Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Form 10-K for Fiscal Year Ended December 31, 1993 32 131K
2: EX-4.16B EX-4.16B Amendment Dated as of September 10, 1993 14 44K
3: EX-4.16C EX-4.16C Master Assignment & Acceptance Agreement 15 41K
4: EX-10.33A EX-10.33A Termination Agreements 6 14K
5: EX-10.53B EX-10.53B Amendment to 1992 Equity Incentive Plan 1 7K
6: EX-10.55 EX-10.55 AT&T Corporate Center Office Sublease 222 670K
7: EX-10.56 Material Contract 4 16K
8: EX-10.57 Material Contract 4 16K
9: EX-10.58 Material Contract 17 50K
10: EX-10.59 Material Contract 12 42K
11: EX-13 EX-13 1993 Annual Report - Portions Deemed Filed 32 118K
12: EX-21 EX-21 Subsidiaries 1 5K
EX-10.59 — Material Contract
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AGREEMENT
WHEREAS, each of the persons listed on the signature pages
hereof (other than UP Leasing Corporation and Chicago and North
Western Acquisition Corporation (collectively, the "WRPI
Parties")) is a party to, or bound by the provisions of, the
Second Amended and Restated Stockholders Agreement dated as of
March 30, 1992, as amended by the Letter Agreement dated
October 1, 1992 (as so amended, the "Stockholders Agreement") by
and among Blackstone Capital Partners L.P. ("Blackstone"),
Blackstone Family Investment Partnership II L.P. ("BFIP"),
Blackstone Advisory Directors Partnership L.P. ("BADP"), Chemical
Investments, Inc. ("Chemical"), The Prudential Insurance Company
of America ("Prudential"), DLJ Capital Corporation ("DLJCC"),
Donaldson, Lufkin & Jenrette Securities Corporation, as custodian
("DLJSC"), Union Pacific Corporation ("Union Pacific"), UP Rail,
Inc. ("UP"), Robert Schmiege, Jerome W. Conlon, James P. Daley,
Mary K. Daley, Robert A. Jahnke, Arthur W. Peters, and Thomas A.
Tingleff (such individuals being referred to herein,
collectively, as the "Management Purchasers"), CNW Corporation,
Chicago and North Western Transportation Company and Chicago and
North Western Holdings Corp. ("Holdings").
WHEREAS, DLJCC is the record and beneficial owner of
1,575,430 shares of common stock, par value $.01 per share
("Common Stock") of Holdings and DLJSC (collectively, the "DLJ
Group") is the record owner of 540,701 shares of Common Stock of
Holdings (collectively, the "DLJ Shares"), in each case
constituting Voting Stock for purposes of, and as defined in, the
Stockholders Agreement.
WHEREAS, Blackstone, BFIP, BADP, Chemical and
Prudential (collectively, the "Blackstone Group") are the record
owners of an aggregate of 12,031,690 shares of Common Stock of
Holdings (the "Blackstone Shares") constituting Voting Stock for
purposes of, and as defined in, the Stockholders Agreement.
WHEREAS, the Blackstone Group and the DLJ Group have
requested the Company to effect the registration (the
"Registration") under the Securities Act of 1933 of 11,558,673 of
the Blackstone Shares (the "Blackstone Secondary Shares") and
2,034,102 of the DLJ Shares (the "DLJ Secondary Shares" and,
collectively with the Blackstone Secondary Shares, the "Secondary
Shares") to permit a public offering of such shares (the
"Offering").
WHEREAS, the Blackstone Group and the DLJ Group are
selling to UP and UP is buying, on a pro rata basis, 500,000 of
the Blackstone Shares and the DLJ Shares (resulting in 425,200
shares allocated to the Blackstone Group and 74,800 shares
allocated to the DLJ Group) (the "UP Shares") on the closing date
of the Offering (the "Closing Date") at a price per share (the
"UP Purchase Price") equal to the public offering price per share
of the Secondary Shares (the "UP Purchase").
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NOW, THEREFORE, the parties hereto agree as follows:
1. (a) Each of the undersigned (other than the WRPI
Parties) hereby consents to the Offering and the sale of the
Secondary Shares pursuant thereto and agrees that the
Registration shall be deemed to constitute a registration of
Registrable Securities requested by Blackstone and DLJ pursuant
to Section 2 of the Registration Rights Agreement dated as of
July 14, 1989 and amended as of July 24, 1989 and March 30, 1992
and as further amended by the Letter Agreement dated October 1,
1992 (as so amended, the "Registration Rights Agreement") by and
among Holdings, Blackstone, BFIP, BADP, Chemical, Prudential,
DLJCC, UP, Union Pacific and the Management Purchasers. Each of
the undersigned which is a Holder under the Registration Rights
Agreement, other than the Blackstone Group and the DLJ Group,
hereby waives any and all rights that it may have under the
Registration Rights Agreement with respect to the Registration
and the Offering.
(b) Each of the undersigned (other than the WRPI
Parties) hereby agrees and confirms that (i) the Management
Purchasers shall not be bound by the restriction on public sale
of Common Stock of Holdings by Holders set forth in Section 4(a)
of the Registration Rights Agreement to the extent such
restriction would apply in connection with the Offering,
(ii) upon completion of the Offering, each Management Purchaser
shall be permitted to transfer shares of Common Stock of Holdings
held by such Management Purchaser without any restriction under
the Stockholders Agreement or any subscription agreement between
such Management Purchaser and the Company relating to the Common
Stock, or otherwise, subject only to any applicable restrictions
under Rule 144 under the Securities Act and (iii) upon completion
of the Offering, each of the persons in the Blackstone Group and
the DLJ Group shall relinquish their respective rights and shall
be released from their respective obligations under the
Stockholders Agreement and the subscription agreements dated as
of July 14, 1989 between Blackstone and DLJCC, respectively, and
the Company relating to the Common Stock, subject only to any
applicable restrictions under Rule 144 under the Securities Act.
(c) Subject to the closing of the sale of the
Secondary Shares in the Offering, the Blackstone Group and the
DLJ Group agree to sell to UP and UP agrees to purchase, on a pro
rata basis, on the Closing Date, the UP Shares at a purchase
price per UP Share equal to the UP Purchase Price. On or prior to
the Closing Date, the Blackstone Group and the DLJ Group will
deliver the UP Shares to Holdings. At such closing, Holdings will
issue to UP, in lieu of the UP Shares, 500,000 newly issued
shares of Non-Voting Common Stock. Each of the undersigned hereby
consents to the sale of the UP Shares and issuance of NonVoting
Common Stock in the UP Purchase.
(d) Each of the undersigned (other than the WRPI
Parties) further waives any and all rights that it may have
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under, and hereby releases each of Holdings, DLJCC, DLJSC,
Blackstone, BFIP, BADP, Chemical, Prudential, UP, Union Pacific
and the Management Purchasers from any and all of their
respective obligations under, the Stockholders Agreement with
respect to the Offering and the UP Purchase and the sales of
shares of Voting Stock and Non-Voting Common Stock transferred
pursuant thereto, including, without limitation, UP's waiver of
its right under Section 2(h) of the Stockholders Agreement to
request an amendment of the Corporation's Certificate of
Incorporation.
2. Each of the undersigned which is subject to
Section 3 of the Stockholders Agreement agrees that the UP
Purchase is deemed to comply with the terms, conditions and
restrictions on transfer contained in the Blackstone Subscription
Agreement and the DLJCC Subscription Agreement (as such terms are
defined in the Stockholders Agreement). Holdings and UP further
acknowledge that the UP Purchase constitutes an acquisition
pursuant to the exercise of UP's right of first refusal pursuant
to the Stockholders Agreement solely for purposes of Section 7.4
of the Exchange Agreement dated March 30, 1992 (the "Exchange
Agreement") between Holdings and UP. Holdings and UP hereby amend
Section 7.4 of the Exchange Agreement to change the percentage
"30%" contained therein to "33%".
3. Upon consummation of the UP Purchase, the parties
hereto acknowledge that (i) the Non-Voting Common Stock acquired
by UP upon conversion of the UP Shares and the shares of Common
Stock into which such Non-Voting Common Stock is convertible
shall continue to constitute Voting Stock for purposes of the
Stockholders Agreement and Registrable Securities as defined in
the Registration Rights Agreement and (ii) the certificates for
the shares of Non-Voting Common Stock issued to UP shall contain
the legends referred to in Section 6 of the Stockholders
Agreement, Section 7 of the Registration Rights Agreement and
Section 5.3 of the Exchange Agreement. Each of the undersigned
agrees that the obligations with respect to cooperation on
Interstate Commerce Commission (the "ICC") matters set forth in
Section 9 of the Stockholders Agreement shall apply to the
12,835,304 shares of Non-Voting Common Stock beneficially owned
by UP (assuming consummation of the UP Purchase) and the shares
of Common Stock into which such shares of Non-Voting Common Stock
are convertible.
4. UP represents that it is acquiring the UP Shares
with the same investment intention set forth in Section 5.2 of
the Exchange Agreement.
5. (a) From and after the Closing Date, Holdings
agrees to use its best efforts to cause Drew Lewis and L. White
Matthews, III (such individuals and their respective successors
as nominees of UP to the Board of Directors of the Company being
referred to herein, together, as the "Additional UP Nominees" and
collectively with the UP Nominee (as defined in the Stockholders
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Agreement), as the "UP Nominees") to be appointed to Holdings'
Board of Directors as members of the class of Directors serving
for a term ending on the date of the Annual Meeting to be held in
1995, such appointment to become effective upon the later to
occur of (the "Effective Time") (i) the effectiveness of the
resignations of Messrs. Peterson and Schwarzman as Directors and
(ii) the obtaining of any approval, exemption or declaratory
order of the ICC necessary for the election of Drew Lewis and
L. White Matthews, III to become effective, as specified in a
resolution (the "Resolution") adopted by the Board of Directors
on June 16, 1993, a copy of which is attached hereto as Exhibit
A. To the extent necessary to ensure that there will at all times
be three nominees of UP on the Holdings' Board of Directors (and,
if Holdings shall continue to have a staggered Board of
Directors, one such nominee shall serve in Class I and two
nominees shall serve in Class III), after the Effective Time, or
if the Additional UP Nominees shall fail to take office prior to
the time that the Resolution shall cease to have effect by the
terms thereof, upon the request of UP (which in the case of an
annual meeting shall be given at least 30 days prior to the
Company's mailing of proxy materials for such meeting), Holdings
will use its best efforts to (i) if a vacancy or vacancies shall
then exist on the Board of Directors in any class, have each such
vacancy or vacancies filled by a UP Nominee, (ii) if no vacancies
or insufficient vacancies shall exist, to expand the Board of
Directors by one or two members, as the case may be, and have
each such duly created vacancy or vacancies filled by a UP
Nominee and (iii) nominate and solicit proxies for the election
as Directors at each annual meeting of stockholders of Holdings
(or, if applicable, at any special meeting of stockholders or in
any written consent executed in lieu of such a meeting of
stockholders, provided that Holdings shall not be required to
schedule a special meeting of stockholders or request such a
written consent at UP's request), recommend to the stockholders
of Holdings that they elect, and otherwise cause the election of,
such nominees of UP. The qualification for nomination of any of
the UP Nominees shall be subject to reasonable determination by
the Board of Directors. During the period in which UP has the
right to nominate three persons to the Board of Directors,
Holdings shall use its best efforts to ensure that the Board of
Directors consists of nine Directors; provided that if it is
necessary to increase the size of the Board of Directors in order
to elect the Additional UP Nominees, the Board of Directors may
be expanded to the extent necessary until the election of
Directors at Holdings' next annual meeting.
(b) From and after the Closing Date, in addition to
their obligations relating to the UP Nominee, the Management
Purchasers shall vote their shares of any voting stock of
Holdings (including any shares of voting stock hereafter
acquired), at any regular or special meeting of the stockholders
of Holdings called for the purpose of filling positions on the
Board of Directors of Holdings, or, to the extent permitted by
the Charter Documents (as defined in the Stockholders Agreement),
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in any written consent executed in lieu of such a meeting of
stockholders, and the Management Purchasers shall vote and
otherwise use their best efforts to ensure that the Board of
Directors of Holdings includes three nominees of UP. During the
period set forth in Section 2(c) of the Stockholders Agreement,
the Management Purchasers shall use their best efforts to ensure
that the Board of Directors consists of no more than nine
Directors; provided that if it is necessary to increase the size
of the Board of Directors after December 31, 1994 in order to
elect the Additional UP Nominees, the Board of Directors may be
expanded to the extent necessary until the election of Directors
at Holdings' next annual meeting. The obligations of a Management
Purchaser under this Section 5(b) shall terminate if such
Management Purchaser ceases to be an employee of Holdings or, in
the case of Mary K. Daley, if James P. Daley ceases to be an
employee of Holdings. The provisions of this Section 5(b) shall
not impose any (i) restriction on the ability of any Management
Purchaser to sell such Management Purchaser's shares of Common
Stock or (ii) requirement that any Management Purchaser make any
expenditure of money in the exercise of such best efforts.
(c) If one of the nominees of UP serving as a Director
should resign or die while serving as a Director of Holdings, or,
in the case of any of the Additional UP Nominees, such person
shall die or decline to serve as a Director prior to the
Effective Time, UP shall be entitled to nominate a successor
nominee. Holdings shall use its best efforts to cause such
nominee to be nominated and elected as a Director of Holdings
within 10 days after UP gives written notice to the Board of
Directors of Holdings that UP has designated such successor
nominee, or, in the case of a successor to an Additional UP
Nominee, at the Effective Time.
(d) The parties hereto acknowledge and agree that in
the event of any breach of the obligations contained in this
Section 5, UP would be irreparably harmed and could not be made
whole by monetary damages. It is accordingly agreed that Holdings
and the Management Purchasers shall and do waive the defense in
any action for specific performance that a remedy at law would be
adequate and that UP, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to compel
specific performance in any action instituted in a Federal Court
of the United States of America sitting in New York City, or in
the event said court shall not have jurisdiction for such action,
in any court of the United States or any state thereof having
subject matter jurisdiction for such action.
(e) The provisions of this Section 5 shall terminate
(i) with respect to both Additional UP Nominees, if UP and its
affiliates cease to own at least 20% of the capital stock of
Holdings of any class or classes, the holders of which are
entitled to vote generally in the election of the members of the
Holdings' Board of Directors and any securities of Holdings
presently convertible into, or exercisable or exchangeable for,
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any such capital stock of Holdings including, but not limited to
the Common Stock and Non-Voting Common Stock of Holdings (whether
or not such Non-Voting Common Stock is presently convertible)
(collectively, "Voting Stock"), and (ii) with respect to one of
the Additional UP Nominees, if UP and its affiliates cease to own
at least 25%, but continue to own at least 20% of Holdings'
Voting Stock.
6. The parties to the agreement dated December 20,
1990, among the WRPI Parties, Blackstone, UP, Union Pacific, CNW
Corporation, Chicago and North Western Transportation Company and
Holdings, hereby agree that such agreement shall be terminated
and shall have no further force or effect upon the closing of the
Offering and the UP Purchase.
7. Holdings represents and warrants that:
(a) Holdings is a corporation duly organized, validly
existing and in good standing under the laws of state of
Delaware. Holdings has all requisite power and authority to
own, operate and lease its properties and to carry on its
business as currently conducted, and is qualified or
licensed to do business and in good standing in each
jurisdiction in which its ownership or leasing of property
or the conduct of its business requires such licensing or
qualification, except to the extent that the failure to be
so qualified or licensed or in good standing would not have
a material adverse effect on Holdings or a material impact
on UP's investment in the UP Shares.
(b) Holdings has all requisite corporate power and
authority to execute and deliver this Agreement and to carry
out its obligations hereunder. The execution and delivery of
this Agreement and the performance by Holdings of its
obligations hereunder have been duly authorized, and no
other corporate proceeding on the part of Holdings or its
stockholders is required. This Agreement has been duly
executed and delivered by Holdings and assuming the due
authorization, execution and delivery hereof by the other
parties hereto, is a valid and binding obligation of
Holdings, enforceable against Holdings in accordance with
its terms.
(c) The execution and delivery of this Agreement by
Holdings, the performance by Holdings of its obligations
hereunder and the consummation of the transactions to be
performed by Holdings contemplated by this agreement will
not (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or By-Laws of
Holdings or any of its subsidiaries, (ii) conflict with, or
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 or conditions of any
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note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Holdings 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 (iii) violate
any statute or law, or any rule, regulation, writ,
injunction, judgment, order or decree of any court,
administrative agency or governmental authority binding on
Holdings or any of its subsidiaries, or any of their
respective properties or assets (provided that no
representation or warranty is made as to any required ICC
action), excluding from the foregoing clauses (ii) and
(iii), conflicts, violations, breaches and defaults which,
individually and in the aggregate, would not have a material
adverse effect on Holdings or a material impact on UP's
investment in the UP Shares.
(d) The UP Shares (and the Non-Voting Common Stock
into which the UP Shares will be converted) have been duly
authorized by Holdings and (assuming, in the case of such
Non-Voting Common Stock, such conversion of the UP Shares)
have been duly and validly issued, and are fully paid and
nonassessable and UP will acquire valid and marketable title
thereto, free and clear of any lien, claim, charge, equity
or encumbrance of any kind (assuming, if applicable, that UP
has not created any lien, claim, charge, equity or
encumbrance of any kind on such shares). The shares of
Common stock issuable upon conversion of the 500,000 shares
of Non-Voting Common Stock have been duly authorized and,
when issued upon conversion of the 500,000 shares of
Non-Voting Common Stock, will be validly issued, fully paid
and nonassessable, and UP will acquire valid and marketable
title thereto, free and clear of any lien, claim, charge,
equity or encumbrance of any kind (assuming, if applicable,
that UP has not created any lien, claim, charge, equity or
encumbrance of any kind on such shares). The shares of
Common Stock issuable upon conversion of such 500,000 shares
of Non-Voting Common Stock have been, and at all times prior
to the conversion of the Shares will be, duly reserved for
issuance upon such conversion.
8. This Agreement shall terminate and shall have no
further force or effect and all consents and waivers hereunder
shall be void if the Closing Date shall not have occurred on or
before December 31, 1993.
9. For purposes of this Agreement, the consents,
waivers and agreements by each of the undersigned hereunder shall
constitute consents, waivers and agreements by each of the
Permitted Transferees (as defined in the Stockholders Agreement)
of such undersigned who represent that such consents, waivers and
agreements are binding on its Permitted Transferees.
8
10. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement.
9
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of June 21, 1993.
CHICAGO AND NORTH WESTERN
HOLDINGS CORP.
By: /s/ Robert Schmiege
Name: Robert Schmiege
Title: Chairman, President
and CEO
BLACKSTONE CAPITAL PARTNERS, L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES L.P.
By: /s/ David A. Stockman
General Partner
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES L.P.
By: /s/ David A. Stockman
General Partner
BLACKSTONE ADVISORY DIRECTORS
PARTNERSHIP L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES L.P.
By: /s/ David A. Stockman
General Partner
CHEMICAL INVESTMENTS, INC.
By: /s/ Arnold L. Chavkin
Name: Arnold L. Chavkin
Title: President
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THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Richard A. Hubbard
Name: Richard A. Hubbard
Title: Vice President
DLJ CAPITAL CORPORATION
By: /s/ J. Brian Mullen
Name: J. Brian Mullen
Title: Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ J. Brian Mullen
Name: J. Brian Mullen
Title: Managing Director
UNION PACIFIC CORPORATION
By: /s/ John E. Dowling
Name: John E. Dowling
Title: Vice President -
Corporate Development
UP RAIL, INC.
By: /s/ John E. Dowling
Name: John E. Dowling
Title: Vice President
CNW CORPORATION
By: /s/ Robert Schmiege
Name: Robert Schmiege
Title: Chairman, President
and CEO
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CHICAGO and NORTH WESTERN
TRANSPORTATION COMPANY
By: /s/ Robert Schmiege
Name: Robert Schmiege
Title: Chairman, President
and CEO
/s/ Robert Schmiege
Robert Schmiege
/s/ Jerome W. Conlon
Jerome W. Conlon
/s/ James P. Daley
James P. Daley
/s/ Mary K. Daley
Mary K. Daley
/s/ Robert A. Jahnke
Robert A. Jahnke
/s/ Arthur W. Peters
Arthur W. Peters
/s/ Thomas A. Tingleff
Thomas A. Tingleff
CHICAGO AND NORTH WESTERN
ACQUISITION CORP.
By: /s/ Robert Schmiege
Name: Robert Schmiege
Title: Chairman, President
and CEO
UP LEASING CORPORATION
By: /s/ Carl W. von Bernuth
Name: Carl W. von Bernuth
Title: Vice President - Law
EXHIBIT A
RESOLVED, that Drew Lewis and L. White Matthews, III
are hereby elected to serve as directors of the Corporation in
Class III, which Class shall serve for a term ending on the date
of the annual meeting in 1995; provided, however, that the
election of such persons shall be effective upon the later to
occur of (i) the effectiveness of the resignations of Messrs.
Peterson and Schwarzman as directors and (ii) the obtaining of
any approval, exemption or declaratory order of the Interstate
Commerce Commission (the "ICC") necessary for the election of
Drew Lewis and L. White Matthews, III to become effective ("ICC
Approval"); and further
RESOLVED, that the foregoing resolution shall be of no
further effect in the event that ICC Approval shall not have been
obtained by the earlier to occur of (i) December 31, 1994, or
(ii) the date of the Corporation's receipt of written notice
given pursuant to the Corporation's By-laws by any stockholder of
record entitled to vote generally in the election of Directors
(other than any stockholder that is a party to the Stockholders
Agreement) indicating such stockholder's intention to nominate
one or more persons for election as Directors at the annual
meeting of stockholders of the Corporation to be held in 1994;
and further
RESOLVED, that in the event that, prior to the date
that ICC Approval is obtained, (i) UP Rail, Inc. ("UP") and its
affiliates cease to own at least 20% of the capital stock of the
Corporation of any class or classes, the holders of which are
entitled to vote in the election of the members of the
Corporation's Board of Directors and any securities of the
Corporation presently convertible into, or exercisable or
exchangeable for, any such capital stock of the Corporation,
including, but not limited to the Common Stock and Non-Voting
Common Stock of the Corporation (whether or not such Non-Voting
Stock is presently convertible) (collectively, "Voting Stock"),
the Board of Directors may elect substitute directors to fill
such vacancies in lieu of Drew Lewis and L. White Matthews, III
or (ii) UP and its affiliates cease to own at least 25%, but
continue to own at least 20%, of the Voting Stock of the
Corporation, the Board of Directors may elect a substitute
director to fill the vacancy in lieu of either Drew Lewis or
L. White Matthews, III, as UP shall elect.
Dates Referenced Herein and Documents Incorporated by Reference
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