Exhibit 10.3

          THIS AGREEMENT Made this 15th day of December, 1931,
between THE BALTIMORE AND OHIO RAILROAD COMPANY, hereinafter
called "BALTIMORE COMPANY", and the BUFFALO, ROCHESTER AND
PITTSBURGH RAILWAY COMPANY, hereinafter called the "ROCHESTER
COMPANY".

          WHEREAS the Rochester Company operates a railroad
connecting with the railroad system of the Baltimore Company at
Butler, Pennsylvania, and extending northwardly to Ashford, New
York, at which point it separates into two lines, one extending
to Buffalo and the other to Rochester, New York, with certain
branches, the principal branches being to Clearfield,
Pennsylvania, and Vintondale, Pennsylvania, the greater part of
said railroad being owned by the Rochester Company and held under
perpetual lease, and a part thereof being operated under trackage
agreements, and also operates into Pittsburgh, Pennsylvania, and
New Castle, Pennsylvania, under trackage agreements with the
Baltimore Company; and

          WHEREAS the Baltimore company, at the time of the
signing hereof, is the owner of more than 99-l/2 per cent. of the
entire capital stock of the Rochester Company, and the operation
by the Baltimore Company of the railroad and appurtenances and
property of the Rochester Company in conjunction with other lines
of railroad owned and operated by the Baltimore Company will
afford continuous routes for the transportation of passengers and
freight and will result in more efficient service to the public
and savings in operating and accounting expense; and

          WHEREAS the Interstate Commerce Commission in its
report and order dated November 19, 1931, Finance Docket 8947,
found that the acquisition by the Baltimore Company of control of
the lines of the Rochester Company under an operating agreement,
and upon the terms proposed, would be in the public interest:

          NOW, THEREFORE, the parties hereto have agreed as
follows:

          Operation under the several agreements between the
Baltimore Company and certain of its subsidiary companies and the
Allegheny and Western Railway Company, and the Rochester Company
as Lessee, all dated January 1, 1918, covering the use of the
Baltimore company's tracks between Butler Junction and New
Castle, Pennsylvania, and between Ribold Junction and Pittsburgh,
Pennsylvania, and the use of certain tracks in New Castle
Junction Yard, and the handling of carload business to and from
industries at Pittsburgh, and trackage to and the use of the
Smithfield station facilities at Pittsburgh, is hereby suspended
during the continuance of operation under this agreement.

          The Baltimore Company will, in conformity with State
and Federal laws, operate all of the lines of railroad, property
and appurtenances of the Rochester company, including the lines
of railroad and railroad properties of all lines owned and leased
by it and/over which it has trackage rights, in the same manner
and to the full extent that the Rochester Company now operates or
has the right to operate over such lines of railroad, together
with all appurtenances thereof, including all lands, terminals,
stations, machine shops and machinery, round-houses and other
buildings owned by or leased to the Rochester Company, whether
used by it at the date of this agreement or otherwise, and also
all tools, machinery and other personal property and all engines,
passenger, freight and work equipment.

          The Baltimore Company during the term of this agreement
shall have the benefit of and assume obligation with respect to
all lines of railroad, leases, trackage agreements, switching
agreements and agreements for handling traffic, as well as a
agreements with telegraph and telephone companies and other
agreements pertaining to the operation of said lines of railroad
and property in so far as such agreements may be sub-let or
assigned or the right to enjoy the benefits thereof granted to
the Baltimore Company.

          The Baltimore Company shall during the term of this
agreement receive for its own use and benefit all revenues and
receipts from said operations, and shall pay all expenses and
charges incident to said operations, including depreciation on
way, structures, equipment and other property of the Rochester
Company and its leased lines accrued or accruing on or after the
date of this agreement; it being understood between the parties
hereto that said revenues and receipts and said expenses and
charges shall include equipment rents, joint facility rents, and
all other items of whatever character (except taxes for which
provision is made hereinafter) as are includible in Net Railway
Operating Income as that term is now or may hereafter be defined
by the Interstate Commerce Commission, and as to all such items
the Baltimore Company shall not be required to keep separate
accounts or make separate reports or account therefor to the
Rochester Company except as may be required by law.

          The Baltimore Company shall also receive all other
income of every kind whatsoever derived from the property of the
Rochester Company not used for railroad purposes, including all
dividends from the stock of other corporations and all interest
on bonds or moneys owned by the Rochester Company, and the
Baltimore Company will pay all expenses and charges payable by
the Rochester Company in respect of such property, and as to all
such items the Baltimore Company shall not be required to keep
separate accounts or make separate report or account therefor to
the Rochester Company except as may be required by law.

          The Baltimore Company shall at its own expense maintain
said lines of railroad in as good operating condition as said
railroad lines are at the date hereof, and when and as necessary
for safe and efficient operation shall replace and renew all
tracks, bridges and other structures, facilities and
appurtenances, and the Baltimore Company shall pay so much of the
cost thereof as under the then prevailing accounting
classifications of the Interstate Commerce Commission is
chargeable to expenses or against income.

          The Baltimore Company will at its own expense maintain
all equipment of the Rochester Company ad of its leased lines in
the same condition in which like equipment is maintained by
railroads of the first class, and shall on or before the
termination of this agreement restore or account to the Rochester
company for the record value of any/equipment retired or
destroyed, less depreciation accrued by the Rochester Company on
said equipment up to the effective date hereof.

          The Baltimore Company will, at the termination of this
agreement, account for all cash and the value of materials and
supplies and other assets belonging to and taken over from the
Rochester Company, and shall charge to said account any and all
unliquidated amounts then found to be due by the Rochester
Company to the Baltimore Company.

          The Baltimore Company will, during the term of this
agreement, assume and carry out all unfulfilled and continuing
contracts of the Rochester Company pertaining to the operation of
said lines of railroad and other property, the use of which is
hereby granted, and will, at its own cost and expense, maintain
and defend all pending or future actions or suits for or against
the Rochester Company with respect to said contacts.

          The Baltimore Company will, as additional consideration
for the use of the property hereby granted, pay to the Rochester
company a sum or sums sufficient to pay the following charges as
and when such charges become due and payable:

          All costs of maintaining the corporate existence of the
Rochester Company including any taxes in respect thereof;

          All taxes payable in respect to all property the use of
which is hereby granted including income and other taxes assessed
against the Rochester Company on amounts paid to it or for its
account for the use of the property covered hereby;

          All rental for leased lines and other property,
interest on all bonds and equipment obligations, and all other
interest bearing obligations of the Rochester Company outstanding
at any time during this agreement, except bonds or other interest
bearing obligations owned by the Baltimore Company at the time
interest payments are due, and, as to the interest on such
obligations, so owned, the Baltimore Company will give to the
Rochester Company a proper acquittance;

          Amounts equal to an annual dividend at the rate of
$4.00 per share on all common stock and $6.00 per share on all
preferred stock of the Rochester Company outstanding, except on
such stock as may be owned by the Baltimore Company.

          During the term of this agreement and to the extent the
Rochester Company may not have available funds or other means of
financing its capital requirements, the Baltimore Company will
advance as a loan to the Rochester Company all necessary funds
for authorized additions, betterments, extensions and
improvements to the property, the use of which is hereby granted,
and to the extent such additions, betterments, extensions and
improvements are chargeable to capital or investment account
under the then effective accounting regulations of the Interstate
Commerce Commission.  The Baltimore Company will likewise, under
the same circumstances, advance as a loan funds sufficient to pay
the principal of maturing obligations of the Rochester Company.
For all such loans or advances the Rochester Company shall give
to the Baltimore Company its mortgage bonds secured by the best
available lien upon its property or such other obligations as may
be acceptable to the Baltimore Company, which bonds or other
obligations will be taken by the Baltimore Company at their then
market value.

          Instead of paying direct to the Rochester Company any
sum or sums herein provided, the Baltimore Company may, if it so
elects, pay all or any said sums directly to the payee thereof at
the time such sums are due and payable.

          The obligation of the Baltimore Company to pay any of
the sums herein provided for is exclusively for the benefit of
the Rochester Company, and the Baltimore Company shall not be
required to pay any such sums so long as in good faith the
Baltimore Company or the Rochester Company contest liability
therefor.

          This agreement shall become effective as and from the
First day of January, 1932, and shall continue until terminated
by sixty days' notice in writing given by either party hereto.


          IN WITNESS WHEREOF the parties hereto have caused this
agreement to be executed in duplicate originals the day and year
first above written.

                             THE BALTIMORE AND OHIO RAILROAD
COMPANY



                         By: /s/ Daniel Willard
                             ------------------
                                        President.

Attest:

     /s/ G.  R. May
     --------------
               Secretary.

                         BUFFALO, ROCHESTER AND PITTSBURGH
                         RAILWAY COMPANY
                         
                         
                         
                         By:  /s/ W. T. Noonan
                              ----------------
                                        President.
Attest:

     /s/ U. V. Clark
     ---------------
               Secretary.