-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Y2W9zda/d3sol87B8R6EeJJajBSTcG1VXdMgYsJpQ/H1HMy02Hz7BjcEPPPvwFuA 06yABB4a3vb3QE0jbmEcMQ== 0000950131-94-001823.txt : 19941125 0000950131-94-001823.hdr.sgml : 19941125 ACCESSION NUMBER: 0000950131-94-001823 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19941122 SROS: MSE SROS: NYSE SROS: PSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SANTA FE PACIFIC CORP CENTRAL INDEX KEY: 0000732639 STANDARD INDUSTRIAL CLASSIFICATION: 4011 IRS NUMBER: 363258709 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-38751 FILM NUMBER: 94561388 BUSINESS ADDRESS: STREET 1: 1700 EAST GOLF RD CITY: SCHAUMBURG STATE: IL ZIP: 60173-5860 BUSINESS PHONE: 7089956000 FORMER COMPANY: FORMER CONFORMED NAME: SANTA FE SOUTHERN PACIFIC CORP DATE OF NAME CHANGE: 19890516 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SANTA FE PACIFIC CORP CENTRAL INDEX KEY: 0000732639 STANDARD INDUSTRIAL CLASSIFICATION: 4011 IRS NUMBER: 363258709 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 1700 EAST GOLF RD CITY: SCHAUMBURG STATE: IL ZIP: 60173-5860 BUSINESS PHONE: 7089956000 FORMER COMPANY: FORMER CONFORMED NAME: SANTA FE SOUTHERN PACIFIC CORP DATE OF NAME CHANGE: 19890516 SC 14D9 1 SCHEDULE 14D9 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------------- SANTA FE PACIFIC CORPORATION (NAME OF SUBJECT COMPANY) SANTA FE PACIFIC CORPORATION (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, PAR VALUE $1.00 PER SHARE (TITLE OF CLASS OF SECURITIES) COMMON STOCK--802183 10 3 (CUSIP NUMBER OF CLASS OF SECURITIES) ---------------- JEFFREY R. MORELAND VICE PRESIDENT--LAW AND GENERAL COUNSEL SANTA FE PACIFIC CORPORATION 1700 EAST GOLF ROAD SCHAUMBURG, ILLINOIS 60173-5860 (708) 995-6000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) ---------------- COPY TO: SCOTT J. DAVIS MAYER, BROWN & PLATT 190 SOUTH LASALLE STREET CHICAGO, ILLINOIS 60603-3441 (312) 782-0600 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 1. SECURITY AND SUBJECT COMPANY. The name of the subject company is Santa Fe Pacific Corporation (the "Company"). The address of the principal executive offices of the Company is 1700 East Golf Road, Schaumburg, Illinois 60173-5860. The title of the class of equity securities to which this Statement relates is the Common Stock, par value $1.00 per share (the "Common Stock"), of the Company. ITEM 2. TENDER OFFER OF THE BIDDER. This statement relates to the tender offer made by UP Acquisition Corporation, a Utah corporation (the "Bidder") which has been formed by Union Pacific Corporation, a Utah corporation ("Union Pacific"), disclosed in a Tender Offer Statement on Schedule 14D-1 dated November 9, 1994 (the "Schedule 14D-1"), to purchase 115,903,127 shares of Common Stock, or such greater number of shares as equals 57.1% of the shares of Common Stock outstanding on a fully diluted basis, at $17.50 per share, net to the tendering shareholder in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 9, 1994 (the "Offer to Purchase"), and the related Letter of Transmittal (which collectively constitute the "Offer"). According to the Offer to Purchase, the address of the principal executive offices of the Bidder and Union Pacific is Martin Tower, Eighth and Eaton Avenues, Bethlehem, Pennsylvania 18018. Bidder and Union Pacific are collectively referred to herein as the "Offerors." The Schedule 14D-1 states that it was filed by the Offerors. According to the Offer to Purchase, the Bidder proposes to acquire the remaining shares of Common Stock in a "back-end" merger in which the holders of each remaining share of Common Stock would receive .354 of a share of Union Pacific's common stock, $2.50 par value ("UP Common Stock"). As of November 21, 1994, .354 of a share of UP Common Stock had a value of $16.68 based on the closing market price of UP Common Stock on that date as reported in the Chicago Sun-Times. According to the Offer to Purchase, the Offer is conditioned upon: (1) there being validly tendered and not withdrawn prior to the expiration of the Offer a number of shares of Common Stock which, when added to the shares of Common Stock beneficially owned by the Bidder and its affiliates, constitutes at least a majority of the shares of Common Stock outstanding on a fully diluted basis, (2) the Company having entered into a definitive merger agreement with Union Pacific and the Bidder to provide for the acquisition of the Company (the "Union Pacific Merger"), (3) the stockholders of the Company not having approved the agreement and plan of merger between Burlington Northern Inc. ("Burlington Northern") and the Company dated as of June 29, 1994, as amended (the "Merger Agreement"), (4) the Bidder being satisfied that Section 203 of the Delaware General Corporation Law has been complied with or is invalid or otherwise inapplicable to the Offer and the Union Pacific Merger, (5) the Bidder being satisfied that the Merger Agreement has been terminated in accordance with its terms and (6) receipt of an informal written opinion in form and substance satisfactory to the Bidder from the staff of the Interstate Commerce Commission ("ICC"), without the imposition of any conditions unacceptable to the Bidder, that the voting trust to be used in connection with the Offer and the Union Pacific Merger is consistent with the policies of the ICC against unauthorized acquisitions of control of a regulated carrier. The Offer also provides that Union Pacific may terminate the Offer if any of the following events shall have occurred: (a) there shall be threatened, instituted or pending any action or proceeding by any government or governmental authority or agency, domestic or foreign, or by any other person, domestic or foreign, before any court or governmental authority or agency, domestic or foreign, (i)(A) challenging or seeking to make illegal, to delay or otherwise directly or indirectly restrain or prohibit the making of the Offer, the acceptance for payment or payment for some or all of the Common Stock by the Bidder or Union Pacific or any other affiliates of Union Pacific or the consummation by the Bidder or Union Pacific or any other affiliates of Union Pacific of the Union Pacific Merger or other business combination with the Company, (B) seeking to obtain damages or (C) otherwise directly or indirectly relating to the transactions contemplated by the Offer or any such merger or business combination, (ii) seeking to prohibit the ownership or operation by Union Pacific, the Bidder or any other affiliates of Union Pacific of all or any portion of the business or assets of the Company and its subsidiaries or of the Bidder, or to compel Union Pacific, the Bidder or any other affiliates of Union Pacific to dispose of or hold separately all or any portion of the business or assets of the Bidder or the Company or any of its subsidiaries or seeking to impose any limitation on the ability of Union Pacific, the Bidder or any other affiliates of Union Pacific to conduct their business or own such assets, (iii) seeking to impose or confirm limitations on the ability of Union Pacific, the Bidder or any other affiliates of Union Pacific effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote any Common Stock acquired by any such person on all matters properly presented to the Company's stockholders, (iv) seeking to require divestiture by Union Pacific, the Bidder or any other affiliates of Union Pacific of any Common Stock, (v) which otherwise, in the sole judgment of the Bidder, might materially adversely affect Union Pacific, the Bidder or any other affiliates of Union Pacific or the value of the Common Stock, or (vi) in the sole judgment of the Bidder, materially adversely affecting the business, properties, assets, liabilities, capitalization, stockholders' equity, condition (financial or other), operations, licenses or franchises, results of operations or prospects of the Company or any of its subsidiaries, joint ventures or partnerships; provided that the condition specified in this paragraph (a) shall not be deemed to exist by reason of any court proceeding pending on the date hereof and known to the Bidder, unless in the sole judgment of the Bidder there is any adverse development in any such proceeding after the date hereof, or before the date hereof if not known to the Bidder on the date hereof, which might, directly or indirectly, result in any of the consequences referred to in (i) through (vi) above; (b) there shall be any action taken, or any statute, rule, regulation, interpretation, judgment, order or injunction proposed, enacted, enforced, promulgated, amended, issued or deemed applicable (i) to the Bidder, Union Pacific or any affiliate of Union Pacific or (ii) to the Offer or the Union Pacific Merger or other business combination by the Bidder or Union Pacific or any affiliate of Union Pacific with the Company, by any court, government or governmental, administrative or regulatory authority or agency, domestic or foreign, which, in the sole judgment of the Bidder, might, directly or indirectly, result in any of the consequences referred to in (i) through (vi) of paragraph (a) above; (c) any change (or any condition, event or development involving a prospective change) shall have occurred or been threatened in the business, properties, assets, liabilities, capitalization, stockholders' equity, condition (financial or other), operations, licenses, franchises, permits, permit applications, results of operations or prospects of the Company or any of its subsidiaries which, in the sole judgment of the Bidder, is or may be materially adverse, or the Bidder shall have become aware of any fact which, in the sole judgment of the Bidder, has or may have material adverse significance with respect to either the value of the Company or any of its subsidiaries or the value of the Common Stock to the Bidder; (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, any decline in either the Dow Industrial Average or the Standard & Poor's Index of 500 Industrial Companies by an amount in excess of 15% measured form the close of business on November 9, 1994 or any material adverse change in prices generally of shares on the NYSE, (ii) a declaration of a banking moratorium or any suspension in payments in respect of banks by federal or state authorities in the United States, (iii) any limitation (whether or not mandatory) by any governmental authority or agency on, or other event which, in the sole judgment of the Bidder, might affect the extension of credit by banks or other lending institutions, (iv) a commencement of a war, armed hostilities or other national or international calamity directly or indirectly involving the United States, (v) a material change in United States or any other currency exchange rates or a suspension of, or limitation on, the market therefor, or (vi) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; (e) the Company or any of its subsidiaries, joint ventures or partnerships or other affiliates shall have (i) split, combined or otherwise changed, or authorized or proposed the split, combination or other 2 change of the Common Stock or its capitalization, (ii) acquired or otherwise caused a reduction in the number of, or authorized or proposed the acquisition or other reduction in the number of, any presently outstanding Common Stock or other securities or other equity interests, (iii) issued, distributed or sold, or authorized or proposed the issuance, distribution or sale of, additional Common Stock, other than Common Stock issued or sold upon the exercise or conversion (in accordance with the present terms thereof) of employee stock options outstanding on the date of the Offer to Purchase, shares of any other class of capital stock or other equity interests, other voting securities, debt securities or any securities convertible into, or rights, warrants or options, conditional or otherwise, to acquire, any of the foregoing, (iv) declared, paid or proposed to declare or pay any cash or dividend or other distribution on any shares of capital stock of the Company (other than quarterly dividends not exceeding amounts previously declared by the Company), (v) altered or proposed to alter any material term of any outstanding security or material contract, permit or license, (vi) incurred any debt otherwise than in the ordinary course of business or any debt containing, in the sole judgment of the Bidder, burdensome covenants or security provisions, (vii) authorized, recommended, proposed or entered into an agreement with respect to any merger, consolidation, recapitalization, liquidation, dissolution, business combination, acquisition of assets, disposition of assets, release or relinquishment of any material contractual or other right of the Company or any of its subsidiaries or any comparable event not in the ordinary course of business, (viii) authorized, recommended, proposed or entered into or announced its intention to authorize, recommend, propose or enter into any agreement or arrangement with any person or group that in the Bidder's sole opinion could adversely affect either the value of the Company or any of its subsidiaries, joint ventures or partnerships or the value of the Common Stock to the Bidder, (ix) entered into any employment, change in control, severance, executive compensation or similar agreement, arrangement or plan with or for one or more of its employees, consultants or directors, or entered into or amended, or made grants or awards pursuant to, any agreements, arrangements or plans so as to provide for increased benefits to one or more employees, consultants or directors, or taken any action to fund, secure or accelerate the funding of compensation or benefits provided for one or more employees, consultants or directors, whether or not as a result of or in connection with the transactions contemplated by the Offer, (x) except as may be required by law, taken any action to terminate or amend any employee benefit plan (as defined in Section 3(c) of the Employee Retirement Income Security Act of 1974, as amended) of the Company or any of its subsidiaries, or the Bidder shall have become aware of any such action which was not previously disclosed in publicly available filings, or (xi) amended or authorized or proposed any amendment to its Certificate of Incorporation or Bylaws or similar organizational documents, or the Bidder shall become aware that the Company or any of its subsidiaries shall have proposed or adopted any such amendment which shall not have been previously disclosed; (f) a tender or exchange offer for any Common Stock shall be made or publicly proposed to be made by any other person (including the Company or any of its subsidiaries or affiliates), or it shall be publicly disclosed or the Bidder shall otherwise learn that (i) any person, entity (including the Company or any of its subsidiaries) or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) shall have acquired or proposed to acquire beneficial ownership of more than 5% of any class or series of capital stock the Company (including the Common Stock), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any right, option or warrant, conditional or otherwise, to acquire beneficial ownership of more than 5% of any class or series of capital stock of the Company (including the Common Stock) other than acquisitions for bona fide arbitrage purposes only and except as disclosed in a Schedule 13D or 13G on file with the Commission on the date of the Offer to Purchase, (ii) any such person, entity or group which before the date of the Offer to Purchase has filed such a Schedule with the Commission has acquired or proposes to acquire, through the acquisition of stock, the formation of a group or otherwise, beneficial ownership of 1% or more of any class or series of capital stock of the Company (including the Common Stock), or shall have been granted any right, option or warrant, conditional or otherwise, to acquire beneficial ownership of 1% or more of any class or series of capital stock of the Company (including the Common Stock), (iii) any person or group shall enter into a definitive agreement or an agreement in principle or made a proposal with respect to a tender offer or exchange offer or a merger, consolidation or other business combination 3 with or involving the Company, or with respect to any amendment of or modification to an existing such transaction or (iv) any person shall file a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended or made a public announcement reflecting an intent to acquire the Company or any assets or securities of the Company; (g) the Bidder shall have reached an agreement or understanding with the Company providing for termination of the Offer, or the Bidder or any of its affiliates shall have entered into a definitive agreement or announced an agreement in principle with the Company providing for a merger or other business combination with the Company or the purchase of stock or assets of the Company which does not contemplate the Offer; (h)(i) any material contractual right of the Company or any of its subsidiaries or affiliates shall be impaired or otherwise adversely affected or any material amount of indebtedness of the Company or any of its subsidiaries, joint ventures or partnerships shall become accelerated or otherwise become due before its stated due date, in either case with or without notice or the lapse of time or both, as a result of the transactions contemplated by the Offer or the Union Pacific Merger or (ii) any covenant, term or condition in any of the Company's or any of its subsidiaries', joint ventures' or partnerships' instruments or agreements is or may be materially adverse to the value of the Common Stock in the hands of the Bidder (including, but not limited to, any event of default that may ensue as a result of the consummation of the Offer or the Union Pacific Merger or the acquisition of control of the Company); or (i) Union Pacific or Bidder shall not have obtained any waiver, consent, extension, approval, action or non-action from any governmental authority or agency (other than approval by the ICC of the acquisition of control of the Company) which is necessary to consummate the Offer; which, in the sole judgment of the Bidder in any such case, and regardless of the circumstances (including any action or inaction by the Bidder or any of its affiliates), giving rise to any such condition, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment or payment for any tendered Common Stock. ITEM 3. IDENTITY AND BACKGROUND. (a) The name and business address of the Company, which is the person filing this Statement, are set forth in Item 1 above. (b) Certain Contracts, Agreements, Arrangements, Understandings and Potential Conflicts of Interest. Certain contracts, agreements, arrangements and understandings between the Company or its affiliates and certain of its executive officers, directors or affiliates are described under the heading "Interests of Certain Persons in the Merger" at pages 36 to 39 of the Company's Joint Proxy Statement/Prospectus dated October 12, 1994. Copies of such pages are filed as Exhibit 1 hereto and are incorporated herein by reference. ITEM 4. THE SOLICITATION OR RECOMMENDATION. (a) Nature of Solicitation or Recommendation. At a special meeting held on November 21, 1994, the Company's Board of Directors unanimously determined to recommend that stockholders not accept the Offer at this time. That recommendation is subject to change as events unfold that will clarify whether a transaction with Union Pacific is in the stockholders' best interest. A form of letter to stockholders of the Company communicating the Board of Directors' recommendation and a form of press release announcing such determination are filed as Exhibits 2 and 3 hereto, respectively, and are incorporated herein by reference. (b) Reasons for Position. The Board of Directors based its determination on the following factors: 4 Union Pacific has proposed to eliminate the risk to stockholders of the Company that the ICC would not approve a Union Pacific-Company merger by the use of a voting trust. However, the Offer is subject to the condition that the staff of the ICC issue an informal, non-binding opinion, without the imposition of any conditions unacceptable to Union Pacific, to the effect that the use of the voting trust submitted by Union Pacific is consistent with the policies of the ICC against unauthorized acquisitions of control of a regulated carrier. Union Pacific has applied to the ICC staff for such an opinion. It is unclear at this point whether or when such an opinion will be issued on the Union Pacific voting trust or whether the ICC may prevent Union Pacific from using a voting trust. The Union Pacific proposal is a taxable transaction, whereas the transaction contemplated by the Burlington Northern Merger Agreement is non-taxable. When coupled with prior statements made by Union Pacific, including its reference to a price of $20 per share of Common Stock in its October 5 meeting with Mr. Robert D. Krebs, the Company's Chairman, President and Chief Executive Officer, the Company's Board of Directors believes Union Pacific should improve the financial terms of its latest proposal. The Offer is also subject to a number of other conditions which suggest that the proposal is too uncertain to be considered a firm alternative to the Burlington Northern Merger Agreement at this time. Union Pacific has the ability to modify or eliminate those conditions. The Company's Board of Directors believes that these issues must be clarified before the Board can determine what course of action is in the best interest of the Company's stockholders. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. Pursuant to a letter agreement dated October 21, 1993 (the "Engagement Letter"), the Company engaged Goldman, Sachs & Co. ("Goldman Sachs") to act as its financial advisor in connection with the possible merger with, or sale of stock or assets to, Burlington Northern. Pursuant to the terms of the Engagement Letter, if the merger with, or sale of stock or assets to, Burlington Northern is accomplished in one or a series of transactions, the Company will pay Goldman Sachs upon consummation of the Merger a transaction fee of .045% of the aggregate consideration paid in such transaction or series of transactions with a maximum transaction fee of $15 million. As part of this fee, the company will pay Goldman Sachs $5 million upon approval of the transaction by the stockholders of Santa Fe and Burlington Northern (which will be credited towards the total transaction fee). The Company has agreed to reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including attorneys' fees, and to indemnify Goldman Sachs against certain liabilities, including certain liabilities under the federal securities laws. Goldman Sachs will advise the Company in connection with the Offer for an amount to be determined. D.F. King & Co., Inc. and MacKenzie Partners, Inc. have been retained by the Company to assist the Company in connection with the Offer and will receive reasonable and customary compensation in connection with the services provided. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES. (a) During the past sixty days, no transaction in the Common Stock has been effected by the Company or, to the best of the Company's knowledge, by any executive officer, director, affiliate or subsidiary of the Company except for regular on-going acquisitions through payroll deduction occurring in the Company's 401(k) retirement plan and option exercises by two executive officers. On October 25, 1994, Mr. Daniel Westerbeck delivered 7,018 shares of Common Stock with a fair market value of $14.25 per share in payment of the option exercise price of $9.92 per share of Common Stock and for which he received 10,082 shares of Common Stock. On October 27, 1994, Mr. Steven Marlier exercised an outstanding option to purchase 6,082 shares of Common Stock at $9.92 per share. 5 (b) To the best of the Company's knowledge, none of its executive officers, directors, affiliates or subsidiaries currently intends to tender pursuant to the Offer any Common Stock that is held of record or beneficially owned by such persons. The foregoing does not include any Common Stock over which, or with respect to which, any such executive officer, director, affiliate or subsidiary acts in a fiduciary or representative capacity or is subject to the instructions of a third party in respect of such tender offer. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY. The following letter is being delivered to Mr. Richard K. Davidson, President of Union Pacific, on November 22, 1994: November 22, 1994 Mr. Richard K. Davidson President Union Pacific Corporation Martin Tower Eight & Eaton Avenues Bethlehem, Pennsylvania 18018 Dear Dick: I enclose a copy of the letter I am sending to our stockholders today with our Schedule 14D-9. The letter sets forth our Board's position. I hope you will give it careful consideration. Sincerely, /s/ Robert D. Krebs ------------------------------------- Robert D. Krebs ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. None. 6 ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. EXHIBIT INDEX
SEQUENTIAL NUMBERED EXHIBIT NO. DESCRIPTION PAGE ----------- ----------- ---------- Exhibit 1-- Pages 36 to 39 of the Company's Joint Proxy Statement/Prospectus dated October 12, 1994. Exhibit 2-- Form of Letter to Stockholders of the Company, dated November 22, 1994. Exhibit 3-- Form of Press Release issued by the Company on Novem- ber 22, 1994.
7 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 22, 1994 /s/ Jeffrey R. Moreland - ------------------------------------- ------------------------------------- (DATE) Jeffrey R. Moreland Vice President--Law and General Counsel 8 EX-1 2 PP 36-39 PROXY/PRO EXHIBIT 1 equally by BNI and SFP, each party shall bear its own expenses, including the fees and expenses of any attorneys, accountants, investment bankers, brokers, finders or other intermediaries or other Persons engaged by it, incurred in connection with the Merger Agreement and the transactions contemplated thereby. INTERESTS OF CERTAIN PERSONS IN THE MERGER Directors and Officers of the Merged Entity The Merger Agreement provides that two-thirds of the initial members of the board of directors of the merged company will be designated by BNI, and one- third of the members of the board will be designated by SFP. Further, the parties have agreed that Mr. Gerald Grinstein, Chairman and Chief Executive Officer of BNI, will serve as Chairman of the merged company and Mr. Robert D. Krebs, Chairman, President and Chief Executive Officer of SFP, will serve as President and Chief Executive Officer of the merged company. Other senior officers of the merged entity will be selected by the merged entity's board of directors based upon, among other things, the recommendations of Mr. Grinstein and Mr. Krebs. SFP Directors and Officers Generally. Officers and directors of SFP owning SFP Common Stock will receive the same consideration in the Merger as other SFP stockholders. In the Merger Agreement, BNI has agreed that it will indemnify and hold harmless each person who is, or has been at any time prior to the date of the Merger Agreement, 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 the Merger 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 of the Merger Agreement or (B) indemnity agreements that may be entered into by SFP from and after the date of the Merger Agreement 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 of the Merger Agreement; 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 will 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 the Merger Agreement, covering each such officer or director 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 of the Merger Agreement, provided that, in satisfying such obligation, BNI will not be obligated to pay premiums in excess of 200% of the amount per annum SFP paid in 1993, but provided further that BNI will nevertheless be obligated to provide such coverage as may be obtained for such amount. Severance Agreements. SFP has entered into thirty-one severance agreements, including individual executive severance agreements with each of Carol Beerbaum, Russell Hagberg, Thomas Hund, Steven Marlier, Donald McInnes, Jeffrey Moreland, Marsha Morgan, Patrick Ottensmeyer, Denis Springer, Daniel Westerbeck and Catherine Westphal. Such individuals are not eligible for duplicate salary replacement benefits under both the individual agreements and The Atchison, Topeka and Santa Fe Railway Company Severance Program (the "ATSF Severance Program") discussed below. Stockholder approval of the Merger will constitute a "change in control" for purposes of the individual agreements. The agreements generally provide that if the executive's employment is terminated (for any reason other than disability, death or termination by SFP for cause) or if the executive terminates his or her employment as the result of certain specified actions taken by SFP or its successors, after a change in control and prior to the expiration of the agreement, the executive will be entitled to certain severance benefits. The agreements will expire on the latest of (a) 36 months after the change in control, (b) the effective date of ICC approval of the Merger or, if later, the first anniversary of the consummation of the Merger (or if SFP determines that it will not consummate the Merger, the date of that determination), or (c) the date on which the ICC determines that it will not approve the Merger. 36 The maximum severance benefits to which the executives will be entitled under the individual agreements (assuming the conditions described in the preceding paragraph are met) are: (i) payment of full base salary through the date of termination, all amounts otherwise due the executive under the terms of any SFP compensation plan and, at the executive's election, a lump sum payment of amounts deferred (and earnings thereon) under the Santa Fe Pacific Supplemental Retirement and Savings Plan (or any similar plan), (ii) severance payments equal to, as elected by the executive, the sum of (A) 200% of the executive's annual salary or the amount of salary replacement payments the executive would otherwise receive under the ATSF Severance Program, and (B) 200% of the maximum incentive award payable to the executive under the Annual Incentive Compensation Plan of SFP (or its affiliates) for the year in which the executive's employment terminates, and in either case, if the executive terminates for certain specified reasons, an additional payment necessary to provide such benefits on an after-tax basis, (iii) payment of outstanding performance awards, calculated as though all relevant performance goals have been met, (iv) a cash payment in settlement of all outstanding stock options, which options will be canceled, (v) payment of all legal fees incurred by the executive as a result of his termination, (vi) continuing life, disability, accident and group health insurance benefits for a period of 24 months after termination of employment, and (vii) payment of outplacement services for a period of twelve months following termination. Certain limitations apply to the amount of benefits payable under the agreements. In particular, exercisability of options and rights shall not be accelerated and no payment or benefit shall be accelerated under agreements to the extent that such acceleration of exercisability, payment or benefit, when aggregated with other payments or benefits to the affected individual, would result in "excess parachute payments" equal to or greater than three times the "base amount" (as defined in section 280G of the Code). The term "excess parachute payments" for purposes of the agreements means "parachute payments" (as defined in section 280G of the Code) other than (i) health and life insurance benefits, and (ii) payments attributable to any award, benefit or other compensation plan or program based upon the number of full or fractional months of any restricted period relating thereto which has elapsed prior to the date of the change in control. In addition, payments or benefits under the agreements shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by section 4999 of the Code, but only if, by reason of such reduction, the executive's net after-tax benefits (as defined under the SFP Long Term Incentive Stock Plan (the "Incentive Plan")) shall exceed the net after-tax benefit if such reduction were not made. SFP Pipelines has entered into an individual executive severance agreement with Mr. Toole. Mr. Toole is not eligible for duplicate salary replacement benefits under both the individual agreement and the Santa Fe Pacific Pipelines, Inc. Severance Program (the "Pipelines Severance Program"). Stockholder approval of the Merger will constitute a "change in control" for purposes of Mr. Toole's agreement. That agreement generally provides for the same benefits as the individual severance agreements previously described. Mr. Toole's agreement, however, will expire 24 months after the change in control. In addition, the maximum severance payments payable to Mr. Toole under his agreement are equal to, as elected by the executive, the sum of (A) two times his annual salary or the amount of salary replacement payments the executive would otherwise receive under the Pipelines Severance Program, (B) the maximum incentive award payable to the executive under the Annual Incentive Compensation Plan of SFP Pipelines for the year in which Mr. Toole's employment terminates and (C) a cash payment attributable to the cash out of Partnership phantom units. The Pipelines Severance Program must remain in effect for a period of at least 24 months following a change in control. Stockholder approval of the Merger will constitute a "change in control" for purposes of the Pipelines Severance Program. The executive officers of SFP other than Mr. Toole are not eligible for benefits under the Pipelines Severance Program. Mr. Toole, however, may elect salary replacement benefits under the Pipelines Severance Program in lieu of those provided under his individual severance agreement. The applicable benefits under the Pipelines Severance Program are generally the same as those provided under the ATSF Severance Program. If payments under the individual agreements are triggered following a change in control, the estimated amounts (based on current compensation levels and assuming terminations occurring during 1994) payable to SFP's five most highly compensated executive officers (including Mr. Krebs, who does not have an individual severance agreement) are as follows: Mr. Springer, $1,664,188; Mr. McInnes, $1,239,377; 37 Mr. Marlier, $914,483; and Mr. Hagberg, $1,517,895. The estimated amounts (based on current compensation levels) payable to SFP's other executive officers in such circumstances range from $251,977 to $1,177,975, and the aggregate amount that would be paid to all of SFP's executive officers in such circumstances would be approximately $11,463,857. In addition, each SFP executive officer would receive non-cash and non-stock benefits of approximately $42,000. As of October 1, 1994, there are thirteen SFP executive officers. The foregoing information (i) includes certain bonus payments to be made in respect of restricted stock (calculated without giving effect to the limitations relating to section 280G of the Code described above) and (ii) does not include the value of stock options or restricted stock discussed below. SFP and its subsidiaries maintain the ATSF Severance Program for all full- time salaried employees, including Mr. Krebs, who are terminated by their respective companies other than for cause as defined in the severance programs. A participant is generally entitled to an amount up to one year's pay based upon a participant's age, length of service and current salary, or in certain circumstances, supplemental payments provided that the aggregate does not exceed two years' pay. The ATSF Severance Program further provides that in the event of a change in control (which is similar to the definition used in the individual agreements), the program will be maintained for a 24-month period. Benefits under the ATSF Severance Program will not be paid if a participant received payments under individual agreements. Upon a covered termination occurring in 1994, Mr. Krebs would be entitled to a cash payment of approximately $760,000 and non-cash benefits with a value of approximately $42,000. SFP executives who have individual severance agreements with SFP may elect to receive salary replacement payments under the ATSF Severance Program instead of the severance payments provided by their individual severance agreements. The amounts payable under the ATSF Severance Program are less than the amounts payable under the individual severance agreements. The applicable salary replacement benefits under the ATSF Severance Program generally are based on the executive's benefit under the SFP Retirement Plan (as defined below). Because Mr. Krebs does not have an individual severance agreement, his only source of severance payments would be the ATSF Severance Program. If the Santa Fe Pacific Retirement Plan (the "SFP Retirement Plan") is terminated within three years following a "change in control," any assets remaining after satisfaction of all benefit liabilities to participants will be applied (to the extent permitted under applicable law) to the payment of retiree medical and life insurance benefits payable to participants and their beneficiaries. Any assets still remaining would be used to increase the retirement benefits payable to participants and their beneficiaries (to the extent permitted under applicable law). For purposes of the SFP Retirement Plan, stockholder approval of the Merger will not constitute a change in control. A subsequent change in the composition of the Board of Directors as a result of the Merger (as discussed above), however, may constitute a "change in control" for purposes of the plan. Stock Options and Other Stock-Based Awards. Stockholder approval of the Merger by the SFP stockholders will constitute a "change in control" accelerating the vesting of or lapse of restrictions, restricted periods and performance periods applicable to most outstanding stock options, restricted stock awards, stock appreciation rights, performance units, performance shares and limited stock appreciation rights under the Incentive Plan and the SFP Incentive Stock Compensation Plan (collectively, the "Stock Plans"). Acceleration of awards under the Stock Plans are subject to the same limitations relating to section 280G of the Code as apply with respect to payments under the severance agreements. The following indicates the number of shares of restricted stock awarded to SFP's five most highly compensated executive officers, and the approximate value thereof (determined using a stock price of $13.00 per SFP share trading on a when issued basis as of September 15, 1994) with respect to which vesting will be accelerated upon stockholder approval of the Merger: Mr. Krebs, 36,920 ($479,960), Mr. Springer, 13,841 ($179,933), Mr. Marlier, 10,222 ($132,886), Mr. McInnes, 10,619 ($138,047), and Mr. Hagberg, 10,829 ($140,777). The aggregate number of shares awarded to all of SFP's executive officers which will vest upon stockholder approval of the Merger is 137,666 shares, which have an aggregate value of approximately $1,789,658 (determined based on a stock price of $13.00 per SFP share trading on a when issued basis as of September 15, 1994). With respect to executive officers, no other benefits under the stock plans will be accelerated upon stockholder approval of the Merger (other than stock options which are discussed below). 38 Assuming that the Merger is approved by SFP stockholders in the fourth quarter of 1994, the total amount of compensation expense that will be charged to operations in the fourth quarter of 1994 due to accelerated vesting of unearned compensation relating to restricted stock will be approximately $6 million. The following indicates the number of options granted to the five most highly compensated executive officers, and the approximate value thereof (assuming a stock price of $22.50 per share as of September 15, 1994), which are unvested as of September 30, 1994 and which would vest upon SFP stockholder approval of the Merger: Mr. Krebs, 332,334 ($1,006,859), Mr. Springer, 50,000 ($268,000), Mr. Marlier, 60,000 ($214,800), Mr. McInnes, 60,000 ($214,800), and Mr. Hagberg, 41,063 ($217,319). The aggregate number of options granted to all SFP executive officers which are unvested as of September 30, 1994 is 716,777 and the aggregate value of such options (assuming a stock price of $22.50 per share as of September 15, 1994) is approximately $2,808,544. The foregoing information uses a price of $13.00 to value restricted stock and $22.50 to value options. The $13.00 per share stock price used to value restricted stock is intended to reflect the value of SFP Common Stock after the distribution to stockholders on September 30, 1994 in connection with the Gold Spinoff. The $22.50 per share stock price was used to value options because the options following the Gold Spinoff will continue to retain the pre-Gold Spinoff value (due to adjustments to the option price and number of shares subject to the options). BNI Severance Arrangements. BNI has entered into certain change in control severance agreements (the "Severance Agreements") with approximately seventy employees of BNI and/or its subsidiaries, including all of its executive officers other than Mr. Grinstein. These Severance Agreements provide for certain severance benefits if the individual's employment with BNI is terminated for certain reasons subsequent to a change in control of BNI. A "change in control" takes place if (i) a person acquires 20% voting power of BNI's stock, (ii) during any two-year period individuals who constitute the Board of Directors at the beginning of such period cease to constitute a majority thereof or (iii) BNI's stockholders approve a merger, consolidation or sale of substantially all BNI's assets or a plan of liquidation or dissolution of BNI. If the employment of a person covered by a Severance Agreement is terminated during the period commencing on the date of the BNI stockholders' approval of the Merger and ending on the second anniversary of the Effective Time for reasons other than death or permanent disability, cause or mandatory retirement or is terminated by the employee for Good Reason (as defined below), then the employee shall be entitled to receive the following benefits: payments of base compensation (annual salary rate and maximum bonus target) through the date of termination and all amounts otherwise owed the executive under the terms of any BNI compensation plan, three times the individual's base compensation, an amount equal to the retirement benefits and BNI's Thrift and Profit Sharing Plan employer contributions payable (assuming the individual remained an employee for three more years or until mandatory retirement, both based on base compensation increasing 8% per year), certain insurance benefits for 18 months after termination, waiver of any restricted periods on, and the vesting of, any outstanding awards of restricted stock or stock options, any legal fees incurred in enforcing the Severance Agreement and payment of any Federal excise taxes on certain amounts paid. For purposes of the Severance Agreements, "Good Reason" means the occurrence of any of the following circumstances: (a) the assignment of any duties inconsistent with and inferior to those held immediately prior to the change in control; (b) a reduction in the individual's base compensation; (c) the relocation of BNI's principal executive offices to a location outside the Fort Worth, Texas Metropolitan Area, requiring the individual to be based anywhere other than BNI's principal executive offices or where the individual was located immediately prior to such change in control; (d) the failure by BNI to pay to the individual any portion of the individual's current or deferred compensation or other benefits when due; (e) the failure by BNI to continue in effect any material compensation plan in which the individual participated immediately prior to the change in control or the failure by BNI to continue the individual's participation therein on a basis not materially less favorable, as existed at the time of the change in control of BNI; (f) the failure to continue to provide benefits at a cost substantially similar to the cost of those enjoyed under any of BNI's life insurance, medical, health and accident, or disability plans in which the individual was participating at the 39 EX-2 3 LETTER TO STOCKHOLDERS Exhibit 2 LOGO (LOGO OF SANTA FE PACIFIC CORPORATION) SANTA FE PACIFIC CORPORATION 1700 EAST GOLF ROAD SCHAUMBURG, ILLINOIS 60173-5860 November 22, 1994 Dear Shareholder: I am writing to give you the views of the Board of Directors of Santa Fe Pacific Corporation about how you should respond to the Union Pacific Corporation tender offer for Santa Fe common stock. The Board recommends that you do not tender your shares to Union Pacific at this time. That recommendation is subject to change as events unfold that will clarify whether a transaction with Union Pacific is in your best interest. The goal of the Board of Directors and management of Santa Fe in connection with the Merger Agreement with Burlington Northern Inc. and the competing proposal from Union Pacific has been to achieve the best result for our shareholders. We are also mindful of the interests of our shippers and the public. It would be a mistake for Santa Fe and for you to give up the benefit of the Burlington Northern Merger Agreement unless and until a better arrangement is clearly available. In responding to the unsolicited proposals from Union Pacific we have maintained the position that we would fulfill our contractual obligations under the Burlington Northern Merger Agreement, but that if Union Pacific were to make a proposal, at a fair price and with an adequate provision for a voting trust that would substantially eliminate the regulatory risk for Santa Fe shareholders, the Santa Fe Board would consider that proposal in light of its fiduciary duties. Union Pacific has now proposed a voting trust. However, the Union Pacific voting trust proposal is subject to the condition that the staff of the Interstate Commerce Commission issue an informal, non-binding opinion, acceptable to Union Pacific, that the use of the voting trust submitted by Union Pacific is consistent with applicable ICC policies. Union Pacific has applied to the ICC staff for such an opinion. It is unclear at this point whether or when such a favorable ICC staff opinion will be issued on the Union Pacific voting trust or whether the ICC may prevent Union Pacific from using a voting trust. The Union Pacific proposal is a taxable transaction, whereas the transaction contemplated by the Burlington Northern Merger Agreement is non-taxable. When coupled with prior statements made by Union Pacific, including its reference to a price of $20 per Santa Fe share in its October 5 meeting with me, we believe Union Pacific should improve the financial terms of its latest proposal. The Union Pacific proposal is also subject to a number of other conditions which suggest that the proposal is too uncertain to be considered a firm alternative to the Burlington Northern Merger Agreement at this time. Union Pacific has the ability to modify or eliminate those conditions. Santa Fe's Board of Directors believes that these issues must be clarified before the Board can determine what course of action is in the best interest of Santa Fe's shareholders. Attached is Santa Fe's Schedule 14D-9, which formally responds to the Union Pacific tender offer. Please review it carefully. I assure you we will continue to manage the situation carefully to protect your interest. Very truly yours, LOGO (LOGO SIGNATURE OF ROBERT D. KREBS) Robert D. Krebs Chairman, President and Chief Executive Officer EX-3 4 PRESS RELEASE EXHIBIT 3 For Immediate Release #70 Schaumburg, Illinois, November 22, 1994 -- Santa Fe Pacific Corporation today filed a Schedule 14D-9 with the SEC announcing its board of directors' recommendation that shareholders not tender their shares to Union Pacific Corporation at this time. A letter to Santa Fe shareholders and the full text of the Schedule 14D-9 follow. -----END PRIVACY-ENHANCED MESSAGE-----