SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
Date of Report (Date of Earliest event reported): June 29, 1994
SANTA FE PACIFIC CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-8627 36-3258709
(Commission File Number) (I.R.S. Employer
Identification No.)
1700 East Golf Road, Schaumburg, Illinois 60173-5860
(Address of Principal Executive Offices) (zip code)
(708) 995-6000
(Registrant's Telephone Number, Including Area Code)
(Not Applicable)
(Former Name or Former Address, If Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 1. Changes in Control of Registrant.
(b) On June 29, 1994, Santa Fe Pacific Corporation ("SFP")
and Burlington Northern Inc. ("BNI") entered into a definitive
Agreement and Plan of Merger which calls for SFP to merge with
and into BNI, with BNI being the surviving corporation. At the
closing of the merger, each SFP share outstanding will be
converted into the right to receive 0.27 of a share of BNI stock.
Upon completion of the merger, BNI will change its name to
Burlington Northern Santa Fe Corporation. Gerald Grinstein,
BNI's chairman and chief executive officer, will be chairman of
the surviving corporation. Robert D. Krebs, chairman, president
and chief executive officer of SFP, will be president and chief
executive officer of the surviving corporation. Two-thirds of
the directors of the surviving corporation will be designated by
BNI, and one-third of the directors of the surviving corporation
will be designated by SFP.
The merger has been approved by the boards of directors of
SFP and BNI, but is still subject to a number of conditions,
including approval by the stockholders of both BNI and SFP and
approval by the Interstate Commerce Commission.
Item 5. Other Events.
On June 29, 1994, the Board of Directors of the registrant
declared a special dividend to holders of its Common Stock as of
September 12, 1994, consisting of a distribution on a pro rata
basis, of its interests in its subsidiary, Santa Fe Pacific Gold
Corporation. The distribution will be effective September 30,
1994. Attached as Exhibit 99.3 is registrant's press release of
June 30, 1994.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
See Exhibit Index included herewith at E-1.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
SANTA FE PACIFIC CORPORATION
(Registrant)
By: /s/ Thomas N. Hund
-----------------------------
(Signature)
Thomas N. Hund
Vice President and Controller
Date: July 11, 1994
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<PAGE>
EXHIBIT INDEX
-------------
2 Agreement and Plan of Merger dated as of June 29, 1994,
between Burlington Northern Inc. and Santa Fe Pacific
Corporation.
99.1 Letter Agreement dated June 29, 1994, regarding
corporate governance issues.
99.2 Letter Agreement dated June 29, 1994, regarding
disclosure schedules.
99.3 Press Release dated June 30, 1994.
E-1
AGREEMENT AND PLAN OF MERGER
dated as of
June 29, 1994
between
BURLINGTON NORTHERN INC.
and
SANTA FE PACIFIC CORPORATION
<PAGE>
TABLE OF CONTENTS (1)
Page
----
ARTICLE I
THE MERGER
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . 2
1.2. Conversion of Shares . . . . . . . . . . . . . . . . 2
1.3. Surrender and Payment . . . . . . . . . . . . . . . . 3
1.4. Stock Options . . . . . . . . . . . . . . . . . . . . 4
1.5. Adjustments . . . . . . . . . . . . . . . . . . . . . 5
1.6. Closing . . . . . . . . . . . . . . . . . . . . . . . 5
1.7. Fractional Shares . . . . . . . . . . . . . . . . . . 6
ARTICLE II
CERTAIN MATTERS RELATING TO BNI
AND THE SURVIVING CORPORATION
2.1. Directors of the Surviving Corporation . . . . . . . 6
2.2. Certificate of Incorporation and Bylaws of the
Surviving Corporation . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SFP
3.1. Corporate Existence and Power . . . . . . . . . . . . 7
3.2. Corporate Authorization . . . . . . . . . . . . . . . 7
3.3. Governmental Authorization . . . . . . . . . . . . . 8
3.4. Non-Contravention . . . . . . . . . . . . . . . . . . 8
3.5. Capitalization . . . . . . . . . . . . . . . . . . . 8
3.6. Material Subsidiaries . . . . . . . . . . . . . . . . 9
3.7. SEC Filings . . . . . . . . . . . . . . . . . . . . 10
3.8. Financial Statements . . . . . . . . . . . . . . . 11
3.9. Disclosure Documents . . . . . . . . . . . . . . . 11
3.10. Information Supplied . . . . . . . . . . . . . . . 12
3.11. No Material Adverse Changes . . . . . . . . . . . . 13
3.12. Undisclosed Material Liabilities . . . . . . . . . 13
3.13. Litigation . . . . . . . . . . . . . . . . . . . . 13
3.14. Taxes . . . . . . . . . . . . . . . . . . . . . . . 14
3.15. ERISA . . . . . . . . . . . . . . . . . . . . . . . 14
3.16. Finders' Fees . . . . . . . . . . . . . . . . . . . 17
3.17. Environmental Matters . . . . . . . . . . . . . . . 17
3.18. Takeover Statutes . . . . . . . . . . . . . . . . . 18
3.19. Compliance With Laws . . . . . . . . . . . . . . . 18
--------------------
(1) The Table of Contents is not a part of this Agreement.
<PAGE>
3.20. Spinoff Dividend . . . . . . . . . . . . . . . . . 18
3.21. Private Letter Ruling . . . . . . . . . . . . . . . 19
3.22. Excess Loss Accounts . . . . . . . . . . . . . . . 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BNI
4.1. Corporate Existence and Power . . . . . . . . . . . 19
4.2. Corporate Authorization . . . . . . . . . . . . . . 19
4.3. Governmental Authorization . . . . . . . . . . . . 20
4.4. Non-Contravention . . . . . . . . . . . . . . . . . 20
4.5. Capitalization . . . . . . . . . . . . . . . . . . 20
4.6. Material Subsidiaries . . . . . . . . . . . . . . . 21
4.7. SEC Filings . . . . . . . . . . . . . . . . . . . . 22
4.8. Financial Statements . . . . . . . . . . . . . . . 23
4.9. Disclosure Documents . . . . . . . . . . . . . . . 23
4.10. Information Supplied . . . . . . . . . . . . . . . 24
4.11. No Material Adverse Changes . . . . . . . . . . . . 24
4.12. Undisclosed Material Liabilities . . . . . . . . . 24
4.13. Litigation . . . . . . . . . . . . . . . . . . . . 25
4.14. Taxes . . . . . . . . . . . . . . . . . . . . . . . 25
4.15. ERISA . . . . . . . . . . . . . . . . . . . . . . . 26
4.16. Finders' Fees . . . . . . . . . . . . . . . . . . . 29
4.17. Environmental Matters . . . . . . . . . . . . . . . 29
4.18. Takeover Statutes . . . . . . . . . . . . . . . . . 29
4.19. Compliance with Laws . . . . . . . . . . . . . . . 29
4.20. BNI Rights Agreement . . . . . . . . . . . . . . . 29
ARTICLE V
COVENANTS OF SFP
5.1. Conduct of SFP . . . . . . . . . . . . . . . . . . 30
5.2. Stockholder Meeting . . . . . . . . . . . . . . . . 32
5.3. Access to Information . . . . . . . . . . . . . . . 32
5.4. Notices of Certain Events . . . . . . . . . . . . . 33
5.5. Tax Matters . . . . . . . . . . . . . . . . . . . . 33
5.6. Rule 145 Affiliates . . . . . . . . . . . . . . . . 34
5.7. The Spinoff . . . . . . . . . . . . . . . . . . . . 34
5.8. No Solicitations . . . . . . . . . . . . . . . . . 34
ARTICLE VI
COVENANTS OF BNI
6.1. Conduct of BNI . . . . . . . . . . . . . . . . . . 35
6.2. Stockholder Meeting . . . . . . . . . . . . . . . . 37
6.3. Access to Information . . . . . . . . . . . . . . . 38
6.4. Notices of Certain Events . . . . . . . . . . . . . 38
6.5. Tax Matters . . . . . . . . . . . . . . . . . . . . 38
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<PAGE>
6.6. Director and Officer Liability . . . . . . . . . . 39
6.7. No Solicitations . . . . . . . . . . . . . . . . . 40
ARTICLE VII
COVENANTS OF BNI AND SFP
7.1. Reasonable Best Efforts . . . . . . . . . . . . . . 40
7.2. ICC Approval . . . . . . . . . . . . . . . . . . . 40
7.3. Certain Filings; Proxy Materials . . . . . . . . . 41
7.4. Public Announcements . . . . . . . . . . . . . . . 41
7.5. Further Assurances . . . . . . . . . . . . . . . . 42
7.6. Antitakeover Statutes . . . . . . . . . . . . . . . 42
7.7. Cooperation . . . . . . . . . . . . . . . . . . . . 42
7.8. Dividends . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VIII
[Intentionally Omitted]
ARTICLE IX
CONDITIONS TO THE MERGER
9.1. Conditions to the Obligations of Each Party . . . . 43
9.2. Conditions to the Obligations of BNI . . . . . . . 44
9.3. Conditions to the Obligations of SFP . . . . . . . 44
ARTICLE X
TERMINATION
10.1. Termination . . . . . . . . . . . . . . . . . . . . 45
10.2. Effect of Termination . . . . . . . . . . . . . . . 46
ARTICLE XI
MISCELLANEOUS
11.1. Notices . . . . . . . . . . . . . . . . . . . . . . 47
11.2. Entire Agreement; Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . 47
11.3. Amendments; No Waivers . . . . . . . . . . . . . . 48
11.4. Expenses . . . . . . . . . . . . . . . . . . . . . 48
11.5. Successors and Assigns . . . . . . . . . . . . . . 49
11.6. Governing Law . . . . . . . . . . . . . . . . . . . 49
11.7. Jurisdiction . . . . . . . . . . . . . . . . . . . 49
11.8. Counterparts; Effectiveness . . . . . . . . . . . . 49
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<PAGE>
TABLE OF DEFINITIONS
Term Section
---- -------
1933 Act . . . . . . . . . . . . . . . . . . . . 1.4(c)
1933 Act Affiliates . . . . . . . . . . . . . . . . . . 5.6
6-1/4% Convertible Preferred Stock . . . . . . . . . . 4.5(a)
Agreement . . . . . . . . . . . . . . . . . . . . . . . Recitals
Acquiring Person . . . . . . . . . . . . . . . . . . . 4.20
Balance Sheet Date . . . . . . . . . . . . . . . . . . 3.8
BNI . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
BNI Balance Sheet . . . . . . . . . . . . . . . . . . . 4.8
BNI Benefit Arrangements . . . . . . . . . . . . . . . 4.16(e)
BNI Common Stock . . . . . . . . . . . . . . . . . . . 1.2(a)
BNI Disclosure Documents . . . . . . . . . . . . . . . 4.9
BNI Employee Plans . . . . . . . . . . . . . . . . . . 4.15(a)
BNI Form 10-K . . . . . . . . . . . . . . . . . . . . . 4.7(a)
BNI Form 10-Q . . . . . . . . . . . . . . . . . . . . . 4.7(a)
BNI Material Subsidiary . . . . . . . . . . . . . . . . 4.6(a)
BNI Option . . . . . . . . . . . . . . . . . . . . . . 1.4(a)
BNI Pension Plans . . . . . . . . . . . . . . . . . . . 4.16(b)
BNI Post-Signing Returns . . . . . . . . . . . . . . . 6.5
BNI Proxy Statement . . . . . . . . . . . . . . . . . . 4.9
BNI Returns . . . . . . . . . . . . . . . . . . . . . . 4.14
BNI Rights Agreement . . . . . . . . . . . . . . . . . 4.20
BNI Securities . . . . . . . . . . . . . . . . . . . . 4.5(a)
BNI Stockholder Meeting . . . . . . . . . . . . . . . . 6.2
BNI Subsidiary Securities . . . . . . . . . . . . . . . 4.6(b)
BNI Voting Debt . . . . . . . . . . . . . . . . . . . . 4.5(b)
Class A Preferred Stock . . . . . . . . . . . . . . . . 4.5(a)
Closing . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Closing Date . . . . . . . . . . . . . . . . . . . . . 1.6
Code . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Common Shares Trust . . . . . . . . . . . . . . . . . . 1.7
Confidentiality Agreement . . . . . . . . . . . . . . . 11.2
Customary Action . . . . . . . . . . . . . . . . . . . 5.1
Distribution Date . . . . . . . . . . . . . . . . . . . 4.20
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . 3.18
Effective Time . . . . . . . . . . . . . . . . . . . . 1.1(b)
Environmental Laws . . . . . . . . . . . . . . . . . . 3.17(b)
Environmental Liabilities . . . . . . . . . . . . . . . 3.17(b)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 3.15(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . 3.15(a)
Excess Shares . . . . . . . . . . . . . . . . . . . . . 1.7
Exchange Act . . . . . . . . . . . . . . . . . . . . . 1.2(d)
Exchange Agent . . . . . . . . . . . . . . . . . . . . 1.3(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . . . 1.2(a)
Form 10 . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
Form S-1 . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
Form S-4 . . . . . . . . . . . . . . . . . . . . . . . 7.3(a)
Hazardous Substances . . . . . . . . . . . . . . . . . 3.17(b)
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<PAGE>
Term Section
---- -------
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . 3.3
ICC . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
Indemnified Parties . . . . . . . . . . . . . . . . . . 6.6
Indemnity Agreements . . . . . . . . . . . . . . . . . 6.6
Lien . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
Liquidation . . . . . . . . . . . . . . . . . . . . . . 3.21
Material . . . . . . . . . . . . . . . . . . . . . . . 3.1
Material Adverse Effect . . . . . . . . . . . . . . . . 3.1
Merger . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Merger Consideration . . . . . . . . . . . . . . . . . 1.2(b)
Multiemployer Plan . . . . . . . . . . . . . . . . . . 3.16(b)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(c)
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . 3.16(b)
Person . . . . . . . . . . . . . . . . . . . . . . . . 1.2(d)
Private Letter Ruling . . . . . . . . . . . . . . . . . 3.21
Properties . . . . . . . . . . . . . . . . . . . . . . 3.21
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(c)
SFP . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
SFP Balance Sheet . . . . . . . . . . . . . . . . . . . 3.8
SFP Common Stock . . . . . . . . . . . . . . . . . . . 1.2(a)
SFP Disclosure Documents . . . . . . . . . . . . . . . 3.9(a)
SFP Employee Plans . . . . . . . . . . . . . . . . . . 3.15(a)
SFP Form 10-K . . . . . . . . . . . . . . . . . . . . . 3.7(a)
SFP Form 10-Q . . . . . . . . . . . . . . . . . . . . . 3.7(a)
SFP Material Subsidiary . . . . . . . . . . . . . . . . 3.6(a)
SFP Pension Plans . . . . . . . . . . . . . . . . . . . 3.15(b)
SFP Post-Signing Returns . . . . . . . . . . . . . . . 5.5
SFP Preferred Stock . . . . . . . . . . . . . . . . . . 3.5(a)
SFP Proxy Statement . . . . . . . . . . . . . . . . . . 3.9(a)
SFP Properties . . . . . . . . . . . . . . . . . . . . 5.2
SFP Returns . . . . . . . . . . . . . . . . . . . . . . 3.14(i)
SFP Securities . . . . . . . . . . . . . . . . . . . . 3.5(a)
SFP Stock Option . . . . . . . . . . . . . . . . . . . 1.4(a)
SFP Stockholder Meeting . . . . . . . . . . . . . . . . 5.2
SFP Subsidiary Securities . . . . . . . . . . . . . . . 3.6(b)
SFP Voting Debt . . . . . . . . . . . . . . . . . . . . 3.5(b)
Share . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Shares . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Spinoff . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Spinoff Company . . . . . . . . . . . . . . . . . . . . Recitals
Spinoff Dividend . . . . . . . . . . . . . . . . . . . Recitals
Spinoff Registration Documents . . . . . . . . . . . . 3.9(b)
Stock Acquisition Date . . . . . . . . . . . . . . . . 4.20
Subsidiary . . . . . . . . . . . . . . . . . . . . . . 1.2(c)
Surviving Corporation . . . . . . . . . . . . . . . . . 1.1(a)
Takeover Proposal . . . . . . . . . . . . . . . . . . . 5.8
Takeover Statute . . . . . . . . . . . . . . . . . . . 3.18
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<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER dated as of June 29, 1994 (this
"Agreement") between Burlington Northern Inc., a Delaware
corporation ("BNI"), and Santa Fe Pacific Corporation, a Delaware
corporation ("SFP").
WHEREAS, the respective Boards of Directors of BNI and SFP
have determined that it is in the best interests of their
respective stockholders to consummate the merger provided for
herein;
WHEREAS, the respective Boards of Directors of BNI and SFP
have determined that this Agreement is in the best interests of
BNI or SFP, as the case may be, and its respective stockholders
and have duly approved this Agreement and authorized its
execution and delivery;
WHEREAS, the respective Boards of Directors of BNI and SFP
have received the opinions of Lazard Fr res & Co. and Goldman,
Sachs & Co., respectively, that the Exchange Ratio (as defined in
Section 1.2(a)(i)) is fair to their respective stockholders from
a financial point of view;
WHEREAS, BNI has been informed that (a) as a result of an
initial public offering of shares of common stock of SFP Gold
Corporation (the "Spinoff Company"), SFP presently owns
approximately 85% of the outstanding capital stock of the Spinoff
Company, (b) the Board of Directors of SFP has declared, pursuant
to resolutions substantially in the form provided to BNI prior to
the date hereof, a dividend (the "Spinoff Dividend") of the stock
of the Spinoff Company owned by SFP, to be issued on
September 30, 1994 to SFP shareholders of record as of
September 12, 1994 (the issuance of the Spinoff Dividend shall be
referred to as the "Spinoff"), and (c) SFP has received a private
letter ruling from the Internal Revenue Service to the effect
that the Spinoff qualifies as a tax-free distribution within the
meaning of Section 355 of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, it is the intention of the parties to this
Agreement that for Federal income tax purposes the Merger shall
qualify as a "reorganization" within the meaning of Section 368
of the Code.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements set forth
herein, the parties hereto hereby agree as follows:
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<PAGE>
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. (a) At the Effective Time
(as defined in Section 1.1(b), SFP shall be merged with and into
BNI in accordance with Delaware Law (the "Merger"), whereupon the
separate existence of SFP shall cease, and BNI shall be the
surviving corporation (the "Surviving Corporation").
(b) The Merger shall become effective at such time as
the certificate of merger is duly filed with the Secretary of
State of the State of Delaware or at such later time as is
specified in the certificate of merger (the "Effective Time");
such filing shall be made as soon as practicable after the
Closing, as defined in Section 1.6 of this Agreement.
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions,
disabilities and duties of SFP and BNI, all as provided under
Delaware Law.
SECTION 1.2. Conversion of Shares. (a) At the
Effective Time:
(i) each share (a "Share" and, collectively, the
"Shares") of SFP common stock, par value $1.00 per share
(the "SFP Common Stock"), outstanding immediately prior to
the Effective Time shall, except as otherwise provided in
Section 1.2(a)(ii) below, be converted into 0.27 shares of
the common stock, no par value (the "BNI Common Stock"), of
BNI (0.27 being defined herein as the "Exchange Ratio"); and
(ii) each Share held by SFP as treasury stock or owned
by BNI or any Subsidiary (as defined in Section 1.2(c)) of
BNI immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto.
(b) The BNI Common Stock (accompanied by rights issued
pursuant to the BNI Rights Agreement (as defined in Section
4.20)) to be received as consideration pursuant to the Merger by
each holder of Shares is referred to herein as the "Merger
Consideration".
(c) For purposes of this Agreement, the word
"Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or
unincorporated, of which (i) 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
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<PAGE>
others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned
or controlled by such Person or by any one or more of its
Subsidiaries or (ii) such Person or any other Subsidiary of such
Person is a general partner, it being understood that
representations and warranties of a Person concerning any former
Subsidiary of such Person shall be deemed to relate only to the
periods during which such former Subsidiary was a Subsidiary of
such Person.
(d) For purposes of this Agreement, the word "Person"
means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization,
including a government or political subdivision or any agency or
instrumentality thereof, or any affiliate (as that term is
defined in the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder (the "Exchange Act")) of any
of the foregoing.
SECTION 1.3. Surrender and Payment. (a) Prior to the
Effective Time, BNI shall appoint an agent reasonably
satisfactory to SFP (the "Exchange Agent") for the purpose of
exchanging certificates representing Shares as provided in
Section 1.2(a)(i). At the Effective Time, BNI will deposit with
the Exchange Agent certificates representing the aggregate Merger
Consideration to be paid in respect of the Shares. Promptly
after the Effective Time, BNI will send, or will cause the
Exchange Agent to send, to each holder of Shares at the Effective
Time a letter of transmittal for use in such exchange (which
shall specify that the delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of the
certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted
into a right to receive the Merger Consideration, upon surrender
to the Exchange Agent of a certificate or certificates
representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such
Shares. Until so surrendered, each such certificate shall, after
the Effective Time, represent for all purposes only the right to
receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to
be paid to a Person other than the registered holder of the
Shares represented by the certificate or certificates surrendered
in exchange therefor, it shall be a condition to such payment
that the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and
that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such
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payment to a Person other than the registered holder of such
Shares or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no
further registration of transfers of Shares. If, after the
Effective Time, certificates representing Shares are presented to
the Surviving Corporation, they shall be canceled and exchanged
for the Merger Consideration in accordance with the procedures
set forth in this Article I.
(e) Any portion of the Merger Consideration deposited
with the Exchange Agent pursuant to Section 1.3(a), and any
portion of the Common Shares Trust (as defined in Section 1.7)
that remains unclaimed by the holders of Shares twelve months
after the Effective Time shall be returned to BNI, upon demand,
and any such holder who has not exchanged his Shares for the
Merger Consideration in accordance with this Article I prior to
that time shall thereafter look only to BNI for his claim for BNI
Common Stock, any cash in lieu of fractional shares of BNI Common
Stock and any dividends or distributions with respect to BNI
Common Stock. Notwithstanding the foregoing, BNI shall not be
liable to any holder of Shares for any amount paid to a public
official pursuant to applicable abandoned property laws.
(f) No dividends or other distributions with respect
to the BNI Common Stock constituting part of the Merger
Consideration shall be paid to the holder of any unsurrendered
certificates representing Shares until such certificates are
surrendered as provided in this Section 1.3. Upon such
surrender, there shall be paid, without interest, to the person
in whose name the certificates representing the BNI Common Stock
into which such Shares were converted are registered, (1) all
dividends and other distributions in respect of BNI Common Stock
that are payable on a date subsequent to, and the record date for
which occurs after, the Effective Time and (2) all dividends or
other distributions in respect of Shares that are payable on a
date subsequent to, and the record date for which occurs before,
the Effective Time.
SECTION 1.4. Stock Options. (a) At the Effective
Time, each outstanding option to purchase shares of SFP Common
Stock (a "SFP Stock Option") granted under any employee stock
option or compensation plan or arrangement of SFP shall be
canceled and substituted with an option (a "BNI Option") to
acquire BNI Common Stock. Such cancellation and substitution
shall comply in all respects with, and shall be performed in
accordance with, the methodology prescribed by the provisions of
Section 424(a) of the Code and the regulations thereunder, and
each BNI Option shall provide the option holder with rights and
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benefits that are no less favorable to him than were provided
under the SFP Stock Option for which it was substituted.
(b) At or as soon as practicable after the Effective
Time, BNI shall issue to each holder of an SFP Stock Option which
is cancelled pursuant to Section 1.4(a) an agreement that
accurately reflects the terms of the BNI Option substituted
therefor as contemplated by Section 1.4(a).
(c) BNI shall take all corporate actions necessary to
reserve for issuance such number of shares of BNI Common Stock as
will be necessary to satisfy exercises in full of all BNI Options
after the Effective Time. With respect to such BNI Common Stock,
BNI shall (i) as soon as practicable after the Effective Time
file with the Securities and Exchange Commission ("SEC") a
Registration Statement on Form S-8 and use its reasonable best
efforts to have such registration statement become and remain
continuously effective under the Securities Act of 1933, as
amended (the "1933 Act") and (ii) file with the New York Stock
Exchange, Inc. (the "NYSE") a listing application and use its
reasonable best efforts to have such shares admitted to trading
thereon upon exercises of BNI Options. BNI shall also use its
reasonable best efforts to ensure that all incentive stock
options within the meaning of the Code continue to qualify as
such at all times after the Effective Time.
SECTION 1.5. Adjustments. If, prior to the Effective
Time, BNI or SFP (as the case may be) should split or combine the
BNI Common Stock or the SFP Common Stock, or pay a stock dividend
or other stock distribution in BNI Common Stock or SFP Common
Stock, or otherwise change the BNI Common Stock or SFP Common
Stock into any other securities, or make any other dividend or
distribution in respect of the BNI Common Stock or the SFP Common
Stock (other than the Spinoff, stock options permitted or
contemplated by this Agreement, and normal dividends as the same
may be adjusted from time to time in accordance with this
Agreement), then the Exchange Ratio will be appropriately
adjusted to reflect such split, combination, dividend or other
distribution or change.
SECTION 1.6. Closing. The closing of the Merger (the
"Closing") shall take place (i) at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York, at 10:00 A.M.
on the second business day after all the conditions set forth in
Article IX (other than those that are waived by the party or
parties for whose benefit such conditions exist) are satisfied or
(ii) at such other place and/or time and/or on such other date as
the parties may agree. The date upon which the Closing shall
occur is herein called the "Closing Date".
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SECTION 1.7. Fractional Shares. No certificates or
scrip representing fractional shares of BNI Common Stock will be
issued in the Merger, but in lieu thereof each holder of Shares
otherwise entitled to a fractional share of BNI Common Stock will
be entitled to receive, from the Exchange Agent in accordance
with the provisions of this Section 1.7, a cash payment in lieu
of such fractional shares of BNI Common Stock representing such
holder's proportionate interest in the net proceeds from the sale
by the Exchange Agent in one or more transactions (which sale
transactions shall be made at such times, in such manner and on
such terms as the Exchange Agent shall determine in its
reasonable discretion) on behalf of all such holders of the
aggregate of the fractional shares of BNI Common Stock which
would otherwise have been issued (the "Excess Shares"). The sale
of the Excess Shares by the Exchange Agent shall be executed on
the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. Until the
net proceeds of such sale or sales have been distributed to the
holders of Shares, the Exchange Agent will hold such proceeds in
trust (the "Common Shares Trust") for the holders of the Shares.
BNI shall pay all commissions, transfer taxes and other out-of-
pocket transaction costs, including the expenses and compensation
of the Exchange Agent, incurred in connection with this sale of
the Excess Shares. The Exchange Agent shall determine the
portion of the Common Shares Trust to which each holder of Shares
shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Common Shares Trust by a
fraction the numerator of which is the amount of the fractional
BNI Common Stock Interest to which such holder of Shares is
entitled and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Shares are
entitled. As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Shares in lieu
of any fractional shares of BNI Common Stock, the Exchange Agent
shall make available such amounts to such holders of Shares
without interest.
ARTICLE II
CERTAIN MATTERS RELATING TO BNI
AND THE SURVIVING CORPORATION
SECTION 2.1. Directors of the Surviving Corporation.
The board of directors of the Surviving Corporation will be
constituted as follows: two-thirds of the directors will be
designated by BNI, and one-third of the directors will be
designated by SFP.
SECTION 2.2. Certificate of Incorporation and Bylaws
of the Surviving Corporation. (a) The certificate of
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incorporation of BNI in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until
amended in accordance with applicable law.
(b) The bylaws of BNI in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SFP
SFP represents and warrants to BNI that, except as
disclosed in Schedule III hereto:
SECTION 3.1. Corporate Existence and Power. SFP is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. SFP is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on SFP. SFP has heretofore delivered to
BNI true and complete copies of SFP's certificate of
incorporation and bylaws as currently in effect. For purposes of
this Agreement, a "Material Adverse Effect" means, with respect
to any Person, a material adverse effect, whether existing or
prospective, on the financial condition, business or properties
of such Person and its Subsidiaries taken as a whole or on the
ability of such Person to perform its obligations hereunder. For
purposes of this Agreement, any reference to any event, change or
effect being "material" with respect to any Person means an
event, change or effect, whether existing or prospective, which
is material in relation to the financial condition, business or
properties of such Person and its Subsidiaries taken as a whole
or on the ability of such Person to perform its obligations
hereunder.
SECTION 3.2 Corporate Authorization. The execution,
delivery and performance by SFP of this Agreement and the
consummation by SFP of the transactions contemplated hereby are
within SFP's corporate powers and, except as set forth in the
next sentence, have been duly authorized by all necessary
corporate action. The affirmative vote of the holders of a
majority of the outstanding shares of SFP Common Stock entitled
to vote thereon is the only vote of any class or series of SFP
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capital stock necessary to approve this Agreement and the
transactions contemplated hereby. This Agreement constitutes a
valid and binding agreement of SFP.
SECTION 3.3. Governmental Authorization. The
execution, delivery and performance by SFP of this Agreement and
the consummation of the Merger by SFP require no action by or in
respect of, or filing with, any governmental body, agency,
official or authority other than (i) the filing of a certificate
of merger in accordance with Delaware Law; (ii) compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"); (iii) compliance with
any applicable requirements relating to approval of the Merger by
the Interstate Commerce Commission (the "ICC"); (iv) compliance
with any applicable requirements of the Exchange Act; (v)
compliance with any applicable requirements of the 1933 Act; (vi)
compliance with any applicable foreign or state securities or
Blue Sky Laws; and (vii) immaterial actions or filings relating
to ordinary operational matters.
SECTION 3.4. Non-Contravention. The execution,
delivery and performance by SFP of this Agreement and the
consummation by SFP of the transactions contemplated hereby do
not and will not (except in the case of clauses (ii), (iii) and
(iv) of this Section 3.4, for any such matters that singly or in
the aggregate have not had, and would not reasonably be expected
to have, a Material Adverse Effect on SFP) (i) contravene or
conflict with the certificate of incorporation or bylaws of SFP,
(ii) assuming compliance with the matters referred to in Section
3.3. contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to SFP or any of its
Subsidiaries, (iii) constitute a default under or give rise to a
right of termination, cancellation or acceleration of any right
or obligation of SFP or any of its Subsidiaries or to a loss of
any benefit to which SFP or any of its Subsidiaries is entitled
under any provision of any agreement, contract or other
instrument binding upon SFP or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by
SFP or any of its Subsidiaries, or (iv) result in the creation or
imposition of any Lien on any asset of SFP or any of its
Subsidiaries. For purposes of this Agreement, "Lien" means, with
respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such
asset.
SECTION 3.5. Capitalization. (a) The authorized
capital stock of SFP consists of six hundred million
(600,000,000) shares of SFP Common Stock and two hundred million
(200,000,000) shares of preferred stock, $1.00 par value per
share ("SFP Preferred Stock"). As of May 31, 1994, there were
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outstanding (i) 186,391,459 shares of SFP Common Stock, and
12,000,000 shares were reserved for issuance pursuant to the SFP
Long-Term Incentive Stock Plan, of which 5,281,405 were available
for grant and 3,629,728 shares were held in treasury, (ii) no
shares of SFP Preferred Stock and (iii) employee stock options to
purchase an aggregate of 9,953,575 Shares (of which options to
purchase an aggregate of 7,004,884 Shares were exercisable). All
outstanding shares of capital stock of SFP have been duly
authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section or as
contemplated by Section 5.1 and except for the exercise of
employee stock options outstanding on May 31, 1994 or issued
since that date in accordance with Section 5.1, there are
outstanding (x) no shares of capital stock or other voting
securities of SFP, (y) no securities of SFP or any of its
Subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of SFP and (z) no options or
other rights to acquire from SFP or any of its Subsidiaries, and
no obligation of SFP or any of its Subsidiaries to issue, any
capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of SFP
(the items in clauses (x), (y) and (z) being referred to
collectively as the "SFP Securities"). There are no outstanding
obligations of SFP or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any SFP Securities.
(b) As of the date hereof, there are no outstanding
bonds, debentures, notes or other indebtedness of SFP having the
right to vote (or convertible into or exercisable for SFP
Securities having the right to vote) on any matters upon which
holders of SFP Common Stock may vote (collectively, "SFP Voting
Debt").
SECTION 3.6. Material Subsidiaries. (a) Each
Subsidiary of SFP as of the date of this Agreement is identified
on Schedule 3.6(a). For purposes of this Agreement, the term
"SFP Material Subsidiary" means each Subsidiary of SFP identified
as material on Schedule 3.6(a). Each SFP Material Subsidiary is
either (i) a corporation that is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction
of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on SFP, or (ii) a
partnership that is duly formed and in good standing under the
laws of its jurisdiction of formation and has all material
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governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and is duly
qualified to do business and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect on SFP.
(b) Except as set forth in the SFP Form 10-K (as
defined in Section 3.7), all of the outstanding capital stock of,
or other ownership interests in, each SFP Subsidiary is owned by
SFP, directly or indirectly, free and clear of any Lien and free
of any other limitation or restriction (including any restriction
on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). Other than the Variable
Rate Exchangeable Debentures Due 2010 issued by SFP Pipeline
Holdings, Inc. and those obligations identified on Schedule
3.6(b), there are no outstanding (i) securities of SFP or any of
its Subsidiaries convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests
in any Subsidiary of SFP, or (ii) options or other rights to
acquire from SFP or any of its Subsidiaries, and no other
obligation of SFP or any of its Subsidiaries to issue, any
capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable for any
capital stock, voting securities or ownership interests in, any
SFP Subsidiary (the capital stock of each Subsidiary of SFP,
together with the items in clauses (i) and (ii), being referred
to collectively as the "SFP Subsidiary Securities"). There are
no outstanding obligations of SFP or any Subsidiary of SFP to
repurchase, redeem or otherwise acquire any outstanding SFP
Subsidiary Securities.
SECTION 3.7. SEC Filings. (a) SFP has delivered to
BNI (i) its annual reports on Form 10-K for its fiscal years
ended December 31, 1989, December 31, 1990, December 31, 1991,
December 31, 1992, and December 31, 1993 (this latest Form 10-K
being referred to herein as the "SFP Form 10-K"), (ii) its
quarterly report on Form 10-Q for its fiscal quarter ending March
31, 1994 (this Form 10-Q being referred to herein as the "SFP
Form 10-Q"), (iii) its proxy statements (as defined in Regulation
14A issued pursuant to the Exchange Act) relating to meetings of
the stockholders of SFP held since January 1, 1989, (iv) its
report on Form 8-K dated June 25, 1993, as amended, and (v) all
other reports, statements, schedules and registration statements
filed by SFP and its Subsidiaries with the SEC since January 1,
1989 and through the date of this Agreement, but including only
such pre-effective amendments to such registration statements as
contain material information not fully reflected in any
subsequent amendment to such registration statements (or to any
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prospectus included therein) delivered to BNI pursuant to this
Section 3.7.
(b) As of its filing date, each such report or
statement, as supplemented or amended, if applicable, filed
pursuant to the Exchange Act did not contain any untrue statement
of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(c) Each such registration statement, as supplemented
or amended, if applicable, filed pursuant to the 1933 Act as of
the date such statement or amendment became effective did not
contain any 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.
SECTION 3.8. Financial Statements. The audited
consolidated financial statements and unaudited consolidated
interim financial statements of SFP included in the SFP Form 10-K
and the SFP Form 10-Q fairly present, in conformity with
generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the
consolidated financial position of SFP and its consolidated
Subsidiaries as of the dates thereof, their consolidated results
of operations and cash flows for the periods then ended (subject
to normal year-end adjustments in the case of the unaudited
consolidated interim financial statements) and, in the case of
the SFP Form 10-K, stockholders' equity. For purposes of this
Agreement, "SFP Balance Sheet" means the Consolidated Balance
Sheet of SFP as of December 31, 1993 set forth in the SFP Form
10-K, and "Balance Sheet Date" means December 31, 1993.
SECTION 3.9. Disclosure Documents. (a) Each document
required to be filed by SFP with the SEC in connection with the
transactions contemplated by this Agreement (the "SFP Disclosure
Documents"), including, without limitation, the definitive proxy
statement of SFP (the "SFP Proxy Statement") to be filed with the
SEC in connection with the Merger, and any amendments or
supplements thereto, will, when filed, comply as to form in all
material respects with the applicable requirements of the
Exchange Act. At the time the SFP Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders
of SFP and at the time such stockholders vote on adoption of this
Agreement, the SFP Proxy Statement, as supplemented or amended,
if applicable, will not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. At the
time of the filing of any SFP Disclosure Document other than the
SFP Proxy Statement and at the time of any distribution thereof,
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such SFP Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section
3.9(a) will not apply to statements or omissions included in SFP
Disclosure Documents based upon information furnished to SFP in
writing by BNI specifically for use therein.
(b) The registration statements on Form S-1 (the "Form
S-1") and the registration statement on Form 10 (the "Form 10")
filed by SFP in connection with the Spinoff, and any amendments
or supplements thereto, or other appropriate filings made to
register the stock of the Spinoff Company under the 1933 Act or
the Exchange Act, as amended and supplemented (the "Spinoff
Registration Documents"), when they became effective, complied as
to form in all material respects with the applicable requirements
of the 1933 Act and the Exchange Act. At the time of the
effectiveness and at the time that the sale of securities
pursuant to the Spinoff Registration Documents was consummated,
the Spinoff Registration Documents did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section
3.9(b) shall not apply to statements or omissions included in the
Spinoff Registration Documents based upon information furnished
to SFP in writing by BNI specifically for use therein.
SECTION 3.10. Information Supplied. The information
supplied or to be supplied by SFP for inclusion or incorporation
by reference in (i) the BNI Proxy Statement (as defined in
Section 4.9) or any amendment or supplement thereto will not, at
the time the BNI Proxy Statement is first mailed to stockholders
of BNI and at the time such stockholders vote on adoption of this
Agreement, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, not misleading, (ii) any BNI Disclosure
Document (as defined in Section 4.9) (other than the BNI Proxy
Statement will not, at the time of effectiveness of such BNI
Disclosure Document and at the time of any distribution thereof
contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were
made, not misleading, and (iii) the Form S-4 (as defined in
Section 7.3(a)) will not, at the time the Form S-4 becomes
effective under the 1933 Act and at the Effective Time, contain
any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made
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therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.11. No Material Adverse Changes. Except as
contemplated by this Agreement or as publicly disclosed prior to
the date of this Agreement, and except as set forth in Schedule
3.11, since the Balance Sheet Date, SFP and the SFP Material
Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably could be
expected to have a Material Adverse Effect on SFP (other
than as a result of (i) changes in conditions, including
economic or political developments, applicable to the
railroad industry generally and (ii) the Spinoff); or
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
SFP capital stock (other than (x) aggregate cash dividends
on the Shares not in excess of $0.10 per Share in 1994,
$0.18 per Share in 1995, $0.20 per Share in 1996 and $0.22
per Share in 1997, in each case having record and payment
dates determined in accordance with Section 7.8 and (y) the
Spinoff).
SECTION 3.12. Undisclosed Material Liabilities.
Except for (i) liabilities reflected in the SEC Reports listed in
Section 3.7 and (ii) liabilities incurred in the ordinary course
of business of SFP and its Subsidiaries consistent with past
practice subsequent to the Balance Sheet Date, SFP and its
Subsidiaries have no liabilities that are material to SFP and
there is no existing condition or set of circumstances which
would reasonably be expected to result in such a liability;
provided, however, that this representation does not cover, and
shall not be deemed to be breached as a result of, any such
liability that results primarily from a Customary Action (as
defined in Section 5.1 below).
SECTION 3.13. Litigation. Except as set forth in the
SFP Form 10-K or the SFP Form 10-Q (i) there is no action, suit,
investigation or proceeding (or any basis therefor) pending
against, or to the knowledge of SFP threatened against or
affecting, SFP or any of its Subsidiaries or any of their
respective properties before any court or arbitrator or any
governmental body, agency or official where there is a reasonable
probability of a determination adverse to SFP or any of its
Subsidiaries which could reasonably be expected to have a
Material Adverse Effect on SFP and (ii) as of the date of this
Agreement, there is no such action, suit, investigation or
proceeding which in any manner challenges or seeks to prevent,
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enjoin, alter or materially delay the Merger, the Spinoff or any
of the other transactions contemplated hereby.
SECTION 3.14. Taxes. Except as set forth in the SFP
Balance Sheet (including the notes thereto) or on Schedule 3.14,
(i) all material tax returns, statements, reports and forms
(collectively, the "SFP Returns") required to be filed with any
taxing authority as of the date hereof by, or with respect to,
SFP and its Subsidiaries have been filed in accordance with all
applicable laws; (ii) SFP and its Subsidiaries have timely paid
all taxes shown as due and payable on the SFP Returns that have
been so filed and as of the time of filing the SFP Returns
correctly reflected the facts regarding the income, business,
assets, operations, activities and the status of SFP and its
Subsidiaries in all material respects; (iii) SFP and its
Subsidiaries have made provision for all material taxes payable
by SFP and its Subsidiaries for which no Return has yet been
filed or in respect of which a final determination has been made;
(iv) the charges, accruals and reserves for taxes with respect to
SFP and its Subsidiaries reflected in the SFP Balance Sheet are
adequate under generally accepted accounting principles to cover
the tax liabilities accruing through the date thereof; and (v) as
of the date of this Agreement, there is no action, suit,
proceeding, investigation, audit or claim now proposed or pending
against or with respect to SFP or any of its Subsidiaries in
respect of any tax where there is a reasonable possibility of a
determination or decision against SFP or any of its Subsidiaries
which would reasonably be expected to have a Material Adverse
Effect on SFP.
SECTION 3.15. ERISA. (a) Schedule III identifies (i)
each "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA") (other
than multiemployer plans (as defined in Section 3(37) of ERISA)),
and (ii) each employment, severance or other similar contract,
arrangement or policy and each retirement or deferred
compensation plan, stock plan, incentive compensation plan,
vacation pay, severance pay, bonus or benefit arrangement,
insurance (including self-insured arrangements) or
hospitalization program, workers' compensation program,
disability program, supplemental unemployment program or fringe
benefit arrangement, whether maintained pursuant to contract or
informal understanding, which does not constitute an "employee
benefit plan" (as defined in Section 3(3) of ERISA), which, in
the case of items described in both clauses (i) and (ii), is
maintained, administered or contributed to by SFP or any of its
ERISA Affiliates (as defined below), and covers any employee or
former employee of SFP or any of its Subsidiaries or with respect
to which SFP or any of its ERISA Affiliates has any liability
(collectively, the "SFP Employee Plans"). True and correct
copies of each of the SFP Employee Plans, all amendments thereto,
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any written interpretations thereof distributed to employees, and
all contracts relating thereto or the funding thereof, including,
without limitation, all trust agreements, insurance contracts,
administration contracts, investment management agreements,
subscription and participation agreements, recordkeeping
agreements and summary plan descriptions, all as currently in
effect, have been furnished or made available to BNI. SFP has
supplied or made available to BNI an accurate description of any
SFP Employee Plan that is not in written form. To the extent
applicable, true and correct copies of the three most recent
annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any SFP Employee Plan and
the most recent actuarial valuation report prepared in connection
with any such plan have been furnished or made available to BNI.
For purposes of this Agreement, "ERISA Affiliate" of any Person
means any other Person which, together with such Person, would be
treated as a single employer under Section 414 of the Code. SFP
has made available to BNI with complete age, salary, service and
related data as of the most recent practical date for employees
and former employees of SFP and any of its Subsidiaries covered
under the SFP Employee Plans.
(b) The only SFP Employee Plans that are subject to
Title IV of ERISA (the "SFP Pension Plans") are identified in the
list of such plans provided or made available to BNI by SFP in
accordance with Section 3.15(a). As of the most recent valuation
date of each SFP Pension Plan, the present value of all benefits
accrued under each SFP Pension Plan determined on a termination
basis using the assumptions established by the Pension Benefit
Guaranty Corporation (the "PBGC") as in effect on such date was
exceeded by the fair market value of the assets of such SFP
Pension Plan (excluding for these purposes any accrued but unpaid
contributions). No "accumulated funding deficiency", as defined
in Section 412 of the Code, has been incurred with respect to any
SFP Pension Plan, whether or not waived. SFP knows of no
"reportable event", within the meaning of Section 4043 of ERISA
and the regulations promulgated thereunder, and no event
described in Section 4041 (other than a standard termination),
4042, 4062 or 4063 of ERISA has occurred in connection with any
SFP Pension Plan, other than a "reportable event" that will not
have a Material Adverse Effect on SFP. No condition exists and
no event has occurred that could constitute grounds for
termination of or the appointment of a trustee to administer any
SFP Pension Plan under Section 4042 of ERISA and, to SFP's
knowledge, neither SFP nor any of its ERISA Affiliates has
engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction for which SFP or any of its
ERISA Affiliates would have liability under Section 4069 or
4212(c) of ERISA. To SFP's knowledge, nothing done or omitted to
be done and no transaction or holding of any asset under or in
connection with any SFP Employee Plan has or will make SFP or any
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of its ERISA Affiliates or any officer or director of SFP or any
of its ERISA Affiliates subject to any liability under Title I or
Section 4071 of ERISA or liable for any tax pursuant to Section
4975 or Chapters 43, 47, or 68 of the Code that could have a
Material Adverse Effect.
(c) Each SFP Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and each trust forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code. SFP has furnished or
made available to BNI copies of the most recent Internal Revenue
Service determination letters with respect to each such SFP
Employee Plan. Each SFP Employee Plan has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code,
which are applicable to such SFP Employee Plan.
(d) None of the payments contemplated by the
contracts, plans or arrangements covering any employee or former
employee of SFP or any of its ERISA Affiliates and arising solely
as a result of the transactions contemplated hereby would, in the
aggregate, constitute excess parachute payments as defined in
Section 280G of the Code (without regard to subsection (b)(4)
thereof).
(e) Except for obligations arising pursuant to any
collective bargaining agreements, no condition exists that would
prevent SFP or any of its Subsidiaries from amending or
terminating any SFP Employee Plan providing health or medical
benefits in respect of any active or former employees of SFP and
its Subsidiaries.
(f) There has been no amendment to, written
interpretation or announcement (whether or not written) by SFP or
any of its ERISA Affiliates relating to, or change in employee
participation or coverage under, any SFP Employee Plan which
would increase materially the expense of maintaining such SFP
Employee Plan above the level of the expense incurred in respect
thereof for the fiscal year ended on the Balance Sheet Date.
(g) To the extent applicable, each SFP Employee Plan
which constitutes a "group health plan" (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code), including
any plans of current or former affiliates which must be taken
into account under Sections 4980B and 414(t) of the Code or
Section 601 of ERISA, has been operated in substantial compliance
with applicable law, including the group health plan continuation
coverage requirements of Section 4980B of the Code and Section
601 of ERISA.
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(h) There are no actions, suits or claims (other than
routine claims for benefits) pending or, to SFP's knowledge,
threatened involving any SFP Employee Plan or the assets thereof
and no facts exist with could give rise to any such actions,
suits or claims (other than routine claims for benefits).
(i) SFP has provided or will promptly provide BNI with
a list of each employee pension benefit plan (as defined in
Section 3(2) of ERISA) which is a multiemployer plan with respect
to which SFP or any of its ERISA Affiliates may have any
liability (including any liability attributable to a current or
former member of SFP's or any of its ERISA Affiliates'
"controlled group" (as defined in Section 4001(a)(14) of ERISA))
and the maximum amount of such liability (determined as if a
complete withdrawal occurred with respect to each such plan
immediately after the Effective Time). With respect to each such
plan, (i) all contributions have been made as required by the
terms of the plans, the terms of any collective bargaining
agreements and applicable law, (ii) neither SFP nor any of its
ERISA Affiliates has withdrawn, partially withdrawn or received
any notice of any claim or demand for withdrawal liability or
partial withdrawal liability that would have a Material Adverse
Effect, and (iii) neither SFP nor any of its ERISA Affiliates has
received any notice that any such plan is in reorganization, that
increased contributions may be required to avoid a reduction in
plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required
under Section 412 of the Code or that any plan is or may become
insolvent.
(j) As of the Balance Sheet Date, the Expected
Postretirement Benefit Obligation (as defined in Statement of
Financial Accounting Standards No. 106) in respect of
postretirement health and medical benefits for current and former
employees of SFP or any of its Subsidiaries calculated by SFP's
actuary using reasonable actuarial assumptions was $291,200,000.
SECTION 3.16. Finders' Fees. Except for Goldman,
Sachs & Co., a copy of whose engagement agreement has been or
will be provided to BNI, there is no investment banker, broker,
finder or other intermediary which has been retained by or is
authorized to act on behalf of SFP or any of its Subsidiaries who
might be entitled to any fee or commission from BNI or any of its
affiliates upon consummation of the transactions contemplated by
this Agreement.
SECTION 3.17. Environmental Matters. (a) Except as
set forth in the SFP Form 10-K or otherwise previously disclosed
in writing by SFP to BNI, there are no Environmental Liabilities
(as defined below) of SFP that, individually or in the aggregate,
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have had or would reasonably be expected to have a Material
Adverse Effect on SFP.
(b) As used in this Agreement, "Environmental Laws"
means any and all federal, state, local and foreign statutes,
laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and
governmental restrictions, whether now or hereafter in effect,
relating to human health, the environment or to emissions,
discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including without
limitation ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof. "Environmental
Liabilities" with respect to any Person means any and all
liabilities of or relating to such Person or any of its
Subsidiaries (including any entity which is, in whole or in part,
a predecessor of such Person or any of its Subsidiaries), whether
vested or unvested, contingent or fixed, actual or potential,
known or unknown, which (i) arise under or relate to matters
covered by Environmental Laws and (ii) relate to actions
occurring or conditions existing on or prior to the Closing Date.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its
derivatives, by-products and other hydrocarbons, or any substance
having any constituent elements displaying any of the foregoing
characteristics, including, without limitation, any substance
regulated under Environmental Laws.
SECTION 3.18. Takeover Statutes. No "fair price",
"moratorium", "control share acquisition" or other similar
antitakeover statute or regulation enacted under state or federal
laws in the United States (each a "Takeover Statute"), including,
without limitation, Section 203 of the Delaware General
Corporation Law (the "DGCL"), applicable to SFP or any of its
Subsidiaries is applicable to the Merger or the other
transactions contemplated hereby.
SECTION 3.19. Compliance With Laws. Except as
publicly disclosed, and except for any matter that would not
reasonably be expected to have a Material Adverse Effect on SFP,
neither SFP nor any of its Subsidiaries is in violation of, or
has violated, any applicable provisions of any laws, statutes,
ordinances or regulations.
SECTION 3.20. Spinoff Dividend. The board of directors
of SFP has declared the Spinoff Dividend, and the Liquidation of
Properties (as those terms are defined in Section 3.21 below) has
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occurred prior to the date of this Agreement in conformity with
the Private Letter Ruling (as defined below).
SECTION 3.21. Private Letter Ruling. SFP has received
from the Internal Revenue Service a valid and effective private
letter ruling dated February 16, 1994 (and supplemented on May
18, 1994) (the "Private Letter Ruling") to the effect that
(i) the Spinoff qualifies as a tax-free distribution under
Section 355 of the Code and (ii) the merger of SFP Properties,
Inc. ("Properties") with and into SFP (the "Liquidation") will be
treated as a distribution by Properties to SFP in complete
liquidation of Properties within the meaning of Section 322 of
the Code. A copy of the Private Letter Ruling has been provided
to BNI.
SECTION 3.22. Excess Loss Accounts. The income that
will be recognized, for federal income tax purposes, upon the
Spinoff arising from excess loss accounts in the stock of the
Spinoff Company and its subsidiaries will be approximately $30
million.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BNI
BNI represents and warrants to SFP that, except as disclosed
in Schedule IV hereto:
SECTION 4.1. Corporate Existence and Power. BNI is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. BNI is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on BNI. BNI has heretofore delivered to
SFP true and complete copies of the certificates of incorporation
and bylaws of BNI as currently in effect.
SECTION 4.2. Corporate Authorization. The execution,
delivery and performance by BNI of this Agreement and the
consummation by BNI of the transactions contemplated hereby are
within the corporate powers of BNI and, except as set forth in
the next sentence, have been duly authorized by all necessary
corporate action. The affirmative vote of the holders of a
majority of the outstanding shares of BNI Common Stock entitled
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to vote thereon is the only vote of any class or series of BNI
capital stock necessary to approve this Agreement and the
transactions contemplated hereby. This Agreement constitutes a
valid and binding agreement of BNI.
SECTION 4.3. Governmental Authorization. The execution,
delivery and performance by BNI of this Agreement and the
consummation of the Merger by BNI require no action by or in
respect of, or filing with, any governmental body, agency,
official or authority other than (i) the filing of a certificate
of merger in accordance with Delaware Law; (ii) compliance with
any applicable requirements of the HSR Act; (iii) compliance with
any applicable requirements relating to approval of the Merger by
the ICC; (iv) compliance with any applicable requirements of the
Exchange Act; (v) compliance with the applicable requirements of
the 1933 Act; (vi) compliance with any applicable foreign or
state securities or Blue Sky laws; and (vii) immaterial actions
or filings relating to ordinary operational matters.
SECTION 4.4. Non-Contravention. The execution,
delivery and performance by BNI of this Agreement and the
consummation by BNI of the transactions contemplated hereby do
not and will not (except, in the case of clauses (ii), (iii) and
(iv) of this Section 4.4, for any such matters that singly or in
the aggregate have not had, and would not reasonably be expected
to have, a Material Adverse Effect on BNI) (i) contravene or
conflict with the certificate of incorporation or bylaws of BNI,
(ii) assuming compliance with the matters referred to in Section
4.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to BNI or any Subsidiary of
BNI, (iii) constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or
obligation of BNI or any of its Subsidiaries or to a loss of any
benefit to which BNI or any of its Subsidiaries is entitled under
any agreement, contract or other instrument binding upon BNI or
any of its Subsidiaries or any license, franchise, permit or
other similar authorization held by BNI or any of its
Subsidiaries, or (iv) result in the creation or imposition of any
Lien on any asset of BNI or any Subsidiary of BNI.
SECTION 4.5. Capitalization. (a) The authorized
capital stock of BNI consists of three hundred million
(300,000,000) shares of BNI Common Stock and twenty-five million
(25,000,000) shares of No Par Value Preferred Stock, including
six million nine hundred thousand (6,900,000) shares of 6- %
Cumulative Convertible Preferred Stock, Series A No Par Value
("6- % Convertible Preferred Stock") and fifty million
(50,000,000) shares of Class A Preferred Stock, No Par Value
("Class A Preferred Stock"). As of May 31, 1994 there were
outstanding (i) 89,208,870 shares of BNI Common Stock (including
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7,800 shares issued after May 31, 1994 with effect prior to such
date), 15,104,280 shares were reserved for issuance pursuant to
stock option plans, 303,532 shares were reserved for issuance
pursuant to "restricted stock" plans and 94,572 shares were held
in the treasury, (ii) six million nine hundred thousand
(6,900,000) shares of 6-1/4% Convertible Preferred Stock, (iii)
no shares of Class A Preferred Stock, and (iv) employee stock
options to purchase an aggregate of 4,170,536 shares of BNI
Common Stock (of which options to purchase an aggregate of
2,925,611 shares were exercisable). All outstanding shares of
capital stock of BNI have been duly authorized and validly issued
and are fully paid and nonassessable. Except as set forth in
this Section or as contemplated by Section 6.1, except for the
exercise of employee stock options outstanding on May 31, 1994 or
issued since that date in accordance with Section 6.1 and except
for changes since that date resulting from the conversion of
shares of the 6-1/4% Convertible Preferred Stock, there are
outstanding (x) no shares of capital stock or other voting
securities of BNI, (y) no securities of BNI or any of its
Subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of BNI and (z) no options or
other rights to acquire from BNI or any of its Subsidiaries, and
no obligation of BNI or any of its Subsidiaries to issue, any
capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of BNI
(the items in clauses (x), (y) and (z) being referred to
collectively as the "BNI Securities"). There are no outstanding
obligations of BNI or any Subsidiary of BNI to repurchase, redeem
or otherwise acquire any BNI Securities.
(b) As of the date hereof, there are no outstanding
bonds, debentures, notes or other indebtedness of BNI having the
right to vote (or convertible into or exercisable for BNI
Securities having the right to vote) on any matters on which
holders of BNI Common Stock may vote (collectively, "BNI Voting
Debt").
SECTION 4.6. Material Subsidiaries. (a) Each
Subsidiary of BNI is identified on Schedule 4.6(a). For purposes
of this Agreement, the term "BNI Material Subsidiary" means each
Subsidiary of BNI identified as material on Schedule 4.6(a).
Each BNI Material Subsidiary is either (i) a corporation that is
duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has all corporate
powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature
of its activities makes such qualification necessary, except for
those jurisdictions where failure to be so qualified would not,
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individually or in the aggregate, have a Material Adverse Effect
on BNI, or (ii) a partnership that is duly formed and in good
standing under the laws of its jurisdiction of formation and has
all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and
is duly qualified to do business and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect on BNI.
(b) Except as set forth in the BNI Form 10-K (as
defined in Section 4.7(a)), all of the outstanding capital stock
of, or other ownership interests in, each BNI Subsidiary, is
owned by BNI, directly or indirectly, free and clear of any Lien
and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests). Other than
those obligations identified on Schedule 4.6(b), there are no
outstanding (i) securities of BNI or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary
of BNI, and (ii) options or other rights to acquire from BNI or
any of its Subsidiaries, and no other obligation of BNI or any of
its Subsidiaries to issue, any capital stock, voting securities
or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or
ownership interests in, any Subsidiary of BNI (the capital stock
of each Subsidiary of BNI, together with the items in clauses (i)
and (ii), being referred to collectively as the "BNI Subsidiary
Securities"). There are no outstanding obligations of BNI or any
Subsidiary of BNI to repurchase, redeem or otherwise acquire any
outstanding BNI Subsidiary Securities.
SECTION 4.7. SEC Filings. (a) BNI has delivered to
SFP (i) the annual reports on Form 10-K for its fiscal years
ended December 31, 1989, December 31, 1990, December 31, 1991,
December 31, 1992, and December 31, 1993 (this latest form 10-K
being referred to herein as the "BNI Form 10-K"), (ii) its
quarterly report on Form 10-Q for its fiscal quarter ending March
31, 1994 (this Form 10-Q being referred to herein as the "BNI
Form 10-Q"), (iii) its proxy statements (as defined in Regulation
14A issued pursuant to the Exchange Act) relating to meetings of
the stockholders of BNI held since January 1, 1989, and (iv) all
other reports, statements, schedules and registration statements
filed by BNI and its Subsidiaries with the SEC since January 1,
1989 and through the date of this Agreement, but including only
such pre-effective amendments and such registration statements as
contain material information not fully reflected in any
subsequent amendments to such registration statements (or any
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prospectus included therein) delivered to SFP pursuant to this
Section 4.7.
(b) As of its filing date, each such report or
statement, as supplemented or amended, if applicable, filed
pursuant to the Exchange Act did not contain any untrue statement
of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(c) Each such registration statement, as supplemented
or amended, if applicable, filed pursuant to the 1933 Act as of
the date such statement or amendment became effective did not
contain any 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.
SECTION 4.8. Financial Statements. The audited
consolidated financial statements and unaudited consolidated
interim financial statements of BNI included in the BNI Form 10-K
and the BNI Form 10-Q fairly present, in conformity with
generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the
consolidated financial position of BNI and its consolidated
Subsidiaries as of the dates thereof, their consolidated results
of operations and cash flows for the periods then ended (subject
to normal year-end adjustments in the case of the unaudited
consolidated interim financial statements) and, in the case of
the BNI Form 10-K, stockholders' equity. For purposes of this
Agreement, "BNI Balance Sheet" means the Consolidated Balance
Sheet of BNI as of the Balance Sheet Date set forth in the BNI
Form 10-K.
SECTION 4.9. Disclosure Documents. Each document
required to be filed by BNI with the SEC in connection with the
transactions contemplated by this Agreement (the "BNI Disclosure
Documents"), including, without limitation the definitive proxy
statement of BNI (the "BNI Proxy Statement") to be filed with the
SEC in connection with the Merger, and any amendments or
supplements thereto, will, when filed, comply as to form in all
material respects with the applicable requirements of the
Exchange Act. At the time the BNI Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders
of BNI and at the time such stockholders vote on adoption of this
Agreement, the BNI Proxy Statement, as supplemented or amended,
if applicable, will not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. At the
time of the filing of any BNI Disclosure Document other than the
BNI Proxy Statement and at the time of any distribution thereof,
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such BNI Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section 4.9
will not apply to statements or omissions included in the BNI
Disclosure Documents based upon information furnished to BNI in
writing by SFP specifically for use therein.
SECTION 4.10. Information Supplied. The information
supplied or to be supplied by BNI for inclusion or incorporation
by reference in (i) the SFP Proxy Statement or any amendment or
supplement thereto will not, at the time the SFP Proxy Statement
is first mailed to stockholders of SFP and at the time such
stockholders vote on adoption of this Agreement contain any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading, and (ii) any SFP Disclosure Document (other than the
SFP Proxy Statement) will not, at the time of effectiveness of
such SFP Disclosure Document and at the time of any distribution
thereof contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, not misleading.
SECTION 4.11. No Material Adverse Changes. Except as
contemplated by this Agreement or as publicly disclosed prior to
the date of this Agreement, and except as set forth in Schedule
4.11, since the Balance Sheet Date, BNI and the BNI Material
Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably could be
expected to have a Material Adverse Effect on BNI (other
than as a result of changes in conditions, including
economic or political developments, applicable to the
railroad industry generally); or
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
BNI Common Stock (other than aggregate cash dividends not in
excess of $1.20 per share in 1994, $1.32 per share in 1995,
$1.48 per share in 1996, and $1.64 per share in 1997, in
each case having record and payment dates determined in
accordance with Section 7.8).
SECTION 4.12. Undisclosed Material Liabilities.
Except for (i) liabilities reflected in the SEC Reports listed in
Section 4.7 and (ii) liabilities incurred in the ordinary course
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of business of BNI and its Subsidiaries subsequent to the Balance
Sheet Date, BNI and its Subsidiaries have no liabilities that are
material to BNI and there is no existing condition or set of
circumstances which could reasonably be expected to result in
such a liability; provided, however, that this representation
does not cover, and shall not be deemed to be breached as a
result of, any such liability that primarily results from a
Customary Action (as defined in Section 5.1 below).
SECTION 4.13. Litigation. Except as set forth in the
BNI Form 10-K or the BNI Form 10-Q, (i) there is no action, suit,
investigation or proceeding (or any basis therefor) pending
against, or to the knowledge of BNI threatened against or
affecting, BNI or any of its Subsidiaries or any of their
respective properties before any court or arbitrator or any
governmental body, agency or official where there is a reasonable
probability of a determination adverse to BNI or any of its
Subsidiaries which could reasonably be expected to have a
Material Adverse Effect on BNI and (ii) as of the date of this
Agreement, there is no such action, suit, investigation or
proceeding which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the Merger or any of the other
transactions contemplated hereby.
SECTION 4.14. Taxes. Except as set forth in the BNI
Balance Sheet (including the notes thereto) or on Schedule 4.14,
(i) all material tax returns, statements, reports and forms
(collectively, the "BNI Returns") required to be filed with any
taxing authority as of the date hereof by, or with respect to,
BNI and its Subsidiaries have been filed in accordance with all
applicable laws; (ii) BNI and its Subsidiaries have timely paid
all taxes shown as due and payable on the BNI Returns that have
been so filed and as of the time of filing the BNI Returns
correctly reflected the facts regarding the income, business,
assets, operations, activities and the status of BNI and its
Subsidiaries in all material respects; (iii) BNI and its
Subsidiaries have made provision for all material taxes payable
by BNI and its Subsidiaries for which no Return has yet been
filed or in respect of which a final determination has been made;
(iv) the charges, accruals and reserves for taxes with respect to
BNI and its Subsidiaries reflected on the BNI Balance Sheet are
adequate under generally accepted accounting principles to cover
the tax liabilities accruing through the date thereof; and (v) as
of the date of this Agreement there is no action, suit,
proceeding, investigation, audit or claim now proposed or pending
against or with respect to BNI or any of its Subsidiaries in
respect of any tax where there is a reasonable possibility of a
determination or decision against BNI or any of its Subsidiaries
which would reasonably be expected to have a Material Adverse
Effect on BNI.
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SECTION 4.15. ERISA. (a) Schedule IV identifies (i)
each "employee benefit plan", as defined in Section 3(3) of ERISA
(other than multiemployer plans (as defined in Section 3(37) of
ERISA)), and (ii) each employment, severance or other similar
contract, arrangement or policy and each retirement or deferred
compensation plan, stock plan, incentive compensation plan,
vacation pay, severance pay, bonus or benefit arrangement,
insurance (including self-insured arrangements) or
hospitalization program, workers' compensation program,
disability program, supplemental unemployment program or fringe
benefit arrangement, whether maintained pursuant to contract or
informal understanding, which does not constitute an "employee
benefit plan" (as defined in Section 3(3) of ERISA), which, in
the case, of items described in both clauses (i) and (ii) is
maintained, administered or contributed to by BNI or any of its
ERISA Affiliates and covers any employee or former employee of
BNI or any of its Subsidiaries or with respect to which BNI or
any of its ERISA Affiliates has any liability (collectively, the
"BNI Employee Plans"). True and correct copies of each of the
BNI Employee Plans, all amendments thereto, any written
interpretations thereof distributed to employees, and all
contracts relating thereto or the funding thereof, including,
without limitation, all trust agreements, insurance contracts,
administration contracts, investment management agreements,
subscription and participation agreements, recordkeeping
agreements and summary plan descriptions, all as currently in
effect, have been furnished or made available to SFP. BNI has
supplied or made available to SFP an accurate description of any
BNI Employee Plan that is not in written form. To the extent
applicable, true and correct copies of the three most recent
annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any BNI Employee Plan and
the most recent actuarial valuation report prepared in connection
with any such plan have been furnished or made available to SFP.
BNI has made available to SFP complete age, salary, service and
related data as of the most recent practical date for employees
and former employees of BNI and any of its Subsidiaries covered
under the BNI Employee Plans.
(b) The only BNI Employee Plans that are subject to
Title IV of ERISA (the "BNI Pension Plans") are identified in the
list of such Plans provided or made available to SFP by BNI in
accordance with Section 4.15(a). As of the most recent valuation
date of each BNI Pension Plan, the present value of all benefits
accrued under each BNI Pension Plan, determined on a termination
basis using the assumptions established by the PBGC as in effect
on such date was exceeded by the fair market value of the assets
of such BNI Pension Plan, (excluding for these purposes any
accrued but unpaid contributions). No "accumulated funding
deficiency", as defined in Section 412 of the Code, has been
incurred with respect to any BNI Pension Plan, whether or not
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waived. BNI knows of no "reportable event", within the meaning
of Section 4043 of ERISA and the regulations promulgated
thereunder, and no event described in Sections 4041 (other than a
standard termination), 4042, 4062 or 4063 of ERISA has occurred
in connection with any BNI Pension Plan, other than a "reportable
event" that will not have a Material Adverse Effect on BNI. No
condition exists and no event has occurred that could constitute
grounds for termination of or the appointment of a trustee to
administer any BNI Pension Plan under Section 4042 of ERISA and,
to BNI's knowledge, neither BNI nor any of its ERISA Affiliates
has engaged in, or is a successor parent corporation to an entity
that has engaged in, a transaction for which BNI or any of its
ERISA Affiliates would have liability under Sections 4069 or
4212(c) of ERISA. To BNI's knowledge nothing done or omitted to
be done and no transaction or holding of any asset under or in
connection with any BNI Employee Plan has or will make BNI or any
of its ERISA Affiliates, any officer or director of BNI or any of
its ERISA Affiliates subject to any liability under Title I or
Section 4071 of ERISA or liable for any tax pursuant to Section
4975 or Chapters 43, 47 or 68 of the Code that could have a
Material Adverse Effect.
(c) Each BNI Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and each trust forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code. BNI has furnished or
made available to SFP copies of the most recent Internal Revenue
Service determination letters with respect to each such BNI
Employee Plan. Each BNI Employee Plan has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code,
which are applicable to such BNI Plan.
(d) None of the payments contemplated by the
contracts, plans or arrangements covering any employee or former
employee of BNI or any of its ERISA Affiliates and arising solely
as a result of the transactions contemplated hereby would, in the
aggregate, constitute excess parachute payments as defined in
Section 280G of the Code (without regard to subsection (b)(4)
thereof).
(e) Except for obligations arising pursuant to any
collective bargaining agreements, no condition exists that would
prevent BNI or any of its Subsidiaries from amending or
terminating any BNI Employee Plan providing health or medical
benefits in respect of any active or former employees of BNI and
its Subsidiaries.
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(f) There has been no amendment to, written
interpretation or announcement (whether or not written) by BNI or
any of its ERISA Affiliates relating to, or change in employee
participation or coverage under, any BNI Employee Plan which
would increase materially the expense of maintaining such BNI
Employee Plan above the level of the expense incurred in respect
thereof for the fiscal year ended on the Balance Sheet Date.
(g) To the extent applicable, each BNI Employee Plan
which constitutes a "group health plan" (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code), including
any plans of current or former affiliates which must be taken
into account under Sections 4980B and 414(t) of the Code or
Section 601 of ERISA, has been operated in substantial compliance
with applicable law, including the group health plan continuation
coverage requirements of Section 4980B of the Code and Section
601 of ERISA.
(h) There are no actions, suits or claims (other than
routine claims for benefits) pending or, to BNI's knowledge,
threatened involving any BNI Employee Plan or the assets thereof
and no facts exist with could give rise to any such actions,
suits or claims (other than routine claims for benefits).
(i) BNI has provided or will promptly provide SFP with
a list of each employee pension benefit plan (as defined in
Section 3(2) of ERISA) which is a multiemployer plan with respect
to which BNI or any of its ERISA Affiliates may have any
liability (including any liability attributable to a current or
former member of BNI's or any of its ERISA Affiliates'
"controlled group" (as defined in Section 4001(a)(14) of ERISA))
and the maximum amount of such liability (determined as if a
complete withdrawal occurred with respect to each such plan
immediately after the Effective Time). With respect to each such
plan, (i) all contributions have been made as required by the
terms of the plans, the terms of any collective bargaining
agreements and applicable law, (ii) neither BNI nor any of its
ERISA Affiliates has withdrawn, partially withdrawn or received
any notice of any claim or demand for withdrawal liability or
partial withdrawal liability that would have a Material Adverse
Effect, and (iii) neither BNI nor any of its ERISA Affiliates has
received any notice that any such plan is in reorganization, that
increased contributions may be required to avoid a reduction in
plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required
under Section 412 of the Code or that any plan is or may become
insolvent.
(j) As of the Balance Sheet Date, the Expected
Postretirement Benefit Obligation (as defined in Statement of
Financial Accounting Standards No. 106) in respect of
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postretirement life, health and medical insurance benefits for
current and former employees of BNI or any of its Subsidiaries
calculated by BNI's actuary using reasonable actuarial
assumptions was $17,000,000.
SECTION 4.16. Finders' Fees. Except for Lazard Fr res
& Co., a copy of whose engagement agreement has been or will be
provided to SFP and whose fees will be paid by BNI, there is no
investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of BNI, the
Surviving Corporation or any Subsidiary of BNI who might be
entitled to any fee or commission from BNI, the Surviving
Corporation or any Subsidiary of BNI upon consummation of the
transactions contemplated by this Agreement.
SECTION 4.17. Environmental Matters. Except as set
forth in the BNI Form 10-K or otherwise previously disclosed in
writing by BNI to SFP, there are no Environmental Liabilities of
BNI that, individually or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect on BNI.
SECTION 4.18. Takeover Statutes. No Takeover Statute,
including, without limitation, Section 203 of the DGCL,
applicable to BNI or any of its Subsidiaries is applicable to the
Merger or the other transactions contemplated hereby.
SECTION 4.19. Compliance with Laws. Except as
publicly disclosed, and except for any matter that would not
reasonably be expected to have a Material Adverse Effect on BNI,
neither BNI nor any of its Subsidiaries is in violation of, or
has violated, any applicable provisions of any laws, statutes,
ordinances or regulations.
SECTION 4.20. BNI Rights Agreement. Under the Rights
Agreement between BNI and The First National Bank of Boston,
dated as of July 14, 1986 (the "BNI Rights Agreement"), SFP will
not become an "Acquiring Person", no "Stock Acquisition Date" or
"Distribution Date" (as such terms are defined in the BNI Rights
Agreement) will occur, and BNI's shareholders will not be
entitled to receive any benefits under the BNI Rights Agreement
as a result of the approval, execution or delivery of this
Agreement or the consummation of the Merger.
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ARTICLE V
COVENANTS OF SFP
SFP agrees that:
SECTION 5.1. Conduct of SFP. From the date hereof
until the Effective Time, except as provided in Schedule V, SFP
and the SFP Material Subsidiaries shall conduct their business in
the ordinary course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their
business organizations and relationships with third parties;
provided that nothing in this Section shall be deemed to prevent
SFP and its Subsidiaries from undertaking any action necessary,
proper or advisable to effectuate the Spinoff and all related
transactions in accordance with and subject to the conditions set
forth in this Agreement; and provided further that nothing in
this Section shall be deemed to prevent SFP and its Subsidiaries
from taking any action referred to in clauses (b)(ii), (c), (f)
or (g) of this Section 5.1 where the taking of such action is not
consistent with the past practices of SFP and its Subsidiaries
if, but only if, such action is a Customary Action. For purposes
of this Agreement, an action shall be considered a "Customary
Action" where such action 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. Without
limiting the generality of the foregoing, from the date hereof
until the Effective Time:
(a) SFP will not adopt or propose any change in its
certificate of incorporation or bylaws;
(b) Except for the Merger and the Spinoff, SFP will
not, and will not permit any Subsidiary of SFP, (i) to adopt
a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or
other reorganization or (ii) make any acquisition of any
business or other assets, whether by means of merger,
consolidation or otherwise, other than in the ordinary
course of business consistent with past practices and other
than acquisitions that are Customary Actions;
(c) SFP will not, and will not permit any Subsidiary
of SFP to, sell, lease, license or otherwise dispose of any
material assets or property except (i) the Spinoff, (ii)
pursuant to existing contracts or commitments, (iii) in the
ordinary course of business consistent with past practice
and (iv) any such sale, lease, license or other disposition
that is a Customary Action;
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(d) SFP will not, and will not permit any Subsidiary
of SFP to, declare, set aside, or pay any dividend or make
any other distribution with respect to any shares of SFP
capital stock other than (i) cash dividends on SFP Common
Stock not in excess of the amounts set forth in Section
3.11(b) and having record and payment dates determined as
set forth in Section 7.8, and (ii) the Spinoff;
(e) Except (i) as expressly permitted by this Section
5.1, Section 5.7 or (ii) pursuant to existing contracts or
commitments, SFP will not, and will not permit any
Subsidiary of SFP to, issue, deliver or sell, or authorize
or propose the issuance, delivery or sale of, any SFP
Securities, any SFP Voting Debt, any SFP Subsidiary
Securities or any securities convertible into or
exchangeable for, or any rights, warrants or options to
acquire, any SFP Securities, SFP Voting Debt or SFP
Subsidiary Securities;
(f) Except for (i) borrowings under existing credit
facilities, replacements therefor and refinancings thereof,
(ii) borrowings in the ordinary course of business
consistent with past practice or (iii) borrowings that are
Customary Actions, SFP will not, and will not permit any
Subsidiary of SFP to, incur any indebtedness for borrowed
money or guarantee any such indebtedness;
(g) Except for loans, advances, capital contributions
or investments made in the ordinary course of business
consistent with past practice and except for loans,
advances, capital contributions or investments that are
Customary Actions, SFP will not, and will not permit any
Subsidiary of SFP to, make any loans, advances or capital
contributions to, or investments in, any other Person (other
than to SFP or any Subsidiary of SFP);
(h) (i) Except for any of the actions referred to in
this clause (i) that is taken in the ordinary course of
business consistent in magnitude and character with past
practice and with the terms of severance or termination
arrangements in effect or pending on the date hereof with
respect to individuals with comparable positions or
responsibilities, and except for any of such actions which,
in the aggregate, are not material, as hereinafter defined,
SFP will not, and will not permit any of its Subsidiaries
to, grant any severance or termination pay to, or enter into
any termination or severance arrangement with, any of its
directors, executive officers or employees and (ii) except
for any of the actions referred to in this clause (ii) that
is taken in the ordinary course of business consistent in
aggregate in magnitude and character with past practice, and
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except for any of such actions which in the aggregate are
not material, as hereinafter defined, SFP will not, and will
not permit any of its Subsidiaries to, establish, adopt,
enter into, amend or take action to accelerate any rights or
benefits under, or grant awards under, (A) any plan or
arrangement providing for options, stock, performance awards
or other forms of incentive or deferred compensation or (B)
any collective bargaining, bonus, profit sharing, thrift,
compensation, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement
for the benefit of any of its directors, executive officers
or employees. For purposes of this subsection (h),
"material" shall mean material in relation to the overall
compensation costs of SFP and its Subsidiaries.
(i) SFP will not, and will not permit any Subsidiary
of SFP to, agree or commit to do any of the actions
prohibited by Sections 5.1(a) through 5.1(h).
SECTION 5.2. Stockholder Meeting. SFP shall cause a
special meeting of its stockholders (the "SFP Stockholder
Meeting") to be duly called and held as soon as reasonably
practicable after the date of this Agreement for the purpose of
voting on the approval and adoption of this Agreement and the
Merger. The board of directors of SFP shall recommend approval
and adoption of this Agreement and the Merger by its
stockholders; provided, however, that prior to the SFP
Stockholder Meeting such recommendation may be withdrawn,
modified or amended to the extent that, as a result of the
commencement or receipt of a Takeover Proposal (as defined in
Section 5.8) relating to SFP, the board of directors of SFP deems
it necessary to do so in the exercise of its fiduciary
obligations to SFP stockholders after being so advised by
counsel.
SECTION 5.3. Access to Information. Subject to any
confidentiality agreements or other confidentiality obligations
binding upon SFP or any of its Subsidiaries, from the date hereof
until the Effective Time, SFP will give BNI, its counsel,
financial advisors, auditors and other authorized representatives
full access to the offices, properties, books and records of SFP
and its Subsidiaries, will furnish to BNI, its counsel, financial
advisors, auditors and other authorized representatives such
financial and operating data and other information as such
Persons may reasonably request and will instruct SFP's employees,
counsel and financial advisors to cooperate with BNI in its
investigation of the business of SFP and its Subsidiaries;
provided that no investigation pursuant to this Section shall
affect any representation or warranty given by SFP to BNI
hereunder; and provided further that access to certain
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information will 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.
SECTION 5.4. Notices of Certain Events. SFP shall
promptly notify BNI of:
(i) any notice or other communication from any person
alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement
including, without limitation, the Spinoff and the
Liquidation; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise
affecting SFP or any Subsidiary of SFP which, if pending on
the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.13 or which relate to
the consummation of the transactions contemplated by this
Agreement.
SECTION 5.5. Tax Matters. From the date hereof until
the Effective Time, (i) SFP and its Subsidiaries will file all
significant tax returns, statements, reports and forms
(collectively, the "SFP Post-Signing Returns") required to be
filed with any taxing authority in accordance with all applicable
laws; (ii) SFP and its Subsidiaries will timely pay all taxes
shown as due and payable on the SFP Post-Signing Returns that are
so filed and as of the time of filing, the SFP Post-Signing
Returns will correctly reflect the facts regarding the income,
business, assets, operations activities and the status of SFP and
its Subsidiaries in all material respects; (iii) SFP and its
Subsidiaries will make provision for all taxes payable by SFP and
its Subsidiaries for which no SFP Post-Signing Return is due
prior to the Effective Time; and (iv) SFP and its Subsidiaries
will promptly notify BNI of any action, suit, proceeding,
investigation, audit or claim pending against or with respect to
SFP or any of its Subsidiaries in respect of any tax where there
is a reasonable possibility of a determination or decision
against SFP which would reasonably be expected to have a
significant adverse effect on SFP's tax liabilities or other tax
attributes.
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SECTION 5.6. Rule 145 Affiliates. At least 40 days
prior to the Closing Date, SFP shall deliver to BNI a letter
identifying all persons who are, at the time of the meeting of
SFP Stockholders Meeting, deemed to be "affiliates" of SFP for
purposes of Rule 145 under the 1933 Act (the "1933 Act
Affiliates"). SFP shall use its reasonable best efforts to cause
each Person who is identified as a possible 1933 Act Affiliate to
deliver to BNI at least 30 days prior to the Closing Date an
agreement substantially in the form of Exhibit A to this
Agreement.
SECTION 5.7. The Spinoff. SFP will not, and will not
permit any of its Subsidiaries (other than the Spinoff Company
and its Subsidiaries) to, enter into or undertake any
transaction, arrangement or agreement with the Spinoff Company or
its Subsidiaries except for (i) transactions, arrangements or
agreements that have been entered into on or prior to the date of
this Agreement which have been provided to BNI on or prior to the
date hereof, (ii) the allocation to employees of the Spinoff
Company of their share of the SFP employee benefit plans in
accordance with applicable law or (iii) such other transactions,
arrangements or agreements that are consented to by BNI (such
consent not to be unreasonably withheld). Without limiting the
generality of the foregoing, in no event may SFP or any of its
Subsidiaries pay any dividend, or make any distribution, to
holders of SFP Common Stock directly or indirectly in connection
with the Spinoff, except for the Spinoff Dividend. Nothing in
this Section 5.7 shall prevent SFP or the Spinoff Company from
taking actions (including, but not limited to filings with and
no-action requests of the SEC, communications with shareholders,
and the liquidation of subsidiaries of the Spinoff Company)
reasonably necessary to effectuate the Spinoff. It shall not be
a breach of this Agreement for SFP to pay any taxes arising from
excess loss accounts (not materially greater than the amount
represented in Section 3.22) in the stock of the Spinoff Company
or its subsidiaries. SFP will use its reasonable best efforts to
ensure that the conditions specified in the Private Letter Ruling
are satisfied.
SECTION 5.8. No Solicitations. SFP will not, and SFP
will use its reasonable best efforts to ensure that its officers,
directors, employees or other agents of SFP 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 of SFP, or, in the event of an unsolicited Takeover
Proposal of SFP, except to the extent required by their fiduciary
duties under applicable law if so advised by outside counsel,
engage in negotiations or provide any confidential information or
data to any Person relating to any such Takeover Proposal. SFP
shall notify BNI orally and in writing of any such inquiries,
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offers or proposals (including, without limitation, the terms and
conditions of any such proposal and the identity of the person
making it), within 48 hours of the receipt thereof and shall give
BNI five days' advance notice of any agreement to be entered into
with or any information to be supplied to any Person making such
inquiry, offer or proposal. SFP shall immediately cease and
cause to be terminated all existing discussions and negotiations,
if any, with any parties conducted heretofore with respect to any
Takeover Proposal of SFP. As used in this Agreement, "Takeover
Proposal" when used in connection with any Person shall mean any
tender or exchange offer, proposal for a merger, consolidation or
other business combination involving such Person or any
Subsidiary of such Person, or any proposal or offer to acquire in
any manner a substantial equity interest in, or a substantial
portion of the assets of such Person or any Subsidiary of such
Person, other than pursuant to the transactions contemplated by
this Agreement.
ARTICLE VI
COVENANTS OF BNI
BNI agrees that:
SECTION 6.1. Conduct of BNI. From the date hereof
until the Effective Time, except as provided in Schedule VI, BNI
and the BNI Material Subsidiaries shall conduct their business in
the ordinary course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their
business organizations and relationships with third parties;
provided that nothing in this Section shall be deemed to prevent
BNI and its Subsidiaries from taking any action referred to in
clauses (b)(ii), (c), (f) or (g) of this Section 6.1 where the
taking of such action is not consistent with the past practices
of BNI and its Subsidiaries if, but only if, such action is a
Customary Action. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
(a) BNI will not adopt or propose any change in its
certificate of incorporation or bylaws, except for an
amendment to its certificate of incorporation authorizing
the issuance of additional shares of Class A Preferred Stock
in connection with the issuance of Rights to former holders
of SFP Common Stock upon consummation of the Merger;
(b) Except for the Merger, BNI will not, and will not
permit any Subsidiary of BNI, (i) to adopt a plan of
complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other
reorganization or (ii) make any acquisition, by means of
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merger, consolidation or otherwise, other than in the
ordinary course of business consistent with past practices
and other than acquisitions that are Customary Actions;
(c) BNI will not, and will not permit any Subsidiary
of BNI to, sell, lease, license or otherwise dispose of any
material assets or property except (i) pursuant to existing
contracts or commitments, (ii) in the ordinary course of
business consistent with past practice and (iii) any such
sale, lease, license or other disposition that is a
Customary Action;
(d) BNI will not, and will not permit any Subsidiary
of BNI to, declare, set aside, or pay any dividend or make
any other distribution with respect to any shares of BNI
capital stock (other than cash dividends on BNI Common Stock
not in excess of the amounts set forth in Section 4.11(b)
and having record and payment dates determined as set forth
in Section 7.8);
(e) Except (i) as expressly permitted by this
Section 6.1, (ii) as necessary in connection with the
transactions contemplated hereby (including the issuance of
Rights to former holders of SFP Common Stock upon
consummation of the Merger) or (iii) pursuant to existing
contracts and commitments, BNI will not, and will not permit
any Subsidiary of BNI to, issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any
BNI Securities, any BNI Voting Debt or any securities
convertible into or exchangeable for, or any rights,
warrants or options to acquire, any BNI Securities or BNI
Voting Debt;
(f) Except for (i) borrowings under existing credit
facilities, replacements therefor and refinancings thereof
(ii) borrowings in the ordinary course of business
consistent with past practice or (iii) borrowings that are
Customary Actions, BNI will not, and will not permit any
Subsidiary of BNI to, incur any indebtedness for borrowed
money or guarantee any such indebtedness;
(g) Except for loans, advances, capital contributions
or investments made in the ordinary course of business
consistent with past practice and except for loans,
advances, capital contributions or investments that are
Customary Actions, BNI will not, and will not permit any
Subsidiary of BNI to, make any loans, advances or capital
contributions to, or investments in, any other Person (other
than to BNI or any Subsidiary of BNI);
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(h) (i) except for any of the actions referred to in
this clause (i) that is taken in the ordinary course of
business consistent in magnitude and character with past
practice and with the terms of severance or termination
arrangements in effect or pending on the date hereof with
respect to individuals with comparable positions or
responsibilities, and except for any of such actions which,
in the aggregate, are not material, as hereinafter defined,
BNI will not, and will not permit any of its Subsidiaries
to, grant any severance or termination pay to, or enter into
any termination or severance arrangement with, any of its
directors, executive officers or employees and (ii) except
for any of the actions referred to in this clause (ii) that
is taken in the ordinary course of business consistent in
aggregate in magnitude and character with past practice, and
except for any of such actions which in the aggregate are
not material, as hereinafter defined, BNI will not, and will
not permit any of its Subsidiaries to, establish, adopt,
enter into, amend or take action to accelerate any rights or
benefits under, or grant awards under, (A) any plan or
arrangement providing for options, stock, performance awards
or other forms of incentive or deferred compensation or (B)
any collective bargaining, bonus, profit sharing, thrift,
compensation, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement
for the benefit of any of its directors, executive officers
or employees. For purposes of this subsection (h),
"material" shall mean material in relation to the overall
compensation costs of BNI and its Subsidiaries.
(i) BNI will not, and will not permit any Subsidiary
of BNI to, agree or commit to do any of the actions
prohibited by Sections 6.1(a) through 6.1(h).
SECTION 6.2. Stockholder Meeting. BNI shall cause a
special meeting of its stockholders (the "BNI Stockholder
Meeting") to be duly called and held as soon as reasonably
practicable after the date of this Agreement for the purpose of
voting on the approval and adoption of this Agreement and the
Merger. The board of directors of BNI shall recommend approval
and adoption of this Agreement and the Merger by its
stockholders; provided that prior to the BNI Stockholder Meeting
such recommendation may be withdrawn, modified or amended to the
extent that, as a result of the commencement or receipt of a
Takeover Proposal (as defined in Section 5.8) relating to BNI,
the board of directors of BNI deems it necessary to do so in the
exercise of its fiduciary obligations to BNI stockholders after
being so advised by counsel.
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SECTION 6.3. Access to Information. Subject to any
confidentiality agreements or other confidentiality obligations
binding upon BNI or any of its Subsidiaries, from the date hereof
until the Effective Time, BNI will give SFP, its counsel,
financial advisors, auditors and other authorized representatives
full access to the offices, properties, books and records of BNI
and its Subsidiaries, will furnish to SFP, its counsel, financial
advisors, auditors and other authorized representatives such
financial and operating data and other information as such
Persons may reasonably request and will instruct BNI's employees,
counsel and financial advisors to cooperate with SFP in its
investigation of the business of BNI and its Subsidiaries;
provided that no investigation pursuant to this Section shall
affect any representation or warranty given by BNI to SFP
hereunder; and provided further that access to certain
information will 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.
SECTION 6.4. Notices of Certain Events. BNI shall
promptly notify SFP of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise
affecting BNI or any BNI Material Subsidiary which, if
pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.13 or
which relate to the consummation of the transactions
contemplated by this Agreement.
SECTION 6.5. Tax Matters. From the date hereof until
the Effective Time, BNI and its Subsidiaries will file all
significant tax returns, statements, reports and forms
(collectively, the "BNI Post-Signing Returns") required to be
filed with any taxing authority in accordance with all applicable
laws; (ii) BNI and its Subsidiaries will timely pay all taxes
shown as due and payable on the BNI Post-Signing Returns that are
so filed and as of the time of filing, the BNI Post-Signing
Returns will correctly reflect the facts regarding the income,
business, assets, operations, activities and the status of BNI
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and its Subsidiaries in all material respects; (iii) BNI and its
Subsidiaries will make provision for all taxes payable by BNI and
its Subsidiaries for which no BNI Post-Signing Return has yet
been filed; and (iv) BNI and its Subsidiaries will promptly
notify SFP of any action, suit, proceeding, investigation, audit
or claim pending against or with respect to BNI or any of its
subsidiaries in respect of any tax where there is a reasonable
possibility of a determination or decision against BNI which
would reasonably be expected to have a significant adverse effect
on BNI's tax liabilities or tax attributes.
SECTION 6.6. Director and Officer Liability. (a) BNI
shall indemnify and hold harmless each person who is, or has been
at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of SFP, in respect of acts
or omissions occurring prior to the Effective Time (the
"Indemnified Parties") (including but not limited to the
transactions contemplated by this Agreement) to the extent
provided under SFP's certificate of incorporation, bylaws and (A)
indemnity agreements between SFP and any of its officers or
directors ("Indemnity Agreements") in effect on the date hereof
or (B) Indemnity Agreements that may be entered into by SFP from
and after the date hereof and prior to the Effective Time so long
as such Agreements shall contain terms and provisions
substantially similar to Indemnity Agreements in effect as of the
date hereof; provided that such indemnification shall be subject
to any limitation imposed from time to time under applicable law.
For six years after the Effective Time, BNI shall provide, if
available, officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective
Time, including but not limited to the transactions contemplated
by this Agreement, covering each such Person currently covered by
SFP's officers' and directors' liability insurance policy, or who
becomes covered by such policy prior to the Effective Time, on
terms with respect to coverage and amount no less favorable than
those of such policy in effect on the date hereof, provided that
in satisfying its obligation under this Section, BNI shall not be
obligated to pay premiums in excess of two-hundred percent (200%)
of the amount per annum SFP paid in its last full fiscal year,
which amount has been disclosed to BNI but provided further that
BNI shall nevertheless be obligated to provide such coverage as
may be obtained for such amount.
(b) Any determination to be made as to whether any
Indemnified Party has met any standard of conduct imposed by law
shall be made by legal counsel reasonably acceptable to such
Indemnified Party and BNI, retained at BNI's expense.
(c) This Section 6.6 is intended to benefit the
Indemnified Parties, their heirs, executors and personal
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representatives and shall be binding on successors and assigns of
BNI.
SECTION 6.7. No Solicitations. BNI will not, and BNI
will use its reasonable best efforts to ensure that its officers,
directors, employees or other agents of BNI 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 of BNI, or, in the event of an unsolicited Takeover
Proposal of BNI, except to the extent required by their fiduciary
duties under applicable law if so advised by outside counsel,
engage in negotiations or provide any confidential information or
data to any Person relating to any such Takeover Proposal. BNI
shall notify SFP orally and in writing of any such inquiries,
offers or proposals (including, without limitation, the terms and
conditions of any such proposal and the identity of the person
making it), within 48 hours of the receipt thereof and shall give
SFP five days' advance notice of any agreement to be entered into
with or any information to be supplied to any Person making such
inquiry, offer or proposal. BNI shall immediately cease and
cause to be terminated all existing discussions and negotiations,
if any, with any parties conducted heretofore with respect to any
Takeover Proposal of BNI.
ARTICLE VII
COVENANTS OF BNI AND SFP
The parties hereto agree that:
SECTION 7.1. Reasonable Best Efforts. Subject to the
terms and conditions of this Agreement, each party will use its
reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 7.2. ICC Approval. BNI and SFP shall, and
each shall cause each of its Subsidiaries to, take all such
actions as are necessary to (i) cooperate with one another to
prepare and present to the ICC as soon as practicable all filings
and other presentations in connection with seeking any ICC
approval, exemption or other authorization necessary to
consummate the transactions contemplated by this Agreement
(including, without limitation, the matters contemplated by
Sections 5.3 and 6.3), (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 approval by persons not party to this Agreement, and
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(iv) take all such further action as reasonably may be necessary
to obtain a final order or orders of the ICC approving such
transactions consistent with this Agreement.
SECTION 7.3. Certain Filings; Proxy Materials. (a)
BNI (i) will promptly prepare and file with the SEC, will use its
reasonable best efforts to have cleared by the SEC and will
thereafter mail to its stockholders as promptly as practicable
the BNI Proxy Statement and all other proxy materials for the BNI
Stockholder Meeting, (ii) will use its reasonable best efforts to
obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby (provided that
prior to the BNI Stockholder Meeting the BNI Board's
recommendation may be withdrawn, modified or amended to the
extent that, as a result of the commencement or receipt of a
Takeover Proposal relating to BNI, the board of directors of BNI
deems it necessary to do so in the exercise of its fiduciary
obligations to BNI stockholders after being so advised by
counsel), (iii) will otherwise comply with all legal requirements
applicable to such meeting and (iv) will make all other filings
or recordings required under applicable Delaware law in
connection with the Merger. BNI will prepare and file with the
SEC the registration statement on Form S-4 (the "Form S-4") (in
which the BNI Proxy Statement will be included as a prospectus)
and will take any action (other than qualifying to do business in
any jurisdiction in which it is now not so qualified) required to
be taken under any applicable state Blue Sky law in connection
with the issuance of BNI Common Stock.
(b) SFP (i) will promptly prepare and file with the
SEC, will use its reasonable best efforts to have cleared by the
SEC and will thereafter mail to its stockholders as promptly as
practicable the SFP Proxy Statement and all other proxy materials
for the SFP Stockholder Meeting, (ii) will use its reasonable
best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated
hereby (provided that prior to the SFP Stockholder Meeting the
SFP Board's recommendation may be withdrawn, modified or amended
to the extent that, as a result of the commencement or receipt of
a Takeover Proposal relating to SFP, the board of directors of
SFP deems it necessary to do so in the exercise of its fiduciary
obligations to SFP stockholders after being so advised by
counsel), (iii) will otherwise comply with all legal requirements
applicable to such meeting and (iv) will make all other filings
or recordings required under applicable Delaware law in
connection with the Merger.
SECTION 7.4. Public Announcements. BNI and SFP will
consult with each other before issuing any press release with
respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any
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listing agreement with any national securities exchange, will not
issue any such press release prior to such consultation.
SECTION 7.5. Further Assurances. At and after the
Effective Time, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the
name and on behalf of SFP, any deeds, bills of sale, assignments
or assurances and to take and do, in the name and on behalf of
SFP, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights,
properties or assets of SFP acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the
Merger.
SECTION 7.6. Antitakeover Statutes. If any Takeover
Statute is or may become applicable to the transactions
contemplated hereby, each of BNI and SFP and the members of their
respective Boards of Directors will grant such approvals and take
such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and
otherwise act to eliminate or minimize the effects of any
Takeover Statute on any of the transactions contemplated by this
Agreement.
SECTION 7.7. Cooperation. BNI and SFP shall together,
or pursuant to an allocation of responsibility to be agreed
between them, coordinate and cooperate (i) with respect to the
timing of the BNI Stockholder Meeting and the SFP Stockholder
Meeting and shall use their reasonable best efforts to hold such
meetings on the same day, (ii) in connection with the preparation
of the SFP Disclosure Documents and the BNI Disclosure Documents,
(iii) in determining whether any action by or in respect of, or
filing with, any governmental body, agency, official or authority
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 (iv) in seeking any such
actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith
or with the SFP Disclosure Documents and the BNI Disclosure
Documents and timely seeking to obtain any such actions,
consents, approvals or waivers. Subject to the terms and
conditions of this Agreement, BNI and SFP will each use its
reasonable best efforts to have the Form S-4 declared effective
under the 1933 Act as promptly as practicable after the Form S-4
is filed, and (v) 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
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relevant to the Merger, provided that the parties will not confer
on any matter to the extent inconsistent with law.
SECTION 7.8. Dividends. From September 30, 1995 to
the Effective Time, all dividends paid by SFP and BNI to their
respective stockholders shall be paid on a quarterly basis, with
identical record and payment dates, in amounts not exceeding the
amounts set forth in Section 5.1(d) or Section 6.1(d), as the
case may be.
ARTICLE VIII
[Intentionally Omitted]
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each
Party. The obligations of SFP and BNI to consummate the Merger
are subject to the satisfaction (or waiver by the party for whose
benefit such conditions exist) of the following conditions:
(i) this Agreement shall have been adopted by the
stockholders of SFP and BNI in accordance with Delaware Law;
(ii) any applicable waiting period under the HSR Act
relating to the Merger shall have expired;
(iii) no court, arbitrator or governmental body, agency
or official shall have issued any order, and there shall not
be any statute, rule or regulation, restraining or
prohibiting the consummation of the Merger or the effective
operation of the business of BNI, SFP and their respective
Subsidiaries after the Effective Time;
(iv) 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 ICC approval, which is addressed in clause (v) below)
shall have been obtained, but excluding any consent,
approval, clearance or confirmation the failure to obtain
which could not reasonably be expected to have a Material
Adverse Effect on the Surviving Corporation after the
Effective Time;
(v) the ICC shall have issued a decision (which
decision shall not have been stayed or enjoined) that (A)
constitutes a final order approving, exempting or otherwise
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authorizing consummation of the Merger and all other
transactions contemplated by this Agreement (or subsequently
presented to the ICC by agreement of BNI and SFP) as may
require such authorization and (B) does not (1) require the
inclusion of any other rail carriers or rail properties
material to the parties, (2) change the Exchange Ratio or
(3) impose on BNI, SFP 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 in the reasonable opinion of the
board of directors of BNI or of SFP, respectively,
significantly and adversely affect the economic benefits of
the transactions contemplated by this Agreement to BNI and
its stockholders or SFP and its stockholders, as the case
may be;
(vi) SFP and BNI shall have obtained an opinion of
nationally recognized tax counsel to the effect that the
Merger will be a tax-free reorganization under Section 368
of the Code and the regulations thereunder; and
(vii) the Merger shall conform to the requirements set
forth in the Private Letter Ruling, and the Spinoff and the
Liquidation shall be tax-free pursuant to and in conformity
with the Private Letter Ruling.
SECTION 9.2. Conditions to the Obligations of BNI.
The obligations of BNI to consummate the Merger are subject to
the satisfaction (or waiver by BNI) of the following further
conditions:
(i) SFP shall have performed in all material respects
all of its obligations hereunder required to be performed by
it at or prior to the Effective Time, and the
representations and warranties of SFP shall have been
accurate in all material respects both when made and at and
as of the Effective Time as if made at and as of such time,
except for the representations and warranties of SFP
contained in Section 3.5(a), which shall be accurate in all
respects both when made and at and as of the Effective Time
as if made at and as of that time;
(ii) all other statutory requirements for the valid
consummation by SFP of the transactions contemplated by this
Agreement (including without limitation the Spinoff and the
Liquidation) shall have been fulfilled.
SECTION 9.3. Conditions to the Obligations of SFP.
The obligations of SFP to consummate the Merger are subject to
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the satisfaction (or waiver by SFP) of the following further
conditions:
(i) BNI shall have performed in all material respects
all of its respective obligations hereunder required to be
performed by it at or prior to the Effective Time, and (A)
the representations and warranties of BNI shall have been
accurate in all material respects both when made and at and
as of the Effective Time as if made at and as of such time,
except for the representations and warranties of BNI in
Section 4.5(a), which shall be accurate in all respects when
made and at and as of the Effective Time as if made at and
as of that time;
(ii) the BNI Common Stock required to be issued
hereunder shall have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance;
(iii) all other statutory requirements for the valid
consummation by SFP of the transactions contemplated by this
Agreement shall have been fulfilled; and
(iv) the Spinoff shall have been consummated.
ARTICLE X
TERMINATION
SECTION 10.1. Termination. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time (notwithstanding any approval of this
Agreement by the stockholders of BNI or SFP):
(i) by mutual written consent of BNI and SFP;
(ii) by either BNI or SFP, if the Merger has not been
consummated by December 31, 1997;
(iii) by either BNI or SFP, if any judgment, injunction,
order or decree enjoining BNI or SFP from consummating the
Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable;
(iv) by BNI, if the Spinoff has not been completed by
December 31, 1994 (it is understood that if BNI does not
exercise the right to terminate pursuant to this Section
10.1(iv) by January 30, 1995 this provision will be deemed
to be waived);
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(v) by BNI, if any Person, entity or "group" (as
defined in Section 13(d)(3) of the Exchange Act) other than
BNI acquires beneficial ownership of 50% or more of the
outstanding Shares;
(vi) by SFP, if any Person, entity or group acquires
beneficial ownership of 50% or more of the outstanding BNI
Common Stock;
(vii) by either BNI or SFP if the approvals of the
stockholders of BNI or SFP contemplated by this Agreement
shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of
stockholders or of any adjournment thereof;
(viii) by BNI, if, prior to the SFP Stockholder Meeting,
the board of directors of SFP shall have withdrawn, modified
or changed in a manner adverse to BNI its approval or
recommendation of this Agreement or the Merger;
(ix) by SFP, if, prior to the BNI Stockholder Meeting,
the board of directors of BNI shall have withdrawn, modified
or changed in a manner adverse to SFP its approval or
recommendation of this Agreement or the Merger;
(x) by BNI, upon a breach of any representation,
warranty, covenant or agreement of SFP, or if any
representation or warranty of SFP shall become untrue, in
either case such that the conditions set forth in Section
9.2(i) would be incapable of being satisfied by December 31,
1997 (or such later date extended), provided that a wilful
breach shall be deemed to cause such conditions to be
incapable of being satisfied by such date; and
(xi) by SFP, upon a breach of any representation,
warranty, covenant or agreement of BNI, or if any
representation or warranty of BNI shall become untrue, in
either case such that the conditions set forth in Section
9.3(i) would be incapable of being satisfied by December 31,
1997 (or as otherwise extended), provided that a wilful
breach shall be deemed to cause such conditions to be
incapable of being satisfied by such date.
SECTION 10.2. Effect of Termination. If this
Agreement is terminated pursuant to Section 10.1, this Agreement
shall become void and of no effect with no liability on the part
of any party hereto, except that (a) the agreements contained in
Sections 3.16, 4.16 and 11.4 shall survive the termination hereof
and (b) no such termination shall relieve any party of any
liability or damages resulting from any breach by that party of
this Agreement.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including telecopy or similar writing) and shall be given,
if to BNI, to:
Burlington Northern Inc.
Attn: Douglas J. Babb, Esq.
3800 Continental Place
777 Main Street
Fort Worth, Texas 76102
Telecopy: (817) 333-2377
with a copy to:
Dennis S. Hersch, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: (212) 450-4800
if to SFP, to:
Santa Fe Pacific Corporation
Attn: Jeffrey R. Moreland
1700 East Golf Road
Schaumburg, Illinois 60173
Telecopy: (708) 995-6847
with a copy to:
Robert A. Helman, Esq.
Mayer, Brown & Platt
190 South La Salle Street
Chicago, Illinois 60603-3441
Telecopy: (312) 701-7711
or such other address or telecopy number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. Each such notice, request or other communication shall
be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and
the appropriate confirmation is received or (ii) if given by any
other means, when delivered at the address specified in this
Section.
SECTION 11.2. Entire Agreement; Survival of
Representations and Warranties. (a) This Agreement (and any
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other agreements contemplated hereby or executed by the parties
or their designees as of the date of this Agreement), and the
Confidentiality and Standstill Agreement dated July 28, 1993
between SFP and BNI (the "Confidentiality Agreement") constitute
the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all prior
agreements, understandings and negotiations, both written and
oral, between the parties with respect to such subject matter.
No representation, inducement, promise, understanding, condition
or warranty not set forth herein has been made or relied upon by
any party hereto. None of this Agreement, the Confidentiality
Agreement or any other agreement contemplated hereby or executed
by the parties or their designees as of the date of this
Agreement (or any provision hereof or thereof) is intended to
confer upon any Person other than the parties hereto any rights
or remedies (except that Section 6.6, is intended to confer
rights and remedies on SFP's officers and directors).
(b) The representations and warranties and agreements
contained herein shall not survive the Effective Time or the
termination of this Agreement except for the agreements set forth
in Sections 6.6 and 11.4.
SECTION 11.3. Amendments; No Waivers. (a) Any
provision of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by SFP and BNI
or in the case of a waiver, by the party against whom the waiver
is to be effective; provided that after the adoption of this
Agreement by the stockholders of SFP, no such amendment or waiver
shall, without the further approval of such stockholders, alter
or change (i) the amount or kind of consideration to be received
in exchange for any shares of capital stock of SFP, (ii) any term
of the certificate of incorporation of the Surviving Corporation
or (iii) any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the holders of any
shares of capital stock of SFP.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 11.4. Expenses. Except as otherwise agreed in
writing by the parties, each party shall bear its own expenses,
including the fees and expenses of any attorneys, accountants,
investment bankers, brokers, finders or other intermediaries or
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other Persons engage by it, incurred in connection with this
Agreement and the transactions contemplated hereby.
SECTION 11.5. Successors and Assigns. The provisions
of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns, provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
SECTION 11.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State
of Delaware (without regard to principles of conflict of laws).
SECTION 11.7. Jurisdiction. Any suit, action or
proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought against any
of the parties in the United States District Court for the
District of Delaware or any state court sitting in the City of
Wilmington, Delaware, and each of the parties hereby consents to
the exclusive jurisdiction of such courts (and of the appropriate
appellate courts) in any such suit, action or proceeding and
waives any objection to venue laid therein. Process in any such
suit, action or proceeding may be served on any party anywhere in
the world, whether within or without the State of Delaware.
Without limiting the foregoing, each of the parties hereto agrees
that service of process upon such party at the address referred
in Section 11.1, together with written notice of such service to
such party, shall be deemed effective service of process upon
such party.
SECTION 11.8. 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 the
signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the
other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
Burlington Northern Inc.
By: /s/ Gerald Grinstein
______________________________
Title: Chairman and Chief
Executive Officer
Santa Fe Pacific Corporation
By: /s/ Robert Krebs
______________________________
Title: Chairman, President and
Chief Executive Officer
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EXHIBIT A
FORM OF AFFILIATE LETTER
Burlington Northern Inc.
3800 Continental Plaza
777 Main Street
Ft. Worth, Texas 76102
Ladies and Gentlemen:
I have been advised that as of the date of this
letter I may be deemed to be an "affiliate" of Santa Fe
Pacific Corporation, a Delaware Corporation ("SFP"), as the
term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Pursuant to the terms of the Agreement
and Plan of Merger dated as of June 29, 1994 (the
"Agreement"), between Burlington Northern Inc., a Delaware
corporation ("BN"), and SFP, SFP will be merged with and
into BN, with BN to be the survivor in the merger (the
"Merger").
As a result of the Merger, I may receive shares of
Common Stock, no par value, of BN (the "BN Securities") in
exchange for shares owned by me of Common Stock, par value
$1.00 per share, of SFP.
I represent, warrant and covenant to BN that in the
event I receive any BN Securities as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the BN Securities in violation of the Act or
the Rules and Regulations.
B. I have carefully read this letter and the
Agreement and discussed the requirements of such documents
and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of the BN Securities to the
extent I felt necessary with my counsel or counsel for SFP.
C. I have been advised that the issuance of BN
Securities to me pursuant to the Merger has been registered
with the Commission under the Act on a Registration
Statement on Form S-4. However, I have also been advised
that, since at the time the Merger was submitted for a vote
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of the stockholders of SFP, I may be deemed to have been an
affiliate of SFP and the distribution by me of the BN
Securities has not been registered under the Act, I may not
sell, transfer or otherwise dispose of the BN Securities
issued to me in the Merger unless (i) such sale, transfer or
other disposition has been registered under the Act, (ii)
such sale, transfer or under other disposition is made in
conformity with Rule 145 promulgated by the Commission under
the Act, or (iii) in the opinion of counsel reasonably
acceptable to BN, or a "no action" letter obtained by the
undersigned from the staff of the Commission, such sale,
transfer or other disposition is otherwise exempt from
registration under the Act.
D. I understand that BN is under no obligation to
register the sale, transfer or other disposition of the BN
Securities by me or on my behalf under the Act or to take
any other action necessary in order to make compliance with
an exemption from such registration available.
E. I also understand that there will be placed on
the certificates for the BN Securities issued to me, or any
substitutions therefor, a legend stating in substance:
"TEN SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT DATED
BETWEEN THE REGISTERED HOLDER HEREOF AND
BURLINGTON NORTHERN INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
BURLINGTON NORTHERN INC."
F. I also understand that unless the transfer by
me of my BN Securities has been registered under the Act or
is a sale made in conformity with the provisions of Rule
145, BN reserves the right to put the following legend on
the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
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<PAGE>
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set
forth in paragraphs E and F above shall be removed by
delivery of substitute certificates without such legend if,
in the judgment of BN, such legend is not required for
purposes of the Act or this Agreement.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of SFP as
described in the first paragraph of this letter or as a
waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Very truly yours,
------------------------
Name:
Accepted this day of
---
, 1994 by
----------------
BURLINGTON NORTHERN INC.
By:
-----------------------
Name:
----------------
Title:
----------------
A-3
BURLINGTON NORTHERN INC.
3800 Continental Plaza
GERALD GRINSTEIN 777 Main Street
Chairman and Ft. Worth, Texas 76102-5384
Chief Executive Officer (817) 333-2272
June 29, 1994
Mr. Robert D. Krebs
Chairman, President and
Chief Executive Officer
Santa Fe Pacific Corporation
1700 E. Golf Road
Schaumburg, IL 60173
Dear Rob:
This letter will confirm our mutual agreement regarding
corporate governance issues after the merger between
Burlington Northern Inc. ("BNI") and Santa Fe Pacific
Corporation ("SFP"):
1. The Board of Directors of the merged company will be
constituted as follows: two-third of the Directors
will be designated by BNI, and one-third of the
Directors will be designated by SFP. These
designations will be made before the merger is
consummated.
2. I will serve as Chairman of the Board of the merged
company, and you will be the President and Chief
Executive Officer of the merged company.
3. We will thoroughly review who would be best suited to
be the officers of the merged company and its
subsidiaries. We will then submit our mutual
recommendations to the Board of Directors of the merged
company, which will be responsible for the careful
selection of the officers to be elected or appointed.
This mutual agreement has been authorized by each of our
respective Boards of Directors at meetings today. We
<PAGE>
Robert D. Krebs -2- June 29, 1994
acknowledge that this is an agreement contemplated by the
Merger Agreement between our respective companies.
Sincerely yours,
/s/ Gerald Grinstein
-----------------------
Gerald Grinstein
for BNI
Agreed and accepted:
/s/ Robert D. Krebs
--------------------------
Robert D. Krebs
for SFP
June 29, 1994
Santa Fe Pacific Corporation
1700 E. Golf Road
Schaumburg, IL 60173
Dear Sirs:
This letter will confirm our mutual agreement
regarding the disclosure schedules contemplated by the
Agreement and Plan of Merger dated as of June 29, 1994 (the
"Merger Agreement") between Burlington Northern Inc. ("BNI")
and Santa Fe Pacific Corporation ("SFP").
Each of BNI and SFP shall deliver to the other its
disclosure schedules not later than July 15, 1994. For the
purposes of this letter, (i) the term "Providing Party"
means the party delivering disclosure schedules and (ii) the
term "Recipient Party" means the party receiving such
materials.
In the event that a Recipient Party shall conclude
in the exercise of its reasonable business judgment that, on
the basis of the information included in the disclosure
schedules, the business of the Providing Party is materially
and adversely different from such Recipient Party's
reasonable understanding of the Providing Party's business
based upon information provided to the Recipient Party prior
to the date hereof, the Recipient Party may elect to
terminate the Merger Agreement in the manner set forth
below. A party seeking to terminate the Merger Agreement
pursuant to this paragraph must so notify the Providing
Party in writing within five days after receipt of the
disclosure schedules from the Providing Party. A failure to
deliver any such notice within such five-day period shall be
deemed a waiver by the Recipient Party of the right to
terminate the Merger Agreement pursuant to this letter.
BNI and SFP represent and warrant to the other
that since the Balance Sheet Date (as defined in the Merger
Agreement) there has not been any event, occurrence or
development of a state of circumstances or facts which has
had or reasonably could be expected to have a Material
Adverse Effect (as defined in the Merger Agreement) on BNI
or SFP, as the case may be.
<PAGE>
BNI and SFP acknowledge that this is an agreement
contemplated by the Merger Agreement between the respective
companies.
Sincerely yours,
BURLINGTON NORTHERN INC.
By /s/ Douglas J. Babb
----------------------
Name: Douglas J. Babb
Title: Vice President and
General Counsel
Agreed and accepted:
SANTA FE PACIFIC CORPORATION
By /s/ Robert D. Krebs
--------------------------
Name: Robert D. Krebs
Title: Chairman, President &
Chief Executive Officer
2
FOR IMMEDIATE RELEASE MEDIA CONTACT: Cathy Westphal #37
(708) 995-6273
SFP DIRECTORS APPROVE SPIN-OFF
SCHAUMBURG, ILLINOIS, JUNE 30, 1994 -- The board of
directors of Santa Fe Pacific Corporation (NYSE: SFX) has
approved a special dividend to its common shareholders consisting
of the company's remaining 85.4% interest in its gold company
subsidiary, Santa Fe Pacific Gold Corporation (NYSE: GLD). As a
result, SFP Gold will become a separate, independent entity
effective September 30, 1994. On June 15, 1994, an initial
public offering representing 14.6% of SFP Gold was completed at a
price to the public of $14 per share.
Holders of record of SFP common stock as of September 12,
1994, will receive one share of common stock of Santa Fe Pacific
Gold Corporation for every approximately 1.7 shares of SFP common
stock held. Shareholders entitled to receive fractional shares
will receive cash from the sale on their behalf of such
fractional shares. Santa Fe Pacific Corporation will continue to
own The Atchison, Topeka and Santa Fe Railway Company and its
interest in Santa Fe Pacific Pipeline Partners, L.P.
As previously announced on April 15, 1994, the company has
received a ruling from the Internal Revenue Service that the
distribution will be tax free to SFP shareholders and the
company.
Robert D. Krebs, chairman, president and chief executive
officer of SFP, said, "This separation will allow management and
the boards of the two companies to more effectively develop and
finance their assets. We are convinced that this will ultimately
lead to higher values for our owners."
###
