services in accordance with Sections 3(a)
and 3(c).

(nn) "Person" means any individual, corporation,
association, partnership (general or limited), joint venture,
trust, estate, limited liability company or other legal entity or
organization.

(oo) "Program Maintenance" means scheduled renewal of
track, signals, structures and other fixed facilities performed
by system or production gangs assembled to accomplish a specific
task or tasks.

(pp) "Program Maintenance Proposal" means a written
proposal prepared by CRC, CSXT or NSR which describes specific
Program Maintenance which the preparer of such proposal believes
is necessary or desirable to maintain the Shared Assets in a safe
operating condition to permit or facilitate (i) the performance
by CRC of its services pursuant to this Agreement, or (ii) the
use of Shared Assets by the Operators, and which specifies a
budget for such Program Maintenance.

(qq) "PRR" means Pennsylvania Lines LLC, a Delaware
limited liability company.

-5-

(rr) "Railcar" means, except as otherwise provided in
the Accounting Plan, each railroad freight car, locomotive,
caboose or other equipment (including RoadRailer or comparable
bimodal freight hauling equipment in the account of either
Operator) furnished in substitution of railroad equipment, loaded
or empty, which an Operator originates, terminates, switches or
moves on or overhead to any Shared Assets, except that (i) a
single standard flat car not exceeding 96 feet in length
(excluding articulated flat cars) shall count as a single
Railcar, (ii) freight rail cars consisting of articulated units
bearing AAR Car Type Codes "Q" and "S" shall count as multiple
Railcars based on the second (numeric) digit of the Car Type Code
for such articulated units (by way of example, a car consisting
of AAR Car Type Code "S566" would be counted as five Railcars)
(or corresponding car type codes and digits if the AAR Car Type
Codes should be modified at any time during the term of this
Agreement), and (iii) a single unit of RoadRailer  equipment (or
comparable bimodal freight hauling equipment in the account of
either Operator) shall count as one-half (1/2) of a Railcar.

(ss) "Reimbursable Expenses" means the expenses shown
on an Expense Statement, minus the revenues, if any, shown on
such Expense Statement.

(tt) "Renewal Term" means the term of extension of this
Agreement under Section 14.

(uu) "RoadRailer " means bimodal freight hauling
equipment manufactured by or under license from "RoadRailer ", a
division of Wabash National Corporation, and capable of movement
over the highway when pulled by a tractor and on the rails using
locomotive power.

(vv) "Routine Maintenance" means day-to-day repairs to
track, signals, structures and other fixed facilities that are
not part of Program Maintenance.

(ww) "Severable Improvement" means a capital
improvement which is not a Nonseverable Improvement.

(xx) "Shared Asset Value" means at any date the value
of the Shared Assets, except leases and other contract rights
granted by either Operator to CRC, as of the most recent
preceding Valuation Date as determined by such appraiser as CSXT
and NSR may select.

(yy) "Shared Assets" means all tracks, lands,
easements, rights of way, structures, facilities, appurtenances
and rights related thereto, which CRC owns, leases or otherwise
has the right to operate over (including those segments over
which CRC or an Operator possesses operating rights pursuant to
Section 3(c)), and which are used for railway purposes in the
Shared Assets Area, including the properties, rights, equipment,
inventory and supplies, whether owned or leased, described or
referred to in Item 3A of Schedule 1 (including Attachments I and
II) of the Transaction Agreement, but excluding Operator's
Facilities.

-6-

(zz) "Shared Assets Area" means the geographical area
comprising the Shared Assets and Operator Facilities and
Jointly-Operated Facilities directly (without intermediate
connection to another railroad) attached to trackage included
within the Shared Assets, which is designated as the "South
Jersey/Philadelphia" Shared Assets Area.

(aaa)     "STB" means the Surface Transportation Board
or, if there shall be no Surface Transportation Board, any
federal agency which is charged with the function of approving
combinations by rail carriers or persons controlling them, or of
other arrangements between rail carriers, and granting exemptions
from other laws with respect thereto or regulating other specific
functions with respect to the context in which such term is
employed or any successor entity thereof.

(bbb)     "Switching and Yard Services" means the
service of classifying and assembling trains for the account of
an Operator in Jointly-Operated Facilities; movement of loaded or
empty Railcars between yards and local industries; and switching
trains and Railcars at yards, terminals and local industries.

(ccc)     "Tax" or "Taxes" means taxes of any kind,
levies or other similar assessments, customs, duties, imposts,
charges or fees, including, without limitation, income taxes,
gross receipts, ad valorem, excise, real or personal property,
sales, use, payroll, withholding, unemployment, transfer and
gains taxes or other governmental taxes imposed by or payable to
the United States, or any state, local or foreign government or
subdivision thereof, and in each instance such term shall include
any interest, penalties or additions to tax attributable to such
Tax or Taxes.

(ddd)     "Temporary Services" means services provided
by CSXT or NSR employees in the operation, maintenance or repair
of any Shared Asset on an emergency basis with the prior approval
of the General Manager or senior CRC employee who is directly
responsible for the operation or maintenance of such Shared
Asset.

(eee)     "Tier One Damages" means those Damages
defined as Tier One Damages in Section 11(f)(i)(A.1).

(fff)     "Tier Two Damages" means those Damages
defined as Tier Two Damages in Section 11(f)(i)(B.1).

(ggg)     "Total Train Usage Percentage" means for an
Operator for a particular time period and Zone, the percentage
obtained by multiplying 100 by the quotient obtained by dividing
(i) the sum of the total number of loaded and empty Railcars in
the account of such Operator in CRC Trains and the total number
of loaded and empty Railcars in the account of such Operator in
Operator Trains, by (ii) the sum of the total number of loaded
and empty Railcars in the accounts of both Operators in CRC
Trains and the total number of loaded and empty Railcars in the
accounts of both Operators in Operator Trains, during such period
in such Zone.

-7-

(hhh)     "Transaction Agreement" means the Transaction
Agreement dated as of June 10, 1997, among CSX, CSXT, NSC, NSR,
Conrail Inc., CRC and CRR Holdings LLC.

(iii)     "Usage Statement" means a statement delivered
by CRC pursuant to Section 9(b).

(jjj)     "USOA" means the uniform system of accounts
prescribed for class I railroads by the STB or any successor
federal agency that shall succeed to the functions of the STB in
prescribing uniform systems of accounts for rail carriers;
provided, that if there shall be no STB and no such federal
agency, USOA shall mean such system of accounts as is generally
maintained by rail carriers consistent with GAAP as applied in
the rail industry.

(kkk)     "Valuation Date" means the date of this
Agreement and thereafter the sixth (6th), twelfth (12th),
eighteenth (18th) and twenty-fourth (24th) anniversaries of the
date of this Agreement and the first day of each Renewal Term.

(lll)     "Zone" means a designated geographic section,
or designated facilities, of the Shared Assets Area as
established and described in the Accounting Plan.

Section 2.     Management.

(a)  CRC Board.

(i)  The CRC Board shall manage the Shared Assets. 

(ii) The CRC Board may appoint a Board of
Managers, a committee, a CRC officer or other persons to have
such duties and authority with respect to the Shared Assets as
may be assigned to them from time to time by the CRC Board.

(iii) Any Board of Managers appointed by the CRC
Board shall be comprised of an equal number of individuals (and
their successors) nominated by CSXT and nominated by NSR. 

(iv) The CRC Board shall remove from any
Board of Managers (A) at the direction of CSXT, any person who
was nominated by CSXT, and (B) at the direction of NSR, any
person who was nominated by NSR.

-8-

(b)  General Manager.

(i)  The General Manager shall not at any time
have been an employee of CSXT or NSR or any of their affiliates
unless otherwise agreed to by both Operators, and shall be
appointed by the CRC Board.

(ii) The General Manager shall manage and
supervise the owner ship, operation, maintenance and use of the
Shared Assets in accordance with directives and policies of the
CRC Board and this Agreement, subject to the authority of the CRC
Board, and through such Shared Assets Area superintendents and
other Shared Assets Area executives as are appointed by the
General Manager with the approval of the CRC Board.  The General 
Manager shall report to the CRC Board.  The General Manager shall
perform his or her responsibilities on an impartial and
non-discriminatory basis as between CSXT and NSR.

(iii) The General Manager may be removed from
office prior to the expiration of his or her term at any time by
a majority of the CRC Board for any reason or for no reason.  
Upon the written request of CSXT or NSR to the CRC Board, the
General Manager shall also be removed from office prior to the
expiration of his or her term for serious misconduct, which shall
mean conduct that would make it unreasonable to retain the
General Manager, including but not limited to conduct such as: 
(A) violation of applicable alcohol or drug use policies, (B)
fraud, (C) embezzlement or other act of dishonesty against CRC,
CSXT or NSR or any of their customers or suppliers, (D)
activities willfully undertaken by the General Manager which
reflect adversely upon the reputation of CRC, CSXT or NSR, (E)
refusal to perform or substantial neglect of the responsibilities
assigned to the General Manager, (F) failure to perform his or
her responsibilities on an impartial and non-discriminatory basis
as between CSXT and NSR after 45 days' written notice from an
Operator describing such failure, (G) any violation of any law or
rule or regulation of any Governmental Entity which results in
serious adverse consequences to CRC, CSXT or NSR, or (H) any
material violation of any directive or policy of the CRC Board or
any statutory or common law duty of loyalty to CRC.  If a
majority of the CRC Board in response to such a request of CSXT
or NSR fails to direct the removal of the General Manager, the
dispute may be submitted by either Operator for resolution by
binding arbitration pursuant to Section 13, provided, however,
that in any such arbitration to resolve a dispute under this
Section 2(b)(iii), the hearing shall commence no later than 30
days following the appointment of the arbitrator and the award
shall be rendered no later than 30 days following the completion
of the hearing.

(c)  Employees.  The General Manager and all persons
who operate and maintain the Shared Assets shall be employees of
CRC, except for CSXT or NSR employees who provide Temporary
Services and employees of Operators or independent contractors
which provide services pursuant to contracts or arrangements in
accordance with Section 2(f).

-9-

(d)  CRC Responsibilities.  CRC shall be responsible
for safely and efficiently operating, controlling and managing
the use of the Shared Assets, impartially as between CSXT and NSR
in accordance with directives and policies of the CRC Board, and
with responsible business practices which are consistent with
those used by CSXT and NSR in the operation of their businesses,
and are designed to achieve the lowest cost of the safe and
efficient operation, use and maintenance of the Shared Assets.

(e)  Impartiality.  CRC shall perform all of its
obligations pursuant to this Agreement on an impartial and
non-discriminatory basis as between CSXT and NSR, giving no
preference to either of them in providing Switching and Yard
Services, in the control of train dispatching over the Shared
Assets, or in any other way whatsoever.

(f)  Independent Contractors.  CRC may, at least to the
extent it may do so immediately prior to the date of this
Agreement, procure the use of equipment or facilities owned by
independent contractors, or services provided by independent
contractors (using their own employees), with respect to the
operation, maintenance and use of Shared Assets, including,
without limitation, accounting, computer and other administrative
services, and the furnishing of equipment and mechanical
services.  For purposes of this Section 2(f), independent
contractors may include CSXT or NSR.

Section 3.     Operations.

(a)  Operator's Rights.  CRC hereby grants to each
Operator full operating rights to operate its own trains (staffed
by a road crew) and equipment, with its own crews and equipment
and at its own expense, over any and all tracks included in the
Shared Assets, and to use all of the Shared Assets in connection
with the operation of such trains or equipment, for the following
purposes:

(i)  Movement by such Operator of trains
(staffed by a road crew) through the Shared Assets Area between
two geographical locations outside the Shared Assets Area;

(ii) Movement by such Operator of trains
(staffed by a road crew) between a geographical location outside
the Shared Assets Area and an Operator's Facility or a
Jointly-Operated Facility which is within the Shared Assets Area;

(iii) Movement by such Operator of trains
(staffed by a road crew) between a geographical location outside
the Shared Assets Area and local industries which are within the
Shared Assets Area;

-10-

(iv) Movement by such Operator of trains
(staffed by a road crew) between Operator's Facilities or
Jointly-Operated Facilities which are within the Shared Assets
Area and local industries which are within the Shared Assets
Area;

(v)  Movement, handling, pick-up, set off,
switching, transfer and interchange of Railcars, blocks of
Railcars or trains (staffed by a road crew) to, from or at local
industries, Operator's Facilities or Jointly-Operated Facilities,
in connection with movements described in Sections 3(a)(i)
through (iv), to the extent provided for in the Operating Plan
agreed to and modified by the parties from time to time; and

(vi) such other purposes as may be agreed
upon by CRC, CSXT and NSR.

(b)  Use.  The crews of each train operated by an
Operator on Shared Assets shall be qualified under and shall
comply with applicable laws and regulations as well as the safety
and operating rules of CRC.

(c)  Grant of Rights.  Subject to reasonable
compensation and other terms established in the Accounting Plan,
and in each case for the purpose of Switching and Yard Services
performed by CRC pursuant to Section 3(d) and movement of
Operator Trains pursuant to Section 3(a):

(i)  CSXT hereby grants to CRC and NSR
overhead operating rights to operate CRC trains and NSR trains,
respectively, with their own crews, over the following CSXT rail
line segments:

(A)  the current CRC line between CP Phil and
CP Field and between CP Arsenal and CP Gray; and

(B)  such other CSXT line segments access to
and use of which by CRC and NSR are necessary to
effectuate the train operations and services
contemplated by this Agreement.

(ii) CSXT hereby grants to CRC and NSR full
operating rights to operate CRC trains and NSR trains,
respectively, with their own crews, over the following CSXT rail
line segments:

(A)  the current CRC Trenton line between
Park Jct. and CP Newtown (at the approximate
boundary of the Shared Assets Area);

(B)  between CP River and point PH-22I (which
point is shown in Exhibit 1 to the Letter
Agreement) located in Greenwich Yard;

-11-

(C)  the Eastwick Connection constructed by
CSXT on the current CRC right-of-way between
Eastwick and CP Field; and

(D)  tracks over the northern part of
Greenwich Yard, as shown in beige on Exhibit 1 to
the Letter Agreement, for the purpose of serving
on an unimpeded basis the Ameriport intermodal
facility and local industry north of Greenwich
Yard.  The coloration of such beige area is
representative only, because the trackage rights
are over such clear tracks (whether within or
parallel to such beige areas) as designated from
time to time by the Greenwich Yard yardmaster. 
CRC and NSR shall have an unimpeded double stack
cleared route ("Cleared Route") for the purpose
stated above.  To the extent NYC or CSXT does any
construction currently or in the future that may
cause a track realignment or relocation, it will
assure that NSR and CRC will continue to have the
Cleared Route.

(iii) CSXT hereby grants to CRC full operating
rights to operate CRC trains with their own crews on an unimpeded
basis over the CSXT rail line between points PH-22D and PH-22E as
shown on Exhibit 1 to the Letter Agreement.

(iv) NSR hereby grants to CRC and CSXT overhead
operating rights to operate CRC trains and CSXT trains, with
their own crews, over such NSR line segments access to and use of
which by CRC and CSXT are necessary to effectuate the train
operations and services contemplated by this Agreement.

(v)  NSR hereby grants to CRC and CSXT full
operating rights to operate CRC trains and CSXT trains,
respectively, with their own crews, over the current Amtrak
Lancaster line between Zoo and 52nd Street.

(vi) NSR hereby grants to CRC and CSXT the
right to use West Falls Yard for the purpose of basing local
trains, classifying and assembling trains and switching Railcars,
but not for the purpose of serving local industries located at
such yard.

(vii) CRC hereby grants to CSXT unimpeded
trackage rights to operate CSXT trains with their own crews over
CRC's Track 354 from point PH-22I to the connection at point
PH-22H with NYC's Track 234, as shown on Exhibit 1 to the Letter
Agreement.

-12-

When required by the CSXT Operating Agreement and the NSR
Operating Agreement, CSXT and NSR have obtained the consent of
NYC and PRR, respectively, for the grant of rights referred to in
this Section 3(c).  Notwithstanding any other provision of this
Agreement, each rail line segment identified in this Section 3(c)
shall be dispatched, maintained, operated and controlled by the
Operator which granted the rights with respect to such segment,
provided that such dispatching, maintenance, operation and
control shall be performed on an impartial and non-discriminatory
basis as between the Operators.  Trains operated by an Operator
pursuant to operating rights granted under this Section 3(c)
shall be governed by and subject to the Operating Plan.

(d)  Switching and Yard Services.

(i)  At the request of and as agent for each
Operator, CRC shall perform Switching and Yard Services required
by such Operator within the Shared Assets Area, including without
limitation any such services which such Operator may be
responsible for performing or having performed for a shipper or
other Person.

(ii) Except as otherwise provided in Section
3(a), and other than within an Operator's Facility, neither
Operator shall with its own equipment or with its own crews
perform any Switching and Yard Service within the Shared Assets
Area for itself or for any other Person.

(e)  Operating Protocols.  From time to time, NSR,
CSXT and CRC may mutually establish Shared Assets Area Operating
Plans, General Dispatching Guidelines, Car Movement Guidelines,
Switching/Blocking Requirements and other operating protocols and
rules concerning operations within the Shared Assets Area, for
the purpose of assuring timely train operations, fluid movement
of all railcars, equal and impartial handling of Operators'
trains and railcars, minimization in the number of empty cars in
the Shared Assets Area, and overall operating efficiency in the
Shared Assets Area.  The current Operating Protocols have been
agreed upon by NSR, CSXT and CRC and are set forth as Exhibit A
to this Agreement.  The Operating Protocols may be modified only
upon mutual agreement of all parties.

(f)  Freight Traffic To Remain in Account of Each
Operator.  Switching and Yard Services and other services
performed by CRC for either Operator under this Agreement shall
be performed as agent for, and for the account of, such Operator. 
All freight traffic and Railcars handled within the Shared Assets
Area, including traffic and Railcars handled by CSXT or NSR
pursuant to Sections 3(a) and 3(c), and traffic and Railcars
handled by CRC pursuant to Sections 3(c) and 3(d), shall at all
times remain in the waybill, car hire and revenue accounts of
either CSXT or NSR.

(g)  Rates, Routes and Divisions.  Each Operator shall
have exclusive and independent authority to establish all rates,
charges, service terms, routes and divisions, and to collect all

-13-

freight revenues, relating to freight traffic transported for its
account to, from and within the Shared Assets Area (except those
Shared Assets Area line segments over which such Operator
possesses only overhead operating rights pursuant to Section
3(c)).  CRC shall not participate or appear in any rates, routes
or divisions relating to any freight traffic whatsoever to, from
and within the Shared Assets Area, and shall not be entitled to
or responsible for any freight charges relating to such freight
traffic.  CRC shall not quote or establish any rate or service
terms applicable to freight transportation services to, from and
within the Shared Assets Area, enter into transportation
contracts with any Person (other than an Operator) for freight
transportation services to, from and within the Shared Assets
Area, or undertake to perform any for-hire transportation
services directly, in its own name or for its own account for any
Person (other than an Operator).  The transfer or exchange of
freight traffic between CSXT and CRC, and between NSR and CRC,
within the Shared Assets Area shall not constitute an interchange
of freight traffic or freight rail cars for purposes of
determining rates, routes, divisions or interline settlements
relating to any such freight traffic.

(h)  Shipper Bills.  Neither Operator shall inform the
other or CRC of any rates or charges to shippers to which such
Operator provides freight transportation services in the Shared
Assets Area, and no copies of any shipper bill of lading or
waybill shall be given by such Operator to the other or to CRC
except to the extent that such documents are exchanged between
rail carriers in the usual course of interline shipments and
documenting.

(i)  Service Responsibility.  Each Operator shall at
all times be solely responsible for obtaining, supplying and
routing Railcars other than locomotives, for all Railcar
ownership costs (including per-diem charges and mileage
allowances) and for providing service to its shippers within the
Shared Assets Area pursuant to its transportation contracts or
other prices with its shippers, including interline accounting,
and all car hire and demurrage or detention charges associated
with Railcars in its account within the Shared Assets Area.

(j)  Dispatching.  CRC shall, from local locations or a
location agreed upon by CSXT and NSR, control the dispatching,
scheduling and movement of, and Switching and Yard Services for,
all trains (including Operator Trains and CRC Trains) over the
Shared Assets (other than Operator's Facilities, unless requested
to do so by the Operator thereof) without any discrimination at
any time in favor of or against either Operator, but in
accordance with written policies and priorities for categories of
freight, type of Railcar, size of train and train destinations
established from time to time by the General Manager and approved
by the CRC Board to achieve the maximum efficiency and lowest
aggregate Shared Asset costs of CRC and the Operators.

(k)  Railcar Weighing.  All Railcars for the account of
an Operator which originate or terminate on Shared Assets and
which require weighing shall be weighed by and at the expense of
such Operator or its customer, and at no cost to CRC.

(l)  Freight Claims.  The Operators shall agree among
themselves on the most fair, practical and efficient arrangements
for handling and administering freight loss and damage claims
with the intent that (i) each Operator shall be responsible for
losses occurring to lading either in its possession or in the
possession of CRC for the account of such Operator, and (ii) the
Operators shall follow relevant AAR rules and formulas in
providing for the allocation of losses which are either of
undetermined origin or in Railcars handled in interline service
by or for the account of both Operators.

-14-

(m)  Freight Car Repairs.  If any Railcars are bad
ordered while on the Shared Assets and must be set out from a CRC
Train or Operator Train, CRC shall promptly return such Railcars
to the Operator in whose account such Railcars reside in
accordance with such Operator's instructions.  CRC shall furnish,
at such Operator's expense, required labor and material to
perform, and shall perform, light repairs on such bad ordered
Railcars as necessary to make such Railcars legal and safe for
movement.  CRC shall bill such Operator for the costs of such
light repairs in accordance with the Field and Office Manuals of
the AAR Interchange Rules in effect at the time such repairs are
performed.  CRC shall bill directly to and collect from the
applicable Operator charges for repair items that, under the AAR
Interchange Rules, are the responsibility of the Railcar owner
and/or the handling line carriers.  Each Operator may rebill
charges for repair items that are the responsibility of the
Railcar owner and/or the handling line carriers.  If any such bad
ordered Railcar cannot be made legal and safe for movement by the
performance of light repairs, CRC shall, at such Operator's
expense, arrange for appropriate removal of the affected Railcar
in accordance with such Operator's instructions. 

(n)  Train Services.  Actual costs incurred by CRC to
provide special services (other than services otherwise provided
for in this Agreement) at the request of an Operator with respect
to trains, locomotives and Railcars for the account of such
Operator, shall be paid by such Operator to CRC, provided that
the costs and terms of similar special services rendered to each
Operator shall be without discrimination between Operators as to
cost and terms, giving due allowance to any differences in the
costs of providing such services.

(o)  Wrecking Service.  Wrecking service or wrecking
train service required in connection with services contemplated
by this Agreement shall be provided by CRC (or its designee) as
promptly as possible.

(p)  Admission of Third Parties. Notwithstanding any
other provision in this Agreement, no party may permit any Person
(other than a party hereto) to have access to, operate over or
use any Shared Asset without the prior approval of all parties,
which approval may be given or refused in the sole discretion of
each party.

Section 4.     Equipment and Properties.  

(a)  Procurement.  CRC shall procure, operate and
maintain all equipment, real property rights and improvements
thereon which are reasonably required for (i) CRC to operate the
Shared Assets, and (ii) the Operators to move trains over the
Shared Assets, in each case in accordance with this Agreement.

-15-

(b)  Contribution of Locomotives by Operators.  Upon
reasonable request by the General Manager, the Operators shall
furnish to CRC, through full-service lease or other mutually
satisfactory arrangements, locomotives reasonably required by CRC
for the performance of its obligations under this Agreement.  The
respective obligations of each Operator to furnish such
locomotives shall be based, insofar as reasonably practicable,
upon the Operator's CRC Train Usage Percentage during the
calendar month preceding such request for the Shared Assets Area
or Zone in which such locomotives are needed by CRC.  It is the
parties' intention that (i) the arrangements pursuant to which
such locomotives are furnished by either Operator to CRC shall
provide that heavy maintenance, repair and overhaul shall be the
responsibility of such Operator, (ii) locomotives furnished by
either Operator to CRC may, in order to permit maintenance,
repair and overhaul of such locomotive units, be exchanged for
other locomotive units furnished by such Operator, and (iii) the
respective obligations of each Operator to furnish such
locomotives upon request by the General Manager shall be adjusted
on at least a monthly or more frequent basis.

(c)  Locomotive Service and Repairs.  At the request of
an Operator, CRC shall furnish required labor and material to
perform, and shall perform, fueling and servicing of any
Operator's locomotive, as well as light repairs on any Operator's
locomotive as necessary to make such locomotive legal and safe
for movement.  CRC shall bill such Operator (or other owner of
such locomotive) for the costs of such fueling, servicing and
light repairs in accordance with industry practice in effect at
the time such fueling, services or repairs are performed.  If any
such locomotive cannot be made safe for movement by the
performance of light repairs, CRC shall, at the expense of such
Operator (or other owner of such locomotive), arrange for
appropriate removal of such locomotive in accordance with such
Operator's instructions.                

Section 5.     Maintenance.

(a)  Routine Maintenance.

(i)  CRC shall be responsible for Routine
Maintenance when necessary or desirable to maintain the Shared
Assets in a safe operating condition, and to permit and
facilitate (A) the performance by CRC of its obligations pursuant
to this Agreement, and (B) the use of Shared Assets by the
Operators in accordance with this Agreement.

(ii) CSXT or NSR, directly or through their
respective affiliates, may perform the work which CRC performed
prior to the date of this Agreement when (A) CRC does not possess
the skills needed for such work, (B) CRC lacks the necessary
employees to do such work in a timely fashion, or (C) CRC does
not possess the equipment needed to do such work.  CRC and the
party performing the work shall agree to a reasonable fee for
such work prior to performance.  CRC, CSXT and NSR may agree to
have additional work performed either by CSXT, NSR or their
affiliates.

-16-

(b)  CRC Program Maintenance.

(i)  The General Manager shall prepare and
submit to the CRC Board a Program Maintenance plan concurrently
with the submission of an Operating Budget and the Capital
Expenditure Budget to the CRC Board.

(ii) Any of CRC, CSXT or NSR may at any time
deliver a Program Maintenance Proposal to the other two of them
and to the General Manager and each member of the CRC Board.  

(iii) The CRC Board shall either (A) approve
any or all of such Program Maintenance Proposals and plan with
such changes as it deems appropriate, include the costs thereof
in a pending or amended Capital Expenditure Budget, and direct
the General Manager to cause the maintenance described in
approved Program Maintenance Proposals or plan to be performed in
accordance with Sections 5(b)(iv) and (v), or (B) disapprove any
or all of such Program Maintenance Proposals or plan.

(iv) Program Maintenance shall be the
responsibility of CSXT and NSR pursuant to contracts or
arrangements with CRC, and CRC shall not perform Program
Maintenance, except for Program Maintenance which can be provided
by Persons other than CSXT or NSR at a lower cost to CRC than the
CSXT or NSR cost thereof.

(v)  CRC shall select, to perform each Program
Maintenance project or program, the Operator which CRC reasonably
determines will perform such project or program at the least cost
to CRC consistent with safe and efficient operations, and taking
into account scheduling considerations, based on written
proposals submitted by each Operator.

(c)  Maintenance Standards.  Unless otherwise
authorized by the CRC Board, the General Manager shall prepare
and submit to the CRC Board proposals (including the Program
Maintenance plan submitted pursuant to Section 5(b)) for the
performance of such Routine Maintenance and Program Maintenance
as is reasonably necessary to keep and maintain the Shared Assets
substantially in their condition as of the date of this
Agreement.  If the CRC Board fails either to approve or
disapprove by majority vote any such proposal within 45 days
after it was submitted to the CRC Board, the disagreement over
the propriety or need for any of the Routine Maintenance or
Program Maintenance included in such proposal may be submitted by
either Operator for resolution by binding arbitration pursuant to
Section 13.

-17-

Section 6.     Capital Improvements.  Except as
provided in Section 5, all capital improvements involving Shared
Assets shall be governed by the following provisions:

(a)  Proposed Projects.  Either Operator, CRC or the
General Manager may propose to the CRC Board from time to time
capital improvement projects.  Each such project shall be
reviewed by the CRC Board, which may approve or disapprove by
majority vote, or fail to approve, such projects. 

(b) CRC Board Approved Projects.  Each Operator shall
be responsible for an equal share of the initial budgeted funding
of each capital improvement project which has been approved by
the CRC Board and is included in an approved Capital Expenditure
Budget, except as provided in Section 6(c).  A final accounting
shall be made to adjust the initial budgeted funding to the
actual project cost as specified in the Accounting Plan.

(c)  Nonseverable Improvement Projects.

(i)  At the written request of an Operator
delivered to the other, each Operator shall, within 45 days of
the delivery of such request, submit to an arbitrator in
accordance with Section 13 a written proposal with respect to a
Nonseverable Improvement project which was neither approved nor
disapproved by majority vote by the CRC Board within 45 days
after such project was proposed to the CRC Board (A) describing
any changes which such Operator proposes be made to such project
and specifying a schedule, budget and allocations between
the Operators of initial capital costs of such Nonseverable
Improvement, or (B) proposing that it not be made.

(ii) The arbitrator receiving the proposals
referred to in Section 6(c)(i) (A) shall consider (1) the degree,
if any, to which the construction, operation and use of such
Nonseverable Improvement would impair or interfere with the use
of Shared Assets by CRC or either Operator, or conflict with any
pending capital improvements included in an approved Capital
Expenditure Budget, and (2) the budget and allocations between
the Operators of initial capital costs of such Nonseverable
Improvement as proposed by each Operator, and (B) shall determine
within 45 days of such receipt which of such proposals shall be
implemented, or that such Nonseverable Improvement shall not be
made, and the CRC Board shall approve any proposal which such
arbitrator determines shall be implemented.

-18-

(d)  Severable Improvement Projects.

(i)  Each Operator shall have the unilateral
right to construct and exclusively fund any Severable Improvement
which was not approved by the CRC Board.

(ii)  Each Severable Improvement funded
exclusively by an Operator shall be used exclusively by that
Operator, which shall be solely responsible for maintaining such
Severable Improvement at its own expense, until such time that
the other Operator gives written notice that it desires also to
use such Severable Improvement, stating the amount which such
other Operator is prepared to pay to the Operator which initially
funded such Severable Improvement for the right to use such
Severable Improvement. 

(iii) If the Operators are unable to agree on
the amount of such payment within 45 days after the notice
referred to in Section 6(d)(ii) was given, then at the written
request of an Operator delivered to the other after 45 days but
before 60 days after such notice was given, each Operator shall,
within 15 days of the delivery of such request, submit to an
arbitrator in accordance with Section 13 a written statement
setting forth the proposed payment by the second Operator, and
the arbitrator shall within 45 days of such receipt determine
which of such proposed amounts shall apply, which shall be
binding on both Operators and paid promptly.

(iv) Such Severable Improvement shall become
a Nonseverable Improvement at the time such second Operator pays
the amount so determined and, thereafter, maintenance and other
costs associated with the operation of such improvement shall be
apportioned between the Operators as provided in this Agreement.

(e)  Capital Improvements as Shared Assets.  Upon
completion, all capital improvements approved by the CRC Board
and all Nonseverable Improvements shall become part of the Shared
Assets owned by CRC subject to all provisions of this Agreement,
free and clear of all Operator liens.

(f)  Title to Severable Improvements.  Each Operator
shall retain title to all Severable Improvements exclusively
funded by such Operator.  At any time during the term of this
Agreement, an Operator may remove (at its sole expense) any
Severable Improvement which it exclusively funded, provided that

-19-

such Operator has repaired (at its sole expense) any damage to a
Shared Asset caused by such removal and has restored the related
Shared Assets substantially to their condition at the time such
Severable Improvements were made.  In the event an Operator shall
not have removed any Severable Improvement to which the Operator
shall have title prior to the expiration or termination of this
Agreement, title to such Severable Improvement shall vest in CRC,
free and clear of all Operator liens, upon such expiration or
termination.

(g)  Noninterference.  The construction, operation and
use of Severable Improvements by an Operator shall not impair or
interfere with the use of Shared Assets by CRC or the other
Operator, nor shall any Severable Improvement conflict with any
pending capital improvements included in an approved Capital
Expenditure Budget.

(h)  Switch Connections.  CRC shall, upon the written
request of one or both Operators, provide for switch and turnout
connections from Shared Asset tracks to a private sidetrack owned
by a shipper or other Person, if such request:

(i) includes the commitment of the Operator
or both Operators making such request, or

(ii) is accompanied by a written undertaking
from such shipper or other Person, in each case satisfactory to
CRC, to pay to CRC all costs incurred from time to time by CRC
to provide for such switch and turnout connections within 30 days
after it delivers a bill for such costs to such Operator,
Operators, shipper or other Person.

(i)  Adjacent Improvements.

(i)  In the event an Operator constructs,
acquires or funds the cost of an Adjacent Improvement (whether or
not such Adjacent Improvement is ultimately owned by such
Operator), the other Operator shall be entitled to share usage of
such Adjacent Improvement by giving written notice stating the
amount which such other Operator is prepared to pay to the first
Operator for such right.  If the Operators are unable to agree on
the amount of such payment within 45 days after such notice was
given, then at the written request of an Operator delivered to
the other after 45 days but before 60 days after such notice was
given, the matter shall be submitted for resolution by binding
arbitration pursuant to Section 13 and the provisions of Section
6(d)(iii) shall apply to determine the amount of such payment.

(ii) After the second Operator pays the
amount so determined, if the first Operator owns or has a
property interest in the Adjacent Improvement, the provisions of
this Section 6 shall be applied as if such improvement were a
Nonseverable Improvement.  If a shipper or another Person
unrelated to the first Operator owns such Adjacent Improvement,
the second Operator shall be entitled to share fully the rights
of the first Operator in connection with such Adjacent
Improvement in consideration of the initial payment.

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(j)  Operator's Facilities.  The foregoing provisions
of this Section 6 shall not apply to any capital improvement
(including, but not limited to, a transloading facility or
automotive ramp) within an Operator's Facility.

Section 7.     Accounting. 

(a)  Books of Record and Account.  CRC shall keep
proper books of record and account, in which full and correct
entries shall be made of all CRC transactions, costs, expenses
and revenues in accordance with GAAP and the USOA, as modified by
the Accounting Plan.  All expense and revenue transactions
related to the Shared Assets Area shall be readily identifiable
by distinct accounting codes.

(b)  Financial Statements.  CRC shall deliver to each
Operator (i) within 30 days after the end of each calendar month,
a summary income statement and a summary balance sheet showing as
of the last day of and for such calendar month, major categories
of CRC revenue, expense, assets and liabilities, (ii) within 30
days after the last day of each CRC fiscal quarter, interim
financial statements as of and for the fiscal quarter ended on
such day, similar to statements described in Rule 10-01 of
Regulation S-X under the Securities Exchange Act of 1934, as
amended, as modified by the Accounting Plan, and (iii) within 30
days after the last day of each CRC fiscal year, statements of
income and cash flow and a balance sheet as of and for the fiscal
year ended on such day, prepared in accordance with GAAP and the
USOA, as modified by the Accounting Plan.

Section 8.     Costs and Budgets.

(a)  CRC Costs.  CRC shall pay (and, except for
Excluded Taxes, CSXT and NSR shall, pursuant to Section 9,
reimburse CRC for) all of the costs and expenses to maintain its
ownership of the Shared Assets and to operate and maintain the
Shared Assets, including but not limited to all Taxes and
assessments, licenses, permits and any other governmental
authorizations required to own, operate and maintain the Shared
Assets, the principal of and interest and premium, if any, on,
and all other costs of, its indebtedness and all other costs of
its capital.

(b)  Employee Cost Reimbursement.  CRC shall reimburse
CSXT and NSR for the wages, pro rata portion of fringe benefits,
other direct employment costs (including additives) and other
actual employee-related costs of any CSXT or NSR employee,
respectively, who provides Temporary Services.

(c)  Capital Expenditure Budget.

(i)  The General Manager shall prepare and
submit to each member of the CRC Board at least 30 days prior to
the beginning of each CRC fiscal year, a Capital Expenditure
Budget for such fiscal year, specifying for such year the
schedule of Program Maintenance and Shared Asset capital
improvements to be performed and constructed for the benefit of
both Operators during such fiscal year and the months therein
during which such expenditures are proposed to be made, for
approval, or modification and approval, by the CRC Board.

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(ii) The General Manager shall not permit any
capital expenditure to be made by CRC, CSXT or NSR except in
accordance with the Capital Expenditure Budget in effect from
time to time, Severable Improvements exclusively funded by an
Operator and emergency capital expenditures made (A) to preserve,
or to mitigate a serious diminution in, the value and usefulness
of a Shared Asset to CRC, CSXT and NSR, or (B) to prevent or
mitigate a serious disruption in the operation and use of the
Shared Assets by or for CRC, CSXT or NSR.

(iii) Any Capital Expenditure Budget may be
amended in writing at any time by the CRC Board.

(d)  Operating Budget.

(i)  The General Manager shall prepare and
submit to each member of the CRC Board at least 30 days prior to
the beginning of each fiscal year of CRC, an Operating Budget for
such fiscal year showing the budget amounts of revenues and
expenses for each month during such fiscal year, for approval, or
modification and approval, by the CRC Board.

(ii) The General Manager shall use all
reasonable efforts to prevent CRC expenses with respect to Shared
Assets for a period from exceeding the amounts shown on the
Operating Budget for such period.

(iii) The General Manager shall give prompt
written notice to each member of the CRC Board of any actual or,
in the judgment of the General Manager, probable, material change
in the revenues, expenses or working capital requirements shown
on the Operating Budget for any period.

(iv) Any Operating Budget may be amended in
writing at any time by the CRC Board.

Section 9.     Cost Sharing.

(a)  Accounting Plan.  The parties shall develop and
implement a written plan of accounting containing a detailed
description, by category of cost and location, of the costs
associated with the management and operation of the Shared Assets
Area and the method by which such costs shall be fairly and
properly apportioned among the parties.  Such plan of accounting
may include separate accounting and sharing of costs for
particular Zones, and shall conform to the following general
principles:

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(i)  Forty two percent (42%) of Interest Rental
shall be apportioned to CSXT and fifty eight percent (58%) of
Interest Rental shall be apportioned to NSR;

(ii) Locomotive ownership, lease, fueling, light
repair and servicing costs incurred by CRC within the Shared
Assets Area or each Zone (except costs incurred by CRC and
charged directly to an Operator pursuant to Section 4(c)) shall
be apportioned between the Operators on the basis of the CRC
Train Usage Percentages;

(iii) Crew compensation and other crew costs
incurred by CRC within the Shared Assets Area or each Zone with
respect to CRC Trains shall be apportioned between the Operators
on the basis of the CRC Train Usage Percentages;

(iv) General and administrative, supervisory
and overhead expenses incurred by CRC within the Shared Assets
Area or for functions related to the Shared Assets Area shall be
apportioned between the Operators on the basis of the CRC Train
Usage Percentages;

(v)  Dispatching and train control costs
(including, without limitation, labor, equipment, materials and
maintenance expenses) incurred by CRC with respect to the Shared
Assets Area shall be apportioned between the Operators on the
basis of the CRC Train Usage Percentages;

(vi) Police and other costs incurred by CRC
with respect to security within the Shared Assets Area shall be
apportioned between the Operators on the basis of the CRC Train
Usage Percentages;

(vii) Damage paid by CRC pursuant to Section
11(c) shall be apportioned between the Operators in accordance
with Section 11(b);

(viii)  All other costs incurred by CRC with
respect to the Shared Assets Area or each Zone (except Taxes and
insurance) shall be apportioned between the Operators on the
basis of the Total Train Usage Percentages;

(ix) Taxes (other than Excluded Taxes)
incurred by CRC with respect to the Shared Assets Area or each
Zone shall be apportioned between the Operators on the basis of
the Operator's Expense Percentages for the period to which
such Taxes relate; and  

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(x)  Insurance costs incurred by CRC with
respect to Shared Assets within the Shared Assets Area or each
Zone shall be apportioned between the Operators on the basis of
the Operator's Expense Percentages for the period to which such
insurance costs relate;

If the parties are unable to agree on the terms and provisions of
the Accounting Plan, such disagreement may be submitted by either
Operator for resolution by binding arbitration pursuant to
Section 13.

(b)  Usage Statement.  CRC shall deliver to each
Operator prior to the last day of each calendar month, a written
statement showing for the prior Billing Month:

(i)  the total number of loaded and empty
Railcars in the account of each Operator in CRC Trains which
performed Switching and Yard Services or operated directly
between customer facilities in each Zone; 

(ii) the total number of loaded and empty
Railcars moved by or for such Operator in Operator Trains which
operated overhead or directly to Jointly-Operated Facilities,
Operators' Facilities or customer facilities in each Zone;

(iii) the calculation of the CRC Train Usage
Percentage and the Total Train Usage Percentage for each Operator
for each Zone,

and (A) all Railcars in a train shall be deemed to be on Shared
Assets when the first or last Railcar of such train is on Shared
Assets and (B) each time that a Railcar is removed from or
added to a train in the Shared Assets Area shall constitute a
separate movement of such Railcar.

(c)  Expense Statement.  Concurrently with the delivery
of each Usage Statement to the Operators, CRC shall deliver to
the Operators a statement showing (i) the expenses incurred by
CRC to own, operate and maintain the Shared Assets during the
Billing Month, (ii) the revenues, if any, derived by CRC from the
ownership and operation of the Shared Assets during such Billing
Month, and (iii) the Reimbursable Expenses for such Billing
Month, in each case computed in accordance with GAAP and the
USOA, as modified by the Accounting Plan.

(d)  Capital Expenditure Statement.  Concurrently with
the delivery of each Usage Statement to the Operators, CRC shall
deliver to the Operators a statement showing the estimated
Budgeted Capital Expenditures for the calendar month immediately
succeeding the calendar month in which such statement is
delivered.

-24-

(e)  Bills.  Concurrently with the delivery to the
Operators of a Usage Statement for a Billing Month, CRC shall
deliver to each Operator a bill (a "Bill") showing for such
Billing Month:

(i)  one hundred and two percent (102%) of
the amount of each Reimbursable Expense apportioned to such
Operator for such Billing Month under the Accounting Plan;

(ii) one-twelfth of fifty percent (50%) of
the annual amount of Budgeted Capital Expenditures approved by
the CRC Board; and

(iii) one-twelfth of the Interest Rental
apportioned to such Operator.

(f)  Payment.  Each Operator shall pay to CRC the
amount shown on each Bill as being payable by such Operator, on
or before the 30th day after the date of such Bill regardless of
whether or not such Operator disputes the accuracy of any amount
or calculation shown on such Bill.

(g)  Disputed Bills.

(i)  Any dispute by an Operator of the
accuracy of any amount or  calculation shown on any Bill shall be
described and specified in reasonable detail in a Dispute Letter
from such Operator to CRC and the other Operator within two years
after the date of such Bill.

(ii) Any amounts or calculations shown on any
Bill which are not disputed in accordance with Section 9(g)(i)
shall conclusively be deemed to be accurate and shall be binding
on each Operator and CRC.

(iii) CRC and both Operators shall promptly
endeavor to resolve the disputes described in each Dispute
Letter, and if they fail to agree to a resolution of such
disputes within 60 days of the delivery of such Dispute Letter to 
CRC, then the firm of independent public accountants which has
been engaged as auditors for CRC shall be engaged to resolve such
disputes in accordance with GAAP and the USOA, as modified by the
Accounting Plan, and the written resolution of such disputes
signed by such accounting firm shall be binding on each Operator
and CRC.

(iv) Any adjustments to Bills which result
from the resolution of Dispute Letter disputes shall be reflected
as charges or credits on the first Bills delivered by CRC to the
Operators after such disputes have been resolved.

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(v)  The fees in connection with the
resolution of any Dispute Letter disputes of the accounting firm
which has been engaged as auditor for CRC shall be paid fifty
percent (50%) by CSXT and fifty percent (50%) by NSR.

Section 10.    Access.  CRC shall give to each Operator
during normal CRC Administrative Office business hours, access to
inspect and make copies of any and all books of record and
accounts relating to this Agreement, all of which shall be
maintained by CRC at the CRC Administrative Office.

Section 11.    Liability.  Except as otherwise provided
in Section 3(l) (Freight Claims), Section 11(f) (Specified Level
Damages) and Section 11(g) (Substance Abuse Exceptions), the
responsibility between and among CRC, CSXT and NSR for all Damage
arising out of, incidental to or occurring in connection with
this Agreement shall be apportioned without consideration of
fault or negligence of any kind or degree in accordance with the
remaining provisions of this Section 11.  The provisions of this
Section 11 are intended to inure only to the benefit of the
parties hereto and their corporate successors and affiliates, and
not to create any benefits for any third parties.

(a)  Operators' Sole Responsibility.  Except as
otherwise provided in Section 11(f) (Specified Level Damages) and
Section 11(g) (Substance Abuse Exceptions), each Operator shall
assume and bear all responsibility for Damage to its own trains,
locomotives and equipment, to Railcars and lading in its
possession or being handled for its account and for the death of
or injury to its own employees.

(b)  Operators' Joint Responsibility.

(i)  Train Usage.  Except as otherwise
provided in (1) Section 11(b)(ii) (First Year), (2) Section 11(a)
(Operators' Sole Responsibility), (3) Section 11(c)(i) (CRC
Damages Generally), (4) Section 11(c)(ii)(B) (No Reallocation for
Insurance), (5) Section 11(f) (Specified Level Damages), and (6)
Section 11(g) (Substance Abuse Exceptions), and subject to
Section 11(c)(ii)(A) (Net of Insurance), all Damage shall be
apportioned between the Operators in proportion to their
respective Total Train Usage Percentages in the Zone in which the
incident giving rise to such Damage occurred for the 12 calendar
month period immediately preceding the incident giving rise to
such Damage.

(ii) First Year.  If an incident giving rise
to Damage for which the Operators are jointly responsible under
Section 11(b)(i) (Train Usage) occurs before June 1, 2000,
responsibility for such Damage shall be borne equally by the
Operators, with each being liable for one-half (1/2) of the
damages.

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(c)  CRC Responsibility - Allocation and Insurance.

(i)  CRC Damages Generally.  Except as otherwise
provided in this Section 11(c), all Damages incurred by CRC,
including, without limitation, those Damages apportioned to CRC
under Section 11(f) (Specified Level Damages) shall be CRC
expenses, allocated as provided in Section 11(b) (Operators'
Joint Responsibility), and included in Expense Statements charged
to the Operators.

(ii) (A)  Net of Insurance.

(1)  Notwithstanding any other provision
in this Agreement (but subject to Section
11(c)(ii)(B) (No Reallocation for Insurance)), all
Damages (including without limitation, loss or
destruction of, or damage to, CRC's own property)
charged to the Operators, under the Expense
Statements or otherwise, shall be net of any CRC
insurance.  It is the intent of the parties (a)
for CRC to look first to any insurance proceeds
available to it before attempting to recover any
such Damages from the Operators and (b) for the
Operators' obligation to make direct payment to
CRC not to include any obligation to make direct
payment for any Damages covered by insurance
procured by or on behalf of CRC.

(2)  If and to the extent that CRC is an
insured under, or otherwise provided coverage
under, an insurance policy or policies each of
which provides coverage for both CRC and one
Operator but not the other Operator, and
regardless of whether two or more of these
policies shall be in existence or have different
deductible-retention amounts and/or limits of
recovery, then the amount of insurance proceeds
deemed "available" under Section 11(c)(ii)(A)(1)
to which CRC shall look before either Operator
shall have any obligation for direct payment
shall, as to each Operator, be the maximum
available limit of the insurance providing
coverage for both that Operator and CRC.

(B)  No Reallocation for Insurance.  When
part of the apportioned Damage will be satisfied from
insurance coverage under this Section 11(c), and part
paid directly by the Operator, the insured portion of

-27-

the Damage shall be apportioned among or between CRC
and the Operators (and consequently between or among
their insurers) in the same manner and amounts as it
would have been apportioned if the loss were not net of
insurance.   If any such allocation results in one
party hereto suffering a greater uninsured loss than
the other(s) because of differing deductibles or
self-retentions, that difference in coverage shall not
be a basis for any reapportionment or reallocation of
Damage.

(d)  Process.  Each Operator shall be responsible for
the payment, handling, administration and disposition of all
Damage for which it bears exclusive responsibility under Section
11(a) (Operators' Sole Responsibility), and both Operators shall
have joint responsibility for the payment, handling,
administration and disposition of all Damage for which they are
jointly responsible under Section 11(b) (Operators' Joint
Responsibility) and Section 11(c) (CRC Responsibility -
Allocation and Insurance).  In assigning joint responsibility to
both Operators, it is not the intent of this Agreement that the
Operators will actually act jointly, but rather that the
Operators will agree between themselves on the most practical and
efficient arrangements for handling, administering, and disposing
of Damage for which they bear joint responsibility, with the
objective of eliminating unnecessary duplication of effort and
minimizing overall costs.

(e)  Indemnification.  Each party to this Agreement
covenants and agrees to (i) fully indemnify and save harmless the
other parties to this Agreement from and against any payments
which are the responsibility of such party under this Agreement,
and all expenses, including attorneys' fees and expenses and
other expenses of any court or regulatory proceeding, incurred by
such other parties in defending any claim that they are liable
for such payments, and (ii) defend such other parties against
such claims with counsel selected by such party and reasonably
acceptable to such other parties.

(f)  Specified Level Damages.

(i)  Damages Amount.  Section 11(a)
(Operators' Sole Responsibility) and Section 11(b) (Operators'
Joint Responsibility) shall apply directly only when the total
amount of all Damages resulting from a single incident is $25
million or less.  Responsibility for Damages resulting from a
single incident for which Damages exceed $25 million shall be
allocated as stated in this Section 11(f)(i).

(A.1)  Tier One Damages Defined.  In this
Section 11(f), "Tier One Damages" for any incident
occurring during and between June 1, 1999 and May 31,
2000 shall, except as otherwise provided in Section
11(g)(Substance Abuse Exceptions), include the greater
of:

(1)  $25 million of Damages; or

(2)  the lowest amount of Damages
which, when allocated among all parties, results
in an allocation to either Operator of Damages in
an amount equal to all insurance benefits
available to that Operator (called the "Lesser
Insured Operator") which has the lesser (as
between the Operators) amount of insurance
benefits available to it, including, without
limitation, insurance to which CRC looks under
Section 11(c) (CRC Responsibility - Allocation and
Insurance).  In determining insurance benefits
available to the Lesser Insured Operator, both
property and liability insurance shall be
considered but (I) only to the extent benefits are
actually available in connection with that
incident and (II) they shall be calculated
separately (i.e., property insurance benefits
shall not be considered in any determination of
available liability insurance benefits and vice
versa).

-28-

In this Section 11(f), "Tier One Damages" for any
incident occurring on or after June 1, 2000 shall,
except as otherwise provided in Section 11(g)
(Substance Abuse Exceptions), include only the first
$25 million of Damages incurred by the parties, unless
otherwise agreed by the parties.

(A.2)  Allocation of Tier One Damages. Tier
One Damages shall be allocated among the parties as
follows:

(1)  Any Damage for which each
Operator would otherwise be solely responsible
under Section 11(a) (Operators' Sole
Responsibility) shall be allocated as provided in
Section 11(a);

(2)  Any and all CRC Damages other
than those specified in preceding Section
11(f)(i)(A.2)(1) (including, without limitation,
Damage to its trains, locomotives and equipment,
whether owned or leased, to Railcars and lading in
its possession or being handled for its account,
and to the property of any others, as well as any
Damage arising from or in connection with the
death of or injury to any persons, including,
without limitation, its own employees) shall be
allocated and paid as provided in Section 11(c)
(CRC Responsibility - Allocation and Insurance);
and 

(3)  Any and all other Damages shall
be allocated as provided in Section 11(b)
(Operators' Joint Responsibility).

(B.1)     Tier Two Damages Defined.  In this
Section 11(f), "Tier Two Damages" shall include (1)
those Damages allocated to Tier Two under Section 11(g)
(Substance Abuse Exceptions) and (2) all of those
Damages in excess of the aggregate Tier One Damages
calculated under Section 11(f)(i)(A.1).

-29-

(B.2)     Allocation of Tier Two Damages. 
Tier Two Damages shall be allocated between or among
the parties hereto in proportion to their respective
fault or negligence in causing the Damage.

(ii) Dispute Resolution.  Any dispute between
or among the parties hereto in determining their respective fault
or negligence in causing the Damage or otherwise relating to
their respective responsibilities for Damage arising out of,
incidental to or occurring in connection with any incident shall
be submitted for resolution by binding arbitration pursuant to
Section 13 (Arbitration).

(iii) Amendment of Certain Amounts.  The $25
million amount referred to in this Section 11(f) may be adjusted
every five years following the date of this Agreement with the
prior approval of all parties, which approval may be given or
refused in the sole discretion of each party.

(g)  Substance Abuse Exceptions.  Each Operator shall
assume and bear all responsibility for Damage to the extent
caused by acts or omissions of any of its employees while under
the influence of drugs or alcohol, and Sections 11(b) (Operators'
Joint Responsibility) and Section 11(f) (Specified Level Damages)
shall not apply to any such Damage.  If, but for the operation of
this Section 11(g), all or any Damages from an incident would
otherwise have been Tier One Damages under Section 11(f)
(Specified Level Damages), the portion of the Damages caused by
acts or omissions of any the employee(s) while under the
influence of drugs or alcohol shall be Tier Two Damages, and
allocated under Section 11(f)(i)(B.2) (Allocation of Tier Two
Damages), and the remaining portion of the Damages from that
incident shall be included in, and allocated under, Tier One or
Tier Two under the otherwise applicable provisions for Section
11(f)(i).

(h)  Transaction Agreement.  Section 2.8 of the
Transaction Agreement shall control any conflict between Sections
11(b) and (c) and said Section 2.8.

(i)  Damages.  As used in this Section 11 only, the
term "Damage(s)" shall exclude:

(i)  Operator Consequential Damages (which
are always borne by the Operator which sustained them); and

(ii) any claim by any party, in its own right,
against any other party for exemplary or punitive damages, but
not for allocation under this Section 11 of exemplary or punitive
damages claimed against that party by a third person not a party
hereto.

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With regard to exemplary and punitive Damages the parties
acknowledge and agree that, with regard to the subject of this
Agreement, the intent and agreement of the parties is that no
party shall bring or recover any claim for exemplary or punitive
damages, in its own right,  against any other party, but that any
party will allocate, in accordance with this Section 11,
exemplary or punitive Damages from any claim against it by a
third person not a party hereto.

Section 12.    No Partnership.  Nothing in this
Agreement shall be construed to establish a partnership or joint
venture between or among CRC, CSXT or NSR or any of their
affiliates or associates.

Section 13.    Arbitration.  Any dispute, controversy
or claim (or any failure by the parties to agree on a matter as
to which this Agreement expressly or implicitly contemplates
subsequent agreement by the parties, except for matters left to
the sole discretion of a party) arising out of or relating to
this Agreement, or the breach, termination or validity hereof,
shall be finally settled through binding arbitration by a sole,
disinterested arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.  The
arbitrator shall be jointly selected by the parties but, if the
parties do not agree on an arbitrator within 30 days after demand
for arbitration is made by a party, they shall request that the
arbitrator be designated by the American Arbitration Association. 
The award of the arbitrator shall be final, binding and
conclusive upon the parties.  Each party to the arbitration shall
pay the compensation, costs, fees and expenses of its own
witnesses, experts and counsel.  The compensation and any costs
and expenses of the arbitrator shall be borne equally by the
parties.  The arbitrator shall have the power to require the
performance of acts found to be required by this Agreement, and
to require the cessation or nonperformance of acts found to be
prohibited by this Agreement.  The arbitrator shall not have the
power to award consequential or punitive damages.  Judgment upon
the award rendered may be entered in any court having
jurisdiction thereof, which court may award appropriate relief at
law or in equity.  All proceedings relating to any such
arbitration, and all testimony, written submissions and award, of
the arbitrator therein, shall be private and confidential as
among the parties, and shall not be disclosed to any other
Person, except as required by law and except as reasonably
necessary to prosecute or defend any judicial action to enforce,
vacate or modify such arbitration award.

Section 14.    Term.  This Agreement shall become
effective as of the date first above written and shall remain in
effect until the twenty-fifth (25th) anniversary of such date,
subject to the right of CSXT and NSR to agree prior to the
twenty-third (23rd) anniversary of such date to extend this
Agreement for a renewal period of five (5) years; and if so
extended, to agree prior to the twenty-eighth (28th) anniversary
of such date to further extend this Agreement for an additional
renewal period of five (5) years (each such period, a "Renewal
Term").

-31-

Section 15.    Force Majeure.  The obligations, other
than payment obligations, of the parties to this Agreement shall
be subject to force majeure (which shall include strikes, riots,
floods, accidents, Acts of God, and other causes or circumstances
beyond the control of the party claiming such force majeure as an
excuse for non-performance), but only as long as, and to the
extent that, such force majeure shall prevent performance of such
obligations.

Section 16.   Entire Agreement.  This Agreement and the
Transaction Agreement, including the other Ancillary Agreements
(as defined in the Transaction Agreement) constitute the entire
agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, except the letter agreement
dated April 8, 1997 between CSX and NSC to the extent such April
8, 1997 letter agreement covers matters not addressed or amended
hereby or in the Transaction Agreement or the Ancillary
Agreements (as defined in the Transaction Agreement); provided
that it is the intent of the parties that this Agreement shall be
an effectuation of such April 8, 1997 letter agreement consistent
with its terms, and that the provisions of this Agreement shall
be interpreted to give effect to such April 8, 1997 letter
agreement; and provided further that, in the event of any
inconsistency between the terms of this Agreement and such April
8, 1997 letter agreement, this Agreement shall prevail.

Section 17.    Amendment and Waiver.  Any amendment to
this Agreement must be in writing and executed and delivered by
CRC, CSXT and NSR, subject to any jurisdiction of the STB.  Any
waiver of any term or provision of this Agreement must be in
writing and executed and delivered by the party entitled to
enforcement of such term or provision.

Section 18.    Severability.  If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, such provision is
intended to be ineffective only to the most limited extent
possible in such context and the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.

Section 19.    Remedies.

(a)  Entitlement to Certain Remedies.  Each party
acknowledges and agrees that the other parties would be
irreparably damaged in the event any of the provisions of this
Agreement were not performed by it in accordance with their
specific terms or were otherwise breached.  It is accordingly
agreed that each party shall be entitled to an injunction or
injunctions to prevent breaches of such provisions and to
specifically enforce such provisions, in addition to any other
remedy to which such party may be entitled, at law or in equity.

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(b)  Preclusion of Certain Remedies.  In no event shall
any party be liable to the other parties for any consequential,
indirect, incidental, punitive or other similar damages
including, but not limited to, lost profits for any breach or
default, or any act or omission arising out of or in any way
relating to this Agreement, under any form or theory of action
whatsoever, whether in contract, tort or otherwise.  The
foregoing is not intended to alter or limit the allocation of
responsibility for Damage as provided in Section 11.

Section 20.    Interpretation.  This Agreement was
drafted jointly by CSXT and NSR, each of which was advised by its
own counsel and other advisors concerning all of the terms and
provisions hereof; accordingly, any ambiguity herein should not
be construed in favor of or against any of them.

Section 21.  Headings.  Headings of Sections and
paragraphs in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of any
term or provision of this Agreement.

Section 22.    Parties.  This Agreement shall inure to
the benefit of and be binding upon CRC, CSXT and NSR and any
successor of any of them by operation of law, and any assignee
agreed to by them in accordance with Section 23, and nothing in
this Agreement is intended or shall be construed to give any
other Person any legal or equitable right, remedy or claim under
or with respect to this Agreement or any term or provision
hereof.

Section 23.  Assignment.  

(a)  Limitation.  Except as provided in Section 23(b),
neither this Agreement (including the documents and instruments
referred to herein) nor any of the rights, interests or
obligations hereunder, shall be assigned by any party, including
by operation of law, without the prior written consent of the
other parties (except to a controlled subsidiary), which consent
may be given or refused in the sole discretion of each party.

(b)  Successor.  Any party without the consent of the
other parties may assign all of its rights and obligations under
this Agreement only to any successor in the event of a merger,
consolidation, sale of all or substantially all its assets (but
only if such sale includes all routes and lines owned by such
party to access the Shared Assets), if such assignee executes and
delivers to the other parties hereto an agreement reasonably
satisfactory in form and substance to such other party under
which such assignee, which is reasonably satisfactory to the
other party, assumes and agrees to perform and discharge all the
obligations and liabilities of the assigning party; provided that
any such assignment shall not relieve the assigning party from
the performance and discharge of such obligations and
liabilities.

-33-

Section 24.  Notices.  Any notice given by CRC, CSXT or
NSR to the others under this Agreement shall be deemed delivered
on the date sent by registered mail, or by such other means as
they may agree, and shall be addressed to them as follows:

(A)  If to CSXT:

Executive Vice President and 
Chief Operating Officer
CSX Transportation, Inc.
500 Water Street, J120
Jacksonville, Florida  32202

(B)  If to NSR:

Senior Vice President Operations
Norfolk Southern Railway Company
Three Commercial Place
Norfolk, Virginia  23510-2191

(C)  If to CRC:

President and Chief Executive Officer
Consolidated Rail Corporation
2001 Market Street
Two Commerce Square
Philadelphia, Pennsylvania  19101

and each of them may from time to time change its address in this
Section 24 by written notice delivered to the others.

Section 25.  Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without regard to principles of
conflicts of laws.

-34-

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in counterparts by their duly authorized
officials as of the day first above written.

CSX TRANSPORTATION, INC.

By:  /s/ Peter J. Shudtz

Title:    Vice President - Law and 
General Counsel - CSX
Corporation, authorized agent
for CSX Transportation, Inc. 

NORFOLK SOUTHERN RAILWAY COMPANY

By:  /s/ J. L. Manetta

Title:    Senior Vice President 
Operation 

CONSOLIDATED RAIL CORPORATION

By:  /s/ Timothy O'Toole

Title:  President

-35-

EXHIBIT A

OPERATING PROTOCOLS

Consolidated Rail Corporation
Shared Assets Area
Terminal Capacity Guidelines

Yard Operations 

o    Cars loaded or empty moving outbound to either parent*
company, which have been made up for train departure at
either a serving merchandise yard, Automotive Terminal or
jointly used Intermodal Facility will be considered
available at the published departure time for scheduled
trains and the later of 4 hours after notice to the parent
or actual available time (set time) for non-scheduled or
extra trains. Cars remaining available for departure in
excess of ten (10) hours will be subject to a charge of
$141.00 per car. Thereafter, for every eight (8) hours that
the same cars continue to remain on track, along with all
other cars of the same block codes within the originating
dispatch yard, will be subject to an additional charge of
$141.00 per car. 

o    Cars loaded or empty assembled for outbound train dispatch
to either parent company will be considered available at
published departure time for such scheduled trains. The
Shared Assets Areas management will provide four (4) hours
advance notice prior to set time on non-scheduled or extra
trains before they will be considered available for
departure. 

o    Management of Shared Assets Areas may refuse an inbound
train of the same category when a specific destination
terminal has been holding more than one (1) intermodal,
automotive, manifest or unit train of a parent for power
and/or crew beyond ten (10) hours of scheduled departure or
availability and conditions within the involved destination
terminal preclude the effective handling of the offered
inbound trains. 

o    Acts of God, Mainline blockages, labor strikes or other
causes to a cessation of consistent service beyond the
control of a parent company will be considered by the
management of the Shared Assets Areas as to the legitimacy
of any assessment. 

o    Opportunities for the Shared Assets Areas management to 

--------------------- 

*The term "parent" means CSXT and/or Norfolk Southern Railway Co.
("NSR") and is not intended to describe the legal relationship
between the parties. 

1 

consolidate - trains for the benefit of a specific Shared
Assets Area operation and the involved parent, as mutually
agreed by the parties, will not result in charges on cars
designated for the annulled train resulting from said
consolidation. 

o    An inventory of hold cars awaiting disposition within any
given Shared Assets Area territory should not exceed thirty
(30) cars per day for either CSXT or NSR individually. The
Shared Assets Areas management may elect to limit receipt of
inbound car flow from the delinquent parent for the affected
Shared Assets Areas territory, in accordance with the
guidelines for holding trains. Any loaded or empty car
including those in unit train consists carrying a "No Bill"
status more than twenty-four (24) hours will be assessed
$10.00 per hour in excess thereof. 

o    Trains inbound to the Shared Assets Area territory must have
proper car and train documents. If this information is
lacking, the Shared Area managers, at their discretion, may
hold trains outside the boundaries of the Shared Assets Area
until proper documentation is received. 

o    Regardless of company of employment, any qualified crew in
the Shared Area may operate any locomotive, regardless of
ownership, in that area for the purposes of
positioning/hostling or movement of light power between
yards. 

Held Trains 

o    In recognition of terminal fluidity and capacity
utilization, the Shared Assets Areas management can require,
in coordination with a parent's command center, an inbound
train to be held outside the boundaries of a Shared Assets
Area. 

-    Such notification must be given with enough notice for
the parent to chamber the train at a location that
minimizes disruption to operations. 

-    Decisions by the Director of Train Operations of Shared
Assets Areas management are final in this regard.
Neither parent may compel the Shared Assets Areas
management to accept trains. 

-    Similarly, the decision to hold out a train other than
temporary holds is recognized as a serious action,
which will be done only after all other alternatives
are exhausted. Data on these actions will be maintained
by Shared Assets Areas management and will be regularly
available for briefing to the Conrail's Board of
Directors at its pleasure. 

2 

Storage 

o    Neither parent company may store or pre-position cars on
Shared Assets Area's tracks, including yard and industrial
tracks to which they have access. Empty cars routed to the
Shared Assets Areas must have a customer destination
assigned, and must be loaded without beginning to accrue
charges as described in Conrail's Demurrage Tariff in effect
on May 1, 1999. When it is determined that cars cannot be
delivered to the customer within 60 hours of arrival, a call
will be made to the parent's operations center. After such a
call is made, except in extraordinary cases, these cars will
then be placed on the parent's first available outbound
train. 

o    CSXT and NS will independently establish such demurrage and
car storage arrangements with customers as each deems
proper. Should customers keep or store cars on SAA tracks
beyond the time at which charges would begin to accrue as
called for in Conrail's Demurrage Tariff in effect on May 1,
1999, then the parent road will be assessed $100 per car per
day to cover the operational cost of congestion and
inefficient use of Shared Assets Areas facilities. 

o    CSXT and NSR recognize that certain customers are currently
provided car storage within the Shared Asset Areas, and that
this storage may be essential to the functioning of the
business of these customers. CSXT, NSR and Shared Assets
will review current pools and by consent of all three
parties approve their makeup and location based on operating
efficiencies. Thereafter pools will be regularly reviewed
for the provision of such storage to avoid congestion. Any
request for additional car storage for any Shared Assets
Area customers must be approved by the Parents, who will
consider the availability of additional space with a view
toward assuring that operations in the Shared Assets Area
remain fluid and will not be affected by providing such car
storage. 

Interchange 

o    CSXT and NSR will not interchange cars to each other within
the Shared Assets Areas locations unless specifically
provided through separate agreements. No open interchanges
have been established except at industries. 

3

Blocking 

o    To ensure the equal and fair use of the Shared Assets
Area capacity by its parent companies, the following car
classification requirements will govern: 

-    Each parent company will be required to block inbound
trains for the Shared Assets Areas. Each parent will
make the number of blocks called for in the split-date
Operating Plan. Failure to comply with inbound blocking
requirements and execute appropriate setoffs (unless
otherwise directed by Shared Assets management) within
the Shared Assets Area will result in an assessment of
$50.00 per loaded or empty car. 

-    Management of the Shared Assets Areas will be required
to block outbound trains. Parent companies will receive
the number of blocks at each Shared Assets Area
terminal that is called for in the split-date Operating
Plan. 

-    Changes to the number of blocks made by or delivered to
a Shared Asset terminal may be made only by mutual
consent of all three parties. 

-    Parent companies, except by joint agreement, may not
compel the Shared Assets Areas management to make a
greater number of blocks at any terminal, beyond the
number of called for in the split-date Operating Plan.

-    Each parent may change the definition of its own
specific blocks originating at a Shared Assets Area
terminal. 

Hours of Service and Recrews 

o    Train crews on parent trains approaching a Shared Assets
Area must have sufficient time to terminate in or exit the
Shared Assets Areas before hours-of-service laws require
them to rest. Sufficient time is considered the trains
scheduled elapsed time to terminate in or pass through the
Shared Assets Area. The Shared Assets Areas management may
grant an exception if the train can make it to its
destination without undue disruption. 

o    Shared Assets Areas shall have the option to provide T&E
relief service for any road train on the hours-of-service
law, regardless of parent company. 

-    Such relief will be provided after coordination with
the appropriate parent's operations center indicating
the involved parent will provide no relief crew. 

4

-    Recrews will be at the sole cost and expense of the
parent whose train is recrewed at full cost plus a $500
surcharge. 

-    If specific trains frequently require recrews, Shared
Assets Areas management may request the parent to
change its schedule or slotting of subject train with
the right to repeatedly hold that train for a recrew
outside the Shared Assets Areas as set forth under the
"held trains" provision until such appropriate
adjustments are made to the non-conforming schedule. 

-    Data on trains recrewed will be maintained by Shared
Assets Areas management and will be regularly available
for briefing to Conrail's Board of Directors at its
pleasure. 

Charges 

o    The charges paid by either owner under these protocols will
be made to a Conrail "passive income" account, which will be
administered by Conrail. 

Changes 

o    These terminal capacity guidelines will be reviewed at the
request of any of the three parties (CSXT, NSR, and/or
CSAO). Proposed changes are subject to the arbitration
provisions of the Shared Asset Area Operating Agreements in
the event CSXT and NSR cannot agree. 

SHARED ASSETS AREA

OPERATING AGREEMENT

FOR

DETROIT

Dated as of June 1, 1999

By and Among

CONSOLIDATED RAIL CORPORATION,

CSX TRANSPORTATION, INC. and

NORFOLK SOUTHERN RAILWAY COMPANY

TABLE OF CONTENTS

Page

Section 1.  Definitions. . . . . . . . . . . . . . . . . . . . .1

(a)  AAR. . . . . . . . . . . . . . . . . . . . . . . . . .1

(b)  Accounting Plan. . . . . . . . . . . . . . . . . . . .1

(c)  Action . . . . . . . . . . . . . . . . . . . . . . . .2

(d)  Adjacent Improvements. . . . . . . . . . . . . . . . .2

(e)  Bill . . . . . . . . . . . . . . . . . . . . . . . . .2

(f)  Billing Month. . . . . . . . . . . . . . . . . . . . .2

(g)  Board of Managers. . . . . . . . . . . . . . . . . . .2

(h)  Budgeted Capital Expenditures. . . . . . . . . . . . .2

(i)  Capital Expenditure Budget . . . . . . . . . . . . . .2

(j)  Capital Expenditure Statement. . . . . . . . . . . . .2

(k)  CRC Administrative Office. . . . . . . . . . . . . . .2

(l)  CRC Board. . . . . . . . . . . . . . . . . . . . . . .2

(m)  CRC Train. . . . . . . . . . . . . . . . . . . . . . .2

(n)  CRC Train Usage Percentage . . . . . . . . . . . . . .2

(o)  CSX. . . . . . . . . . . . . . . . . . . . . . . . . .3

(p)  CSXT Operating Agreement . . . . . . . . . . . . . . .3

(q)  Damage(s). . . . . . . . . . . . . . . . . . . . . . .3

(r)  Dispute Letter . . . . . . . . . . . . . . . . . . . .3

Page

(s)  Excluded Taxes . . . . . . . . . . . . . . . . . . . .3

(t)  Expense Statement. . . . . . . . . . . . . . . . . . .3

(u)  GAAP . . . . . . . . . . . . . . . . . . . . . . . . .3

(v)  General Manager. . . . . . . . . . . . . . . . . . . .3

(w)  Governmental Entity. . . . . . . . . . . . . . . . . .3

(x)  Interest Rental. . . . . . . . . . . . . . . . . . . .3

(y)  Jointly-Operated Facility. . . . . . . . . . . . . . .4

(z)  Lesser Insured Operator. . . . . . . . . . . . . . . .4

(aa) Liabilities. . . . . . . . . . . . . . . . . . . . . .4

(bb) Nonseverable Improvement . . . . . . . . . . . . . . .4

(cc) NSC. . . . . . . . . . . . . . . . . . . . . . . . . .4

(dd) NSR Operating Agreement. . . . . . . . . . . . . . . .4

(ee) NYC. . . . . . . . . . . . . . . . . . . . . . . . . .4

(ff) Operating Budget . . . . . . . . . . . . . . . . . . .4

(gg) Operating Plan . . . . . . . . . . . . . . . . . . . .5

(hh) Operator . . . . . . . . . . . . . . . . . . . . . . .5

(ii) Operator Consequential Damages . . . . . . . . . . . .5

(jj) Operator's Expense Percentage. . . . . . . . . . . . .5

(kk) Operator's Facility. . . . . . . . . . . . . . . . . .5

(ll) Operator Train . . . . . . . . . . . . . . . . . . . .5

-ii-

Page

(mm) Person . . . . . . . . . . . . . . . . . . . . . . . .5

(nn) Program Maintenance. . . . . . . . . . . . . . . . . .5

(oo) Program Maintenance Proposal . . . . . . . . . . . . .5

(pp) PRR. . . . . . . . . . . . . . . . . . . . . . . . . .5

(qq) Railcar. . . . . . . . . . . . . . . . . . . . . . . .6

(rr) Reimbursable Expenses. . . . . . . . . . . . . . . . .6

(ss) Renewal Term . . . . . . . . . . . . . . . . . . . . .6

(tt) RoadRailer . . . . . . . . . . . . . . . . . . . . . .6

(uu) Routine Maintenance. . . . . . . . . . . . . . . . . .6

(vv) Severable Improvement. . . . . . . . . . . . . . . . .6

(ww) Shared Asset Value . . . . . . . . . . . . . . . . . .6

(xx) Shared Assets. . . . . . . . . . . . . . . . . . . . .6

(yy) Shared Assets Area . . . . . . . . . . . . . . . . . .7

(zz) STB. . . . . . . . . . . . . . . . . . . . . . . . . .7

(aaa) Switching and Yard Services . . . . . . . . . . . . . 7

(bbb) Tax or Taxes. . . . . . . . . . . . . . . . . . . . . 7

(ccc) Temporary Services. . . . . . . . . . . . . . . . . . 7

(ddd) Tier One Damages. . . . . . . . . . . . . . . . . . . 7

(eee) Tier Two Damages. . . . . . . . . . . . . . . . . . . 7

(fff) Total Train Usage Percentage. . . . . . . . . . . . . 8 

-iii-

Page

(ggg) Transaction Agreement . . . . . . . . . . . . . . . . 8

(hhh) Usage Statement . . . . . . . . . . . . . . . . . . . 8

(iii) USOA. . . . . . . . . . . . . . . . . . . . . . . . . 8

(jjj) Valuation Date. . . . . . . . . . . . . . . . . . . . 8

(kkk) Zone. . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 2.  Management . . . . . . . . . . . . . . . . . . . . .8

(a)  CRC Board. . . . . . . . . . . . . . . . . . . . . . .8

(b)  General Manager. . . . . . . . . . . . . . . . . . . .9

(c)  Employees. . . . . . . . . . . . . . . . . . . . . . 10

(d)  CRC Responsibilities . . . . . . . . . . . . . . . . 10

(e)  Impartiality . . . . . . . . . . . . . . . . . . . . 10

(f)  Independent Contractors. . . . . . . . . . . . . . . 10

Section 3.  Operations . . . . . . . . . . . . . . . . . . . . 10

(a)  Operator's Rights. . . . . . . . . . . . . . . . . . 10

(b)  Use. . . . . . . . . . . . . . . . . . . . . . . . . 11

(c)  Grant of Rights. . . . . . . . . . . . . . . . . . . 11

(d)  Switching and Yard Services. . . . . . . . . . . . . 12

(e)  Operating Protocols. . . . . . . . . . . . . . . . . 12

(f)  Freight Traffic to Remain in Account of Each Operator12

(g)  Rates, Routes and Divisions. . . . . . . . . . . . . 13

-iv-

Page

(h)  Shipper Bills. . . . . . . . . . . . . . . . . . . . 13

(i)  Service Responsibility . . . . . . . . . . . . . . . 13

(j)  Dispatching. . . . . . . . . . . . . . . . . . . . . 13

(k)  Railcar Weighing . . . . . . . . . . . . . . . . . . 14

(l)  Freight Claims . . . . . . . . . . . . . . . . . . . 14

(m)  Freight Car Repairs. . . . . . . . . . . . . . . . . 14

(n)  Train Services . . . . . . . . . . . . . . . . . . . 15

(o)  Wrecking Service . . . . . . . . . . . . . . . . . . 15

(p)  Admission of Third Parties . . . . . . . . . . . . . 15

Section 4.  Equipment and Properties . . . . . . . . . . . . . 15

(a)  Procurement. . . . . . . . . . . . . . . . . . . . . 15

(b)  Contribution of Locomotives by Operators . . . . . . 15

(c)  Locomotive Service and Repair. . . . . . . . . . . . 16

Section 5.  Maintenance. . . . . . . . . . . . . . . . . . . . 16

(a)  Routine Maintenance. . . . . . . . . . . . . . . . . 16

(b)  CRC Program Maintenance. . . . . . . . . . . . . . . 17

(c)  Maintenance Standards. . . . . . . . . . . . . . . . 17

Section 6.  Capital Improvements . . . . . . . . . . . . . . . 18

(a)  Proposed Projects. . . . . . . . . . . . . . . . . . 18

(b)  CRC Board Approved Projects. . . . . . . . . . . . . 18

-v-

Page

(c)  Nonseverable Improvement Projects. . . . . . . . . . 18

(d)  Severable Improvement Projects . . . . . . . . . . . 18

(e)  Capital Improvements as Shared Assets. . . . . . . . 19

(f)  Title to Severable Improvements. . . . . . . . . . . 19

(g)  Noninterference. . . . . . . . . . . . . . . . . . . 19

(h)  Switch Connections . . . . . . . . . . . . . . . . . 20

(i)  Adjacent Improvements. . . . . . . . . . . . . . . . 20

(j)  Operator's Facilities. . . . . . . . . . . . . . . . 20

Section 7.  Accounting . . . . . . . . . . . . . . . . . . . . 21

(a)  Books of Record and Account. . . . . . . . . . . . . 21

(b)  Financial Statements . . . . . . . . . . . . . . . . 21

Section 8.  Costs and Budgets. . . . . . . . . . . . . . . . . 21

(a)  CRC Costs. . . . . . . . . . . . . . . . . . . . . . 21

(b)  Employee Cost Reimbursement. . . . . . . . . . . . . 21

(c)  Capital Expenditure Budget . . . . . . . . . . . . . 21

(d)  Operating Budget . . . . . . . . . . . . . . . . . . 22

Section 9.  Cost Sharing . . . . . . . . . . . . . . . . . . . 22

(a)  Accounting Plan. . . . . . . . . . . . . . . . . . . 22

(b)  Usage Statement. . . . . . . . . . . . . . . . . . . 24

(c)  Expense Statement. . . . . . . . . . . . . . . . . . 24

-vi-

Page

(d)  Capital Expenditure Statement. . . . . . . . . . . . 24

(e)  Bills. . . . . . . . . . . . . . . . . . . . . . . . 25

(f)  Payment. . . . . . . . . . . . . . . . . . . . . . . 25

(g)  Disputed Bills . . . . . . . . . . . . . . . . . . . 25

Section 10.  Access. . . . . . . . . . . . . . . . . . . . . . 26

Section 11.  Liability . . . . . . . . . . . . . . . . . . . . 26

(a)  Operators' Sole Responsibility . . . . . . . . . . . 26

(b)  Operators' Joint Responsibility. . . . . . . . . . . 26

(c)  CRC Responsibility - Allocation and Insurance. . . . 27

(d)  Process. . . . . . . . . . . . . . . . . . . . . . . 28

(e)  Indemnification. . . . . . . . . . . . . . . . . . . 28

(f)  Specified Level Damages. . . . . . . . . . . . . . . 28

(g)  Substance Abuse Exception. . . . . . . . . . . . . . 30

(h)  Transaction Agreement. . . . . . . . . . . . . . . . 30

(i)  Damages. . . . . . . . . . . . . . . . . . . . . . . 30

Section 12.  No Partnership. . . . . . . . . . . . . . . . . . 31

Section 13.  Arbitration . . . . . . . . . . . . . . . . . . . 31

Section 14.  Term. . . . . . . . . . . . . . . . . . . . . . . 31

Section 15.  Force Majeure . . . . . . . . . . . . . . . . . . 32

Section 16.  Entire Agreement. . . . . . . . . . . . . . . . . 32

-vii-

Page

Section 17.  Amendment and Waiver. . . . . . . . . . . . . . . 32

Section 18.  Severability. . . . . . . . . . . . . . . . . . . 32

Section 19.  Remedies. . . . . . . . . . . . . . . . . . . . . 32

(a)  Entitlement to Certain Remedies. . . . . . . . . . . 32

(b)  Preclusion of Certain Remedies . . . . . . . . . . . 33

Section 20.  Interpretation. . . . . . . . . . . . . . . . . . 33

Section 21.  Headings. . . . . . . . . . . . . . . . . . . . . 33

Section 22.  Parties . . . . . . . . . . . . . . . . . . . . . 33

Section 23.  Assignment. . . . . . . . . . . . . . . . . . . . 33

(a)  Limitation . . . . . . . . . . . . . . . . . . . . . 33

(b)  Successor. . . . . . . . . . . . . . . . . . . . . . 33

Section 24.  Notices . . . . . . . . . . . . . . . . . . . . . 34

Section 25.  Governing Law . . . . . . . . . . . . . . . . . . 34

EXHIBIT A - Operating Protocols 

-viii-

SHARED ASSETS AREA

OPERATING AGREEMENT

FOR

DETROIT

This SHARED ASSETS AREA OPERATING AGREEMENT
("Agreement") dated as of June 1, 1999, is by and among
Consolidated Rail Corporation ("CRC"), CSX Transportation, Inc.
("CSXT") and Norfolk Southern Railway Company ("NSR").

W I T N E S S E T H:

WHEREAS, all capitalized terms in this Agreement have
the respective meanings set forth in Section 1; and

WHEREAS, CSX owns all of the common stock of and
controls CSXT, NSC owns all of the common stock of and controls
NSR, and CSX and NSC jointly control CRC; and

WHEREAS, CSXT, NSR and CRC desire that the Shared
Assets shall be owned, operated and maintained by CRC and used by
or for the exclusive benefit of CSXT and NSR, and that CSXT and
NSR shall each have full and equal rights to use the Shared
Assets to provide competitive railway freight transportation
services to, from and between all places within the Shared Assets
Area.

NOW, THEREFORE, in consideration of the premises,
covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is
acknowledged, CRC, CSXT and NSR hereby agree as follows:

Section 1.     Definitions.   For purposes of this
Agreement, the following terms have the following meanings:

(a)  "AAR" means the Association of American Railroads.

(b)  "Accounting Plan" means the plan of accounting
adopted pursuant to Section 9(a).

(c)  "Action" means any action, claim, suit,
arbitration, inquiry, subpoena, discovery request, proceeding or
investigation by or before any Governmental Entity.

(d)  "Adjacent Improvement" means a capital
improvement, such as a spur, which provides access to customers
and local industries and which (i) is on property which is not
part of the Shared Assets and (ii) will be directly (without
intermediate connection to another railroad) attached to trackage
included within the Shared Assets.

(e)  "Bill" means a bill delivered by CRC to an
Operator pursuant to Section 9(e).

(f)  "Billing Month" means the calendar month for which
information is shown on a Usage Statement.

(g)  "Board of Managers" means any Board of Managers
which may be appointed by the CRC Board pursuant to Section
2(a)(ii).

(h)  "Budgeted Capital Expenditures" means capital
expenditures included on a Capital Expenditure Budget which has
been approved by the CRC Board.

(i)  "Capital Expenditure Budget" means a written
budget specifying proposed capital expenditures to be made by CRC
with respect to Shared Assets for the periods of time specified
in such budget, and the proposed sources of the capital required
to make such expenditures.

(j)  "Capital Expenditure Statement" means a statement
delivered by CRC pursuant to Section 9(d).

(k)  "CRC Administrative Office" means the
administrative office of CRC located at Philadelphia,
Pennsylvania, or at such other place designated by CRC in a
notice it delivers to CSXT and NSR.

(l)  "CRC Board" means the Board of Directors of CRC.

(m)  "CRC Train" means a train operated by CRC and
performing services pursuant to Sections 3(c) or (d).

(n)  "CRC Train Usage Percentage" means for an Operator
for a particular time period and Zone, the percentage obtained by
multiplying 100 by the quotient obtained by dividing (i) the
total number of loaded and empty Railcars in the account of such
Operator in CRC Trains, by (ii) the total number of loaded and
empty Railcars in the accounts of both Operators in CRC Trains,
during such time period in such Zone.

-2-

(o)  "CSX" means CSX Corporation.

(p)  "CSXT Operating Agreement" means the agreement,
dated June 1, 1999, between CSXT and NYC providing for the use,
operation and maintenance by CSXT of certain assets owned or
leased by NYC.

(q)  "Damage(s)" means all assessments, fines, losses,
damages, liabilities, and costs and expenses related thereto,
including, without limitation, interest, penalties and attorneys'
and consultants' fees and also expressly including, without
limitation, all liabilities arising after the effective date
hereof under the Federal Employers Liability Act, as amended, and
environmental laws.

(r)  "Dispute Letter" means a letter delivered by an
Operator pursuant to Section 9(g)(i).

(s)  "Excluded Taxes" means:  (A) all Taxes based, in
whole or in part, on net income or gross income (including,
without limitation, any minimum tax) of CRC or which are in
substitution for, or relieve CRC from, any Tax based upon or
measured by CRC's net income or gross income, together with any
interest, penalties, additions to tax or additional amounts that
may become payable in respect thereof; (B) business and
occupation taxes, and gross receipts taxes (unless in the nature
of a sales tax) of CRC and Taxes based upon the equity interests
of CRC; and (C) interest, fines and penalties to the extent due
to the acts or omissions of CRC in connection with such Excluded
Taxes.

(t)  "Expense Statement" means a statement delivered by
CRC pursuant to Section 9(c).

(u)  "GAAP" at any time means generally accepted
accounting principles in effect at such time.

(v)  "General Manager" means the chief executive
officer of CRC.

(w)  "Governmental Entity" means any federal, state,
local or foreign court, administrative agency or commission or
other governmental or regulatory authority or commission or any
arbitration tribunal.

(x)  "Interest Rental" means an amount representing a
fair periodic return on the Shared Asset Value as of the most
recent preceding Valuation Date as determined by such appraiser
as CSXT and NSR may select.  The Interest Rental for the first
six years of this Agreement shall be as follows:

-3-

June 1, 1999 through May 31, 2000 -- $6 million
June 1, 2000 through May 31, 2001 -- $7 million
June 1, 2001 through May 31, 2002 -- $7 million
June 1, 2002 through May 31, 2003 -- $8 million
June 1, 2003 through May 31, 2004 -- $8 million
June 1, 2004 through May 31, 2005 -- $9 million

(y)  "Jointly-Operated Facility" means a facility or
yard which is operated by or for a rail carrier and one or more
other rail carriers.

(z)  "Lesser Insured Operator" means the Operator which
has the lesser (as between the Operators) amount of available
insurance benefits as specified in Section 11(f)(i)(A.1)(2).

(aa) "Liabilities" means any and all debts, liabilities
and obligations of any kind whatsoever, whether or not accrued,
contingent or reflected on a balance sheet, known or unknown,
absolute, determined, determinable or otherwise, including,
without limitation, those arising under any law, rule,
regulation, action, order or consent decree of any Governmental
Entity or any judgment in any Action of any kind or award of any
arbitrator of any kind and those arising under any contract.

(bb) "Nonseverable Improvement" means a capital
improvement which is integral to the operation of the Shared
Assets and is not readily removable.

(cc) "NSC" means Norfolk Southern Corporation.

(dd) "NSR Operating Agreement" means the agreement,
dated June 1, 1999, between NSR and PRR providing for the use,
operation and maintenance by NSR of certain assets owned or
leased by PRR.

(ee) "NYC" means New York Central Lines LLC, a Delaware
limited liability company.

(ff) "Operating Budget" means a written budget
specifying estimated operating revenues and expenses and working
capital requirements of CRC with respect to the Shared Assets for
the periods of time specified in such budget.

-4-

(gg) "Operating Plan" means the plan for road train and
local train schedules and classifications and related operating
protocols for the Shared Assets Area as may be agreed to, and
modified from time to time, by CRC, CSXT and NSR.

(hh) "Operator" means either CSXT or NSR.

(ii) "Operator Consequential Damages" means
consequential, indirect, incidental or other similar damage,
injury or loss to an Operator.

(jj) "Operator's Expense Percentage" means for an
Operator the percentage obtained by multiplying 100 by the
quotient obtained by dividing (i) the total Reimbursable Expenses
(except for Interest Rental, Taxes, insurance costs and any other
CRC expenses not apportioned between the Operators on a usage
basis) payable by such Operator for a particular period, by (ii)
the total Reimbursable Expenses (except for Interest Rental,
Taxes, insurance costs and any other CRC expenses not apportioned
between the Operators on a usage basis) payable by both Operators
for such period.

(kk) "Operator's Facility" means a present, expanded or
new facility or yard which is owned or controlled exclusively by
an Operator.

(ll) "Operator Train" means a train operated by an
Operator and performing services in accordance with Sections 3(a)
and 3(c).

(mm) "Person" means any individual, corporation,
association, partnership (general or limited), joint venture,
trust, estate, limited liability company or other legal entity or
organization.

(nn) "Program Maintenance" means scheduled renewal of
track, signals, structures and other fixed facilities performed
by system or production gangs assembled to accomplish a specific
task or tasks.

(oo) "Program Maintenance Proposal" means a written
proposal prepared by CRC, CSXT or NSR which describes specific
Program Maintenance which the preparer of such proposal believes
is necessary or desirable to maintain the Shared Assets in a safe
operating condition to permit or facilitate (i) the performance
by CRC of its services pursuant to this Agreement, or (ii) the
use of Shared Assets by the Operators, and which specifies a
budget for such Program Maintenance.

(pp) "PRR" means Pennsylvania Lines LLC, a Delaware
limited liability company.

-5-

(qq) "Railcar" means, except as otherwise provided in
the Accounting Plan, each railroad freight car, locomotive,
caboose or other equipment (including RoadRailer  or comparable
bimodal freight hauling equipment in the account of either
Operator) furnished in substitution of railroad equipment, loaded
or empty, which an Operator originates, terminates, switches or
moves on or overhead to any Shared Assets, except that (i) a
single standard flat car not exceeding 96 feet in length
(excluding articulated flat cars) shall count as a single
Railcar, (ii) freight rail cars consisting of articulated units
bearing AAR Car Type Codes "Q" and "S" shall count as multiple
Railcars based on the second (numeric) digit of the Car Type Code
for such articulated units (by way of example, a car consisting
of AAR Car Type Code "S566" would be counted as five Railcars)
(or corresponding car type codes and digits if the AAR Car Type
Codes should be modified at any time during the term of this
Agreement), and (iii) a single unit of RoadRailer  equipment (or
comparable bimodal freight hauling equipment in the account of
either Operator) shall count as one-half (1/2) of a Railcar.

(rr) "Reimbursable Expenses" means the expenses shown
on an Expense Statement, minus the revenues, if any, shown on
such Expense Statement.    

(ss) "Renewal Term" means the term of extension of this
Agreement under Section 14.

(tt) "RoadRailer " means bimodal freight hauling
equipment manufactured by or under license from "RoadRailer ", a
division of Wabash National Corporation, and capable of movement
over the highway when pulled by a tractor and on the rails using
locomotive power.

(uu) "Routine Maintenance" means day-to-day repairs to
track, signals, structures and other fixed facilities that are
not part of Program Maintenance.

(vv) "Severable Improvement" means a capital
improvement which is not a Nonseverable Improvement.

(ww) "Shared Asset Value" means at any date the value
of the Shared Assets, except leases and other contract rights
granted by either Operator to CRC, as of the most recent
preceding Valuation Date as determined by such appraiser as CSXT
and NSR may select.

(xx) "Shared Assets" means all tracks, lands,
easements, rights of way, structures, facilities, appurtenances
and rights related thereto, which CRC owns, leases or otherwise
has the right to operate over (including those segments over
which CRC or an Operator possesses operating rights pursuant to
Section 3(c)), and which are used for railway purposes in the
Shared Assets Area, including the properties, rights, equipment,
inventory and supplies, whether owned or leased, described or
referred to in Item 3A of Schedule 1 (including Attachments I and
II) of the Transaction Agreement, but excluding Operator's
Facilities.

-6-

(yy) "Shared Assets Area" means the geographical area
comprising the Shared Assets and Operator Facilities and
Jointly-Operated Facilities directly (without intermediate
connection to another railroad) attached to trackage included
within the Shared Assets, which is designated as the "Detroit"
Shared Assets Area.

(zz) "STB" means the Surface Transportation Board or,
if there shall be no Surface Transportation Board, any federal
agency which is charged with the function of approving
combinations by rail carriers or persons controlling them, or of
other arrangements between rail carriers, and granting exemptions
from other laws with respect thereto or regulating other specific
functions with respect to the context in which such term is
employed or any successor entity thereof.

(aaa)     "Switching and Yard Services" means the
service of classifying and assembling trains for the account of
an Operator in Jointly-Operated Facilities; movement of loaded or
empty Railcars between yards and local industries; and switching
trains and Railcars at yards, terminals and local industries.

(bbb)     "Tax" or "Taxes" means taxes of any kind,
levies or other similar assessments, customs, duties, imposts,
charges or fees, including, without limitation, income taxes,
gross receipts, ad valorem, excise, real or personal property,
sales, use, payroll, withholding, unemployment, transfer and
gains taxes or other governmental taxes imposed by or payable to
the United States, or any state, local or foreign government or
subdivision thereof, and in each instance such term shall include
any interest, penalties or additions to tax attributable to such
Tax or Taxes.

(ccc)     "Temporary Services" means services provided
by CSXT or NSR employees in the operation, maintenance or repair
of any Shared Asset on an emergency basis with the prior approval
of the General Manager or senior CRC employee who is directly
responsible for the operation or maintenance of such Shared
Asset.

(ddd)     "Tier One Damages" means those Damages
defined as Tier One Damages in Section 11(f)(i)(A.1).

(eee)     "Tier Two Damages" means those Damages
defined as Tier Two Damages in Section 11(f)(i)(B.1).

-7-

(fff)     "Total Train Usage Percentage" means for an
Operator for a particular time period and Zone, the percentage
obtained by multiplying 100 by the quotient obtained by dividing
(i) the sum of the total number of loaded and empty Railcars in
the account of such Operator in CRC Trains and the total number
of loaded and empty Railcars in the account of such Operator in
Operator Trains, by (ii) the sum of the total number of loaded
and empty Railcars in the accounts of both Operators in CRC
Trains and the total number of loaded and empty Railcars in the
accounts of both Operators in Operator Trains, during such period
in such Zone.

(ggg)     "Transaction Agreement" means the Transaction
Agreement dated as of June 10, 1997, among CSX, CSXT, NSC, NSR,
Conrail Inc., CRC and CRR Holdings LLC.

(hhh)     "Usage Statement" means a statement delivered
by CRC pursuant to Section 9(b).

(iii)     "USOA" means the uniform system of accounts
prescribed for class I railroads by the STB or any successor
federal agency that shall succeed to the functions of the STB in
prescribing uniform systems of accounts for rail carriers;
provided, that if there shall be no STB and no such federal
agency, USOA shall mean such system of accounts as is generally
maintained by rail carriers consistent with GAAP as applied in
the rail industry.

(jjj)     "Valuation Date" means the date of this
Agreement and thereafter the sixth (6th), twelfth (12th),
eighteenth (18th) and twenty-fourth (24th) anniversaries of the
date of this Agreement and the first day of each Renewal Term.

(kkk)     "Zone" means a designated geographic section,
or designated facilities, of the Shared Assets Area as
established and described in the Accounting Plan.

Section 2.     Management.

(a)  CRC Board.

(i)  The CRC Board shall manage the Shared Assets. 

(ii) The CRC Board may appoint a Board of
Managers, a committee, a CRC officer or other persons to have
such duties and authority with respect to the Shared Assets as
may be assigned to them from time to time by the CRC Board.

(iii)  Any Board of Managers appointed by the CRC
Board shall be comprised of an equal number of individuals (and
their successors) nominated by CSXT and nominated by NSR. 

-8-

(iv) The CRC Board shall remove from any Board of
Managers (A) at the direction of CSXT, any person who was
nominated by CSXT, and (B) at the direction of NSR, any person
who was nominated by NSR.

(b)  General Manager.

(i)  The General Manager shall not at any time
have been an employee of CSXT or NSR or any of their affiliates
unless otherwise agreed to by both Operators, and shall be
appointed by the CRC Board.

(ii) The General Manager shall manage and
supervise the ownership, operation, maintenance and use of the
Shared Assets in accordance with directives and policies of the
CRC Board and this Agreement, subject to the authority of the CRC
Board, and through such Shared Assets Area superintendents and
other Shared Assets Area executives as are appointed by the
General Manager with the approval of the CRC Board.  The General
Manager shall report to the CRC Board.  The General Manager shall
perform his or her responsibilities on an impartial and
non-discriminatory basis as between CSXT and NSR.

(iii)  The General Manager may be removed
from office prior to the expiration of his or her term at any
time by a majority of the CRC Board for any reason or for no
reason.   Upon the written request of CSXT or NSR to the CRC
Board, the General Manager shall also be removed from office
prior to the expiration of his or her term for serious
misconduct, which shall mean conduct that would make it
unreasonable to retain the General Manager, including but not
limited to conduct such as:  (A) violation of applicable alcohol
or drug use policies, (B) fraud, (C) embezzlement or other act of
dishonesty against CRC, CSXT or NSR or any of their customers or
suppliers, (D) activities willfully undertaken by the General
Manager which reflect adversely upon the reputation of CRC, CSXT
or NSR, (E) refusal to perform or substantial neglect of the
responsibilities assigned to the General Manager, (F) failure to
perform his or her responsibilities on an impartial and
non-discriminatory basis as between CSXT and NSR after 45 days'
written notice from an Operator describing such failure, (G) any
violation of any law or rule or regulation of any Governmental
Entity which results in serious adverse consequences to CRC, CSXT
or NSR, or (H) any material violation of any directive or policy
of the CRC Board or any statutory or common law duty of loyalty
to CRC.  If a majority of the CRC Board in response to such a
request of CSXT or NSR fails to direct the removal of the General
Manager, the dispute may be submitted by either Operator for
resolution by binding arbitration pursuant to Section 13,
provided, however, that in any such arbitration to resolve a
dispute under this Section 2(b)(iii), the hearing shall commence
no later than 30 days following the appointment of the arbitrator
and the award shall be rendered no later than 30 days following
the completion of the hearing.

-9-

(c)  Employees.  The General Manager and all persons
who operate and maintain the Shared Assets shall be employees of
CRC, except for CSXT or NSR employees who provide Temporary
Services and employees of Operators or independent contractors
which provide services pursuant to contracts or arrangements in
accordance with Section 2(f).

(d)  CRC Responsibilities.  CRC shall be responsible
for safely and efficiently operating, controlling and managing
the use of the Shared Assets, impartially as between CSXT and NSR
in accordance with directives and policies of the CRC Board, and
with responsible business practices which are consistent with
those used by CSXT and NSR in the operation of their businesses,
and are designed to achieve the lowest cost of the safe and
efficient operation, use and maintenance of the Shared Assets.

(e)  Impartiality.  CRC shall perform all of its
obligations pursuant to this Agreement on an impartial and
non-discriminatory basis as between CSXT and NSR, giving no
preference to either of them in providing Switching and Yard
Services, in the control of train dispatching over the Shared
Assets, or in any other way whatsoever.

(f)  Independent Contractors.  CRC may, at least to the
extent it may do so immediately prior to the date of this
Agreement, procure the use of equipment or facilities owned by
independent contractors, or services provided by independent
contractors (using their own employees), with respect to the
operation, maintenance and use of Shared Assets, including,
without limitation, accounting, computer and other administrative
services, and the furnishing of equipment and mechanical
services.  For purposes of this Section 2(f), independent
contractors may include CSXT or NSR.

Section 3.     Operations.

(a)  Operator's Rights.  CRC hereby grants to each
Operator full operating rights to operate its own trains (staffed
by a road crew) and equipment, with its own crews and equipment
and at its own expense, over any and all tracks included in the
Shared Assets, and to use all of the Shared Assets in connection
with the operation of such trains or equipment, for the following
purposes:

(i)  Movement by such Operator of trains (staffed
by a road crew) through the Shared Assets Area between two
geographical locations outside the Shared Assets Area;

-10-

(ii) Movement by such Operator of trains (staffed
by a road crew) between a geographical location outside the
Shared Assets Area and an Operator's Facility or a
Jointly-Operated Facility which is within the Shared Assets Area;

(iii) Movement by such Operator of trains (staffed
by a road crew) between a geographical location outside the
Shared Assets Area and local industries which are within the
Shared Assets Area;

(iv) Movement by such Operator of trains (staffed
by a road crew) between Operator's Facilities or Jointly-Operated
Facilities which are within the Shared Assets Area and local
industries which are within the Shared Assets Area;

(v)  Movement, handling, pick-up, set off,
switching, transfer and interchange of Railcars, blocks of
Railcars or trains (staffed by a road crew) to, from or at local
industries, Operator's Facilities or Jointly-Operated Facilities,
in connection with movements described in Sections 3(a)(i)
through (iv), to the extent provided for in the Operating Plan
agreed to and modified by the parties from time to time; and

(vi) such other purposes as may be agreed
upon by CRC, CSXT and NSR.

(b)  Use.  The crews of each train operated by an
Operator on Shared Assets shall be qualified under and shall
comply with applicable laws and regulations as well as the safety
and operating rules of CRC.

(c)  Grant of Rights.  Subject to reasonable
compensation and other terms established in the Accounting Plan,
and in each case for the purpose of Switching and Yard Services
performed by CRC pursuant to Section 3(d) and movement of
Operator Trains pursuant to Section 3(a):

(i)  CSXT hereby grants to CRC and NSR overhead
operating rights to operate CRC trains and NSR trains,
respectively, with their own crews, over such CSXT line segments
access to and use of which by CRC and NSR are necessary to
effectuate the train operations and services contemplated by
this Agreement.

(ii) NSR hereby grants to CRC and CSXT overhead
operating rights to operate CRC trains and CSXT trains, with
their own crews, over such NSR line segments access to and use of
which by CRC and CSXT are necessary to effectuate the train
operations and services contemplated by this Agreement.

-11-

When required by the CSXT Operating Agreement and the NSR
Operating Agreement, CSXT and NSR have obtained the consent of
NYC and PRR, respectively, for the grant of rights referred to in
this Section 3(c).  Notwithstanding any other provision of this
Agreement, each rail line segment identified in this Section 3(c)
shall be dispatched, maintained, operated and controlled by the
Operator which granted the rights with respect to such segment,
provided that such dispatching, maintenance, operation and
control shall be performed on an impartial and non-discriminatory
basis as between the Operators.  Trains operated by an Operator
pursuant to operating rights granted under this Section 3(c)
shall be governed by and subject to the Operating Plan.

(d)  Switching and Yard Services.

(i)  At the request of and as agent for each
Operator, CRC shall perform Switching and Yard Services required
by such Operator within the Shared Assets Area, including without
limitation any such services which such Operator may be
responsible for performing or having performed for a shipper or
other Person.

(ii) Except as otherwise provided in Section 3(a),
and other than within an Operator's Facility, neither Operator
shall with its own equipment or with its own crews perform any
Switching and Yard Service within the Shared Assets Area for
itself or for any other Person.

(e)  Operating Protocols.  From time to time, NSR, CSXT
and CRC may mutually establish Shared Assets Area Operating
Plans, General Dispatching Guidelines, Car Movement Guidelines,
Switching/Blocking Requirements and other operating protocols and
rules concerning operations within the Shared Assets Area, for
the purpose of assuring timely train operations, fluid movement
of all railcars, equal and impartial handling of Operators'
trains and railcars, minimization in the number of empty cars in
the Shared Assets Area, and overall operating efficiency in the
Shared Assets Area.  The current Operating Protocols have been
agreed upon by NSR, CSXT and CRC and are set forth as Exhibit A
to this Agreement.  The Operating Protocols may be modified only
upon mutual agreement of all parties.

(f)  Freight Traffic To Remain in Account of Each
Operator.  Switching and Yard Services and other services
performed by CRC for either Operator under this Agreement shall
be performed as agent for, and for the account of, such Operator. 
All freight traffic and Railcars handled within the Shared Assets
Area, including traffic and Railcars handled by CSXT or NSR
pursuant to Sections 3(a) and 3(c), and traffic and Railcars
handled by CRC pursuant to Sections 3(c) and 3(d), shall at all
times remain in the waybill, car hire and revenue accounts of
either CSXT or NSR.

-12-

(g)  Rates, Routes and Divisions.  Each Operator shall
have exclusive and independent authority to establish all rates,
charges, service terms, routes and divisions, and to collect all
freight revenues, relating to freight traffic transported for its
account to, from and within the Shared Assets Area (except those
Shared Assets Area line segments over which such Operator
possesses only overhead operating rights pursuant to Section
3(c)).  CRC shall not participate or appear in any rates, routes
or divisions relating to any freight traffic whatsoever to, from
and within the Shared Assets Area, and shall not be entitled to
or responsible for any freight charges relating to such freight
traffic.  CRC shall not quote or establish any rate or service
terms applicable to freight transportation services to, from and
within the Shared Assets Area, enter into transportation
contracts with any Person (other than an Operator) for freight
transportation services to, from and within the Shared Assets
Area, or undertake to perform any for-hire transportation
services directly, in its own name or for its own account for any
Person (other than an Operator).  The transfer or exchange of
freight traffic between CSXT and CRC, and between NSR and CRC,
within the Shared Assets Area shall not constitute an interchange
of freight traffic or freight rail cars for purposes of
determining rates, routes, divisions or interline settlements
relating to any such freight traffic.

(h)  Shipper Bills.  Neither Operator shall inform the
other or CRC of any rates or charges to shippers to which such
Operator provides freight transportation services in the Shared
Assets Area, and no copies of any shipper bill of lading or
waybill shall be given by such Operator to the other or to CRC
except to the extent that such documents are exchanged between
rail carriers in the usual course of interline shipments and
documenting.

(i)  Service Responsibility.  Each Operator shall at
all times be solely responsible for obtaining, supplying and
routing Railcars other than locomotives, for all Railcar
ownership costs (including per-diem charges and mileage
allowances) and for providing service to its shippers within the
Shared Assets Area pursuant to its transportation contracts or
other prices with its shippers, including interline accounting,
and all car hire and demurrage or detention charges associated
with Railcars in its account within the Shared Assets Area.

(j)  Dispatching.  CRC shall, from local locations or a
location agreed upon by CSXT and NSR, control the dispatching,
scheduling and movement of, and Switching and Yard Services for,
all trains (including Operator Trains and CRC Trains) over the
Shared Assets (other than Operator's Facilities, unless requested
to do so by the Operator thereof) without any discrimination at
any time in favor of or against either Operator, but in
accordance with written policies and priorities for categories of
freight, type of Railcar, size of train and train destinations
established from time to time by the General Manager and approved
by the CRC Board to achieve the maximum efficiency and lowest
aggregate Shared Asset costs of CRC and the Operators, provided,
however, that CSXT shall control the dispatching, scheduling,
movement and Switching and Yard Services for all CRC Trains and
Operator Trains over the following Shared Asset rail segments:

-13-

(A)  the current CRC Lincoln Secondary between
Carleton, MI and Hold Out Signal at Lincoln Yard;

and NSR shall control the dispatching, scheduling, movement and
Switching and Yard Services for all CRC Trains and Operator
Trains over the following Shared Asset rail segments:

(B)  the current CRC Detroit Line between
Trenton, MI and CP YD;

(C)  the current CRC Junction Yard Secondary
between CP YD and CP Townline, including New Wye Runner; and

(D)  the current CRC Lincoln Running Track between
Ecorse Jct. and the connection with NSR.

Dispatching, scheduling and movement of trains performed by
either Operator under this Section 3(j) shall conform to the same
standards of non-discrimination, written policies and priorities
applicable to the control of such functions by CRC at other
locations included within the Shared Assets Area.

(k)  Railcar Weighing.  All Railcars for the account of
an Operator which originate or terminate on Shared Assets and
which require weighing shall be weighed by and at the expense of
such Operator or its customer, and at no cost to CRC.

(l)  Freight Claims.  The Operators shall agree among
themselves on the most fair, practical and efficient arrangements
for handling and administering freight loss and damage claims
with the intent that (i) each Operator shall be responsible for
losses occurring to lading either in its possession or in the
possession of CRC for the account of such Operator, and (ii) the
Operators shall follow relevant AAR rules and formulas in
providing for the allocation of losses which are either of
undetermined origin or in Railcars handled in interline service
by or for the account of both Operators.

(m)  Freight Car Repairs.  If any Railcars are bad
ordered while on the Shared Assets and must be set out from a CRC
Train or Operator Train, CRC shall promptly return such Railcars
to the Operator in whose account such Railcars reside in
accordance with such Operator's instructions.  CRC shall furnish,
at such Operator's expense, required labor and material to
perform, and shall perform, light repairs on such bad ordered
Railcars as necessary to make such Railcars legal and safe for
movement.  CRC shall bill such Operator for the costs of such
light repairs in accordance with the Field and Office Manuals of
the AAR Interchange Rules in effect at the time such repairs are
performed.  CRC shall bill directly to and collect from the
applicable Operator charges for repair items that, under the AAR
Interchange Rules, are the responsibility of the Railcar owner
and/or the handling line carriers.  Each Operator may rebill
charges for repair items that are the responsibility of the
Railcar owner and/or the handling line carriers.  If any such bad
ordered Railcar cannot be made legal and safe for movement by the
performance of light repairs, CRC shall, at such Operator's
expense, arrange for appropriate removal of the affected Railcar
in accordance with such Operator's instructions.

-14-

(n)  Train Services.  Actual costs incurred by CRC to
provide special services (other than services otherwise provided
for in this Agreement) at the request of an Operator with respect
to trains, locomotives and Railcars for the account of such
Operator, shall be paid by such Operator to CRC, provided that
the costs and terms of similar special services rendered to each
Operator shall be without discrimination between Operators as to
cost and terms, giving due allowance to any differences in the
costs of providing such services.

(o)  Wrecking Service.  Wrecking service or wrecking
train service required in connection with services contemplated
by this Agreement shall be provided by CRC (or its designee) as
promptly as possible.

(p)  Admission of Third Parties. Notwithstanding any
other provision in this Agreement, no party may permit any Person
(other than a party hereto) to have access to, operate over or
use any Shared Asset without the prior approval of all parties,
which approval may be given or refused in the sole discretion of
each party.

Section 4.     Equipment and Properties.  

(a)  Procurement.  CRC shall procure, operate and
maintain all equipment, real property rights and improvements
thereon which are reasonably required for (i) CRC to operate the
Shared Assets, and (ii) the Operators to move trains over the
Shared Assets, in each case in accordance with this Agreement.

(b)  Contribution of Locomotives by Operators.  Upon
reasonable request by the General Manager, the Operators shall
furnish to CRC, through full-service lease or other mutually
satisfactory arrangements, locomotives reasonably required by CRC
for the performance of its obligations under this Agreement.  The
respective obligations of each Operator to furnish such
locomotives shall be based, insofar as reasonably practicable,
upon the Operator's CRC Train Usage Percentage during the
calendar month preceding such request for the Shared Assets Area
or Zone in which such locomotives are needed by CRC.  It is the
parties' intention that (i) the arrangements pursuant to which
such locomotives are furnished by either Operator to CRC shall
provide that heavy maintenance, repair and overhaul shall be the
responsibility of such Operator, (ii) locomotives furnished by
either Operator to CRC may, in order to permit maintenance,
repair and overhaul of such locomotive units, be exchanged for
other locomotive units furnished by such Operator, and (iii) the
respective obligations of each Operator to furnish such
locomotives upon request by the General Manager shall be adjusted
on at least a monthly or more frequent basis.

-15-

(c)  Locomotive Service and Repairs.  At the request of
an Operator, CRC shall furnish required labor and material to
perform, and shall perform, fueling and servicing of any
Operator's locomotive, as well as light repairs on any Operator's
locomotive as necessary to make such locomotive legal and safe
for movement.  CRC shall bill such Operator (or other owner of
such locomotive) for the costs of such fueling, servicing and
light repairs in accordance with industry practice in effect at
the time such fueling, services or repairs are performed.  If any
such locomotive cannot be made safe for movement by the
performance of light repairs, CRC shall, at the expense of such
Operator (or other owner of such locomotive), arrange for
appropriate removal of such locomotive in accordance with such
Operator's instructions.                

Section 5.     Maintenance.

(a)  Routine Maintenance.

(i)  CRC shall be responsible for Routine
Maintenance when necessary or desirable to maintain the Shared
Assets in a safe operating condition, and to permit and
facilitate (A) the performance by CRC of its obligations pursuant
to this Agreement, and (B) the use of Shared Assets by the
Operators in accordance with this Agreement.

(ii) CSXT or NSR, directly or through their
respective affiliates, may perform the work which CRC performed
prior to the date of this Agreement when (A) CRC does not possess
the skills needed for such work, (B) CRC lacks the necessary
employees to do such work in a timely fashion, or (C) CRC does
not possess the equipment needed to do such work.  CRC and the
party performing the work shall agree to a reasonable fee for
such work prior to performance.  CRC, CSXT and NSR may agree to
have additional work performed either by CSXT, NSR or their
affiliates.

-16-

(b)  CRC Program Maintenance.

(i)  The General Manager shall prepare and
submit to the CRC Board a Program Maintenance plan concurrently
with the submission of an Operating Budget and the Capital
Expenditure Budget to the CRC Board.

(ii) Any of CRC, CSXT or NSR may at any time
deliver a Program Maintenance Proposal to the other two of them
and to the General Manager and each member of the CRC Board.  

(iii) The CRC Board shall either (A) approve any
or all of such Program Maintenance Proposals and plan with such
changes as it deems appropriate, include the costs thereof in a
pending or amended Capital Expenditure Budget, and direct the
General Manager to cause the maintenance described in approved
Program Maintenance Proposals or plan to be performed in
accordance with Sections 5(b)(iv) and (v), or (B) disapprove any
or all of such Program Maintenance Proposals or plan.

(iv) Program Maintenance shall be the
responsibility of CSXT and NSR pursuant to contracts or
arrangements with CRC, and CRC shall not perform Program
Maintenance, except for Program Maintenance which can be provided
by Persons other than CSXT or NSR at a lower cost to CRC than
the CSXT or NSR cost thereof.

(v)  CRC shall select, to perform each
Program Maintenance project or program, the Operator which CRC
reasonably determines will perform such project or program at the
least cost to CRC consistent with safe and efficient operations,
and taking into account scheduling considerations, based on
written proposals submitted by each Operator.

(c)  Maintenance Standards.  Unless otherwise
authorized by the CRC Board, the General Manager shall prepare
and submit to the CRC Board proposals (including the Program
Maintenance plan submitted pursuant to Section 5(b)) for the
performance of such Routine Maintenance and Program Maintenance
as is reasonably necessary to keep and maintain the Shared Assets
substantially in their condition as of the date of this
Agreement.  If the CRC Board fails either to approve or
disapprove by majority vote any such proposal within 45 days
after it was submitted to the CRC Board, the disagreement over
the propriety or need for any of the Routine Maintenance or
Program Maintenance included in such proposal may be submitted by
either Operator for resolution by binding arbitration pursuant to
Section 13.

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Section 6.     Capital Improvements.  Except as
provided in Section 5, all capital improvements involving Shared
Assets shall be governed by the following provisions:

(a)  Proposed Projects.  Either Operator, CRC or the
General Manager may propose to the CRC Board from time to time
capital improvement projects.  Each such project shall be
reviewed by the CRC Board, which may approve or disapprove by
majority vote, or fail to approve, such projects.

(b)  CRC Board Approved Projects.  Each Operator shall
be responsible for an equal share of the initial budgeted funding
of each capital improvement project which has been approved by
the CRC Board and is included in an approved Capital Expenditure
Budget, except as provided in Section 6(c).  A final accounting
shall be made to adjust the initial budgeted funding to the
actual project cost as specified in the Accounting Plan.

(c)  Nonseverable Improvement Projects.

(i)  At the written request of an Operator
delivered to the other, each Operator shall, within 45 days of
the delivery of such request, submit to an arbitrator in
accordance with Section 13 a written proposal with respect to a
Nonseverable Improvement project which was neither approved nor
disapproved by majority vote by the CRC Board within 45 days
after such project was proposed to the CRC Board (A) describing
any changes which such Operator proposes be made to such project
and specifying a schedule, budget and allocations between the
Operators of initial capital costs of such Nonseverable
Improvement, or (B) proposing that it not be made.

(ii) The arbitrator receiving the proposals
referred to in Section 6(c)(i) (A) shall consider (1) the degree,
if any, to which the construction, operation and use of such
Nonseverable Improvement would impair or interfere with the use
of Shared Assets by CRC or either Operator, or conflict with any
pending capital improvements included in an approved Capital
Expenditure Budget, and (2) the budget and allocations between
the Operators of initial capital costs of such Nonseverable
Improvement as proposed by each Operator, and (B) shall determine
within 45 days of such receipt which of such proposals shall be
implemented, or that such Nonseverable Improvement shall not be
made, and the CRC Board shall approve any proposal which such
arbitrator determines shall be implemented.

(d)  Severable Improvement Projects.

(i)  Each Operator shall have the unilateral right
to construct and exclusively fund any Severable Improvement which
was not approved by the CRC Board.

-18-

(ii)  Each Severable Improvement funded
exclusively by an Operator shall be used exclusively by that
Operator, which shall be solely responsible for maintaining such
Severable Improvement at its own expense, until such time that
the other Operator gives written notice that it desires also
to use such Severable Improvement, stating the amount which such
other Operator is prepared to pay to the Operator which initially
funded such Severable Improvement for the right to use such
Severable Improvement. 

(iii) If the Operators are unable to agree on the
amount of such payment within 45 days after the notice referred
to in Section 6(d)(ii) was given, then at the written request of
an Operator delivered to the other after 45 days but before 60
days after such notice was given, each Operator shall, within 15
days of the delivery of such request, submit to an arbitrator in
accordance with Section 13 a written statement setting forth the
proposed payment by the second Operator, and the arbitrator shall
within 45 days of such receipt determine which of such proposed
amounts shall apply, which shall be binding on both Operators and
paid promptly.

(iv) Such Severable Improvement shall become a
Nonseverable Improvement at the time such second Operator pays
the amount so determined and, thereafter, maintenance and other
costs associated with the operation of such improvement shall be
apportioned between the Operators as provided in this Agreement.

(e)  Capital Improvements as Shared Assets.  Upon
completion, all capital improvements approved by the CRC Board
and all Nonseverable Improvements shall become part of the Shared
Assets owned by CRC subject to all provisions of this Agreement,
free and clear of all Operator liens.

(f)  Title to Severable Improvements.  Each Operator
shall retain title to all Severable Improvements exclusively
funded by such Operator.  At any time during the term of this
Agreement, an Operator may remove (at its sole expense) any
Severable Improvement which it exclusively funded, provided that
such Operator has repaired (at its sole expense) any damage to a
Shared Asset caused by such removal and has restored the related
Shared Assets substantially to their condition at the time such
Severable Improvements were made.  In the event an Operator shall
not have removed any Severable Improvement to which the Operator
shall have title prior to the expiration or termination of this
Agreement, title to such Severable Improvement shall vest in CRC,
free and clear of all Operator liens, upon such expiration or
termination.

(g)  Noninterference.  The construction, operation and
use of Severable Improvements by an Operator shall not impair or
interfere with the use of Shared Assets by CRC or the other
Operator, nor shall any Severable Improvement conflict with any
pending capital improvements included in an approved Capital
Expenditure Budget.

-19-

(h)  Switch Connections.  CRC shall, upon the written
request of one or both Operators, provide for switch and turnout
connections from Shared Asset tracks to a private sidetrack owned
by a shipper or other Person, if such request:

(i) includes the commitment of the Operator or
both Operators making such request, or 

(ii) is accompanied by a written undertaking from
such shipper or other Person, in each case satisfactory to CRC,
to pay to CRC all costs incurred from time to time by CRC to
provide for such switch and turnout connections within 30 days
after it delivers a bill for such costs to such Operator,
Operators, shipper or other Person.

(i)  Adjacent Improvements.

(i)  In the event an Operator constructs,
acquires or funds the cost of an Adjacent Improvement (whether or
not such Adjacent Improvement is ultimately owned by such
Operator), the other Operator shall be entitled to share usage of
such Adjacent Improvement by giving written notice stating the
amount which such other Operator is prepared to pay to the first
Operator for such right.  If the Operators are unable to agree on
the amount of such payment within 45 days after such notice was
given, then at the written request of an Operator delivered to
the other after 45 days but before 60 days after such notice was
given, the matter shall be submitted for resolution by binding
arbitration pursuant to Section 13 and the provisions of Section
6(d)(iii) shall apply to determine the amount of such payment.

(ii) After the second Operator pays the amount so
determined, if the first Operator owns or has a property interest
in the Adjacent Improvement, the provisions of this Section 6
shall be applied as if such improvement were a Nonseverable
Improvement.  If a shipper or another Person unrelated to the
first Operator owns such Adjacent Improvement, the second
Operator shall be entitled to share fully the rights of the first
Operator in connection with such Adjacent Improvement in
consideration of the initial payment.

(j)  Operator's Facilities.  The foregoing provisions
of this Section 6 shall not apply to any capital improvement
(including, but not limited to, a transloading facility or
automotive ramp) within an Operator's Facility.

-20-

Section 7.     Accounting. 

(a)  Books of Record and Account.  CRC shall keep
proper books of record and account, in which full and correct
entries shall be made of all CRC transactions, costs, expenses
and revenues in accordance with GAAP and the USOA, as modified by
the Accounting Plan.  All expense and revenue transactions
related to the Shared Assets Area shall be readily identifiable
by distinct accounting codes.

(b)  Financial Statements.  CRC shall deliver to each
Operator (i) within 30 days after the end of each calendar month,
a summary income statement and a summary balance sheet showing as
of the last day of and for such calendar month, major categories
of CRC revenue, expense, assets and liabilities, (ii) within 30
days after the last day of each CRC fiscal quarter, interim
financial statements as of and for the fiscal quarter ended on
such day, similar to statements described in Rule 10-01 of
Regulation S-X under the Securities Exchange Act of 1934, as
amended, as modified by the Accounting Plan, and (iii) within 30
days after the last day of each CRC fiscal year, statements of
income and cash flow and a balance sheet as of and for the fiscal
year ended on such day, prepared in accordance with GAAP and the
USOA, as modified by the Accounting Plan.

Section 8.     Costs and Budgets.

(a)  CRC Costs.  CRC shall pay (and, except for
Excluded Taxes, CSXT and NSR shall, pursuant to Section 9,
reimburse CRC for) all of the costs and expenses to maintain its
ownership of the Shared Assets and to operate and maintain the
Shared Assets, including but not limited to all Taxes and
assessments, licenses, permits and any other governmental
authorizations required to own, operate and maintain the Shared
Assets, the principal of and interest and premium, if any, on,
and all other costs of, its indebtedness and all other costs of
its capital.

(b)  Employee Cost Reimbursement.  CRC shall reimburse
CSXT and NSR for the wages, pro rata portion of fringe benefits,
other direct employment costs (including additives) and other
actual employee-related costs of any CSXT or NSR employee,
respectively, who provides Temporary Services.

(c)  Capital Expenditure Budget.

(i)  The General Manager shall prepare and
submit to each member of the CRC Board at least 30 days prior to
the beginning of each CRC fiscal year, a Capital Expenditure
Budget for such fiscal year, specifying for such year the
schedule of Program Maintenance and Shared Asset capital
improvements to be performed and constructed for the benefit of
both Operators during such fiscal year and the months therein
during which such expenditures are proposed to be made, for
approval, or modification and approval, by the CRC Board.

-21-

(ii) The General Manager shall not permit any
capital expenditure to be made by CRC, CSXT or NSR except in
accordance with the Capital Expenditure Budget in effect from
time to time, Severable Improvements exclusively funded by an
Operator and emergency capital expenditures made (A) to preserve,
or to mitigate a serious diminution in, the value and usefulness
of a Shared Asset to CRC, CSXT and NSR, or (B) to prevent or
mitigate a serious disruption in the operation and use of the
Shared Assets by or for CRC, CSXT or NSR.

(iii)  Any Capital Expenditure Budget may be
amended in writing at any time by the CRC Board.

(d)  Operating Budget.

(i)  The General Manager shall prepare and submit
to each member of the CRC Board at least 30 days prior to the
beginning of each fiscal year of CRC, an Operating Budget for
such fiscal year showing the budget amounts of revenues and
expenses for each month during such fiscal year, for approval, or
modification and approval, by the CRC Board.

(ii) The General Manager shall use all reasonable
efforts to prevent CRC expenses with respect to Shared Assets for
a period from exceeding the amounts shown on the Operating Budget
for such period.

(iii)  The General Manager shall give prompt
written notice to each member of the CRC Board of any actual or,
in the judgment of the General Manager, probable, material change
in the revenues, expenses or working capital requirements shown
on the Operating Budget for any period.

(iv) Any Operating Budget may be amended in
writing at any time by the CRC Board.

Section 9.     Cost Sharing.

(a)  Accounting Plan.  The parties shall develop and
implement a written plan of accounting containing a detailed
description, by category of cost and location, of the costs
associated with the management and operation of the Shared Assets
Area and the method by which such costs shall be fairly and
properly apportioned among the parties.  Such plan of accounting
may include separate accounting and sharing of costs for
particular Zones, and shall conform to the following general
principles:

-22-

(i)  Forty two percent (42%) of Interest Rental
shall be apportioned to CSXT and fifty eight percent (58%) of
Interest Rental shall be apportioned to NSR;

(ii) Locomotive ownership, lease, fueling,
light repair and servicing costs incurred by CRC within the
Shared Assets Area or each Zone (except costs incurred by CRC and
charged directly to an Operator pursuant to Section 4(c)) shall
be apportioned between the Operators on the basis of the CRC
Train Usage Percentages;

(iii)  Crew compensation and other crewcosts
incurred by CRC within the Shared Assets Area or each Zone with
respect to CRC Trains shall be apportioned between the Operators
on the basis of the CRC Train Usage Percentages;

(iv) General and administrative, supervisory
and overhead expenses incurred by CRC within the Shared Assets
Area or for functions related to the Shared Assets Area shall be
apportioned between the Operators on the basis of the CRC Train
Usage Percentages;

(v)  Dispatching and train control costs
(including, without limitation, labor, equipment, materials and
maintenance expenses) incurred by CRC with respect to the Shared
Assets Area shall be apportioned between the Operators on the
basis of the CRC Train Usage Percentages;

(vi) Police and other costs incurred by CRC
with respect to security within the Shared Assets Area shall be
apportioned between the Operators on the basis of the CRC Train
Usage Percentages;

(vii)  Damage paid by CRC pursuant to Section
11(c) shall be apportioned between the Operators in accordance
with Section 11(b);

(viii)  All other costs incurred by CRC with
respect to the Shared Assets Area or each Zone (except Taxes and
insurance) shall be apportioned between the Operators on the
basis of the Total Train Usage Percentages;

(ix) Taxes (other than Excluded Taxes) incurred by
CRC with respect to the Shared Assets Area or each Zone shall be
apportioned between the Operators on the basis of the Operator's
Expense Percentages for the period to which such Taxes relate;
and 

-23-

(x)  Insurance costs incurred by CRC with respect
to Shared Assets within the Shared Assets Area or each Zone shall
be apportioned between the Operators on the basis of the
Operator's Expense Percentages for the period to which such
insurance costs relate;

If the parties are unable to agree on the terms and provisions of
the Accounting Plan, such disagreement may be submitted by either
Operator for resolution by binding arbitration pursuant to
Section 13.

(b)  Usage Statement.  CRC shall deliver to each
Operator prior to the last day of each calendar month, a written
statement showing for the prior Billing Month:

(i)  the total number of loaded and empty Railcars
in the account of each Operator in CRC Trains which performed
Switching and Yard Services or operated directly between customer
facilities in each Zone; 

(ii) the total number of loaded and empty Railcars
moved by or for such Operator in Operator Trains which operated
overhead or directly to Jointly-Operated Facilities, Operators'
Facilities or customer facilities in each Zone;

(iii) the calculation of the CRC Train Usage
Percentage and the Total Train Usage Percentage for each Operator
for each Zone,

and (A) all Railcars in a train shall be deemed to be on Shared
Assets when the first or last Railcar of such train is on Shared
Assets and (B) each time that a Railcar is removed from or added
to a train in the Shared Assets Area shall constitute a separate
movement of such Railcar.

(c)  Expense Statement.  Concurrently with the delivery
of each Usage Statement to the Operators, CRC shall deliver to
the Operators a statement showing (i) the expenses incurred by
CRC to own, operate and maintain the Shared Assets during the
Billing Month, (ii) the revenues, if any, derived by CRC from the
ownership and operation of the Shared Assets during such Billing
Month, and (iii) the Reimbursable Expenses for such Billing
Month, in each case computed in accordance with GAAP and the
USOA, as modified by the Accounting Plan.

(d)  Capital Expenditure Statement.  Concurrently with
the delivery of each Usage Statement to the Operators, CRC shall
deliver to the Operators a statement showing the estimated
Budgeted Capital Expenditures for the calendar month immediately
succeeding the calendar month in which such statement is
delivered.

-24-

(e)  Bills.  Concurrently with the delivery to the
Operators of a Usage Statement for a Billing Month, CRC shall
deliver to each Operator a bill (a "Bill") showing for such
Billing Month:

(i)  one hundred and two percent (102%) of the
amount of each Reimbursable Expense apportioned to such Operator
for such Billing Month under the Accounting Plan;

(ii) one-twelfth of fifty percent (50%) of
the annual amount of Budgeted Capital Expenditures approved by
the CRC Board; and

(iii) one-twelfth of the Interest Rental
apportioned to such Operator.

(f)  Payment.  Each Operator shall pay to CRC the
amount shown on each Bill as being payable by such Operator, on
or before the 30th day after the date of such Bill regardless of
whether or not such Operator disputes the accuracy of any amount
or calculation shown on such Bill.

(g)  Disputed Bills.

(i)  Any dispute by an Operator of the accuracy of
any amount or calculation shown on any Bill shall be described
and specified in reasonable detail in a Dispute Letter from such
Operator to CRC and the other Operator within two years after the
date of such Bill.

(ii) Any amounts or calculations shown on any Bill
which are not disputed in accordance with Section 9(g)(i) shall
conclusively be deemed to be accurate and shall be binding on
each Operator and CRC.

(iii) CRC and both Operators shall promptly
endeavor to resolve the disputes described in each Dispute
Letter, and if they fail to agree to a resolution of such
disputes within 60 days of the delivery of such Dispute Letter to
CRC, then the firm of independent public accountants which has
been engaged as auditors for CRC shall be engaged to resolve such
disputes in accordance with GAAP and the USOA, as modified by the
Accounting Plan, and the written resolution of such disputes
signed by such accounting firm shall be binding on each Operator
and CRC.

(iv) Any adjustments to Bills which result
from the resolution of Dispute Letter disputes shall be reflected
as charges or credits on the first Bills delivered by CRC to the
Operators after such disputes have been resolved.

-25-

(v)  The fees in connection with the resolution of
any Dispute Letter disputes of the accounting firm which has been
engaged as auditor for CRC shall be paid fifty percent (50%) by
CSXT and fifty percent (50%) by NSR.

Section 10.    Access.  CRC shall give to each Operator
during normal CRC Administrative Office business hours, access to
inspect and make copies of any and all books of record and
accounts relating to this Agreement, all of which shall be
maintained by CRC at the CRC Administrative Office.

Section 11.    Liability.  Except as otherwise provided
in Section 3(l) (Freight Claims), Section 11(f) (Specified Level
Damages) and Section 11(g) (Substance Abuse Exceptions), the
responsibility between and among CRC, CSXT and NSR for all Damage
arising out of, incidental to or occurring in connection with
this Agreement shall be apportioned without consideration of
fault or negligence of any kind or degree in accordance with the
remaining provisions of this Section 11.  The provisions of this
Section 11 are intended to inure only to the benefit of the
parties hereto and their corporate successors and affiliates, and
not to create any benefits for any third parties.

(a)  Operators' Sole Responsibility.  Except as
otherwise provided in Section 11(f) (Specified Level Damages) and
Section 11(g) (Substance Abuse Exceptions), each Operator shall
assume and bear all responsibility for Damage to its own trains,
locomotives and equipment, to Railcars and lading in its
possession or being handled for its account and for the death of
or injury to its own employees.

(b)  Operators' Joint Responsibility.

(i)  Train Usage.  Except as otherwise provided in
(1) Section 11(b)(ii) (First Year), (2) Section 11(a)
(Operators' Sole Responsibility), (3) Section 11(c)(i) (CRC
Damages Generally), (4) Section 11(c)(ii)(B) (No Reallocation for
Insurance), (5) Section 11(f) (Specified Level Damages), and
(6)Section 11(g) (Substance Abuse Exceptions), and subject to
Section 11(c)(ii)(A) (Net of Insurance), all Damage shall be
apportioned between the Operators in proportion to their
respective Total Train Usage Percentages in the Zone in which the
incident giving rise to such Damage occurred for the 12 calendar
month period immediately preceding the incident giving rise to
such Damage.

(ii)  First Year.  If an incident giving rise to
Damage for which the Operators are jointly responsible under
Section 11(b)(i) (Train Usage) occurs before June 1, 2000,
responsibility for such Damage shall be borne equally by the
Operators, with each being liable for one-half (1/2) of the
damages.

-26-

(c)  CRC Responsibility - Allocation and Insurance.

(i)  CRC Damages Generally.  Except as otherwise
provided in this Section 11(c), all Damages incurred by CRC,
including, without limitation, those Damages apportioned to CRC
under Section 11(f) (Specified Level Damages) shall be CRC
expenses, allocated as provided in Section 11(b) (Operators'
Joint Responsibility), and included in Expense Statements charged
to the Operators.

(ii) (A)  Net of Insurance.

(1)  Notwithstanding any other provision
in this Agreement (but subject to Section
11(c)(ii)(B) (No Reallocation for Insurance)), all
Damages (including without limitation, loss or
destruction of, or damage to, CRC's own property)
charged to the Operators, under the Expense
Statements or otherwise, shall be net of any CRC
insurance.  It is the intent of the parties (a)
for CRC to look first to any insurance proceeds
available to it before attempting to recover any
such Damages from the Operators and (b) for the
Operators' obligation to make direct payment to
CRC not to include any obligation to make direct
payment for any Damages covered by insurance
procured by or on behalf of CRC.

(2)  If and to the extent that CRC is an
insured under, or otherwise provided coverage
under, an insurance policy or policies each of
which provides coverage for both CRC and one
Operator but not the other Operator, and
regardless of whether two or more of these
policies shall be in existence or have different
deductible-retention amounts and/or limits of
recovery, then the amount of insurance proceeds
deemed "available" under Section 11(c)(ii)(A)(1)
to which CRC shall look before either Operator
shall have any obligation for direct payment
shall, as to each Operator, be the maximum
available limit of the insurance providing
coverage for both that Operator and
CRC.

(B)  No Reallocation for Insurance. When part
of the apportioned Damage will be satisfied from
insurance coverage under this Section 11(c), and
part paid directly by the Operator, the insured
portion of the Damage shall be apportioned among
or between CRC and the Operators (and consequently
between or among their insurers) in the same
manner and amounts as it would have been
apportioned if the loss were not net of insurance. 
If any such allocation results in one party
hereto suffering a greater uninsured loss than the
other(s) because of differing deductibles or
self-retentions, that difference in coverage shall
not be a basis for any reapportionment or
reallocation of Damage.

-27-

(d)  Process.  Each Operator shall be responsible for
the payment, handling, administration and disposition of all
Damage for which it bears exclusive responsibility under Section
11(a) (Operators' Sole Responsibility), and both Operators shall
have joint responsibility for the payment, handling,
administration and disposition of all Damage for which they are
jointly responsible under Section 11(b) (Operators' Joint
Responsibility) and Section 11(c) (CRC Responsibility -
Allocation and Insurance).  In assigning joint responsibility to
both Operators, it is not the intent of this Agreement that the
Operators will actually act jointly, but rather that the
Operators will agree between themselves on the most practical and
efficient arrangements for handling, administering, and disposing
of Damage for which they bear joint responsibility, with the
objective of eliminating unnecessary duplication of effort and
minimizing overall costs.

(e)  Indemnification.  Each party to this Agreement
covenants and agrees to (i) fully indemnify and save harmless the
other parties to this Agreement from and against any payments
which are the responsibility of such party under this Agreement,
and all expenses, including attorneys' fees and expenses and
other expenses of any court or regulatory proceeding, incurred by
such other parties in defending any claim that they are liable
for such payments, and (ii) defend such other parties against
such claims with counsel selected by such party and reasonably
acceptable to such other parties.

(f)  Specified Level Damages.

(i)  Damages Amount.  Section 11(a) (Operators'
Sole Responsibility) and Section 11(b) (Operators' Joint
Responsibility) shall apply directly only when the total amount
of all Damages resulting from a single incident is $25 million or
less.  Responsibility for Damages resulting from a single
incident for which Damages exceed $25 million shall be allocated
as stated in this Section 11(f)(i).

(A.1)     Tier One Damages Defined. In this
Section 11(f), "Tier One Damages" for any incident occurring
during and between June 1, 1999 and May 31, 2000 shall,
except as otherwise provided in Section 11(g) (Substance
Abuse Exceptions), include the greater of:

(1)  $25 million of Damages; or

(2)  the lowest amount of Damages which,
when allocated among all parties, results in
an allocation to either Operator of Damages
in an amount equal to all insurance benefits
available to that Operator (called the
"Lesser Insured Operator") which has the
lesser (as between the Operators) amount of
insurance benefits available to it,
including, without limitation, insurance to
which CRC looks under Section 11(c) (CRC
Responsibility - Allocation and Insurance). 
In determining insurance benefits available
to the Lesser Insured Operator, both property
and liability insurance shall be considered
but (I) only to the extent benefits are
actually available in connection with that
incident and (II) they shall be calculated
separately (i.e., property insurance benefits
shall not be considered in any determination
of available liability insurance benefits and
vice versa).

-28-

In this Section 11(f), "Tier One Damages" for any
incident occurring on or after June 1, 2000 shall,
except as otherwise provided in Section 11(g)
(Substance Abuse Exceptions), include only the
first $25 million of Damages incurred by the
parties, unless otherwise agreed by the parties.

(A.2)     Allocation of Tier One Damages. 
Tier
One Damages shall be allocated among the parties as follows:

(1)  Any Damage for which each
Operator
would otherwise be solely responsible under
Section 11(a) (Operators' Sole
Responsibility) shall be allocated as
provided in Section 11(a);

(2)  Any and all CRC Damages other
than
those specified in preceding Section
11(f)(i)(A.2)(1) (including, without
limitation, Damage to its trains, locomotives
and equipment, whether owned or leased, to
Railcars and lading in its possession or
being handled for its account, and to the
property of any others, as well as any Damage
arising from or in connection with the death
of or injury to any persons, including,
without limitation, its own employees) shall
be allocated and paid as provided in Section
11(c) (CRC Responsibility - Allocation and
Insurance); and

(3)  Any and all other Damages
shall be
allocated as provided in Section 11(b)
(Operators' Joint Responsibility).

(B.1)     Tier Two Damages Defined. In this
Section 11(f), "Tier Two Damages" shall include (1) those
Damages allocated to Tier Two under Section 11(g) (Substance
Abuse Exceptions) and (2) all of those Damages in excess of
the aggregate Tier One Damages calculated under Section
11(f)(i)(A.1).

-29-

(B.2)     Allocation of Tier Two Damages. 
Tier
Two Damages shall be allocated between or among the parties
hereto in proportion to their respective fault or negligence
in causing the Damage.

(ii) Dispute Resolution.  Any dispute between or
among the parties hereto in determining their respective fault or
negligence in causing the Damage or otherwise relating to their
respective responsibilities for Damage arising out of, incidental
to or occurring in connection with any incident shall be
submitted for resolution by binding arbitration pursuant to
Section 13 (Arbitration).

(iii)  Amendment of Certain Amounts.  The $25
million amount referred to in this Section 11(f) may be adjusted
every five years following the date of this Agreement with the
prior approval of all parties, which approval may be given or
refused in the sole discretion of each party.

(g)  Substance Abuse Exceptions.  Each Operator shall
assume and bear all responsibility for Damage to the extent
caused by acts or omissions of any of its employees while under
the influence of drugs or alcohol, and Sections 11(b) (Operators'
Joint Responsibility) and Section 11(f) (Specified Level Damages)
shall not apply to any such Damage.  If, but for the operation of
this Section 11(g), all or any Damages from an incident would
otherwise have been Tier One Damages under Section 11(f)
(Specified Level Damages), the portion of the Damages caused by
acts or omissions of any the employee(s) while under the
influence of drugs or alcohol shall be Tier Two Damages, and
allocated under Section 11(f)(i)(B.2) (Allocation of Tier Two
Damages), and the remaining portion of the Damages from that
incident shall be included in, and allocated under, Tier One or
Tier Two under the otherwise applicable provisions for Section
11(f)(i).

(h)  Transaction Agreement.  Section 2.8 of the
Transaction Agreement shall control any conflict between Sections
11(b) and (c) and said Section 2.8.

(i)  Damages.  As used in this Section 11 only, the
term "Damage(s)" shall exclude:

(i)  Operator Consequential Damages (which are
always borne by the Operator which sustained them); and

(ii) any claim by any party, in its own right,
against any other party for exemplary or punitive damages, but
not for allocation under this Section 11 of exemplary or punitive
damages claimed against that party by a third person not a party
hereto.

-30-

With regard to exemplary and punitive Damages the parties
acknowledge and agree that, with regard to the subject of this
Agreement, the intent and agreement of the parties is that no
party shall bring or recover any claim for exemplary or punitive
damages, in its own right,  against any other party, but that any
party will allocate, in accordance with this Section 11,
exemplary or punitive Damages from any claim against it by a
third person not a party hereto.

Section 12.    No Partnership.  Nothing in this
Agreement shall be construed to establish a partnership or joint
venture between or among CRC, CSXT or NSR or any of their
affiliates or associates.

Section 13.    Arbitration.  Any dispute, controversy
or claim (or any failure by the parties to agree on a matter as
to which this Agreement expressly or implicitly contemplates
subsequent agreement by the parties, except for matters left to
the sole discretion of a party) arising out of or relating to
this Agreement, or the breach, termination or validity hereof,
shall be finally settled through binding arbitration by a sole,
disinterested arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.  The
arbitrator shall be jointly selected by the parties but, if the
parties do not agree on an arbitrator within 30 days after demand
for arbitration is made by a party, they shall request that the
arbitrator be designated by the American Arbitration Association. 
The award of the arbitrator shall be final, binding and
conclusive upon the parties.  Each party to the arbitration shall
pay the compensation, costs, fees and expenses of its own
witnesses, experts and counsel.  The compensation and any costs
and expenses of the arbitrator shall be borne equally by the
parties.  The arbitrator shall have the power to require the
performance of acts found to be required by this Agreement, and
to require the cessation or nonperformance of acts found to be
prohibited by this Agreement.  The arbitrator shall not have the
power to award consequential or punitive damages.  Judgment upon
the award rendered may be entered in any court having
jurisdiction thereof, which court may award appropriate relief at
law or in equity.  All proceedings relating to any such
arbitration, and all testimony, written submissions and award, of
the arbitrator therein, shall be private and confidential as
among the parties, and shall not be disclosed to any other
Person, except as required by law and except as reasonably
necessary to prosecute or defend any judicial action to enforce,
vacate or modify such arbitration award.

Section 14.    Term.  This Agreement shall become
effective as of the date first above written and shall remain in
effect until the twenty-fifth (25th) anniversary of such date,
subject to the right of CSXT and NSR to agree prior to the
twenty-third (23rd) anniversary of such date to extend this
Agreement for a renewal period of five (5) years; and if so
extended, to agree prior to the twenty-eighth (28th) anniversary
of such date to further extend this Agreement for an additional
renewal period of five (5) years (each such period, a "Renewal
Term").

-31-

Section 15.    Force Majeure.  The obligations, other
than payment obligations, of the parties to this Agreement shall
be subject to force majeure (which shall include strikes, riots,
floods, accidents, Acts of God, and other causes or circumstances
beyond the control of the party claiming such force majeure as an
excuse for non- performance), but only as long as, and to the
extent that, such force majeure shall prevent performance of such
obligations.

Section 16.   Entire Agreement.  This Agreement and the
Transaction Agreement, including the other Ancillary Agreements
(as defined in the Transaction Agreement) constitute the entire
agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, except the letter agreement
dated April 8, 1997 between CSX and NSC to the extent such April
8, 1997 letter agreement covers matters not addressed or amended
hereby or in the Transaction Agreement or the Ancillary
Agreements (as defined in the Transaction Agreement); provided
that it is the intent of the parties that this Agreement shall be
an effectuation of such April 8, 1997 letter agreement consistent
with its terms, and that the provisions of this Agreement shall
be interpreted to give effect to such April 8, 1997 letter
agreement; and provided further that, in the event of any
inconsistency between the terms of this Agreement and such April
8, 1997 letter agreement, this Agreement shall prevail.

Section 17.    Amendment and Waiver.  Any amendment to
this Agreement must be in writing and executed and delivered by
CRC, CSXT and NSR, subject to any jurisdiction of the STB.  Any
waiver of any term or provision of this Agreement must be in
writing and executed and delivered by the party entitled to
enforcement of such term or provision.

Section 18.    Severability.  If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, such provision is
intended to be ineffective only to the most limited extent
possible in such context and the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.

Section 19.    Remedies.

(a)  Entitlement to Certain Remedies.  Each party
acknowledges and agrees that the other parties would be
irreparably damaged in the event any of the provisions of this
Agreement were not performed by it in accordance with their
specific terms or were otherwise breached.  It is accordingly
agreed that each party shall be entitled to an injunction or
injunctions to prevent breaches of such provisions and to
specifically enforce such provisions, in addition to any other
remedy to which such party may be entitled, at law or in equity.

-32-

(b)  Preclusion of Certain Remedies.  In no event shall
any party be liable to the other parties for any consequential,
indirect, incidental, punitive or other similar damages
including, but not limited to, lost profits for any breach or
default, or any act or omission arising out of or in any way
relating to this Agreement, under any form or theory of action
whatsoever, whether in contract, tort or otherwise.  The
foregoing is not intended to alter or limit the allocation of
responsibility for Damage as provided in Section 11.

Section 20.    Interpretation.  This Agreement was
drafted jointly by CSXT and NSR, each of which was advised by its
own counsel and other advisors concerning all of the terms and
provisions hereof; accordingly, any ambiguity herein should not
be construed in favor of or against any of them.

Section 21.  Headings.  Headings of Sections and
paragraphs in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of any
term or provision of this Agreement.

Section 22.    Parties.  This Agreement shall inure to
the benefit of and be binding upon CRC, CSXT and NSR and any
successor of any of them by operation of law, and any assignee
agreed to by them in accordance with Section 23, and nothing in
this Agreement is intended or shall be construed to give any
other Person any legal or equitable right, remedy or claim under
or with respect to this Agreement or any term or provision
hereof.

Section 23.  Assignment.  

(a)  Limitation.  Except as provided in Section 23(b),
neither this Agreement (including the documents and instruments
referred to herein) nor any of the rights, interests or
obligations hereunder, shall be assigned by any party, including
by operation of law, without the prior written consent of the
other parties (except to a controlled subsidiary), which consent
may be given or refused in the sole discretion of each party.

(b)  Successor.  Any party without the consent of the
other parties may assign all of its rights and obligations under
this Agreement only to any successor in the event of a merger,
consolidation, sale of all or substantially all its assets (but
only if such sale includes all routes and lines owned by such
party to access the Shared Assets), if such assignee executes and
delivers to the other parties hereto an agreement reasonably
satisfactory in form and substance to such other party under
which such assignee, which is reasonably satisfactory to the
other party, assumes and agrees to perform and discharge all the
obligations and liabilities of the assigning party; provided that
any such assignment shall not relieve the assigning party from
the performance and discharge of such obligations and
liabilities.

-33-

Section 24.  Notices.  Any notice given by CRC, CSXT or
NSR to the others under this Agreement shall be deemed delivered
on the date sent by registered mail, or by such other means as
they may agree, and shall be addressed to them as follows:

(A)  If to CSXT:

Executive Vice President and 
Chief Operating Officer
CSX Transportation, Inc.
500 Water Street, J120
Jacksonville, Florida  32202

(B)  If to NSR:

Senior Vice President Operations
Norfolk Southern Railway Company
Three Commercial Place
Norfolk, Virginia  23510-2191

(C)  If to CRC:

President and Chief Executive Officer
Consolidated Rail Corporation
2001 Market Street
Two Commerce Square
Philadelphia, Pennsylvania  19101

and each of them may from time to time change its address in this
Section 24 by written notice delivered to the others.

Section 25.  Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without regard to principles of
conflicts of laws. 

-34-

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in counterparts by their duly authorized
officials as of the day first above written.

CSX TRANSPORTATION, INC.

By:  /s/ Peter J. Shudtz

Title:    Vice President - Law and 
General Counsel - CSX
Corporation, authorized agent
for CSX Transportation, Inc. 

NORFOLK SOUTHERN RAILWAY COMPANY

By:  /s/ J. L. Manetta

Title:    Senior Vice President 
Operation 

CONSOLIDATED RAIL CORPORATION

By:  /s/ Timothy O'Toole

Title:  President

-35-

EXHIBIT A

OPERATING PROTOCOLS

Consolidated Rail Corporation
Shared Assets Area
Terminal Capacity Guidelines

Yard Operations 

o    Cars loaded or empty moving outbound to either parent*
company, which have been made up for train departure at
either a serving merchandise yard, Automotive Terminal or
jointly used Intermodal Facility will be considered
available at the published departure time for scheduled
trains and the later of 4 hours after notice to the parent
or actual available time (set time) for non-scheduled or
extra trains. Cars remaining available for departure in
excess of ten (10) hours will be subject to a charge of
$141.00 per car. Thereafter, for every eight (8) hours that
the same cars continue to remain on track, along with all
other cars of the same block codes within the originating
dispatch yard, will be subject to an additional charge of
$141.00 per car. 

o    Cars loaded or empty assembled for outbound train dispatch
to either parent company will be considered available at
published departure time for such scheduled trains. The
Shared Assets Areas management will provide four (4) hours
advance notice prior to set time on non-scheduled or extra
trains before they will be considered available for
departure. 

o    Management of Shared Assets Areas may refuse an inbound
train of the same category when a specific destination
terminal has been holding more than one (1) intermodal,
automotive, manifest or unit train of a parent for power
and/or crew beyond ten (10) hours of scheduled departure or
availability and conditions within the involved destination
terminal preclude the effective handling of the offered
inbound trains. 

o    Acts of God, Mainline blockages, labor strikes or other
causes to a cessation of consistent service beyond the
control of a parent company will be considered by the
management of the Shared Assets Areas as to the legitimacy
of any assessment. 

o    Opportunities for the Shared Assets Areas management to 

--------------------- 

*The term "parent" means CSXT and/or Norfolk Southern Railway Co.
("NSR") and is not intended to describe the legal relationship
between the parties. 

1 

consolidate - trains for the benefit of a specific Shared
Assets Area operation and the involved parent, as mutually
agreed by the parties, will not result in charges on cars
designated for the annulled train resulting from said
consolidation. 

o    An inventory of hold cars awaiting disposition within any
given Shared Assets Area territory should not exceed thirty
(30) cars per day for either CSXT or NSR individually. The
Shared Assets Areas management may elect to limit receipt of
inbound car flow from the delinquent parent for the affected
Shared Assets Areas territory, in accordance with the
guidelines for holding trains. Any loaded or empty car
including those in unit train consists carrying a "No Bill"
status more than twenty-four (24) hours will be assessed
$10.00 per hour in excess thereof. 

o    Trains inbound to the Shared Assets Area territory must have
proper car and train documents. If this information is
lacking, the Shared Area managers, at their discretion, may
hold trains outside the boundaries of the Shared Assets Area
until proper documentation is received. 

o    Regardless of company of employment, any qualified crew in
the Shared Area may operate any locomotive, regardless of
ownership, in that area for the purposes of
positioning/hostling or movement of light power between
yards. 

Held Trains 

o    In recognition of terminal fluidity and capacity
utilization, the Shared Assets Areas management can require,
in coordination with a parent's command center, an inbound
train to be held outside the boundaries of a Shared Assets
Area. 

-    Such notification must be given with enough notice for
the parent to chamber the train at a location that
minimizes disruption to operations. 

-    Decisions by the Director of Train Operations of Shared
Assets Areas management are final in this regard.
Neither parent may compel the Shared Assets Areas
management to accept trains. 

-    Similarly, the decision to hold out a train other than
temporary holds is recognized as a serious action,
which will be done only after all other alternatives
are exhausted. Data on these actions will be maintained
by Shared Assets Areas management and will be regularly
available for briefing to the Conrail's Board of
Directors at its pleasure. 

2 

Storage 

o    Neither parent company may store or pre-position cars on
Shared Assets Area's tracks, including yard and industrial
tracks to which they have access. Empty cars routed to the
Shared Assets Areas must have a customer destination
assigned, and must be loaded without beginning to accrue
charges as described in Conrail's Demurrage Tariff in effect
on May 1, 1999. When it is determined that cars cannot be
delivered to the customer within 60 hours of arrival, a call
will be made to the parent's operations center. After such a
call is made, except in extraordinary cases, these cars will
then be placed on the parent's first available outbound
train. 

o    CSXT and NS will independently establish such demurrage and
car storage arrangements with customers as each deems
proper. Should customers keep or store cars on SAA tracks
beyond the time at which charges would begin to accrue as
called for in Conrail's Demurrage Tariff in effect on May 1,
1999, then the parent road will be assessed $100 per car per
day to cover the operational cost of congestion and
inefficient use of Shared Assets Areas facilities. 

o    CSXT and NSR recognize that certain customers are currently
provided car storage within the Shared Asset Areas, and that
this storage may be essential to the functioning of the
business of these customers. CSXT, NSR and Shared Assets
will review current pools and by consent of all three
parties approve their makeup and location based on operating
efficiencies. Thereafter pools will be regularly reviewed
for the provision of such storage to avoid congestion. Any
request for additional car storage for any Shared Assets
Area customers must be approved by the Parents, who will
consider the availability of additional space with a view
toward assuring that operations in the Shared Assets Area
remain fluid and will not be affected by providing such car
storage. 

Interchange 

o    CSXT and NSR will not interchange cars to each other within
the Shared Assets Areas locations unless specifically
provided through separate agreements. No open interchanges
have been established except at industries. 

3

Blocking 

o    To ensure the equal and fair use of the Shared Assets
Area capacity by its parent companies, the following car
classification requirements will govern: 

-    Each parent company will be required to block inbound
trains for the Shared Assets Areas. Each parent will
make the number of blocks called for in the split-date
Operating Plan. Failure to comply with inbound blocking
requirements and execute appropriate setoffs (unless
otherwise directed by Shared Assets management) within
the Shared Assets Area will result in an assessment of
$50.00 per loaded or empty car. 

-    Management of the Shared Assets Areas will be required
to block outbound trains. Parent companies will receive
the number of blocks at each Shared Assets Area
terminal that is called for in the split-date Operating
Plan. 

-    Changes to the number of blocks made by or delivered to
a Shared Asset terminal may be made only by mutual
consent of all three parties. 

-    Parent companies, except by joint agreement, may not
compel the Shared Assets Areas management to make a
greater number of blocks at any terminal, beyond the
number of called for in the split-date Operating Plan.

-    Each parent may change the definition of its own
specific blocks originating at a Shared Assets Area
terminal. 

Hours of Service and Recrews 

o    Train crews on parent trains approaching a Shared Assets
Area must have sufficient time to terminate in or exit the
Shared Assets Areas before hours-of-service laws require
them to rest. Sufficient time is considered the trains
scheduled elapsed time to terminate in or pass through the
Shared Assets Area. The Shared Assets Areas management may
grant an exception if the train can make it to its
destination without undue disruption. 

o    Shared Assets Areas shall have the option to provide T&E
relief service for any road train on the hours-of-service
law, regardless of parent company. 

-    Such relief will be provided after coordination with
the appropriate parent's operations center indicating
the involved parent will provide no relief crew. 

4

-    Recrews will be at the sole cost and expense of the
parent whose train is recrewed at full cost plus a $500
surcharge. 

-    If specific trains frequently require recrews, Shared
Assets Areas management may request the parent to
change its schedule or slotting of subject train with
the right to repeatedly hold that train for a recrew
outside the Shared Assets Areas as set forth under the
"held trains" provision until such appropriate
adjustments are made to the non-conforming schedule. 

-    Data on trains recrewed will be maintained by Shared
Assets Areas management and will be regularly available
for briefing to Conrail's Board of Directors at its
pleasure. 

Charges 

o    The charges paid by either owner under these protocols will
be made to a Conrail "passive income" account, which will be
administered by Conrail. 

Changes 

o    These terminal capacity guidelines will be reviewed at the
request of any of the three parties (CSXT, NSR, and/or
CSAO). Proposed changes are subject to the arbitration
provisions of the Shared Asset Area Operating Agreements in
the event CSXT and NSR cannot agree. 

MONONGAHELA USAGE AGREEMENT

Dated as of June 1, 1999

By and Among

CSX TRANSPORTATION, INC.

NORFOLK SOUTHERN RAILWAY COMPANY

PENNSYLVANIA LINES LLC

NEW YORK CENTRAL LINES LLC

TABLE OF CONTENTS

Page

Section 1.  Definitions. . . . . . . . . . . . . . . . . . . . .4

Section 2.  Description of Monongahela . . . . . . . . . . . . 10

Section 3.  Customer Service . . . . . . . . . . . . . . . . . 11

Section 4.  Usage of Subject Trackage. . . . . . . . . . . . . 11

Section 5.  Miscellaneous Operations Provisions. . . . . . . . 12

Section 6.  Car Hire . . . . . . . . . . . . . . . . . . . . . 19

Section 7.  Accounting Records . . . . . . . . . . . . . . . . 19

Section 8.  Repairs and Lading Adjustments . . . . . . . . . . 20

Section 9.  Usage Charges. . . . . . . . . . . . . . . . . . . 21

A.   Transportation Costs . . . . . . . . . . . . . . . . 21

B.   Other Usage Charges. . . . . . . . . . . . . . . . . 21

Section 10.  Maintenance of the Monongahela. . . . . . . . . . 27

Section 11.  Capital Improvements. . . . . . . . . . . . . . . 29

Section 12.  Labor Claims. . . . . . . . . . . . . . . . . . . 32

Section 13.  Freight Claims. . . . . . . . . . . . . . . . . . 32

Section 14.  Liability . . . . . . . . . . . . . . . . . . . . 33

(a)  Sole Responsibility  . . . . . . . . . . . . . . . . 33

(b)  NSR-CSXT Joint Responsibility. . . . . . . . . . . . 34

(c)  Process. . . . . . . . . . . . . . . . . . . . . . . 34

(d)  Indemnification. . . . . . . . . . . . . . . . . . . 35

Page

(e)  Specified Level Damages. . . . . . . . . . . . . . . 35

(f)  Exceptions . . . . . . . . . . . . . . . . . . . . . 36

(g)  Damages. . . . . . . . . . . . . . . . . . . . . . . 36

(h)  Limitation . . . . . . . . . . . . . . . . . . . . . 37

Section 15.  No Partnership. . . . . . . . . . . . . . . . . . 37

Section 16.  Arbitration . . . . . . . . . . . . . . . . . . . 37

Section 17.  Force Majeure . . . . . . . . . . . . . . . . . . 39

Section 18.  Entire Agreement. . . . . . . . . . . . . . . . . 39

Section 19.  Amendment and Waiver. . . . . . . . . . . . . . . 40

Section 20.  Severability. . . . . . . . . . . . . . . . . . . 40

Section 21.  Remedies. . . . . . . . . . . . . . . . . . . . . 40

Section 22.  Interpretation. . . . . . . . . . . . . . . . . . 41

Section 23.  Headings. . . . . . . . . . . . . . . . . . . . . 41

Section 24.  Parties . . . . . . . . . . . . . . . . . . . . . 42

Section 25.  Assignment. . . . . . . . . . . . . . . . . . . . 42

Section 26.  Term. . . . . . . . . . . . . . . . . . . . . . . 43

Section 27.  Termination of Other Agreements . . . . . . . . . 45

Section 28.  Notices . . . . . . . . . . . . . . . . . . . . . 45

Section 29.  Governing Law . . . . . . . . . . . . . . . . . . 47

-ii-

MONONGAHELA USAGE AGREEMENT

This Monongahela Usage Agreement ("Agreement") made
this 1st day of June, 1999, by and between NORFOLK SOUTHERN
RAILWAY COMPANY, hereinafter referred to as "NSR", PENNSYLVANIA
LINES LLC, hereinafter referred to as "PRR", and CSX
TRANSPORTATION, INC., hereinafter referred to as "CSXT," and NEW
YORK CENTRAL LINES LLC, hereinafter referred to as "NYC";

WITNESSETH:

WHEREAS, all capitalized terms in this Agreement have
the respective meanings set forth in Section 1; and

WHEREAS, Consolidated Rail Corporation ("CRC") is a
wholly owned subsidiary of Conrail Inc. ("CRR"); and

WHEREAS, CSX Corporation ("CSX") owns all of the com
mon stock of and controls CSXT, Norfolk Southern Corporation
("NSC") owns all of the common stock of and controls NSR, and CSX
and NSC jointly control CRC; and

WHEREAS, pursuant to the Transaction Agreement, certain
assets of CRC have been allocated to PRR, which is a wholly-owned
subsidiary of CRC, to be operated by NSR under the terms of the
NSR Operating Agreement; and

WHEREAS, NSR and CSXT have agreed, and the STB has
approved in Finance Docket No. 33388, that certain tracks
comprising all the rail facilities described in Section 2 of this
Agreement (hereinafter "Monongahela"), shall be allocated to PRR
pursuant to the Transaction Agreement, and pursuant to the NSR 
Operating Agreement, be operated by NSR, and NSR shall control,
operate and maintain the Monongahela under this Agreement,
provided, however, that NYC shall have equal access, pursuant to
the terms of this Agreement, through full use of the Monongahela
to all current and future customer facilities located on or
accessed from the Monongahela; and

WHEREAS, pursuant to the Transaction Agreement, certain
assets of CRC (including equal access to the Monongahela that is
the subject of this Agreement) have been allocated to NYC, which
is a wholly-owned subsidiary of CRC, to be operated by CSXT under
the terms of the CSXT Operating Agreement; and           

WHEREAS, pursuant to the CSXT Operating Agreement, NYC
is assigning to CSXT all of its rights and obligations to operate
NYC's assets, including all of its rights and obligations with
respect to the Monongahela set forth in this Agreement, and thus
CSXT, pursuant to this Agreement and the CSXT Operating
Agreement, shall have all of the rights and obligations conferred
by or imposed under this Agreement during the term of the CSXT
Operating Agreement;

WHEREAS, under provisions of this Agreement and the
CSXT Operating Agreement, CSXT, as the assignee of NYC, shall
have equal access through full use of the Monongahela to all
current and future customer facilities located on or accessed
from the Monongahela; and

-2-

WHEREAS, in accordance with the terms of this
Agreement, NSR and CSXT shall share all maintenance and other
expenses as specifically described herein which relate directly
to the Monongahela on a joint usage basis; and

WHEREAS, NSR and CSXT shall be able to provide
separately transportation service to all customers on or accessed
from the Monongahela and, except as provided herein, no access
fees shall be charged NYC for the joint usage; provided, however,
the Operating Fee payable by CSXT to NYC under the CSXT Operating
Agreement includes an arm's-length charge for the assignment by
NYC to CSXT of access to the Monongahela; and

WHEREAS, as provided herein, NSR and CSXT will work
together to develop the expansion of existing and future
facilities serving customers located on or accessed from the
Monongahela; and

WHEREAS, NSR and CSXT are agreeable to such an
arrangement under the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises,
covenants and agreements set forth herein, and for good and
valuable consideration, the receipt and sufficiency of which is
acknowledged, CSXT and NSR hereby agree as follows:

-3-

Section 1.  Definitions. 

For purposes of this Agreement, the following terms
have the following meanings:

(a)  "AAA" means the American Arbitration Association.

(b)  "AAR" means the Association of American Railroads.

(c)  "Accounting Plan" means the plan of accounting
adopted pursuant to Section 9(B)(a).

(d)  "Action" means any action, claim, suit,
arbitration, inquiry, subpoena, discovery request, proceeding or
investigation by or before any Governmental Entity.

(e)  "Bill" means a bill delivered by NSR to CSXT
pursuant to Section 9(B)(e).

(f)  "Billing Month" means the calendar month for which
information is shown on a Usage Statement.

(g)  "Budgeted Capital Expenditures" means capital
expenditures included on a Capital Expenditure Budget which has
been agreed upon by NSR and CSXT.

(h)  "CCBU" means CSXT's Cumberland Coal Business Unit,
currently headquartered in Cumberland, MD, or any successor
thereof.

(i)  "CSXT Operating Agreement" has the meaning set
forth in the Transaction Agreement.

-4-

(j)  "Capital Expenditure Budget" means a written
budget specifying proposed capital expenditures to be made on the
Monongahela for the periods of time specified in such budget and
the proposed sources of the capital required to make such
expenditures.

(k)  "Capital Expenditure Statement" means a statement
delivered  by NSR pursuant to Section 9(B)(d).

(l)  "Carpenter/Tobias Letter" means the letter
agreement dated April 28, 1998, concerning the operation of the
Monongahela.

(m)  "Damage(s)" means all assessments, fines, losses,
damages, liabilities, and costs and expenses related thereto,
including, without limitation, interest, penalties and attorneys'
and consultants' fees and also expressly including, without
limitation, all liabilities arising after the effective date
hereof under the Federal Employers Liability Act, as amended, and
environmental laws.

(n)  "Dispute Letter" means a letter delivered by CSXT
pursuant to Section 9(B)(g).

(o)  "Expense Statement" means a statement delivered by
NSR pursuant to Section 9(B)(c). 

(p)  "GAAP" at any time means generally accepted
accounting principles in effect at such time.

(q)  "Governmental Entity" means any federal, state,
local or foreign court, administrative agency or commission or
other governmental or regulatory authority or commission or any
arbitration tribunal.

-5-

(r)  "Liabilities" means any and all debts, liabilities
and obligations of any kind whatsoever, whether or not accrued,
contingent or reflected on a balance sheet, known or unknown,
absolute, determined, determinable or otherwise, including,
without limitation, those arising under any law, rule,
regulation, action, order or consent decree of any Governmental
Entity or any judgment in any Action of any kind or award of any
arbitrator of any kind and those arising under any contract.

(s)  "Monongahela Train" means a train operated by NSR
for NSR or for CSXT and serving customers located on the
Monongahela.

(t)  "Monongahela Train Usage Percentage" means for
either NSR or CSXT, for a particular time period, the percentage
obtained by multiplying 100 by the quotient obtained by dividing
(1) the total number of loaded and empty Railcars in the account
of NSR or CSXT, as the case may be, that are in Monongahela
Trains, by (2) the sum of the total number of loaded and empty
Railcars in the accounts of both NSR and CSXT that are in
Monongahela Trains, during such period for each Zone.

(u)  "Nonseverable Improvement" means a capital
improvement which is integral to the operation of the Monongahela
and is not readily removable.

(v)  "NSR Operating Agreement" has the meaning set
forth in the Transaction Agreement.

(w)  "Railcar" means, except as otherwise provided in
the Accounting Plan, each railroad freight car, locomotive,
caboose or other equipment (including RoadRailer equipment (or
comparable bimodal freight hauling equipment in either NSR's or
CSXT's account)) furnished in substitution of railroad equipment,
loaded or empty, which an Operator originates, terminates,
switches or moves on or overhead within the Monongahela, except
that (i) a single standard flat car not exceeding 96 feet in
length (excluding articulated flat cars) shall count as a single
Railcar, (ii) freight railcars consisting of articulated units
bearing AAR car type codes "Q" and "S" shall count as multiple
Railcars based on the second (numeric) digit of the car type code
for such articulated units (by way of example, a car consisting
of AAR Car Type Code "S566" would be counted as five Railcars)
(or corresponding car type codes and digits if the AAR car type
codes should be modified at any time during the term of this
Agreement), and (iii) a single unit of RoadRailer  equipment (or
comparable bimodal freight hauling equipment in either NSR's or
CSXT's account) shall count as one-half (1/2) of a Railcar.

-6-

(x)  "Railroad Consequential Damages" means
consequential, indirect, incidental or other similar damage,
injury or loss to either NSR or CSXT.

(y)  "Reimbursable Expenses" means the expenses shown
on an Expense Statement, minus the revenues, if any, shown on
such Expense Statement.

(z)  "RoadRailer  means bimodal freight hauling
equipment manufactured by or under license from "RoadRailer , a
division of Wabash National Corporation, and capable of movement
over the highway when pulled by a tractor and on the rails using
locomotive power.

-7-

(aa) "Severable Improvement" means a capital
improvement that is not a Nonseverable Improvement, and
specifically includes but is not limited to, track extensions to
customer facilities.

(bb) "STB" means the Surface Transportation Board, or
if there shall be no Surface Transportation Board, any federal
agency which is charged with the function of approving
combinations by rail carriers or persons controlling them, or of
other arrangements between such rail carriers, and granting
exemptions from other laws with respect thereto or regulating
other specific functions with respect to the context in which
such term is employed or any successor entity thereof.

(cc) "Tax" or "Taxes" means taxes, levies or other
similar assessments, customs, duties, imposts, charges or fees,
including, without limitation, ad valorem, excise, real or
personal property, sales, use, payroll, withholding,
unemployment, transfer and gains taxes or other governmental
taxes imposed by or payable to the United States, or any state,
local or foreign government or subdivision thereof, and in each
instance such term shall include any interest, penalties or
additions to tax attributable to such Tax or Taxes.

(dd) "Total Monongahela Train Usage Percentage" means
for either NSR or CSXT, for a particular time period, the
percentage obtained by multiplying 100 by the quotient obtained
by dividing (1) the total number of loaded and empty Railcars in
the account of NSR or CSXT, as the case may be, that are in
Monongahela Trains by (2) the sum of the total number of loaded
and empty Railcars in the accounts of both NSR and CSXT that are
in Monongahela Trains, during such period for the entire
Monongahela.

-8-

(ee) "Total Train Usage Percentage" means for either
NSR or CSXT for a particular time period, the percentage obtained
by multiplying 100 by the quotient obtained by dividing (i) the
total number of loaded and empty Railcars in the account of
either NSR or CSXT, as the case may be, by (ii) the sum of the
total number of loaded and empty Railcars in the accounts of both
NSR and CSXT, during such period on the Monongahela.

(ff) "Train Usage Percentage" means for either NSR or
CSXT for a particular time period and Zone, the percentage
obtained by multiplying 100 by the quotient obtained by dividing
(i) the total number of loaded and empty Railcars in the account
of either NSR or CSXT, as the case may be, by (ii) the sum of the
total number of loaded and empty Railcars in the accounts of both
NSR and CSXT, during such period in such Zone.

(gg) "Transaction Agreement" means the Transaction
Agreement dated as of June 10, 1997, among CSX, CSXT, NSC, NSR,
Conrail Inc., CRC and CRR Holdings LLC. 

(hh) "Usage Statement" means a statement delivered by
NSR pursuant to Section 9(B)(b).

(ii) "USOA" means the uniform system of accounts
prescribed for class I railroads by the STB or any successor
federal agency that shall succeed to the functions of the STB in
prescribing uniform systems of accounts for rail carriers;
provided, that if there shall be no STB and no such federal
agency, USOA shall mean such system of accounts as is generally
maintained by rail carriers consistent with GAAP as applied in
the rail industry.

-9-

(jj) "Zone" refers to the division of the Monongahela
for accounting purposes, into the following three segments.

Zone 1:   MP 0.0 CP BROWN to CP 85 WAYNESBURG
(including Manor Branch)

Zone 2:   CP 85 WAYNESBURG to MP W27.3 FEDERAL
2 MINE

Zone 3:   MP 0.0 CP BROWN to MP 79.6 LOVERIDGE

Section 2.  Description of Monongahela.  

The Monongahela is defined as the trackage described in
the definition of Zones set forth above, and as shown on Exhibit
"A", which is attached and made a part hereof (which includes
CRC's Waynesburg Southern Branch), and includes all existing and
future spurs, sidings, leads, industry, switching, loading, side,
team and other tracks extending therefrom, together with the
right to use the Manor Branch shown on Exhibit "A", which is
attached hereto and made a part hereof.  Monongahela includes the
track structure (rails, ties, ballast, etc., including structures
supporting the track), right of way, communication facilities,
signal facilities and all other appurtenances thereto.  The
Monongahela also includes all future Nonseverable Improvements. 
The Monongahela excludes any tracks or facilities constructed
beyond the limits of the Zones described above, or connecting to
CP 58, MP 0.0 or MP 66.4 (Rivesville) from outside the Zones.

-10-

Section 3.  Customer Service.  

Both NSR and CSXT shall be able to provide separately
and independently rail transportation service to all customers on
or accessed from the Monongahela with their own equipment and
crews.

Section 4.  Use of Subject Trackage.

(a)  CSXT shall have equal access to the Monongahela,
as more specifically provided herein.

(b)  Subject to the terms of this Agreement, NSR shall
have control of the management and operation of the Monongahela. 
However, should CSXT be dissatisfied with the fairness and
equality of treatment of CSXT's movements by NSR's Monongahela
dispatchers, NSR and CSXT shall attempt to resolve these
dispatching concerns.  If the attempt does not resolve CSXT's
concerns about Monongahela dispatching, CSXT shall have the right
to request a change of control of Monongahela dispatching to
CSXT.  If NSR disagrees with such request for change in
dispatching control, NSR and CSXT agree to submit that request to
binding arbitration as provided in Section 16 of this Agreement. 
From time to time, but not more frequently than 12 months after
the last change in dispatching control or arbitration, the party
not controlling dispatching may again seek a change and require
arbitration.

-11-

Section 5.  Miscellaneous Operations Provisions.

(a)  When operating over the Monongahela, locomotives
and crews shall be equipped to communicate with the controlling
dispatcher on radio frequencies normally used in directing train
movements on the Monongahela.

(b)  Procedures for qualification and occupancy of the
Monongahela shall be arranged by the local supervision of NSR and
CSXT, and shall be fair and impartial as between NSR and CSXT.    

(c)  Before locomotives or equipment of NSR and CSXT
enter onto Monongahela, the employees shall request permission
from the dispatcher in charge of the Monongahela.  Further, NSR
and CSXT shall ascertain that the trackage is clear and shall
await confirmation from the dispatcher that such permission has
been issued to allow NSR and/or CSXT movements on or over the
Monongahela.  Upon completing its operations and clearing the
Monongahela, NSR or CSXT, as the case may be, shall notify the
dispatcher that it has completed its operations and that its
equipment is in the clear for other operations or has moved off
of Monongahela.  Once NSR or CSXT has notified the dispatcher it
is in the clear or has cleared the Monongahela, NSR or CSXT shall
not reenter the Monongahela without again obtaining permission
from the dispatcher.

-12-

(d)  The operation and equal access to the mines on the
Monongahela (the "Mines") will be governed by the loading demand
of the Mines, while always taking into account the customer's
choice of carrier for the particular movement.  Trains will be
scheduled onto the Monongahela based on the Mines' request.  The
current practice of the Mines in providing a seven day loading
schedule of required loading will continue.  The scheduling and
sequencing will be coordinated between the Mines and designated
NSR and CSXT representatives.  All parties will work towards a
monthly loading projection to facilitate advanced planning and
scheduling.

A rolling 36 hour loading schedule will be
coordinated and maintained by the Mines, NSR and CSXT, and will
be updated every four hours.  The loading schedule will be the
governing vehicle for sequencing trains on the Monongahela by the
dispatcher.  This will allow each carrier to have sufficient 
notification to ensure trains are positioned to protect loading
on the Monongahela.  NSR and CSXT will develop scheduled running
times from their staging facilities to the entrance to the
Monongahela.  NSR and CSXT will jointly develop running times
from the entrance points to each of the Mines.               

Changes in the train loading schedule or train
ordering will be coordinated jointly between NSR and CSXT to
assure demand is met for all Mines.  In the event either an NSR
or CSXT train fails to make the loading schedule, every effort
will be made to coordinate and resequence the loading schedule to
facilitate both carriers.  The governing factor is to provide the

-13-

appropriate NSR or CSXT trains required by the Mines.  NSR and
CSXT agree to coordinate and implement an operating plan for the
Monongahela (the "Operating Plan") to ensure efficient movement
of traffic on the Monongahela.  Related to the Operating Plan,
Accounting Plan and this Agreement is the Carpenter/Tobias
Letter.  The Carpenter/Tobias Letter was executed in furtherance
of this Agreement, the Operating Plan and the Monongahela
Accounting Plan and shall be enforceable according to its terms. 
In the event that coal producers on the Monongahela need to
change the loading sequence once trains are positioned on the
Monongahela, every attempt will be made to have the original
carrier secure the loading, subject to customer approval.

A Service Standards Committee ("Committee") shall
be established with equal local representation from NSR and CSXT
including General Manager Coal Operations and General Manager
CCBU or other representatives for CSXT and the Superintendent of
the Pittsburgh Division and the AVP Transportation, or other
representatives, for NSR.  The Committee is charged with
developing and agreeing upon the contents of a "Report Card" for
the service on the Monongahela.  The Report Card will attempt to
provide a mechanism to determine whether impartial access (as
measured by train performance, dispatching and maintenance) to
all Mines is being provided.  The Committee will meet on a
quarterly basis, or more frequently if required, to review
service, dispatching, maintenance and other issues as they arise. 
The Committee's goal is to resolve all issues encompassing the
operation on the Monongahela.

-14-

(e)  NSR and CSXT shall comply with the provisions of
the Federal Locomotive Inspection Act and the Federal Safety
Appliance Act, as amended, and any other federal and state and
local laws, regulations and rules respecting the operation,
condition, inspection and safety of its trains, locomotives, cars
and equipment while such trains, locomotives, cars, and equipment
are being operated over the Monongahela.

(f)  CSXT in its use of the Monongahela shall comply in
all respects with the safety rules, operating rules and other
regulations of NSR, and the movement of CSXT trains, locomotives,
cars, and equipment over the Monongahela shall at all times be
subject to the orders of the transportation officers of NSR;
provided that all such rules, regulations, practices and orders
must be impartially administered as between NSR and CSXT.  NSR
and CSXT trains shall not include locomotives, cars or equipment
which exceed the width, height, weight or other restrictions or
capacities of the Monongahela as published in Railway Line
Clearances, and no train shall contain locomotives, cars or
equipment which require speed restrictions or other movement
restrictions that would violate operating rules and regulations
applicable to the Monongahela, except with the concurrence of NSR
which shall not be unreasonably withheld.

(g)  CSXT shall make such arrangements with NSR as may
be required to have all CSXT employees who shall operate its
trains, locomotives, cars and equipment over the Monongahela
qualified for operation thereover, and CSXT shall pay to NSR,
upon receipt of bills therefor, any cost incurred by NSR in
connection with the cost of pilots furnished by NSR, until such
time as such employees are deemed by the appropriate examining
officer of NSR to be properly qualified for operation over
Monongahela.

-15-

(h)  In the event of any investigation or hearing
concerning the violation of any operating rule or practice by
CSXT's employees while on the Monongahela, CSXT shall be notified
in advance of any such investigation or hearing and such 
investigation or hearing may be attended by any official
designated by CSXT, and any such investigation or hearing shall
be conducted in accordance with the collective bargaining
agreements, if any, that pertain to CSXT's employee or employees
required to attend such hearings.

(i)  NSR shall have the right to exclude from the
Monongahela any employee of CSXT determined by above, to be in
violation of NSR's rules, regulations, orders, practices, or
instructions issued by NSR's timetable or otherwise.  CSXT shall
release, indemnify, defend, and save harmless NSR and its parent
corporation, subsidiaries and affiliates, and all of their
respective directors, officers, agents and employees from and
against any and all claims and expenses resulting from such
reasonable and lawful exclusion.

(j)  The railcars, trains, locomotives, cars and
equipment of NSR and CSXT shall be operated without prejudice or
partiality to either party and in such manner as shall afford the
most economical and efficient movement of all traffic.

-16-

(k)  In the event that a train of CSXT shall be forced
to stop on the Monongahela, due to mechanical failure of CSXT's
equipment, or any other cause not resulting from an accident or
derailment, and such train is unable to proceed, or if a train of
CSXT fails to maintain the minimum speeds required on the
Monongahela, or if in emergencies, crippled or otherwise
defective Railcars are set out of CSXT's trains on the
Monongahela, NSR shall arrange for motive power or such other
assistance as may be necessary to haul, help or push such trains
or Railcars, or to properly move the disabled equipment in the
clear or off the Monongahela, and CSXT shall reimburse NSR for
the cost of rendering any such assistance.  If such assistance
cannot be commenced within a reasonable time, CSXT shall have the
option through coordination with NSR, to provide such assistance
itself.  If a train of NSR becomes unable to proceed or maintain
the required minimum speed or NSR Railcars become crippled and
are set out, NSR shall promptly clear off such trains or Railcars
so as not to impede movements on the Monongahela.

(l)  If it becomes necessary to move, make repairs to,
adjust or, transfer the lading of crippled or defective Railcars,
such work shall be done by NSR, and if the Railcar is in the
account of CSXT, CSXT shall reimburse NSR for the cost thereof. 
If the Railcar is in the account of NSR, such cost shall be borne
by NSR and not shared pursuant to Section 9.

(m)  In the event NSR and CSXT agree that NSR should
retain employees or provide additional employees for the sole
benefit of CSXT, the parties hereto shall enter into a separate

-17-

agreement under which CSXT shall bear all cost and expense for
any such retained or additional employees provided, including
without limitation all cost and expense associated with labor
protective payments which are made by NSR and which would not
have been incurred had the retained or additional employees not
been provided.

(n)  Notwithstanding the provisions of Section 14, for
the purposes of this Section 5, the word "equipment" shall mean
and be confined to (i) cabooses, (ii) vehicles and machinery 
which are capable of being operated on railroad tracks that, at
the time of an occurrence, are being operated on the Monongahela
and (iii) vehicles and machinery that, at the time of an
occurrence, are on the Monongahela or its right of way for the
purpose of maintenance, repair or inspection thereof or the
clearing of wrecks thereon.

(o)  Whenever CSXT's or NSR's use of the Monongahela
requires rerailing, wrecking service or wrecking train service,
NSR shall perform or provide such service.  The cost of rerailing
and the repair and restoration of roadbed, track and structures
shall be borne 100% by CSXT if the Railcars are in CSXT's account
or 100% by NSR if they are in NSR's account.  Any other cost,
liability and expense related to the foregoing, including without
limitation loss of, damage to, or destruction of any property
whatsoever and injury to and death of any person or persons
whomsoever or any damage to or destruction of the environment
whatsoever, including without limitation land, air, water,
wildlife, and vegetation, resulting therefrom, shall be
apportioned in accordance with the provisions of Section 14
hereof.  All locomotives, railcars, and equipment and salvage
from the same so picked up and removed which is owned by or under
the management and control of or used by CSXT at the time of such
wreck, shall be promptly delivered to CSXT.  If such assistance
cannot be commenced within a reasonable time, CSXT shall have the
option to provide such assistance itself.

-18-

Section 6.  Car Hire.

All NSR and CSXT Railcars shall remain in the
respective accounts of NSR and CSXT at all times.  NSR and CSXT
Railcars and lading being moved in their respective trains
pursuant to this Agreement shall be the sole property of that
party.  NSR and CSXT shall each pay and collect or cause to be
paid and collected all car hire and mileage charges pertaining to
their respective Railcars, and neither NSR nor CSXT shall have
any responsibility for any such car hire or mileage charges in
the other party's account however incurred.

Section 7.  Accounting Records.

The records of each party hereto, insofar as they
pertain to matters covered by this Agreement, shall be retained
for a period of three (3) calendar years and shall be open at all
reasonable times to inspection by the other party during such
period.  These records shall include train consist (list)
indicating car initial and number with associated car type code.

-19-

Section 8.  Repairs and Lading Adjustments.

If any CSXT Railcars are bad ordered en route and it is
necessary that they be set out, such Railcars, after being
promptly repaired, shall be returned or delivered to CSXT.  NSR
shall at the expense of CSXT, furnish required labor and
material, and perform light repairs on such bad ordered equipment
to make it safe for movement.  For liability purposes only, the
employees and equipment of NSR while in any manner so engaged or
while en route to or returning from such repair assignment shall
be considered sole CSXT employees and exclusive CSXT equipment. 
In the case of such repairs by NSR to CSXT Railcars, billing
therefor shall be in accordance with the Field and Office Manuals
of the AAR Interchange Rules, or similar rules providing
"industry standard" procedures which are in effect at the time
such work is performed, hereinafter called "Interchange Rules". 
NSR shall prepare and submit billing directly to and collect from
the car owners for car owner responsibility items as determined
under the Interchange Rules and NSR shall prepare and submit
billing directly to and collect from CSXT for handling line
responsibility items as determined under the Interchange Rules. 
NSR shall also submit billing to and collect from CSXT any
charges for repair to freight cars that are car owner
responsibility items as determined under the Interchange Rules,
should said car owner refuse or otherwise fail to make payment
therefor.  In the event NSR Railcars are bad ordered en route and
set out, repaired, or work is performed on such Railcars, as
provided above, all such costs shall be borne by NSR and not
shared pursuant to Section 9.

-20-

Section 9.  Usage Charges.

A.   Transportation Costs.  The Carpenter/Tobias letter
states that NSR will provide crews to operate CSXT trains between
the Mines and CSXT's Newell Yard or the Alicia or LaBelle barge
terminals (or such other locations as may be mutually agreed
upon).  Transportation costs associated with NSR's operation of
CSXT trains shall be as set forth in the Accounting Plan. To the
extent NSR and CSXT will be performing service over the
Monongahela by operating their own trains with their own crews,
any and all costs directly associated with the operation of such
trains and crews shall be borne by the party operating such
trains and crews.

B.   Other Usage Charges.  Given the rights of equal
access to the Monongahela, the parties agree that certain costs
directly related to the maintenance and operation of the
Monongahela shall be shared based upon usage.  Accordingly, the
parties agree to the following:

(a)  The parties shall develop and implement a written
Accounting Plan containing a detailed description, by category of
cost and location, of the costs directly associated with the
management and operation of the Monongahela and the method by
which such costs shall be fairly and properly apportioned between
the parties.  Such Accounting Plan will include separate
accounting and sharing of costs as mutually agreed for particular
Zones or for the overall Monongahela, as the case may be, and
shall conform to the following general principles:

-21-

(i)  General and administrative, supervisory and
overhead expenses incurred within the Monongahela or for
functions directly related to the Monongahela shall be
apportioned on the basis of the Total Train Usage Percentages, or
Total Monongahela Train Usage Percentages, whichever is
applicable as provided in the Accounting Plan;

(ii) Dispatching (where dispatching is located on
the Monongahela or where dispatching is devoted 100% to the
Monongahela), maintenance of dispatching equipment and train
control costs (including labor, materials and maintenance
expenses) incurred with respect to the Monongahela shall be
apportioned on the basis of the Total Train Usage Percentages, or
Total Monongahela Train Usage Percentages, whichever is
applicable as provided in the Accounting Plan;

(iii)     Police and other costs incurred with
respect to security within the Monongahela shall be apportioned
on the basis of the Total Train Usage Percentages, or Total
Monongahela Train Usage Percentages, whichever is applicable as
provided in the Accounting Plan;

(iv) Damage paid by NSR pursuant to Section 14
shall be apportioned in accordance with Section 14;

(v)  Taxes (excluding income taxes) incurred with
respect to the Monongahela or individual Zones thereof shall be
apportioned between NSR and CSXT on the basis of the Total Train
Usage Percentages, or Total Monongahela Train Usage Percentages,
whichever is applicable as provided in the Accounting Plan, or
Train Usage Percentage for the individual Zone, if capable of
determination, for the period for which such Taxes apply;

-22-

(vi) The cost of premiums for liability and
property insurance, other than self-insurance, incurred with
respect to the Monongahela or individual Zones thereof shall be
apportioned between NSR and CSXT on the basis of (w) Total Train
Usage Percentage, (x) Train Usage Percentage for the individual
Zone, (y) Total Monongahela Train Usage Percentage, or (z)
Monongahela Train Usage Percentage for the individual Zone,
whichever is applicable, as provided in the Accounting Plan, if
capable of determination for the period for which such Insurance
costs apply;

(vii)     The expense of installation and
maintenance of AEI readers including, but not limited to, those
in the vicinity of CP 58 (existing), CP 85 Waynesburg, MP 0.5 and
MP 66.0 shall be borne 50% by NSR and 50% by CSXT;

(viii)    Section 14 of this Agreement deals with
the apportionment of Liability between the parties.  Any payments
made by NSR pursuant to Section 14(a) which arise from the death
or injury to NSR employees, when such NSR employees are "joint
employees," such as Maintenance of Way, Signal, Dispatch, Bridge
and Building, Mechanical and other employees whose work on the
Monongahela is other than revenue train operations, shall be paid
by NSR in accordance with Section 14(a), but apportioned based on
Total Train Usage Percentage or Train Usage Percentage for the
individual Zone, whichever is applicable as provided in the
Accounting Plan; provided, however, should such employee
Liability expense arise from work performed as a result of
capital improvements at the sole cost of NSR or CSXT, then that
party shall be fully responsible for all such payments; and

-23-

(ix) Maintenance of track structure (rails, ties,
ballast, etc., including structures supporting the track), right
of way, tunnels, communication facilities, signal facilities and
all other appurtenances thereto shall be apportioned on the basis
of the Total Train Usage Percentage, for the entire Monongahela
or Train Usage Percentage for each Zone, whichever is applicable,
as provided in the Accounting Plan.

(x)  Any other costs shall be reimbursed as
otherwise provided in this Agreement.

If the parties are unable to agree on the terms
and provisions of the Accounting Plan, such disagreement may be
submitted by either NSR or CSXT for resolution by binding
arbitration pursuant to Section 16.

(b)  NSR shall deliver to CSXT prior to the last day of
each calendar month, a written statement (the "Usage Statement")
showing for the prior Billing Month:

(i)  the total number of Railcars moved by NSR or
CSXT on the Monongahela and in each Zone; and

(ii)  the calculation of the Total Train Usage
Percentage, the Train Usage Percentage, Total Monongahela Train
Usage Percentage and Monongahela Train Usage Percentage for each
party for each Zone, and (A) all Railcars in a train shall be
deemed to be on the Monongahela, or a Zone, as the case may be,
when the first or last Railcar of such train is on the
Monongahela, or a Zone, as the case may be, and (B) each time
that a Railcar is removed from or added to a train on the
Monongahela, or a Zone, as the case may be, shall constitute a
separate movement of such Railcar.

-24-

(c)  Concurrently with the delivery of each Usage
Statement, NSR shall deliver to CSXT a statement (the "Expense
Statement") showing the expenses incurred by NSR and CSXT during
the Billing Month, computed in accordance with GAAP and the USOA,
as modified by the Accounting Plan.

(d)  Concurrently with the delivery of each Usage
Statement, NSR shall deliver to CSXT a statement (the "Capital
Expenditure Statement") showing the estimated Budgeted Capital
Expenditures for the calendar month immediately succeeding the
calendar month in which such statement is delivered.

(e)  Concurrently with the delivery of a Usage
Statement for a Billing Month, NSR shall deliver to CSXT a bill
(a "Bill") showing for such Billing Month:

(i)  the amount of each Reimbursable Expense
payable by CSXT for such Billing Month calculated in accordance
with the Accounting Plan; and

-25-

(ii) CSXT's percentage of the amount of Budgeted
Capital Expenditures and shown on the Capital Expenditure
Statement delivered with such Usage Statement.

(f)  CSXT shall pay to NSR the amount shown on each
Bill on or before the 30th day after the date of such Bill
regardless of whether or not CSXT disputes the accuracy of any
amount or calculation shown on such Bill.

(g)  Disputed Bills:

(i)  Any dispute by CSXT of the accuracy of any
amount or calculation shown on any Bill, shall be described and
specified in reasonable detail in a Dispute Letter from CSXT to
NSR within two (2) years after the date of such Bill.

(ii) Any amounts or calculations shown on any Bill
which are not disputed in accordance with this section 9 shall
conclusively be deemed to be accurate and shall be binding on
both parties.
(iii)  CSXT and NSR shall promptly endeavor to
resolve the disputes described in each Dispute Letter, and if
they fail to agree to a resolution of such disputes within 45
days of the delivery of such Dispute Letter, then a firm of
independent public accountants shall be selected jointly by CSXT
and NSR (or if they do not agree on such firm, then such firm
shall be selected by arbitration pursuant to Section 16) to
resolve such disputes, in each case in accordance with GAAP and
the USOA, as modified by the Accounting Plan, and the written
resolution of such disputes signed by such accounting firm shall
be binding on CSXT and NSR.

-26-

(iv) Any adjustments to Bills which result from
the resolution of Dispute Letter disputes shall be reflected as
charges or credits on the first Bills delivered by NSR to CSXT
after such disputes have been resolved.

(v)  The costs of NSR's and CSXT's auditors in
connection with the resolution of any Dispute Letter disputes
shall be paid by each respective party, and the fees of any
independent public accounting firm engaged to resolve such
disputes shall be paid 50 percent by NSR and 50 percent by CSXT.

(h)  At the option of either party hereto, the
Accounting Plan provided for in this Section 9 may be opened for
reevaluation every year from the effective date of this
Agreement.  Such reevaluation may include the definition of the
Zones and any modifications needed thereto.  In the event the
parties fail to reach agreement upon reevaluation, such failure
shall not constitute a breach of this Agreement, and the parties
shall continue to be bound by the terms of compensation provided
in this Section 9 until the matter is settled or submitted to
binding arbitration as outlined in Section 16.

Section 10.  Maintenance of the Monongahela.

(a)  NSR shall be responsible to maintain, repair and
renew the infrastructure of the Monongahela.  NSR shall keep and
maintain the Monongahela in good condition for the use herein
contemplated.  NSR shall take all reasonable steps to ensure that

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any interruptions to train operations shall be kept to a minimum. 
Furthermore, except as may be otherwise provided in Section 14,
CSXT shall not by reason of failure or neglect on the part of NSR
to maintain, repair or renew the Monongahela, have or make any
claim or demand against NSR or its parent corporation,
subsidiaries or affiliates, including PRR, or their respective
directors, officers, agents or employees for any injury to or
death of any person or persons whomsoever, or for any damage to
or loss or destruction of any property whatsoever, or for any
damages of any nature suffered by CSXT resulting from any such
failure or neglect.

(b)  The Monongahela will be jointly inspected by each
party's Chief Engineer or their designees at any time upon mutual
agreement, but not less than once every three (3) years to
determine if appropriate track standards are maintained, and to
review the performance of any capital plan for the Monongahela as
pertains to maintenance of track, signals, right of way and
appurtenances thereto.  On or before August 15 of each year, NSR
will provide CSXT with a capital improvement plan covering the
next three (3) years.

(c)  Existing and future connections or facilities
which are jointly used by the parties hereto shall continue to be
maintained, repaired and renewed by and at the expense of both
parties apportioned in accordance with Sections 9 and 11 and the
Accounting Plan, which shall become a part hereof.

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Section 11.  Capital Improvements.

Capital Improvements on the Monongahela shall be
governed by the following provisions:  

(a)  From time to time, NSR or CSXT may propose to each
other construction of capital improvement projects ("Project"). 
Each Project shall be reviewed promptly by the other party.  If
approved by both parties, NSR and CSXT shall be responsible for
an equal share of the budgeted initial funding, as approved in
the Capital Expenditure Budget, for the approved Project.  A
final accounting will be made to adjust the initial budgeted
funding to the actual project cost as specified in the Accounting
Plan.

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(b)  If a proposed project is not approved, and the
proposed Project would be a Nonseverable Improvement of the
Monongahela which may be used in the normal course of business by
NSR or CSXT, then the following procedure shall occur:

(i)  At the written request of either NSR or CSXT
delivered to the other, each party shall, within 45 days of the
delivery of such request, submit to an arbitrator in accordance
with Section 16 a written proposal with respect to a Nonseverable
Improvement Project which was not agreed upon by the parties (1)
describing any changes from the initial request which such party
proposes be made to such Project and specifying a schedule,
budget and allocations between NSR and CSXT of the capital costs
of such Nonseverable Improvement or (2) proposing that it not be
made.

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(ii) The arbitrator receiving the proposals
referred to in Section 11(b)(i) (A) shall consider (1) the
degree, if any, to which the construction, operation and use of
such Nonseverable Improvement would impair or interfere with the
use of the Monongahela, conflict with any pending capital
improvements, or be necessary or unnecessary to the operations of
a particular party, and (2) the budget and allocations between
NSR and CSXT of the capital costs of such Nonseverable
Improvement as proposed by NSR and CSXT and (B) shall determine
within 45 days of such receipt which of such proposals shall be
accepted, or that such Nonseverable Improvement shall not be
made.  The arbitrator's decision shall be binding and enforceable
upon NSR to fund and cause the Nonseverable Improvement to be
made in accordance with such decision and upon CSXT to fund such
Nonseverable Improvement in accordance with such decision, unless
the decision is that such Nonseverable Improvement shall not be
made.

(c)  Severable Improvements:

(i)  (A) NSR shall have the right to cause the
construction, at its sole expense, and (B) CSXT shall have the
right to require NSR to cause the construction, but at CSXT's
sole expense, of any Severable Improvement which has not been
agreed upon by the parties to be funded on a shared basis. 

(ii) Each Severable Improvement funded exclusively
by NSR or CSXT shall be used exclusively by NSR or CSXT, as the
case may be, and each party shall be solely responsible for the
cost of maintaining such Severable Improvement (recognizing that
in either case the actual performance of such maintenance shall
be the responsibility of NSR), until such time that the other
party gives written notice that it desires also to use such
Severable Improvement, stating the amount which such other party
is prepared to pay to the party which initially funded such
Severable Improvement for the right to use such Severable
Improvement.

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(iii)  If the parties are unable to agree on
the amount of such payment within 45 days after such notice was
given, then at the written request of a party delivered to the
other after 45 days but before 60 days after such notice was
given, NSR and CSXT, within 15 days of the delivery of such
request, shall submit to an arbitrator in accordance with Section
16 a written statement setting forth the proposed payment by the
other party, and the arbitrator shall within 45 days of such
receipt determine which of such proposed amounts shall apply,
which shall be binding on both parties and paid promptly.  Upon
payment of the amount determined by the arbitrator, the
improvement shall become a Nonseverable Improvement.

(d)  Upon completion, all capital improvements shall
become part of the Monongahela owned by PRR subject to all
provisions of this Agreement.

(e)  Subject to all of the provisions hereof, the
parties will work together to develop the expansion of existing
and future facilities serving customers located on or accessed
from the Monongahela.

(f)  The construction, operation and use of a Severable
Improvement by a party shall not unduly impair or interfere with
the use of a Severable Improvement by the other party, nor shall
any Severable Improvement unduly impair or interfere with train
operations on the Monongahela.  No Severable Improvement shall
unduly impair or interfere with any pending or proposed capital
improvements included in an approved Capital Expenditure Budget.

-31-

Section 12.  Labor Claims.

Each party shall indemnify and hold harmless the other
party against any and all costs and payments, including benefits,
allowances, and arbitration, administrative, and litigation
expenses, arising out of claims or grievances made by or on
behalf of or lawsuits brought by or on behalf of its own
employees or their collective bargaining representatives, either
pursuant to employee protective conditions imposed by a
governmental agency upon the agency's approval or exemption of
this Agreement and operations hereunder or pursuant to a
collective bargaining agreement.  It is the parties' intention
that each party shall bear the full costs of protection of its
own employees under employee protective conditions that may be
imposed, and of grievances filed by its own employees arising
under its collective bargaining agreements with its employees.

Section 13.  Freight Claims.

The  parties shall agree between themselves on the most
fair, practical and efficient arrangements for handling and
administering freight loss and damage claims with the intent that
(a) each party shall be responsible for losses occurring to
lading in its possession for the account of such party and (b)
the parties shall follow relevant AAR rules and formulas in
providing for the allocation of losses which are either of
undetermined origin or in Railcars handled in interline service
by or for the account of both parties.

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Section 14.  Liability.

Except as otherwise provided in Section 13 and this
Section 14, the responsibility between CSXT and NSR for all
Damage arising out of, incidental to or occurring in connection
with this Agreement shall be apportioned without consideration of
fault or negligence of any kind or degree as follows:

(a)  Sole Responsibility.  Except as otherwise provided
in Section 14(e) (Specified Level Damages) and Section 14(f)
(Exceptions), each party shall assume and bear all responsibility
for Damage to its own trains, locomotives and equipment, to
Railcars and lading in its possession or being handled for its
account, and for the death of or injury to its own employees. 
Subject to Section 14(f) (Exceptions), for the purpose of this
Section 14(a):

(i)  when NSR employees are engaged in capital
improvements at the sole cost of CSXT under Section
9(B)(a)(viii), such employees engaged in such capital
improvements shall be treated as if they were CSXT employees; and

(ii) when NSR is operating trains for CSXT, NSR
employees engaged in moving, inspecting, preparing, handling,
being transported to or from, transporting such employees to or
from, or other similar activities directly related to the
movement of CSXT trains shall be treated as if they were CSXT
employees and such trains shall be CSXT trains.

-33-

(b)  NSR-CSXT Joint Responsibility.  (i)  Except as
otherwise provided in Section 14(b)(ii) with regard to Damages
occurring in the first 12 months of operation and in Sections
14(a) (Sole Responsibility), Section 14(e) (Specified Level
Damages) and Section 14(f) (Exceptions), the parties shall
jointly assume and bear all responsibility for all Damage in
proportion to their respective Train Usage Percentages in the
Zone in which the incident giving rise to such Damage occurred
for the 12 calendar month period immediately preceding the
incident giving rise to such Damage.

(ii) In the event an incident giving rise to
Damage for which the parties are jointly responsible occurs
during the 12-month period immediately following the date of this
Agreement, responsibility for such Damage shall be borne equally
by the parties with each being liable for one-half (1/2) of the
damages.

(c)  Process.  Each party shall be responsible for the
payment, handling, administration and disposition of all Damage
for which it bears exclusive responsibility under Section 14(a),
and both parties shall have joint responsibility for the payment,
handling, administration and disposition of all Damage for which
they are jointly responsible under Section 14(b).  In assigning
joint responsibility to both parties, it is not the intent of
this Agreement that the parties will actually act jointly, but
rather that the parties will agree between themselves on the most
practical and efficient arrangements for handling, administering,
and disposing of Damage for which they bear joint responsibility,
with the objective of eliminating unnecessary duplication of
effort and minimizing overall costs.

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(d)  Indemnification.  Each party to this Agreement
covenants and agrees to (i) fully indemnify and save harmless the
other party to this Agreement from and against any payments which
are the responsibility of such party under this Agreement, and
all expenses, including attorneys' fees and expenses and other
expenses of any court or regulatory proceeding, incurred by such
other parties in defending any claim that it is liable for such
payments, and (ii) defend such other party against such claims
with counsel selected by such party and reasonably acceptable to
such other party.

(e)  Specified Level Damages.  Sections 14(a) (Sole
Responsibility) and 14(b) (NSR-CSXT Joint Responsibility) shall
apply directly only when the total amount of all Damages
resulting from a single incident is $25 million or less. 
Responsibility for Damages resulting from a single incident for
which Damages exceed $25 million shall be classified as "Tier One
Damages" or "Tier Two Damages" and allocated as stated in
subparagraphs (i), (ii) and (iii) of this Section 14(e). 

(i)  In this Section 14(e), "Tier One Damages" 
for any incident include the greater of (1) $25 million of Damages 
or (2) an amount equal to all combined liability insurance 
benefits available to whichever of NSR or CSXT has the lesser 
(as between them) amount of insurance benefits available to it 
applicable to that incident, but only to the extent that benefits 
are actually available.

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(ii) Tier One Damages shall be allocated between
NSR and CSXT in accordance with Sections 14(a) (Sole
Responsibility) and 14(b) (NSR-CSXT Joint Responsibility).

(iii)   In this Section 14(e), "Tier Two Damages"
include all of those Damages in excess of the Tier One Damages
calculated under Section 14(e)(i).  Tier Two Damages shall be
allocated between the parties hereto in proportion to their
respective fault or negligence in causing the Damage.

(f)  Exceptions.  Each party shall assume and bear all
responsibility for Damage to the extent caused by acts or
omissions of any of its employees while under the influence of
drugs or alcohol and Sections 14(b) and (e) shall not apply to
any such Damage.  Notwithstanding any other provision of this
Agreement including, without limitation, both clauses of the last
sentence of Section 14(a) and Section 9(B)(a)(viii), no NSR
employee handling a CSXT train or performing other functions on
the Monongahela shall be treated as a CSXT employee for purposes
of this Section 14(f).

(g)  Damages.  As used in this Section 14 only, the
term "Damage(s)" shall exclude Railroad Consequential Damages
(which are always borne by whichever of NSR or CSXT sustained
them) and claims for exemplary and punitive Damages.  With regard
to exemplary and punitive Damages, the parties acknowledge and
agree that, with regard to the subject of this Agreement, the
intent and agreement of the parties is that no party shall bring
or recover any claim for exemplary or punitive damages, in its
own right, against any other party, but that any party will
allocate, in accordance with this Section 14, exemplary or
punitive Damages from any claim against it by a third person not
a party hereto.

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(h)  Limitation.  The parties hereto acknowledge that,
pursuant to the penultimate paragraph of the Carpenter/Tobias
Letter, CSXT can elect to operate its own trains with its own
crews, and if CSXT exercises that election in the future and runs
its own trains with its own crews, the provisions of clause (ii)
of the last sentence of Section 14(a) shall not apply during any
such CSXT operations.

Section 15.  No Partnership.  

Nothing in this Agreement shall be construed to
establish a partnership or joint venture between or among CSXT or
NSR or any of their affiliates or associates.

Section 16.  Arbitration.

Any dispute, controversy or claim (or any failure by
the parties to agree on a matter as to which this Agreement
expressly or implicitly contemplates subsequent agreement by the
parties, except for matters left to the sole discretion of a

-37-

party) arising out of or relating to this Agreement, or the
breach, termination or validity hereof, shall be finally settled
through binding arbitration by a sole, disinterested arbitrator
in accordance with the Commercial Arbitration Rules of the AAA. 
The arbitrator shall be jointly selected by the parties, but if
the parties do not agree on an arbitrator within 30 days after
demand for arbitration is made by a party, they shall request
that the arbitrator be designated by the AAA.  The award of the
arbitrator shall be final, binding and conclusive upon the
parties.  Each party to the arbitration shall pay the
compensation, costs, fees and expenses of its own witnesses,
experts and counsel.  The compensation, and any costs and
expenses of the arbitrator, shall be borne equally by the
parties.  The arbitrator shall have the power to require the
performance of acts, found to be required by this Agreement, and
to require the cessation or nonperformance of acts found to be
prohibited by this Agreement.  The arbitrator shall not have the
power to award consequential or punitive damages.  Judgment upon
the award rendered may be entered in any court having
jurisdiction thereof, which court may award appropriate relief at
law or in equity.  All proceedings relating to any such
arbitration, and all testimony, written submissions and award of
the arbitrator therein, shall be private and confidential as
between the parties, and shall not be disclosed to any third
party, except as required by law and except as reasonably
necessary to prosecute or defend any judicial action to enforce,
vacate or modify such arbitration award.

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Section 17.  Force Majeure.   

The obligations, other than payment obligations, of the
parties to this Agreement shall be subject to force majeure
(which shall include strikes, riots, floods, accidents, Acts of
God, and other causes or circumstances beyond the control of the
party claiming such force majeure as an excuse for
non-performance), but only as long as, and to the extent that,
such force majeure shall prevent performance of such obligations.

Section 18.  Entire Agreement.

This Agreement, the Carpenter/Tobias Letter, and the
Transaction Agreement (including the other Ancillary Agreements,
as defined in the Transaction Agreement) constitute the entire
agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, except the letter agreement
dated April 8, 1997 between CSX and NSC to the extent such April
8, 1997 letter agreement covers matters not addressed or amended
hereby or in the Transaction Agreement or the Ancillary
Agreements (as defined in the Transaction Agreement); provided
that it is the intent of the parties that this Agreement shall be
an effectuation of such April 8, 1997 letter agreement consistent
with its terms, and that the provisions of this Agreement should
be interpreted to give effect to such April 8, 1997 letter
agreement; and provided further that, in the event of any
inconsistency between the terms of this Agreement and such April
8, 1997 letter agreement, this Agreement shall prevail.

-39-

Section 19.  Amendment and Waiver.

Any amendment to this Agreement must be in writing and
executed and delivered by CSXT, NSR, PRR, and NYC subject to any
jurisdiction of the STB.  Any waiver of any term or provision of
this Agreement must be in writing and executed and delivered by
the party entitled to enforcement of such term or provision.

Section 20.  Severability.

If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its
regulatory policy, such provision is to be intended to be
ineffective only to the most limited extent possible in such
context and the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

Section 21.  Remedies.

(a)  Each party acknowledges and agrees that the other
parties would be irreparably damaged in the event any of the
provisions of this Agreement were not performed by it in
accordance with their specific terms or were otherwise breached. 
It is accordingly agreed that each party shall be entitled to an
injunction or injunctions to prevent breaches of such provisions
and to specifically enforce such provisions, in addition to any
other remedy to which such party may be entitled, at law or in
equity.

-40-

(b)  In no event shall any party be liable to the other
parties for any consequential, indirect, incidental, punitive or
other similar damages including but not limited to lost profits
for any breach or default, or any act or omission arising out of
or in any way relating to this Agreement, under any form or
theory of action whatsoever, whether in contract, tort or
otherwise.

Section 22.  Interpretation.

This Agreement was drafted jointly by CSXT, NSR, PRR
and NYC, each of which was advised by its own counsel and other
advisors concerning all of the terms and provisions hereof;
accordingly, any ambiguity herein should not be construed in
favor of or against any of them.

Section 23.  Headings.

Headings of sections in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of any term or provision of this
Agreement.

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Section 24.  Parties.

This Agreement shall inure to the benefit of and be
binding upon NSR, CSXT, PRR, and NYC and any successor of any of
them by operation of law, and any assignee agreed to by them in
accordance with Section 25, and nothing in this Agreement is
intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or with respect to this
Agreement or any term or provision hereof.

Section 25.  Assignment.

(a)  Except as provided herein, neither this Agreement 
(including the documents and instruments referred to herein) nor
any of the rights, interests or obligations hereunder, shall be
assigned by any party, including by operation of law, without the
prior written consent of the other parties, except to a
controlled subsidiary, or in the case of PRR, to NS, NSR or a
subsidiary or affiliate of NS, and in the case of NYC, to CSX,
CSXT or a subsidiary or affiliate of CSX.

(b)  (i)  Except as otherwise provided herein, in the
event either of NSR or PRR proposes to sell or transfer its
interest in all or any portion of the Monongahela, CSXT shall
have the right of first refusal to purchase such interest at the
same price, and substantially the same terms and conditions
offered to NSR or PRR; provided CSXT must make such offer within
30 days of receiving notification from NSR or PRR of the price,
terms and conditions being offered by such other prospective
purchaser.

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(ii) In the event CSXT or NYC proposes to sell or
transfer its operating rights on all or any portion of the
Monongahela, NSR shall have the right of first refusal to
purchase such rights at the same price, and substantially the
same terms and conditions offered to CSXT or NYC, provided NSR
must make such offer within 30 days of receiving notification
from CSXT or NYC of the price, terms and conditions being offered
by such other prospective purchaser.

(c)  Any party without the consent of the other party
may assign all of its rights and obligations under this Agreement
only to any successor in the event of a merger, consolidation,
sale of all or substantially all its assets, including all routes
and lines owned by such party to access the Monongahela, if such
assignee executes and delivers to the other party hereto an
agreement reasonably satisfactory in form and substance to such
other party under which such assignee, which is reasonably
satisfactory to the other party, assumes and agrees to perform
and discharge all the obligations and Liabilities of the
assigning party; provided that any such assignment shall not
relieve the assigning party from the performance and discharge of
such obligations and Liabilities.

Section 26.  Term.

(a)  This Agreement shall become effective as of the
date first above written and shall remain in effect until the
25th anniversary of such date, and shall remain in effect
continuously thereafter unless and until terminated by CSXT or,
if the CSXT Operating Agreement shall have terminated, by NYC, in
its sole discretion, upon (90) days written notice.

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(b)  The rights, benefits, duties and obligations
running from or to NSR under this Agreement shall in all events
expire (except liabilities incurred prior to termination) upon
the earlier of:  (i) termination of this Agreement or (ii)
termination of the NSR Operating Agreement (including any
renewals thereof) and the rights, benefits, duties and
obligations running from or to CSXT under this Agreement shall in
all events expire (except liabilities incurred prior to
termination) upon the earlier of (i) termination of this
Agreement or (ii) termination of the CSXT Operating Agreement
(including any renewals thereof).  Notwithstanding any other
provision of this Agreement, (1) upon termination of the NSR
Operating Agreement, the rights, benefits, duties and obligations
running from or to NSR under this Agreement shall run from or to
PRR, and (2) upon termination of the CSXT Operating Agreement,
the rights, benefits, duties and obligations running from or to
CSXT under this Agreement shall run from or to NYC.  In the event
PRR is unable or unwilling to carry out the duties and
obligations of NSR or fails to designate an operator reasonably
satisfactory to NYC to do so, then NYC, or an operator designated
by NYC and satisfactory to PRR, shall have the option to carry
out such duties and obligations related solely to the
Monongahela.

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Section 27.  Termination of Other Agreement.

This Agreement, upon the effective date hereof,
supersedes and terminates the agreement by and between The
Monongahela Railway Company  (now CRC) and CSXT dated October 19,
1990, relating to CSXT trackage rights between Brown,
Pennsylvania, and Catawba Junction (Rivesville), West Virginia.

Section 28.  Notices.

Any notice given by CSXT, NSR, PRR, or NYC to the
others under this Agreement shall be deemed delivered on the date
sent by registered mail, or by such other means as they may
agree, and shall be addressed to them as follows:

(a)  If to CSXT:

Executive Vice President and 
Chief Operating Officer
CSX Transportation, Inc.
500 Water Street, J120
Jacksonville, Florida  32202

(b)  If to NSR:

Senior Vice President Operations
Norfolk Southern Railway Company
Three Commercial Place
Norfolk, Virginia  23510-2191

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(c)  If to PRR:

PRR
2001 Market Street
Philadelphia, Pennsylvania 19103
Attention: Vice President-General Counsel

Copy to:

Senior Vice President Operations
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510

(d)  If to NYC:

NYC
2001 Market Street
Philadelphia, Pennsylvania 19103
Attention: Vice President-General Counsel

Copy to:

Executive Vice President and 
Chief Operating Officer
CSX Transportation, Inc.
500 Water Street, J120
Jacksonville, Florida 32202

and each of them may from time to time change its address in this
Section 28 by written notice delivered to the others.

-46-

Section 29.  Governing Law.

This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without
regard to principles of conflicts of laws.

-47-

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in counterparts by their duly authorized
officials as of the day first above written.

CSX TRANSPORTATION, INC.

By:  /s/  Peter J. Shudtz

Title:    Vice President - Law and 
General Counsel - CSX
Corporation, authorized agent
for CSX Transportation, Inc. 

NORFOLK SOUTHERN RAILWAY COMPANY

By:  /s/ J. L. Manetta                                

Title: Senior Vice President Operations

PENNSYLVANIA LINES LLC

By:   /s/ James D. McGeehan         

Title:  Assistant Treasurer

NEW YORK CENTRAL LINES LLC

By:   /s/ C. A. Cook    

Title:    Vice President and Assistant Secretary

-48-

EXHIBIT "A" [MAP] 

Map of Monongahela Mine District 

<ARTICLE>      5
<MULTIPLIER>   1,000,000

<PERIOD-TYPE>                                           6-MOS
<FISCAL-YEAR-END>                                       DEC-31-1999
<PERIOD-END>                                            JUN-30-1999
<CASH>                                                  $   105
<SECURITIES>                                                 17
<RECEIVABLES>                                               721
<ALLOWANCES>                                                  5
<INVENTORY>                                                  54
<CURRENT-ASSETS>                                          1,187
<PP                                                   15,626
<DEPRECIATION>                                            4,757
<TOTAL-ASSETS>                                           18,874
<CURRENT-LIABILITIES>                                     1,819
<BONDS>                                                   7,393
<PREFERRED-MANDATORY>                                         0
<PREFERRED>                                                   0
<COMMON>                                                    402
<OTHER-SE>                                                5,579
<TOTAL-LIABILITY-AND-EQUITY>                             18,874
<SALES>                                                       0
<TOTAL-REVENUES>                                          2,224
<CGS>                                                         0
<TOTAL-COSTS>                                             1,789
<OTHER-EXPENSES>                                            (97)
<LOSS-PROVISION>                                              0
<INTEREST-EXPENSE>                                          259
<INCOME-PRETAX>                                             273
<INCOME-TAX>                                                 84
<INCOME-CONTINUING>                                         189
<DISCONTINUED>                                                0
<EXTRAORDINARY>                                               0
<CHANGES>                                                     0
<NET-INCOME>                                                189
<EPS-BASIC>                                              0.50
<EPS-DILUTED>                                              0.50