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Sectors: Transportation
Governing Law: New York, View New York State Laws
Effective Date: November 14, 1994
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EXHIBIT 10.17 ================================================================================


3-YEAR TERM LOAN
FACILITY AGREEMENT


Dated as of November 14, 1994


among


BURLINGTON NORTHERN RAILROAD COMPANY,


THE LENDERS NAMED HEREIN


and


TEXAS COMMERCE BANK NATIONAL ASSOCIATION,


as Administrative Agent


================================================================================
[CS&M Ref. No. 6700-227]


TABLE OF CONTENTS


Article Section Page - ------- ------- ----


I. DEFINITIONS


1.01 Defined Terms ......................................... 1
1.02 Terms Generally ....................................... 12


II. THE CREDITS


2.01 Commitments ........................................... 12
2.02 Term Loans ............................................ 12
2.03 Fees .................................................. 13
2.04 Repayment of Term Loans ............................... 13
2.05 Interest on Term Loans ................................ 14
2.06 Default Interest ...................................... 15
2.07 Alternate Rate of Interest ............................ 15
2.08 Conversion and Continuation of Borrowings ............. 16
2.09 Prepayment ............................................ 17
2.10 Reserve Requirements; Change in Circumstances ......... 17
2.11 Change in Legality .................................... 19
2.12 Indemnity ............................................. 20
2.13 Pro Rata Treatment .................................... 21
2.14 Sharing of Setoffs .................................... 21
2.15 Payments .............................................. 22
2.16 Taxes ................................................. 23
2.17 Assignment or Prepayment of Term Loans Under
Certain Circumstances .............................. 26


III. REPRESENTATIONS AND WARRANTIES .............................. 27


IV. CONDITIONS OF LENDING ....................................... 31


V. AFFIRMATIVE COVENANTS


5.01 Existence; Businesses and Properties .................. 32
5.02 Insurance ............................................. 33
5.03 Reporting Requirements ................................ 33
5.04 Consolidated Tangible Net Worth ....................... 36
5.05 Taxes ................................................. 36


Contents, p. 2


Article Section Page - ------- ------- ----


VI. NEGATIVE COVENANTS


6.01 Debt .................................................. 36
6.02 Sale, etc., of Assets ................................. 37
6.03 Mergers, etc. ......................................... 38
6.04 Liens ................................................. 38
6.05 Sales of Accounts Receivable .......................... 39


VII. EVENTS OF DEFAULT ........................................... 40


VIII. THE AGENT ................................................... 43


IX. MISCELLANEOUS


9.01 Notices ............................................... 46
9.02 Survival of Agreement ................................. 47
9.03 Binding Effect ........................................ 47
9.04 Successors and Assigns ................................ 48
9.05 Expenses; Indemnity ................................... 51
9.06 Right of Setoff ....................................... 52
9.07 Applicable Law ........................................ 53
9.08 Waivers; Amendment .................................... 53
9.09 Interest Rate Limitation .............................. 54
9.10 Entire Agreement ...................................... 54
9.11 Severability .......................................... 54
9.12 Counterparts .......................................... 55
9.13 Headings .............................................. 55
9.14 Jurisdiction; Consent to Service of Process ........... 55


Exhibit A Administrative Questionnaire


Exhibit B Form of Assignment and Acceptance


Exhibit C Form of Opinion of Francis T. Kelly, Esq., Counsel for
the Borrower


Exhibit D Form of Opinion of Douglas J. Babb, Vice President and
General Counsel of the Borrower


Schedule 2.01 Commitments


Schedule 6.04(a) Existing Liens


3-YEAR TERM LOAN FACILITY AGREEMENT dated as of November
14, 1994, among BURLINGTON NORTHERN RAILROAD COMPANY, a
Delaware corporation (the "Borrower"); the lenders
listed in Schedule 2.01 hereto (the "Lenders"); and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national
banking association, as administrative agent (in such
capacity, the "Administrative Agent").


The Borrower has requested the Lenders to extend credit to the Borrower in order to enable it to borrow on a term basis, on the Funding Date (as defined below), an aggregate principal amount of $150,000,000. The proceeds of such borrowing will be used by the Borrower to redeem the Series J Mortgage Bonds (as defined below) or will be used to reimburse the Borrower for payments made in connection with the redemption of such Bonds on the Funding Date. The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions herein set forth.


Accordingly, the Borrower, the Lenders, and the Administrative Agent agree as follows:


ARTICLE I. DEFINITIONS


SECTION 1.01. Defined Terms. As used in this Agreement, the following
------------- terms shall have the meanings specified below:


"ABR Borrowing" shall mean a Borrowing comprised of ABR Term Loans.
-------------


"ABR Period" shall mean any period during which the Term Loans
---------- bear interest at the Alternate Base Rate.


"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
------------- determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.


"Administrative Questionnaire" shall mean an Administrative
---------------------------- Questionnaire in the form of Exhibit A hereto.


"Affiliate" shall mean, when used with respect to a specified
--------- person, another person that directly, or


2


indirectly through one or more intermediaries, controls or is controlled by or is under common control with the person specified.


"Agent Fees" shall have the meaning given such term in Section 2.03.
----------

"Agent" shall mean the Administrative Agent.
-----


"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
------------------- upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean as of a particular date, the
---------- prime rate most recently announced by the Administrative Agent and thereafter entered in the minutes of the Administrative Agent's Loan and Discount Committee, automatically fluctuating upward and downward with and at the time specified in each such announcement without notice to the Borrower or any other person, which prime rate may not necessarily represent the lowest or best rate actually charged to a customer. "Base CD Rate" shall mean the sum of (a) the
------------ product of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary CD Rate" shall mean, for any
----------------------------- day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 9:00 a.m., Houston time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Administrative Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it. "Federal Funds Effective Rate" shall mean, for any day, the weighted
---------------------------- average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal


3


Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any reason, including the inability of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (b) or (c), or both, of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.


"Assessment Rate" shall mean for any date the annual rate (rounded
--------------- upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the Administrative agent as the then current net annual assessment rate that will be employed in determining amounts payable by the Administrative Agent to the Federal Deposit Insurance Corporation (or any successor) for insurance by such Corporation (or such successor) of time deposits made in dollars at the Administrative Agent's domestic offices.


"Assignment and Acceptance" shall mean an assignment and acceptance
------------------------- entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit B hereto.


"Board" shall mean the Board of Governors of the Federal Reserve System
----- of the United States.


"Borrowing" shall mean a group of Term Loans of a single Type as to
--------- which a single Interest Period is in effect.


"Business Day" shall mean any day (other than a day which is a Saturday,
------------ Sunday or legal holiday in the State of Texas or New York) on which banks are open for business in Houston and New York City; provided, however, that, when
-------- ------- used in connection with a Eurodollar Term Loan,


4


the term "Business Day" shall also exclude any day on which banks are not open
------------ for dealings in dollar deposits in the London interbank market.


A "Change in Control" shall be deemed to have occurred if (a) any person
----------------- or group (within the meaning of Rule 13d-5 of the Securities and Exchange commission as in effect on the date hereof) shall own directly or indirectly, beneficially or of record, shares representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Parent (other than as the result of a transaction approved by the Parent's Board of Directors), (b) a majority of the seats (other than vacant seats) on the Board of Directors of the Parent shall at any time have been occupied by persons who were neither (i) nominated by the Board of Directors of the Parent, nor (ii) appointed by Directors so nominated, (c) any person or group shall otherwise directly or indirectly obtain control of the Parent (other than in a transaction approved by the Parent's Board of Directors) or (d) the Parent shall cease to control the Borrower.


"Closing Date" shall mean the date hereof.
------------


"Code" shall mean the Internal Revenue Code of 1986, as the same may be
---- amended from time to time.


"Commitment" shall mean, with respect to each Lender, the commitment of
---------- such Lender hereunder as set forth in Schedule 2.01 hereto to make one or more Term Loans pursuant to Section 2.01. The Commitments shall automatically and permanently terminate at 5:00 p.m., New York City time, on the Funding Date.


"Consolidated Tangible Net Worth" shall mean preferred stockholder's and
------------------------------- common stockholder's equity of the Borrower (other than mandatorily redeemable preferred stock) minus intangible assets of the Borrower and its consolidated Subsidiaries.


"Debt" shall mean, without duplication, (i) indebtedness for borrowed
---- money or for the deferred purchase price of property or services whether evidenced by bonds, debentures, notes or similar instruments or otherwise (but excluding, in any case, liabilities by endorsement of negotiable instruments for deposit or collection and liabilities with respect to accounts payable incurred in the ordinary course of business), (ii) obligations as lessee


5


under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases and (iii) obligations under direct or indirect guarantees in respect of, and obligations to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness on obligations of persons (other than the Borrower and its consolidated Subsidiaries) of the kinds referred to in clauses (i) and (ii) above.


"Default" shall mean any event or condition which upon notice, lapse of
------- time or both would constitute an Event of Default.


"dollars" or "$" shall mean lawful money of the United States of
------- - America.


"Engagement Letter" shall mean the engagement letter dated November 3,
----------------- 1994, among the Borrower, the Administrative Agent and Chemical Securities Inc.


"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
----- as the same may be amended from time to time.


"ERISA Affiliate" shall mean any person who for purposes of Title IV of
--------------- ERISA is a member of the Borrower's controlled group, or is under common control with the Borrower, within the meaning of Section 414 of the Code and the regulations promulgated and rulings issued thereunder.


"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
-------------------- Term Loans.


"Eurodollar Period" shall mean any period during which the Term Loans
----------------- bear interest at rates determined by reference to the LIBO Rate.


"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
-------------------- rate determined by reference to the LIBO Rate in accordance with the provisions of Article II.


"Event of Default" shall have the meaning given such term in Article
---------------- VII.


"Existing Facility" shall mean the 5-year Competitive Advance and
----------------- Revolving Credit Facility Agreement dated as of May 6, 1994, and the 364-day Competitive Advance


6


and Revolving Credit Facility Agreement dated as of May 6, 1994, both among the Borrower, the lenders named therein, Texas Commerce Bank National Association, as administrative agent, and Chemical Bank Agency Services Corporation, as competitive advance facility agent.


"Existing Liens" shall mean Liens existing on the date hereof and
-------------- described on Schedule 6.04(a) hereto and any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by such Lien, but only to the extent the amount of such Debt shall not be increased.


"Existing Mortgages" shall mean each security or other agreement of
------------------ whatever nature described within the Burlington Northern Railroad Company Long-Term Debt Book dated December 31, 1993, a copy of which has been delivered by the Borrower to the Administrative Agent, as such agreements may have been amended or modified to the date hereof or as they may be amended, supplemented, replaced or modified from time to time hereafter.


"Federal Funds Effective Rate" shall have the meaning assigned thereto
---------------------------- in the definition of Alternate Base Rate.


"Fees" shall mean the Agent Fees.
----


"Funding Date" shall mean November 15, 1994.
------------


"GAAP" shall mean United States generally accepted accounting
---- principles, applied on a basis consistent with the financial statements referred to in paragraph (e) of Article III hereof.


"Governmental Authority" shall mean any Federal, state, local or foreign
---------------------- court or governmental agency, authority, instrumentality or regulatory body.


"ICC" shall mean the Interstate Commerce Commission or any successor
--- thereto.


"Insufficiency" shall mean, with respect to any Plan, the amount, if
------------- any, by which the present value of the benefit liabilities under such Plan exceeds the fair market value of the assets of such Plan.


"Interest Payment Date" shall mean, with respect to any Term Loan, the
--------------------- last day of the Interest Period


7


applicable to the Borrowing of which such Term Loan is part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day that would have been an Interest Payment Date for such Borrowing had successive Interest Periods of three months' duration been applicable to such Borrowing and, in addition, the date of any conversion of such Borrowing with or to a Borrowing of a different Type.


"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
--------------- period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 3 or 6 months thereafter, as the Borrower may elect, and (b) as to any ABR Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the date 90 days thereafter or, if earlier, on the Maturity Date or the date of repayment, prepayment or conversion of such Borrowing; provided, however, that if any Interest Period would end on a day
-------- ------- other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.


"Interest Rate Margin" shall mean, with respect to each Term Loan of
-------------------- each Lender, the margin (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places), as set forth in a letter dated the date hereof from the Borrower to each such Lender accepting the Commitment of such Lender and confirming such margin, to be added to or subtracted from the LIBO Rate in order to determine the interest rate per annum applicable to such Term Loan during a Eurodollar Period.


"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any
--------- Interest Period, an interest rate per annum equal to the average (rounded upwards, if necessary, to the next 1/16 of 1%) of the rates per annum at which dollar deposits for a maturity comparable to such


8


Interest Period are offered by the principal London offices of the Reference Banks (or, if any Reference Bank does not at the time maintain a London office, the principal London office of any Affiliate of such Reference Bank) in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period in amounts approximately equal to the amount of such Borrowing.


"Lien" shall mean any lien, security interest or other charge or
---- encumbrance, or any assignment of the right to receive income, or any other type of preferential arrangement, in each case to secure any obligation of any person.


"Loan Documents" shall mean this Agreement and the Fee Letter dated
-------------- November 3, 1994, among the Administrative Agent and the Borrower.


"Margin Stock" shall have the meaning given such term under
------------ Regulation U.


"Material Adverse Effect" shall mean a material adverse effect on the
----------------------- financial condition or operations of the Borrower and its consolidated Subsidiaries on a consolidated basis.


"Material Plan" shall mean any Plan the assets of which exceed
------------- $50,000,000 or the liabilities of which for unfunded benefit liabilities exceed $15,000,000.


"Maturity Date" shall mean November 15, 1997.
-------------


"Moody's" shall mean Moody's Investors Service.
-------


"Mortgage Indenture" shall mean the Consolidated Mortgage, dated
------------------ March 2, 1970, by Burlington Northern Inc. (the former name of the Borrower) to Morgan Guaranty Trust Company of New York and Jacob M. Ford II, as trustees, as amended to the date hereof and as amended, supplemented or modified from time to time hereafter.


"Multiemployer Plan" shall mean a multiemployer plan as defined in
------------------ Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code) is making or accruing an obligation to make contributions, or has within any of the preceding


9


five plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements.


"Multiple Employer Plan" shall mean a single employer plan, as defined
---------------------- in Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the Borrower or an ERISA Affiliate and at least one person other than the Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which the Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.


"Parent" shall mean Burlington Northern Inc., a Delaware corporation.
------


"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
---- and defined in ERISA, or any successor thereto.


"person" shall mean any natural person, corporation, business trust,
------ joint venture, association, company, partnership or government, or any agency or political subdivision thereof.


"Plan" shall mean any pension plan (other than a Multiemployer Plan)
---- subject to the provisions of Title IV of ERISA or Section 412 of the Code which is maintained for employees of the Borrower or any ERISA Affiliate.


"Reference Banks" shall mean Texas Commerce Bank National Association,
--------------- Mellon Bank, N.A. and The Sanwa Bank, Limited.


"Register" shall have the meaning given such term in Section 9.04(d).
--------


"Regulation D" shall mean Regulation D of the Board as from time to time
------------ in effect and all official rulings and interpretations thereunder or thereof.


"Regulation G" shall mean Regulation G of the Board as from time to time
------------ in effect and all official rulings and interpretations thereunder or thereof.


"Regulation U" shall mean Regulation U of the Board as from time to
------------ time in effect and all official rulings and interpretations thereunder or thereof.


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