Document/Exhibit Description Pages Size
1: 10-K Annual Report 33 146K
2: EX-3 Exhibit 3.2 9 35K
3: EX-4 Exhibit 4.16E 10 31K
4: EX-4 Exhibit 4.17C 12 29K
5: EX-10 Exhibit 10.10 67 222K
6: EX-10 Exhibit 10.15 96 292K
7: EX-10 Exhibit 10.26 3 16K
8: EX-10 Exhibit 10.60 6 28K
9: EX-10 Exhibit 10.61 21 70K
10: EX-10 Exhibit 10.62 21 70K
11: EX-10 Exhibit 10.63 21 70K
12: EX-10 Exhibit 10.64 21 70K
13: EX-10 Exhibit 10.65 21 70K
14: EX-10 Exhibit 10.66 21 70K
15: EX-10 Exhibit 10.67 51 214K
16: EX-10 Exhibit 10.68 8 23K
17: EX-10 Exhibit 10.69 1 7K
18: EX-13 Annual or Quarterly Report to Security Holders 29 115K
19: EX-21 Subsidiaries of the Registrant 1 7K
20: EX-27 Financial Data Schedule (Pre-XBRL) 1 11K
22: EX-99 Exhibit 99.1 2 10K
21: EX-99 Miscellaneous Exhibit 2 9K
AGREEMENT AND PLAN OF MERGER
by and among
UNION PACIFIC CORPORATION,
UP RAIL, INC.
and
CHICAGO AND NORTH WESTERN TRANSPORTATION COMPANY
dated as of
March 16, 1995
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER AND MERGER . . . . . . . . . . 1
Section 1.1 The Offer . . . . . . . . . . . . . . . . 1
Section 1.2 Company Actions . . . . . . . . . . . . . 3
Section 1.3 Directors . . . . . . . . . . . . . . . . 4
Section 1.4 The Merger . . . . . . . . . . . . . . . 6
Section 1.5 Effective Time . . . . . . . . . . . . . 7
Section 1.6 Closing . . . . . . . . . . . . . . . . . 7
Section 1.7 Directors and Officers of the
Surviving Corporation . . . . . . . 7
Section 1.8 Stockholders' Meeting . . . . . . . . . . 7
Section 1.9 Merger Without Meeting of
Stockholders . . . . . . . . . . . . 8
ARTICLE II CONVERSION OF SHARES . . . . . . . . . . 9
Section 2.1 Conversion of Capital Stock . . . . . . . 9
Section 2.2 Exchange of Certificates . . . . . . . . 9
Section 2.3 Company Option Plans and
Agreements . . . . . . . . . . . . . 10
Section 2.4 No Dissenter's Rights . . . . . . . . . . 12
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE COMPANY . . . . . . . . . . . 12
Section 3.1 Organization . . . . . . . . . . . . . . 12
Section 3.2 Capitalization . . . . . . . . . . . . . 13
Section 3.3 Corporate Authorization;
Validity of Agreement;
Company Action . . . . . . . . . . . 15
Section 3.4 Consents and Approvals; No
Violations . . . . . . . . . . . . . 16
Section 3.5 SEC Reports and Financial
Statements . . . . . . . . . . . . . 17
Section 3.6 Absence of Certain Changes . . . . . . . 17
Section 3.7 Information in Proxy
Statement . . . . . . . . . . . . . . . . 18
Section 3.8 Employee Benefit Plans; ERISA . . . . . . 18
Section 3.9 Litigation; Compliance with
Law . . . . . . . . . . . . . . . . 20
Section 3.10 Taxes . . . . . . . . . . . . . . . . . . 21
Section 3.11 Environmental Matters . . . . . . . . . . 21
Section 3.12 Opinion of Financial Advisors . . . . . . 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER . . . . 22
Section 4.1 Organization . . . . . . . . . . . . . . 22
i
Page
Section 4.2 Authorization; Validity of
Agreement; Necessary Action . . . . 23
Section 4.3 Consents and Approvals;
No Violations . . . . . . . . . . . 23
Section 4.4 Information in Proxy
Statement; Schedule 14D-9 . . . . . 24
Section 4.5 Financing . . . . . . . . . . . . . . . . 24
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . 24
Section 5.1 Interim Operations of the
Company . . . . . . . . . . . . . . 24
Section 5.2 Access to Information . . . . . . . . . . 27
Section 5.3 Consents and Approvals . . . . . . . . . 27
Section 5.4 Employee Benefits . . . . . . . . . . . . 28
Section 5.5 No Solicitation . . . . . . . . . . . . . 31
Section 5.6 Additional Agreements . . . . . . . . . . 33
Section 5.7 Publicity . . . . . . . . . . . . . . . . 33
Section 5.8 Notification of Certain
Matters . . . . . . . . . . . . . . 33
Section 5.9 Directors' and Officers'
Insurance and Indemnification . . . 34
Section 5.10 Conversion of Non-Voting
Common Stock . . . . . . . . . . . . 35
Section 5.11 ICC Determination . . . . . . . . . . . . 36
ARTICLE VI CONDITIONS . . . . . . . . . . . . . . . 36
Section 6.1 Conditions to Each Party's
Obligation To Effect the Merger . . 36
Section 6.2 Conditions to Parent's
Obligation To Effect the Merger . . 37
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . 37
Section 7.1 Termination . . . . . . . . . . . . . . . 37
Section 7.2 Effect of Termination . . . . . . . . . . 39
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . 40
Section 8.1 Fees and Expenses . . . . . . . . . . . . 40
Section 8.2 Finders' Fees . . . . . . . . . . . . . . 40
Section 8.3 Amendment and Modification . . . . . . . 41
Section 8.4 Nonsurvival of Representations
and Warranties . . . . . . . . . . . 41
Section 8.5 Notices . . . . . . . . . . . . . . . . . 41
Section 8.6 Interpretation . . . . . . . . . . . . . 42
Section 8.7 Counterparts . . . . . . . . . . . . . . 42
ii
Page
Section 8.8 Entire Agreement; No Third
Party Beneficiaries;
Rights of Ownership . . . . . . . . 43
Section 8.9 Severability . . . . . . . . . . . . . . 43
Section 8.10 Governing Law . . . . . . . . . . . . . . 43
Section 8.11 Assignment . . . . . . . . . . . . . . . 43
CONDITIONS TO THE TENDER OFFER . . . . . . . . . . . . . Annex A
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 16,
1995, by and among Union Pacific Corporation, a Utah corporation
("Parent"), UP Rail, Inc., a Utah corporation and an indirect,
wholly owned subsidiary of Parent (the "Purchaser"), and Chicago
and North Western Transportation Company, a Delaware corporation
(the "Company").
WHEREAS, the Boards of Directors of Parent, the
Purchaser and the Company have approved, and deem it advisable
and in the best interests of their respective shareholders to
consummate, the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. (a) As promptly as
practicable (but in no event later than five business days after
the public announcement of the execution hereof), the Purchaser
shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
an offer (the "Offer") to purchase for cash all of the issued and
outstanding shares of Common Stock, par value $.01 per share
(referred to herein as either the "Shares" or "Company Common
Stock"), of the Company at a price of $35.00 per Share, net to
the seller in cash (such price, or such higher price per Share as
may be paid in the Offer, being referred to herein as the "Offer
Price"), subject to there being validly tendered and not
withdrawn prior to the expiration of the Offer, that number of
Shares which, together with the shares of Non-Voting Common
Stock, par value $.01 per Share (the "Non-Voting Shares"), of the
Company beneficially owned by Parent or the Purchaser (assuming
conversion of such Non-Voting Shares into Shares), represent at
least a majority of the Shares outstanding on a fully diluted
basis (assuming conversion of the Non-Voting Shares into Shares)
(the "Minimum Condition") and to the other conditions set forth
in Annex A hereto. The Purchaser shall, on the terms and subject
to the prior satisfaction or waiver (except that the Minimum
Condition may not be waived) of the conditions of the Offer,
accept for payment and pay for Shares tendered as soon as
practicable after it is permitted to do so under the Exchange
Act. The obligations of the Purchaser to commence the Offer and
to accept for payment and to pay for any Shares validly tendered
on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other
conditions set forth in Annex A hereto. The Offer shall be made
by means of an offer to purchase (the "Offer to Purchase")
containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Annex A hereto.
Without the written consent of the Company (such consent to be
authorized by the Board of Directors of the Company or a duly
authorized committee thereof), the Purchaser shall not amend or
waive the Minimum Condition and shall not decrease the Offer
Price or decrease the number of Shares sought, or amend any other
condition of the Offer in any manner adverse to the holders of
the Shares, provided, however, that if on the initial scheduled
expiration date of the Offer (as it may be extended), all
conditions to the Offer shall not have been satisfied or waived,
the Offer may be extended from time to time until June 30, 1995
without the consent of the Company. In addition, the Offer Price
may be increased and the Offer may be extended to the extent
required by law in connection with such increase in each case
without the consent of the Company.
(b) As soon as practicable on the date the Offer
is commenced, Parent and the Purchaser shall file with the United
States Securities and Exchange Commission (the "SEC") (i) a
Tender Offer Statement on Schedule 14D-1 with respect to the
Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1") which will
include, as exhibits, the Offer to Purchase and a form of letter
of transmittal and summary advertisement (collectively, together
with any amendments and supplements thereto, the "Offer
Documents"), and (ii) a Rule 13e-3 Transaction Statement on
Schedule 13E-3 (together with any supplements or amendments
thereto, the "Schedule 13E-3") with respect to the Offer. Parent
and the Purchaser represent that the Offer Documents and the
Schedule 13E-3 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date
filed with the SEC and on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is
made by Parent or the Purchaser with respect to information
supplied by the Company in writing for inclusion in the Offer
Documents or the Schedule 13E-3. Each of Parent and the Purchas-
er further agrees to take all steps necessary to cause the Offer
Documents and the Schedule 13E-3 to be filed with the SEC and to
be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Each of
Parent and the Purchaser, on the one hand, and the Company, on
the other hand, agrees promptly to correct any information
provided by it for use in the Offer Documents and/or the Schedule
13E-3 if and to the extent that it shall have become false and
misleading in any material respect, and Parent and the Purchaser
further agree to take all steps necessary to cause the Offer
2
Documents and/or the Schedule 13E-3, as the case may be, as so
corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel
shall be given the opportunity to review the Schedule 14D-1 and
the Schedule 13E-3 before they are filed with the SEC. In
addition, Parent and the Purchaser agree to provide the Company
and its counsel in writing with any comments Parent, the
Purchaser or their counsel may receive from time to time from the
SEC or its staff with respect to the Offer Documents or the
Schedule 13E-3 promptly after the receipt of such comments.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents
to the Offer and represents that the Board of Directors, at a
meeting duly called and held, has unanimously (with Richard K.
Davidson absent and not voting) (i) determined that each of the
Offer and the Merger (as defined in Section 1.4) is fair to and
in the best interests of the Company's stockholders (other than
Parent and the Purchaser), (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the
Merger (collectively, the "Transactions"), (iii) resolved to
recommend that the stockholders of the Company accept the Offer,
tender their Shares thereunder to the Purchaser and approve and
adopt this Agreement and the Merger; provided, however, that such
recommendation may be withdrawn, modified or amended only to the
extent that the Board of Directors of the Company determines,
based on an opinion of outside legal counsel to the Company, that
the failure to take such action would likely result in a breach
of the Board of Directors' fiduciary duties under applicable
laws; and (iv) to the extent required, approved this Agreement,
the Offer, the Merger, the Company Stock Option Agreement (as
defined in Section 1.9) and the transactions contemplated hereby
and thereby for purposes of Section 203 of the Delaware General
Corporation Law ("DGCL"). The Company further represents that
The Blackstone Group L.P. ("Blackstone") has delivered to the
Board of Directors of the Company its opinion that the cash
consideration to be received by the holders of Shares pursuant to
the Offer and the Merger is fair to such holders from a financial
point of view.
(b) Concurrently with the commencement of the
Offer, the Company shall file with the SEC a Solici-
tation/Recommendation Statement on Schedule 14D-9 (together with
all amendments and supplements thereto and including the exhibits
thereto, the "Schedule 14D-9") which shall contain the
recommendation referred to in clauses (i), (ii) and (iii) of
Section 1.2(a) hereof and will join in the filing of the Schedule
13E-3. The Company represents that the Schedule 14D-9 and the
Schedule 13E-3 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date
3
filed with the SEC and on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by
Parent or the Purchaser for inclusion in the Schedule 14D-9 or
the Schedule 13E-3. The Company further agrees to take all steps
necessary to cause the Schedule 14D-9 and the Schedule 13E-3 to
be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable
federal securities laws. Each of the Company, on the one hand,
and Parent and the Purchaser, on the other hand, agrees promptly
to correct any information provided by it for use in the Schedule
14D-9 and the Schedule 13E-3 if and to the extent that it shall
have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the
Schedule 14D-9 and the Schedule 13E-3 as so corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given the
opportunity to review the Schedule 14D-9 and the Schedule 13E-3
before it is filed with the SEC. In addition, the Company agrees
to provide Parent, the Purchaser and their counsel in writing
with any comments the Company or its counsel may receive from
time to time from the SEC or its staff with respect to the
Schedule 14D-9 and the Schedule 13E-3 promptly after the receipt
of such comments.
(c) In connection with the Offer, the Company
will promptly furnish or cause to be furnished to the Purchaser
mailing labels, security position listings and any available
listing or computer file containing the names and addresses of
the record holders of the Shares as of a recent date, and shall
furnish the Purchaser with such information and assistance as the
Purchaser or its agents may reasonably request in communicating
the Offer to the stockholders of the Company.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for
any Shares by the Purchaser or any other subsidiary of Parent
pursuant to the Offer which, together with the Non-Voting Shares,
represents at least a majority of the outstanding shares of
Company Common Stock (on a fully diluted basis and assuming
conversion of the Non-Voting Shares into Shares), Parent shall be
entitled to designate such number of directors, rounded up to the
next whole number, on the Board of Directors of the Company as is
equal to the product of the total number of directors on such
Board (giving effect to the existing representatives of Parent
serving on the Board of Directors, including representatives
4
which Parent has the right to designate under the 1993 Agreement
(as defined in Section 3.2), and the directors designated by
Parent pursuant to this sentence) multiplied by the ratio of the
aggregate number of Shares and Non-Voting Shares (if any)
beneficially owned by the Purchaser, Parent and any of their
affiliates to the total number of Shares and Non-Voting Shares
(if any) then outstanding. Promptly after consummation of the
Offer, the Company shall, upon request of the Purchaser, use its
best efforts promptly either to increase the size of its Board of
Directors or, at the Company's election, secure the resignations
of such number of its incumbent directors as is necessary to
enable Parent's designees to be so elected or appointed to the
Company's Board, and shall cause Parent's designees to be so
elected or appointed. At such time, the Company shall also cause
persons designated by Parent to constitute the same percentage
(rounded up to the next whole number) as is on the Company's
Board of Directors of (i) each committee of the Company's Board
of Directors, (ii) each board of directors (or similar body) of
each Subsidiary (as defined in Section 3.1) of the Company and
(iii) each committee (or similar body) of each such board, in
each case only to the extent permitted by applicable law or the
rules of any stock exchange on which the Company Common Stock is
listed. Notwithstanding the foregoing, until the Effective Time
(as defined in Section 1.5 hereof), the Company and Parent shall
use all reasonable efforts to retain as members of its Board of
Directors at least three (3) directors who are directors of the
Company on the date hereof and are not representatives of Parent
(the "Company Directors"); provided, that subsequent to the
purchase of and payment for Shares pursuant to the Offer, Parent
shall always have its designees represent at least a majority of
the entire Board of Directors. As used in this Agreement, the
term "Company Directors" shall initially mean each of Messrs.
James R. Thompson, Samuel K. Skinner and Harold A. Poling;
provided that in the event that any of such initial directors
resigns or otherwise ceases to be a director for any reason, then
the other Company Directors shall have the right, by majority
vote, to designate a replacement for such directors (and such
replacement shall be a "Company Director"). If for any reason at
any time prior to the Effective Time no Company Directors then
remain, the other directors shall use reasonable best efforts to
designate three persons to be the Company Directors, none of whom
shall be directors, officers, employees or affiliates of Parent
or the Purchaser.
(b) The Company's obligations under Section 1.3(a)
shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take
all actions required pursuant to such Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section
1.3(a), including mailing to stockholders as part of the Schedule
14D-9 the information required by such Section 14(f) and Rule
14f-1, as is necessary to enable Parent's designees to be elected
5
to the Company's Board of Directors. Parent or the Purchaser
will supply the Company any information with respect to either of
them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1. The provisions of
this Section 1.3(a) are in addition to and shall not limit any
rights which the Purchaser, Parent or any of their affiliates may
have as a holder or beneficial owner of Shares or Non-Voting
Shares as a matter of law with respect to the election of
directors or otherwise (except that, as provided above, the
number of directors that Parent shall have the right to designate
pursuant to this Section 1.3 shall include the representatives
which Parent has the right to designate under the 1993
Agreement).
(c) The concurrence of a majority of the Company
Directors shall be required for any amendment or termination of
this Agreement by the Company, any waiver of any of the Company's
rights hereunder or otherwise pursuant to Section 8.3 hereof, any
extension of the time for performance of Parent's or the
Purchaser's obligations or other acts hereunder, or any other
action taken by the Company's Board of Directors in connection
with this Agreement (including actions to enforce this
Agreement); provided, that if there shall be no such directors
notwithstanding the reasonable best efforts of the other
directors to appoint Company Directors, such actions may be
effected by majority vote of the entire Board of Directors of the
Company.
Section 1.4 The Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time (as defined
in Section 1.5 hereof), the Company and the Purchaser shall
consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the
separate corporate existence of the Purchaser shall thereupon
cease, (b) the Company shall be the successor or surviving
corporation in the Merger and shall continue to be governed by
the laws of the State of Delaware, and (c) the separate corporate
existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by
the Merger. Pursuant to the Merger, (x) the Restated Certificate
of Incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation
of the Surviving Corporation (as defined below) until thereafter
amended as provided by law and such Restated Certificate of
Incorporation, and (y) the By-laws of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of
the Surviving Corporation until thereafter amended as provided by
law, the Restated Certificate of Incorporation and such By-laws.
The corporation surviving the Merger is sometimes hereinafter
referred to as the "Surviving Corporation." The Merger shall
have the effects set forth in the DGCL and the Utah Business
Corporation Act ("UBCA").
6
Section 1.5 Effective Time. Parent, the Purchaser and
the Company will cause appropriate Certificates of Merger or, if
applicable, Certificates of Ownership and Merger (the
"Certificates of Merger") to be executed and filed on the date of
the Closing (as defined in Section 1.6) (or on such other date as
Parent and the Company may agree) with the Secretary of State of
the State of Delaware (the "Secretary of State") as provided in
the DGCL and with the Division of Corporations and Commercial
Code of the State of Utah (the "Division") as provided in the
UBCA. The Merger shall become effective on the date on which the
Certificates of Merger have been duly filed with the Secretary of
State and the Division or such time as is agreed upon by the
parties and specified in the Certificates of Merger, and such
time is hereinafter referred to as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York time, on a
date to be specified by the parties, which shall be no later than
the first business day after satisfaction or waiver of all of the
conditions set forth in Article VI hereof (the "Closing Date"),
at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022, unless another date or place
is agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving
Corporation. The directors and officers of the Purchaser at the
Effective Time shall, from and after the Effective Time, be the
directors and officers, respectively, of the Surviving Corpora-
tion until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation
or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-laws.
Section 1.8 Stockholders' Meeting.
(a) If required by applicable law in order to
consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Special
Meeting") as soon as practicable following the acceptance
for payment and purchase of Shares by the Purchaser pursuant
to the Offer for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the SEC a
preliminary proxy or information statement relating to the
Merger and this Agreement and use its best efforts (x) to
obtain and furnish the information required to be included
by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, to respond promptly to
7
any comments made by the SEC with respect to the preliminary
proxy or information statement and cause a definitive proxy
or information statement (the "Proxy Statement") to be
mailed to its stockholders and (y) to obtain the necessary
approvals of the Merger and this Agreement by its
stockholders; and
(iii) subject to the fiduciary obligations
of the Board under applicable law as advised by independent
counsel, include in the Proxy Statement the recommendation
of the Board that stockholders of the Company vote in favor
of the approval of the Merger and the adoption of this
Agreement.
(b) Not later than promptly following the
consummation of the Offer and receipt of the ICC Final Approval
(as defined in Section 3.4 hereof), Parent will convert or cause
to be converted all of its Non-Voting Shares into Shares. Parent
agrees that it will vote, or cause to be voted, all of the Shares
then owned by it, the Purchaser or any of its other subsidiaries
and affiliates in favor of the approval of the Merger and the
adoption of this Agreement.
Section 1.9 Merger Without Meeting of Stockholders.
Notwithstanding Section 1.8 hereof, in the event that Parent, the
Purchaser or any permitted assignee of Purchaser shall acquire at
least 90% of the outstanding shares of the capital stock of the
Company, pursuant to the Offer, the Company Stock Option
Agreement (as defined below), the conversion of Non-Voting Shares
into Shares or, subsequent to consummation of the Offer, by any
other means, the parties hereto agree, at the request of Parent
and subject to Article VI hereof, to take all necessary and
appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of
the DGCL and Sections 1104 and 1107 of the UBCA. In connection
therewith, Parent and the Company are entering into a Company
Stock Option Agreement, dated as of the date hereof (the "Company
Stock Option Agreement"), pursuant to which, subject to Parent
having previously acquired at least 85% of the outstanding Shares
(assuming conversion of the Non-Voting Shares into Shares) and
other conditions set forth therein, Parent shall have the right
to purchase from the Company a sufficient number of Shares such
that such Shares purchased pursuant to the Company Stock Option
Agreement, together with all Shares owned by Parent or the
Purchaser, would represent 90% of the outstanding Shares and
permit the Merger to be effected in accordance with Section 253
of the DGCL and Sections 1104 and 1107 of the UBCA (a "Short-form
Merger"). Parent agrees to effect a Short-form Merger promptly
following the exercise of the option under the Company Stock
Option Agreement.
8
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Capital Stock. As of the
Effective Time, by virtue of the Merger and without any action on
the part of the holders of any shares of Company Common Stock or
common stock, par value $.01 per share, of the Purchaser (the
"Purchaser Common Stock"):
(a) Purchaser Common Stock. The issued and
outstanding shares of the Purchaser Common Stock shall be
converted into and become such number of fully paid and
nonassessable shares of common stock of the Surviving Corporation
as the Company had outstanding immediately prior to the Effective
Time.
(b) Cancellation of Treasury Stock and
Parent-Owned Stock. All shares of Company Common Stock that are
owned by the Company as treasury stock and any shares of Company
Common Stock and Non-Voting Shares owned by Parent, the Purchaser
or any other wholly owned Subsidiary (as defined in Section 3.1
hereof) of Parent shall be cancelled and retired and shall cease
to exist and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Conversion of Shares. Each issued and
outstanding share of Company Common Stock (other than shares to
be cancelled in accordance with Section 2.1(b)) shall be
converted into the right to receive the Offer Price, payable to
the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly
representing such share of Company Common Stock in the manner
provided in Section 2.2. All such shares of Company Common
Stock, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration therefor
upon the surrender of such certificate in accordance with Section
2.2, without interest.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank
or trust company to act as agent for the holders of shares of
Company Common Stock in connection with the Merger, which Paying
Agent shall be reasonably satisfactory to the Company (the
"Paying Agent"), to receive the funds to which holders of shares
of Company Common Stock shall become entitled pursuant to Section
2.1(c). Such funds shall be invested by the Paying Agent as
directed by Parent or the Surviving Corporation.
9
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Paying Agent shall mail
to each holder of record of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (the "Certificates"), whose shares
were converted pursuant to Section 2.1 into the right to receive
the Merger Consideration (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and
have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents
as may be appointed by Parent, which agents shall be reasonably
satisfactory to the Company, together with such letter of
transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger
Consideration for each share of Company Common Stock formerly
represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered,
it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered
or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.2.
(c) After the Effective Time there shall be no
transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the Merger Consideration as
provided in this Article II.
Section 2.3 Company Option Plans and Agreements.
(a) The Company shall (i) terminate its 1989
Equity Incentive Plan for Key Employees, 1992 Equity Incentive
Plan and 1994 Equity Incentive Plan (collectively, the "Plans"),
immediately prior to the Effective Time without prejudice to the
rights of the holders of options awarded pursuant thereto and
10
(ii) grant no additional options or similar rights under the
Plans or otherwise on or after the date hereof. As used
hereafter in this Section 2.3, "Options" shall include each
employee stock option granted by the Company, whether pursuant to
the Plans, pursuant to certain Rollover Option Agreements dated
as of July 14, 1989 or otherwise.
(b) The Company shall use its best efforts to
obtain the consent of each holder of any Options (whether or not
then exercisable) that it does not have the right to cancel to
the cancellation of, and shall cancel, his Options (irrespective
of their exercise price), or, in the case of Options that the
Company has the right to cancel, shall cancel such Options, such
cancellation (whether or not consent is required therefor) to
take effect as of the Effective Time. The preceding sentence
shall not apply to (i) Options with respect to which the holder
thereof holds, and agrees, prior to consummation of the Offer, to
exercise limited stock appreciation rights ("LSARs") prior to the
Effective Time and does exercise such LSARs prior to the
Effective Time, and (ii) Options (whether or not then
exercisable) held by employees of the Company that Parent or its
affiliates have agreed to employ and who agree prior to
consummation of the Offer to cancel such Options effective as of
the Effective Time in consideration for issuance at such time of
Options on common stock of Parent ("Parent Options"), Parent
being obligated with respect thereto to issue Parent Options to
each such employee which Options cover common stock having an
aggregate Fair Market Value on the date of issuance of such
Options equal to the aggregate value at the Offer Price of stock
of the Company subject to such Options held by such employee and
having an aggregate spread between Fair Market Value (as defined
below) and exercise price equal to the aggregate spread on such
employee's Options between the Offer Price and the weighted
average exercise price of such Options. As soon as practicable
after the date hereof, the Company shall notify each holder of
Options as to the alternatives made available pursuant to this
Section 2.3. Parent Options shall have the same expiration dates
as corresponding Options and terms and conditions (other than any
reload feature or "Change in Control" feature) not materially
less favorable than those of corresponding Options. In
consideration of each cancellation of Options (except those
cancelled in consideration of Parent Options and those cancelled
on exercise of LSARs), the Company shall pay to such holders,
promptly upon such cancellation, in respect of each Option
(whether or not then exercisable and whether or not the Company
had the right to cancel the Option, provided, however, that in
the case of Options requiring a consent to the cancellation
thereof, such consent shall have been obtained), an amount equal
to the excess, if any, of the Offer Price over the exercise price
per Share subject thereto, multiplied by the number of Shares
subject thereto. "Fair Market Value" means the average closing
price on the New York Stock Exchange Composite Tape for common
11
stock of Parent on each of the ten trading days preceding the day
on which the Effective Time occurs.
Section 2.4 No Dissenter's Rights. In accordance with
Schwabacher v. United States, 334 U.S. 192 (1948), stockholders
of the Company will not have any dissenter's rights; provided,
however, that if (a) the parties, at Parent's sole discretion,
elect to seek, for mergers within a corporate family, and obtain,
a declaratory order that the class exemption is available for the
Merger or (b) the Interstate Commerce Commission (or any
successor agency) (the "ICC") or a court of competent
jurisdiction determines that dissenter's rights are available to
holders of Shares, then holders of Shares shall be provided with
dissenter's rights in accordance with the DGCL.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser that, except as disclosed (including, in the case of
financial statements, provided for) in the Company's Form 10-K
for the fiscal year ended December 31, 1994 ("Form 10-K") or the
Annual Report to Stockholders for the fiscal year ended
December 31, 1994 (the "Annual Report"), each as heretofore filed
with the SEC or delivered to Parent in draft form prior to the
date hereof (including, without limitation, any financial
statements and related notes or schedules included in such
documents and all exhibits and schedules included or expressly
incorporated by reference therein on or prior to the date
hereof):
Section 3.1 Organization. Each of the Company and its
Subsidiaries is a corporation, partnership or other entity duly
organized, validly existing, duly qualified or licensed to do
business and in good standing under the laws of the jurisdiction
of its incorporation or organization and in each jurisdiction in
which the nature of the business conducted by it makes such
qualification or licensing necessary, and has all requisite
corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or
to have such power, authority, and governmental approvals would
not have a Material Adverse Effect on the Company. As used in
this Agreement, the word "Subsidiary" means, with respect to any
party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any
other Subsidiary of such party is a general partner (excluding
such partnerships where such party or any Subsidiary of such
party do not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or
12
other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by
such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries. As used in this
Agreement, any reference to any event, change or effect having a
"Material Adverse Effect" on or with respect to any entity means
such event, change or effect, individually or in the aggregate
with such other events, changes, or effects, is materially
adverse to the financial condition or businesses of such entity
and its Subsidiaries, taken as a whole. Exhibit 21 to the Form
10-K sets forth a complete list of the Company's active
Subsidiaries. The Company's inactive subsidiaries have no
material operations and no liabilities which would have or be
likely to have a Material Adverse Effect on the Company.
Section 3.2 Capitalization. (a) The authorized
capital stock of the Company consists only of 125,000,000 shares
of Company Common Stock, 125,000,000 shares of Company Non-Voting
Common Stock, $0.01 par value (the "Non-Voting Common Stock") and
15,000,000 preferred shares, $0.01 par value (the "Preferred
Stock"). As of the date hereof, (i) 31,330,631 shares of Company
Common Stock are issued and outstanding, (ii) 12,835,304 shares
of Non-Voting Common Stock are issued and outstanding,
(iii) 25,479 shares of Company Common Stock and no shares of
Company Non-Voting Common Stock are issued and held in the
treasury of the Company, and (iv) 2,592,067 shares of Company
Common Stock are reserved for issuance upon exercise of then
outstanding Options granted under the Option Plans and 12,835,304
shares of Company Common Stock are reserved for issuance upon
conversion of the Non-Voting Common Stock. As of the date
hereof, there are no shares of Preferred Stock issued and
outstanding. All the outstanding shares of the Company's capital
stock are, and all shares which may be issued pursuant to the
exercise of outstanding Options or upon exercise of the option
under the Company Stock Option Agreement will be, when issued in
accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and non-assessable. As of the date
hereof, the Company has no outstanding stock appreciation rights
except for limited stock appreciation rights granted in tandem
with Options. There are no bonds, debentures, notes or other
indebtedness having voting rights (or convertible into securities
having such rights) ("Voting Debt") of the Company or any of its
Subsidiaries issued and outstanding. Except as set forth above
and except for the transactions contemplated by this Agreement
and the Company Stock Option Agreement and except as set forth in
Section 3.2 of the disclosure schedule delivered by the Company
to Parent on or prior to the date hereof (the "Disclosure
Schedule"), as of the date hereof, there are no existing options,
warrants, calls, pre-emptive rights, subscriptions or other
rights, convertible securities, agreements, arrangements or
13
commitments of any character, relating to the issued or unissued
capital stock of the Company or any of its Subsidiaries,
obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any
shares of capital stock or Voting Debt of, or other equity
interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity
interests or obligations of the Company or any of its
Subsidiaries to grant, extend or enter into any such option,
warrant, call, subscription or other right, convertible security,
agreement, arrangement or commitment. Except as set forth in
Section 3.2 of the Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries
to (i) repurchase, redeem or otherwise acquire any Shares or the
capital stock of the Company or any subsidiary or affiliate of
the Company or (ii) to provide funds to make any investment (in
the form of a loan, capital contribution or otherwise) in (x) any
Subsidiary which is not wholly-owned or (y) any other entity.
Except as permitted by this Agreement and except for Options
which by their terms can not be cancelled as set forth in Section
3.2 of the Disclosure Schedule, following the Merger, neither the
Company (or the Surviving Corporation) nor any of its
Subsidiaries will have any obligation to issue, transfer or sell
any shares of its capital stock pursuant to any employee benefit
plan or otherwise.
(b) Except as set forth in Section 3.2 of the
Disclosure Schedule, all of the outstanding shares of capital
stock of each of the Subsidiaries are beneficially owned by the
Company, directly or indirectly, and all such shares have been
validly issued and are fully paid and nonassessable and, except
for security interests arising under the Credit Agreement, dated
as of March 27, 1992, as amended to date, among the Company,
Chemical Bank, as agent, and the banks named therein (the "Credit
Agreement"), the Senior Secured Note Purchase Agreement, dated as
of March 27, 1992, as amended to date, among Chicago and North
Western Transportation Company, the Company (as Guarantor), and
the Purchasers listed therein (the "Note Agreement"), and the
Pledge Agreement, dated as of December 20, 1990 between Chicago
and North Western Railway Company and Citibank, N.A., as trustee,
and the Mortgage Trust Deed and Security Agreement, dated as of
December 20, 1990, among Citibank, N.A., as trustee, and Chemical
Bank, as administrative agent et. al, are owned by either the
Company or one of its Subsidiaries free and clear of all liens,
charges, claims or encumbrances.
(c) Except for the Second Amended and Restated
Stockholders Agreement, dated as of March 30, 1992, as amended,
among the Company, Parent and certain other parties (the
"Stockholders Agreement"), and an agreement, dated as of June 21,
1993 (the "1993 Agreement") among the parties to the Stockholders
Agreement, there are no voting trusts or other agreements or
14
understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock of the
Company or any of the Subsidiaries. None of the Company or its
Subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company, or any of its
Subsidiaries, respectively, as a result of the transactions
contemplated by this Agreement. Parent and the Company agree to
terminate, and agree to use their reasonable best efforts to
cause the other parties thereto to terminate, as of the Effective
Time, the Stockholders Agreement, the 1993 Agreement and the
Registration Rights Agreement, dated July 14, 1989, as amended,
among Parent, Blackstone Capital Partners L.P. and certain other
parties thereto.
Section 3.3 Corporate Authorization; Validity of
Agreement; Company Action. (a) The Company has full corporate
power and authority to execute and deliver this Agreement and,
subject to obtaining any necessary approval of its stockholders
as contemplated by Section 1.8 hereof with respect to the Merger,
to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Company of this
Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly and validly authorized by its
Board of Directors and, except for those actions contemplated by
Section 1.2(a) hereof and obtaining any approval of its
stockholders as contemplated by Section 1.8 hereof with respect
to the Merger, no other corporate action on the part of the
Company is necessary to authorize the execution and delivery by
the Company of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and, assuming due
authorization, execution and delivery of this Agreement by Parent
and the Purchaser, is a valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought.
(b) The Board of Directors of the Company has
duly and validly approved and taken all corporate action required
to be taken by the Board of Directors for the consummation of the
transactions contemplated by this Agreement, including the Offer,
the acquisition of Shares pursuant to the Offer and the Merger or
the Company Stock Option Agreement, including, but not limited
to, all actions, to the extent required, necessary to render the
provisions of Section 203 of the DGCL inapplicable to such
transactions. The affirmative vote of the holders of a majority
of the Shares is the only vote of the holders of any class or
15
series of Company capital stock necessary to approve the Merger.
Except as previously disclosed to Parent in writing, neither the
Offer nor the Merger, individually or taken together, is a
transaction that constitutes a change in control under any of the
Company's stock option or restricted stock plans, any other
benefit plan in which any employee of the Company or any of its
Subsidiaries participates or any Company Agreement (as defined in
Section 3.4).
Section 3.4 Consents and Approvals; No Violations.
Except (A) as disclosed in Section 3.4 of the Disclosure
Schedule, (B) for filings, permits, authorizations, consents and
approvals as may be required under, and other applicable
requirements of, the Exchange Act, (C) for the filing and
recordation of the Certificate of Merger as required by the DGCL
and the UBCA, (D) for any applicable state takeover laws, (E) for
the applicable requirements relating to a determination by the
ICC that the terms of the Merger are just and reasonable, and
(F) for the ICC's approval of Parent's application for an order
authorizing the common control (within the meaning of the
Interstate Commerce Act) of the rail subsidiaries of the Company
and Parent having become final and effective (the "ICC Final
Approval"), neither the execution, delivery or performance of
this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will (i) conflict with
or result in any breach of any provision of the certificate of
incorporation or by-laws or similar organizational documents of
the Company or of any of its Subsidiaries, (ii) require any
filing with, or permit, authorization, consent or approval of,
any court, arbitral tribunal, administrative agency or commission
or other governmental or other regulatory authority or agency (a
"Governmental Entity"), except where the failure to obtain such
permits, authorizations, consents or approvals or to make such
filings would not have a Material Adverse Effect on the Company,
(iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give
rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, guarantee, other evidence
of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound (a "Company Agreement") or
(iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, except in the case of (iii)
or (iv) for such violations, breaches or defaults which would
not, individually or in the aggregate, have a Material Adverse
Effect on the Company, and which will not materially impair the
ability of the Company to consummate the transactions
contemplated hereby.
16
Section 3.5 SEC Reports and Financial Statements. The
Company has filed with the SEC, and has heretofore made available
to Parent true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by
it and its Subsidiaries since January 1, 1992 under the Exchange
Act or the Securities Act of 1933, as amended (the "Securities
Act") (as such documents have been filed prior to the date
hereof, and amended since the time of their filing prior to the
date hereof, collectively, the "Company SEC Documents"). As of
their respective dates or, if amended, as of the date of the last
such amendment, the Company SEC Documents, including, without
limitation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations
of the SEC thereunder. Each of the consolidated financial
statements included in the Company SEC Documents have been
prepared from, and are in accordance with, the books and records
of the Company and its consolidated subsidiaries, comply in all
material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto including the effect of such notes
on earlier financial statements and except that the quarterly
financial statements contain all footnote disclosures required by
Regulation S-X but not all footnotes required by GAAP) and fairly
present the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial
position, if any) of the Company and its consolidated
subsidiaries as at the dates thereof or for the periods presented
therein.
Section 3.6 Absence of Certain Changes. Except as
disclosed in the Company SEC Documents filed prior to the date of
this Agreement, from December 31, 1994 until the date of this
Agreement, the Company and its Subsidiaries have conducted their
respective businesses and operations consistent with past
practice only in the ordinary and usual course and there have not
occurred (i) any events, changes, or effects (including the
incurrence of any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise) having or, which
would be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company; (ii) except
as set forth in Section 3.6 of the Disclosure Schedule, any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to
17
the equity interests of the Company or of any of its
Subsidiaries; or (iii) any change by the Company or any of its
Subsidiaries in accounting principles or methods, except insofar
as may be required by a change in GAAP. Since December 31, 1994,
except as set forth in Section 3.6 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has taken any of
the actions prohibited by Section 5.1(b),(c)(i), (ii) and (v),
(d), (g), (h), (j) or (k) hereof. Section 3.6 of the Disclosure
Schedule sets forth the amount of principal and unpaid interest
outstanding under each instrument evidencing indebtedness of the
Company and its Subsidiaries (other than immaterial indebtedness)
which will accelerate or become due or result in a right of
redemption or repurchase on the part of the holder of such
indebtedness (with or without due notice or lapse of time) as a
result of this Agreement, the Offer or the Merger or the other
transactions contemplated hereby.
Section 3.7 Information in Proxy Statement. The Proxy
Statement (or any amendment thereof or supplement thereto) will,
at the date mailed to Company stockholders and at the time of the
meeting of Company stockholders to be held in connection with the
Merger, not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading,
except that no representation is made by the Company with respect
to statements made therein based on information supplied by
Parent or the Purchaser in writing for inclusion in the Proxy
Statement. The Proxy Statement will comply in all material
respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
Section 3.8 Employee Benefit Plans; ERISA. To the
best knowledge of the Company:
(a) There are no material employee benefit plans,
arrangements, contracts or agreements (including, without
limitation, employment agreements, change of control employment
agreements and severance agreements) of any type (including but
not limited to plans described in section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained, or contributed to, by the Company, any of its
Subsidiaries or any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the
Company would be deemed a "single employer" within the meaning of
section 4001(b)(15) of ERISA, with respect to which the Company
or any of its Subsidiaries has or may have a liability, other
than those listed on Section 3.8(a) of the Disclosure Schedule
(the "Benefit Plans"). Neither the Company nor any ERISA
Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Benefit Plan or modify
18
or change any existing Benefit Plan that would affect any
employee or terminated employee of the Company or any Subsidiary.
(b) With respect to each Benefit Plan: (i) if
intended to qualify under section 401(a), 401(k) or 403(a) of the
Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code"), such plan so
qualifies, and its trust is exempt from taxation under section
501(a) of the Code; (ii) such plan has been administered in all
material respects in accordance with its terms and applicable
law; (iii) no breaches of fiduciary duty have occurred which
might reasonably be expected to give rise to material liability
on the part of the Company or the Subsidiaries; (iv) no disputes
are pending, or, to the knowledge of the Company, threatened that
might reasonably be expected to give rise to material liability
on the part of the Company or the Subsidiaries; (v) no prohibited
transaction (within the meaning of Section 406 of ERISA) has
occurred that might reasonably be expected to give rise to
material liability on the part of the Company or the
Subsidiaries; and (vi) all contributions and premiums due as of
the date hereof (including any extensions for such contributions
and premiums) have been made in full.
(c) Full payment has been made, or will be made
in accordance with section 404(a)(6) of the Code, of all amounts
which the Company or its Subsidiaries are required to pay under
the terms of each of the Benefit Plans as of the last day of the
most recent plan year thereof ended prior to the date of this
Agreement, and all such amounts which become payable through the
Effective Time will be paid by the Company or its Subsidiaries at
or prior to the Effective Time, except for annual contributions
by the Company for calendar 1994, which are due and payable in
the ordinary course on or before the Company's tax return due
date, including any extensions.
(d) Neither the Company nor any ERISA Affiliate
has incurred any liability under Title IV of ERISA since the
effective date of ERISA that has not been satisfied in full.
Except as identified in Section 3.8(d) of the Disclosure
Schedule, neither the Company nor any ERISA Affiliate maintains
(or contributes to), or has maintained (or has contributed to)
within the last six years, any employee benefit plan that is
subject to Title IV of ERISA.
(e) With respect to each Benefit Plan that is a
"welfare plan" (as defined in section 3(1) of ERISA): except as
specifically disclosed in Section 3.8 of the Disclosure Schedule,
no such plan provides medical or death benefits with respect to
current or former employees of the Company or any of its
Subsidiaries beyond their termination of employment, other than
on an employee-pay-all basis.
19
(f) Except as specifically set forth on Schedule
3.8, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any individual to severance pay or
accelerate the time of payment or vesting, or increase the
amount, of compensation or benefits due to any individual,
(ii) constitute or result in a prohibited transaction under
section 4975 of the Code or section 406 or 407 of ERISA or
(iii) subject the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the Benefit Plans, any related trust, any
trustee or administrator thereof, or any party dealing with the
Benefit Plans or any such trust to either a civil penalty
assessed pursuant to section 409 or 502(i) of ERISA or a tax
imposed pursuant to section 4976 or 4980B of the Code.
(g) Except as set forth in Section 3.8(g) of the
Disclosure Schedule, there is no Benefit Plan that is a
"multiemployer plan," as such term is defined in section 3(37) of
ERISA.
(h) With respect to each Benefit Plan, the
Company has delivered to Parent accurate and complete copies of
all plan texts, summary plan descriptions, summaries of material
modifications, trust agreements and other related agreements
including all amendments to the foregoing; the two most recent
annual reports; the most recent annual and periodic accounting of
plan assets; the most recent determination letter received from
the United States Internal Revenue Service (the "Service"); and
the two most recent actuarial reports, to the extent any of the
foregoing may be applicable to a particular Benefit Plan.
Section 3.9 Litigation; Compliance with Law.
(a) Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement or as
disclosed in Section 3.9 of the Disclosure Schedule, there is no
suit, claim, action, proceeding or investigation pending (other
than suits, claims, actions or proceedings which have not been
served and as to which none of the Chief Executive Officer, the
Chief Financial Officer or the most senior legal officer of the
Company has knowledge) or, to the best knowledge of the Chief
Executive Officer, Chief Financial Officer or the most senior
legal officer of the Company, threatened against, the Company or
any of its Subsidiaries which, individually or in the aggregate,
is likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company, or materially impair the ability
of the Company to consummate the Offer, the Merger or the other
transactions contemplated hereby.
(b) To the best knowledge of the Company, the
Company and its Subsidiaries have complied in a timely manner
with all laws, statutes, regulations, rules, ordinances, and
judgments, decrees, orders, writs and injunctions, of any court
20
or governmental entity relating to any of the property owned,
leased or used by them, or applicable to their business,
including, but not limited to, equal employment opportunity,
discrimination, occupational safety and health, environmental,
interstate commerce and antitrust laws, except where the failure
to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.10 Taxes. (a) The Company and its
Subsidiaries have (i) duly filed (or there has been filed on
their behalf) with the appropriate governmental authorities all
material Tax Returns (as hereinafter defined) required to be
filed by them on or prior to the date hereof, and (ii) duly paid
in full or made provision in accordance with GAAP (or there has
been paid or provision has been made on their behalf) for the
payment of all material Taxes (as hereinafter defined) for all
periods ending through the date hereof.
(b) Other than payroll tax issues being reviewed
by the Internal Revenue Service Appeals Division, no federal,
state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company or its
Subsidiaries wherein an adverse determination or ruling in any
one such proceeding or in all such proceedings in the aggregate
could have a Material Adverse Effect on the Company.
(c) The federal income Tax Returns of the Company
and its Subsidiaries have been examined by the Internal Revenue
Service (or the applicable statutes of limitation for the
assessment of federal income Taxes for such periods have expired)
for all periods through and including December 31, 1990 (except
for the 1985, 1987 and 1989B tax years), and no material
deficiencies were asserted as a result of such examinations which
have not been resolved and fully paid.
(d) "Taxes" shall mean all federal, state, local
and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto.
"Tax Returns" shall mean all federal, state, local and foreign
tax returns, declarations, statements, reports, schedules, forms
and information returns and any amended Tax Returns relating to
Taxes.
Section 3.11. Environmental Matters. (a) Except as
set forth in the Company SEC Documents or otherwise previously
disclosed in writing by the Company to Parent, to the best
knowledge of the Chief Executive Officer, Chief Financial
Officer, the most senior legal officer, and the most senior legal
officer directly in charge of environmental matters of the
Company, there are no Environmental Liabilities (as defined
21
below) of the Company that have had or are likely to have a
Material Adverse Effect on the Company.
(b) As used in this Agreement, "Environmental
Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements
and governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants,
Hazardous Substances or wastes into the environment, including
without limitation ambient air, surface water, ground water or
land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"Environmental Liabilities" with respect to any person means any
and all liabilities of or relating to such Person or any of its
Subsidiaries (including any entity which is, in whole or in part,
a predecessor of such Person or any of its Subsidiaries), whether
vested or unvested, contingent or fixed, actual or potential,
known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws and (ii) relate to actions
occurring or conditions existing on or prior to the date of this
Agreement. "Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum,
its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics, including, without limitation, any
substance regulated under Environmental Laws.
Section 3.12 Opinion of Financial Advisors. The
Company has received an opinion from Blackstone to the effect
that the cash consideration to be received by the holders of
Shares pursuant to the Offer and the Merger is fair to such
holders from a financial point of view, a copy of which opinion
will be delivered to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the
Company as follows:
Section 4.1 Organization. Each of Parent and the
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of Utah and has all requisite
corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except where
22
the failure to be so organized, existing and in good standing or
to have such power, authority, and governmental approvals would
not have a Material Adverse Effect on Parent. Parent and each of
its Subsidiaries is duly qualified or licensed to do business and
in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and
in good standing would not, in the aggregate, have a Material
Adverse Effect on Parent.
Section 4.2 Authorization; Validity of Agreement;
Necessary Action. Each of Parent and the Purchaser has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the
consummation of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and the Purchaser and no
other corporate proceedings on the part of Parent and the
Purchaser are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by Parent and the Purchaser, as
the case may be, and, assuming due authorization, execution and
delivery of this Agreement by the Company, is a valid and binding
obligation of each of Parent and the Purchaser, as the case may
be, enforceable against them in accordance with its respective
terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought.
Section 4.3 Consents and Approvals; No Violations.
Except (A) for filings, permits, authorizations, consents and
approvals as may be required under, and other applicable
requirements of, the Exchange Act, (B) the filing and recordation
of the Certificate of Merger as required by the DGCL and the
UBCA, (C) any applicable state takeover laws, (D) the applicable
requirements relating to a determination by the ICC that the
terms of the Merger are just and reasonable, and (E) the ICC
Final Approval, neither the execution, delivery or performance of
this Agreement by Parent and the Purchaser nor the consummation
by Parent and the Purchaser of the transactions contemplated
hereby nor compliance by Parent and the Purchaser with any of the
provisions hereof will (i) conflict with or result in any breach
of any provision of the respective articles of incorporation or
by-laws of Parent and the Purchaser, (ii) require any filing
with, or permit, authorization, consent or approval of, any
Governmental Entity (except where the failure to obtain such
23
permits, authorizations, consents or approvals or to make such
filings would not have a material adverse effect on Parent and
its Subsidiaries taken as a whole), (iii) result in a violation
or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any material note, bond,
mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which Parent or any of its
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable
to Parent, any of its Subsidiaries or any of their properties or
assets, except in the case of (iii) and (iv) for violations,
breaches or defaults which would not, individually or in the
aggregate, materially impair the ability of Parent or Purchaser
to consummate the Offer, the Merger or the other transactions
contemplated hereby.
Section 4.4 Information in Proxy Statement; Schedule
14D-9. None of the information supplied by Parent or the
Purchaser for inclusion or incorporation by reference in the
Proxy Statement or the Schedule 14D-9 will, at the date mailed to
stockholders and at the time of the meeting of stockholders to be
held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading.
Section 4.5 Financing. Either Parent or the
Purchaser has, or will have prior to the satisfaction of the
conditions to the Offer, sufficient funds available (through
existing credit arrangements or otherwise) to purchase all of the
Shares outstanding on a fully diluted basis and to refinance the
indebtedness referred to in Section 3.6 of the Disclosure
Schedule.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The
Company covenants and agrees that, except (i) as expressly
provided in this Agreement, or (ii) with the prior written
consent of Parent after the date hereof, and prior to the time
the directors of the Purchaser have been elected to, and shall
constitute a majority of, the Board of Directors of the Company
pursuant to Section 1.3 (the "Appointment Date"):
24
(a) the business of the Company and its
Subsidiaries shall be conducted only in the ordinary and usual
course consistent with past practice and, to the extent
consistent therewith, each of the Company and its Subsidiaries
shall use its reasonable best efforts to preserve its business
organization intact and maintain its existing relations with
customers, suppliers, employees, creditors and business partners;
(b) the Company will not, directly or indirectly,
split, combine or reclassify the outstanding Company Common
Stock, Non-Voting Common Stock or any outstanding capital stock
of any of the Subsidiaries of the Company;
(c) neither the Company nor any of its
Subsidiaries shall: (i) amend its articles of incorporation or
by-laws or similar organizational documents; (ii) except as set
forth in Section 5.1(c) of the Disclosure Schedule, declare, set
aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock (other than
dividends paid by a wholly-owned Subsidiary in the ordinary
course of business consistent with past practice); (iii) issue,
sell, transfer, pledge, dispose of or encumber any additional
shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class of the Company
or its Subsidiaries, other than issuances pursuant to the
exercise of Options outstanding on the date hereof or pursuant to
the conversion of the Non-Voting Shares into Shares; (iv)
transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any material assets other than in the ordinary and usual
course of business and consistent with past practice, or incur or
modify any material indebtedness; or (v) except as set forth in
Section 5.1(c) of the Disclosure Schedule, redeem, purchase or
otherwise acquire directly or indirectly any of its capital
stock;
(d) neither the Company nor any of its
Subsidiaries shall: (i) except as set forth in Section 5.1(d) of
the Disclosure Schedule, promote any employee or grant any
increase in the compensation payable or to become payable by the
Company or any of its Subsidiaries to any employee, provided,
however, the Company may increase compensation (x) as required
pursuant to collective bargaining agreements and (y) for
employees other than executive officers, on the anniversary date
of the employee whose compensation is being increased provided
that such employee's compensation has not been increased since
his prior anniversary date and provided further that the
percentage increase on his 1995 anniversary date does not exceed
4% or (A) adopt any new, or (B) amend or otherwise increase, or
accelerate the payment or vesting of the amounts payable or to
become payable under any existing, bonus, incentive compensation,
deferred compensation, severance, profit sharing, stock option,
25
stock purchase, insurance, pension, retirement or other employee
benefit plan agreement or arrangement; or (ii) enter into any, or
amend any existing, employment or severance agreement with or,
except in accordance with the existing written policies of the
Company, grant any severance or termination pay to any officer,
director or employee of the Company or any of its Subsidiaries;
(e) neither the Company nor any of its
Subsidiaries shall modify, amend or terminate any of its material
Company Agreements or waive, release or assign any material
rights or claims, except in the ordinary course of business and
consistent with past practice;
(f) neither the Company nor any of its
Subsidiaries shall permit any material insurance policy naming it
as a beneficiary or a loss payable payee to be cancelled or
terminated without notice to Parent, except in the ordinary
course of business and consistent with past practice;
(g) neither the Company nor any of its
Subsidiaries shall: (i) incur or assume any long-term debt in
excess of $1,000,000 in the aggregate, or except in the ordinary
course of business, incur or assume any short-term indebtedness
in amounts not consistent with past practice; (ii) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations
of any other person, except in the ordinary course of business
and consistent with past practice; (iii) make any loans, advances
or capital contributions to, or investments in, any other person
(other than to wholly owned Subsidiaries of the Company or
customary loans or advances to employees in accordance with past
practice); or (iv) except as disclosed in Section 5.1(g) of the
Disclosure Schedule enter into any material commitment or
transaction (including, but not limited to, any borrowing,
capital expenditure or purchase, sale or lease of assets) other
than capital expenditures pursuant to the Company's capital
expenditures budget that aggregate since December 31, 1994 not
more than $75,000,000;
(h) neither the Company nor any of its
Subsidiaries shall change any of the accounting principles used
by it unless required by GAAP;
(i) neither the Company nor any of its
Subsidiaries shall pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of any such claims, liabilities or
obligations, (x) in the ordinary course of business and
consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) of
26
the Company and its consolidated Subsidiaries, (y) incurred in
the ordinary course of business and consistent with past practice
or (z) which are legally required to be paid, discharged or
satisfied (provided that if such claims, liabilities or
obligations referred to in this clause (z) are legally required
to be paid and are also not otherwise payable in accordance with
clauses (x) or (y) above, the Company will notify Parent in
writing if such claims, liabilities or obligations exceed,
individually or in the aggregate, $10 million in value,
reasonably in advance of their payment);
(j) neither the Company nor any of its
Subsidiaries will adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of
its Subsidiaries or any agreement relating to a Takeover Proposal
(as hereafter defined) (other than the Merger); and
(k) neither the Company nor any of its
Subsidiaries will enter into an agreement, contract, commitment
or arrangement to do any of the foregoing, or to authorize,
recommend, propose or announce an intention to do any of the
foregoing.
Section 5.2 Access to Information. The Company shall
(and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and
other representatives of Parent, access, during normal business
hours, during the period prior to the Effective Time, to all of
its and its Subsidiaries' properties, books, contracts,
commitments and records and, during such period, the Company
shall (and shall cause each of its Subsidiaries to) furnish
promptly to the Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it
during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably
request. Until the Effective Time, Parent will hold any such
information which is nonpublic in confidence in accordance with
the provisions of the confidentiality agreement between the
Company and the Parent (the "Confidentiality Agreement"), subject
to the requirements of applicable law. Notwithstanding anything
in the Confidentiality Agreement to the contrary, materials
furnished to Parent pursuant to this Section 5.2 may be used by
Parent for strategic and integration planning purposes.
Section 5.3 Consents and Approvals. Each of the
Company, Parent and the Purchaser will take all reasonable
actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby (which actions shall include,
without limitation, furnishing all information in connection with
27
approvals of or filings with any Governmental Entity) and will
promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or
any of their Subsidiaries in connection with this Agreement and
the transactions contemplated hereby. Each of the Company,
Parent and the Purchaser will, and will cause its Subsidiaries
to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party
required to be obtained or made by Parent, the Purchaser, the
Company or any of their Subsidiaries in connection with the Offer
or the Merger or the taking of any action contemplated thereby or
by this Agreement.
Section 5.4 Employee Benefits.
With respect to employee benefits matters, Parent,
Purchaser and Company agree as follows:
(a) Parent agrees to cause the Surviving Corporation
and its Subsidiaries to honor and assume the Change of Control
Employment Agreements listed on Schedule 5.4(a) hereto. If
Parent shall notify Company prior to the Effective Time that
Parent wishes to substitute alternate contractual arrangements
(to become effective as of the Effective Time) with one or more
of the employees who currently have Change of Control Employment
Agreements, the Company agrees to use its best efforts to
facilitate Parent's negotiations with any such employee and to
cooperate in making any such contractual changes which are
agreed-upon by Parent and such employee. Each individual
employee who (i) receives a lump sum payment in cash of all
benefits under Section 5(a) of a Change of Control Employment
Agreement, (ii) agrees to amend the Second Amended and Restated
Stockholders Agreement, dated as of March 30, 1992, as amended,
an agreement, dated as of June 21, 1993 among the parties to such
Stockholders Agreement, and the Registration Rights Agreement,
dated July 14, 1989, as amended (collectively, the "Three
Agreements"), to provide that they shall terminate upon the
Effective Time of the Merger and to waive (effective as of the
Effective Time) any and all rights under each of the Three
Agreements to which such employee is a party, and (iii) waives
any claims such employee may have against the Company except for
routine benefit claims under the Company's benefit plans pursuant
to their terms and any rights to indemnification by the Company
under Section 5.9 of this Agreement, will also receive a separate
payment ("Extra Payment") from the Company representing his or
her individual share of $15 million on a pro rata basis in the
proportion that his or her individual 1995 annualized
compensation (current salary and maximum bonus) bears to the
total 1995 annualized compensation (current salary and maximum
bonus) of all of the 27 executives who have Change of Control
28
Employment Agreements, provided that if the amount an employee
would receive from the sum of amounts paid ("Relevant
Compensation") under the Change of Control Employment Agreement,
the Extra Payment and all other compensation and benefits paid to
the employee which would not be deductible (in whole or in part)
as a result of Section 280G of the Code, net of all applicable
federal, state and local income and excise taxes ("Applicable
Taxes") thereon, would be smaller than the amount such employee
would receive from Relevant Compensation net of Applicable Taxes
if the amount of the Extra Payment were reduced, then the Extra
Payment shall be reduced (but not below zero) to the amount which
results in the employee receiving the largest possible amount
from Relevant Compensation net of Applicable Taxes.
(b) No employee of the Company who is not an executive
officer of the Company and whose compensation or benefits are not
the subject of a collective bargaining agreement, and who has not
entered into a Change of Control Employment Agreement with the
Company shall be terminated during the 18-month period following
the Effective Date for the sole purpose of a reduction in force
without being permitted to participate in a two-part cash
severance program (voluntary and involuntary) consistent with,
and no less generous than, that offered by Parent to certain of
its employees in December 1994, under the Union Pacific Railroad
Company Marketing and Sales Department 1994 Voluntary Force
Reduction Program.
(c) With respect to the Chicago and North Western
Railway Company Supplemental Pension Plan (the "Pension Plan"),
the Chicago and North Western Railway Company Profit Sharing and
Retirement Savings Program (the "Savings Program"), the Chicago
and North Western Transportation Company Executive Retirement
Plan (the "Executive Retirement Plan"), and the Chicago and North
Western Transportation Company Excess Benefit Retirement Plan
(the "Excess Benefit Plan"), hereinafter referred to collectively
as the "Retirement Plans," Parent, the Purchaser, and the Company
agree as follows:
(i) Each employee of the Company who, as of the
date hereof, is eligible to participate in one or more of
the Retirement Plans shall, until December 31, 1995,
continue to be eligible to participate in each Retirement
Plan in which he was eligible to participate as of the date
hereof, subject to the terms and conditions of the
applicable Retirement Plan as in effect from time to time
(which, until December 31, 1995, shall remain, to the extent
lawful (and, where applicable, consistent with the tax
qualification of the Retirement Plan), consistent in all
material respects with the terms and conditions of the
Retirement Plan in effect at the Effective Time). Under the
Savings Program the Company contribution for 1995 shall be
equal to the 1995 Company contribution which would occur if
29
the Company Contribution Base (as defined under the Savings
Program) for 1995 equalled the Company Contribution Base for
the calendar quarter ending March 31, 1995 (excluding any
expenses of the transaction contemplated by the Agreement)
multiplied by four (4).
(ii) Each of the Retirement Plans shall be
amended to provide that no benefits shall accrue thereunder
after December 31, 1995.
(iii) Effective January 1, 1996, each employee of
the Company on that date who was an active participant in
the Pension Plan as of December 31, 1995 shall become a
participant in the Pension Plan for Salaried Employees of
Union Pacific Corporation and Affiliates (the "UPPP") and
shall be credited thereunder (A) with compensation paid by
the Company before January 1, 1996, as determined in
accordance with the terms of the Pension Plan as in effect
on the date of this Agreement, (B) for eligibility, vesting,
retirement eligibility, and benefit accrual purposes, with
the service with which he was credited for such purposes
under the Pension Plan as of December 31, 1995, and (C) with
compensation and service from and after January 1, 1996, in
accordance with the applicable provisions of the UPPP;
provided that the benefits to which each such employee shall
be entitled under the UPPP shall be reduced by the actuarial
equivalent of the benefits to which the employee is
entitled, as of December 31, 1995, under the Pension Plan
and the actuarial equivalent of the amount described in
Article 2.1(c) and (d) of the Pension Plan as in effect on
the date of this Agreement, and determined as of December
31, 1995. For purposes of this paragraph (iii), actuarial
equivalence shall be determined in accordance with the
applicable provisions of Appendix I to the Pension Plan as
in effect on the date of this Agreement.
(iv) Effective January 1, 1996, each employee of
the Company on that date who was an active participant in
the Savings Program as of December 31, 1995 shall be
eligible to participate in the Union Pacific Corporation
Thrift Plan (the "Thrift Plan") in accordance with the terms
of the Thrift Plan as in effect from time to time and shall
be credited thereunder, for eligibility and vesting
purposes, with the service he was credited with for such
purposes under the Savings Program as of December 31, 1995,
and for service from and after January 1, 1996, in
accordance with the terms of the Thrift Plan as in effect
from time to time.
(v) From and after January 1, 1996, each employee
of the Company on that date who was an active participant in
the Executive Retirement Plan, the Excess Benefit Plan, or
30
both as of December 31, 1995 shall be entitled to
participate in any excess benefit or other unfunded deferred
compensation plan that supplements the UPPP or the Thrift
Plan and in which similarly situated employees of Parent are
then entitled to participate.
(d) Each of the Company's employee benefit plans shall
be amended to provide that if an employee of the Company as of
the date hereof, whose compensation or benefits at such date are
not the subject of a collective bargaining agreement (a
"Nonagreement Employee"), is transferred to employment with the
Parent or the Purchaser after such date and before January 1,
1996, the Nonagreement Employee shall be permitted to participate
in the plan pursuant to the terms of the plan and shall not be
prohibited from such participation solely by reason of such
transfer, provided that the Nonagreement Employee is otherwise
eligible to participate in the plan in accordance with the terms
and conditions thereof.
(e) Except to the extent otherwise provided in this
Agreement, from and after January 1, 1996, each Nonagreement
Employee of the Company at the Effective Time who is a
Nonagreement Employee of the Parent, Company, or Purchaser on
January 1, 1996 shall be entitled to participate in, and to
receive benefits under, the employee benefit plans of the
Company, Parent, and the Purchaser, in accordance with terms and
conditions that are comparable to the terms and conditions that
apply to similarly situated employees of the Purchaser or Parent.
Except with respect to the Retirement Plans, each such employee
of the Company whose compensation or benefits are not subject to
a collective bargaining agreement shall at all times on and after
January 1, 1996 be given full credit for all past service under
all employee benefit plans of Parent, Purchaser and all
affiliates to the extent to which credit is given for such
service under the Company's similar benefit plans, subject to
reduction for any benefits to which such employee is entitled
from the Company under its similar benefit plans.
(f) The Company will pay, as soon as reasonably
practical after the date of Closing, bonuses under its Bonus Plan
in an amount determined by projecting to December 31, 1995 the
Company's performance (measured using the performance measures
established by the Compensation Committee for 1995, calculating
such bonuses without giving effect to the expenses of the
transaction contemplated by the Agreement) through the date of
Closing and prorating the resulting bonus amounts to the date of
Closing.
Section 5.5 No Solicitation. (a) The Company (and
its Subsidiaries and affiliates) will not, and the Company (and
its Subsidiaries and affiliates) will use their best efforts to
ensure that their respective officers, directors, employees,
31
investment bankers, attorneys, accountants and other agents do
not, directly or indirectly: (i) initiate, solicit or encourage,
or take any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any
Takeover Proposal (as defined below) of the Company or any
Subsidiary or affiliate or an inquiry with respect thereto, or,
(ii) in the event of an unsolicited Takeover Proposal for the
Company or any Subsidiary or affiliate, engage in negotiations or
discussions with, or provide any information or data to any
Person relating to any Takeover Proposal, except to the extent
that the Company's Board of Directors determines, based on the
opinion of outside legal counsel to the Company, that the failure
to engage in such negotiation or discussions or provide such
information would likely result in a breach of the Board of
Directors' fiduciary duties under applicable law. The Company
shall notify Parent and the Purchaser orally and in writing of
any such offers, proposals or Takeover Proposals (including,
without limitation, the terms and conditions thereof and the
identity of the Person making it), within 24 hours of the receipt
thereof, unless the Company's Board of Directors determines,
based on the opinion of outside legal counsel to the Company,
that giving such notice would result in a breach of the Board of
Directors' fiduciary duties under applicable law. The Company
shall, and shall cause its Subsidiaries and affiliates, and their
respective officers, directors, employees, investment bankers,
attorneys, accountants and other agents to, immediately cease and
cause to be terminated all existing discussions and negotiations,
if any, with any parties conducted heretofore with respect to any
Takeover Proposal relating to the Company. Notwithstanding
anything to the contrary, nothing contained in this Section 5.5
shall prohibit the Company or its Board of Directors from
(i) issuing a press release or otherwise publicly disclosing the
terms of any Takeover Proposal; (ii) communicating to the
Company's stockholders a position as required by Rule 14e-2
promulgated under the Exchange Act; or (iii) making any
disclosure to the Company's stockholders which the Board of
Directors of the Company determines, based on the opinion of
outside legal counsel to the Company, that the Company would
likely be required to make under applicable law (including,
without limitation, laws relating to the fiduciary duties of
directors).
(b) As used in this Agreement, "Takeover
Proposal" when used in connection with any Person shall mean any
tender or exchange offer involving such Person, any proposal for
a merger, consolidation or other business combination involving
such Person or any Subsidiary of such Person, any proposal or
offer to acquire in any manner a substantial equity interest in,
or a substantial portion of the business or assets of, such
Person or any Subsidiary of such Person, any proposal or offer
with respect to any recapitalization or restructuring with
respect to such Person or any Subsidiary of such Person or any
32
proposal or offer with respect to any other transaction similar
to any of the foregoing with respect to such Person or any
Subsidiary of such Person; provided, however, that, as used in
this Agreement, the term "Takeover Proposal" shall not apply to
any transaction of the type described in this subsection (b)
involving Parent, the Purchaser or their affiliates. As used in
this Agreement, "Person" shall mean any corporation, partnership,
person or other entity or group (including the Company and its
affiliates and representatives, but excluding Parent or any of
its affiliates or representatives).
Section 5.6 Additional Agreements. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things
necessary, proper or advisable, whether under applicable laws and
regulations or otherwise, and to remove any injunctions or other
impediments or delays, legal or otherwise, to consummate and make
effective the Merger and the other transactions contemplated by
this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of
the Company and Parent shall use all reasonable efforts to take,
or cause to be taken, all such necessary actions. Parent and the
Company further agree to use their reasonable best efforts to
make final and effective the ICC Final Approval.
Section 5.7 Publicity. So long as this Agreement is
in effect and subject to Section 5.5 hereof, neither the Company,
Parent nor any of their respective affiliates shall issue or
cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the prior consultation
of the other party, except as may be required by law or by any
listing agreement with a national securities exchange. Nothing
contained in this Section 5.7 shall prohibit Parent or its
affiliates from issuing a press release or otherwise publicly
commenting on, without prior consultation, any matter disclosed
by the Company or its Board of Directors without prior
consultation pursuant to clause (iii) of the last sentence of
Section 5.5(a) hereof.
Section 5.8 Notification of Certain Matters. The
Company shall give prompt notice to Parent and Parent shall give
prompt notice to the Company, of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of
which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time and (ii) any material failure
of the Company or Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the
33
delivery of any notice pursuant to this Section 5.8 shall not
limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.9 Directors' and Officers' Insurance and
Indemnification. Parent agrees that at all times after
consummation of the Offer, it shall indemnify, or shall cause the
Company (or the Surviving Corporation if after the Effective
Time) and its Subsidiaries to indemnify, each person who is now,
or has been at any time prior to the date hereof, an employee,
agent, director or officer of the Company or of any of the
Company's Subsidiaries, successors and assigns (individually an
"Indemnified Party" and collectively the "Indemnified Parties"),
to the same extent and in the same manner as is now provided in
the respective charters or by-laws of the Company and such
Subsidiaries or otherwise in effect on the date hereof, with
respect to any claim, liability loss, damage, cost or expense
(whenever asserted or claimed) ("Indemnified Liability") based in
whole or in part on, or arising in whole or in part out of, any
matter existing or occurring at or prior to the Effective Time.
Parent shall, and shall cause the Company (or the Surviving
Corporation if after the Effective Time) to, maintain in effect
for not less than 6 years after consummation of the Offer the
current policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries on the date hereof
(provided that Parent may substitute therefor policies having at
least the same coverage and containing terms and conditions which
are no less advantageous to the persons currently covered by such
policies as insured) with respect to matters existing or
occurring at or prior to the Effective Time; provided, however,
that if the aggregate annual premiums for such insurance at any
time during such period shall exceed 300% of the per annum rate
of premium currently paid by the Company and its Subsidiaries for
such insurance on the date of this Agreement, then Parent shall
cause the Company (or the Surviving Corporation if after the
Effective Time) to, and the Company (or the Surviving Corporation
if after the Effective Time) shall, provide the maximum coverage
that shall then be available at an annual premium equal to 300%
of such rate, and Parent, in addition to the indemnification
provided above in this Section 5.9, shall indemnify the
Indemnified Parties for the balance of such insurance coverage on
the same terms and conditions as though Parent were the insurer
under those policies. Without limiting the foregoing, in the
event any Indemnified Party becomes involved in any capacity in
any action, proceeding or investigation based in whole or in part
on, or arising in whole or in part out of, any matter, including
the transactions contemplated hereby, existing or occurring at or
prior to the Effective Time, then to the extent permitted by law
Parent shall, or shall cause the Company (or the Surviving
Corporation if after the Effective Time) to, periodically advance
to such Indemnified Party its legal and other expenses (including
the cost of any investigation and preparation incurred in
34
connection therewith), subject to the provision by such
Indemnified Party of an undertaking to reimburse the amounts so
advanced in the event of a final determination by a court of
competent jurisdiction that such Indemnified Party is not
entitled thereto. Promptly after receipt by an Indemnified Party
of notice of the assertion (an "Assertion") of any claim or the
commencement of any action against him in respect to which
indemnity or reimbursement may be sought against Parent, the
Company, the Surviving Corporation or a Subsidiary of the Company
or the Surviving Corporation ("Indemnitors") hereunder, such
Indemnified Party shall notify any Indemnitor in writing of the
Assertion, but the failure to so notify any Indemnitor shall not
relieve any Indemnitor of any liability it may have to such
Indemnified Party hereunder except to the extent that such
failure shall have materially and irreversibly prejudiced
Indemnitor in defending against such Assertion. Indemnitors
shall be entitled to participate in and, to the extent
Indemnitors elect by written notice to such Indemnified Party
within 30 days after receipt by any Indemnitor of notice of such
Assertion, to assume the defense of such Assertion, at their own
expense, with counsel chosen by Indemnitors and reasonably
satisfactory to such Indemnified Party. Notwithstanding that
Indemnitors shall have elected by such written notice to assume
the defense of any Assertion, such Indemnified Party shall have
the right to participate in the investigation and defense
thereof, with separate counsel chosen by such Indemnified Party,
but in such event the fees and expenses of such counsel shall be
paid by such Indemnified Party unless such separate counsel is
required due to a conflict of interest, in which case the
Indemnitors shall be responsible for the fees and expenses of one
separate counsel for all such Indemnified Parties. No
Indemnified Party shall settle any Assertion without the prior
written consent of Parent, nor shall Parent settle any Assertion
without either (i) the written consent of all Indemnified Parties
against whom such Assertion was made, or (ii) obtaining a general
release from the party making the Assertion for all Indemnified
Parties as a condition of such settlement. The provisions of
this Section 5.9 are intended for the benefit of, and shall be
enforceable by, the respective Indemnified Parties.
Section 5.10 Conversion of Non-Voting Common Stock.
The Company agrees to acquiesce in the two conditions contained
in the ICC's decision in Finance Docket No. 32133 served on
March 7, 1995, subject to the consummation of the Offer. The
Company agrees to cooperate with Parent, and join in any filings
or submissions to the ICC, in connection with obtaining the ICC
Final Approval; provided, however, that notwithstanding the
foregoing, prior to consummation of the Offer, neither party
shall be deemed to waive any rights under Section 9 of the
Stockholders Agreement with respect to any conditions in the ICC
Final Approval. On or after April 6, 1995 (provided no stays
have been entered by any court or by the ICC prior to such time
35
in connection with Parent's application with the ICC for an order
authorizing the common control of the rail subsidiaries of Parent
and the Company) or on such later date that the parties shall
receive the ICC Final Approval, and provided that Purchaser shall
have consummated the Offer or, if the Offer shall not have been
consummated, the provisions of Section 9 of the Stockholders
Agreement relating to the conditions of the ICC Final Approval
shall have been satisfied, the Company shall, not later than the
next business day immediately following the receipt of the
request of Parent or the Purchaser, accompanied by delivery to
the Company's transfer agent of certificates representing
Purchaser's shares of Non-Voting Common Stock, convert
Purchaser's shares of Non-Voting Common Stock into shares of
Company Common Stock and appoint two Parent designees to the
Board of Directors of the Company.
Section 5.11 ICC Determination. The Company agrees to
support, and if requested by Parent, to join in, the application
of Parent to the ICC requesting a determination that the terms of
the Merger are just and reasonable or, alternatively, a
declaratory order of the ICC that no such determination is
required, and the Company agrees to take such further action as
is necessary or desirable to obtain such determination or order.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To
Effect the Merger. The respective obligation of each party to
effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions:
(a) Stockholder Approval. This Agreement shall
have been approved and adopted by the requisite vote of the
holders of Company Common Stock, if required by applicable law
and the Restated Certificate of Incorporation, in order to
consummate the Merger;
(b) Statutes; Consents. No statute, rule, order,
decree or regulation shall have been enacted or promulgated by
any foreign or domestic government or any governmental agency or
authority of competent jurisdiction which prohibits the
consummation of the Merger and all foreign or domestic
governmental consents, orders and approvals required for the
consummation of the Merger and the transactions contemplated
hereby shall have been obtained and shall be in effect at the
Effective Time;
(c) Injunctions. There shall be no order or
injunction of a foreign or United States federal or state court
36
or other governmental authority of competent jurisdiction in
effect precluding, restraining, enjoining or prohibiting
consummation of the Merger and there shall be no suit, action,
proceeding or investigation by a Governmental Entity seeking to
restrain, enjoin or prohibit the Merger; and
(d) Purchase of Shares in Offer. Parent, the
Purchaser or their affiliates shall have purchased shares of
Company Common Stock pursuant to the Offer.
Section 6.2 Conditions to Parent's Obligation to
Effect the Merger. The obligation of Parent to effect the Merger
shall be subject to the ICC having made a determination that the
terms of the Merger are just and reasonable or having issued a
declaratory order that no such determination is required.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere
to the contrary notwithstanding, this Agreement may be terminated
and the Merger contemplated herein may be abandoned at any time
prior to the Effective Time, whether before or after stockholder
approval thereof:
(a) By the mutual consent of the Board of
Directors of Parent and the Board of Directors of the Company.
(b) By either of the Board of Directors of the
Company or the Board of Directors of Parent:
(i) if shares of Company Common Stock shall
not have been purchased pursuant to the Offer on or prior to
June 30, 1995; provided, however, that the right to
terminate this Agreement under this Section 7.1(b)(i) shall
not be available to any party whose failure to fulfill any
material obligation under this Agreement has been the cause
of, or resulted in, the failure of Parent or the Purchaser,
as the case may be, to purchase shares of Company Common
Stock pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action
(which order, decree, ruling or other action the parties
hereto shall use their reasonable efforts to lift), in each
case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have
become final and non-appealable.
37
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of
Company Common Stock pursuant to the Offer, the Board of
Directors of the Company shall have (A) withdrawn, or
modified or changed in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger in order to approve and permit the
Company to execute a definitive agreement relating to a
Takeover Proposal, and (B) determined, based on an opinion
of outside legal counsel to the Company, that the failure to
take such action as set forth in the preceding clause (A)
would likely result in a breach of the Board of Directors'
fiduciary duties under applicable law; or
(ii) if, prior to the purchase of Company
Common Stock pursuant to the Offer, Parent or the Purchaser
breaches or fails in any material respect to perform or
comply with any of its material covenants and agreements
contained herein or breaches its representations and
warranties in any material respect; or
(iii) if Parent or the Purchaser shall have
terminated the Offer, or the Offer shall have expired,
without Parent or the Purchaser, as the case may be,
purchasing any shares of Company Common Stock pursuant
thereto; provided that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(iii) if the
Company is in material breach of this Agreement; or
(iv) if, due to an occurrence that if
occurring after the commencement of the Offer would result
in a failure to satisfy any of the conditions set forth in
Annex A hereto, Parent, the Purchaser or any of their
affiliates shall have failed to commence the Offer on or
prior to five business days following the date of the
initial public announcement of the Offer; provided, that the
Company may not terminate this Agreement pursuant to this
Section 7.1(c)(iv) if the Company is in material breach of
this Agreement.
(d) By the Board of Directors of Parent:
(i) if, due to an occurrence that if
occurring after the commencement of the Offer would result
in a failure to satisfy any of the conditions set forth in
Annex A hereto, Parent, the Purchaser, or any of their
affiliates shall have failed to commence the Offer on or
prior to five business days following the date of the
initial public announcement of the Offer; provided that
Parent may not terminate this Agreement pursuant to this
38
Section 7.1(d)(i) if Parent is in material breach of this
Agreement; or
(ii) if (A) prior to the purchase of shares
of Company Common Stock pursuant to the Offer, the Board of
Directors of the Company shall have withdrawn, or modified
or changed (including by amendment of the Schedule 14D-9) in
a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or
shall have recommended a Takeover Proposal, or shall have
executed an agreement in principle (or similar agreement) or
definitive agreement providing for a Takeover Proposal or
other business combination with a person or entity other
than Parent, the Purchaser or their affiliates (or the Board
of Directors of the Company resolves to do any of the
foregoing), or (B) it shall have been publicly disclosed or
Parent or the Purchaser shall have learned that any person,
entity or "group" (as that term is defined in Section
13(d)(3) of the Exchange Act) (an "Acquiring Person"), other
than Parent or its affiliates or any group of which any of
them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than 30% of any class or series of
capital stock of the Company (including the Shares), through
the acquisition of stock, the formation of a group or
otherwise, or shall have been granted an option, right, or
warrant, conditional or otherwise, to acquire beneficial
ownership of more than 30% of any class or series of capital
stock of the Company (including the Shares); or
(iii) if Parent or the Purchaser, as the
case may be, shall have terminated the Offer, or the Offer
shall have expired without Parent or the Purchaser, as the
case may be, purchasing any shares of Company Common Stock
thereunder, provided that Parent may not terminate this
Agreement pursuant to this Section 7.1(d)(iii) if it or the
Purchaser has failed to purchase shares of Company Common
Stock in the Offer in violation of the material terms
thereof.
Section 7.2 Effect of Termination. In the event of
the termination of this Agreement as provided in Section 7.1,
written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability
on the part of the Parent, the Purchaser or the Company except
(A) for fraud or for material breach of this Agreement and (B) as
set forth in Sections 8.1 and 8.2 hereof.
39
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as
contemplated by this Agreement, including Section 8.1(b) hereof,
all costs and expenses incurred in connection with this Agreement
and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses.
(b) If (w) the Board of Directors of the Company
shall terminate this Agreement pursuant to Section 7.1(c)(i)
hereof, (x) the Board of Directors of Parent shall terminate this
Agreement pursuant to Section 7.1(d)(ii) hereof, (y) the Board of
Directors of the Company shall terminate this Agreement pursuant
to Section 7.1(c) (iii) or 7.1(c)(iv) or the Board of Directors
or Parent shall terminate this Agreement pursuant to Section
7.1(d)(iii) and within one (1) year of any such termination under
this clause (y), a Person shall acquire or beneficially own a
majority of the then outstanding shares of Company Common Stock
or shall have obtained representation on the Company's Board of
Directors or shall enter into a definitive agreement with the
Company with respect to a Takeover Proposal or similar business
combination or (z) the Board of Directors of Parent shall
terminate this Agreement pursuant to Section 7.1(d)(i) due to
(I) a material breach of the representations and warranties of
the Company set forth in this Agreement or (II) a material breach
of, or failure to perform or comply with, any material
obligation, agreement or covenant contained in this Agreement,
including but not limited to the covenants contained in Section
5.1 hereof, by the Company, then in any such case as described in
clause (w), (x), (y) or (z) (each such case of termination being
referred to as a "Trigger Event"), the Company agrees that it
shall promptly assume and pay, or reimburse Parent for, all
reasonable fees and expenses incurred, or to be incurred by
Parent, the Purchaser and their affiliates (including the fees
and expenses of legal counsel, accountants, financial advisors,
other consultants, financial printers and financing sources) in
connection with the Offer, the Merger and the consummation of the
transactions contemplated by this Agreement, in an amount not to
exceed $3 million in the aggregate.
Section 8.2 Finders' Fees. (a) Except for
Blackstone, a copy of whose engagement agreement has been or will
be provided to Parent and whose fees will be paid by the Company,
there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act
on behalf of the Company or any of its Subsidiaries who might be
entitled to any fee or commission from the Company or any of its
Subsidiaries upon consummation of the transactions contemplated
by this Agreement.
40
(b) Except for CS First Boston Corporation, a
copy of whose engagement agreement has been or will be provided
to the Company and whose fees will be paid by Parent, there is no
investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Parent or
any of its Subsidiaries who might be entitled to any fee or
commission from Parent or any of its Subsidiaries upon
consummation of the transactions contemplated by this Agreement.
Section 8.3 Amendment and Modification. Subject to
applicable law, this Agreement may be amended, modified and
supplemented in any and all respects, whether before or after any
vote of the stockholders of the Company contemplated hereby, by
written agreement of the parties hereto, by action taken by their
respective Boards of Directors (which in the case of the Company
shall include approvals as contemplated in Section 1.3(c)), at
any time prior to the Closing Date with respect to any of the
terms contained herein; provided, however, that after the
approval of this Agreement by the stockholders of the Company, no
such amendment, modification or supplement shall reduce or change
the Merger Consideration.
Section 8.4 Nonsurvival of Representations and
Warranties. None of the representations and warranties in this
Agreement or in any schedule, instrument or other document
delivered pursuant to this Agreement shall survive the Effective
Time.
Section 8.5 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or
sent by an overnight courier service, such as Federal Express, to
the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Union Pacific Corporation
Martin Tower, Eighth and
Eaton Avenues
Bethlehem, Pennsylvania 18018
Attention: Chairman and Chief
Executive Officer
Telephone No.: (610) 861-3200
Telecopy No.: (610) 861-3111
41
with a copy to:
Paul T. Schnell, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2001
and
(b) if to the Company, to:
Chicago and North Western
Transportation Company
165 North Canal Street
Chicago, Illinois 60606
Attention: Chairman and Chief
Executive Officer
Telephone No.: (312) 559-6172
Telecopy No.: (312) 559-7169
with a copy to:
Paul J. Miller, Esq.
Sonnenschein, Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606-6404
Telephone No.: (312) 876-8000
Telecopy No.: (312) 876-7934
Section 8.6 Interpretation. When a reference is made
in this Agreement to Sections, such reference shall be to a
Section of this Agreement unless otherwise indicated. Whenever
the words "include", "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words
"without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been
made available if requested by the party to whom such information
is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import,
unless the context otherwise requires, shall be deemed to refer
to March 16, 1995. As used in this Agreement, the term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of
the Exchange Act.
Section 8.7 Counterparts. This Agreement may be
executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when two or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
42
Section 8.8 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership. This Agreement and the
Confidentiality Agreement (including the documents and the
instruments referred to herein and therein except to the extent
superseded hereby): (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.9 are not
intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 8.9 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, 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 8.10 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of Delaware without giving effect to the principles of conflicts
of law thereof.
Section 8.11 Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned
Subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
43
IN WITNESS WHEREOF, Parent, the Purchaser and the
Company have caused this Agreement to be signed by their
respective officers thereunto duly authorized as of the date
first written above.
UNION PACIFIC CORPORATION
By:/s/ Drew Lewis
Name:
Title:
UP RAIL, INC.
By:/s/ Carl von Bernuth
Name:
Title:
CHICAGO AND NORTH WESTERN
TRANSPORTATION COMPANY
By:/s/ Robert Schmiege
Name: Robert Schmiege
Title: Chairman, President and
Chief Executive Officer
44
ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and
in addition to (and not in limitation of) the Purchaser's rights
to extend and amend the Offer at any time in its sole discretion
(subject to the provisions of the Merger Agreement), the
Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the SEC, including
Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if
(i) the Minimum Condition has not been satisfied prior to the
expiration of the Offer, (ii) the Interstate Commerce
Commission's ("ICC") approval of Parent's application for an
order authorizing the common control, within the meaning of the
Interstate Commerce Act, of the rail subsidiaries of the Company
and Parent shall not have become final and effective prior to the
expiration of the Offer, or (iii) at any time on or after
March 16, 1995 and prior to the acceptance for payment of any
such Shares, any of the following events shall occur or shall be
determined by the Purchaser to have occurred:
(a) there shall have been instituted or pending
any action, proceeding, application, claim or suit, or any
statute, rule, regulation, judgment, order or injunction
promulgated, entered, enforced, enacted, proposed, issued or
applicable to the Offer or the Merger by any domestic or foreign
federal, state or local governmental regulatory or administrative
agency or authority or court or legislative body or commission
which directly or indirectly (l) prohibits or makes illegal, or
imposes any material adverse limitations on, Parent's or the
Purchaser's ownership or operation of all or a material portion
of the businesses or assets of the Company and its Subsidiaries,
taken as a whole, or compels Parent or the Purchaser or their
respective Subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the
Company or its Subsidiaries, in each case taken as a whole,
(2) prohibits, or makes illegal the acceptance for payment,
payment for or purchase of Shares or the consummation of the
Offer or the Merger, (3) restricts the ability of the Purchaser,
or renders the Purchaser unable, to accept for payment, pay for
or purchase some or all of the Shares, (4) imposes material
limitations on the ability of the Purchaser or Parent effectively
to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders,
(5) prohibits, restricts, results in a delay, or imposes material
1
limitations on the ability of Purchaser to convert the Non-Voting
Shares into Shares, or (6) otherwise materially adversely affects
the financial condition, businesses or results of operations of
the Company and its Subsidiaries, taken as a whole; provided that
in each such case Parent shall have used all reasonable efforts
to cause any such judgment, order or injunction to be vacated or
lifted;
(b) the representations and warranties of the
Company set forth in the Merger Agreement shall not have been
true and correct when made, except (i) those representations and
warranties that address matters only as of a particular date are
true and correct as of such date, and (ii) where the failure of
such representations and warranties to have been true and correct
when made (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein),
does not have, and is not likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, or the Company shall have
breached or failed in any material respect to perform or comply
with any material obligation, agreement or covenant required by
the Merger Agreement to be performed or complied with by it;
(c) (i) it shall have been publicly disclosed or
Parent or the Purchaser shall have otherwise learned that any
person, entity or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or its affiliates or any group
of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under
the Exchange Act) of more than 30% of the outstanding shares of
any class or series of capital stock of the Company (including
the Shares), through the acquisition of stock, the formation of a
group or otherwise, or shall have been granted an option, right
or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 30% of any class or series of capital
stock of the Company (including the Shares); or (ii) any person
or group shall have entered into a definitive agreement or
agreement in principle with the Company with respect to a
Takeover Proposal or other business combination with the Company;
(d) the Company's Board of Directors shall have
withdrawn, or modified or changed in a manner adverse to Parent
or the Purchaser (including by amendment of the Schedule 14D-9)
its recommendation of the Offer, the Merger Agreement, or the
Merger, or recommended another proposal or offer, or shall have
resolved to do any of the foregoing; or
(e) the Merger Agreement shall have been
terminated in accordance with its terms;
which in the sole judgment of Parent or the Purchaser, in any
such case, and regardless of the circumstances (including any
2
action or inaction by Parent or the Purchaser giving rise to such
condition) makes it inadvisable to proceed with the Offer or with
such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of
the Purchaser and Parent and may be waived by Parent or the
Purchaser, in whole or in part at any time and from time to time
in the sole discretion of Parent or the Purchaser. The failure
by Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right
and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
3
Dates Referenced Herein and Documents Incorporated by Reference
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