<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
SOUTHERN PACIFIC RAIL CORPORATION
----------------------------------------------------
(NAME OF SUBJECT COMPANY)
UNION PACIFIC CORPORATION
UNION PACIFIC RAILROAD COMPANY
UP ACQUISITION CORPORATION
----------------------------------------------------
(BIDDERS)
COMMON STOCK, PAR VALUE $.001 PER SHARE
----------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
843584 10 3
----------------------------------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
RICHARD J. RESSLER, ESQ.
ASSISTANT GENERAL COUNSEL
UNION PACIFIC CORPORATION
MARTIN TOWER, EIGHTH AND EATON AVENUES
BETHLEHEM, PENNSYLVANIA 18018
(610) 861-3200
----------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
WITH A COPY TO:
PAUL T. SCHNELL, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 735-3000
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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<S> <C>
$975,861,775 $195,172.36
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</TABLE>
* FOR PURPOSES OF CALCULATING THE FILING FEE ONLY. THIS CALCULATION ASSUMES
THE PURCHASE OF 39,034,471 SHARES OF COMMON STOCK, PAR VALUE $.001 PER
SHARE, OF SOUTHERN PACIFIC RAIL CORPORATION AT $25.00 NET PER SHARE IN
CASH.
** THE AMOUNT OF THE FILING FEE, CALCULATED IN ACCORDANCE WITH RULE 0-11(D) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EQUALS 1/50TH OF ONE
PERCENT OF THE AGGREGATE VALUE OF CASH OFFERED BY UP ACQUISITION
CORPORATION FOR SUCH NUMBER OF SHARES.
[_] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLE. FILING PARTY: NOT APPLICABLE.
FORM OR REGISTRATION NO.: NOT APPLICABLE. DATE FILED: NOT APPLICABLE.
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<PAGE>
CUSIP No. 843584 10 3 14D-1
1.NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
UNION PACIFIC CORPORATION (13-2626465)
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2.CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
[_] (a)
[X] (b)
--------------------------------------------------------------------------------
3.SEC USE ONLY
--------------------------------------------------------------------------------
4.SOURCE OF FUNDS
BK, WC
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5.[_] CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f)
--------------------------------------------------------------------------------
6.CITIZENSHIP OR PLACE OF ORGANIZATION
UTAH
--------------------------------------------------------------------------------
7.AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 See Section 13 of the Offer to Purchase, dated August 9, 1995
filed as Exhibit (a)(1) hereto
--------------------------------------------------------------------------------
8.[_] CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
--------------------------------------------------------------------------------
9.PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
--------------------------------------------------------------------------------
10.TYPE OF REPORTING PERSON
HC and CO
2
<PAGE>
CUSIP No. 843584 10 3 14D-1
1.NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
UNION PACIFIC RAILROAD COMPANY
--------------------------------------------------------------------------------
2.CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
[_] (a)
[X] (b)
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3.SEC USE ONLY
--------------------------------------------------------------------------------
4.SOURCE OF FUNDS
AF
--------------------------------------------------------------------------------
5.[_] CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f)
--------------------------------------------------------------------------------
6.CITIZENSHIP OR PLACE OF ORGANIZATION
UTAH
--------------------------------------------------------------------------------
7.AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
--------------------------------------------------------------------------------
8.[_] CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
--------------------------------------------------------------------------------
9.PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
--------------------------------------------------------------------------------
10.REPORTING PERSON
CO
3
<PAGE>
CUSIP No. 843584 10 3 14D-1
1.NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
UP ACQUISITION CORPORATION
--------------------------------------------------------------------------------
2.CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
[_] (a)
[X] (b)
--------------------------------------------------------------------------------
3.SEC USE ONLY
--------------------------------------------------------------------------------
4.SOURCE OF FUNDS
AF
--------------------------------------------------------------------------------
5.[_] CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f)
--------------------------------------------------------------------------------
6.CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
--------------------------------------------------------------------------------
7.AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
--------------------------------------------------------------------------------
8.[_] CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
--------------------------------------------------------------------------------
9.PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
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10.REPORTING PERSON
CO
4
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Southern Pacific Rail Corporation, a
Delaware corporation (the "Company"). The address of the Company's principal
executive offices is Southern Pacific Building, One Market Plaza, San
Francisco, California 94105.
(b) This Statement on Schedule 14D-1 relates to the offer by UP Acquisition
Corporation ("Purchaser"), a Delaware corporation and a direct wholly owned
subsidiary of Union Pacific Railroad Company ("UPRR"), a Utah corporation and
an indirect wholly owned subsidiary of Union Pacific Corporation, a Utah
corporation ("Parent"), to purchase up to 39,034,471 shares of Common Stock,
par value $.001 per share (the "Shares" or "Common Stock"), of the Company,
upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 9, 1995 and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer")
at a purchase price of $25.00 per Share, net to the tendering stockholder in
cash. At August 3, 1995, 156,137,884 Shares were outstanding. The information
set forth under "INTRODUCTION" in the Offer to Purchase annexed hereto as
Exhibit (a)(1) is incorporated herein by reference.
(c) The information set forth under "THE OFFER--Price Range of Shares;
Dividends" in the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This Statement is being filed by Purchaser, UPRR and Parent.
The information set forth under "INTRODUCTION" and "THE OFFER--Certain
Information Concerning Purchaser, UPRR and Parent" in the Offer to Purchase
and Schedule I thereto is incorporated herein by reference.
(e)-(f) During the last five years, neither Purchaser, UPRR, Parent nor any
persons controlling Purchaser, nor, to the best knowledge of Purchaser, UPRR
or Parent, any of the persons listed on Schedule I to the Offer to Purchase
(i) has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, Federal
or State securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth under "INTRODUCTION," "THE OFFER--
Background of the Offer; Contacts with the Company," "--Purpose of the Offer
and the Merger; Plans for the Company," "--Merger Agreement; Shareholders
Agreements; Registration Rights Agreements; Other Agreements," "--Certain
Information Concerning the Company" and "--Certain Information Concerning
Purchaser, UPRR and Parent" in the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under "INTRODUCTION" and "THE OFFER--
Source and Amount of Funds" in the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth under "INTRODUCTION," "THE OFFER--
Background of the Offer; Contacts with the Company," "--Purpose of the Offer
and the Merger; Plans for the Company" and "--Merger Agreement; Shareholders
Agreements; Registration Rights Agreements; Other Agreements" in the Offer to
Purchase is incorporated herein by reference.
5
<PAGE>
(f)-(g) The information set forth under "INTRODUCTION" and "THE OFFER--
Effect of the Offer on the Market for the Shares; Exchange Listing and
Exchange Act Registration; Margin Regulations" in the Offer to Purchase is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) Not applicable.
(b) Not applicable.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "INTRODUCTION," "THE OFFER--Background of
the Offer; Contacts with the Company," "--Purpose of the Offer and the Merger;
Plans for the Company," and "--Merger Agreement; Shareholders Agreements;
Registration Rights Agreements; Other Agreements" in the Offer to Purchase is
incorporated herein by reference.
ITEM 8.PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "THE OFFER--Fees and Expenses" in the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth under "THE OFFER--Certain Information Concerning
Purchaser, UPRR and Parent" in the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth under "INTRODUCTION" and "THE OFFER--
Certain Legal Matters; Regulatory Approvals" in the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth under "THE OFFER--Effect of the Offer on the
Market for the Shares; Exchange Listing and Exchange Act Registration; Margin
Regulations" in the Offer to Purchase is incorporated herein by reference.
(e) The information set forth under "THE OFFER--Certain Legal Matters;
Regulatory Approvals" in the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Offer to Purchase dated August 9, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
</TABLE>
6
<PAGE>
<TABLE>
<C> <S>
(a)(7) Text of Press Release issued by Parent on August 3, 1995.
(a)(8) Text of Press Release issued by Parent on August 4, 1995.
(a)(9) Form of Summary Advertisement dated August 9, 1995.
(b)(1) Revolving Credit Agreement, dated as of March 2, 1993, among Parent,
the banks listed on the signature pages thereof and Chemical Bank, as
administrative agent (the "Revolving Credit Agreement").
(b)(2) First Amendment, dated as of February 28, 1994, to the Revolving
Credit Agreement.
(b)(3) Second Amendment, dated as of February 27, 1995, to the Revolving
Credit Agreement.
(c)(1) Agreement and Plan of Merger, dated as of August 3, 1995, by and
among Parent, UPRR, Purchaser and the Company.
(c)(2) Shareholders Agreement, dated as of August 3, 1995, among Parent,
Purchaser, The Anschutz Corporation, a Kansas corporation ("TAC"),
Anschutz Foundation, a Colorado not-for-profit corporation (the
"Foundation"), and Mr. Philip F. Anschutz ("Mr. Anschutz").
(c)(3) Shareholder Agreement, dated as of August 3, 1995, among Parent,
Purchaser and The Morgan Stanley Leveraged Equity Fund II, L.P., a
Delaware limited partnership.
(c)(4) Shareholders Agreement, dated as of August 3, 1995, among Parent,
Purchaser and the Company.
(c)(5) Shareholders Agreement, dated as of August 3, 1995, among Union
Pacific Resources Group Inc., a Utah corporation ("Resources"), TAC,
the Foundation and Mr. Anschutz.
(c)(6) Registration Rights Agreement, dated as of August 3, 1995, among
Parent, TAC and the Foundation.
(c)(7) Registration Rights Agreement, dated as of August 3, 1995, between
Purchaser and the Company.
(c)(8) Registration Rights Agreement, dated as of August 3, 1995, among
Resources, TAC and the Foundation.
(c)(9) Form of Voting Trust Agreement, dated as of August 3, 1995, among
Parent, Purchaser and Southwest Bank of St. Louis.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
7
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: August 9, 1995 Union Pacific Corporation
/s/ Carl W. von Bernuth
By: _________________________________
Name: Carl W. von Bernuth
Title:Senior Vice President and
General Counsel
8
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: August 9, 1995 UP Acquisition Corporation
/s/ Carl W. von Bernuth
By: _________________________________
Name: Carl W. von Bernuth
Title: Vice President and
Assistant Secretary
9
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: August 9, 1995 Union Pacific Railroad Company
/s/ Carl W. von Bernuth
By: _________________________________
Name: Carl W. von Bernuth
Title:Senior Vice President and
General Counsel
10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
(a)(1) Offer to Purchase dated August 9, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release issued by Parent on August 3, 1995.
(a)(8) Text of Press Release issued by Parent on August 4, 1995.
(a)(9) Form of Summary Advertisement dated August 9, 1995.
(b)(1) Revolving Credit Agreement, dated as of March 2, 1993, among
Parent, the banks listed on the signature pages thereof and
Chemical Bank, as administrative agent (the "Revolving Credit
Agreement").
(b)(2) First Amendment, dated as of February 28, 1994, to the Revolving
Credit Agreement.
(b)(3) Second Amendment, dated as of February 27, 1995, to the Revolving
Credit Agreement.
(c)(1) Agreement and Plan of Merger, dated as of August 3, 1995, among
Parent, UPRR, the Purchaser and the Company.
(c)(2) Shareholders Agreement, dated as of August 3, 1995, among Parent,
the Purchaser, TAC, the Foundation and Mr. Anschutz.
(c)(3) Shareholders Agreement, dated as of August 3, 1995, among Parent,
the Purchaser and The Morgan Stanley Leveraged Equity Fund II,
L.P., a Delaware limited partnership.
(c)(4) Shareholders Agreement, dated as of August 3, 1995, among Parent,
the Purchaser and the Company.
(c)(5) Shareholders Agreement, dated as of August 3, 1995, among
Resources, TAC, the Foundation and Mr. Anschutz.
(c)(6) Registration Rights Agreement, dated as of August 3, 1995, among
Parent, TAC and the Foundation.
(c)(7) Registration Rights Agreement, dated as of August 3, 1995, between
Purchaser and the Company.
(c)(8) Registration Rights Agreement, dated as of August 3, 1995, among
Resources, TAC and the Foundation.
(c)(9) Voting Trust Agreement, dated as of August 3, 1995, among Parent,
the Purchaser and Southwest Bank of St. Louis.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
11
<PAGE>
EXHIBIT 99(a)(1)
OFFER TO PURCHASE FOR CASH
UP TO 39,034,471 SHARES OF COMMON STOCK
OF
SOUTHERN PACIFIC RAIL CORPORATION
AT
$25.00 NET PER SHARE
BY
UP ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNION PACIFIC CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 6, 1995, UNLESS
THE OFFER IS EXTENDED.
---------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE RECEIPT BY UP
ACQUISITION CORPORATION ("PURCHASER"), PRIOR TO THE EXPIRATION OF THE OFFER,
OF AN INFORMAL WRITTEN OPINION IN FORM AND SUBSTANCE SATISFACTORY TO
PURCHASER FROM THE STAFF OF THE INTERSTATE COMMERCE COMMISSION (THE "ICC"),
WITHOUT THE IMPOSITION OF ANY CONDITIONS UNACCEPTABLE TO PURCHASER, THAT
THE USE OF A VOTING TRUST (THE "VOTING TRUST") IS CONSISTENT WITH THE
POLICIES OF THE ICC AGAINST UNAUTHORIZED ACQUISITIONS OF CONTROL OF A
REGULATED CARRIER AND (II) THE RECEIPT BY PURCHASER, PRIOR TO THE
EXPIRATION OF THE OFFER, OF AN INFORMAL STATEMENT FROM THE PREMERGER
NOTIFICATION OFFICE OF THE FEDERAL TRADE COMMISSION EITHER THAT (1) NO
REVIEW OF THE OFFER, THE MERGER (AS DEFINED HEREIN) AND THE TRANSACTIONS
CONTEMPLATED BY THE ANCILLARY AGREEMENTS (AS DEFINED HEREIN) WILL BE
UNDERTAKEN PURSUANT TO THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976, AS AMENDED (THE "HSR ACT"), OR (2) THE TRANSACTIONS
CONTEMPLATED BY THE OFFER, THE MERGER AND THE ANCILLARY AGREEMENTS
ARE NOT SUBJECT TO THE HSR ACT, OR IN THE ABSENCE OF THE RECEIPT OF
SUCH INFORMAL STATEMENT REFERRED TO IN CLAUSE (1) OR (2) ABOVE, ANY
APPLICABLE WAITING PERIOD UNDER THE HSR ACT SHALL HAVE EXPIRED OR
BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER. SEE SECTION
15.
---------------
THE BOARD OF DIRECTORS OF SOUTHERN PACIFIC RAIL CORPORATION (THE "COMPANY")
UNANIMOUSLY HAS APPROVED THE OFFER AND THE MERGER, DETERMINED THAT EACH OF
THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF
THE COMPANY WHO DESIRE TO RECEIVE CASH FOR THEIR SHARES ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon
guaranteed if required by Instruction 1 to the Letter of Transmittal, mail or
deliver the Letter of Transmittal or such facsimile and any other required
documents to the Depositary and either deliver the certificates for such
Shares to the Depositary along with the Letter of Transmittal or facsimile or
deliver such Shares pursuant to the procedure for book-entry transfer set
forth in Section 3 prior to the expiration of the Offer or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. A stockholder having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such stockholder desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedures
for book-entry transfer described in this Offer to Purchase on a timely basis,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other tender offer materials, may be
directed to the Information Agent (as defined herein) or the Dealer Manager
(as defined herein) at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase.
---------------
The Dealer Manager for the Offer is:
CS First Boston
August 9, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION............................................................. 1
THE OFFER................................................................ 5
1. Terms of the Offer; Proration; Expiration Date....................... 5
2. Acceptance for Payment and Payment for Shares........................ 6
3. Procedures for Tendering Shares...................................... 8
4. Withdrawal Rights.................................................... 10
5. Certain Federal Income Tax Consequences.............................. 10
6. Price Range of Shares; Dividends..................................... 13
7. Effect of the Offer on the Market for the Shares; Exchange Listing
and Exchange Act Registration; Margin Regulations.................... 13
8. Certain Information Concerning the Company........................... 14
9. Certain Information Concerning Purchaser, UPRR and Parent............ 19
10. Source and Amount of Funds........................................... 22
11. Background of the Offer; Contacts with the Company................... 22
12. Purpose of the Offer and the Merger; Plans for the Company........... 26
13. Merger Agreement; Shareholders Agreements; Registration Rights
Agreements; Other Agreements......................................... 26
14. Dividends and Distributions.......................................... 61
15. Conditions of the Offer.............................................. 62
16. Certain Legal Matters; Regulatory Approvals.......................... 64
17. Fees and Expenses.................................................... 68
18. Miscellaneous........................................................ 69
</TABLE>
Schedule I--Information Concerning the Directors and Executive Officers of
Parent, UPRR and Purchaser
i
<PAGE>
To the Holders of Common Stock of Southern Pacific Rail Corporation:
INTRODUCTION
UP Acquisition Corporation ("Purchaser"), a Delaware corporation and a
direct wholly owned subsidiary of Union Pacific Railroad Company, a Utah
corporation ("UPRR") and an indirect wholly owned subsidiary of Union Pacific
Corporation, a Utah corporation ("Parent"), hereby offers to purchase up to
39,034,471 shares of common stock, par value $.001 per share (the "Common
Stock" or the "Shares"), of Southern Pacific Rail Corporation, a Delaware
corporation (the "Company"), at a price of $25.00 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser will pay all charges and expenses of CS First
Boston Corporation, as Dealer Manager (in such capacity, the "Dealer
Manager"), Citibank, N.A., as Depositary (the "Depositary"), and D.F. King &
Co., Inc., as Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD" OR "BOARD OF DIRECTORS")
UNANIMOUSLY HAS APPROVED THE OFFER AND THE MERGER (AS DEFINED BELOW),
DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS
OF THE COMPANY WHO DESIRE TO RECEIVE CASH FOR THEIR SHARES ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE RECEIPT BY
PURCHASER, PRIOR TO THE EXPIRATION OF THE OFFER, OF AN INFORMAL WRITTEN
OPINION IN FORM AND SUBSTANCE SATISFACTORY TO PURCHASER FROM THE STAFF OF THE
INTERSTATE COMMERCE COMMISSION (THE "ICC"), WITHOUT THE IMPOSITION OF ANY
CONDITIONS UNACCEPTABLE TO PURCHASER, THAT THE USE OF A VOTING TRUST (THE
"VOTING TRUST") IS CONSISTENT WITH THE POLICIES OF THE ICC AGAINST
UNAUTHORIZED ACQUISITIONS OF CONTROL OF A REGULATED CARRIER (SUCH CONDITION,
THE "VOTING TRUST CONDITION") AND (II) THE RECEIPT BY PURCHASER, PRIOR TO THE
EXPIRATION OF THE OFFER, OF AN INFORMAL STATEMENT FROM THE PREMERGER
NOTIFICATION OFFICE OF THE FEDERAL TRADE COMMISSION (THE "FTC") EITHER THAT
(1) NO REVIEW OF THE OFFER, THE MERGER AND THE TRANSACTIONS CONTEMPLATED BY
THE ANCILLARY AGREEMENTS (AS DEFINED HEREIN) WILL BE UNDERTAKEN PURSUANT TO
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), OR (2) THE TRANSACTIONS CONTEMPLATED BY THE OFFER, THE MERGER AND THE
ANCILLARY AGREEMENTS ARE NOT SUBJECT TO THE HSR ACT, OR IN THE ABSENCE OF THE
RECEIPT OF SUCH INFORMAL STATEMENT REFERRED TO IN CLAUSE (1) OR (2) ABOVE, ANY
APPLICABLE WAITING PERIOD UNDER THE HSR ACT SHALL HAVE EXPIRED OR BEEN
TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER (SUCH CONDITION, THE "HSR
CONDITION"). SEE SECTION 15.
Counsel for Parent has been orally advised by the Premerger Notification
Office of the FTC that the Offer and the Merger are exempt from the HSR Act
and, accordingly, Parent currently expects that the HSR Condition will be
satisfied.
The Company has advised Purchaser that Morgan Stanley & Co. Incorporated
("Morgan Stanley") (an affiliate of a party who has entered into a
shareholders agreement with Parent (see Section 16)) has delivered to the
Board its written opinion that on the date of the Merger Agreement (as defined
below) the consideration to be received by the holders of Shares pursuant to
the Offer and the Merger, taken together, is fair from a financial
1
<PAGE>
point of view to such holders. A copy of such opinion is contained in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to stockholders of the Company
herewith, and such stockholders are urged to read the opinion in its entirety
for a description of the assumptions made, factors considered, procedures
followed by, and certain information concerning, Morgan Stanley.
The purpose of the Offer is for Parent, through UPRR and Purchaser, to
acquire a significant equity interest in the Company as the first step in the
acquisition of the entire equity interest in the Company. The Offer is being
made pursuant to an Agreement and Plan of Merger, dated as of August 3, 1995
(the "Merger Agreement"), by and among the Company, Parent, UPRR and
Purchaser. The Merger Agreement provides that, following the completion of the
Offer and the satisfaction or the waiver of certain conditions, (i) Purchaser
will be merged with and into UPRR and (ii) the Company will be merged with and
into UPRR (such merger of the Company with and into UPRR, the "Merger"), in
each case with UPRR as the surviving corporation (the "Surviving
Corporation"). As more fully described in Section 13, in the Merger, each
outstanding Share (other than Shares held in the treasury of the Company or
owned by Parent, UPRR, Purchaser or any other wholly owned subsidiary of
Parent) will be converted, at the election of the holder of Shares and subject
to certain limitations, into the right to receive (i) $25.00 in cash, without
interest, (ii) .4065 shares of common stock, par value $2.50 per share, of
Parent (the "Parent Common Stock") or (iii) a combination of such cash and
shares of Parent Common Stock. However, the Merger Agreement contains
provisions which will ensure that, regardless of the number of Shares the
holders of which have elected to receive cash or Parent Common Stock, as the
case may be, the aggregate number of Shares to be converted into Parent Common
Stock pursuant to the Merger shall be equal as nearly as practicable to 60% of
all Shares outstanding immediately prior to the Merger, and the number of
Shares to be converted into the right to receive cash pursuant to the Merger,
together with the Shares purchased in the Offer, shall be equal as nearly as
practicable to 40% of all Shares outstanding immediately prior to the Merger.
Accordingly, in the case of any particular stockholder, depending on the
aggregate number of Shares the holders of which have elected to receive cash
or Parent Common Stock, as the case may be, such stockholder may not receive
in respect of his or her Shares the amount of cash, Parent Common Stock or
combination thereof that such stockholder requested in his or her election.
See Section 13. The Surviving Corporation will be a wholly owned subsidiary of
Parent. The time at which the Merger is consummated in accordance with the
Merger Agreement is hereinafter referred to as the "Effective Time." The Offer
and the Merger are sometimes collectively referred to herein as the
"Transactions."
On August 4, 1995, Union Pacific Resources Group Inc. ("Resources"), a
wholly owned subsidiary of Parent, filed a registration statement on Form S-1
with the Securities and Exchange Commission ("SEC") in connection with an
initial public offering (the "IPO") of shares of its common stock, no par
value per share (the "Resources Common Stock"), representing no more than
17.25% of the outstanding shares of Resources Common Stock (after giving
effect to the issuance of shares in the IPO and shares to be issued to
employees or reserved for issuance with respect to employee options). Parent
intends, subject to certain conditions, to distribute to its stockholders all
of the remaining shares of Resources Common Stock held by Parent following the
IPO by means of a tax-free distribution (the "Spin-off"). The Merger Agreement
provides that Parent will not effect the Spin-off until after the consummation
of the Merger. Accordingly, holders of Shares who receive Parent Common Stock
in the Merger and continue to hold such Parent Common Stock as of the record
date for such distribution would receive Resources Common Stock in the event
that the Spin-off is consummated. See Sections 9 and 13 for a description of
the Spin-off.
THE OFFER DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY PARENT COMMON STOCK. SUCH AN OFFER MAY BE MADE ONLY PURSUANT TO A
PROSPECTUS.
Pursuant to a Shareholders Agreement (the "Anschutz Shareholders
Agreement"), dated as of August 3, 1995, by and among Parent, Purchaser, The
Anschutz Corporation, a Kansas corporation ("TAC"), Anschutz Foundation, a
Colorado not-for-profit corporation (the "Foundation"), and Mr. Philip F.
Anschutz ("Mr. Anschutz" and, collectively with TAC and the Foundation, the
"Shareholders"), the Shareholders, who
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have advised Purchaser that in the aggregate they own 49,643,008 Shares,
representing approximately 31.8% of all outstanding Shares, have agreed, among
other things, to vote all Shares owned by them in favor of the Merger and to
comply with certain "standstill" agreements and restrictions on dispositions
of Shares to be received in the Merger. In addition, pursuant to a Shareholder
Agreement (the "MSLEF Shareholder Agreement"), dated as of August 3, 1995, by
and among Parent, Purchaser and The Morgan Stanley Leveraged Equity Fund II,
L.P., a Delaware limited partnership ("MSLEF"), MSLEF, which has advised
Purchaser that it beneficially owns 13,341,580 Shares, representing
approximately 8.5% of all outstanding Shares, has agreed, among other things,
to vote all Shares owned by it in favor of the Merger. Similarly, pursuant to
a Shareholders Agreement (the "Parent Shareholders Agreement"), dated as of
August 3, 1995, by and among Parent, Purchaser and the Company, Parent and
Purchaser have agreed, among other things, to vote all Shares acquired by them
pursuant to the Offer in favor of the Merger and to comply with certain
"standstill" agreements and restrictions on dispositions of such Shares. In
addition, pursuant to a Shareholders Agreement (the "Anschutz/Resources
Shareholders Agreement" and, together with the Anschutz Shareholders
Agreement, the MSLEF Shareholder Agreement and the Parent Shareholders
Agreement, the "Shareholders Agreements"), dated as of August 3, 1995, by and
among Resources and the Shareholders, the Shareholders have agreed, among
other things, to comply with certain "standstill" agreements and restrictions
on dispositions of shares of Resources Common Stock to be received in the
Spin-off. Pursuant to the Anschutz Shareholders Agreement and the MSLEF
Shareholder Agreement, the Shareholders and MSLEF are free to tender in the
Offer all, a portion or none of the Shares owned by them. Reference is made to
Item 6 of the Schedule 14D-9 for information concerning the current intention
of the Shareholders and MSLEF with respect to the tendering of their Shares in
the Offer. See Section 13 for a more complete description of the Shareholders
Agreements and certain other agreements entered into in connection with the
Merger Agreement and the transactions contemplated thereby. Parent has agreed,
pursuant to the Anschutz Shareholders Agreement and the Anschutz/Resources
Shareholders Agreement, respectively, to cause Mr. Anschutz to be appointed as
Vice Chairman of the Board of Directors of Parent on or prior to the Effective
Time (as defined herein) and to cause a designee of TAC (other than Mr.
Anschutz) to be appointed as a director of Resources' Board of Directors on or
prior to the consummation of the Spin-off. See Section 13.
Simultaneously with the purchase of Shares pursuant to the Offer, the Shares
purchased will be deposited in an independent, irrevocable Voting Trust in
accordance with the terms of the proposed Voting Trust Agreement. See Section
16. The Offer is conditioned upon the Voting Trust Condition.
The Offer is not conditioned on any minimum number of Shares being tendered,
except that if a tender or exchange offer for some or all of the Shares is
made or proposed by another person, the Offer is conditioned on there being
validly tendered and not withdrawn at least 39,034,471 Shares.
Certain other conditions to the consummation of the Offer are described in
Section 15. Subject to the terms of the Merger Agreement, Purchaser reserves
the right to waive any one or more of the conditions to the Offer.
The obligations of Parent, UPRR and Purchaser to consummate the Merger are
conditioned upon, among other things, the ICC or any Similar Successor (as
defined in the Merger Agreement) having issued a final decision approving,
exempting or otherwise authorizing consummation of the Merger and all other
transactions contemplated by the Merger Agreement and the Ancillary Agreements
as may require such authorization and which, among other things, does not
impose on Parent, the Company or any of their respective Subsidiaries, terms
or conditions that materially and adversely affect the long-term benefits
expected to be received by Parent from the transactions contemplated by the
Merger Agreement. See Section 13.
The Merger is also conditioned upon, among other things, the approval and
adoption of the Merger Agreement by the requisite vote of the stockholders of
the Company. Under the Company's Amended and Restated Certificate of
Incorporation and the Delaware General Corporation Law (the "DGCL"), the
affirmative vote of the holders of a majority of the outstanding Shares is
required to approve and adopt the Merger
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Agreement and the Merger. SINCE THE SHAREHOLDERS AND MSLEF HAVE AGREED,
PURSUANT TO THE ANSCHUTZ SHAREHOLDERS AGREEMENT AND THE MSLEF SHAREHOLDER
AGREEMENT, RESPECTIVELY, TO VOTE ALL SHARES WHICH THEY ARE ENTITLED TO VOTE IN
FAVOR OF THE MERGER AND ASSUMING MSLEF DOES NOT SELL ANY OF ITS SHARES
FOLLOWING THE OFFER, IF PURCHASER, PURSUANT TO THE OFFER, ACQUIRES AT LEAST
9.8% OF THE OUTSTANDING SHARES FROM HOLDERS OF SHARES OTHER THAN THE
SHAREHOLDERS OR MSLEF, PURCHASER WILL NOT NEED THE VOTE OF ANY OTHER COMPANY
STOCKHOLDER TO APPROVE THE MERGER.
According to the Company, as of August 3, 1995, there were 156,137,884
Shares outstanding and 2,178,514 Shares were reserved for issuance pursuant to
awards previously granted under the Company's Equity Incentive Plan (the
"EIP").
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER; PRORATION; EXPIRATION DATE. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any extension or amendment), Purchaser
will accept for payment and pay for up to 39,034,471 Shares which are validly
tendered prior to the Expiration Date (as hereinafter defined) and not
withdrawn in accordance with Section 4. The term "Expiration Date" means 12:00
Midnight, New York City time, on Wednesday, September 6, 1995, unless and
until Purchaser, in its sole discretion (but subject to the terms of the
Merger Agreement), shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by Purchaser, shall
expire.
If more than 39,034,471 Shares are validly tendered prior to the Expiration
Date and not withdrawn, Purchaser will, upon the terms and subject to the
conditions of the Offer, accept such Shares for payment on a pro rata basis,
with adjustments to avoid purchases of fractional Shares, based upon the
number of Shares validly tendered prior to the Expiration Date and not
withdrawn.
Because of the difficulty of determining precisely the number of Shares
validly tendered and not withdrawn, if proration is required, Purchaser would
not expect to announce the final results of proration until approximately
seven New York Stock Exchange ("NYSE") trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of Shares may
obtain such preliminary information from the Depositary and may also be able
to obtain such preliminary information from their brokers.
The Offer is conditioned upon, among other things, satisfaction of the
Voting Trust Condition. If the Voting Trust Condition is not satisfied or any
or all of the other events set forth in Section 15 shall have occurred or
shall be determined by Purchaser to have occurred prior to the Expiration
Date, Purchaser reserves the right (but shall not be obligated) to (i) decline
to purchase any of the Shares tendered in the Offer and terminate the Offer,
and return all tendered Shares to the tendering stockholders, (ii) waive or
amend any or all conditions to the Offer, to the extent permitted by
applicable law and the provisions of the Merger Agreement, and, subject to
complying with applicable rules and regulations of the SEC, purchase all
Shares validly tendered, or (iii) extend the Offer and, subject to the right
of stockholders to withdraw Shares until the Expiration Date, retain the
Shares which have been tendered during the period or periods for which the
Offer is extended.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms of the Merger Agreement), at any time and from time to time, to
extend for any reason the period of time during which the Offer is open,
including the occurrence of any of the events specified in Section 15, by
giving oral or written notice of such extension to the Depositary. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw its Shares. See Section 4.
Subject to the applicable regulations of the SEC, Purchaser also expressly
reserves the right, in its sole discretion (but subject to the terms of the
Merger Agreement), at any time and from time to time, (i) to delay acceptance
for payment of, or, regardless of whether such Shares were theretofore
accepted for payment, payment for, any Shares in order to comply in whole or
in part with any applicable law, and (ii) to waive any condition or otherwise
amend the Offer in any respect by giving oral or written notice of such delay,
waiver or amendment to the Depositary and by making a public announcement
thereof.
Notwithstanding the fact that Purchaser has reserved the right to assert the
occurrence of a condition following acceptance for payment of Shares but prior
to payment for Shares in order to delay payment or cancel its obligation to
pay for properly tendered Shares, Purchaser understands that all conditions of
the Offer, other than receipt of necessary governmental approvals, must be
satisfied or waived prior to the acceptance of Shares for payment. If,
following acceptance of payment for Shares, Purchaser asserts such a
governmental approval as a condition and does not promptly pay for Shares
tendered, Purchaser will promptly return such Shares.
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The Merger Agreement provides that, without the consent of the Company (such
consent to be authorized by the Board of Directors or a duly authorized
committee thereof), Purchaser will not, among other things, decrease the Offer
Price, decrease the number of Shares sought in the Offer, waive the condition
set forth in paragraph (k) of Section 15 hereof, or amend any term or
condition of the Offer in any manner adverse to the holders of Shares. The
Merger Agreement further provides that if on the initial scheduled Expiration
Date, all conditions to the Offer shall not have been satisfied or waived, the
Offer may be extended from time to time without the consent of the Company for
such period of time as is reasonably expected to be necessary to satisfy the
unsatisfied conditions. In addition, the Merger Agreement provides that
without the consent of the Company, the Offer Price may be increased and the
Offer may be extended to the extent required by law in connection with such an
increase in the Offer Price.
Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), requires Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer, and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of the third preceding paragraph), any Shares upon the
occurrence of any of the conditions specified in Section 15 without extending
the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to stockholders in a manner reasonably designed to
inform them of such changes) and without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the terms or information. With respect to a change in
price or a change in percentage of securities sought (other than an increase
in the number of Shares sought not in excess of 2% of the outstanding Shares),
a minimum ten business day period is required to allow for adequate
dissemination to stockholders and investor response. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal,
and other relevant materials will be mailed to record holders of Shares whose
names appear on the Company's stockholder list and will be furnished, for
subsequent transmittal to beneficial owners of Shares, to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment),
Purchaser will purchase, by accepting for payment, and will pay for, up to
39,034,471 Shares which are validly tendered prior to the Expiration Date (and
not properly withdrawn in accordance with Section 4)
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promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions set forth in Section 15. Purchaser
expressly reserves the right, in its discretion, to delay acceptance for
payment of, or, subject to applicable rules of the SEC, payment for, Shares in
order to comply in whole or in part with any applicable law.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "Share Certificates") or timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Shares, if such
procedure is available, into the Depositary's account at The Depository Trust
Company, the Midwest Securities Trust Company or the Philadelphia Depository
Trust Company (each a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, or an Agent's Message (as defined below) and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when Purchaser
gives oral or written notice to the Depositary of Purchaser's acceptance of
such Shares for payment. Payment for Shares accepted pursuant to the Offer
will be made by deposit of the purchase price therefor with the Depositary,
which will act as agent for tendering stockholders for the purpose of
receiving payments from Purchaser and transmitting payments to such tendering
stockholders. Under no circumstances will interest on the purchase price for
Shares be paid by Purchaser, regardless of any delay in making such payment.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering stockholders, Purchaser's obligation to make such
payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. Purchaser will pay any
stock transfer taxes incident to the transfer to it of validly tendered
Shares, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, as well as any charges and expenses of the Depositary and the
Information Agent.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer (including proration due to tenders
of more than 39,034,471 Shares), or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedure set forth in Section 3, such Shares will be credited to an account
maintained at such Book-Entry Transfer Facility), as promptly as practicable
following the expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay such increased
consideration for all such Shares purchased pursuant to the Offer, whether or
not such Shares were tendered prior to such increase in consideration.
Purchaser reserves the right to transfer or assign, in whole at any time, or
in part from time to time, to Parent, UPRR or one or more other direct or
indirect wholly owned subsidiaries of Parent, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, provided that any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
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3. PROCEDURES FOR TENDERING SHARES.
Valid Tender of Shares. In order for Shares to be validly tendered pursuant
to the Offer, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (i) the Share Certificates evidencing tendered
Shares must be received by the Depositary at such address or Shares must be
tendered pursuant to the procedure for book-entry transfer described below and
a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at a Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Shares may
be effected through book-entry transfer at a Book-Entry Transfer Facility, the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of Shares, and any other required
documents, must, in any case, be transmitted to and received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date or the tendering stockholder must comply with the
guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantee. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the
Securities Transfer Agent's Medallion Program (each, an "Eligible
Institution"), unless the Shares tendered thereby are tendered (i) by a
registered holder of Shares who has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal, or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
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(iii) in the case of a guarantee of Shares, the Share Certificates for
all tendered Shares, in proper form for transfer, or a Book-Entry
Confirmation, together with a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof) with any required
signature guarantee (or, in the case of a book-entry transfer, an Agent's
Message) and any other documents required by such Letter of Transmittal,
are received by the Depositary within five NYSE trading days after the date
of execution of the Notice of Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will, in all cases, be made only after timely receipt by
the Depositary of (i) the Share Certificates evidencing such Shares, or a
Book-Entry Confirmation of the delivery of such Shares, if available, (ii) a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) (or in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by Purchaser in its sole discretion, whose determination will be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, to waive any of the conditions of the
Offer (subject to the terms of the Merger Agreement) or any defect or
irregularity in any tender with respect to Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in
the case of other stockholders. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. None of Parent, UPRR, Purchaser, the Company, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or will incur
any liability for failure to give any such notification.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by Purchaser (and any and all non-
cash dividends, distributions, rights, other Shares, or other securities
issued or issuable in respect of such Shares on or after the date of the
Merger Agreement). All such proxies shall be considered coupled with an
interest in the tendered Shares. This appointment will be effective if, when,
and only to the extent that, Purchaser accepts such Shares for payment
pursuant to the Offer. Upon such acceptance for payment, all prior proxies
given by such stockholder with respect to such Shares and other securities
will, without further action, be revoked, and no subsequent proxies may be
given. The designees of Purchaser will, with respect to the Shares and other
securities for which the appointment is effective, be empowered to exercise
all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, by written consent or otherwise, and
Purchaser reserves the right to require that, in order for Shares or other
securities to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares Purchaser must be able to exercise full
voting rights with respect to such Shares.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE
OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH
STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH
STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY
COMPLETING THE SUBSTITUTE FORM
9
<PAGE>
W-9 IN THE LETTER OF TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT
TO A STOCKHOLDER, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS
MADE TO SUCH STOCKHOLDER. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after October 8,
1995, or at such later time as may apply if the Offer is extended.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder, if different from that of the person who tendered
such Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Share Certificates, the serial numbers shown on such
Share Certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution, unless
such Shares have been tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3, any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Parent, UPRR,
Purchaser, the Company, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a
summary of the material federal income tax consequences of the Offer and
Merger to holders of Shares who hold the Shares as capital assets. The
discussion set forth below is for general information only and may not apply
to certain categories of holders of Shares subject to special treatment under
the Internal Revenue Code of 1986, as amended (the "Code"), such as foreign
holders and holders who acquired such Shares pursuant to the exercise of
employee stock options or otherwise as compensation. This summary is based
upon laws, regulations, rulings and decisions currently in effect, all of
which are subject to change, retroactively or prospectively, and to possibly
differing interpretations.
Tax Consequences of the Offer and the Merger Generally. The Offer and the
Merger should be treated as a single integrated transaction for federal income
tax purposes. Consequently, the Offer and the Merger should, in the aggregate,
qualify as a reorganization pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D)
of the Code. In such event, generally (i) no gain or loss will be recognized
by Parent, UPRR, Purchaser or the Company pursuant to the Offer and the
Merger, (ii) gain or loss will be recognized by a stockholder of the Company
who receives
10
<PAGE>
solely cash in exchange for Shares pursuant to the Offer and/or the Merger,
(iii) no gain or loss will be recognized by a stockholder of the Company who
does not exchange any Shares pursuant to the Offer and who receives solely
Parent Common Stock in exchange for Shares pursuant to the Merger, and (iv) a
stockholder of the Company who receives a combination of cash and Parent
Common Stock in exchange for such stockholder's Shares, pursuant to the Offer
and/or the Merger, will not recognize loss but will recognize gain, if any, to
the extent of the cash received. If so integrated, the federal income tax
consequences to a stockholder may be, depending on such stockholder's
particular circumstances, less favorable than the federal income tax
consequences to such stockholder if the Offer and the Merger are not treated
as integrated.
If the Offer and the Merger were not treated as a single integrated
transaction for federal income tax purposes, the receipt of cash pursuant to
the Offer would be a sale or exchange, while the Merger should still qualify
as a reorganization pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code.
TAX CONSEQUENCES IF THE OFFER AND THE MERGER ARE TREATED AS A SINGLE
INTEGRATED TRANSACTION
Exchange of Shares Solely for Cash. In general, a stockholder of the Company
who, pursuant to the Offer and/or the Merger, exchanges all of the Shares
actually owned by such stockholder solely for cash will recognize capital gain
or loss equal to the difference between the amount of cash received and such
stockholder's adjusted tax basis in the Shares surrendered. The gain or loss
will be long-term capital gain or loss if, as of the date of the exchange, the
holder thereof has held such Shares for more than one year. Gain or loss will
be calculated separately for each identifiable block of Shares surrendered
pursuant to the Offer and/or the Merger.
Exchange of Shares Solely for Parent Common Stock. A stockholder of the
Company who, pursuant to the Merger, exchanges all of the Shares actually
owned by such stockholder solely for shares of Parent Common Stock will not
recognize any gain or loss upon such exchange. Such stockholder may recognize
gain or loss, however, to the extent cash is received in lieu of a fractional
share of Parent Common Stock, as discussed below. The aggregate adjusted tax
basis of the shares of Parent Common Stock received in such exchange will be
equal to the aggregate adjusted tax basis of the Shares surrendered therefor,
and the holding period of Parent Common Stock will include the period during
which the Shares surrendered in exchange therefor were held.
Exchange of Shares for Parent Common Stock and Cash. A stockholder of the
Company who, pursuant to the Offer and/or the Merger, exchanges all of the
Shares actually owned by such stockholder for a combination of shares of
Parent Common Stock and cash will not recognize any loss on such exchange.
Such stockholder will realize gain equal to the excess, if any, of the cash
and the aggregate fair market value of Parent Common Stock received pursuant
to the Offer and/or the Merger over such stockholder's adjusted tax basis in
the Shares exchanged therefor, but will recognize any realized gain only to
the extent of the cash received.
Any gain recognized by a stockholder of the Company who receives a
combination of Parent Common Stock and cash pursuant to the Offer and/or the
Merger will be treated as capital gain unless the receipt of the cash has the
effect of the distribution of a dividend for federal income tax purposes, in
which case such recognized gain will be treated as ordinary dividend income to
the extent of such stockholder's ratable share of the Company's accumulated
earnings and profits.
For purposes of determining whether the cash received pursuant to the Offer
and/or the Merger will be treated as a dividend for federal income tax
purposes, a stockholder of the Company will be treated as if such stockholder
first exchanged all of such stockholder's Shares solely for Parent Common
Stock and then Parent immediately redeemed a portion of such Parent Common
Stock in exchange for the cash such stockholder actually received.
In general, the determination as to whether the cash received will be
treated as received pursuant to a sale or exchange (generating capital gain)
or a dividend distribution (generating ordinary income) depends upon whether
and to what extent there is a reduction in the stockholder's deemed percentage
stock ownership of Parent. A stockholder of the Company who exchanges such
stockholder's Shares for a combination of Parent Common Stock and cash will
recognize capital gain rather than dividend income if the deemed redemption by
11
<PAGE>
Parent (described in the preceding paragraph) is "not essentially equivalent
to a dividend" or is "substantially disproportionate" with respect to such
stockholder.
Whether the deemed exchange and subsequent redemption transaction are "not
essentially equivalent to a dividend" with respect to a Company stockholder
will depend upon such stockholder's particular circumstances. In order to
reach such conclusion, it must be determined that the transaction results in a
"meaningful reduction" in such Company stockholder's deemed percentage stock
ownership of Parent. In determining whether a reduction in a Company
stockholder's deemed percentage stock ownership has occurred, (i) the
percentage of the outstanding stock of Parent that such Company stockholder is
deemed actually and constructively to have owned immediately before the deemed
redemption by Parent should be compared to (ii) the percentage of the
outstanding stock of Parent actually and constructively owned by such
stockholder immediately after the deemed redemption by Parent as a result of
the Offer, Merger or otherwise.
A Company stockholder will comply with the "substantially disproportionate"
rule if the percentage described in (ii) above is less than 80 percent of the
percentage described in (i) above. Even if a Company stockholder does not
qualify under such test, the IRS has ruled that a minority stockholder in a
publicly held corporation whose relative stock interest is minimal and who
exercises no control with respect to corporate affairs is considered to have a
"meaningful reduction" if such stockholder has a reduction in such
stockholder's percentage stock ownership. In most circumstances, therefore,
gain recognized by a stockholder of the Company who exchanges such
stockholder's Shares for a combination of Parent Common Stock and cash will be
capital gain, which will constitute long-term capital gain if the holding
period for such Shares was greater than one year as of the date of the
exchange.
The aggregate tax basis of Parent Common Stock received by a Company
stockholder who, pursuant to the Offer and/or the Merger, exchanges such
stockholder's Shares for a combination of Parent Common Stock and cash will be
the same as the aggregate tax basis of the Shares surrendered therefor,
decreased by the cash received and increased by the amount of gain recognized,
if any (including any portion of such gain that is treated as a dividend). The
holding period of Parent Common Stock will include the holding period of the
Shares surrendered therefor.
Cash Received in Lieu of a Fractional Interest of Parent Common Stock. Cash
received in lieu of a fractional share of Parent Common Stock will be treated
as received in redemption of such fractional interest and gain or loss will be
recognized, measured by the difference between the amount of cash received and
the portion of the basis of the Shares allocable to such fractional interest.
Such gain or loss will constitute capital gain or loss, and will generally be
long-term capital gain or loss if the holding period for such Shares was
greater than one year as of the date of the exchange.
TAX CONSEQUENCES IF THE OFFER AND THE MERGER ARE TREATED AS SEPARATE
TRANSACTIONS
Although counsel to Parent believes such result to be unlikely, if the Offer
and the Merger were treated as separate transactions for federal income tax
purposes, the receipt of cash pursuant to the Offer would be a taxable
transaction, while the Merger should still qualify as a reorganization
pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. Accordingly, a
stockholder of the Company who receives cash pursuant to the Offer would
recognize gain or loss equal to the difference between the amount of cash
received and the stockholder's adjusted tax basis in the Shares surrendered.
The gain or loss would be long-term capital gain or loss if, as of the date of
the exchange, such stockholder had held such stock for more than one year.
A stockholder of the Company who receives Parent Common Stock and/or cash
pursuant to the Merger would be subject to the federal income tax rules
concerning reorganizations discussed above under "Tax Consequences if the
Offer and the Merger are Treated as a Single Integrated Transaction".
12
<PAGE>
WITHHOLDING
Unless a stockholder complies with certain reporting and/or certification
procedures or is an exempt recipient under applicable provisions of the Code
and Treasury Regulations promulgated thereunder, such stockholder may be
subject to withholding tax of 31% with respect to any cash payments received
pursuant to the Offer and Merger. Stockholders should consult their brokers or
the Depositary to ensure compliance with such procedures. Foreign stockholders
should consult with their own tax advisors regarding withholding taxes in
general.
THE ABOVE DISCUSSION MAY NOT APPLY TO CERTAIN CATEGORIES OF STOCKHOLDERS
SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, SUCH AS FOREIGN STOCKHOLDERS AND
STOCKHOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE EXERCISE OF AN
EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION. STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF
THE OFFER AND THE MERGER, INCLUDING ANY FEDERAL, STATE, LOCAL OR OTHER TAX
CONSEQUENCES (INCLUDING ANY TAX RETURN FILING OR OTHER TAX REPORTING
REQUIREMENTS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the NYSE and quoted under the symbol RSP. The following table sets
forth, for the quarters indicated, the high and low sales prices per Share on
the NYSE as reported by the Dow Jones News Service:
<TABLE>
<CAPTION>
MARKET PRICE
---------------
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1993:
Third Quarter (partial)(1)................................ $16 3/4 $14 1/4
Fourth Quarter............................................ 21 3/8 15 1/4
FISCAL YEAR ENDED DECEMBER 31, 1994:
First Quarter............................................. 24 3/8 18 5/8
Second Quarter............................................ 23 3/4 19 1/8
Third Quarter............................................. 21 3/4 18 3/8
Fourth Quarter............................................ 19 7/8 16 5/8
FISCAL YEAR ENDED DECEMBER 31, 1995:
First Quarter............................................. 19 7/8 16
Second Quarter............................................ 19 14 1/2
Third Quarter (through August 8, 1995).................... 24 3/8 15 7/8
</TABLE>
--------
(1) The initial public offering of Shares occurred in August, 1993.
On August 2, 1995, the last trading day prior to the date of the public
announcement of the Transactions, the reported closing sales price of the
Shares on the NYSE Composite Tape was $19 5/8 per Share. On August 8, 1995,
the last full trading day prior to the date of this Offer to Purchase, the
reported closing sales price of the Shares on the NYSE Composite Tape was $23
1/2 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR
THE SHARES.
The Company has not declared any cash dividends on the Shares since the
initial public offering of Shares in August, 1993.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS. The purchase of Shares pursuant
to the Offer will reduce the number of Shares that might otherwise trade
publicly and could reduce the number of holders of Shares, which could
adversely affect the liquidity and market value of the remaining Shares held
by the public. Following the Offer, a large percentage of the outstanding
Shares will be owned by the Shareholders, MSLEF and the Purchaser.
13
<PAGE>
According to the NYSE's published guidelines, the NYSE would consider
delisting the Shares if, among other things, the number of record holders of
at least 100 Shares should fall below 1,200, the number of publicly held
Shares (exclusive of holdings of officers, directors and their families and
other concentrated holdings of 10% or more ("NYSE Excluded Holdings")) should
fall below 600,000 or the aggregate market value of publicly held Shares
(exclusive of NYSE Excluded Holdings) should fall below $5,000,000. If, as a
result of the purchase of Shares pursuant to the Offer or otherwise, the
Shares no longer meet the requirements of the NYSE for continued listing and
the listing of the Shares is discontinued, the market for the Shares could be
adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange
or through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market therefor
and the availability of such quotations would depend, however, upon such
factors as the number of stockholders and/or the aggregate market value of
such securities remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act as described below and other factors.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer Price.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations
of the Federal Reserve Board, in which event such Shares could no longer be
used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the SEC if
the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders of the Shares. The termination of registration
of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of Shares and
to the SEC and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with stockholders' meetings
pursuant to Section 14(a), and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. In addition, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability
to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities" or be eligible for NASDAQ
reporting.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise noted
below, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been taken from or based upon
publicly available documents and records on file with the SEC and other public
sources. Neither Parent, UPRR nor Purchaser assumes any responsibility for the
accuracy or completeness of the information concerning the Company contained
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of
any such information but which are unknown to Parent, UPRR or Purchaser.
The Company is a Delaware corporation whose principal executive offices are
located at Southern Pacific Building, One Market Place, San Francisco,
California 94105. The Company, through the integrated network of its principal
subsidiaries, transports freight over approximately 14,500 miles of first main
track throughout the western United States. The Company operates in 15 states
over five main routes. The Company serves most west
14
<PAGE>
coast ports and large population centers west of the Mississippi and connects
with eastern railroads at Chicago, St. Louis, Kansas City, Memphis and New
Orleans. The Company's rail lines reach the principal Gulf ports south from
Chicago and east from the Los Angeles basin. It interchanges with Mexican
railroads at six gateways into Mexico.
The principal commodities hauled in the Company's carload operations are
chemicals and petroleum products, food and agricultural products, forest
products (including paper, paper products and lumber) and coal. Intermodal
container and trailer operations continue to be the Company's largest single
traffic category. In 1994, the largest five shippers accounted for less than
17% of the Company's gross freight revenues, with no shipper providing more
than 6% of such revenue.
The Company became the nation's sixth largest railroad, based on revenues,
in October 1988 when it acquired Southern Pacific Transportation Company
("SPT") from Santa Fe Pacific Corporation ("Santa Fe"). In 1989 and 1990, the
Company acquired access to Chicago from St. Louis and Kansas City,
respectively. For the five years preceding the acquisition by the Company, SPT
had been held in trust pending the decision of the ICC that denied Santa Fe's
requested merger with SPT.
In addition to its rail business, the Company historically has received
substantial cash flow from "traditional" real estate sales and leasing
activities. More recently, transit corridor sales have become a significant
source of cash with the Company usually retaining operating rights over these
corridors to continue freight rail service to its customers.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in (i) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994, as amended (the "Company Form 10-K") and (ii) the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1995 (the "Company
Form 10-Q"). More comprehensive financial information is included in the
Company Form 10-K and the Company Form 10-Q and other documents filed by the
Company with the SEC. The financial information that follows is qualified in
its entirety by reference to the Company Form 10-K and the Company Form 10-Q
and other documents, including the financial statements and related notes
contained therein. The Company Form 10-K and the Company Form 10-Q and other
documents may be examined and copies may be obtained from the offices of the
SEC in the manner set forth below.
15
<PAGE>
SOUTHERN PACIFIC RAIL CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED DECEMBER 31,
JUNE 30, JUNE 30, ---------------------------
1995(1) 1994 1994(3) 1993(2) 1992
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue............ $1,571.3 $1,554.8 $3,142.6 $2,918.6 $2,878.0
Operating expenses........... 1,519.5 1,385.2 2,796.9 2,815.4 2,769.1
Operating income............. 51.8 169.6 345.7 103.2 108.9
Net income (loss) to common
shareholders................ (7.5) 57.5 241.8 (154.9) 24.1
PER SHARE INFORMATION:
Net earnings (loss) per
Share....................... (0.05) 0.39 1.59 (1.39) 0.24
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
--------------- -----------------------
1995 1994 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets........................ $ 432.5 $ 550.6 $ 672.6 $ 354.2 $ 327.7
Net property.......................... 3,365.9 2,626.2 2,929.0 2,531.7 2,318.7
Total assets.......................... 4,359.3 3,705.7 4,152.1 3,434.0 3,204.5
Long-term debt, current portion....... 54.9 59.8 59.5 66.7 153.5
Current liabilities................... 914.1 864.4 1,015.8 916.2 1,082.8
Long-term debt, excluding current
portion.............................. 1,407.7 1,155.1 1,089.3 1,408.3 1,175.5
Total shareholders' equity (deficit).. 1,057.0 874.4 1,058.7 312.5 (76.9)
</TABLE>
--------
(1) Included $39.5 million after-tax special charge.
(2) Included $104.2 million after-tax charge for adoption of FAS 106.
(3) Included $6.0 million after-tax charge for adoption of FAS 112.
The Company is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the
SEC relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
SEC. These reports, proxy statements and other information should be available
for inspection at the public reference facilities of the SEC located in
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also
should be available for inspection and copying at prescribed rates at the
following regional offices of the SEC: Seven World Trade Center, New York, New
York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of this material may also be obtained by mail, upon payment of the
SEC's customary fees, from the SEC's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. Reports, proxy statements and other information
concerning the Company should also be available for inspection at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.
Certain Projected Financial Information. In the course of its discussions
with Parent described in Section 11, the Company, in March, 1995, provided
Parent and its financial advisors with certain business and financial
information which Parent and the Company believe was not publicly available.
Such information included, among other things, certain financial projections
for 1995 through 1999 (the "March Company Projections") prepared by management
of the Company as a long-range plan. In late July, the Company furnished
Parent with updated financial projections for 1995 and 1996 (the "July Company
Projections"), which updated projections reflected a decline in projected
results from the March Company Projections. The July Projections do not take
into account any of the potential effects of the transactions contemplated by
the Offer and the Merger. The Company does not as a matter of course publicly
disclose internal projections as to future revenues, earnings or financial
condition.
16
<PAGE>
Set forth below is a selected summary of the July Company Projections and
the March Company Projections.
THE JULY COMPANY PROJECTIONS
THE COMPANY HAS ADVISED PARENT THAT THE JULY COMPANY PROJECTIONS SET FORTH
BELOW SUPERSEDE THE INCOME STATEMENT DATA IN THE MARCH COMPANY PROJECTIONS FOR
THE YEARS 1995 AND 1996 BECAUSE SUCH INCOME STATEMENT DATA IN THE MARCH
COMPANY PROJECTIONS NO LONGER REFLECT THE COMPANY'S VIEW AS TO THE PROJECTED
RESULTS.
THE JULY PROJECTIONS
<TABLE>
<CAPTION>
INCOME STATEMENT DATA:
----------------------
YEAR ENDED DECEMBER 31,
-------------------------
1995 (RANGE)(1) 1996
----------------- ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Operating revenues.............................. $ 3,220 - $3,200 $3,332
Operating expenses.............................. (2,900) - (2,920) (2,887)
----------------- ------
Operating income................................ $ 320 - 280 $ 445
================= ======
Gains from real estate sales(2)................. $ 70 - 70 $ 60
Net income...................................... 134 - 110 201
</TABLE>
--------
(1)Excludes the effect of the $39.5 million after-tax special charge
recorded in June, 1995.
(2)Excludes the sale of major properties and transit corridors.
The July Company Projections assumed an operating ratio (operating
expenses/revenues) for the Company ranging from 90.1% - 91.3% in 1995 and
86.6% in 1996.
THE MARCH COMPANY PROJECTIONS
THE COMPANY HAS ADVISED PARENT THAT THE JULY COMPANY PROJECTIONS SET FORTH
ABOVE SUPERSEDE THE INCOME STATEMENT DATA IN THE MARCH COMPANY PROJECTIONS FOR
THE YEARS 1995 AND 1996 BECAUSE SUCH INCOME STATEMENT DATA IN THE MARCH
COMPANY PROJECTIONS NO LONGER REFLECT THE COMPANY'S VIEW AS TO THE PROJECTED
RESULTS.
INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Operating revenues............. $ 3,327 $ 3,488 $ 3,643 $ 3,798 $ 3,976
Operating expenses............. (2,879) (2,933) (2,995) (3,080) (3,177)
------- ------- ------- ------- -------
Operating income............... $ 448 $ 555 $ 648 $ 718 $ 799
======= ======= ======= ======= =======
Gains from real estate
sales(1)...................... $ 67 $ 60 $ 60 $ 60 $ 60
Net income..................... 203 257 311 347 391
CASH FLOW DATA:
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Operating cash flows........... $ 309 $ 400 $ 521 $ 586 $ 618
Sale of assets(1).............. 70 70 70 70 70
------- ------- ------- ------- -------
Net internally generated funds. 379 470 591 656 688
Debt issuance net of debt
retirement(2)................. 309 151 163 159 126
------- ------- ------- ------- -------
Available cash................. 688 621 754 815 814
Capital expenditures(2)........ (716) (500) (500) (500) (550)
------- ------- ------- ------- -------
Net change in cash............. $ (28) $ 121 $ 254 $ 315 $ 264
======= ======= ======= ======= =======
</TABLE>
--------
(1)Excludes the sale of major properties and transit corridors.
(2) Debt issuance and capital expenditures include long-term capital
leases which are not included on the Cash Flow Statement included in
the Company's published financial reports.
17
<PAGE>
The March Company Projections were based on the following assumptions:
1. Revenue was projected to increase at a compound annual growth rate (CAGR)
of 4.6% from $3,327 million in 1995 to $3,976 million in 1999.
2. The Company's operating ratio (operating expenses/revenues) was projected
at 86.5% in 1995, 84.1% in 1996, 82.2% in 1997, 81.1% in 1998 and 79.9% in
1999.
3. Net income was projected to increase at a CAGR of 17.8% from $203 million
in 1995 to $391 million in 1999.
In connection with the March Projections, the Company also furnished Parent
with projected balance sheets of the Company for the years 1995 through 1999.
Such balance sheets projected total assets of the Company increasing from
$4,684 million in 1995 to $7,062 million in 1999, total long-term debt
(excluding current portion) increasing from $1,363 million in 1995 to $1,920
million in 1999 and total stockholders' equity increasing from $1,261 million
in 1995 to $2,564 million in 1999.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE SEC OR THE GUIDELINES ESTABLISHED
BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. THE PROJECTIONS ARE
INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE SUCH INFORMATION WAS PROVIDED
TO PARENT. NONE OF PARENT, PURCHASER, UPRR OR ANY PARTY TO WHOM THE
PROJECTIONS WERE PROVIDED ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OF SUCH
INFORMATION. WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THESE PROJECTIONS ARE
BASED UPON A VARIETY OF ASSUMPTIONS RELATING TO THE BUSINESSES OF THE COMPANY
WHICH, THOUGH PARENT HAS BEEN ADVISED WERE CONSIDERED REASONABLE BY THE
COMPANY AT THE TIME THEY WERE FURNISHED TO PARENT, MAY NOT BE REALIZED AND ARE
SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCE THAT THE
PROJECTIONS WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY FROM
THOSE SHOWN. THE PROJECTIONS HAVE NOT BEEN EXAMINED OR COMPILED BY THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS. FOR THESE REASONS, AS WELL AS THE
BASES ON WHICH SUCH PROJECTIONS WERE COMPILED, THERE CAN BE NO ASSURANCE THAT
SUCH PROJECTIONS WILL BE REALIZED, OR THAT ACTUAL RESULTS WILL NOT BE HIGHER
OR LOWER THAN THOSE ESTIMATED. THE INCLUSION OF SUCH PROJECTIONS HEREIN SHOULD
NOT BE REGARDED AS AN INDICATION THAT PARENT, PURCHASER, UPRR OR ANY OTHER
PARTY WHO RECEIVED SUCH INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF
FUTURE EVENTS.
Certain Operating Relationships. Various subsidiaries of each of Parent and
UPRR, on the one hand, and the Company, on the other hand, have operating
relationships with each other. For purposes of this subsection, the term "SPT"
includes the Denver and Rio Grande Western Railroad Company, the St. Louis
Southwestern Railway Company, SPCSL Corp. and other rail carrier subsidiaries
of each, while the term "UPRR" includes Missouri Pacific Railroad Company,
Chicago and North Western Transportation Company and other rail carrier
subsidiaries of each. Approximately 9%, 9% and 8% of SPT's total loads in
1992, 1993 and 1994, respectively, were interchanged with UPRR. Additionally,
approximately 4%, 4% and 3% of UPRR's total loads in 1992, 1993 and 1994,
respectively, were interchanged with SPT. Major interchange locations between
UPRR and SPT include Ogden, UT, Colton, CA, Portland, OR, and El Paso, TX. In
connection with such interchanges, either or both of SPT's and UPRR's railroad
subsidiaries may be the party billing the shipper of such interchange freight,
and in cases where one of the parties bills for the entire shipment, such
party will periodically remit to the other party the net amount of the
proceeds due to such other carrier in accordance with standard industry
practice. In addition, UPRR and SPT, often together with other railroads,
cooperate in terminal switching operations at certain major locations
including Los Angeles, CA, St. Louis, MO, East St. Louis, IL, Denver, CO, and
Houston, TX. SPT and UPRR also have proprietary interests in various terminal
companies in their service territories, including the Alton & Southern Railway
Company in East St. Louis, IL, as to which each is a 50% owner.
In addition to the foregoing, UPRR and SPT are parties to various trackage
rights agreements pursuant to which UPRR operates over approximately 704 miles
of SPT track and SPT operates over approximately 2,340 miles of UPRR track.
For example, (i) UPRR and SPT have a paired track arrangement where each uses
certain trackage of the other between Alazon and Weso, NV, (ii) the two
companies have granted each other reciprocal trackage rights between
Paragould, AR and Valley Jct., IL whereby UPRR operates over 113 miles of SPT
trackage between Paragould and Illmo, Jct. and SPT operates over 119 miles of
UPRR trackage between Valley Jct. and Simbco Jct., IL, (iii) SPT has bridge
rights over 431 miles of UPRR trackage between Pueblo, CO and
18
<PAGE>
Herington, KS, and (iv) SPT has trackage rights over UPRR's trackage between
Kansas City, MO and St. Louis, MO. During 1992, 1993 and 1994, payments from
SPT to UPRR under all trackage rights agreements totaled approximately
$45,820,000, $53,355,000 and $46,500,000, respectively, while payments under
all trackage rights agreements from UPRR to SPT totalled approximately
$5,591,000, $11,969,000, and $10,372,000 during 1992, 1993 and 1994,
respectively.
As is not unusual in the railroad industry, disputes have arisen between
UPRR and SPT over the interpretation and/or operation of trackage rights
agreements between the two. Currently, trackage rights agreement disputes
between UPRR and SPT exist on the following matters:
. Whether SPT as a trackage rights tenant is obligated to pay a share
(approximately $1.5 million) of the cost of past separation
allowance/reserve board payments for employees on UPRR's Pueblo, CO line
and a share (approximately $2.5 million) of capital costs and operating
costs for UPRR's Harriman Dispatch Center.
. Whether SPT is contractually obligated to indemnify UPRR for damages
resulting from derailments on UPRR's line at Cody, KS and East Acoma, NV.
In addition, by Settlement Agreement and Release dated March 31, 1995, UPRR
and SPT settled disputes between the two concerning (i) SPT's payment of rent
and interest to UPRR for SPT's use of trackage rights over UPRR's lines
between St. Louis and Kansas City, and (ii) SPT allegations that UPRR engaged
in past service and dispatching discrimination against SPT over the St. Louis-
Kansas City trackage rights and other portions of UPRR's rail system. Among
other things, pursuant to this settlement (i) SPT paid UPRR $30,756,012 on
April 3, 1995, and (ii) SPT will pay UPRR (a) $1,076,460 as simple interest on
the unpaid balance of the settlement amount on each of October 3, 1995 and
April 3, 1996, and (b) the balance of $30,756,012 on April 3, 1996.
Disputes also exist between UPRR and SPT concerning UPRR's proposed build-in
to shippers (Amoco, Chevron and Exxon) currently exclusively served by SPT at
Mont Belvieu, TX.
9. CERTAIN INFORMATION CONCERNING PURCHASER, UPRR AND PARENT.
Purchaser. Purchaser is a Delaware corporation organized in 1995 and has not
carried on any significant activities other than activities undertaken in
connection with the Offer and the Merger. The principal offices of Purchaser
are located at Martin Tower, Eighth & Eaton Avenues, Bethlehem, Pennsylvania
18018. Purchaser is a wholly owned subsidiary of UPRR and an indirect wholly
owned subsidiary of Parent. Until immediately prior to the time that Purchaser
will purchase Shares pursuant to the Offer, it is not expected that Purchaser
will have any significant assets or liabilities or engage in activities other
than those incident to the transactions contemplated by the Offer and the
Merger.
Parent. Parent is a Utah corporation, organized in 1969, with principal
executive offices located at Martin Tower, Eighth and Eaton Avenues,
Bethlehem, Pennsylvania 18018.
Parent operates, through subsidiaries, in the areas of rail transportation
(UPRR and Missouri Pacific Railroad Company and Chicago and North Western
Transportation Company (collectively, the "Railroad")), oil, gas and mining
(Resources) and trucking (Overnite Transportation Company ("Overnite")). Each
of these subsidiaries is indirectly wholly owned by Parent. Substantially all
of Parent's operations are in the United States.
Resources is one of the largest independent oil and gas companies in North
America and is engaged primarily in the exploration for and the development
and production of natural gas, natural gas liquids and crude oil in several
major producing basins in the United States and Canada. Resources also engages
in the hard minerals business through its nonoperated joint venture and
royalty interests in several coal and trona (natural soda ash) mines located
on lands in Wyoming.
The Spin-off. Resources has filed a registration statement with the SEC in
connection with the proposed IPO of shares of Resources Common Stock
representing no more than 17.25% of the outstanding shares of Resources Common
Stock (after giving effect to the issuance of shares in the IPO and shares to
be issued to employees or reserved for issuance with respect to employee
options). Parent intends, following consummation of the Merger, to distribute
its ownership interest in Resources to shareholders of Parent by means of the
Spin-off. The Spin-off will be subject to declaration by Parent's board of
directors, which declaration is expected to be subject to (1) the receipt of a
favorable ruling from the Internal Revenue Service as to the tax-free nature
of
19
<PAGE>
the transaction and (2) the absence of any change in market conditions or
other circumstances that causes the board of directors of Parent to conclude
that the Spin-off is not in the best interests of the shareholders of Parent.
Parent has not determined what action it would take if it were not to receive
the favorable tax ruling. Alternatives would include, without limitation,
completing the Spin-off based on an opinion of counsel or selling additional
shares of Resources Common Stock to reduce Parent's investment in Resources.
No assurance can be given that such favorable tax ruling will be obtained. In
addition, pursuant to the Merger Agreement, Parent has agreed not to go
forward with the Spin-off prior to the earlier of the consummation of the
Merger or termination of the Merger Agreement. Pursuant to the Merger
Agreement, Parent has also agreed that in connection with any tax opinion or
IRS private letter ruling, such opinion or ruling shall provide that no
income, gain or loss will be recognized by Parent's stockholders (including
former Company stockholders who receive Parent Common Stock in the Merger)
upon receipt of Resources Common Stock. Even if a favorable IRS ruling is
obtained, there can be no assurance that the Spin-off will occur or that
Parent will not sell its shares of Resources Common Stock.
Overnite. Overnite, a major interstate trucking company, serves all 50
states and portions of Canada through 174 service centers and through agency
partnerships with several small, high-quality carriers serving areas not
directly covered by Overnite. As one of the largest trucking companies in the
United States, specializing in less-than-truckload shipments, Overnite
transports a variety of products, including machinery, textiles, plastics,
electronics and paper products.
UPRR. UPRR is a Utah corporation with principal executive offices located at
1416 Dodge Street, Omaha, Nebraska 68179. UPRR is the second largest railroad
in the United States by mileage, with approximately 22,600 route miles linking
West Coast and Gulf Coast ports with the Midwest. UPRR maintains coordinated
service with other carriers for the handling of freight throughout the United
States, Canada and Mexico. UPRR handles exported and imported freight
throughout the system, principally through the Gulf Coast and Pacific Coast
ports and across the Texas-Mexico border. Major categories of freight hauled
by UPRR are automotive, chemicals, energy (coal), food/consumer/government,
grains and grain products, intermodal, forest products and metals and
minerals.
Parent is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the
SEC relating to its business, financial condition and other matters.
Information, as of particular dates, concerning Parent's directors and
officers, their remuneration, stock options granted to them, the principal
holders of Parent's securities, any material interests of such persons in
transactions with Parent and other matters is required to be disclosed in
proxy statements distributed to Parent's stockholders and filed with the SEC.
These reports, proxy statements and other information should be available for
inspection and copies may be obtained in the same manner as set forth for the
Company in Section 8. The shares of Parent common stock are listed on the
NYSE, and reports, proxy statements and other information concerning Parent
should also be available for inspection at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Parent, Purchaser and UPRR are set forth in Schedule I hereto.
Except as set forth in this Offer to Purchase, none of Parent, UPRR or
Purchaser, or, to the best knowledge of Parent, UPRR or Purchaser, any of the
persons listed in Schedule I hereto, or any associate or majority-owned
subsidiary of such persons, beneficially owns any equity security of the
Company, and none of Parent, UPRR, Purchaser, or, to the best knowledge of
Parent, UPRR or Purchaser, any of the other persons referred to above, or any
of the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent, UPRR or
Purchaser, or, to the best knowledge of Parent, UPRR or Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans,
20
<PAGE>
guaranties against loss or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, none of Parent, UPRR or Purchaser, or, to the
best knowledge of Parent, UPRR or Purchaser, any of the persons listed in
Schedule I hereto has had any transactions with the Company, or any of its
executive officers, directors or affiliates that would require reporting under
the rules of the SEC.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between Parent, UPRR or Purchaser, or their
respective subsidiaries, or, to the best knowledge of Parent, UPRR or
Purchaser, any of the persons listed in Schedule I hereto, on the one hand,
and the Company or its executive officers, directors or affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors, or a sale or other
transfer of a material amount of assets.
Financial Information. Set forth below is certain selected consolidated
financial information relating to Parent and its subsidiaries which has been
excerpted or derived from the financial statements contained in Parent's
Annual Reports on Form 10-K for the fiscal years ended December 31, 1994 and
December 31, 1993 (the "Parent Form 10-Ks") and expected to be included in
Parent's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1995 to be filed with the SEC following commencement of the Offer (the "Parent
Form 10-Q"). More comprehensive financial information is included in the
Parent Form 10-K and the Parent Form 10-Q and other documents filed by Parent
with the SEC. The financial information that follows is qualified in its
entirety by reference to the Parent Form 10-K and the Parent Form 10-Q and
other documents including the financial statements and related notes contained
therein. The Parent Form 10-Ks and the Parent Form 10-Q (when filed) and other
documents may be examined and copies may be obtained from the offices of the
SEC in the manner set forth below.
UNION PACIFIC CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION(1)(2)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED DECEMBER 31,
JUNE 30, JUNE 30, ---------------------------
1995 1994 1994 1993 1992
---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues........... $ 3,538 $3,214 $ 6,492 $ 6,002 $ 5,773
Operating expenses........... 2,922 2,611 5,248 4,890 4,691
------- ------ -------- -------- -------
Operating income............. $ 616 $ 603 $ 1,244 $ 1,112 $ 1,082
======= ====== ======== ======== =======
Income (loss) from
Discontinued Operations(1).. $ 135 $ 218 $ (38) $ 235 $ 272
Accounting changes(3)........ -- -- -- (116) --
Net income................... 415 503 546 530 728
PER SHARE INFORMATION:
Net earnings per Share....... $ 2.02 $ 2.45 $ 2.66 $ 2.58 $ 3.57
BALANCE SHEET DATA:
Current assets............... $ 1,156 $ 976 $ 1,349 $ 981 $ 1,052
Net Assets of Discontinued
Operations.................. 1,862 2,501 1,789 1,845 1,558
Net property................. 13,174 9,464 9,670 9,298 8,671
Total assets................. 17,570 14,645 14,543 13,797 13,361
Long-term debt, current
portion..................... 68 76 427 83 95
Current liabilities.......... 2,032 1,532 2,000 1,590 1,513
Long-term debt, excluding
current portion............. 6,173 4,489 4,052 4,022 3,940
Total shareholders' equity... 5,350 5,227 5,131 4,885 4,639
</TABLE>
--------
(1) The Financial Statements have been adjusted to reflect Resources as
discontinued operations.
21
<PAGE>
(2) Sale of USPCI, Inc. ("USPCI")--At year-end 1994, Parent completed the sale
of USPCI to Laidlaw Inc. for $225 million in notes that were subsequently
collected in January 1995. The sale resulted in a net loss of $412 million
in 1994 including an $8 million net loss from USPCI operations during the
year. Prior years' results have been restated to present USPCI as a
discontinued operation.
(3) Accounting Adjustments--In January 1993, Parent adopted the Financial
Accounting Standards Board's pronouncements covering the recognition of
postretirement benefits other than pensions and accounting for income
taxes, as well as a pro-rata method of recognizing transportation revenues
and expenses. The cumulative effect of adopting these accounting changes
was a one-time, after-tax charge to earnings of $116 million or $0.56 per
share.
10. SOURCE AND AMOUNT OF FUNDS.
Purchaser estimates that the total amount of funds required to purchase
Shares pursuant to the Offer, to pay the cash portion of the consideration in
the Merger and to pay all related costs and expenses will be approximately
$1.6 billion. See "THE OFFER--Fees and Expenses."
Purchaser plans to obtain the necessary funds through capital contributions
or advances made by Parent and/or UPRR. Parent and UPRR plan to obtain the
funds for such capital contributions or advances from their available cash and
working capital, and either through the issuance of long or short term debt
securities (including, without limitation, commercial paper notes) (the "Debt
Securities") or pursuant to an existing $1.4 billion credit facility with
various commercial banks (the "Facility").
The Facility was established pursuant to a Revolving Credit Agreement, dated
as of March 2, 1993, as amended (the "Credit Agreement"), among Parent,
Chemical Bank, as administrative agent, Credit Suisse and NationsBank, N.A.
(Carolinas), as co-agents, and various banks named therein. The Facility will
mature on March 2, 2000. The interest on the drawings under the Facility will
range from .15% to .50% above the London Interbank Offered Rate ("LIBOR") per
annum, and would be in addition to a Facility fee ranging from .10% to .25%
per annum, in each case based on Parent's credit rating. The Facility fee is
payable on the entire amount of the Facility, whether used or unused. The
foregoing description of the terms and provisions of the Facility is qualified
in its entirety by reference to the text of the Credit Agreement, a copy of
which is filed as an exhibit to the Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") and is incorporated herein by reference.
The proceeds of the Facility are available to finance the Offer and for
general corporate purposes of Parent.
Parent's commercial paper program involves the private placement of
unsecured, commercial paper notes with maturities of up to 270 days. The
commercial paper generally has an effective interest rate approximating the
then market rate of interest for commercial paper of similar rating, currently
approximately 5.9%. Parent may refinance any commercial paper borrowings used
to finance the purchase of Shares pursuant to the Offer through private
placements of additional commercial paper, borrowings under the Facility or,
depending on market or business conditions, through such other financing as
Parent may deem appropriate.
It is anticipated that the indebtedness incurred by Parent and UPRR in
connection with the Debt Securities and/or the Facility will be repaid from
funds generated internally by Parent and its subsidiaries (including, after
the Merger, if consummated, dividends paid by the Surviving Corporation and
its subsidiaries), through additional borrowings, through application of
proceeds of dispositions or through a combination of two or more such sources.
No final decisions have been made concerning the method Parent and UPRR will
employ to repay such indebtedness. Such decisions when made will be based on
Parent's review from time to time of the advisability of particular actions,
as well as on prevailing interest rates and financial and other economic
conditions.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In the ordinary course of Parent's long-term strategic review process,
Parent and UPRR routinely analyze potential combinations with various railroad
companies. Beginning in mid-1994, certain senior officers of Parent
22
<PAGE>
and the Company had occasional, informal discussions regarding the possibility
and desirability of an acquisition of the Company by Parent and other possible
transactions. On September 8, 1994, Parent and the Company entered into a
confidentiality agreement in connection with these discussions, but the
discussions terminated later in September 1994.
In late February, 1995 and continuing through mid-April, 1995, certain
senior officers and directors of Parent and the Company had a number of
meetings and telephone conversations to discuss on a preliminary basis a
possible acquisition of the Company by Parent. In connection with such
preliminary discussions, on April 8, 1995, Parent's legal counsel provided to
the Company and its legal counsel a draft merger agreement. No negotiations
were ever conducted concerning such draft agreement. In mid-April, 1995,
Parent and the Company discontinued discussions concerning a possible
transaction due to an inability to reach agreement on the structure and terms
thereof.
Discussions and meetings concerning a possible transaction resumed in late
June, 1995 among certain senior officers of Parent and the Company. At a
meeting on July 17, 1995, senior officers of Parent and the Company
established a preliminary basis for continuing discussions to seek to reach an
agreement concerning a transaction and for proceeding with a due diligence
review. Such officers of Parent and the Company determined to continue
discussions on the basis of the following tentative terms, among others:
Parent would acquire up to 25% of the outstanding Common Stock in a cash
tender offer at $25.00 per Share and, following receipt of ICC approval and
the satisfaction of other conditions, would acquire the remaining Shares in a
"cash election" merger in which stockholders of the Company would receive, at
their election, for each Share, cash consideration of $25.00, or a fraction of
a share of Parent Common Stock determined by dividing $25.00 by the average
closing price of Parent Common Stock prior to the merger (subject to a pricing
"collar" mechanism which would result in not more than 0.4464 shares of Parent
Common Stock nor less than 0.4065 shares being issued per Share). In such
transaction, 60% of the Shares would be converted into Parent Common Stock and
the remaining 40% into cash, including the Shares to be acquired in the tender
offer.
At the July 17, 1995 meeting, Parent indicated to Mr. Anschutz that its
willingness to continue discussions was conditioned upon, among other things,
the willingness of the Shareholders and MSLEF to consider agreeing to vote
their Shares, representing approximately 31.8% and 8.5%, respectively, of the
outstanding Common Stock, in favor of the merger. Mr. Anschutz indicated that
the Shareholders would be willing to consider such an agreement if the Company
and Parent could negotiate satisfactory terms for a transaction, and provided
that satisfactory terms concerning an agreement between the Shareholders and
Parent could be negotiated. Subsequently, Parent was advised that MSLEF also
would be willing to consider an agreement to vote its Shares in favor of the
merger if the Company and Parent could negotiate satisfactory terms for a
transaction, and subject to MSLEF's negotiation of satisfactory terms of an
agreement with Parent.
Management of Parent and the Company each conditioned their willingness to
continue discussions concerning a possible transaction upon, among other
things, the negotiation of satisfactory terms and the
negotiation and execution of definitive transaction agreements, a satisfactory
due diligence review, and the approval of their respective Boards of
Directors. The Company also indicated to Parent that its willingness to
continue discussions was conditioned upon the willingness of Parent to enter
into an appropriate agreement restricting voting, additional acquisitions and
dispositions of Shares to be purchased by Parent in the Offer.
Following the July 17, 1995 meeting, extensive due diligence was conducted
by the Company, Parent and their respective legal, financial and accounting
advisors. In addition, senior officers of the Company and Parent and their
respective counsel met and talked regularly to negotiate the terms of the
transaction and the definitive agreements providing for the transaction, and
senior officers of Parent and its counsel negotiated with the Shareholders and
MSLEF and their counsel the terms of their transactions and the definitive
agreements therefor.
On July 27, 1995, at a regularly scheduled meeting, the Board of Directors
of Parent analyzed and reviewed, with Parent's management and financial and
legal advisors, among other things, various strategic, financial and
23
<PAGE>
legal considerations concerning a possible transaction with the Company, the
potential terms of a transaction and the status of negotiations. (At several
earlier meetings, Parent's Board of Directors had reviewed the strategic
considerations and other issues, as well as the status of any discussions then
being conducted, regarding such an acquisition.) At the July 27 meeting,
Parent's management and financial and legal advisors made presentations to the
Board concerning various aspects of the possible transaction. No decision was
reached by the Board at the meeting, but it was the consensus of directors
that management and Parent's advisors should continue to negotiate with the
Company and report back to the Board once management was prepared to make a
recommendation. At its July 27, 1995 meeting, the Board of Directors of Parent
approved the IPO and the Spin-off (see "THE OFFER--Certain Information
Concerning Parent, UPRR and the Purchaser"). Following the meeting, Parent
issued a press release announcing the IPO.
On July 27, 1995, at a regularly scheduled meeting, the Board of Directors
of the Company analyzed and reviewed, with the Company's management and
financial and legal advisors, among other things, various strategic, financial
and legal considerations concerning a possible transaction with the Company,
the potential terms of a transaction and the status of negotiations. At the
July 27 meeting, the Company's management and financial and legal advisors
made presentations to the Board concerning various aspects of the possible
transaction. No decision was reached by the Board of the Company at the
meeting, but it was the consensus of directors that management and the
Company's advisors should continue to negotiate with Parent and report back to
the Board of the Company once the Company's management was prepared to make a
recommendation.
On August 2, 1995, senior officers of Parent and the Company met and had
various telephone conversations to discuss the progress of the negotiations to
date, certain issues between the parties that had not been resolved, and the
results of due diligence. With respect to the proposed pricing for the
transaction, the parties agreed to a fixed exchange ratio of .4065 shares of
Parent Common Stock per Share for the stock portion of the purchase price, in
place of the previously discussed "floating" exchange ratio with a pricing
"collar".
On August 3, 1995, the Board of Directors of Parent held a special
telephonic meeting to review, with the advice and assistance of the Board's
financial and legal advisors, the proposed Merger Agreement and Ancillary
Agreements and the transactions contemplated thereby, including the Offer and
Merger. At such meeting, Parent's management and financial and legal advisors
made presentations to the Board concerning the transaction, and Parent's
financial advisor, CS First Boston Corporation ("CS First Boston"), rendered
to Parent's Board an oral opinion (which was subsequently confirmed in
writing) to the effect that, as of such date, the consideration to be paid by
Parent in the Offer and the Merger, taken together, was fair to Parent from a
financial point of view. Following the Board's review of the transaction, the
Board unanimously approved (with three directors absent, and one director
abstaining because of an affiliation with Morgan Stanley, the financial
advisor to the Company in connection with the transaction and an affiliate of
MSLEF, a party to an Ancillary Agreement in its capacity as a shareholder of
the Company) the proposed Merger Agreement and Ancillary Agreements and the
transactions contemplated thereby, and authorized, subject to completion of
negotiation of a limited number of remaining issues, the execution and
delivery of such Agreements.
Also on August 3, 1995, the Board of Directors of the Company held a special
meeting to review, with the advice and assistance of the Board's financial and
legal advisors, the proposed Merger Agreement and Ancillary
Agreements and the transactions contemplated thereby, including the Offer and
Merger. At such meeting, the Company's management and financial and legal
advisors made presentations to the Board concerning the transaction and the
Company's financial advisor, Morgan Stanley, provided an oral opinion (which
was subsequently confirmed in writing) that on the date of the Merger
Agreement the consideration to be received by the holders of Shares pursuant
to the Offer and the Merger, taken together, is fair from a financial point of
view to such holders. Following the Board's review of the transaction, the
Board unanimously approved the proposed Merger Agreement and Ancillary
Agreements and the transactions contemplated thereby, authorized (subject to
completion of negotiation of a limited number of remaining issues) the
execution and delivery of such Agreements, determined that the Offer and the
Merger are fair to and in the best interests of the holders of Shares,
recommended that stockholders of the Company who desire to receive cash for
their Shares accept the Offer and
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tender their Shares pursuant to the Offer, and recommended that stockholders
of the Company approve and adopt the Merger Agreement. The Board's approval of
the Merger Agreement and the Ancillary Agreements and the transactions
contemplated thereby constituted approval for purposes of Section 203 of the
DGCL such that the provisions of the statute are not applicable to such
Agreements or the transactions contemplated thereby (see "Certain Legal
Matters; Regulatory Approvals--State Takeover Statutes").
Following the August 3, 1995 Board meetings described above, the following
joint press release was issued:
BETHLEHEM, PA., Aug. 3--Union Pacific Corporation (NYSE: UNP) and
Southern Pacific Rail Corporation (NYSE: RSP) announced today that they
have reached an agreement providing for the merger of Southern Pacific with
Union Pacific. The $5.4 billion transaction would form North America's
largest railroad, a 34,000-mile network operating in 25 states and serving
both Mexico and Canada. The two railroad companies had combined 1994
operating revenues of $9.54 billion.
The agreement, approved today by the Boards of Directors of Union Pacific
and Southern Pacific, is subject to execution of a definitive merger
agreement, which is expected to be signed very shortly. Under terms of the
agreement, Union Pacific would make a first-step cash tender offer of
$25.00 a share for up to 25 percent of the Common Stock of Southern
Pacific. The tender offer would commence next week. The shares purchased in
the tender offer will be held in a voting trust. Following completion of
the offer, and the satisfaction of other conditions, including approval by
the Interstate Commerce Commission (ICC), Southern Pacific will be merged
with Union Pacific Corporation. Upon completing the transaction, each share
of Southern Pacific stock will be converted, at the holder's election
(subject to proration), into the right to receive $25.00 in cash or 0.4065
shares of Union Pacific Common Stock. As a result of the transaction, 60
percent of Southern Pacific shares will be converted into Union Pacific
stock and the remaining 40 percent into cash, including the shares acquired
in the original tender offer. The two companies expect to file an
application with the ICC no later than December 1.
Union Pacific also stated that the previously announced spin-off of Union
Pacific Resources would be consummated after completion of the transaction.
The initial public offering of shares of Union Pacific Resources will
proceed as scheduled.
In connection with the merger, Philip Anschutz, a major shareholder of
Southern Pacific, will be appointed non-executive Vice Chairman of the
Board of Directors of Union Pacific following completion of the transaction
and will enter into a customary seven-year standstill agreement. In
addition, Mr. Anschutz, who owns 31 percent of Southern Pacific, and the
Morgan Stanley Leveraged Equity Fund, which owns seven percent of Southern
Pacific, have agreed to vote their shares in favor of the transaction.
"When completed, this transaction will deliver major benefits for
customers," said Drew Lewis, Union Pacific's Chairman and Chief Executive
Officer. "The combined system will be able to offer new services that
neither Union Pacific nor Southern Pacific can offer on its own. The new
system will yield extensive new single-line service, faster schedules, more
frequent and reliable service, shorter routes and improved equipment
utilization. Benefits from operating efficiencies, facility consolidations,
cost savings and increased traffic are estimated to be in excess of $500
million per year."
During the afternoon and evening of August 3, 1995, senior officers of the
Company and Parent, Mr. Anschutz and MSLEF and their respective counsel
resolved all remaining issues to the mutual satisfaction of the parties, and
the Merger Agreement and Ancillary Agreements were executed and delivered by
all parties thereto.
Prior to the commencement of trading on the morning of August 4, 1995,
Parent issued the following press release:
BETHLEHEM, PA., Aug. 4--Union Pacific Corporation (NYSE: UNP) announced
today that it has executed a definitive merger agreement for the previously
announced merger with Southern Pacific Rail Corporation (NYSE: RSP). Under
the terms of the agreement, Union Pacific will make a first-step cash
tender offer of $25.00 per share for up to 25 percent of the Common Stock
of Southern Pacific. Following
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completion of the transaction, each share of Southern Pacific stock will be
converted, subject to proration, into the right to receive $25.00 in cash
or 0.4065 shares of Union Pacific Common Stock. As a result of the
transaction, 60 percent of Southern Pacific's shares will be converted into
Union Pacific stock and the remaining 40 percent, including the shares
acquired in the original tender offer, will be converted into cash.
The merger is subject to receipt of Interstate Commerce Commission (ICC)
approval and other customary conditions.
On August 9, 1995, Parent and the Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY. The purpose
of the Offer is for Parent, through UPRR and Purchaser, to acquire a
significant equity interest in the Company as a first step in acquiring the
entire equity interest in the Company. The purpose of the Merger is for Parent
to acquire all Shares not purchased pursuant to the Offer and to achieve the
transportation benefits and efficiencies of consolidating the UPRR and SPT
railroads.
Upon consummation of the Merger, Parent intends to continue to review the
Company and its assets, businesses, operations, properties, policies,
corporate structure, capitalization and management and consider if any changes
would be desirable in light of the circumstances then existing. Upon
consummation of the Merger, Parent intends to continue to review the business
of the Company and identify synergies and cost savings, including its freight
traffic arrangements with the Company.
Parent regards the resulting consolidation of the Company's and Parent's
rail subsidiaries as an opportunity to achieve certain cost savings and
synergies. Parent currently estimates that the Merger will result in excess of
$500 million of annual pre-tax benefits, of which a substantial portion is
attributable to pre-tax cost savings and reductions resulting from systemwide
consolidations, including savings in general and administrative expenses,
increased efficiencies in facilities and equipment utilization and synergies
achieved through the increased coordination of departments, including
maintenance of way and equipment, transportation, operations, communications
and computers. Synergies and benefits are also expected to come from traffic
gains and diversions less anticipated concessions to other rail carriers. THE
FOREGOING ESTIMATES OF COST SAVINGS AND SYNERGIES ARE INHERENTLY SUBJECT TO
SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF PARENT. THERE CAN BE NO ASSURANCE THAT THEY WILL BE ACHIEVED AND
ACTUAL SAVINGS AND SYNERGIES MAY VARY MATERIALLY FROM THOSE ESTIMATED. THE
INCLUSION OF SUCH ESTIMATES HEREIN SHOULD NOT BE REGARDED AS AN INDICATION
THAT PARENT, PURCHASER, UPRR OR ANY OTHER PARTY CONSIDERS SUCH ESTIMATES AN
ACCURATE PREDICTION OF FUTURE EVENTS.
Except as noted in this Offer to Purchase, none of Parent, UPRR or Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a reorganization, liquidation, relocation of
operations, or sale or transfer of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's corporate structure,
business or composition of its board of directors, management or personnel.
13. MERGER AGREEMENT; SHAREHOLDERS AGREEMENTS; REGISTRATION RIGHTS
AGREEMENTS; OTHER AGREEMENTS.
Merger Agreement.
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT.
THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT
WHICH IS INCORPORATED HEREIN BY REFERENCE. CAPITALIZED TERMS NOT OTHERWISE
DEFINED HEREIN OR IN THE FOLLOWING SUMMARY SHALL HAVE THE MEANINGS SET FORTH
IN THE MERGER AGREEMENT.
The Offer. The Merger Agreement provides that Purchaser will commence the
Offer and that, on the terms and subject to the prior satisfaction or waiver
of the conditions to the Offer, Purchaser will purchase all Shares
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validly tendered pursuant to the Offer after the later of the satisfaction of
the conditions of the Offer and the expiration of the Offer; provided,
however, that Purchaser will not purchase the Shares until after any
calculation of proration. The Merger Agreement provides that, without the
written consent of the Company by the Board of Directors (or a duly authorized
committee thereof), Purchaser will not waive the condition to the Offer that
Parent and Purchaser will not breach or fail to perform their agreements under
the Parent Shareholders Agreement, decrease the Offer Price, decrease the
number of Shares sought in the Offer or change the form of consideration to be
paid pursuant to the Offer or impose additional conditions to the Offer, or
amend any other term or any condition of the Offer in any manner adverse to
the holders of Shares except that if on the initial scheduled expiration date
of the Offer (as may be extended in accordance with the terms of the Merger
Agreement), all conditions to the Offer will not have been satisfied or
waived, the Offer may be extended from time to time without the consent of the
Company for such period of time as is reasonably expected to be necessary to
satisfy the unsatisfied conditions. The Merger Agreement further provides that
Purchaser will waive the condition to the Offer that Parent or Purchaser will
not breach or fail to perform their agreements under the Parent Shareholders
Agreement if directed to do so by the Company. In addition, the Merger
Agreement provides that, without the consent of the Company, the Offer Price
may be increased and the Offer may be extended to the extent required by law
in connection with such an increase in the Offer Price.
The Mergers. The Merger Agreement provides that, subject to the terms and
conditions thereof and in accordance with the Utah Business Corporation Act
("UBCA"), at the Sub Merger Effective Time (as defined in the Merger
Agreement), UPRR and Purchaser will consummate a merger (the "Purchaser
Merger") pursuant to which (i) Purchaser will be merged with and into UPRR and
the separate corporate existence of Purchaser will thereupon cease, (ii) UPRR
will be the surviving corporation in the Purchaser Merger and will continue to
be governed by the laws of the State of Utah, and (iii) the separate corporate
existence of UPRR will continue unaffected by the Purchaser Merger. Pursuant
to the Purchaser Merger, (x) the Articles of Incorporation of UPRR will be the
Articles of Incorporation of the surviving corporation in the Purchaser Merger
until thereafter amended, and (y) the By-laws of UPRR will be the By-laws of
the surviving corporation in the Purchaser Merger until thereafter amended.
The Purchaser Merger will have the effects set forth in the UBCA and the DGCL.
Subject to the terms and conditions of the Merger Agreement and in
accordance with the DGCL and the UBCA, at the Effective Time, the Company and
UPRR will consummate the Merger (together with the Purchaser Merger, the
"Mergers") pursuant to which (i) the Company shall be merged with and into
UPRR and the separate corporate existence of the Company will thereupon cease,
(ii) UPRR will be the successor or surviving corporation in the Merger and
will continue to be governed by the laws of the State of Utah, and (iii) the
separate corporate existence of UPRR will continue unaffected by the Merger.
Pursuant to the Merger, (x) the Certificate of Incorporation of UPRR will be
the Certificate of Incorporation of the Surviving Corporation (as defined in
the Merger Agreement) until thereafter amended, and (y) the By-laws of UPRR
will be the By-laws of the Surviving Corporation until thereafter amended. The
Merger shall have the effects set forth in the UBCA and the DGCL.
Conversion of Shares. The Merger Agreement provides that each issued and
outstanding share of Common Stock of UPRR prior to the Sub Merger Effective
Time will, at the Sub Merger Effective Time, be converted into and become one
fully paid and nonassessable share of common stock of UPRR, as the surviving
corporation.
The Merger Agreement provides that each issued and outstanding share of
Common Stock of Purchaser (the "Purchaser Common Stock") will, at the Sub
Merger Effective Time, by virtue of the Purchaser Merger and without any
action on the part of UPRR, be cancelled and retired and cease to exist.
The Merger Agreement provides that each issued and outstanding share of
Common Stock of UPRR immediately prior to the Effective Time will, at the
Effective Time, by virtue of the Merger and without any action on the part of
Parent, be converted into one fully paid and nonassessable share of common
stock of the Surviving Corporation.
The Merger Agreement provides that as of the Effective Time, each issued and
outstanding share of Common Stock of the Company (other than Shares that are
owned by the Company as treasury stock and any
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Shares owned by Parent, Purchaser, UPRR or any other direct or indirect wholly
owned Subsidiary of Parent, which shares at the Effective Time will be
cancelled and retired) will be converted into the right to receive either (i)
the Cash Consideration (as defined below), without interest, (ii) shares of
Parent Common Stock or (iii) a combination of cash and shares of Parent Common
Stock. Pursuant to the Merger Agreement, each of the issued and outstanding
shares of common stock, par value $.01 per share, of Purchaser will be
converted into a fully paid and non-assessable share of common stock of the
Surviving Corporation.
Each holder of Shares, as more fully set forth in the Merger Agreement
(other than holders of Shares to be cancelled), will have the right to submit
a request specifying the number of Shares that such holder desires to have
converted into .4065 shares of Parent Common Stock per Share in the Merger (a
"Stock Election") and the number of Shares that such holder desires to have
converted into the right to receive $25.00 per Share, without interest (the
"Cash Consideration"), in the Merger (a "Cash Election").
The aggregate number of Shares to be converted into Parent Common Stock
pursuant to the Merger will be equal as nearly as practicable to 60% of all
outstanding Shares; and the number of Shares to be converted into the right to
receive the Cash Consideration in the Merger pursuant to the Merger Agreement,
together with the Shares acquired by Purchaser pursuant to the Offer (the
"Tendered Shares"), will be equal as nearly as practicable to 40% of all
outstanding Shares.
If Stock Elections are received for a number of Shares that is 60% or less
of the outstanding Shares, each Share covered by a Stock Election will be
converted in the Merger into .4065 of a share of Parent Common Stock (the
"Conversion Fraction"). In the event that between the date of the Merger
Agreement and the Effective Time, the issued and outstanding shares of Parent
Common Stock will have been affected or changed into a different number of
shares or a different class of shares as a result of a stock split, reverse
stock split, stock dividend, spin-off, extraordinary dividend,
recapitalization, reclassification or other similar transaction with a record
date within such period, the Conversion Fraction shall be appropriately
adjusted.
If Stock Elections are received for more than 60% of the outstanding Shares,
each Share as to which an Election is not in effect at the Election Deadline
(other than Shares purchased pursuant to the Offer) (a "Non-Electing Share")
and each Share for which a Cash Election has been received will be converted
into the right to receive the Cash Consideration in the Merger, and Shares for
which Stock Elections have been received will be converted into Parent Common
Stock and the right to receive the Cash Consideration in the following manner:
(1) The Exchange Agent will distribute with respect to Shares as to which
a Stock Election has been made a number of shares of Parent Common Stock
equal to the Conversion Fraction with respect to a fraction of such Shares,
the numerator of which fraction will be 60% of the number of outstanding
Shares and the denominator of which shall be the aggregate number of Shares
covered by Stock Elections; and
(2) Shares covered by a Stock Election and not fully converted into the
right to receive Parent Common Stock as set forth in clause (1) above will
be converted in the Merger into the right to receive the Cash Consideration
for each Share so converted.
If the number of Tendered Shares and Shares for which Cash Elections are
received in the aggregate is 40% or less of the outstanding Shares, each Share
covered by a Cash Election will be converted in the Merger into the right to
receive the Cash Consideration.
If the number of Tendered Shares and Shares for which Cash Elections are
received in the aggregate is more than 40% of the outstanding Shares, each
Non-Electing Share and each Share for which a Stock Election has been received
will be converted in the Merger into a fraction of a share of Parent Common
Stock equal to the Conversion Fraction, and, the Shares for which Cash
Elections have been received will be converted into the right to receive the
Cash Consideration and Parent Common Stock in the following manner:
(1) The Exchange Agent will distribute with respect to Shares as to which
a Cash Election has been made the Cash Consideration with respect to a
fraction of such Shares, the numerator of which fraction will
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be 40% of the number of outstanding Shares minus the number of Tendered
Shares and the denominator of which will be the aggregate number of Shares
covered by Cash Elections; and
(2) Shares covered by a Cash Election and not fully converted into the
right to receive the Cash Consideration as set forth in clause (1) above
will be converted in the Merger into the right to receive a number of
shares of Parent Common Stock equal to the Conversion Fraction for each
Share so converted.
The Merger Agreement provides that if (x) Stock Elections are not received
for more than 60% of the outstanding Shares or (y) the number of Tendered
Shares and Shares for which Cash Elections are received in the aggregate is
not more than 40% of the outstanding Shares, the Exchange Agent will
distribute with respect to each Non-Electing Share, the Cash Consideration
with respect to a fraction of such Non-Electing Share, where such fraction is
calculated in a manner that will result in the sum of (i) the number of Shares
converted into cash pursuant to this paragraph, (ii) the number of Shares for
which Cash Elections have been received and (iii) the number of Shares
purchased pursuant to the Offer being as close as practicable to 40% of the
outstanding Shares. Each Non-Electing Share not converted into the right to
receive the Cash Consideration as set forth in the preceding sentence will be
converted in the Merger into the right to receive a number of Shares of Parent
Common Stock equal to the Conversion Fraction for each Non-Electing Share so
converted.
In lieu of any fractional share of Parent Common Stock, Parent will pay to
each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of Parent Common Stock an amount in cash determined
by multiplying (i) the Average Parent Share Price (as defined in the Merger
Agreement) on the date on which the Effective Time occurs by (ii) the
fractional interest in a share of Parent Common Stock to which such holder
would otherwise be entitled.
Equity Incentive Plan. The Merger Agreement provides that prior to the
purchase of Shares pursuant to the Offer, the Board of Directors (or, if
appropriate, any committee administering the EIP) will adopt resolutions or
take other actions as necessary to assure that no holder of an outstanding
Award with respect to which Shares might otherwise be issued at or after the
Effective Time will have any right to receive equity securities of the
Company, the Surviving Corporation or any Subsidiary at or after the Effective
Time (any such right having been adjusted to be a right to receive other
securities, property or cash in accordance with the Equity Incentive Plan).
The Company will also ensure that, following the Effective Time, no
participant in any other stock-based plan, agreement, program or arrangement
(including, without limitation, the Employee Stock Purchase Plan) will have
any right thereunder to acquire equity securities of the Company, the
Surviving Corporation, or any Subsidiary.
Board of Directors. The directors and officers of UPRR at the Purchaser
Merger Effective Time will, from and after the Sub Merger Effective Time, be
the initial directors and officers, respectively, of UPRR until their
successors have been duly elected or appointed or qualified or until their
earlier death, resignation or removal in accordance with the UPRR's
Certificate of Incorporation and By-laws.
The directors and officers of UPRR at the Effective Time will, from and
after the Effective Time, be the initial directors and officers, respectively,
of the Surviving Corporation until their successors 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.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company will,
in order to consummate the Merger, duly call, give notice of, convene and hold
a special meeting of its stockholders (the "Company Special Meeting") as soon
as practicable after the registration statement required to be filed by Parent
in the Merger (the "Registration Statement") is declared effective, for the
purpose of considering and taking action upon the Merger Agreement. The
Company will include in the joint proxy statement/prospectus forming a part of
the Registration Statement (the "Proxy Statement/Prospectus") the
recommendation of the Board of Directors of the Company that stockholders of
the Company vote in favor of the approval of the Merger and the adoption of
the Merger Agreement; provided that the Company may, at any time prior to the
purchase of 39,034,471 Shares pursuant to the Offer, or if less than
39,034,471 Shares are tendered, the purchase of at least 15% of the
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outstanding Shares pursuant to the Offer, withdraw, modify or change such
recommendation only to the extent that the Board of Directors determines,
after having received the oral or written opinion of outside legal counsel to
the Company, that the failure to so withdraw, modify or change such
recommendation would result in a breach of the Board of Directors' fiduciary
duties under applicable law.
Voting Trust. The parties to the Merger Agreement have agreed that
simultaneously with the purchase of Shares pursuant to the Offer, such Shares
shall be deposited in the Voting Trust. The Voting Trust may not be modified
or amended without the prior written approval of the Company unless such
modification or amendment is not inconsistent with the Merger Agreement or the
Ancillary Agreements and is not adverse to the Company or its shareholders.
See "--Voting Trust Agreement" below and Section 16.
Interim Operations of the Company. In the Merger Agreement, the Company has
agreed that, except as expressly provided in the Merger Agreement or consented
to in writing by Parent, prior to the Effective Time, (i) the business of the
Company and its Subsidiaries will be conducted only in the ordinary and usual
course consistent with past practice or pursuant to Customary Actions (as
defined below) and, to the extent consistent therewith, each of the Company
and its Subsidiaries will use its reasonable best efforts to preserve its
business organization intact and maintain its existing relations with
customers, suppliers, employees, creditors and business partners; (ii) the
Company will not, directly or indirectly, split, combine or reclassify the
outstanding Common Stock or any outstanding capital stock of any of the
Subsidiaries of the Company; (iii) neither the Company nor any of its
Subsidiaries shall (a) amend its articles of incorporation or by-laws or
similar organizational documents; (b) 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 Subsidiaries of the Company to the
Company; (c) 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 stock-based awards outstanding on
the date of the Merger Agreement; (d) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any material assets other than in
the ordinary course of business and consistent with past practice; (e) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock;
(f) (i) grant any increase in the compensation payable or to become payable by
the Company or any of its Subsidiaries to any officer or employee (including
through any new award made under, or the exercise of any discretion under, the
Southern Pacific Rail Corporation Equity Incentive Plan; however, Chairman's
Circle Awards in accordance with past practice may be made payable in cash or,
with the written consent of Parent, in Shares), provided, however, the Company
may increase compensation (x) as required pursuant to collective bargaining
agreements and (y) for employees who have merit promotions and/or industry-
competitive salary adjustments in the ordinary course and consistent with past
practice; (ii) adopt any new, or 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, stock purchase, insurance, pension, retirement
or other employee benefit plan, agreement or arrangement; (iii) 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; or (iv) make any additional contributions
to any grantor trust created by the Company to provide funding for non-tax-
qualified employee benefits or compensation; or (v) provide any severance
program to any Subsidiary which does not have a severance program as of the
date of the Merger Agreement, other than a program which is substantially
identical to the Southern Pacific Lines Non-Agreement Severance Benefit Plan
as revised on August 25, 1993; provided, however, the foregoing clauses (i)
and (iii) will not apply with respect to the initial compensation package for
any officer or employee hired after the date of the Merger Agreement if such
package is industry-competitive and conforms to past practice; (g) modify,
amend or terminate any of the Company Agreements (as defined in the Merger
Agreement) or waive, release or assign any material rights or claims, except
in the ordinary course of business and consistent with past practice and
except for a Customary Action; (h) permit any material insurance policy naming
the Company 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 and except for a Customary Action; (i)
except as previously disclosed to Parent
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in writing, incur or assume any debt except for (A) borrowings under existing
credit facilities in an amount not to exceed $450 million and replacements
therefor and refinancings thereof; provided, however, that the Company and its
Subsidiaries will not prepay or call any long-term borrowings, (B) capital
leases under the Company's existing program to finance the rebuilding of
freight cars and to finance equipment under existing purchase commitments; and
(C) borrowings in the ordinary course of business consistent with past
practice that do not exceed $12.5 million in the fiscal year ending December
31, 1995, $25 million in the fiscal year ending December 31, 1996 and $12.5
million in the fiscal quarter ending March 31, 1997; (j) 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 consistent with past practice; (k) 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); (l) enter
into any material commitment (including, but not limited to, any capital
expenditure or purchase of assets) other than in the ordinary course of
business consistent with past practice or, in the case of capital
expenditures, pursuant to Customary Actions; (m) change any of the accounting
principles used by it unless required by GAAP; (n) 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 (1) reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company and its consolidated Subsidiaries, (2)
incurred in the ordinary course of business consistent with past practice, or
which are Customary Actions or (3) which are legally required to be paid,
discharged or satisfied; (o) except as previously disclosed to Parent in
writing, adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other material
reorganization of the Company or any of its Subsidiaries or any agreement
relating to a Takeover Proposal (as defined in the Merger Agreement) (other
than the Merger); (p) knowingly take, or agree to commit to take, any action
that would make any representation or warranty of the Company contained in the
Merger Agreement inaccurate in any respect at, or as of any time prior to, the
Effective Time; (q) other than between or among wholly owned Subsidiaries of
the Company which remain wholly owned or between the Company and its wholly
owned Subsidiaries which remain wholly owned, neither the Company nor any of
its Subsidiaries will engage in any transaction with, or enter into any
agreement, arrangement, or understanding with, directly or indirectly, any of
the Company's affiliates, including, without limitation, any transactions,
agreements, arrangements or understandings with any affiliate or other Person
covered under Item 404 of Regulation S-K under the Securities Act of 1933, as
amended, that would be required to be disclosed under such Item 404, other
than pursuant to such agreements, arrangements, or understandings existing on
the date of the Merger Agreement or as disclosed in writing to Parent and
Purchaser on the date thereof; provided, however, that any such agreement,
arrangement or understanding disclosed in such writing shall be approved by at
least two independent directors of the Company, after having received an
appraisal or valuation from an independent appraiser or expert (reasonably
acceptable to Parent) that the terms are fair to the Company and are no less
favorable to the Company than could be obtained in an arms-length transaction
with an unaffiliated party, and, provided, further, that the Company provides
Parent with all information concerning any such agreement, arrangement or
understanding that Parent may reasonably request; and (r) 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.
The Company has disclosed to Parent in writing pursuant to the covenant in
the Merger Agreement on transactions with related parties described in clause
(q) of the preceding paragraph that SPT is considering, among others, the
following transactions with certain affiliates: (i) an affiliate of The
Anschutz Corporation, one of the Shareholders, has been negotiating since mid-
1994 to purchase from SPT certain land that SPT owns in downtown Denver; (ii)
Majestic/Anschutz Venture L.P., an affiliate of the Shareholders, has
expressed an interest in purchasing land owned by SPT in downtown Los Angeles;
(iii) Pacific Pipeline System, Inc., an affiliate of the Shareholders, is
seeking to amend an existing easement to build a pipeline on SPT's right-of-
way in California; and (iv) SPT expects to grant additional fiber optic
easements to QWest Communications, an affiliate of the Shareholders. The
foregoing four proposed transactions are subject to the procedures for
engaging in transactions with related parties described in the two provisos to
clause (q) of the preceding paragraph.
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For purposes of the Merger Agreement, a "Customary Action" means an action
taken which occurs in the ordinary course of the relevant person's business
and where the taking of such action is generally recognized as being customary
and prudent for other major enterprises in such person's line of business.
Interim Operations of Parent. In the Merger Agreement, Parent has agreed
that, except as expressly provided in the Merger Agreement, or with the prior
written consent of the Company, after the date of the Merger Agreement and
prior to the Effective Time: (i) Parent will not, directly or indirectly,
split, combine or reclassify the outstanding Parent Common Stock; (ii) Parent
will not: (a) amend its articles of incorporation; or (b) declare, set aside
or pay any dividend or other distribution payable in cash, stock or property
with respect to its capital stock except for quarterly cash dividends
consistent in amount with past practice, provided that Parent may increase its
dividend rate consistent with the amount reflected in Parent's long-range plan
previously furnished to the Company, and except for dividends paid by Parent's
Subsidiaries to Parent or its Subsidiaries; (iii) neither Parent nor any of
its Subsidiaries shall change any of the accounting principles used by it
unless required by GAAP; (iv) Parent will not issue, sell, transfer, pledge or
dispose of direct or indirect beneficial ownership of the capital stock of
UPRR or permit UPRR to sell, transfer or dispose of any substantial portion of
or all of the assets of UPRR; and (v) neither Parent 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.
No Solicitation. In the Merger Agreement, the Company has agreed that
neither the Company nor any of its Subsidiaries and affiliates over which it
exercises control will, and the Company (and its subsidiaries and affiliates
over which it exercises control) will use their best efforts to ensure that
their respective officers, directors, employees, investment bankers,
attorneys, accountants and other agents do not, directly or indirectly,
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. The Company also agreed that it will, and will cause
its subsidiaries and affiliates to, immediately cease and cause to be
terminated all existing discussions and negotiations that have taken place
prior to the date of the Merger Agreement, if any, with any parties with
respect to any Takeover Proposal relating to the Company. The Merger Agreement
provides that the Company may engage in discussions and negotiations with, or
provide any information or data to, a third party concerning an unsolicited
written Takeover Proposal for the Company or any subsidiary or affiliate if in
the opinion of the Board of Directors of the Company, after having received
the oral or written opinion of outside legal counsel, the failure to engage in
such negotiations or discussions or provide such information would result in a
breach of the fiduciary duties of the Board under applicable law. The Company
has agreed to (i) notify Parent, Purchaser and UPRR of any such offers,
proposals or Takeover Proposals within 24 hours of the receipt thereof,
(ii) thereafter inform Parent on a reasonable basis of the status and content
of any discussions or negotiations with such a third party, including any
material changes to the terms and conditions thereof and (iii) give Parent
three days' advance notice of any information to be supplied to any Person
making such offer, proposal, inquiry or Takeover Proposal. As used in the
Merger Agreement, "Takeover Proposal" when used in connection with any Person
shall mean any tender or exchange offer involving the capital stock of 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 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
other than pursuant to the transactions to be effected pursuant to the Merger
Agreement.
Directors' and Officers' Insurance and Indemnification. In the Merger
Agreement, Parent has agreed that at all times after consummation of the
Merger, it will indemnify, or will cause the Surviving Corporation and its
Subsidiaries to indemnify, each person who is, or has been prior to the date
of the Merger Agreement, 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
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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
of the Merger Agreement, 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. The Merger Agreement
also provides that Parent will, and will cause the Surviving Corporation to,
maintain in effect for not less than six years after consummation of the
Merger the current policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries on the date of the Merger
Agreement (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 will exceed 200% of the per annum
rate of premium currently paid by the Company and its subsidiaries for such
insurance on the date of the Merger Agreement, then Parent will cause the
Surviving Corporation to, and the Surviving Corporation shall, provide the
maximum coverage that will then be available at an annual premium equal to
200% of such rate, and Parent, in addition to the indemnification provided
above, will 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. In the event any Indemnified Party becomes
involved in any capacity in any action or proceeding based in whole or in part
on any matter, including the transactions contemplated by the Merger
Agreement, existing or occurring at or prior to the Effective Time, then to
the extent permitted by law Parent will, or will cause the Surviving
Corporation to, periodically advance to such Indemnified Party its legal and
other expenses (including the cost of any investigation and preparation
incurred in 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.
Spin-off. Pursuant to the Merger Agreement, Parent has agreed that no
dividend shall be declared for any distribution of shares of capital stock of
Resources or for the distribution to Parent's stockholders of any proceeds or
any other disposition of Resources or the assets thereof, and no declaration
of or record date for any such distribution shall occur, until after the
consummation of the Merger. If any tax opinion or IRS private letter ruling is
requested by Parent and issued in connection with such distribution of shares
of capital stock of Resources, such tax opinion or IRS private letter ruling
shall provide that no income, gain or loss will be recognized by Parent's
stockholders (including former Company stockholders who receive Parent Common
Stock in the Merger) upon the receipt of Resources Common Stock.
Compensation and Benefits. Pursuant to the Merger Agreement, Parent has
agreed to cause the Surviving Corporation and its subsidiaries to honor and
assume the Employment Agreements, Contractual Supplemental Executive
Retirement Agreements and Stock Bonus Agreements disclosed to Parent pursuant
to the Merger Agreement.
Parent has also agreed to cause Surviving Corporation and its Subsidiaries
to honor and assume the Company's employee benefit plans and employee
programs, arrangements and agreements disclosed to Parent pursuant to the
Merger Agreement. The Merger Agreement provides that nothing therein shall
prohibit Parent, Surviving Corporation or its Subsidiaries from amending or
terminating any such plan, program, arrangement or agreement at any time in
accordance with applicable law (except as to benefits already vested
thereunder); provided that the severance plan for employees of the Company and
its Subsidiaries who are terminated other than for cause, as in effect on the
date of the Merger Agreement, will be continued in effect for at least one
year following the Effective Time.
Parent and Surviving Corporation have agreed to cause the Committee under
the EIP to make adequate provision for the adjustment of outstanding Awards
under the Stock Bonus Agreements issued under the EIP and in accordance with
the terms thereof.
As described more fully in the Merger Agreement and the Schedule 14D-9,
promptly after the completion of the purchase of Shares pursuant to the Offer,
the Company and its Subsidiaries will establish a Management
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Continuity Plan (the "MCP") that will provide certain payments disclosed to
Parent pursuant to the Merger Agreement (the "MCP Awards") to certain
nonagreement employees of the Company or its Subsidiaries (whether employed at
the date of the Merger Agreement or hired subsequently). Promptly after the
later of (i) the establishment of the MCP or (ii) a nonagreement employee's
date of hire (or promotion, if applicable), the Company will communicate in
writing to each nonagreement employee who is eligible to participate in the
MCP the amount of his or her potential MCP Award and its conditions of
payment.
As described more fully in the Merger Agreement and the Schedule 14D-9,
promptly after completion of the purchase of Shares pursuant to the Offer, the
Company and its Subsidiaries will establish an enhanced severance program that
will provide certain additional severance amounts to terminated nonagreement
employees who become entitled to severance pursuant to (i) the Southern
Pacific Line Non-Agreement Severance Benefit Plan as revised August 25, 1993,
(ii) the substantially identical plans to be established for certain
Subsidiaries which do not currently have a severance plan, or (iii) the
individual agreements in existence on the date of the Merger Agreement which
provide severance benefits.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent, Purchaser and UPRR
with respect to, among other things, its organization, authorization,
capitalization, financial statements, public filings, employee benefit plans,
defaults, information in the Proxy Statement/Prospectus, compliance with laws,
litigation, tax matters, real property, environmental matters, consents and
approvals, opinions of financial advisors, undisclosed liabilities and the
absence of certain events. In the Merger Agreement, Parent, Purchaser and UPRR
have made customary representations and warranties to the Company with respect
to, among other things, organization, authorization, capitalization, financial
statements, public filings, employee benefit plans, information in the proxy
statement/prospectus, compliance with laws, litigation, tax matters,
environmental matters, consents and approvals, undisclosed liabilities,
absence of certain events and financing to fund the purchase of the Shares
pursuant to the Offer.
Conditions to the Merger. The obligations of the Company, on the one hand,
and Parent, UPRR and Purchaser, on the other hand, to consummate the Merger
are subject to the satisfaction (or, if permissible, waiver by the party for
whose benefit such conditions exist) of the following conditions: (a) the
Merger Agreement shall have been adopted by the stockholders of the Company in
accordance with the DGCL (following the consummation of the Offer, the Shares
owned by Purchaser, together with the Shares owned by the Shareholders and
MSLEF, will likely represent more than a majority of the outstanding Shares
and accordingly the vote of other shareholders will not be necessary to
approve the Merger); (b) if required by the rules of the NYSE, or by law, the
issuance of Parent Common Stock in the Merger shall have been approved by the
stockholders of Parent; (c) no court, arbitrator or governmental body, agency
or official shall have issued any order, decree or ruling and there shall not
be any statute, rule or regulation, restraining, enjoining or prohibiting the
consummation of the Merger or which would materially and adversely affect the
long-term benefits expected to be received by Parent from the transactions
contemplated by the Merger Agreement; and (d) the Registration Statement shall
have become effective under the Securities Act and no stop order suspending
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
SEC.
The obligations of Parent, UPRR and Purchaser to consummate the Merger are
subject to the satisfaction (or waiver) of the following further conditions:
(a) the representations and warranties of the Company shall have been true and
accurate both when made and (except for those representations and warranties
that address matters only as of a particular date or only with respect to a
specific period of time which need only be true and accurate as of such date
or with respect to such period) as of the Effective Time as if made at and as
of such time, except where the failure of such representations and warranties
to be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein), would not have
and is not reasonably likely to have a material adverse effect on the Company
and its Subsidiaries; (b) the Company shall have performed in all material
respects its obligations hereunder required to be performed by it at or prior
to the
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Effective Time; (c) (i) the ICC or any Similar Successor (as defined in the
Merger Agreement) shall have issued a decision (which decision shall not have
been stayed or enjoined) that (A) constitutes a final order approving,
exempting or otherwise authorizing consummation of the Merger and all other
transactions contemplated by the Merger Agreement and the Ancillary Agreements
(or subsequently presented to the ICC or a Similar Successor by agreement of
Parent and the Company) as may require such authorization and (B) does not (1)
change or disapprove of the Merger Consideration or other material provisions
of Article II of the Merger Agreement or (2) impose on Parent, the Company or
any of their respective Subsidiaries any other terms or conditions (including,
without limitation, labor protective provisions but excluding conditions
heretofore imposed by the ICC in New York Dock Railway--Control--Brooklyn
Eastern District, 360 I.C.C. 60 (1979)) that materially and adversely affect
the long-term benefits expected to be received by Parent from the transactions
contemplated by the Merger Agreement; or (ii) no successor to the ICC (other
than a Similar Successor) shall have required any divestiture, hold separate,
or other restriction or action in connection with the expiration or
termination of any waiting period applicable to the Merger or the transactions
contemplated by the Merger Agreement, or in connection with any other action
by or in respect of or filing with such successor, that would materially and
adversely affect the long-term benefits expected to be received by Parent from
the transactions contemplated by the Merger Agreement; (d) all actions by or
in respect of or filings with any governmental body, agency official, or
authority required to permit the consummation of the Merger (other than
approval of the ICC or any Similar Successor, which is addressed in clause
(c)) shall have been obtained but excluding any consent, approval, clearance
or confirmation the failure to obtain which would not have a material adverse
effect on Parent, the Company or, after the Effective Time, the Surviving
Corporation; (e) each of the Ancillary Agreements shall be valid, in full
force and effect and complied with in all material respects (including,
without limitation, the absence of any challenge, change or disapproval of the
Ancillary Agreements by the ICC or any successor), except for such failure to
be in full force and effect and such non-compliance that does not materially
and adversely affect the benefits expected to be received by Parent, UPRR and
Sub under the Anschutz Stockholder Agreement, the Parent/Company Registration
Rights Agreement, the Merger Agreement and the Ancillary Agreements; (f) since
the date of the Merger Agreement, there shall not have occurred any event,
change or effect having, or which would be reasonably likely to have,
individually or in the aggregate (after taking into account the proceeds of
insurance coverage), a material adverse effect on the Company and its
Subsidiaries, taken as a whole, as a result of or arising out of "force
majeure" (where "force majeure" shall mean any act of God (including, without
limitation, earthquake, hurricane, flood, tornado or fire)), accident, damage
to or destruction of facilities, properties or assets (tangible or
intangible), war, civil disturbance, national calamity (excluding an economic
crisis in and of itself) or acts of terrorism; and (g) Parent shall have
received an opinion of nationally recognized tax counsel to Parent, to the
effect that the Merger (whether or not the Offer is integrated with the Merger
for federal income tax purposes) will qualify as a reorganization within the
meaning of Section 368 of the Code and in rendering such opinion tax counsel
may rely upon representations provided by the parties hereto as well as
certain stockholders of the parties.
The obligations of the Company to consummate the Merger are subject to the
satisfaction (or waiver by the Company) of the following further conditions:
(a) the representations and warranties of Parent, UPRR and Purchaser (other
than the representations and warranties set forth in Sections 4.7 (no
undisclosed liabilities), 4.10 (employee benefit plans; ERISA), 4.11 (taxes)
and 4.12 (environmental)) of the Merger Agreement shall have been true and
accurate both when made and as of the Effective Time as if made at and as of
such time, except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein), would not have
and is not reasonably likely to have, individually or in the aggregate, a
material adverse effect on Parent and its Subsidiaries; (b) each of Parent,
UPRR and Purchaser shall have performed in all material respects all of the
respective obligations hereunder required to be performed by Parent, UPRR or
Purchaser, as the case may be, at or prior to the Effective Time; (c) the
Parent Common Stock to be issued in the Merger shall have been approved for
listing on the NYSE; (d) the ICC shall have issued a decision (which decision
shall not have been stayed or enjoined) that (i) constitutes a final order
approving, exempting or otherwise authorizing consummation of the Merger and
all other transactions contemplated by the Merger Agreement or subsequently
presented to the ICC by agreement of the Company and Parent, as may require
such authorization and (ii) does not change or
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disapprove of the Merger Consideration or other material provisions of Article
II of the Merger; (e) since the date of the Merger, there shall not have
occurred any event, change or effect having, or which would be reasonably
likely to have, individually or in the aggregate (after taking into account
the proceeds of insurance coverage), a material adverse effect on Parent and
its Subsidiaries, taken as a whole, as a result of or arising out of "force
majeure" (where "force majeure" shall mean any act of God (including, without
limitation, earthquake, hurricane, flood, tornado or fire)), accident, damage
to or destruction of facilities, properties or assets (tangible or
intangible), war, civil disturbance, national calamity (excluding an economic
crisis in and of itself) or acts of terrorism; and (f) the Company shall have
received an opinion of nationally recognized tax counsel to the Company, to
the effect that the Merger (whether or not the Offer is integrated with the
Merger for federal income tax purposes) will qualify as a reorganization
within the meaning of Section 368(a) of the Code and in rendering such opinion
tax counsel may rely upon representations provided by the parties hereto as
well as certain stockholders of the parties.
Termination. The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the stockholders of the
Company, (a) by mutual consent of the Board of Directors of Parent and the
Board of Directors of the Company, or (b) by either the Board of Directors of
Parent or the Board of Directors of the Company (i) if the Merger will not
have occurred on or prior to March 31, 1997, provided, however, that the right
to terminate the Merger Agreement will not be available to any party whose
failure to fulfill any obligations under the Merger Agreement has been the
cause of, or resulted in, the failure of the Merger to occur on or before such
date; (ii) if Shares shall have not been purchased pursuant to the Offer
within 90 days following the commencement of the Offer; provided, however,
that the right to terminate the Merger Agreement will not be available to any
party whose failure to fulfill any obligations under the Merger Agreement has
been the cause of, or resulted in, the failure to satisfy the conditions to
the Offer, or (iii) 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 shall use their best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement and such order, decree, ruling or other
action shall have become final and non-appealable.
The Merger Agreement may be terminated by the Board of Directors of the
Company (i) if, prior to the purchase of 39,034,471 Shares pursuant to the
Offer or, if fewer than 39,034,471 Shares are tendered, the purchase of at
least 15% of the outstanding Shares pursuant to the Offer, the Board of
Directors of the Company will have withdrawn (or modified or changed in a
manner adverse to Parent or Purchaser) its approval or recommendation of the
Merger Agreement or the Merger in order to approve and permit the Company to
execute a definitive agreement relating to a Takeover Proposal, and
determined, after having received the oral or written opinion of outside legal
counsel to the Company, that the failure to take such action would result in a
breach of its fiduciary duties under applicable law; provided, however, that
(1) the Board of Directors will have determined that notwithstanding a binding
commitment to consummate an agreement of the nature of the Merger Agreement
entered into in the proper exercise of their applicable fiduciary duties, and
notwithstanding all concessions which may be offered by Parent, Purchaser or
UPRR in negotiations entered into pursuant to clause (2) below, such fiduciary
duties would also require the directors to terminate the Merger Agreement as a
result of such Takeover Proposal; and (2) prior to any such termination, the
Company shall, and shall cause its respective financial and legal advisors to,
negotiate with Parent, Purchaser or UPRR to make such adjustments in the terms
and conditions of the Merger Agreement as would enable the Company to proceed
with the transactions contemplated therein on such adjusted terms; and (3) the
Company shall have given Parent and Purchaser three days advance notice of any
termination; or (ii) if Parent, Purchaser or UPRR (x) breaches or fails in any
material respect to perform or comply with any of its material covenants and
agreements contained in the Merger Agreement or (y) breaches its
representations and warranties in any material respect and such breach would
have or would be reasonably likely to have a material adverse effect on Parent
and its Subsidiaries, in each case such that the conditions to the Merger set
forth in the Merger Agreement would not be satisfied; provided, however, that
if any such breach is curable by the breaching party through the exercise of
the breaching party's best efforts and for so long as the breaching party will
be so using its best efforts to cure such breach, the Company may not
terminate the Merger Agreement pursuant to this clause (ii).
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The Merger Agreement may be terminated by the Board of Directors of Parent
(i) if the Company (x) breaches or fails in any material respect to perform or
comply with any of its material covenants and agreements contained in the
Merger Agreement or (y) breaches its representations and warranties in any
material respect and such breach would have or would be reasonably likely to
have a material adverse effect on the Company and its Subsidiaries, in each
case such that the conditions to the Merger set forth in the Merger Agreement
would not be satisfied; provided, however, that if any such breach is curable
by the Company through the exercise of the Company's best efforts and for so
long as the Company will be so using its best efforts to cure such breach,
Parent may not terminate the Merger Agreement pursuant to this clause (i); or
(ii) if (A) prior to the Effective Time, the Board of Directors of the Company
shall have withdrawn or modified or changed in a manner adverse to Parent,
Purchaser or UPRR its approval or recommendation of the Offer, the Merger
Agreement or the Merger or shall have recommended a Takeover Proposal or other
business combination, or shall have entered into 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,
Purchaser, UPRR or their Subsidiaries (or the Board of Directors resolves to
do any of the foregoing), or (B) prior to the certification of the vote of the
Company's shareholders to approve the Merger at the Company Special Meeting
(as defined in the Anschutz Shareholders Agreement), it shall have been
publicly disclosed or Parent, Purchaser or UPRR shall have learned that (x)
any person, entity or "group" (as that term is defined in Section 13(d)(3) of
the Exchange Act), other than Parent, its Subsidiaries or the Shareholders,
shall have acquired beneficial ownership, of more than 25% of any class or
series of capital stock of the Company (including the Shares) or (y) any such
person, entity or group which, prior to the date of the Merger Agreement, had
filed a Schedule 13D with the SEC, shall have acquired or proposed to acquire
beneficial ownership of additional 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, constituting 1% or more of any such
class or series. The Company has advised Parent that as of the date of the
Merger, no person, entity or group had so filed a Schedule 13D with the SEC.
Shareholders Agreements
THE FOLLOWING ARE SUMMARIES OF CERTAIN PROVISIONS OF THE SHAREHOLDERS
AGREEMENTS. THE SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE
SHAREHOLDERS AGREEMENTS WHICH ARE INCORPORATED HEREIN BY REFERENCE.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN OR IN THE FOLLOWING SUMMARIES
SHALL HAVE THE MEANINGS SET FORTH IN THE APPLICABLE SHAREHOLDERS AGREEMENT.
Anschutz Shareholders Agreement
Tender of Shares; Pledge. The Anschutz Shareholders Agreement provides that
the Shareholders may, but shall have no obligation to, tender (or cause the
record owner of the Shares to tender), pursuant to and in accordance with the
terms of the Offer, any or all of the Shares beneficially owned by the
Shareholders. The Shareholders will, for all Shares tendered by Shareholders
in the Offer and accepted for payment and paid for by Purchaser, receive the
same per Share consideration paid to other shareholders who have tendered into
the Offer.
The Anschutz Shareholders Agreement provides that TAC has advised Parent
that shares of Company Common Stock (as defined in the Anschutz Shareholders
Agreement) Beneficially Owned (as defined in the Anschutz Shareholders
Agreement) by TAC are or may be pledged to Bank of America National Trust and
Savings Association or Citibank, N.A., respectively (collectively, the
"Banks") pursuant to pledge agreements (substantially in the forms reviewed by
Parent, collectively, the "Existing Pledge Agreements") to secure indebtedness
borrowed from the Banks. In the Anschutz Shareholders Agreement, TAC
represents and warrants that (i) the Existing Pledge Agreements do not or,
before indebtedness borrowed therefrom is secured by any such Shares, will
not, prevent, limit or interfere with TAC's compliance with, or performance of
its obligations under, the Anschutz Shareholders Agreement, absent a default
under the applicable Existing Pledge Agreements and (ii) it is not in default
under the Existing Pledge Agreements. Prior to the execution of the Anschutz
Shareholders Agreement, TAC delivered to Parent a letter from Bank of America
National Trust and Savings Association acknowledging the Anschutz Shareholders
Agreement and agreeing in effect that, notwithstanding any default under the
Existing Pledge Agreement, TAC (and Purchaser with respect to the proxy
described below) shall have the right to exercise all voting rights with
respect to the Company Common Stock pledged
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thereunder as set forth in the Anschutz Shareholders Agreement and the proxy
described below. TAC shall deliver to Parent a similar letter from Citibank,
N.A. before shares of Company Common Stock shall be pledged under the
applicable Existing Pledge Agreement to secure any indebtedness. Shareholders
may, subsequent to the date of the Anschutz Shareholders Agreement, effect one
or more pledges of Company Voting Securities (as defined in the Anschutz
Shareholders Agreement) or Parent Voting Securities (as defined in the
Anschutz Shareholders Agreement) to be received pursuant to the Merger or
otherwise, or grants of security interests therein, to one or more financial
institutions (other than the Banks) that are not Affiliates of any Shareholder
(collectively, "Other Financial Institutions") as security for the payment of
bona fide indebtedness owed by one or more of the Shareholders or their
Affiliates to such Other Financial Institutions. Except as set forth in the
proviso below, neither the Bank nor any Other Financial Institution which
hereafter becomes a pledgee of Company Voting Securities or Parent Voting
Securities shall incur any obligations under the Anschutz Shareholders
Agreement with respect to such Company Voting Securities or such Parent Voting
Securities, as the case may be, or shall be restricted from exercising any
right of enforcement or foreclosure with respect to any related security
interest or lien; provided, however, that it shall be a condition to any such
pledge to any Other Financial Institution that, in the case of Company Voting
Securities, the pledgee shall agree that TAC (and Purchaser with respect to
the proxy described below) shall have the right to exercise all voting rights
with respect to the Company Voting Securities pledged thereunder as set forth
in the Anschutz Shareholders Agreement and the proxy described below and, in
the case of Company Voting Securities or Parent Voting Securities, no such
pledge shall prevent, limit or interfere with Shareholders' compliance with,
or performance of their obligations under, the Anschutz Shareholders
Agreement, absent a default under such pledge agreement. The obligations of
the Banks and the Other Financial Institutions with respect to voting of
Company Common Stock and the proxy described below, and such proxy shall
terminate on the earlier of (x) the consummation of the Merger and (y) the
termination of the Merger Agreement in accordance with the terms thereof.
Voting of Company Common Stock; Irrevocable Proxy; No Solicitation. The
Anschutz Shareholders Agreement provides that the Shareholders, during the
period commencing on the date of the Anschutz Shareholders Agreement and
continuing until the earlier of (x) the consummation of the Merger, (y) six
months following the termination of the Merger Agreement in accordance with
Section 7.1(c)(i) (permitting the Company to terminate the Merger Agreement if
the Board of Directors of the Company shall have (A) withdrawn, or modified or
changed its approval or recommendation of the Merger Agreement in order to
permit the Company to execute a definitive agreement relating to a Takeover
Proposal, and (B) determined that the failure to take such action would result
in a breach of the Board of Directors' fiduciary duties) or 7.1(d)(ii)
(permitting Parent to terminate the Merger Agreement if the Board of Directors
of the Company shall have withdrawn, or modified or changed in a manner
adverse to Parent, UPRR or Purchaser its approval or recommendation of the
Merger Agreement or recommended a Takeover Proposal, or entered into an
agreement providing for a Takeover Proposal with a person or entity other than
Parent, UPRR, Purchaser or their Subsidiaries, or prior to the Company's
shareholders approval of the Merger, any person, entity or group, other than
Parent or its Subsidiaries, or the Shareholders, shall have acquired
beneficial ownership of more than 25% of the capital stock of the Company, or
any such person, entity or group which, prior to the date of the Merger
Agreement, had filed a Schedule 13D with the SEC, shall have acquired
beneficial ownership of additional shares of the Company constituting 1% or
more of the Company) thereof (such termination sections of the Merger
Agreement being referred to herein as the "Fiduciary-out Termination
Provisions"), and (z) upon the termination of the Merger Agreement in
accordance with any provision of Section 7.1 thereof, other than the
Fiduciary-out Termination Provisions (such period being referred to as the
"Voting Period"), at any meeting (whether annual or special, and whether or
not an adjourned or postponed meeting) of the Company's stockholders, however
called, or in connection with any written consent of the Company's
stockholders, subject to the absence of a preliminary or permanent injunction
or other final order by any United States federal court or state court barring
such action, the Shareholders shall vote (or cause to be voted) all Shares and
all other Company Voting Securities beneficially owned by them, (i) in favor
of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval and adoption of the Merger Agreement and the terms
thereof and each of the other actions contemplated by the Merger Agreement,
the Anschutz Shareholders Agreement and the Ancillary Agreements (as defined
in the Merger Agreement) and any actions required in furtherance thereof; (ii)
against
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any action or agreement that would (A) result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or any of the Ancillary Agreements to which it is a
party or of the Shareholders under the Anschutz Shareholders Agreement or (B)
impede, interfere with, delay, postpone, or adversely affect the Offer, the
Merger or the transactions contemplated by the Merger Agreement, the Anschutz
Shareholders Agreement and the Ancillary Agreements; and (iii) except as
otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement, the Anschutz Shareholders Agreement and the Ancillary Agreements):
(A) any extraordinary corporate transaction, such as a merger, consolidation
or other business combination involving the Company or any of its
subsidiaries; (B) any sale, lease or transfer of a substantial portion of the
assets or business of the Company or its subsidiaries, or reorganization,
restructuring, recapitalization, special dividend, dissolution or liquidation
of the Company or its subsidiaries; or (C) any change in the present
capitalization of the Company including any proposal to sell a substantial
equity interest in the Company or any of its subsidiaries. The Shareholders
have agreed not to enter into any agreement, arrangement or understanding with
any Person (as defined in the Anschutz Shareholders Agreement) the effect of
which would be inconsistent or violative of the foregoing provisions and
agreements.
The Anschutz Shareholders Agreement provides that at the request of Parent
(which request has been made), each Shareholder, in furtherance of the
transactions contemplated by the Anschutz Shareholders Agreement and by the
Merger Agreement and the Ancillary Agreements, and in order to secure the
performance by Shareholders of their duties under the Anschutz Shareholders
Agreement, shall promptly execute and deliver to Purchaser an irrevocable
proxy. The proxy entitles the holder thereof to vote the Shares subject
thereto with respect to all matters referred to in the preceding paragraph.
The Shareholders acknowledge and agree that such irrevocable proxy shall be
coupled with an interest, shall constitute, among other things, an inducement
for Parent to enter into the Anschutz Shareholders Agreement, the Merger
Agreement and the Ancillary Agreements to which it is a party, shall be
irrevocable during the Voting Period and shall not be terminated by operation
of law upon the occurrence of any event.
Restrictions on Transfer, Proxies; No Solicitation. The Anschutz
Shareholders Agreement provides that the Shareholders shall not, during the
Voting Period, directly or indirectly: (i) except as described in "Tender of
Shares; Pledge" above, Transfer (as defined in the Anschutz Shareholders
Agreement) (including but not limited to the Transfer of any securities of an
Affiliate (as defined in the Anschutz Shareholders Agreement) which is the
record holder or Beneficial Owner of Company Voting Securities if, as the
result of such Transfer, such Person would cease to be an Affiliate of a
Shareholder) to any Person any or all of the Company Voting Securities
Beneficially Owned by Shareholders, provided that a Shareholder may Transfer
Company Voting Securities to any other Shareholder; (ii) except in respect of
the irrevocable proxy and voting agreement referred to above, grant any
proxies or powers of attorney, deposit any Company Voting Securities into a
voting trust or enter into a voting agreement, understanding or arrangement
with respect to the Company Voting Securities; or (iii) take any action that
would make any representation or warranty of the Shareholders contained in the
Anschutz Shareholders Agreement untrue or incorrect or would result in a
breach by Shareholders of their obligations under the Anschutz Shareholders
Agreement or a breach by the Company of its obligations under the Merger
Agreement or any of the Ancillary Agreements to which it is a party.
Notwithstanding any provisions of the Anschutz Shareholders Agreement to the
contrary, the Shareholders may Transfer in the aggregate, following the
consummation of the Offer and prior to the Effective Time, a number of Shares
in the aggregate not greater than 10% of the Shares Beneficially Owned by the
Shareholders immediately following consummation of the Offer; provided,
however, that any such Shares which are so Transferred by TAC, or Transferred
by the Foundation in an amount in excess of 1,558,254 Shares, prior to the
Company Special Meeting, shall continue to be subject to the voting agreement
and the proxy described above, and, as a condition to any such Transfer of
Shares, the Shareholders shall enter into a written agreement with the
transferee of such Shares, in form and substance satisfactory to Parent,
granting the Shareholders the right to vote such Shares in accordance with the
voting agreement and the proxy referred to above.
The Anschutz Shareholders Agreement provides that during the Voting Period,
the Shareholders shall not, and shall cause their respective Affiliates and
the respective officers, directors, employees, associates, partners,
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investment bankers, attorneys, accountants and other agents and
representatives of Shareholders and their subsidiaries and affiliates
(collectively, "Representatives") not to, 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 in the Merger Agreement) of the Company or
any Affiliate or any inquiry with respect thereto, or (ii) in the event of an
unsolicited Takeover Proposal for the Company or any Affiliate of the Company,
engage in negotiations or discussions with, or provide any information or data
to, any Person (other than Parent, any of its Affiliates or representatives)
relating to any Takeover Proposal. The Shareholders shall notify Parent and
the Purchaser orally and in writing of any such offers, proposals, or
inquiries relating to the purchase or acquisition by any person of the Shares
Beneficially Owned by the Shareholders (including, without limitation, the
terms and conditions thereof and the identity of the Person making it), within
24 hours of the receipt thereof, provided that Shareholders shall have no such
notification obligation with respect to any proposal, offer or inquiry
relating to any Takeover Proposal (which Takeover Proposal notification shall
be reported to the Board of Directors of the Company) other than to the extent
that such proposal contemplates treating Shareholders, as shareholders of the
Company, in any manner different than or inconsistent with the treatment of
other shareholders of the Company, whether as to terms, the entering into of
separate agreements or otherwise. The Shareholders have agreed to, and to
cause their Representatives to, immediately cease and cause to be terminated
all existing activities, discussions and negotiations, if any, with any
parties conducted prior to the date of the Anschutz Shareholders Agreement
with respect to any Takeover Proposal relating to the Company, other than
discussions or negotiations with Parent and its Affiliates.
The Anschutz Shareholders Agreement provides that, during the Voting Period,
the Shareholders will not, and will cause their Affiliates not to, directly or
indirectly, make any public comment, statement or communication, or take any
action that would otherwise require any public disclosure by the Shareholders,
Parent or any other Person, concerning the Merger, the Offer, the Spin-off and
the other transactions contemplated by the Merger Agreement, the Anschutz
Shareholders Agreement and the Ancillary Agreements, except for any disclosure
(i) concerning the status of Shareholders as parties to such agreements, the
terms thereof, and their beneficial ownership of Shares required pursuant to
Section 13(d) of the Exchange Act or (ii) required pursuant in the Schedule
14D-9 or the Proxy Statement/Prospectus.
The Anschutz Shareholders Agreement provides that, notwithstanding the
restrictions described in the second preceding paragraph, any Person who is a
director or officer of the Company may exercise his fiduciary duties in his
capacity as a director or officer with respect to the Company, as opposed to
taking action with respect to the direct or indirect ownership of any Shares,
and no such exercise of fiduciary duties shall be deemed to be a breach of, or
a violation of such restrictions described in, such paragraph and none of the
Shareholders shall have any liability thereunder for any such exercise of
fiduciary duties by such Person in his capacity as a director and officer of
the Company.
Standstill and Related Provisions. The Anschutz Shareholders Agreement
provides that, subject to the paragraph immediately following item (xi) below,
the Shareholders, for a period commencing on the date of the Anschutz
Shareholders Agreement and terminating on the seventh anniversary of the
Effective Time or, if earlier, the termination of the Anschutz Shareholders
Agreement in accordance with the terms thereof (the "Standstill Period"),
without the prior written consent of the Board of Directors of Parent (the
"Parent Board") specifically expressed in a resolution adopted by a majority
of the directors of Parent, the Shareholders will not, and the Shareholders
will cause each of their respective Affiliates not to, directly or indirectly,
alone or in concert with others:
(i) acquire, offer or propose to acquire, or agree to acquire (except, in
any case, by way of (A) following consummation of the Merger, stock
dividends or other distributions or rights offerings made available to
holders of any shares of Parent Common Stock generally, share-splits,
reclassifications, recapitalizations, reorganizations and any other similar
action taken by Parent, (B) following consummation of the Merger, the
conversion, exercise or exchange of Parent Voting Securities in accordance
with the terms thereof and (C) the issuance and delivery of Parent Voting
Securities pursuant to the Merger Agreement, provided, that any such
securities shall be subject to the provisions of the Anschutz
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Shareholders Agreement), directly or indirectly, whether by purchase,
tender or exchange offer, through the acquisition of control of another
Person, by joining a partnership, limited partnership, syndicate or other
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) (other
than groups consisting solely of Shareholders and their Affiliates, all of
which are or, prior to the formation of such group, become, parties to the
Anschutz Shareholders Agreement) or otherwise, any Parent Voting
Securities; provided, however, that if Parent shall issue additional Parent
Voting Securities following consummation of the Merger, Shareholders and
their Affiliates may purchase or acquire additional Parent Voting
Securities to bring their Beneficial Ownership up to the greater of 5.5%
and the percentage of outstanding Parent Voting Securities Beneficially
Owned by the Shareholders immediately prior to such issuance by Parent;
provided, further, without limiting the immediately preceding proviso, if
as a result of Transfers of Parent Voting Securities, Shareholders
Beneficially Own less than 5.5% of the then outstanding shares of Parent
Voting Securities, Shareholders may purchase or acquire additional Parent
Voting Securities to bring their Beneficial Ownership up to, but not in
excess of, 5.5% of the then outstanding shares of Parent Voting Securities.
In addition, in the event that a Shareholder or an Affiliate thereof
inadvertently and without knowledge (an "Inadvertent Acquisition")
indirectly acquires Beneficial Ownership of not more than one-quarter of
one percent of the Parent Voting Securities in excess of the amount
permitted to be owned by the Shareholders pursuant to this paragraph
pursuant to a transaction by which a Person (that was not then an Affiliate
of a Shareholder before the consummation of such transaction) owning Parent
Voting Securities becomes an Affiliate of such Shareholder, then all Parent
Voting Securities so acquired shall thereupon become subject to the
Anschutz Shareholders Agreement and such Shareholder shall be deemed not to
have breached the Anschutz Shareholders Agreement provided that such
Shareholder, within 120 days thereafter, causes a number of such Parent
Voting Securities in excess of the amount permitted to be so owned (or, at
the election of such Shareholder, an equal number of the other Parent
Voting Securities that are Beneficially Owned by a Shareholder) to be
Transferred, in a transaction subject to the provisions described in
"Limitations on Disposition" below, to a transferee that is not a
Shareholder, an Affiliate thereof or a member of a "group" in which a
Shareholder or an Affiliate is included (or, if Parent or its assignee
shall exercise any purchase rights under the second paragraph of the
provisions described in "Limitations on Disposition" below, to Parent or
its assignee);
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules of the SEC) of
proxies or consents (whether or not relating to the election or removal of
directors), seek to advise, encourage or influence any Person with respect
to the voting of any Parent Voting Securities, initiate, propose or
otherwise "solicit" (as such term is used in the proxy rules of the SEC)
shareholders of Parent for the approval of shareholder proposals, whether
made pursuant to Rule 14a-8 of the Exchange Act or otherwise, or induce or
attempt to induce any other Person to initiate any such shareholder
proposal or otherwise communicate with the Parent's shareholders or others
pursuant to Rule 14a-1(2)(iv) under the Exchange Act or otherwise;
(iii) seek, propose, or make any statement with respect to, any merger,
consolidation, business combination, tender or exchange offer, sale or
purchase of assets, sale or purchase of securities, dissolution,
liquidation, reorganization, restructuring, recapitalization, change in
capitalization, change in corporate structure or business or similar
transaction involving Parent or its subsidiaries (including Resources) (any
of the foregoing being referred to herein as a "Specified Parent
Transaction"); provided that the foregoing shall not prevent (A) voting of
Parent Common Stock in the manner described in the last paragraph under
"Standstill and Related Provisions" (but shall prevent any public comment,
statement or communication, and any action that would otherwise require any
public disclosure by the Shareholders, Parent or any other Person,
concerning such voting) or (B) the Shareholder Designee (as defined below
under "Parent Covenants") from exercising his fiduciary duties in his
capacity as a director by participating in any Board deliberations or vote
of the Board of Directors of Parent with respect to a Specified Parent
Transaction;
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Parent
Voting Securities, other than groups consisting solely of Shareholders and
their Affiliates;
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(v) deposit any Parent Voting Securities in any voting trust or subject
any Parent Voting Securities to any arrangement or agreement with respect
to the voting of any Parent Voting Securities except as set forth in the
Anschutz Shareholders Agreement;
(vi) call or seek to have called any meeting of the stockholders of
Parent or execute any written consent with respect to Parent or Parent
Voting Securities; provided that the foregoing shall not prevent the
Shareholder Designee from exercising his fiduciary duties in his capacity
as a director by participating in any Board deliberations or vote of the
Board of Directors of Parent with respect to the calling of any annual
meeting of shareholders of Parent;
(vii) otherwise act, alone or in concert with others, to control or seek
to control or influence or seek to influence the management, Board of
Directors or policies of Parent (except to the extent the actions by a
Shareholder Designee relating to the Parent's Board of Directors in the
exercise of his fiduciary duties in his capacity as a director may be
viewed as influencing or seeking to influence the management, Board of
Directors or policies of Parent);
(viii) seek, alone or in concert with others, representation on the
Parent Board (except as described below under "Parent Covenants"), or seek
the removal of any member of such Board or a change in the composition or
size of such Board;
(ix) make any publicly disclosed proposal, comment, statement or
communication, or make any proposal, comment, statement or communication
(including, without limitation, any request to amend, waive or terminate
any provision of the Anschutz Shareholders Agreement other than the
"standstill" restrictions described in these items (i)-(xi)), or make any
proposal, comment, statement or communication (including, without
limitation, any request to amend, waive or terminate any provision of the
Anschutz Shareholders Agreement other than the "standstill" restrictions
described in these items (i)-(xi)) in a manner that would require any
public disclosure by the Shareholders, Parent or any other Person, or enter
into any discussion with any Person (other than directors and officers of
Parent), regarding any of the foregoing;
(x) make or disclose any request to amend, waive or terminate any of the
"standstill" restrictions set forth in these items (i)-(xi); or
(xi) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or oral) with,
or advise, finance, assist or encourage, any other Person in connection
with any of the foregoing, or take any action inconsistent with the
foregoing, or make any investment in or enter into any arrangement with,
any other Person that engages, or offers or proposes to engage, in any of
the foregoing.
The restrictions described above shall not prevent Shareholders from (A)
performing their obligations and exercising their rights under the Anschutz
Shareholders Agreement, including, without limitation, (w) Transferring any
Company Voting Securities or Parent Voting Securities in accordance with the
terms thereof, (x) selecting the Shareholder Designee, (y) serving in the
positions described in or resigning from such positions contemplated by the
Anschutz Shareholders Agreement, and (z) voting in accordance with the terms
thereof and granting a proxy to Purchaser in accordance with the terms
thereof; (B) communicating in a non-public manner with any other Shareholder
or their Affiliates; and (C) complying with the requirements of Sections 13(d)
and 16(a) of the Exchange Act and the rules and regulations thereunder, in
each case, as from time to time in effect, or any successor provisions or
rules with respect thereto, or any other applicable law, rule, regulation,
judgment, decree, ruling, order, award, injunction, or other official action
of any agency, bureau, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government (whether
federal, state, county or local, domestic or foreign).
The Anschutz Shareholders Agreement provides that during the period
commencing on the date of the Anschutz Shareholders Agreement and continuing
until the earlier of (x) the consummation of the Merger and (y) the
termination of the Merger Agreement, Shareholders will not, and Shareholders
will cause each of their respective Affiliates not to, directly or indirectly,
alone or in concert with others, acquire, offer or propose to acquire, or
agree to acquire, whether by purchase, tender or exchange offer, through the
acquisition of control of
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another Person, by joining a partnership, limited partnership, syndicate or
other "group" or otherwise, any Company Voting Securities (except by way of
stock dividends or other distributions or rights offerings made available to
holders of any shares of Company Common Stock generally, stock-splits,
reclassifications, recapitalizations, reorganizations and any other similar
action taken by Company).
The Anschutz Shareholders Agreement provides that subject to the receipt of
proper notice and the absence of a preliminary or permanent injunction or
other final order by any United States federal court or state court barring
such action, during the Standstill Period, the Shareholders will, and will
cause their Affiliates to, (i) be present, in person or represented by proxy,
at all annual and special meetings of shareholders of Parent so that all
Parent Common Stock Beneficially Owned by the Shareholders and their
affiliates and then entitled to vote may be counted for the purposes of
determining the presence of a quorum at such meetings, and (ii) vote in
accordance with the recommendation of the Board of Directors of Parent in the
election of directors. On all other matters presented for a vote of
shareholders of Parent, Shareholders may vote in their discretion.
Limitations on Disposition. The Anschutz Shareholders Agreement provides
that during the Standstill Period, the Shareholders will not, and will cause
their Affiliates not to, directly or indirectly, without the prior written
consent of the Parent Board specifically expressed in a resolution adopted by
a majority of the directors of Parent, Transfer any Parent Voting Securities
(including but not limited to the Transfer of any securities of an Affiliate
which is the record holder or Beneficial Owner of Parent Voting Securities, if
as the result of such Transfer, such Person would cease to be an Affiliate of
a Shareholder), if, to the knowledge of the Shareholders or any of their
Affiliates, after due inquiry which is reasonable in the circumstances (and
which shall include, with respect to the Transfer of 1% or more of the Parent
Voting Securities then outstanding in one transaction, or a series of related
transactions, specific inquiry with respect to the identity of the acquiror of
such Parent Voting Securities and the number of Parent Voting Securities that,
immediately following such transaction or transactions, would be Beneficially
Owned by such acquiror, together with its Affiliates and any members of a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) of which
such acquiror is a member), immediately following such transaction the
acquiror of such Parent Voting Securities, together with its Affiliates and
any members of such a group, would Beneficially Own in the aggregate 4% or
more of the Parent Voting Securities then outstanding; provided that, without
the prior written consent of the Board of Directors of Parent, (i)
Shareholders and their Affiliates may Transfer any number of Parent Voting
Securities to any other Shareholder, any Affiliate of a Shareholder or to any
heirs, distributees, guardians, administrators, executors, legal
representatives or similar successors in interest of any Shareholder, provided
that (A) such transferee, if not then a Shareholder, shall become a party to
the Anschutz Shareholders Agreement and agree in writing to perform and comply
with all of the obligations of such transferor Shareholder under the Anschutz
Shareholders Agreement, and thereupon such transferee shall be deemed to be a
Shareholder party to the Anschutz Shareholders Agreement for all purposes of
the Anschutz Shareholders Agreement, and (B) if the transferee is not prior
thereto a Shareholder, the transferor shall remain liable for such
transferee's performance of and compliance with the obligations of the
transferor under the Anschutz Shareholders Agreement, (ii) Shareholders and
their Affiliates may Transfer Parent Voting Securities in a tender offer,
merger, or other similar business combination transaction approved by the
Board of Directors of Parent, and (iii) Shareholders may pledge their Parent
Voting Securities as provided in the Anschutz Shareholders Agreement and the
pledgee may Transfer such Parent Voting Securities in connection with the
enforcement or foreclosure of any related security interest or lien following
a default.
The Anschutz Shareholders Agreement provides that during the Standstill
Period, if to the knowledge of the Shareholders after making due inquiry which
is reasonable under the circumstances, immediately following the Transfer of
any Parent Voting Securities the acquiror thereof, together with its
Affiliates and any members of a "group" (within the meaning of Section
13(d)(3) of the Exchange Act), would Beneficially Own in the aggregate 2% or
more of the outstanding Parent Voting Securities (a "2% Sale"), Shareholders
shall, prior to effecting any such Transfer, offer Parent a right of first
refusal to purchase the shares proposed to be Transferred on the following
terms. Shareholders shall provide Parent with written notice (the "2% Sale
Notice") of any proposed 2% Sale, which 2% Sale Notice shall contain the
identity of the purchaser, the number of shares of Parent Voting Securities
proposed to be Transferred to such purchaser, the purchase price for such
shares and the form of
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consideration payable for such shares. The 2% Sale Notice shall also contain
an irrevocable offer to sell the shares subject to such 2% Sale Notice to
Parent for cash at a price equal to the price contained in such 2% Sale
Notice. Parent shall have the right and option, by written notice delivered to
such Shareholder (the "Purchase Notice") within 15 days of receipt of the 2%
Sale Notice, to accept such offer as to all, but not less than all, of the
Parent Voting Securities subject to such 2% Sale Notice. Parent shall have the
right to assign to any Person such right to purchase the shares subject to the
2% Sale Notice. In the event Parent (or its assignee) elects to purchase the
shares subject to the 2% Sale Notice, the closing of the purchase of the
Parent Voting Securities shall occur at the principal office of Parent (or its
assignee) on or before the 30th day following such Shareholder's receipt of
the Purchase Notice. In the event Parent does not elect to purchase the shares
subject to the 2% Sale Notice, such Shareholder shall be free, for a period of
30 days following the receipt of notice from Parent of its election not to
purchase such shares or, in the absence of any such notice, for a period of 30
days following the 15th day after receipt by Parent of the 2% Sale Notice, to
sell the shares subject to the 2% Sale Notice in accordance with the terms of,
and to the person identified in, the 2% Sale Notice. If such sale is not
effected within such 30 day period such shares shall remain subject to the
provisions of the Anschutz Shareholders Agreement. Notwithstanding the
foregoing, the right of first refusal described in this paragraph shall not
apply to the sale by Shareholders of Parent Voting Securities (i) made in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act, or (ii) made in a transaction permitted pursuant to,
and made in compliance with, clauses (i) or (iii) of the proviso in the
immediately preceding paragraph, or (iii) made in a tender offer, merger or
other similar business combination transaction approved by the Board of
Directors of Parent. Any proposed sale by Shareholders of Parent Voting
Securities shall be subject to the restrictions on sales to an acquiror which
would Beneficially Own 4% or more of the outstanding Parent Voting Securities,
as described in the immediately preceding paragraph, whether or not Parent
exercises its right of first refusal and consummates the purchase of Parent
Voting Securities. If Parent (or its assignee) exercises its right to purchase
any Parent Voting Securities but fails to complete the purchase thereof for
any reason other than the failure of such Shareholder to perform its
obligations thereunder with respect to such purchase, then, on the 30th day
following such Shareholder's receipt of the Purchase Notice, such Parent
Voting Securities shall cease to be subject to the voting obligations
described in the last paragraph under "Standstill and Related Provisions"
above, the transfer restrictions and right of first refusal described in this
"Limitations on Disposition" and the requirement that certain legends be
placed on the certificates representing such Parent Voting Securities. If the
purchase price described in any 2% Sale Notice is not solely made up of cash
or marketable securities, the 2% Sale Notice shall include a good faith
estimate of the cash equivalent of such other consideration, and the
consideration payable by Parent or its assignee (if Parent elects to purchase
(or to have assignee purchase) the Parent Voting Securities described in the
2% Sale Notice) in place of such other consideration shall be cash equal to
the amount of such estimate; provided, however, that if Parent in good faith
disagrees with such estimate and states a different good faith estimate in the
Purchase Notice, and if Parent and such Shareholder cannot agree on the cash
equivalent of such other (i.e., other than cash or marketable securities)
consideration, such cash equivalent shall be determined by a reputable
investment banking firm without material connections with either party. Such
investment banking firm shall be selected by both parties or, if they shall be
unable to agree, by an arbitrator appointed by the American Arbitration
Association. The fees and expenses of any such investment banking firm and/or
arbitrator shall be shared equally by Parent and such Shareholder, unless
otherwise determined by such firm or arbitrator. In the event of such
differing estimates by Parent and such Shareholder, periods of time which
would otherwise run under the provisions described in this paragraph from the
date of such Shareholder's receipt of the Purchase Notice shall run instead
from the date on which the parties agree on such cash equivalent or, in the
absence of such agreement, the date on which such cash equivalent is
determined by such investment banking firm. If the purchase price described in
any 2% Sale Notice shall include marketable securities, the purchase price
payable by Parent (or its designee) shall include, to the extent marketable
securities were included as a portion of the consideration provided for in the
2% Sale Notice, an amount in cash determined by reference to the Current
Market Price (as defined in the Anschutz Shareholders Agreement) of such
securities on the day the Purchase Notice is received by such Shareholder.
The Anschutz Shareholders Agreement provides that in connection with any
proposed privately negotiated sale by any Shareholders of Parent Voting
Securities representing in excess of 3.9% of the then outstanding
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shares of Parent Voting Securities, Parent will cooperate with and permit the
proposed purchaser to conduct a due diligence review reasonable under the
circumstances of Parent and its Subsidiaries and their respective business and
operations, including, without limitation, reasonable access during normal
business hours to their executive officers, and, if reasonable under the
circumstances, their properties subject to execution by such purchaser of a
customary confidentiality agreement; provided that Parent shall not be
required to permit more than two such due diligence reviews in any twelve-
month period.
Parent Covenants. The Anschutz Shareholders Agreement provides that on or
prior to the Effective Time, the Board of Directors of Parent will take all
action necessary to elect Mr. Anschutz, or another individual selected by TAC
and reasonably acceptable to the Board of Directors of Parent (such director
being referred to as the "Shareholder Designee") as a director of Parent's
Board of Directors and to appoint Mr. Anschutz, but not any other Shareholder
Designee, as Vice Chairman of the Board of Directors as of the Effective Time.
Subject to the following sentence of this paragraph, after the Effective Time
and during the Standstill Period, Parent shall include the Shareholder
Designee in the Board of Directors' slate of nominees for election as
directors at Parent's annual meeting of shareholders and shall recommend that
the Shareholder Designee be elected as a director of Parent. The Shareholder
Designee, if requested by Parent, shall resign from Parent's Board of
Directors (a) effective not later than the next annual meeting of shareholders
of Parent, if Shareholders and their Affiliates Beneficially Own less than 4%
of the Parent Voting Securities then outstanding, provided, however that the
Anschutz Shareholders Agreement shall continue in full force and effect until
the date of such resignation, or (b) immediately if the Shareholders violate
or breach any of the material terms or provisions of the Anschutz Shareholders
Agreement. Notwithstanding any resignation pursuant to clause (b) of the
preceding sentence, all of the provisions of the Anschutz Shareholders
Agreement other than those described in this "Parent Covenants" shall continue
in full force and effect. The duties and responsibilities of the Vice Chairman
shall be as assigned by the Board of Directors of Parent or by the Chairman of
the Board, and the Vice Chairman shall receive no additional compensation for
serving in such position. So long as a Shareholder Designee serves as a member
of the Board of Directors of Parent, Parent agrees that the Shareholder
Designee shall serve (subject to the applicable requirements of the NYSE or
any other security exchange on which the Parent Common Stock is listed, or if
not so listed, under the rules or regulations of the National Association of
Securities Dealers) as a member of the Executive, Finance and Corporate
Development, and Compensation, Benefits and Nominating Committees of the
Board. Except as otherwise provided in the Anschutz Shareholders Agreement,
upon the termination of the Anschutz Shareholders Agreement, if so requested
by Parent, the Shareholder Designee shall resign as a director of the Parent's
Board of Directors.
In the event that any Shareholder Designee shall cease to be a member of the
Board of Directors by reason of death, disability or resignation (other than
resignations required pursuant to the provisions of the immediately preceding
paragraph), Parent shall replace such Shareholder Designee with another
Shareholder Designee at the next meeting of the Board of Directors.
The Shareholder Designee, upon nomination or appointment as a director of
Parent, shall agree in writing to comply with the obligations of the
Shareholders described in the first paragraph (and the numbered items related
thereto) of "Standstill and Related Provisions" above and the obligation of
such Shareholder Designee under this paragraph.
Without the prior written consent of Shareholders, Parent shall not take or
recommend to its shareholders any action which would impose limitations, not
imposed on other stockholders of Parent, on the enjoyment by any of
Shareholders and their Affiliates of the legal rights generally enjoyed by
shareholders of Parent, other than those imposed by the terms of the Anschutz
Shareholders Agreement, the Merger Agreement and the Ancillary Agreements;
provided, however, that the foregoing shall not prevent Parent from
implementing or adopting a Shareholder Rights Plan or issuing a similar
security which has a "trigger" threshold of not less than the greater of 10%
of the outstanding shares of Parent Common Stock or the amount then
Beneficially Owned by Shareholders not in violation of the Anschutz
Shareholders Agreement.
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Additional Limitation on Dispositions. The Anschutz Shareholders Agreement
provides that notwithstanding any other provision thereof, TAC will not, and
will cause its Affiliates not to, for a period of two years commencing as of
the Effective Time (the "Reorganization Continuity Period"), enter into any
transaction or arrangement to the extent such transaction or arrangement
(combined with any other transactions or arrangements entered into by TAC or
its Affiliates) would result in TAC having entered into an Economic
Disposition with respect to an amount of Parent Voting Securities received by
TAC in the Merger that exceeds the Threshold Amount unless the condition
described in the following paragraph is satisfied, regardless of whether such
transaction or arrangement would be treated as a sale, exchange or other
taxable disposition of such Parent Voting Securities for United States federal
income tax purposes. For purposes of this subsection, the "Threshold Amount"
equals the number of Parent Voting Securities received by TAC in the Merger
multiplied by the following fraction: the numerator is 20% and the denominator
is (A) the percentage of outstanding Company Common Stock held by TAC as of
the date of the Anschutz Shareholders Agreement minus (B) the percentage of
outstanding Company Common Stock that TAC exchanges for cash in the Offer or
the Merger. For purposes of this subsection, an "Economic Disposition" of
shares of Parent Voting Securities shall mean (i) any transaction or
arrangement (including an outright sale) that would be treated as a sale,
exchange or other taxable disposition for United States federal income tax
purposes of shares of Parent Voting Securities received in the Merger and (ii)
any transaction or arrangement (or combination of transactions or
arrangements) entered into by or on behalf of TAC or its Affiliates that
reduces the economic benefits and burdens to TAC of owning shares of Parent
Voting Securities (including any swap transaction, notional principal contract
or the acquisition or grant of any calls, puts or other options, whether or
not cash settlement is permitted or required) to such an extent that such
transaction or arrangement causes TAC not to satisfy the "continuity of
proprietary interest" requirement under Section 368 of the Code with respect
to such shares.
The Anschutz Shareholders Agreement provides that during the Reorganization
Continuity Period, at least thirty (30) business days prior to entering into
any proposed transaction or arrangement (combined with any other transactions
or arrangements entered into by TAC) relating to or involving any shares of
Parent Voting Securities in excess of the Threshold Amount (a "Proposed
Transaction"), TAC must provide at its expense a written opinion of nationally
recognized tax counsel, in form and substance reasonably acceptable to Parent,
that the Proposed Transaction will not adversely affect the treatment of the
Merger as a reorganization within the meaning of Section 368 of the Code.
The Anschutz Shareholders Agreement provides that the bona fide pledge of
any Parent Voting Securities, or the bona fide grant of a security interest
therein, to secure the payment of bona fide indebtedness owed by TAC or any of
its Affiliates, and the sale, exchange or disposition, or Economic
Disposition, at the direction of the pledgee or holder of a security interest,
of any of such Parent Voting Securities in connection with the exercise of any
right of enforcement or foreclosure in respect thereof, shall not be subject
to or prevented by the restrictions set forth in this "Additional Limitations
on Disposition."
The Anschutz Shareholders Agreement provides that the Threshold Amount and
the number of shares of Parent Voting Securities that are or have been subject
to an Economic Disposition shall be adjusted, as of any date of determination,
to give effect to any stock dividends, share-splits, reclassifications,
recapitalizations, reorganizations or other similar actions that shall have
been taken by Parent as of such date with respect to the Parent Voting
Securities.
Termination. The Anschutz Shareholders Agreement provides that, except as
otherwise provided therein, the Anschutz Shareholders Agreement shall
terminate (a) if the Effective Time does not occur, upon the termination of
the Merger Agreement, provided, however, that if the Merger Agreement shall
have been terminated pursuant to the Fiduciary-out Termination Provisions, the
provisions described under "Voting of Company Common Stock; Irrevocable Proxy"
and "Restrictions on Transfer; Proxies; No Solicitation" above shall survive
the termination of the Anschutz Shareholders Agreement for a period of six
months, or (b) if the Effective Time does occur, on the earliest to occur of
(1) the seventh anniversary of the Effective Time, (2) at such time that the
Shareholders Beneficially Own, and continue to Beneficially Own, in the
aggregate, less than
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4% of the Parent Voting Securities then outstanding, it being understood,
however, that if the Shareholders at any time Beneficially Own in the
aggregate less than 4% of the Parent Voting Securities then outstanding but,
prior to the seventh anniversary of the Effective Time, subsequently acquire
Beneficial Ownership of any Parent Voting Securities (except pursuant to
clauses (A), (B) or (C) of the parenthetical exception to the first sentence
in item (i) under the first paragraph of "Standstill and Related Provisions"
above or in an Inadvertent Acquisition) such that immediately following such
acquisition Shareholders become Beneficial Owners in the aggregate of more
than 4% of the Parent Voting Securities then outstanding, the "standstill"
restrictions and limitations on disposition provisions, among others, in the
Anschutz Shareholders Agreement shall be effective and in full force again as
if no such termination had occurred, and (3) if at any time that the
Shareholders Beneficially Own in the aggregate more than 4% of the Parent
Voting Securities then outstanding (i) the Shareholder Designee shall not be
elected as a director of Parent as provided in the Anschutz Shareholders
Agreement, (ii) if and so long as Mr. Anschutz shall be a director of Parent,
Mr. Anschutz (but not any other Shareholder Designee) shall not be appointed
Vice Chairman of the Board of Directors, (iii) subject to applicable
requirements of the NYSE or any other security exchange on which the Parent
Common Stock is listed, or if not so listed, under the rules or regulations of
the National Association of Securities Dealers, a Shareholder Designee who is
then a director shall not be appointed as a member of the Executive, Finance
and Corporate Development, and Compensation, Benefits and Nominating
Committees, respectively, of the Board of Directors of Parent (or committees
having similar functions) or (iv) Parent shall have breached its covenant
described in the second paragraph of "Parent Covenants" above, provided that
TAC, for itself and on behalf of all other Shareholders, may by written notice
to Parent irrevocably elect that, from and after the delivery thereof, the
references in this paragraph and in "Parent Covenants" above to "4%" be
deleted and replaced by references to "3%."
MSLEF Shareholder Agreement
Tender of Shares. The MSLEF Shareholder Agreement provides that MSLEF may,
but shall have no obligation to, tender (or cause the record owner of the
Shares to tender), pursuant to and in accordance with the terms of the Offer,
any or all of the Shares Beneficially Owned by MSLEF. MSLEF acknowledges and
agrees that Parent's, UPRR's and Purchaser's obligation to accept for payment
and pay for Shares in the Offer, including any Shares tendered by MSLEF, is
subject to the terms and conditions of the Offer. MSLEF will, for all Shares
tendered by MSLEF in the Offer and accepted for payment and paid for by
Purchaser, receive the same per Share consideration paid to other shareholders
who have tendered into the Offer.
Voting of Company Common Stock; Irrevocable Proxy; No Acquisition of
Additional Company Voting Securities. The MSLEF Shareholder Agreement provides
that during the period commencing on the date of the MSLEF Shareholder
Agreement and continuing until the earlier of (x) the consummation of the
Merger and (y) six months following the termination of the Merger Agreement in
accordance with the Fiduciary-out Termination Provisions, and (z) upon the
termination of the Merger Agreement other than pursuant to the Fiduciary-out
Termination Provisions (such period being referred to as the "Voting Period")
at any meeting (whether annual or special, and whether or not an adjourned or
postponed meeting) of the Company's shareholders, however called, or in
connection with any written consent of the Company's shareholders, subject to
the absence of a preliminary or permanent injunction or other final order by
any United States federal court or state court barring such action, MSLEF
shall vote (or cause to be voted) the Shares and all other Company Voting
Securities that it Beneficially Owns, whether owned on the date of the MSLEF
Shareholder Agreement or thereafter acquired, (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
and adoption of the Merger Agreement and the terms thereof and each of the
other actions contemplated by the Merger Agreement, the MSLEF Shareholder
Agreement and the Ancillary Agreements and any actions required in furtherance
thereof; (ii) against any action or agreement that would (A) result in a
material breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or any of
the Ancillary Agreements to which it is a party or of MSLEF under the MSLEF
Shareholder Agreement or (B) in the judgement of Parent as communicated in
writing to MSLEF, impede, interfere with, delay, postpone, or adversely affect
the Offer, the Merger or the transactions contemplated by the Merger
Agreement, the MSLEF Shareholder Agreement and the Ancillary Agreements; and
(iii) except as otherwise
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agreed to in writing in advance by Parent, against the following actions
(other than the Merger and the transactions contemplated by the Merger
Agreement, the MSLEF Shareholder Agreement and the Ancillary Agreements): (A)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or any of its subsidiaries;
(B) any sale, lease or transfer of a substantial portion of the assets or
business of the Company or its subsidiaries, or reorganization, restructuring,
recapitalization, special dividend, dissolution or liquidation of the Company
or its subsidiaries; or (C) any change in the present capitalization of the
Company including any proposal to sell a substantial equity interest in the
Company or any of its subsidiaries. MSLEF has agreed not to enter into any
agreement, arrangement or understanding with any Person the effect of which
would be inconsistent with or violative of the provisions and agreements
described in this subsection.
The MSLEF Shareholder Agreement provides that, at the request of Parent
(which request has been made), MSLEF, in furtherance of the transactions
contemplated by the MSLEF Shareholder Agreement and by the Merger Agreement
and the Ancillary Agreements, and in order to secure the performance by MSLEF
of its duties under the MSLEF Shareholder Agreement, shall promptly execute
and deliver to Purchaser an irrevocable proxy. MSLEF acknowledges and agrees
that the proxy executed and delivered pursuant to this paragraph shall be
coupled with an interest, shall constitute, among other things, an inducement
for Parent to enter into the MSLEF Shareholder Agreement, the Merger Agreement
and the Ancillary Agreements to which it is a party, shall be irrevocable
during the Voting Period and shall not be terminated by operation of law or
upon the occurrence of any event.
MSLEF agrees that during the period commencing on the date of the MSLEF
Shareholder Agreement and continuing until the earlier of (x) the consummation
of the Merger and (y) the termination of the Merger Agreement, MSLEF will not,
and will cause its general partner not to, acquire, offer or propose to
acquire, or agree to acquire, whether by purchase, tender or exchange offer,
any Company Voting Securities.
Restrictions on Transfer, Proxies; No Solicitation. MSLEF shall not, during
the Voting Period, directly or indirectly: (i) except as provided under
"Tender of Shares" above or this paragraph, Transfer to any Person any or all
of the Company Voting Securities Beneficially Owned by the MSLEF; (ii) except
as provided in the second paragraph of the preceding Subsection, grant any
proxies or powers of attorney, deposit any such Company Voting Securities into
a voting trust or enter into a voting agreement, understanding or arrangement
with respect to the Company Voting Securities; or (iii) take any action that
would make any representation or warranty of MSLEF contained in the MSLEF
Shareholder Agreement untrue or incorrect or would result in a breach by the
MSLEF of its obligations under the MSLEF Shareholder Agreement or a breach by
the Company of its obligations under the Merger Agreement or any of the
Ancillary Agreements to which it is a party. Notwithstanding any provisions of
the MSLEF Shareholder Agreement to the contrary, MSLEF may Transfer in the
aggregate, following the consummation of the Offer and prior to the Effective
Time, a portion of the Shares in the aggregate not greater than 10% of the
Shares Beneficially Owned by MSLEF immediately following the consummation of
the Offer.
The MSLEF Shareholder Agreement provides that MSLEF shall not, and shall
cause its general partner not to, 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 in the Merger Agreement) of the Company or any
Affiliate or any inquiry with respect thereto, or (ii) in the event of an
unsolicited written Takeover Proposal for the Company or any Affiliate of the
Company, engage in negotiations or discussions with, or provide any
information or data to, any Person (other than Parent, any of its Affiliates
or representatives) relating to any Takeover Proposal. MSLEF shall notify
Parent and Purchaser orally and in writing of any such offers, proposals or
inquiries relating to the purchase or acquisition by any Person of the Shares
Beneficially Owned by MSLEF (including, without limitation, the terms and
conditions thereof and the identity of the Person making it), within 24 hours
of the receipt thereof. MSLEF shall, and shall cause its general partner to,
immediately cease and cause to be terminated all existing activities,
discussions and negotiations, if any, with any parties conducted heretofore
with respect to any Takeover Proposal relating to the Company, other than
discussions or negotiations with Parent and its Affiliates.
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The MSLEF Shareholder Agreement provides that MSLEF will not, and will cause
its general partner not to, directly or indirectly, make any public comment,
statement or communication, or take any action that would otherwise require
any public disclosure by MSLEF, Parent or any other Person, concerning the
Merger, the Offer, the Spin-off and the other transactions contemplated by the
Merger Agreement, the MSLEF Shareholder Agreement and the Ancillary
Agreements, except for any disclosure (i) concerning the status of MSLEF as a
party to such agreement, the terms thereof, and its beneficial ownership of
Shares, required pursuant to Section 13(d) or Section 16 of the Exchange Act
or (ii) required in the Schedule 14D-9 or the Proxy Statement/Prospectus.
Notwithstanding the restrictions described in the MSLEF Shareholder
Agreement, any Person who is a director or officer of the Company may exercise
his fiduciary duties in his capacity as a director or officer with respect to
the Company, as opposed to taking action with respect to the direct or
indirect ownership of any Shares, and no such exercise of fiduciary duties
shall be deemed to be a breach of, or a violation of the restrictions set
forth in, the second preceding paragraph and MSLEF shall not have any
liability hereunder for any such exercise of fiduciary duties by such Person
in his capacity as a director and officer of the Company.
Termination. The MSLEF Shareholder Agreement provides that, except as
otherwise provided therein, the MSLEF Shareholder Agreement shall terminate at
the end of the Voting Period.
Parent Shareholders Agreement
Voting of Company Common Stock; Irrevocable Proxy. The Parent Shareholders
Agreement provides that during the period commencing on the date of the Parent
Shareholders Agreement and continuing until the earlier of (x) the
consummation of the Merger and (y) the termination of the Merger Agreement in
accordance with the termination provisions thereof, at any meeting (whether
annual or special, and whether or not an adjourned or postponed meeting) of
the Company's stockholders, however called, or in connection with any written
consent of the Company's stockholders, subject to the absence of a preliminary
or permanent injunction or other final order by any United States federal
court or state court barring such action, Parent and Purchaser (collectively,
the "Parent Shareholders") shall vote (or cause to be voted) the Shares
purchased pursuant to the Offer and all other Company Voting Securities that
they Beneficially Own, whether owned on the date of the Parent Shareholders
Agreement or thereafter acquired, (i) in favor of the Merger, the execution
and delivery by the Company of the Merger Agreement and the approval and
adoption of the Merger Agreement and the terms thereof and each of the other
actions contemplated by the Merger Agreement, the Parent Shareholders
Agreement and the Ancillary Agreements and any actions required in furtherance
thereof; (ii) with respect to the election or removal of directors, in the
same proportion as all Company Voting Securities that are not Beneficially
Owned by Parent Shareholders that vote with respect to such matter ("Voted
Non-Shareholder Securities") have been voted with respect to such matter;
(iii) with respect to any other proposed merger, business combination, or
similar transaction (including, without limitation, any consolidation, sale of
all or substantially all the assets, recapitalization, liquidation or winding
up or other Specified Company Transaction (as defined herein)) involving the
Company (other than the transactions contemplated by the Merger Agreement), as
the Parent Shareholders may determine, in their sole discretion; and (iv)
unless either (A) one of the transactions described in clause (iii) above has
been proposed or (B) the matter being proposed would impose on Parent
Shareholders limitations, not imposed on other shareholders of the Company, on
the enjoyment of any of Parent Shareholders and their Affiliates of the legal
rights generally enjoyed by stockholders of the Company, with respect to all
matters submitted to a vote of the Company's stockholders not specified in
(i), (ii) or (iii) above, in the same proportion as all Voted Non-Shareholder
Securities have been voted with respect to such matter. Parent Shareholders
shall not enter into any agreement or understanding with any Person the effect
of which would be inconsistent or violative of the provisions and agreements
contained in this and the following paragraph. As more fully described under
the section below entitled "Standstill and Related Provisions," Parent
Shareholders are also subject to certain voting restrictions following
termination of the Merger Agreement.
The Parent Shareholders Agreement provides that Parent Shareholders (or the
Trustee, if the Shares are held in the Voting Trust), in furtherance of the
transactions contemplated thereby and by the Merger Agreement and
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the Ancillary Agreements, and in order to secure the performance by Parent
Shareholders of their duties under the Parent Shareholders Agreement, shall
following consummation of the Offer execute and deliver to the Company an
irrevocable proxy. Parent Shareholders acknowledge and agree that such proxy
shall be coupled with an interest, shall constitute, among other things, an
inducement for the Company to enter into the Parent Shareholders Agreement,
the Merger Agreement and the Ancillary Agreements to which it is a party,
shall be irrevocable until the earlier of the Company Special Meeting or the
termination of the Merger Agreement in accordance with its terms and shall not
be terminated by operation of law or upon the occurrence of any event.
Restrictions on Transfer; Proxies; Pledges. The Parent Shareholders
Agreement provides that Parent Shareholders shall not, during the period
commencing on the date thereof and continuing until the first to occur of (x)
the consummation of the Merger or (y) the termination of the Merger Agreement
pursuant to the terms thereof, directly or indirectly: (i) Transfer (including
but not limited to the Transfer by Parent of any securities of Purchaser or
any Affiliate of Parent controlling Purchaser) to any Person (other than to
the Voting Trust) any or all of the Company Voting Securities (or any interest
therein) which it may hereafter acquire in the Offer or otherwise; (ii) except
as provided in the Parent Shareholders Agreement and except for the Voting
Trust, grant any proxies or powers of attorney, deposit any Company Voting
Securities into a voting trust or enter into a voting agreement, understanding
or arrangement with respect to the Company Voting Securities; (iii) take any
action that would make any representation or warranty of Parent Shareholders
contained in the Parent Shareholders Agreement untrue or incorrect or would
result in a breach by Parent Shareholders of their respective obligations
under the Parent Shareholders Agreement or would result in a breach by Parent
Shareholders of their respective obligations under the Merger Agreement or any
of the Ancillary Agreements to which it is a party; or (iv) take certain
action covered by certain of the standstill related provisions of the Parent
Shareholders Agreement, provided, however, in the event a bona fide proposal
for a Specified Company Transaction is made by any Person (other than the
Parent Shareholders and their Affiliates) only the restrictions set forth in
Section 4(a)(viii) (seeking Board representation) of the Parent Shareholders
Agreement shall be applicable.
The Parent Shareholders Agreement provides that following termination of the
Merger Agreement in accordance with its terms, Parent Shareholders may effect
one or more pledges of Company Voting Securities or grants of security
interests therein, to one or more banks or other financial institutions that
are not Affiliates of any Parent Shareholder as security for the payment of
bona fide full recourse indebtedness owed by Parent or UPRR to such banks or
financial institutions. Except as set forth in the proviso below, such banks
and financial institutions shall not incur any obligations under the Parent
Shareholders Agreement with respect to such Company Voting Securities or shall
be restricted from exercising any right of enforcement or foreclosure with
respect to any related security interest or lien; provided, however, that it
shall be a condition to any such pledge that the pledgee shall agree to be
bound by the provisions of the Parent Shareholders Agreement, except that
following an event of default or foreclosure, the pledgee shall be permitted
to sell, subject only to the right of first refusal set forth in the Parent
Shareholders Agreement, (x) an unlimited number of Voting Company Securities
to any Person that is not, and does not control, a Class I Railroad and (y) up
to 4% of the then outstanding shares of Company Voting Securities to a Class I
Railroad.
Standstill and Related Provisions. The Parent Shareholders Agreement
provides that subject to the paragraph immediately following item (xi) below,
in the event that the Merger Agreement is terminated in accordance the terms
thereof other than pursuant to the Fiduciary-out Termination Provisions, but
only in such event, Parent Shareholders agree that for a period commencing on
the date of such termination and continuing until the termination of the
Parent Shareholders Agreement in accordance with the terms described under
"Termination" below (any such period being hereafter referred to as the
"Parent Standstill Period"), without the prior written consent of the Board of
Directors of the Company (the "Board") specifically expressed in a resolution
adopted by a majority of the directors of the Company, Parent Shareholders
will not, and Parent Shareholders will cause each of their respective
Affiliates not to, directly or indirectly, alone or in concert with others:
(i) acquire, offer or propose to acquire, or agree to acquire (except, in
any case, by way of (A) stock dividends or other distributions or rights
offerings made available to holders of any shares of Company Common Stock
generally, share-splits, reclassifications, recapitalizations,
reorganizations and any other
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similar action taken by Company, and (B) the conversion, exercise or
exchange of Company Voting Securities in accordance with the terms thereof,
provided, that any such securities shall be subject to the provisions of
the Parent Shareholders Agreement), directly or indirectly, whether by
purchase, tender or exchange offer, through the acquisition of control of
another Person, by joining a partnership, limited partnership, syndicate or
other "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
(other than groups consisting solely of Parent Shareholders and their
Affiliates, all of which are or, prior to the formation of such group,
become parties to the Parent Shareholders Agreement) or otherwise, any
Company Voting Securities; provided, however, that if, solely as a result
of the issuance by the Company of additional Company Voting Securities,
Parent Shareholders and their Affiliates Beneficially Own less than the
amount of shares of Company Voting Securities Beneficially Owned
immediately following the consummation of the Offer (the "Ownership
Limit"), Parent Shareholders may purchase or acquire additional Company
Voting Securities to bring their Beneficial Ownership up to the greater of
5.5% and the percentage of outstanding Company Voting Securities
Beneficially Owned by the Parent Shareholders immediately prior to such
issuance by the Company; provided, further, if as a result of Transfers of
Company Voting Securities, Parent Shareholders Beneficially Own less than
5.5% of the then outstanding Company Voting Securities, Parent Shareholders
may purchase or acquire additional Company Voting Securities to bring their
Beneficial Ownership up to, but not in excess of, 5.5% of the then
outstanding shares of Company Voting Securities. In addition, in the event
that a Parent Shareholder or an Affiliate thereof inadvertently and without
knowledge indirectly acquires Beneficial Ownership of not more than one-
quarter of one percent of the Company Voting Securities in excess of the
amount permitted to be owned by the Parent Shareholders pursuant to this
paragraph pursuant to a transaction by which a Person (that was not then an
Affiliate of a Parent Shareholder before the consummation of such
transaction) owning Company Voting Securities becomes an Affiliate of such
Parent Shareholder, then all Company Voting Securities so acquired shall
thereupon become subject to the Parent Shareholders Agreement and such
Parent Shareholder shall be deemed not to have breached the Parent
Shareholders Agreement provided that such Parent Shareholder, within 120
days thereafter, causes a number of such Company Voting Securities in
excess of the amount permitted to be so owned (or, at the election of such
Parent Shareholder, an equal number of the other Company Voting Securities
that are Beneficially Owned by a Parent Shareholder) to be Transferred, in
a transaction subject to the provisions described in "Limitations on
Disposition" below, to a transferee that is not a Parent Shareholder, an
Affiliate thereof or a member of a "group" in which a Parent Shareholder or
an Affiliate is included (or, if Parent or its assignee shall exercise any
purchase rights under the second paragraph of "Limitations on Disposition"
below, to the Company or its assignee);
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules of the SEC) of
proxies or consents (whether or not relating to the election or removal of
directors), seek to advise, encourage or influence any Person with respect
to the voting of any Company Voting Securities, initiate, propose or
otherwise "solicit" (as such term is used in the proxy rules of the SEC)
stockholders of the Company for the approval of stockholder proposals,
whether made pursuant to Rule 14a-8 of the Exchange Act or otherwise, or
induce or attempt to induce any other Person to initiate any such
stockholder proposal or otherwise communicate with the Parent's
shareholders or others pursuant to Rule 14a-1(2)(iv) under the Exchange Act
or otherwise;
(iii) seek, propose, or make any statement with respect to, any merger,
consolidation, business combination, tender or exchange offer, sale or
purchase of assets, sale or purchase of securities, dissolution,
liquidation, reorganization, restructuring, recapitalization, change in
capitalization, change in corporate structure or business or similar
transaction involving the Company or its subsidiaries (any of the foregoing
being referred to herein as a "Specified Company Transaction"); provided
that the foregoing shall not prevent voting in accordance with the final
paragraph of this subsection (but shall prevent any public comment,
statement or communication, and any action that would otherwise require any
public disclosure by Parent Shareholders, the Company or any other Person,
concerning such voting);
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any
Company Voting Securities, other than groups consisting solely of Parent
Shareholders and their Affiliates;
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(v) except for the Voting Trust, deposit any Company Voting Securities in
any voting trust or subject any Company Voting Securities to any
arrangement or agreement with respect to the voting of any Company Voting
Securities, other than the Parent Shareholders Agreement;
(vi) call or seek to have called any meeting of the stockholders of the
Company or execute any written consent with respect to the Company or
Company Voting Securities;
(vii) otherwise act, alone or in concert with others, to control or seek
to control or influence or seek to influence the management, Board of
Directors or policies of the Company;
(viii) seek, alone or in concert with others, representation on the Board
of Directors of the Company, or seek the removal of any member of such
Board or a change in the composition or size of such Board;
(ix) make any publicly disclosed proposal, comment, statement or
communication (including, without limitation, any request to amend, waive
or terminate any provision of the Parent Shareholders Agreement other than
the "standstill" provisions described in these items (i)-(xi)), or make any
proposal, comment, statement or communication (including, without
limitation, any request to amend, waive or terminate any provision of the
Parent Shareholders Agreement other than the "standstill" provisions
described in these items (i)-(xi)) in a manner that would require any
public disclosure by Parent Shareholders or any other Person, or enter into
any discussion with any Person (other than directors and officers of the
Company), regarding any of the foregoing;
(x) make or disclose any request to amend, waive or terminate any of the
standstill provisions of the Parent Shareholders Agreement; or
(xi) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or oral) with,
or advise, finance, assist or encourage, any other Person in connection
with any of the foregoing, or take any action inconsistent with the
foregoing, or make any investment in or enter into any arrangement with,
any other Person that engages, or offers or proposes to engage, in any of
the foregoing.
The restrictions set forth above shall not prevent Parent Shareholders from
(A) performing their obligations and exercising their rights under the Parent
Shareholders Agreement, including, without limitation, (x) Transferring any
Company Voting Securities in accordance with Parent Shareholders Agreement or
to the Voting Trust, and (y) voting and granting a proxy to the Company in
accordance with Parent Shareholders Agreement; (B) communicating in a non-
public manner with any other Parent Shareholder or its Affiliates; and (C)
complying with the requirements of Sections 13(d) and 16(a) of the Exchange
Act and the rules and regulations thereunder, in each case, as from time to
time in effect, or any successor provisions or rules with respect thereto, or
any other applicable law, rule, regulation, judgment, decree, ruling, order,
award, injunction, or other official action of any agency, bureau, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government (whether federal, state, county or local,
domestic or foreign).
The Parent Shareholders Agreement provides that subject to the receipt of
proper notice and the absence of a preliminary or permanent injunction or
other final order by any United States federal court or state court barring
such action, Parent Shareholders agree that during any Parent Standstill
Period Parent Shareholders will, and will cause their Affiliates to, (i) be
present, in person or represented by proxy, at all annual and special meetings
of stockholders of the Company so that all Company Common Stock Beneficially
Owned by Parent Shareholders and their Affiliates and then entitled to vote
may be counted for the purposes of determining the presence of a quorum at
such meetings; and (ii) with respect to the election or removal of directors,
vote in the same proportion as all Voted Non-Parent Shareholder Securities
have been voted with respect to such matter; and (iii) with respect to any
proposed merger, business combination, or similar transaction (including,
without limitation, any consolidation, sale of all or substantially all the
assets, recapitalization, liquidation or winding up or other Specified Company
Transaction) involving the Company, vote as the Parent Shareholders may
determine, in their sole discretion; and (iv) unless the matter being proposed
would impose on Parent Shareholders limitations, not imposed on other
stockholders of the Company, on the enjoyment of any of Parent Shareholders
and their Affiliates of the legal rights generally enjoyed by stockholders of
the Company, with respect to all matters
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submitted to a vote of the Company's stockholders not specified in (ii) or
(iii) above, vote in the same proportion as all Voted Non-Shareholder
Securities have been voted with respect to such matter.
Limitations on Disposition. The Parent Shareholders Agreement provides that
Parent Shareholders, during the Standstill Period, will not, and will cause
their Affiliates not to, directly or indirectly, without the prior written
consent of the Board of Directors of the Company specifically expressed in a
resolution adopted by a majority of the directors of the Company, Transfer to
any Person any Company Voting Securities (including but not limited to the
Transfer of any securities of an Affiliate which is the record holder or
Beneficial Owner of Parent Voting Securities, if, as the result of such
Transfer, such Person would cease to be an Affiliate of a Parent Shareholder),
if, to the knowledge of the Parent Shareholders or any of their Affiliates,
after due inquiry which is reasonable in the circumstances (and which shall
include, with respect to the Transfer of 1% or more of the Company Voting
Securities then outstanding in one transaction, or a series of related
transactions, specific inquiry which respect to the identity of the acquiror
of such Company Voting Securities and the number of Company Voting Securities
that, immediately following such transaction or transactions, would be
Beneficially Owned by such acquiror, together with its Affiliates and any
members of a "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) of which such acquiror is a member), immediately following such
transaction the acquiror of such Company Voting Securities, together with its
Affiliates and any members of such a group, would Beneficially Own in the
aggregate 6% (or 4% in the event that the purchaser is or controls a Class I
Railroad) or more of the Company Voting Securities then outstanding; provided
that, without the prior written consent of the Board of Directors of the
Company, (i) Parent Shareholders and their Affiliates may Transfer any number
of Company Voting Securities to any other Parent Shareholder or any Affiliate
of a Parent Shareholder, provided that (A) such transferee, if not then a
Parent Shareholder, shall become a party to the Parent Shareholders Agreement
and agree in writing to perform and comply with all of the obligations of such
transferor Parent Shareholder under the Parent Shareholders Agreement, and
thereupon such transferee shall be deemed to be a Parent Shareholder party
thereto for all purposes of the Parent Shareholders Agreement, and (B) if the
transferee is not prior thereto a Parent Shareholder, the transferor shall
remain liable for such transferee's performance of and compliance with the
obligations of the transferor under the Parent Shareholders Agreement, (ii)
Parent Shareholders and their Affiliates may Transfer Company Voting
Securities in a tender offer, merger, or other similar business combination
transaction approved by the Board of Directors of the Company, and (iii)
Parent Shareholders may pledge their Parent Voting Securities as provided in
the second paragraph of "Restrictions on Transfer; Proxies; Pledges" above and
the pledgee may Transfer such Company Voting Securities as contemplated by the
proviso in such paragraph.
The Parent Shareholders Agreement provides that during the Parent Standstill
Period, if to the knowledge of the Parent Shareholders after making due
inquiry which is reasonable under the circumstances, immediately following the
Transfer of any Company Voting Securities the acquiror thereof, together with
its Affiliates and any members of a "group" (within the meaning of Section
13(d)(3) of the Exchange Act), would Beneficially Own in the aggregate 2% or
more of the outstanding Parent Voting Securities (a "2% Sale"), Parent
Shareholders shall, prior to effecting any such Transfer, offer the Company a
right of first refusal to purchase the shares proposed to be Transferred on
the following terms. Parent Shareholders shall provide the Company with
written notice (the "2% Sale Notice") of any proposed 2% Sale, which 2% Sale
Notice shall contain the identity of the purchaser, the number of shares of
Company Voting Securities proposed to be Transferred to such purchaser, the
purchase price for such shares and the form of consideration payable for such
shares. The 2% Sale Notice shall also contain an irrevocable offer to sell the
shares subject to such 2% Sale Notice to the Company for cash at a price equal
to the price contained in such 2% Sale Notice. The Company shall have the
right and option, by written notice delivered to such Parent Shareholder (the
"Purchase Notice") within 15 days of receipt of the 2% Sale Notice, to accept
such offer as to all, but not less than all, of the Company Voting Securities
subject to such 2% Sale Notice. The Company shall have the right to assign to
any Person such right to purchase the Company Voting Securities subject to the
2% Sale Notice. In the event the Company (or its assignee) elects to purchase
the Company Voting Securities subject to the 2% Sale Notice, the closing of
the purchase of the Company Voting Securities shall occur at the principal
office of the Company (or its assignee) on or before the 30th day following
such Parent Shareholder's receipt of the Purchase Notice. In the event the
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Company does not elect to purchase the shares subject to the 2% Sale Notice,
such Parent Shareholder shall be free, for a period of 30 days following the
receipt of notice from Parent of its election not to purchase such Company
Voting Securities or, in the absence of any such notice, for a period of 30
days following the 15th day after receipt by the Company of the 2% Sale
Notice, to sell the Company Voting Securities subject to the 2% Sale Notice in
accordance with the terms of, and to the person identified in, the 2% Sale
Notice. If such sale is not effected within such 30 day period such Company
Voting Securities shall remain subject to the provisions of the Parent
Shareholders Agreement. Notwithstanding the foregoing, the right of first
refusal set forth in this paragraph shall not apply to the Transfer by Parent
Shareholders of Company Voting Securities (i) made in an underwritten public
offering pursuant to an effective registration statement under the Securities
Act, or (ii) made in a transaction permitted pursuant to, and made in
compliance with, clauses (i) or (iii) of the proviso to the first paragraph of
"Limitations on Disposition" above, or (iii) made in a tender offer, merger or
other similar business combination transaction approved by the Board of
Directors of the Company. Any proposed sale by Parent Shareholders of Company
Voting Securities shall be subject to the restrictions on sales to an acquiror
which would Beneficially Own 6% (or 4%, in the event that the purchaser is or
controls a Class I Railroad) or more of the outstanding Company Voting
Securities, as described in the immediately preceding paragraph, whether or
not the Company exercises its right of first refusal and consummates the
purchase of Parent Voting Securities. If the Company (or its assignee)
exercises its right to purchase any Company Voting Securities but fails to
complete the purchase thereof for any reason other than the failure of such
Parent Shareholder to perform its obligations hereunder with respect to such
purchase, then, on the 30th day following such Parent Shareholder's receipt of
the Purchase Notice, such Company Voting Securities shall cease to be subject
to the voting requirements, the limitations on disposition and the stop
transfer provisions of the Parent Shareholders Agreement for any purpose
whatsoever. If the purchase price described in any 2% Sale Notice is not
solely made up of cash or marketable securities, the 2% Sale Notice shall
include a good faith estimate of the cash equivalent of such other
consideration, and the consideration payable by the Company or its assignee
(if the Company elects to purchase (or to have assignee purchase) the Company
Voting Securities described in the 2% Sale Notice) in place of such other
consideration shall be cash equal to the amount of such estimate; provided,
however, that if Parent in good faith disagrees with such estimate and states
a different good faith estimate in the Purchase Notice, and if the Company and
such Parent Shareholder cannot agree on the cash equivalent of such other
(i.e., other than cash or marketable securities) consideration, such cash
equivalent shall be determined by a reputable investment banking firm without
material connections with either party. Such investment banking firm shall be
selected by both parties or, if they shall be unable to agree, by an
arbitrator appointed by the American Arbitration Association. The fees and
expenses of any such investment banking firm and/or arbitrator shall be shared
equally by the Company and such Parent Shareholder, unless otherwise
determined by such firm or arbitrator. In the event of such differing
estimates by the Company and such Parent Shareholder, periods of time which
would otherwise run under this paragraph from the date of such Parent
Shareholder's receipt of the Purchase Notice shall run instead from the date
on which the parties agree on such cash equivalent or, in the absence of such
agreement, the date on which such cash equivalent is determined by such
investment banking firm. If the purchase price described in any 2% Sale Notice
shall include marketable securities, the purchase price payable by the Company
(or its designee) shall include, to the extent marketable securities were
included as a portion of the consideration provided for in the 2% Sale Notice,
an amount in cash determined by reference to the Current Market Price of such
securities on the day the Purchase Notice is received by such Parent
Shareholder.
The Parent Shareholders Agreement provides that in connection with any
proposed privately negotiated sale by any Parent Shareholders of Company
Voting Securities representing in excess of 3.9% of the then outstanding
Company Voting Securities, the Company will cooperate with and permit the
proposed purchaser to conduct a due diligence review that is reasonable under
the circumstances of the Company and its Subsidiaries and their respective
business and operations, including, without limitation, reasonable access
during normal business hours to their executive officers and, if reasonable
under the circumstances, their properties, subject to execution by such
purchaser of a customary confidentiality agreement; provided that the Company
shall not be required to permit more than two such due diligence reviews in
any twelve-month period.
The Parent Shareholders Agreement provides that notwithstanding any
provision to the contrary contained therein, and without being subject to any
of the restrictions set forth therein, Parent Shareholders and their
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Affiliates may (i) transfer or distribute, by means of dividend, exchange
offer or other distribution, any shares of Company Voting Securities to
Parent's stockholders and (ii) transfer or dispose of the Company Voting
Securities in connection with an underwritten public offering of debt or
equity securities of Parent which are convertible or exchangeable into Company
Voting Securities, it being agreed that the Company shall fully cooperate with
Parent in connection with any such disposition, including by filing any
necessary registration statement with the SEC and entering into a customary
underwriting agreement, if necessary.
Limitation on Company Action. The Parent Shareholders Agreement provides
that without the prior written consent of Parent Shareholders, the Company
shall not take or recommend to its stockholders any action which would impose
limitations, not imposed on other stockholders of the Company, on the
enjoyment by any of the Parent Shareholders and their Affiliates of the legal
rights generally enjoyed by shareholders of the Company, other than those
imposed by the terms of the Parent Shareholders Agreement, the Merger
Agreement, and the Ancillary Agreements; provided, however, that the foregoing
shall not prevent the Company from implementing or adopting a Shareholder
Rights Plan or issuing a similar security which has a "trigger" threshold of
not less than two percentage points greater than the percentage of outstanding
shares of Company Common Stock then Beneficially Owned by the Parent
Shareholders.
Access to Information. The Parent Shareholders Agreement provides that 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 Shareholders, access, during normal business hours,
during the term of the Parent Shareholders Agreement, 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 Parent Shareholders (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 Shareholders may reasonably request; provided, however,
that access to certain Company information may require the entry of a
protective order by the ICC, after which date full access will be granted to
such information consistent with this paragraph and subject to the terms of
such order. Unless otherwise required by law, Parent Shareholders will hold
any such information which is nonpublic in confidence in accordance with the
provisions of the existing confidentiality agreement between the Company and
Parent, subject to the requirements of applicable law.
Termination. The Parent Shareholders Agreement provides that except as
otherwise provided therein, the Parent Shareholders Agreement shall terminate
(i) if the Offer is not consummated, upon the termination of the Merger
Agreement in accordance with its terms, (ii) if the Effective Time does occur,
on the Effective Time or (iii) if the Offer is consummated but the Effective
Time does not occur, at such time that Parent Shareholders Beneficially Own,
and continue to Beneficially Own, in the aggregate less than 4% of the Company
Voting Securities then outstanding, it being understood that if, under the
circumstances of this clause (iii), the Parent Shareholders Beneficially Own
less than 4% of the Company Voting Securities then outstanding but prior to
the seventh anniversary of the Effective Time, subsequently become Beneficial
Owners of more than 4% of the Company Voting Securities then outstanding, the
standstill and limitations on disposition provisions, among others, in the
Parent Shareholders Agreement shall become effective and in full force again
as if no such termination had occurred.
Voting Trust. The Parent Shareholders Agreement provides that the parties
thereto acknowledge and agree that the Trustee shall be entitled to exercise
any and all rights, and shall be subject to any and all obligations, of Parent
Shareholders under the Parent Shareholders Agreement (as if a Parent
Shareholder party thereto) it being understood that the standstill provisions
thereof shall not be applicable to the Trustee or the Voting Trust (other than
the provisions incorporated by reference into the restrictions on transfer
provisions thereof).
Anschutz/Resources Shareholders Agreement
Effectiveness. The Anschutz/Resources Shareholders Agreement provides that
it shall become effective only upon consummation of the Spin-off and shall
terminate and be void and of no further force or effect if the Merger
Agreement is terminated in accordance with the termination provisions thereof.
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Pledge. The Anschutz/Resources Shareholders Agreement provides that TAC has
advised Parent that shares of Company Common Stock Beneficially Owned by TAC
are or may be pledged to Bank of America National Trust and Savings
Association or Citibank, N.A., respectively (collectively, the "Banks")
pursuant to pledge agreements (substantially in the forms reviewed by Parent,
collectively, the "Existing Pledge Agreements") to secure indebtedness
borrowed from the Banks. In the Anschutz/Resources Shareholders Agreement TAC
represents and warrants that the Existing Pledge Agreements do not or, before
indebtedness borrowed therefrom is secured by any such shares, will not
prevent, limit or interfere with TAC's compliance with, or performance of its
obligations under, the Anschutz/Resources Shareholders Agreement, absent a
default under the applicable Existing Pledge Agreements. TAC represents and
warrants that it is not in default under the Existing Pledge Agreements.
Before Resources Voting Securities shall be pledged to secure indebtedness
owed under an Existing Pledge Agreement, TAC shall deliver to Parent a letter
from Bank of America National Trust and Savings Association or Citibank, N.A.,
as the case may be, acknowledging the Anschutz/Resources Shareholders
Agreement and agreeing that, notwithstanding any default under the Existing
Pledge Agreement, TAC shall have the right to exercise all voting rights with
respect to the Company Common Stock pledged thereunder. Shareholders may
hereafter effect one or more pledges of Company Voting Securities, or grants
of security interests therein, to one or more financial institutions (other
than the Banks) that are not Affiliates of any Shareholder (collectively,
"Other Financial Institutions") as security for the payment of bona fide
indebtedness owed by one or more of the Shareholders or their Affiliates to
such financial institutions. Except as set forth in the proviso below, neither
the Bank nor any financial institution which hereafter becomes a pledgee of
Company Voting Securities shall incur any obligations under the
Anschutz/Resources Shareholders Agreement with respect to such Company Voting
Securities or shall be restricted from exercising any right of enforcement or
foreclosure with respect to any related security interest or lien; provided,
however, that it shall be a condition to any such pledge to any Other
Financial Institution that the pledgee shall agree that TAC shall have the
right to exercise all voting rights with respect to the Company Voting
Securities pledged thereunder and no such pledge shall prevent, limit or
interfere with Shareholders' compliance with, or performance of their
obligations under, the Anschutz/Resources Shareholders Agreement, absent a
default under such pledge agreement.
Public Comments; Fiduciary Duties. The Anschutz/Resources Shareholders
Agreement provides that during the Resources Standstill Period, Shareholders
will not, and will cause their Affiliates not to, directly or indirectly, make
any public comment, statement or communication, or take any action that would
otherwise require any public disclosure by Shareholders, Parent, Resources or
any other Person, concerning the Merger, the Offer, the Spin-off and the other
transactions contemplated by the Merger Agreement, the Anschutz/Resources
Shareholders Agreement and the Ancillary Agreements, except for any disclosure
(i) concerning the status of Shareholders as parties to such agreements, the
terms thereof, and their beneficial ownership of Shares required pursuant to
Section 13(d) of the Exchange Act or (ii) required in the Schedule 14D-9 or
the Proxy Statement/Prospectus.
The Anschutz/Resources Shareholders Agreement provides that the parties
acknowledge that any Person who is a director or officer of the Company may
exercise his fiduciary duties in his capacity as a director or officer with
respect to the Company, as opposed to taking action with respect to the direct
or indirect ownership of any Shares, and no such exercise of fiduciary duties
shall be deemed to be a breach of, or a violation of the restrictions set
forth in, the Anschutz/Resources Shareholders Agreement and none of the
Shareholders shall have any liability hereunder for any such exercise of
fiduciary duties by such Person in his capacity as a director and officer of
the Company.
Standstill and Related Provisions. The Anschutz/Resources Shareholders
Agreement provides for virtually the same "standstill" restrictions and voting
obligations with respect to the Shareholders as those contained in the
Anschutz Shareholders Agreement except that the restrictions and obligations
apply to Resources and the Resources Voting Securities. See "--Anschutz
Shareholders Agreement--Standstill and Related Provisions" above.
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Limitations on Disposition. The Anschutz/Resources Shareholders Agreement
provides for virtually the same limitations on dispositions by the
Shareholders as those contained in the Anschutz Shareholders Agreement except
that the restrictions and obligations apply to Resources and the Resources
Voting Securities. See "--Anschutz Shareholders Agreement--Limitations on
Disposition" above.
Resources Covenants. The Anschutz/Resources Shareholders Agreement provides
that on or prior to the consummation of the Spin-off, the Board of Directors
of Resources will take all action necessary to elect a designee of TAC who is
not an Affiliate of, and does not have any business relationship with, any of
the Shareholders or their Affiliates, and is reasonably acceptable to the
Board of Directors of Resources (the "Resources Shareholder Designee") as a
director of Resources' Board of Directors. In the event that the Resources
Shareholder Designee shall resign, become disabled or be removed as a member
of Resources' Board of Directors (except in circumstances, other than item
(vi) below, in which the Resources Shareholder Designee was required
(including if requested by Resources) to resign as a director pursuant to the
terms of the Anschutz/Resources Shareholders Agreement) TAC shall have the
right to select a new Resources Shareholder Designee. Shareholders acknowledge
that as a condition precedent to the appointment of the Resources Shareholder
Designee to Resources' Board of Directors, the Resources Shareholder Designee
shall enter into an agreement (the "SD Agreement"), in form and substance
satisfactory to Resources and its counsel, to the effect that:
(i) the Resources Shareholder Designee agrees that the Resources
Shareholder Designee will not provide, disclose, or otherwise make
available, directly or indirectly, any confidential or non-public
information relating to Resources or its subsidiaries, including
competitively sensitive information, to the Shareholders, or their
Affiliates or Representatives;
(ii) the Resources Shareholder Designee will not voluntarily receive,
directly or indirectly, any confidential or non-public information relating
to any business, company or entity affiliated with any of the Shareholders
which competes in any way with, or is a potential competitor of, Resources
(a "Competing Business"), and, in the event the Resources Shareholder
Designee involuntarily receives, or receives on an unsolicited basis, such
confidential or non-public information, the Resources Shareholder Designee
agrees to report to Resources the fact that the Resources Shareholder
Designee received such information;
(iii) in connection with actions taken as a director of Resources, the
Resources Shareholder Designee will not take into account or consider the
impact or effect of such actions on the Shareholders (other than in their
capacity as shareholders of Resources), their Affiliates or on any
Competing Business;
(iv) the Resources Shareholder Designee will not serve as an officer,
director or employee of, or become a shareholder, partner or equity
investor in, any Competing Business so long as such Resources Shareholder
Designee serves as a director of Resources;
(v) none of the Resources Shareholder Designee, any family member of the
Resources Shareholder Designee or any person controlled by the Resources
Shareholder Designee will have any business relationship with, enter into
any arrangements or understandings relating to such business relationship
with, or receive any compensation, gifts or other forms of consideration
from, the Shareholders or their Affiliates so long as the Resources
Shareholder Designee is a director of Resources; and
(vi) the Resources Shareholder Designee, if requested by Resources (A)
will immediately resign as a director of Resources in the event that the
FTC shall institute, commence, or threaten any action, proceeding or
inquiry relating to the Resources Shareholder Designee's position as a
director of Resources, provided, that in the event of one or more
resignations pursuant to this clause (A), the Shareholders shall have the
right in each such event to designate a new Resources Shareholder Designee
in accordance with the terms of the Anschutz/Resources Shareholders
Agreement; (B) will resign as a director of Resources not later than the
next annual meeting of shareholders of Resources in the event that the
Shareholders and their Affiliates Beneficially Own less than 4% of
Resources' Voting Securities then outstanding, provided, however, that the
Anschutz/Resources Shareholders Agreement shall continue in full force and
effect until the date of such resignation and (C) will immediately resign
if the Shareholders violate or breach any of the material terms
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or provisions of the Anschutz/Resources Shareholders Agreement.
Notwithstanding any resignation pursuant to clause (C) of the preceding
sentence, all of the provisions of the Anschutz/Resources Shareholders
Agreement other than those described in this subsection shall continue in
full force and effect.
So long as Shareholders and their Affiliates continue to Beneficially Own in
excess of 4% of the Resources Voting Securities then outstanding or until the
termination of the Anschutz/Resources Shareholders Agreement, Resources shall
include the Shareholder Designee in the Board of Directors' slate of nominees
for election as directors at Resources' annual meeting of shareholders and
shall recommend that the Resources Shareholder Designee be elected as a
director of Resources.
So long as a Resources Shareholder Designee serves as a member of the Board
of Directors of Resources, Resources agrees that the Shareholder Designee
shall serve (subject to the applicable requirements of the FTC, the NYSE or
any other security exchange on which the Resources Common Stock is listed, or
if not so listed, under the rules or regulations of the National Association
of Securities Dealers) as a member of the Executive, Finance and Corporate
Development, and Compensation, Benefits and Nominating Committees of the Board
(or the three committees having similar functions). Except as otherwise
provided in the Anschutz/Resources Shareholders Agreement, upon the
termination of the Anschutz/Resources Shareholders Agreement, if requested by
Resources, the Resources Shareholder Designee shall resign as a director of
Resources' Board of Directors.
The Anschutz/Resources Shareholders Agreement provides that in the event
that the Resources Shareholder Designee shall cease to be a member of the
Board of Directors by reason of death, disability or resignation (except in
circumstances in which TAC shall not have the right to select a new
Shareholder Designee as described in the first paragraph under "Resources
Covenants" above), Resources shall replace such Resources Shareholder Designee
with another Resources Shareholder Designee at the next meeting of the Board
of Directors.
The Anschutz/Resources Shareholders Agreement provides that the Resources
Shareholder Designee, upon nomination or appointment as a director of
Resources, shall agree in writing to comply with the obligations of the
Shareholders under the "standstill" restrictions of the Anschutz/Resources
Shareholders Agreement referred to under "Standstill and Related Provisions"
above and the other obligation of such Resources Shareholder Designee under
the Anschutz/Resources Shareholders Agreement.
The Anschutz/Resources Shareholders Agreement provides that without the
prior written consent of Shareholders, Resources shall not take or recommend
to its shareholders any action which would impose limitations, not imposed on
other shareholders of Resources, on the enjoyment by any of Shareholders and
their Affiliates of the legal rights generally enjoyed by shareholders of
Resources, other than those imposed by the terms of the Anschutz/Resources
Shareholders Agreement, the Merger Agreement and the Ancillary Agreements;
provided, however, that the foregoing shall not prevent Resources from
implementing or adopting a Shareholder Rights Plan or issuing a similar
security which has a "trigger" threshold of not less than the greater of 10%
of the outstanding shares of Resources Common Stock or the amount then
Beneficially Owned by Shareholders not in violation of the Anschutz/Resources
Shareholders Agreement.
Termination. The Anschutz/Resources Shareholders Agreement provides that
except as otherwise provided therein, the Anschutz/Resources Shareholders
Agreement shall terminate on the earliest to occur of (1) the seventh
anniversary of the Effective Time, (2) following consummation of the Spin-off,
at such time that the Shareholders Beneficially Own, and continue to
Beneficially Own, in the aggregate, less than 4% of the Resources Voting
Securities then outstanding, it being understood, however, that if the
Shareholders at any time Beneficially Own in the aggregate less than 4% of the
Resources Voting Securities then outstanding but, prior to the seventh
anniversary of the Effective Time, subsequently acquire Beneficial Ownership
of any Resources Voting Securities (except pursuant to the provisions in the
Anschutz/Resources Shareholders Agreement comparable to clauses (A), (B) or
(C) of the parenthetical exception to the first sentence in item (i) under the
first paragraph of "Standstill and Related Provisions" under Anschutz
Shareholders Agreement above or in an Inadvertent Acquisition) if immediately
following such acquisition Shareholders become Beneficial Owners in
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the aggregate of more than 4% of the Resources Voting Securities then
outstanding, the standstill and limitations on disposition provisions, among
others, of the Anschutz/Resources Shareholders Agreement shall be effective
and in full force again as if no such termination had occurred and (3) if at
any time that the Shareholders Beneficially Own in the aggregate more than 4%
of the Resources Voting Securities then outstanding (i) the Resources
Shareholder Designee shall not be elected as a director of Resources (other
than as a result of a resignation or non-election in accordance with certain
provisions of the Anschutz/Resources Shareholders Agreement), (ii) subject to
applicable requirements of the FTC, the NYSE or any other security exchange on
which the Resources Common Stock is listed, or if not so listed, under the
rules or regulations of the National Association of Securities Dealers, the
Resources Shareholder Designee who is then a director shall not be appointed
as a member of the Executive, Finance and Corporate Development, and
Compensation, Benefits and Nominating Committees, respectively, of the Board
of Directors of Resources (or committees having similar functions) or (iv)
Resources shall have breached its covenant described in the fourth paragraph
under "Resources Covenants"; provided that TAC, for itself and on behalf of
all other Shareholders, may by written notice to Resources irrevocably elect
that, from and after the delivery thereof, the references in this paragraph
and in "Resources Covenants" above to "4%" be deleted and replaced by
references to "3%".
Registration Rights Agreements
THE FOLLOWING ARE SUMMARIES OF CERTAIN PROVISIONS OF CERTAIN REGISTRATION
RIGHTS AGREEMENTS (THE "REGISTRATION RIGHTS AGREEMENTS" AND, TOGETHER WITH THE
SHAREHOLDERS AGREEMENTS, THE "ANCILLARY AGREEMENTS") ENTERED INTO IN
CONNECTION WITH THE OFFER, THE MERGER AND THE SPIN-OFF. THE SUMMARIES ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE REGISTRATION RIGHTS AGREEMENTS
WHICH ARE INCORPORATED HEREIN BY REFERENCE. CAPITALIZED TERMS NOT OTHERWISE
DEFINED HEREIN OR IN THE FOLLOWING SUMMARIES SHALL HAVE THE MEANINGS SET FORTH
IN THE APPLICABLE REGISTRATION RIGHTS AGREEMENT.
Pursuant to a Registration Rights Agreement (the "Anschutz/Parent RRA"),
dated as of August 3, 1995, by and among Parent, TAC and the Foundation, TAC
and the Foundation are granted, subject to the terms and conditions therein
specified, three demand and unlimited "piggy-back" registration rights in
respect of the shares of Parent Common Stock to be received by them in the
Merger. The Anschutz/Parent RRA also provides for, under certain
circumstances, indemnification by Parent in favor of TAC and the Foundation
and by TAC and the Foundation in favor of Parent with respect to information
furnished by Parent and by TAC and the Foundation.
Pursuant to a Registration Rights Agreement (the "Anschutz/Resources RRA"),
dated as of August 3, 1995, by and among Resources, TAC and the Foundation,
TAC and the Foundation are granted, subject to the terms and conditions
therein specified, three demand and unlimited "piggy-back" registration rights
in respect of the shares of Resources Common Stock to be received by them in
the Spin-off. The Anschutz/Resources RRA also provides for, under certain
circumstances, indemnification by Resources in favor of TAC and the Foundation
and by TAC and the Foundation in favor of Resources with respect to
information furnished by Resources and by TAC and the Foundation.
Pursuant to a Registration Rights Agreement (the "Purchaser/Company RRA"),
dated as of August 3, 1995, by and among Purchaser and the Company, Purchaser
is granted, subject to the terms and conditions therein specified, six demand
and unlimited "piggy-back" registration rights in respect of the Shares to be
purchased pursuant to the Offer. The Purchaser/Company RRA also provides,
under certain circumstances, for indemnification by the Company in favor of
Purchaser and by Purchaser in favor of the Company with respect to information
furnished by the Company and by Purchaser.
Voting Trust Agreement.
Pursuant to a proposed Voting Trust Agreement (the "Voting Trust
Agreement"), dated as of August 3, 1995, by and among Parent, Purchaser and
Southwest Bank of St. Louis, a Missouri banking corporation (the "Trustee"),
the Trustee has agreed to act as trustee in respect of the Voting Trust. In
such capacity, the Trustee will vote all Shares (the "Trust Stock") acquired
by Purchaser in the Offer to approve the Merger, in favor of
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any proposal necessary to effectuate Parent's acquisition of the Company
pursuant to the Merger Agreement, and, so long as the Merger Agreement is in
effect subject to certain exceptions, against any other proposed merger,
business combination or similar transaction involving the Company. On other
matters (including the election or removal of directors), the Trustee will
vote the Trust Stock in the same proportion as all other Shares are voted with
respect to such matters. See "--Parent Shareholders Agreement--Limitations on
Disposition" for a description of the provisions of the Parent Shareholders
Agreement concerning dispositions.
Pending the termination of the Voting Trust, the Trustee shall pay over to
Purchaser all cash dividends and cash distributions paid on the Trust Stock.
The Voting Trust Agreement provides that the Voting Trust is subject to the
rights of Parent provided in the Parent Shareholders Agreement with respect to
the disposition of the Trust Stock. The Trustee has agreed to take all actions
reasonably requested by Parent with respect to any proposed sale or
disposition of the Trust Stock by Purchaser, including, without limitation, in
connection with the exercise of rights under the Merger Agreement, the
Purchaser/Company RRA and the Parent Shareholders Agreement. Upon (i) approval
or exemption by the ICC of the Transactions or a similar transaction between
the Company and UPRR, Parent or any of their affiliates or (ii) if the law is
amended, delivery to the Trustee of an opinion of independent legal counsel
that no ICC or other governmental approval is required, the Trustee shall
either transfer the Trust Stock to Purchaser or, if stockholder approval of
the Merger has not previously been obtained, vote the Trust Stock in favor of
the Merger.
In the event that the Merger Agreement terminates in accordance with its
terms or the condition set forth in Section 6.2(c) (ICC approval or exemption
from approval of the Merger) of the Merger Agreement is not satisfied or
waived by Parent and Purchaser, Parent has agreed to use its best efforts,
consistent with its rights under and subject to the terms of the Parent
Shareholders Agreement and the Purchaser/Company RRA, to sell the Trust Stock
to one or more eligible purchasers, to sell or distribute the Trust Stock in a
public offering made under the Securities Act of 1933, to distribute such
Trust Stock to stockholders of Parent, or otherwise to dispose of the Trust
Stock within two years. Such disposition shall be subject to any jurisdiction
of the ICC to oversee Parent's divestiture of Trust Stock. The Trustee would
continue to perform its duties under the Voting Trust Agreement and, should
Parent be unsuccessful in its efforts to sell or distribute the Trust Stock
during the two-year period, the Trustee, subject to the terms of the Parent
Shareholders Agreement, shall as soon as practicable sell the Trust Stock for
cash to one or more eligible purchasers in such manner and for such price as
the Trustee in its discretion shall deem reasonable after consultation with
Parent. (An "eligible purchaser" thereunder shall be a person or entity that
is not affiliated with Parent and which has all necessary regulatory
authority, if any, to purchase the Trust Stock.) The Voting Trust Agreement
further provides that Parent would cooperate with the Trustee in effecting
such disposition and that the Trustee would act in accordance with any
direction made by Parent as to any specific terms or method of disposition, to
the extent not inconsistent with the requirements of the terms of any ICC or
court order. The proceeds of the sale would be distributed to Parent.
The Voting Trust Agreement also provides that if the ICC issues an order
that termination of the Voting Trust will not cause Parent or its affiliates
to control the Company, the Trustee will transfer the Trust Stock to Purchaser
and the Voting Trust shall terminate.
The Voting Trust Agreement provides that the Trustee shall receive
reasonable and customary compensation and indemnification from Parent and
Purchaser.
Pursuant to the Merger Agreement, the Voting Trust Agreement may not be
modified or amended without the prior written approval of the Company unless
such modification or amendment is not inconsistent with the Merger Agreement
or the Ancillary Agreements and is not adverse to the Company or its
stockholders.
Parent has requested the staff of the ICC to render an informal written
opinion that the use of the Voting Trust is consistent with the policies of
the ICC. See "THE OFFER--Certain Legal Matters; Regulatory Approvals".
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Dissenters' Rights
In accordance with the United States Supreme Court decision, Schwabacher v.
United States, 334 U.S. 192 (1948), stockholders of the Company will not have
any dissenters' rights under state law, unless the ICC (or any successor
agency) or a court of competent jurisdiction determines that state-law
dissenters' rights are available to holders of Shares. Parent considers it
unlikely that the ICC or a court will determine that state-law dissenters'
rights are available to holders of Shares. As part of the approval of the
Merger, Parent and the Company intend to seek a determination of the ICC that
the terms of the Merger are just and reasonable. It is Parent's and the
Company's understanding that upon the issuance of such a determination, state-
law dissenters' rights will be pre-empted. Stockholders of the Company will
have an opportunity to participate in this ICC proceeding.
If dissenters' rights are available to holders of Shares, such rights will
be provided in accordance with Section 262 of the DGCL which generally
provides that any holder of Shares at the Effective Time who does not wish to
accept the consideration paid pursuant to the Merger has the right to seek an
appraisal and be paid the "fair value" of its Shares at the Effective Time
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) judicially determined and paid to them in cash
provided that such holder complies with the provisions of Section 262 of DGCL.
Appraisal rights cannot be exercised at this time. Stockholders who will be
entitled to appraisal rights, if any, in connection with the Merger (or
similar business combination) will receive additional information concerning
any available appraisal rights and the procedures to be followed in connection
therewith before such stockholders have to take any action relating thereto.
Stockholders who sell shares in the Offer will not be entitled to exercise
any appraisal rights with respect to Shares purchased but, rather, will
receive the Offer Price.
14. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of the Merger
Agreement, the Company should (i) split, combine or otherwise change the
Shares or its capitalization, (ii) issue or sell any additional securities of
the Company or otherwise cause an increase in the number of outstanding
securities of the Company (except for Shares issuable upon the vesting of
previously granted awards under the EIP) or (iii) acquire currently
outstanding Shares or otherwise cause a reduction in the number of outstanding
Shares, then, without prejudice to Purchaser's rights under Sections 1 and 15,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the purchase price and other terms of the Offer and the Merger,
including, without limitation, the amount and type of securities offered to be
purchased.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any dividend on the Shares or make any distribution (including, without
limitation, the issuance of additional Shares pursuant to a stock dividend or
stock split, the issuance of other securities or the issuance of rights for
the purchase of any securities) with respect to the Shares that is payable or
distributable to stockholders of record on a date prior to the transfer to the
name of Purchaser or its nominee or transferee on the Company's stock transfer
records of the Shares purchased pursuant to the Offer, then, without prejudice
to Purchaser's rights under Sections 1 and 15, (i) the purchase price per
Share payable by Purchaser pursuant to the Offer will be reduced by the amount
of any such cash dividend or cash distribution and (ii) any such non-cash
dividend, distribution or right to be received by the tendering stockholders
will be received and held by such tendering stockholders for the account of
Purchaser and will be required to be promptly remitted and transferred by each
such tendering stockholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such non-cash dividend, distribution or right and
may withhold the entire purchase price or deduct from the purchase price the
amount of value thereof, as determined by Purchaser in its sole discretion.
The Company has agreed in the Merger Agreement that it will not pay any
dividends on the Shares prior to the Merger.
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15. CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the
Offer, and in addition to (and not in limitation of) Purchaser's rights to
extend and amend the Offer at any time in its sole discretion (subject to the
provisions of the Merger Agreement), 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 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 (1) Purchaser does not receive prior to the expiration of the Offer an
informal written opinion in form and substance satisfactory to Purchaser from
the staff of the ICC, without the imposition of any conditions unacceptable to
Purchaser, that the use of the Voting Trust is consistent with the policies of
the ICC against unauthorized acquisitions of control of a regulated carrier,
(2) Purchaser does not receive prior to the expiration of the Offer an
informal statement from the Premerger Notification Office of the FTC either
that (i) no review of the Offer, the Merger and the transactions contemplated
by the Ancillary Agreements will be undertaken pursuant to the HSR Act, or
(ii) the transactions contemplated by the Offer, the Merger and the
transactions contemplated by the Ancillary Agreements are not subject to the
HSR Act, or in the absence of the receipt of such informal statement referred
to in clause (i) or (ii) above, any applicable waiting period under the HSR
Act shall have expired or been terminated prior to the expiration of the Offer
(see Section 16), or (3) at any time on or after August 3, 1995 and prior to
the acceptance for payment of Shares, any of the following events shall occur
or shall be determined by Purchaser to have occurred:
(a) there shall be instituted, pending or threatened any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, (i) challenging or seeking to make illegal, to delay materially
or otherwise directly or indirectly to restrain or prohibit the making of
the Offer, the acceptance for payment of or payment for some of or all the
Shares by Parent, UPRR or Purchaser or the consummation by Parent, UPRR or
Purchaser of the Merger, seeking to obtain material damages relating to the
Merger Agreement, the Ancillary Agreement or any of the transactions
contemplated thereby or otherwise seeking to prohibit directly or
indirectly the transactions contemplated by the Offer or the Merger, or
challenging or seeking to make illegal the transactions contemplated by the
Ancillary Agreements or otherwise directly or indirectly to restrain,
prohibit or delay the transactions contemplated by the Ancillary
Agreements, (ii) except for the Voting Trust, seeking to restrain, prohibit
or delay Parent's, UPRR's, Purchaser's or any of their subsidiaries'
ownership or operation of all or any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or to compel
Parent or any of its subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, (iii) except for the Voting Trust, seeking
to impose or confirm material limitations on the ability of Parent, UPRR,
Purchaser or any of their subsidiaries or affiliates effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned by Parent, UPRR,
Purchaser or any of their subsidiaries on all matters properly presented to
the Company's stockholders in accordance with the terms of the Parent
Stockholder Agreement, or (iv) seeking to require divestiture by Parent or
Purchaser or any of their subsidiaries of any Shares; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree enacted, enforced, promulgated, issued or
deemed applicable to the Offer or the Merger, by or before any court,
government or governmental authority or agency, domestic or foreign to the
Offer or the Merger, that, directly or indirectly, results in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above; or
(c) there shall have occurred (i) any general suspension of trading in
securities on any national securities exchange or in the over-the-counter
market, (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory), (iii) any limitation (whether or not mandatory) by any United
States governmental authority or agency on the extension of credit by banks
or other financial institutions or (iv) in the case of any of the
situations described in clauses (i) through (iii) inclusive, existing at
the date of the commencement of the Offer, a material acceleration or
worsening thereof; or
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(d) there shall have occurred any event, change or effect which has, or
would be reasonably likely to have, individually or in the aggregate (after
taking into account the proceeds of insurance coverage), a material adverse
effect on the financial condition, businesses, results of operations,
assets, liabilities or properties of the Company and its Subsidiaries taken
as a whole as a result of or arising out of "force majeure" (where "force
majeure" shall mean any act of God (including, without limitation,
earthquake, hurricane, flood, tornado or fire)), accident, damage to or
destruction of facilities, properties or assets (tangible or intangible),
war, civil disturbance, national calamity (excluding an economic crisis in
and of itself) or acts of terrorism; or
(e) Parent, UPRR or Purchaser shall have otherwise learned that (i) any
person, entity or "group" (as that term is defined in Section 13(d)(3) of
the Exchange Act), other than Parent or its Subsidiaries, the Shareholders,
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 25% 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 any
option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 25% of any class or series of capital stock of the
Company (including the Shares) other than as disclosed in a Schedule 13D on
file with the SEC on August 3, 1995; or (ii) any such person, entity or
"group" (as that term is defined in Section 13(d)(3) of the Exchange Act),
other than Parent or its Subsidiaries, or the Shareholders, which, prior to
August 3, 1995, had filed a Schedule 13D with the SEC, shall have acquired
or proposed to acquire beneficial ownership of additional 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,
constituting 1% or more of any such class or series, or shall have been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of additional shares of any class or series of capital
stock of the Company (including the Shares) constituting 1% or more of any
such class or series; or
(f) a tender or exchange offer for some or all of the Shares shall have
been publicly proposed to be made or shall have been made by another person
and prior to the expiration of the Offer there shall not have been validly
tendered and not withdrawn at least 39,034,471 Shares; or
(g) the Board of Directors of the Company shall have withdrawn, modified
or changed in a manner adverse to Parent or Purchaser its approval or
recommendation of the Merger Agreement, the Offer or the Merger or shall
have recommended a Takeover Proposal or other business combination, or the
Company shall have entered into an agreement in principle (or similar
agreement) or definitive agreement providing for a Takeover Proposal (as
defined in the Merger Agreement) or other business combination with a
person or entity other than Parent, Purchaser or their Subsidiaries (or the
Board of Directors of the Company resolves to do any of the foregoing); or
(h) the Company shall have breached or failed to observe or perform in
any material respect any of its covenants or agreements under the Merger
Agreement, or any of the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and accurate both when made
and, in the case of the representations set forth in Sections 3.10(b)
(compliance with law) and 3.11 (no defaults) of the Merger Agreement at any
time prior to consummation of the Offer, as if made at and as of such time,
except where the failure of such representations and warranties to be so
true and correct (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
(i) the Merger Agreement shall have been terminated in accordance with
its terms; or
(j) any party to the Ancillary Agreements other than Purchaser and Parent
shall have breached or failed to perform any of its agreements under such
agreements or breached any of its representations and warranties in such
agreements or any such agreement shall not be valid, binding and
enforceable, except for such breaches or failures or failures to be valid,
binding and enforceable that do not materially and adversely affect the
benefits expected to be received by Parent and Purchaser under the Anschutz
Shareholders Agreement, the Purchaser/Company RRA, the Merger Agreement and
the Ancillary Agreements; or
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(k) Purchaser or Parent shall have breached or failed to perform any of
its agreements under the Parent Stockholders Agreement or breached any of
its representations and warranties in such agreement or such agreement
shall not be valid, binding and enforceable, except for such breaches or
failures or failures to be valid, binding and enforceable that do not
materially and adversely affect the benefits expected to be received by the
Company under such agreement;
which, in the sole judgment of Parent or Purchaser in any such case, and
regardless of the circumstances (including any action or omission by Parent or
Purchaser) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by Parent or Purchaser in
whole or in part at any time and from time to time in their reasonable
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
The Merger Agreement provides that, without the written consent of the
Company, Purchaser will not waive the condition set forth in paragraph (k)
above, and further provides that Purchaser shall waive the condition set forth
in paragraph (k) above if directed by the Company.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Except as otherwise disclosed herein, based on representations and
warranties made by the Company in the Merger Agreement and a review of
publicly available information by the Company with the SEC, none of Purchaser,
UPRR or Parent is aware of (i) any license or regulatory permit that appears
to be material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the acquisition of Shares by
Parent, Purchaser or UPRR pursuant to the Offer or the Merger, respectively,
or (ii) any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required
for the acquisition or ownership of Shares by Parent, Purchaser or UPRR as
contemplated herein. Should any such approval or other action be required,
Parent, Purchaser and UPRR currently contemplate that such approval or action
would be sought. While Purchaser does not currently intend to delay the
acceptance for payment of Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval
or action, if needed, would be obtained or would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Purchaser, UPRR or Parent or that certain parts of
the businesses of the Company, Purchaser, UPRR or Parent might not have to be
disposed of in the event that such approvals were not obtained or any other
actions were not taken. Purchaser's obligation under the Offer to accept for
payment and pay for Shares is subject to certain conditions. See Section 15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The notice and waiting period
requirements of the HSR Act do not apply to the affiliation of Parent's and
the Company's ICC-regulated railroad operations, provided that information and
documentary material filed with the ICC in connection with the seeking of ICC
approval of the affiliation of such operations are contemporaneously filed
with the Antitrust Division and the FTC. Parent intends to comply with these
contemporaneous filing requirements and therefore believes that the notice and
waiting period requirements do not apply to the Transactions. Parent, UPRR and
the Purchaser believe that the Offer is not subject to the HSR Act. Parent,
UPRR and the Purchaser requested the FTC to confirm this understanding and
counsel for Parent has been orally advised by the Premerger Notification
Office of the FTC that the Offer and the Merger are exempt from the HSR Act.
Accordingly, Parent currently expects that the HSR Condition will be
satisfied. See Section 15.
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ICC Matters; The Voting Trust. Certain activities of subsidiaries of the
Company are regulated by the ICC. Provisions of the Interstate Commerce Act
require approval of, or the granting of an exemption from approval by, the ICC
for the acquisition of control of two or more carriers subject to the
jurisdiction of the ICC ("Carriers") by a person that is not a Carrier and for
the acquisition or control of a Carrier by a person that is not a Carrier but
that controls any number of Carriers. ICC approval or exemption is required
for, among other things, Purchaser's acquisition of control of the Company.
Parent and Purchaser do not believe that ownership by Purchaser of the Shares
to be purchased pursuant to the Offer would give Parent and its affiliates
control of the Company and its affiliates. Nonetheless, Purchaser intends to
deposit the Shares purchased pursuant to the Offer in the Voting Trust in
order to ensure that Parent and its affiliates do not acquire and directly or
indirectly exercise control over the Company and its affiliates prior to
obtaining necessary ICC approvals or exemptions. ICC approval of the proposed
Merger is not a condition to the Offer. The Offer is conditioned upon the
issuance by the staff of the ICC of an informal, non-binding opinion, without
the imposition of any conditions unacceptable to Purchaser, that the use of
the Voting Trust is consistent with the policies of the ICC against
unauthorized acquisitions of control of a regulated carrier. Parent and UPRR
have requested the staff of the ICC to issue such an opinion. Under ICC
regulations that have been in effect since 1979, the ICC staff has the power
to issue such opinions. The proposed Voting Trust Agreement is modelled
closely upon voting trust agreements that have been approved by the ICC.
However, there can be no assurance that the ICC will not seek changes in, or
request public comment regarding, the Voting Trust Agreement. See "THE OFFER--
The Merger Agreement; Shareholders Agreements; Registration Rights Agreements;
Other Agreements--Voting Trust Agreement."
It is possible that railroad competitors of UPRR and SPT, or others, may
argue that Purchaser should not be permitted to use the voting trust mechanism
to acquire Shares prior to final ICC approval of the acquisition of control of
the Company. Purchaser believes it is unlikely that such arguments would
prevail, but there can be no assurance in this regard, nor can there be any
assurance that if such arguments are made, it will not cause delay in
obtaining a favorable ICC staff opinion regarding the Voting Trust Agreement.
Pursuant to the terms of the Voting Trust Agreement, it is expected that the
Trustee would hold such Shares until (i) the receipt of ICC approval, (ii) the
Shares are sold to a third party or otherwise disposed of, or (iii) the Voting
Trust is otherwise terminated. The Voting Trust Agreement that has been
submitted to the staff of the ICC for approval provides that Trustee will have
sole power to vote the Shares in the Trust, will vote those Shares in favor of
the Merger and so long as the Merger Agreement is in effect against any other
acquisition transaction, will vote the Shares in favor of any permitted
disposition of the Shares and, on all other matters, will vote the Shares in
proportion to the vote of all other stockholders of the Company. The Voting
Trust Agreement contains certain other terms and conditions designed to ensure
that neither Purchaser nor Parent will control the Company during the pendency
of the ICC proceedings. In addition, the Voting Trust Agreement provides that
Purchaser or its successor in interest will be entitled to receive any
dividends paid by the Company other than stock dividends.
ICC Matters; Acquisition of Control. Set forth below is information relating
to approval by the ICC of the acquisition of control over the Company by
Parent, UPRR and Purchaser. On or before December 1, 1995, Parent, the Company
and various of their affiliates plan to file an application (the "ICC
Application") seeking approval of the ICC for the acquisition of control over
the Company and its affiliates by Parent and its affiliates, the Merger, and
related transactions. Under applicable law and regulations, the ICC will hold
a public hearing on such application, unless it determines that a public
hearing is not necessary in the public interest. In ruling on the ICC
Application, it is expected that the ICC will consider at least the following:
(a) the effect of the proposed control transaction on the adequacy of
transportation to the public; (b) the effect on the public interest of
including, or failing to include, other carriers in the area served by the
railroad operations of Parent and the Company; (c) the total fixed charges
that would result from the proposed control transaction; (d) the interests of
carrier employees affected by the proposed control transaction; and (e)
whether the proposed control transaction would have an adverse effect on
competition among ICC-regulated carriers in the affected region. The ICC has
the authority to impose conditions on its approval of a control transaction to
alleviate competitive or other
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concerns. If such conditions are imposed, the applicants can elect to
consummate the control transaction subject to the conditions or can elect not
to consummate the transaction. Parent has indicated a willingness to accept
conditions to preserve rail competition where UPRR and SPT are the only rail
competitors. See Section 13. The obligations of Parent, UPRR and Purchaser to
consummate the Merger are conditioned upon, among other things, the issuance by
the ICC or any Similar Successor (as defined in the Merger Agreement) of a
decision (which decision shall not have been stayed or enjoined) that (A)
constitutes a final order approving, exempting or otherwise authorizing
consummation of the Merger and all other transactions contemplated by the
Merger Agreement and the Ancillary Agreements (or subsequently presented to the
ICC or a Similar Successor by agreement of Parent and the Company) as may
require such authorization and (B) does not (1) change or disapprove of the
Merger Consideration (as defined in the Merger Agreement) or other material
provisions of Article II of the Merger Agreement or (2) impose on Parent, the
Company or any of their respective Subsidiaries (as defined in the Merger
Agreement) any other terms or conditions (including, without limitation, labor
protective provisions but excluding conditions heretofore imposed by the ICC in
New York Dock Railway--Control--Brooklyn Eastern District, 360 I.C.C. 60
(1979)) that materially and adversely affect the long-term benefits expected to
be received by Parent from the transactions contemplated by the Merger
Agreement. There is no assurance that ICC approval will be obtained or obtained
on terms that would be acceptable to Parent. See "Merger Agreements;
Shareholders Agreements; Registration Rights Agreements; Other Agreements--
Merger Agreement-Conditions to the Merger."
Three of the five factors listed above are, in Parent's view, unlikely to
affect whether the ICC Application is approved by the ICC. As to factor (b)--
inclusion of other carriers--the ICC disfavors this remedy, it has rarely been
requested, and Parent believes it is unlikely to be requested by any railroad
in a Parent/Company proceeding. As to factor (c)--effect on fixed charges--the
capital structure of the resulting company will be sufficiently strong that
this factor is unlikely, in Parent's view, to be given weight by the ICC in
deciding whether to approve a combination of the Company and Parent. As to
factor (d)--the interest of affected carrier employees--the ICC has adopted a
standard set of labor protective conditions--the New York Dock conditions
referred to above--which it imposes in rail merger and control transactions,
and Parent expects that those conditions would be imposed upon a merger of
Parent and the Company and that this would not affect approval of the
transaction.
The remaining two factors--factor (a)--effect on the adequacy of
transportation--and factor (e)--effect on rail competition--are reflected in
the public interest balancing test that the ICC applies in reviewing railroad
mergers like the proposed combination of Parent and the Company. On the one
hand, the ICC considers the public benefits of the transaction in terms of
better service to shippers, efficiencies, cost savings and the like. On the
other hand, the ICC considers any public harms from the transaction. The
principal harm of concern to the ICC, and the principal issue that is likely to
be raised by parties opposing approval of a merger of UPRR and the Company or
seeking the imposition of conditions thereto, is reduction in competition. In
applying the public interest balancing test, the ICC is guided by Congress'
intent to encourage mergers, consolidations, and joint use of facilities that
tend to rationalize and improve the Nation's rail system.
Parent intends to present to the ICC its case that the acquisition of control
of the Company satisfies the public interest balancing test. First, Parent will
seek to show that a combination of the Company and Parent has significant
public benefits. Second, Parent will seek to show that a combination of the
Company and Parent, especially with competition-preserving conditions that
Parent is prepared to agree to, will have no significant adverse effect on rail
competition, and indeed will strengthen such competition. While Parent will
seek to present a highly persuasive case, there can be no assurance that the
ICC Application will not be denied, or will not be granted subject to
conditions that are so onerous that the Merger is not consummated.
Under existing law, the ICC is generally required to enter a final order with
respect to the ICC Application within approximately 31 months after such
application is filed. However, the ICC can process such cases more quickly, and
has published proposed regulations under which a decision would be issued
within six months of
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the filing of the ICC Application. Parent, the Company and various of their
affiliates have asked the ICC to adopt a six-month schedule for processing the
ICC Application, based on the schedule that the ICC adopted in the recent
Burlington Northern/Santa Fe proceeding. Parent believes it is likely that the
schedule it has proposed, or a schedule generally similar to it, will be
adopted. Under existing law, other railroads and other interested parties may
seek to intervene to oppose the ICC Application or to seek protective
conditions in the event approval by the ICC is granted. In addition, any
appeals from the ICC final order might not be resolved for a substantial
period of time after the entry of such order by the ICC.
It is possible that the ICC will cease to exist before a decision is
rendered on the ICC Application. Both the Administration and leading members
of Congress have proposed that the ICC be abolished in the near future, and
various proposals are under consideration as to the creation of a successor
agency and the disposition of various ICC functions. Parent believes that the
likely outcome is that the present statutory public interest standard for the
review of railroad control transactions will be retained and the review
function will be transferred to an independent agency within the United States
Department of Transportation. In this event, Parent would expect the timing
and substance of the review of the ICC Application to be largely unaffected.
However, there are a number of other possibilities, including the repeal of
the public interest standard and the subjection of railroad control
transactions to the antitrust laws, notwithstanding the previous advice from
the FTC (described above) under current law that the Transactions are exempt
from the HSR Act. There can be no assurance that these other possibilities
will not come to pass, or as to the terms upon which, or whether, the
acquisition would receive government approval in that event. The obligations
of Parent, UPRR and Purchaser to consummate the Merger are subject to the
condition that, among other things, that no successor to the ICC (other than a
Similar Successor) shall have required any divestiture, hold separate, or
other restriction or action in connection with the expiration or termination
of any waiting period applicable to the Merger Agreement and the transactions
contemplated thereby, or in connection with any other action by or in respect
of or filing with such successor, that would materially and adversely affect
the long-term benefits expected to be received by Parent from the transactions
contemplated by the Merger Agreement.
Pending receipt of the ICC approval, it is expected that the business and
operations of the Company will be conducted in the usual and ordinary course
of business, and the Company's employees and management will continue in their
present positions.
State Takeover Statutes. As a Delaware corporation, the Company is subject
to Section 203 ("Section 203") of the DGCL. Section 203 would prevent an
"Interested Stockholder" (generally defined as a person beneficially owning
15% or more of a corporation's voting stock) from engaging in a "Business
Combination" (as defined in Section 203) with a Delaware corporation for three
years following the date such person became an Interested Stockholder unless:
(i) before such person became an Interested Stockholder, the board of
directors of the corporation approved the transaction in which the Interested
Stockholder became an Interested Stockholder or approved the Business
Combination, (ii) upon consummation of the transaction which resulted in the
Interested Stockholder becoming an Interested Stockholder, the Interested
Stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time that the transaction commenced (excluding stock held
by directors who are also officers and by employee stock ownership plans that
do not allow plan participants to determine confidentially whether to tender
shares) or (iii) following the transaction in which such person became an
Interested Stockholder, the Business Combination is (x) approved by the board
of directors of the corporation and (y) authorized at a meeting of
stockholders by the affirmative vote of the holders of at least 66 2/3% of the
outstanding voting stock of the corporation not owned by the Interested
Stockholder. In accordance with the provisions of Section 203, the Board has
approved the transactions contemplated by the Merger Agreement and the
Ancillary Agreements, including Purchaser's acquisition of Shares pursuant to
the Offer. Accordingly, the transactions contemplated by the Merger Agreement
and the Ancillary Agreements, including Purchaser's acquisition of Shares
pursuant to the Offer, are exempt from the provisions of Section 203.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme
Court of the United States invalidated on constitutional
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grounds the Illinois Business Takeover Statute, which, as a matter of state
securities law, made takeovers of corporations meeting certain requirements
more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court held that the State of Indiana may, as a matter of corporate
law, and, in particular, with respect to those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders. The state law before the Supreme Court
was by its terms applicable only to corporations that had a substantial number
of stockholders in the state and were incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer and has not complied with any such laws. Should any person
seek to apply any state takeover law, Purchaser will take such action as then
appears desirable, which may include challenging the validity or applicability
of any such statute in appropriate court proceedings. In the event it is
asserted that one or more state takeover laws is applicable to the
Transaction, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser and/or UPRR might
be required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, Purchaser may
not be obligated to accept for payment any Shares tendered. See Section 15.
17. FEES AND EXPENSES. CS First Boston is acting as the Dealer Manager in
connection with the Offer and is acting as financial advisor to Parent in
connection with its acquisition of the Company. Parent has agreed to pay CS
First Boston for its services an announcement fee of $2 million (the
"Announcement Fee"), payable upon the first public announcement of the
Transaction, a tender offer fee payable in connection with the Offer, based
upon the aggregate consideration paid in the Offer, but in an amount not to
exceed $3 million (the "Tender Offer Fee"), and a transaction fee payable in
connection with the Parent's proposed acquisition of the Company, based upon
the size of such transaction, but in an amount not to exceed $12 million (the
"Transaction Fee"), 75% of which is payable upon the acquisition of beneficial
ownership of 50% or more of the outstanding Common Stock, with the balance
payable upon closing of the Merger. Any portion of the Announcement Fee and
the Tender Offer Fee paid prior to the consummation of Parent's acquisition of
the Company will be fully credited against the Transaction Fee. If the Merger
is consummated CS First Boston will receive an aggregate fee of $12 million.
Parent has agreed to reimburse CS First Boston for its reasonable out-of-
pocket expenses, including the fees and expenses of its legal counsel,
incurred in connection with its engagement, and to indemnify CS First Boston
and certain related persons against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the
federal securities laws. Parent has also agreed that CS First Boston will have
a right of first opportunity for an 18-month period to act as Parent's
exclusive financial advisor, to the extent Parent elects to engage a financial
advisor, in connection with (i) any dispositions or divestitures of the assets
or securities of the Company acquired in the Transaction or (ii) any
transactions regarding trackage, haulage or other operating rights resulting
from the Transaction, with fees and other conditions of any such future
transactions to be mutually agreed upon.
CS First Boston has rendered various investment banking and other advisory
services to Parent and its affiliates in the past and is expected to continue
to render such services, for which it has received and will continue to
receive customary compensation from Parent and its affiliates. In the ordinary
course of business, CS First Boston and its affiliates may actively trade the
debt and equity securities of Parent and its affiliates and the Company for
their own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
Purchaser has retained D.F. King & Co., Inc. to act as the Information Agent
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, telegraph and personal interviews and
may request brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary
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<PAGE>
compensation for its services, will be reimbursed for certain reasonable out-
of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
In addition, Citibank, N.A. has been retained as the Depositary. The
Depositary has not been retained to make solicitations or recommendations in
its role as Depositary. The Depositary will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable out-
of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions to
any broker or dealer or any other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will, upon request only, be reimbursed by Purchaser for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
18. MISCELLANEOUS.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, Purchaser will make a good faith effort to comply with such state
statute. If, after such good faith effort, Purchaser cannot comply with any
such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of Purchaser by one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT, UPRR OR PURCHASER NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Parent, UPRR and Purchaser have filed with the SEC the Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. The Schedule 14D-1, and any amendments thereto, may
be inspected at, and copies may be obtained from, the same places and in the
same manner as set forth in Section 8 (except that they will not be available
at the regional offices of the SEC).
UP Acquisition Corporation
August 9, 1995
69
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the
Shares and any other required documents should be sent by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
CITIBANK, N.A.
By Mail: By Overnight Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street, 5th
P.O. Box 1429 404 Sette Drive Floor
Paramus, New Jersey Paramus, New Jersey 07652 New York, New York
07653
By Facsimile Transmission: By Telex:
(for Eligible Institutions Only) (710) 990-4964
(201) 262-3240 Answerback: CDDI PARA
Confirm by Telephone:
(800) 422-2066
------------
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(Call Toll Free) 1-800-697-6974
or (212) 269-5550 (call collect)
The Dealer Manager for the Offer is:
CS FIRST BOSTON
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
(212) 909-2000 (call collect)
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT, UPRR AND PURCHASER
1. Directors and Executive Officers of Parent. Set forth below is the name,
current business address, citizenship and the present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated, each person identified below is employed by Parent. The
principal address of Parent and, unless otherwise indicated below, the current
business address for each individual listed below is Martin Tower, Eighth and
Eaton Avenues, Bethlehem, Pennsylvania 18018. Directors are identified by an
asterisk. Each such person is a citizen of the United States.
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS
*Drew Lewis Chairman and Chief Executive Officer of
Parent. Director, American Express
Company, AT&T Corp., Ford Motor Company,
FPL Group, Inc., Gannett Co., Inc.
*L. White Matthews, III Executive Vice President-Finance of
Parent; Chief Financial Officer of UPRR.
Ursula F. Fairbairn Senior Vice President-Human Resources of
Parent since April 1990; Vice President--
Employee Relations of UPRR; prior to
April 1990, Mrs. Fairbairn served as
Director of Education and Management
Development for International Business
Machines Corporation.
Carl W. von Bernuth Senior Vice President and General Counsel
of Parent since September 1991; Vice
President and General Counsel of UPRR;
prior to September 1991, Mr. von Bernuth
served as Vice President and General
Counsel of Parent.
Charles E. Billingsley Vice President and Controller of Parent
since January 1990; Chief Accounting
Officer of UPRR; prior to January 1990,
Mr. Billingsley served as Controller of
Parent.
*Richard K. Davidson 1416 Dodge President of Parent; Chairman and Chief
Street Omaha, NE 68179 Executive Officer of UPRR. It has been
announced that Mr. Davidson will become
Chief Operating Officer of Parent no
later than January 1, 1996 and will
retain his position as President of
Parent.
John E. Dowling Vice President-Corporate Development of
Parent and UPRR since January 1990; prior
thereto, Mr. Dowling served as Vice
President-Financial Administration of
Parent.
John B. Gremillion, Jr.
Vice President-Taxes of Parent and UPRR
since February 1992; prior to February
1992, Mr. Gremillion, Jr. served as
Director of Taxes of Parent.
I-1
<PAGE>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS
Mary E. McAuliffe 555 13th Street, Vice President-External Relations of
N.W. Suite 450W Washington, DC Parent since December 1991; prior
20004 thereto, Ms. McAuliffe served as
Director-Washington Affairs,
Transportation and Tax Parent.
Gary F. Schuster Vice President-Corporate Relations of
Parent.
Gary M. Stuart Vice President and Treasurer of Parent
since December 1989; Treasurer of UPRR;
prior to January 1990, Mr. Stuart served
as Treasurer of Parent.
Judy L. Swantak Vice President and Corporate Secretary of
Parent since September 1991; Secretary of
UPRR; from March 1990 to September 1991,
Mrs. Swantak served as Corporate
Secretary of Parent and prior thereto
served as Assistant Secretary of Parent.
*Robert P. Bauman 1500 Littleton Chairman, British Aerospace, p.l.c.,
Road Parsippany, NJ 07054 London, England. Director, Capital
Cities/ABC, Inc., CIGNA Corporation,
Reuters Holdings p.l.c., Russell Reynolds
Associates, Inc.
*Richard B. Cheney 1150 17th Former Secretary of Defense. Senior
Street, N.W. Suite 1100 Fellow, American Enterprise Institute,
Washington, DC 20036 Washington, D.C. Director, IGI Inc.,
Morgan Stanley Group Inc., Procter &
Gamble Co., US WEST, Inc.
*E. Virgil Conway 101 Park Avenue Financial Consultant. Chairman, Financial
31st Floor New York, NY 10178 Accounting Standards Advisory Council.
Director, Accu-Health, Inc., Centennial
Insurance Company, Metropolitan
Transportation Authority, Trism, Inc.
Trustee, Atlantic Mutual Insurance
Company, Consolidated Edison Company of
New York, Inc., HRE Properties, Mutual
Funds Managed by Phoenix Home Life.
*Spencer F. Eccles P.O. Box 30006 Chairman and Chief Executive Officer,
Salt Lake City, UT 84130 First Security Corporation, Salt Lake
City, Utah. Director, Anderson Lumber
Co., First Security Bank of Utah, Zion's
Cooperative Mercantile Institution.
*Elbridge T. Gerry, Jr. 59 Wall Partner, Brown Brothers Harriman & Co.,
Street New York, NY 10005 New York, New York.
I-2
<PAGE>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS
*William H. Gray, III 8260 Willow President, United Negro College Fund,
Oaks Corporate Drive P.O. Box Inc., New York, N.Y. Director, Chase
10444 Fairfax, VA 22031 Manhattan Corp., Lotus Development Corp.,
MBIA Inc., Prudential Insurance Company
of America, Rockwell International
Corporation, Warner Lambert Company,
Westinghouse Electric Corporation.
*Judith Richards Hope 1299 Senior Partner, Paul, Hastings, Janofsky
Pennsylvania Ave., N.W. Tenth & Walker, law firm, Los Angeles,
Floor Washington, D.C. 20004 California and Washington D.C. Director,
The Budd Company, General Mills, Inc.,
Russell Reynolds Associates, Inc., Zurich
Reinsurance Center Holdings, Inc. Member,
The Harvard Corporation (The President
and Fellows of Harvard College).
*Lawrence M. Jones 250 N. St. Retired Chairman and Chief Executive
Francis Street P.O. Box 1762 Officer, The Coleman Company, Inc.,
Wichita, KS 67201 Wichita, Kansas. Director, Coleman
Company, Inc., Fleming Companies, Inc.,
Fourth Financial Corp.
*Richard J. Mahoney 800 N. Retired Chairman and Chief Executive
Lindbergh Boulevard St. Louis, MO Officer, Monsanto Company, Director,
63167 Metropolitan Life Insurance Company.
*Claudine B. Malone 7570 Potomac President, Financial and Management
Fall Road McLean, VA 22102 Consulting, Inc., McLean, Virginia.
Director, Dell Computer Corporation,
Hannaford Brothers, Hasbro, Inc.,
Houghton Mifflin Company, Mallinckrodt
Group, LaFarge Corporation, The Limited,
Inc., S.A.I.C., Scott Paper Company.
Trustee, Penn Mutual Life Insurance Co.
*Jack L. Messman 801 Cherry Street President and Chief Executive Officer,
Fort Worth, TX 76102 Union Pacific Resources Company.
Director, CTD, Inc., Novell, Inc.,
Safeguard Scientifics Inc., Tandy, Inc.,
WaWa, Inc.
*John R. Meyer Harvard University Professor, Harvard University, Cambridge,
79 Kennedy Street Cambridge, MA Massachusetts. Director, The Dun &
02138 Bradstreet Corporation, Rand McNally Co.,
Inc. Trustee, Mutual Life Insurance
Company of New York.
*Thomas A. Reynolds, Jr. 35 West Chairman Emeritus, Winston & Strawn, law
Wacker Drive Suite 4700 Chicago, firm, Chicago, Illinois, Director,
IL 60601 Gannett Co., Inc., Jefferson Smurfit
Group.
*James D. Robinson, III J.D. President, J. D. ROBINSON INC.,
ROBINSON INC. 126 East 56th Street Principal, RRE Investors, LLC, New York,
26th Floor New York, NY 10022 N.Y., Former Chairman & CEO, American
Express Company, Director, Alexander &
Alexander Services, Inc., Bristol
Myers/Squibb Company, The Coca-Cola
Company, First Data Corporation, New
World Communications Group, Inc., Senior
Advisor, Trust Company of the West.
I-3
<PAGE>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS
*Robert W. Roth 1580 Griffen Rd. Retired President and Chief Executive
Pebble Beach, CA 93953 Officer, Jantzen, Inc., Portland, Oregon.
*Richard D. Simmons International President, International Herald Tribune,
Herald Tribune 1150 15th Street, Washington, D.C. Director, International
NW Washington, DC 20071 Herald Tribune, J.P. Morgan & Co.,
Incorporated, Morgan Guaranty Trust
Company of New York, The Washington Post
Company, Yankee Publishing.
Except for the directors listed below, each of the directors named in the
preceding tables has held the indicated office or position in his or her
principal occupation for at least five years. Each of the directors listed
below held the office or position first indicated as of five years ago.
Mr. Robert P. Bauman was Chief Executive of SmithKline Beecham p.l.c.
through April 1994 and since such date has been non-executive Chairman of
British Aerospace, p.l.c. Mr. Richard B. Cheney served as Secretary of Defense
through January 20, 1993, and since such date has been Senior Fellow, American
Enterprise Institute. Mr. Richard K. Davidson was Executive Vice President of
UPRR to August 7, 1991, President and Chief Executive Officer to September 17,
1991, and since such date has been Chairman and Chief Executive Officer of
UPRR. Mr. Davidson has also been President of Parent since May 26, 1994. Mr.
William H. Gray, III, served as a member of the United States House of
Representatives from the Second District of Pennsylvania through August 1991
and since such date has been President of United Negro College Fund, Inc. Mr.
Lawrence M. Jones was President and Chief Executive Officer of The Coleman
Company, Inc. through September 1990, and Chairman and Chief Executive Officer
of The Coleman Company, Inc. through December 31, 1993. Mr. Drew Lewis was
Chairman, President and Chief Executive Officer of Parent through May 26, 1994
and since such date has been Chairman and Chief Executive Officer of Parent.
Mr. Lewis also served as Chairman of UPRR during August and September 1991.
Mr. L. White Matthews, III, was Senior Vice President--Finance of Parent to
April 16, 1992 and since such date has been Executive Vice President--Finance
of Parent. Mr. Jack L. Messman was Chairman and Chief Executive Officer of
USPCI, Inc., to May 1, 1991 and since such date has been President and Chief
Executive Officer of Union Pacific Resources Company and has continued as
Chairman of USPCI. Mr. Thomas A. Reynolds, Jr., was Chairman of Winston &
Strawn through December 31, 1992 and since such date has been Chairman
Emeritus of such firm. Mr. James D. Robinson, III, was Chairman, President and
Chief Executive Officer of American Express Company through July 1991,
Chairman and Chief Executive Officer from August 1991 through January 25,
1993, and Chairman from January 26 through February 22, 1993. Mr. Richard D.
Simmons was President of The Washington Post Co. (communications) through May
1991 and since such date has been President of International Herald Tribune.
2. Directors and Executive Officers of UPRR. The name and present position
with UPRR of each of the directors and executive officers of UPRR are set
forth below. Each director and executive officer listed below is a citizen of
the United States. Directors are identified by an asterisk. The present
principal occupation or employment and material occupations, positions,
offices or employments for the past five years of each of the directors and
executive officers of UPRR are set forth below or in Part 1 above. Unless
otherwise indicated in Part 1 above, the current business address of each
person listed below is 1416 Dodge Street, Omaha, NE 68179.
I-4
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<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- -----------------------------------------------------------------
<S> <C>
*Richard K. Davidson See Part 1 above.
John J. Koraleski Executive Vice President-Finance & Information Technology since
October 1991; and from December 1989 through September 1991 Mr.
Koraleski served as Vice President-Finance.
*L. White Mattews, III See Part 1 above.
James A. Shattuck Executive Vice President-Marketing & Sales since May 1993; from
January 1993 through April 1993 Mr. Shattuck served as Senior
Vice President-Marketing; from October 1990 through September
1991, he served as Vice President-Information and Communication
Systems; from October 1991 through December 1992 he served as
Vice President-Marketing; and from May 1987 through September
1990, he served as President of Union Pacific Technologies, Inc.
Arthur L. Shoener Executive Vice President-Operations since September 1991; and
from August 1989 through August 1991 Mr. Shoener served as Vice
President-Field Operations.
Arthur W. Peters Senior Vice President-Marketing and Sales since May 1995; prior
thereto, Mr. Peters served as Senior Vice President--Marketing
and Sales of Chicago and North Western Transportation Company.
Carl W. von Bernuth See Part 1 above.
Thomas L. Watts Senior Vice President-Labor Relations since January 1994; and
from November 1989 through December 1993 Mr. Watts served as Vice
President-Labor Relations.
Henry L. Arms Vice President-Energy since February 1995; and from February 1987
through January 1995 Mr Arms served as Assistant Vice President-
Energy.
Charles E. Billingsley See Part 1 above.
James J. Damman, Jr. Vice President-National Customer Service Center since July 1993;
from February 1992 through June 1993 Mr. Damman served as
Assistant Vice President-Marketing Services; and from June 1990
through January 1992 he served as Assistant Vice President-Food &
Food Products.
James V. Dolan Vice President-Law since December 1983.
John E. Dowling See Part 1 above.
D. J. Duffy Vice President-Quality since January 1995; from September 1992
through December 1994 Mr Duffy served as Assistant Vice
President-Quality; from February 1991 through August 1992 he
served as General Superintendent-Omaha; and from April 1989
through January 1991 he served as General Director-Development.
Charles R. Eisele Vice President-Purchasing since April 1994; from March 1992
through March 1994 Mr. Eisele served as Vice President-Human
Resources; and from July 1990 through February 1992 he served as
Senior Assistant Vice President-Management Systems.
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- -------------------------------------------------------
<S> <C>
Ursula F. Fairbairn See Part 1 above.
John B. Gremillion, Jr. See Part 1 above.
Michael F. Kelly Vice President-Marketing since February 1995; from July
1993 through January 1995 Mr. Kelly served as Vice
President-Marketing Services; from October 1991 through
June 1993 he served as Vice President-Field Operations;
and from August 1989 through September 1991 he served
as Vice President- Transportation Services.
Rex B. King Vice President-Risk Management since July 1993; and
from August 1989 through June 1993 Mr. King served as
Senior Assistant Vice President-Train Management.
Junius M. Kyle, III Vice President-Government Affairs Louisiana & Texas
since March 1990.
Stanley J. McLaughlin Vice President-Engineering Services since August 1989.
Robert D. Naro Vice President-Transportation since July 1993; from
July 1991 through June 1993 Mr. Naro served as Senior
Assistant Vice President-Customer Service; and from
August 1989 through June 1991 he served as General
Superintendent.
John H. Rebensdorf Vice President-Strategic Planning since February 1987.
Barbara W. Schaefer Vice President-Human Resources since April 1994; from
May 1992 through March 1994 Ms. Schaefer served as
Director-Compensation & Human Resource Information
Services of Parent; from April 1991 through April 1992
she served as Assistant Vice President-Contracts & Real
Estate; and from November 1988 through March 1991 she
served as General Director-Contracts & Real Estate.
James E. Sims Vice President-Marketing since July 1993; from January
1991 through June 1993 Mr. Sims served as Senior
Assistant Vice President-Chemicals; and from February
1989 through December 1990 he served as Senior
Assistant Vice President-Marketing.
Morris B. Smith, Jr Vice President-Finance since January 1995; from June
1993 through December 1994 Mr. Smith served as Vice
President-Finance for USPCI; from October 1990 through
May 1993 he served as Assistant Controller-Planning &
Analysis of Parent; and from July 1990 through
September 1990 he served as General Manager-Liquid
Marketing & AD of Union Pacific Resources.
Gary M. Stuart See Part 1 above.
Judy L. Swantak See Part 1 above.
Harris Wagenseil Vice President-Maintenance Operations since April 1994;
from October 1991 through March 1994 Mr. Wagenseil
served as Vice President-Supply & Maintenance
Operations; and from June 1990 through September 1991
he served as Vice President-Supply.
Joyce M. Wrenn Vice President-Information Technologies & Chief
Information Officer since March 1992; and from November
1986 through February 1992 Ms. Wrenn served as Vice
President-Information System Technologies of American
Airlines.
</TABLE>
I-6
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- -----------------------------------------------------------------
<S> <C>
James R. Young Vice President-Reengineering & Quality since May 1995; from
January 1995 through April 1995 Mr. Young served as Vice
President- Reengineering; from October 1991 through December 1994
he served as Vice President-Finance; and from December 1989
through September 1991 he served as Assistant Vice President-
Financial Analysis.
*Robert P. Bauman See Part I above.
*Richard B. Cheney See Part I above.
*E. Virgil Conway See Part I above.
*Spencer F. Eccles See Part I above.
*Elbridge T. Gerry, Jr. See Part I above.
*William H. Gray, III See Part I above.
*Judith Richards Hope See Part I above.
*Lawrence M. Jones See Part I above.
*Richard J. Mahoney See Part I above.
*Claudine B. Malone See Part I above.
*Jack L. Messman See Part I above.
*John R. Meyer See Part I above.
*Thomas A. Reynolds, Jr. See Part I above.
*James D. Robinson, III See Part I above.
*Robert W. Roth See Part I above.
*Richard D. Simmons See Part I above.
</TABLE>
3. Directors and Executive Officers of the Purchaser. Set forth below are
the name and present position with Purchaser of each director and executive
officer of Purchaser. The principal address of Purchaser and the current
business address for each individual listed below is Martin Tower, Eighth and
Eaton Avenues, Bethlehem, Pennsylvania 18018. Directors are identified by an
asterisk. Each such person is a citizen of the United States. In addition to
the position with Purchaser indicated below, the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each such person are set forth in Part 1 above.
<TABLE>
<CAPTION>
PRESENT POSITION
NAME WITH PURCHASER
---- ----------------
<S> <C>
*Drew Lewis............................................ Chairman
*L. White Matthews, III................................ President
*Carl W. von Bernuth................................... Vice President and
Assistant Secretary
John E. Dowling....................................... Vice President
Judy L. Swantak....................................... Secretary
Gary M. Stuart........................................ Treasurer
</TABLE>
I-7
<PAGE>
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SOUTHERN PACIFIC RAIL CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 9, 1995
BY
UP ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
UNION PACIFIC CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
SEPTEMBER 6, 1995, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CITIBANK, N.A.
By Mail: By Overnight Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street, 5th
P.O. Box 1429 404 Sette Drive Floor
Paramus, New Jersey Paramus, New Jersey 07652 New York, New York
07653
By Facsimile Transmission: By Telex:
(For Eligible Institutions Only) (710) 990-4964
(201) 262-3240 Answer Back: CDDI PARA
Confirm by telephone:
(800) 422-2066
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OR TELEX TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Southern
Pacific Rail Corporation either if certificates evidencing Shares ("Share
Certificates") are to be forwarded herewith or if delivery of Shares is to be
made by book-entry transfer to the Depositary's account at The Depository
Trust Company, the Midwest
<PAGE>
Securities Trust Company or the Philadelphia Depository Trust Company (each, a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the book-entry transfer procedure described in "THE
OFFER--Procedures for Tendering Shares" of the Offer to Purchase (as defined
below). Delivery of documents to a Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures does not constitute
delivery to the Depositary.
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other documents required
hereby to the Depositary prior to the Expiration Date (as defined in "THE
OFFER--Terms of the Offer; Proration; Expiration Date" of the Offer to
Purchase) or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis and who wish to tender their Shares must do so
pursuant to the guaranteed delivery procedure described in "THE OFFER--
Procedures for Tendering Shares" of the Offer to Purchase. See Instruction 2.
[_] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution: ______________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
[_] Midwest Securities Trust Company
Account Number ______________________ Transaction Code Number _____________
[_] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ____________________________________________
Window Ticket No. (if any): _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Institution which Guaranteed Delivery: ______________________________
If Delivered by Book-Entry Transfer, Check Box of Book-Entry Transfer
Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
[_] Midwest Securities Trust Company
Account Number ______________________ Transaction Code Number _____________
2
<PAGE>
DESCRIPTION OF SHARES TENDERED
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S)
(PLEASE FILL
IN,
IF BLANK,
EXACTLY AS
NAME(S)
APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARE(S)
SHARE TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
-------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE EVIDENCED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
TOTAL SHARES
-------------------------------------------------------
</TABLE>
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to UP Acquisition Corporation, a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Union
Pacific Corporation, a Utah corporation, the above-described shares of common
stock, par value $.001 per share (the "Common Stock" or the "Shares"), of
Southern Pacific Rail Corporation, a Delaware corporation (the "Company"),
pursuant to Purchaser's offer to purchase up to 39,034,471 Shares, at a price
of $25.00 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated August 9, 1995 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). The undersigned understands that Purchaser reserves
the right to transfer or assign, in whole at any time, or in part from time to
time, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the undersigned hereby sells, assigns and transfers
to, or upon the order of, Purchaser all right, title and interest in and to
all the Shares that are being tendered hereby (and any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect of such Shares) and rights declared, paid or distributed
in respect of such Shares on or after August 3, 1995 (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (i)
deliver Share Certificates evidencing such Shares and all Distributions, or
transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with
all accompanying evidence of transfer and authenticity, to or upon the order
of the Purchaser, (ii) present such Shares and all Distributions for transfer
on the books of the Company and (iii) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
3
<PAGE>
By executing this Letter of Transmittal, the undersigned irrevocably
appoints L. White Matthews, III, Richard K. Davidson and Judy L. Swantak as
proxies of the undersigned, each with full power of substitution, to the full
extent of the undersigned's rights with respect to the Shares tendered by the
undersigned and accepted for payment by Purchaser (and any and all
Distributions). All such proxies shall be considered coupled with an interest
in the tendered Shares. This appointment will be effective if, when, and only
to the extent that, Purchaser accepts such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies given by the
undersigned with respect to such Shares and other securities will, without
further action, be revoked, and no subsequent proxies may be given. The
individuals named above as proxies will, with respect to the Shares and other
securities for which the appointment is effective, be empowered (subject to
the terms of the Voting Trust Agreement (as defined in the Offer to Purchase)
so long as it shall be in effect with respect to the Shares) to exercise all
voting and other rights of the undersigned as they in their sole discretion
may deem proper at any annual, special, adjourned or postponed meeting of the
Company's stockholders, by written consent or otherwise, and Purchaser
reserves the right to require that, in order for Shares or other securities to
be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares Purchaser must be able to exercise full voting rights
with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned own(s) the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that such tender of
shares complies with Rule 14e-4 under the Exchange Act, and that when such
Shares are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances, and that none of
such Shares and Distributions will be subject to any adverse claim. The
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly
to the Depositary for the account of Purchaser all Distributions in respect of
the Shares tendered hereby, accompanied by appropriate documentation of
transfer, and, pending such remittance and transfer or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
each such Distribution and may withhold the entire purchase price of the
Shares tendered hereby or deduct from such purchase price, the amount or value
of such Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "THE OFFER--Procedures for Tendering Shares" of
the Offer to Purchase and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Offer. Purchaser's
acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the undersigned and Purchaser upon the
terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, Purchaser
may not be required to accept for payment any of the Shares tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased
or not tendered, in the name(s) of the registered holder(s) appearing above
under "Description of Shares Tendered." Similarly, unless otherwise indicated
in the box entitled "Special Delivery Instructions," please mail the check for
the purchase price of all Shares purchased and all Share Certificates
evidencing Shares not tendered or not purchased (and accompanying documents,
as appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase
4
<PAGE>
price of all Shares purchased and return all Share Certificates evidencing
Shares not purchased or not tendered in the name(s) of, and mail such check
and Share Certificates to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered hereby and delivered by book-entry transfer, but
which are not purchased, by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any
Shares from the name of the registered holder(s) thereof if Purchaser does not
accept for payment any of the Shares tendered hereby.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares purchased or Share Shares purchased or Share
Certificates evidencing Shares Certificates evidencing Shares
not tendered or not purchased not tendered or not purchased
are to be issued in the name of are to be mailed to someone
someone other than the other than the undersigned, or
undersigned, or if Shares to the undersigned at an address
tendered hereby and delivered by other than that shown under
book-entry transfer which are "Description of Shares
not purchased are to be returned Tendered."
by credit to an account at one
of the Book-Entry Transfer
Facilities other than that
designated above.
Mail check and/or Share
Certificate(s) to:
Issue check and/or Share Name: ___________________________
Certificate(s) to: (PLEASE PRINT)
Name: ___________________________ Address: ________________________
(PLEASE PRINT)
---------------------------------
(ZIP CODE)
Address: ________________________
---------------------------------
(ZIP CODE)
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON
REVERSE SIDE)
[_] Credit Shares delivered by
book-entry transfer and not
purchased to the account set
forth below:
Check appropriate box:
[_] The Depository Trust Company
[_] Midwest Securities Trust
Company
[_] Philadelphia Depository
Trust Company
Account Number __________________
5
<PAGE>
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated: _____________________ , 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please
provide the following information. See Instruction 5.)
Name(s) ___________________________________________________________________
---------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title) _____________________________________________________
(SEE INSTRUCTION 5)
Address ___________________________________________________________________
---------------------------------------------------------------------------
(ZIP CODE)
Area Code and Telephone No. _______________________________________________
Taxpayer Identification or Social Security No. ____________________________
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ______________________________________________________
Name ______________________________________________________________________
(PLEASE PRINT)
Title _____________________________________________________________________
Name of Firm ______________________________________________________________
Address ___________________________________________________________________
---------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No. _______________________________________________
Dated ______________________ , 1995
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is
a bank, broker, dealer, credit union, savings association, or other entity
that is a member in good standing of the Securities Transfer Agent's Medallion
Program (each, an "Eligible Institution"). No signature guarantee is required
on this Letter of Transmittal (a) if this Letter of Transmittal is signed by
the registered holder(s) (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of Shares) of Shares tendered
herewith, unless such holder(s) has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the reverse hereof, or (b) if such Shares are tendered for the account of an
Eligible Institution. See Instruction 5. If a Share Certificate is registered
in the name of a person other than the signer of this Letter of Transmittal,
or if payment is to be made, or a Share Certificate not accepted for payment
or not tendered is to be returned, to a person other than the registered
holder(s), then the Share Certificate must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share Certificate, with the signature(s)
on such Share Certificate or stock powers guaranteed as described above. See
Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to
the procedure set forth in "THE OFFER--Procedures for Tendering Shares" of the
Offer to Purchase. Share Certificates evidencing all tendered Shares, or
confirmation of a book-entry transfer of such Shares, if such procedure is
available, into the Depositary's account at one of the Book-Entry Transfer
Facilities pursuant to the procedures set forth in "THE OFFER--Procedures for
Tendering Shares" of the Offer to Purchase, together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message, as defined below) and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth on the reverse hereof prior to the Expiration Date (as
defined in "THE OFFER--Terms of the Offer Proration; Expiration Date" of the
Offer to Purchase). If Share Certificates are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Stockholders whose Share
Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-
entry transfer on a timely basis may tender their Shares pursuant to the
guaranteed delivery procedure described in "THE OFFER--Procedures for
Tendering Shares" of the Offer to Purchase. Pursuant to such procedure: (i)
such tender must be made by or through an Eligible Institution; (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser herewith, must be received by
the Depositary prior to the Expiration Date; and (iii) in the case of a
guarantee of Shares, the Share Certificates, in proper form for transfer, or a
confirmation of a book-entry transfer of such Shares, if such procedure is
available, into the Depositary's account at one of the Book-Entry Transfer
Facilities, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
any other documents required by this Letter of Transmittal, must be received
by the Depositary within five New York Stock Exchange, Inc. trading days after
the date of execution of the Notice of Guaranteed Delivery, all as described
in "THE OFFER--Procedures for Tendering Shares" of the Offer to Purchase. The
term "Agent's Message" means a message, transmitted by a Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of this Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE
7
<PAGE>
TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of
Transmittal (or a facsimile hereof), all tendering stockholders waive any
right to receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share Certificates
delivered to the Depositary herewith will be sent to the person(s) signing
this Letter of Transmittal, unless otherwise provided in the box entitled
"Special Delivery Instructions," as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the Share Certificates evidencing such Shares without
alteration, enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate
stock powers are required, unless payment is to be made to, or Share
Certificates evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), in which case,
the Share Certificate(s) evidencing the Shares tendered hereby must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on such Share
Certificate(s). Signatures on such Share Certificate(s) and stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on
such Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority so to
act must be submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If,
8
<PAGE>
however, payment of the purchase price of any Shares purchased is to be made
to, or Share Certificate(s) evidencing Shares not tendered or not purchased
are to be issued in the name of, a person other than the registered holder(s),
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer
to such other person will be deducted from the purchase price of such Shares
purchased, unless evidence satisfactory to Purchaser of the payment of such
taxes, or exemption therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES EVIDENCING THE
SHARES TENDERED HEREBY.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name
of a person other than the person(s) signing this Letter of Transmittal or if
such check or any such Share Certificate is to be sent to someone other than
the person(s) signing this Letter of Transmittal or to the person(s) signing
this Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered," the appropriate boxes on this
Letter of Transmittal must be completed. Stockholders delivering Shares
tendered hereby by book-entry transfer may request that Shares not purchased
be credited to such account maintained at a Book-Entry Transfer Facility as
such stockholder may designate in the box entitled "Special Payment
Instructions" on the reverse hereof. If no such instructions are given, all
such Shares not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated on the reverse hereof as the account
from which such Shares were delivered.
8. Requests for Assistance or Additional Copies. Requests for assistance may
be directed to the Information Agent or Dealer Manager at their respective
addresses or telephone numbers set forth below. Additional copies of the Offer
to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 may be obtained from the Information Agent or the Dealer
Manager or from brokers, dealers, commercial banks or trust companies.
9. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and
that such stockholder is not subject to backup withholding of federal income
tax. If a tendering stockholder has been notified by the Internal Revenue
Service that such stockholder is subject to backup withholding, such
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such stockholder has since been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such stockholder.
If the tendering stockholder has not been issued a TIN and has applied for one
or intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute
Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
to such stockholder until a TIN is provided to the Depositary.
10. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the Stockholder should
promptly notify the Depositary. The Stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE GUARANTEES, OR AN
AGENT'S MESSAGE (TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-
ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND
DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY
PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
9
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the
stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect
to Shares purchased pursuant to the Offer may be subject to backup withholding
of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such
statements can be obtained from the Depositary. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies with respect to a stockholder, the Depositary
is required to withhold 31% of any payments made to such stockholder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained
from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
(i) such stockholder has not been notified by the Internal Revenue Service
that such stockholder is subject to backup withholding as a result of a
failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified such stockholder that such stockholder is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering stockholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for
the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% of all payments of the purchase price
to such stockholder until a TIN is provided to the Depositary.
10
<PAGE>
PAYER'S NAME: CITIBANK, N.A.
PART I--PLEASE PROVIDE
YOUR TIN IN THE BOX AT
RIGHT AND CERTIFY BY
SIGNING AND DATING
BELOW.
------------------------
SUBSTITUTE Social Security Number
FORM W-9
DEPARTMENT OF THE TREASURY OR
INTERNAL REVENUE SERVICE
------------------------
PAYER'S REQUEST FOR TAXPAYER Employer Identification
IDENTIFICATION NUMBER (TIN) Number
(If awaiting TIN write
"Applied For")
-----------------------------------------------------
PART II--For Payees Exempt From Backup
Withholding, see the enclosed Guidelines and
complete as instructed therein.
CERTIFICATION--Under penalties of perjury, I
certify that:
(l) The number shown on this form is my correct
Taxpayer Identification Number (or a Taxpayer
Identification Number has not been issued to
me and either (a) I have mailed or delivered
an application to receive a Taxpayer
Identification Number to the appropriate
Internal Revenue Service ("IRS") or Social
Security Administration office or (b) I intend
to mail or deliver an application in the near
future. I understand that if I do not provide
a Taxpayer Identification Number within sixty
(60) days, 31% of all reportable payments made
to me thereafter will be withheld until I
provide a number), and
(2) I am not subject to backup withholding either
because I have not been notified by the IRS
that I am subject to backup withholding as a
result of failure to report all interest or
dividends, or the IRS has notified me that I
am no longer subject to backup withholding.
-----------------------------------------------------
CERTIFICATE INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS
that you are subject to backup withholding because
of underreporting interest or dividends on your
tax return. However, if after being notified by
the IRS that you were subject to backup
withholding you received another notification from
the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines.)
SIGNATURE _______________________ DATE ____ , 1995
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager as set forth below:
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(Call Toll Free) 1-800-697-6974
The Dealer Manager for the Offer is:
CS FIRST BOSTON CORPORATION
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
(212) 909-2000 (Call Collect)
12
<PAGE>
EXHIBIT 99(a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
SOUTHERN PACIFIC RAIL CORPORATION
TO
UP ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNION PACIFIC CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if (i) certificates
("Share Certificates") evidencing shares of common stock, par value $.001 per
share (the "Common Stock" or the "Shares"), of Southern Pacific Rail
Corporation, a Delaware corporation (the "Company"), are not immediately
available, (ii) time will not permit all required documents to reach Citibank,
N.A., as Depositary (the "Depositary"), prior to the Expiration Date (as
defined in "THE OFFER--Terms of the Offer; Proration; Expiration Date" of the
Offer to Purchase (as defined below)) or (iii) the procedure for book-entry
transfer cannot be completed on a timely basis. This Notice of Guaranteed
Delivery may be delivered by hand or transmitted by telegram, facsimile
transmission or mail to the Depositary. See "THE OFFER--Procedures for
Tendering Shares" of the Offer to Purchase.
The Depositary for the Offer is:
CITIBANK, N.A.
By Mail: By Overnight Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
c/o Citicorp Data c/o Citicorp Data Corporate Trust Window
Distribution, Inc. Distribution, Inc. 111 Wall Street, 5th
P.O. Box 1429 404 Sette Drive Floor
Paramus, New Jersey Paramus, New Jersey 07652 New York, New York
07653
By Facsimile Transmission: By Telex:
(For Eligible Institutions Only) (710) 990-4964
(201) 262-3240 Answer Back: CDDI PARA
Confirm by Telephone:
(800) 422-2066
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE
INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF
TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to UP Acquisition Corporation, a Delaware
corporation and an indirect wholly owned subsidiary of Union Pacific
Corporation, a Utah corporation, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated August 9, 1995 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, as amended from time
to time, together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares specified below pursuant to the guaranteed
delivery procedures described in "THE OFFER--Procedures for Tendering Shares"
of the Offer to Purchase.
Number of Shares: Name(s) of Record Holder(s):
------------------------------------- -------------------------------------
Certificate Nos. (if available):
------------------------------------- -------------------------------------
PLEASE PRINT
Check ONE box if Shares will be
tendered by book-entry transfer: Address(es): ________________________
-------------------------------------
[_] The Depository Trust Company ZIP CODE
[_] Midwest Securities Trust Company Company Area Code and Tel. No.: _____
[_] Philadelphia Depository Trust Area Code and Tel. No.: _____________
Company
Signature(s): _______________________
Account Number: _____________________
Dated: ________________________, 1995 -------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a member firm of a registered national securities exchange,
a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States, hereby (a) represents that the tender of shares effected hereby
complies with Rule 14e-4 of the Securities Exchange Act of 1934, as amended,
and (b) guarantees delivery to the Depositary, at one of its addresses set
forth above, of certificates evidencing the Shares tendered hereby in proper
form for transfer, or confirmation of book-entry transfer of such Shares into
the Depositary's accounts at The Depository Trust Company, the Midwest
Securities Trust Company or the Philadelphia Depository Trust Company, in each
case with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees, or
an Agent's Message (as defined in "THE OFFER--Acceptance for Payment and
Payment for Shares" of the Offer to Purchase), and any other documents
required by the Letter of Transmittal, within five New York Stock Exchange,
Inc. trading days after the date of execution of this Notice of Guaranteed
Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
------------------------------------- -------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
------------------------------------- -------------------------------------
ADDRESS TITLE
-------------------------------------
ZIP CODE Name: _______________________________
PLEASE PRINT
Area Code and Tel. No.: _____________
Date: _________________________, 1995
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99(a)(4)
[CS First Boston Logo] CS First Boston
Corporation
Park Avenue Plaza
New York, New York 10055
Tel: (212) 909-2000
OFFER TO PURCHASE FOR CASH
UP TO 39,034,471 SHARES OF COMMON STOCK
OF
SOUTHERN PACIFIC RAIL CORPORATION
AT
$25.00 NET PER SHARE
BY
UP ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNION PACIFIC CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
SEPTEMBER 6, 1995, UNLESS THE OFFER IS EXTENDED.
August 9, 1995
To Brokers, Dealers, Commercial
Banks, Trust Companies and Other
Nominees:
We have been appointed by UP Acquisition Corporation, a Delaware corporation
("Purchaser") and an indirect wholly owned subsidiary of Union Pacific
Corporation, a Utah corporation ("Parent"), to act as Dealer Manager in
connection with the Purchaser's offer to purchase up to 39,034,471 shares of
common stock, par value $.001 per share (the "Common Stock" or the "Shares"),
of Southern Pacific Rail Corporation, a Delaware corporation (the "Company"),
at a price of $25.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase, dated
August 9, 1995 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer") enclosed herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE RECEIPT BY
PURCHASER, PRIOR TO THE EXPIRATION OF THE OFFER, OF AN INFORMAL WRITTEN
OPINION IN FORM AND SUBSTANCE SATISFACTORY TO PURCHASER FROM THE STAFF OF THE
INTERSTATE COMMERCE COMMISSION (THE "ICC"), WITHOUT THE IMPOSITION OF ANY
CONDITIONS UNACCEPTABLE TO PURCHASER, THAT THE USE OF A VOTING TRUST (THE
"VOTING TRUST") IS CONSISTENT WITH THE POLICIES OF THE ICC AGAINST
UNAUTHORIZED ACQUISITIONS OF CONTROL OF A REGULATED CARRIER (SUCH CONDITION,
THE "VOTING TRUST CONDITION") AND (II) THE RECEIPT BY PURCHASER, PRIOR TO THE
EXPIRATION OF THE OFFER, OF AN INFORMAL STATEMENT FROM THE PREMERGER
NOTIFICATION OFFICE OF THE FEDERAL TRADE COMMISSION EITHER THAT (1) NO REVIEW
OF THE OFFER, THE MERGER AND THE TRANSACTIONS CONTEMPLATED BY THE ANCILLARY
AGREEMENTS (AS DEFINED HEREIN) WILL BE UNDERTAKEN PURSUANT TO THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), OR (2)
THE TRANSACTIONS CONTEMPLATED BY THE OFFER, THE MERGER AND THE ANCILLARY
AGREEMENTS ARE NOT SUBJECT TO THE HSR ACT, OR IN THE ABSENCE OF THE RECEIPT OF
SUCH INFORMAL STATEMENT REFERRED TO IN CLAUSE (1) OR (2) ABOVE, ANY APPLICABLE
WAITING PERIOD UNDER THE HSR ACT SHALL HAVE EXPIRED OR BEEN TERMINATED PRIOR
TO THE EXPIRATION OF THE OFFER (SUCH CONDITION, THE "HSR CONDITION"). SEE
SECTION 15 OF THE OFFER TO PURCHASE.
Counsel for Parent has been orally advised by the Premerger Notification
Office of the Federal Trade Commission that the Offer and the Merger are
exempt from the HSR Act and, accordingly, Parent currently expects that the
HSR Condition will be satisfied.
<PAGE>
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following
documents:
1. Offer to Purchase, dated August 9, 1995;
2. Letter of Transmittal to be used by holders of Shares in accepting the
Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
certificates evidencing such Shares (the "Share Certificates") are not
immediately available or time will not permit all required documents to
reach Citibank, N.A. (the "Depositary") prior to the Expiration Date (as
defined in the Offer to Purchase) or the procedure for book-entry transfer
cannot be completed on a timely basis;
4. A letter to stockholders of the Company from Mr. Jerry R. Davis,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will purchase, by accepting for payment, and will pay
for, up to 39,034,471 Shares validly tendered prior to the Expiration Date
(and not properly withdrawn in accordance with "THE OFFER--Withdrawal Rights"
of the Offer to Purchase) promptly after the later to occur of (i) the
Expiration Date and (ii) the satisfaction or waiver of the conditions set
forth in "THE OFFER--Conditions of the Offer" of the Offer to Purchase. For
purposes of the Offer, Purchaser will be deemed to have accepted for payment,
and thereby purchased, tendered Shares if, as and when Purchaser gives oral or
written notice to the Depositary of Purchaser's acceptance of such Shares for
payment. In all cases, payment for Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) the Share
Certificates or timely confirmation of a book-entry transfer of such Shares,
if such procedure is available, into the Depositary's account at The
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company pursuant to the procedures set forth in
"THE OFFER--Procedures for Tendering Shares" of the Offer to Purchase, (ii)
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, or an Agent's Message (as defined in "THE OFFER--Acceptance for
Payment and Payment for Shares" of the Offer to Purchase) and (iii) any other
documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
any other person (other than the Dealer Manager and the Information Agent as
described in "THE OFFER--Fees and Expenses" of the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Purchaser will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding the enclosed materials to your
clients.
Purchaser will pay any stock transfer taxes incident to the transfer to it
of validly tendered Shares, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 6, 1995,
UNLESS THE OFFER IS EXTENDED.
2
<PAGE>
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates evidencing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
If holders of Shares wish to tender Shares, but it is impracticable for them
to forward their certificates or other required documents prior to the
Expiration Date, a tender may be effected by following the guaranteed delivery
procedures specified under "THE OFFER--Procedures for Tendering Shares" of the
Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Manager or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the
undersigned, at CS First Boston Corporation, telephone (212) 909-2000
(Collect) or by calling the Information Agent, D.F. King & Co., Inc. at 1-800-
697-6974 (Toll Free), or from brokers, dealers, commercial banks or trust
companies.
Very truly yours,
CS First Boston Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF PARENT, PURCHASER, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT 99(a)(5)
OFFER TO PURCHASE FOR CASH
UP TO 39,034,471 SHARES OF COMMON STOCK
OF
SOUTHERN PACIFIC RAIL CORPORATION
AT
$25.00 NET PER SHARE
BY
UP ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNION PACIFIC CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
SEPTEMBER 6, 1995, UNLESS THE OFFER IS EXTENDED.
August 9, 1995
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated August 9,
1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer") in connection
with the Offer by UP Acquisition Corporation, a Delaware corporation
("Purchaser") and an indirect wholly owned subsidiary of Union Pacific
Corporation, a Utah corporation ("Parent"), to purchase up to 39,034,471
shares of common stock, par value $.001 per share (the "Common Stock" or the
"Shares"), of Southern Pacific Rail Corporation, a Delaware corporation (the
"Company"), at a price of $25.00 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and
all other documents required by the Letter of Transmittal to the Depositary
prior to the Expiration Date (as defined in "THE OFFER--Terms of the Offer;
Proration; Expiration Date" of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer to the Depositary's account
at a Book-Entry Transfer Facility (as defined in "THE OFFER--Acceptance for
Payment and Payment for Shares" of the Offer to Purchase) on a timely basis
and who wish to tender their Shares must do so pursuant to the guaranteed
delivery procedure described in "THE OFFER--Procedures for Tendering Shares"
of the Offer to Purchase. See Instruction 2 of the Letter of Transmittal.
Delivery of documents to a Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF
RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT
BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms
and subject to the conditions set forth in the Offer.
<PAGE>
Your attention is invited to the following:
1. The tender price is $25.00 per Share, net to the seller in cash.
2. The Offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York City time, on Wednesday, September 6, 1995, unless the
Offer is extended.
3. The Offer is being made for up to 39,034,471 Shares.
4. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined in the Offer to Purchase), has determined
that the Offer and the Merger are fair to and in the best interests of
holders of Shares and recommends that stockholders of the Company who
desire to receive cash for their Shares accept the Offer and tender their
Shares pursuant to the Offer.
5. The Offer is conditioned upon, among other things, Purchaser having
received, prior to the expiration of the Offer, an informal written opinion
in form and substance satisfactory to Purchaser from the staff of the
Interstate Commerce Commission ("ICC"), without the imposition of any
conditions unacceptable to Purchaser, that the use of a voting trust is
consistent with the policies of the ICC against unauthorized acquisitions
of control of a regulated carrier.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, Purchaser will make a good faith effort
to comply with such state statute. If, after such good faith effort, Purchaser
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of Purchaser by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form set forth in this
letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH UP TO
39,034,471 SHARES OF COMMON STOCK
OF SOUTHERN PACIFIC RAIL CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated August 9, 1995, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the offer by UP Acquisition Corporation, a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Union
Pacific Corporation, a Utah corporation ("Parent"), to purchase up to
39,034,471 shares of common stock, par value $.001 per share (the "Common
Stock" or the "Shares"), of Southern Pacific Rail Corporation, a Delaware
corporation (the "Company").
This will instruct you to tender to Purchaser the number of Shares indicated
below (or, if no number is indicated below, all Shares) held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
NUMBER OF SHARES TO BE TENDERED*: SIGN HERE
____________________________ SHARES -------------------------------------
-------------------------------------
ACCOUNT NUMBER: _____________________ SIGNATURE(S)
DATED: _______________________ , 1995 -------------------------------------
-------------------------------------
PLEASE TYPE OR PRINT NAME(S) HERE
-------------------------------------
-------------------------------------
PLEASE TYPE OR PRINT ADDRESS(ES)
HERE
-------------------------------------
AREA CODE AND TELEPHONE NUMBER
-------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NUMBER(S)
--------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
EXHIBIT 99(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
-----------------------------------------
GIVE THE
FOR THIS TYPE OF SOCIAL SECURITY
ACCOUNT: NUMBER OF--
-----------------------------------------
<C> <S> <C>
1. An individual's The individual
account
2. Two or more The actual owner
individuals of the account
(joint account) or, if combined
funds, any one of
the
individuals(1)
3. Husband and wife The actual owner
(joint account) of the account
or, if joint
funds, either
person(1)
4. Custodian The minor(2)
account of a
minor (Uniform
Gift to Minors
Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only contributor,
the minor(1)
6. Account in the The ward, minor,
name of guardian or incompetent
or committee for person(3)
a designated
ward, minor, or
incompetent
person
7. a. The usual The grantor-
revocable trustee(1)
savings trust
account
(grantor is
also trustee)
b. So-called The actual
trust account owner(1)
that is not a
legal or
valid trust
under State
law
8. Sole The owner(4)
proprietorship
account
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate, or pension trust The legal entity
(Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization account The organization
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of Agriculture in the name of a public entity (such as a State or local The public entity
government, school district, or prison) that receives agricultural program payments
</TABLE>
------------------------------------- -------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your num-
ber, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDEN-
TIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, inter-
est, or other payments to give taxpayer identification numbers to payers who
must report the payments to IRS. IRS uses the numbers for identification pur-
poses. Payers must be given the numbers whether or not recipients are required
to file tax returns. Beginning January 1, 1984, payers must generally withhold
20% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain penal-
ties may also apply.
PENALTIES.
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 5% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99(a)(7)
FOR IMMEDIATE RELEASE
UNION PACIFIC ANNOUNCES AGREEMENT TO MERGE WITH SOUTHERN PACIFIC
BETHLEHEM, PA, AUGUST 3 -- Union Pacific Corporation (NYSE: UNP) and Southern
Pacific Rail Corporation (NYSE: RSP) announced today that they have reached an
agreement providing for the merger of Southern Pacific with Union Pacific. The
$5.4 billion transaction would form North America's largest railroad, a 34,000
mile network operating in 25 states and serving both Mexico and Canada. The two
railroad companies had combined 1994 operating revenues of $9.54 billion.
The agreement, approved today by the Boards of Directors of Union Pacific
and Southern Pacific, is subject to execution of a definitive merger agreement,
which is expected to be signed very shortly. Under terms of the agreement,
Union Pacific would make a first-step cash tender offer of $25.00 a share for up
to 25 percent of the Common Stock of Southern Pacific. The tender offer would
commence next week. The shares purchased in the tender offer will be held in a
voting trust. Following completion of the offer, and the satisfaction of other
conditions, including approval by the Interstate Commerce Commission (ICC),
Southern Pacific will be
<PAGE>
merged with Union Pacific Corporation. Upon completing the transaction, each
share of Southern Pacific stock will be converted, at the holder's election
(subject to proration), into the right to receive $25.00 in cash or 0.4065
shares of Union Pacific Common Stock. As a result of the transaction, 60
percent of Southern Pacific shares will be converted into Union Pacific stock
and the remaining 40 percent into cash, including the shares acquired in the
original tender offer. The two companies expect to file an application with the
ICC no later than December 1.
Union Pacific also stated that the previously announced spin-off of Union
Pacific Resources would be consummated after completion of the transaction. The
initial public offering of shares of Union Pacific Resources will proceed as
scheduled.
In connection with the merger, Philip Anschutz, a major shareholder of
Southern Pacific, will be appointed non-executive Vice Chairman of the Board of
Directors of Union Pacific following completion of the transaction and will
enter into a customary seven-year standstill agreement. In addition, Mr.
Anschutz, who owns 31 percent of Southern Pacific, and the Morgan Stanley
Leveraged Equity
2
<PAGE>
Fund, which owns seven percent of Southern Pacific, have agreed to vote their
shares in favor of the transaction.
"When completed, this transaction will deliver major benefits for
customers," said Drew Lewis, Union Pacific's Chairman and Chief Executive
Officer. "The combined system will be able to offer new services that neither
Union Pacific nor Southern Pacific can offer on its own. The new system will
yield extensive new single-line service, faster schedules, more frequent and
reliable service, shorter routes and improved equipment utilization. Benefits
from operating efficiencies, facility consolidations, cost savings and increased
traffic are estimated to be in excess of $500 million per year."
[Map depicting tracks operated by UPRR and the Southern Pacific Lines, and
a summary of the following statistical data for UPRR and Southern Pacific Lines:
operating revenues, operating income, employees, track operated, States served,
locomotives, freight cars, and trains operated daily.]
3
<PAGE>
EXHIBIT 99(a)(8)
FOR IMMEDIATE RELEASE
UNION PACIFIC ANNOUNCES EXECUTION OF MERGER AGREEMENT FOR
SOUTHERN PACIFIC ACQUISITION
BETHLEHEM, PA, AUGUST 4 -- Union Pacific Corporation (NYSE: UNP) announced today
that it has executed a definitive merger agreement for the previously announced
merger with Southern Pacific Rail Corporation (NYSE: RSP). Under the terms of
the agreement, Union Pacific will make a first-step cash tender offer of $25.00
per share for up to 25 percent of the Common Stock of Southern Pacific.
Following completion of the transaction, each share of Southern Pacific stock
will be converted, at the holder's election, into the right to receive $25.00 in
cash or 0.4065 shares of Union Pacific Common Stock. As a result of the
transaction, 60 percent of Southern Pacific's shares will be converted into
Union Pacific stock and the remaining 40 percent, including the shares acquired
in the original tender offer, will be converted into cash.
The merger is subject to receipt of Interstate Commerce Commission (ICC)
approval and other customary conditions.
<PAGE>
EXHIBIT 99(a)(9)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated August
9, 1995 and the related Letter of Transmittal and is being made to all holders
of Shares. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. In those jurisdictions where securities,
blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf
of UP Acquisition Corporation by CS First Boston Corporation
("CS First Boston") or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
Up to 39,034,471 Shares of Common Stock
of
Southern Pacific Rail Corporation
at
$25.00 Net Per Share
by
UP Acquisition Corporation
an indirect wholly owned subsidiary of
Union Pacific Corporation
UP Acquisition Corporation, a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Union Pacific Corporation, a Utah
corporation ("Parent"), hereby offers to purchase up to 39,034,471 shares of
common stock, par value $0.001 per share (the "Shares"), of Southern Pacific
Rail Corporation, a Delaware corporation (the "Company"), at a price of $25.00
per share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated August 9,
1995 (the "Offer to Purchase") and in the related Letter of Transmittal (which
together constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 6, 1995,
UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) RECEIPT BY
PURCHASER, PRIOR TO THE EXPIRATION OF THE OFFER, OF AN INFORMAL WRITTEN OPINION
IN FORM AND SUBSTANCE SATISFACTORY TO PURCHASER FROM THE STAFF OF THE INTERSTATE
COMMERCE COMMISSION ("ICC"), WITHOUT THE IMPOSITION OF ANY CONDITIONS
UNACCEPTABLE TO PURCHASER, THAT THE USE OF A VOTING TRUST ("VOTING TRUST") IS
CONSISTENT WITH THE POLICIES OF THE ICC AGAINST UNAUTHORIZED ACQUISITIONS OF
CONTROL OF A REGULATED CARRIER, AND (2) THE RECEIPT BY PURCHASER, PRIOR TO THE
EXPIRATION OF THE OFFER, OF AN INFORMAL STATEMENT FROM THE PREMERGER
NOTIFICATION OFFICE OF THE FEDERAL TRADE COMMISSION EITHER THAT (I) NO REVIEW OF
THE OFFER, THE MERGER (AS DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED BY
THE ANCILLARY AGREEMENTS ENTERED INTO IN CONNECTION WITH THE MERGER AGREEMENT
(AS DEFINED BELOW) (THE "ANCILLARY AGREEMENTS") WILL BE UNDERTAKEN PURSUANT TO
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), OR (II) THE TRANSACTIONS CONTEMPLATED BY THE OFFER, THE MERGER AND THE
ANCILLARY AGREEMENTS ARE NOT SUBJECT TO THE HSR ACT, OR IN THE ABSENCE OF THE
RECEIPT OF SUCH INFORMAL STATEMENT REFERRED TO IN CLAUSE (I) OR (II) ABOVE, ANY
APPLICABLE WAITING PERIOD UNDER THE HSR ACT SHALL HAVE EXPIRED OR BEEN
TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS APPROVED THE OFFER
AND THE MERGER (AS DEFINED HEREIN), DETERMINED THAT EACH OF THE OFFER AND THE
MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY
AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY WHO DESIRE TO RECEIVE CASH FOR
THEIR SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of August 3, 1995 (the "Merger Agreement"), by and among the Company,
Parent, Union Pacific Railroad Company, a Utah corporation ("UPRR") and an
indirect wholly owned subsidiary of Parent, and Purchaser. The Merger Agreement
provides, among other things, that following completion of the Offer and the
satisfaction or waiver of certain conditions set forth in the Merger Agreement
(including approval of the Merger by the ICC), Purchaser will be merged with and
into UPRR, with UPRR continuing as the surviving corporation. Subsequently, the
Company will merge (the "Merger") with and into UPRR, with UPRR continuing as
the surviving corporation. In the Merger, each outstanding Share (other than
Shares held in the treasury of the Company or owned by Parent, Purchaser, UPRR
or any other wholly owned subsidiary of Parent) will be converted, at the
election of the holder of Shares, into the right to receive either $25.00 in
cash or .4065 of a share of Parent common stock. The Merger Agreement provides
that the aggregate number of Shares to be converted into Parent common stock
pursuant to the Merger shall be equal as nearly as practicable to 60% of all
outstanding Shares, and that the aggregate number of Shares to be converted into
the right to receive $25.00 in cash per Share pursuant to the Merger, together
with the Shares purchased in the Offer, shall be equal as nearly as practicable
to 40% of all outstanding Shares. In connection with the Merger Agreement,
Parent and Purchaser have entered into Shareholder Agreements with certain major
stockholders of the Company owning approximately 40.3% of the Company's
outstanding Shares pursuant to which such stockholders have agreed, among other
things, to vote in favor of the Merger.
Purchaser expressly reserves the right, in its sole judgment and subject
to the terms of the Merger Agreement, at any time or from time to time and
regardless of whether any of the events set forth in Section 15 of the Offer to
Purchase shall have occurred or shall have been determined by Purchaser to have
occurred, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary (as defined in
the Offer to Purchase) and (ii) to amend the Offer in any respect by giving oral
or written notice of such amendment to the Depositary. Any such extension or
amendment will be followed as promptly as practicable by a public announcement
thereof, such announcement in the case of an extension, to be issued not later
than 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date (as defined in the Offer to Purchase).
During any such extension, all Shares previously tendered and not withdrawn will
remain subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares.
Purchaser will, upon the terms and subject to the conditions of the
Offer, purchase up to 39,034,471 Shares on a pro rata basis (with adjustments to
avoid purchases of fractional Shares) based upon the number of Shares properly
tendered on or prior to the Expiration Date and not withdrawn. Due to the
difficultly of determining the precise number of Shares properly tendered and
not withdrawn, if proration is required, Purchaser does not expect to announce
the final results of proration or pay for any Shares until at least seven New
York Stock Exchange trading days after the Expiration Date. Preliminary results
of proration will be announced by press release as promptly as practicable after
the Expiration Date. Holders of Shares may obtain such preliminary information
when it becomes available from the Information Agent and may be able to obtain
such information from their brokers.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases, upon the terms and subject to the conditions of the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering stockholders. Under no circumstances
will interest on the purchase price for Shares be paid by Purchaser by reason of
any delay in making such payment. In all cases, payment for Shares purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of (a) certificates for such Shares ("Certificates") or a book-entry
confirmation of the book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company, the Midwest Securities Trust Company or
the Philadelphia Depository Trust Company (collectively, the "Book-Entry
Transfer Facilities"), pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (b) the Letter of Transmittal (or facsimile thereof) properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a book-
entry transfer, and (c) any other documents required by the Letter of
Transmittal.
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or if Purchaser is unable to accept
for payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights set forth in the Offer to Purchase, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares and
such Shares may not be withdrawn except to the extent that the tendering
stockholder is entitled to and duly exercises withdrawal rights as described in
Section 4 of the Offer to Purchase. Any such delay will be an extension of the
Offer to the extent required by law.
If certain events occur, Purchaser will not be obligated to accept for
payment or pay for any Shares tendered pursuant to the Offer. If any tendered
Shares are not purchased pursuant to the Offer for any reason (including because
of proration) or are not paid for because of invalid tender, or if Certificates
are submitted representing more Shares than are tendered, Certificates
representing unpurchased or untendered Shares will be returned, without expense
to the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3 of the Offer to Purchase, such
Shares will be credited to an account maintained within such Book-Entry Transfer
Facility), as soon as practicable following the expiration, termination or
withdrawal of the Offer and determination of the final results of proration.
Except as otherwise provided in Section 4 of the Offer to Purchase,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time prior to 12:00 Midnight, New
York City time, on Wednesday, September 6, 1995 (or if Purchaser shall have
extended the period of time for which the Offer is open, at the latest time and
date at which the Offer, as so extended by Purchaser, shall expire) and unless
theretofore accepted for payment and paid for by Purchaser pursuant to the
Offer, may also be withdrawn at any time after October 8, 1995. In order for a
withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of the Offer to Purchase. Any notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn, and if Certificates for Shares
have been tendered, the name of the registered holder of the Shares as set forth
in the tendered Certificate, if different from that of the person who tendered
such Shares. If Certificates for Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then prior to the physical release of
such Certificates, the serial numbers shown on such Certificates evidencing the
Shares to be withdrawn must be submitted to the Depositary and the signature on
the notice of withdrawal must be guaranteed by a firm which is a bank, broker,
dealer, credit union, savings association or other entity that is a member in
good standing of the Securities Transfer Agent's Medallion Program (an "Eligible
Institution'') unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawal of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will be deemed not to be validly tendered for purposes of the Offer.
Withdrawn Shares may, however, be retendered by repeating one of the procedures
set forth in Section 3 of the Offer to Purchase at any time before the
Expiration Date. Purchaser, in its sole judgment, will determine all questions
as to the form and validity (including time of receipt) of notices of
withdrawal, and such determination will be final and binding. Any Shares
properly withdrawn will be deemed not validly tendered for the purposes of the
Offer, but may be retendered at any subsequent time prior to the Expiration Date
by following the procedures described in Section 3 of the Offer to Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder lists
and security position listing for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list, or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the
Offer to Purchase, the Letter of Transmittal or other tender offer materials may
be directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers as set forth below, and copies will be furnished
promptly at Purchaser's expense. No fees or commissions will be paid to brokers,
dealers or other persons (other than the Information Agent and the Dealer
Manager) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call toll free 1-800-697-6974
The Dealer Manager for the Offer is:
CS FIRST BOSTON
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
(212) 909-2000 (Call Collect)
August 9, 1995
<PAGE>
EXHIBIT 99(b)(1)
REVOLVING CREDIT AGREEMENT, dated as of March 2, 1993, among
UNION PACIFIC CORPORATION, a Utah corporation (the "Borrower"),
the banks listed on the signature pages hereof and any other
banks which from time to time become parties hereto pursuant to
Section 8.07 of this Agreement (all such banks being referred to
herein collectively as the "Banks"), and CHEMICAL BANK, as
administrative agent (in such capacity, the "Administrative
Agent") for the Banks hereunder.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted CD Rate" means, for each Adjusted CD Rate Advance comprising
part of the same Contract Borrowing, an interest rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the sum of (a) a rate
per annum equal to the product of (i) the Fixed CD Rate in effect for the
Interest Period then applicable to such Advance and (ii) 1.00 plus the Domestic
Reserve Percentage, plus (b) the Assessment Rate. For purposes hereof, the term
"Fixed CD Rate" shall mean the arithmetic average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the prevailing rates per annum bid at or
about 10:00 a.m. (New York City time) to each Reference Bank on the first
Business Day of the Interest Period then applicable to such Contract Borrowing
by three New York City negotiable certificate of deposit dealers of recognized
standing for the purchase at face value of negotiable certificates of deposit of
such Reference Bank in a principal amount approximately equal to such Reference
Bank's portion of such Contract Borrowing and with a maturity comparable to such
Interest Period.
"Adjusted CD Rate Advance" means a Contract Advance that bears
interest based on the Adjusted CD Rate.
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"Advance" means any Contract Advance or Auction Advance.
"Agreement" means this Agreement, as amended, modified and
supplemented from time to time, including, without limitation, any such
supplement in respect of Auction Advances under Section 2.03(a)(v).
"Alternate Base Rate" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as effective. "Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) 1.00 plus the Domestic Reserve Percentage
and (b) the Assessment Rate. "Three-Month Secondary CD Rate" shall mean, for
any day, the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a Business
Day, the next preceding Business Day) by the Board of Governors of the Federal
Reserve System through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of such
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m. (New York City time) on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it. "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of
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such transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including the
inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"Alternate Base Rate Advance" means a Contract Advance which bears
interest computed at the Alternate Base Rate.
"Applicable Fee Percentage" means on any date the applicable
percentage set forth below based upon the ratings applicable on such date to the
Borrower's senior, unsecured, non-credit-enhanced long term indebtedness for
borrowed money ("Index Debt"):
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Applicable
Fee
Ratings Percentage
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Category 1
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BBB+ and higher by S&P; .1875%
Baa1 and higher by Moody's
Category 2
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Lower than BBB+ and equal .25%
to or higher than BBB- by
S&P;
Lower than Baa1 and equal
to or higher than Baa3 by
Moody's
Category 3
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BB+ or lower by S&P; .375%
Ba1 or lower by Moody's
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For purposes of the foregoing, (i) if neither Moody's nor S&P shall have in
effect a rating for Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then both such rating
agencies will be deemed to have established ratings for Index Debt in Category
3; (ii) if only one of Moody's or S&P shall have in effect a rating for Index
Debt, the Borrower and the Banks will negotiate in good faith to agree upon
another rating agency to be substituted by an amendment to this Agreement for
the rating agency which shall not have a rating in effect, and in the absence of
such amendment the Applicable Fee Percentage will be determined by reference to
the available rating; (iii) if the ratings established by Moody's and S&P shall
fall within different Categories, the Applicable Fee Percentage shall be
determined by reference to the numerically lower Category and (iv) if any rating
established by Moody's or S&P shall be changed (other than as a result of a
change in the rating system of either Moody's or S&P) such change shall be
effective as of the date on which such change is first announced by the rating
agency making such change. Each change in the Applicable Fee Percentage shall
apply during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such
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change. If the rating system of either Moody's or S&P shall change prior to the
Maturity Date, the Borrower and the Banks shall negotiate in good faith to amend
the references to specific ratings in this definition to reflect such changed
rating system. If both Moody's and S&P shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Banks shall negotiate in
good faith to agree upon a substitute rating agency and to amend the references
to specific ratings in this definition to reflect the ratings used by such
substitute rating agency.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of an Alternate Base Rate Advance,
such Bank's CD Lending Office in the case of an Adjusted CD Rate Advance, such
Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Contract
Advance and, in the case of an Auction Advance, the office or affiliate of such
Bank notified by such Bank to the Borrower and the Administrative Agent as such
Bank's Applicable Lending Office with respect to such Auction Advance.
"Applicable Rate" means:
(i) with respect to Adjusted CD Rate Advances, the Adjusted CD Rate
plus .375%;
(ii) with respect to Alternate Base Rate Advances, the Alternate Base
Rate; and
(iii) with respect to Eurodollar Rate Contract Advances, the
Eurodollar Rate plus .25%.
"Assessment Rate" means for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee, and accepted by the Administrative
Agent, in substantially the form of Exhibit B hereto.
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"Auction Advance" means an advance by a Bank to the Borrower as part
of an Auction Borrowing resulting from the auction bidding procedure described
in Section 2.03, and refers to a Fixed Rate Auction Advance or a Eurodollar Rate
Auction Advance.
"Auction Borrowing" means a Borrowing consisting of simultaneous
Auction Advances of the same Type from each of the Banks whose offer to make an
Auction Advance as part of such Borrowing has been accepted by the Borrower
under the auction bidding procedure described in Section 2.03.
"Auction Reduction" means, as to any Bank as at any date, an amount
equal to such Bank's pro rata (in accordance with the Commitments) share of the
aggregate amount of all Auction Advances outstanding on such date (giving effect
to the payment of any Auction Advances to be made on such date).
"Borrowing" means a Contract Borrowing or an Auction Borrowing.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
"CD Lending Office" means, with respect to any Bank, the office or
affiliate of such Bank specified as its "CD Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Bank (or, if no such office or affiliate is specified, its Domestic
Lending Office), or such other office or affiliate of such Bank as such Bank may
from time to time specify to the Borrower and the Administrative Agent.
"Closing Date" means such Business Day as shall be agreed upon by the
Borrower and the Administrative Agent as the date upon which all of the
conditions set forth in Section 3.01 are satisfied or waived; provided that such
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date shall be no later than March 9, 1993, or such later Business Day as shall
be agreed upon by the Borrower and the Majority Banks.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
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"Commitment" has the meaning specified in Section 2.01(a).
"Contract Advance" means an advance by a Bank to the Borrower as part
of a Contract Borrowing and refers to an Adjusted CD Rate Advance, an Alternate
Base Rate Advance or a Eurodollar Rate Contract Advance.
"Contract Borrowing" means a Borrowing consisting of simultaneous
Contract Advances of the same Type made ratably by all of the Banks pursuant to
Section 2.01(a).
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property (excluding
obligations under agreements for the purchase of goods in the normal course of
business, but including obligations under agreements relating to the issuance of
performance letters of credit or acceptance financing), (iv) obligations as
lessee under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, (v)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (iv) above and (vi)
liabilities in respect of unfunded vested benefits under Plans covered by Title
IV of ERISA; provided, however, that (x) for the purposes of Section 5.02(a),
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"Debt" means only indebtedness for borrowed money and (y) for the purposes of
Section 6.01(e), "Debt" means only the obligations described in clauses (i),
(ii) and (iii) above.
"Domestic Lending Office" means, with respect to any Bank, the office
or affiliate of such Bank specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Bank, or such other office or affiliate of such Bank as such
Bank may from time to time specify to the Borrower and the Administrative Agent.
"Domestic Reserve Percentage" means, for any Interest Period, the
reserve percentage applicable on the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the
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maximum reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with deposits exceeding one billion
dollars with respect to liabilities consisting of or including (among other
liabilities) U.S. dollar nonpersonal time deposits in the United States with a
maturity equal to such Interest Period.
"Eligible Assignee" means any of the following entities approved in
writing by the Borrower in its sole discretion and notified to the
Administrative Agent, and then only to the extent of a proposed assignment
approved in writing by the Borrower in its sole discretion and notified to the
Administrative Agent: (i) a commercial bank organized under the laws of the
United States, or any state thereof, and having total assets in excess of
$3,000,000,000 and a combined capital and surplus of at least $150,000,000; (ii)
a commercial bank organized under the laws of any other country which is a
member of the OECD, or a political subdivision of any such country, and having
total assets in excess of $3,000,000,000 and a combined capital and surplus of
at least $150,000,000, provided that such bank is acting through a branch or
agency located in the United States, in the country in which it is organized or
in another country which is also a member of the OECD; and (iii) the central
bank of any country which is a member of the OECD.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower is a member and
which is under common control within the meaning of the regulations under
Section 414 of the Internal Revenue Code of 1986, as amended.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor regulation), as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Bank, the
office or affiliate of such Bank specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Bank (or, if no such office or
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9
affiliate is specified, its Domestic Lending Office), or such other office or
affiliate of such Bank as such Bank may from time to time specify to the
Borrower and the Administrative Agent.
"Eurodollar Rate" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the average of the rates at which
deposits in U.S. dollars in immediately available funds approximately equal in
principal amount to (i) in the case of a Contract Borrowing, the portion of such
Eurodollar Rate Contract Advance of the Bank serving as Administrative Agent and
(ii) in the case of an Auction Borrowing, a principal amount that would have
been the portion of such Auction Borrowing of the Bank serving as Administrative
Agent had such Auction Borrowing been a Contract Borrowing, and for a maturity
comparable to (a) in the case of a Contract Borrowing, the Interest Period then
applicable to such Contract Advance and (b) in the case of an Auction Borrowing,
the maturity of such Auction Advance, are offered to the principal London
offices of the Reference Banks (or if any Reference Bank does not at the time
maintain a London office, the principal London office of any affiliate of such
Reference Bank) in the London interbank market at approximately 11:00 a.m.
(London time) two Business Days prior to (x) the commencement of the Interest
Period then applicable to such Contract Advance or (y) the making of such
Auction Advance, as the case may be.
"Eurodollar Rate Advance" means any Eurodollar Rate Contract Advance
or Eurodollar Rate Auction Advance.
"Eurodollar Rate Auction Advance" means an Auction Advance which bears
interest based on the Eurodollar Rate.
"Eurodollar Rate Contract Advance" means a Contract Advance which
bears interest based on the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" of any Bank for any Eurodollar
Rate Advance means the reserve percentage applicable to such Bank on (i) in the
case of a Contract Advance, the first day of the Interest Period then applicable
to such Contract Advance and (ii) in the case of an Auction Advance, the date of
such Auction Advance, under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
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for determining the reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) under Regulation
D promulgated by the Board of Governors of the Federal Reserve System, or any
successor or supplemental regulations, then applicable to such Bank with respect
to liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Interest Period or the term of such Auction Advance,
as the case may be.
"Events of Default" has the meaning specified in Section 6.01.
"Facility A Credit Agreement" means the $400,000,000 Revolving Credit
Agreement dated as of the date hereof and as amended from time to time, among
the Borrower, the banks named therein (which include certain of the Banks) and
Chemical Bank, as administrative agent for the banks.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
"Fixed Rate" means an interest rate per annum (expressed in the form
of a decimal to no more than four decimal places) specified by a Bank making an
Auction Advance under the auction bidding procedure described in Section 2.03.
"Fixed Rate Auction Advance" means an Auction Advance which bears
interest based on the Fixed Rate.
"Interest Period" means, for each Contract Advance comprising part of
the same Contract Borrowing, the period commencing on the date of such Contract
Advance or on the last day of the immediately preceding Interest Period
applicable to such Contract Advance, as the case may be, and ending on the last
day of the period selected by the Borrower pursuant to the provisions below.
The duration of each such Interest Period shall be (a) in the case of an
Alternate Base Rate Advance, until the next succeeding March 31, June 30,
September 30 or December 31, (b) in the case of an Adjusted CD Rate Advance, 30,
60, 90 or 180 days and (c) in the case of a Eurodollar Rate Contract Advance, 1
month or 2, 3 or 6 months, as the Borrower may select (in the case of clause (b)
or (c)) by notice to the Administrative Agent pursuant to Section 2.02(a);
provided, however, that:
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(i) Interest Periods commencing on the same date for Contract Advances
comprising part of the same Contract Borrowing shall be of the same
duration;
(ii) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day in both New York City and London, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day in both such cities, provided, in the case of any
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Interest Period for a Eurodollar Rate Contract Advance, that if such
extension would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day in both such cities; and
(iii) no Interest Period shall end on a date later than the Maturity
Date.
"Majority Banks" means at any time Banks that, in the aggregate, meet
the following two criteria: (a) represent at least 66-2/3% of the then aggregate
unpaid principal amount of the Advances, if any, owing to Banks and (b)
represent at least 66-2/3% of the Commitments.
"Material Plan" means either (i) a Plan under which the present value
of the vested benefits exceeds the fair market value of the assets of such Plan
allocable to such benefits by more than $20,000,000 or (ii) a Plan whose assets
have a market value in excess of $100,000,000.
"Maturity Date" means the fifth anniversary of the date of this
Agreement.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"Notice of Contract Borrowing" has the meaning specified in Section
2.02(a).
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"Notice of Auction Borrowing" has the meaning specified in Section
2.03(a).
"OECD" means the Organization for Economic Cooperation and
Development.
"Participating Bank" has the meaning specified in Section 2.03(a)(v).
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) maintained for employees of the Borrower or any ERISA Affiliate and
covered by Title IV of ERISA.
"Railroads" means Union Pacific Railroad Company and Missouri Pacific
Railroad Company.
"Reference Banks" means Chemical Bank, Citibank, N.A. and Morgan
Guaranty Trust Company of New York and such other additional or substitute
financial institutions as may be agreed to by the Borrower, the Administrative
Agent and the Majority Banks from time to time.
"Register" has the meaning specified in Section 8.07(c).
"Reportable Event" means an event described in Section 4043(b) of
ERISA with respect to which the 30-day notice requirement has not been waived by
the PBGC.
"S&P" means Standard and Poor's Corporation or any successor thereto.
"Special Rate Loan" means any loan made by a Bank to the Borrower
pursuant to Section 2.01(b).
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"Special Rate Loan Reduction" means, as to any Bank as at any date, an
amount equal to such Bank's pro rata (in accordance with the Commitments) share
of the aggregate amount of all Special Rate Loans outstanding on such date
(giving effect to the payment of any Special Rate Loans to be made on such
date).
"Subsidiary" of a Person means any corporation or other similar entity
of which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation or
entity (irrespective of whether or not at the time capital stock of any other
class or classes of such corporation or entity shall or might have voting power
upon the occurrence of any contingency) is at the time directly or indirectly
owned by such Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person.
"Termination Date" means the Maturity Date or the earlier date of
termination in whole of the Commitments pursuant to Section 2.06 or 6.01.
"Termination Event" means (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
"Reportable Event" not subject to the provision for 30-day notice to the PBGC
under such regulations), or (ii) the withdrawal of the Borrower or any of its
ERISA Affiliates from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
to terminate a Plan by the PBGC, or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Type", when used in respect of any Advance or Borrowing, refers to
the Rate by reference to which interest on such Advance or on the Advances
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the Eurodollar Rate, the Adjusted CD Rate, the Alternate Base Rate and
the Fixed Rate.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
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computation of periods of time from a
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specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
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specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e).
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES AND SPECIAL RATE LOANS
SECTION 2.01. The Contract Advances; Special Rate Loans. (a) Each
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Bank severally agrees, on the terms and conditions hereinafter set forth, to
make Contract Advances to the Borrower from time to time on any Business Day
during the period from the Closing Date until the Termination Date in an
aggregate amount not to exceed at any time outstanding the excess, if any, of
(i) the amount set opposite such Bank's name on the signature pages hereof, as
such amount may be reduced pursuant to Section 2.06 or increased pursuant to
Section 2.17 (such Bank's obligation to make such Advances being hereinafter
referred to as such Bank's "Commitment") over (ii) the aggregate amount of (x)
such Bank's Special Rate Loan Reduction, if any, and (y) such Bank's Auction
Reduction, if any; provided, however, that at no time shall the aggregate
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outstanding principal amount of Contract Advances, Auction Advances and Special
Rate Loans exceed the aggregate amount of the Commitments. Each Contract
Borrowing shall be in an aggregate amount not less than $10,000,000 (subject to
the terms of this Section 2.01(a)) or an integral multiple of $1,000,000 in
excess thereof and shall consist of Contract Advances of the same Type made on
the same day by the Banks ratably according to their respective Commitments.
(b) Upon the request of the Borrower, each Bank may, in its sole
discretion, from time to time on any Business Day during the period from the
Closing Date until the Termination Date, extend loans to the Borrower in an
aggregate amount not less than $10,000,000 or an integral multiple of $1,000,000
in excess thereof, at an interest rate and upon repayment terms to be mutually
agreed upon between such Bank and the Borrower ("Special Rate Loans"). The
amount of any Special Rate Loan made by a Bank may
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exceed such Bank's Commitment; provided that at no time shall the aggregate
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amount of Contract Advances, Auction Advances and Special Rate Loans outstanding
exceed the aggregate amount of the Commitments. Notwithstanding any other
provision of this Agreement, (i) any Special Rate Loan shall be made by a Bank
directly to the Borrower; (ii) all payments in respect of any Special Rate Loan
shall be made by the Borrower directly to the Bank which made such loan; (iii)
Special Rate Loans need not be made on a pro rata basis among the Banks; and
(iv) each Special Rate Loan shall be entitled to the benefits of the provisions
contained in Articles V and VI and Sections 8.05 and 8.07 hereof unless
otherwise agreed by the Borrower and the Bank which made such loan with written
notice to the Administrative Agent. On each date when any Bank makes a Special
Rate Loan, the Borrower and such Bank shall notify the Administrative Agent
thereof (and the Administrative Agent shall promptly notify the other Banks),
specifying the principal amount of such Special Rate Loan, the interest rate
thereon, the repayment terms and the maturity thereof.
(c) Within the limits and on the conditions set forth in this Section
2.01, the Borrower may from time to time borrow under this Section 2.01, repay
pursuant to Sections 2.07(a) and 2.07(b), as appropriate, prepay under Section
2.07(d) and reborrow under this Section 2.01.
SECTION 2.02. Making the Contract Advances. (a) Each Contract
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Borrowing shall be made on notice, given (i) in the case of a Borrowing
consisting of Alternate Base Rate Advances, not later than 10:30 a.m. (New York
City time) on the day of the proposed Borrowing; (ii) in the case of a Borrowing
consisting of Adjusted CD Rate Advances, not later than 10:30 a.m. (New York
City time) on the second Business Day prior to the day of the proposed
Borrowing; and (iii) in the case of a Borrowing consisting of Eurodollar Rate
Contract Advances, not later than 10:30 a.m. (New York City time) on the third
Business Day prior to the date of the proposed Contract Borrowing, by the
Borrower to the Administrative Agent, which shall give to each Bank prompt
notice thereof by cable or telecopy. Each such notice of a Contract Borrowing
(a "Notice of Contract Borrowing") shall be in substantially the form of Exhibit
A-1 hereto, specifying therein the requested (i) date of such Contract
Borrowing, (ii) Type of Contract Advances comprising such Contract Borrowing,
(iii) aggregate amount of such Contract Borrowing and (iv) Interest Period.
Each Bank shall, before 12:00 noon (New York City time) on the date of any such
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Contract Borrowing, make available for the account of its Applicable Lending
Office to the Administrative Agent at its address referred to in Section 8.02,
in same-day funds, such Bank's ratable portion of such Contract Borrowing. Upon
the Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower at the Administrative Agent's
aforesaid address.
(b) Each Notice of Contract Borrowing shall be irrevocable and
binding on the Borrower. In the case of any Contract Borrowing which the
related Notice of Contract Borrowing specifies is to be comprised of Eurodollar
Rate Contract Advances or Adjusted CD Rate Advances, the Borrower shall
indemnify each Bank against any loss, cost or expense incurred by such Bank as a
result of any failure by the Borrower to complete such Borrowing (whether or not
due to a failure to fulfill on or before the date specified in such Notice of
Contract Borrowing the applicable conditions set forth in Article III), such
losses, costs and expenses to include, without limitation, any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank to
fund the Contract Advance to be made by such Bank as part of such Contract
Borrowing when such Contract Advance, as a result of such failure, is not made
on such date.
(c) Unless the Administrative Agent shall have received notice from a
Bank prior to the date of any Contract Borrowing that such Bank will not make
available to the Administrative Agent such Bank's ratable portion of such
Contract Borrowing, the Administrative Agent may assume that such Bank has made
such portion available to the Administrative Agent on the date of such Contract
Borrowing in accordance with subsection (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made such ratable portion available to the
Administrative Agent, such Bank and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount, together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to
<PAGE>
17
Contract Advances comprising such Contract Borrowing and (ii) in the case of
such Bank, an interest rate equal at all times to the Federal Funds Effective
Rate. If such Bank shall repay to the Administrative Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Contract Advance as
part of such Contract Borrowing for purposes of this Agreement.
(d) The failure of any Bank to make the Contract Advance to be made
by it as part of any Contract Borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make its Contract Advance on the date of such
Contract Borrowing, but no Bank shall be responsible for the failure of any
other Bank to make the Contract Advance to be made by such other Bank on the
date of any Contract Borrowing.
SECTION 2.03. The Auction Advances. (a) Each Bank severally agrees
---------------------
that the Borrower may make Auction Borrowings under this Section 2.03 from time
to time on any Business Day during the period from the Closing Date until the
Termination Date, in each case on the terms and conditions hereinafter set
forth; provided, however, that at no time shall the aggregate amount of Contract
-------- -------
Advances, Auction Advances and Special Rate Loans outstanding exceed the
aggregate amount of the Commitments. Each Auction Borrowing shall consist of
Auction Advances of the same Type made on the same day.
(i) The Borrower may request an Auction Borrowing under this Section
2.03 by delivering to the Administrative Agent, (A) in the case of a
Borrowing consisting of Fixed Rate Auction Advances, by not later than 9:00
a.m. (New York City time) on the day of the proposed Auction Borrowing, and
(B) in the case of a Borrowing consisting of Eurodollar Rate Auction
Advances, by not later than 9:00 a.m. (New York City time) on the third
Business Day prior to the date of the proposed Auction Borrowing, a notice
of an Auction Borrowing (a "Notice of Auction Borrowing"), in substantially
the form of Exhibit A-2 hereto, specifying the proposed (1) date of such
Auction Borrowing, (2) Type of Auction Advances comprising such Auction
Borrowing, (3) aggregate amount (which shall not be less than $10,000,000
or an integral multiple of $1,000,000 in excess thereof) of such Auction
Borrowing, (4) maturity date for repayment of each Auction Advance to be
made as part of such Auction
<PAGE>
18
Borrowing (which maturity date shall be, in the case of a Fixed Rate
Auction Borrowing, not earlier than seven days after the date of such
Borrowing, and, in the case of a Eurodollar Rate Auction Borrowing, not
later than 1 month or 2, 3 or 6 months after the date of such Borrowing, as
the Borrower shall elect) and (5) any other terms to be applicable to such
Auction Borrowing. The Administrative Agent shall in turn promptly notify
(by cable or telecopy) each Bank of each request for an Auction Borrowing
received by it from the Borrower and of the terms contained in such Notice
of Auction Borrowing.
(ii) Each Bank shall, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more Auction Advances to the Borrower as
part of such proposed Auction Borrowing at a rate or rates of interest
specified by such Bank in its sole discretion, by notifying (by telecopy,
cable or telephone (in the case of telephone, immediately confirmed by
telecopy)) the Administrative Agent (which shall give prompt notice thereof
to the Borrower), (A) in the case of a Fixed Rate Auction Borrowing, before
10:00 a.m. (New York City time) on the date of such proposed Auction
Borrowing specified in the Notice of Auction Borrowing delivered with
respect thereto, and (B) in the case of a Eurodollar Rate Auction
Borrowing, before 10:00 a.m. (New York City time) on the third Business Day
prior to the date of such proposed Auction Borrowing specified in the
Notice of Auction Borrowing delivered with respect thereto, of the maximum
amount of each Auction Advance which such Bank would be willing to make as
part of such proposed Auction Borrowing (which amount may, subject to the
proviso to the first sentence of this Section 2.03(a), exceed such Bank's
Commitment), the rate or rates of interest therefor (and whether reserves
are included therein) and such Bank's Applicable Lending Office with
respect to each such Auction Advance and any other terms and conditions
required by such Bank; provided that, if Chemical Bank in its capacity as a
--------
Bank shall, in its sole discretion, elect to make any such offer, it shall
notify the Borrower of such offer before 9:45 a.m. (New York City time) on
the date specified herein for notice of offers by the other Banks. If any
Bank shall fail to notify the Administrative Agent, before the time
specified herein for notice of offers, that it elects to make such an
offer, such Bank shall be deemed
<PAGE>
19
to have elected not to make such an offer, and such Bank shall not be
obligated or entitled to, and shall not, make any Auction Advance as part
of such Auction Borrowing. If any Bank shall provide telephonic notice to
the Administrative Agent of its election to make an offer, but such
telephonic notice has not been confirmed by telecopy to the Administrative
Agent at or before the time specified herein for notice of offers, the
Administrative Agent may, in its sole discretion and without liability to
such Bank or the Borrower, elect whether or not to provide notice thereof
to the Borrower.
(iii) The Borrower shall, in turn, (A) in the case of a Fixed Rate
Auction Borrowing, before 11:00 a.m. (New York City time) on the date of
such proposed Auction Borrowing specified in the Notice of Auction
Borrowing delivered with respect thereto, and (B) in the case of a
Eurodollar Rate Auction Borrowing, before 11:00 a.m. (New York City time)
on the third Business Day prior to the date of such proposed Auction
Borrowing specified in the Notice of Auction Borrowing delivered with
respect thereto, either:
(x) cancel such proposed Auction Borrowing by giving the
Administrative Agent notice to that effect, or
(y) accept one or more of the offers made by any Bank or Banks
pursuant to paragraph (ii) above, in its sole discretion, by giving
notice to the Administrative Agent of the amount of each Auction
Advance (which amount shall be equal to or greater than $1,000,000,
and equal to or less than the maximum amount offered by such Bank,
notified to the Borrower by the Administrative Agent on behalf of such
Bank for such Auction Advance pursuant to paragraph (ii) above) to be
made by each Bank as part of such Auction Borrowing, and reject any
remaining offers made by Banks pursuant to paragraph (ii) above, by
giving the Administrative Agent notice to that effect; provided,
--------
however, that the aggregate amount of such offers accepted by the
-------
Borrower shall be equal at least to $10,000,000 or an integral
multiple of $1,000,000 in excess thereof.
<PAGE>
20
(iv) If the Borrower notifies the Administrative Agent that such
Auction Borrowing is canceled pursuant to paragraph (iii)(x) above, the
Administrative Agent shall give prompt notice (by cable or telecopy)
thereof to the Banks, and such Auction Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Bank or Banks pursuant to paragraph (iii)(y) above, such offer or offers
and the Notice of Auction Borrowing in respect thereof shall constitute a
supplement to this Agreement in respect of such Auction Borrowing and the
Auction Advances made pursuant thereto, and the Administrative Agent shall
in turn promptly notify (A) each Bank that has made an offer as described
in paragraph (ii) above of the date and aggregate amount of such Auction
Borrowing, the interest rate thereon and whether or not any offer or offers
made by such Bank pursuant to paragraph (ii) above have been accepted by
the Borrower and (B) each Bank that is to make an Auction Advance as part
of such Auction Borrowing (a "Participating Bank" as to such Auction
Borrowing) of the amount of each Auction Advance to be made by such Bank as
part of such Auction Borrowing and the maturity date for the repayment of
each such Auction Advance (together with a confirmation of the
Administrative Agent's understanding of the interest rate and any other
terms applicable to each such Auction Advance; the Administrative Agent
shall assume, unless notified by such Bank to the contrary, that its
understanding of such information is correct). Each such Participating Bank
shall, before 12:00 noon (New York City time) on the date of such Auction
Borrowing specified in the notice received from the Administrative Agent
pursuant to clause (A) of the preceding sentence, make available for the
account of its Applicable Lending Office to the Administrative Agent at its
address referred to in Section 8.02 such Bank's portion of such Auction
Borrowing, in same-day funds. Upon fulfillment of the applicable
conditions set forth in Article III and after receipt by the Administrative
Agent of such funds, the Administrative Agent will make such funds
available to the Borrower at the Administrative Agent's aforesaid address.
Promptly after each Auction Borrowing, the Administrative Agent will notify
each Bank of the amount of the Auction Borrowing, such Bank's Auction
Reduction resulting
<PAGE>
21
therefrom and the date upon which such Auction Reduction commenced and is
anticipated to terminate.
(b) Within the limits and on the conditions set forth in this Section
2.03, the Borrower may from time to time borrow under this Section 2.03, repay
pursuant to Section 2.07(c), prepay under Section 2.07(d), and reborrow under
this Section 2.03.
SECTION 2.04. Conversion and Continuation of Contract Borrowings.
---------------------------------------------------
The Borrower shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (i) not later than 12:00 noon (New York City time), one
Business Day prior to conversion, to convert any Borrowing consisting of
Eurodollar Rate Contract Advances or Adjusted CD Rate Advances into a Borrowing
consisting of Alternate Base Rate Advances, (ii) not later than 10:00 a.m. (New
York City time), two Business Days prior to conversion or continuation, to
convert any Borrowing consisting of Eurodollar Rate Contract Advances or
Alternate Base Rate Advances into a Borrowing consisting of Adjusted CD Rate
Advances or to continue any Borrowing consisting of Adjusted CD Rate Advances
for an additional Interest Period, (iii) not later than 10:00 a.m. (New York
City time), three Business Days prior to conversion or continuation, to convert
any Borrowing consisting of Alternate Base Rate Advances or Adjusted CD Rate
Advances into a Borrowing consisting of Eurodollar Rate Contract Advances or to
continue any Borrowing consisting of Eurodollar Contract Advances for an
additional Interest Period, (iv) not later than 10:00 a.m. (New York City time),
three Business Days prior to conversion, to convert the Interest Period with
respect to any Borrowing consisting of Eurodollar Rate Contract Advances to
another permissible Interest Period, and (v) not later than 10:00 a.m. (New York
City time), two Business Days prior to conversion, to convert the Interest
Period with respect to any Borrowing consisting of Adjusted CD Rate Advances to
another permissible Interest Period, subject in each case to the following:
(a) each conversion or continuation shall be made pro rata among the
Banks in accordance with the respective principal amounts of the Advances
comprising the converted or continued Contract Borrowing;
(b) if less than all the outstanding principal amount of any Contract
Borrowing shall be converted or continued, the aggregate principal amount
of such
<PAGE>
22
Contract Borrowing converted or continued shall be an amount of $10,000,000
or an integral multiple of $1,000,000 in excess thereof;
(c) accrued interest on an Advance (or portion thereof) being
converted shall be paid by the Borrower at the time of conversion;
(d) if any Borrowing consisting of Eurodollar Rate Contract Advances
or Adjusted CD Rate Advances is converted at a time other than the end of
the Interest Period applicable thereto, the Borrower shall pay, upon
demand, any amounts due to the Banks pursuant to Section 8.04(b) as a
result of such conversion;
(e) any portion of a Contract Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as a
Borrowing consisting of Eurodollar Rate Contract Advances;
(f) any portion of a Borrowing maturing or required to be repaid in
less than 30 days may not be converted into or continued as a Borrowing
consisting of Adjusted CD Rate Advances;
(g) any portion of a Borrowing consisting of Eurodollar Rate Contract
Advances or Adjusted CD Rate Advances which cannot be converted into or
continued as such by reason of clauses (e) and (f) above shall be
automatically converted at the end of the Interest Period in effect for
such Borrowing into a Borrowing consisting of Alternate Base Rate Advances;
and
(h) no Interest Period may be selected for any Borrowing consisting of
Eurodollar Rate Contract Advances or Adjusted CD Rate Advances that would
end later than the Maturity Date.
Each notice pursuant to this Section 2.04 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Contract Borrowing that the Borrower requests be converted or continued, (ii)
whether such Contract Borrowing is to be converted to or continued as a
Borrowing consisting of Eurodollar Rate Contract Advances, Adjusted CD Rate
Advances or Alternate Base Rate Advances, (iii) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day) and (iv)
if such Contract Borrowing is to be
<PAGE>
23
converted to or continued as a Borrowing consisting of Eurodollar Rate Contract
Advances or Adjusted CD Rate Advances, the Interest Period with respect thereto.
If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Borrowing consisting of Eurodollar Rate
Contract Advances or Adjusted CD Rate Advances, the Borrower shall be deemed to
have selected an Interest Period of one month's duration, in the case of a
Borrowing consisting of Eurodollar Rate Contract Advances, or 30 days' duration,
in the case of a Borrowing consisting of Adjusted CD Rate Advances. The
Administrative Agent shall advise the other Banks of any notice given pursuant
to this Section 2.04 and of each Bank's portion of any converted or continued
Contract Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.04 to continue any Contract Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.04 to convert such Contract Borrowing), such Contract Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as a Borrowing consisting of Alternate Base Rate Advances.
SECTION 2.05. Fees. The Borrower agrees to pay to each Bank,
-----
through the Administrative Agent, a facility fee equal to the Applicable Fee
Percentage multiplied by the daily average amount of the Commitment of such
Bank, whether used or unused, during the preceding quarter (or shorter period
commencing with the date of this Agreement or ending with the Termination Date),
payable in arrears on the last day of each March, June, September and December
during the term of the Commitments and on the Termination Date.
SECTION 2.06. Optional Reduction of the Commitments. The Borrower
--------------------------------------
shall have the right, upon at least two Business Days' irrevocable notice to the
Administrative Agent, to terminate in whole or reduce ratably in part the
respective Commitments of the Banks; provided, however, that (i) each partial
-------- -------
reduction shall be in the aggregate amount of $10,000,000 or in an integral
multiple of $1,000,000 in excess thereof and (ii) no such termination or
reduction shall be made which would reduce the Commitments to an amount less
than the aggregate outstanding principal amount of the Advances and Special Rate
Loans. The Administrative Agent shall promptly thereafter notify each Bank of
such termination or reduction.
<PAGE>
24
SECTION 2.07. Repayment of Advances and Special Rate Loans;
---------------------------------------------
Prepayment. (a) The Borrower shall repay to the Administrative Agent for the
-----------
account of each Bank the principal amount of each Contract Advance made by each
Bank on the Maturity Date.
(b) The Borrower shall repay to each Bank making a Special Rate Loan
the principal amount of such Special Rate Loan on the date when due.
(c) The Borrower shall repay to the Administrative Agent for the
account of each Participating Bank which has made an Auction Advance on the
maturity date of each Auction Advance (such maturity date being that specified
by the Borrower for repayment of such Auction Advance in the Notice of Auction
Borrowing delivered with respect thereto) the then unpaid principal amount of
such Auction Advance.
(d) The Borrower may, on notice given to the Administrative Agent (i)
in the case of Alternate Base Rate Advances, not later than 10:30 a.m. (New York
City time) on the day of the proposed prepayment, and (ii) in the case of
Adjusted CD Rate Advances and Eurodollar Rate Contract Advances, not later than
10:30 a.m. (New York City time) on the second Business Day prior to the day of
the proposed prepayment, stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amounts of the Contract Advances constituting part of
the same Contract Borrowing in whole or ratably in part; provided, however, that
-------- -------
any such partial prepayment shall be in an aggregate principal amount not less
than $10,000,000, and provided further, that any such prepayment of Adjusted CD
----------------
Rate Advances or Eurodollar Rate Contract Advances shall be subject to the
provisions of Section 8.04(b) hereof. The Borrower may not prepay any principal
amount of any Auction Advance unless the Participating Bank making such Auction
Advance shall have expressly agreed thereto. The Administrative Agent shall
promptly notify each Bank of any prepayments pursuant to this Section 2.07(d)
promptly after any such prepayment. The Borrower shall have no right to prepay
any principal amount of any Advance except as expressly set forth in this
Section 2.07(d).
SECTION 2.08. Interest. The Borrower shall pay interest on each
---------
Advance and Special Rate Loan made by each Bank from the date of such Advance or
Special Rate Loan, as
<PAGE>
25
the case may be, until paid in full, at the following rates per annum:
(i) Contract Advances. If such Advance is a Contract Advance, the
------------------
Applicable Rate from time to time for such Contract Advance from the date
of such Advance until the last day of the last Interest Period therefor,
payable on the last day of each Interest Period and, in the case of any
Interest Period longer than 90 days (in the case of Adjusted CD Rate
Advances) or three months (in the case of Eurodollar Rate Contract
Advances), on such 90th day or the last day of such three-month period, as
the case may be.
(ii) Auction Advances. If such Advance is an Auction Advance, a
-----------------
rate per annum equal at all times from the date of such Advance until the
maturity thereof at the rate of interest for such Auction Advance specified
by the Participating Bank making such Auction Advance in its notice with
respect thereto delivered pursuant to subsection (a)(ii) of Section 2.03
above, payable on the proposed maturity date specified by the Borrower for
such Auction Advance in the related Notice of Auction Borrowing delivered
pursuant to subsection (a)(i) of Section 2.03 above, provided, that in the
--------
case of Advances with maturities of greater than three months, interest
shall be payable at the end of each three-month period for such Advance.
(iii) Special Rate Loans. If such loan is a Special Rate Loan, a
-------------------
rate per annum equal at all times as agreed to between the Bank making such
Special Rate Loan and the Borrower at the time of the making of the Special
Rate Loan by such Bank.
(iv) Default Amounts. In the case of any past-due amounts of the
----------------
principal of, or (to the fullest extent permitted by law) interest on, any
Advance or Special Rate Loan, from the date such amount becomes due until
paid in full, payable on demand, a rate per annum equal at all times to 2%
above the Alternate Base Rate in effect from time to time.
SECTION 2.09. Interest Rate Determination. Each Reference Bank
----------------------------
agrees to furnish to the Administrative Agent timely information for the purpose
of determining each Adjusted CD Rate or Eurodollar Rate, as applicable. If any
one or more of the Reference Banks shall not furnish such
<PAGE>
26
timely information to the Administrative Agent for the purpose of determining
any such interest rate, the Administrative Agent shall determine such interest
rate on the basis of timely information furnished by the remaining Reference
Banks, subject, however, to Section 2.10(a) hereof.
SECTION 2.10. Alternate Rate of Interest. (a) If fewer than two
---------------------------
Reference Banks furnish timely information to the Administrative Agent for
determining the Eurodollar Rate for any Eurodollar Rate Advances or the Adjusted
CD Rate for any Adjusted CD Rate Advances comprising any requested Borrowing,
the right of the Borrower to select Advances of such Type for such Borrowing or
any subsequent Borrowing shall be suspended until the Administrative Agent shall
notify the Borrower and the Banks that the circumstances causing such suspension
no longer exist, and (i) any request by the Borrower for a Eurodollar Rate
Auction Advance shall be of no force and effect and shall be denied by the
Administrative Agent and (ii) any request by the Borrower for a Eurodollar Rate
Contract Advance or an Adjusted CD Rate Advance shall be deemed to be a request
for an Alternate Base Rate Advance; and
(b) If Banks having more than 66-2/3% of the Commitments shall, at
least one Business Day before the date of any requested Borrowing, notify the
Administrative Agent that the Eurodollar Rate for any Eurodollar Rate Advances
or the Adjusted CD Rate for any Adjusted CD Rate Advances comprising such
Borrowing will not adequately reflect the cost to such Banks of making or
funding their respective Advances for such Borrowing, the right of the Borrower
to select Advances of such Type for such Borrowing or any subsequent Borrowing
shall be suspended until the Administrative Agent shall notify the Borrower and
the Banks that the circumstances causing such suspension no longer exist, and
(i) any request by the Borrower for a Eurodollar Rate Auction Advance shall be
of no force and effect and shall be denied by the Administrative Agent and (ii)
any request by the Borrower for a Eurodollar Rate Contract Advance or an
Adjusted CD Rate Advance shall be deemed to be a request for an Alternate Base
Rate Advance.
SECTION 2.11. Increased Costs; Increased Capital. (a) If, due to
-----------------------------------
either (i) the introduction of or any change after the date hereof (other than
any change by way of imposition or increase of reserve requirements, in the case
of Adjusted CD Rate Advances, included in the Domestic
<PAGE>
27
Reserve Percentage or, in the case of Eurodollar Rate Advances, included in the
Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request received from
any central bank or other governmental authority after the date hereof (whether
or not having the force of law), there shall be any increase in the cost to any
Bank of agreeing to make or making, funding or maintaining Adjusted CD Rate
Advances or Eurodollar Rate Advances, then the Borrower shall from time to time,
upon demand by such Bank (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Bank additional
amounts sufficient to compensate such Bank for such increased cost. Increased
costs shall not include income, stamp or other taxes, imposts, duties, charges,
fees, deductions or withholdings imposed, levied, collected, withheld or
assessed by the United States of America or any political subdivision or taxing
authority thereof or therein (including Puerto Rico) or of the country in which
any Bank's principal office or Applicable Lending Office may be located or any
political subdivision or taxing authority thereof or therein. Each Bank agrees
that, upon the occurrence of any event giving rise to a demand under this
subsection 2.11(a) with respect to the Eurodollar Lending Office or the CD
Lending Office of such Bank, it will, if requested by the Borrower and to the
extent permitted by law or the relevant governmental authority, endeavor in good
faith and consistent with its internal policies to avoid or minimize the
increase in costs resulting from such event by endeavoring to change its
Eurodollar Lending Office or CD Lending Office, as appropriate; provided,
--------
however, that such avoidance or minimization can be made in such a manner that
-------
such Bank, in its sole determination, suffers no economic, legal or regulatory
disadvantage. A certificate as to the amount of and specifying in reasonable
detail the basis for such increased cost, submitted to the Borrower and the
Administrative Agent by such Bank, shall constitute such demand and shall, in
the absence of manifest error, be conclusive and binding for all purposes.
(b) If either (i) the introduction after the date hereof of, or any
change after the date hereof in or in the interpretation of, any law or
regulation or (ii) the compliance by any Bank with any guideline or request
received from any central bank or other governmental authority after the date
hereof (whether or not having the force of law), affects or would affect the
amount of capital
<PAGE>
28
required or expected to be maintained by such Bank or any corporation
controlling such Bank and such Bank determines that the amount of such capital
is increased by or based upon the existence of its Advances or Special Rate
Loans or Commitment, then the Borrower shall, from time to time, upon demand by
such Bank (with a copy of such demand to the Administrative Agent), immediately
pay to the Administrative Agent for the account of such Bank additional amounts
sufficient to compensate such Bank to the extent that such Bank determined such
increase in capital to be allocable to the existence of such Bank's Advances or
Special Rate Loans or Commitment. A certificate as to the amount of such
increased capital and specifying in reasonable detail the basis therefor,
submitted to the Borrower and the Administrative Agent by such Bank, shall
constitute such demand and shall, in the absence of manifest error, be
conclusive and binding for all purposes. Each Bank shall use all reasonable
efforts to mitigate the effect upon the Borrower of any such increased capital
requirement and shall assess any cost related to such increased capital on a
nondiscriminatory basis among the Borrower and other borrowers of such Bank to
which it applies and such Bank shall not be entitled to demand or be compensated
for any increased capital requirement unless it is, as a result of such law,
regulation, guideline or request, such Bank's policy generally to seek to
exercise such rights, where available, against other borrowers of such Bank.
(c) Notwithstanding the foregoing provisions of this Section 2.11,
(i) the Borrower shall not be required to reimburse any Bank for any increased
costs incurred more than three months prior to the date that such Bank notifies
the Borrower in writing thereof and (ii) in the event any Bank grants a
participation in an Advance or Special Rate Loan pursuant to Section 8.07, the
Borrower shall not be obligated to reimburse for increased costs with respect to
such Advance or Special Rate Loan to the extent that the aggregate amount
thereof exceeds the aggregate amount for which the Borrower would have been
obligated if such Bank had not made such participation.
SECTION 2.12. Additional Interest on Eurodollar Rate Advances. The
------------------------------------------------
Borrower shall pay to the Administrative Agent for the account of each Bank any
costs which such Bank determines are attributable to such Bank's compliance with
regulations of the Board of Governors of the Federal Reserve System requiring
the maintenance of reserves with respect to liabilities or assets consisting of
or including
<PAGE>
29
Eurocurrency Liabilities. Such costs shall be paid to the Administrative Agent
for the account of such Bank in the form of additional interest on the unpaid
principal amount of each Eurodollar Rate Advance of such Bank, from the date of
such Advance until such principal amount is paid in full, at an interest rate
per annum equal at all times to the remainder obtained by subtracting (i) the
Eurodollar Rate for the applicable period for such Advance from (ii) the rate
obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage of such Bank for such period, payable on
each date on which interest is payable on such Advance. Such additional
interest shall be determined by such Bank and notified to the Borrower and the
Administrative Agent. A certificate setting forth the amount of such additional
interest, submitted to the Borrower and the Administrative Agent by such Bank,
shall be conclusive and binding for all purposes, absent manifest error.
SECTION 2.13. Change in Legality. If any Bank shall, at least three
-------------------
Business Days before the date of any requested Borrowing consisting of
Eurodollar Rate Advances or at least two Business Days before the date of any
requested Borrowing consisting of Adjusted CD Rate Advances, notify the
Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any central
bank or other governmental authority asserts that it is unlawful, for such Bank
or its Applicable Lending Office to perform its obligations hereunder to make,
fund or maintain Eurodollar Rate Advances or Adjusted CD Rate Advances
hereunder, the right of the Borrower to select Advances of such Type from such
Bank for such Borrowing or any subsequent Borrowing shall be suspended until
such Bank shall notify the Administrative Agent that the circumstances causing
such suspension no longer exist; and during the period when such obligation of
such Bank is suspended, any Borrowing consisting of Eurodollar Rate Advances or
Adjusted CD Rate Advances, as the case may be, shall not exceed the Commitments
of the other Banks less the aggregate amount of any Special Rate Loans and
Auction Advances then outstanding, and shall be made by the other Banks pro rata
according to their respective Commitments.
SECTION 2.14. Payments and Computations. (a) The Borrower shall
--------------------------
make each payment hereunder from a bank account of the Borrower located in the
United States not later than 11:00 a.m. (New York City time) on the day
<PAGE>
30
when due in U.S. dollars to the Administrative Agent at its address referred to
in Section 8.02 in same-day funds. The Administrative Agent will promptly
thereafter cause to be distributed like funds to the Banks entitled thereto for
the account of their respective Applicable Lending Offices, in each case to be
applied in accordance with the terms of this Agreement.
(b) All computations of interest based on the Alternate Base Rate
shall be made by the Administrative Agent on the basis of a year of 365 or 366
days, as the case may be, when determined by reference to the Prime Rate and on
the basis of a year of 360 days at all other times, and all computations of fees
and of interest based on the Adjusted CD Rate, the Eurodollar Rate or the Fixed
Rate shall be made by the Administrative Agent, and all computations of interest
pursuant to Section 2.09 shall be made by the Reference Banks, on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent
(or, in the case of Section 2.09, by the Reference Banks) of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
payment of interest or fees, as the case may be; provided, however, that, if
-------- -------
such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent the
Borrower shall not have so made such payment in full to the Administrative
Agent, each Bank shall repay
<PAGE>
31
to the Administrative Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Effective Rate.
(e) Each Bank shall maintain on its books a loan account in the name
of the Borrower in which shall be recorded all Advances made by such Bank to the
Borrower, the interest rate and the maturity date of each such Advance and all
payments of principal and interest made by the Borrower with respect to such
Advances. The obligation of the Borrower to repay the Advances made by each
Bank and to pay interest thereon shall be evidenced by the entries from time to
time made in the loan account of such Bank maintained pursuant to this Section
2.14(e); provided that the failure to make an entry with respect to an Advance
--------
shall not affect the obligations of the Borrower hereunder with respect to such
Advance. In case of any dispute, action or proceeding relating to any Advance,
the entries in such loan account shall be prima facie evidence of the amount of
such Advance and of any amounts paid or payable with respect thereto.
(f) The Administrative Agent shall maintain on its books a set of
accounts in which shall be recorded all Advances made by the Banks to the
Borrower, the interest rates and maturity dates of such Advances and all
payments of principal and interest made thereon. In case of any discrepancy
between the entries in the Administrative Agent's books and the entries in any
Bank's books, such Bank's records shall be considered correct, in the absence of
manifest error.
SECTION 2.15. Taxes on Payments. (a) All payments made by the
------------------
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any income, stamp or other taxes, imposts,
duties, charges, fees, deductions or withholdings, imposed, levied, collected,
withheld or assessed by the United States of America (or by any political
subdivision or taxing authority thereof or therein) as a result of (i) the
introduction after the date hereof of any law, regulation, treaty, directive or
guideline (whether or not having the force of law), or (ii) any change after the
date hereof in any law, regulation, treaty, directive or guideline (whether or
not having the force of law), or (iii) any change after the date hereof in the
interpretation or application of any law, regulation, treaty, directive or
guideline (whether or
<PAGE>
32
not having the force of law) or (iv) any such taxes, imposts, duties, charges,
fees, deductions or withholdings being imposed, levied, collected, withheld or
assessed at a greater rate than the rate that would have been applicable had
such an introduction or change not been made, but only to the extent of the
increase in such rate ("Withholding Taxes"). If any Withholding Taxes are
required to be withheld from any amounts payable to or for the account of any
Bank hereunder, the amounts so payable to or for the account of such Bank shall
be increased to the extent necessary to yield to such Bank (after payment of all
Withholding Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts payable to or for the account of such Bank under this
Agreement prior to such introduction or change. Whenever any Withholding Tax is
payable by the Borrower, as promptly as possible thereafter, the Borrower shall
send to the Administrative Agent, for the account of such Bank, a certified copy
of an original official receipt showing payment thereof. If the Borrower fails
to pay any Withholding Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent, for the account of any Bank the
required receipts or other required documentary evidence, the Borrower shall
indemnify such Bank or the Administrative Agent for any incremental taxes,
interest or penalties that may become payable by such Bank or the Administrative
Agent as a result of any such failure.
(b) At least four Business Days prior to the first Borrowing or, if
the first Borrowing does not occur within thirty days after the date of
execution of this Agreement, by the end of such thirty day period, each Bank
that is organized outside the United States agrees that it will deliver to the
Borrower and the Administrative Agent two duly completed copies of United States
Internal Revenue Service Form 1001 (or such other documentation or information
as may, under applicable United States federal income tax statutes or
regulations, be required in order to claim an exemption or reduction from United
States income tax withholding by reason of an applicable treaty with the United
States, such documentation or other information being hereafter referred to as
"Form 1001") or 4224 (or such other documentation or information as may, under
applicable United States federal income tax statutes or regulations, be required
in order to claim an exemption from United States income tax withholding for
income that is effectively connected with the conduct of a trade or business
within the United States, such documentation or other information being
<PAGE>
33
hereafter referred to as "Form 4224"), as the case may be, indicating in each
case that such Bank is either entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes or,
as the case may be, is subject to such limited deduction or withholding as it is
capable of recovering in full from a source other than the Borrower. Each Bank
which delivers to the Borrower and the Administrative Agent a Form 1001 or 4224
pursuant to the next preceding sentence further undertakes to deliver to the
Borrower and the Administrative Agent two further copies of the said Form 1001
or 4224, or successor applicable form or certificate, as the case may be, as and
when the previous form filed by it hereunder shall expire or shall become
incomplete or inaccurate in any respect, unless in any of such cases an event
has occurred prior to the date on which any such delivery would otherwise be
required which renders such form inapplicable.
(c) If at any time any Bank by reason of payment by the Borrower of
any Withholding Taxes obtains a credit against, or return or reduction of, any
tax payable by it, or any other currently realized tax benefit, which it would
not have enjoyed but for such payment ("Tax Benefit"), such Bank shall thereupon
pay to the Borrower the amount which such Bank shall certify to be the amount
that, after payment, will leave such Bank in the same economic position it would
have been in had it received no such Tax Benefit ("Equalization Amount");
provided, however, that if such Bank shall subsequently determine that it has
-------- -------
lost the benefit of all or a portion of such Tax Benefit, the Borrower shall
promptly remit to such Bank the amount certified by such Bank to be the amount
necessary to restore such Bank to the position it would have been in if no
payment had been made pursuant to this Section 2.15(c); provided, further,
-------- -------
however, that if such Bank shall be prevented by applicable law from paying the
-------
Borrower all or any portion of the Equalization Amount owing to the Borrower
such payment need not be made to the extent such Bank is so prevented and the
amount not paid shall be credited to the extent lawful against future payment
owing to such Bank; provided, further, however, that the aggregate of all
-------- ------- -------
Equalization Amounts paid by any Bank shall in no event exceed the aggregate of
all amounts paid by the Borrower to such Bank in respect of Withholding Taxes
plus, in the case of a Tax Benefit that occurs by reason of a refund, interest
actually received from the relevant taxing authority with respect to such
refund. A certificate submitted in good
<PAGE>
34
faith by the Bank pursuant to this Section 2.15(c) shall be deemed conclusive
absent manifest error.
(d) In the event a Bank shall become aware that the Borrower is
required to pay any additional amount to it pursuant to Section 2.15(a), such
Bank shall promptly notify the Administrative Agent and the Borrower of such
fact and shall use reasonable efforts, consistent with legal and regulatory
restrictions, to change the jurisdiction of its Applicable Lending Office if the
making of such change (i) would avoid the need for or reduce the amount of any
such additional amounts that may thereafter accrue, (ii) would not, in the good
faith determination of such Bank, be disadvantageous for regulatory or
competitive reasons to such Bank and (iii) would not require such Bank to incur
any cost or forego any economic advantage for which the Borrower shall not have
agreed to reimburse and indemnify such Bank.
SECTION 2.16. Sharing of Payments, Etc. If any Bank shall obtain any
-------------------------
payment (whether voluntary, involuntary, through the exercise of any right of
setoff or otherwise) on account of the Contract Advances made by it (other than
pursuant to Sections 2.11, 2.15, 2.17, 8.04 or 8.07(g) hereof) in excess of its
ratable share of payments on account of the Contract Advances obtained by all
the Banks, then such Bank shall forthwith purchase from the other Banks through
the Administrative Agent such participations in the Contract Advances made by
them as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that, if all or any
-------- -------
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall repay
to the purchasing Bank the purchase price to the extent of such recovery
together with an amount equal to such Bank's ratable share (according to the
proportion of (i) the amount of such Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.16 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of setoff) with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrower in the amount of such participation.
<PAGE>
35
SECTION 2.17. Removal of a Bank. The Borrower shall have the right,
------------------
by giving at least 15 Business Days' prior notice in writing to the affected
Bank and the Administrative Agent, at any time when no Event of Default and no
event which with the passage of time or the giving of notice or both would
become an Event of Default has occurred and is then continuing, to remove as a
party hereto any Bank having a credit rating of C/D (or its equivalent) or lower
by Thompson BankWatch, Inc. (or any successor thereto), such removal to be
effective as of the date specified in such notice from the Borrower (a "Removal
Date"), which date shall be the last day of an Interest Period. On any Removal
Date, the Borrower shall repay all the outstanding Advances, Special Rate Loans
and Auction Advances of the affected Bank, together with all accrued interest,
fees and all other amounts owing hereunder to such Bank. Upon such Removal Date
and receipt of the payment referred to above, the Commitment of such affected
Bank shall terminate and such Bank shall cease thereafter to constitute a Bank
hereunder. The Borrower shall have the right to offer to one or more Banks the
right to increase their Commitments up to, in the aggregate for all such
increases, the Commitment of any Bank which is removed pursuant to the foregoing
provisions of this Section 2.17 (such Commitment being herein called an
"Unallocated Commitment") effective on the relevant Removal Date, it being
understood that no Bank shall be obligated to increase its Commitment in
response to any such offer. The Borrower shall also have the right to offer all
or any portion of an Unallocated Commitment to one or more commercial banks not
parties hereto having a credit rating higher than C/D (or its equivalent) by
Thompson BankWatch, Inc. (or any successor thereto), and, upon each such bank's
acceptance of such offer and execution and delivery of an instrument agreeing to
the terms and conditions hereof, each such bank shall become a Bank hereunder
with a Commitment in an amount specified in such instrument. If the Bank which
is removed pursuant to this Section 2.17 is a Reference Bank, the Administrative
Agent, with the consent of the Borrower (which shall not be unreasonably
withheld), shall appoint a new Reference Bank from among the Banks. The
obligations of the Borrower described in Sections 2.11 and 8.04 shall survive
for the benefit of any Bank removed pursuant to this Section 2.17
notwithstanding such removal.
<PAGE>
36
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Borrowing. The
------------------------------------------
obligation of each Bank to make an Advance on the occasion of the initial
Borrowing is subject to the conditions precedent that the Administrative Agent
shall have received, on or before the day of the initial Borrowing, the
following, each dated the same day, in form and substance satisfactory to the
Administrative Agent and in sufficient copies for each Bank:
(a) Certified copies of the resolutions of the Board of Directors of
the Borrower approving this Agreement and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect
to this Agreement.
(b) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the other documents to be
delivered hereunder.
(c) A favorable opinion of the Senior Vice President and General
Counsel or Assistant General Counsel of the Borrower, substantially in the
form of Exhibit C hereto and as to such other matters as any Bank through
the Administrative Agent may reasonably request.
(d) A favorable opinion of Cravath, Swaine & Moore, counsel for the
Administrative Agent, substantially in the form of Exhibit D hereto.
(e) A certificate of a Financial Officer of the Borrower certifying
the termination of (i) the $800,000,000 Revolving Credit and Term Loan
Agreement dated as of May 23, 1989, as amended, among the Borrower, the
banks named therein, Citibank, N.A. and Morgan Guaranty Trust Company of
New York, as Co-Arranging Banks, and Citibank, N.A., as Administrative
Agent, and (ii) the $300,000,000 Revolving Credit Agreement dated as of
April 27, 1988, among the Borrower, the banks named therein, Union Bank of
Switzerland, New York Branch, as Swing Line Agent, and Credit Suisse First
Boston Limited, as Agent, and the
<PAGE>
37
payment in full of all obligations of the Borrower outstanding under such
agreements.
SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation
---------------------------------------
of each Bank to make an Advance in connection with any Borrowing shall be
subject to the further conditions precedent that on the date of such Borrowing
the following statements shall be true (and each of the giving of the applicable
Notice of Contract Borrowing or Notice of Auction Borrowing and the acceptance
by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
such statements are true):
(i) the representations and warranties contained in Section 4.01
(excluding those contained in subsections (e) and (f) thereof) are correct
on and as of the date of such Borrowing, before and after giving effect to
such Borrowing and to the application of the proceeds therefrom, as though
made on and as of such date; and
(ii) no event has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
-----------------------------------------------
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Utah.
(b) The execution, delivery and performance by the Borrower of this
Agreement are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not contravene (i) the
Borrower's charter or by-laws or (ii) any law or any contractual
restriction binding on or affecting the Borrower.
<PAGE>
38
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Borrower of this
Agreement except such as has been duly obtained or made and are in full
force and effect.
(d) This Agreement is the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms.
(e) The statement of consolidated financial position of the Borrower
and its consolidated Subsidiaries as at December 31, 1991, and the related
statements of consolidated income and consolidated changes in common
stockholders' equity of the Borrower and its consolidated Subsidiaries for
the fiscal year then ended, copies of which have been furnished to each
Bank, fairly present the financial condition of the Borrower and its
consolidated Subsidiaries as at such date and the results of the operations
of the Borrower and its consolidated Subsidiaries for the period ended on
such date, all in accordance with generally accepted accounting principles
consistently applied, and since December 31, 1991, there has been no
material adverse change in such condition or operations.
(f) There is no pending or threatened action or proceeding affecting
the Borrower or any of its consolidated Subsidiaries before any court,
governmental agency or arbitrator, (i) which purports to affect the
legality, validity or enforceability of this Agreement or (ii) except as
set forth in the Borrower's annual report on Form 10-K for the fiscal year
ended December 31, 1991, and in Borrower's quarterly reports on Form 10-Q
for the quarters ended March 31, June 30 and September 30, 1992 (copies of
which have been furnished to each Bank), which may materially adversely
affect the financial condition or operations of the Borrower or any of its
Subsidiaries, taken as a whole.
(g) After applying the proceeds of each Advance and Special Rate Loan,
not more than 25% of the value of the assets of the Borrower and its
Subsidiaries (as determined in good faith by the Borrower) will consist of
or be represented by margin stock (within the
<PAGE>
39
meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System).
(h) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning
of Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance or Special Rate Loan will be used
for any purpose which violates the provisions of the regulations of said
Board. If requested by any Bank or the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Bank a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
said Regulation U, the statements made in which shall be such, in the
opinion of each Bank, as to permit the transactions contemplated hereby in
accordance with said Regulation U.
(i) No Termination Event has occurred nor is reasonably expected to
occur with respect to any Plan which may materially adversely affect the
financial condition or operations of the Borrower and its Subsidiaries,
taken as a whole. Neither the Borrower nor any of its ERISA Affiliates has
incurred nor reasonably expects to incur any withdrawal liability under
ERISA to any Multiemployer Plan which may materially adversely affect the
financial condition or operations of the Borrower and its Subsidiaries,
taken as a whole. Schedule B (Actuarial Information) to the 1991 annual
report (Form 5500 Series) with respect to each Plan, copies of which have
been filed with the Internal Revenue Service and furnished to each Bank, is
complete and accurate in all material respects and in all material respects
fairly presents the funding status of each Plan. No Reportable Event has
occurred and is continuing with respect to any Plan which may materially
adversely affect the financial condition or operations of the Borrower and
its Subsidiaries, taken as a whole.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance or
----------------------
Special Rate Loan shall remain unpaid or any Bank shall have any Commitment
hereunder, the Borrower will,
<PAGE>
40
and, in the case of Section 5.01(a), will cause its Subsidiaries to, unless the
Majority Banks shall otherwise consent in writing:
(a) Keep Books; Corporate Existence; Maintenance of Properties;
-----------------------------------------------------------
Compliance with Laws; Insurance.
--------------------------------
(i) keep proper books of record and account, all in accordance with
generally accepted accounting principles;
(ii) preserve and keep in full force and effect its existence, and
preserve and keep in full force and effect its licenses, rights and
franchises to the extent it deems necessary to carry on its business;
(iii) maintain and keep, or cause to be maintained and kept, its
properties in good repair, working order and condition, and from time to
time make or cause to be made all needful and proper repairs, renewals,
replacements and improvements, in each case to the extent it deems
necessary to carry on its business;
(iv) use its reasonable efforts to comply in all material respects
with all material applicable statutes, regulations and orders of, and all
material applicable restrictions imposed by, any governmental agency in
respect of the conduct of its business and the ownership of its properties,
to the extent it deems necessary to carry on its business, except such as
are being contested in good faith by appropriate proceedings; and
(v) insure and keep insured its properties in such amounts (and with
such self-insurance and deductibles) as it deems necessary to carry on its
business and to the extent available on premiums and other terms which the
Borrower or any Subsidiary, as the case may be, deems appropriate. Any of
such insurance may be carried by, through or with any captive or affiliated
insurance company or by way of self-insurance as the Borrower or any
Subsidiary, as the case may be, deems appropriate.
Nothing in this subsection shall prohibit the Borrower or any of its
Subsidiaries from discontinuing any business, forfeiting any license, right or
franchise or discontinuing
<PAGE>
41
the operation or maintenance of any of its properties to the extent it deems
appropriate in the conduct of its business.
(b) Net Worth. Maintain an excess of consolidated total assets over
----------
consolidated total liabilities of the Borrower and its consolidated Subsidiaries
of not less than $2,250,000,000.
(c) Reporting Requirements. Furnish to the Banks:
-----------------------
(i) as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Borrower, a
statement of the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and the related
statements of income and retained earnings of the Borrower and its
consolidated Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified by
a principal financial or accounting officer of the Borrower; provided,
--------
however, that the Borrower may deliver, in lieu of the foregoing, the
-------
quarterly report of the Borrower for such fiscal quarter on Form 10-Q filed
with the Securities and Exchange Commission or any governmental authority
succeeding to the functions of such Commission, but only so long as the
financial statements contained in such quarterly report on Form 10-Q relate
to the same companies and are substantially the same in content as the
financial statements referred to in the preceding provisions of this clause
(i);
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the annual report for
such year for the Borrower and its Subsidiaries, containing the
consolidated financial statements of the Borrower and its consolidated
Subsidiaries for such year and accompanied by a report thereon of Deloitte
& Touche or other independent public accountants of nationally recognized
standing;
(iii) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to its stockholders generally, and copies
of all reports and registration statements (without exhibits) which the
Borrower files with the Securities and Exchange
<PAGE>
42
Commission or any national securities exchange (other than registration
statements relating to employee benefit plans);
(iv) promptly after the filing or receiving thereof, copies of any
notices of any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder which the Borrower or any Subsidiary files with the
PBGC, or which the Borrower or any Subsidiary receives from the PBGC to the
effect that proceedings or other action by the PBGC is to be instituted;
and
(v) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as any
Bank through the Administrative Agent may from time to time reasonably
request.
(d) Notices. Promptly give notice to the Administrative Agent and
--------
each Bank:
(i) of the occurrence of any Event of Default or any event which, with
the giving of notice or the passage of time, or both, would become an Event
of Default; and
(ii) of the commencement of any litigation, investigation or
proceeding affecting the Borrower or any of its Subsidiaries before any
court, governmental authority or arbitrator which, in the reasonable
judgment of the Borrower, could have a material adverse effect on the
business, operations, property or financial or other condition of the
Borrower and its Subsidiaries, taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of
the Borrower setting forth details of the occurrence referred to therein and
stating what action the Borrower proposes to take with respect thereto.
(e) Certificates. Furnish to the Banks:
-------------
(i) concurrently with the delivery of the financial statements
referred to in Section 5.01(c)(ii), a letter signed by the independent
public accountants certifying such financial statements to the effect that,
in the course of the examination upon which their report for such fiscal
year was based (but without any special or
<PAGE>
43
additional audit procedures for that purpose other than review of the terms
and provisions of this Agreement), they did not become aware of any Event
of Default involving financial or accounting matters or any condition or
event which, after notice or lapse of time, or both, would constitute such
an Event of Default, or, if such accountants became aware of any such Event
of Default or other condition or event, specifying the nature thereof; and
(ii) concurrently with the delivery of the financial statements or
Form 10-Q referred to in Section 5.01(c)(i), a certificate of a principal
financial or accounting officer of the Borrower stating that, to the best
of such officer's knowledge, the Borrower during such period has observed
or performed all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement to be observed, performed or
satisfied by it, and that such officer has obtained no knowledge of any
Event of Default or any event which, with notice or lapse of time, or both,
would become an Event of Default, except as specified in such certificate.
SECTION 5.02. Negative Covenants. So long as any Advance or Special
-------------------
Rate Loan shall remain unpaid or any Bank shall have any Commitment hereunder,
the Borrower will not, without the written consent of the Majority Banks:
(a) Liens, Etc. (i) Create, assume, incur or suffer to exist, or
-----------
permit any Subsidiary to create, assume, incur or suffer to exist, any
Mortgage (as hereinafter defined) upon any stock or indebtedness, whether
now owned or hereafter acquired, of any Domestic Subsidiary (as hereinafter
defined), to secure any Debt of the Borrower or any other Person (other
than the Advances and Special Rate Loans made hereunder), without in any
such case making effective provision whereby all of the Advances and
Special Rate Loans made hereunder shall be directly secured equally and
ratably with such Debt, excluding, however, from the operation of the
--------- -------
foregoing provisions of this paragraph (i) any Mortgage upon stock or
indebtedness of any corporation existing at the time such corporation
becomes a Domestic Subsidiary, or existing upon stock or indebtedness of a
Domestic Subsidiary at the time of acquisition of such stock or
indebtedness, and any extension, renewal or replacement (or
<PAGE>
44
successive extensions, renewals or replacements) in whole or in part of any
such Mortgage; provided, however, that the principal amount of Debt secured
-------- -------
thereby shall not exceed the principal amount of Debt so secured at the
time of such extension, renewal or replacement; and provided further, that
----------------
such Mortgage shall be limited to all or such part of the stock or
indebtedness which secured the Mortgage so extended, renewed or replaced;
(ii) Create, assume, incur or suffer to exist, or permit any
Restricted Subsidiary (as hereinafter defined) to create, assume, incur or
suffer to exist, any Mortgage upon any Principal Property (as hereinafter
defined), whether owned or leased on the date hereof or hereafter acquired,
to secure any Debt of the Borrower or any other Person (other than the
Advances and Special Rate Loans made hereunder), without in any such case
making effective provision whereby all of the Advances and Special Rate
Loans made hereunder shall be directly secured equally and ratably with
such Debt, excluding, however, from the operation of the foregoing
provisions of this paragraph (ii):
(A) any Mortgage upon property owned or leased by any corporation
existing at the time such corporation becomes a Restricted Subsidiary;
(B) any Mortgage upon property existing at the time of
acquisition thereof or to secure the payment of all or any part of the
purchase price thereof or to secure any Debt incurred prior to, at the
time of or within 180 days after the acquisition of such property for
the purpose of financing all or any part of the purchase price
thereof;
(C) any Mortgage upon property to secure all or any part of the
cost of exploration, drilling, development, construction, alteration,
repair or improvement of all or any part of such property, or Debt
incurred prior to, at the time of or within 180 days after the
completion of such exploration, drilling, development, construction,
alteration, repair or improvement for the purpose of financing all or
any part of such cost;
<PAGE>
45
(D) any Mortgage securing Debt of a Restricted Subsidiary owing
to the Borrower or to another Restricted Subsidiary;
(E) any Mortgage existing on the date hereof and set forth on
Schedule II hereto; and
(F) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any
Mortgage referred to in the foregoing clauses (A) to (E), inclusive;
provided, however, that the principal amount of Debt secured thereby
-------- -------
shall not exceed the principal amount of Debt so secured at the time
of such extension, renewal or replacement; and provided further, that
----------------
such Mortgage shall be limited to all or such part of the property
which secured the Mortgage so extended, renewed or replaced (plus
improvements on such property).
Notwithstanding the foregoing provisions of this paragraph (ii), the
Borrower may, and may permit any Restricted Subsidiary to, create, assume,
incur or suffer to exist any Mortgage upon any Principal Property which is
not excepted by clauses (A) through (F), above, without equally and ratably
securing the Advances and Special Rate Loans, provided that the aggregate
amount of Debt then outstanding secured by such Mortgage and all similar
Mortgages does not exceed 10% of the total consolidated stockholders'
equity of the Borrower as shown on the most recent audited consolidated
balance sheet required to be delivered to the Banks pursuant to Section
5.01(c). For the purpose of this paragraph (ii), the following types of
transactions shall not be deemed to create a Mortgage to secure any Debt:
(A) the sale or other transfer of (y) any oil or gas or minerals
in place for a period of time until, or in an amount such that, the
purchaser will realize therefrom a specified amount of money (however
determined) or a specified amount of such oil or gas or minerals, or
(z) any other interest in property of the character commonly referred
to as a "production payment";
(B) any Mortgage in favor of the United States of America or any
state thereof, or any
<PAGE>
46
other country, or any political subdivision of any of the foregoing,
to secure partial, progress, advance or other payments pursuant to the
provisions of any contract or statute, or any Mortgage upon property
of the Borrower or a Restricted Subsidiary intended to be used
primarily for the purpose of or in connection with air or water
pollution control, provided that no such Mortgage shall extend to any
other property of the Borrower or a Restricted Subsidiary.
As used in this Section 5.02(a), the following terms shall have the
following meanings notwithstanding any conflicting definition set forth in
Section 1.01:
"Domestic Subsidiary" means a Subsidiary which is incorporated or
conducting its principal operations within the United States of America or any
state thereof or off the coast of the United States of America but within an
area over which the United States of America or any state thereof has
jurisdiction.
"Mortgage" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Principal Property" means (i) any property owned or leased by the
Borrower or any Subsidiary, or any interest of the Borrower or any Subsidiary in
property, located within the United States of America or any state thereof
(including property located off the coast of the United States of America held
pursuant to lease from any Federal, State or other governmental body), which is
considered by the Borrower to be capable of producing oil or gas or minerals in
commercial quantities, and (ii) any refinery, smelter or processing or
manufacturing plant owned or leased by the Borrower or any Subsidiary and
located within the United States of America or any state thereof, except (a)
facilities related thereto employed in transportation, distribution or marketing
or (b) any refinery, smelter or processing or manufacturing plant, or portion
thereof, which in the opinion of the Board of Directors of the Borrower is not a
principal plant in relation to the activities of the Borrower and its Restricted
Subsidiaries taken as a whole.
"Restricted Subsidiary" means any Subsidiary which owns or leases (as
lessor or lessee) a Principal Property but does not include (i) Union Pacific
Railroad Company or any other Subsidiary which is principally a common carrier
<PAGE>
47
by rail or truck engaged in interstate or intrastate commerce and is subject to
regulation of such activities by any Federal, state or other governmental body,
or (ii) any Subsidiary the principal business of which is leasing machinery,
equipment, vehicles or other properties none of which is a Principal Property,
or financing accounts receivable, or engaging in ownership and development of
any real property which is not a Principal Property.
(b) Debt to Net Worth Restriction. Create or suffer to exist, or
------------------------------
permit any of its Subsidiaries to create or suffer to exist, any Debt if,
immediately after giving effect to such Debt and the receipt and
application of any proceeds thereof, the aggregate amount of Debt of the
Borrower and its consolidated Subsidiaries, on a consolidated basis, would
exceed 200% of the total consolidated stockholders' equity of the Borrower
as shown on the most recent consolidated balance sheet required to be
delivered to the Banks pursuant to Section 5.01(c).
(c) Restriction on Fundamental Changes. Enter into any transaction
-----------------------------------
of merger or consolidation, or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which
the Borrower is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Borrower
substantially as an entirety shall be a corporation organized and
existing under the laws of the United States of America, any state
thereof or the District of Columbia (the "Successor Corporation") and
shall expressly assume, by amendment to this Agreement executed by the
Borrower and such Successor Corporation and delivered to the
Administrative Agent, the due and punctual payment of the principal of
and interest on the Advances made hereunder and all other amounts
payable under this Agreement and the performance or observance of
every covenant hereof on the part of the Borrower to be performed or
observed;
(ii) immediately after giving effect to such transaction, no
Event of Default and no event which, with notice or lapse of time, or
both,
<PAGE>
48
would become an Event of Default, shall have occurred and be
continuing;
(iii) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Borrower
would become subject to a Mortgage which would not be permitted by
Section 5.02(a), the Borrower or the Successor Corporation, as the
case may be, shall take such steps as shall be necessary effectively
to secure the Advances made hereunder equally and ratably with (or
prior to) all indebtedness secured thereby; and
(iv) the Borrower shall have delivered to the Administrative
Agent a certificate signed by an executive officer of the Borrower and
a written opinion of counsel satisfactory to the Administrative Agent
(who may be counsel to the Borrower), each stating that such
transaction and such amendment to this Agreement comply with this
Section 5.02(c) and that all conditions precedent herein provided for
relating to such transaction have been satisfied.
(d) Prohibition of Sale of Certain Stock. Convey, sell, assign or
-------------------------------------
otherwise transfer any of the shares of capital stock of the Railroads now
owned or at any time hereafter acquired by the Borrower.
(e) Compliance with ERISA. To the extent that any event or action
----------------------
set forth in clauses (i) through (iv) below would subject the Borrower and
its Subsidiaries taken as a whole to any material liability to the PBGC or
otherwise, (i) terminate, or permit any Subsidiary to terminate, any Plan;
(ii) engage in, or permit any Subsidiary to engage in, any "prohibited
transaction" (as defined in Section 4975 of the Code) involving any Plan;
(iii) incur or suffer to exist, or permit any Subsidiary to incur or suffer
to exist, any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, involving any Plan; or (iv) allow or
suffer to exist, or permit any Subsidiary to allow or suffer to exist, any
event or condition which presents a risk of incurring a liability to the
PBGC by reason of termination of any Plan.
<PAGE>
49
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
------------------
("Events of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Advance or
Special Rate Loan when the same becomes due and payable; provided, that if
--------
any such failure shall result from the malfunctioning or shutdown of any
wire transfer or other payment system employed by the Borrower to make such
payment or from an inadvertent error of a technical or clerical nature by
the Borrower or any bank or other entity employed by the Borrower to make
such payment, no Event of Default shall result under this paragraph (a)
during the period (not in excess of two Business Days) required by the
Borrower to make alternate payment arrangements; or
(b) the Borrower shall fail to pay any interest on any Advance or
Special Rate Loan or any fee payable hereunder or under any agreement
executed in connection herewith when the same becomes due and payable and
such failure shall remain unremedied for ten days; or
(c) any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement
(including, without limitation, any representation or warranty deemed made
by the Borrower at the time of any Advance or Special Rate Loan pursuant to
Article III) shall prove to have been incorrect in any material respect
when made or deemed made; or
(d) the Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed if such failure shall remain unremedied for 30 days
after written notice thereof shall have been given to the Borrower by the
Administrative Agent or any Bank; or
(e) an event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any Debt of the Borrower (other than any such Debt
owed to any Bank or an affiliate of any Bank
<PAGE>
50
if such event of default shall relate solely to a restriction on margin
stock within the meaning of Regulation U issued by the Board of Governors
of the Federal Reserve System), whether such Debt now exists or shall
hereafter be created, shall happen and shall result in Debt of the Borrower
in excess of $20,000,000 principal amount becoming or being declared due
and payable prior to the date on which it would otherwise become due and
payable, and such declaration shall not be rescinded or annulled; or
(f) (i) the Borrower or any of the Railroads shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of the Railroads shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of the Railroads any case, proceeding
or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the Borrower
or any of the Railroads any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Borrower or any of the Railroads shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii)
above; or (v) the Borrower or any of the Railroads shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due;
<PAGE>
51
(g) a Material Plan shall fail to maintain the minimum funding standards
required by Section 412 of the Internal Revenue Code of 1986, as amended,
for any plan year or a waiver of such standard is sought or granted under
Section 412(d), or a Material Plan is, shall have been or will be
terminated or the subject of termination proceedings under ERISA, or the
Borrower or any of its Subsidiaries or any ERISA Affiliate has incurred or
will incur a liability to or on account of a Material Plan under Sections
4062, 4063 or 4064 of ERISA, and there shall result from any such event
either a liability or a material risk of incurring a liability to the PBGC
or a Material Plan (or a related trust) which will have a material adverse
effect upon the business, operations or the condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole; or
(h) the Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred withdrawal
liability to such Multiemployer Plan in an amount which, when aggregated
with all other amounts required to be paid to Multiemployer Plans in
connection with withdrawal liabilities (determined as of the date of such
notification), will have a material adverse effect upon the business,
operations or the condition (financial or otherwise) of the Borrower and
its Subsidiaries, taken as a whole;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of Banks having at least 66-2/3% of the Commitments, by
notice to the Borrower, declare the obligation of each Bank to make Advances and
Special Rate Loans to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of Banks owed
at least 66-2/3% of the then aggregate unpaid principal amount of the Advances
and Special Rate Loans owing to Banks, by notice to the Borrower, declare the
Advances and Special Rate Loans, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Advances and Special Rate Loans, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
-------- -------
an order for relief with respect
<PAGE>
52
to the Borrower or any of its Subsidiaries under the Federal Bankruptcy Code,
(A) the obligation of each Bank to make Advances and Special Rate Loans shall
automatically be terminated and (B) the Advances and Special Rate Loans, all
such interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.
ARTICLE VII
THE ADMINISTRATIVE AGENT
SECTION 7.01. Authorization and Action. Each Bank hereby appoints
-------------------------
and authorizes the Administrative Agent to take such action as administrative
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by this Agreement (including, without limitation, enforcement or
collection of the amounts due hereunder), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks, and such
instructions shall be binding upon all Banks and all holders of Advances and
Special Rate Loans; provided, however, that the Administrative Agent shall not
-------- -------
be required to take any action which exposes the Administrative Agent to
personal liability or which is contrary to this Agreement or applicable law.
The Administrative Agent agrees to give to each Bank prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the
-------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or wilful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in
<PAGE>
53
good faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties or representations made
in or in connection with this Agreement; (iii) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of the Borrower or to
inspect the property (including the books and records) of the Borrower; (iv)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (v) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopy,
telegram or cable) believed by it to be genuine and signed or sent by the proper
party or parties.
SECTION 7.03. Chemical Bank and Affiliates. With respect to its
-----------------------------
Commitment, Chemical Bank shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Administrative Agent; and the term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include Chemical Bank in its individual capacity. Chemical
Bank and its affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, the
Borrower, any of its subsidiaries and any Person who may do business with or own
securities of the Borrower or any such subsidiary, all as if Chemical Bank were
not the Administrative Agent and without any duty to account therefor to the
Banks.
SECTION 7.04. Bank Credit Decision. Each Bank acknowledges that it
---------------------
has, independently and without reliance upon the Administrative Agent or any
other Bank and based on the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
<PAGE>
54
SECTION 7.05. Indemnification. The Banks agree to indemnify the
----------------
Administrative Agent (to the extent not reimbursed by the Borrower), ratably as
computed as set forth below from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Administrative Agent under this Agreement, provided that no Bank shall be
--------
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or wilful misconduct. Without
limitation of the foregoing, each Bank agrees to reimburse the Administrative
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Administrative Agent in connection with
the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Administrative Agent is not reimbursed for such expenses
by the Borrower. For purposes of this Section 7.05, ratable allocations among
the Banks shall be made (i) in respect of any demand by the Administrative Agent
prior to a declaration made pursuant to clause (ii) of Section 6.01, according
to the respective amounts of their Commitments and (ii) thereafter according to
the respective principal amounts of the Advances and Special Rate Loans then
outstanding to them. Each Bank agrees that any reasonable allocation of
expenses or other amounts referred to in this paragraph between this Agreement
and the Facility A Credit Agreement shall be conclusive and binding for all
purposes.
SECTION 7.06. Successor Administrative Agent. The Administrative
-------------------------------
Agent may resign at any time by giving written notice thereof to the Banks and
the Borrower and may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Administrative Agent with the consent of
the Borrower (which consent shall not be required if at the time of such
appointment any Event of Default or an event which with the passage of time or
the giving of notice or both would become an Event of Default has occurred and
is continuing). If no
<PAGE>
55
successor Administrative Agent shall have been so appointed by the Majority
Banks, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Majority
Banks' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a commercial bank organized or licensed
under the laws of the United States of America or of any state thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article VII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
----------------
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by all the Banks, do any of the following: (a) waive any of
the conditions specified in Section 3.01 or 3.02 (if and to the extent that the
Borrowing which is the subject of such waiver would involve an increase in the
aggregate outstanding amount of Advances over the aggregate amount of Advances
outstanding immediately prior to such Borrowing), (b) increase the Commitments
of the Banks or subject the Banks to any additional obligations, (c) reduce the
principal of, or interest on, the Advances or any fees or other amounts payable
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Advances or any fees or other amounts payable hereunder,
<PAGE>
56
(e) make any change which would alter the percentage of the Commitments or of
the aggregate unpaid principal amount of the Advances, or the number of Banks,
which shall otherwise be required for the Banks or any of them to take any
action hereunder or (f) amend this Section 8.01; and provided further, that no
-------- --------
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Banks required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement.
SECTION 8.02. Notices, Etc. All notices and other communications
-------------
provided for hereunder shall be in writing (including telecopy, telegraphic or
cable communication) and telecopied, mailed, telegraphed, cabled or delivered,
if to the Borrower, at its address at Martin Tower, Eighth and Eaton Avenues,
Bethlehem, Pennsylvania 18018, Attention: Treasurer; if to any Bank listed on
Schedule I hereto, at its Domestic Lending Office specified opposite its name on
Schedule I hereto; if to any other Bank, at its Domestic Lending Office
specified in the Assignment and Acceptance pursuant to which it became a Bank;
and if to the Administrative Agent, at its address at Chemical Bank Agency
Services Corporation, Grand Central Tower, 140 East 45th Street, 29th Floor, New
York, New York 10017, Attention: Sandra J. Miklave, with a copy to Chemical
Bank, 270 Park Avenue, 9th Floor, New York, New York 10017, Attention: Birgitta
L. Hanan; or, as to the Borrower, any Bank or the Administrative Agent, at such
other address as shall be designated by such party in a written notice to the
other parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when
telecopied, mailed, telegraphed or cabled, be effective when sent by telecopy,
deposited in the mails, delivered to the telegraph company or delivered to the
cable company, respectively, except that notices and communications to the
Administrative Agent pursuant to Article II or VII shall not be effective until
received by the Administrative Agent. The Administrative Agent shall be
entitled to rely on any oral notice made pursuant to Section 2.03(v) believed by
it to be genuine and made by the proper party or parties, and the Borrower and
the Banks, as the case may be, agree to be conclusively bound by the
Administrative Agent's records in respect of any such notice.
<PAGE>
57
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
--------------------
Bank or the Administrative Agent to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes. (a) The Borrower agrees to
--------------------------
pay on demand all costs and expenses in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto and with respect to advising the
Administrative Agent as to its rights and responsibilities under this Agreement,
and all costs and expenses, if any (including, without limitation, reasonable
counsel fees and expenses), incurred by the Administrative Agent or any Bank in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement and the other documents to be delivered
hereunder. In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from the execution and delivery of this Agreement and agrees
to save the Administrative Agent and each Bank harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
(b) If any payment of principal of any Adjusted CD Rate Advance or
Eurodollar Rate Contract Advance or Auction Advance or Special Rate Loan is made
by the Borrower to or for the account of a Bank other than on the last day of
the Interest Period for such Contract Advance, or on the maturity date of such
Auction Advance or Special Rate Loan, as the case may be, or as a result of a
payment pursuant to Section 2.07(d), or as a result of acceleration of the
maturity of the Advances and Special Rate Loans pursuant to Section 6.01 or for
any other reason, or by an Eligible Assignee to a Bank other than on the last
day of the Interest Period (or the final maturity date in the case of an Auction
Advance or Special Rate Loan) for such Advance or Special Rate Loan upon an
assignment of rights and obligations under this Agreement pursuant to Section
8.07 as
<PAGE>
58
a result of a demand by the Borrower pursuant to Section 8.07(a), or an
assignment of rights and obligations under this Agreement pursuant to Section
2.17 as a result of a demand by the Borrower, or if the Borrower fails to
convert or continue any Contract Advance hereunder after irrevocable notice of
such conversion or continuation has been given pursuant to Section 2.04, the
Borrower shall, upon demand by such Bank (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Bank any amounts required to compensate such Bank for any additional losses,
costs or expenses which it may reasonably incur as a result of such payment or
failure, including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Bank to fund or maintain such
Advance. A certificate of such Bank setting forth the amount demanded hereunder
and the basis therefor shall, in the absence of manifest error, be conclusive
and binding for all purposes.
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during
-----------------
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Advances and Special Rate Loans due and
payable pursuant to the provisions of Section 6.01, each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement and the Advances and Special Rate Loans made by such Bank,
irrespective of whether or not such Bank shall have made any demand under this
Agreement and although such obligations may be unmatured. Each Bank agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Bank, provided that the failure to give such
--------
notice shall not affect the validity of such set-off and application. The
rights of each Bank under this Section 8.05 are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which such Bank
may have.
<PAGE>
59
SECTION 8.06. Binding Effect. This Agreement shall become effective
---------------
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Bank that
such Bank has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Administrative Agent and each Bank and their
respective successors and assigns.
SECTION 8.07. Assignments and Participations. (a) Each Bank may
-------------------------------
and, if demanded by the Borrower pursuant to subsection (g) hereof, shall assign
to one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Advances owing to it); provided, however, that
-------- -------
(i) each such assignment shall be of a constant, and not a varying, percentage
of all of the rights and obligations of the Banks under this Agreement, (ii) the
amount of the Commitment of the assigning Bank being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $25,000,000 and shall
be an integral multiple of $1,000,000, (iii) each such assignment shall be to an
Eligible Assignee and (iv) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register (as defined in Section 8.07(c)), an Assignment and Acceptance, together
with a processing fee of $2,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least three Business Days after the
execution thereof, (x) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Bank hereunder and (y) the Bank assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto). Notwithstanding the foregoing, any Bank assigning its rights and
obligations under this Agreement may retain any Auction Advances made by it
outstanding at such time, and in such case shall retain its rights
<PAGE>
60
hereunder in respect of any Advances so retained until such Advances have been
repaid in full in accordance with this Agreement.
(b) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Administrative
Agent, such assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee, except for any required
consent of the Borrower; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as administrative agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Bank.
(c) The Administrative Agent shall maintain at its address referred
to in Section 8.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Commitment of, and principal
<PAGE>
61
amount of the Advances owing to, each Bank from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Administrative Agent and the Banks
may treat each Person whose name is recorded in the Register as a Bank hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee representing that it is an Eligible Assignee, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit B hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register,
(iii) give prompt notice thereof to the Borrower and (iv) send a copy thereof to
the Borrower.
(e) Each Bank may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Advances or Special Rate Loans owing to it); provided, however, that (i)
-------- -------
such Bank's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Borrower, the Administrative Agent and the
other Banks shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement; and
provided further, however, that such Bank shall not agree with any such bank or
---------------- -------
other financial institution to permit such bank or other financial institution
to enforce the obligations of the Borrower relating to the Advances or any
Special Rate Loan or to approve of any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
with respect to any decrease in any fees payable hereunder or the amount of
principal or rate of interest which is payable in respect of such Advances or
Special Rate Loan or any extension of the dates fixed for the payment thereof).
(f) Any Bank may, in connection with any assignment or participation
or proposed assignment or
<PAGE>
62
participation pursuant to this Section 8.07, disclose to the assignee or
participant or proposed assignee or participant, any information relating to the
Borrower furnished to such Bank by or on behalf of the Borrower; provided that,
--------
prior to any such disclosure, the assignee or participant or proposed assignee
or participant, if not an Eligible Assignee, shall agree to preserve the
confidentiality of any confidential information relating to the Borrower
received by it from such Bank.
(g) If any Bank shall make demand for payment under or shall notify
the Borrower that it is affected by an event described in Section 2.11 or 2.15
hereunder or shall notify the Administrative Agent pursuant to Section 2.13
hereunder, then within 15 days after such demand or such notice, the Borrower
may (i) demand that such Bank assign in accordance with this Section 8.07 to one
or more Eligible Assignees designated by the Borrower all (but not less than
all) of such Bank's Commitment and the Advances and Special Rate Loans owing to
it within the next succeeding 30 days, provided that, if any such Eligible
Assignee designated by the Borrower shall fail to consummate such assignment on
terms acceptable to such Bank, or if the Borrower shall fail to designate any
such Eligible Assignees for all or part of such Bank's Commitment or Advances,
then such Bank may assign such Commitment or Advances to any other Eligible
Assignee in accordance with this Section 8.07 during such 30-day period or (ii)
terminate all (but not less than all) of such Bank's Commitment and repay all
(but not less than all) of such Bank's Advances and Special Rate Loans not so
assigned on or before such 30th day in accordance with Sections 2.06 and 2.07(d)
hereof (but without the requirements stated therein for ratable treatment of the
Banks). Nothing in this Section 8.07(g) shall relieve the Borrower of its
obligations for payment under Section 2.11 or 2.15 arising prior to an
assignment or termination pursuant hereto.
(h) Any Bank may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank; provided that no such assignment
--------
shall release a Bank from any of its obligations hereunder. In connection with
any such assignment or proposed assignment, the Borrower will, promptly upon the
request of any Bank, execute and deliver to such Bank a note evidencing the
Borrower's obligations hereunder, in a form mutually satisfactory to the
Borrower and such Bank; provided that if the Borrower certifies to such Bank
--------
upon such request that
<PAGE>
63
it believes any authorization, approval or other action by the Interstate
Commerce Commission is required for the issuance of such note, the Borrower
shall not be deemed to be in default under this Section 8.07(h) so long as the
Borrower is diligently seeking such authorization, approval or other action, at
such Bank's expense.
(i) This Section 8.07 sets forth the exclusive manner by which a Bank
may assign its rights and obligations hereunder or sell participations in or to
its rights and obligations hereunder.
(j) Each Bank agrees to notify the Borrower of any assignment of or
grant of a participating interest in any Advance or Special Rate Loan, and of
the identity of the assignee or participant.
(k) The Borrower may not assign or delegate any rights or obligations
hereunder without the prior written consent of each Bank.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
--------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.09. Execution in Counterparts. This Agreement may be
--------------------------
executed in any number of counterparts and
<PAGE>
64
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
UNION PACIFIC CORPORATION,
by
Edwin A. Willis
-----------------------
Name: Edwin A. Willis
Title: Assistant Treasurer
CHEMICAL BANK, as Administrative Agent,
by
Birgitta L. Hanan
------------------------
Name: Birgitta L. Hanan
Title: Vice President
<PAGE>
65
Banks
-----
Commitment
----------
$50,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
by
Calvin Blount
-------------------------
Name: Calvin Blount
Title: Assistant
Vice President
by
Deirdre Doyle
--------------------------
Name: Deirdre Doyle
Title: Assistant
Vice President
<PAGE>
66
Banks
-----
Commitment
----------
$50,000,000 CHEMICAL BANK,
by
Birgitta L. Hanan
------------------------
Name: Birgitta L. Hanan
Title: Vice President
<PAGE>
67
Banks
-----
Commitment
----------
$50,000,000 CITIBANK, N.A.,
by
J. Darrell Thomas
--------------------------
Name: J. Darrell Thomas
Title: Vice President
<PAGE>
68
Banks
-----
Commitment
----------
$50,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
by
Gerald F. Mackin
--------------------------
Name: Gerald F. Mackin
Title: Vice President
<PAGE>
69
Banks
-----
Commitment
----------
$30,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
by
Laura E. Reim
--------------------------
Name: Laura E. Reim
Title: Vice President
$20,000,000 J. P. MORGAN DELAWARE,
by
David Morris
--------------------------
Name: David Morris
Title: Vice President
<PAGE>
70
Banks
-----
Commitment
----------
$50,000,000 NATIONSBANK OF NORTH CAROLINA, N.A.,
by
Frederick G. Van Zijl
--------------------------
Name: Frederick G. Van Zijl
Title: Vice President
<PAGE>
71
Banks
-----
Commitment
----------
$50,000,000 UNION BANK OF SWITZERLAND, NEW YORK BRANCH,
by
A. Jane Michaelis
--------------------------
Name: A. Jane Michaelis
Title: Vice President
by
Jean Claude De Roche
--------------------------
Name: Jean Claude De Roche
Title: Assistant
Vice President
<PAGE>
72
Banks
-----
Commitment
----------
$30,000,000 ABN AMRO BANK N.V.,
by
Blaise R. Heid
-------------------------
Name: Blaise R. Heid
Title: Vice President
by
Olga L. Zoutendijk
--------------------------
Name: Olga L. Zoutendijk
Title: Vice President
<PAGE>
73
Banks
-----
Commitment
----------
$30,000,000 BANK OF MONTREAL
by
Christine M. Tierney
--------------------------
Name: Christine M. Tierney
Title: Director
<PAGE>
74
Banks
-----
Commitment
----------
$30,000,000 THE CHASE MANHATTAN BANK, N.A.,
by
Francis M. Cox, III
--------------------------
Name: Francis M. Cox, III
Title: Vice President
<PAGE>
75
Banks
-----
Commitment
----------
$30,000,000 CREDIT LYONNAIS NEW YORK BRANCH,
by
Deborah E. Bradley
--------------------------
Name: Deborah E. Bradley
Title: Vice President
<PAGE>
76
Banks
-----
Commitment
----------
$30,000,000 CREDIT SUISSE,
by
Thomas Bosshard
--------------------------
Name: Thomas Bosshard
Title: Associate
by
Andrea E. Shkane
--------------------------
Name: Andrea E. Shkane
Title: Assistant
Vice President
<PAGE>
77
Banks
-----
Commitment
----------
$30,000,000 NATIONAL WESTMINSTER BANK PLC,
by
G. M. Sherman
--------------------------
Name: G. M. Sherman
Title: Vice President
<PAGE>
78
Banks
-----
Commitment
----------
$30,000,000 THE NORTHERN TRUST COMPANY,
by
Gregory F. Werd, Jr.
--------------------------
Name: Gregory F. Werd, Jr.
Title: Second Vice President
<PAGE>
79
Banks
-----
Commitment
----------
$30,000,000 SOCIETE GENERALE,
by
Jan Wertlieb
--------------------------
Name: Jan Wertlieb
Title: Vice President
<PAGE>
80
Banks
-----
Commitment
----------
$30,000,000 THE TORONTO-DOMINION BANK,
by
David W. Lewing
--------------------------
Name: David W. Lewing
Title: Managing Director
<PAGE>
81
Banks
-----
Commitment
----------
$20,000,000 THE BANK OF TOKYO TRUST COMPANY,
by
John R. Jeffers
--------------------------
Name: John R. Jeffers
Title: Vice President
<PAGE>
82
Banks
-----
Commitment
----------
$20,000,000 BANQUE NATIONALE DE PARIS,
by
Eric Vigne
--------------------------
Name: Eric Vigne
Title: Senior Vice President
by
Judith Domkowski
-------------------------
Name: Judith Domkowski
Title: Vice President
<PAGE>
83
Banks
-----
Commitment
----------
$20,000,000 THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
by
Joseph L. Sooter, Jr.
--------------------------
Name: Joseph L. Sooter, Jr.
Title: Vice President
<PAGE>
84
Banks
-----
Commitment
----------
$20,000,000 THE FIRST NATIONAL BANK OF BOSTON,
by
Barbara W. Wilson
--------------------------
Name: Barbara W. Wilson
Title: Vice President
<PAGE>
85
Banks
-----
Commitment
----------
$20,000,000 THE INDUSTRIAL BANK OF JAPAN TRUST COMPANY,
by
Takeshi Kawano
--------------------------
Name: Takeshi Kawano
Title: Senior Vice President
and Senior Manager
<PAGE>
86
Banks
-----
Commitment
----------
$20,000,000 MELLON BANK, N.A.,
by
Susan A. Dalton
--------------------------
Name: Susan A. Dalton
Title: Vice President
<PAGE>
87
Banks
-----
Commitment
----------
$20,000,000 PNC BANK, NATIONAL ASSOCIATION,
by
H. Todd Dissinger
--------------------------
Name: H. Todd Dissinger
Title: Vice President
<PAGE>
88
Banks
-----
Commitment
----------
$20,000,000 THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH,
by
Yoshinori Kawamura
--------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
<PAGE>
89
Banks
-----
Commitment
----------
$20,000,000 SWISS BANK CORPORATION, CHICAGO BRANCH,
by
Neil R. Gunn
--------------------------
Name: Neil R. Gunn
Title: Director
by
Benjamin R. Riensche
--------------------------
Name: Benjamin R. Riensche
Title: Associate Director
<PAGE>
EXHIBIT 99(b)(2)
CONFORMED COPY
FIRST AMENDMENT dated as of February 28, 1994 (this
"Amendment"), to the U.S. $800,000,000 Revolving Credit Agreement
dated as of March 2, 1993 (the "Facility B Agreement"), among
UNION PACIFIC CORPORATION, a Utah corporation (the "Borrower"),
the banks parties thereto (the "Banks") and CHEMICAL BANK, a New
York banking corporation, as administrative agent for the Banks
(in such capacity, the "Administrative Agent").
A. The Borrower has requested that the Banks amend certain provisions
of the Facility B Agreement. The Banks are willing to enter into this
Amendment, subject to the terms and conditions set forth herein.
B. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Facility B Agreement.
Accordingly, in consideration of the mutual agreements contained in
this Amendment and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Amendment to Section 1.01. (a) The table in the
--------------------------
definition of "Applicable Fee Percentage" in Section 1.01 of the Facility B
Agreement is hereby amended to read in its entirety as follows:
<PAGE>
2
Ratings Applicable
------- Fee
Percentage
-----------
Category 1
----------
BBB+ and higher by S&P;
Baa1 and higher by Moody's .15%
Category 2
----------
Lower than BBB+ and equal
to or higher than BBB- by
S&P; .225%
Lower than Baa1 and equal
to or higher than Baa3 by
Moody's
Category 3
----------
BB+ or lower by S&P;
Ba1 or lower by Moody's .30%
======================= ===
(b) The definition of "Facility A Credit Agreement" in Section 1.01
of the Facility B Agreement is hereby amended to read in its entirety as
follows:
"Facility A Credit Agreement" means the $600,000,000 Revolving Credit
Agreement, as amended from time to time, among the Borrower, the banks
named therein (which include certain of the Banks) and Chemical Bank,
as administrative agent for the banks.
(c) The definition of "Maturity Date" in Section 1.01 of the Facility
B Agreement is hereby amended to read in its entirety as follows:
"Maturity Date" means March 2, 1999.
SECTION 2. Amendment to Section 2.01(a). Section 2.01(a) of the
-----------------------------
Facility B Agreement is hereby amended to read in its entirety as follows:
"Each Bank severally agrees, on the terms and conditions hereinafter
set forth, to make Contract
<PAGE>
3
Advances to the Borrower from time to time on any Business Day during
the period from the Closing Date until the Termination Date in an
aggregate amount not to exceed at any time outstanding the excess, if
any, of (i) the amount set opposite such Bank's name on the signature
pages to the First Amendment to this Agreement, dated as of February
28, 1994, as such amount may be reduced pursuant to Section 2.06 or
increased pursuant to Section 2.17 (such Bank's obligation to make
such Advances being hereinafter referred to as such Bank's
"Commitment") over (ii) the aggregate amount of (x) such Bank's
Special Rate Loan Reduction, if any, and (y) such Bank's Auction
Reduction, if any; provided, however, that at no time shall the
-------- -------
aggregate outstanding principal amount of Contract Advances, Auction
Advances and Special Rate Loans exceed the aggregate amount of the
Commitments. Each Contract Borrowing shall be in an aggregate amount
not less than $10,000,000 (subject to the terms of this Section
2.01(a)) or an integral multiple of $1,000,000 in excess thereof and
shall consist of Contract Advances of the same Type made on the same
day by the Banks ratably accordingly to their respective Commitments."
SECTION 3. Amendment to Section 5.01(c)(i). Section 5.01(c)(i) of
--------------------------------
the Facility B Agreement is hereby amended by replacing the words "45 days"
therein with the words "60 days."
SECTION 4. Representations and Warranties. The Borrower represents
-------------------------------
and warrants to the Administrative Agent and to each of the Banks that:
(a) This Amendment, and the Facility B Agreement as amended hereby,
have been duly authorized, executed and delivered by it and constitute
legal, valid and binding obligations of the Borrower enforceable in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally, or by general equitable
principles, including but not limited to principles governing the
availability of the remedies of specific performance and injunctive relief.
<PAGE>
4
(b) The representations and warranties set forth in Article IV of the
Facility B Agreement are true and correct in all material respects before
and after giving effect to this Amendment with the same effect as if made
on the date hereof, except to the extent such representations and
warranties expressly relate to an earlier date, in which case they were
true and correct in all material respects on and as of such earlier date.
(c) As of the date hereof, the Borrower has performed all obligations
to be performed on its part as set forth in the Facility B Agreement.
For purposes of the foregoing representations, references to the
Facility B Agreement shall mean the Facility B Agreement as amended hereby.
SECTION 5. Conditions to Effectiveness. The amendments to the
----------------------------
Facility B Agreement set forth in this Amendment shall become effective on the
date hereof, provided that (a) the Administrative Agent shall have received
counterparts of this Amendment which, when taken together, bear the signatures
of the Borrower and each Bank under the Facility B Agreement and (b) the
Administrative Agent shall have received a favorable written opinion of the
Borrower's counsel, dated the date hereof and addressed to the Banks, to the
effect set forth in Annex I hereto.
SECTION 6. Facility B Agreement. Except as specifically amended
---------------------
hereby, the Facility B Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof.
After the date hereof, any reference to the Facility B Agreement shall mean the
Facility B Agreement as amended hereby.
SECTION 7. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
---------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. Counterparts. This Amendment may be executed in two or
-------------
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one contract.
SECTION 9. Expenses. The Borrower agrees to reimburse the
---------
Administrative Agent for its out-of-pocket
<PAGE>
5
expenses in connection with the preparation and execution of this Amendment,
including the fees, charges and disbursements of Cravath, Swaine & Moore,
counsel for the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
UNION PACIFIC CORPORATION,
as Borrower,
by
/s/ John B. Larsen
--------------------------
Name: John B. Larsen
Title: Assistant Treasurer
Banks
-----
Commitment
---------- CHEMICAL BANK, individually
$50,000,000 and as Administrative Agent,
by
/s/ John J. Huber III
--------------------------
Name: John J. Huber III
Title: Managing Director
<PAGE>
6
Banks
-----
Commitment BANK OF AMERICA NATIONAL TRUST
---------- AND SAVINGS ASSOCIATION,
$50,000,000
by
/s/ Robert A. Kilgannon
-------------------------
Name: Robert A. Kilgannon
Title: Vice President
Banks
-----
Commitment CITIBANK, N.A.,
----------
$50,000,000
by
/s/ Robert D. Wetrus
-------------------------
Name: Robert D. Wetrus
Title: Vice President
Banks
-----
Commitment THE FIRST NATIONAL BANK OF
---------- CHICAGO,
$50,000,000
by
/s/ Gerald F. Mackin
-------------------------
Name: Gerald F. Mackin
Title: Vice President
Banks
-----
Commitment J. P. MORGAN DELAWARE,
----------
$20,000,000
by
/s/ David J. Morris
-------------------------
Name: David J. Morris
Title: Vice President
<PAGE>
7
Banks
-----
Commitment MORGAN GUARANTY TRUST COMPANY
---------- OF NEW YORK,
$30,000,000
by
/s/ Laura E. Reim
-------------------------
Name: Laura E. Reim
Title: Vice President
Banks
-----
Commitment NATIONSBANK OF NORTH CAROLINA,
---------- N.A.,
$50,000,000
by
/s/ Bill Manley
-------------------------
Name: Bill Manley
Title: Senior Vice
President
Banks
-----
Commitment UNION BANK OF SWITZERLAND,
---------- NEW YORK BRANCH,
$50,000,000
by
/s/ Daniel H. Perron
-------------------------
Name: Daniel H. Perron
Title: Vice President
by
/s/ James P. Kelleher
-------------------------
Name: James P. Kelleher
Title: Assistant
Treasurer
<PAGE>
8
Banks
-----
Commitment ABN AMRO BANK, N.V.,
----------
$30,000,000
by
/s/ Blaise R. Heid
-------------------------
Name: Blaise R. Heid
Title: Group Vice
President
by
/s/ Duane P. Helkowski
-------------------------
Name: Duane P. Helkowski
Title: Corporate Banking
Officer
Banks
-----
Commitment BANK OF MONTREAL,
----------
$50,000,000
by
/s/ Christine M. Tierney
-------------------------
Name:Christine M. Tierney
Title: Director
Banks
-----
Commitment THE CHASE MANHATTAN BANK,
---------- N.A.,
$30,000,000
by
/s/ Dawn Lee Lum
-------------------------
Name: Dawn Lee Lum
Title: Vice President
<PAGE>
9
Banks
-----
Commitment CREDIT LYONNAIS NEW YORK
---------- BRANCH,
$30,000,000
by
/s/ Mary E. Collier
-------------------------
Name: Mary E. Collier
Title: Vice President
Banks
-----
Commitment CREDIT SUISSE,
----------
$30,000,000
by
/s/ Thomas Bosshard
-------------------------
Name: Thomas Bosshard
Title: Associate
by
/s/ Jay Chall
-------------------------
Name: Jay Chall
Title: Member of Senior
Management
Banks
-----
Commitment NATIONAL WESTMINSTER BANK PLC,
----------
$30,000,000
by
/s/ George M. Sherman
-------------------------
Name: George M. Sherman
Title: Vice President
Banks
-----
Commitment THE NORTHERN TRUST COMPANY,
----------
$30,000,000
by
/s/ Greg Werd
-------------------------
Name: Greg Werd
Title: Vice President
<PAGE>
10
Banks
-----
Commitment SOCIETE GENERALE,
----------
$30,000,000
by
/s/ Jan Wertlieb
-------------------------
Name: Jan Wertlieb
Title: Vice President
Banks
-----
Commitment THE TORONTO-DOMINION BANK,
----------
$30,000,000
by
/s/ William H. Hoffmann
-------------------------
Name: William H. Hoffmann
Title: Director
Banks
-----
Commitment THE BANK OF TOKYO TRUST
---------- COMPANY,
$20,000,000
by
/s/ John R. Jeffers
-------------------------
Name: John R. Jeffers
Title: Vice President
<PAGE>
11
Banks
-----
Commitment BANQUE NATIONALE DE PARIS,
----------
$20,000,000
by
/s/ Eric Vigne
-------------------------
Name: Eric Vigne
Title: Senior Vice
President
by
/s/ Richard L. Sted
-------------------------
Name: Richard L. Sted
Title: Senior Vice
President
Banks
-----
Commitment THE BOATMEN'S NATIONAL BANK OF
---------- ST. LOUIS,
$20,000,000
by
/s/ John C. Solomon
-------------------------
Name: John C. Solomon
Title: Vice President
Banks
-----
Commitment THE FIRST NATIONAL BANK OF
---------- BOSTON,
$20,000,000
by
/s/ Barbara W. Wilson
-------------------------
Name: Barbara W. Wilson
Title: Vice President
<PAGE>
12
Banks
-----
Commitment THE INDUSTRIAL BANK OF JAPAN
---------- TRUST COMPANY,
$20,000,000
by
/s/ Takeshi Kawano
-------------------------
Name: Takeshi Kawano
Title: Senior Vice
President and
Senior Manager
Corporate Finance
Banks
-----
Commitment MELLON BANK, N.A.,
----------
$20,000,000
by
/s/ Robert E. Bjorhus Jr.
-------------------------
Name:Robert E. Bjorhus Jr
Title: Vice President
Banks
-----
Commitment PNC BANK, NATIONAL
---------- ASSOCIATION,
$20,000,000
by
/s/ Robert Q. Reilly
-------------------------
Name: Robert Q. Reilly
Title: Vice President
Banks
-----
Commitment THE SUMITOMO BANK, LIMITED,
---------- NEW YORK BRANCH,
$20,000,000
by
/s/ Yoshinori Kawamura
-------------------------
Name: Yoshinori Kawamuri
Title: Joint General
Manager
<PAGE>
EXHIBIT 99(b)(3)
CONFORMED COPY
SECOND AMENDMENT dated as of February 27, 1995 (this
"Amendment"), to the U.S. $800,000,000 Revolving Credit Agreement
dated as of March 2, 1993, as amended (the "Facility B
Agreement"), among UNION PACIFIC CORPORATION, a Utah corporation
(the "Borrower"), the banks parties thereto (the "Banks") and
CHEMICAL BANK, a New York banking corporation, as administrative
agent for the Banks (in such capacity, the "Administrative
Agent").
A. The Borrower has requested that the Banks amend certain provisions
of the Facility B Agreement. The Banks are willing to enter into this
Amendment, subject to the terms and conditions set forth herein.
B. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Facility B Agreement.
Accordingly, in consideration of the mutual agreements contained in
this Amendment and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Amendment to Cover Page. (a) The reference on the Cover
------------------------
Page of the Facility B Agreement to "$800,000,000" is hereby amended to read as
follows:
"$1,400,000,000".
(b) The reference on the Cover Page of the Facility B Agreement to
the Morgan Guaranty Trust Company of New York as Co-Agent shall be deleted and
replaced by references to Credit Suisse and NationsBank, N.A. (Carolinas) as Co-
Agents.
<PAGE>
2
SECTION 2. Amendments to Section 1.01. (a) The definition of
---------------------------
"Applicable Fee" Percentage in Section 1.01 of the Facility B Agreement is
hereby amended to read in its entirety as follows:
"Applicable Fee Percentage" means on any date the applicable
percentage set forth below based upon the ratings applicable on such date to the
Borrower's senior, unsecured, non-credit-enhanced long term indebtedness for
borrowed money ("Index Debt"):
<TABLE>
<CAPTION>
Ratings Applicable
------- Fee
Percentage
-----------
<S> <C>
Category 1
----------
A and higher by S&P;
A2 and higher by Moody's .10%
Category 2
----------
Lower than A and equal to
or higher than BBB+ by S&P;
Lower than A2 and equal to
or higher than Baa1 by
Moody's .125%
Category 3
----------
Lower than BBB+ and equal
to or higher than BBB- by
S&P; .15%
Lower than Baa1 and equal
to or higher than Baa3 by
Moody's
Category 4
----------
BB+ or lower by S&P;
Ba1 or lower by Moody's .25%
</TABLE>
For purposes of the foregoing, (i) if neither Moody's nor S&P shall have in
effect a rating for Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then both such rating
agencies
<PAGE>
3
will be deemed to have established ratings for Index Debt in Category 4; (ii) if
only one of Moody's or S&P shall have in effect a rating for Index Debt, the
Borrower and the Banks will negotiate in good faith to agree upon another rating
agency to be substituted by an amendment to this Agreement for the rating agency
which shall not have a rating in effect, and in the absence of such amendment
the Applicable Fee Percentage will be determined by reference to the available
rating; (iii) if the ratings established by Moody's and S&P shall fall within
different Categories, the Applicable Fee Percentage shall be determined by
reference to the numerically lower Category and (iv) if any rating established
by Moody's or S&P shall be changed (other than as a result of a change in the
rating system of either Moody's or S&P) such change shall be effective as of the
date on which such change is first announced by the rating agency making such
change. Each change in the Applicable Fee Percentage shall apply during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating
system of either Moody's or S&P shall change prior to the Maturity Date, the
Borrower and the Banks shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed rating system. If
both Moody's and S&P shall cease to be in the business of rating corporate debt
obligations, the Borrower and the Banks shall negotiate in good faith to agree
upon a substitute rating agency and to amend the references to specific ratings
in this definition to reflect the ratings used by such substitute rating agency.
(b) The definition of "Applicable Rate" in Section 1.01 of the
Facility B Agreement is hereby amended to read in its entirety as follows:
"Applicable Rate" means:
(i) with respect to Adjusted CD Rate Advances, the Adjusted CD Rate
plus .375%;
(ii) with respect to Alternate Base Rate Advances, the Alternate Base
Rate; and
(iii) with respect to Eurodollar Rate Contract Advances, the
Eurodollar Rate plus on any date the applicable spread (the "Applicable
Spread") set forth
<PAGE>
4
below based upon the ratings applicable on such date to the Index Debt:
<TABLE>
<CAPTION>
Applicable
Ratings Spread
------- ----------
<S> <C>
Category 1
----------
A and higher by S&P;
A2 and higher by Moody's .15%
Category 2
----------
Lower than A and equal to
or higher than BBB+ by S&P;
Lower than A2 and equal to
or higher than Baa1 by
Moody's .25%
Category 3
----------
Lower than BBB+ and equal
to or higher than BBB- by
S&P;
Lower than Baa1 and equal
to or higher than Baa3 by
Moody's .30%
Category 4
----------
BB+ or lower by S&P;
Ba1 or lower by Moody's .50%
</TABLE>
For purposes of the foregoing, (i) if neither Moody's nor S&P shall have in
effect a rating for Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then both such rating
agencies will be deemed to have established ratings for Index Debt in Category
4; (ii) if only one of Moody's or S&P shall have in effect a rating for Index
Debt, the Borrower and the Banks will negotiate in good faith to agree upon
another rating agency to be substituted by an amendment to this Agreement for
the rating agency which shall not have a rating in effect, and in the absence of
such amendment the Applicable Spread will be determined by reference to the
available rating; (iii) if the ratings established by Moody's and S&P
<PAGE>
5
shall fall within different Categories, the Applicable Spread shall be
determined by reference to the numerically lower Category and (iv) if any rating
established by Moody's or S&P shall be changed (other than as a result of a
change in the rating system of either Moody's or S&P) such change shall be
effective as of the date on which such change is first announced by the rating
agency making such change. Each change in the Applicable Spread shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change. If
the rating system of either Moody's or S&P shall change prior to the Maturity
Date, the Borrower and the Banks shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect such changed rating
system. If both Moody's and S&P shall cease to be in the business of rating
corporate debt obligations, the Borrower and the Banks shall negotiate in good
faith to agree upon a substitute rating agency and to amend the references to
specific ratings in this definition to reflect the ratings used by such
substitute rating agency.
(c) The definition of "Majority Banks" in Section 1.01 of the
Facility B Agreement is hereby amended to read in its entirety as follows:
"Majority Banks" means at any time Banks that in the aggregate (a)
represent at least 66-2/3% of the Commitments and (b) after the expiry
or termination of the Commitments, represent at least 66-2/3% of the
aggregate unpaid principal amount of the Advances and Special Rate
Loans.
(d) The definition of "Maturity Date" in Section 1.01 of the Facility
B Agreement is hereby amended to read in its entirety as follows:
"Maturity Date" means March 2, 2000.
(e) The definition of "Reference Banks" in Section 1.01 of the
Facility B Agreement is hereby amended to read in its entirety as follows:
"Reference Banks" means Chemical Bank, Citibank, N.A., Credit Suisse
and NationsBank, N.A. (Carolinas) and such other additional or substitute
financial institutions as may be agreed to by the Borrower, the Administrative
Agent and the Majority Banks from time to time.
<PAGE>
6
SECTION 3. Amendment to Section 2.01(a). Section 2.01(a) of the
-----------------------------
Facility B Agreement is hereby amended to read in its entirety as follows:
"Each Bank severally agrees, on the terms and conditions hereinafter set
forth, to make Contract Advances to the Borrower from time to time on any
Business Day during the period from the Closing Date until the Termination
Date in an aggregate amount not to exceed at any time outstanding the
excess, if any, of (i) the amount set opposite such Bank's name on the
signature pages to the Second Amendment to this Agreement, dated as of
February 27, 1995, as such amount may be reduced pursuant to Section 2.06
or increased pursuant to Section 2.17 or reduced or increased pursuant to
Section 8.07 (such Bank's obligation to make such Advances being
hereinafter referred to as such Bank's "Commitment") over (ii) the
aggregate amount of (x) such Bank's Special Rate Loan Reduction, if any,
and (y) such Bank's Auction Reduction, if any; provided, however, that at
-------- -------
no time shall the aggregate outstanding principal amount of Contract
Advances, Auction Advances and Special Rate Loans exceed the aggregate
amount of the Commitments. Each Contract Borrowing shall be in an
aggregate amount of not less than $10,000,000 (subject to the terms of this
Section 2.01(a)) or an integral multiple of $1,000,000 in excess thereof
and shall consist of Contract Advances of the same Type made on the same
day by the Banks ratably accordingly to their respective Commitments."
SECTION 4. Amendments to Section 2.11. Section 2.11(a) and (b) of
---------------------------
the Facility B Agreement are hereby amended by deleting all references to "after
the date hereof" and replacing each such reference with the words "after
February 27, 1995".
SECTION 5. Amendments to Section 2.15. (a) Section 2.15(a) of the
---------------------------
Facility B Agreement is hereby amended by deleting all references to "after the
date hereof" and replacing each such reference with the words "after February
27, 1995".
(b) Section 2.15 of the Facility B Agreement is hereby amended by
adding the following new Section 2.15(e):
<PAGE>
7
(e) Notwithstanding the foregoing provisions of this Section
2.15, in the event any Bank grants a participation in an Advance or Special
Rate Loan purusant to Section 8.07, the Borrower shall not be obligated to
pay any taxes, imposts, duties, charges, fees, deductions or withholdings
to the extent that the aggregate amount thereof exceeds the aggregate
amount for which the Borrower would have been obligated if such Bank had
not granted such participation.
SECTION 6. Amendments to Section 4.01. Section 4.01(g) of the
---------------------------
Facility B Agreement is hereby amended to read in its entirety as follows:
(g) After applying the proceeds of each Advance and Special Rate
Loan, not more than 25% of the value of the assets of the Borrower and its
Subsidiaries (as determined in good faith by the Borrower) that are subject
to Section 5.02(a)(i) or 5.02(d) will consist of or be represented by
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System).
SECTION 7. Amendments to Section 5.02. (a) Section 5.02(c)(i) of the
---------------------------
Facility B Agreement is hereby amended by inserting the words "and Special Rate
Loans" following the reference to "Advances".
(b) Section 5.02(c)(iii) of the Facility B Agreement is hereby
amended by inserting the words "and Special Rate Loans" following the reference
to "Advances".
SECTION 8. Amendments to Section 8.07. (a) Section 8.07(a) of the
---------------------------
Facility B Agreement is hereby amended by inserting the words "and Special Rate
Loans" following the first reference to "Advances".
(b) Section 8.07(a)(i) of the Facility B Agreement is hereby amended
by inserting the words "(except in the case of Special Rate Loans)" following
the word "shall".
(c) Section 8.07(g) of the Facility B Agreement is hereby amended by
replacing the two references to "Commitment or Advances" with, in each case, the
words "Commitment, Advances or Special Rate Loans".
<PAGE>
8
SECTION 9. Representations and Warranties. The Borrower represents
-------------------------------
and warrants to the Administrative Agent and to each of the Banks that:
(a) This Amendment, and the Facility B Agreement as amended hereby,
have been duly authorized, executed and delivered by it and constitute
legal, valid and binding obligations of the Borrower enforceable in
accordance with their terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally, or by general equitable
principles, including but not limited to principles governing the
availability of the remedies of specific performance and injunctive relief.
(b) The representations and warranties set forth in Article IV of the
Facility B Agreement are true and correct in all material respects before
and after giving effect to this Amendment with the same effect as if made
on the date hereof, except to the extent such representations and
warranties expressly relate to an earlier date, in which case they were
true and correct in all material respects on and as of such earlier date.
(c) As of the date hereof, the Borrower has performed all obligations
to be performed on its part as set forth in the Facility B Agreement.
For purposes of the foregoing representations, references to the
Facility B Agreement shall mean the Facility B Agreement as amended hereby.
SECTION 10. Conditions to Effectiveness. The amendments to the
----------------------------
Facility B Agreement set forth in this Amendment shall become effective on the
date hereof, provided that (a) the Administrative Agent shall have received
counterparts of this Amendment which, when taken together, bear the signatures
of the Borrower and each Bank under the Facility B Agreement, (b) the
Administrative Agent shall have received a favorable written opinion of the
Borrower's counsel, dated the date hereof and addressed to the Banks, to the
effect set forth in Annex I hereto, (c) the U.S. $600,000,000 Revolving Credit
Agreement dated as of March 2, 1993, as amended, among the Borrower, the Banks
and the Administrative Agent, shall have terminated as
<PAGE>
9
of the date hereof and (d) the U.S. $800,000,000 364-Day Competitive Advance and
Revolving Credit Agreement, dated as of March 29, 1994, among the Borrower, the
Administrative Agent and the financial institutions party thereto, shall have
terminated as of the date hereof.
SECTION 11. Facility B Agreement. Except as specifically amended
---------------------
hereby, the Facility B Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof.
After the date hereof, any reference to the Facility B Agreement shall mean the
Facility B Agreement as amended hereby.
SECTION 12. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
---------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 13. Counterparts. This Amendment may be executed in two or
-------------
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one contract.
SECTION 14. Expenses. The Borrower agrees to reimburse the
---------
Administrative Agent for its out-of-pocket expenses in connection with the
preparation and execution of this Amendment, including the fees, charges and
<PAGE>
disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
UNION PACIFIC CORPORATION,
as Borrower,
by
/s/ Robert M. Knight, Jr.
-------------------------------
Name: Robert M. Knight, Jr.
Title: Assistant Treasurer
Banks
-----
Commitment CHEMICAL BANK, individually
---------- and as Administrative Agent,
$87,500,000
by
/s/ Julie S. Long
-------------------------------
Name: Julie S. Long
Title: Vice President
<PAGE>
Commitment BANK OF AMERICA NATIONAL TRUST
---------- AND SAVINGS ASSOCIATION,
$87,500,000
by
/s/ Craig S. Munro
-------------------------
Name: Craig S. Munro
Title: Managing Director
<PAGE>
Commitment CITIBANK, N.A.,
----------
$87,500,000
/s/ Robert D. Wetrus
-------------------------
Name: Robert D. Wetrus
Title: Vice President
Attorney-in-Fact
<PAGE>
Commitment THE FIRST NATIONAL BANK OF
---------- CHICAGO,
$87,500,000
by
/s/ Gerald E. Mackin
-------------------------
Name: Gerald E. Mackin
Title: Vice President
<PAGE>
Commitment MORGAN GUARANTY TRUST COMPANY
---------- OF NEW YORK,
$87,500,000
by
/s/ Laura E. Reim
-------------------------
Name: Laura E. Reim
Title: Vice President
<PAGE>
Commitment NATIONSBANK, N.A. (Carolinas)
----------
$87,500,000
by
/s/ Michael D. Monte
-------------------------
Name: Michael D. Monte
Title: Vice President
<PAGE>
Commitment UNION BANK OF SWITZERLAND,
---------- NEW YORK BRANCH,
$87,500,000
by
/s/ James P. Kelleher
------------------------------
Name: James P. Kellehen
Title: Assistant Vice
President
by
/s/ Daniel R. Strickford
------------------------------
Name: Daniel R. Strickford
Title: Assistant Treasurer
<PAGE>
Commitment ABN AMRO BANK, N.V.,
----------
$52,500,000
by
/s/ Duane P. Helkowski
------------------------------
Name: Duane P. Helkowski
Title: Assistant Vice
President
by
/s/ Blaise R. Heid
------------------------------
Name: Blaise R. Heid
Title: Senior Vice President
<PAGE>
Commitment BANK OF MONTREAL,
----------
$87,500,000
by
/s/ David J. Thompson
------------------------------
Name: David J. Thompson
Title: Director
<PAGE>
Commitment THE CHASE MANHATTAN BANK,
---------- N.A.,
$52,500,000
by
/s/ F. M. Cox, III
------------------------------
Name: F. M. Cox, III
Title: Vice President
<PAGE>
Commitment CREDIT LYONNAIS NEW YORK
---------- BRANCH,
$52,500,000
by
/s/ Mary E. Collier
------------------------------
Name: Mary E. Collier
Title: Vice President
<PAGE>
Commitment CREDIT SUISSE,
----------
$52,500,000
by
/s/ Eilleen O'Connell Fox
------------------------------
Name: Eilleen O'Connell Fox
Title: Member of Senior
Management
by
/s/ Adrian Germann
------------------------------
Name: Adrian Germann
Title: Associate
<PAGE>
Commitment NATIONAL WESTMINSTER BANK PLC,
----------
$52,500,000
by
/s/ Anne Marie Torre
-------------------------
Name: Anne Marie Torre
Title: Vice President
<PAGE>
Commitment THE NORTHERN TRUST COMPANY,
----------
$52,500,000
by
/s/ James C. McCall
-------------------------
Name: James C. McCall
Title: Second Vice
President
<PAGE>
Commitment SOCIETE GENERALE,
----------
$52,500,000
by
/s/ Jan Wertlieb
-------------------------
Name: Jan Wertlieb
Title: Vice President
<PAGE>
Commitment THE TORONTO-DOMINION BANK,
----------
$52,500,000
by
/s/ Jorge A. Garcia
-------------------------
Name: Jorge A. Garcia
Title: Manager--Credit
Administration
<PAGE>
Commitment THE BANK OF TOKYO TRUST
---------- COMPANY,
$35,000,000
by
/s/ M. R. Manon
-------------------------
Name: M. R. Manon
Title: Vice President
<PAGE>
Commitment BANQUE NATIONALE DE PARIS,
----------
$35,000,000
by
/s/ Barry S. Feigenbaum
-------------------------
Name: Barry S. Feignebaum
Title: Senior Vice
President
by
/s/ Walter Kaplan
-------------------------
Name: Walter Kaplan
Title: Vice President
<PAGE>
Commitment THE BOATMEN'S NATIONAL BANK OF
---------- ST. LOUIS,
$35,000,000
by
/s/ Joseph L. Sooter, Jr.
-------------------------
Name: Joseph L. Sooter, Jr.
Title: Vice President
<PAGE>
Commitment THE FIRST NATIONAL BANK OF
---------- BOSTON,
$35,000,000
by
/s/ Barbara Wilson
-------------------------
Name: Barbara Wilson
Title: Director
<PAGE>
Commitment THE INDUSTRIAL BANK OF JAPAN
---------- TRUST COMPANY,
$35,000,000
by
/s/ Takeshi Kawano
-------------------------
Name: Takeshi Kawano
Title: Senior Vice President
and Senior Manager
Corporate Finance
U.S.A.
<PAGE>
Commitment MELLON BANK, N.A.,
----------
$35,000,000
by
/s/ Donald G. Cassidy, Jr.
------------------------------
Name: Donald G. Cassidy, Jr.
Title: First Vice President
<PAGE>
Commitment PNC BANK, NATIONAL
---------- ASSOCIATION,
$35,000,000
by
/s/ Robert Q. Reilly
-------------------------
Name: Robert Q. Reilly
Title: Vice President
<PAGE>
Commitment THE SUMITOMO BANK, LIMITED,
---------- NEW YORK BRANCH,
$35,000,000
by
/s/ Y. Kawamura
------------------------------
Name: Y. Kawamura
Title: Joint General Manager
<PAGE>
EXHIBIT 99(c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
UNION PACIFIC CORPORATION,
UP ACQUISITION CORPORATION,
UNION PACIFIC RAILROAD COMPANY
and
SOUTHERN PACIFIC RAIL CORPORATION
dated as of
August 3, 1995
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - THE OFFER AND MERGER.......................... 3
Section 1.1 The Offer..................................... 3
Section 1.2 Company Actions............................... 6
Section 1.3 The Mergers................................... 8
Section 1.4 Effective Time................................ 9
Section 1.5 Closing....................................... 10
Section 1.6 Directors and Officers of Initial Surviving
Corporation and the Surviving Corporation..... 10
Section 1.7 Stockholders' Meeting......................... 11
Section 1.8 Voting Trust.................................. 11
ARTICLE II - CONVERSION OF SHARES.......................... 12
Section 2.1 Conversion of Shares.......................... 12
Section 2.2 Election Procedure............................ 13
Section 2.3 Issuance of Parent Common Stock and Payment of
Cash Consideration; Proration................. 15
Section 2.4 Issuance of Parent Common Stock............... 19
Section 2.5 Payment of Cash Consideration................. 20
Section 2.6 Equity Incentive Plan......................... 20
Section 2.7 Stock Transfer Books.......................... 21
Section 2.8 No Dissenter's Rights......................... 21
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 21
Section 3.1 Organization.................................. 21
Section 3.2 Capitalization................................ 22
Section 3.3 Corporate Authorization; Validity of
Agreement; Company Action..................... 24
Section 3.4 Consents and Approvals; No Violations......... 25
Section 3.5 SEC Reports and Financial Statements.......... 27
Section 3.6 Absence of Certain Changes.................... 27
Section 3.7 No Undisclosed Liabilities.................... 28
Section 3.8 Information in Proxy Statement/Prospectus..... 29
Section 3.9 Employee Benefit Plans; ERISA................. 29
Section 3.10 Litigation; Compliance with Law............... 33
Section 3.11 No Default.................................... 33
Section 3.12 Taxes......................................... 34
Section 3.13 Contracts..................................... 37
Section 3.14 Assets; Real Property......................... 37
Section 3.15 Environmental Matters......................... 38
Section 3.16 Transactions with Affiliates. ................ 42
Section 3.17 Opinion of Financial Advisor.................. 42
i
<PAGE>
Page
----
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT, UPRR
AND SUB....................................... 42
Section 4.1 Organization.................................. 43
Section 4.2 Capitalization................................ 43
Section 4.3 Corporate Authorization; Validity of
Agreement; Necessary Action................... 44
Section 4.4 Consents and Approvals; No Violations......... 45
Section 4.5 SEC Reports and Financial Statements.......... 46
Section 4.6 Absence of Certain Changes.................... 47
Section 4.7 No Undisclosed Liabilities.................... 48
Section 4.8 Information in Proxy Statement/Prospectus..... 48
Section 4.9 Litigation; Compliance with Law............... 49
Section 4.10 Employee Benefit Plan; ERISA.................. 49
Section 4.11 Taxes......................................... 50
Section 4.12 Environmental................................. 50
Section 4.13 Financing..................................... 51
Section 4.14 Opinion of Financial Advisor.................. 51
ARTICLE V - COVENANTS..................................... 51
Section 5.1 Interim Operations of the Company............. 51
Section 5.2 Interim Operations of Parent.................. 55
Section 5.3 Access to Information......................... 56
Section 5.4 Spinco Spin-off............................... 57
Section 5.5 Consents and Approvals........................ 58
Section 5.6 Employee Benefits............................. 59
Section 5.7 No Solicitation............................... 62
Section 5.8 Additional Agreements......................... 64
Section 5.9 Publicity..................................... 64
Section 5.10 Notification of Certain Matters............... 64
Section 5.11 Directors' and Officers' Insurance and
Indemnification............................... 65
Section 5.12 Rule 145 Affiliates........................... 66
Section 5.13 Cooperation................................... 67
Section 5.14 Proxy Statement/Prospectus.................... 67
Section 5.15 Tax-Free Reorganization....................... 68
Section 5.16 Restructuring................................. 68
ARTICLE VI - CONDITIONS.................................... 69
Section 6.1 Conditions to the Obligations of Each Party... 69
Section 6.2 Conditions to the Obligations of Parent,
UPRR and Sub.................................. 69
Section 6.3 Conditions to the Obligations of the Company.. 72
ARTICLE VII - TERMINATION................................... 73
Section 7.1 Termination................................... 73
Section 7.2 Effect of Termination......................... 77
ii
<PAGE>
Page
----
ARTICLE VIII - MISCELLANEOUS................................. 77
Section 8.1 Fees and Expenses............................. 77
Section 8.2 Finders' Fees................................. 77
Section 8.3 Amendment and Modification.................... 78
Section 8.4 Nonsurvival of Representations and Warranties. 78
Section 8.5 Notices....................................... 78
Section 8.6 Interpretation................................ 80
Section 8.7 Counterparts.................................. 80
Section 8.8 Entire Agreement; No Third Party Benefi-
ciaries; Rights of Ownership.................. 80
Section 8.9 Severability.................................. 80
Section 8.10 Specific Performance.......................... 81
Section 8.11 Governing Law................................. 81
Section 8.12 Assignment.................................... 81
Exhibit A Anschutz Stockholder Agreement
Exhibit B MSLEF Stockholder Agreement
Exhibit C Anschutz/Parent Registration Rights Agreement
Exhibit D Anschutz/Spinco Stockholder Agreement
Exhibit E Anschutz/Spinco Registration Rights Agreement
Exhibit F Parent Stockholder Agreement
Exhibit G Parent/Company Registration Rights Agreement
Exhibit H Form of Voting Trust Agreement
Exhibit I Form of Affiliate Agreement
iii
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Acquiring Person........................................ 76
Ancillary Agreements.................................... 3
Anschutz Holders........................................ 1
Anschutz/Parent Registration Rights Agreement........... 2
Anschutz/Spinco Registration Rights Agreement........... 2
Anschutz/Spinco Stockholder Agreement................... 2
Anschutz Stockholder Agreement.......................... 1
Articles of Merger...................................... 10
Assertion............................................... 66
Average Parent Share Price.............................. 19
Benefit Plans........................................... 29
Cash Consideration...................................... 13
Cash Election........................................... 13
Certificate of Merger................................... 16
Certificates............................................ 13
Cleanup................................................. 40
Closing................................................. 10
Closing Date............................................ 10
Code.................................................... 3
Company................................................. 1
Company Affiliates...................................... 67
Company Agreement....................................... 26
Company Common Stock.................................... 4
Company Fairness Opinion................................ 8
Company SEC Documents................................... 27
Company Special Meeting................................. 11
Confidentiality Agreement............................... 57
controlled group........................................ 29, 49
Conversion Fraction..................................... 16
CS First Boston......................................... 51
Customary Action........................................ 55
Debt Instruments........................................ 26
DGCL.................................................... 3
Director Plans.......................................... 32
Disclosure Schedule..................................... 22
Division................................................ 10
Effective Time.......................................... 10
EIP..................................................... 60
Election................................................ 13
Election Deadline....................................... 14
Enhanced Severance Program.............................. 61
Environmental Laws...................................... 41
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Environmental Liabilities and Costs..................... 41
Equity Incentive Plan................................... 23
ERISA................................................... 9
ERISA Affiliate......................................... 29
Exchange Act............................................ 4
Exchange Agent.......................................... 14
force majeure........................................... 71
Form of Election........................................ 13
Foundation.............................................. 1
GAAP.................................................... 7
Governmental Entity..................................... 26
group health plan....................................... 32
Hazardous Substances, Oils, Pollutants or Contaminants.. 41
Holdings................................................ 68
HSR Act................................................. 25, 83
ICA..................................................... 25
ICC..................................................... 21
Indemnified Liability................................... 65
Indemnified Parties..................................... 65
Indemnified Party....................................... 66
Indemnitors............................................. 66
Initial Surviving Corporation........................... 8
Management Continuity Plan.............................. 60
MCP Awards.............................................. 60
Merger.................................................. 1, 9
Mergers................................................. 1, 9
Merger Consideration.................................... 13
Morgan Stanley.......................................... 8
Mr. Anschutz............................................ 1
MSLEF Stockholder Agreement............................. 1
multiemployer plan...................................... 32
New Identical Plans..................................... 62
Non-Electing Shares..................................... 18
NYSE.................................................... 69
Offer................................................... 4
Offer Documents......................................... 5
Offer Price............................................. 4
Offer to Purchase....................................... 4
outstanding............................................. 15
Parent.................................................. 1
Parent Disclosure Schedule.............................. 44
Parent Plans............................................ 43, 50
Parent Preferred Stock.................................. 43
Parent SEC Documents.................................... 47
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Parent Stockholder Agreement............................ 2
Parent Voting Debt...................................... 3
Parent/Company Registration Rights Agreement............ 3
Person.................................................. 63
Preferred Stock......................................... 22
Property................................................ 38
Proxy Statement/Prospectus.............................. 11
Real Property........................................... 37
Registration Statement.................................. 11
Release................................................. 42
Schedule 14D-1.......................................... 5
Schedule 14D-9.......................................... 7
SEC..................................................... 5
Second Payment.......................................... 61
Secretary of State...................................... 10
Service................................................. 32
Severance Plan.......................................... 62
Shares.................................................. 4
Similar Successor....................................... 58
Spin-off................................................ 2
Spinco.................................................. 2
Stockholder Agreements.................................. 2
Sub..................................................... 1
Sub Articles of Merger.................................. 9
Sub Certificate of Merger............................... 9
Sub Common Stock........................................ 12
Sub Merger.............................................. 1, 8
Sub Merger Effective Time............................... 10
Subsidiary.............................................. 22
TAC..................................................... 1
Takeover Proposal....................................... 63
Tax Return.............................................. 37
Taxes................................................... 36
Tendered Shares......................................... 15
UPRR.................................................... 1
Voting Debt............................................. 23
Voting Trust............................................ 12, 83
welfare plan............................................ 31
</TABLE>
vi
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM WHERE DEFINED
---- -------------
<S> <C>
Acquiring Person.................................................(S) 7.1(d)(ii)
Ancillary Agreements...................................................Recitals
Assertion..............................................................(S) 5.11
Average Parent Share Price...........................................(S) 2.3(b)
Benefit Plans........................................................(S) 3.9(a)
Cash Consideration......................................................(S) 2.2
Cash Election........................................................(S) 2.2(a)
Certificate of Merger...................................................(S) 1.4
Certificates.........................................................(S) 2.1(d)
Cleanup.............................................................(S) 3.15(j)
Closing.................................................................(S) 1.5
Closing Date............................................................(S) 1.5
Code...................................................................Recitals
Company............................................................Introduction
Company Affiliates.....................................................(S) 5.12
Company Agreement.......................................................(S) 3.4
Company Common Stock.................................................(S) 1.1(a)
Company Fairness Opinion.............................................(S) 1.2(d)
Company SEC Documents...................................................(S) 3.5
Company Special Meeting..............................................(S) 1.7(a)
Conversion Fraction..................................................(S) 2.3(b)
Customary Action........................................................(S) 5.1
Debt Instruments........................................................(S) 3.4
DGCL...................................................................Recitals
Director Plans.......................................................(S) 3.9(m)
Disclosure Schedule..................................................(S) 3.2(a)
Effective Time..........................................................(S) 1.4
Election.............................................................(S) 2.2(a)
Election Deadline....................................................(S) 2.2(d)
Environmental Laws..................................................(S) 3.15(j)
Environmental Liabilities and Costs.................................(S) 3.15(j)
Equity Incentive Plan................................................(S) 3.2(a)
ERISA................................................................(S) 3.9(a)
ERISA Affiliate......................................................(S) 3.9(a)
Exchange Act.........................................................(S) 1.1(a)
Exchange Agent.......................................................(S) 2.2(d)
force majeure............................................(S) 6.2(f), (S) 6.3(e)
Form of Election.....................................................(S) 2.2(b)
GAAP....................................................................(S) 3.5
Governmental Entity.....................................................(S) 3.4
Hazardous Substances, Oils, Pollutants or Contaminants..............(S) 3.15(j)
HSR Act.................................................................(S) 3.4
</TABLE>
vii
<PAGE>
<TABLE>
<CAPTION>
TERM WHERE DEFINED
---- -------------
<S> <C>
ICA.....................................................................(S) 3.4
ICC.....................................................................(S) 2.8
Indemnified Liability..................................................(S) 5.11
Indemnified Parties....................................................(S) 5.11
Indemnified Party......................................................(S) 5.11
Indemnitors............................................................(S) 5.11
Merger........................................................Recitals, (S) 1.3
Merger Consideration.................................................(S) 2.1(d)
Morgan Stanley.......................................................(S) 1.2(d)
Non-Electing Shares..................................................(S) 2.3(g)
Offer................................................................(S) 1.1(a)
Offer Documents......................................................(S) 1.1(b)
Offer Price..........................................................(S) 1.1(a)
Offer to Purchase....................................................(S) 1.1(a)
outstanding.............................................................(S) 2.3
Parent.............................................................Introduction
Parent Common Stock..................................................(S) 1.7(b)
Parent Preferred Stock...............................................(S) 4.2(a)
Parent Proxy Statement...............................................(S) 1.7(b)
Parent SEC Documents....................................................(S) 4.5
Parent Special Meeting...............................................(S) 1.7(b)
Parent Stockholder Agreement...........................................Recitals
Parent Voting Debt...................................................(S) 4.2(a)
Parent/Company Registration Rights Agreement...........................Recitals
Person...............................................................(S) 5.7(a)
Preferred Stock......................................................(S) 3.2(a)
Property............................................................(S) 3.15(a)
Proxy Statement/Prospectus...........................................(S) 1.7(a)
Purchaser..........................................................Introduction
Purchaser Common Stock...............................................(S) 2.1(b)
Real Property..........................................................(S) 3.14
Registration Statement...............................................(S) 1.7(a)
Release.............................................................(S) 3.15(j)
Schedule 13E-3.......................................................(S) 1.7(c)
Schedule 14D-1.......................................................(S) 1.1(b)
Schedule 14D-9.......................................................(S) 1.2(b)
SEC..................................................................(S) 1.1(b)
Secretary of State......................................................(S) 1.4
[Seller I]/Parent Registration Rights Agreement........................Recitals
[Seller I]/Spinco Registration Rights Agreement........................Recitals
[Seller I]/Spinco Stockholder Agreement................................Recitals
[Seller I] Stockholder Agreement.......................................Recitals
[Seller II] Stockholder Agreement......................................Recitals
Service..............................................................(S) 3.9(k)
</TABLE>
viii
<PAGE>
<TABLE>
<CAPTION>
TERM WHERE DEFINED
---- -------------
<S> <C>
Shares...............................................................(S) 1.1(a)
Special Meetings.....................................................(S) 1.7(b)
Spin-off...............................................................Recitals
Spinco.................................................................Recitals
Stock Election.......................................................(S) 2.2(a)
Stockholder Agreements.................................................Recitals
Subsidiary..............................................................(S) 3.1
Surviving Corporation...................................................(S) 1.3
Takeover Proposal....................................................(S) 5.7(b)
Tax Return..........................................................(S) 3.12(d)
Taxes...............................................................(S) 3.12(d)
Tendered Shares.........................................................(S) 2.3
Treasury Regulations................................................(S) 3.12(b)
Voting Debt..........................................................(S) 3.2(a)
</TABLE>
ix
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of August 3, 1995, by and among
Union Pacific Corporation, a Utah corporation ("Parent"), UP Acquisition
Corporation, a Delaware corporation and an indirect wholly owned subsidiary of
Parent ("Sub"), Union Pacific Railroad Company, a Utah corporation and an
indirect wholly owned subsidiary of Parent ("UPRR") and Southern Pacific Rail
Corporation, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, UPRR Sub and the Company
have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein;
WHEREAS, it is intended that the acquisition be accomplished by Sub
commencing a cash tender offer for Shares (as defined in Section 1.1) to be
followed by a merger of Sub with and into UPRR (the "Sub Merger"), with UPRR
being the surviving corporation, which, in turn, will be followed by a merger of
the Company with and into UPRR (the "Merger" and, together with the Sub Merger,
the "Mergers");
WHEREAS, as a condition and inducement to Parent's, UPRR's and Sub's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent is
entering into Stockholder Agreements with The Anschutz Corporation, a Kansas
corporation ("TAC"), Anschutz Foundation (the "Foundation") and Philip F.
Anschutz ("Mr. Anschutz," and together with TAC and the Foundation, the
"Anschutz Holders"), in the form of Exhibit A hereto (the "Anschutz Stockholder
Agreement"), and Morgan Stanley Leveraged Equity Fund II, L.P., in the form of
Exhibit B hereto (the "MSLEF Stockholder Agreement"), pursuant to which, among
other things, such stockholders have agreed to vote the Shares then owned by
such stockholder in favor of the Merger provided for herein and, in the case of
the Anschutz Holders, to abide by certain agreements relating to the shares of
Parent Common Stock (as defined in Section 1.7) to be received by the Anschutz
Holders in the Merger;
<PAGE>
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, TAC and the Foundation are entering into a Registration
Rights Agreement, in the form of Exhibit C hereto (the "Anschutz/Parent
Registration Rights Agreement"), pursuant to which, among other things, Parent
will grant TAC and the Foundation certain registration rights with respect to
shares of Parent Common Stock to be received by TAC and the Foundation in the
Merger;
WHEREAS, as a condition and inducement to Parent's and Sub's entering
into this Agreement and incurring the obligations set forth herein, and in
furtherance of Parent's proposed spin-off (the "Spin-off") of shares of an
entity owning Parent's oil and gas exploration and production operations and
related assets ("Spinco") described in Section 5.4 hereof, concurrently with the
execution and delivery of this Agreement, Parent is causing Spinco to enter
into, and the Anschutz Holders are entering into, (a) an Agreement, in the form
of Exhibit D hereto (the "Anschutz/Spinco Stockholder Agreement"), pursuant to
which, among other things, the Anschutz Holders have agreed to abide by certain
agreements relating to the shares of Spinco stock to be received by the Anschutz
Holders in the Spin-off, and (b) an Agreement, in the form of Exhibit E hereto
(the "Anschutz/Spinco Registration Rights Agreement"), pursuant to which, among
other things, Spinco will grant TAC and the Foundation certain registration
rights with respect to shares of Spinco stock to be received by TAC and the
Foundation in the Spin-off, such agreements to be effective subject to, and only
upon consummation of, the Spin-off;
WHEREAS, as a condition and inducement to the Company's, Parent's,
UPRR's and Sub's entering into this Agreement and incurring the obligations set
forth herein, concurrently with the execution and delivery of this Agreement,
the parties hereto are entering into an Agreement, in the form of Exhibit F
hereto (the "Parent Stockholder Agreement" and, collectively with the Anschutz
Stockholder Agreement, the MSLEF Stockholder Agreement and the MSLEF/Spinco
Stockholder Agreement, the "Stockholder Agreements"), pursuant to which, among
other things, the parties have made certain agreements relating to the Shares to
be purchased in the Offer (as defined in Section 1.1);
2
<PAGE>
WHEREAS, as a condition and inducement to Parent's, UPRR's and Sub's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, the parties
hereto are entering into an Agreement, in the form of Exhibit G hereto (the
"Parent/Company Registration Rights Agreement" and, together with the
Anschutz/Parent Registration Rights Agreement, the Anschutz/Spinco Registration
Rights Agreement and the Stockholder Agreements, the "Ancillary Agreements"),
pursuant to which, among other things, the Company will grant to Parent, UPRR
and Sub certain registration rights with respect to Shares to be purchased by
Sub in the Offer;
WHEREAS, the Board of Directors of the Company has approved the
transactions contemplated by this Agreement and the Ancillary Agreements in
accordance with the provisions of Section 203 of the Delaware General
Corporation Law (the "DGCL") and has resolved to recommend the acceptance of the
Offer and the approval of the Merger by the holders of Shares; and
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger provided for herein shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations promulgated thereunder, and this
Agreement is intended to be and is adopted as a plan of reorganization within
the meaning of Section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Ancillary Agreements, 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), Sub shall commence (within the meaning of Rule
3
<PAGE>
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) an offer (the "Offer") to purchase for cash up to 39,034,471 shares of
the issued and outstanding common stock, par value $.001 per share (referred to
herein as either the "Shares" or "Company Common Stock"), of the Company at a
price of $25.00 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 the conditions set forth in Annex A hereto. Sub
shall, on the terms and subject to the prior satisfaction or waiver of the
conditions of the Offer, accept for payment and pay for Shares tendered as soon
as practicable after the later of the satisfaction of the conditions to the
Offer and the expiration of the Offer; provided, however, that no such payment
shall be made until after any calculation of proration. The obligations of Sub
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 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 and the 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), Sub shall not waive the condition set forth in paragraph (k)
on Annex A hereto, decrease the Offer Price, decrease the number of Shares
sought, change the form of consideration to be paid pursuant to the Offer or
impose conditions to the Offer in addition to those set forth in Annex A hereto,
or amend any other term or condition of the Offer in any manner which is adverse
to the holders of Shares; provided, however, that if on the initial scheduled
expiration date of the Offer (as it may be extended in accordance with the terms
hereof), all conditions to the Offer shall not have been satisfied or waived,
the Offer may be extended from time to time without the consent of the Company
for such period of time as is reasonably expected to be necessary to satisfy the
unsatisfied conditions. Sub shall waive the condition set forth in paragraph
(k) of Annex A hereto if directed by 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.
4
<PAGE>
(b) Parent, UPRR and Sub shall file with the United States Securities
and Exchange Commission (the "SEC") as soon as practicable on the date the Offer
is commenced, 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"). Parent, UPRR and Sub represent that the Offer Documents 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, will 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, UPRR or Sub with respect to
information supplied by the Company in writing for inclusion in the Offer
Documents. The information supplied by the Company for inclusion in the Offer
Documents will not, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, 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. Each of Parent,
UPRR and Sub further agrees to take all steps necessary to cause the Offer
Documents 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, UPRR and Sub, 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 if and to the extent that it shall have become false and
misleading in any material respect, and Parent, UPRR and Sub further agree to
take all steps necessary to cause the Offer Documents 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 Offer Documents before they are filed with the SEC.
5
<PAGE>
In addition, Parent, UPRR and Sub agree to provide the Company and its counsel
in writing with any comments Parent, UPRR, Sub or their counsel may receive from
time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments. Parent, UPRR and Sub will
cooperate with the Company in responding to any comments received from the SEC
with respect to the Offer and amending the Offer in response to any 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 (i) determined that this Agreement and the transactions contemplated
hereby, including, without limitation, the Offer, the Merger, the Ancillary
Agreements to which the Company is a party and the transactions contemplated
thereby, are fair to and in the best interests of the holders of Shares, (ii)
approved this Agreement and the transactions contemplated hereby, including,
without limitation, the Offer and the Merger, and approved the Ancillary
Agreements and the transactions contemplated thereby, such determination and
approval constituting approval thereof for purposes of Section 203 of the DGCL,
and (iii) resolved to recommend that the stockholders of the Company who desire
to receive cash for their Shares accept the Offer and tender their Shares
thereunder to Sub and that all stockholders of the Company approve and adopt
this Agreement; provided, however, that prior to the purchase by Sub of
39,034,471 Shares pursuant to the Offer, or if less than 39,034,471 Shares are
tendered, the purchase of at least 15% of the outstanding Shares pursuant to the
Offer, the Company may modify, withdraw or change such recommendation only to
the extent that the Board of Directors of the Company determines, after having
received the oral or written opinion of outside legal counsel to the Company,
that the failure to so withdraw, modify or change would result in a breach of
the Board of Directors' fiduciary duties under applicable laws.
(b) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-
9 (together with all amendments and supplements thereto and
6
<PAGE>
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; provided, however, that the Company may modify, withdraw or change such
recommendation only to the extent that the Board of Directors of the Company
determines, after having received the oral or written opinion of outside legal
counsel to the Company, that the failure to so withdraw, modify or change would
result in a breach of the Board of Directors' fiduciary duties under applicable
laws. The Company represents that the Schedule 14D-9 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 the Company with respect to information supplied by Parent, UPRR or Sub
for inclusion in the Schedule 14D-9. The information supplied by Parent, UPRR
and Sub for inclusion in the Schedule 14D-9 will not, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, 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. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 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, UPRR
and Sub, on the other hand, agrees promptly to correct any information provided
by it for use in the Schedule 14D-9 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 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.
Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, UPRR, Sub and their counsel in
7
<PAGE>
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 promptly after
the receipt of such comments. The Company will cooperate with Parent and Sub in
responding to any comments received from the SEC with respect to the Schedule
14D-9 and amending the Schedule 14D-9 in response to any such comments.
(c) In connection with the Offer, if requested by Sub, the Company
will promptly furnish or cause to be furnished to Sub 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 Sub with such information and assistance as Sub or its agents may
reasonably request in communicating the Offer to the stockholders of the
Company.
(d) The Company has received the written opinion of Morgan Stanley &
Co., Incorporated ("Morgan Stanley"), dated as of the date of this Agreement, to
the effect that, as of such date, the consideration to be received by holders of
Shares (other than Sub and its affiliates) pursuant to the Offer and Merger,
taken together, is fair from a financial point of view to such holders (the
"Company Fairness Opinion"). The Company has delivered to Sub a copy of the
Company Fairness Opinion, together with Morgan Stanley's authorization to the
inclusion of the Company Fairness Opinion in the Offer Documents and the Proxy
Statement/Prospectus (as defined in Section 1.7).
Section 1.3 The Mergers. (a) Subject to the terms and conditions of
-----------
this Agreement and in accordance with the UBCA, at the Sub Merger Effective
Time, UPRR and Sub shall consummate a merger (the "Sub Merger") pursuant to
which (i) Sub shall be merged with and into UPRR and the separate corporate
existence of Sub shall thereupon cease, (ii) UPRR shall be the successor or
surviving corporation (the "Initial Surviving Corporation") in the Sub Merger
and shall continue to be governed by the laws of the State of Utah, and (iii)
the separate corporate existence of UPRR with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Sub Merger.
Pursuant to the Sub Merger, (x) the Certificate of Incorporation of UPRR, as in
effect immediately prior to the Sub Merger Effective Time (as de-
8
<PAGE>
fined in Section 1.4), shall be the Certificate of Incorporation of the Initial
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation, and (y) the By-laws of UPRR, as in effect
immediately prior to the Sub Merger Effective Time, shall be the By-laws of the
Initial Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Initial Surviving Corporation and such By-
laws. The Sub Merger shall have the effects set forth in the UBCA.
(b) Subject to the terms and conditions of this Agreement and in
accordance with the DGCL and the UBCA, at the Effective Time, the Company and
the Initial Surviving Corporation shall consummate a merger (the "Merger", and
together with the Sub Merger, the "Mergers") pursuant to which (i) the Company
shall be merged with and into the Initial Surviving Corporation and the separate
corporate existence of the Company shall thereupon cease, (ii) the Initial
Surviving Corporation shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the laws of the State of Utah, and
(iii) the separate corporate existence of the Initial Surviving Corporation with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. Pursuant to the Merger, (x) the Certificate of
Incorporation of the Initial Surviving Corporation, 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 Certificate of Incorporation, and (y) the By-laws of the Initial
Surviving Corporation, 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 Certificate of Incorporation of the Surviving Corporation
and such By-laws. The Merger shall have the effects set forth in the UBCA and
the DGCL.
Section 1.4 Effective Time. (a) Parent, UPRR and Sub will cause
--------------
Articles of Ownership and Merger (the "Sub Articles of Merger") and a
Certificate of Ownership and Merger (the "Sub Certificate of Merger"), each with
respect to the Sub Merger, to be executed and filed on a date as soon as
practicable following the satisfaction of the condition specified in Section
6.2(c) hereof (or on such later date as Parent and the Company may agree) with
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the Division of Corporations and Commercial Code of the State of Utah (the
"Division") as provided in the UBCA and with the Secretary of State of the State
of Delaware (the "Secretary of State") as provided in the DGCL, respectively.
The Sub Merger shall become effective on the date on which the Sub Articles of
Merger and the Sub Certificate of Merger have been duly filed with the Division
and the Secretary of State, respectively, or such time as is agreed upon by the
parties and specified in the Sub Articles of Merger and the Sub Certificate of
Merger, and such time is hereinafter referred to as the "Sub Merger Effective
Time".
(b) Parent, the Initial Surviving Corporation and the Company will
cause Articles of Merger (the "Articles of Merger") and a Certificate of Merger
(the "Certificate of Merger"), each with respect to the Merger, to be executed
and filed on the date of the Closing (as defined in Section 1.5) (or on such
other date as Parent and the Company may agree) with the Division as provided in
the UBCA and the Secretary of State as provided in the DGCL, respectively. The
Merger shall become effective on the date on which the Articles of Merger and
the Certificate of Merger have been duly filed with the Division and the
Secretary of State, respectively, or such time as is agreed upon by the parties
and specified in the Articles of Merger and Certificate of Merger, and such time
is hereinafter referred to as the "Effective Time".
Section 1.5 Closing. The closing of the Merger (the "Closing") will
-------
take place at 10:00 a.m., New York City time, on a date to be specified by the
parties, which shall be no later than the third business day after satisfaction
or waiver of all of the conditions set forth in Article VII hereof (the "Closing
Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York, unless another time, date or place is agreed to in
writing by the parties hereto.
Section 1.6 Directors and Officers of Initial Surviving Corporation
-------------------------------------------------------
and the Surviving Corporation. (a) The directors and officers of UPRR at the
-----------------------------
Sub Merger Effective Time shall, from and after the Sub Merger Effective Time,
be the initial directors and officers, respectively, of the Initial Surviving
Corporation until their successors shall have been duly elected or appoint-
10
<PAGE>
ed or qualified or until their earlier death, resignation or removal in
accordance with the Initial Surviving Corporation's Certificate of Incorporation
and By-laws.
(b) The directors and officers of the Initial Surviving Corporation
at the Effective Time shall, from and after the Effective Time, be the initial
directors and officers, respectively, of the Surviving Corporation 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 1.7 Stockholders' Meeting. In order to consummate the
---------------------
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Company Special Meeting"), as soon as
practicable after the registration statement on Form S-4 (together with all
amendments, schedules, and exhibits thereto) to be filed by Parent in connection
with the registration of the Parent Common Stock to be issued by Parent in the
Merger (the "Registration Statement") is declared effective, for the purpose of
considering and taking action upon this Agreement. The Company shall include in
the joint proxy statement/prospectus forming a part of the Registration
Statement (the "Proxy Statement/Prospectus") the recommendation of the Board of
Directors of the Company that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement; provided that the
--------
Company may, at any time prior to the purchase of 39,034,471 Shares pursuant to
the Offer, or if less than 39,034,471 Shares are tendered, the purchase of at
least 15% of the outstanding Shares pursuant to the Offer, withdraw, modify or
change such recommendation only to the extent that the Board of Directors
determines, after having received the oral or written opinion of outside legal
counsel to the Company, that the failure to so withdraw, modify or change such
recommendation would result in a breach of the Board of Directors' fiduciary
duties under applicable law.
Section 1.8 Voting Trust. The parties agree that simultaneously with
------------
the purchase by Parent, UPRR, Sub or their affiliates of Shares pursuant to the
Offer,
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such Shares shall be deposited in a voting trust (the "Voting Trust") in
accordance with the terms and conditions of a voting trust agreement in the form
attached hereto as Exhibit H. The Voting Trust may not be modified or amended
without the prior written approval of the Company unless such modification or
amendment is not inconsistent with this Agreement or the Ancillary Agreements
and is not adverse to the Company or its shareholders.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Shares. (a) Each share of Common Stock,
--------------------
par value $.01 per share, of UPRR issued and outstanding immediately prior to
the Sub Merger Effective Time shall, at the Sub Merger Effective Time, be
converted into and become one fully paid and nonassessable share of common stock
of the Initial Surviving Corporation.
(b) Each share of Common Stock, par value $.01 per share, of Sub (the
"Sub Common Stock"), issued and outstanding immediately prior to the Sub Merger
Effective Time shall, at the Sub Merger Effective Time, by virtue of the Sub
Merger and without any action on the part of UPRR, be cancelled and retired and
cease to exist.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Shares to be cancelled
pursuant to Section 2.1(e) hereof) shall, at the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into the right to receive such number of duly authorized, validly
issued, fully paid and nonassessable shares of Parent Common Stock or cash,
without any interest thereon, as specified in Section 2.3 hereof.
(d) Each share of Common Stock, par value $.01 per share, of the
Initial Surviving Corporation, issued and outstanding immediately prior to the
Effective Time shall, at the Effective Time, by virtue of the Merger and without
any action on the part of Parent, be
12
<PAGE>
converted into one fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
(e) All shares of Company Common Stock that are owned by the Company
as treasury stock and any shares of Company Common Stock owned by Parent, Sub,
the Initial Surviving Corporation or any other direct or indirect wholly owned
Subsidiary (as defined in Section 3.1 hereof) of Parent shall, at the Effective
Time, be cancelled and retired and shall cease to exist and no Parent Common
Stock or other consideration shall be delivered in exchange therefor.
(f) On and after the Effective Time, holders of certificates which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates") shall cease to have any rights as stockholders of the Company,
except the right to receive the consideration set forth in this Article II (the
"Merger Consideration") for each Share held by them.
Section 2.2 Election Procedure. Each holder of Shares (other than
------------------
holders of Shares to be cancelled as set forth in Section 2.1(c)) shall have the
right to submit a request specifying the number of Shares that such holder
desires to have converted into shares of Common Stock, par value $2.50 per
share, of Parent in the Merger and the number of Shares that such holder desires
to have converted into the right to receive $25.00 per Share, without interest
(the "Cash Consideration"), in the Merger in accordance with the following
procedure:
(a) Each holder of Shares may specify in a request made in accordance
with the provisions of this Section 2.2 (herein called an "Election") (i) the
number of Shares owned by such holder that such holder desires to have converted
into Parent Common Stock in the Merger (a "Stock Election") and (ii) the number
of Shares owned by such holder that such holder desires to have converted into
the right to receive the Cash Consideration in the Merger (a "Cash Election").
(b) Parent shall prepare a form reasonably acceptable to the Company
(the "Form of Election") which shall be mailed to the Company's stockholders in
accordance with Section 2.2(c) so as to permit the
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<PAGE>
Company's stockholders to exercise their right to make an Election prior to the
Election Deadline (as defined in Section 2.2(d)).
(c) Parent shall use all reasonable efforts to make the Form of
Election available to all stockholders of the Company at least ten business days
prior to the Election Deadline.
(d) Any Election shall have been made properly only if the person
authorized to receive Elections and to act as exchange agent under this
Agreement (the "Exchange Agent") shall have received, by 5:00 p.m. local time in
the city in which the principal office of such Exchange Agent is located, on the
date of the Election Deadline, a Form of Election properly completed and signed
and accompanied by certificates for the Shares to which such Form of Election
relates (or by an appropriate guarantee of delivery of such certificates, as set
forth in such Form of Election, from a member of any registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company in the United States provided such
certificates are in fact delivered to the Exchange Agent by the time required in
such guarantee of delivery). Failure to deliver Shares covered by such a
guarantee of delivery within the time set forth on such guarantee shall be
deemed to invalidate any otherwise properly made Election. As used herein,
"Election Deadline" means the date announced by Parent, in a news release
delivered to the Dow Jones News Service, as the last day on which Forms of
Election will be accepted; provided, that such date shall be a business day no
earlier than twenty business days prior to the Effective Time and no later than
the date on which the Effective Time occurs and shall be at least five business
days following the date of such news release; provided further, that Parent
shall have the right to set a later date as the Election Deadline so long as
such later date is no later than the date on which the Effective Time occurs.
(e) Any Company stockholder may at any time prior to the Election
Deadline change his or her Election by written notice received by the Exchange
Agent prior to the Election Deadline accompanied by a properly completed and
signed, revised Form of Election.
14
<PAGE>
(f) Any Company stockholder may, at any time prior to the Election
Deadline, revoke his or her Election by written notice received by the Exchange
Agent prior to the Election Deadline or by withdrawal prior to the Election
Deadline of his or her certificates for Shares, or of the guarantee of delivery
of such certificates, previously deposited with the Exchange Agent. All
Elections shall be revoked automatically if the Exchange Agent is notified in
writing by Parent or the Company that this Agreement has been terminated. Any
Company stockholder who shall have deposited certificates for Shares with the
Exchange Agent shall have the right to withdraw such certificates by written
notice received by the Exchange Agent and thereby revoke his Election as of the
Election Deadline if the Merger shall not have been consummated prior thereto.
(g) Parent shall have the right to make rules, not inconsistent with
the terms of this Agreement, governing the validity of the Forms of Election,
the manner and extent to which Elections are to be taken into account in making
the determinations prescribed by Section 2.3, the issuance and delivery of
certificates for Parent Common Stock into which Shares are converted in the
Merger and the payment of cash for Shares converted into the right to receive
the Cash Consideration in the Merger.
Section 2.3 Issuance of Parent Common Stock and Payment of Cash
---------------------------------------------------
Consideration; Proration. The manner in which each Share (other than Shares to
------------------------
be cancelled as set forth in Section 2.1(c)) shall be converted into Parent
Common Stock or the right to receive the Cash Consideration on the Effective
Date shall be as set forth in this Section 2.3. All references to "outstanding"
Shares in this Section 2.3 shall mean (i) all Shares outstanding immediately
prior to the Effective Time, including, without limitation, all Shares acquired
by Sub pursuant to the Offer (the "Tendered Shares") minus (ii) Shares owned by
Parent or by any direct or indirect wholly-owned subsidiary of Parent (other
than the Tendered Shares).
(a) As is more fully set forth below, the aggregate number of Shares
to be converted into Parent Common Stock pursuant to the Merger, shall be equal
as nearly as practicable to 60% of all outstanding Shares; and the number of
Shares to be converted into the right
15
<PAGE>
to receive the Cash Consideration in the Merger pursuant to this Agreement,
together with the Tendered Shares, shall be equal as nearly as practicable to
40% of all outstanding Shares.
(b) If Stock Elections are received for a number of Shares that is
60% or less of the outstanding Shares, each Share covered by a Stock Election
shall be converted in the Merger into .4065 of a share of Parent Common Stock
(the "Conversion Fraction"). In the event that between the date of this
Agreement and the Effective Time, the issued and outstanding shares of Parent
Common Stock shall have been affected or changed into a different number of
shares or a different class of shares as a result of a stock split, reverse
stock split, stock dividend, spin-off, extraordinary dividend, recapitalization,
reclassification or other similar transaction with a record date within such
period, the Conversion Fraction shall be appropriately adjusted.
(c) If Stock Elections are received for more than 60% of the
outstanding Shares, each Non-Electing Share (as defined in Section 2.3(g)) and
each Share for which a Cash Election has been received shall be converted into
the right to receive the Cash Consideration in the Merger, and the Shares for
which Stock Elections have been received shall be converted into Parent Common
Stock and the right to receive the Cash Consideration in the following manner:
(1) The Exchange Agent will distribute with respect to
Shares as to which a Stock Election has been made a number
of shares of Parent Common Stock equal to the Conversion
Fraction with respect to a fraction of such Shares, the
numerator of which fraction shall be 60% of the number of
outstanding Shares and the denominator of which shall be the
aggregate number of Shares covered by Stock Elections.
16
<PAGE>
(2) Shares covered by a Stock Election and not fully
converted into the right to receive Parent Common Stock as
set forth in clause (1) above shall be converted in the
Merger into the right to receive the Cash Consideration for
each Share so converted.
(d) If the number of Tendered Shares and Shares for which Cash
Elections are received in the aggregate is 40% or less of the outstanding
Shares, each Share covered by a Cash Election shall be converted in the Merger
into the right to receive the Cash Consideration.
(e) If the number of Tendered Shares and Shares for which Cash
Elections are received in the aggregate is more than 40% of the outstanding
Shares, each Non-Electing Share (as defined in Section 2.3(g)) and each Share
for which a Stock Election has been received shall be converted in the Merger
into a fraction of a share of Parent Common Stock equal to the Conversion
Fraction, and, the Shares for which Cash Elections have been received shall be
converted into the right to receive the Cash Consideration and Parent Common
Stock in the following manner:
(1) The Exchange Agent will distribute with respect to
Shares as to which a Cash Election has been made the Cash
Consideration with respect to a fraction of such Shares, the
numerator of which fraction shall be 40% of the number of
outstanding Shares minus the number of Tender Shares and the
denominator of which shall be the aggregate number of Shares
covered by Cash Elections.
(2) Shares covered by a Cash Election and not fully
converted into the right to receive the Cash Consideration
as set forth in clause (1) above shall be converted in the
Merger into the right to receive a number of shares of
Parent Common Stock
17
<PAGE>
equal to the Conversion Fraction for each Share so
converted.
(f) If Non-Electing Shares are not converted under either Section
2.3(c) or Section 2.3(e), the Exchange Agent shall distribute with respect to
each such Non-Electing Share, the Cash Consideration with respect to a fraction
of such Non-Electing Share, where such fraction is calculated in a manner that
will result in the sum of (i) the number of Shares converted into cash pursuant
to this Section 2.3(f), (ii) the number of Shares for which Cash Elections have
been received and (iii) the number of Shares purchased pursuant to the Offer
being as close as practicable to 40% of the outstanding Shares. Each Non-
Electing Share not converted into the right to receive the Cash Consideration as
set forth in the preceding sentence shall be converted in the Merger into the
right to receive a number of Shares of Parent Common Stock equal to the
Conversion Fraction for each Non-Electing Share so converted.
(g) For the purposes of this Section 2.3, outstanding Shares as to
which an Election is not in effect at the Election Deadline (other than Shares
purchased pursuant to the Offer) shall be called "Non-Electing Shares". If
Parent and the Company shall determine that any Election is not properly made
with respect to any Shares, such Election shall be deemed to be not in effect,
and the Shares covered by such Election shall, for purposes hereof, be deemed to
be Non-Electing Shares.
(h) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to shares shall be payable on or with
respect to any fractional share and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Parent. In lieu of any such fractional share of Parent Common Stock, Parent
shall pay to each former stockholder of the Company who otherwise would be
entitled to receive a fractional share of Parent Common Stock an amount in cash
determined by multiplying (i) the Average Parent Share Price (as defined below)
on the date on which the Effective Time occurs by (ii) the fractional interest
in a share of Parent Common Stock to which such holder would otherwise be
entitled. For purposes hereof,
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<PAGE>
the "Average Parent Share Price" shall mean the average closing sales price,
rounded to four decimal points, of the Parent Common Stock as reported on the
New York Stock Exchange Composite Tape, for the twenty (20) consecutive trading
days ending on the trading day which is five (5) trading days prior to the
Effective Time.
Section 2.4 Issuance of Parent Common Stock. Immediately following
-------------------------------
the Effective Time, Parent shall deliver, in trust, to the Exchange Agent, for
the benefit of the holders of Shares, certificates representing an aggregate
number of shares of Parent Common Stock as nearly as practicable equal to the
product of the Conversion Fraction and the number of Shares to be converted into
Parent Common Stock as determined in Section 2.3. As soon as practicable after
the Effective Time, each holder of Shares converted into Parent Common Stock
pursuant to Section 2.1(a), upon surrender to the Exchange Agent (to the extent
not previously surrendered with a Form of Election) of one or more certificates
for such Shares for cancellation, shall be entitled to receive certificates
representing the number of shares of Parent Common Stock into which such Shares
shall have been converted in the Merger. No dividends or distributions that
have been declared will be paid to persons entitled to receive certificates for
shares of Parent Common Stock until such persons surrender their certificates
for Shares, at which time all such dividends shall be paid. In no event shall
the persons entitled to receive such dividends be entitled to receive interest
on such dividends. If any certificate for such Parent Common Stock is to be
issued in a name other than that in which the certificate for Shares surrendered
in exchange therefor is registered, it shall be a condition of such exchange
that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of issuance of certificates for such
Parent Common Stock in a name other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Shares for any Parent Common Stock or dividends thereon delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
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<PAGE>
Section 2.5 Payment of Cash Consideration. At the Closing, Parent
-----------------------------
shall deposit in trust with the Exchange Agent, for the benefit of the holders
of Shares, an amount in cash equal to $25.00 multiplied by the number of Shares
to be converted into the right to receive the Cash Consideration as determined
in Section 2.3. As soon as practicable after the Effective Time, the Exchange
Agent shall distribute to holders of Shares converted into the right to receive
the Cash Consideration pursuant to Section 2.1(a), upon surrender to the
Exchange Agent (to the extent not previously surrendered with a Form of
Election) of one or more certificates for such Shares for cancellation, a bank
check for an amount equal to $25.00 times the number of Shares so converted. In
no event shall the holder of any such surrendered certificates be entitled to
receive interest on any of the Cash Consideration to be received in the Merger.
If such check is to be issued in the name of a person other than the person in
whose name the certificates for the Shares surrendered for exchange therefor are
registered, it shall be a condition of the exchange that the person requesting
such exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of issuance of such check to a person other than the
registered holder of the certificates surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of Shares for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 2.6 Equity Incentive Plan. Prior to the purchase of Shares
---------------------
pursuant to the Offer, the Board of Directors (or, if appropriate, any committee
administering the Equity Incentive Plan) shall adopt such resolutions or take
such other actions as are necessary to assure that no holder of an outstanding
Award with respect to which Shares might otherwise be issued at or after the
Effective Time shall have any right to receive equity securities of the Company,
the Surviving Corporation or any Subsidiary at or after the Effective Time (any
such right having been adjusted to be a right to receive other securities,
property or cash in accordance with Section 5.2(b) of the Equity Incentive
Plan). The Company shall also ensure that, following the Effective Time, no
participant in any other stock-based plan,
20
<PAGE>
agreement, program or arrangement (including, without limitation, the Employee
Stock Purchase Plan) shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation, or any Subsidiary.
Section 2.7 Stock Transfer Books. At the Effective Time, the stock
--------------------
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares on the records of the Company. If, after
the Effective Time, certificates representing Shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged for cash and/or
certificates representing Parent Common Stock pursuant to this Article II.
Section 2.8 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 the Interstate Commerce
-------- -------
Commission (the "ICC") (or any successor agency) 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, UPRR and Sub as
follows:
Section 3.1 Organization. Each of the Company and its Subsidiaries
------------
is a corporation, partnership or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, 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 and its Subsidiaries taken as a whole. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business and in good standing
21
<PAGE>
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 the
Company and its Subsidiaries taken as a whole. 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 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, (except to the extent used in Sections 6.1(c), 6.2(c) and 6.2(e)
hereof and conditions (j) and (k) to the Offer set forth in Annex A hereto), any
reference to any event, change or effect having a material adverse effect on or
with respect to any entity (or group of entities taken as a whole) means such
event, change or effect, individually or in the aggregate with such other
events, changes, or effects, which is materially adverse to the financial
condition, business, results of operations, assets, liabilities (after taking
into account any corresponding increase in assets) or properties of such entity.
If "material adverse effect" is used with respect to more than one entity, it
shall mean such events, changes or effects with respect to all such entities
taken as a whole. Section 3.1 of the Disclosure Schedule delivered by the
Company to Parent on or prior to the date hereof (the "Disclosure Schedule")
sets forth a complete list of the Company's Subsidiaries.
Section 3.2 Capitalization. (a) The authorized capital stock of the
--------------
Company consists of 300,000,000 Shares and 10,000,000 preferred shares, par
value $.01 per share (the "Preferred Stock"). As of the date hereof, (i)
156,137,884 shares of Company Common Stock are issued and outstanding and
2,178,514 shares of
22
<PAGE>
Company Common Stock are reserved for issuance pursuant to awards previously
granted pursuant to the Company's 1993 Equity Incentive Plan (the "Equity
Incentive Plan"), (ii) no shares of Preferred Stock are issued and outstanding,
and (iii) no Shares or shares of Preferred Stock are issued and held in the
treasury of the Company. All the outstanding shares of the Company's capital
stock are, and all shares which may be issued pursuant to the Equity Incentive
Plan will be, when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and non-assessable. Except as disclosed
in Section 3.2(a) of the Disclosure Schedule, 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, as of the date hereof, (i) there
are no shares of capital stock of the Company authorized, issued or outstanding
and (ii) there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, convertible securities, agreements, arrangements
or 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 disclosed in Section
3.2(a) of the Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Shares or the capital stock of the Company or any
subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity. Except as permitted by this Agreement,
following the Merger, neither the Company 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.
23
<PAGE>
(b) Except as disclosed in Section 3.2(b) 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 are owned by
either the Company or one of its Subsidiaries free and clear of all liens,
charges, security interests, options, claims or encumbrances of any nature
whatsoever.
(c) Except for the Corporate Matters Agreement, dated as of August 1,
1993, among the Company, MSLEF, TAC and certain other parties referred to
therein, and the Parent Stockholder Agreement, there are no voting trusts or
other agreements or 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. The Company has delivered to
Parent a letter agreement which causes the termination, as of the Effective
Time, of the Corporate Matters Agreement.
(d) At the Effective Time, the number of shares of Company
Common Stock outstanding shall not exceed 158,316,398.
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, the Parent Stockholder Agreement and the Parent/Company
Registration Rights Agreement and, subject in the case of this Agreement to
obtaining any necessary approval of its stockholders as contemplated by Section
1.7 hereof with respect to the Merger, to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by the
Company of this Agreement, the Parent Stockholder Agreement and the
Parent/Company Registration Rights Agreement, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by its Board of Directors and, except in the case of this Agreement
for obtaining the approval of its stockholders as contemplated by Section 1.7
hereof with respect to the
24
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Merger, no other corporate action or proceedings on the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement, the Parent Stockholder Agreement and the Parent/Company Registration
Rights Agreement and the consummation by it of the transactions contemplated
hereby and thereby. Each of this Agreement, the Parent Stockholder Agreement
and the Parent/Company Registration Rights Agreement has been duly executed and
delivered by the Company and, assuming this Agreement, the Parent Stockholder
Agreement and the Parent/Company Registration Rights Agreement constitute valid
and binding obligations of Parent, UPRR and Sub, constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their 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.
(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, without limitation, the Offer, the acquisition of Shares
pursuant to the Offer and the Merger, and the Ancillary Agreements to which it
is a party), the Parent Stockholder Agreement and the Parent/Company
Registration Rights Agreement, including, but not limited to, all actions
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 series of Company capital
stock necessary to approve the Merger.
Section 3.4 Consents and Approvals; No Violations. Except as
-------------------------------------
disclosed in Section 3.4 of the Disclosure Schedule, and except for all filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Interstate Commerce Act
(the "ICA"), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), if any, and for the approval of
25
<PAGE>
this Agreement by the Company's stockholders and the filing and recordation of
the Certificate of Merger as required by the DGCL, neither the execution,
delivery or performance of this Agreement, the Parent Stockholder Agreement or
the Parent/Company Registration Rights Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby or thereby
nor compliance by the Company with any of the provisions hereof or thereof 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 and its
Subsidiaries and would not, or would not be reasonably likely to, materially
impair the consummation of the Offer or the Ancillary Agreements or the ability
of the Company to consummate the Merger or the other transactions contemplated
hereby or thereby, (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 (collectively, the "Debt
Instruments"), 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 clause (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 its Subsidiaries,
and which would not, or would not be reasonably likely to, materially impair the
consummation of the Offer or the Ancillary Agreements or the ability of the
Company to consummate the Merger or the other transactions contemplated hereby
or thereby.
26
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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 (as such documents have been
amended since the time of their filing, 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/or 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)
and fairly present in all material respects 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 to the extent
--------------------------
disclosed in the Company SEC Documents filed prior to the date of this Agreement
or as otherwise disclosed to Parent in Section 3.6 of the Disclosure Schedule,
from June 30, 1995 through the date of this Agreement, the Company and its
Subsidiaries have conducted their respective businesses and operations in the
ordinary course of business consistent with past practice. From June 30, 1995
through the date of this Agreement, there has not occurred (i) any events,
chang-
27
<PAGE>
es, or effects (including the incurrence of any liabilities 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 and its Subsidiaries; (ii) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of the Company or of any of its
Subsidiaries, other than regular quarterly cash dividends or dividends paid by
wholly owned 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. Except as set forth on Schedule 3.6 of the
Disclosure Schedule, from June 30, 1995 through the date of this Agreement,
neither the Company nor any of its Subsidiaries has taken any of the actions
prohibited by Section 5.1 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) to the extent
--------------------------
disclosed in the Company SEC Documents filed prior to the date of this Agreement
and (b) for liabilities and obligations incurred in the ordinary course of
business consistent with past practice, during the period from June 30, 1995
through the date of this Agreement, neither the Company nor any of its
Subsidiaries have incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that have, or would be reasonably
likely to have, a material adverse effect on the Company and its Subsidiaries or
would be required to be reflected or reserved against on a consolidated balance
sheet of the Company and its Subsidiaries (including the notes thereto) prepared
in accordance with GAAP as applied in preparing the June 30, 1995 consolidated
balance sheet of the Company and its Subsidiaries. Section 3.7 of the
Disclosure Schedule sets forth each instrument evidencing indebtedness of the
Company and its Subsidiaries which will accelerate or become due or payable, or
result in a right of redemption or repurchase on the part of the holder of such
indebtedness, or with respect to which any other payment or amount will become
due or payable, in any such case with or without due notice or lapse of time, as
a result of this Agreement, the Merger, the Ancillary Agreements or the other
transactions contemplated hereby and thereby.
28
<PAGE>
Section 3.8 Information in Proxy Statement/Prospectus. The Proxy
-----------------------------------------
Statement/Prospectus (or any amendment thereof or supplement thereto), at the
date mailed to Company Stockholders and at the time of the Special Meetings, on
the date filed with the SEC and at the time of the Special Meetings, will 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, provided, however, that no representation is made by the Company
-------- -------
with respect to statements made therein based on information supplied by Parent,
UPRR or Sub for inclusion in the Proxy Statement/Prospectus. None of the
information supplied by the Company for inclusion or incorporation by reference
in the Registration Statement will, at the date it becomes effective and at the
time of the Special Meetings 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. Subject to the proviso set forth in the second
preceding sentence, the Proxy Statement/Prospectus will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 3.9 Employee Benefit Plans; ERISA. As of the date of this
-----------------------------
Agreement, except as set forth in Section 3.9 of the Disclosure Schedule:
(a)(i) there are no material employee benefit plans, arrangements, practices,
contracts or agreements (including, without limitation, employment agreements,
change of control employment agreements and severance agreements, incentive
compensation, bonus, stock option, stock appreciation rights and stock purchase
plans) of any type (including but not limited to plans described in section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained 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 "controlled group" within the meaning of section
4001(a)(14) of ERISA, or with respect to which the Company or any of its
Subsidiaries has or may have a liability, other than those listed on Section
3.9(a) of the Disclosure Schedule (the "Benefit Plans"). Except as disclosed in
Schedule 3.9(a)(ii) (or
29
<PAGE>
as otherwise permitted by this Agreement) 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 or change any existing Benefit Plan
that would affect any employee or terminated employee of the Company or any
ERISA Affiliate.
(b) Except as disclosed in Schedule 3.9(b), under the applicable laws
of all jurisdictions within the United States of America and all foreign
jurisdictions, with respect to any Benefit Plan, there are no material amounts
accrued but unpaid as of the most recent balance sheet date that are not
reflected on that balance sheet prepared in accordance with GAAP.
(c) With respect to each Benefit Plan except as disclosed on Schedule
3.9(c) and as would not have a Material Adverse Effect on the Company and its
Subsidiaries: (i) if intended to qualify under section 401(a), 401(k) or 403(a)
of 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 accordance
with its terms and applicable law; (iii) no breaches of fiduciary duty have
occurred; (iv) no disputes are pending, or, to the knowledge of the Company,
threatened; (v) no prohibited transaction (within the meaning of Section 406 of
ERISA) has occurred; and (vi) all contributions and premiums due (including any
extensions for such contributions and premiums) have been made in full.
(d) Except as disclosed in Schedule 3.9(d), none of the Benefit Plans
has incurred or will incur any "accumulated funding deficiency," as such term is
defined in section 412 of the Code, whether or not waived.
(e) Except as disclosed on Schedule 3.9(e): (i) 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 would
not have or would not reasonably be likely to have a material adverse effect on
the Company and its Subsidiaries (including sections 4063-4064 and 4069 of
ERISA) and, to the knowledge of the Company, no basis for any such liability
exists; (ii) neither the Company nor any ERISA Affiliate maintains (or
contributes
30
<PAGE>
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; and (iii) there is
no pending dispute between the Company or any ERISA Affiliate concerning payment
of contributions or payment of withdrawal liability payments.
(f) 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
3.9(f) 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, and each such welfare plan may be amended or terminated
by the Company or any of its Subsidiaries at any time with respect to such
former or current employees.
(g) With respect to each Benefit Plan that is intended to provide
special tax treatment to participants (including sections 79, 105, 106, 125, 127
and 129 of the Code), to the Company's knowledge, such Benefit Plan has
satisfied all of the material requirements for the receipt of such special tax
treatment since January 1, 1992.
(h) Except as specifically set forth in Section 3.9(h) of the
Disclosure Schedule, 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 with respect to any Benefit Plan, or (ii) constitute or
result in a prohibited transaction under section 4975 of the Code or section 406
or 407 of ERISA with respect to any Benefit Plan.
(i) Except as disclosed on Schedule 3.9(i), neither the Company, any
Benefits Affiliate nor any "administrator" as that term is defined in section
3(16) of ERISA, has any liability with respect to or connected with any Benefit
Plan for excise taxes payable under the Code or civil penalties payable under
ERISA and, to the Company's knowledge, no basis for any such liability exists.
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<PAGE>
(j) Except as disclosed on Schedule 3.9(j), there is no Benefit Plan
that is a "multiemployer plan," as such term is defined in section 3(37) of
ERISA, or which is covered by section 4063 or 4064 of ERISA.
(k) With respect to each Benefit Plan except Plans in which employees
of Parent or its Affiliates participate and except Multiemployer Plans from
which the Company has withdrawn, the Company has delivered or made available to
Parent accurate and complete (with inadvertent or de minimis omissions) 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.
(l) With respect to each Benefit Plan that is a "group health plan" as
such term is defined in section 5000(b) of the Code, except as specifically set
forth in Section 3.9(l) of the Disclosure Schedule, to the Company's knowledge,
each such Benefit Plan complies and has complied with the requirements of Part 6
of Title I of ERISA and Sections 4980B and 5000 of the Code except where the
failure to so comply would not have a material adverse effect on the Company and
its Subsidiaries.
(m) There are no material plans, arrangements, practices, contracts
or agreements (including change of control agreements, severance agreements,
retirement agreements, stock option or purchase agreements, medical or death
benefit agreements) maintained by the Company or an ERISA Affiliate or with
respect to which the Company or any of its Subsidiaries has a material liability
to a director or former director (as a director) of the Company or an ERISA
Affiliate other than those listed on Section 3.9(m) of the Disclosure Schedule
or disclosed in the Company's most recent proxy statement (the "Director
Plans"). Neither the Company nor any ERISA Affiliate has any formal plan or
commitment, whether legally binding or not, to create any Director Plan or
modify or change any existing Director Plan that would
32
<PAGE>
affect any director or former director of the Company or any ERISA Affiliate.
Section 3.10 Litigation; Compliance with Law.
-------------------------------
(a) Except to the extent disclosed in the Company SEC Documents filed
prior to the date of this Agreement, as of the date of this Agreement, there is
no suit, claim, action, proceeding or investigation pending or, to the best
knowledge of the Company, threatened against or affecting, the Company or any of
its Subsidiaries which, individually or in the aggregate, is reasonably likely
to have a material adverse effect on the Company and its Subsidiaries, or would,
or would be reasonably likely to, materially impair the consummation of the
Offer or the Ancillary Agreements or the ability of the Company to consummate
the Merger or the other transactions contemplated hereby or thereby.
(b) The Company and its Subsidiaries have complied with all laws,
statutes, regulations, rules, ordinances, and judgments, decrees, orders, writs
and injunctions, of any court 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, antitrust
laws, ERISA and laws relating to Taxes (as defined in Section 3.12) except where
the failure to so comply would not have a material adverse effect on the Company
and its Subsidiaries.
Section 3.11 No Default. The business of the Company and each of
----------
its Subsidiaries is not being conducted in default or violation of any term,
condition or provision of (a) its respective articles of incorporation or by-
laws or similar organizational documents, (b) any Company Agreement or (c)
except as disclosed in Section 3.11 of the Disclosure Schedule, any federal,
state, local or foreign law, statute, regulation, rule, ordinance, judgment,
decree, order, writ, injunction, concession, grant, franchise, permit or license
or other governmental authorization or approval applicable to the Company or any
of its Subsidiaries, excluding from the foregoing clauses (b) and (c), defaults
or violations that would not have a material adverse effect on the Company and
its Subsidiaries or would not, or would not
33
<PAGE>
be reasonably likely to, materially impair the consummation of the Offer or the
Ancillary Agreements or the ability of the Company to consummate the Merger or
the other transactions contemplated hereby or thereby. No investigation or
review by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the best knowledge of the Company, threatened,
nor to the best knowledge of the Company, has any Governmental Entity indicated
an intention to conduct the same, except such investigation or review as would
not reasonably be expected to have a material adverse effect on the Company and
its Subsidiaries, or would not materially impair the consummation of the Offer
or the Ancillary Agreements or the ability of the Company to consummate the
Merger or the other transactions contemplated hereby or thereby.
Section 3.12 Taxes. (a) As of the date of this Agreement, except as
-----
set forth in Section 3.12 of the Disclosure Schedule and except as such failure
of any representation or warranty made in this Section 3.12(a) to be true and
correct which would not have a material adverse effect on the Company and its
Subsidiaries:
(i) the Company and its Subsidiaries have (I) duly filed (or there
have been filed on their behalf) with the appropriate governmental authorities
all Tax Returns (as hereinafter defined) required to be filed by them and such
Tax Returns are true, correct and complete, 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 Taxes (as hereinafter defined) for
all periods ending through the date hereof;
(ii) the Company and its Subsidiaries have complied in all respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including withholding of Taxes pursuant to Sections 1441
and 1442 of the Code or similar provisions under any foreign laws) and have,
within the time and the manner prescribed by law, withheld from employee wages
and paid over to the proper governmental authorities all amounts required to be
so withheld and paid over under applicable laws;
34
<PAGE>
(iii) 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 and
neither the Company nor its Subsidiaries has received a written notice of any
pending audits or proceedings;
(iv) neither the Service nor any other taxing authority (whether
domestic or foreign) has asserted, or to the best knowledge of the Company, is
threatening to assert, against the Company or any of its Subsidiaries any
deficiency or claim for Taxes; and
(v) all transactions that could give rise to an understatement of the
federal income tax liability of the Company or any of its Subsidiaries within
the meaning of Section 6662(d) of the Code are adequately disclosed on Tax
Returns in accordance with Section 6662(d)(2)(B) of the Code if there is or was
no substantial authority for the treatment giving rise to such understatement.
(b) As of the date of this Agreement, except as set forth in
Section 3.12 of the Disclosure Schedule:
(i) there are no material liens for Taxes upon any property or assets
of the Company or any Subsidiary thereof, except for liens for Taxes not yet due
and payable and liens for Taxes that are being contested in good faith by
appropriate proceedings;
(ii) neither the Company nor any of its Subsidiaries has agreed to or
is required to make any adjustment under Section 481(a) of the Code;
(iii) the federal income Tax Returns of the Company and its
Subsidiaries have been examined by the 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
periods during which the Company or any Subsidiary was a member of the Santa Fe
Pacific Corporation consolidated group;
35
<PAGE>
(iv) neither the Company nor any of its Subsidiaries is a party to
any material agreement providing for the allocation or sharing of Taxes;
(v) neither the Company nor any of its Subsidiaries has, with regard
to any assets or property held or acquired by any of them, filed a consent to
the application of Section 341(f) of the Code, or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the Company or
any of its Subsidiaries;
(c) The schedules attached to the copy of the 1993 consolidated
federal income tax return of the Company provided to Parent accurately reflect
the net operating loss carryovers, investment tax credit carryovers and other
carryovers of the Company and its Subsidiaries as of the end of the 1993 taxable
year, except to the extent such carryovers are subject to adjustment as a result
of items reflected in the Revenue Agent's Report, Engineer's Report and Protest
for the taxable periods ending July 31, 1989, December 31, 1989 and December 31,
1990 and any items raised in the audit currently being conducted by the Internal
Revenue Service for the 1991 through 1993 taxable years. The Company will
provide to Parent a copy of the similar schedules attached to the 1994
consolidated Federal income tax return of the Company within 45 days after the
date such return is filed with the Internal Revenue Service. Except as set
forth in Section 3.12 of the Disclosure Schedule such carryovers are not subject
to limitations imposed by Sections 382, 383 or 384 of the Code (or any
predecessor thereto) or otherwise (including under Sections 1.1502-21 and 1502-
22 of the Treasury Regulations).
(d) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security, railroad
retirement, railroad unemployment, occupation, use, service, service use,
license, net worth, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the Service or any taxing authority (whether domestic or
foreign including, without limitation, any state, county, local or foreign
government or any subdivision or taxing agency thereof (includ-
36
<PAGE>
ing a United States possession)), whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest
whether paid or received, fines, penalties or additional amounts attributable
to, or imposed upon, or with respect to, any such taxes, charges, fees, levies
or other assessments. "Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction (foreign or domestic) with respect to Taxes,
including, without limitation, information returns, any documents with respect
to or accompanying payments of estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
Section 3.13 Contracts. Each Company Agreement is valid, binding and
---------
enforceable and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not have a material
adverse effect on the Company and its Subsidiaries, and there are no defaults
thereunder, except those defaults that would not have a material adverse effect
on the Company and its Subsidiaries. Neither the Company nor any Subsidiary is
a party to any agreement that expressly limits the ability of the Company or any
Subsidiary to compete in or conduct any line of business or compete with any
person or in any geographic area or during any period of time, other than
existing cooperative agreements or arrangements with other rail carriers or
customers in the ordinary course of business consistent with past practice.
Section 3.14 Assets; Real Property. The assets, properties, rights
---------------------
and contracts, including, without limitation (as applicable), title thereto, of
the Company and its Subsidiaries, taken as a whole, are sufficient to permit the
Company and its Subsidiaries to conduct their business as it is currently being
conducted, except where the failure to have such assets, properties, rights and
contracts would not have a material adverse effect on the Company and its
Subsidiaries. All material real property owned by the Company and its
Subsidiaries (the "Real Property") is owned free and clear of all liens,
charges, security interests, options, claims, mortgages, pledges, easements,
rights-of-way or other encumbrances and restrictions of any nature whatso-
37
<PAGE>
ever, except as described in Section 3.14(b) of the Disclosure Schedule and
those that do not materially adversely interfere with the use of such Real
Property as currently used.
Section 3.15 Environmental Matters. As of the date of this
---------------------
Agreement, except to the extent disclosed in the Company SEC Documents filed
prior to the date hereof or as set forth in Section 3.15 of the Disclosure
Schedule and except as would not have a material adverse effect on the Company
and its Subsidiaries:
(a) The Company and its Subsidiaries have obtained all permits,
licenses and other authorizations which are required under the Environmental
Laws (as hereafter defined) for the ownership, use and operation of each
location owned, operated or leased by the Company or its Subsidiaries (the
"Property"), all such permits, licenses and authorizations are in effect, no
appeal nor any other action is pending to revoke or modify in a manner adverse
to the Company any such permit, license or authorization, and the Company and
its Subsidiaries are in full compliance with all terms and conditions of all
such permits, licenses and authorizations.
(b) The Company, its Subsidiaries and the Property are in compliance
with all Environmental Laws including, without limitation, all restrictions,
conditions, standards, limitations, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in any
regulation, code, plan, code, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder.
(c) The Company has heretofore made available to Parent true and
complete copies of (i) all environmental studies submitted to or issued by a
governmental agency or made by or at the direction of the Company or its
Subsidiaries relating to the Property or any other property or facility
previously owned, operated or leased by the Company for which the Company
reasonably would be expected to be exposed to material Environmental Liabilities
and Costs and (ii) and all studies or reports relating to the health and welfare
of employees of the Company and to the impact of any Hazardous Substances, Oils,
Pollutants or Contaminants from any facility of the
38
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Company upon residents in the area of the facilities and upon surrounding
properties.
(d) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter which would reasonably be expected to result in liability
existing or pending, or to the best knowledge of the Company threatened,
relating to the Company, its Subsidiaries, the Property or any other property or
facility owned, operated or leased, or previously owned operated or leased by
the Company or its Subsidiaries relating in any way to the Environmental Laws or
any regulations, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder.
(e) Neither the Company nor any of its Subsidiaries have, and to the
best of the Company's knowledge, no other person has, Released, placed, stored,
buried or dumped any Hazardous Substances, Oils, Pollutants or Contaminants or
any other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on or beneath the Property or
any property formerly owned, operated or leased by the Company or its
Subsidiaries except for inventories of such substances to be used, and wastes
generated therefrom, in the ordinary course of business of the Company (which
inventories and wastes, if any, were and are disposed of in accordance with
applicable laws and regulations and in a manner such that there has been no
Release of any such substances into the environment in violation of the
Environmental Laws).
(f) No Release, or Cleanup has occurred at the Property which could
result in the assertion or creation of a lien on the Property by any
governmental body or agency with respect thereto, nor has any such assertion of
a lien been made by any governmental body or agency with respect thereto.
(g) Neither the Company nor any of its Subsidiaries have received any
written notice or order from any governmental agency or private or public entity
advising it that it is responsible for or potentially responsible for paying for
any material cost of Cleanup of any Hazardous Substances, Oils, Pollutants or
Contami-
39
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nants or any other waste or substance and neither the Company nor its
Subsidiaries has entered into any such agreements concerning such Cleanup, nor
is the Company aware of any facts which might reasonably give rise to such
notice, order or agreement.
(h) Neither the Company nor any of its Subsidiaries are currently
undertaking any Cleanup, removal, treatment or remediation of any Hazardous
Substances, Oils, Pollutants or Contaminants which would, or would reasonably be
expected to, expose the Company to Material Environmental Liabilities and Costs.
(i) With regard to the Company, its Subsidiaries and the Property,
there are no past or present (or, to the best knowledge of the Company, future)
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent compliance or continued compliance,
with the Environmental Laws as in effect on the date hereof or with any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, or which may give
rise to any common law or legal liability under the Environmental Laws, based on
or related to the manufacture, generation, processing, distribution, use,
treatment, storage, place of disposal, transport or handling, or the Release or
threatened Release into the indoor or outdoor environment by the Company or its
Subsidiaries or a facility of the Company or its Subsidiaries, of any Hazardous
Substances, Oils, Pollutants or Contaminants.
(j) For purposes of this Section 3.15, the following definitions
shall apply:
"Cleanup" means all actions required by Environmental Laws to: (1)
clean up, remove, treat or remediate Hazardous Substances, Oils, Pollutants or
Contaminants in the indoor or outdoor environment; (2) prevent the Release of
Hazardous Substances, Oils, Pollutants or Contaminants so that they do not
migrate, endanger or threaten to endanger public health or welfare or the indoor
or outdoor environment; (3) perform studies and investigations and monitoring
and care; or (4) respond to any government requests for information or documents
in any way relating to clean up, removal, treatment or remediation or potential
clean up, removal,
40
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treatment or remediation of Hazardous Substances, Oils, Pollutants or
Contaminants in the workplace or outdoor environment.
"Environmental Laws" means all applicable foreign, federal, state
and local laws, common law, regulations, rules and ordinances relating to
pollution or protection of health, safety and the environment, including,
without limitation, laws relating to Releases or threatened Releases of
Hazardous Substances, Oils, Pollutants or Contaminants into the indoor or
outdoor environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances, Oils, Pollutants or Contaminants,
and all laws and regulations with regard to recordkeeping, notification,
disclosure and reporting requirements respecting chemicals, Hazardous
Substances, Oils, Pollutants or Contaminants, and all laws relating to
endangered or threatened species of fish, wildlife and plants and the management
or use of natural resources.
"Hazardous Substances, Oils, Pollutants or Contaminants" means all
substances defined as such in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. (S) 300.5, or defined as such by, or
regulated as such under, any Environmental Law.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, obligations to conduct cleanup, losses, damages,
deficiencies, punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, all reasonable fees, disbursements and
expenses of counsel, expert and consulting fees and costs of investigations and
feasibility studies and responding to government requests for information or
documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any person or entity, whether
based in contract, tort, implied or express warranty, strict liability, joint
and several liability, criminal or civil statute, under any Environmental Law,
or arising from environmental, health or safety conditions, or the Release or
threatened Re-
41
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lease of Hazardous Substances, Oils, Pollutants or Contaminants into the
environment, as a result of past or present ownership, leasing or operation of
any Properties, owned, leased or operated by the Company;
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater, and surface or subsurface strata) or
into or out of any property, including the movement of Hazardous Substances,
Oils, Pollutants or Contaminants through or in the air, soil, surface water,
groundwater or property.
Section 3.16 Transactions with Affiliates. Except to the extent
----------------------------
disclosed in the Company SEC Documents filed prior to the date of this
Agreement, continuing activities under the terms of the agreements listed in
Section 3.16 of the Disclosure Schedule or as disclosed in writing to Parent and
Sub on the date hereof, from January 1, 1992 through the date of this Agreement
there have been no transactions, agreements, arrangements or understandings
between the Company or its Subsidiaries, on the one hand, and the Company's
affiliates (other than wholly-owned Subsidiaries of the Company) or other
Persons, on the other hand, that would be required to be disclosed under Item
404 of Regulation S-K under the Securities Act.
Section 3.17 Opinion of Financial Advisor. The Company has received
----------------------------
an opinion from Morgan Stanley to the effect that the consideration to be
received by the stockholders of the Company pursuant to the Offer and Merger,
taken together, as of the date of this Agreement, is fair from a financial point
of view to such stockholders, a copy of which opinion has been delivered to
Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT, UPRR AND SUB
Parent, UPRR and Sub represent and warrant to the Company as follows:
42
<PAGE>
Section 4.1 Organization. Each of Parent, UPRR and Sub is a
------------
corporation duly organized, validly existing and in good standing under the laws
of Utah, Utah and Delaware respectively, 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 Parent and its Subsidiaries. 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 have a material adverse effect on Parent and its
Subsidiaries taken as a whole.
Section 4.2 Capitalization. (a) The authorized capital stock of
--------------
Parent consists of 500,000,000 shares of Parent Common Stock and 20,000,000
preferred shares, no par value (the "Parent Preferred Stock"). As of the date
hereof, (i) 205,359,000 shares of Parent Common Stock are issued and
outstanding, (ii) no shares of Parent Preferred Stock are issued and
outstanding, (iii) 26,593,616 shares of Parent Common Stock and no shares of
Parent Preferred Stock are issued and held in the treasury of Parent,and (iv)
9,699,504 shares of Parent Common Stock are reserved for issuance upon exercise
of then outstanding options and 9,914,320 shares of Parent Common Stock are
reserved for issuance under Parent's 1993 Stock Option and Retention Stock Plan,
the 1990 Retention Stock Plan and the 1988 Stock Option and Restricted Stock
Plan (collectively, the "Parent Plans"). All of the outstanding shares of
Parent's capital stock are, and all shares which may be issued pursuant to the
exercise of outstanding options or pursuant to the Parent Plans will be, when
issued in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable. Except for Parent's 4.75% Convertible
Debentures due April 1, 1999 there are no bonds, debentures, notes or other
indebtedness having voting rights (or convertible into securities having such
rights) ("Parent Voting Debt") of Parent or any of its
43
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Subsidiaries issued and outstanding. Except as set forth above, and except as
set forth in Section 4.2 of the Disclosure Schedule delivered to the Company on
or prior to the date hereof (the "Parent Disclosure Schedule") and except for
transactions contemplated by this Agreement, as of the date hereof, (i) there
are no shares of capital stock of Parent authorized, issued or outstanding and
(ii) there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, convertible securities, agreements, arrangements
or commitments of any character, relating to the issued or unissued capital
stock of Parent or any of its Subsidiaries, obligating Parent or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Parent Voting Debt of, or other equity
interest in, Parent or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or obligations of Parent 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. There are no outstanding contractual obligations of Parent or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Parent Common Stock or the capital stock of Parent or any subsidiary or
affiliate of Parent or to provide funds to make any investment (in the form of a
loan, capital contribution or otherwise) in any Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or understandings
to which Parent or any of its Subsidiaries is a party with respect to the voting
of the capital stock of Parent or its Subsidiaries. None of Parent or its
Subsidiaries is required to redeem, repurchase or otherwise acquire shares of
capital stock of Parent, or any of its Subsidiaries, respectively, as a result
of the transactions contemplated by this Agreement.
Section 4.3 Corporate Authorization; Validity of Agreement; Necessary
---------------------------------------------------------
Action. Each of Parent, UPRR and Sub has full corporate power and authority to
------
execute and deliver this Agreement, the Parent Stockholder Agreement and the
Parent/Company Registration Rights Agreement to which it is a party and, subject
in the case of this Agreement to obtaining any necessary approval of Parent's
44
<PAGE>
stockholders as contemplated by Section 1.7 hereof with respect to the Merger,
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Parent, UPRR and Sub of this Agreement, the Parent
Stockholder Agreement and the Parent/Company Registration Rights Agreement to
which they are parties and the consummation by Parent, UPRR and Subof the
transactions contemplated hereby and thereby have been duly and validly
authorized by their respective Boards of Directors and, except in the case of
this Agreement for obtaining any necessary approval of Parent's stockholders as
contemplated by Section 1.7 hereof, no other corporate action or proceedings on
the part of Parent, UPRR and Sub are necessary to authorize the execution and
delivery by Parent, UPRR and Sub of this Agreement, the Parent Stockholder
Agreement and the Parent/Company Registration Rights Agreement to which they are
parties and the consummation by Parent, UPRR and Sub of the transactions
contemplated hereby and thereby. Each of this Agreement, the Parent Stockholder
Agreement and the Parent/Company Registration Rights Agreement has been duly
executed and delivered by Parent, UPRR and Sub, as the case may be to the extent
a party thereto, and, assuming this Agreement, the Parent Stockholder Agreement
and the Parent/Company Registration Rights Agreement constitute valid and
binding obligations of the Company, constitute valid and binding obligations of
each of Parent, UPRR and Sub, as the case may be to the extent a party thereto,
enforceable against them in accordance with their 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.
The shares of Parent Common Stock to be issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
Section 4.4 Consents and Approvals; No Violations. Except for
-------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the Securities
Act, the DGCL, the ICA, the HSR Act, if any, state blue sky laws and any
applicable state takeover
45
<PAGE>
laws and the approval by Parent's stockholders of the issuance of Parent Common
Stock in the Merger, neither the execution, delivery or performance of this
Agreement, the Parent Stockholder Agreement and the Parent/Company Registration
Rights Agreement by Parent, UPRR and Sub nor the consummation by Parent, UPRR
and Sub of the transactions contemplated hereby or thereby nor compliance by
Parent, UPRR and Sub with any of the provisions hereof or thereof will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws of Parent, UPRR and Sub, (ii) require any filing with,
or permit, authorization, consent or approval of, any 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
Parent and its Subsidiaries or would not, or would not be reasonably likely to,
materially impair the consummation of the Ancillary Agreements or the ability of
Parent, UPRR and Sub to consummate the Offer, the Merger or the other
transactions contemplated hereby or thereby), (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 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 clauses
(iii) and (iv) for violations, breaches or defaults which would not have a
material adverse effect on Parent and its Subsidiaries or would not, or would
not be reasonably likely to, materially impair the consummation of the Ancillary
Agreements or the ability of Parent, UPRR or Sub to consummate the Offer, the
Merger or the other transactions contemplated hereby or thereby.
Section 4.5 SEC Reports and Financial Statements. Parent has filed
------------------------------------
with the SEC, and has heretofore made available to the Company true and complete
copies of, all forms, reports, schedules, statements and other documents
required to be filed by it and its Sub-
46
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sidiaries since January 1, 1992 under the Exchange Act or the Securities Act (as
such documents have been amended since the time of their filing, collectively,
the "Parent SEC Documents"). As of their respective dates or, if amended, as of
the date of the last such amendment, the Parent 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 Parent SEC Documents have been
prepared from, and are in accordance with, the books and records of Parent
and/or 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 GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position and the consolidated results of operations and
cash flows (and changes in financial position, if any) of Parent and its
consolidated Subsidiaries as at the dates thereof or for the periods presented
therein.
Section 4.6 Absence of Certain Changes. Except as contemplated by
--------------------------
Section 5.4 hereof or to the extent disclosed in the Parent SEC Documents filed
prior to the date of this Agreement, from June 30, 1995 through the date of this
Agreement, Parent and its Subsidiaries have conducted their respective
businesses in the ordinary course of business consistent with past practice.
From June 30, 1995 through the date of this Agreement, there has not occurred
(i) any events, changes, or effects (including the incurrence of any liabilities
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 Parent and its Subsidiaries; (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with
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respect to the equity interests of Parent or of any of its Subsidiaries other
than regular quarterly cash dividends or dividends paid by wholly owned
Subsidiaries; or (iii) any change by Parent or any of its Subsidiaries in
accounting principles or methods, except insofar as may be required by a change
in GAAP.
Section 4.7 No Undisclosed Liabilities. Except (a) to the extent
--------------------------
disclosed in the Parent SEC Documents filed prior to the date of this Agreement
and (b) for liabilities and obligations incurred in the ordinary course of
business consistent with past practice, during the period from June 30, 1995
through the date of this Agreement, neither Parent nor any of its Subsidiaries
have incurred any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that have, or would be reasonably likely to
have, a material adverse effect on Parent and its Subsidiaries or would be
required to be reflected or reserved against on a consolidated balance sheet of
Parent and its Subsidiaries (including the notes thereto) prepared in accordance
with GAAP as applied in preparing the June 30, 1995 consolidated balance sheet
of Parent and its Subsidiaries.
Section 4.8 Information in Proxy Statement/Prospectus. The
-----------------------------------------
Registration Statement (or any amendment thereof or supplement thereto) will, at
the date it becomes effective and at the time of the Company Special Meeting,
will 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, provided, however, that no representation is made by Parent, UPRR or
Sub with respect to statements made therein based on information supplied by the
Company for inclusion in the Registration Statement. None of the information
supplied by Parent, UPRR or Sub for inclusion or incorporation by reference in
the Proxy Statement/Prospectus will, at the date mailed to stockholders and at
the time of the Special Meetings, 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. Subject to the proviso set forth in
the second preceding sentence, the Registra-
48
<PAGE>
tion Statement will comply in all material respects with the provisions of the
Securities Act and Exchange Act, respectively, and the rules and regulations
thereunder.
Section 4.9 Litigation; Compliance with Law.
-------------------------------
(a) Except to the extent disclosed in the Parent SEC Documents filed
prior to the date of this Agreement, as of the date of this Agreement, there is
no suit, claim, action, proceeding or investigation pending or, to the best
knowledge of Parent, threatened against or affecting, Parent or any of its
Subsidiaries, which, individually or in the aggregate, is reasonably likely to
have a material adverse effect on Parent and its Subsidiaries or would, or would
be reasonably likely to, materially impair the consummation of the Ancillary
Agreements or the ability of Parent to consummate the Offer, the Merger or the
other transactions contemplated hereby or thereby.
(b) Parent and its Subsidiaries have complied with all laws,
statutes, regulations, rules, ordinances, and judgments, decrees, orders, writs
and injunctions, of any court 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 have a material adverse
effect on Parent and its Subsidiaries.
Section 4.10 Employee Benefit Plan; ERISA. As of the date of this
----------------------------
Agreement, except as would not have a material adverse effect on Parent and its
Subsidiaries, the material employee benefit plans, arrangements, practices,
contracts and agreements (including, without limitation, employment agreements,
change of control employment agreements and severance agreements, incentive
compensation, bonus, stock option, stock appreciation rights and stock purchase
plans, and including, but not limited to, plans described in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained by Parent, any of its Subsidiaries or any trade or business, whether
or not incorporated, that together with Parent would be deemed a "controlled
group" within the meaning of section 4001(a)(14) of
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ERISA, or with respect to which the Parent or any of its subsidiaries has or may
have a liability (the "Parent Plans") are in substantial compliance with
applicable laws, including ERISA and the Internal Revenue Code of 1986, as
amended from time to time.
Section 4.11 Taxes. Except as set forth in Section 4.11(a) of the
-----
Parent Disclosure Schedule (which schedule shall be provided by Parent to
Company within twenty (20) business days of the date of this Agreement) and
except as such failure of any representation or warranty made in this Section
4.11(a) to be true and correct which would not have a material adverse effect on
the Parent and its Subsidiaries:
(a) Parent and its Subsidiaries have (i) duly filed (or there have
been filed on their behalf) with the appropriate governmental authorities all
Tax Returns required to be filed by them and such Tax Returns are true, correct
and complete, 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 Taxes for all periods ending through the date hereof; and
(b) Parent and its Subsidiaries have complied in all respects with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including withholding of Taxes pursuant to Sections 1441
and 1442 of the Code or similar provisions under any foreign laws) and have,
within the time and the manner prescribed by law, withheld from employee wages
and paid over to the proper governmental authorities all amounts required to be
so withheld and paid over under applicable laws.
Section 4.12 Environmental. Except as set forth in the Parent SEC
-------------
Documents, to the best knowledge of the Chief Executive Officer, Chief Financial
Officer, the most senior officer, and the most senior legal officer directly in
charge of environmental matters of Parent, there are no Environmental
Liabilities and Costs of Parent and its Subsidiaries that would have or are
reasonably likely to have a material adverse effect on Parent and its
Subsidiaries.
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Section 4.13 Financing. Either Parent, UPRR or Sub has, or will have
---------
prior to the consummation of the Offer or the satisfaction of the conditions to
the Merger, as the case may be, sufficient funds available to purchase the
Shares pursuant to the Offer and the Shares converted into the right to receive
Cash Consideration in the Merger.
Section 4.14 Opinion of Financial Advisor. Parent has received an
----------------------------
opinion from CS First Boston Corporation ("CS First Boston") dated the date of
this Agreement to the effect that, as of such date, the consideration to be paid
by Parent in the Offer and the Merger, taken together, is fair to Parent from a
financial point of view, a copy of which opinion has been delivered to the
Company.
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
Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary course of business consistent with past practice
or pursuant to Customary Actions and, to the extent consistent therewith, each
of the Company and its Subsidiaries shall use its best efforts to preserve its
business organization intact and maintain its existing relations with customers,
suppliers, employees, creditors and business partners;
(b) except as disclosed in Section 5.1(b) of the Disclosure Schedule,
the Company will not, directly or indirectly, split, combine or reclassify the
outstanding Company 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)
except as disclosed in Section 5.1(c) of the Disclosure Schedule, amend its
articles of
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incorporation or by-laws or similar organizational documents; (ii) 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 the
Company's Subsidiaries to the Company or its Subsidiaries; (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 exercise of
stock-based awards outstanding on the date hereof as disclosed in Section 3.2 or
in Section 5.1(c) of the Disclosure Schedule; (iv) transfer, lease, license,
sell, mortgage, pledge, dispose of, or encumber any material assets other than
(a) in the ordinary course of business consistent with past practice or (b)
pursuant to existing agreements disclosed in Section 5.1(c) of the Disclosure
Schedule; or (v) except as set forth on 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 otherwise provided in this Agreement, grant any increase in the
compensation payable or to become payable by the Company or any of its
Subsidiaries to any officer or employee (including through any new award made
under, or the exercise of any discretion under, the Southern Pacific Rail
Corporation Equity Incentive Plan; however, Chairman's Circle Awards in
accordance with past practice may be made payable in cash or, with the written
consent of Parent, in Shares), provided, however, the Company may increase
compensation (x) as required pursuant to collective bargaining agreements and
(y) for employees who have merit promotions and/or industry-competitive salary
adjustments in the ordinary course and consistent with past practice (ii) 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, stock purchase, insurance, pension, retirement or other employee benefit
plan agreement or arrangement; (iii) enter into any, or amend any existing,
employment or severance agreement with or, except in accordance with the
existing written policies of the
52
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Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its Subsidiaries; or (iv) make any additional
contributions to any grantor trust created by the Company to provide funding for
non-tax-qualified employee benefits or compensation; or (v) provide any
severance program to any Subsidiary which does not have a severance program as
of the date of this Agreement, other than a program which is substantially
identical to the Southern Pacific Lines Non-Agreement Severance Benefit Plan as
revised on August 25, 1993; provided, however, the foregoing clauses (i) and
(iii) shall not apply with respect to the initial compensation package for any
officer or employee hired after the date of this Agreement if such package is
industry-competitive and conforms to past practice.
(e) neither the Company nor any of its Subsidiaries shall modify,
amend or terminate any of the Company Agreements or waive, release or assign any
material rights or claims, except in the ordinary course of business consistent
with past practice and except for a Customary Action;
(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 consistent with past practice and except for a Customary
Action;
(g) except as set forth in Section 5.1(g) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries shall: (i) incur or assume any
debt except for (A) borrowings under existing credit facilities in an amount not
to exceed $450 million and replacements therefor and refinancings thereof;
provided, however, that the Company and its Subsidiaries shall not prepay or
-------- -------
call any long-term borrowings, (B) capital leases under the Company's existing
program to finance the rebuilding of freight cars and to finance equipment under
existing purchase commitments; and (C) borrowings in the ordinary course of
business consistent with past practice that do not exceed $12.5 million in the
fiscal year ending December 31, 1995, $25 million in the fiscal year ending
December 31, 1996 and $12.5 million in the fiscal quarter ending March 31, 1997;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
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(whether directly, contingently or otherwise) for the obligations of any other
person, except in the ordinary course of business 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) enter into any material commitment (including, but not limited to, any
capital expenditure or purchase of assets) other than in the ordinary course of
business consistent with past practice or, in the case of capital expenditures,
pursuant to Customary Actions;
(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)
reflected or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries, (y) incurred in the ordinary course of business consistent with
past practice or which are Customary Actions or (z) which are legally required
to be paid, discharged or satisfied;
(j) except as disclosed in Section 5.1(j) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries will adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization of the Company or any of its
Subsidiaries or any agreement relating to a Takeover Proposal (as defined in
Section 5.6) (other than the Merger);
(k) neither the Company nor any of its Subsidiaries knowingly will
take, or agree to commit to take, any action that would make any representation
or warranty of the Company contained herein inaccurate in any respect at, or as
of any time prior to, the Effective Time;
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(l) other than between or among wholly-owned Subsidiaries of the
Company which remain wholly-owned or between the Company and its wholly-owned
Subsidiaries which remain wholly-owned, neither the Company nor any of its
Subsidiaries will engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of the Company's
affiliates, including, without limitation, any transactions, agreements,
arrangements or understandings with any affiliate or other Person covered under
Item 404 of Regulation S-K under the Securities Act that would be required to be
disclosed under such Item 404, other than pursuant to such agreements,
arrangements, or understandings existing on the date of this Agreement (which
are set forth on Section 5.1(l) of the Disclosure Schedule) or as disclosed in
writing to Parent and Sub on the date hereof; provided, however, that any such
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agreement, arrangement or understanding disclosed in such writing shall be
approved by at least two independent directors of the Company, after having
received an appraisal or valuation from an independent appraiser or expert
(reasonably acceptable to Parent) that the terms are fair to the Company and are
no less favorable to the Company than could be obtained in an arms-length
transaction with an unaffiliated party, and, provided, further, that the Company
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provides Parent with all information concerning any such agreement, arrangement
or understanding that Parent may reasonably request; and
(m) 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.
For the purposes of this Agreement, a "Customary Action" means an
action taken which occurs in the ordinary course of the relevant person's
business and where the taking of such action is generally recognized as being
customary and prudent for other major enterprises in such person's line of
business.
Section 5.2 Interim Operations of Parent. Parent covenants and
----------------------------
agrees that, except (i) as expressly provided in this Agreement, or (ii) with
the prior written consent of the Company, after the date hereof and prior to the
Effective Time:
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(a) Parent will not, directly or indirectly, split, combine or
reclassify the outstanding Parent Common Stock;
(b) Parent shall not: (i) amend its articles of incorporation; or
(ii) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to its capital stock except for quarterly
cash dividends consistent in amount with past practice, provided that Parent may
increase its dividend rate consistent with the amount reflected in Parent's
long-range plan previously furnished to the Company, and except for dividends
paid by Parent's Subsidiaries to Parent or its Subsidiaries;
(c) neither Parent nor any of its Subsidiaries shall change any of
the accounting principles used by it unless required by GAAP;
(d) Parent will not issue, sell, transfer, pledge or dispose of
direct or indirect beneficial ownership of the capital stock of UPRR or permit
UPRR to sell, transfer or dispose of any substantial portion of or all of the
assets of UPRR; and
(e) neither Parent 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 5.3 Access to Information. (a) To the extent permitted by
---------------------
applicable law, 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 (including any Tax Returns
or other Tax related information pertaining to the Company and its Subsidiaries)
and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to 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
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its business, properties and personnel as Parent may reasonably request
(including any Tax Returns or other Tax related information pertaining to the
Company and its Subsidiaries); provided, however, that access to certain Company
information may require the entry of a protective order by the ICC, after which
date full access will be granted to such information consistent with this
paragraph and subject to the terms of such order. Parent will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the existing confidentiality agreement between the Company and Parent (the
"Confidentiality Agreement").
(b) To the extent permitted by applicable law, Parent shall (and
shall cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of the
Company, 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 (including any Tax Returns or other Tax
related information pertaining to Parent and its Subsidiaries) and, during such
period, Parent shall (and shall cause each of its Subsidiaries to) furnish
promptly to the Company (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 the federal securities laws and (b) all other information
as the Company may reasonably request (including any Tax Returns or other Tax
related information pertaining to Parent and its Subsidiaries); provided,
however, that access to certain Parent information may require the entry of a
protective order by the ICC, after which date full access will be granted to
such information consistent with this paragraph and subject to the terms of such
order. The Company will hold any such information which is nonpublic in
confidence in accordance with the provisions of the Confidentiality Agreement.
Section 5.4 Spinco Spin-off. The Company acknowledges that Parent
---------------
has announced its intention to effect an initial public offering of no more than
17.25% (not including employee shares or employee options) of, and to distribute
to its stockholders, as a pro rata dividend, the remainder of, the shares of
capital stock of Spinco. Parent agrees that no dividend shall be declared for
any distribution of shares of capital stock
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of Spinco or for the distribution to Parent's stockholders of any proceeds or
any other disposition of Spinco or the assets thereof, and no declaration of or
record date for any such distribution shall occur, until after the consummation
of the Merger. If any tax opinion or IRS private letter ruling is requested by
Parent and issued in connection with such distribution of shares of capital
stock of Spinco, such tax opinion or IRS private letter ruling shall provide
that no income, gain or loss will be recognized by Parent shareholders
(including former Company shareholders who receive Parent stock in the Merger)
upon the receipt of Spinco stock.
Section 5.5 Consents and Approvals. (a) Parent and the Company
----------------------
shall, and each shall cause each of its Subsidiaries to, subject to the
following sentence, (i) cooperate with one another to prepare and present to the
ICC, or any successor applying substantially similar standards of review and
procedures (a "Similar Successor"), as soon as practicable all filings and other
presentations in connection with seeking any ICC or Similar Successor approval,
exemption or other authorization necessary to consummate the transactions
contemplated by this Agreement (including, without limitation, the matters
contemplated by Section 5.3 hereof) and the Ancillary Agreements, (ii) prosecute
such filings and other presentations with diligence, (iii) diligently oppose any
objections to, appeals from or petitions to reconsider or reopen any such ICC or
Similar Successor approval by persons not party to this Agreement, and (iv) take
all such further action as in Parent's and the Company's judgment reasonably may
facilitate obtaining a final order or orders of the ICC or Similar Successor
approving such transactions consistent with this Agreement and the Ancillary
Agreements. Subject to consultation with the Company and after giving good
faith consideration to the views of the Company, Parent shall have final
authority over the development, presentation and conduct of the ICC or Similar
Successor case, including over decisions as to whether to agree to or acquiesce
in conditions.
(b) Each of the Company, Parent, UPRR and Sub 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 Ancillary Agreements and
the transactions contemplated hereby and
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thereby (which actions shall include, without limitation, furnishing all
information in connection with approvals of or filings with any Governmental
Entity, including, without limitation, any schedule, or reports required to be
filed with the SEC, (other than the ICC or a Similar Successor which is covered
by subsection (a) of this Section 5.5)), 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 Ancillary Agreements and the transactions contemplated hereby
and thereby. Each of the Company, Parent, UPRR and Sub will, and will cause its
Subsidiaries to, take all reasonable actions necessary to obtain any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private third party (other than the ICC or a Similar
Successor which is covered by subsection (a) of this Section 5.5), required to
be obtained or made by Parent, UPRR, Sub, the Company or any of their
Subsidiaries in connection with the Offer, the Merger or the taking of any
action contemplated thereby or by this Agreement or the Ancillary Agreements.
Subject to consultation with the Company and after giving good faith
consideration to the views of the Company, Parent shall have final authority
over the development, presentation and conduct of any case before a Governmental
Entity in connection with this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby.
Section 5.6 Employee Benefits. (a) Parent agrees to cause Surviving
-----------------
Corporation and its Subsidiaries to honor and assume, and Surviving Corporation
agrees to honor and assume, the Employment Agreements, Contractual Supplemental
Executive Retirement Agreements and Stock Bonus Agreements, all as listed under
those categories on Section 3.9(a)(i) of the Disclosure Schedule, true and
accurate copies of which have previously been made available to Parent.
Notwithstanding the foregoing, nothing in this Section 5.6 shall be deemed to
require the employment of any nonagreement employee to be continued for any
particular period of time.
(b) Parent agrees to cause Surviving Corporation and its Subsidiaries
to honor and assume, and Surviving Corporation agrees to honor and assume, the
Company's employee benefit plans and employee programs,
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arrangements and agreements listed on Section 3.9 of the Disclosure Schedule,
true and accurate copies of which have previously been made available to Parent.
Nothing in this Agreement shall prohibit Parent, Surviving Corporation or its
Subsidiaries from amending or terminating any such plan, program, arrangement or
agreement at any time in accordance with applicable law (except as to benefits
already vested thereunder); provided that the severance plan for employees of
the Company and its Subsidiaries who are terminated other than for cause, as in
effect on the date of this Agreement, shall be continued in effect for at least
one year following the Effective Time.
(c) Parent and Surviving Corporation agree to cause the Committee
under the Southern Pacific Rail Corporation Equity Incentive Plan (the "EIP") to
make adequate provision for the adjustment of outstanding Awards under the Stock
Bonus Agreements issued under EIP, in accordance with Section 5.2(b) of EIP.
(d) Promptly after the completion of the purchase of Shares pursuant
to the Offer, the Company and its Subsidiaries shall establish a "Management
Continuity Plan (the 'MCP')" that will provide certain payments described in
Section 5.6(d) of the Disclosure Schedule (the "MCP Awards") to certain
nonagreement employees of the Company or its Subsidiaries (whether employed at
the date of this Agreement or hired subsequently). Promptly after the later of
(i) the establishment of the MCP or (ii) a nonagreement employee's date of hire
(or promotion, if applicable), the Company will communicate in writing to each
nonagreement employee who is eligible to participate in the MCP the amount of
his or her potential MCP Award and its conditions of payment. Certain eligible
nonagreement employees and their potential MCP Awards are listed in Section
5.6(d) of the Disclosure Schedule; other eligible employees will be designated
at the later of the date the MCP is established or the respective employee's
date of hire (or promotion, if applicable). In order to become an "MCP
Participant", the eligible employee must waive, within 60 days of the later of
completion of purchase of Shares pursuant to the Offer or his or her date of
hire (or promotion, if applicable), any right to receive a payment from any
other incentive plan, incentive program or incentive arrangement maintained by
the Company (or its Subsidiaries) or the Surviving Corpo-
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ration (or its Subsidiaries), except for rights under the two Stock Bonus
Agreements listed in Section 3.9(a), Part I of the Stock Bonus Agreement
category, of the Disclosure Schedule.
Payment of each MCP Award shall be made in two parts, subject to the
respective MCP Participant's fulfilling certain conditions:
First Payment:
If the MCP Participant is employed by the Company or its Subsidiaries
on December 25, 1995 and has not, prior to December 25, 1995, received a
written notice from the employer that the MCP Participant is not fulfilling
his or her work performance obligations, then, if the MCP Participant is a
Group I Employee, sixty percent (60%) of the MCP Award shall be paid to
such MCP Participant prior to December 31, 1995, or, if the MCP Participant
is not a Group I Employee, fifty percent (50%) of the MCP Award shall be
paid to such MCP Participant prior to December 31, 1995.
Second Payment:
If the MCP Participant is employed by the Company or its Subsidiaries
at the Effective Time and has not, prior to the Effective Time, received a
written notice from the employer that the MCP Participant is not fulfilling
his or her work performance obligations, the MCP Participant becomes
entitled to the remainder of his or her MCP Award (the "Second Payment"),
subject to the further condition that the MCP Participant continue to be so
employed for at least sixty (60) days immediately following the Effective
Time, unless such employment is earlier terminated at the request of the
Surviving Corporation or its Subsidiaries. The Second Payment shall be
made at the earlier of the 60th day following the Effective Time or the day
of such earlier termination.
(e) Promptly after completion of the purchase of Shares pursuant to
the Offer, the Company and its Subsidiaries shall establish an enhanced
severance program (the "Enhanced Severance Program") that will
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provide certain additional severance amounts to terminated nonagreement
employees who become entitled to severance pursuant to (i) the Southern Pacific
Line Non-Agreement Severance Benefit Plan as revised August 25, 1993 (the
"Severance Plan"), (ii) the substantially identical plans to be established for
certain Subsidiaries which do not currently have a severance plan (the "New
Identical Plans"), or (iii) the individual agreements in existence on the date
of this Agreement which provide severance benefits. The payments to be made
pursuant to this Section 5.6(e) are described in Section 5.6(e) of the
Disclosure Schedule. The Parent agrees to cause the Surviving Corporation and
its Subsidiaries to maintain and honor, and the Surviving Corporation agrees
that it will maintain and honor, the Enhanced Severance Program, the Severance
Plan and the New Identical Plans, without any amendment, for one year after the
Effective Time. Parent and Surviving Corporation agree the Severance Plan and
New Identical Plans may be amended to provide that the following events shall
constitute a constructive termination thereunder which will entitle a Group A or
Group B Employee to severance thereunder: (i) reduction in base salary, (ii)
being required to work at a job which is not commensurate with the individual's
skills, or (iii) being required to accept a new principal place of work which is
at least fifty (50) miles farther from the individual's old residence than the
individual's old residence was from the individual's former place of work.
Parent and Surviving Corporation agree the Severance Plan and New Identical
Plans may be amended to provide that the following event shall constitute a
constructive termination thereunder which will entitle a Group C Employee to
severance thereunder: reduction in base salary.
Section 5.7 No Solicitation. (a) The Company (and its Subsidiaries,
---------------
and affiliates over which it exercises control) will not, and the Company (and
its Subsidiaries, and affiliates over which it exercises control) will use their
best efforts to ensure that their respective officers, directors, employees,
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 an inquiry with respect
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thereto, or, (ii) in the event of an unsolicited Takeover Proposal for the
Company or any Subsidiary or affiliate of the Company, engage in negotiations or
discussions with, or provide any information or data to, any corporation,
partnership, person or other entity or group (other than Parent, any of its
affiliates or representatives) ("Person") relating to any Takeover Proposal,
except in the case of clause (ii) above to the extent that the Company's Board
of Directors determines, after having received the oral or written opinion of
outside legal counsel to the Company, that the failure to engage in such
negotiation or discussions or provide such information would result in a breach
of the Board of Directors' fiduciary duties under applicable law. The Company
shall notify Parent, UPRR and Sub orally and in writing of any such offers,
proposals, inquiries or Takeover Proposals (including, without limitation, the
material terms and conditions thereof and the identity of the Person making it),
within 24 hours of the receipt thereof, shall thereafter inform Parent on a
reasonable basis of the status and content of any discussions or negotiations
with such a third party, including any material changes to the terms and
conditions thereof, and shall give Parent three days' advance notice of any
information to be supplied to any Person making such offer, proposal, inquiry or
Takeover Proposal. 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 discussions and negotiations that have taken place prior to
the date hereof, if any, with any parties conducted heretofore with respect to
any Takeover Proposal relating to the Company.
(b) As used in this Agreement, "Takeover Proposal" when used in
connection with any Person shall mean any tender or exchange offer involving the
capital stock of 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 proposal or offer with
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respect to any other transaction similar to any of the foregoing with respect to
such Person or any Subsidiary of such Person other than pursuant to the
transactions to be effected pursuant to this Agreement.
Section 5.8 Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto agrees to use its best
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, or 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 their best efforts to take, or cause to be taken,
all such necessary actions.
Section 5.9 Publicity. So long as this Agreement is in effect,
---------
neither the Company nor Parent nor affiliates which either of them control shall
issue or cause the publication of any press release or other public statement or
announcement with respect to this Agreement or the Ancillary Agreements or the
transactions contemplated hereby or thereby without the prior consultation of
the other party, except as may be required by law or by obligations pursuant to
any listing agreement with a national securities exchange.
Section 5.10 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(a) 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 (b) 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
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delivery of any notice pursuant to this Section 5.10 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
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Section 5.11 Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
Parent agrees that at all times after the Effective Time, it shall indemnify, or
shall cause the Surviving Corporation 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 Surviving Corporation to,
maintain in effect for not less than six (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 200% 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 Surviving Corporation to, and the Surviving Corporation
shall, provide the maximum coverage that shall then be available at an annual
premium equal to 200% of such rate, and Parent, in addition to the
indemnification provided above in this Section 5.11, 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
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by law Parent shall, or shall cause the Surviving Corporation to, periodically
advance to such Indemnified Party its legal and other expenses (including the
cost of any investigation and preparation incurred in 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 where 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. 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 5.11 are
intended for the benefit of, and shall be enforceable by, the respective
Indemnified Parties.
Section 5.12 Rule 145 Affiliates. At least 40 days prior to the
-------------------
Closing Date, the Company shall deliver
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to Parent a letter identifying, to the best of the Company's knowledge, all
persons who are, at the time of the Company Special Meeting, deemed to be
"affiliates" of the Company for purposes of Rule 145 under the Securities Act
("Company Affiliates"). The Company shall use its best efforts to cause each
Person who is identified as a Company Affiliate to deliver to Parent at least 30
days prior to the Closing Date an agreement substantially in the form of Exhibit
I to this Agreement.
Section 5.13 Cooperation. Parent and the Company shall together, or
-----------
pursuant to an allocation of responsibility to be agreed upon between them,
coordinate and cooperate (a) with respect to the timing of the Company Special
Meeting, (b) in determining whether any action by or in respect of, or filing
with, any Governmental Entity (other than the ICC which is covered by Section
5.5(a) hereof) is required, or any actions, consents approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, and (c) in seeking any such actions, consents, approvals
or waivers or making any such filings, furnishing information required in
connection therewith and timely seeking to obtain any such actions, consents
approvals or waivers. Subject to the terms and conditions of this Agreement,
Parent and the Company will each use its best efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after the Registration Statement is filed, and Parent and the Company shall,
subject to applicable law, confer on a regular and frequent basis with one or
more representatives of one another to report operational matters of
significance to the Merger and the general status of ongoing operations insofar
as relevant to the Merger, provided that the parties will not confer on any
matter to the extent inconsistent with law.
Section 5.14. Proxy Statement/Prospectus. As soon as practicable
--------------------------
following the consummation of the Offer, Parent and the Company shall prepare
and file with the SEC the Proxy Statement/Prospectus and each shall use its best
efforts to have the Proxy Statement/Prospectus cleared by the SEC as promptly as
practicable. As soon as practicable following such clearance Parent shall
prepare and file with the SEC the Registration Statement,
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of which the Proxy Statement/Prospectus will form a part, and shall use its best
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable thereafter. Parent and the Company shall cooperate with
each other in the preparation of the Proxy Statement/Prospectus, and each will
provide to the other promptly copies of all correspondence between it or any of
its representatives and the SEC. Each of the Company and Parent shall furnish
all information concerning it required to be included in the Registration
Statement and the Proxy Statement/Prospectus, and as promptly as practicable
after the effectiveness of the Registration Statement, the Proxy
Statement/Prospectus will be mailed to the stockholders of the Company. No
amendment or supplement to the Registration Statement or the Proxy
Statement/Prospectus will be made without the approval of each of the Company
and Parent, which approval will not be unreasonably withheld or delayed. Each
of the Company and Parent will advise the other promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any amendment thereto or any supplement or amendment to the Proxy
Statement/Prospectus has been filed, or the issuance of any stop order, or the
suspension of the qualification of the Parent Common Stock to be issued in the
Merger for offering or sale in any jurisdiction, or of any request by the SEC or
the NYSE for amendment of the Registration Statement or the Proxy
Statement/Prospectus.
Section 5.15 Tax-Free Reorganization. The parties intend the
-----------------------
transaction to qualify as a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code; each party and its affiliates shall use all reasonable
efforts to cause the Merger to so qualify; neither party nor any affiliate shall
take any action that would cause the Merger not to qualify as a reorganization
under those Sections; and the parties will take the position for all purposes
that the Merger qualifies as a reorganization under those Sections.
Section 5.16 Restructuring. Parent covenants and agrees that, no
-------------
later than one day prior to the Effective Time, it shall cause (a) Union Pacific
Holdings, Inc. ("Holdings") to distribute all of its assets and liabilities (by
merger or otherwise) to Parent in a complete liquidation under Section 332 of
the Code and (b) Sub to distribute all of its assets and liabilities
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(by merger or otherwise) to UPRR in a complete liquidation under Section 332 of
the Code.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to the Obligations of Each Party. The
-------------------------------------------
obligations of the Company, on the one hand, and Parent, UPRR and Sub, on the
other hand, to consummate the Merger are subject to the satisfaction (or, if
permissible, waiver by the party for whose benefit such conditions exist) of the
following conditions:
(a) this Agreement shall have been adopted by the stockholders of the
Company in accordance with the DGCL;
(b) if required by the rules of the New York Stock Exchange, Inc.
("NYSE") or by law, the issuance of Parent Common Stock in the Merger shall
have been approved by the stockholders of Parent in accordance with the
rules of the NYSE and applicable law;
(c) no court, arbitrator or governmental body, agency or official
shall have issued any order, decree or ruling and there shall not be any
statute, rule or regulation, restraining, enjoining or prohibiting the
consummation of the Merger or which would materially and adversely affect
the long-term benefits expected to be received by Parent from the
transactions contemplated by this Agreement; and
(d) the Registration Statement shall have become effective under the
Securities Act and no stop order suspending effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the SEC.
Section 6.2 Conditions to the Obligations of Parent, UPRR and Sub.
-----------------------------------------------------
The obligations of Parent, UPRR and Sub to consummate the Merger are subject to
the satisfaction (or waiver by Parent) of the following further conditions:
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(a) the representations and warranties of the Company shall have been
true and accurate both when made and (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate
as of such date or with respect to such period) as of the Effective Time as
if made at and as of such time, except where the failure of such
representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material adverse effect"
set forth therein), would not have and is not reasonably likely to have a
material adverse effect on the Company and its Subsidiaries;
(b) the Company shall have performed in all material respects its
obligations hereunder required to be performed by it at or prior to the
Effective Time;
(c) (i) the ICC or any Similar Successor shall have issued a decision
(which decision shall not have been stayed or enjoined) that (A)
constitutes a final order approving, exempting or otherwise authorizing
consummation of the Merger and all other transactions contemplated by this
Agreement and the Ancillary Agreements (or subsequently presented to the
ICC or a Similar Successor by agreement of Parent and the Company) as may
require such authorization and (B) does not (1) change or disapprove of the
Merger Consideration or other material provisions of Article II of this
Agreement or (2) impose on Parent, the Company or any of their respective
Subsidiaries any other terms or conditions (including, without limitation,
labor protective provisions but excluding conditions heretofore imposed by
the ICC in New York Dock Railway -- Control-- Brooklyn Eastern District,
360 I.C.C. 60 (1979)) that materially and adversely affect the long-term
benefits expected to be received by Parent from the transactions
contemplated by this Agreement; or (ii) no successor to the ICC (other than
a Similar Successor) shall have required any divestiture, hold separate, or
other restriction or action in connection with the expiration or
termination of any waiting period applicable to this Agreement and the
transactions contemplated hereby, or in connection with any other action by
or in respect of or filing with such
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successor, that would materially and adversely affect the long-term
benefits expected to be received by Parent from the transactions
contemplated by this Agreement;
(d) all actions by or in respect of or filings with any governmental
body, agency official, or authority required to permit the consummation of
the Merger (other than approval of the ICC or any Similar Successor, which
is addressed in Section 6.2(c) hereof) shall have been obtained but
excluding any consent, approval, clearance or confirmation the failure to
obtain which would not have a material adverse effect on Parent, the
Company or, after the Effective Time, the Surviving Corporation;
(e) each of the Ancillary Agreements shall be valid, in full force
and effect and complied with in all material respects (including, without
limitation, the absence of any challenge, change or disapproval of the
Ancillary Agreements by the ICC or any successor), except for such failure
to be in full force and effect and such non-compliance that does not
materially and adversely affect the benefits expected to be received by
Parent, UPRR and Sub under the Anschutz Stockholder Agreement, the
Parent/Company Registration Rights Agreement, this Agreement and the
Ancillary Agreements;
(f) since the date of this Agreement, there shall not have occurred
any event, change or effect having, or which would be reasonably likely to
have, individually or in the aggregate (after taking into account the
proceeds of insurance coverage), a material adverse effect on the Company
and its Subsidiaries, taken as a whole, as a result of or arising out of
"force majeure" (where "force majeure" shall mean any act of God
(including, without limitation, earthquake, hurricane, flood, tornado or
fire)), accident, damage to or destruction of facilities, properties or
assets (tangible or intangible), war, civil disturbance, national calamity
(excluding an economic crisis in and of itself) or acts of terrorism; and
(g) Parent shall have received an opinion of nationally recognized
tax counsel to Parent, to the effect that the Merger (whether or not the
Offer is integrated with the Merger for federal income tax
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purposes) will qualify as a reorganization within the meaning of Section
368 of the Code and in rendering such opinion tax counsel may rely upon
representations provided by the parties hereto as well as certain
stockholders of the parties.
Section 6.3 Conditions to the Obligations of the Company. The
--------------------------------------------
obligations of the Company to consummate the Merger are subject to the
satisfaction (or waiver by the Company) of the following further conditions:
(a) the representations and warranties of Parent, UPRR and Sub (other
than the representations and warranties set forth in Sections 4.7, 4.10,
4.11 and 4.12) shall have been true and accurate both when made and (except
for those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such
period) as of the Effective Time as if made at and as of such time, except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein), would not have and is not
reasonably likely to have, individually or in the aggregate, a material
adverse effect on Parent and its Subsidiaries;
(b) each of Parent, UPRR and Sub shall have performed in all material
respects all of the respective obligations hereunder required to be
performed by Parent, UPRR or Sub, as the case may be, at or prior to the
Effective Time;
(c) the Parent Common Stock to be issued in the Merger shall have
been approved for listing on the New York Stock Exchange, subject to
official notice of issuance;
(d) the ICC shall have issued a decision (which decision shall not
have been stayed or enjoined) that (i) constitutes a final order approving,
exempting or otherwise authorizing consummation of the Merger and all other
transactions contemplated by this Agreement or subsequently presented to
the ICC by agreement of the Company and Parent, as may require such
authorization and (ii) does not
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change or disapprove of the Merger Consideration or other material
provisions of Article II of this Agreement;
(e) since the date of this Agreement, there shall not have occurred
any event, change or effect having, or which would be reasonably likely to
have, individually or in the aggregate (after taking into account the
proceeds of insurance coverage), a material adverse effect on Parent and
its Subsidiaries, taken as a whole, as a result of or arising out of "force
majeure" (where "force majeure" shall mean any act of God (including,
without limitation, earthquake, hurricane, flood, tornado or fire)),
accident, damage to or destruction of facilities, properties or assets
(tangible or intangible), war, civil disturbance, national calamity
(excluding an economic crisis in and of itself) or acts of terrorism; and
(f) the Company shall have received an opinion of nationally
recognized tax counsel to the Company, to the effect that the Merger
(whether or not the Offer is integrated with the Merger for federal income
tax purposes) will qualify as a reorganization within the meaning of
Section 368(a) of the Code and in rendering such opinion tax counsel may
rely upon representations provided by the parties hereto as well as certain
stockholders of the parties.
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:
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(i) if the Merger shall not have occurred on or prior to March
31, 1997; 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 obligation under this Agreement has been the cause
of, or resulted in, the failure of the Merger to occur on or prior to such
date;
(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 best 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; or
(iii) if Parent or Sub has not purchased Shares in accordance
with the terms of the Offer within 90 days following the commencement of
the Offer; provided, however, that the right to terminate this Agreement
-------- -------
under this Section 7.1(b)(iii) shall not be available to any party whose
failure to fulfill any obligations under this Agreement has been the cause
of, or resulted in, the failure to satisfy the conditions to the Offer.
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of 39,034,471 Shares pursuant to
the Offer, or if fewer than 39,034,471 Shares are tendered, the purchase of
at least 15% of the outstanding Shares 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 Sub its approval or recommendation of 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, after having received the oral or written opinion of outside
legal counsel to the Company, that the failure to take such action as set
forth in the preceding clause (A) would result in a breach of the Board of
Directors' fiduciary du-
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ties under applicable law; provided, however, that (1) the Board of
-------- -------
Directors of the Company shall have determined that notwithstanding a
binding commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of their applicable fiduciary
duties, and notwithstanding all concessions which may be offered by Parent,
UPRR or Sub in negotiations entered into pursuant to clause (2) below, such
fiduciary duties would also require the directors to terminate this
Agreement as a result of such Takeover Proposal; and (2) prior to any such
termination, the Company shall, and shall cause its respective financial
and legal advisors to, negotiate with Parent, UPRR or Sub to make such
adjustments in the terms and conditions of this Agreement as would enable
the Company to proceed with the transactions contemplated herein on such
adjusted terms, and (3) the Company shall have given Parent and Sub three
days' advance notice of any termination pursuant to this Section 7.1(c)(i);
or
(ii) if Parent, UPRR or Sub (x) breaches or fails in any
material respect to perform or comply with any of its material covenants
and agreements contained herein or (y) breaches its representations and
warranties in any material respect and such breach would have or would be
reasonably likely to have a material adverse effect on Parent and its
Subsidiaries, in each case such that the conditions set forth in Section
6.1 or Section 6.2 would not be satisfied; provided, however, that if any
-------- -------
such breach is curable by the breaching party through the exercise of the
breaching party's best efforts and for so long as the breaching party shall
be so using its best efforts to cure such breach, the Company may not
terminate this Agreement pursuant to this Section 7.1(c)(ii).
(d) By the Board of Directors of Parent:
(i) if the Company (x) breaches or fails in any material respect
to perform or comply with any of its material covenants and agreements
contained herein or (y) breaches its representations and warranties in any
material respect and such breach would have or would be reasonably likely
to have a material adverse effect on the Company and
75
<PAGE>
its Subsidiaries, in each case such that the conditions set forth in
Section 6.1 or Section 6.3 would not be satisfied; provided, however, that
-------- -------
if any such breach is curable by the Company through the exercise of the
Company's best efforts and for so long as the Company shall be so using its
best efforts to cure such breach, Parent may not terminate this Agreement
pursuant to this Section 7.1(d)(i); or
(ii) if (A) prior to the Effective Time, the Board of Directors
of the Company shall have withdrawn, or modified or changed in a manner
adverse to Parent, UPRR or Sub its approval or recommendation of this
Agreement or the Offer or Merger or shall have recommended a Takeover
Proposal or other business combination, or the Company shall have entered
into 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, UPRR, Sub or their Subsidiaries
(or the Board of Directors of the Company resolves to do any of the
foregoing), or (B) prior to the certification of the vote of the Company's
shareholders to approve the Merger at the Company Special Meeting, it shall
have been publicly disclosed or Parent, UPRR or Sub shall have learned that
(x) 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 Subsidiaries, or the Anschutz Holders, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 25% 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 any option,
right or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 25% of any class or series of capital stock of the Company
(including the Shares) other than as disclosed in a Schedule 13D on file
with the SEC on the date hereof; or (y) any such person, entity or "group"
(as that term is defined in Section 13(d)(3) of the Exchange Act), other
than Parent or its Subsidiaries, or the Anschutz Holders, which, prior to
the date hereof, had filed a Schedule 13D with the
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SEC, shall have acquired or proposed to acquire beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
additional 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, constituting 1% or more of any such class or series,
or shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of additional shares of any
class or series of capital stock of the Company (including the Shares)
constituting 1% or more of any such class or series.
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,
UPRR, Sub 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.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. Except for expenses incurred in
-----------------
connection with printing the Offer Documents, Schedule 14D-9, Proxy/Prospectus
and the Registration Statement, as well as the filing fees relating thereto,
which costs shall be shared equally by Parent and the Company, all costs and
expenses incurred in connection with this Agreement and the Ancillary Agreements
and the consummation of the transactions contemplated hereby and thereby shall
be paid by the party incurring such expenses.
Section 8.2 Finders' Fees. (a) Except for Morgan Stanley, 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
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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.
(b) Except for CS First Boston, 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, pursuant to
action taken by their respective Boards of Directors, 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 consideration to be received by the Company's stockholders in the Merger.
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
FedEx, 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, UPRR or Sub, to:
Union Pacific Corporation
Martin Tower
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Eighth & Eaton Avenues
Bethlehem, Pennsylvania 18018
Attention: Carl W. von Bernuth, Esq.
Telephone No.: (610) 861-3200
Telecopy No.: (610) 861-3111
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:
Southern Pacific Rail Corporation
Southern Pacific Building
One Market Plaza
San Francisco, California 94105
Attention: Cannon Y. Harvey, Esq.
Telephone No.: (415) 541-1000
Telecopy No.: (415) 541-1881
with a copy to:
Joseph W. Morrisey, Jr., Esq.
Holme Roberts & Owen LLC
1700 Lincoln
Suite 4100
Denver, Colorado 80203
Telephone No.: (303) 861-7000
Telecopy No.: (303) 866-0200
and
Peter D. Lyons, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone No.: (212) 848-4000
Telecopy No.: (212) 848-7179
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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 August 3, 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.
Section 8.8 Entire Agreement; No Third Party Beneficiaries; Rights of
---------------------------------------------------------
Ownership. This Agreement, the Ancillary Agreements and the Confidentiality
---------
Agreement (including the exhibits hereto and the documents and the instruments
referred to herein and therein): (a) constitute the entire agreement and
supersede 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 5.6 with respect to the obligations of the Company
thereunder and Section 5.11, 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.
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Section 8.10 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to the remedy of specific performance of the terms hereof, in addition
to any other remedy at law or equity.
Section 8.11 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 8.12 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 Sub 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; provided,
--------
however, that no such assignment shall relieve Parent from any of its
-------
obligations hereunder. 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.
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IN WITNESS WHEREOF, Parent, UPRR, Sub 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: Drew Lewis
Title: Chairman and Chief
Executive Officer
UP ACQUISITION CORPORATION
By: /s/ L. White Matthews, III
----------------------------------
Name: L. White Matthews, III
Title: Executive Vice
President - Finance
UNION PACIFIC RAILROAD COMPANY
By: /s/ R.K. Davidson
----------------------------------
Name: R.K. Davidson
Title: Chairman and Chief
Executive Officer
SOUTHERN PACIFIC RAIL CORPORATION
By: /s/ Cannon Y. Harvey
----------------------------------
Name: Cannon Y. Harvey
Title: Executive Vice
President
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Sub's rights to extend and amend the Offer at any time in
its sole discretion (subject to the provisions of the Merger Agreement), Sub
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 Sub'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 (1) Sub does not receive prior to the expiration of the
Offer an informal written opinion in form and substance satisfactory to Sub from
the staff of the ICC, without the imposition of any conditions unacceptable to
Sub, that the use of a voting trust (the "Voting Trust") is consistent with the
policies of the ICC against unauthorized acquisitions of control of a regulated
carrier, or (2) Sub does not receive prior to the expiration of the Offer an
informal statement from the Premerger Notification Office either that (i) no
review of the Offer, the Merger and the transactions contemplated by the
Ancillary Agreements will be undertaken pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or (ii) the
transactions contemplated by the Offer, the Merger and the transactions
contemplated by the Ancillary Agreements are not subject to the HSR Act, or in
the absence of the receipt of such informal statement referred to in clause (i)
or (ii) above, any applicable waiting period under the HSR Act shall have
expired or been terminated prior to the expiration of the Offer, (3) at any time
on or after August 3, 1995 and prior to the acceptance for payment of Shares,
any of the following events shall occur or shall be determined by Sub to have
occurred:
(a) there shall be instituted, pending or threatened any action or
proceeding by any government or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the making of the
Offer, the acceptance for payment of or payment for some of or all the Shares by
Parent, UPRR or Sub or the consummation by Parent, UPRR or Sub of the Merger,
seeking to obtain material damages relating to the Merger Agreement, the
Ancillary Agreement or any
83
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of the transactions contemplated thereby or otherwise seeking to prohibit
directly or indirectly the transactions contemplated by the Offer or the Merger,
or challenging or seeking to make illegal the transactions contemplated by the
Ancillary Agreements or otherwise directly or indirectly to restrain, prohibit
or delay the transactions contemplated by the Ancillary Agreements, (ii) except
for the Voting Trust, seeking to restrain, prohibit or delay Parent's, UPRR's,
Sub's or any of their subsidiaries' ownership or operation of all or any
material portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or to compel Parent or any of its subsidiaries to dispose of
or hold separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, (iii) except for the Voting
Trust, seeking to impose or confirm material limitations on the ability of
Parent, UPRR, Sub or any of their subsidiaries or affiliates effectively to
exercise full rights of ownership of the Shares, including, without limitation,
the right to vote any Shares acquired or owned by Parent, UPRR, Sub or any of
their subsidiaries on all matters properly presented to the Company's
stockholders in accordance with the terms of the Parent Stockholder Agreement,
or (iv) seeking to require divestiture by Parent, or Sub or any of their
subsidiaries of any Shares; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger, by or before any court, government or
governmental authority or agency, domestic or foreign to the Offer or the
Merger, that, directly or indirectly, results in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading in
securities on any national securities exchange or in the over-the-counter
market, (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(iii) any limitation (whether or not mandatory) by any United States
governmental authority or agency on the extension of credit by banks or other
financial institutions or (iv) in the case of any of the situations described in
clauses (i) through (iii) inclusive, existing at the date of the commencement of
the Offer, a material acceleration or worsening thereof; or
(d) there shall have occurred any event, change or effect which has, or
would be reasonably likely to have, individually
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or in the aggregate (after taking into account the proceeds of insurance
coverage), a material adverse effect on the financial condition, businesses,
results of operations, assets, liabilities or properties of the Company and its
Subsidiaries taken as a whole as a result of or arising out of "force majeure"
(where "force majeure" shall mean any act of God (including, without limitation,
earthquake, hurricane, flood, tornado or fire)), accident, damage to or
destruction of facilities, properties or assets (tangible or intangible), war,
civil disturbance, national calamity (excluding an economic crisis in and of
itself) or acts of terrorism; or
(e) Parent, UPRR or Sub shall have otherwise learned that (i) any person,
entity or "group" (as that term is defined in Section 13(d)(3) of the Exchange
Act), other than Parent or its Subsidiaries, the Anschutz Holders, 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 25% 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 any option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 25% of any class or
series of capital stock of the Company (including the Shares) other than as
disclosed in a Schedule 13D on file with the SEC on August 3, 1995; or (ii) any
such person, entity or "group" (as that term is defined in Section 13(d)(3) of
the Exchange Act), other than Parent or its Subsidiaries, or the Anschutz
Holders, which, prior to August 3, 1995, had filed a Schedule 13D with the SEC,
shall have acquired or proposed to acquire beneficial ownership of additional
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, constituting 1% or more of any such class or series, or shall have
been granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of additional shares of any class or series of capital
stock of the Company (including the Shares) constituting 1% or more of any such
class or series; or
(f) a tender or exchange offer for some or all of the Shares shall have
been publicly proposed to be made or shall have been made by another person and
prior to the expiration of the Offer there shall not have been validly tendered
and not withdrawn at least 39,034,471 Shares; or
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(g) the Board of Directors of the Company shall have withdrawn, modified
or changed in a manner adverse to Parent or Sub its approval or recommendation
of the Merger Agreement, the Offer or the Merger or shall have recommended a
Takeover Proposal or other business combination, or the Company shall have
entered into an agreement in principle (or similar agreement) or definitive
agreement providing for a Takeover Proposal (as defined in the Merger Agreement)
or other business combination with a person or entity other than Parent, Sub or
their Subsidiaries (or the Board of Directors of the Company resolves to do any
of the foregoing); or
(h) the Company shall have breached or failed to observe or perform in any
material respect any of its covenants or agreements under the Merger Agreement,
or any of the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate both when made and, in the case
of the representations set forth in Sections 3.10(b) and 3.11 of the Merger
Agreement at any time prior to consummation of the Offer, as if made at and as
of such time, except where the failure of such representations and warranties to
be so true and correct (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
(i) the Merger Agreement shall have been terminated in accordance with its
terms; or
(j) any party to the Ancillary Agreements other than Sub and Parent shall
have breached or failed to perform any of its agreements under such agreements
or breached any of its representations and warranties in such agreements or any
such agreement shall not be valid, binding and enforceable, except for such
breaches or failures or failures to be valid, binding and enforceable that do
not materially and adversely affect the benefits expected to be received by
Parent and Sub under the Anschutz Stockholder Agreement, the Parent/Company
Registration Rights Agreement, the Merger Agreement and the Ancillary
Agreements; or
(k) Sub or Parent shall have breached or failed to perform any of its
agreements under the Parent Stockholders Agreement or breached any of its
representations and warranties in such agreement or such agreement shall not be
valid, binding and enforceable, except for such breaches or failures or failures
to
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be valid, binding and enforceable that do not materially and adversely affect
the benefits expected to be received by the Company under such agreement;
which, in the sole judgment of Parent or Sub in any such case, and regardless of
the circumstances (including any action or omission by Parent or Sub) giving
rise to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Sub
and may be asserted by Parent or Sub regardless of the circumstances giving rise
to any such condition or may be waived by Parent or Sub in whole or in part at
any time and from time to time in their reasonable discretion. The failure by
Parent or Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right; the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
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EXHIBIT 99(c)(2)
ANSCHUTZ SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of August 3, 1995, by and among Union Pacific
Corporation, a Utah corporation ("Parent"), UP Acquisition Corporation, a
Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser"), The Anschutz Corporation, a Kansas corporation ("TAC"), Anschutz
Foundation, a Colorado not-for-profit corporation (the "Foundation"), and Mr.
Philip F. Anschutz ("Mr. Anschutz" and, collectively with TAC and the
Foundation, the "Shareholders").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser, Union Pacific Railroad Company, a Utah corporation ("UPRR"), and
Southern Pacific Rail Corporation, a Delaware corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as such Agreement may hereafter be
amended from time to time, the "Merger Agreement"), pursuant to which Purchaser
has agreed, among other things, to commence a cash tender offer (the "Offer") to
purchase up to 39,034,471 shares of common stock, $.001 par value, of the
Company (the "Company Common Stock") and the Company will be merged with and
into UPRR (the "Merger");
WHEREAS, as of the date hereof, Shareholders are the record and
beneficial owner of, and have the sole right to vote and dispose of, an
aggregate of 49,643,008 shares (the "Shares") of Company Common Stock; and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and the Ancillary Agreements (as defined in the Merger
Agreement), and incurring the obligations set forth therein, including the Offer
and the Merger, Parent has required that Shareholders agree, and Shareholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement and the Ancillary Agreements, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings
<PAGE>
ascribed to them in the Merger Agreement. In addition, for purposes of this
Agreement:
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to any Shareholder,
"Affiliate" shall not include the Company or Parent and the Persons that
directly, or indirectly through one or more intermediaries, are controlled by
the Company or Parent, as the case may be.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all Affiliates of such
Person and all other Persons with whom such Person would constitute a "group"
within the meaning of Section 13(d) of the Exchange Act and the rules
promulgated thereunder.
(c) "Company Voting Securities" shall mean any securities of the
Company entitled, or which may be entitled, to vote generally in the election of
directors and any securities convertible into or exercisable or exchangeable for
such securities (whether or not subject to contingencies with respect to any
matter or proposal submitted for the vote or consent of shareholders of the
Company). For purposes of determining the percentage of Company Voting
Securities Beneficially Owned by a Person, securities Beneficially Owned by any
such Person that are convertible, exercisable or exchangeable for securities
entitled to vote shall be deemed to be converted, exercised or exchanged and
shall represent the number of securities of the Company entitled to vote into
which such convertible, exercisable or exchangeable securities (disregarding for
such purposes any restrictions on conversion, exercise or exchange) are then
convertible, exchangeable or exercisable.
(d) "Current Market Price" shall mean, as applied to any class of
stock on any date, the average of the daily "Closing Prices" (as hereinafter
defined) for
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the 20 consecutive trading days immediately prior to the date in question. The
term "Closing Price" on any day shall mean the last sales price, regular way,
per share of such stock on such day, or if no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if shares of
such stock are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of such stock are listed or admitted to trading, or, if the
shares of such stock are not listed or admitted to trading on any national
securities exchange on the NASDAQ National Market System or, if the shares of
such stock are not quoted on the NASDAQ National Market System, the average of
the high bid and low asked prices in the over-the-counter market as reported by
the National Association of Securities Dealers Inc.'s Automated Quotation
System.
(e) "including" shall mean including without
limitation.
(f) "Parent Voting Securities" shall mean any securities of Parent
entitled, or which may be entitled, to vote generally in the election of
directors and any securities convertible into or exercisable or exchangeable for
such securities (whether or not subject to contingencies with respect to any
matter or proposal submitted for the vote or consent of shareholders of Parent).
For purposes of this Agreement, Parent Voting Securities shall not include
Company Voting Securities. For purposes of determining the percentage of Parent
Voting Securities Beneficially Owned by a Person, securities Beneficially Owned
by any such Person that are convertible, exercisable or exchangeable for
securities entitled to vote shall be deemed to be converted, exercised or
exchanged and shall represent the number of securities of Parent entitled to
vote into which such convertible, exercisable or exchangeable securities
(disregarding for such purposes any restrictions on conversion, exercise or
exchange) are then convertible, exchangeable or exercisable.
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(g) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(h) "Transfer" shall mean, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
2. Tender of Shares; Pledge. (a) The parties agree that
------------------------
Shareholders may, but shall have no obligation to, tender (or cause the record
owner of the Shares to tender), pursuant to and in accordance with the terms of
the Offer, any or all of the Shares and any other shares of Company Common Stock
hereafter Beneficially Owned by Shareholders. Shareholders hereby acknowledge
and agree that Parent's and Purchaser's obligation to accept for payment and pay
for Shares in the Offer, including any Shares tendered by Shareholders, is
subject to the terms and conditions of the Offer. The parties agree that
Shareholders will, for all Shares tendered by Shareholders in the Offer and
accepted for payment and paid for by Purchaser, receive the same per Share
consideration paid to other shareholders who have tendered into the Offer.
(b) TAC has advised Parent that shares of Company Common Stock
Beneficially Owned by TAC are or may be pledged to Bank of America National
Trust and Savings Association or Citibank, N.A., respectively (collectively, the
"Banks") pursuant to pledge agreements (substantially in the forms reviewed by
Parent, collectively, the "Existing Pledge Agreements") to secure indebtedness
borrowed from the Banks. TAC represents and warrants that the Existing Pledge
Agreements do not or, before indebtedness borrowed therefrom is secured by any
such shares, will not prevent, limit or interfere with TAC's compliance with, or
performance of its obligations under, this Agreement, absent a default under the
applicable Existing Pledge Agreements. TAC represents and warrants that it is
not in default under the Existing Pledge Agreements. TAC has heretofore
delivered to Parent a letter from Bank of America National Trust and Savings
Association acknowledging this Agreement and agreeing in effect that,
notwithstanding any default under the Existing Pledge Agreement, TAC (and
Purchaser with respect to the proxy
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<PAGE>
described in Section 3(b) hereof) shall have the right to exercise all voting
rights with respect to the Company Common Stock pledged thereunder as set forth
in Section 3 of this Agreement and the proxy described in Section 3(b) hereof.
TAC shall deliver to Parent a similar letter from Citibank, N.A. before shares
of Company Common Stock shall be pledged under the applicable Existing Pledge
Agreement to secure any indebtedness. Shareholders may hereafter effect one or
more pledges of Company Voting Securities or Parent Voting Securities to be
received pursuant to the Merger or otherwise, or grants of security interests
therein, to one or more financial institutions (other than the Banks) that are
not Affiliates of any Shareholder (collectively, "Other Financial Institutions")
as security for the payment of bona fide indebtedness owed by one or more of the
Shareholders or their Affiliates to such Other Financial Institutions. Except
as set forth in the proviso below, neither the Bank nor any Other Financial
Institution which hereafter becomes a pledgee of Company Voting Securities or
Parent Voting Securities shall incur any obligations under this Agreement with
respect to such Company Voting Securities or such Parent Voting Securities, as
the case may be, or shall be restricted from exercising any right of enforcement
or foreclosure with respect to any related security interest or lien; provided,
--------
however, that it shall be a condition to any such pledge to any Other Financial
-------
Institution that, in the case of Company Voting Securities, the pledgee shall
agree that TAC (and Purchaser with respect to the proxy described in Section
3(b) hereof) shall have the right to exercise all voting rights with respect to
the Company Voting Securities pledged thereunder as set forth in Section 3 of
this Agreement and the proxy described in Section 3(b) hereof and, in the case
of Company Voting Securities or Parent Voting Securities, no such pledge shall
prevent, limit or interfere with Shareholders' compliance with, or performance
of their obligations under, this Agreement, absent a default under such pledge
agreement. The obligations of the Banks and the Other Financial Institutions
under or with respect to Section 3 hereof and such proxy shall terminate on the
earlier of (x) the consummation of the Merger and (y) the termination of the
Merger Agreement in accordance with Article VII thereof.
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<PAGE>
3. Voting of Company Common Stock; Irrevocable
-------------------------------------------
Proxy.
-----
(a) Shareholders hereby agree that during the period commencing on the
date hereof and continuing until the earlier of (x) the consummation of the
Merger and (y) six months following the termination of the Merger Agreement in
accordance with Section 7.1(c)(i) or 7.1(d)(ii) thereof, and (z) upon the
termination of the Merger Agreement in accordance with any provision of Section
7.1 other than Section 7.1(c)(i) or 7.1(d)(ii) (such period being referred to as
the "Voting Period"), at any meeting (whether annual or special, and whether or
not an adjourned or postponed meeting) of the Company's shareholders, however
called, or in connection with any written consent of the Company's shareholders,
subject to the absence of a preliminary or permanent injunction or other final
order by any United States federal court or state court barring such action,
Shareholders shall vote (or cause to be voted) the Shares and all other Company
Voting Securities that they Beneficially Own, whether owned on the date hereof
or hereafter acquired: (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval and adoption of the Merger
Agreement and the terms thereof and each of the other actions contemplated by
the Merger Agreement, this Agreement and the Ancillary Agreements and any
actions required in furtherance thereof and hereof; (ii) against any action or
agreement that would (A) result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or any of the Ancillary Agreements to which it is a party or of
Shareholders under this Agreement or (B) impede, interfere with, delay,
postpone, or adversely affect the Offer, the Merger or the transactions
contemplated by the Merger Agreement, this Agreement and the Ancillary
Agreements; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement, this Agreement and the
Ancillary Agreements): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or any
of its subsidiaries; (B) any sale, lease or transfer of a substantial portion of
the assets or business of the Company or its subsidiaries, or reorganization,
restructuring, recapitalization, special dividend, dissolution or liquidation of
the Company or its subsidiaries; or (C) any change in the present capi-
6
<PAGE>
talization of the Company including any proposal to sell a substantial equity
interest in the Company or any of its subsidiaries. Shareholders shall not
enter into any agreement, arrangement or understanding with any Person the
effect of which would be inconsistent or violative of the provisions and
agreements contained in this Section 3.
(b) At the request of Parent, each Shareholder, in furtherance of the
transactions contemplated hereby and by the Merger Agreement and the Ancillary
Agreements, and in order to secure the performance by Shareholders of their
duties under this Agreement, shall promptly execute and deliver to Purchaser an
irrevocable proxy, in the form of Exhibit A hereto. Shareholders acknowledge
and agree that the proxy executed and delivered pursuant to this Section 3(b)
shall be coupled with an interest, shall constitute, among other things, an
inducement for Parent to enter into this Agreement, the Merger Agreement and the
Ancillary Agreements to which it is a party, shall be irrevocable during the
Voting Period and shall not be terminated by operation of law upon the
occurrence of any event.
4. Restrictions on Transfer, Proxies; No Solicitation. (a)
--------------------------------------------------
Shareholders shall not, during the Voting Period, directly or indirectly: (i)
except as provided in Section 2 hereof, Transfer (including but not limited to
the Transfer of any securities of an Affiliate which is the record holder or
Beneficial Owner of Company Voting Securities if, as the result of such
Transfer, such Person would cease to be an Affiliate of a Shareholder) to any
Person any or all of the Company Voting Securities Beneficially Owned by
Shareholders, provided that a Shareholder may Transfer Company Voting Securities
--------
to any other Shareholder, (ii) except as provided in Sections 2(b) and 3(b) of
this Agreement, grant any proxies or powers of attorney, deposit any such
Company Voting Securities into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to the Company Voting Securities; or
(iii) take any action that would make any representation or warranty of
Shareholders contained herein untrue or incorrect or would result in a breach by
Shareholders of their obligations under this Agreement or a breach by the
Company of its obligations under the Merger Agreement or any of the Ancillary
Agreements to which it is a party. Notwithstanding any provisions of this
Agreement to the contrary, Shareholders may Transfer in the aggregate, fol-
7
<PAGE>
lowing the consummation of the Offer and prior to the Effective Time, a number
of Shares in the aggregate not greater than 10% of the Shares Beneficially Owned
by Shareholders immediately following the consummation of the Offer; and
provided, further, that any such Shares which are so Transferred by TAC, or
Transferred by the Foundation in an amount in excess of 1,558,254 Shares, prior
to the Company Special Meeting, shall continue to be subject to the voting
agreement in Section 3(a) hereof and the proxy referred to in Section 3(b)
hereof, and, as a condition to any such Transfer of Shares, Shareholders shall
enter into a written agreement with the transferee of such Shares, in form and
substance satisfactory to Parent, granting Shareholders the right to vote such
Shares in accordance with the Voting Agreement in Section 3(a) hereof and the
proxy referred to in Section 3(b) hereof.
(b) During the Voting Period, Shareholders shall not, and shall cause
their respective Affiliates and the respective officers, directors, employees,
partners, investment bankers, attorneys, accountants and other agents and
representatives of Shareholders and such Affiliates (such Affiliates, officers,
directors, employees, partners, investment bankers, attorneys, accountants,
agents and representatives of any Person are hereinafter collectively referred
to as the "Representatives" of such Person) not to, 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 in the Merger Agreement) of the Company or any
Affiliate or any inquiry with respect thereto, or (ii) in the event of an
unsolicited Takeover Proposal for the Company or any Affiliate of the Company,
engage in negotiations or discussions with, or provide any information or data
to, any Person (other than Parent, any of its Affiliates or representatives)
relating to any Takeover Proposal. Shareholders shall notify Parent and the
Purchaser orally and in writing of any such offers, proposals, or inquiries
relating to the purchase or acquisition by any Person of the Shares Beneficially
Owned by the Shareholders (including, without limitation, the terms and
conditions thereof and the identity of the Person making it), within 24 hours of
the receipt thereof; provided that Shareholders shall have no such notification
--------
obligation with respect to any proposal, offer or inquiry relating to any
Takeover Proposal (which Takeover Proposal notification shall be reported
8
<PAGE>
to the Board of Directors of the Company) other than to the extent that such
proposal contemplates treating Shareholders, as shareholders of the Company, in
any manner different than or inconsistent with the treatment of other
shareholders of the Company, whether as to terms, the entering into of separate
agreements or otherwise. Shareholders shall, and shall cause their
Representatives to, immediately cease and cause to be terminated all existing
activities, discussions and negotiations, if any, with any parties conducted
heretofore with respect to any Takeover Proposal relating to the Company, other
than discussions or negotiations with Parent and its Affiliates.
(c) During the Voting Period, Shareholders will not, and will cause
their Affiliates not to, directly or indirectly, make any public comment,
statement or communication, or take any action that would otherwise require any
public disclosure by Shareholders, Parent or any other Person, concerning the
Merger, the Offer, the Spin-off (as described in Section 5.4 of the Merger
Agreement) and the other transactions contemplated by the Merger Agreement, this
Agreement and the Ancillary Agreements, except for any disclosure (i) concerning
the status of Shareholders as parties to such agreements the terms thereof, and
their beneficial ownership of Shares required pursuant to Section 13d of the
Exchange Act or (ii) required in the Schedule 14D-9 or the Proxy
Statement/Prospectus.
(d) Notwithstanding the restrictions set forth in Section 4(b), any
Person who is a director or officer of the Company may exercise his fiduciary
duties in his capacity as a director or officer with respect to the Company, as
opposed to taking action with respect to the direct or indirect ownership of any
Shares, and no such exercise of fiduciary duties shall be deemed to be a breach
of, or a violation of the restrictions set forth in, Section 4(b) and none of
the Shareholders shall have any liability hereunder for any such exercise of
fiduciary duties by such Person in his capacity as a director and officer of the
Company. Nothing in this Section 4(d) shall relieve or affect any of the
Company's or its Affiliates' obligations under the Merger Agreement.
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<PAGE>
5. Standstill and Related Provisions.
---------------------------------
(a) Subject to the paragraph at the end of this Subsection 5(a),
Shareholders agree that for a period commencing on the date hereof and
terminating on the seventh anniversary of the Effective Time or, if earlier, the
termination of this Agreement in accordance with the terms of Section 13 hereof
(the "Standstill Period"), without the prior written consent of the Board of
Directors of Parent (the "Board") specifically expressed in a resolution adopted
by a majority of the directors of Parent, Shareholders will not, and
Shareholders will cause each of their respective Affiliates not to, directly or
indirectly, alone or in concert with others:
(i) acquire, offer or propose to acquire, or agree to acquire
(except, in any case, by way of (A) following consummation of the Merger, stock
dividends or other distributions or rights offerings made available to holders
of any shares of Parent Common Stock generally, share-splits, reclassifications,
recapitalizations, reorganizations and any other similar action taken by Parent,
(B) following consummation of the Merger, the conversion, exercise or exchange
of Parent Voting Securities in accordance with the terms thereof and (C) the
issuance and delivery of Parent Voting Securities pursuant to the Merger
Agreement, provided, that any such securities shall be subject to the provisions
hereof), directly or indirectly, whether by purchase, tender or exchange offer,
through the acquisition of control of another Person, by joining a partnership,
limited partnership, syndicate or other "group" (within the meaning of Section
13(d)(3) of the Exchange Act) (other than groups consisting solely of
Shareholders and their Affiliates, all of which are or, prior to the formation
of such group, become, parties to this Agreement) or otherwise, any Parent
Voting Securities; provided, however, that if Parent shall issue additional
-------- -------
Parent Voting Securities following consummation of the Merger, Shareholders and
their Affiliates may purchase or acquire additional Parent Voting Securities to
bring their Beneficial Ownership up to the greater of 5.5% and the percentage of
outstanding Parent Voting Securities Beneficially Owned by the Shareholders
immediately prior to such issuance by Parent; provided, further, without
-------- -------
limiting the immediately preceding proviso, if as a result of Transfers of
Parent Voting Securities, Shareholders Beneficially Own less than 5.5% of the
then out-
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<PAGE>
standing shares of Parent Voting Securities, Shareholders may purchase or
acquire additional Parent Voting Securities to bring their Beneficial Ownership
up to, but not in excess of, 5.5% of the then outstanding shares of Parent
Voting Securities. In addition, in the event that a Shareholder or an Affiliate
thereof inadvertently and without knowledge (an "Inadvertent Acquisition")
indirectly acquires Beneficial Ownership of not more than one-quarter of one
percent of the Parent Voting Securities in excess of the amount permitted to be
owned by the Shareholders pursuant to this Section 5(a) pursuant to a
transaction by which a Person (that was not then an Affiliate of a Shareholder
before the consummation of such transaction) owning Parent Voting Securities
becomes an Affiliate of such Shareholder, then all Parent Voting Securities so
acquired shall thereupon become subject to this Agreement and such Shareholder
shall be deemed not to have breached this Agreement provided that such
Shareholder, within 120 days thereafter, causes a number of such Parent Voting
Securities in excess of the amount permitted to be so owned (or, at the election
of such Shareholder, an equal number of the other Parent Voting Securities that
are Beneficially Owned by a Shareholder) to be Transferred, in a transaction
subject to Section 6 hereof, to a transferee that is not a Shareholder, an
Affiliate thereof or a member of a "group" in which a Shareholder or an
Affiliate is included (or, if Parent or its assignee shall exercise any purchase
rights under Section 6(b) hereof, to Parent or its assignee);
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules of the Securities and
Exchange Commission as in effect on the date hereof) of proxies or consents
(whether or not relating to the election or removal of directors), seek to
advise, encourage or influence any Person with respect to the voting of any
Parent Voting Securities, initiate, propose or otherwise "solicit" (as such term
is used in the proxy rules of the Securities and Exchange Commission as in
effect on the date hereof) shareholders of Parent for the approval of
shareholder proposals, whether made pursuant to Rule 14a-8 of the Exchange Act
or otherwise, or induce or attempt to induce any other Person to initiate any
such shareholder proposal or otherwise communicate with the Parent's
shareholders or others pursuant to Rule 14a-1(2)(iv) under the Exchange Act or
otherwise;
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(iii) seek, propose, or make any statement with respect to, any
merger, consolidation, business combination, tender or exchange offer, sale or
purchase of assets, sale or purchase of securities, dissolution, liquidation,
reorganization, restructuring, recapitalization, change in capitalization,
change in corporate structure or business or similar transaction involving
Parent or its subsidiaries (including Spinco)(any of the foregoing being
referred to herein as a "Specified Parent Transaction"); provided that the
--------
foregoing shall not prevent (A) voting in accordance with Section 5(c) hereof
(but shall prevent any public comment, statement or communication, and any
action that would otherwise require any public disclosure by Shareholders,
Parent or any other Person, concerning such voting) or (B) the Shareholder
Designee (as defined in Section 7 hereof) from exercising his fiduciary duties
in his capacity as a director by participating in any Board deliberations or
vote of the Board of Directors of Parent with respect to a Specified Parent
Transaction;
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Parent
Voting Securities, other than groups consisting solely of Shareholders and their
Affiliates;
(v) deposit any Parent Voting Securities in any voting trust or
subject any Parent Voting Securities to any arrangement or agreement with
respect to the voting of any Parent Voting Securities except as set forth in
this Agreement;
(vi) call or seek to have called any meeting of the stockholders of
Parent or execute any written consent with respect to Parent or Parent Voting
Securities; provided that the foregoing shall not prevent the Shareholder
--------
Designee from exercising his fiduciary duties in his capacity as a director by
participating in any Board deliberations or vote of the Board of Directors of
Parent with respect to the calling of any annual meeting of shareholders of
Parent;
(vii) otherwise act, alone or in concert with others, to control or
seek to control or influence or seek to influence the management, Board of
Directors or policies of Parent (except to the extent the actions by a
Shareholder Designee relating to Parent's Board of Directors in the exercise of
his fiduciary
12
<PAGE>
duties in his capacity as a director may be viewed as influencing or seeking to
influence the management, Board of Directors or policies of Parent);
(viii) seek, alone or in concert with others, representation on the
Board of Directors of Parent (except as provided in Section 7 of this
Agreement), or seek the removal of any member of such Board or a change in the
composition or size of such Board;
(ix) make any publicly disclosed proposal, comment, statement or
communication (including, without limitation, any request to amend, waive or
terminate any provision of this Agreement other than Section 5(a)), or make any
proposal, comment, statement or communication (including, without limitation,
any request to amend, waive or terminate any provision of this Agreement other
than Section 5(a)) in a manner that would require any public disclosure by
Shareholders, Parent or any other Person, or enter into any discussion with any
Person (other than directors and officers of Parent), regarding any of the
foregoing;
(x) make or disclose any request to amend, waive
or terminate any provision of Section 5(a) of this Agreement; or
(xi) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or oral) with, or
advise, finance, assist or encourage, any other Person in connection with any of
the foregoing, or take any action inconsistent with the foregoing, or make any
investment in or enter into any arrangement with, any other Person that engages,
or offers or proposes to engage, in any of the foregoing.
The restrictions set forth in this Section 5(a) shall not prevent Shareholders
from (A) performing their obligations and exercising their rights under this
Agreement, including, without limitation, (w) Transferring any Company Voting
Securities or Parent Voting Securities in accordance with Sections 2(b), 4 and 6
hereof, (x) selecting the Shareholder Designee, (y) serving in the positions
described in or resigning from such positions as described in Section 7(a)
hereof, and (z) voting in accordance with Sections 3(a) and 5(b) hereof and
granting a proxy to Purchaser in accordance with Section 3(b) hereof; (B)
communicating in a non-public manner with any
13
<PAGE>
other Shareholder or their Affiliates; and (C) complying with the requirements
of Sections 13(d) and 16(a) of the Exchange Act and the rules and regulations
thereunder, in each case, as from time to time in effect, or any successor
provisions or rules with respect thereto, or any other applicable law, rule,
regulation, judgment, decree, ruling, order, award, injunction, or other
official action of any agency, bureau, commission, court, department, official,
political subdivision, tribunal or other instrumentality of any government
(whether federal, state, county or local, domestic or foreign).
(b) Shareholders agree that during the period commencing on the date
hereof and continuing until the earlier of (x) the consummation of the Merger
and (y) the termination of the Merger Agreement, Shareholders will not, and
Shareholders will cause each of their respective Affiliates not to, directly or
indirectly, alone or in concert with others, acquire, offer or propose to
acquire, or agree to acquire, whether by purchase, tender or exchange offer,
though the acquisition of control of another Person, by joining a partnership,
limited partnership, syndicate or other "group" or otherwise, any Company Voting
Securities (except by way of stock dividends or other distributions or rights
offerings made available to holders of any shares of Company Common Stock
generally, stock-splits, reclassifications, recapitalizations, reorganizations
and any other similar action taken by Company).
(c) Subject to the receipt of proper notice and the absence of a
preliminary or permanent injunction or other final order by any United States
federal court or state court barring such action, Shareholders agree that during
the Standstill Period Shareholders will, and will cause their Affiliates to, (i)
be present, in person or represented by proxy, at all annual and special
meetings of shareholders of Parent so that all Parent Common Stock Beneficially
Owned by Shareholders and their Affiliates and then entitled to vote may be
counted for the purposes of determining the presence of a quorum at such
meetings, and (ii) vote in accordance with the recommendation of the Board of
Directors of Parent in the election of directors and as directed by the Persons
acting as Proxies in respect of proxies solicited by the Board of Directors of
Parent (including the manner in which such Parent Common Stock shall be
cumulated). On all other matters presented for a vote of shareholders of
Parent, Shareholders may vote in their discretion.
14
<PAGE>
6. Limitations on Disposition. (a) Shareholders agree that during
--------------------------
the Standstill Period they will not, and will cause their Affiliates not to,
directly or indirectly, without the prior written consent of the Board of
Directors of Parent specifically expressed in a resolution adopted by a majority
of the directors of Parent, Transfer to any Person any Parent Voting Securities
(including but not limited to the Transfer of any securities of an Affiliate
which is the record holder or Beneficial Owner of Parent Voting Securities, if
(as the result of such Transfer, such Person would cease to be an Affiliate of a
Shareholder), if, to the knowledge of the Shareholders or any of their
Affiliates, after due inquiry which is reasonable in the circumstances (and
which shall include, with respect to the Transfer of 1% or more of the Parent
Voting Securities then outstanding in one transaction, or a series of related
transactions, specific inquiry which respect to the identity of the acquiror of
such Parent Voting Securities and the number of Parent Voting Securities that,
immediately following such transaction or transactions, would be Beneficially
Owned by such acquiror, together with its Affiliates and any members of a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) of which
such acquiror is a member), immediately following such transaction the acquiror
of such Parent Voting Securities, together with its Affiliates and any members
of such a group, would Beneficially Own in the aggregate 4% or more of the
Parent Voting Securities then outstanding; provided that, without the prior
--------
written consent of the Board of Directors of Parent, (i) Shareholders and their
Affiliates may Transfer any number of Parent Voting Securities to any other
Shareholder, any Affiliate of a Shareholder or to any heirs, distributees,
guardians, administrators, executors, legal representatives or similar
successors in interest of any Shareholder, provided that (A) such transferee, if
--------
not then a Shareholder, shall become a party to this Agreement and agree in
writing to perform and comply with all of the obligations of such transferor
Shareholder under this Agreement, and thereupon such transferee shall be deemed
to be a Shareholder party hereto for all purposes of this Agreement, and (B) if
the transferee is not prior thereto a Shareholder, the transferor shall remain
liable for such transferee's performance of and compliance with the obligations
of the transferor under this Agreement, (ii) Shareholders and their Affiliates
may Transfer Parent Voting Securities in a tender offer, merger, or other
similar business combination transaction approved by the Board of Directors of
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Parent, and (iii) Shareholders may pledge their Parent Voting Securities as
provided in Section 2(b) hereof and the pledgee may Transfer such Parent Voting
Securities in connection with the enforcement or foreclosure of any related
security interest or lien following a default.
(b) During the Standstill Period, if to the knowledge of the
Shareholders after making due inquiry which is reasonable under the
circumstances, immediately following the Transfer of any Parent Voting
Securities the acquiror thereof, together with its Affiliates and any members of
a "group" (within the meaning of Section 13(d)(3) of the Exchange Act), would
Beneficially Own in the aggregate 2% or more of the outstanding Parent Voting
Securities (a "2% Sale"), Shareholders shall, prior to effecting any such
Transfer, offer Parent a right of first refusal to purchase the shares proposed
to be Transferred on the following terms. Shareholders shall provide Parent
with written notice (the "2% Sale Notice") of any proposed 2% Sale, which 2%
Sale Notice shall contain the identity of the purchaser, the number of shares of
Parent Voting Securities proposed to be Transferred to such purchaser, the
purchase price for such shares and the form of consideration payable for such
shares. The 2% Sale Notice shall also contain an irrevocable offer to sell the
shares subject to such 2% Sale Notice to Parent for cash at a price equal to the
price contained in such 2% Sale Notice. Parent shall have the right and option,
by written notice delivered to such Shareholder (the "Purchase Notice") within
15 days of receipt of the 2% Sale Notice, to accept such offer as to all, but
not less than all, of the Parent Voting Securities subject to such 2% Sale
Notice. Parent shall have the right to assign to any Person such right to
purchase the shares subject to the 2% Sale Notice. In the event Parent (or its
assignee) elects to purchase the shares subject to the 2% Sale Notice, the
closing of the purchase of the Parent Voting Securities shall occur at the
principal office of Parent (or its assignee) on or before the 30th day following
such Shareholder's receipt of the Purchase Notice. In the event Parent does not
elect to purchase the shares subject to the 2% Sale Notice, such Shareholder
shall be free, for a period of 30 days following the receipt of notice from
Parent of its election not to purchase such shares or, in the absence of any
such notice, for a period of 30 days following the 15th day after receipt by
Parent of the 2% Sale Notice, to sell the shares subject to the 2% Sale Notice
in accordance with the terms of, and to the person identified in, the 2% Sale
Notice. If
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<PAGE>
such sale is not effected within such 30 day period such shares shall remain
subject to the provisions of this Agreement. Notwithstanding the foregoing, the
right of first refusal set forth in this Subsection (b) shall not apply to the
sale by Shareholders of Parent Voting Securities (i) made in an underwritten
public offering pursuant to an effective registration statement under the
Securities Act, or (ii) made in a transaction permitted pursuant to, and made
in compliance with, clauses (i) or (iii) of the proviso to Section 6(a) hereof,
or (iii) made in a tender offer, merger or other similar business combination
transaction approved by the Board of Directors of Parent. Any proposed sale by
Shareholders of Parent Voting Securities shall be subject to the restrictions on
sales to an acquiror which would Beneficially Own 4% or more of the outstanding
Parent Voting Securities, set forth in the proviso in Section 6(a) hereof,
whether or not Parent exercises its right of first refusal and consummates the
purchase of Parent Voting Securities. If Parent (or its assignee) exercises its
right to purchase any Parent Voting Securities but fails to complete the
purchase thereof for any reason other than the failure of such Shareholder to
perform its obligations hereunder with respect to such purchase, then, on the
30th day following such Shareholder's receipt of the Purchase Notice, such
Parent Voting Securities shall cease to be subject to Sections 5(c), 6 and 12
hereof for any purpose whatsoever. If the purchase price described in any 2%
Sale Notice is not solely made up of cash or marketable securities, the 2% Sale
Notice shall include a good faith estimate of the cash equivalent of such other
consideration, and the consideration payable by Parent or its assignee (if
Parent elects to purchase (or to have assignee purchase) the Parent Voting
Securities described in the 2% Sale Notice) in place of such other consideration
shall be cash equal to the amount of such estimate; provided, however, that if
-------- -------
Parent in good faith disagrees with such estimate and states a different good
faith estimate in the Purchase Notice, and if Parent and such Shareholder cannot
agree on the cash equivalent of such other (i.e., other than cash or marketable
----
securities) consideration, such cash equivalent shall be determined by a
reputable investment banking firm without material connections with either
party. Such investment banking firm shall be selected by both parties or, if
they shall be unable to agree, by an arbitrator appointed by the American
Arbitration Association. The fees and expenses of any such investment banking
firm and/or arbitrator shall be shared equally by Parent and such Shareholder,
17
<PAGE>
unless otherwise determined by such firm or arbitrator. In the event of such
differing estimates by Parent and such Shareholder, periods of time which would
otherwise run under this Section 6(b) from the date of such Shareholder's
receipt of the Purchase Notice shall run instead from the date on which the
parties agree on such cash equivalent or, in the absence of such agreement, the
date on which such cash equivalent is determined by such investment banking
firm. If the purchase price described in any 2% Sale Notice shall include
marketable securities, the purchase price payable by Parent (or its designee)
shall include, to the extent marketable securities were included as a portion of
the consideration provided for in the 2% Sale Notice, an amount in cash
determined by reference to the Current Market Price of such securities on the
day the Purchase Notice is received by such Shareholder.
(c) Not later than the tenth day following the end of any calendar
month during the Standstill Period in which one or more dispositions of Parent
Voting Securities by Shareholders or any of their Affiliates shall have
occurred, the relevant Shareholder shall give written notice to Parent of all
such dispositions. Such notice shall state the date upon which each such
disposition was effected, the price and other terms of each such disposition,
the number and type of Parent Voting Securities involved in each such
disposition, the means by which each such disposition was effected and, to the
extent known, the identity of the Persons acquiring such Parent Voting
Securities.
(d) In connection with any proposed privately negotiated sale by any
Shareholders of Parent Voting Securities representing in excess of 3.9% of the
then outstanding shares of Parent Voting Securities, Parent will cooperate with
and permit the proposed purchaser to conduct a due diligence review reasonable
under the circumstances of Parent and its Subsidiaries and their respective
business and operations, including, without limitation, reasonable access during
normal business hours to their executive officers, and, if reasonable under the
circumstances, their properties subject to execution by such purchaser of a
customary confidentiality agreement; provided that Parent shall not be required
to permit more than two such due diligence reviews in any twelve-month period.
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7. Parent Covenants. (a) On or prior to the Effective Time, the
----------------
Board of Directors of Parent will take all action necessary to elect Mr.
Anschutz, or another individual selected by TAC and reasonably acceptable to the
Board of Directors of Parent (such director being referred to as the
"Shareholder Designee") as a director of Parent's Board of Directors and to
appoint Mr. Anschutz, but not any other Shareholder Designee, as Vice Chairman
of the Board of Directors as of the Effective Time. Subject to the following
sentence of this Section 7, after the Effective Time and during the Standstill
Period, Parent shall include the Shareholder Designee in the Board of Directors'
slate of nominees for election as directors at Parent's annual meeting of
shareholders and shall recommend that the Shareholder Designee be elected as a
director of Parent. The Shareholder Designee, if requested by Parent, shall
resign from Parent's Board of Directors (a) effective not later than the next
annual meeting of shareholders of Parent, if Shareholders and their Affiliates
Beneficially Own less than 4% of the Parent Voting Securities then outstanding,
provided, however that this Agreement shall continue in full force and effect
-------- -------
until the date of such resignation, or (b) immediately if the Shareholders
violate or breach any of the material terms or provisions of this Agreement.
Notwithstanding any resignation pursuant to clause (b) of the preceding
sentence, all of the provisions of this Agreement other than this Section 7
shall continue in full force and effect. The duties and responsibilities of the
Vice Chairman shall be as assigned by the Board of Directors of Parent or by the
Chairman of the Board, and the Vice Chairman shall receive no additional
compensation for serving in such position. So long as a Shareholder Designee
serves as a member of the Board of Directors of Parent, Parent agrees that the
Shareholder Designee shall serve (subject to the applicable requirements of the
New York Stock Exchange or any other security exchange on which the Parent
Common Stock is listed, or if not so listed, under the rules or regulations of
the National Association of Securities Dealers) as a member of the Executive,
Finance and Corporate Development, and Compensation, Benefits and Nominating
Committees of the Board. Except as otherwise provided in this Section 7, upon
the termination of this Agreement, if so requested by Parent, the Shareholder
Designee shall resign as a director of the Parent's Board of Directors.
19
<PAGE>
(b) In the event that any Shareholder Designee shall cease to be a
member of the Board of Directors by reason of death, disability or resignation
(other than resignations required pursuant to the provisions of this Section 7),
Parent shall replace such Shareholder Designee with another Shareholder Designee
at the next meeting of the Board of Directors.
(c) The Shareholder Designee, upon nomination or appointment as a
director of Parent, shall agree in writing to comply with the obligations of the
Shareholders under Section 5(a) hereof and the obligation of such Shareholder
Designee under this Section 7(c).
(d) Without the prior written consent of Shareholders, Parent shall
not take or recommend to its shareholders any action which would impose
limitations, not imposed on other Shareholders of Parent, on the enjoyment by
any of Shareholders and their Affiliates of the legal rights generally enjoyed
by shareholders of Parent, other than those imposed by the terms of this
Agreement, the Merger Agreement and the Ancillary Agreements; provided, however,
that the foregoing shall not prevent Parent from implementing or adopting a
Shareholder Rights Plan or issuing a similar security which has a "trigger"
threshold of not less than the greater of 10% of the outstanding shares of
Parent Common Stock or the amount then Beneficially Owned by Shareholders not in
violation of this Agreement.
8. Additional Limitation on Dispositions. (a) Notwithstanding any
-------------------------------------
other provision of this Agreement, TAC agrees that it will not, and will cause
its Affiliates not to, for a period of two years commencing as of the Effective
Time (the "Reorganization Continuity Period"), enter into any transaction or
arrangement to the extent such transaction or arrangement (combined with any
other transactions or arrangements entered into by TAC or its Affiliates) would
result in TAC having entered into an Economic Disposition with respect to an
amount of Parent Voting Securities received by TAC in the Merger that exceeds
the Threshold Amount unless the condition described in Section 8(b) is
satisfied, regardless of whether such transaction or arrangement would be
treated as a sale, exchange or other taxable disposition of such Parent Voting
Securities for United States federal income tax purposes. For purposes of this
Section 8, the "Threshold Amount" equals the number of Parent Voting Securities
received by TAC in the Merger multiplied by
20
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the following fraction: the numerator is 20 per cent and the denominator is (A)
the percentage of outstanding Company Common Stock currently held by TAC minus
(B) the percentage of outstanding Company Common Stock that TAC exchanges for
cash in the Offer or the Merger. For purposes of this Section 8, an "Economic
Disposition" of shares of Parent Voting Securities shall mean (i) any
transaction or arrangement (including an outright sale) that would be treated as
a sale, exchange or other taxable disposition for United States federal income
tax purposes of shares of Parent Voting Securities received in the Merger and
(ii) any transaction or arrangement (or combination of transactions or
arrangements) entered into by or on behalf of TAC or its Affiliates that reduces
the economic benefits and burdens to TAC of owning shares of Parent Voting
Securities (including any swap transaction, notional principal contract or the
acquisition or grant of any calls, puts or other options, whether or not cash
settlement is permitted or required) to such an extent that such transaction or
arrangement causes TAC not to satisfy the "continuity of proprietary interest"
requirement under Section 368 of the Internal Revenue Code of 1986, as amended
(the "Code") with respect to such shares.
(b) During the Reorganization Continuity Period, at least thirty (30)
business days prior to entering into any proposed transaction or arrangement
(combined with any other transactions or arrangements entered into by TAC)
relating to or involving any shares of Parent Voting Securities in excess of the
Threshold Amount (a "Proposed Transaction"), TAC must provide at its expense a
written opinion of nationally recognized tax counsel, in form and substance
reasonably acceptable to Parent, that the Proposed Transaction will not
adversely affect the treatment of the Merger as a reorganization within the
meaning of Section 368 of the Code.
(c) The bona fide pledge of any Parent Voting Securities, or the bona
fide grant of a security interest therein, to secure the payment of bona fide
indebtedness owed by TAC or any of its Affiliates, and the sale, exchange or
disposition, or Economic Disposition, at the direction of the pledgee or holder
of a security interest, of any of such Parent Voting Securities in connection
with the exercise of any right of enforcement or foreclosure in respect thereof,
shall not be subject to or prevented by this Section 8.
21
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(d) The Threshold Amount and the number of shares of Parent Voting
Securities that are or have been subject to an Economic Disposition shall be
adjusted, as of any date of determination, to give effect to any stock
dividends, share-splits, reclassifications, recapitalizations, reorganizations
or other similar actions that shall have been taken by Parent as of such date
with respect to the Parent Voting Securities.
9. Representations and Warranties of Shareholders. Shareholders
----------------------------------------------
hereby represent and warrant to Parent and Purchaser as follows:
(a) TAC is a corporation duly organized and validly existing under
the laws of the State of Kansas and is in good standing under the laws of the
State of Kansas. The Foundation is a not-for-profit corporation duly organized
and existing under the laws of the State of Colorado. Shareholders have all
necessary power and authority to execute and deliver this Agreement and perform
their obligations hereunder. The execution and delivery by TAC and the
Foundation of this Agreement and the performance by TAC and the Foundation of
their obligations hereunder have been duly and validly authorized by the Board
of Directors of TAC and the Foundation, and by the sole stockholder of TAC, and
no other proceedings or actions on the part of any Shareholder are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Shareholders and constitutes the valid and binding agreement of Shareholders,
enforceable against Shareholders in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights 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.
(c) Each Shareholder is the sole record holder and Beneficial Owner
of the number of Share listed opposite such Shareholder's name on the signature
page hereof, and , except as provided in Section 2(b) hereof and to the extent
created by either or both of the Corporate Matters Agreement (the "Corporate
Matters Agreement") and
22
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the Shareholder Agreement, each dated as of August 1, 1993 and among Company,
MSLEF and certain other parties, TAC and certain other parties thereto, each of
which the Shareholders agree to terminate as of the Effective Time, has good and
marketable title to all of such Shares, free and clear of all liens, claims,
options, proxies, voting agreements, security interests, charges and
encumbrances. The Shares constitute all of the capital stock of the Company
Beneficially Owned by Shareholders, and except for the Shares, neither
Shareholders nor any of their Affiliates Beneficially Owns or has any right to
acquire (whether currently, upon lapse of time, following the satisfaction of
any conditions, upon the occurrence of any event or any combination of the
foregoing) any Company Voting Securities. Except as provided in Section 2(b)
hereof and in this Section 9(c), each Shareholder has sole power to vote and to
dispose of the Shares Beneficially Owned by such Shareholder, and sole power to
issue instructions with respect to such Shares to the extent appropriate in
respect of the matters set forth in this Agreement, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of such Shares, with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement. Shareholders do not beneficially own or
have any right to acquire (whether currently, upon lapse of time, following the
satisfaction of any conditions, upon the occurrence of any event or any
combination of the foregoing), except pursuant to the Merger, any Parent Voting
Securities.
(d) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Hart-Scott Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), with respect to the
acquisition by Shareholders of Parent Voting Securities in the Merger, the
Securities Exchange Act of 1934, and the ICA, in each case as amended, (i) no
filing with, and no permit, authorization, consent or approval of, any state or
federal governmental body or authority is necessary for the execution of this
Agreement by Shareholders and the consummation by Shareholders of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by Shareholders, the consummation by Shareholders of the
transactions contemplated hereby or compliance by Shareholders with any of the
provisions hereof shall (A) conflict with or result in any breach of the
certificate or incorpora-
23
<PAGE>
tion or by-laws or other organizational documents of TAC or the Foundation, (B)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which any Shareholder is a
party or by which any Shareholder or any of its properties or assets (including
the Shares) may be bound, or (C) violate any order, writ, injunction, decree,
judgment, statute, rule or regulation applicable to any Shareholder or any of
its properties or assets. To the best knowledge of Shareholders, no litigation
is pending or threatened involving Shareholders or the Company relating in any
way to this Agreement, the Merger Agreement, the Ancillary Agreements, or any
transactions contemplated hereby or thereby.
(e) Shareholders understand and acknowledge that Parent is entering
into, and causing the Purchaser to enter into, the Merger Agreement and the
Ancillary Agreements, and is incurring the obligations set forth therein, in
reliance upon Shareholders' execution and delivery of this Agreement.
(f) Except for Morgan Stanley & Co. Incorporated, no broker,
investment banker, financial adviser or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Shareholders.
(g) Shareholders have no plan or intention, and as of the Effective
Time will have no plan or intention to sell, exchange or otherwise dispose of
any of the shares of Parent Voting Securities that they receive in the Merger.
(h) Shareholders have no plan or intention and, provided the IRS
requests such a representation, will represent (in the form requested by Parent)
that as of the effective date of the distribution of the shares of Spinco
capital stock (the "Spin-off") they will have no plan or intention, to sell,
exchange, transfer by
24
<PAGE>
gift, or otherwise dispose of any of the shares of Spinco capital stock they
receive in the Spin-off.
(i) Shareholders will make such representations as may reasonably be
requested by Parent (provided such representations are true at the time given),
and in such form as may reasonably be requested by Parent, for use in connection
with the request by Parent that the Internal Revenue Service issue a private
letter ruling with respect to the tax consequences of the Spin-off.
10. Representations and Warranties of Parent and Purchaser. Parent
------------------------------------------------------
and Purchaser hereby represent and warrant to Shareholders as follows:
(a) Parent is a corporation duly organized and validly existing under
the laws of the State of Utah, and Purchaser is a corporation duly organized and
validly existing under the laws of the State of Delaware and each of them is in
good standing under the laws of the state of its incorporation. Parent and
Purchaser have all necessary corporate power and authority to execute and
deliver this Agreement and perform their respective obligations hereunder. The
execution and delivery by Parent and Purchaser of this Agreement and the
performance by Parent and Purchaser of their respective obligations hereunder
have been duly and validly authorized by the Board of Directors of each of
Parent and Purchaser and no other corporate proceedings on the part of Parent or
Purchaser are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Parent and Purchaser and constitutes a valid and binding agreement each of
Parent and Purchaser, enforceable against each of them in accordance with its
terms except to the extent (i) such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights 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.
(c) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the ICA, the HSR Act,
with respect to the sale of Parent Voting Securities to Share-
25
<PAGE>
holders in the Merger, and the ICA (i) no filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by Parent or
Purchaser and the consummation by Parent or Purchaser of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by Parent or Purchaser, the consummation by Parent or Purchaser of the
transactions contemplated hereby or compliance by Parent or Purchaser with any
of the provisions hereof shall (A) conflict with or result in any breach of the
certificate of incorporation or by-laws of Parent or Purchaser, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of their respective properties or assets may
be bound, or (C) violate any order, writ, injunction, decree, judgment, statute,
rule or regulation applicable to Parent or Purchaser or any of their respective
properties or assets. To the best knowledge of Parent, no litigation is pending
or threatened involving Parent or Purchaser relating in any way to this
Agreement, the Merger Agreement, the Ancillary Agreements, or any transactions
contemplated hereby or thereby.
(d) Except for CS First Boston Corporation, no broker, investment
banker, financial adviser or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Purchaser.
11. Further Assurances. (a) From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
(b) Shareholders agree that, prior to the consummation of the Offer,
they will enter into an amend-
26
<PAGE>
ment to the existing Registration Rights Agreement, forming Exhibit A to the
Corporate Matters Agreement, by and among the Company and the parties named
therein, which amendment shall be reasonably satisfactory to Parent, in order to
permit Parent to freely exercise its "piggyback" registration rights in
accordance with terms and provisions of the Registration Rights Agreement being
entered into by the Company, Parent and Purchaser in connection with the
execution of the Merger Agreement.
12. Stop Transfer; Legend.
---------------------
(a) Shareholders agree with and covenant to Parent that Shareholders
shall not request that the Company or Parent, as the case may be, register the
transfer (book-entry or otherwise) of any certificated or uncertificated
interest representing any of the securities of the Company or of Parent, as the
case may be, unless such transfer is made in compliance with this Agreement.
(b) During the Standstill Period, Shareholders shall promptly
surrender to the Company all certificates representing the Shares, and other
Company Voting Securities acquired by Shareholders or their Affiliates after the
date hereof, and the Company shall place the following legend on such
certificates:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST 3, 1995 BY AND AMONG UP
ACQUISITION CORPORATION, UNION PACIFIC CORPORATION AND PHILIP F. ANSCHUTZ,
THE ANSCHUTZ CORPORATION, ANSCHUTZ FOUNDATION WHICH, AMONG OTHER THINGS,
RESTRICTS THE TRANSFER AND VOTING THEREOF."
(c) During the Standstill Period, each certificate representing
Parent Voting Securities the Beneficial Ownership of which is acquired by any
Shareholder shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
AGREEMENTS BETWEEN PHILIP F. ANSCHUTZ, THE ANSCHUTZ CORPORATION, ANSCHUTZ
FOUNDATION AND UNION PACIFIC CORPORATION, COPIES OF WHICH MAY BE OBTAINED
FROM UNION PACIFIC CORPORATION WHICH, AMONG OTHER THINGS, RESTRICT THE
TRANSFER AND VOTING THEREOF."
27
<PAGE>
(d) In connection with any Transfer of Company Voting Securities or
Parent Voting Securities to any Person, other than a Shareholder, an Affiliate
of a Shareholder, any heir, distributee, guardian, administrator, executor,
legal representative or similar successor in interest, or a member of a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) in which a
Shareholder or an Affiliate thereof or such other Person is included, pursuant
to, and made in compliance with, Section 6 hereof, and from and after the
termination of the Standstill Period, the Company may and Parent shall, upon
surrender thereto of any certificates representing Company Voting Securities or
Parent Voting Securities, as the case may be, that bear a legend required by
this Section 12, issue and deliver to the record owner of the securities
represented thereby, or to its registered transferee, certificates representing
such securities without such legend.
13. Termination. Except as otherwise provided in this Agreement,
-----------
this Agreement shall terminate (a) if the Effective Time does not occur, upon
the termination of the Merger Agreement, provided, however, that if the Merger
Agreement shall have been terminated pursuant to Section 7.1(c)(i) or 7.1(d)(ii)
thereof, the provisions of Sections 3 and 4 hereof shall survive the termination
of this Agreement for a period of six months, or (b) if the Effective Time does
occur, on the earliest to occur of (1) the seventh anniversary of the Effective
Time, (2) at such time that the Shareholders Beneficially Own, and continue to
Beneficially Own, in the aggregate, less than 4% of the Parent Voting Securities
then outstanding, it being understood,however, that if the Shareholders at any
time Beneficially Own in the aggregate less than 4% of the Parent Voting
Securities then outstanding but, prior to the seventh anniversary of the
Effective Time, subsequently acquire Beneficial Ownership of any Parent Voting
Securities (except pursuant to clauses (A), (B) or (C) of the parenthetical
exception to the first sentence in Section 5(a)(i) hereof or in an Inadvertent
Acquisition) such that immediately following such acquisition Shareholders
become Beneficial Owners in the aggregate of more than 4% of the Parent Voting
Securities then outstanding, the provisions of Sections 5, 6, 9, 11, 12, 13 and
14 of this Agreement shall be effective and in full force again as if no such
termination had occurred, and (3) if at any time that the Shareholders
Beneficially Own in the aggregate more than 4% of the Parent Voting Securities
then outstanding (i) the Shareholder Designee
28
<PAGE>
shall not be elected as a director of Parent as provided in this Agreement, (ii)
if and so long as Mr. Anschutz shall be a director of Parent, Mr. Anschutz (but
not any other Shareholder Designee) shall not be appointed Vice Chairman of the
Board of Directors, (iii) subject to applicable requirements of the New York
Stock Exchange or any other security exchange on which the Parent Common Stock
is listed, or if not so listed, under the rules or regulations of the National
Association of Securities Dealers, a Shareholder Designee who is then a director
shall not be appointed as a member of the Executive, Finance and Corporate
Development, and Compensation, Benefits and Nominating Committees, respectively,
of the Board of Directors of Parent (or committees having similar functions) or
(iv) Parent shall have breached its covenant in Section 7(b) hereof; provided
--------
that TAC, for itself and on behalf of all other Shareholders, may by written
notice to Parent irrevocably elect that, from and after the delivery thereof,
the references in this Section 13 and in Section 7 hereof to "4%" be deleted and
replaced by references to "3%." Notwithstanding anything to the contrary, any
agreements or covenants which by their terms require action or performance
following termination of this Agreement shall survive such termination.
14. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Shareholders agree that this Agreement and the respective rights
and obligations of Shareholders hereunder shall attach to any Company Voting
Securities or Parent Voting Securities that may become Beneficially Owned by
Shareholders. The obligations of Shareholders under Sections 5(c), 6 and 12
hereof shall terminate with respect to Company Voting Securities and Parent
Voting Securities that shall cease to be Beneficially Owned by a Shareholder, an
Affiliate thereof or any heir, distributee, guardian, administrator, executor,
legal representative or similar successor in interest, pursuant to a Transfer
thereof to any Person other than a Shareholder, an Affiliate of a Shareholder,
such other Person or a member of a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) in which a Shareholder, an
29
<PAGE>
Affiliate thereof or such other person is included; provided that such Transfer
--------
shall be permitted by, and made in accordance with Section 2(b) hereof, Section
4(a) hereof or Section 6 hereof, as the case may be, and such termination shall
be effective upon the Transfer of such securities; such transferees of such
securities shall have no obligations or rights under or with respect to this
Agreement and, except as otherwise provided herein, shall not be deemed to be
Shareholders for any purposes of this Agreement; and thereafter such securities
shall not be subject to Sections 5(c), 6 and 12 hereof for any purpose
whatsoever. The representations, warranties, covenants, obligations and other
agreements of Shareholders made or undertaken in this Agreement are made or
undertaken by each Shareholder with respect to itself alone, severally and not
jointly, and, no Shareholder shall have any responsibility with respect to the
representations, warranties, covenants, obligations and other agreements made or
undertaken by any other Shareholder in this Agreement or any liability with
respect to the breach thereof by any other Shareholder.
(c) Except as otherwise provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, and each
of Parent and Purchaser, on the one hand, and Shareholders, on the other hand,
shall indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any brokerage fees, commissions or
finders' fees asserted by any person on the basis of any act or statement
alleged to have been made by such party or its Affiliates.
(d) Except as provided in the Agreement, this Agreement shall not be
assigned by operation of law or otherwise without the prior written consent of
the other party, provided that Parent may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any
30
<PAGE>
representation, agreement or condition otherwise required to be complied with by
such other party hereunder, but any such waiver shall be effective only if in
writing executed by the waiving party.
(f) All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly received if given) by hand delivery or telecopy (with a confirmation
copy sent for next day delivery via courier service, such as Federal Express),
or by any courier service, such as Federal Express, providing proof of delivery.
All communications hereunder shall be delivered to the respective parties at the
following addresses:
If to Shareholders:
The Anschutz Corporation
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
Anschutz Foundation
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
Philip F. Anschutz
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
copy to:
and, in either case, with a copy to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Telephone No.: (212) 326-2000
Telecopy No.: (212) 326-2091
Attention: Drake S. Tempest, Esq.
If to Parent or
Purchaser: Union Pacific Corporation
Martin Tower
Eighth and Eaton Avenues
Bethlehem, Pennsylvania 18018
Telephone No.: (610) 861-3200
31
<PAGE>
Telecopy No.: (610) 861-3111
Attention: Carl W. von Bernuth
copy to: Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2001
Attention: Paul T. Schnell, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Whenever possible, each provision or portion of any provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(h) Each of the parties hereto recognizes and acknowledges that a
breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore each of the parties hereto agrees
that in the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise
32
<PAGE>
available in respect hereof at law or in equity, or to insist upon compliance by
any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.
(j) This Agreement is not intended to be for the benefit of, and
shall not be enforceable by, any person or entity who or which is not a party
hereto.
(k) This Agreement shall be governed and construed in accordance with
the laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.
(l) The representations and warranties made herein shall survive
through the term of this Agreement.
(m) Each party hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court in the State of New York in any action, suit
or proceeding arising in connection with this Agreement, and agrees that any
such action, suit or proceeding may be brought only in such court (and waives
any objection based on forum non conveniens or any other objection to venue
----- --- ----------
therein); provided, however, that such consent to jurisdiction is solely for the
-------- -------
purpose referred to in this paragraph (m) and shall not be deemed to be a
general submission to the jurisdiction of said Court or in the State of New York
other than for such purposes. Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(n) The descriptive headings used herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
(o) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
33
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and Shareholders have caused
this Agreement to be duly executed as of the day and year first above written.
UNION PACIFIC CORPORATION
By:/s/ Drew Lewis
--------------
Name: Drew Lewis
Title: Chairman and Chief
Executive Officer
UP ACQUISITION CORPORATION
By:/s/ L. White Matthews,III
-------------------------
Name: L. White Matthews,III
Title: Executive Vice
President-Finance
No. of Shares: 48,084,754 THE ANSCHUTZ CORPORATION
By:/s/ Phillip F. Anschutz
-----------------------
Name: Phillip F. Anshutz
Title:
No. of Shares: 1,558,254 ANSCHUTZ FOUNDATION
By:/s/ Phillip F. Anschutz
-----------------------
Name: Phillip F. Anschutz
Title:
/s/ Phillip F. Anschutz
--------------------------------
No. of Shares: 48,084,754 Philip F. Anschutz
[by reason
of ownership
of TAC]
The undersigned agrees to be bound by and comply with the provisions
of Section 12(b) of this Agreement.
SOUTHERN PACIFIC RAIL
CORPORATION
/s/ Cannon Y. Harvey
------------------------------
Name: Cannon Y. Harvey
Title:
34
<PAGE>
EXHIBIT A
---------
IRREVOCABLE PROXY
-----------------
The undersigned hereby revokes any previous proxies and appoints Union
Pacific Corporation ("Parent"), Drew Lewis and Richard K. Davidson, and each of
them, with full power of substitution, as attorney and proxy of the undersigned
to attend any and all meetings of shareholders of Southern Pacific Rail
Corporation, a Delaware corporation (the "Company") (and any adjournments or
postponements thereof), to vote all shares of Common Stock, $.001 par value, of
the Company that the undersigned is then entitled to vote, and to represent and
otherwise to act for the undersigned in the same manner and with the same effect
as if the undersigned were personally present, with respect to all matters
specified in Section 3(a) of the Shareholders Agreement (the "Shareholders
Agreement"), dated as of August 3, 1995, by and among Parent, UP Acquisition
Corporation, the undersigned and [other Shareholders]. Capitalized terms used
and not defined herein have the respective meanings ascribed to them in, or as
prescribed by, the Shareholders Agreement.
This proxy shall be deemed to be a proxy coupled with an interest and
is irrevocable during the Voting Period
<PAGE>
and has been granted pursuant to Section 3(b) of the Shareholders Agreement.
The undersigned authorizes such attorney and proxy to substitute any
other person to act hereunder, to revoke any substitution and to file this proxy
and any substitution or revocation with the Secretary of the Company.
Dated: __________, 1995
[Shareholder]
By:______________________
Name:
Title:
<PAGE>
EXHIBIT 99(c)(3)
MSLEF SHAREHOLDER AGREEMENT
AGREEMENT, dated as of August 3, 1995, by and among Union Pacific
Corporation, a Utah corporation ("Parent"), UP Acquisition Corporation, a
Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser"), and The Morgan Stanley Leveraged Equity Fund II, L.P., a Delaware
limited partnership (the "Shareholder").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser, Union Pacific Railroad Company, a Utah corporation ("UPRR"), and
Southern Pacific Rail Corporation, a Delaware corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as such Agreement may hereafter be
amended from time to time, the "Merger Agreement"), pursuant to which Purchaser
has agreed, among other things, to commence a cash tender offer (the "Offer") to
purchase up to 39,034,471 shares of common stock, $.001 par value, of the
Company (the "Company Common Stock") and the Company will be merged with and
into UPRR (the "Merger");
WHEREAS, as of the date hereof, Shareholder is the record and
beneficial owner of, and has the sole right to vote and dispose of, an aggregate
of 13,341,580 shares (the "Shares") of Company Common Stock; and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and the Ancillary Agreements (as defined in the Merger
Agreement), and incurring the obligations set forth therein, including the Offer
and the Merger, Parent has required that Shareholder agree, and Shareholder has
agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement and the Ancillary Agreements, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Merger Agreement.
In addition, for purposes of this Agreement:
<PAGE>
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to the Shareholder,
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing; provided, however, that securities
Beneficially Owned by the Shareholder shall include only those securities
(including, without limitation, the Shares) with respect to which the
Shareholder exercises direct voting and investment control and shall not include
securities (other than those securities (including, without limitation, the
Shares) with respect to which the Shareholder exercises direct voting and
investment control) Beneficially Owned by any Affiliates of the Shareholder or
any other Persons with whom the Shareholder would constitute a "group" within
the meaning of Section 13(d) of the Exchange Act and the rules promulgated
thereunder.
(c) "Company Voting Securities" shall mean any securities of the
Company entitled, or which may be entitled, to vote generally in the election of
directors and any securities convertible into or exercisable or exchangeable for
such securities (whether or not subject to contingencies with respect to any
matter or proposal submitted for the vote or consent of shareholders of the
Company). For purposes of determining the percentage of Company Voting
Securities Beneficially Owned by a Person, securities Beneficially Owned by any
such Person that are convertible, exercisable or exchangeable for securities
entitled to vote shall be deemed to be converted, exercised or exchanged and
shall represent the number of securities of the Company entitled to vote into
which such convertible, exercisable or exchangeable securities (disregarding for
such purposes any restrictions on conversion, exercise or exchange) are then
convertible, exchangeable or exercisable.
2
<PAGE>
(d) "including" shall mean including without limitation.
(e) "Parent Voting Securities" shall mean any securities of Parent
entitled, or which may be entitled, to vote generally in the election of
directors and any securities convertible into or exercisable or exchangeable for
such securities (whether or not subject to contingencies with respect to any
matter or proposal submitted for the vote or consent of shareholders of Parent).
For purposes of this Agreement, Parent Voting Securities shall not include
Company Voting Securities. For purposes of determining the percentage of Parent
Voting Securities Beneficially Owned by a Person, securities Beneficially Owned
by any such Person that are convertible, exercisable or exchangeable for
securities entitled to vote shall be deemed to be converted, exercised or
exchanged and shall represent the number of securities of Parent entitled to
vote into which such convertible, exercisable or exchangeable securities
(disregarding for such purposes any restrictions on conversion, exercise or
exchange) are then convertible, exchangeable or exercisable.
(f) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(g) "Transfer" shall mean, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each agreement, arrangement or understanding,
whether or not in writing, to effect any of the foregoing. As a verb,
"Transfer" shall have a correlative meaning.
2. Tender of Shares. The parties agree that Shareholder may, but
----------------
shall have no obligation to, tender (or cause the record owner of the Shares to
tender), pursuant to and in accordance with the terms of the Offer, any or all
of the Shares and any other shares of Company Common Stock hereafter
Beneficially Owned by Shareholder. Shareholder hereby acknowledges and agrees
that Parent's and Purchaser's obligation to accept for payment and pay for
Shares in the Offer, including any Shares tendered by Shareholder, is subject to
the terms and conditions of the Offer. The parties agree that Shareholder will,
for all Shares tendered by Shareholder
3
<PAGE>
in the Offer and accepted for payment and paid for by Purchaser, receive the
same per Share consideration paid to other shareholders who have tendered into
the Offer.
3. Voting of Company Common Stock; Irrevocable Proxy; No Acquisition
-----------------------------------------------------------------
of Additional Company Voting Securities.
---------------------------------------
(a) Shareholder hereby agrees that during the period commencing on
the date hereof and continuing until the earlier of (x) the consummation of the
Merger and (y) six months following the termination of the Merger Agreement in
accordance with Section 7.1(c)(i) or 7.1(d)(i) thereof, and (z) upon the
termination of the Merger Agreement in accordance with any provision of Section
7.1 other than Section 7.1(c)(i) or 7.1(d)(ii) (such period being referred to as
the "Voting Period") at any meeting (whether annual or special, and whether or
not an adjourned or postponed meeting) of the Company's shareholders, however
called, or in connection with any written consent of the Company's shareholders,
subject to the absence of a preliminary or permanent injunction or other final
order by any United States federal court or state court barring such action,
Shareholder shall vote (or cause to be voted) the Shares and all other Company
Voting Securities that it Beneficially Owns, whether owned on the date hereof or
hereafter acquired, (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval and adoption of the Merger
Agreement and the terms thereof and each of the other actions contemplated by
the Merger Agreement, this Agreement and the Ancillary Agreements and any
actions required in furtherance thereof and hereof; (ii) against any action or
agreement that would (A) result in a material breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or any of the Ancillary Agreements to which it is a
party or of Shareholder under this Agreement or (B) in the judgement of Parent
as communicated in writing to the Shareholder, impede, interfere with, delay,
postpone, or adversely affect the Offer, the Merger or the transactions
contemplated by the Merger Agreement, this Agreement and the Ancillary
Agreements; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement, this Agreement and the
Ancillary Agreements): (A) any extraordinary corporate transaction, such as a
merger, consolidation or
4
<PAGE>
other business combination involving the Company or any of its subsidiaries; (B)
any sale, lease or transfer of a substantial portion of the assets or business
of the Company or its subsidiaries, or reorganization, restructuring,
recapitalization, special dividend, dissolution or liquidation of the Company or
its subsidiaries; or (C) any change in the present capitalization of the Company
including any proposal to sell a substantial equity interest in the Company or
any of its subsidiaries. Shareholder shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 3.
(b) At the request of Parent, Shareholder, in furtherance of the
transactions contemplated hereby and by the Merger Agreement and the Ancillary
Agreements, and in order to secure the performance by Shareholder of its duties
under this Agreement, shall promptly execute and deliver to Purchaser an
irrevocable proxy, in the form of Exhibit A hereto. Shareholder acknowledges
and agrees that the proxy executed and delivered pursuant to this Section 3(b)
shall be coupled with an interest, shall constitute, among other things, an
inducement for Parent to enter into this Agreement, the Merger Agreement and the
Ancillary Agreements to which it is a party, shall be irrevocable during the
Voting Period and shall not be terminated by operation of law upon the
occurrence of any event.
(c) Shareholder agrees that during the period commencing on the date
hereof and continuing until the earlier of (x) the consummation of the Merger
and (y) the termination of the Merger Agreement, Shareholder will not, and will
cause its general partner not to, acquire, offer or propose to acquire, or agree
to acquire, whether by purchase, tender or exchange offer, any Company Voting
Securities.
4. Restrictions on Transfer, Proxies; No Solicitation.
--------------------------------------------------
(a) Shareholder shall not, during the Voting Period, directly or
indirectly: (i) except as provided in Section 2 or this Section 4(a), Transfer
to any Person any or all of the Company Voting Securities Beneficially Owned by
the Shareholder; (ii) except as provided in Section 3(b) of this Agreement,
grant any proxies or powers of attorney, deposit any such Company Voting
Securities
5
<PAGE>
into a voting trust or enter into a voting agreement, understanding or
arrangement with respect to the Company Voting Securities; or (iii) take any
action that would make any representation or warranty of Shareholder contained
herein untrue or incorrect or would result in a breach by the Shareholder of its
obligations under this Agreement or a breach by the Company of its obligations
under the Merger Agreement or any of the Ancillary Agreements to which it is a
party. Notwithstanding any provisions of this Agreement to the contrary,
Shareholder may Transfer in the aggregate, following the consummation of the
Offer and prior to the Effective Time, a portion of the Shares in the aggregate
not greater than 10% of the Shares Beneficially Owned by the Shareholder
immediately following the consummation of the Offer.
(b) Shareholder shall not, and shall cause its general partner not
to, 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 in the Merger
Agreement) of the Company or any Affiliate or any inquiry with respect thereto,
or (ii) in the event of an unsolicited written Takeover Proposal for the Company
or any Affiliate of the Company, engage in negotiations or discussions with, or
provide any information or data to, any Person (other than Parent, any of its
Affiliates or representatives) relating to any Takeover Proposal. Shareholder
shall notify Parent and Purchaser orally and in writing of any such offers,
proposals or inquiries relating to the purchase or acquisition by any Person of
the Shares Beneficially Owned by the Shareholder (including, without limitation,
the terms and conditions thereof and the identity of the Person making it),
within 24 hours of the receipt thereof. Shareholder shall, and shall cause its
general partner to, immediately cease and cause to be terminated all existing
activities, discussions and negotiations, if any, with any parties conducted
heretofore with respect to any Takeover Proposal relating to the Company, other
than discussions or negotiations with Parent and its Affiliates.
(c) Shareholder will not, and will cause its general partner not to,
directly or indirectly, make any public comment, statement or communication, or
take any action that would otherwise require any public disclosure by
Shareholder, Parent or any other Person, concerning the Merger, the Offer, the
Spin-off (as described in
6
<PAGE>
Section 5.4 of the Merger Agreement) and the other transactions contemplated by
the Merger Agreement, this Agreement and the Ancillary Agreements, except for
any disclosure (i) concerning the status of Shareholder as a party to such
agreement, the terms thereof, and its beneficial ownership of Shares, required
pursuant to Section 13(d) or Section 16 of the Exchange Act or (ii) required in
the Schedule 14D-9 or the Proxy Statement/Prospectus.
(d) Notwithstanding the restrictions set forth in Section 4(b), any
Person who is a director or officer of the Company may exercise his fiduciary
duties in his capacity as a director or officer with respect to the Company, as
opposed to taking action with respect to the direct or indirect ownership of any
Shares, and no such exercise of fiduciary duties shall be deemed to be a breach
of, or a violation of the restrictions set forth in, Section 4(b) and the
Shareholder shall not have any liability hereunder for any such exercise of
fiduciary duties by such Person in his capacity as a director and officer of the
Company. Nothing in this Section 4(d) shall relieve or affect any of the
Company's or its Affiliates' obligations under the Merger Agreement.
5. Representations and Warranties of Shareholder. Shareholder
---------------------------------------------
hereby represents and warrants to Parent and Purchaser as follows:
(a) Shareholder is a limited partnership duly organized and validly
existing under the laws of the State of Delaware. Shareholder has all necessary
power and authority to execute and deliver this Agreement and perform its
obligations hereunder. The execution and delivery by Shareholder of this
Agreement and the performance by Shareholder of its obligations hereunder have
been duly and validly authorized by all required partnership action, and no
other proceedings or actions on the part of Shareholder are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Shareholder and constitutes the valid and binding agreement of Shareholder,
enforceable against Shareholder in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights and (ii) the remedy of specific
performance and injunctive and other forms of equitable
7
<PAGE>
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) Shareholder is the sole record holder and Beneficial Owner of
13,341,580 Shares, and has good and marketable title to all of such Shares, free
and clear of all choate liens, claims, options, proxies, voting agreements and
perfected security interests (other than to the extent created by either or both
of the Corporate Matters Agreement (the "Corporate Matters Agreement") and the
Shareholder Agreement, each dated as of August 1, 1993, among the Company, TAC,
the Shareholder and certain other parties thereto, each of which Shareholder
agrees to terminate as of the Effective Time). The Shares constitute all of the
capital stock of the Company Beneficially Owned by Shareholder, and except for
the Shares, Shareholder does not Beneficially Own or have any right to acquire
(whether currently, upon lapse of time, following the satisfaction of any
conditions, upon the occurrence of any event or any combination of the
foregoing) any Company Voting Securities. Shareholder has sole power to vote
and to dispose of the Shares, and sole power to issue instructions with respect
to the Shares to the extent appropriate in respect of the matters set forth in
this Agreement, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to all
of the Shares, with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.
Shareholder does not beneficially own or have any right to acquire (whether
currently, upon lapse of time, following the satisfaction of any conditions,
upon the occurrence of any event or any combination of the foregoing), except
pursuant to the Merger, any Parent Voting Securities.
(d) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the ICA, the HSR Act
and the Exchange Act (i) no filing with, and no permit, authorization, consent
or approval of, any state or federal governmental body or authority is necessary
for the execution of this Agreement by Shareholder and the consummation by
Shareholder of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by Shareholder, the consummation by
Shareholder of the transactions contemplated hereby or compliance by Shareholder
with any of the provisions hereof
8
<PAGE>
shall (A) conflict with or result in any breach of Shareholder's agreement of
limited partnership or any agreement of partnership of the general partner, (B)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third-party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which Shareholder is a party or
by which Shareholder or any of its properties or assets (including the Shares)
may be bound, or (C) violate any order, writ, injunction, decree, judgment,
statute, rule or regulation applicable to Shareholder or any of its properties
or assets. To the best knowledge of Shareholder, no litigation is pending or
threatened involving Shareholder or the Company relating in any way to this
Agreement, the Merger Agreement, the Ancillary Agreements, or any transactions
contemplated hereby or thereby.
(e) Shareholder understands and acknowledges that Parent is entering
into, and causing the Purchaser to enter into, the Merger Agreement and the
Ancillary Agreements, and is incurring the obligations set forth therein, in
reliance upon Shareholder's execution and delivery of this Agreement.
(f) Except for Morgan Stanley & Co. Incorporated, no broker,
investment banker, financial adviser or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Shareholder.
(g) Shareholder will make such representations as may reasonably be
requested by Parent, and in such form as may reasonably be requested by Parent,
for use in connection with the request by Parent that the Internal Revenue
Service issue a private letter ruling with respect to the tax consequences of
the Spin-off.
6. Representations and Warranties of Parent and Purchaser. Parent
------------------------------------------------------
and Purchaser hereby represent and warrant to Shareholder as follows:
9
<PAGE>
(a) Parent is a corporation duly organized and validly existing under
the laws of the State of Utah, and Purchaser is a corporation duly organized and
validly existing under the laws of the State of Delaware and each of them is in
good standing under the laws of the state of its incorporation. Parent and
Purchaser have all necessary corporate power and authority to execute and
deliver this Agreement and perform their respective obligations hereunder. The
execution and delivery by Parent and Purchaser of this Agreement and the
performance by Parent and Purchaser of their respective obligations hereunder
have been duly and validly authorized by the Board of Directors of each of
Parent and Purchaser and no other corporate proceedings on the part of Parent or
Purchaser are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Parent and Purchaser and constitutes a valid and binding agreement of each of
Parent and Purchaser, enforceable against each of them in accordance with its
terms except to the extent (i) such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights 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.
(c) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the ICA (i), no filing
with, and no permit, authorization, consent or approval of, any state or federal
public body or authority is necessary for the execution of this Agreement by
Parent or Purchaser and the consummation by Parent or Purchaser of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by Parent or Purchaser, the consummation by Parent or Purchaser
of the transactions contemplated hereby or compliance by Parent or Purchaser
with any of the provisions hereof shall (A) conflict with or result in any
breach of the certificate of incorporation or by-laws of Parent or Purchaser,
(B) result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note,
10
<PAGE>
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which Parent or Purchaser is a party or by which Parent or Purchaser or
any of their respective properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Parent or Purchaser or any of their respective properties or
assets. To the best knowledge of Parent, no litigation is pending or threatened
involving Parent or Purchaser relating in any way to this Agreement, the Merger
Agreement, the Ancillary Agreements, or any transactions contemplated hereby or
thereby.
(d) Except for CS First Boston Corporation, no broker, investment
banker, financial adviser or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Parent or Purchaser.
7. Further Assurances.
------------------
(a) From time to time, at the other party's request and without
further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
(b) Shareholder agrees that, prior to the consummation of the Offer,
it will enter into an amendment to the existing Registration Rights Agreement,
forming Exhibit A to the Corporate Matters Agreement, by and among the Company
and the parties named therein, which amendment shall be reasonably satisfactory
to Parent and Shareholder, in order to permit Parent to freely exercise its
"piggyback" registration rights in accordance with the terms and provisions of
the Registration Rights Agreement being entered into by the Company, Parent and
Purchaser in connection with the execution of the Merger Agreement.
8. Stop Transfer; Legend.
---------------------
(a) Shareholder agrees with and covenants to Parent that Shareholder
shall not request that the Company or Parent, as the case may be, register the
transfer
11
<PAGE>
(book-entry or otherwise) of any certificated or uncertificated interest
representing any of the securities of the Company or of Parent, as the case may
be, unless the Shareholder represents to the Company that such transfer is made
in compliance with this Agreement.
(b) Shareholder shall promptly surrender to the Company all
certificates representing the Shares, and other Company Voting Securities
acquired by Shareholder or its Affiliates after the date hereof, and the Company
shall place the following legend on such certificates:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDER AGREEMENT, DATED AS OF AUGUST 3, 1995 BY AND AMONG UP
ACQUISITION CORPORATION, UNION PACIFIC CORPORATION AND THE MORGAN STANLEY
LEVERAGED EQUITY FUND II, L.P. WHICH, AMONG OTHER THINGS, RESTRICTS THE
TRANSFER AND VOTING THEREOF."
9. Termination. Except as otherwise provided in this Agreement, this
-----------
Agreement shall terminate at the end of the Voting Period.
10. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Shareholder agrees that this Agreement and the obligations
hereunder shall attach to any Company Voting Securities that may become
Beneficially Owned by Shareholder.
(c) All costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, and each of Parent and Purchaser, on the one hand, and
Shareholder, on the other hand, shall indemnify and hold the other harmless from
and against any and all claims, liabilities or obligations with respect to any
brokerage fees, commissions or finders' fees asserted by any person on the basis
of any act or statement alleged to have been made by such party or its
Affiliates.
12
<PAGE>
(d) Except as provided in the Agreement, this Agreement shall not be
assigned by operation of law or otherwise without the prior written consent of
the other party, provided that Parent may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly received if given) by hand delivery or telecopy (with a confirmation
copy sent for next day delivery via courier service, such as FedEx), or by any
courier service, such as FedEx, providing proof of delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses:
If to Shareholder:
The Morgan Stanley Leveraged
Equity Fund II, L.P.
1221 Avenue of the Americas
New York, New York 10024
Attn: Frank V. Sica
Telephone: 212-703-7761
Telecopy: 212-703-6422
copy to: Peter R. Vogelsang, Vice President
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10024
Telephone: 212-703-5792
Telecopy: 212-703-6422
13
<PAGE>
If to Parent or
Purchaser:
Union Pacific Corporation
Martin Tower
Eighth & Eaton Avenue
Bethlehem, Pennsylvania 18018
Attn: Carl. W. von Bernuth
Telephone: (610) 861-3200
Telecopy: (610) 861-3111
copy to: Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Paul T. Schnell, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2001
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Whenever possible, each provision or portion of any provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(h) Each of the parties hereto recognizes and acknowledges that a
breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore each of the parties hereto agrees
that in the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
14
<PAGE>
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) This Agreement is not intended to be for the benefit of, and
shall not be enforceable by, any person or entity who or which is not a party
hereto.
(k) This Agreement shall be governed and construed in accordance with
the laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.
(l) The representations and warranties made herein shall survive
through the term of this Agreement.
(m) Each party hereby irrevocably submits to the non-exclusive
original jurisdiction of the Supreme Court in the State of New York or the
Federal District Court for the Southern District of New York in any action, suit
or proceeding arising in connection with this Agreement, and agrees that any
such action, suit or proceeding may be brought in such court (and waives any
objection based on forum non conveniens or any other objection to venue
----- --- ----------
therein); provided, however, that such consent to jurisdiction is solely for the
-------- -------
purpose referred to in this paragraph (m) and shall not be deemed to be a
general submission to the jurisdiction of said Courts or in the State of New
York other than for such purposes. Each party hereto hereby waives any right to
a trial by jury in connection with any such action, suit or proceeding.
(n) The descriptive headings used herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
15
<PAGE>
(o) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
16
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
UNION PACIFIC CORPORATION
By:/s/ Drew Lewis
--------------
Name: Drew Lewis
Title: Chairman and Chief
Executive Officer
UP ACQUISITION CORPORATION
By:/s/ L. White Matthews, III
--------------------------
Name: L. White Matthews, III
Title: Executive Vice
President-Fincance
THE MORGAN STANLEY LEVERAGED
EQUITY FUND II, L.P.
By: MORGAN STANLEY LEVERAGED
EQUITY FUND II, INC.
By:/s/ Kenneth F. Clifford
-----------------------
Name: Kenneth F. Clifford
Title: Vice President
The undersigned agrees to be bound by and comply with the provisions
of Section 8(b) of this Agreement.
SOUTHERN PACIFIC RAIL
CORPORATION
By:/s/ Cannon Y. Harvey
--------------------
Name: Cannon Y. Harvey
Title:
17
<PAGE>
EXHIBIT A
---------
IRREVOCABLE PROXY
-----------------
The undersigned hereby revokes any previous proxies and appoints Union
Pacific Corporation ("Parent"), Drew Lewis and Richard K. Davidson, and each of
them, with full power of substitution, as attorney and proxy of the undersigned
to attend any and all meetings of shareholders of Southern Pacific Rail
Corporation, a Delaware corporation (the "Company") (and any adjournments or
postponements thereof), to vote all shares of Common Stock, $.001 par value, of
the Company that the undersigned is then entitled to vote, and to represent and
otherwise to act for the undersigned in the same manner and with the same effect
as if the undersigned were personally present, with respect to all matters
specified in Section 3(a) of the Shareholder Agreement (the "Shareholder
Agreement"), dated as of August 3, 1995, by and among Parent, UP Acquisition
Corporation, and the undersigned. Capitalized terms used and not defined herein
have the respective meanings ascribed to them in, or as prescribed by, the
Shareholder Agreement.
This proxy shall be deemed to be a proxy coupled with an interest and
is irrevocable during the
A-1
<PAGE>
Voting Period and has been granted pursuant to Section 3(b) of the Shareholder
Agreement.
The undersigned authorizes such attorney and proxy to substitute any
other person to act hereunder, to revoke any substitution and to file this proxy
and any substitution or revocation with the Secretary of the Company.
Dated: __________
THE MORGAN STANLEY LEVERAGED
EQUITY FUND II, L.P.
By: MORGAN STANLEY LEVERAGED
EQUITY FUND II, INC.
By:______________________
Name:
Title:
A-2
<PAGE>
EXHIBIT 99(c)(4)
PARENT SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of August 3, 1995, by and among Union Pacific
Corporation, a Utah corporation ("Parent"), UP Acquisition Corporation, a
Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser" and, together with Parent, the "Shareholders"), and Southern
Pacific Rail Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Union Pacific Railroad Company, a Utah corporation ("UPRR") and an indirect
wholly owned subsidiary of Parent, Purchaser, a direct wholly owned subsidiary
of UPRR, and the Company have entered into an Agreement and Plan of Merger (as
such Agreement may hereafter be amended from time to time, the "Merger
Agreement"), pursuant to which, among other things, Purchaser has agreed to
commence a tender offer (the "Offer") to purchase up to 39,034,471 shares (the
"Shares") of common stock, $0.001 par value, of the Company (the "Company Common
Stock") and the Company will be merged with and into UPRR (the "Merger");
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, the Company
has required that Shareholders agree, and Shareholders have agreed, to enter
into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Merger Agreement.
In addition, for purposes of this Agreement:
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to any Shareholder,
"Affiliate" shall not include
<PAGE>
the Company and the Persons that directly, or indirectly through one or more
intermediaries, are controlled by the Company.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all Affiliates of such
Person and all other Persons with whom such Person would constitute a "group"
within the meaning of Section 13(d) of the Exchange Act and the rules
promulgated thereunder.
(c) "Company Voting Securities" shall mean any securities of the
Company entitled, or which may be entitled, to vote (whether or not entitled to
vote generally in the election of directors) and any securities convertible into
or exercisable or exchangeable for such securities (whether or not subject to
contingencies with respect to any matter or proposal submitted for the vote or
consent of shareholders of the Company). For purposes of determining the
percentage of Company Voting Securities Beneficially Owned by a Person,
securities Beneficially Owned by any such Person that are convertible,
exercisable or exchangeable for securities entitled to vote shall be deemed to
be converted, exercised or exchanged and shall represent the number of
securities of the Company entitled to vote into which such convertible,
exercisable or exchangeable securities (disregarding for such purposes any
restrictions on conversion, exercise or exchange) are then convertible,
exchangeable or exercisable.
(d) "Current Market Price" shall mean, as applied to any class of
stock on any date, the average of the daily "Closing Prices" (as hereinafter
defined) for the 20 consecutive trading days immediately prior to the date in
question. The term "Closing Price" on any day shall mean the last sales price,
regular way, per share of such stock on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York
2
<PAGE>
Stock Exchange or, if shares of such stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of such stock are listed or
admitted to trading, or, if the shares of such stock are not listed or admitted
to trading on any national securities exchange on the NASDAQ National Market
System or, if the shares of such stock are not quoted on the NASDAQ National
Market System, the average of the high bid and low asked prices in the over-the-
counter market as reported by the National Association of Securities Dealers
Inc.'s Automated Quotation System.
(e) "including" shall mean including without
limitation.
(f) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(g) "Transfer" shall mean, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing. As a
verb, "Transfer" shall have a correlative meaning.
(h) "Trustee" shall mean the trustee of the Voting
Trust.
(i) "Voting Trust" shall mean the Voting Trust into which Shares
acquired by the Purchaser are to be deposited as described in Section 1.8 of the
Merger Agreement.
2. Voting of Company Common Stock; Irrevocable
-------------------------------------------
Proxy.
-----
(a) Shareholders hereby agree that during the period commencing on the
date hereof and continuing until the earlier of (x) the consummation of the
Merger and (y) the termination of the Merger Agreement in accordance with
Article VII thereof, at any meeting (whether annual or special, and whether or
not an adjourned or postponed meeting) of the Company's shareholders, however
called,
3
<PAGE>
or in connection with any written consent of the Company's shareholders, subject
to the absence of a preliminary or permanent injunction or other final order by
any United States federal court or state court barring such action, Shareholders
shall vote (or cause to be voted) the Shares purchased pursuant to the Offer and
all other Company Voting Securities that they Beneficially Own, whether owned on
the date hereof or hereafter acquired, (i) in favor of the Merger, the execution
and delivery by the Company of the Merger Agreement and the approval and
adoption of the Merger Agreement and the terms thereof and each of the other
actions contemplated by the Merger Agreement, this Agreement and the Ancillary
Agreements and any actions required in furtherance thereof and hereof; (ii) with
respect to the election or removal of directors, in the same proportion as all
Company Voting Securities that are not Beneficially Owned by Shareholders that
vote with respect to such matter ("Voted Non-Shareholder Securities") have been
voted with respect to such matter; (iii) with respect to any other proposed
merger, business combination, or similar transaction (including, without
limitation, any consolidation, sale of all or substantially all the assets,
recapitalization, liquidation or winding up or other Specified Company
Transaction) involving the Company (other than the transactions contemplated by
the Merger Agreement), as the Shareholders may determine, in their sole
discretion; and (iv) unless either (A) one of the transactions described in
clause (iii) above has been proposed or (B) the matter being proposed would
impose on Shareholders limitations not imposed on other shareholders of the
Company, on the enjoyment of any of Shareholders and their Affiliates of the
legal rights generally enjoyed by shareholders of the Company, with respect to
all matters submitted to a vote of the Company's stockholders not specified in
(i), (ii) or (iii) above, in the same proportion as all Voted Non-Shareholder
Securities have been voted with respect to such matter. Shareholders shall not
enter into any agreement or understanding with any Person the effect of which
would be inconsistent or violative of the provisions and agreements contained in
this Section 2.
(b) Shareholders (or the Trustee, if the Shares are held in the
Voting Trust), in furtherance of the transactions contemplated hereby and by the
Merger Agreement and the Ancillary Agreements, and in order to secure the
performance by Shareholders of their duties under this Agreement, shall
following consummation of the Offer execute and deliver to the Company an
irrevocable
4
<PAGE>
proxy, in the form of Exhibit A hereto. Shareholders acknowledge and agree that
the proxy executed and delivered pursuant to this Section 2(b) shall be coupled
with an interest, shall constitute, among other things, an inducement for the
Company to enter into this Agreement, the Merger Agreement and the Ancillary
Agreements to which it is a party, shall be irrevocable until the earlier of the
Company Special Meeting or the termination of the Merger Agreement in accordance
with its terms and shall not be terminated by operation of law upon the
occurrence of any event.
3. Restrictions on Transfer, Proxies; Pledges. (a) Shareholders
------------------------------------------
shall not, during the period commencing on the date hereof and continuing until
the first to occur of (x) the consummation of the Merger or (y) the termination
of the Merger Agreement in accordance with Article VII thereof, directly or
indirectly: (i) Transfer (including but not limited to the Transfer by Parent
of any securities of Purchaser or any Affiliate of Parent controlling Purchaser)
to any Person (other than to the Voting Trust) any or all of the Company Voting
Securities (or any interest therein) which it may hereafter acquire in the Offer
or otherwise; (ii) except as provided in Sections 2(b) and 4(b) of this
Agreement and except for the Voting Trust, grant any proxies or powers of
attorney, deposit any Company Voting Securities into a voting trust or enter
into a voting agreement, understanding or arrangement with respect to the
Company Voting Securities; (iii) take any action that would make any
representation or warranty of Shareholders contained herein untrue or incorrect
or would result in a breach by Shareholders of their respective obligations
under this Agreement or would result in a breach by Shareholders of their
respective obligations under the Merger Agreement or any of the Ancillary
Agreements to which it is a party; or (iv) take any action covered by Section
4(a)(ii), (iv), (vi) and (viii) hereof, provided, however, in the event a bona
-------- -------
fide proposal for a Specified Company Transaction is made by any Person (other
than the Shareholders and their Affiliates) only the restrictions set forth in
Section 4(a)(viii) shall be applicable.
(b) Following termination of the Merger Agreement in accordance with
its terms, Shareholders may effect one or more pledges of Company Voting
Securities or grants of security interests therein, to one or more banks or
other financial institutions that are not Affiliates of any Shareholder as
security for the payment of
5
<PAGE>
bona fide full recourse indebtedness owed by Parent or UPRR to such banks or
financial institutions. Except as set forth in the proviso below, such banks
and financial institutions shall not incur any obligations under this Agreement
with respect to such Company Voting Securities or shall be restricted from
exercising any right of enforcement or foreclosure with respect to any related
security interest or lien; provided, however, that it shall be a condition to
-------- -------
any such pledge that the pledgee shall agree to be bound by the provisions of
Sections 4(b) and 5 of this Agreement, except that following an event of default
or foreclosure, the pledgee shall be permitted to sell, subject only to the
right of first refusal set forth in Section 5(b) hereof, (x) an unlimited number
of Voting Company Securities to any Person that is not, and does not control, a
Class I Railroad and (y) up to 4% of the then outstanding shares of Company
Voting Securities to a Class I Railroad.
4. Standstill and Related Provisions.
---------------------------------
(a) Subject to the final paragraph of this Subsection 4(a), in the
event that the Merger Agreement is terminated in accordance with Article VII
thereof other than Section 7.1(c)(i) or 7.1(d)(ii) thereof, but only in such
event, Shareholders agree that for a period commencing on the date of such
termination and continuing until the termination of this Agreement in accordance
with the terms of Section 12 hereof (any such period being hereafter referred to
as the "Standstill Period"), without the prior written consent of the Board of
Directors of the Company (the "Board") specifically expressed in a resolution
adopted by a majority of the directors of the Company, Shareholders will not,
and Shareholders will cause each of their respective Affiliates not to, directly
or indirectly, alone or in concert with others:
(i) acquire, offer or propose to acquire, or agree to acquire
(except, in any case, by way of (A) stock dividends or other distributions or
rights offerings made available to holders of any shares of Company Common Stock
generally, share-splits, reclassifications, recapitalizations, reorganizations
and any other similar action taken by Company, and (B) the conversion, exercise
or exchange of Company Voting Securities in accordance with the terms thereof,
provided, that any such securities shall be subject to the provisions hereof),
directly or indirectly, whether by purchase, tender or exchange offer, through
the acquisition
6
<PAGE>
of control of another Person, by joining a partnership, limited partnership,
syndicate or other "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) (other than groups consisting solely of Shareholders and their
Affiliates, all of which are or, prior to the formation of such group, become
parties to this Agreement) or otherwise, any Company Voting Securities;
provided, however, that if, solely as a result of the issuance by the Company of
-------- -------
additional Company Voting Securities, Shareholders and their Affiliates
Beneficially Own less than the amount of shares of Company Voting Securities
Beneficially Owned immediately following the consummation of the Offer (the
"Ownership Limit"), Shareholders may purchase or acquire additional Company
Voting Securities to bring their Beneficial Ownership up to the greater of 5.5%
and the percentage of outstanding Company Voting Securities Beneficially Owned
by the Shareholders immediately prior to such issuance by the Company; provided,
--------
further, if as a result of Transfers of Company Voting Securities, Shareholders
-------
Beneficially Own less than 5.5% of the then outstanding Company Voting
Securities, Shareholders may purchase or acquire additional Company Voting
Securities to bring their Beneficial Ownership up to, but not in excess of, 5.5%
of the then outstanding shares of Company Voting Securities. In addition, in
the event that a Shareholder or an Affiliate thereof inadvertently and without
knowledge indirectly acquires Beneficial Ownership of not more than one-quarter
of one percent of the Company Voting Securities in excess of the amount
permitted to be owned by the Shareholders pursuant to this Section 5(a) pursuant
to a transaction by which a Person (that was not then an Affiliate of a
Shareholder before the consummation of such transaction) owning Company Voting
Securities becomes an Affiliate of such Shareholder, then all Company Voting
Securities so acquired shall thereupon become subject to this Agreement and such
Shareholder shall be deemed not to have breached this Agreement provided that
such Shareholder, within 120 days thereafter, causes a number of such Company
Voting Securities in excess of the amount permitted to be so owned (or, at the
election of such Shareholder, an equal number of the other Company Voting
Securities that are Beneficially Owned by a Shareholder) to be Transferred, in a
transaction subject to Section 5 hereof, to a transferee that is not a
Shareholder, an Affiliate thereof or a member of a "group" in which a
Shareholder or an Affiliate is included (or, if Parent or its assignee shall
exercise any purchase rights
7
<PAGE>
under Section 5(b) hereof, to the Company or its assignee);
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules of the Securities and
Exchange Commission as in effect on the date hereof) of proxies or consents
(whether or not relating to the election or removal of directors), seek to
advise, encourage or influence any Person with respect to the voting of any
Company Voting Securities, initiate, propose or otherwise "solicit" (as such
term is used in the proxy rules of the Securities and Exchange Commission as in
effect on the date hereof) shareholders of the Company for the approval of
shareholder proposals, whether made pursuant to Rule 14a-8 of the Exchange Act
or otherwise, or induce or attempt to induce any other Person to initiate any
such shareholder proposal or otherwise communicate with the Parent's
shareholders or others pursuant to Rule 14a-1(2)(iv) under the Exchange Act or
otherwise;
(iii) seek, propose, or make any statement with respect to, any
merger, consolidation, business combination, tender or exchange offer, sale or
purchase of assets, sale or purchase of securities, dissolution, liquidation,
reorganization, restructuring, recapitalization, change in capitalization,
change in corporate structure or business or similar transaction involving the
Company or its subsidiaries (any of the foregoing being referred to herein as a
"Specified Company Transaction"); provided that the foregoing shall not prevent
--------
voting in accordance with Section 4(b) hereof (but shall prevent any public
comment, statement or communication, and any action that would otherwise require
any public disclosure by Shareholders, the Company or any other Person,
concerning such voting);
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Company
Voting Securities, other than groups consisting solely of Shareholders and their
Affiliates;
(v) except for the Voting Trust, deposit any Company Voting
Securities in any voting trust or subject any Company Voting Securities to any
arrangement or agreement with respect to the voting of any Company Voting
Securities, other than this Agreement;
8
<PAGE>
(vi) call or seek to have called any meeting of the stockholders of
the Company or execute any written consent with respect to the Company or
Company Voting Securities;
(vii) otherwise act, alone or in concert with others, to control or
seek to control or influence or seek to influence the management, Board of
Directors or policies of the Company;
(viii) seek, alone or in concert with others, representation on the
Board of Directors of the Company, or seek the removal of any member of such
Board or a change in the composition or size of such Board;
(ix) make any publicly disclosed proposal, comment, statement or
communication (including, without limitation, any request to amend, waive or
terminate any provision of this Agreement other than Section 4(a)), or make any
proposal, comment, statement or communication (including, without limitation,
any request to amend, waive or terminate any provision of this Agreement other
than Section 4(a)) in a manner that would require any public disclosure by
Shareholders or any other Person, or enter into any discussion with any Person
(other than directors and officers of the Company), regarding any of the
foregoing;
(x) make or disclose any request to amend, waive or terminate any
provision of Section 4(a) of this Agreement; or
(xi) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or oral) with, or
advise, finance, assist or encourage, any other Person in connection with any of
the foregoing, or take any action inconsistent with the foregoing, or make any
investment in or enter into any arrangement with, any other Person that engages,
or offers or proposes to engage, in any of the foregoing.
The restrictions set forth in this Section 4(a) shall not prevent Shareholders
from (A) performing their obligations and exercising their rights under this
Agreement, including, without limitation, (x) Transferring any Company Voting
Securities in accordance with Sections 3 and 5 hereof or to the Voting Trust,
and (y) voting in
9
<PAGE>
accordance with Sections 2(a) and 4(b) hereof and granting a proxy to the
Company in accordance with Section 2(b) hereof; (B) communicating in a non-
public manner with any other Shareholder or their Affiliates; and (C) complying
with the requirements of Sections 13(d) and 16(a) of the Exchange Act and the
rules and regulations thereunder, in each case, as from time to time in effect,
or any successor provisions or rules with respect thereto, or any other
applicable law, rule, regulation, judgment, decree, ruling, order, award,
injunction, or other official action of any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government (whether federal, state, county or local, domestic or
foreign).
(b) Subject to the receipt of proper notice and the absence of a
preliminary or permanent injunction or other final order by any United States
federal court or state court barring such action, Shareholders agree that during
any Standstill Period Shareholders will, and will cause their Affiliates to, (i)
be present, in person or represented by proxy, at all annual and special
meetings of shareholders of the Company so that all Company Common Stock
Beneficially Owned by Shareholders and their Affiliates and then entitled to
vote may be counted for the purposes of determining the presence of a quorum at
such meetings; and (ii) with respect to the election or removal of directors, in
the same proportion as all Voted Non-Shareholder Securities have been voted with
respect to such matter; and (iii) with respect to any proposed merger, business
combination, or similar transaction (including, without limitation, any
consolidation, sale of all or substantially all the assets, recapitalization,
liquidation or winding up or other Specified Company Transaction) involving the
Company, as the Shareholders may determine, in their sole discretion; and (iv)
unless the matter being proposed would impose on Shareholders limitations, not
imposed on other shareholders of the Company, on the enjoyment of any of
Shareholders and their Affiliates of the legal rights generally enjoyed by
shareholders of the Company with respect to all matters submitted to a vote of
the Company's stockholders not specified in (ii) or (iii) above, in the same
proportion as all Voted Non-Shareholder Securities have been voted with respect
to such matter.
5. Limitations on Disposition. (a) Shareholders agree that during
--------------------------
the Standstill Period they will not, and will cause their Affiliates not to,
directly or
10
<PAGE>
indirectly, without the prior written consent of the Board of Directors of the
Company specifically expressed in a resolution adopted by a majority of the
directors of the Company, Transfer to any Person any Company Voting Securities
(including but not limited to the Transfer of any securities of an Affiliate
which is the record holder or Beneficial Owner of Parent Voting Securities, if,
(as the result of such Transfer, such Person would cease to be an Affiliate of a
Shareholder), if, to the knowledge of the Shareholders or any of their
Affiliates, after due inquiry which is reasonable in the circumstances (and
which shall include, with respect to the Transfer of 1% or more of the Company
Voting Securities then outstanding in one transaction, or a series of related
transactions, specific inquiry which respect to the identity of the acquiror of
such Company Voting Securities and the number of Company Voting Securities that,
immediately following such transaction or transactions, would be Beneficially
Owned by such acquiror, together with its Affiliates and any members of a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) of which
such acquiror is a member), immediately following such transaction the acquiror
of such Company Voting Securities, together with its Affiliates and any members
of such a group, would Beneficially Own in the aggregate 6% (or 4% in the event
that the purchaser is or controls a Class I Railroad) or more of the Company
Voting Securities then outstanding; provided that, without the prior written
--------
consent of the Board of Directors of the Company, (i) Shareholders and their
Affiliates may Transfer any number of Company Voting Securities to any other
Shareholder or any Affiliate of a Shareholder, provided that (A) such
--------
transferee, if not then a Shareholder, shall become a party to this Agreement
and agree in writing to perform and comply with all of the obligations of such
transferor Shareholder under this Agreement, and thereupon such transferee shall
be deemed to be a Shareholder party hereto for all purposes of this Agreement,
and (B) if the transferee is not prior thereto a Shareholder, the transferor
shall remain liable for such transferee's performance of and compliance with the
obligations of the transferor under this Agreement, (ii) Shareholders and their
Affiliates may Transfer Company Voting Securities in a tender offer, merger, or
other similar business combination transaction approved by the Board of
Directors of the Company, and (iii) Shareholders may pledge their Parent Voting
Securities as provided in Section 3(b) hereof and the pledgee may Transfer such
Company Voting Securities as contemplated by the proviso in Section 3(b).
11
<PAGE>
(b) During the Standstill Period, if to the knowledge of the
Shareholders after making due inquiry which is reasonable under the
circumstances, immediately following the Transfer of any Company Voting
Securities the acquiror thereof, together with its Affiliates and any members of
a "group" (within the meaning of Section 13(d)(3) of the Exchange Act), would
Beneficially Own in the aggregate 2% or more of the outstanding Parent Voting
Securities (a "2% Sale"), Shareholders shall, prior to effecting any such
Transfer, offer the Company a right of first refusal to purchase the shares
proposed to be Transferred on the following terms. Shareholders shall provide
the Company with written notice (the "2% Sale Notice") of any proposed 2% Sale,
which 2% Sale Notice shall contain the identity of the purchaser, the number of
shares of Company Voting Securities proposed to be Transferred to such
purchaser, the purchase price for such shares and the form of consideration
payable for such shares. The 2% Sale Notice shall also contain an irrevocable
offer to sell the shares subject to such 2% Sale Notice to the Company for cash
at a price equal to the price contained in such 2% Sale Notice. The Company
shall have the right and option, by written notice delivered to such Shareholder
(the "Purchase Notice") within 15 days of receipt of the 2% Sale Notice, to
accept such offer as to all, but not less than all, of the Company Voting
Securities subject to such 2% Sale Notice. The Company shall have the right to
assign to any Person such right to purchase the Company Voting Securities
subject to the 2% Sale Notice. In the event the Company (or its assignee)
elects to purchase the Company Voting Securities subject to the 2% Sale Notice,
the closing of the purchase of the Company Voting Securities shall occur at the
principal office of the Company (or its assignee) on or before the 30th day
following such Shareholder's receipt of the Purchase Notice. In the event the
Company does not elect to purchase the shares subject to the 2% Sale Notice,
such Shareholder shall be free, for a period of 30 days following the receipt of
notice from Parent of its election not to purchase such Company Voting
Securities or, in the absence of any such notice, for a period of 30 days
following the 15th day after receipt by the Company of the 2% Sale Notice, to
sell the Company Voting Securities subject to the 2% Sale Notice in accordance
with the terms of, and to the person identified in, the 2% Sale Notice. If such
sale is not effected within such 30 day period such Company Voting Securities
shall remain subject to the provisions of this Agreement. Notwithstanding the
foregoing, the right of first refusal set
12
<PAGE>
forth in this Subsection (b) shall not apply to the Transfer by Shareholders of
Company Voting Securities (i) made in an underwritten public offering pursuant
to an effective registration statement under the Securities Act, or (ii) made in
a transaction permitted pursuant to, and made in compliance with, clauses (i) or
(iii) of the proviso to Section 5(a) hereof, or (iii) made in a tender offer,
merger or other similar business combination transaction approved by the Board
of Directors of the Company. Any proposed sale by Shareholders of Company
Voting Securities shall be subject to the restrictions on sales to an acquiror
which would Beneficially Own 6% (or 4%, in the event that the purchaser is or
controls a Class I Railroad) or more of the outstanding Company Voting
Securities, set forth in the proviso in Section 6(a) hereof, whether or not the
Company exercises its right of first refusal and consummates the purchase of
Parent Voting Securities. If the Company (or its assignee) exercises its right
to purchase any Company Voting Securities but fails to complete the purchase
thereof for any reason other than the failure of such Shareholder to perform its
obligations hereunder with respect to such purchase, then, on the 30th day
following such Shareholder's receipt of the Purchase Notice, such Company Voting
Securities shall cease to be subject to Sections 4(b), 5 and 11 hereof for any
purpose whatsoever. If the purchase price described in any 2% Sale Notice is
not solely made up of cash or marketable securities, the 2% Sale Notice shall
include a good faith estimate of the cash equivalent of such other
consideration, and the consideration payable by the Company or its assignee (if
the Company elects to purchase (or to have assignee purchase) the Company Voting
Securities described in the 2% Sale Notice) in place of such other consideration
shall be cash equal to the amount of such estimate; provided, however, that if
-------- -------
Parent in good faith disagrees with such estimate and states a different good
faith estimate in the Purchase Notice, and if the Company and such Shareholder
cannot agree on the cash equivalent of such other (i.e., other than cash or
----
marketable securities) consideration, such cash equivalent shall be determined
by a reputable investment banking firm without material connections with either
party. Such investment banking firm shall be selected by both parties or, if
they shall be unable to agree, by an arbitrator appointed by the American
Arbitration Association. The fees and expenses of any such investment banking
firm and/or arbitrator shall be shared equally by the Company and such
Shareholder, unless otherwise determined by such firm or arbitrator.
13
<PAGE>
In the event of such differing estimates by the Company and such Shareholder,
periods of time which would otherwise run under this Section 5(b) from the date
of such Shareholder's receipt of the Purchase Notice shall run instead from the
date on which the parties agree on such cash equivalent or, in the absence of
such agreement, the date on which such cash equivalent is determined by such
investment banking firm. If the purchase price described in any 2% Sale Notice
shall include marketable securities, the purchase price payable by the Company
(or its designee) shall include, to the extent marketable securities were
included as a portion of the consideration provided for in the 2% Sale Notice,
an amount in cash determined by reference to the Current Market Price of such
securities on the day the Purchase Notice is received by such Shareholder.
(c) Not later than the tenth day following the end of any calendar
month during the Standstill Period in which one or more dispositions of Company
Voting Securities by Shareholders or any of their Affiliates shall have
occurred, the relevant Shareholder shall give written notice to the Company of
all such dispositions. Such notice shall state the date upon which each such
disposition was effected, the price and other terms of each such disposition,
the number and type of the Company Voting Securities involved in each such
disposition, the means by which each such disposition was effected and, to the
extent known, the identity of the Persons acquiring such Company Voting
Securities.
(d) In connection with any proposed privately negotiated sale by any
Shareholders of Company Voting Securities representing in excess of 3.9% of the
then outstanding Company Voting Securities, the Company will cooperate with and
permit the proposed purchaser to conduct a due diligence review that is
reasonable under the circumstances of the Company and its Subsidiaries and their
respective business and operations, including, without limitation, reasonable
access during normal business hours to their executive officers and, if
reasonable under the circumstances, their properties, subject to execution by
such purchaser of a customary confidentiality agreement; provided that the
Company shall not be required to permit more than two such due diligence reviews
in any twelve-month period.
(e) Notwithstanding any provision to the contrary contained in this
Agreement, and without being
14
<PAGE>
subject to any of the restrictions set forth in this Agreement, Shareholders and
their Affiliates may (i) transfer or distribute, by means of dividend, exchange
offer or other distribution, any shares of Company Voting Securities to Parent's
shareholders and (ii) transfer or dispose of the Company Voting Securities in
connection with an underwritten public offering of debt or equity securities of
Parent which are convertible or exchangeable into Company Voting Securities, it
being agreed that the Company shall fully cooperate with Parent in connection
with any such disposition, including by filing any necessary registration
statement with the Securities and Exchange Commission and entering into a
customary underwriting agreement, if necessary.
6. Limitation on Company Action. Without the prior written consent
----------------------------
of Shareholders, the Company shall not take or recommend to its shareholders any
action which would impose limitations, not imposed on other shareholders of
Parent, on the enjoyment by any of the Shareholders and their Affiliates of the
legal rights generally enjoyed by shareholders of the Company, other than those
imposed by the terms of this Agreement, the Merger Agreement, and the Ancillary
Agreements; provided, however, that the foregoing shall not prevent the Company
from implementing or adopting a Shareholder Rights Plan or issuing a similar
security which has a "trigger" threshold of not less than two percentage points
greater than the percentage of outstanding shares of Company Common Stock then
Beneficially Owned by the Shareholders.
7. 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 Shareholders, access, during
normal business hours, during the term of this Agreement, 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 Shareholders (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 Shareholders
may reasonably request; provided, however, that access to certain Company
information may require the entry of a protective order by the ICC, after which
date full access will be granted to such information consis-
15
<PAGE>
tent with this paragraph and subject to the terms of such order. Unless
otherwise required by law, Shareholders will hold any such information which is
nonpublic in confidence in accordance with the provisions of the existing
confidentiality agreement between the Company and Parent, subject to the
requirements of applicable law.
8. Representations and Warranties of Shareholders. Shareholders
----------------------------------------------
hereby represent and warrant to the Company as follows:
(a) Purchaser is a corporation duly organized and validly existing
under the laws of the State of Delaware and is in good standing under the laws
of the State of Delaware. Parent is a corporation duly organized and validly
existing under the laws of the State of Utah and is in good standing under the
laws of the State of Utah. Shareholders have all necessary corporate power and
authority to execute and deliver this Agreement and perform their obligations
hereunder. The execution and delivery by Parent and Purchaser of this Agreement
and the performance by Parent and Purchaser of their obligations hereunder have
been duly and validly authorized by the Board of Directors of Parent and
Purchaser, and by the sole stockholder of Purchaser, and no other corporate
proceedings on the part of either Shareholder are necessary to authorize the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Shareholders and constitutes the valid and binding agreement of Shareholders,
enforceable against Shareholders in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights 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.
(c) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") with respect to the
acquisition of Company Voting Securities in the Offer or the Merger, if
applicable, the Exchange Act
16
<PAGE>
and the ICA, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal governmental body or authority is necessary
for the execution of this Agreement by Shareholders and the consummation by
Shareholders of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by Shareholders, the consummation by
Shareholders of the transactions contemplated hereby or compliance by
Shareholders with any of the provisions hereof shall (A) conflict with or result
in any breach of the certificate or incorporation or by-laws of Parent or
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan agreement,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
any Shareholder is a party or by which any Shareholder or any of its properties
or assets may be bound, or (C) violate any order, writ, injunction, decree,
judgment, statute, rule or regulation applicable to any Shareholder or any of
their respective properties or assets. To the best knowledge of Shareholders,
no litigation is pending or threatened involving Shareholders or the Company
relating in any way to this Agreement, the Merger Agreement, the Ancillary
Agreements, or any transactions contemplated hereby or thereby.
(d) Shareholders understand and acknowledge that the Company is
entering into the Merger Agreement and is incurring the obligations set forth
therein, in reliance upon Shareholders' execution and delivery of this
Agreement.
(e) Except for CS First Boston Corporation, no broker, investment
banker, financial adviser or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Shareholders.
9. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to Shareholders as follows:
17
<PAGE>
(a) The Company is a corporation duly organized and validly existing
under the laws of the State of Delaware, and is in good standing under the laws
of the state of its incorporation. The Company has all necessary corporate
power and authority to execute and deliver this Agreement and perform its
obligations hereunder. The execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations hereunder have
been duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by the Company and constitutes a valid and binding agreement of the Company,
enforceable against it in accordance with its terms except to the extent (i)
such enforcement may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors rights 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.
(c) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the ICA, (i) no filing
with, and no permit, authorization, consent or approval of, any state or federal
public body or authority is necessary for the execution of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and (ii) none of the execution and delivery of this Agreement by the
Company, the consummation by the Company contemplated hereby or compliance by
the Company with any of the provisions hereof shall (A) conflict with or result
in any breach of the certificate of incorporation or by-laws of the Company, (B)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which the Company is a party or
by which the Company or any of its
18
<PAGE>
properties or assets may be bound, or (C) violate any order, writ, injunction,
decree, judgment, statute, rule or regulation applicable to the Company or any
of its properties or assets. To the best knowledge of the Company, no
litigation is pending or threatened involving the Company or Shareholders
relating in any way to this Agreement, the Merger Agreement, the Ancillary
Agreements, or any transactions contemplated hereby or thereby.
(d) Except for Morgan Stanley & Co. Incorporated, no broker,
investment banker, financial adviser or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of the Company.
10. Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
11. Stop Transfer; Legend.
---------------------
(a) Shareholders agree with and covenant to the Company that
Shareholders shall not request that the Company register the transfer (book-
entry or otherwise) of any certificated or uncertificated interest representing
any of the securities of the Company as the case may be, unless such transfer is
made in compliance with this Agreement.
(b) Shareholders shall promptly surrender to the Company all
certificates representing Company Voting Securities hereafter acquired by
Shareholders or their Affiliates after the date hereof pursuant to the Offer or
otherwise, and instruct the Company to place the following legend on such
certificates:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST 3, 1995 BY AND AMONG SOUTHERN
PACIFIC RAIL CORPORATION, UNION PACIFIC CORPORATION AND UP ACQUISITION
CORPORATION WHICH, AMONG OTHER THINGS, RESTRICTS THE TRANSFER AND VOTING
THEREOF."
19
<PAGE>
(c) Each certificate representing Company Voting Securities the
Beneficial Ownership of which is acquired by Shareholders during the term of
this Agreement shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
AGREEMENTS BETWEEN UNION PACIFIC CORPORATION, UP ACQUISITION CORPORATION
AND SOUTHERN PACIFIC RAIL CORPORATION, COPIES OF WHICH MAY BE OBTAINED FROM
SOUTHERN PACIFIC RAIL CORPORATION WHICH, AMONG OTHER THINGS, RESTRICT THE
TRANSFER AND VOTING THEREOF."
(d) In connection with any Transfer of Company Voting Securities to
any Person, other than a Shareholder or an Affiliate of a Shareholder, pursuant
to, and made in compliance with, Section 5 hereof, and from and after the
termination of the Standstill Period, the Company shall, upon surrender thereto
of any certificates representing Company Voting Securities, as the case may be,
that bear a legend required by this Section 11, issue and deliver to the record
owner of the securities represented thereby, or to its registered transferee,
certificates representing such securities without such legend.
12. Termination. Except as otherwise provided in this Agreement,
-----------
this Agreement shall terminate (i) if the Offer is not consummated, upon the
termination of the Merger Agreement in accordance with its terms, (ii) if the
Effective Time does occur, on the Effective Time or (iii) if the Offer is
consummated but the Effective Time does not occur, at such time that
Shareholders Beneficially Own, and continues to Beneficially Own, in the
aggregate less than 4% of the Company Voting Securities then outstanding, it
being understood that if, under the circumstances of this clause (iii), the
Shareholders Beneficially Own less than 4% of the Company Voting Securities then
outstanding but prior to the seventh anniversary of the Effective Time,
subsequently become Beneficial Owners of more than 4% of the Company Voting
Securities then outstanding, the provisions of Sections 4, 5, 6, 7, 10, 11, 12,
13 and 14 of this Agreement shall become effective and in full force again as if
no such termination had occurred.
20
<PAGE>
13. Voting Trust. The parties hereto acknowledge and agree that the
------------
Trustee shall be entitled to exercise any and all rights, and shall be subject
to any and all obligations, of Shareholders under this Agreement (as if a
Shareholder party hereto) it being understood that Section 4(a) shall not be
applicable to the Trustee or the Voting Trust (other than the provisions
incorporated by reference into Section 3(a)).
14. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Shareholders agree that this Agreement and the obligations
hereunder shall attach to any Company Voting Securities that may become
Beneficially Owned by Shareholders. The obligations of Shareholders under
Sections 4(b), 5 and 11 hereof shall terminate with respect to Company Voting
Securities that shall cease to be Beneficially Owned by a Shareholder, an
Affiliate thereof or any heir, distributee, guardian, administrator, executor,
legal representative or similar successor in interest, pursuant to a Transfer
thereof to any Person other than a Shareholder, an Affiliate of a Shareholder,
such other Person or a member of a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) in which a Shareholder, an Affiliate thereof or
such other person is included; provided that such Transfer shall be permitted
--------
by, and made in accordance with Section 3(b) hereof, or Section 5 hereof, as the
case may be, and such termination shall be effective upon the Transfer of such
securities; such transferees of such securities shall have no obligations or
rights under or with respect to this Agreement and, except as otherwise provided
herein, shall not be deemed to be Shareholders for any purposes of this
Agreement; and thereafter such securities shall not be subject to Sections 4(b),
5 and 11 hereof for any purpose whatsoever.
(c) Except as otherwise provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, and each
of Shareholders, on the one hand, and the Company, on the other hand, shall
indemnify and hold the
21
<PAGE>
other harmless from and against any and all claims, liabilities or obligations
with respect to any brokerage fees, commissions or finders' fees asserted by any
person on the basis of any act or statement alleged to have been made by such
party or its Affiliates.
(d) Except as provided in the Agreement, this Agreement shall not be
assigned by operation of law or otherwise without the prior written consent of
the other party, provided that the Company may assign, in its sole discretion,
its rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of the Company, but no such assignment shall relieve the Company of
its obligations hereunder if such assignee does not perform such obligations.
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly received if given) by hand delivery or telecopy (with a confirmation
copy sent for next day delivery via courier service, such as Federal Express),
or by any courier service, such as Federal Express, providing proof of delivery.
All communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Company: Southern Pacific Rail Corporation
Southern Pacific Building
One Market Plaza
San Francisco, California
Attention: Cannon Y. Harvey, Esq.
Telephone No.: (415) 541-1200
Telecopy No.: (415) 541-1881
22
<PAGE>
copy to: Joseph W. Morrisey, Jr., Esq.
Holme Roberts & Owen LLC
1700 Lincoln
Suite 4100
Denver, Colorado 80203
Telephone No.: (303) 861-7000
Telecopy No.: (303) 866-0200
and
Peter D. Lyons, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone No.: (212) 848-4000
Telecopy No.: (212) 848-7179
If to Shareholders: Union Pacific Corporation
Martin Tower
Eighth & Eaton Avenues
Bethlehem, Pennsylvania 18018
Attention: Carl W. von Bernuth, Esq.
Telephone No.: (610) 861-3200
Telecopy No.: (610) 861-3111
copy to: Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2001
Attention: Paul T. Schnell, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Whenever possible, each provision or portion of any provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal
23
<PAGE>
or unenforceable provision or portion of any provision had never been contained
herein.
(h) Each of the parties hereto recognizes and acknowledges that a
breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore each of the parties hereto agrees
that in the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) This Agreement is not intended to be for the benefit of, and
shall not be enforceable by, any person or entity who or which is not a party
hereto.
(k) This Agreement shall be governed and construed in accordance with
the laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.
(l) The representations and warranties made herein shall survive
through the term of this Agreement.
(m) Each party hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court in the State of New York in any action, suit
or proceeding arising in connection with this Agreement, and agrees that any
such action, suit or proceeding shall be brought only in such court (and waives
any objection based on forum
-----
24
<PAGE>
non conveniens or any other objection to venue therein); provided, however, that
--- ---------- -------- -------
such consent to jurisdiction is solely for the purpose referred to in this
paragraph (m) and shall not be deemed to be a general submission to the
jurisdiction of said Court or in the State of New York other than for such
purposes. Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(n) The descriptive headings used herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
(o) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
25
<PAGE>
IN WITNESS WHEREOF, Shareholders and the Company have caused this
Agreement to be duly executed as of the day and year first above written.
UNION PACIFIC CORPORATION
By:
-------------------------
Name:
Title:
UP ACQUISITION CORPORATION
By:
-------------------------
Name:
Title:
SOUTHERN PACIFIC RAIL
CORPORATION
By:
-------------------------
Name:
Title:
26
<PAGE>
EXHIBIT A
---------
IRREVOCABLE PROXY
-----------------
The undersigned hereby revokes any previous proxies and appoints
Southern Pacific Rail Corporation, a Delaware corporation (the "Company"),
_____________ and _____________, and each of them, with full power of
substitution, as attorney and proxy of the undersigned to attend any and all
meetings of shareholders of the Company (and any adjournments or postponements
thereof), to vote all shares of Common Stock, $.001 par value, of the Company
that the undersigned is entitled to vote, and to represent and otherwise to act
for the undersigned in the same manner and with the same effect as if the
undersigned were personally present, with respect to all matters specified in
Section 2(a) of the Shareholders Agreement (the "Shareholders Agreement") dated
as of August 3, 1995, by and among Union Pacific Corporation, UP Acquisition
Corporation and Southern Pacific Rail Corporation. Capitalized terms used and
not defined herein have the respective meanings ascribed to them in, or as
prescribed by, the Shareholders Agreement.
This proxy shall be deemed to be a proxy coupled with an interest and
is irrevocable until the earli-
27
<PAGE>
er to occur of the special meeting of the Company's shareholders to consider and
vote upon the Merger and the termination of the Merger Agreement in accordance
with its terms, and has been granted pursuant to Section 2(b) of the
Shareholders Agreement.
The undersigned authorizes such attorney and proxy to substitute any
other person to act hereunder, to revoke any substitution and to file this proxy
and any substitution or revocation with the Secretary of the Company.
Dated: ________, 1995
UP ACQUISITION CORPORATION
By:
-------------------------
Name:
Title:
28
<PAGE>
EXHIBIT 99(c)(5)
ANSCHUTZ/SPINCO SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of August 3, 1995, by and among Union Pacific
Resources Group Inc., a corporation ("Spinco") and an indirect wholly owned
subsidiary of Union Pacific Corporation, a Utah corporation ("Parent"), The
Anschutz Corporation, a Kansas corporation ("TAC"), Anschutz Foundation, a
Colorado not-for-profit corporation (the "Foundation"), and Mr. Philip F.
Anschutz ("Mr. Anschutz" and, collectively with TAC and the Foundation, the
"Shareholders").
W I T N E S S E T H:
-------------------
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Union Pacific Railroad Company, a Utah corporation and an indirect wholly owned
subsidiary of Parent ("UPRR"), UP Acquisition Corporation, a Delaware
corporation and a direct wholly owned subsidiary of UPRR (the "Purchaser"), and
Southern Pacific Rail Corporation, a Delaware corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as such Agreement may hereafter be
amended from time to time, the "Merger Agreement"), pursuant to which Purchaser
has agreed, among other things, to commence a cash tender offer (the "Offer") to
purchase up to 39,034,471 shares of common stock, $.001 par value, of the
Company (the "Company Common Stock") and the Company will be merged with and
into UPRR (the "Merger");
WHEREAS, pursuant to the Merger, the Shareholders will receive shares
of Common Stock, par value $2.50 per share, of Parent;
WHEREAS, Parent intends to effect an initial public offering of no
more than 17.25% (not including employee shares or employee options) of, and to
distribute to its shareholders as a pro rata dividend (the "Spin-off") the
remainder of, the shares of capital stock of Spinco;
WHEREAS, the Shareholders, as a result of the Merger and the Spin-off,
may beneficially own certain shares of capital stock of Spinco (the "Spinco
Shares"); and
WHEREAS, as an inducement and a condition to Parent, UPRR and the
Purchaser entering into the Merger
<PAGE>
Agreement and incurring the obligations set forth therein, Parent has required
that the Shareholders agree, and the Shareholders have agreed, to enter into
this Shareholders' Agreement, pursuant to which, among other things, the
Shareholders have agreed to abide by certain agreements relating to the Spinco
Shares.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained herein
and in the Merger Agreement and the Ancillary Agreements, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined
-------------------
herein have the respective meanings ascribed to them in the Merger Agreement.
In addition, for purposes of this Agreement:
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For purposes of this Agreement, with respect to any Shareholder,
"Affiliate" shall not include Spinco and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by Spinco.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all Affiliates of such
Person and all other Persons with whom such Person would constitute a "group"
within the meaning of Section 13(d) of the Exchange Act and the rules
promulgated thereunder.
(c) "Company Voting Securities" shall mean any securities of the
Company entitled, or which may be entitled, to vote generally in the election of
directors and any securities convertible into or exercisable or exchangeable for
such securities (whether or not subject to contingencies with respect to any
matter or proposal
2
<PAGE>
submitted for the vote or consent of shareholders of the Company). For purposes
of determining the percentage of Company Voting Securities Beneficially Owned by
a Person, securities Beneficially Owned by any such Person that are convertible,
exercisable or exchangeable for securities entitled to vote shall be deemed to
be converted, exercised or exchanged and shall represent the number of
securities of the Company entitled to vote into which such convertible,
exercisable or exchangeable securities (disregarding for such purposes any
restrictions on conversion, exercise or exchange) are then convertible,
exchangeable or exercisable.
(d) "Spinco Voting Securities" shall mean any securities of Spinco
entitled, or which may be entitled, to vote generally in the election of
directors and any securities convertible into or exercisable or exchangeable for
such securities (whether or not subject to contingencies with respect to any
matter or proposal submitted for the vote or consent of shareholders of Spinco).
For purposes of this Agreement, Spinco Voting Securities shall not include
Parent Voting Securities or Company Voting Securities. For purposes of
determining the percentage of Spinco Voting Securities Beneficially Owned by a
Person, securities Beneficially Owned by any such Person that are convertible,
exercisable or exchangeable for securities entitled to vote shall be deemed to
be converted, exercised or exchanged and shall represent the number of
securities of Spinco entitled to vote into which such convertible, exercisable
or exchangeable securities (disregarding for such purposes any restrictions on
conversion, exercise or exchange) are then convertible, exchangeable or
exercisable.
(e) "Current Market Price" shall mean, as applied to any class of
stock on any date, the average of the daily "Closing Prices" (as hereinafter
defined) for the 20 consecutive trading days immediately prior to the date in
question. The term "Closing Price" on any day shall mean the last sales price,
regular way, per share of such stock on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if shares of such stock are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the
3
<PAGE>
principal national securities exchange on which the shares of such stock are
listed or admitted to trading, or, if the shares of such stock are not listed or
admitted to trading on any national securities exchange on the NASDAQ National
Market System or, if the shares of such stock are not quoted on the NASDAQ
National Market System, the average of the high bid and low asked prices in the
over-the-counter market as reported by the National Association of Securities
Dealers Inc.'s Automated Quotation System.
(f) "including" shall mean including without limitation.
(g) "Parent Voting Securities" shall mean any securities of Parent
entitled, or which may be entitled, to vote generally in the election of
directors and any securities convertible into or exercisable or exchangeable for
such securities (whether or not subject to contingencies with respect to any
matter or proposal submitted for the vote or consent of shareholders of Parent).
For purposes of this Agreement, Parent Voting Securities shall not include
Company Voting Securities. For purposes of determining the percentage of Parent
Voting Securities Beneficially Owned by a Person, securities Beneficially Owned
by any such Person that are convertible, exercisable or exchangeable for
securities entitled to vote shall be deemed to be converted, exercised or
exchanged and shall represent the number of securities of Parent entitled to
vote into which such convertible, exercisable or exchangeable securities
(disregarding for such purposes any restrictions on conversion, exercise or
exchange) are then convertible, exchangeable or exercisable.
(h) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(i) "Transfer" shall mean, with respect to a security, the sale,
transfer, pledge, hypothecation, encumbrance, assignment or disposition of such
security or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each agreement, arrangement or understanding,
whether or not in writing, to effect any of the foregoing. As a verb,
"Transfer" shall have a correlative meaning.
4
<PAGE>
2. Effectiveness. This Agreement shall become effective only upon
-------------
consummation of the Spin-off and shall terminate and be void and of no further
force or effect if the Merger Agreement is terminated in accordance with Article
VII thereof.
3. Pledge. TAC has advised Parent that shares of Company Common
------
Stock Beneficially Owned by TAC are or may be pledged to Bank of America
National Trust and Savings Association or Citibank, N.A., respectively
(collectively, the "Banks") pursuant to pledge agreements (substantially in the
forms reviewed by Parent, collectively, the "Existing Pledge Agreements") to
secure indebtedness borrowed from the Banks. TAC represents and warrants that
the Existing Pledge Agreements do not or, before indebtedness borrowed therefrom
is secured by any such shares, will not prevent, limit or interfere with TAC's
compliance with, or performance of its obligations under, this Agreement, absent
a default under the applicable Existing Pledge Agreements. TAC represents and
warrants that it is not in default under the Existing Pledge Agreements. Before
Spinco Voting Securities shall be pledged to secure indebtedness owed under an
Existing Pledge Agreement, TAC shall deliver to Parent a letter from Bank of
America National Trust and Savings Association or Citibank, N.A., as the case
may be, acknowledging this Agreement and agreeing that, notwithstanding any
default under the Existing Pledge Agreement, TAC shall have the right to
exercise all voting rights with respect to the Company Common Stock pledged
thereunder. Shareholders may hereafter effect one or more pledges of Company
Voting Securities, or grants of security interests therein, to one or more
financial institutions (other than the Banks) that are not Affiliates of any
Shareholder (collectively, "Other Financial Institutions") as security for the
payment of bona fide indebtedness owed by one or more of the Shareholders or
their Affiliates to such financial institutions. Except as set forth in the
proviso below, neither the Bank nor any financial institution which hereafter
becomes a pledgee of Company Voting Securities shall incur any obligations under
this Agreement with respect to such Company Voting Securities or shall be
restricted from exercising any right of enforcement or foreclosure with respect
to any related security interest or lien; provided, however, that it shall be a
-------- -------
condition to any such pledge to any Other Financial Institution that the pledgee
shall agree that TAC shall have the right to exercise all voting rights with
respect to the Company Voting Securities
5
<PAGE>
pledged thereunder no such pledge shall prevent, limit or interfere with
Shareholders' compliance with, or performance of their obligations under, this
Agreement, absent a default under such pledge agreement.
4. Public Comments; Fiduciary Duties.
---------------------------------
(a) During the Standstill Period (as defined below), Shareholders
will not, and will cause their Affiliates not to, directly or indirectly, make
any public comment, statement or communication, or take any action that would
otherwise require any public disclosure by Shareholders, Parent, Spinco or any
other Person, concerning the Merger, the Offer, the Spin-off (as described in
Section 5.4 of the Merger Agreement) and the other transactions contemplated by
the Merger Agreement, this Agreement and the Ancillary Agreements, except for
any disclosure (i) concerning the status of Shareholders as parties to such
agreements the terms thereof, and their beneficial ownership of Shares required
pursuant to Section 13d of the Exchange Act or (ii) required in the Schedule
14D-9 or the Proxy Statement/Prospectus.
(b) It is hereby acknowledged that any Person who is a director or
officer of the Company may exercise his fiduciary duties in his capacity as a
director or officer with respect to the Company, as opposed to taking action
with respect to the direct or indirect ownership of any Shares, and no such
exercise of fiduciary duties shall be deemed to be a breach of, or a violation
of the restrictions set forth in, this Agreement and none of the Shareholders
shall have any liability hereunder for any such exercise of fiduciary duties by
such Person in his capacity as a director and officer of the Company. Nothing
in this Section 4(b) shall relieve or affect any of the Company's or its
Affiliates' obligations under the Merger Agreement.
5. Standstill and Related Provisions.
---------------------------------
(a) Subject to the paragraph at the end of this Subsection 5(a),
Shareholders agree that for a period commencing on the date hereof and
terminating on the seventh anniversary of the Effective Time or, if earlier, the
termination of this Agreement in accordance with the terms of Section 13 hereof
(the "Standstill Period"), without the prior written consent of the Board of
Directors of Spinco (the "Board") specifically expressed in a resolution adopted
by a majority of the
6
<PAGE>
directors of Spinco, Shareholders will not, and Shareholders will cause each of
their respective Affiliates not to, directly or indirectly, alone or in concert
with others:
(i) acquire, offer or propose to acquire, or agree to acquire
(except, in any case, by way of (A) following consummation of the Spin-off,
stock dividends or other distributions or rights offerings made available to
holders of any shares of common stock of Spinco ("Spinco Common Stock")
generally, share-splits, reclassifications, recapitalizations, reorganizations
and any other similar action taken by Spinco, (B) following consummation of the
Spin-off, the conversion, exercise or exchange of Spinco Voting Securities in
accordance with the terms thereof and (C) the issuance and delivery of Spinco
Voting Securities pursuant to the Spin-off, provided, that any such securities
shall be subject to the provisions hereof), directly or indirectly, whether by
purchase, tender or exchange offer, through the acquisition of control of
another Person, by joining a partnership, limited partnership, syndicate or
other "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
(other than groups consisting solely of Shareholders and their Affiliates, all
of which are or, prior to the formation of such group, become, parties to this
Agreement) or otherwise, any Spinco Voting Securities; provided, however, that
-------- -------
if Spinco shall issue additional Spinco Voting Securities following consummation
of the Spin-off, Shareholders and their Affiliates may purchase or acquire
additional Spinco Voting Securities to bring their Beneficial Ownership up to
the greater of 5.5% and the percentage of outstanding Spinco Voting Securities
Beneficially Owned by the Shareholders immediately prior to such issuance by
Spinco; provided, further, without limiting the immediately preceding proviso,
-------- -------
if as a result of Transfers of Spinco Voting Securities, Shareholders
Beneficially Own less than 5.5% of the then outstanding shares of Spinco Voting
Securities, Shareholders may purchase or acquire additional Spinco Voting
Securities to bring their Beneficial Ownership up to, but not in excess of, 5.5%
of the then outstanding shares of Spinco Voting Securities. In addition, in the
event that a Shareholder or an Affiliate thereof inadvertently and without
knowledge (an "Inadvertent Acquisition") indirectly acquires Beneficial
Ownership of not more than one-quarter of one percent of the Spinco Voting
Securities in excess of the amount permitted to be owned by the Shareholders
pursuant to this Section 5(a) pursuant to a
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transaction by which a Person (that was not then an Affiliate of a Shareholder
before the consummation of such transaction) owning Spinco Voting Securities
becomes an Affiliate of such Shareholder, then all Spinco Voting Securities so
acquired shall thereupon become subject to this Agreement and such Shareholder
shall be deemed not to have breached this Agreement provided that such
Shareholder, within 120 days thereafter, causes a number of such Spinco Voting
Securities in excess of the amount permitted to be so owned (or, at the election
of such Shareholder, an equal number of the other Spinco Voting Securities that
are Beneficially Owned by a Shareholder) to be Transferred, in a transaction
subject to Section 6 hereof, to a transferee that is not a Shareholder, an
Affiliate thereof or a member of a "group" in which a Shareholder or an
Affiliate is included (or, if Spinco or its assignee shall exercise any purchase
rights under Section 6(b) hereof, to Spinco or its assignee);
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules of the Securities and
Exchange Commission as in effect on the date hereof) of proxies or consents
(whether or not relating to the election or removal of directors), seek to
advise, encourage or influence any Person with respect to the voting of any
Spinco Voting Securities, initiate, propose or otherwise "solicit" (as such term
is used in the proxy rules of the Securities and Exchange Commission as in
effect on the date hereof) shareholders of Spinco for the approval of
shareholder proposals, whether made pursuant to Rule 14a-8 of the Exchange Act
or otherwise, or induce or attempt to induce any other Person to initiate any
such shareholder proposal or otherwise communicate with the Spinco's
shareholders or others pursuant to Rule 14a-1(2)(iv) under the Exchange Act or
otherwise;
(iii) seek, propose, or make any statement with respect to, any
merger, consolidation, business combination, tender or exchange offer, sale or
purchase of assets, sale or purchase of securities, dissolution, liquidation,
reorganization, restructuring, recapitalization, change in capitalization,
change in corporate structure or business or similar transaction involving
Spinco or its subsidiaries (any of the foregoing being referred to herein as a
"Specified Spinco Transaction"); provided that the foregoing shall not prevent
--------
(A) voting in accordance with Section 5(c) hereof (but shall prevent any public
comment, statement or
8
<PAGE>
communication, and any action that would otherwise require any public disclosure
by Shareholders, Spinco or any other Person, concerning such voting) or (B) the
Shareholder Designee (as defined in Section 7 hereof) from exercising his
fiduciary duties in his capacity as a director by participating in any Board
deliberations or vote of the Board of Directors of Spinco with respect to a
Specified Spinco Transaction;
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Spinco
Voting Securities, other than groups consisting solely of Shareholders and their
Affiliates;
(v) deposit any Spinco Voting Securities in any voting trust or
subject any Spinco Voting Securities to any arrangement or agreement with
respect to the voting of any Spinco Voting Securities except as set forth in
this Agreement;
(vi) call or seek to have called any meeting of the stockholders of
Spinco or execute any written consent with respect to Spinco or Spinco Voting
Securities; provided that the foregoing shall not prevent the Shareholder
--------
Designee from exercising his fiduciary duties in his capacity as a director by
participating in any Board deliberations or vote of the Board of Directors of
Spinco with respect to the calling of any annual meeting of shareholders of
Spinco;
(vii) otherwise act, alone or in concert with others, to control or
seek to control or influence or seek to influence the management, Board of
Directors or policies of Spinco (except to the extent the actions by a
Shareholder Designee relating to Spinco's Board of Directors in the exercise of
his fiduciary duties in his capacity as a director may be viewed as influencing
or seeking to influence the management, Board of Directors or policies of
Spinco);
(viii) seek, alone or in concert with others, representation on the
Board of Directors of Spinco (except as provided in Section 7 of this
Agreement), or seek the removal of any member of such Board or a change in the
composition or size of such Board;
(ix) make any publicly disclosed proposal, comment, statement or
communication (including,
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<PAGE>
without limitation, any request to amend, waive or terminate any provision of
this Agreement other than Section 5(a)), or make any proposal, comment,
statement or communication (including, without limitation, any request to amend,
waive or terminate any provision of this Agreement other than Section 5(a)) in a
manner that would require any public disclosure by Shareholders, Spinco or any
other Person, or enter into any discussion with any Person (other than directors
and officers of Spinco), regarding any of the foregoing;
(x) make or disclose any request to amend, waive or terminate any
provision of Section 5(a) of this Agreement; or
(xi) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or oral) with, or
advise, finance, assist or encourage, any other Person in connection with any of
the foregoing, or take any action inconsistent with the foregoing, or make any
investment in or enter into any arrangement with, any other Person that engages,
or offers or proposes to engage, in any of the foregoing.
The restrictions set forth in this Section 5(a) shall not prevent Shareholders
from (A) performing their obligations and exercising their rights under this
Agreement, including, without limitation, (w) Transferring any Company Voting
Securities or Spinco Voting Securities in accordance with Sections 3, 4 and 6
hereof, (x) selecting the Shareholder Designee, (y) serving in the positions
described in or resigning from such positions as described in Section 7(a)
hereof, and (z) voting in accordance with Section 5(b) hereof; (B) communicating
in a non-public manner with any other Shareholder or their Affiliates; and (C)
complying with the requirements of Sections 13(d) and 16(a) of the Exchange Act
and the rules and regulations thereunder, in each case, as from time to time in
effect, or any successor provisions or rules with respect thereto, or any other
applicable law, rule, regulation, judgment, decree, ruling, order, award,
injunction, or other official action of any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government (whether federal, state, county or local, domestic or
foreign).
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<PAGE>
(b) Shareholders agree that during the period commencing on the date
hereof and continuing until the earlier of (x) the consummation of the Merger
and (y) the termination of the Merger Agreement, Shareholders will not, and
Shareholders will cause each of their respective Affiliates not to, directly or
indirectly, alone or in concert with others, acquire, offer or propose to
acquire, or agree to acquire, whether by purchase, tender or exchange offer,
though the acquisition of control of another Person, by joining a partnership,
limited partnership, syndicate or other "group" or otherwise, any Company Voting
Securities (except by way of stock dividends or other distributions or rights
offerings made available to holders of any shares of Company Common Stock
generally, stock-splits, reclassifications, recapitalizations, reorganizations
and any other similar action taken by Company).
(c) Subject to the receipt of proper notice and the absence of a
preliminary or permanent injunction or other final order by any United States
federal court or state court barring such action, Shareholders agree that during
the Standstill Period Shareholders will, and will cause their Affiliates to, (i)
be present, in person or represented by proxy, at all annual and special
meetings of shareholders of Spinco so that all Spinco Common Stock Beneficially
Owned by Shareholders and their Affiliates and then entitled to vote may be
counted for the purposes of determining the presence of a quorum at such
meetings, and (ii) vote in accordance with the recommendation of the Board of
Directors of Spinco in the election of directors and as directed by the Persons
acting as Proxies in respect of proxies solicited by the Board of Directors of
Spinco (including the manner in which such Spinco Common Stock shall be
cumulated). On all other matters presented for a vote of shareholders of
Spinco, Shareholders may vote in their discretion.
6. Limitations on Disposition.
--------------------------
(a) Shareholders agree that during the Standstill Period they will
not, and will cause their Affiliates not to, directly or indirectly, without the
prior written consent of the Board of Directors of Spinco specifically expressed
in a resolution adopted by a majority of the directors of Spinco, Transfer to
any Person any Spinco Voting Securities (including but not limited to the
Transfer of any securities of an Affiliate which is the record holder or
Beneficial Owner of Spinco
11
<PAGE>
Voting Securities if, as the result of such Transfer, such Person would cease to
be an Affiliate of a Shareholder), if, to the knowledge of the Shareholders or
any of their Affiliates, after due inquiry which is reasonable in the
circumstances (and which shall include, with respect to the Transfer of 1% or
more of the Spinco Voting Securities then outstanding in one transaction, or a
series of related transactions, specific inquiry which respect to the identity
of the acquiror of such Spinco Voting Securities and the number of Spinco Voting
Securities that, immediately following such transaction or transactions, would
be Beneficially Owned by such acquiror, together with its Affiliates and any
members of a "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) of which such acquiror is a member), immediately following such transaction
the acquiror of such Spinco Voting Securities, together with its Affiliates and
any members of such a group, would Beneficially Own in the aggregate 4% or more
of the Spinco Voting Securities then outstanding; provided that, without the
--------
prior written consent of the Board of Directors of Spinco, (i) Shareholders and
their Affiliates may Transfer any number of Spinco Voting Securities to any
other Shareholder, any Affiliate of a Shareholder or to any heirs, distributees,
guardians, administrators, executors, legal representatives or similar
successors in interest of any Shareholder, provided that (A) such transferee, if
--------
not then a Shareholder, shall become a party to this Agreement and agree in
writing to perform and comply with all of the obligations of such transferor
Shareholder under this Agreement, and thereupon such transferee shall be deemed
to be a Shareholder party hereto for all purposes of this Agreement, and (B) if
the transferee is not prior thereto a Shareholder, the transferor shall remain
liable for such transferee's performance of and compliance with the obligations
of the transferor under this Agreement, (ii) Shareholders and their Affiliates
may Transfer Spinco Voting Securities in a tender offer, merger, or other
similar business combination transaction approved by the Board of Directors of
Spinco, and (iii) Shareholders may pledge their Spinco Voting Securities as
provided in Section 3 hereof and the pledgee may Transfer such Spinco Voting
Securities in connection with the enforcement or foreclosure of any related
security interest or lien following a default.
(b) During the Standstill Period, if to the knowledge of the
Shareholders after making due inquiry which is reasonable under the
circumstances, immediately
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<PAGE>
following the Transfer of any Spinco Voting Securities the acquiror thereof,
together with its Affiliates and any members of a "group" (within the meaning of
Section 13(d)(3) of the Exchange Act), would Beneficially Own in the aggregate
2% or more of the outstanding Spinco Voting Securities (a "2% Sale"),
Shareholders shall, prior to effecting any such Transfer, offer Spinco a right
of first refusal to purchase the shares proposed to be Transferred on the
following terms. Shareholders shall provide Spinco with written notice (the "2%
Sale Notice") of any proposed 2% Sale, which 2% Sale Notice shall contain the
identity of the purchaser, the number of shares of Spinco Voting Securities
proposed to be Transferred to such purchaser, the purchase price for such shares
and the form of consideration payable for such shares. The 2% Sale Notice shall
also contain an irrevocable offer to sell the shares subject to such 2% Sale
Notice to Spinco for cash at a price equal to the price contained in such 2%
Sale Notice. Spinco shall have the right and option, by written notice
delivered to such Shareholder (the "Purchase Notice") within 15 days of receipt
of the 2% Sale Notice, to accept such offer as to all, but not less than all, of
the Spinco Voting Securities subject to such 2% Sale Notice. Spinco shall have
the right to assign to any Person such right to purchase the shares subject to
the 2% Sale Notice. In the event Spinco (or its assignee) elects to purchase
the shares subject to the 2% Sale Notice, the closing of the purchase of the
Spinco Voting Securities shall occur at the principal office of Spinco (or its
assignee) on or before the 30th day following such Shareholder's receipt of the
Purchase Notice. In the event Spinco does not elect to purchase the shares
subject to the 2% Sale Notice, such Shareholder shall be free, for a period of
30 days following the receipt of notice from Spinco of its election not to
purchase such shares or, in the absence of any such notice, for a period of 30
days following the 15th day after receipt by Spinco of the 2% Sale Notice, to
sell the shares subject to the 2% Sale Notice in accordance with the terms of,
and to the person identified in, the 2% Sale Notice. If such sale is not
effected within such 30 day period such shares shall remain subject to the
provisions of this Agreement. Notwithstanding the foregoing, the right of first
refusal set forth in this Subsection (b) shall not apply to the sale by
Shareholders of Spinco Voting Securities (i) made in an underwritten public
offering pursuant to an effective registration statement under the Securities
Act, or (ii) made in a transaction permitted pursuant to, and made in
compliance with, clauses (i) or
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<PAGE>
(iii) of the proviso to Section 6(a) hereof, or (iii) made in a tender offer,
merger or other similar business combination transaction approved by the Board
of Directors of Spinco. Any proposed sale by Shareholders of Spinco Voting
Securities shall be subject to the restrictions on sales to an acquiror which
would Beneficially Own 4% or more of the outstanding Spinco Voting Securities,
set forth in the proviso in Section 6(a) hereof, whether or not Spinco exercises
its right of first refusal and consummates the purchase of Spinco Voting
Securities. If Spinco (or its assignee) exercises its right to purchase any
Spinco Voting Securities but fails to complete the purchase thereof for any
reason other than the failure of such Shareholder to perform its obligations
hereunder with respect to such purchase, then, on the 30th day following such
Shareholder's receipt of the Purchase Notice, such Spinco Voting Securities
shall cease to be subject to Sections 5(c), 6 and 12 hereof for any purpose
whatsoever. If the purchase price described in any 2% Sale Notice is not solely
made up of cash or marketable securities, the 2% Sale Notice shall include a
good faith estimate of the cash equivalent of such other consideration, and the
consideration payable by Spinco or its assignee (if Spinco elects to purchase
(or to have assignee purchase) the Spinco Voting Securities described in the 2%
Sale Notice) in place of such other consideration shall be cash equal to the
amount of such estimate; provided, however, that if Spinco in good faith
-------- -------
disagrees with such estimate and states a different good faith estimate in the
Purchase Notice, and if Spinco and such Shareholder cannot agree on the cash
equivalent of such other (i.e., other than cash or marketable securities)
----
consideration, such cash equivalent shall be determined by a reputable
investment
banking firm without material connections with either party. Such investment
banking firm shall be selected by both parties or, if they shall be unable to
agree, by an arbitrator appointed by the American Arbitration Association. The
fees and expenses of any such investment banking firm and/or arbitrator shall be
shared equally by Spinco and such Shareholder, unless otherwise determined by
such firm or arbitrator. In the event of such differing estimates by Spinco and
such Shareholder, periods of time which would otherwise run under this Section
6(b) from the date of such Shareholder's receipt of the Purchase Notice shall
run instead from the date on which the parties agree on such cash equivalent or,
in the absence of such agreement, the date on which such cash equivalent is
determined by such investment banking firm. If the purchase price described
14
<PAGE>
in any 2% Sale Notice shall include marketable securities, the purchase price
payable by Spinco (or its designee) shall include, to the extent marketable
securities were included as a portion of the consideration provided for in the
2% Sale Notice, an amount in cash determined by reference to the Current Market
Price of such securities on the day the Purchase Notice is received by such
Shareholder.
(c) Not later than the tenth day following the end of any calendar
month during the Standstill Period in which one or more dispositions of Spinco
Voting Securities by Shareholders or any of their Affiliates shall have
occurred, the relevant Shareholder shall give written notice to Spinco of all
such dispositions. Such notice shall state the date upon which each such
disposition was effected, the price and other terms of each such disposition,
the number and type of Spinco Voting Securities involved in each such
disposition, the means by which each such disposition was effected and, to the
extent known, the identity of the Persons acquiring such Spinco Voting
Securities.
(d) In connection with any proposed privately negotiated sale by any
Shareholders of Spinco Voting Securities representing in excess of 3.9% of the
then outstanding Spinco Voting Securities, Spinco will cooperate with and permit
the proposed purchaser to conduct a due diligence review reasonable under the
circumstances of Spinco and its Subsidiaries and their respective business and
operations, including, without limitation, reasonable access during normal
business hours to their executive officers, and, if reasonable under the
circumstances, their properties, subject to execution by such purchaser of a
customary confidentiality agreement; provided that Spinco shall not be required
to permit more than two such due diligence reviews in any twelve-month period.
7. Spinco Covenants.
----------------
(a) On or prior to the consummation of the Spin-off, the Board of
Directors of Spinco will take all action necessary to elect a designee of TAC
who is not an Affiliate of, does not have any business relationship with, any of
the Shareholders or their Affiliates, and is reasonably acceptable to the Board
of Directors of Spinco (the "Shareholder Designee") as a director of Spinco's
Board of Directors. In the event that the Shareholder
15
<PAGE>
Designee shall resign, become disabled or be removed as a member of Spinco's
Board of Directors (except in circumstances, other than Section 7(a)(vi) hereof,
in which the Shareholder Designee was required (including if requested by
Spinco) to resign as a director pursuant to the terms of this Agreement) TAC
shall have the right to select a new Shareholder Designee. Shareholders
acknowledge that as a condition precedent to the appointment of the Shareholder
Designee to Spinco's Board of Directors, the Shareholder Designee shall enter
into an agreement (the "SD Agreement"), in form and substance satisfactory to
Spinco and its counsel, to the effect that:
(i) the Shareholder Designee agrees that he will not provide,
disclose, or otherwise make available, directly or indirectly, any
confidential or non-public information relating to Spinco or its
subsidiaries, including competitively sensitive information, to the
Shareholders, or their Affiliates or Representatives;
(ii) the Shareholder Designee will not voluntarily receive, directly
or indirectly, any confidential or non-public information relating to any
business, company or entity affiliated with any of the Shareholders which
competes in any way with, or is a potential competitor of, Spinco (a
"Competing Business"), and, in the event the Shareholder Designee
involuntarily receives, or receives on an unsolicited basis, such
confidential or non-public information, the Shareholder Designee agrees to
report to Spinco the fact that the Shareholder Designee received such
information;
(iii) in connection with actions taken as a director of Spinco, the
Shareholder Designee will not take into account or consider the impact or
effect of such actions on the Shareholders (other than in their capacity as
shareholders of Spinco), their Affiliates or on any Competing Business;
(iv) the Shareholder Designee will not serve as an officer, director
or employee of, or become a shareholder, partner or equity investor in, any
Competing Business so long as
16
<PAGE>
such Shareholder Designee serves as a director of Spinco;
(v) none of the Shareholder Designee, any family member of the
Shareholder Designee or any person controlled by the Shareholder Designee
will have any business relationship with, enter into any arrangements or
understandings relating to such business relationship with, or receive any
compensation, gifts or other forms of consideration from, the Shareholders
or their Affiliates so long as the Shareholder Designee is a director of
Spinco; and
(vi) the Shareholder Designee, if requested by Spinco (A) will
immediately resign as a director of Spinco in the event that the Federal
Trade Commission (the "FTC") shall institute, commence, or threaten any
action, proceeding or inquiry relating to the Shareholder Designee's
position as a director of Spinco, provided, that in the event of one or
more resignations pursuant to this clause (A), the Shareholders shall have
the right in each such event to designate a new Shareholder Designee in
accordance with the terms hereof; (B) will resign as a director of Spinco
not later than the next annual meeting of Shareholders of Spinco in the
event that the Shareholders and their Affiliates Beneficially Own less than
4% of Spinco's Voting Securities then outstanding, provided, however that
-------- -------
this Agreement shall continue in full force and effect until the date of
such resignation and (C) will immediately resign if the Shareholders
violate or breach any of the material terms or provisions of this
Agreement. Notwithstanding any resignation pursuant to clause (C) of the
preceding sentence, all of the provisions of this Agreement other than this
Section 7 shall continue in full force and effect.
So long as Shareholders and their Affiliates continue to Beneficially
Own in excess of 4% of the Spinco Voting Securities then outstanding or until
the termination of this Agreement, Spinco shall include the Shareholder Designee
in the Board of Directors' slate of nominees for election as directors at
Spinco's annual meeting of shareholders and shall recommend that the Shareholder
Designee be elected as a director of Spinco.
17
<PAGE>
So long as a Shareholder Designee serves as a member of the Board of
Directors of Spinco, Spinco agrees that the Shareholder Designee shall serve
(subject to the applicable requirements of the FTC, the New York Stock Exchange
or any other security exchange on which the Spinco Common Stock is listed, or if
not so listed, under the rules or regulations of the National Association of
Securities Dealers) as a member of the Executive, Finance and Corporate
Development, and Compensation Benefits and Nominating Committees of the Board
(or the three committees having similar functions). Except as otherwise
provided in this Section 7, upon the termination of this Agreement, if requested
by Spinco, the Shareholder Designee shall resign as a director of Spinco's Board
of Directors.
(b) In the event that any Shareholder Designee shall cease to be a
member of the Board of Directors by reason of death, disability or resignation
(except in circumstances in which TAC shall not have the right under the first
paragraph of Section 7(a) hereof to select a new Shareholder Designee), Spinco
shall replace such Shareholder Designee with another Shareholder Designee at the
next meeting of the Board of Directors.
(c) The Shareholder Designee, upon nomination or appointment as a
director of Spinco, shall agree in writing to comply with the obligations of the
Shareholders under Section 5(a) hereof and the obligation of such Shareholder
Designee under this Section 7(c).
(d) Without the prior written consent of Shareholders, Spinco shall
not take or recommend to its shareholders any action which would impose
limitations, not imposed on other Shareholders of Spinco, on the enjoyment by
any of Shareholders and their Affiliates of the legal rights generally enjoyed
by shareholders of Spinco, other than those imposed by the terms of this
Agreement, the Merger Agreement and the Ancillary Agreements; provided, however,
that the foregoing shall not prevent Spinco from implementing or adopting a
Shareholder Rights Plan or issuing a similar security which has a "trigger"
threshold of not less than the greater of 10% of the outstanding shares of
Spinco Common Stock or the amount then Beneficially Owned by Shareholders not in
violation of this Agreement.
8. Intentionally Omitted
---------------------
18
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9. Representations and Warranties of Shareholders. Shareholders
----------------------------------------------
hereby represent and warrant to Spinco as follows:
(a) TAC is a corporation duly organized and validly existing under
the laws of the State of Kansas and is in good standing under the laws of the
State of Kansas. The Foundation is a not-for-profit corporation duly organized
and validly existing under the laws of the State of Colorado. Shareholders have
all necessary power and authority to execute and deliver this Agreement and
perform their obligations hereunder. The execution and delivery by TAC and the
Foundation of this Agreement and the performance by TAC and the Foundation of
their obligations hereunder have been duly and validly authorized by the Board
of Directors of TAC and the Foundation, and by the sole stockholder of TAC, and
no other proceedings or actions on the part of any Shareholder are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Shareholders and constitutes the valid and binding agreement of Shareholders,
enforceable against Shareholders in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights 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.
(c) Each Shareholder is the sole record holder and Beneficial Owner
of the number of shares of Company Common Stock ("Company Shares") listed
opposite such Shareholder's name on the signature page hereof, and, except as
provided in Section 3 hereof and to the extent created by either or both of the
Corporate Matters Agreement and the Registration Rights Agreement, each dated as
of August 1, 1993 and among the Company, The Morgan Stanley Leveraged Equity
Fund II, L.P., a Delaware limited partnership, TAC and certain other parties
thereto, each of which the Shareholders agree to terminate as of the Effective
Time, has good and marketable title to all of such Company Shares, free and
clear of all liens, claims, options, proxies, voting agreements, security
interests, charges and encumbrances. The Company Shares
19
<PAGE>
constitute all of the capital stock of the Company Beneficially Owned by
Shareholders, and except for the Company Shares, neither Shareholders nor any of
their Affiliates Beneficially Owns or has any right to acquire (whether
currently, upon lapse of time, following the satisfaction of any conditions,
upon the occurrence of any event or any combination of the foregoing) any
Company Voting Securities. Except as provided in Section 3 hereof and in this
Section 9(c), each Shareholder has sole power to vote and to dispose of the
Company Shares Beneficially Owned by such Shareholder, and sole power to issue
instructions with respect to such Company Shares to the extent appropriate in
respect of the matters set forth in this Agreement, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of such Company Shares, with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement. Shareholders do not
beneficially own or have any right to acquire (whether currently, upon lapse of
time, following the satisfaction of any conditions, upon the occurrence of any
event or any combination of the foregoing), except pursuant to the Merger, any
Parent Voting Securities.
(d) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the ICA, the Securities
Exchange Act of 1934, each as amended, (i) no filing with, and no permit,
authorization, consent or approval of, any state or federal governmental body or
authority is necessary for the execution of this Agreement by Shareholders and
the consummation by Shareholders of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by Shareholders, the
consummation by Shareholders of the transactions contemplated hereby or
compliance by Shareholders with any of the provisions hereof shall (A) conflict
with or result in any breach of the certificate or incorporation or by-laws or
other organizational documents of TAC or the Foundation, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which any Shareholder is a party or
20
<PAGE>
by which any Shareholder or any of its properties or assets (including the
Company Shares) may be bound, or (C) violate any order, writ, injunction,
decree, judgment, statute, rule or regulation applicable to any Shareholder or
any of its properties or assets. To the best knowledge of Shareholders, no
litigation is pending or threatened involving Shareholders or the Company
relating in any way to this Agreement, the Merger Agreement, the Ancillary
Agreements, or any transactions contemplated hereby or thereby.
(e) Shareholders understand and acknowledge that Parent is entering
into, and causing the Purchaser to enter into, the Merger Agreement and the
Ancillary Agreements, and is incurring the obligations set forth therein, in
reliance upon Shareholders' execution and delivery of this Agreement.
(f) Except for Morgan Stanley & Co. Incorporated, no broker,
investment banker, financial adviser or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Shareholders.
(g) Shareholders have no plan or intention, and as of the Effective
Time will have no plan or intention to sell, exchange or otherwise dispose of
any of the shares of Parent Voting Securities that they receive in the Merger.
(h) Shareholders have no plan or intention and, as of the effective
date of the Spin-off, will have no plan or intention, to sell, exchange or
otherwise dispose of any of the Spinco Shares that they receive in such Spin-off
(including by inter vivos gift).
(i) Shareholders will make such representations as may reasonably be
requested by Parent (provided such representations are true at the time given),
and in such form as may reasonably be requested by Parent, for use in connection
with the request by Parent that the Internal Revenue Service issue a private
letter ruling with respect to the tax consequences of the Spin-off, including
the representation made in Section 9(h) hereof.
21
<PAGE>
10. Representations and Warranties of Spinco. Spinco hereby
----------------------------------------
represents and warrants to Shareholders as follows:
(a) Spinco is a corporation duly organized and validly existing under
the laws of the State of Delaware, and is in good standing under the laws of the
state of its incorporation. Spinco has all necessary corporate power and
authority to execute and deliver this Agreement and perform its obligations
hereunder. The execution and delivery by Spinco of this Agreement and the
performance by Spinco of its obligations hereunder have been duly and validly
authorized by the Board of Directors of Spinco and no other corporate
proceedings on the part of Spinco are necessary to authorize the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
(b) This Agreement has been duly and validly executed and delivered
by Spinco and constitutes a valid and binding agreement of Spinco, enforceable
against Spinco in accordance with its terms except to the extent (i) such
enforcement may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors rights 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.
(c) Except for filings, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the ICA, (i) no filing
with, and no permit, authorization, consent or approval of, any state or federal
public body or authority is necessary for the execution of this Agreement by
Spinco and the consummation by Spinco of the transactions contemplated hereby
and (ii) none of the execution and delivery of this Agreement by Spinco, the
consummation by Spinco of the transactions contemplated hereby or compliance by
Spinco with any of the provisions hereof shall (A) conflict with or result in
any breach of the certificate of incorporation or by-laws of Spinco, (B) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract,
22
<PAGE>
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Spinco is a party or by which Spinco or any of
its properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, statute, rule or regulation applicable to Spinco
or any of its properties or assets. To the best knowledge of Spinco, no
litigation is pending or threatened involving Spinco relating in any way to this
Agreement, the Merger Agreement, the Ancillary Agreements or any transactions
contemplated hereby or thereby.
(d) Except for CS First Boston Corporation, no broker, investment
banker, financial adviser or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Spinco.
11. Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
12. Stop Transfer; Legend.
---------------------
(a) Shareholders agree with and covenant to Spinco that Shareholders
shall not request that Spinco register the transfer (book-entry or otherwise) of
any certificated or uncertificated interest representing any of the securities
of Spinco unless such transfer is made in compliance with this Agreement.
(b) During the Standstill Period, Shareholders shall promptly
surrender to Spinco all certificates representing the Spinco Shares, and other
Spinco Voting Securities acquired by Shareholders or their Affiliates after the
date hereof, and Spinco shall place the following legend on such certificates:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST 3, 1995 BY AND AMONG UNION
PACIFIC RESOURCES GROUP INC., THE ANSCHUTZ CORPORATION, ANSCHUTZ FOUNDATION
AND MR. PHILIP F. ANSCHUTZ WHICH, AMONG
23
<PAGE>
OTHER THINGS, RESTRICTS THE TRANSFER AND VOTING THEREOF."
(c) In connection with any Transfer of Spinco Voting Securities to
any Person, other than a Shareholder, an Affiliate of a Shareholder, any heir,
distributee, guardian, administrator, executor, legal representative or similar
successor in interest, or a member of a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) in which a Shareholder or an Affiliate thereof or
such other Person is included, pursuant to, and made in compliance with, Section
6 hereof, and from and after the termination of the Standstill Period, Spinco
shall, upon surrender thereto of any certificates representing Spinco Voting
Securities that bear a legend required by this Section 12, issue and deliver to
the record owner of the securities represented thereby, or to its registered
transferee, certificates representing such securities without such legend.
13. Termination. Except as otherwise provided in this Agreement,
-----------
this Agreement shall terminate on the earliest to occur of (1) the seventh
anniversary of the Effective Time, (2) following consummation of the Spin-off,
at such time that the Shareholders Beneficially Own, and continue to
Beneficially Own, in the aggregate, less than 4% of the Spinco Voting Securities
then outstanding, it being understood, however, that if the Shareholders at any
time Beneficially Own in the aggregate less than 4% of the Spinco Voting
Securities then outstanding but, prior to the seventh anniversary of the
Effective Time, subsequently acquire Beneficial Ownership of any Spinco Voting
Securities (except pursuant to clauses (A), (B) or (C) of the parenthetical
exception to the first sentence in Section 5(a)(i) hereof or in an Inadvertent
Acquisition) if immediately following such acquisition Shareholders become
Beneficial Owners in the aggregate of more than 4% of the Spinco Voting
Securities then outstanding, the provisions of Sections 5, 6, 9, 11, 12, 13 and
14 of this Agreement shall be effective and in full force again as if no such
termination had occurred and (3) if at any time that the Shareholders
Beneficially Own in the aggregate more than 4% of the Spinco Voting Securities
then outstanding (i) the Shareholder Designee shall not be elected as a director
of Parent (other than as a result of a resignation or non-election referred to
in Section 7(a)(vi)(A) or 7(a)(vi)(C) hereof), (ii) subject to applicable
requirements of the FTC, the New York Stock Exchange or any other security
exchange on which the
24
<PAGE>
Spinco Common Stock is listed, or if not so listed, under the rules or
regulations of the National Association of Securities Dealers, the Shareholder
Designee who is then a director shall not be appointed as a member of the
Executive, Finance and Corporate Development, and Compensation, Benefits and
Nominating Committees, respectively, of the Board of Directors of Parent (or
committees having similar functions) or (iv) Parent shall have breached its
covenant in Section 7(b) hereof; provided that TAC, for itself and on behalf of
--------
all other Shareholders, may by written notice to Parent irrevocably elect that,
from and after the delivery thereof, the references in this Section 13 and in
Section 7 hereof to "4%" be deleted and replaced by references to "3%".
Notwithstanding anything herein to the contrary, any agreements or covenants
contained herein which by their terms require action or performance following
termination of this Agreement shall survive such termination.
14. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Shareholders agree that this Agreement and the respective rights
and obligations of Shareholders hereunder shall attach to any Spinco Voting
Securities that may become Beneficially Owned by Shareholders. The obligations
of Shareholders under Sections 5(c), 6 and 12 hereof shall terminate with
respect to Spinco Voting Securities that shall cease to be Beneficially Owned by
a Shareholder, an Affiliate thereof or any heir, distributee, guardian,
administrator, executor, legal representative or similar successor in interest,
pursuant to a Transfer thereof to any Person other than a Shareholder, an
Affiliate of a Shareholder, such other Person or a member of a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) in which a Shareholder, an
Affiliate thereof or such other person is included; provided that such Transfer
--------
shall be permitted by, and made in accordance with Section 3 hereof or Section 6
hereof, as the case may be, and such termination shall be effective upon the
Transfer of such securities; such transferees of such securities shall have no
obligations or rights under or with respect to this Agreement and, except as
otherwise provided herein, shall not be deemed
25
<PAGE>
to be Shareholders for any purposes of this Agreement; and thereafter such
securities shall not be subject to Sections 5(c), 6 and 12 hereof for any
purpose whatsoever. The representations, warranties, covenants, obligations and
other agreements of Shareholders made or undertaken in this Agreement are made
or undertaken by each Shareholder with respect to itself alone, severally and
not jointly, and, no Shareholder shall have any responsibility with respect to
the representations, warranties, covenants, obligations and other agreements
made or undertaken by any other Shareholder in this Agreement or any liability
with respect to the breach thereof by any other Shareholder.
(c) Except as otherwise provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, and each
of Spinco, on the one hand, and Shareholders, on the other hand, shall indemnify
and hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any brokerage fees, commissions or finders' fees
asserted by any person on the basis of any act or statement alleged to have been
made by such party or its Affiliates.
(d) Except as provided in the Agreement, this Agreement shall not be
assigned by operation of law or otherwise without the prior written consent of
the other party, provided that Spinco may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Spinco no such assignment shall relieve Spinco of its obligations
hereunder if such assignee does not perform such obligations.
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly
26
<PAGE>
received if given) by hand delivery or telecopy (with a confirmation copy sent
for next day delivery via courier service, such as FedEx), or by any courier
service, such as FedEx, providing proof of delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses:
If to Shareholders:
The Anschutz Corporation
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
Anschutz Foundation
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
Philip F. Anschutz
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
and, in either case, with a copy to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Telephone No.: (212) 326-2000
Telecopy No.: (212) 326-2091
Attention: Drake S. Tempest, Esq.
If to Spinco:
Union Pacific Resources Group Inc.
P.O. Box 7, 801 Cherry Street
Fort Worth, Texas 76101
Telephone No.: (817) 877-6000
Telecopy No.: (817) 877-7522
Attention: B. J. Zimmerman, Esq.
27
<PAGE>
copy to:
Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2001
Attention: Paul T. Schnell, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Whenever possible, each provision or portion of any provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(h) Each of the parties hereto recognizes and acknowledges that a
breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore each of the parties hereto agrees
that in the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to
28
<PAGE>
insist upon compliance by any other party hereto with its obligations hereunder,
and any custom or practice of the parties at variance with the terms hereof,
shall not constitute a waiver by such party of its right to exercise any such or
other right, power or remedy or to demand such compliance.
(j) This Agreement is not intended to be for the benefit of, and
shall not be enforceable by, any person or entity who or which is not a party
hereto.
(k) This Agreement shall be governed and construed in accordance with
the laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.
(l) The representations and warranties made herein shall survive
through the term of this Agreement.
(m) Each party hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court in the State of New York in any action, suit
or proceeding arising in connection with this Agreement, and agrees that any
such action, suit or proceeding may be brought in such court (and waives any
objection based on forum non conveniens or any other objection to venue
----- --- ----------
therein); provided, however, that such consent to jurisdiction is solely for the
-------- -------
purpose referred to in this paragraph (m) and shall not be deemed to be a
general submission to the jurisdiction of said Court or in the State of New York
other than for such purposes. Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(n) The descriptive headings used herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
(o) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
29
<PAGE>
IN WITNESS WHEREOF, Spinco and Shareholders have caused this Agreement
to be duly executed as of the day and year first above written.
UNION PACIFIC RESOURCES GROUP INC.
By:______________________________
Name:
Title:
No. of Shares: 48,084,754 THE ANSCHUTZ CORPORATION
By:______________________________
Name:
Title:
No. of Shares: 1,558,254 ANSCHUTZ FOUNDATION
By:______________________________
Name:
Title:
________________________
No. of Shares: 48,084,754 Philip F. Anschutz
[by reason
of ownership
of TAC]
30
<PAGE>
EXHIBIT 99(c)(6)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 3, 1995, by and
among Union Pacific Corporation, a Utah corporation ("Parent"), The Anschutz
Corporation, a Kansas corporation ("TAC"), and Anschutz Foundation, a Colorado
not-for-profit corporation (the "Foundation" and, together with TAC, the
"Holders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Union Pacific Railroad Company, a Utah corporation and an indirect wholly owned
subsidiary of Parent ("UPRR"), UP Acquisition Corporation, a Delaware
corporation and a direct wholly owned subsidiary of UPRR ("Purchaser"), and
Southern Pacific Rail Corporation, a Delaware corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as such Agreement may be amended
from time to time, the "Merger Agreement"), pursuant to which, among other
things, Purchaser has agreed to commence a cash tender offer (the "Offer") to
purchase up to 39,034,471 shares of common stock, $.001 par value, of the
Company ("Company Common Stock") and the Company will be merged with and into
UPRR (the "Merger");
WHEREAS, pursuant to the Merger, the Holders will receive shares of
Common Stock, par value $2.50 per share, of Parent ("Parent Common Stock");
WHEREAS, Parent, Purchaser and the Holders are simultaneously herewith
entering into a Shareholders Agreement (the "Shareholders Agreement"), pursuant
to which, among other things, the Holders have agreed to vote their shares of
Company Common Stock in favor of the Merger and to abide by certain agreements
relating to the shares of Parent Common Stock to be received in the Merger;
WHEREAS, as an inducement and a condition to their entering into the
Shareholders Agreement and voting for the Merger, the Holders have required that
Parent agree, and Parent has agreed, to enter into this Registration Rights
Agreement providing, among other things, for the registration under the
Securities Act of 1933, as
<PAGE>
amended (the "Securities Act"), of shares of Parent Common Stock to be disposed
of by the Holders;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Shareholders Agreement, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used and not defined
-----------
herein have the respective meanings ascribed to them in the Merger Agreement.
In addition, for purposes of this Agreement:
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that, directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For the purposes of this definition, "control" (including, with
correlative meanings, the term "controlled by" and "under common control with"),
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
(b) "Commission" shall mean the Securities and Exchange Commission.
(c) "Demand Registration" shall mean a Demand Registration as defined
in Section 2.1.
(d) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(e) "Piggy-Back Registration" shall mean a Piggy-Back Registration as
defined in Section 2.2.
(f) "Registrable Securities" shall mean the Parent Common Stock
received by the Holders pursuant to
2
<PAGE>
the Merger until (i) a registration statement covering such security has been
declared effective by the Commission and it has been disposed of pursuant to
such effective registration statement, (ii) it has been sold under circumstances
in which all of the applicable conditions of Rules 145 and 144 or Rule 144A (or
any similar provisions then in force) under the Securities Act are met, or (iii)
it has been otherwise transferred and Parent has delivered a new certificate or
other evidence of ownership for it not bearing a restrictive legend and it may
be resold without subsequent registration under the Securities Act.
(g) "Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
(h) "Termination Date" means the seventh anniversary of the Closing
Date (as defined in the Merger Agreement).
(i) "Underwriter" means a securities dealer which purchases any
Registrable Securities as principal and not as part of such dealer's market-
making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registrations. (a) Request for Registration.
-------------------- ------------------------
Any Holder may make, at any time or from time to time after the Closing Date,
subject to the terms herein and until and including the Termination Date of this
Agreement, a written request for registration under the Securities Act of all or
part of the Registrable Securities then held by such Holder (a "Demand
Registration"); provided, that Parent shall not be obligated to effect more than
three Demand Registrations for the Holders in total pursuant to this Agreement.
Such request will specify the number of Registrable Securities proposed to be
sold by the Holder(s) and will also specify the intended method of disposition
thereof. Parent will give written notice of such registration request to all
the Holders of the Registrable Securities and, subject to Section 2.3, include
in such registration
3
<PAGE>
all such Registrable Securities with respect to which Parent has received
written requests for inclusion therein within 20 business days after receipt by
the Holders of Parent's notice. Each request will also specify the number of
Registrable Securities to be registered and the intended disposition thereof.
(b) Effective Registration. A Demand Registration will not count as
----------------------
a Demand Registration unless and until it has become effective.
(c) Underwriting of Demand Registrations. At the election of the
------------------------------------
Holders, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an underwritten offering. The Holder
requesting the Demand Registration (with the consent of Parent, not to be
unreasonably withheld) shall select the book-running managing Underwriter in
connection with such offering and any additional investment bankers and managers
to be used in connection with the offering. To the extent 10% or more of the
Registrable Securities so requested to be registered in a Demand Registration
are excluded from the offering in accordance with Section 2.3, there shall be
provided one additional Demand Registration under Section 2.1(a).
SECTION 2.2. Piggy-Back Registration. If Parent proposes to file a
-----------------------
registration statement under the Securities Act with respect to an offering by
Parent for its own account or for the account of any of its respective
securityholders of any class of equity security (other than a registration
statement on Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission) or filed in connection with an exchange offer or offering of
securities solely to Parent's existing securityholders or a registration
statement filed by Parent to comply with its obligations under Demand
Registrations pursuant to Section 2.1 hereof), then Parent shall give written
notice of such proposed filing to the Holders of Registrable Securities as soon
as practicable (but in no event less than 10 days before the anticipated filing
date), and such notice shall offer such Holders the opportunity to register such
number of shares of Registrable Securities as each such Holder may request (a
"Piggy-Back Registration"). Parent shall use its best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Regis-
4
<PAGE>
trable Securities requested to be included in a Piggy-Back Registration to be
included on the same terms and conditions as any similar securities of Parent
included therein.
SECTION 2.3. Reduction of Offering. Notwithstanding anything
---------------------
contained in this Registration Rights Agreement, if the managing Underwriter or
Underwriters of an offering described in Section 2.1 or 2.2 delivers a written
opinion to the Holders of the Registrable Securities to be included in such
offering that the success of the offering would be materially and adversely
affected by inclusion of all the Registrable Securities requested to be included
either because of (a) the size of the offering that the Holders, Parent and such
other persons intend to make or (b) the kind of securities that the Holders,
Parent and any other persons or entities intend to include in such offering,
then (A) in the event that the size of the offering is the basis of such
Underwriter's opinion, the amount of securities to be offered for the accounts
of Holders shall be reduced to the extent necessary to reduce the total amount
of securities to be included in such offering to the amount recommended by such
managing Underwriter or Underwriters and Parent will include in the registration
the maximum number of securities which it is so advised can be sold without such
adverse effect, allocated, on a pro-rata basis within each following order of
priority, as follows:
(i) FIRST, any securities proposed to be registered by Holder(s)
exercising a Demand Registration right pursuant to this Agreement or any
securities proposed to be included in such Demand Registration by other
Holder(s) as contemplated by Section 2.1(a);
(ii) SECOND, any securities proposed to be registered by Parent for
its own account; and
(iii) THIRD, any other securities proposed to be registered for the
account of the Holders in a Piggy-Back Registration or any securities
proposed to be registered by another holder(s) pursuant to a registration
rights agreement entered into between such other holder(s) and Parent who
are exercising "piggy-back" registration rights;
5
<PAGE>
and (B) in the event that the kind of securities to be offered is the basis of
such Underwriter's opinion, (x) the Registrable Securities to be included in
such offering shall be reduced as described in clause (A) above or (y) if the
actions described in the immediately preceding clause (x) would, in the judgment
of the managing Underwriter, be insufficient to eliminate substantially the
material and adverse effect that inclusion of the Registration Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever the Holders have
--------------------
requested that any Registrable Securities be registered pursuant to Section 2.1
hereof, Parent will use its best efforts to effect the registration and
facilitate the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as promptly as practicable, and in
connection with any such request:
(a) Parent will as expeditiously as possible prepare and file
with the Commission a registration statement on any form for which
Parent then qualifies or which counsel for Parent shall deem
appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with
the intended method of distribution thereof, and use its best efforts
to cause such filed registration statement to become and remain
effective for a period of not less than 180 days (90 days in the case
of a fully underwritten offering other than pursuant to Rule 415 under
the Securities Act); provided that if Parent shall furnish to the
Holders making a request pursuant to Section 2.1 a certificate signed
by either its Chairman or President stating that in his good faith
judgment it would be significantly disadvantageous to Parent or its
shareholders for such a registration statement to be filed as
expeditiously
6
<PAGE>
as possible, Parent shall have a period of not more than 90 days
within which to file such registration statement measured from the
date of receipt of the request in accordance with Section 2.1.
(b) Parent will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto,
furnish and allow a reasonable time for review and comment to each
Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such
registration statement as proposed to be filed, and thereafter furnish
to such Selling Holder and Underwriter, if any, such number of copies
of such registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such
registration statement (including each preliminary prospectus) and
such other documents as such Selling Holder or Underwriter may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(c) After the filing of the registration statement, Parent will
promptly notify each Selling Holder of Registrable Securities covered
by such registration statement of any stop order issued or threatened
by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(d) Parent will use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky
laws of such jurisdictions in the United States as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of
distribution) requests and (ii) cause such Registrable Securities to
be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and
operations of Parent and do
7
<PAGE>
any and all other acts and things that may be reasonably necessary or
advisable to enable such Selling Holder to consummate the disposition
of the Registrable Securities owned by such Selling Holder; provided
that Parent will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required
to qualify but for this paragraph (d), (B) subject itself to taxation
in any such jurisdiction, (C) consent to general service of process in
any such jurisdiction or (D) consent to any material restrictions on
the conduct of its business or any restrictions on payments to any
stockholders of Parent; and provided further that the Holders will not
be required to take any action pursuant to this paragraph (d).
(e) Parent will promptly notify each Selling Holder of such
Registrable Securities, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment.
(f) Parent and each Selling Holder will enter into customary
agreements (including an underwriting agreement in customary form
containing customary representations, warranties, covenants, opinions,
certificates, cross-indemnification and contribution provisions) and
take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities.
(g) Parent will make available for inspection by any Selling
Holder of such Registrable Securities, any Underwriter participat-
8
<PAGE>
ing in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by any such
Selling Holder or Underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and
properties of Parent (collectively, the "Records") as shall be
reasonably necessary to conduct due diligence, and cause Parent's
officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration
statement. The Selling Holders shall cause such Records which Parent
determines, in good faith, to be confidential and which Parent
notifies the Inspectors are confidential to be kept confidential by
the Inspectors and not used for any purpose other than such
registration of Registrable Securities, and the Selling Holders shall
cause the Inspectors not to disclose the Records unless (i) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such registration statement or (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction. Information obtained by
any Selling Holder hereunder as a result of such inspections shall be
deemed confidential and shall be kept confidential by the Selling
Holders and may not be used by any Selling Holder for any purpose
other than such registration of Registrable Securities. Each Selling
Holder will, upon learning that disclosure of such Records is sought
in a court of competent jurisdiction, give notice to Parent and allow
Parent, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
(h) Parent will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling
Holder or Underwriter, of (i) an opinion or opinions of counsel to
Parent and (ii) a comfort letter or comfort letters from Parent's
independent public accountants, each in custom-
9
<PAGE>
ary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the Holders of a
majority of the Registrable Securities included in such offering or
the managing Underwriter therefor reasonably requests.
(i) Parent will otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security-holders, as soon as reasonably practicable,
an earnings statement covering a period of 12 months, beginning within
three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act.
(j) Parent will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on
which similar securities issued by Parent are then listed.
Each Selling Holder of Registrable Securities agrees to promptly
furnish in writing to Parent such information regarding the distribution of the
Registrable Securities as Parent may from time to time reasonably request and
such other information as may be legally required in connection with such
registration.
Upon receipt of any notice from Parent of the happening of any event
of the kind described in Section 3.1(e) hereof, each Selling Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such Selling
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.1(e) hereof, and, if so directed by Parent, such
Selling Holder will deliver to Parent all copies, other than permanent file
copies then in such Selling Holder's possession, of the most recent prospectus
covering such Registrable Securities at the time of receipt of such notice. In
the event Parent shall give such notice, Parent shall extend the period during
which such registration statement shall be maintained effective (including the
period referred to in Section 3.1(a)
10
<PAGE>
hereof) by the number of days during the period from and including the date of
the giving of notice pursuant to Section 3.1(e) hereof to the date when Parent
shall make available to the Selling Holders of Registrable Securities covered by
such registration statement a prospectus supplemented or amended to conform with
the requirements of Section 3.1(e) hereof.
The procedures set forth in this Section 3.1 shall apply to Piggy-Back
Registrations pursuant to Section 2.2.
SECTION 3.2. Registration Expenses. In connection with any
---------------------
registration statement required to be filed hereunder, Parent shall pay the
following Registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses (including without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities, and (vi) reasonable fees and disbursements of counsel for Parent and
customary fees and expenses for independent certified public accountants
retained by Parent (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 3.1(h) hereof).
Parent shall have no obligation to pay any underwriting fees, discounts,
commissions or expenses attributable to the sale of Registrable Securities,
including, without limitation, the fees and expenses of any Underwriters and
such Underwriters' counsel, or any out-of-pocket expenses of the Holders (or the
agents who manage their accounts), including, without limitation, the fees and
expenses of any counsel retained by the Holders. Such Holders' fees, discounts,
commissions and expenses shall be paid promptly by the Holders.
11
<PAGE>
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by Parent. Parent agrees to indemnify
-------------------------
and hold harmless each Selling Holder of Registrable Securities, its officers,
directors and agents, and each Person, if any, who controls such Selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities or
in any amendment or supplement thereto or in any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to Parent by
such Selling Holder or on such Selling Holder's behalf expressly for the use
therein; provided, that with respect to any untrue statement or omission or
--------
alleged untrue statement or omission made in any preliminary prospectus, the
indemnity agreement contained in this paragraph shall not apply to the extent
that any such loss, claim, damage, liability or expense results from the fact
that a current copy of the prospectus was not sent or given to the person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Securities concerned to such
person if it is determined that it was the responsibility of such Selling Holder
to provide such person with a current copy of the prospectus and such current
copy of the prospectus would have cured the defect giving rise to such loss,
claim, damage, liability or expense. Parent also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1.
12
<PAGE>
SECTION 4.2. Indemnification by Holders of Registrable Securities.
----------------------------------------------------
Each Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless Parent, its officers, directors and agents and each Person, if any, who
controls Parent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from Parent to such Selling Holder, but only with respect to information
furnished in writing by such Selling Holder or on such Selling Holder's behalf
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus; and provided that the liability of each Selling Holder
under the foregoing indemnity shall be limited to an amount equal to the public
offering price of the Registrable Securities sold by such Selling Holder, less
the applicable underwriting discounts and commissions. Each Selling Holder also
agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
Parent provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceeding. If any action or
-------------------------------------
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such person (an "Indemnified Party") shall promptly notify
the person against whom such indemnity may be sought (an "Indemnifying Party")
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all expenses. Such Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (a) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (b) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing inter-
13
<PAGE>
ests between them. It is understood that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for all such Indemnified Parties, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Indemnified Parties, such firm shall be
designated in writing by the Indemnified Parties and shall, in the case of a
Demand Registration, be reasonably satisfactory to the Indemnifying Party. The
Indemnifying Party shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of with any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
SECTION 4.4. Contribution. If the indemnification provided for in
------------
this Article IV is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (a) as between Parent and the
Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by Parent
and the Selling Holders on the one hand and the Underwriters on the other from
the offering of the securities, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of
14
<PAGE>
Parent and the Selling Holders on the one hand and of the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations and (b) as between Parent on the one hand and each Selling Holder
on the other, in such proportion as is appropriate to reflect the relative fault
of Parent and of each Selling Holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by Parent and the Selling Holders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by Parent and the Selling Holders bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
prospectus. The relative fault of Parent and the Selling Holders on the one
hand and of the Underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by Parent and the Selling Holders or by the Underwriters.
The relative fault of Parent on the one hand and of each Selling Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Parent and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitation set forth above,
any legal or other expenses
15
<PAGE>
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no Selling Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities of such
Selling Holder were offered to the public exceeds the amount of any damages
which such Selling Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
ARTICLE V
EFFECTIVENESS
SECTION 5.1. Effectiveness. This Agreement shall become effective
-------------
only upon the consummation of the Merger and shall terminate and be void and of
no force or effect if the Merger Agreement is terminated in accordance with its
terms.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of
16
<PAGE>
such underwriting arrangements and these Registration Rights.
SECTION 6.2. Merger, Consolidation, Exchange, Recapitalization etc.
-----------------------------------------------------
In the event, directly or indirectly, (a) Parent shall merge with and into, or
consolidate with, or consummate a share exchange with, any other person, or (b)
any person shall merge with and into, or consolidate, Parent and Parent shall be
the surviving corporation of such merger or consolidation and, in connection
with such merger or consolidation, all or part of the Registrable Securities
shall be changed into or exchanged for stock or other securities of any person,
or (c) any capital stock or other securities are issued in respect of, in
exchange for, or in substitution of, any Parent equity securities by reason of
any reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, split-off,
sale of assets, distribution to stockholders or combination of the shares of
Parent equity securities or any Parent's capital structure, then, in each such
case, appropriate adjustments shall be made so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Registration Rights Agreement.
SECTION 6.3. 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
FedEx, 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, to:
Union Pacific Corporation
Martin Towers
Eighth & Eaton Avenues
Bethlehem, Pennsylvania 18018
Attention: Carl W. von Bernuth, Esq.
Telephone No.: (610) 861-3200
Telecopy No.: (610) 861-3111
17
<PAGE>
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 Holders to:
The Anschutz Corporation
Anschutz Foundation
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
Attention: Philip F. Anschutz
Telephone No.: (303) 298-1000
Telecopy No.: (303) 298-8881
with a copy to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Drake S. Tempest, Esq.
Telephone No.: (212) 326-2000
Telecopy No.: (212) 326-2091
SECTION 6.4. No Waivers; Remedies. No failure or delay by any party
--------------------
in exercising any right, power or privilege under this Agreement shall operate
as a waiver of the right, power or privilege. A single or partial exercise of
any right, power or privilege shall not preclude any other or further exercise
of the right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement shall be
cumulative and not exclusive of any rights or remedies provided by law.
18
<PAGE>
SECTION 6.5. Amendments, etc. No amendment, modification,
---------------
termination or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 6.6. Assignment. The provisions of this Agreement shall not
----------
be assignable and any transfer of Registrable Securities shall not transfer any
rights under this Agreement to the transferee; provided, however, that (a)
either Holder shall have the right to assign its rights under this Agreement to
any Person who or which (i) acquires at least 20% of the Parent Common Stock
then Beneficially Owned by such Holder, (ii) would then be eligible to report
its ownership of Parent Common Stock (assuming ownership by such Person of a
sufficient number of shares of Parent Common Stock to require such reporting) on
a Schedule 13G, (iii) shall have agreed in writing (which agreement shall be
addressed, and shall be reasonably satisfactory in form and substance, to
Parent) to be bound by and comply with this Agreement with the same force and
effect as if all references herein to the Holders were references to such Person
and (iv) is reasonably acceptable to Parent, and (b) without the consent of
Parent, but subject to clauses (i) and (iii) of subsection (a) above, either
Holder shall have the right to assign its rights under this Agreement to (x) any
financial institution to which such Holder has, in accordance with Section 2(b)
of the Shareholders Agreement, pledged shares of Parent Common Stock, provided
that such assignment shall not be effective until following a default by Holder
under such pledge, or (y) any Affiliate of Mr. Philip F. Anschutz (it being
understood and agreed that any such rights transferred to any such Affiliate
shall terminate if such Affiliate ceases to be an Affiliate of Mr. Philip F.
Anschutz).
SECTION 6.7. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of New York, without
giving effect to the principles of conflicts of laws thereof. All rights and
obligations of Parent and Holders shall be
19
<PAGE>
in addition to and not in limitation of those provided by applicable law.
SECTION 6.8. Counterparts; Effectiveness. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 6.9. Severability of Provisions. Any provision of this
--------------------------
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 6.10. Headings and References. Section headings in this
-----------------------
Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. Reference to parties
and sections in this Agreement are references to the parties to or the sections
of this Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 6.11. Entire Agreement. This Agreement embodies the entire
----------------
agreement and understanding of the respective parties with respect to the
Holders' registration rights and supersedes all prior agreements or
understandings with respect to such rights.
SECTION 6.12. Survival. Except as otherwise specifically provided in
--------
this Agreement, each representation, warranty or covenant of each party to this
Agreement contained in or made pursuant to this Agreement shall survive and
remain in full force and effect, notwithstanding any investigation or notice to
the contrary or any waiver by any other party of a related condition precedent
to the performance by the other party of an obligation under this Agreement.
SECTION 6.13. Non-Exclusive Jurisdiction. Each party hereto (a)
--------------------------
agrees that any action, suit or proceeding (collectively, an "Action") with
respect to this Agreement may be brought in the courts of the United States of
America for the Southern District of New York, (b) accepts for itself and in
respect of its property,
20
<PAGE>
generally and unconditionally, the jurisdiction of those courts and (c)
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which it
may now or hereafter have to the bringing of any Action in those jurisdictions.
SECTION 6.14. Waiver of Jury Trial. Each party waives any right to a
--------------------
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 6.15. Specific Performance. Each of the parties hereto
--------------------
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
SECTION 6.16. No Inconsistent Agreements. Parent is not as of the
--------------------------
date hereof subject to any agreement with respect to the registration under the
Securities Act of any securities of Parent or otherwise, and prior to the
Termination Date shall not enter into any such agreement that is inconsistent
with the provisions of this Agreement, including, without limitation, the order
of priority by which the total amount of securities of Parent to be included in
any offering subject to Article II hereof shall be reduced pursuant to Section
2.3 hereof.
21
<PAGE>
IN WITNESS WHEREOF, Parent and the Holders have caused this Agreement
to be duly executed as of the date first above written.
UNION PACIFIC CORPORATION
By:
--------------------------
Name:
Title:
THE ANSCHUTZ CORPORATION
By:
--------------------------
Name:
Title:
ANSCHUTZ FOUNDATION
By:
--------------------------
Name:
Title:
22
<PAGE>
EXHIBIT 99(c)(7)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 3, 1995, between UP
Acquisition Corporation, a Delaware corporation (the "Holder" and, collectively
with any of its successors and permitted assigns hereunder, the "Holders") and
Southern Pacific Rail Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution of this Agreement, Union
Pacific Corporation, a Utah corporation ("Parent"), Union Pacific Railroad
Company, a Utah corporation and an indirect wholly owned subsidiary of Parent
("UPRR"), the Holder, a direct wholly owned subsidiary of UPRR, and the Company
have entered into an Agreement and Plan of Merger (as such Agreement may be
amended from time to time, the "Merger Agreement"), pursuant to which, among
other things, the Holder has agreed to commence a cash tender offer (the
"Offer") to purchase up to 39,034,471 shares of common stock, $.001 par value,
of the Company ("Company Common Stock") and the Company will be merged with and
into UPRR (the "Merger");
WHEREAS, Parent, the Company and the Holder are simultaneously
herewith entering into a Shareholders Agreement (the "Shareholders Agreement"),
pursuant to which, among other things, the Holder has agreed to vote its shares
of Company Common Stock in favor of the Merger and to abide by certain
agreements relating to the shares of Company Common Stock to be purchased in the
Offer;
WHEREAS, as an inducement and a condition to its entering into the
Shareholders Agreement and the Merger Agreement and commencing the Offer, the
Holder has required that the Company agree, and the Company has agreed, to enter
into this Registration Rights Agreement providing, among other things, for the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of shares of Company Common Stock to be disposed of by the Holder;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties,
<PAGE>
covenants and agreements contained herein and in the Shareholders Agreement and
the Merger Agreement, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used and not defined
-----------
herein have the respective meanings ascribed to them in the Merger Agreement.
In addition, for purposes of this Agreement:
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that, directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For the purposes of this definition, "control" (including, with
correlative meanings, the term "controlled by" and "under common control with"),
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
(b) "Commission" shall mean the Securities and Exchange Commission.
(c) "Demand Registration" shall mean a Demand Registration as defined
in Section 2.1.
(d) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(e) "Piggy-Back Registration" shall mean a Piggy-Back Registration as
defined in Section 2.2.
(f) "Registrable Securities" shall mean the Company Common Stock
purchased by the Holder pursuant to the Offer until (i) a registration statement
covering such security has been declared effective by the Commission and it has
been disposed of pursuant to such effective registration statement, (ii) it has
been sold under
2
<PAGE>
circumstances in which all of the applicable conditions of Rules 145 and 144 or
Rule 144A (or any similar provisions then in force) under the Securities Act are
met, or (iii) it has been otherwise transferred and the Company has delivered a
new certificate or other evidence of ownership for it not bearing a restrictive
legend and it may be resold without subsequent registration under the Securities
Act.
(g) "Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
(h) "Termination Date" means the seventh anniversary of the date on
which the Holder accepts shares of Company Common Stock for payment pursuant to
the Offer.
(i) "Underwriter" means a securities dealer which purchases any
Registrable Securities as principal and not as part of such dealer's market-
making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registrations. (a) Request for Registration.
-------------------- ------------------------
Any Holder may make, at any time or from time to time after the date on which
the Holder accepts shares of Company Common Stock for payment pursuant to the
Offer, subject to the terms herein and until and including the Termination Date
of this Agreement, a written request for registration under the Securities Act
of all or part of the Registrable Securities then held by such Holder (a "Demand
Registration"); provided, that the Company shall not be obligated to effect more
than six Demand Registrations for the Holders in total pursuant to this
Agreement. Such request will specify the number of Registrable Securities
proposed to be sold by the Holder(s) and will also specify the intended method
of disposition thereof. The Company will give written notice of such
registration request to all the Holders of the Registrable Securities and,
subject to Section 2.3, include in such registration all such Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 20 business
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<PAGE>
days after receipt by the Holders of the Company's notice. Each request will
also specify the number of Registrable Securities to be registered and the
intended disposition thereof.
(b) Effective Registration. A Demand Registration will not count as
----------------------
a Demand Registration unless and until it has become effective.
(c) Underwriting of Demand Registrations. At the election of the
------------------------------------
Holders, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an underwritten offering. The Holder
requesting the Demand Registration (with the consent of the Company, not to be
unreasonably withheld) shall select the book-running managing Underwriter in
connection with such offering and any additional investment bankers and managers
to be used in connection with the offering. To the extent 10% or more of the
Registrable Securities so requested to be registered in a Demand Registration
are excluded from the offering in accordance with Section 2.3, there shall be
provided one additional Demand Registration under Section 2.1(a).
SECTION 2.2. Piggy-Back Registration. If the Company proposes to
-----------------------
file a registration statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
respective securityholders of any class of equity security (other than a
registration statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the Commission) or filed in connection with an exchange offer or
offering of securities solely to the Company's existing securityholders or a
registration statement filed by the Company to comply with its obligations under
Demand Registrations pursuant to Section 2.1 hereof), then the Company shall
give written notice of such proposed filing to the Holders of Registrable
Securities as soon as practicable (but in no event less than 10 days before the
anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of shares of Registrable Securities as each
such Holder may request (a "Piggy-Back Registration"). The Company shall use
its best efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on the
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same terms and conditions as any similar securities of the Company included
therein.
SECTION 2.3. Reduction of Offering. Notwithstanding anything
---------------------
contained in this Registration Rights Agreement, if the managing Underwriter or
Underwriters of an offering described in Section 2.1 or 2.2 delivers a written
opinion to the Holders of the Registrable Securities to be included in such
offering that the success of the offering would be materially and adversely
affected by inclusion of all the Registrable Securities requested to be included
either because of (a) the size of the offering that the Holders, Parent and such
other persons intend to make or (b) the kind of securities that the Holders,
Parent and any other persons or entities intend to include in such offering,
then (A) in the event that the size of the offering is the basis of such
Underwriter's opinion, the amount of securities to be offered for the accounts
of Holders shall be reduced to the extent necessary to reduce the total amount
of securities to be included in such offering to the amount recommended by such
managing Underwriter or Underwriters and the Company will include in the
registration the maximum number of securities which it is so advised can be sold
without such adverse effect, allocated, on a pro-rata basis within each
following order of priority, as follows:
(i) FIRST, any securities proposed to be registered by Holder(s)
exercising a Demand Registration right pursuant to this Agreement or any
securities proposed to be included in such Demand Registration by other
Holder(s) as contemplated by Section 2.1(a);
(ii) SECOND, any securities proposed to be registered by the Company
for its own account; and
(iii) THIRD, any other securities proposed to be registered for the
account of the Holders in a Piggy-Back Registration or any securities
proposed to be registered by another holder(s) pursuant to a registration
rights agreement entered into between such other holder(s) and the Company
who are exercising "piggy-back" registration rights;
5
<PAGE>
and (B) in the event that the kind of securities to be offered is the basis of
such Underwriter's opinion, (x) the Registrable Securities to be included in
such offering shall be reduced as described in clause (A) above or (y) if the
actions described in the immediately preceding clause (x) would, in the judgment
of the managing Underwriter, be insufficient to eliminate substantially the
material and adverse effect that inclusion of the Registration Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever the Holders have
--------------------
requested that any Registrable Securities be registered pursuant to Section 2.1
hereof, the Company will use its best efforts to effect the registration and
facilitate the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as promptly as practicable, and in
connection with any such request:
(a) The Company will as expeditiously as possible prepare and
file with the Commission a registration statement on any form for
which the Company then qualifies or which counsel for the Company
shall deem appropriate and which form shall be available for the sale
of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use
its best efforts to cause such filed registration statement to become
and remain effective for a period of not less than 180 days (90 days
in the case of a fully underwritten offering other than pursuant to
Rule 415 under the Securities Act); provided that if the Company shall
furnish to the Holders making a request pursuant to Section 2.1 a
certificate signed by either its Chairman or President stating that in
his good faith judgment it would be significantly disadvantageous to
the Company or its shareholders for such a registration statement to
be filed as expedi-
6
<PAGE>
tiously as possible, the Company shall have a period of not more than
90 days within which to file such registration statement measured from
the date of receipt of the request in accordance with Section 2.1.
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement
thereto, furnish and allow a reasonable time for review and comment to
each Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such
registration statement as proposed to be filed, and thereafter furnish
to such Selling Holder and Underwriter, if any, such number of copies
of such registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such
registration statement (including each preliminary prospectus) and
such other documents as such Selling Holder or Underwriter may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(c) After the filing of the registration statement, the Company
will promptly notify each Selling Holder of Registrable Securities
covered by such registration statement of any stop order issued or
threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue
sky laws of such jurisdictions in the United States as any Selling
Holder reasonably (in light of such Selling Holder's intended plan of
distribution) requests and (ii) cause such Registrable Securities to
be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of
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<PAGE>
the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to
enable such Selling Holder to consummate the disposition of the
Registrable Securities owned by such Selling Holder; provided that the
Company will not be required to (A) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (B) subject itself to taxation in
any such jurisdiction, (C) consent to general service of process in
any such jurisdiction or (D) consent to any material restrictions on
the conduct of its business or any restrictions on payments to any
stockholders of the Company; and provided further that the Holders
will not be required to take any action pursuant to this paragraph
(d).
(e) The Company will promptly notify each Selling Holder of such
Registrable Securities, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment.
(f) The Company and each Selling Holder will enter into
customary agreements (including an underwriting agreement in customary
form containing customary representations, warranties, covenants,
opinions, certificates, cross-indemnification and contribution
provisions) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable
Securities.
(g) The Company will make available for inspection by any
Selling Holder of such Regis-
8
<PAGE>
trable Securities, any Underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant
or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to
conduct due diligence, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any
Inspectors in connection with such registration statement. The
Selling Holders shall cause such Records which the Company determines,
in good faith, to be confidential and which the Company notifies the
Inspectors are confidential to be kept confidential by the Inspectors
and not used for any purpose other than such registration of
Registrable Securities, and the Selling Holders shall cause the
Inspectors not to disclose the Records unless (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or
omission in such registration statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction. Information obtained by any Selling Holder
hereunder as a result of such inspections shall be deemed confidential
and shall be kept confidential by the Selling Holders and may not be
used by any Selling Holder for any purpose other than such
registration of Registrable Securities. Each Selling Holder will,
upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
(h) The Company will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling
Holder or Underwriter, of (i) an opinion or opinions of counsel to the
Company and (ii) a comfort letter or comfort letters from the
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<PAGE>
Company's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or
comfort letters, as the case may be, as the Holders of a majority of
the Registrable Securities included in such offering or the managing
Underwriter therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security-holders, as soon as reasonably practicable,
an earnings statement covering a period of 12 months, beginning within
three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act.
(j) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed.
Each Selling Holder of Registrable Securities agrees to promptly
furnish in writing to the Company such information regarding the distribution of
the Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection with
such registration.
Upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3.1(e) hereof, each Selling Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such Selling
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.1(e) hereof, and, if so directed by the Company, such
Selling Holder will deliver to the Company all copies, other than permanent file
copies then in such Selling Holder's possession, of the most recent prospectus
covering such Registrable Securities at the time of receipt of such notice. In
the event the Company shall give such notice, the Company shall extend the
period during which such registration statement shall be
10
<PAGE>
maintained effective (including the period referred to in Section 3.1(a) hereof)
by the number of days during the period from and including the date of the
giving of notice pursuant to Section 3.1(e) hereof to the date when the Company
shall make available to the Selling Holders of Registrable Securities covered by
such registration statement a prospectus supplemented or amended to conform with
the requirements of Section 3.1(e) hereof.
The procedures set forth in this Section 3.1 shall apply to Piggy-Back
Registrations pursuant to Section 2.2.
SECTION 3.2. Registration Expenses. In connection with any
---------------------
registration statement required to be filed hereunder, the Company shall pay the
following Registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses (including without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities, and (vi) reasonable fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
3.1(h) hereof). The Company shall have no obligation to pay any underwriting
fees, discounts, commissions or expenses attributable to the sale of Registrable
Securities, including, without limitation, the fees and expenses of any
Underwriters and such Underwriters' counsel, or any out-of-pocket expenses of
the Holders (or the agents who manage their accounts), including, without
limitation, the fees and expenses of any counsel retained by the Holders. Such
Holders' fees, discounts, commissions and expenses shall be paid promptly by the
Holders.
11
<PAGE>
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The Company agrees to
------------------------------
indemnify and hold harmless each Selling Holder of Registrable Securities, its
officers, directors and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus relating to the Registrable Securities
or in any amendment or supplement thereto or in any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to the Company
by such Selling Holder or on such Selling Holder's behalf expressly for the use
therein; provided, that with respect to any untrue statement or omission or
--------
alleged untrue statement or omission made in any preliminary prospectus, the
indemnity agreement contained in this paragraph shall not apply to the extent
that any such loss, claim, damage, liability or expense results from the fact
that a current copy of the prospectus was not sent or given to the person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Securities concerned to such
person if it is determined that it was the responsibility of such Selling Holder
to provide such person with a current copy of the prospectus and such current
copy of the prospectus would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The Company also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1.
12
<PAGE>
SECTION 4.2. Indemnification by Holders of Registrable Securities.
----------------------------------------------------
Each Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless the Company, its officers, directors and agents and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Selling Holder, but only with
respect to information furnished in writing by such Selling Holder or on such
Selling Holder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus; and provided that the
liability of each Selling Holder under the foregoing indemnity shall be limited
to an amount equal to the public offering price of the Registrable Securities
sold by such Selling Holder, less the applicable underwriting discounts and
commissions. Each Selling Holder also agrees to indemnify and hold harmless
Underwriters of the Registrable Securities, their officers and directors and
each person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Company provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceeding. If any action or
-------------------------------------
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such person (an "Indemnified Party") shall promptly notify
the person against whom such indemnity may be sought (an "Indemnifying Party")
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all expenses. Such Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (a) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (b) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing inter-
13
<PAGE>
ests between them. It is understood that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for all such Indemnified Parties, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Indemnified Parties, such firm shall be
designated in writing by the Indemnified Parties and shall, in the case of a
Demand Registration, be reasonably satisfactory to the Indemnifying Party. The
Indemnifying Party shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of with any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
SECTION 4.4. Contribution. If the indemnification provided for in
------------
this Article IV is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (a) as between the Company and
the Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Holders on the one hand and the Underwriters on the
other from the offering of the securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only such relative benefits but also the
14
<PAGE>
relative fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (b) as between the Company on the one hand
and each Selling Holder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Holders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering (net
of underwriting discounts and commissions but before deducting expenses)
received by the Company and the Selling Holders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the prospectus. The relative fault of
the Company and the Selling Holders on the one hand and of the Underwriters on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Selling Holders or by the Underwriters. The relative fault of the
Company on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
15
<PAGE>
limitation set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.4, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities of such Selling Holder
were offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
ARTICLE V
EFFECTIVENESS
SECTION 5.1. Effectiveness. This Agreement shall become effective
-------------
only upon the consummation of the Offer and shall terminate and be void and of
no force or effect if the Merger Agreement is terminated in accordance with its
terms prior to the consummation of the Offer.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers
16
<PAGE>
of attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
Registration Rights.
SECTION 6.2. Merger, Consolidation, Exchange, Recapitalization etc.
-----------------------------------------------------
In the event, directly or indirectly, (a) the Company shall merge with and into,
or consolidate with, or consummate a share exchange with, any other person, or
(b) any person shall merge with and into, or consolidate, the Company and the
Company shall be the surviving corporation of such merger or consolidation and,
in connection with such merger or consolidation, all or part of the Registrable
Securities shall be changed into or exchanged for stock or other securities of
any person, or (c) any capital stock or other securities are issued in respect
of, in exchange for, or in substitution of, any Company equity securities by
reason of any reorganization, recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock dividend, split-
up, split-off, sale of assets, distribution to stockholders or combination of
the shares of the Company equity securities or any other alteration of the
Company's capital structure, then, in each such case, appropriate adjustments
shall be made so as to fairly and equitably preserve, as far as practicable, the
original rights and obligations of the parties hereto under this Registration
Rights Agreement.
SECTION 6.3. 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
FedEx, 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 the Holder, to:
UP Acquisition Corporation
Martin Tower
Eighth & Eaton Avenues
Bethlehem, Pennsylvania 18018
Attention: Carl W. von Bernuth, Esq.
Telephone No.: (610) 861-3200
Telecopy No.: (610) 861-3111
17
<PAGE>
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:
Southern Pacific Rail Corporation
Southern Pacific Building
One Market Plaza
San Francisco, California 94015
Attention: Cannon Y. Harvey, Esq.
Telephone No.: (415) 541-1000
Telecopy No.: (415) 541-1881
with a copy to:
Joseph W. Morrisey, Jr., Esq.
Holme Roberts & Owen LLC
1700 Lincoln
Suite 4100
Denver, Colorado 80203
Telephone No.: (303) 861-7000
Telecopy No.: (303) 866-0200
and
Peter D. Lyons, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone No.: (212) 848-4000
Telecopy No.: (212) 848-7179
SECTION 6.4. No Waivers; Remedies. No failure or delay by any party
--------------------
in exercising any right, power or privilege under this Agreement shall operate
as a waiver of the right, power or privilege. A single or partial exercise of
any right, power or privilege shall not preclude any other or further exercise
of the right,
18
<PAGE>
power or privilege or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 6.5. Amendments, etc. No amendment, modification,
---------------
termination or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 6.6. Assignment. The provisions of this Agreement shall not
----------
be assignable and any transfer of Registrable Securities shall not transfer any
rights under this Agreement to the transferee; provided, however, that (a) the
Holder shall have the right to assign its rights under this Agreement to any
Person who or which (i) acquires at least 20% of the Company Common Stock
purchased by the Holder in the Offer, (ii) would be eligible to report its
ownership of the Company Common Stock (assuming ownership by such Person of a
sufficient number of shares of the Company Common Stock to require such
reporting) on a Schedule 13G, (iii) shall have agreed in writing (which
agreement shall be addressed, and shall be reasonably satisfactory in form and
substance, to the Company) to be bound by and comply with this Agreement with
the same force and effect as if all references herein to the Holder were
references to such Person, and (iv) is reasonably acceptable to the Company, and
(b) without the consent of the Company, but subject to clauses (i) and (iii) of
subsection (a) above, the Holder shall have the right to assign its rights under
this Agreement to (x) any financial institution to which such Holder has, in
accordance with Section 3(b) of the Shareholders Agreement, pledged shares of
the Company Common Stock, provided that such assignment shall not be effective
until following a default by Holder under such pledge, (y) any Affiliate of the
Holder or Parent (it being understood and agreed that any such rights
transferred to any such Affiliate shall terminate if such Affiliate ceases to be
an Affiliate of the Holder or Parent) or (z) the Trustee under the Voting Trust
(as such terms are defined in the Merger Agreement).
19
<PAGE>
SECTION 6.7. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of New York, without
giving effect to the principles of conflicts of laws thereof. All rights and
obligations of the Company and Holders shall be in addition to and not in
limitation of those provided by applicable law.
SECTION 6.8. Counterparts; Effectiveness. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 6.9. Severability of Provisions. Any provision of this
--------------------------
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 6.10. Headings and References. Section headings in this
-----------------------
Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. Reference to parties
and sections in this Agreement are references to the parties to or the sections
of this Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 6.11. Entire Agreement. This Agreement embodies the entire
----------------
agreement and understanding of the respective parties with respect to the
Holders' registration rights and supersedes all prior agreements or
understandings with respect to such rights.
SECTION 6.12. Survival. Except as otherwise specifically provided in
--------
this Agreement, each representation, warranty or covenant of each party to this
Agreement contained in or made pursuant to this Agreement shall survive and
remain in full force and effect, notwithstanding any investigation or notice to
the contrary or any waiver by any other party of a related condition precedent
to the performance by the other party of an obligation under this Agreement.
20
<PAGE>
SECTION 6.13. Non-Exclusive Jurisdiction. Each party hereto (a)
--------------------------
agrees that any action, suit or proceeding (collectively, an "Action") with
respect to this Agreement may be brought in the courts of the United States of
America for the Southern District of New York, (b) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts and (c) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any
Action in those jurisdictions.
SECTION 6.14. Waiver of Jury Trial. Each party waives any right to a
--------------------
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 6.15. Specific Performance. Each of the parties hereto
--------------------
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
SECTION 6.16. No Inconsistent Agreements. The Company is not as of
--------------------------
the date hereof subject to any agreement with respect to the registration under
the Securities Act of any securities of the Company or otherwise, and prior to
the Termination Date shall not enter into any such agreement that is
inconsistent with the provisions of this Agreement, including, without
limitation, the order of priority by which the total amount of securities of the
Company to be included in any offering subject to Article II shall be reduced
pursuant to Section 2.3.
21
<PAGE>
IN WITNESS WHEREOF, the Company and the Holder have caused this
Agreement to be duly executed as of the date first above written.
SOUTHERN PACIFIC RAIL CORPORATION
By:______________________________
Name:
Title:
UP ACQUISITION CORPORATION
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT 99(c)(8)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 3, 1995, among Union
Pacific Resources Group Inc., a Utah corporation ("Spinco"), The Anschutz
Corporation, a Kansas corporation ("TAC"), and Anschutz Foundation, a Colorado
not-for-profit corporation (the "Foundation" and, together with TAC, the
"Holders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution of this Agreement, Union
Pacific Corporation, a Utah corporation ("Parent"), Union Pacific Railroad
Company, a Utah corporation and an indirect wholly owned subsidiary of Parent
("UPRR"), UP Acquisition Corporation, a Delaware corporation and a direct wholly
owned subsidiary of UPRR ("Purchaser"), and Southern Pacific Rail Corporation, a
Delaware corporation (the "Company"), have entered into an Agreement and Plan of
Merger (as such Agreement may be amended from time to time, the "Merger
Agreement"), pursuant to which, among other things, Purchaser has agreed to
commence a cash tender offer (the "Offer") to purchase up to 39,034,471 shares
of common stock, $.001 par value, of the Company and the Company will be merged
with and into UPRR (the "Merger");
WHEREAS, pursuant to the Merger, the Holders will receive shares of
Common Stock, par value $2.50 per share, of Parent;
WHEREAS, Parent intends to effect an initial public offering of no
more than 17.25% (not including employee shares or employee options) of, and to
distribute to its shareholders as a pro rata dividend (the "Spin-off") the
remainder of the shares of capital stock of Spinco;
WHEREAS, the Holders, as a result of the Merger and the Spin-off, may
beneficially own certain shares of capital stock of Spinco (the "Spinco
Shares");
WHEREAS, Spinco and the Holders are simultaneously herewith entering
into a Shareholders Agreement
<PAGE>
(the "Shareholders Agreement"), pursuant to which, among other things, the
Holders have agreed to abide by certain agreements relating to the Spinco
Shares;
WHEREAS, as an inducement and a condition to their entering into the
Shareholders Agreement and voting for the Merger, the Holders have required that
Parent agree, and Parent has agreed, to cause Spinco to enter into this
Registration Rights Agreement providing, among other things, for the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of Spinco Shares to be disposed of by the Holders;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained herein
and in the Shareholders Agreement, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used and not defined
-----------
herein have the respective meanings ascribed to them in the Merger Agreement.
In addition, for purposes of this Agreement:
(a) "Affiliate" shall mean, with respect to any specified Person, any
Person that, directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified. For the purposes of this definition, "control" (including, with
correlative meanings, the term "controlled by" and "under common control with"),
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
(b) "Commission" shall mean the Securities and Exchange Commission.
(c) "Demand Registration" shall mean a Demand Registration as defined
in Section 2.1.
2
<PAGE>
(d) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(e) "Piggy-Back Registration" shall mean a Piggy-Back Registration as
defined in Section 2.2.
(f) "Registrable Securities" shall mean any Spinco Shares received by
the Holders pursuant to the Spin-off until (i) a registration statement covering
such security has been declared effective by the Commission and it has been
disposed of pursuant to such effective registration statement, (ii) it has been
sold under circumstances in which all of the applicable conditions of Rules 145
and 144 or Rule 144A (or any similar provisions then in force) under the
Securities Act are met, or (iii) it has been otherwise transferred and Spinco
has delivered a new certificate or other evidence of ownership for it not
bearing a restrictive legend and it may be resold without subsequent
registration under the Securities Act.
(g) "Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
(h) "Termination Date" means the seventh anniversary of the date on
which the Spin-off is consummated.
(i) "Underwriter" means a securities dealer which purchases any
Registrable Securities as principal and not as part of such dealer's market-
making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registrations. (a) Request for Registration.
-------------------- ------------------------
Any Holder may make, at any time or from time to time after the date on which
the Spin-off is consummated, subject to the terms herein and until and including
the Termination Date of this Agreement, a written request for registration under
the Securities Act of all or part of the Registrable Securities then held by
such Holder (a "Demand Registration"); provided, that
3
<PAGE>
Spinco shall not be obligated to effect more than three Demand Registrations for
the Holders in total pursuant to this Agreement. Such request will specify the
number of Registrable Securities proposed to be sold by the Holder(s) and will
also specify the intended method of disposition thereof. Spinco will give
written notice of such registration request to all the Holders of the
Registrable Securities and, subject to Section 2.3, include in such registration
all such Registrable Securities with respect to which Spinco has received
written requests for inclusion therein within 20 business days after receipt by
the Holders of Spinco's notice. Each request will also specify the number of
Registrable Securities to be registered and the intended disposition thereof.
(b) Effective Registration. A Demand Registration will not count as
----------------------
a Demand Registration unless and until it has become effective.
(c) Underwriting of Demand Registrations. At the election of the
------------------------------------
Holders, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an underwritten offering. The Holder
requesting the Demand Registration (with the consent of Spinco, not to be
unreasonably withheld) shall select the book-running managing Underwriter in
connection with such offering and any additional investment bankers and managers
to be used in connection with the offering. To the extent 10% or more of the
Registrable Securities so requested to be registered in a Demand Registration
are excluded from the offering in accordance with Section 2.3, there shall be
provided one additional Demand Registration under Section 2.1(a).
SECTION 2.2. Piggy-Back Registration. If Spinco proposes to file a
-----------------------
registration statement under the Securities Act with respect to an offering by
Spinco for its own account or for the account of any of its respective
securityholders of any class of equity security (other than a registration
statement on Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission) or filed in connection with an exchange offer or offering of
securities solely to Spinco's existing securityholders or a registration
statement filed by Spinco to comply with its obligations under Demand
Registrations pursuant to Section 2.1 hereof), then Spinco shall give written
notice of such proposed filing to the
4
<PAGE>
Holders of Registrable Securities as soon as practicable (but in no event less
than 10 days before the anticipated filing date), and such notice shall offer
such Holders the opportunity to register such number of shares of Registrable
Securities as each such Holder may request (a "Piggy-Back Registration").
Spinco shall use its best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of Spinco included
therein.
SECTION 2.3. Reduction of Offering. Notwithstanding anything
---------------------
contained in this Registration Rights Agreement, if the managing Underwriter or
Underwriters of an offering described in Section 2.1 or 2.2 delivers a written
opinion to the Holders of the Registrable Securities to be included in such
offering that the success of the offering would be materially and adversely
affected by inclusion of all the Registrable Securities requested to be included
either because of (a) the size of the offering that the Holders, Spinco and such
other persons intend to make or (b) the kind of securities that the Holders,
Spinco and any other persons or entities intend to include in such offering,
then (A) in the event that the size of the offering is the basis of such
Underwriter's opinion, the amount of securities to be offered for the accounts
of Holders shall be reduced to the extent necessary to reduce the total amount
of securities to be included in such offering to the amount recommended by such
managing Underwriter or Underwriters and Spinco will include in the registration
the maximum number of securities which it is so advised can be sold without such
adverse effect, allocated, on a pro-rata basis within each following order of
priority, as follows:
(i) FIRST, any securities proposed to be registered by Holder(s)
exercising a Demand Registration right pursuant to this Agreement or any
securities proposed to be included in such Demand Registration by other
Holder(s) as contemplated by Section 2.1(a);
(ii) SECOND, any securities proposed to be registered by Spinco for
its own account; and
5
<PAGE>
(iii) THIRD, any other securities proposed to be registered for the
account of the Holders in a Piggy-Back Registration or any securities
proposed to be registered by another holder(s) pursuant to a registration
rights agreement entered into between such other holder(s) and Spinco who
are exercising "piggy-back" registration rights;
and (B) in the event that the kind of securities to be offered is the basis of
such Underwriter's opinion, (x) the Registrable Securities to be included in
such offering shall be reduced as described in clause (A) above or (y) if the
actions described in the immediately preceding clause (x) would, in the judgment
of the managing Underwriter, be insufficient to eliminate substantially the
material and adverse effect that inclusion of the Registration Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever the Holders have
--------------------
requested that any Registrable Securities be registered pursuant to Section 2.1
hereof, Spinco will use its best efforts to effect the registration and
facilitate the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as promptly as practicable, and in
connection with any such request:
(a) Spinco will as expeditiously as possible prepare and file
with the Commission a registration statement on any form for which
Spinco then qualifies or which counsel for Spinco shall deem
appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with
the intended method of distribution thereof, and use its best efforts
to cause such filed registration statement to become and remain
effective for a period of not less than 180 days (90 days in the case
of a fully underwritten offering other than pursuant
6
<PAGE>
to Rule 415 under the Securities Act); provided that if Spinco shall
furnish to the Holders making a request pursuant to Section 2.1 a
certificate signed by either its Chairman or President stating that in
his good faith judgment it would be significantly disadvantageous to
Spinco or its shareholders for such a registration statement to be
filed as expeditiously as possible, Spinco shall have a period of not
more than 90 days within which to file such registration statement
measured from the date of receipt of the request in accordance with
Section 2.1.
(b) Spinco will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto,
furnish and allow a reasonable time for review and comment to each
Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such
registration statement as proposed to be filed, and thereafter furnish
to such Selling Holder and Underwriter, if any, such number of copies
of such registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such
registration statement (including each preliminary prospectus) and
such other documents as such Selling Holder or Underwriter may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(c) After the filing of the registration statement, Spinco will
promptly notify each Selling Holder of Registrable Securities covered
by such registration statement of any stop order issued or threatened
by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(d) Spinco will use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky
7
<PAGE>
laws of such jurisdictions in the United States as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of
distribution) requests and (ii) cause such Registrable Securities to
be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and
operations of Spinco and do any and all other acts and things that may
be reasonably necessary or advisable to enable such Selling Holder to
consummate the disposition of the Registrable Securities owned by such
Selling Holder; provided that Spinco will not be required to (A)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph (d), (B)
subject itself to taxation in any such jurisdiction, (C) consent to
general service of process in any such jurisdiction or (D) consent to
any material restrictions on the conduct of its business or any
restrictions on payments to any stockholders of Spinco; and provided
further that the Holders will not be required to take any action
pursuant to this paragraph (d).
(e) Spinco will promptly notify each Selling Holder of such
Registrable Securities, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each
Selling Holder any such supplement or amendment.
(f) Spinco and each Selling Holder will enter into customary
agreements (including an underwriting agreement in customary form
containing customary representations, warranties, covenants, opinions,
certificates, cross-indem-
8
<PAGE>
nification and contribution provisions) and take such other actions as
are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(g) Spinco will make available for inspection by any Selling
Holder of such Registrable Securities, any Underwriter participating
in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by any such
Selling Holder or Underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and
properties of Spinco (collectively, the "Records") as shall be
reasonably necessary to conduct due diligence, and cause Spinco's
officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration
statement. The Selling Holders shall cause such Records which Spinco
determines, in good faith, to be confidential and which Spinco
notifies the Inspectors are confidential to be kept confidential by
the Inspectors and not used for any purpose other than such
registration of Registrable Securities, and the Selling Holders shall
cause the Inspectors not to disclose the Records unless (i) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such registration statement or (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction. Information obtained by
any Selling Holder hereunder as a result of such inspections shall be
deemed confidential and shall be kept confidential by the Selling
Holders and may not be used by any Selling Holder for any purpose
other than such registration of Registrable Securities. Each Selling
Holder will, upon learning that disclosure of such Records is sought
in a court of competent jurisdiction, give notice to Spinco and allow
Spinco, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
9
<PAGE>
(h) Spinco will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling
Holder or Underwriter, of (i) an opinion or opinions of counsel to
Spinco and (ii) a comfort letter or comfort letters from Spinco's
independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Holders of a majority of the
Registrable Securities included in such offering or the managing
Underwriter therefor reasonably requests.
(i) Spinco will otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security-holders, as soon as reasonably practicable,
an earnings statement covering a period of 12 months, beginning within
three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act.
(j) Spinco will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on
which similar securities issued by Spinco are then listed.
Each Selling Holder of Registrable Securities agrees to promptly
furnish in writing to Spinco such information regarding the distribution of the
Registrable Securities as Spinco may from time to time reasonably request and
such other information as may be legally required in connection with such
registration.
Upon receipt of any notice from Spinco of the happening of any event
of the kind described in Section 3.1(e) hereof, each Selling Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such Selling
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.1(e) hereof, and, if so directed by Spinco, such
Selling Holder will deliver to Spinco all
10
<PAGE>
copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event Spinco shall give such
notice, Spinco shall extend the period during which such registration statement
shall be maintained effective (including the period referred to in Section
3.1(a) hereof) by the number of days during the period from and including the
date of the giving of notice pursuant to Section 3.1(e) hereof to the date when
Spinco shall make available to the Selling Holders of Registrable Securities
covered by such registration statement a prospectus supplemented or amended to
conform with the requirements of Section 3.1(e) hereof.
The procedures set forth in this Section 3.1 shall apply to Piggy-Back
Registrations pursuant to Section 2.2.
SECTION 3.2. Registration Expenses. In connection with any
---------------------
registration statement required to be filed hereunder, Spinco shall pay the
following Registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses (including without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities, and (vi) reasonable fees and disbursements of counsel for Spinco and
customary fees and expenses for independent certified public accountants
retained by Spinco (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 3.1(h) hereof).
Spinco shall have no obligation to pay any underwriting fees, discounts,
commissions or expenses attributable to the sale of Registrable Securities,
including, without limitation, the fees and expenses of any Underwriters and
such Underwriters' counsel, or any out-of-pocket expenses of the Holders (or the
agents who manage their accounts), including, without limitation, the fees and
expenses of
11
<PAGE>
any counsel retained by the Holders. Such Holders' fees, discounts, commissions
and expenses shall be paid promptly by the Holders.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by Spinco. Spinco agrees to indemnify
-------------------------
and hold harmless each Selling Holder of Registrable Securities, its officers,
directors and agents, and each Person, if any, who controls such Selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities or
in any amendment or supplement thereto or in any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to Spinco by
such Selling Holder or on such Selling Holder's behalf expressly for the use
therein; provided, that with respect to any untrue statement or omission or
--------
alleged untrue statement or omission made in any preliminary prospectus, the
indemnity agreement contained in this paragraph shall not apply to the extent
that any such loss, claim, damage, liability or expense results from the fact
that a current copy of the prospectus was not sent or given to the person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Securities concerned to such
person if it is determined that it was the responsibility of such Selling Holder
to provide such person with a current copy of the prospectus and such current
copy of the prospectus would have cured the defect giving rise to such loss,
claim, damage, liability or expense. Spinco also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each person who controls
12
<PAGE>
such underwriters on substantially the same basis as that of the indemnification
of the Selling Holders provided in this Section 4.1.
SECTION 4.2. Indemnification by Holders of Registrable Securities.
----------------------------------------------------
Each Selling Holder agrees, severally but not jointly, to indemnify and hold
harmless Spinco, its officers, directors and agents and each Person, if any, who
controls Spinco within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from Spinco to such Selling Holder, but only with respect to information
furnished in writing by such Selling Holder or on such Selling Holder's behalf
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus; and provided that the liability of each Selling Holder
under the foregoing indemnity shall be limited to an amount equal to the public
offering price of the Registrable Securities sold by such Selling Holder, less
the applicable underwriting discounts and commissions. Each Selling Holder also
agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
Spinco provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceeding. If any action or
-------------------------------------
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such person (an "Indemnified Party") shall promptly notify
the person against whom such indemnity may be sought (an "Indemnifying Party")
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all expenses. Such Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (a) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (b) the named parties to any such action or proceeding
13
<PAGE>
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the Indemnifying Party shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties and shall, in the case of a Demand Registration, be
reasonably satisfactory to the Indemnifying Party. The Indemnifying Party shall
not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or proceeding,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of with any Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.
SECTION 4.4. Contribution. If the indemnification provided for in
------------
this Article IV is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (a) as between Spinco and the
Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by Spinco
and the Selling Holders on the one hand and the Under-
14
<PAGE>
writers on the other from the offering of the securities, or if such allocation
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of Spinco
and the Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (b) as between Spinco on the one hand and each Selling Holder
on the other, in such proportion as is appropriate to reflect the relative fault
of Spinco and of each Selling Holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by Spinco and the Selling Holders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by Spinco and the Selling Holders bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
prospectus. The relative fault of Spinco and the Selling Holders on the one
hand and of the Underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by Spinco and the Selling Holders or by the Underwriters.
The relative fault of Spinco on the one hand and of each Selling Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Spinco and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified
15
<PAGE>
Party as a result of the losses, claims, damages or liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitation set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.4, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities of such Selling Holder
were offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
ARTICLE V
EFFECTIVENESS
SECTION 5.1. Effectiveness. This Agreement shall become effective
-------------
only upon the consummation of the Spin-off and shall terminate and be void and
of no force or effect if the Merger Agreement is terminated in accordance with
Article VII thereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the
16
<PAGE>
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and these Registration Rights.
SECTION 6.2. Merger, Consolidation, Exchange, Recapitalization etc.
-----------------------------------------------------
In the event, directly or indirectly, (a) Spinco shall merge with and into, or
consolidate with, or consummate a share exchange with, any other person, or (b)
any person shall merge with and into, or consolidate, Spinco and Spinco shall be
the surviving corporation of such merger or consolidation and, in connection
with such merger or consolidation, all or part of the Registrable Securities
shall be changed into or exchanged for stock or other securities of any person,
or (c) any capital stock or other securities are issued in respect of, in
exchange for, or in substitution of, any Spinco equity securities by reason of
any reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, split-off,
sale of assets, distribution to stockholders or combination of the shares of
Spinco equity securities or any Spinco's capital structure, then, in each such
case, appropriate adjustments shall be made so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Registration Rights Agreement.
SECTION 6.3. 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
FedEx, 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 Spinco, to:
Union Pacific Resources Group Inc.
P.O. Box 7
801 Cherry Street
Forth Worth, Texas 76101
Attention: B.J. Zimmerman, Esq.
Telephone No.: (817) 877-6000
Telecopy No.: (817) 877-7522
17
<PAGE>
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 Holders, to:
The Anschutz Corporation
Anschutz Foundation
Suite 2400
555 Seventeenth Street
Denver, Colorado 80202
Attention: Philip F. Anschutz
Telephone No.: (303) 298-1000
Telecopy No.: (303) 298-8881
with a copy to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Drake S. Tempest, Esq.
Telephone No.: (212) 326-2000
Telecopy No.: (212) 326-2091
SECTION 6.4. No Waivers; Remedies. No failure or delay by any party
--------------------
in exercising any right, power or privilege under this Agreement shall operate
as a waiver of the right, power or privilege. A single or partial exercise of
any right, power or privilege shall not preclude any other or further exercise
of the right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement shall be
cumulative and not exclusive of any rights or remedies provided by law.
18
<PAGE>
SECTION 6.5. Amendments, etc. No amendment, modification,
---------------
termination or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 6.6. Assignment. The provisions of this Agreement shall not
----------
be assignable and any transfer of Registrable Securities shall not transfer any
rights under this Agreement to the transferee; provided, however, that (a)
either Holder shall have the right to assign its rights under this Agreement to
any Person who or which (i) acquires at least 20% of the Spinco Shares then
Beneficially Owned by such Holder, (ii) would then be eligible to report its
ownership of Spinco Shares (assuming ownership by such Person of a sufficient
number of Spinco Shares to require such reporting) on a Schedule 13G, (iii)
shall have agreed in writing (which agreement shall be addressed, and shall be
reasonably satisfactory in form and substance, to Spinco) to be bound by and
comply with this Agreement with the same force and effect as if all references
herein to the Holder were references to such Person, and (iv) is reasonably
acceptable to Spinco and (b) without the consent of Spinco, but subject to
clauses (i) and (iii) of subsection (a) above, either Holder shall have the
right to assign its rights under this Agreement to (x) any financial institution
to which such Holder has, in accordance with Section 3 of the Shareholders
Agreement, pledged Spinco Shares, provided that such assignment shall not be
effective until following a default by Holder under such pledge, or (y) any
Affiliate of Mr. Philip F. Anschutz (it being understood and agreed that any
such rights transferred to any such Affiliate shall terminate if such Affiliate
ceases to be an Affiliate of Mr. Philip F. Anschutz).
SECTION 6.7. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of New York, without
giving effect to the principles of conflicts of laws thereof. All rights and
obligations of Spinco and Holders shall be in addition to and not in limitation
of those provided by applicable law.
19
<PAGE>
SECTION 6.8. Counterparts; Effectiveness. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 6.9. Severability of Provisions. Any provision of this
--------------------------
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 6.10. Headings and References. Section headings in this
-----------------------
Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. Reference to parties
and sections in this Agreement are references to the parties to or the sections
of this Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 6.11. Entire Agreement. This Agreement embodies the entire
----------------
agreement and understanding of the respective parties with respect to the
Holders' registration rights and supersedes all prior agreements or
understandings with respect to such rights.
SECTION 6.12. Survival. Except as otherwise specifically provided in
--------
this Agreement, each representation, warranty or covenant of each party to this
Agreement contained in or made pursuant to this Agreement shall survive and
remain in full force and effect, notwithstanding any investigation or notice to
the contrary or any waiver by any other party of a related condition precedent
to the performance by the other party of an obligation under this Agreement.
SECTION 6.13. Non-Exclusive Jurisdiction. Each party hereto (a)
--------------------------
agrees that any action, suit or proceeding (collectively, an "Action") with
respect to this Agreement may be brought in the courts of the United States of
America for the Southern District of New York, (b) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts and (c) irrevocably waives any objection, including, without
limitation, any objection to the laying of
20
<PAGE>
venue or based on the grounds of FORUM NON CONVENIENS, which it may now or
hereafter have to the bringing of any Action in those jurisdictions.
SECTION 6.14. Waiver of Jury Trial. Each party waives any right to a
--------------------
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 6.15. Specific Performance. Each of the parties hereto
--------------------
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
SECTION 6.16. No Inconsistent Agreements. Spinco is not as of the
--------------------------
date hereof subject to any agreement with respect to the registration under the
Securities Act of any securities of Spinco or otherwise, and prior to the
Termination Date shall not enter into any such agreement that is inconsistent
with the provisions of this Agreement, including, without limitation, the order
of priority by which the total amount of securities of Spinco to be included in
any offering subject to Article II hereof shall be reduced pursuant to Section
2.3 hereof.
21
<PAGE>
IN WITNESS WHEREOF, Spinco and the Holders have caused this Agreement
to be duly executed as of the date first above written.
UNION PACIFIC RESOURCES GROUP INC.
By:______________________________
Name:
Title:
THE ANSCHUTZ CORPORATION
By:______________________________
Name:
Title:
ANSCHUTZ FOUNDATION
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT 99(c)(9)
THIS VOTING TRUST AGREEMENT, dated as of August 3, 1995, by and among UNION
PACIFIC CORPORATION, a Utah corporation ("Parent"), UP ACQUISITION CORPORATION,
a Delaware corporation and an indirect wholly-owned subsidiary of Parent (the
"Purchaser"), and SOUTHWEST BANK OF ST. LOUIS, a Missouri banking corporation
(the "Trustee"),
W I T N E S S E T H:
-------------------
WHEREAS, the Purchaser has agreed to commence a tender offer (the "Tender
Offer") to acquire up to 39,034,471 shares of common stock, $0.001 par value
("Common Stock"), of Southern Pacific Rail Corporation, a Delaware corporation
(the "Company");
WHEREAS, the Purchaser intends, simultaneously with the acceptance for
payment of such tendered shares pursuant to the Tender Offer, to deposit such
shares of Common Stock in an independent, irrevocable voting trust, pursuant to
the rules of the Interstate Commerce Commission (the "ICC"), in order to avoid
any allegation or assertion that Parent or the Purchaser is controlling or has
the power to control the Company prior to the receipt of approval by the ICC of
the merger (the "Merger") of the Company with and into Union Pacific Railroad
Company ("UPRR") pursuant to the Agreement and Plan of Merger
<PAGE>
dated as of August 3, 1995 by and among Parent, UPRR, the Purchaser and the
Company, as it may be amended from time to time (the "Merger Agreement") (a copy
of which is attached hereto as Exhibit A);
WHEREAS, Parent, Purchaser and the Company have entered into a Shareholders
Agreement dated as of August 3, 1995 (the "Shareholders Agreement") (a copy of
which is attached hereto as Exhibit B), with respect to the Common Stock and any
other voting securities of the Company that are or come to be beneficially owned
by Parent, Purchaser or any of their affiliates during the term of the
Shareholders Agreement;
WHEREAS, neither the Trustee nor any of its affiliates has any officers or
board members in common or any direct or indirect business arrangements or
dealings (as described in Paragraph 9 hereof) with Parent or the Purchaser or
any of their affiliates; and
WHEREAS, the Trustee is willing to act as voting trustee pursuant to the
terms of this Trust Agreement and the rules of the ICC,
NOW THEREFORE, the Parties hereto agree as follows:
2
<PAGE>
1. Parent and the Purchaser hereby appoint Southwest Bank of St. Louis as
Trustee hereunder, and Southwest Bank of St. Louis hereby accepts said
appointment and agrees to act as Trustee under this Trust Agreement as provided
herein.
2. Parent and the Purchaser agree that, prior to acceptance of the
tendered shares of Common Stock pursuant to the Tender Offer, (i) the Purchaser
will direct the depositary for the Tender Offer to transfer to the Trustee any
shares accepted for payment pursuant to the Tender Offer, and (ii) Parent and
the Purchaser will transfer or cause to be transferred to the Trustee all
certificates representing shares of Common Stock owned as of the date hereof by
Parent, the Purchaser or any affiliate of either of them. Parent and the
Purchaser also agree that immediately upon receipt, acquisition or purchase by
either of them or by any of their affiliates of any additional shares of Common
Stock, or any other voting securities of the Company, they will transfer or
cause to be transferred to the Trustee the certificate or certificates
representing such additional shares. All such certificates shall be duly
endorsed or accompanied by proper instruments duly executed for transfer thereof
to the Trustee,
3
<PAGE>
and shall be exchanged for one or more Voting Trust Certificates substantially
in the form attached hereto as Exhibit C (the "Trust Certificates"), with the
blanks therein appropriately filled. All shares of Common Stock and other
voting securities of the Company at any time delivered to the Trustee hereunder
are hereinafter called the "Company Trust Stock." The Trustee shall present to
the Company all certificates representing Company Trust Stock for surrender and
cancellation and for the issuance and delivery to the Trustee of new
certificates (the "Trust Stock") registered in the name of the Trustee or its
nominee.
3. The Trustee shall be present, in person or represented by proxy, at all
annual and special meetings of shareholders of the Company so that all Trust
Stock may be counted for the purposes of determining the presence of a quorum at
such meetings. The Trustee shall be entitled and it shall be its duty to
exercise any and all voting rights in respect of the Trust Stock either in
person or by proxy or consent, as hereinafter provided, unless otherwise
directed by an order of the ICC or a court of competent jurisdiction. Parent
and Purchaser agree, and the Trustee acknowledges, that the Trustee shall not
participate in or interfere with the
4
<PAGE>
management of the Company and shall take no other actions with respect to the
Company except in accordance with the terms hereof and the terms of the
Shareholders Agreement. The Trustee shall vote all shares of the Trust Stock to
approve and effect the Merger, and in favor of any proposal necessary to
effectuate Parent's acquisition of the Company pursuant to the Merger Agreement.
For so long as the Merger Agreement is in effect, the Trustee shall vote all
shares of Trust Stock against any other proposed merger, business combination or
similar transaction (including, without limitation, any consolidation, sale of
all or substantially all the assets, reorganization, recapitalization,
liquidation or winding up of or by the Company) involving the Company, but not
involving Parent or one of its subsidiaries or affiliates, other than in
connection with a disposition pursuant to Paragraph 8. The Trustee shall vote
all shares of Trust Stock in favor of any proposal or action necessary or
desirable to dispose of Trust Stock in accordance with Paragraph 8 hereof.
Except as otherwise expressly provided in the three immediately preceding
sentences, the Trustee shall vote all shares of Trust Stock with respect to all
matters, including without limitation the election or removal of directors,
voted on by the
5
<PAGE>
shareholders of the Company (whether at a regular or special meeting or pursuant
to a unanimous written consent) in the same proportion as all shares of Common
Stock (other than Trust Stock) are voted with respect to such matters. In
exercising its voting rights in accordance with this Paragraph 3, the Trustee
shall take such actions at all annual, special or other meetings of stockholders
of the Company or in connection with any action by consent in lieu of a meeting.
4. This Trust Agreement and the nomination of the Trustee during the term
of the trust shall be irrevocable by Parent and the Purchaser and their
affiliates and shall terminate only in accordance with the provisions of
Paragraphs 8 and 14 hereof.
5. Except as provided in Paragraph 3, the Trustee shall not exercise the
voting powers of the Trust Stock in any way so as to create any dependence or
intercorporate relationship between (i) Parent, the Purchaser and their
affiliates, on the one hand, and (ii) the Company or its affiliates, on the
other hand. The term "affiliate" or "affiliates" wherever used in this Trust
Agreement shall have the meaning specified in Section 11343(c) of Title 49 of
the United States Code, as amended. The Trustee shall not, without the prior
approval of
6
<PAGE>
the ICC, vote the Trust Stock to elect any officer, director, nominee or
representative of Parent, the Purchaser or any affiliate of either of them as an
officer or director of the Company or of any affiliate of the Company. The
Trustee shall be kept informed respecting the business operations of the Company
by means of the financial statements and other public disclosure documents
periodically filed by the Company and affiliates of the Company with the
Securities and Exchange Commission (the "SEC") and the ICC, and by means of
information respecting the Company contained in such statements and other
documents filed by Parent with the SEC and the ICC, copies of which shall be
promptly furnished to the Trustee by the Company or Parent, as the case may be,
and the Trustee shall be fully protected in relying upon such information. The
Trustee shall not be liable for any mistakes of fact or law or any error of
judgment, or for any act or omission, except as a result of the Trustee's
willful misconduct or gross negligence.
6. All Trust Certificates shall be transferable on the books of the
Trustee by the registered holder upon the surrender thereof properly assigned,
in accordance with rules from time to time established for the purpose by the
Trustee.
7
<PAGE>
Until so transferred, the Trustee may treat the registered holder as owner for
all purposes. Each transferee of a Trust Certificate issued hereunder shall, by
his acceptance thereof, assent to and become a party to this Trust Agreement,
and shall assume all attendant rights and obligations.
7. Pending the termination of this Trust as hereinafter provided, the
Trustee shall, immediately following the receipt of each cash dividend or cash
distribution as may be declared and paid upon the Trust Stock, pay the same over
to or as directed by the Purchaser or to or as directed by the holder of Trust
Certificates hereunder as then known to the Trustee. The Trustee shall receive
and hold dividends and distributions other than cash upon the same terms and
conditions as the Trust Stock and shall issue Trust Certificates representing
any new or additional securities that may be paid as dividends upon the Trust
Stock or distributed to the registered holders of Trust Certificates in
proportion to their respective interests.
8. (a) This Trust is accepted by the Trustee subject to the right hereby
reserved in Parent at any time to sell or make any other disposition of the
whole or any part of the Trust Stock in accordance with the terms of the
Sharehold-
8
<PAGE>
ers Agreement, whether or not an event described in subparagraph (b) below has
occurred. The Trustee shall take all actions reasonably requested by Parent
with respect to (including, without limitation, exercising all voting rights in
respect of Trust Stock in favor of any proposal or action necessary or desirable
to effect, or consistent with the effectuation of) any proposed sale or other
disposition of the whole or any part of the Trust Stock by the Purchaser or
Parent, including, without limitation, in connection with the exercise by Parent
of any rights under the Merger Agreement, the Registration Rights Agreement
dated as of August 3, 1995 between the Purchaser and the Company (the
"Registration Rights Agreement") (a copy of which is attached hereto as Exhibit
D), and the Shareholders Agreement to cause Trust Stock to be offered and sold
pursuant to a registration statement under the Securities Act of 1933 (an
"Offering") or distributed to shareholders of Parent (the "Distribution"). The
Trustee shall at any time upon the receipt of a direction from Parent, signed by
its President or one of its Vice Presidents and under its corporate seal
designating the person or entity to whom Parent has directly or indirectly sold
or otherwise disposed of the whole or any part of the Trust Stock
9
<PAGE>
and certifying that such disposition will be in compliance with all applicable
requirements of the Shareholders Agreement and that such person or entity is not
an affiliate of Parent and has all necessary regulatory authority, if any, to
purchase the Trust Stock (upon which certification the Trustee shall be entitled
to rely), immediately transfer to the person or entity therein named all of the
Trustee's right, title and interest in such amount of the Trust Stock as may be
set forth in said direction. If the foregoing direction shall specify all of
the Trust Stock, then following transfer of the Trustee's right, title and
interest therein, and in the event of a sale thereof, upon delivery to or upon
the order of the Purchaser of the proceeds of such sale, this Trust shall cease
and come to an end. If the foregoing direction is as to only a part of the
Trust Stock, then this Trust shall cease as to said part upon such transfer, and
receipt of proceeds in the event of sale, but shall remain in full force and
effect as to the remaining part of the Trust Stock, provided, however, that upon
-------- -------
the receipt of a written opinion of counsel for Parent, a copy of which is
submitted to the ICC, stating that the transfer of voting rights in all the
remaining Trust Stock to the Purchaser would not give Parent or the Purchaser
control
10
<PAGE>
of the Company within the meaning of 49 U.S.C. (S) 11343, and absent any
contrary direction of the ICC, this Trust shall cease and come to an end and all
Trust Stock and other property then held by the Trustee shall be distributed to
or upon the order of the Purchaser or the holder or holders of Trust
Certificates. In the event of a sale of Trust Stock by the Purchaser, the
Trustee shall, to the extent the consideration therefor is payable to or
controllable by the Trustee, promptly pay, or cause to be paid, upon the order
of the Purchaser the net proceeds of such sale to the registered holders of the
Trust Certificates in proportion to their respective interests. It is the
intention of this paragraph that no violations of 49 U.S.C. (S) 11343 will
result from a termination of this Trust.
(b) In the event the ICC by final order shall (i) approve or exempt the
acquisition of control of the Company by the Purchaser, Parent or any of their
affiliates or (ii) approve or exempt a merger between the Company and UPRR,
Parent or any of their affiliates, then immediately upon the direction of Parent
and the delivery of a certified copy of such order of the ICC or other
governmental authority with respect thereof, or, in the event that Subtitle IV
of Title 49
11
<PAGE>
of the United States Code, or other controlling law, is amended to allow the
Purchaser, UPRR, Parent or their affiliates to acquire control of the Company
without obtaining ICC or other governmental approval, upon delivery of an
opinion of independent counsel selected by the Trustee that no order of the ICC
or other governmental authority is required, the Trustee shall either (i)
transfer to or upon the order of the Purchaser, Parent or the holder or holders
of Trust Certificates hereunder as then known to the Trustee, its right, title
and interest in and to all of the Trust Stock then held by it in accordance with
the terms, conditions and agreements of this Trust Agreement and not theretofore
transferred by it as provided in subparagraph (a) hereof, or (ii) if shareholder
approval has not previously been obtained, vote the Trust Stock with respect to
any such merger between the Company and UPRR, Parent or any affiliate of either
as directed by the holder or holders of the Trust Certificates, and upon any
such transfer or merger this Trust shall cease and come to an end.
(c) In the event that the Merger Agreement terminates in accordance with
its terms or the condition set forth in Section 6.2(c) of the Merger Agreement
is not satisfied and is not waived by Parent and the Purchaser, Parent
12
<PAGE>
shall use its best efforts, consistent with its rights under and subject to the
terms of the Shareholders Agreement and the Registration Rights Agreement, to
sell the Trust Stock to one or more eligible purchasers, to sell or distribute
the Trust Stock in one Offering or Distribution, or otherwise to dispose of the
Trust Stock, during a period of two years after such order becomes final after
judicial review or failure to appeal or such extension of that period as the ICC
shall approve. Such disposition shall be subject to any jurisdiction of the ICC
to oversee Parent's divestiture of Trust Stock. At all times, the Trustee shall
continue to perform its duties under this Trust Agreement and, should Parent be
unsuccessful in its efforts to sell or distribute the Trust Stock during the
period referred to, the Trustee, subject to the terms of the Shareholders
Agreement, shall as soon as practicable sell the Trust Stock for cash to one or
more eligible purchasers in such manner and for such price as the Trustee in its
discretion shall deem reasonable after consultation with Parent. (An "eligible
purchaser" hereunder shall be a person or entity that is not affiliated with
Parent and which has all necessary regulatory authority, if any, to purchase the
Trust Stock.) Parent agrees to cooperate with the Trustee in effecting such
13
<PAGE>
disposition and the Trustee agrees to act in accordance with any direction made
by Parent as to any specific terms or method of disposition, to the extent not
inconsistent with the requirements of the terms of any ICC or court order. The
proceeds of the sale shall be distributed to or upon the order of Parent or, on
a pro rata basis, to the holder or holders of the Trust Certificates hereunder
as then known to the Trustee. The Trustee may, in its reasonable discretion,
require the surrender to it of the Trust Certificates hereunder before paying to
the holder his share of the proceeds. Upon disposition of the Trust Stock
pursuant to this paragraph 8(c), this Trust shall cease and come to an end.
(d) Unless sooner terminated pursuant to any other provision herein
contained, this Trust Agreement shall terminate on August 3, 2000, and may be
extended by the parties hereto, so long as no violation of 49 U.S.C. (S) 11343
will result from such termination or extension. All Trust Stock and any other
property held by the Trustee hereunder upon such termination shall be
distributed to or upon the order of the Purchaser or the holder or holders of
Trust Certificates hereunder as then known to the Trustee. The Trustee may, in
its reasonable discretion, require the surren-
14
<PAGE>
der to it of the Trust Certificates hereunder before the release or transfer of
the stock interests evidenced thereby.
(e) The Trustee shall promptly inform the ICC of any transfer or
disposition of Trust Stock pursuant to this Paragraph 8.
(f) The Trustee shall, upon direction by Parent, take all actions that are
necessary, appropriate or desirable to permit a registration statement for the
Trust Stock under the Securities Act of 1933, as amended, and/or an information
statement for the Trust Stock under the Securities Exchange Act of 1934, as
amended, and, in either case, a registration statement, information statement,
exchange offer or other documents under any other applicable securities laws, to
be filed and to become effective in connection with any disposition of the Trust
Stock permitted by the Shareholders Agreement. To the extent that registration
is required under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other applicable securities laws in
respect of any distribution of Trust Stock as contemplated herein, the Purchaser
or Parent shall reimburse the Trustee for any expenses incurred by it and
indemnify and hold the Trustee harmless from and against any loss,
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liability, cost or expense related thereto or arising therefrom.
(g) Except as provided in this Paragraph 8, the Trustee shall not dispose
of, or in any way encumber, the Trust Stock.
(h) Notwithstanding the foregoing, if the ICC issues a declaratory order
that the termination of the Trust will not cause Parent, the Purchaser or their
affiliates to have control of the Company, the Trustee shall transfer to or upon
the order of the Purchaser, Parent or the holder or holders of Trust
Certificates hereunder as then known to the Trustee, its right, title and
interest in and to all of the Trust Stock then held by it in accordance with the
terms, conditions and agreements of this Trust Agreement and not theretofore
transferred by it as provided in subparagraph (a) hereof, and this Trust shall
cease and come to an end.
9. Neither the Trustee nor any affiliate of the Trustee may have (i) any
officers, or members of their respective boards of directors, in common with the
Purchaser, Parent, or any affiliate of either, or (ii) any direct or indirect
business arrangements or dealings, financial or otherwise, with the Purchaser,
Parent or any affiliate of
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either, other than dealings pertaining to establishment and carrying out of this
voting trust. Mere investment in the stock or securities of the Purchaser or
Parent or any affiliate of either by the Trustee, short of obtaining a
controlling interest, will not be considered a proscribed business arrangement
or dealing, but in no event shall any such investment by the Trustee in voting
securities of the Purchaser, Parent or their affiliates exceed 5 percent of
their outstanding voting securities and in no event shall the Trustee hold a
proportion of such voting securities so substantial as to permit the Trustee in
any way to control or direct the affairs of the Purchaser, Parent or their
affiliates. Neither the Purchaser, Parent nor their affiliates shall purchase
the stock or securities of the Trustee or any affiliate of the Trustee.
10. The Trustee shall be entitled to receive reasonable and customary
compensation for all services rendered by it as Trustee under the terms hereof
and said compensation to the Trustee, together with all counsel fees, taxes, or
other expenses reasonably incurred hereunder, shall be promptly paid by the
Purchaser or Parent, who shall be jointly and severally liable for the same.
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11. The Trustee may at any time or from time to time appoint an agent or
agents and may delegate to such agent or agents the performance of any
administrative duty of the Trustee and be entitled to reimbursement for the fees
and expenses of such agents.
12. The Trustee shall not be answerable for the default or misconduct of
any agent or attorney appointed by it in pursuance hereof if such agent or
attorney shall have been selected with reasonable care. The duties and
responsibilities of the Trustee shall be limited to those expressly set forth in
this Trust Agreement. The Trustee shall be fully protected by acting in
reliance upon any notice, advice, direction or other document or signature
believed by the Trustee to be genuine. The Trustee shall not be responsible for
the sufficiency or accuracy of the form, execution, validity or genuineness of
the Trust Stock, or of any other documents, or of any endorsement thereon, or
for any lack of endorsement thereon, or for any description therein, nor shall
the Trustee be responsible or liable in any respect on account of the identity,
authority or rights of the persons executing or delivering or purporting to
execute or deliver any such Trust Stock or other document or endorsement or this
Trust
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Agreement, except for the execution and delivery of this Trust Agreement by this
Trustee. The Purchaser and Parent agree that they will at all times jointly and
severally protect, indemnify and save harmless the Trustee from any loss,
damages, liability, cost or expense of any kind or character whatsoever in
connection with this Trust except those, if any, resulting from the gross
negligence or willful misconduct of the Trustee, and will at all times
themselves undertake, assume full responsibility for, and pay on a current
bases, but at least quarterly, all cost and expense of any suit or litigation of
any character, whether or not involving a third party, including any proceedings
before the ICC, with respect to the Trust Stock or this Trust Agreement, and if
the Trustee shall be made a party thereto, or be the subject of any
investigation or proceeding (whether formal or informal), the Purchaser or
Parent will pay all costs, damages and expenses, including reasonable counsel
fees, to which the Trustee may be subject by reason thereof; provided, however,
-------- -------
that the Purchaser and Parent shall not be responsible for the cost and expense
of any suit that the Trustee shall settle without first obtaining Parent's
written consent. The indemnification obligations of the Purchaser and Parent
shall survive any
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termination of this Trust Agreement or the removal, resignation or other
replacement of the Trustee. The Trustee may consult with counsel selected by it
and the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or omitted or suffered by the Trustee
hereunder in good faith and in accordance with such opinion.
13. To the extent requested to do so by the Purchaser or any registered
holder of a Trust Certificate, the Trustee shall furnish to the party making
such request full information with respect to (i) all property theretofore
delivered to it as Trustee, (ii) all Property then held by it as Trustee, and
(iii) all action theretofore taken by it as Trustee.
14. The Trustee, or any trustee hereafter appointed, may at any time
resign by giving sixty days' written notice of resignation to Parent and the
ICC. Parent shall at least fifteen days prior to the effective date of such
notice appoint a successor trustee which shall (i) satisfy the requirements of
Paragraph 9 hereof and (ii) be a corporation organized and doing business under
the laws of the United States or of any State thereof and authorized under such
laws
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to exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or state
authority. If no successor trustee shall have been appointed and shall have
accepted appointment at least fifteen days prior to the effective date of such
notice of resignation, the resigning Trustee may petition any authority or court
of competent jurisdiction for the appointment of a successor trustee. Upon
written assumption by the successor trustee of the Trustee's powers and duties
hereunder, a copy of the assumption shall be delivered by the Trustee to Parent
and the ICC and all registered holders of Trust Certificates shall be notified
of such assumption, whereupon the Trustee shall be discharged of its powers and
duties hereunder and the successor trustee shall become vested therewith. In
the event of any material violation by the Trustee of the terms and conditions
of this Trust Agreement, the Trustee shall become disqualified from acting as
trustee hereunder as soon as a successor trustee shall have been selected in the
manner provided by this paragraph.
15. Subject to the terms of the Shareholders Agreement, this Trust
Agreement may from time to time be modified or amended by agreement executed by
the Trustee, the
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Purchaser, Parent and all registered holders of the Trust Certificates (i)
pursuant to an order of the ICC, (ii) with the prior approval of the ICC, (iii)
in order to comply with any order of the ICC or (iv) upon receipt of an opinion
of counsel satisfactory to the Trustee and the holders of Trust Certificates
that an order of the ICC approving such modification or amendment is not
required and that the amendment is consistent with the regulations of the ICC
regarding voting trusts.
16. The provisions of this Trust Agreement and of the rights and
obligations of the parties hereunder shall be governed by the laws of the State
of Delaware, except that to the extent any provision hereof may be found
inconsistent with the Interstate Commerce Act or regulations promulgated
thereunder by the ICC, such Act and regulations shall control and such provision
hereof shall be given effect only to the extent permitted by such Act and
regulations. In the event that the ICC shall, at any time hereafter by final
order, find that compliance with law requires any other or different action by
the Trustee than is provided herein, the Trustee shall act in accordance with
such final order instead of the provisions of this Trust Agreement.
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17. This Trust Agreement is executed in duplicate, each of which shall
constitute an original, and one of which shall be retained by Parent and the
other shall be held by the Trustee.
18. A copy of this Agreement and any amendments or modifications thereto
shall be filed with the ICC by the Purchaser.
19. This Trust Agreement shall be binding upon the successors and assigns
to the parties hereto, including without limitation successors to the Purchaser
and Parent by merger, consolidation or otherwise.
20. The term "ICC" includes any successor agency or governmental
department that is authorized to carry out the responsibilities now carried out
by the ICC with respect to voting trusts and control of common carriers.
21. (a) Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by U.S. mail, certified
mail, return receipt requested or by Federal Express, Express Mail, or similar
overnight delivery or courier service or delivered (in person or by telecopy)
against receipt to the party to whom it is to be given at the address of such
party set forth below (or to
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such other address as the party shall have given notice of) with a copy to each
of the other parties hereto:
To the Trustee: Southwest Bank of St. Louis
--------------
2301 South Kingshighway
St. Louis, Missouri 63110
Attention: Linn H. Bealke
Vice Chairman
To Parent: Union Pacific Corporation
---------
Eighth and Eaton Avenues
Bethlehem, Pennsylvania 18018
Attention: Carl W. von Bernuth, Esq.
Senior Vice President
To the Purchaser: UP Acquisition Corporation
----------------
c/o Union Pacific Corporation
Eighth and Eaton Avenues
Bethlehem, Pennsylvania 18018
Attention: Carl W. von Bernuth, Esq.
Vice President
(b) Unless otherwise specifically provided herein, any notice to or
communication with the holders of the Trust Certificates hereunder shall be
deemed to be sufficiently given or made if enclosed in postpaid envelopes
(regular not registered mail) addressed to such holders at their respective
addresses appearing on the Trustee's transfer books, and deposited in any post
office or post office box. The addresses of the holders of Trust Certificates,
as shown on the Trustee's transfer books, shall in all cases be deemed to be the
addresses of Trust Certificate holders for all
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purposes under this Trust Agreement, without regard to what other or different
addresses the Trustee may have for any Trust Certificate holder on any other
books or records of the Trustee. Every notice so given of mailing shall be the
date such notice is deemed given for all purposes.
22. Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (a) will waive, in
any action for specific performance, the defense of adequacy of a remedy at law
and (b) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Wilmington,
Delaware. Each party hereto consents to personal jurisdiction in any such
action brought in any state or federal court sitting in Wilmington, Delaware.
IN WITNESS WHEREOF, Union Pacific Corporation and UP Acquisition
Corporation have caused this Trust Agreement to be executed by their Treasurers
and their corporate seals to be affixed, attested by their Secretaries, and
Southwest Bank of
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St. Louis has caused this Trust Agreement to be executed by one of its duly
authorized corporate officers and its corporate seal to be affixed, attested to
by its Corporate Secretary or one of its Assistant Corporate Secretaries, the
day and year first above written.
Attest: UNION PACIFIC CORPORATION
____________________________ By_________________________
Secretary Treasurer
Attest: UP ACQUISITION CORPORATION
___________________________ By_________________________
Secretary Treasurer
Attest: SOUTHWEST BANK OF ST. LOUIS
___________________________ By_________________________
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EXHIBIT C
No.__________ __________ Shares
VOTING TRUST CERTIFICATE
for
COMMON STOCK,
$0.001 PAR VALUE
of
SOUTHERN PACIFIC RAIL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS IS TO CERTIFY that ______________________ will be entitled, on
the surrender of this Certificate, to receive on the termination of the Voting
Trust Agreement hereinafter referred to, or otherwise as provided in Paragraph 7
of said Voting Trust Agreement, a certificate or certificates for ________
shares of the Common Stock, $0.001 par value, of Southern Pacific Rail
Corporation, a Delaware corporation (the "Company"). This Certificate is issued
pursuant to, and the rights of the holder hereof are subject to and limited by,
the terms of a Voting Trust Agreement, dated as of August 3, 1995, executed by
Union Pacific Corporation, a Utah corporation, UP Acquisition Corporation, a
Delaware corporation, and Southwest Bank of St. Louis, as Voting Trustee, a copy
of which Voting Trust Agreement is on file in the registered office of said
corporation at The Corporation Trust Co., 100 West Tenth Street, Wilmington,
Delaware 19801, and open to inspection of any stockholder of the Company and the
holder hereof. The Voting Trust Agreement, unless earlier terminated (or
extended) pursuant to the terms thereof, will terminate on August 3, 2000, so
long as no violation of 49 U.S.C. (S) 11343 will result from such termination.
The holder of this Certificate shall be entitled to the benefits of
said Voting Trust Agreement, including the right to receive payment equal to the
cash dividends, if any, paid by the Company with respect to the number of shares
represented by this Certificate.
This Certificate shall be transferable only on the books of the
undersigned Voting Trustee or any successor, to be kept by it, on surrender
hereof by the registered holder in person or by attorney duly authorized in
accordance with the provisions of said Voting Trust Agreement, and until so
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transferred, the Voting Trustee may treat the registered holder as the owner of
this Voting Trust Certificate for all purposes whatsoever, unaffected by any
notice to the contrary.
By accepting this Certificate, the holder hereof assents to all the
provisions of, and becomes a party to, said Voting Trust Agreement.
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed by its officer duly authorized.
Dated:
By_____________________________
Authorized Officer
