Exhibit 10(a)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PROGRESS RAIL SERVICES HOLDINGS
CORP.,
PRSC ACQUISITION CORP.,
PMRC ACQUISITION CO.,
PROGRESS RAIL SERVICES CORPORATION,
PROGRESS METAL RECLAMATION COMPANY,
PROGRESS FUELS CORPORATION
AND
PROGRESS ENERGY, INC.
(WITH RESPECT TO ARTICLES III, VI, VIII AND
IX)
FEBRUARY 17, 2005
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS....................................................................................1
1.1
Abatement......................................................................................2
1.2
ABCA...........................................................................................2
1.3
Action.........................................................................................2
1.4
Adjustment
Amount..............................................................................2
1.5
Affiliate......................................................................................2
1.6
Agreement......................................................................................2
1.7
Applicable Lease
Agreements....................................................................2
1.8
Asbestos.......................................................................................2
1.9
Asbestos
Abatement.............................................................................2
1.10
Asbestos Abatement
Proposal....................................................................2
1.11
Asbestos
Laws..................................................................................2
1.12
Asbestos
Matters...............................................................................3
1.13
Audited
Statements.............................................................................3
1.14
Basket.........................................................................................3
1.15
Benefit
Plan...................................................................................3
1.16
Business.......................................................................................3
1.17
Business
Combination..........................................................................3
1.18
Canadian Benefit
Plan..........................................................................4
1.19
Canadian Pacific
Earnout.......................................................................4
1.20
Claim..........................................................................................4
1.21
Closing........................................................................................4
1.22
Closing
Date...................................................................................4
1.23
Closing Financial
Statements...................................................................4
1.24
Closing Working
Capital........................................................................4
1.25
Code...........................................................................................4
1.26
Companies......................................................................................4
1.27
Company Transaction
Expenses...................................................................4
1.28
Consolidated
Subsidiaries......................................................................5
1.29
Contracts......................................................................................5
1.30
Current
Property...............................................................................5
1.31
Dispute
Notification...........................................................................5
1.32
DOJ............................................................................................5
1.33
Effective
Time.................................................................................5
1.34
Environmental
Claim............................................................................5
1.35
Environmental
Laws.............................................................................5
1.36
Environmental
Matters..........................................................................5
1.37
Environmental Response
Action..................................................................6
1.38
Environmental Response Action
Proposal.........................................................6
1.39
ERISA..........................................................................................6
1.40
Final
Determination............................................................................6
1.41
Financial
Statements...........................................................................7
1.42
FTC............................................................................................7
1.43
GAAP...........................................................................................7
1.44
Georgetown Steel
Bankruptcy....................................................................7
1.45
Governmental
Authority.........................................................................7
1.46
Hazardous
Materials............................................................................7
1.47
Holdings.......................................................................................7
1.48
Holdings
Claim.................................................................................7
1.49
Holdings Claim
Notice..........................................................................7
1.50
Holdings Controlled Environmental Response
Action..............................................7
1.51
HSR
Act........................................................................................7
1.52
Incentive
Plan.................................................................................7
1.53
Indebtedness...................................................................................8
1.54
Independent
Accountants........................................................................8
1.55
Initial Written
Notice.........................................................................8
1.56
Intellectual
Property..........................................................................8
1.57
IRS............................................................................................8
1.58
KBCA...........................................................................................8
1.59
Knowledge of the
Companies.....................................................................8
1.60
Laws...........................................................................................8
1.61
Leased Real
Property...........................................................................8
1.62
Least Stringent Abatement
Remedy...............................................................9
1.63
Least Stringent
Standard.......................................................................9
1.64
Liabilities....................................................................................9
1.65
Licensed
Rights................................................................................9
1.66
Liens..........................................................................................9
1.67
Losses.........................................................................................9
1.68
Material Adverse
Effect........................................................................9
1.69
Mergers........................................................................................9
1.70
Merger
Consideration...........................................................................9
1.71
Merger
Subs....................................................................................9
1.72
Notice of
Disagreement.........................................................................9
1.73
Open Source
License............................................................................9
1.74
Option........................................................................................10
1.75
Ordinary
Rework...............................................................................10
1.76
Other Antitrust
Regulations...................................................................10
1.77
Other Tax
Returns.............................................................................10
1.78
Owned Real
Property...........................................................................10
1.79
PBO...........................................................................................10
1.80
Pension
Plan..................................................................................10
1.81
Permits.......................................................................................10
1.82
Permitted
Liens...............................................................................10
1.83
Person........................................................................................10
1.84
Plan..........................................................................................11
1.85
Plan Funding
Statement........................................................................11
1.86
Post-Closing
Period...........................................................................11
1.87
Pre-Closing
Period............................................................................11
1.88
Progress Controlled Environmental Response
Action.............................................11
1.89
Progress
Energy...............................................................................11
1.90
Progress
Fuels................................................................................11
1.91
Progress Fuels
Claim..........................................................................11
1.92
Progress Fuels Claim
Notice...................................................................11
1.93
Progress Fuels
Group..........................................................................11
1.94
Progress
Metal................................................................................11
1.95
Progress Metal Articles of
Merger.............................................................11
1.96
Progress Metal
Merger.........................................................................11
1.97
Progress Metal Merger
Consideration...........................................................11
1.98
Progress Metal Merger
Sub.....................................................................11
1.99
Progress Metal
Plan...........................................................................11
1.100
Progress Metal
Shares.........................................................................11
1.101
Progress Metal Surviving
Corporation..........................................................12
1.102
Progress
Rail.................................................................................12
1.103
Progress Rail Articles of
Merger..............................................................12
1.104
Progress Rail
Merger..........................................................................12
1.105
Progress Rail Merger
Consideration............................................................12
1.106
Progress Rail Merger
Sub......................................................................12
1.107
Progress Rail Surviving
Corporation...........................................................12
1.108
RCL...........................................................................................12
1.109
Real
Property.................................................................................12
1.110
Real Property
Leases..........................................................................12
1.111
Release.......................................................................................12
1.112
Relevant
Group................................................................................12
1.113
Required
Consents.............................................................................12
1.114
Retained Leasing
Assets.......................................................................12
1.115
Retained Leasing
Liabilities..................................................................12
1.116
Retained Real
Property........................................................................13
1.117
Retention
Plan................................................................................13
1.118
Shares........................................................................................13
1.119
Software......................................................................................13
1.120
State Income
Tax..............................................................................13
1.121
Subsidiary....................................................................................13
1.122
Surviving
Corporations........................................................................13
1.123
Target Working
Capital........................................................................13
1.124
Tax
Claim.....................................................................................13
1.125
Tax
Indemnitee................................................................................13
1.126
Tax
Returns...................................................................................13
1.127
Taxes.........................................................................................14
1.128
Taxing
Authority..............................................................................14
1.129
Trade
Secrets.................................................................................14
1.130
Transfer
Taxes................................................................................14
1.131
Unfunded
PBO..................................................................................14
1.132
WARN
Act......................................................................................14
1.133
Warranty
Obligation...........................................................................14
1.134
Working
Capital...............................................................................14
ARTICLE II
THE
MERGERS...................................................................................15
2.1
The
Mergers...................................................................................15
2.2
Merger
Consideration..........................................................................15
2.3
Deliveries at
Closing.........................................................................15
2.4
Effective
Time................................................................................16
2.5
Effects of the
Mergers........................................................................16
2.6
Effect on Capital
Stock.......................................................................17
2.7
Adjustment Amount and
Payment.................................................................18
2.8
Adjustment
Procedure..........................................................................18
2.9
Further Assurances
...........................................................................19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PROGRESS ENERGY AND PROGRESS
FUELS..........................19
3.1
Ownership of the
Shares.......................................................................19
3.2
Organization..................................................................................19
3.3
Authorization; Execution and Delivery;
Enforceability.........................................20
3.4
No Violation or Conflict;
Consents............................................................20
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PROGRESS FUELS
CONCERNING THE COMPANIES
AND THE
SUBSIDIARIES..........................................................................20
4.1
Organization; Capitalization of the Companies; Authorization;
Execution and Delivery;
Enforceability................................................................................20
4.2
Subsidiaries..................................................................................21
4.3
No Violation or Conflict;
Consents............................................................22
4.4
Financial
Statements..........................................................................22
4.5
Absence of
Change.............................................................................23
4.6
Assets........................................................................................23
4.7
Intellectual
Property.........................................................................25
4.8
Compliance with
Law...........................................................................27
4.9
Contracts, Agreements,
etc....................................................................27
4.10
Litigation....................................................................................29
4.11
Insurance.....................................................................................29
4.12
Employee
Benefits.............................................................................30
4.13
Employment
Matters............................................................................32
4.14
Taxes.........................................................................................33
4.15
Transactions With
Affiliates..................................................................35
4.16
Accounts Receivable; Accounts
Payable.........................................................35
4.17
Environmental and
Asbestos....................................................................36
4.18
Books and
Records.............................................................................38
4.19
Real
Property.................................................................................38
4.20
Substantial Customers and
Suppliers...........................................................39
4.21
Entire
Business...............................................................................40
4.22
Warranty
Obligations..........................................................................40
4.23
Inventory.....................................................................................40
4.24
Foreign Corrupt Practices
Act.................................................................40
4.25
No
Broker.....................................................................................40
4.26
Bank
Accounts.................................................................................41
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND THE MERGER
SUBS................................41
5.1
Organization..................................................................................41
5.2
Authorization; Execution and Delivery;
Enforceability.........................................41
5.3
No Violation or Conflict;
Consents............................................................42
5.4
No
Broker.....................................................................................42
5.5
Purchase for
Investment.......................................................................42
ARTICLE VI
PRE-CLOSING
COVENANTS.........................................................................42
6.1
Conduct of
Business...........................................................................42
6.2
Employee Benefits
Matters.....................................................................44
6.3
Access to
Information.........................................................................45
6.4
Further Assurances; Consents; Waiver of
Notices...............................................45
6.5
Publicity.....................................................................................45
6.6
Confidentiality...............................................................................46
6.7
No
Solicitations..............................................................................46
6.8
Estoppel Certificates; Landlord Lien Waivers; Contract Notices;
Termination of Liens..........46
6.9
Cooperation with Debt
Financing...............................................................47
6.10
Insurance.....................................................................................47
6.11
Company Transaction
Expenses..................................................................47
6.12
Antitrust
Matters.............................................................................47
6.13
Available Cash
...............................................................................48
6.14
Title Insurance Affidavits, Indemnities and
Information.......................................48
ARTICLE VII
CONDITIONS PRECEDENT TO CONSUMMATION OF THE
MERGERS...........................................48
7.1
Conditions Precedent to Each Party's Obligations to Effect the
Mergers........................48
7.2
Conditions Precedent to Obligations of Holdings to Effect the
Mergers.........................49
7.3
Conditions Precedent to Obligations of Progress Fuels, Progress
Rail and Progress
Metal to Effect the
Mergers...................................................................51
ARTICLE VIII
POST-CLOSING
COVENANTS............................................................................51
8.1
Access to Books and
Records...................................................................52
8.2
Tax
Matters...................................................................................52
8.3
Employee
Benefits.............................................................................63
8.4
WARN
Act......................................................................................65
8.5
Nonsolicitation; Noncompetition;
Nondisclosure................................................65
8.6
Insurance.....................................................................................66
8.7
Directors' and Officers'
Insurance............................................................67
8.8
Recoveries....................................................................................67
ARTICLE IX
SURVIVAL;
INDEMNIFICATION.....................................................................67
9.1
Limitation on and Survival of Representations and
Warranties..................................67
9.2
Indemnification by Progress Energy and Progress
Fuels.........................................68
9.3
Indemnification by
Holdings...................................................................71
9.4
Limitation of
Liability.......................................................................72
9.5
Indemnity Amounts to be Computed on After Tax
Basis...........................................73
9.6
Exclusive
Remedy..............................................................................73
9.7
Procedures for Environmental Response
Action..................................................74
9.8
Standards for Environmental Response
Actions..................................................80
9.9
Insurance
Proceeds............................................................................81
9.10
Procedures and Standards for Asbestos
Abatement...............................................81
ARTICLE X
TERMINATION...................................................................................83
10.1
Termination...................................................................................83
10.2
Effect of
Termination.........................................................................84
ARTICLE XI
MISCELLANEOUS.................................................................................84
11.1
Entire
Agreement..............................................................................84
11.2
Expenses......................................................................................84
11.3
Amendment.....................................................................................84
11.4
Extension;
Waiver.............................................................................85
11.5
Governing
Law.................................................................................85
11.6
Assignment....................................................................................85
11.7
Notices.......................................................................................85
11.8
Counterparts;
Headings........................................................................86
11.9
Specific
Performance..........................................................................86
11.10
Interpretation................................................................................86
11.11
Severability..................................................................................86
11.12
No
Reliance...................................................................................86
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EXHIBITS
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Exhibit
6.8(a)
Exhibit 7.2(e)
Exhibit 7.2(g)
Exhibit 7.2(m)
Exhibit 7.3(e)
Exhibit 7.3(g)
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Form of
Collateral Access Agreement
Form of Secretary's Certificate
Form of Opinion of Counsel of Progress Fuels and the Companies
Form of Employee Lease Agreement
Form of Opinion of Counsel of Holdings and the Merger Subs
Trademark Coexistence Agreement
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SCHEDULES
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Schedule
1.81
Schedule 1.114
Schedule 1.115
Schedule 1.116
Schedule 2.8
Schedule 3.1
Schedule 4.1
Schedule 4.2(a)
Schedule 4.2(b)
Schedule 4.3
Schedule 4.4
Schedule 4.5
Schedule 4.7
Schedule 4.8
Schedule 4.9
Schedule 4.10
Schedule 4.11
Schedule 4.12
Schedule 4.13
Schedule 4.14
Schedule 4.15
Schedule 4.16
Schedule 4.17
Schedule 4.19(a)
Schedule 4.19(b)
Schedule 4.19(c)
Schedule 4.20
Schedule 4.21
Schedule 4.22
Schedule 4.26
Schedule 6.1(ix)
Schedule 6.2(c)
Schedule 7.2(j)
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Permits
Retained Leasing Assets
Exceptions to Retained Leasing Liabilities
Retained Real Property
Working Capital
Ownership of Shares
Organization
Subsidiaries; Ownership; Capitalization
Subsidiaries; Organization
Required Consents
Exceptions to Financial Statements
Absence of Change
Intellectual Property
Compliance with Law
Contracts, Agreements, etc.
Litigation
Insurance
Employee Benefits
Employment Matters
Taxes
Transactions With Affiliates
Accounts Receivable; Accounts Payable
Environmental and Asbestos
Owned Real Property
Condemnation Proceedings
Real Property Leases
Substantial Customers and Suppliers
Entire Business
Warranty Obligations
Bank Accounts
Capital Expenditure Budget
Management Plans
Debt Financing
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AGREEMENT AND PLAN OF MERGER
This
Agreement and Plan of Merger (“Agreement”) is made as
of February 17, 2005 by and among Progress Rail Services Holdings
Corp., a Delaware corporation (“Holdings”), PRSC
Acquisition Corp., an Alabama corporation (“Progress Rail
Merger Sub”), PMRC Acquisition Co., a Kentucky corporation
(“Progress Metal Merger Sub” and, together with
Progress Rail Merger Sub, the “Merger Subs”), Progress
Rail Services Corporation, an Alabama corporation (“Progress
Rail”), Progress Metal Reclamation Company, a Kentucky
corporation (“Progress Metal” and, together with
Progress Rail, the “Companies”), Progress Fuels
Corporation, a Florida corporation (“Progress Fuels”),
and Progress Energy, Inc., a North Carolina corporation
(“Progress Energy”), with respect to Articles III, VI,
VIII and IX.
RECITALS
WHEREAS , Holdings (as the sole shareholder of each of
Progress Rail Merger Sub and Progress Metal Merger Sub), the Boards
of Directors of each of Progress Rail Merger Sub and Progress Metal
Merger Sub and the Boards of Directors of each of the Companies
have approved and declared advisable this Agreement and the
transactions contemplated hereby, pursuant to which Holdings will
acquire (i) Progress Rail by means of a merger of Progress Rail
Merger Sub with and into Progress Rail and (ii) Progress Metal by
means of a merger of Progress Metal Merger Sub with and into
Progress Metal, in each case upon the terms and subject to the
conditions set forth herein;
WHEREAS , concurrently with the execution hereof, Progress
Fuels, the sole holder of (i) all of the outstanding shares of
common stock, par value $1.00 per share, of Progress Rail (the
“Progress Rail Shares”) and (ii) all of the outstanding
shares of common stock, no par value per share, of Progress Metal
(the “Progress Metal Shares” and, together with the
Progress Rail Shares, the “Shares”), has executed a
written consent approving and adopting this Agreement;
and
WHEREAS , the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection
with the Mergers and also to prescribe various conditions to the
Mergers.
NOW, THEREFORE , in consideration of the foregoing premises
and the respective representations, warranties, covenants and
agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
When
used in this Agreement, the following terms shall have the meanings
specified:
1.1 Abatement .
“Abatement” when used with respect to Asbestos or an
Asbestos Abatement shall include any action to remove, abate or
encapsulate the Asbestos and mitigate or eliminate any risks
associated with the Asbestos.
1.2 ABCA. "ABCA" shall have the
meaning given in Schedule 2.1 .
1.3 Action. "Action" shall mean
any action, claim, suit, litigation, proceeding, arbitration or
governmental investigation or audit.
1.4 Adjustment Amount.
"Adjustment Amount" shall have the meaning given in Section
2.7 .
1.5 Affiliate .
“Affiliate” shall mean (i) any director, partner,
officer, agent or employee of any of the Companies, any Subsidiary
or Progress Fuels, (ii) any Person, firm or corporation that
directly or indirectly controls, is controlled by or is under
common control with any of the Companies, any Subsidiary or
Progress Fuels or (iii) any other Person that owns or controls (A)
5% or more of any class of equity securities of that Person or any
of its Affiliates or (B) 5% or more of any class of equity
securities (including any equity securities issuable upon the
exercise of any option or convertible security) of that Person or
any of its Affiliates. For purposes of this definition,
“control” (including with correlative meanings, the
terms “controlling”, “controlled by”, and
“under common control with”) as applied to any Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
that Person, whether through ownership of voting securities or by
contract or otherwise. Where the term “Affiliate” is
used herein with respect to Holdings, it shall have the meaning set
forth above, except that “Holdings” shall be
substituted for “any of the Companies, any Subsidiary or
Progress Fuels.”
1.6 Agreement .
“Agreement” shall mean this Agreement, together with
the Exhibits and Schedules attached hereto and the certificates
delivered in connection herewith, as the same may be amended from
time to time in accordance with the terms hereof.
1.7 Applicable Lease
Agreements . “Applicable Lease Agreements” shall
mean any leases in effect as of the Closing Date pursuant to which
the Companies or the Subsidiaries lease Leased Real
Property.
1.8 Asbestos. "Asbestos" shall
mean any asbestos and any asbestos-containing material or
asbestos-containing product.
1.9 Asbestos Abatement. "Asbestos
Abatement" shall have the meaning given in Section 9.9(a)
.
1.10 Asbestos Abatement Proposal.
"Asbestos Abatement Proposal" shall have the meaning given in
Section 9.9(c) .
1.11 Asbestos Laws .
“Asbestos Laws” shall mean all federal, national,
provincial, state or local statutes, laws, codes, common law rules
(including, without limitation, personal injury claims, premises
liability claims and product liability claims), regulations,
ordinances, orders, standards, permits, licenses or requirements
(including consent decrees, judicial decisions and administrative
orders) pertaining to Asbestos, including, without limitation,
those relating to the protection, preservation, conservation or
regulation of the environment, the disposal, abatement,
encapsulation, handling, transportation, removal, storage,
disturbance, dismantling, Release or exposure to Asbestos or
imposing requirements relating to public or employee health and
safety, including without limitation, any Environmental Laws to the
extent that they regulate, apply to or pertain to
Asbestos.
1.12 Asbestos Matters .
“Asbestos Matters” shall mean any and all Losses
(including, without limitation, any actual or alleged personal
injury (including death) or property damage) relating to, incurred
in connection with or arising out of: (i) the actual or
alleged manufacture, processing, marketing, distribution, sale,
assembly, treatment, storage, transportation, disposal,
installation, removal, disturbance, dismantling, handling or use of
Asbestos as of or prior to the Closing Date, by or on behalf of the
Companies, any of their current or former Subsidiaries or
Affiliates or any of their respective predecessors, in each case
regardless of when such actual or alleged exposure, damage or
injury occurs or occurred, when any such actual or alleged Losses
become or became known or manifest or when any claim accrues; or
(ii) the actual or alleged presence of or exposure of any
Person to any Asbestos as of or prior to the Closing Date at any
real property currently owned, operated, leased or occupied by the
Companies, any of their current or former Subsidiaries or
Affiliates or any of their respective predecessors or the actual or
alleged presence of or exposure of any person to Asbestos prior to,
as of, or after the Closing Date with respect to any real property
formerly owned, operated, leased or occupied by the Companies, any
of their current or former Subsidiaries or Affiliates or any of
their respective predecessors, in each case regardless of when such
actual or alleged exposure, damage or injury occurs or occurred,
when any such actual or alleged Losses become or became known or
manifest or when any claim accrues; provided ,
however , Asbestos Matters shall not include any costs
associated with the Abatement of any Asbestos contained in any
building materials or any other alleged property damage relating to
Asbestos at any real property currently owned, operated, leased or
occupied by the Companies or any Subsidiaries to the extent such
Asbestos is in compliance with applicable Asbestos Laws as of the
Closing Date.
1.13 Audited Statements. "Audited
Statements" shall have the meaning given in Section 7.2(p)
.
1.14 Basket. "Basket" shall have
the meaning given in Section 9.4 .
1.15 Benefit Plan. "Benefit Plan"
shall have the meaning given in Section 4.12(a) .
1.16 Business .
“Business” shall mean the business of, directly or
indirectly, providing products and services or advice with respect
to rail, railcar or transit systems, including, without limitation,
railcar and locomotive repair, trackwork, rail parts reconditioning
and sales, scrap metal recycling, railcar leasing and other
rail-related products or services currently provided by any of the
Companies or the Subsidiaries.
1.17 Business Combination
. “Business Combination” shall mean, with respect to
any Person, (i) any merger, consolidation or combination to which
such Person is a party, (ii) any sale, dividend, split or
other disposition of any capital stock or other equity interests of
such Person, (iii) any tender offer (including, without
limitation, a self-tender), exchange offer, recapitalization,
liquidation, dissolution or similar transaction, (iv) any
sale, dividend or other disposition of all or a material portion of
the assets and properties of such Person or (v) the entering into
of any agreement or understanding, or the granting of any rights or
options, with respect to any of the foregoing.
1.18 Canadian Benefit Plan.
"Canadian Benefit Plan" shall have the meaning given in Section
4.12(a) .
1.19 Canadian Pacific Earnout.
"Canadian Pacific Earnout" shall mean the amounts payable by
Chemetron-Railway Products, Inc. to Canadian Pacific Railway
Company pursuant to that Conditional Sales Agreement, dated
December 15, 1999, by and between Canadian Pacific Railway Company
and Chemetron-Railway Products, Inc.
1.20 Claim.
“Claim” shall mean with respect to any Person, any and
all suits, sanctions, legal proceedings, claims, assessments,
judgments, damages, penalties, fines, assessments, awards,
settlements or compromises related thereto, liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise),
obligations, demands, payments, out-of-pocket costs, reasonable
out-of-pocket expenses of whatever kind (including reasonable
attorneys’ and consultants’ fees and expenses and
disbursements in connection therewith) and losses incurred or
sustained by or against such Person.
1.21 Closing .
“Closing” shall mean the consummation of the Mergers
contemplated herein which shall occur at 10:00 a.m., local time, on
the Closing Date, at the offices of Morgan, Lewis & Bockius
LLP, New York, New York or at such other time and place as shall be
agreed by Progress Fuels and Holdings.
1.22 Closing Date .
“Closing Date” shall mean the date that the Closing
actually occurs, which shall be (i) the third business day in each
of the State of Alabama and the State of Kentucky after the
satisfaction or waiver of the closing conditions set forth in
Article VII , or (ii) such other date as Progress Fuels and
Holdings may mutually agree in writing.
1.23 Closing Financial
Statements. "Closing Financial Statements" shall have the meaning
given in Section 2.8(b) .
1.24 Closing Working Capital.
"Closing Working Capital" shall have the meaning given in
Section 2.8(b) .
1.25 Code. "Code" shall mean the
Internal Revenue Code of 1986, as amended.
1.26 Companies. "Companies" shall
have the meaning given in the preamble to this
Agreement.
1.27 Company Transaction
Expenses . “Company Transaction Expenses” shall
mean any costs and expenses, other than Taxes, of the Companies or
any of the Subsidiaries relating to the transactions contemplated
by this Agreement incurred at or prior to the Closing, including,
without limitation, (i) any costs and expenses of any agent,
broker, finder, investment banker, consultant, financial,
accounting or legal advisor or other similar Person which relate to
the transactions contemplated by this Agreement, (ii) the
costs of any surveys, whether updates or otherwise, with respect to
Owned Real Property and the costs of accountants’ comfort
letters required by Holdings’ financing sources but excluding
other costs, if any, payable by the Companies pursuant to any
agreement entered into with Holdings’ debt financing sources,
or (iii) any payments which become due and payable as a result of
the transactions contemplated by this Agreement.
1.28 Consolidated Subsidiaries.
"Consolidated Subsidiaries" shall have the meaning given in
Section 8.2(a) .
1.29 Contracts. "Contracts" shall
have the meaning given in Section 4.9 .
1.30 Current Property. "Current
Property" shall have the meaning given in Section 1.36
.
1.31 Dispute Notification.
"Dispute Notification" shall have the meaning given in Section
9.7(c) .
1.32 DOJ. "DOJ" shall have the
meaning given in Section 6.13(a) .
1.33 Effective Time. "Effective
Time" shall have the meaning given in Section 2.2
.
1.34 Environmental Claim.
"Environmental Claim" shall mean any Claim under any Environmental
Law.
1.35 Environmental Laws .
“Environmental Laws” shall mean all federal, national,
provincial, state or local statutes, laws, codes, common law rules,
regulations, ordinances, orders, standards, permits, licenses or
requirements (including consent decrees, judicial decisions and
administrative orders) pertaining to the protection, preservation,
conservation or regulation of the environment, the disposal,
Release or exposure to Hazardous Materials; or imposing
requirements relating to public or employee health and safety,
including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.
§ 9601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. § 6901 et seq., the Emergency
Planning and Community Right to Know Act, 42 U.S.C.
§ 11001 et seq., the Clean Air Act, 42 U.S.C.
§ 7401 et seq., the Federal Water Pollution Control Act,
33 U.S.C. § 1251 et seq., the Toxic Substances Control
Act, 15 U.S.C. § 2601 et seq., the Safe Drinking Water
Act, 42 U.S.C. § 300F et seq., and the Occupational
Safety and Health Act, 29 U.S.C. § 651 et seq., and any
statutory, regulatory or common law doctrine related to the
contamination or remediation of property (including, without
limitation, contribution, strict liability, negligence, trespass
and nuisance). Environmental Laws shall not include the
applicability of the foregoing to Asbestos other than when the term
“Environmental Laws” is used in the definition of
Asbestos Laws.
1.36 Environmental Matters
. “Environmental Matters” shall mean: (i) the
presence, Release, threatened Release or migration of any Hazardous
Materials existing or occurring at levels, concentrations, amounts
or under conditions or circumstances that exceed or do not satisfy
the requirements or criteria of the Least Stringent Standard (as
described by Section 9.8(a)) as of or prior to the
Closing Date at, from, in, to, on, or under any real property
owned, operated, occupied or leased as of the Closing Date by the
Companies or the Subsidiaries (“Current Property”) but
not to the extent of any Losses that result from any negligent
affirmative actions after the Closing Date by Holdings, or anyone
acting at the direction of Holdings, that exacerbate or worsen any
such condition; (ii) any Environmental Claim (including,
without limitation, any Environmental Claim relating to any
Applicable Lease Agreement) arising out of or relating to the
presence, Release, threatened Release or migration of any Hazardous
Materials existing or occurring as of or prior to the Closing Date
at, from, in, to, on, or under any Current Property but not to the
extent of any Losses that result from any negligent affirmative
actions after the Closing Date by Holdings, or anyone acting at the
direction of Holdings, that exacerbate or worsen any such condition
giving rise to the Environmental Claim; (iii) any violation of
any Environmental Law or Permit required pursuant to Environmental
Laws as of or prior to the Closing Date by the Companies or the
Subsidiaries or any of their respective actual or alleged corporate
predecessors or other Persons for whom the Companies or the
Subsidiaries are held responsible; (iv) the exposure or
alleged exposure of any Person as of or prior to the Closing Date
to any Hazardous Materials present or Released at, from, in, to,
on, or under any Current Property; (v) any Environmental Claim
arising out of products or services provided or operations
conducted by or on behalf of the Companies, the Subsidiaries, any
former Affiliates or any of their respective corporate predecessors
on or prior to the Closing Date; and (vi) the actual or
alleged transportation, treatment, storage, handling, or disposal
or arrangement for transportation, treatment, storage, handling or
disposal of any Hazardous Materials by or on behalf of the
Companies, the Subsidiaries, any current or former Affiliates, or
any of their respective actual or alleged corporate predecessors
(or any other Persons for whom the Companies or the Subsidiaries
are held responsible) as of or prior to the Closing Date
(“Off-Site Disposal Activities”), any Releases of
Hazardous Materials related to such Off-Site Disposal Activities or
the exposure or alleged exposure of any Person to any Hazardous
Materials related to any such Off-Site Disposal Activities.
Environmental Matters shall not include Asbestos Matters which are
the subject of Section 9.2(a)(vii) or matters covered
by the indemnities provided in Sections 9.2(a)(iv) or
(vi)(A) which shall be covered by the indemnities in those
sections.
1.37 Environmental Response
Action. "Environmental Response Action" shall have the meaning
given in Section 9.7(a) .
1.38 Environmental Response
Action Proposal. "Environmental Response Action Proposal" shall
have the meaning given in Section 9.7(d).
1.39 ERISA. "ERISA" shall mean
the Employee Retirement Income Security Act of 1974, as
amended.
1.40 Final Determination .
“Final Determination” shall mean (i) a decision,
judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has
become final after all allowable appeals by either party to the
action have been exhausted or the time for filing such appeals has
expired and is not subject to further review or modification, (ii)
a closing agreement entered into under Section 7121 of the Code or
any other settlement or other final agreement entered into in
connection with an administrative or judicial proceeding,
(iii) execution of an Internal Revenue Service Form 870-AD or
(iv) the expiration of the time for instituting suit with respect
to a claimed deficiency.
1.41 Financial Statements
. “Financial Statements” shall mean the combined
audited balance sheets of the Companies as of each of November 30,
2002 and 2003 and the combined unaudited balance sheet of the
Companies as of November 30, 2004 and, in each case, the notes
thereto and the related combined statements of operations,
shareholders’ equity and cash flows of the Companies for the
years then ended, all as previously provided to
Holdings.
1.42 FTC. "FTC" shall have the
meaning given in Section 6.13(a) .
1.43 GAAP .
“GAAP” shall mean generally accepted accounting
principles as in effect in the United States of America at the time
of the preparation of the subject financial statements,
consistently applied.
1.44 Georgetown Steel
Bankruptcy . “Georgetown Steel Bankruptcy” shall
mean the proceeding, In re Georgetown Steel Company, LLC, United
States Bankruptcy Court, District of South Carolina, Case No.
03-13156.
1.45 Governmental
Authority . “Governmental Authority” shall mean any
federal, national, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality or any court or tribunal, in each case whether of
the United States, any of its possessions or territories or of any
foreign nation.
1.46 Hazardous Materials .
“Hazardous Materials” shall mean any chemicals,
materials or substances which are now or hereafter become defined
as or included in the definition of “hazardous
substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous substances,”
“restricted hazardous wastes,” “toxic
substances,” “solid wastes,”
“pollutants” or “contaminants” or words or
similar meaning or regulatory effect, or any other chemical,
material or substances, exposure to which is prohibited, limited or
regulated by any applicable Environmental Law, including petroleum,
petroleum hydrocarbons or petroleum products, petroleum
by-products, radioactive materials, radon, urea formaldehyde, lead
or lead-containing materials and polychlorinated
biphenyls.
1.47 Holdings. "Holdings" shall
have the meaning given in the preamble to this
Agreement.
1.48 Holdings Claim. "Holdings
Claim" shall have the meaning given in Section 9.2(a)
.
1.49 Holdings Claim Notice.
"Holdings Claim Notice" shall have the meaning given in Section
9.2(b) .
1.50 Holdings Controlled
Environmental Response Action. "Holdings Controlled Environmental
Response Action" shall have the meaning given in Section
9.7(l)(i) .
1.51 HSR Act. "HSR Act" shall
mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15
U.S.C. ss. 18a), as amended.
1.52 Incentive Plan. "Incentive
Plan" shall have the meaning given in Section 6.2(c)
.
1.53 Indebtedness .
“Indebtedness” of any Person shall mean all obligations
of such Person (i) for borrowed money, (ii) evidenced by notes,
bonds, debentures or similar instruments, (iii) for reimbursement
with respect to letters or credit, banker’s acceptances and
surety bonds, (iv) for the deferred revenue of goods or
services (other than trade payables or accruals incurred in the
ordinary course of business), (v) under capital leases,
(vi) arising under conditional sale or title retention
agreements with respect to property acquired by such Person, (vii)
for deferred rental expenses and (viii) in the nature of guarantees
of the obligations described in clauses (i) through (vii) above of
any other Person.
1.54 Independent Accountants.
"Independent Accountants" shall have the meaning given in
Section 2.8(d) .
1.55 Initial Written Notice.
"Initial Written Notice" shall have the meaning given in Section
9.7(b) .
1.56 Intellectual Property
. “Intellectual Property” shall mean all United States
and foreign (i) patents and patent applications, patent disclosures
awaiting filing determination and patents subsequently issuing from
patent applications and design rights, (ii) trademarks, service
marks, trade names, corporate names, trade dress and domain names,
including logos and slogans, and registrations and applications for
registrations for the foregoing and all goodwill of the Companies
and all Subsidiaries associated therewith, (iii) registered
copyrights and registrations, renewals and applications, (iv)
Software, (v) Trade Secrets, (vi) in connection with the foregoing
clauses (i) through (v) above, causes of action (including past
infringement), damages and remedies relating thereto and rights of
protection of any interest therein under the laws of all
jurisdictions and (vii) copies and tangible embodiments thereof (in
whatever form or medium, including electronic media).
1.57 IRS. "IRS" shall have the
meaning given in Section 4.12(b) .
1.58 KBCA. "KBCA" shall have the
meaning given in Section 2.1 .
1.59 Knowledge of the
Companies . “Knowledge of the Companies” shall mean
the actual knowledge or awareness of the following Persons and,
with respect to all of the following Persons except Donald K.
Davis, David B. Fountain, Carol Nelson and David J.
Hatcher, matters which such Person should have known after due
inquiry: William P. Ainsworth, David R. Klementz,
John R. Grace, Jackie A. Nesmith, David R. Roeder,
J. Duane Cantrell, Jimmy Lawley, Michael Vanden Bergh, Glen
Lehmann, Edward A. O’Neal, Thomas R. Sullivan,
Laine H. Spruiell, Gary Pickett, H. Michael Smith,
Matthew I. Hart, Donald K. Davis, David B. Fountain,
Carol Nelson and David J. Hatcher.
1.60 Laws .
“Laws” shall mean any national, federal, state,
provincial, local or other law or governmental requirement of any
kind, and the rules, regulations and orders promulgated
thereunder.
1.61 Leased Real Property.
"Leased Real Property" shall have the meaning given in Section
4.19(c) .
1.62 Least Stringent Abatement
Remedy. "Least Stringent Abatement Remedy" shall have the meaning
given in Section 9.9(d) .
1.63 Least Stringent Standard.
"Least Stringent Standard" shall have the meaning given in
Section 9.8(a) .
1.64 Liabilities .
“Liabilities” shall mean any and all contingencies,
liabilities and obligations of any kind, character or description
whatsoever, known or unknown, contingent, fixed or otherwise, due
or to become due, asserted or unasserted.
1.65 Licensed Rights. "Licensed
Rights" shall have the meaning given in Section 4.7(a)
.
1.66 Liens .
“Liens” shall mean any and all liens, encumbrances,
assignments, claims, title and survey matters, mortgages, charges,
deeds of trust, leases, possessory rights, options, rights of first
refusal, easements, rights of way, claims, restrictions, pledges,
security interests, impositions and any other encumbrance of any
kind or character.
1.67 Losses. "Losses" shall have
the meaning given in Section 9.2(a) .
1.68 Material Adverse
Effect . “Material Adverse Effect” or
“Material Adverse Change” shall mean (i) with respect
to any entity or group of entities, a material adverse effect on or
change in (or any development which, insofar as reasonably can be
foreseen, is reasonably likely to have a material adverse effect on
or change in) the business, operations, assets, Liabilities,
financial condition or results of operations of such entity or
group of entities taken as a whole, other than any change,
circumstance or effect (A) relating to the economy or securities
markets in general or (B) relating generally to the industries in
which such entity or group of entities operates and not
specifically relating to it, in each case, which do not and will
not have a materially disproportionate effect on the Business or
the Companies; or (ii) a material adverse impairment of the ability
of Progress Energy, Progress Fuels or either of the Companies to
perform its obligations under this Agreement and the other
agreements contemplated hereby.
1.69 Mergers. "Mergers" shall
have the meaning given in Section 2.1 .
1.70 Merger Consideration.
"Merger Consideration" shall have the meaning given in Section
2.2 .
1.71 Merger Subs. "Merger Subs"
shall have the meaning given in the preamble to this
Agreement.
1.72 Notice of Disagreement.
"Notice of Disagreement" shall have the meaning given in Section
8.3(b) .
1.73 Open Source License .
“Open Source License” shall mean the Companies’
and the Subsidiaries’ license of any Software from a third
party in accordance with the terms and conditions of any version of
the GNU General Public License, GNU Lesser General Public License
or any similar license (generally on a “point and
click” download basis from the World Wide Web) pursuant to
which the licensee is permitted, on a royalty-free basis, to freely
distribute, modify, create derivative works of or otherwise
incorporate all or any portion of the relevant Software into the
Intellectual Property.
1.74 Option .
“Option” shall mean, with respect to any Person, any
security, right, subscription, warrant, option,
“phantom” stock right or other contract that gives the
right to (i) purchase or otherwise receive or be issued any shares
of capital stock or other equity interests of such Person or any
security of any kind convertible into or exchangeable or
exercisable for any shares of capital stock or other equity
interests of such Person or (ii) receive any benefits or rights
similar to any rights enjoyed by or accruing to the holder of
shares of capital stock or other equity interests of such Person,
including, without limitation, any rights to participate in the
equity, income or election of directors or officers of such
Person.
1.75 Ordinary Rework .
“Ordinary Rework” shall mean ordinary reworking of
product in connection with all or any part of a product shipment
returned by a customer within 90 days from the shipping date or the
subject of a notice of dissatisfaction received within 90 days from
the shipping date where the aggregate cost to the Companies and the
Subsidiaries of such reworking is less than an aggregate of two
hundred fifty thousand dollars ($250,000) with respect to the
entire shipment.
1.76 Other Antitrust Regulations.
"Other Antitrust Regulations" shall mean any foreign antitrust or
competition laws.
1.77 Other Tax Returns. "Other
Tax Returns" shall have the meaning given in Section
8.2(f)(i) .
1.78 Owned Real Property. "Owned
Real Property" shall have the meaning given in Section
4.19(a) .
1.79 PBO. "PBO" shall have the
meaning given in Section 8.3(b) .
1.80 Pension Plan. "Pension Plan"
shall have the meaning given in Section 8.3(b) .
1.81 Permits .
“Permits” shall mean all written permits, licenses and
governmental authorizations, registrations and approvals required,
as of the date hereof, to be obtained in the conduct of the
business of the Companies or the Subsidiaries, including, without
limitation, those Permits listed on Schedule 1.81
.
1.82 Permitted Liens .
“Permitted Liens” shall mean (i) liens for Taxes not
yet due and payable and (ii) title defects that do not materially
interfere with the existing use or enjoyment of the assets of the
Companies or any Subsidiary subject thereto or affected thereby, do
not, individually or in the aggregate, materially detract from the
value of the assets subject thereto or affected thereby, and do not
materially and adversely affect the marketability thereof or render
title to any real property unmarketable.
1.83 Person .
“Person” shall mean any natural person, corporation,
general partnership, limited partnership, limited liability company
or partnership, proprietorship, other business organization, trust,
union, association or governmental or regulatory
authority.
1.84 Plan. "Plan" shall have the
meaning given in Section 4.12(a) .
1.85 Plan Funding Statement.
"Plan Funding Statement" shall have the meaning given in Section
8.3(b) .
1.86 Post-Closing Period.
"Post-Closing Period" shall have the meaning given in Section
8.2(g)(iii)(b) .
1.87 Pre-Closing Period.
"Pre-Closing Period" shall have the meaning given in Section
8.2(g)(iii)(b) .
1.88 Progress Controlled
Environmental Response Action. "Progress Controlled Environmental
Response Action" shall have the meaning given in Section
9.7(a) .
1.89 Progress Energy. "Progress
Energy" shall have the meaning given in the preamble to this
Agreement.
1.90 Progress Fuels. "Progress
Fuels" shall have the meaning given in the preamble to this
Agreement.
1.91 Progress Fuels Claim.
"Progress Fuels Claim" shall have the meaning given in Section
9.3(a) .
1.92 Progress Fuels Claim Notice.
"Progress Fuels Claim Notice" shall have the meaning given in
Section 9.3(b) .
1.93 Progress Fuels Group.
"Progress Fuels Group" shall have the meaning given in Section
8.2(a) .
1.94 Progress Metal. "Progress
Metal" shall have the meaning given in the preamble of to this
Agreement.
1.95 Progress Metal Articles of
Merger. "Progress Metal Articles of Merger" shall have the meaning
given in Section 2.4 .
1.96 Progress Metal Merger.
"Progress Metal Merger" shall have the meaning given in Section
2.1 .
1.97 Progress Metal Merger
Consideration. "Progress Metal Merger Consideration" shall have the
meaning given in Section 2.2 .
1.98 Progress Metal Merger Sub.
"Progress Metal Merger Sub" shall have the meaning given in the
preamble to this Agreement.
1.99 Progress Metal Plan.
"Progress Metal Plan" shall have the meaning given in Section
8.3(b) .
1.100 Progress Metal Shares.
"Progress Metal Shares" shall have the meaning given in the
Recitals to this Agreement.
1.101 Progress Metal Surviving
Corporation. "Progress Metal Surviving Corporation" shall have the
meaning given in Section 2.1 .
1.102 Progress Rail. "Progress
Rail" shall have the meaning given in the preamble to this
Agreement.
1.103 Progress Rail Articles of
Merger. "Progress Rail Articles of Merger" shall have the meaning
given in Section 2.4 .
1.104 Progress Rail Merger.
"Progress Rail Merger" shall have the meaning given in Section
2.1 .
1.105 Progress Rail Merger
Consideration. "Progress Rail Merger Consideration" shall have the
meaning given in Section 2.2 .
1.106 Progress Rail Merger Sub.
"Progress Rail Merger Sub" shall have the meaning given in the
preamble to this Agreement.
1.107 Progress Rail Surviving
Corporation. "Progress Rail Surviving Corporation" shall have the
meaning given in Section 2.1.
1.108 RCL. "RCL" shall mean
Railcar, Ltd., a Georgia corporation.
1.109 Real Property. "Real
Property" shall have the meaning given in Section 4.19(c)
.
1.110 Real Property Leases. "Real
Property Leases" shall have the meaning given in Section
4.9(c) .
1.111 Release .
“Release” shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of Hazardous Materials into the
environment.
1.112 Relevant Group .
“Relevant Group” shall mean any affiliated, combined,
consolidated, unitary or similar group of which any of the
Companies or any of their Subsidiaries is or was a
member.
1.113 Required Consents .
“Required Consents” shall mean those consents required
from parties to the Contracts and Permits that are necessary or
required in order to give effect to the transactions contemplated
herein and that are specifically identified on Schedule 4.3
attached hereto.
1.114 Retained Leasing
Assets . “Retained Leasing Assets” shall mean those
assets which are set forth in Schedule 1.114 attached
hereto.
1.115 Retained Leasing
Liabilities . “Retained Leasing Liabilities” shall
mean any and all Liabilities, including, without limitation, those
Liabilities, whenever asserted, arising out of events occurring or
facts existing prior to the Closing which, directly or indirectly,
relate to or arise from RCL or otherwise from the railcar leasing
business of Progress Rail and excluding those specified Liabilities
which are set forth in Schedule 1.115 attached
hereto.
1.116 Retained Real
Property . “Retained Real Property” shall mean each
of the following parcels of real property owned by the Companies or
the Subsidiaries: (i) real property located in Augusta,
Georgia, (ii) real property located in Louisville, Kentucky,
and (iii) real property located in Lake City, Pennsylvania, in
each case as more fully described on Schedule 1.116
attached hereto.
1.117 Retention Plan. "Retention
Plan" shall have the meaning given in Section 6.2(c)
.
1.118 Shares. "Shares" shall have
the meaning given in the Recitals to this Agreement.
1.119 Software .
“Software” shall mean all computer software owned,
licensed, leased or otherwise used by the Companies and the
Subsidiaries, of any nature whatsoever (including system software,
application software, utility software, web sites, security
software, programming software, middleware and firmware, modules,
data files and upload software), in object and/or source code form
as applicable, including, without limitation, the software
described on Schedule 4.7 .
1.120 State Income Tax. "State
Income Tax" shall have the meaning given in Section
8.2(b)(i) .
1.121 Subsidiary .
“Subsidiary” shall mean, with respect to any Company,
any corporation or other entity of which more than fifty percent
(50%) of the total voting power of shares of capital stock entitled
to vote in the election of directors or others performing similar
functions is at the time owned or controlled, directly or
indirectly, by such Company or a Subsidiary thereof.
1.122 Surviving Corporations.
"Surviving Corporations" shall have the meaning given in Section
2.1 .
1.123 Target Working Capital.
"Target Working Capital" shall be two hundred twenty one million
dollars ($221,000,000).
1.124 Tax Claim .
“Tax Claim” shall mean any written notice or claim made
by any Taxing Authority or other Person with respect to Taxes or
examination of any Tax Return, that if pursued successfully, could
serve as the basis for a claim for indemnification of a Tax
Indemnitee or Progress Fuels under this Agreement.
1.125 Tax Indemnitee .
“Tax Indemnitee” shall mean Holdings and its
Subsidiaries and Affiliates (including, following the Closing, the
Companies and the Subsidiaries of the Companies).
1.126 Tax Returns .
“Tax Returns” shall mean any report, return, amended
return, refund claim, information statement, payee statement or
other information provided or required to be provided to any
Governmental Authority (including any schedule or attachment
thereto, and any amendment thereof), with respect to Taxes,
including any return of an affiliated, combined or unitary
group.
1.127 Taxes .
“Taxes” shall mean any and all federal, state, local,
or foreign net or gross income, gross receipts, net proceeds,
sales, use, ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental, profits, windfall
profits, transaction, license, lease, service, service use,
occupation, severance, energy, unemployment, social security,
worker’s compensation, capital, premium and other taxes,
levies, imposts, duties, assessments, charges and withholdings of
any nature whatever, whether disputed or not, imposed or required
to be collected by or paid over to a Governmental Authority
including any interest, penalties, fines, assessments or additions
imposed in respect of the foregoing, or in respect of any failure
to comply with any requirement regarding Tax Returns.
1.128 Taxing Authority .
“Taxing Authority” shall mean any Governmental
Authority having jurisdiction with respect to any Tax.
1.129 Trade Secrets .
“Trade Secrets” shall mean confidential information
including trade secrets, designs, business processes, customer
lists, sales and profit figures, distribution and sales methods,
financial and marketing plans, supplier lists, technology rights
and licenses, specifications and other technical information, data,
process technology, processes, proposals, plans, formulae,
innovations, inventions (whether patentable or unpatenable and
whether or not reduced to practice), discoveries, ideas, databases
and all other proprietary information, in each case to the extent
confidential or protectable as a trade secret to the extent
protectable under the laws of the relevant jurisdiction.
1.130 Transfer Taxes .
“Transfer Taxes” shall mean sales, use, transfer, real
property transfer, recording, documentary, stamp, registration and
stock transfer Taxes and fees.
1.131 Unfunded PBO. "Unfunded
PBO" shall have the meaning given in Section 8.3(b)
.
1.132 WARN Act. "WARN Act" shall
mean the Worker Adjustment and Retraining Notification Act, 29
U.S.C.ss. 2101 et seq.
1.133 Warranty Obligation.
"Warranty Obligation" shall have the meaning given in Section
4.22 .
1.134 Working Capital. "Working
Capital" shall have the meaning given in Section 2.8(a)
.
Unless
the context of this Agreement otherwise requires, (i) words of any
gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number,
respectively; (iii) the terms “hereof,”
“herein,” “hereby” and derivative or
similar words refer to this entire Agreement; (iv) the terms
“Article” or “Section” refer to the
specified Article or Section of this Agreement; (v) the phrases
“ordinary course of business” and “ordinary
course of business consistent with past practice” refer to
the practice of the Business; (vi) the phrase
“including” shall mean “including, without
limitation”; (vii) the word “or” shall not be
exclusive; (viii) all references to “$” shall be deemed
to mean United States dollars; (ix) all accounting terms used
herein and not expressly defined herein shall have the meanings
given to them under GAAP; and (x) the phrases “the
transactions contemplated hereby” or “the transactions
contemplated by this Agreement” when used in Articles
III and IV , Section 7.2(l) and (except as
explicitly provided otherwise) Section 8.2 shall not include
the debt financings contemplated by Holdings to finance the
Mergers.
ARTICLE II
THE MERGERS
2.1 The Mergers . Upon the
terms and subject to the satisfaction or waiver of the conditions
of this Agreement and (a) in accordance with the Alabama Business
Corporation Act (the “ABCA”), at the Effective Time,
Progress Rail Merger Sub shall be merged with and into Progress
Rail and the separate corporate existence of Progress Rail Merger
Sub shall thereupon cease (the “Progress Rail Merger”)
and (b) in accordance with the Kentucky Business Corporation Act
(the “KBCA”), at the Effective Time, Progress Metal
Merger Sub shall be merged with and into Progress Metal and the
separate corporate existence of Progress Metal Merger Sub shall
thereupon cease (the “Progress Metal Merger” and,
together with the Progress Rail Merger, the “Mergers”).
As a result of the Progress Rail Merger, (i) the outstanding shares
of capital stock of Progress Rail Merger Sub and Progress Rail
shall be converted or canceled in the manner provided in Section
2.6 , the separate corporate existence of Progress Rail Merger
Sub shall cease and Progress Rail shall be the surviving
corporation following the Progress Rail Merger and (ii) the
outstanding shares of capital stock of Progress Metal Merger Sub
and Progress Metal shall be converted or canceled in the manner
provided in Section 2.6 , the separate corporate existence
of Progress Metal Merger Sub shall cease and Progress Metal shall
be the surviving corporation following the Progress Metal Merger.
Progress Rail as the surviving corporation following the Progress
Rail Merger is sometimes referred to herein as the “Progress
Rail Surviving Corporation” and Progress Metal as the
surviving corporation following the Progress Metal Merger is
sometimes referred to herein as the “Progress Metal Surviving
Corporation” or, together with the Progress Rail Surviving
Corporation, the “Surviving Corporations.”
2.2 Merger Consideration .
The aggregate merger consideration (the “Merger
Consideration”) shall be four hundred five million dollars
($405,000,000). The merger consideration for the Progress Metal
Shares (the “Progress Metal Merger Consideration”)
shall be an amount not less than twenty million dollars
($20,000,000) and not more than thirty million dollars
($30,000,000) and the merger consideration for the Progress Rail
Shares (the “Progress Rail Merger Consideration”) shall
be an amount equal to the Merger Consideration minus the Progress
Metal Merger Consideration. At least three (3) days prior to the
Closing, Holdings shall determine the amount of the Progress Metal
Merger Consideration and shall provide notice to Progress Fuels of
the amount so determined. The Merger Consideration shall be
increased or decreased by the Adjustment Amount in accordance with
Sections 2.7 and 2.8 .
2.3 Deliveries at Closing
. At the Effective Time, in addition to the deliveries required to
be made at or prior to the Closing pursuant to Article VII
hereof, (a) Progress Fuels shall deliver to Holdings certificates
which represented the Shares immediately prior to the Effective
Time and (b) Holdings shall deliver, or cause to be delivered, to
Progress Fuels the Merger Consideration in immediately available
funds by wire transfer to an account specified by Progress
Fuels.
2.4 Effective Time .
Subject to the provisions of this Agreement, as soon as practicable
on the Closing Date, (a) Progress Rail shall file the articles of
merger (the “Progress Rail Articles of Merger”),
including a plan of merger, executed in accordance with the
relevant provisions of the ABCA with the Secretary of State of
Alabama and, as soon as practicable on or after the Closing Date,
shall make all other filings or recordings required under the ABCA
and (b) Progress Metal shall file the articles of merger (the
“Progress Metal Articles of Merger”), including a plan
of merger, executed in accordance with the relevant provisions of
the KBCA with the Secretary of State of the State of Kentucky and,
as soon as practicable on or after the Closing Date, shall make all
other filings or recordings required under the KBCA. The Progress
Rail Merger shall become effective at such time as is set forth in
the Progress Rail Articles of Merger and the Progress Metal Merger
shall become effective at such time as is set forth in the Progress
Metal Articles of Merger, which designated times with respect to
Progress Rail and Progress Metal shall be the same and which time
is hereinafter referred to as the “Effective
Time.”
2.5 Effects of the Mergers
.
(a) At
and after the Effective Time, the Mergers shall have the effects
set forth in Section 10-2B-11.06 of the ABCA and Section
271B.11-060(1) of the KBCA, as applicable.
(b) At
the Effective Time, (i) the Articles of Incorporation of Progress
Rail as the Progress Rail Surviving Corporation shall be amended
and restated in its entirety to be identical to the Articles of
Incorporation of Progress Rail Merger Sub as in effect immediately
prior to the Effective Time, except Article First of the Articles
of Incorporation of the Progress Rail Surviving Corporation shall
read as follows: “The name of the corporation is Progress
Rail Services Corporation (the “Corporation”).”,
and (ii) the Articles of Incorporation of Progress Metal as the
Progress Metal Surviving Corporation shall be amended and restated
in its entirety to be identical to the Articles of Incorporation of
Progress Metal Merger Sub as in effect immediately prior to the
Effective Time, except Article 1 of the Articles of Incorporation
of the Progress Rail Surviving Corporation shall read as follows:
“The Corporation’s name shall be Progress Metal
Reclamation Company.”, in each case until amended thereafter
in accordance with applicable Law.
(c) At
the Effective Time, (i) the Bylaws of Progress Rail as the Progress
Rail Surviving Corporation shall be amended and restated in their
entirety to be identical to the Bylaws of Progress Rail Merger Sub
as in effect immediately prior to the Effective Time, except that
all references to “Progress Rail Merger Sub” in the
Bylaws of the Progress Rail Surviving Corporation shall be changed
to refer to “Progress Rail Services Corporation”, and
(ii) the Bylaws of Progress Metal as the Progress Metal Surviving
Corporation shall be amended and restated in their entirety to be
identical to the Bylaws of Progress Metal Merger Sub as in effect
immediately prior to the Effective Time, except that all references
to “Progress Metal Merger Sub” in the Bylaws of the
Progress Metal Surviving Corporation shall be changed to refer to
“Progress Metal Reclamation Company”, in each case
until amended thereafter in accordance with applicable
Law.
(d) At
the Effective Time, (i) the directors and officers of Progress Rail
Merger Sub immediately prior to the Effective Time shall be the
directors and officers of the Progress Rail Surviving Corporation,
each to hold office until their respective death, permanent
disability, resignation or removal or until their respective
successors are duly elected and qualified, all in accordance with
the Articles of Incorporation and Bylaws of the Progress Rail
Surviving Corporation and applicable Law, and (ii) the directors
and officers of Progress Metal Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Progress
Metal Surviving Corporation, each to hold office until their
respective death, permanent disability, resignation or removal or
until their respective successors are duly elected and qualified,
all in accordance with the Articles of Incorporation and Bylaws of
the Progress Metal Surviving Corporation and applicable
Law.
2.6 Effect on Capital
Stock . At the Effective Time, by virtue of the Mergers and
without any action on the part of Holdings, Progress Rail Merger
Sub, Progress Metal Merger Sub, Progress Rail, Progress Metal or
Progress Fuels, the following shall occur:
(a) The
Progress Rail Shares shall be converted into the right to receive
and become exchangeable for the Progress Rail Merger Consideration
in cash, without interest thereon, subject to adjustment as
provided in Section 2.7 . All such Progress Rail Shares
shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and Progress Fuels, as the
sole shareholder of the Progress Rail Shares, shall cease to have
any rights with respect thereto except the right to receive the
Progress Rail Merger Consideration, as set forth herein.
(b) The
Progress Metal Shares shall be converted into the right to receive
and become exchangeable for the Progress Metal Merger Consideration
in cash, without interest thereon, subject to adjustment as
provided in Section 2.7 . All such Progress Metal Shares
shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and Progress Fuels, as the
sole shareholder of the Progress Metal Shares, shall cease to have
any rights with respect thereto except the right to receive the
Progress Metal Merger Consideration, as set forth
herein.
(c) Each
share of capital stock of Progress Rail and Progress Metal that is
owned by Progress Rail and Progress Metal, respectively, as
treasury stock, if any, and any such shares of capital stock owned
by any direct or indirect subsidiary of Progress Fuels, if any,
shall be canceled and retired and shall cease to exist and no cash,
securities or other consideration shall be delivered in exchange
therefor.
(d) (i)
Each share of common stock, par value $1.00 per share, of Progress
Rail Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid
and nonassessable share of common stock of the Progress Rail
Surviving Corporation, and (ii) each share of common stock, no par
value per share, of Progress Metal Merger Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of
common stock of the Progress Metal Surviving
Corporation.
2.7 Adjustment Amount and
Payment . The “Adjustment Amount” (which may be a
positive or negative number) will be equal to the amount determined
by subtracting the Target Working Capital from the Closing Working
Capital. The Adjustment Amount shall be paid by wire transfer by
Progress Fuels to an account specified by Holdings (if the
Adjustment Amount is negative) or wire transfer by Holdings to an
account specified by Progress Fuels (if the Adjustment Amount is
positive). All such payments shall be made together with interest
at the rate of three percent (3%) per annum, which interest shall
begin accruing on the Closing Date and end on the date the payment
is made. Within three (3) business days after the calculation of
the Closing Working Capital becomes binding and conclusive on the
parties pursuant to Section 2.8 of this Agreement, Progress
Fuels or Holdings, as the case may be, shall make the wire transfer
payment provided for in this Section 2.7 . Progress Fuels
and Holdings shall mutually agree upon the allocation of the
Adjustment Amount between the Progress Rail Merger Consideration
and the Progress Metal Merger Consideration. If Progress Fuels and
Holdings cannot reach agreement, then they shall submit the dispute
to the Independent Accountants for resolution in accordance with
the procedures set forth in Section 2.8 .
2.8 Adjustment Procedure
.
(a)
“Working Capital” as of a given date shall mean the
amount calculated in accordance with Schedule 2.8
.
(b)
Holdings shall prepare, or cause to be prepared, a combined balance
sheet (the “Closing Financial Statements”) of the
Companies as of the Closing Date on the same basis and applying the
accounting principles, policies and practices set forth in
Schedule 2.8 . Holdings shall then determine the Working
Capital as of the Closing Date (the “Closing Working
Capital”) based on the Closing Financial Statements and using
the same methodology as was used to calculate the Target Working
Capital as described on Schedule 2.8 , which Schedule
2.8 shall also describe any differences between such
principles, policies and practices and GAAP. Holdings shall deliver
the Closing Financial Statements and its determination of the
Closing Working Capital to Progress Fuels within seventy five (75)
days following the Closing Date.
(c) If
within thirty (30) business days following delivery of the Closing
Financial Statements and the Closing Working Capital calculation,
Progress Fuels has not given Holdings written notice of its
objection to the Closing Working Capital calculation (which notice
must state the basis of Progress Fuels’ objection in
reasonable detail and include supporting documentation for such
objection), then the Closing Working Capital calculated by Holdings
shall be binding and conclusive on the parties and be used in
computing the Adjustment Amount.
(d) If
Progress Fuels duly gives Holdings such notice of objection, and if
Progress Fuels and Holdings fail to resolve the issues outstanding
with respect to the Closing Financial Statements and the
calculations of the Closing Working Capital within thirty (30) days
of Holdings’ receipt of Progress Fuels’ objection
notice, Progress Fuels and Holdings shall submit the issues
remaining in dispute to KPMG, certified public accountants (the
“Independent Accountants”), for resolution applying the
principles, policies and practices described on Schedule 2.8
. If issues remaining in dispute are submitted to the Independent
Accountants for resolution, (i) Progress Fuels and Holdings shall
promptly furnish or cause to be furnished to the Independent
Accountants such work papers and other documents and information
relating to the disputed issues as the Independent Accountants may
request and are available to that party or its agents and shall be
afforded the opportunity to present to the Independent Accountants
any material relating to the disputed issues and to discuss the
issues with the Independent Accountants; (ii) the Independent
Accountants may only make a determination with respect to the
disputed items by deciding that the position of Progress Fuels or
Holdings or a position in between (but not higher or lower) is
correct, and the determination by the Independent Accountants, as
set forth in a notice to be delivered to both Progress Fuels and
Holdings within sixty (60) days of the submission to the
Independent Accountants of the issues remaining in dispute, shall
be final, binding and conclusive on the parties and shall be used
in the calculation of the Closing Working Capital; and (iii)
Progress Fuels and Holdings will each bear fifty percent (50%) of
the fees and costs of the Independent Accountants for such
determination.
2.9
Further Assurances . If, at any time after the Effective
Time, either of the Surviving Corporations shall consider or be
advised that any deeds, bills of sale, assignments or assurances or
any other acts or things are necessary, desirable or proper (a) to
vest, perfect or confirm, of record or otherwise, in such Surviving
Corporation its right, title and interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of
either of the constituent corporations, or (b) otherwise to carry
out the purposes of this Agreement, such Surviving Corporation and
its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of
either constituent corporation, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of
either constituent corporation, all such other acts and things as
may be necessary, desirable or proper to vest, perfect or confirm
such Surviving Corporation’s right, title and interest in, to
and under any of the rights, privileges, powers, franchises,
properties or assets of such constituent corporation and otherwise
to carry out the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PROGRESS ENERGY AND PROGRESS FUELS
Progress
Energy and Progress Fuels, jointly and severally, hereby represent
and warrant to Holdings and the Merger Subs that:
3.1
Ownership of the Shares . Progress Fuels owns of record and
beneficially the Shares, free and clear of any and all Liens.
Schedule 3.1 sets forth the number of Shares.
3.2
Organization . Progress Energy is duly incorporated, validly
existing and in good standing under the laws of the State of North
Carolina and has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated herein. Progress Fuels is duly incorporated, validly
existing and in good standing under the laws of the State of
Florida and has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated herein. Each of Progress Energy and Progress Fuels is
duly qualified as a foreign corporation in good standing in each
jurisdiction in which the conduct of its business requires such
qualification, except where the failure to be so qualified would
not prevent or materially delay consummation of the transactions
contemplated hereby.
3.3
Authorization; Execution and Delivery; Enforceability . Each
of Progress Energy and Progress Fuels has full corporate power and
authority to enter into, deliver and perform this Agreement, and
each agreement or instrument (to which it is a party) executed in
connection herewith or delivered pursuant hereto and to consummate
the transactions contemplated hereby. Each of Progress
Energy’s and Progress Fuels’ execution, delivery and
performance of this Agreement and all agreements and instruments
executed in connection herewith or delivered pursuant hereto and
the transactions contemplated hereby have been duly authorized by
all requisite corporate action. This Agreement and all agreements
or instruments executed by Progress Energy and Progress Fuels in
connection herewith or delivered by Progress Energy and Progress
Fuels pursuant hereto have been duly executed and delivered
thereby, and this Agreement and all agreements and instruments
executed by Progress Energy and Progress Fuels in connection
herewith or delivered thereby pursuant hereto constitute the legal,
valid and binding obligations thereof, enforceable in accordance
with their respective terms except to the extent that enforcement
may be affected by applicable bankruptcy, reorganization,
insolvency and similar laws affecting creditors’ rights and
remedies generally and by general principles of equity (regardless
of whether enforcement is sought at law or in equity).
3.4
No Violation or Conflict; Consents . The execution, delivery
and performance by Progress Energy and Progress Fuels of this
Agreement and all of the other documents and instruments
contemplated hereby and the consummation of the transactions
contemplated herein do not and will not conflict with, violate or
breach any Laws, judgment, order or decree binding on Progress
Energy or Progress Fuels or their respective properties, or the
articles of incorporation or bylaws of Progress Energy or Progress
Fuels. Except for such filings and consents as may be required
pursuant to the HSR Act or any Other Antitrust Regulations, all of
which will have been made or obtained, as the case may be, prior to
the Closing, no consent of any other Person, and no notice to,
filing or registration with, or authorization, consent or approval
of, any governmental, regulatory or self-regulatory agency is
necessary or is required to be made or obtained by Progress Energy
or Progress Fuels in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
PROGRESS FUELS CONCERNING THE COMPANIES AND THE
SUBSIDIARIES
Progress
Fuels hereby represents and warrants to Holdings and the Merger
Subs that:
4.1 Organization;
Capitalization of the Companies; Authorization; Execution and
Delivery; Enforceability .
(a)
Organization . Progress Rail is duly organized, validly
existing and in good standing under the laws of the State of
Alabama. Progress Metal is duly organized, validly existing and in
good standing under the laws of the State of Kentucky. The
Companies have full corporate power and authority to conduct their
businesses as they are now being conducted and to own their
properties and to lease those properties leased by them. The
Companies are duly qualified, licensed or admitted to do business
as foreign corporations and are in good standing in each
jurisdiction in which such qualification, license or admission is
necessary under applicable law as a result of the conduct of their
business or the ownership of their properties, except where the
failure to be so qualified, licensed or admitted and in good
standing would not have a Material Adverse Effect on the Companies
and the Subsidiaries, taken as a whole. Each of the jurisdictions
in which each of the Companies is qualified, licensed or admitted
to do business as a foreign corporation is listed on Schedule
4.1 . Progress Fuels has delivered to Holdings true, correct
and complete copies of the Companies’ Articles of
Incorporation and Bylaws (in each case, as amended to date). The
Companies are not in default under or in violation of any
provisions of their Articles of Incorporation or Bylaws.
(b)
Capitalization . The authorized capital stock of Progress
Rail consists of 7,500 shares of common stock, $1.00 par value per
share, of which 1,000 shares are issued and outstanding as of the
date hereof. The authorized capital stock of Progress Metal
consists of 1,000 shares of common stock, no par value, of which
1,000 shares are issued and outstanding as of the date hereof. All
of the outstanding Shares have been duly and validly authorized and
issued, are fully paid and nonassessable, and were not issued in
violation of any Laws or the preemptive rights of any shareholder.
Except for the Shares, no shares of capital stock of the Companies
have been issued, are held in treasury or are reserved for
issuance. There are no outstanding Options with respect to the
Companies or agreements, arrangements or understandings to issue
Options with respect to the Companies and there are no preemptive
rights or agreements, arrangements or understandings to issue
preemptive rights with respect to the issuance or sale of the
Companies’ capital stock. There are no shareholder
agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the capital stock of
any of the Companies.
(c)
Authorization; Execution and Delivery; Enforceability . Each
of the Companies has full corporate power and authority to enter
into, deliver and perform this Agreement, and each agreement or
instrument (to which it is a party) executed in connection herewith
or delivered pursuant hereto and to consummate the transactions
contemplated hereby. Each of the Companies’ execution,
delivery and performance of this Agreement and all agreements and
instruments executed in connection herewith or delivered pursuant
hereto and the transactions contemplated hereby have been duly
authorized by all requisite corporate action. This Agreement and
all agreements or instruments executed by the Companies in
connection herewith or delivered by the Companies pursuant hereto
have been duly executed and delivered thereby, and this Agreement
and all agreements and instruments executed by the Companies in
connection herewith or delivered thereby pursuant hereto constitute
the legal, valid and binding obligations thereof, enforceable in
accordance with their respective terms except to the extent that
enforcement may be affected by applicable bankruptcy,
reorganization, insolvency and similar laws affecting
creditors’ rights and remedies generally and by general
principles of equity (regardless of whether enforcement is sought
at law or in equity).
4.2 Subsidiaries
.
(a)
Ownership; Capitalization . Each Subsidiary of the Companies
is set forth in Schedule 4.2(a) attached hereto. Except as
set forth in Schedule 4.2(a) , the Companies have no equity
investments or other similar interests, including any interest that
would be required to be consolidated with either of the Companies
under FASB Interpretation No. 46, Consolidation of Variable
Interest Entities, in any other Person. Except as set forth in
Schedule 4.2(a) , the Companies are the direct, indirect or
beneficial owners of all of the outstanding shares of capital stock
or other equity interests of any kind of each of their respective
Subsidiaries, in each case, free and clear of any and all Liens.
The authorized, issued and outstanding capital stock, and the
record ownership of all such shares of capital stock, of each
Subsidiary of the Companies are as set forth in Schedule
4.2(a) . All of the shares of capital stock of each Subsidiary
of the Companies have been duly and validly authorized and issued,
are fully paid and nonassessable, and were not issued in violation
of any Laws or the preemptive rights of any shareholder. Except as
set forth in Schedule 4.2(a) , (i) no capital stock of any
Subsidiary of the Companies is outstanding, (ii) there are no
outstanding Options with respect to any Subsidiary of the Companies
or agreements, arrangements or understandings to issue Options with
respect to any Subsidiary of the Companies and (iii) there are no
preemptive rights or agreements, arrangements or understandings to
issue preemptive rights with respect to the issuance or sale of any
Subsidiary of the Companies’ capital stock. There are no
shareholder agreements, voting trusts, proxies or other agreements
or understandings with respect to or concerning the capital stock
of any Subsidiary of the Companies.
(b)
Organization . Each Subsidiary of the Companies is duly
organized, validly existing and in good standing under the laws of
its respective state jurisdiction of incorporation or organization
and has full corporate or other power and authority to conduct its
business as it is presently being conducted and to own its
properties and lease those properties leased by it. Each Subsidiary
of the Companies is duly qualified, licensed or admitted to do
business as a foreign corporation or business entity and is in good
standing in each jurisdiction in which such qualification, license
or admission is necessary under applicable law as a result of the
conduct of its business or the ownership of its properties, except
where the failure to be so qualified, licensed or admitted and in
good standing would not have a Material Adverse Effect on the
Companies and the Subsidiaries, taken as a whole. Each jurisdiction
in which each Subsidiary of the Companies is qualified, licensed or
admitted to do business as a foreign corporation or other business
entity is listed on Schedule 4.2(b). Progress Fuels has
delivered to Holdings true, correct and complete copies of the
certificate or articles of incorporation or organization and bylaws
or operating agreements (in each case, as amended to the date
hereof) of each Subsidiary of the Companies. No Subsidiary of the
Companies is in default under or in violation of any provisions of
its certificate or articles of incorporation or organization and
bylaws or operating agreements.
4.3 No Violation or Conflict;
Consents . Except as set forth in Schedule 4.3 , the
execution, delivery and performance of this Agreement and all of
the other documents and instruments contemplated hereby to which
the Companies or any of the Subsidiaries are a party and the
consummation of the transactions contemplated hereby and thereby do
not and will not (a) conflict with, violate or breach any Laws,
judgment, order or decree binding on the Companies or any of the
Subsidiaries or their respective properties or the articles of
incorporation or bylaws of the Companies or any of the
Subsidiaries, or (b)(i) conflict with or result in a violation or
breach of, (ii) constitute (with or without notice or lapse of time
or both) a default under, (iii) result in or give any Person any
right of termination, cancellation, acceleration or modification in
or with respect to, (iv) result in or give any Person any
additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (v) result in the
creation or imposition of any Lien upon the Companies or any of the
Subsidiaries or any of their respective properties under, any
material contract, Real Property Lease or other agreement to which
the Companies or any of the Subsidiaries is a party or by which
they or any of their respective properties is bound. Except for the
Required Consents which are set forth in Schedule 4.3 , and
such filings and consents as may be required pursuant to the HSR
Act or any Other Antitrust Regulations, all of which will have been
made or obtained, as the case may be, prior to the Closing, no
consent of any other Person, and no notice to, filing or
registration with, or authorization, consent or approval of, any
governmental, regulatory or self-regulatory agency is necessary or
is required to be made or obtained by the Companies or any of the
Subsidiaries in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby, except where the failure to get such consent of any other
Person would not have a Material Adverse Effect on the Companies
and the Subsidiaries, taken as a whole, and would not prevent or
materially delay consummation of the transactions contemplated
hereby.
4.4 Financial Statements
.
(a)
Progress Fuels has delivered to Holdings copies of the Financial
Statements. The Financial Statements present fairly in all material
respects the combined financial condition, results of operations
and cash flows of the Companies and the Subsidiaries, taken as a
whole, as of the dates and for the periods indicated, and have been
prepared in accordance with GAAP applied on a basis consistent with
past practice (subject, in the case of unaudited financial
statements, to footnotes and normal year end audit adjustments).
Except for the potential impact of the matter described in
Schedule 4.4 (in the amount described in Schedule 4.4
), all intercompany activity has been eliminated in the Financial
Statements.
(b) The
Companies and the Subsidiaries do not have any Liabilities except
Liabilities (i) reflected on or accrued or reserved against in
the combined balance sheet included in the Financial Statements, or
reflected in the notes thereto, (ii) set forth in Schedule
4.4 , or (iii) pursuant to contracts disclosed on
Schedule 4. 9 or entered into in the ordinary course of
business and consistent with past practices, in each case, other
than for tort or breach of contract (with notice, lapse of time or
both), (iv) pursuant to any Benefit Plan disclosed on Schedule
4.12 , (v) with respect to Taxes, (vi) for which
indemnification is available pursuant to Section 9.2(a) , or
(vii) pursuant to litigation, claims or environmental matters
disclosed on Schedules 4.8 , 4.10 or 4.17
.
4.5 Absence of Change .
Except as set forth in Schedule 4.5, since December 1, 2004,
the Companies and the Subsidiaries have conducted their business
only in the ordinary course of business consistent with past
practice, and have not suffered any change in business, financial
condition or results of operations that has had or, insofar as can
reasonably be foreseen, is likely to have a Material Adverse Effect
on the Companies and the Subsidiaries, taken as a whole. None of
the other representations or warranties set forth in this Agreement
shall be deemed to limit the foregoing. In addition, without
limiting the foregoing, except as expressly contemplated hereby and
except as set forth in Schedule 4.5 , there has not occurred
since December 1, 2004:
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(a)
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any
declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock (or equity interests)
of the Companies, or any direct or indirect redemption, purchase or
other acquisition by the Companies of any such capital stock (or
equity interests) of the Companies;
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(b)
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any
authorization, issuance, sale or other disposition by the Companies
of any shares of capital stock (or equity interests) of the
Companies, or any modification or amendment of any right of any
holder of any outstanding shares of capital stock (or equity
interests) of the Companies;
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(c)
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(i) any
increase of more than five percent (5%) (A) in salary of any
current or former officer, director, stockholder, employee or
consultant of the Companies or the Business with salary of greater
than $125,000 in the fiscal year ended November 30, 2004 with
respect to any period beginning after November 30, 2004 or (B) in
the aggregate salaries for all current or former officers,
directors, stockholders, employees or consultants of the Companies
or the Business with respect to any period beginning after November
30, 2004; (ii) any payment of consideration of any nature
whatsoever (other than salary, commissions or consulting fees paid
to any current or former officer, director, stockholder, employee
or consultant of the Companies or the Business) to any current or
former officer, director, stockholder, employee or consultant of
the Companies or the Business; (iii) any establishment or
modification of (A) targets, goals, pools or similar provisions
under any benefit plan, employment contract or other employee
compensation arrangement or (B) salary ranges, increase guidelines
or similar provisions in respect of any benefit plan, employment
contract or other employee compensation arrangement; or (iv) any
adoption, entering into, amendment, modification or termination
(partial or complete) of any Benefit Plan, except as necessary to
comply with changes in applicable Law and with the written consent
of Holdings, not to be unreasonably withheld;
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(d)
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(i) any
incurrence by the Companies or any Subsidiary of Indebtedness,
other than Indebtedness incurred in the ordinary course of business
consistent with past practice, or (ii) any voluntary purchase,
cancellation, prepayment or complete or partial discharge in
advance of a scheduled payment date with respect to, or waiver of
any right of the Companies under any Indebtedness of or owing to
the Companies or of any Subsidiary under any Indebtedness of or
owing to such Person with respect to the conduct of the
Business;
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(e)
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any physical
damage, destruction or other casualty loss (whether or not covered
by insurance) affecting any of the Real Property, personal property
or equipment of the Companies or of any Subsidiary used or held for
use in the conduct of the Business in an aggregate amount exceeding
$1,000,000;
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(f)
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other than in
the ordinary course of business consistent with past practice, any
material change in (i) any investment, accounting, financial
reporting, inventory, credit, allowance or tax practice or policy
of the Companies or the Business or (ii) any method of calculating
any bad debt, contingency or other reserve of the Companies or the
Business for accounting, financial reporting or tax
purposes;
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(g)
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any entering
into, any material amendment or modification or termination
(partial or complete) or granting of a waiver under or giving any
material consent with respect to (i) any contract which is required
(or had it been in effect on the date hereof would have been
required) to be disclosed pursuant to Section 4.9 ,
(ii) any license held by the Companies or any Subsidiary used or
held for use in connection with the Business or (iii) any
Intellectual Property;
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(h)
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any
commencement or termination by the Companies of any line of
business;
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(i)
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any settlement
or consent to the entry of judgement with respect to any proceeding
involving a material amount of Taxes of either of the Companies or
any of the Subsidiaries; or
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(j)
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any entering
into of an agreement to do or engage in any of the foregoing,
including, without limitation, with respect to any Business
Combination not otherwise restricted by the foregoing
paragraphs.
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4.6 Assets .
(a) The
Companies and the Subsidiaries have good title to, or sufficient
leasehold interest in, all their properties and assets, whether
tangible or intangible, real, personal or mixed, to permit the
operation of their businesses as currently conducted, free and
clear of all Liens, except for Permitted Liens. Any such leasehold
interest is pursuant to a lease that is (i) valid, binding, and
enforceable in accordance with its terms (subject to any applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws
affecting creditors’ rights generally, and subject to general
equitable principles), and (ii) in full force and
effect.
(b)
Subject to ordinary wear and tear and to scheduled or necessary
repairs in the ordinary course of business, all tangible capital
assets of the Companies and the Subsidiaries necessary to conduct
their businesses as currently conducted are in operating condition
and repair consistent with prudent industry practice in businesses
similar to the Business.
4.7 Intellectual Property
.
(a)
Schedule 4.7 attached hereto contains a complete and
accurate list of all the Intellectual Property described in clauses
(i) through (iv) of Section 1.56 , owned or licensed by and
used in the business of the Companies or such Subsidiary. As to the
Intellectual Property, the Companies or a Subsidiary either (i) own
the entire rights, title, and interest thereto, or (ii) hold such
Intellectual Property pursuant to a valid, subsisting and
enforceable license (“Licensed Rights”). All
Intellectual Property is owned free and clear of any Lien and is
valid, subsisting, and enforceable. All registered Intellectual
Property owned by the Companies or such Subsidiary remain in good
standing with all fees and filings due as of the Closing Date paid
in full. Except as set forth in Schedule 4.7 , no
Intellectual Property has been cancelled or abandoned since
November 30, 2004. The Companies or such Subsidiary have taken
commercially reasonable actions to maintain and protect the
Intellectual Property.
(b)
Except as set forth in Schedule 4.7 or Schedule 4.10
, there are no claims, demands or proceedings instituted, pending
or, to the Knowledge of the Companies, proposed or threatened by
any third party pertaining to, or challenging the Companies’
or such Subsidiary’s use of or right to use, any of the
Intellectual Property. Except as set forth in Schedule 4.7 ,
to the Knowledge of the Companies, the conduct of the business of
the Companies and the Subsidiaries does not infringe upon,
misappropriate, dilute or violate any intellectual property owned
or controlled by any third party. Except as set forth in
Schedule 4.7 , to the Knowledge of the Companies, no third
party is misappropriating, infringing, diluting or violating any
Intellectual Property owned or used by the Companies and such
Subsidiaries. Except as set forth in Schedule 4.7 , to the
Knowledge of the Companies, none of the Intellectual Property is
subject to any outstanding judgment restricting the use thereof by
the Companies and such Subsidiaries.
(c)
Except as disclosed in Schedule 4.7 , the Companies and such
Subsidiaries use commercially reasonable measures to protect the
Trade Secrets, no such Trade Secrets have been disclosed or
permitted to be disclosed to any person (except in the ordinary and
normal course of business and under an obligation of confidence),
and all such information held outside the Companies and such
Subsidiaries is subject to contractual confidentiality obligations
to which one or more of the Companies and such Subsidiaries are
party and able to enforce.
(d) All
licenses, sublicenses or other rights of use under the Licensed
Rights are valid and authorized by the terms under which the
Companies and such Subsidiaries license or otherwise use such
Licensed Rights and no such license, sublicense or other Licensed
Rights shall terminate or be forfeited as a result of the execution
and performance of this Agreement. To the Knowledge of the
Companies and such Subsidiaries, the licensors of any Intellectual
Property licensed to the Companies and such Subsidiaries own and
are entitled to license the subject matter of such
licenses.
(e) All
Software used internally by the Companies and such Subsidiaries is
owned by the Companies and such Subsidiaries or used pursuant to a
valid license or other enforceable right and is not a
“bootleg” version or copy. The Companies and such
Subsidiaries possess such working copies of all of the Software,
including, object and source codes and all related manuals,
licenses and other documentation, as are necessary for the current
conduct of the business of the Companies and such Subsidiaries
consistent with prudent business practices in businesses similar to
the Business. The Software and other information technology used to
operate the business, to the Knowledge of the Companies and
consistent with prudent business practices in businesses similar to
the Business, (i) are in satisfactory working order and are
scalable to meet current and reasonably anticipated capacity; (ii)
have appropriate security, back ups, disaster recovery arrangements
and hardware and software support and maintenance to minimize the
risk of material error, breakdown, failure or security breach
occurring and to ensure if such event does occur it does not cause
a material disruption to the business of the Companies or such
Subsidiary; (iii) are configured and maintained to minimize the
effects of viruses and do not contain trojan horses and other
malicious code; and (iv) have not suffered any material error,
breakdown, failure or security breach in the last twelve months
which has caused disruption or damage to the business of any of the
Companies or such Subsidiary.
(f) All
open source Software used by the Companies and the Subsidiaries,
including that set forth in Schedule 4.7 , is fully
segregable and independent from the Companies’ and the
Subsidiaries’ proprietary software and no open source code,
including any general public license source code, is or has been
incorporated or otherwise integrated into, aggregated or compiled
with the Companies’ and the Subsidiaries’ proprietary
software. Except as set forth in Schedule 4.7 , the
Companies and the Subsidiaries have not made any improvements or
changes to any such open source code, including any general public
license source code, that would constitute improvements that the
Companies and the Subsidiaries would be obligated to share with the
open source community under any applicable Open Source License, nor
have the Companies and the relevant Subsidiaries based any
proprietary software on open source software.
4.8 Compliance with Law .
Except as reflected on Schedule 4.8 and Schedule 4.17
attached hereto, each of the Companies and the Subsidiaries have
obtained all Permits required under, and is in compliance with, all
applicable Laws and Permits, except where absence of or
noncompliance with would not, individually or in the aggregate,
have a Material Adverse Effect on the Companies and the
Subsidiaries, taken as a whole.
4.9 Contracts, Agreements,
etc . Schedule 4.9 attached hereto contains a correct
and complete list of the following contracts, agreements, or
arrangements to which the Companies or any Subsidiary are a party
(not including “Benefit Plans” described in Section
4.12 ) (the “Contracts”):
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(a)
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notes,
mortgages, indentures, loan or credit agreements, security
agreements each of which secures Indebtedness, and other agreements
and instruments reflecting obligations for borrowed money or other
monetary Indebtedness or otherwise relating to the borrowing of
money by, or the extension of credit to the Companies or any
Subsidiary, in each case creating an actual or potential obligation
of the Companies or any Subsidiary of not less than $1,000,000, or
commitments to enter into any such agreements or
commitments;
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(b)
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management,
consulting and employment agreements and written agreements,
commitments, representations, promises or communications to enter
into the same other than as previously approved by Holdings where
such agreement is terminable upon not more than sixty (60)
days’ prior notice without further Liability of the Companies
or the Subsidiaries thereunder;
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(c)
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(i) with
respect to real property, option agreements, purchase and sale
agreements, lease agreements or other agreements involving any real
property (the “Real Property Leases”), and (ii) with
respect to equipment, machinery, personal property or other assets,
tangible or intangible, option agreements, purchase and sale
agreements, lease agreements or other agreements involving amounts
payable by or to the Companies or any Subsidiary of $1,000,000 or
more;
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(d)
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agreements and
purchase orders for the purchase or sale of goods, services,
supplies or capital assets that have continuing obligations to
perform and (i) have terms of more than one year, are subject to
automatic renewal or are indefinite and (ii) involved an annual
payment of more than $2,500,000 during at least one of the last
three fiscal years or, to the Knowledge of the Companies, would
reasonably be expected to involve the payment of more than
$2,500,000 during any fiscal year in the future;
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(e)
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partnership,
joint venture, stockholders’ or other similar agreements with
any Person;
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(f)
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contracts or
agreements between or among the Companies or any Subsidiary or
Affiliate thereof, on the one hand, and any current or former
director, officer or Affiliate of the Companies or any Subsidiary,
on the other hand, with respect to the Business except for
contracts and agreements between the Companies and
Subsidiaries;
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(g)
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outstanding
guarantees, subordination agreements, indemnity agreements and
other similar types of agreements, whether or not entered into in
the ordinary course of business, which the Companies or any
Subsidiary is or may become liable for or obligated to discharge,
or any asset of the Companies or any Subsidiary is or may become
subject to the satisfaction of, any Indebtedness, obligation,
performance or undertaking of any other Person, except for (i)
indemnification agreements contained in any of the instruments
listed in the Schedules hereto or any other customary indemnity
provisions included in agreements for the purchase or sale of
goods, services or supplies and (ii) any of the foregoing in which,
in each case, the aggregate obligation of either Company or any
Subsidiary thereunder is less than $1,000,000;
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(h)
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contracts,
orders, decrees or judgments preventing or restricting the
Companies or any Subsidiary from carrying on any business activity
or competing with any Person or prohibiting or limiting disclosure
of confidential or proprietary information;
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(i)
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agreements,
contracts or commitments relating to the acquisition by the
Companies or any Subsidiary of the outstanding capital stock or
equity interest of any business enterprise or the disposition of
any assets or properties of the Companies or any Subsidiary
(excluding dispositions of real property) within the last five
fiscal years;
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(j)
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agreements,
contracts or commitments with independent contractors,
distributors, dealers, manufacturers’ representatives or
sales agencies that involved the payment of commissions during at
least one of the last three fiscal years of more than $1,000,000
or, to the Knowledge of the Companies, would reasonably be expected
to involve the payment of more than $1,000,000 during any fiscal
year in the future;
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(k)
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all contracts
that (i) limit or contain restrictions on the ability of the
Companies or any Subsidiary to declare or pay dividends on, to make
any other distribution in respect of or to issue or purchase,
redeem or otherwise acquire its capital stock, to incur
Indebtedness, to incur or suffer to exist any Lien, to purchase or
sell any assets or properties, to change the lines of business in
which it participates or engages or to engage in any Business
Combination, or (ii) require the Companies or any Subsidiary to
maintain specified financial ratios or levels of net worth or other
indicia of financial condition;
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(l)
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all agreements,
contracts or commitments to which a Governmental Authority is a
party under which any obligations are still outstanding and that
involved the payment during at least one of the last three fiscal
years of more than $1,000,000 or, to the Knowledge of the
Companies, would reasonably be expected to involve the payment of
more than $1,000,000 during any fiscal year in the future;
and
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(m)
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contracts,
commitments or obligations not made in the ordinary course of
business and having unexpired terms in excess of one year or
requiring aggregate future payments or receipts in excess of
$1,000,000 or otherwise material to the business or operations of
the Companies or any Subsidiary.
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Progress
Fuels has provided Holdings with access to true and complete copies
of all Contracts, including all amendments, modifications, waivers
and elections applicable thereto.
Except
as set forth in Schedule 4.9 , as to the Companies and the
Subsidiaries, such Contracts are valid and binding obligations of
the identified Company or Subsidiary, subject to no Liens, except
Permitted Liens, enforceable in accordance with their respective
terms (subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting generally the
enforcement of creditors’ rights and subject to general
principles of equity), and are in full force and effect. Except as
set forth in Schedule 4.9 , there are no contracts,
agreements or arrangements which would have been required to be
disclosed under Section 4.9(d) but were terminated or
expired by their terms since December 1, 2003. Except as disclosed
in Schedule 4.9 , there is not under any such Contract any
existing material breach or material default (or event or
condition, which after notice or lapse of time, or both, would
constitute a material breach or material default) by the Companies
or any Subsidiary with respect thereto and neither of the Companies
nor any Subsidiary has received written notice of any such breach
or default. The identified Company or Subsidiary has performed,
and, to the Knowledge of the Companies, every other party has
performed, each material term, covenant and condition of each of
the Contracts that is to be performed at or before the date hereof.
No event has occurred that would, with the passage of time or
compliance with any applicable notice requirements or both,
constitute a default by the identified Company or Subsidiary or, to
the Knowledge of the Companies, any other party under any of the
Contracts and, to the Knowledge of the Companies, no party to any
of the Contracts intends or has a reasonable basis upon which to
cancel or terminate any of such Contracts.
4.10 Litigation . Except
as set forth in Schedule 4.10 or Schedule 4.8 , there
is no claim, legal action, suit, litigation, arbitration, dispute
or investigation, judicial, administrative or otherwise, or any
order, decree or judgment, now pending or in effect, or, to the
Knowledge of the Companies, threatened or contemplated against the
Companies or the Subsidiaries.
4.11 Insurance . Attached
hereto as Schedule 4.11 is a list of all insurance policies
now or ever held for the benefit of the Companies and the
Subsidiaries showing for each the policy limits and coverages and
the expiration dates of each such policy. The premiums due thereon
have been timely paid. Except as set forth in Schedule 4.11
, such policies are in such amounts, against such risks and losses,
and on such terms and conditions as are consistent with industry
practice in the business of the Companies and its Subsidiaries.
Neither Progress Energy, Progress Fuels nor the Companies or any
Subsidiary has received any written notice or cancellation or
termination in respect of any such policies, is in default
thereunder nor knows of any reason or state of facts that could
lead to the cancellation of such policies. None of Progress Fuels,
the Companies or the Subsidiaries have received (and have no
knowledge of) any written notice or request from any insurance
company or the Board of Fire Underwriters (or organization
exercising functions similar thereto) requiring the performance of
any work or alteration or canceling or threatening to cancel any of
said policies if such work is not performed. Except as set forth in
Schedule 4.11, none of the Progress Fuels, the Companies or
the Subsidiaries have made any claims under any casualty insurance
policy during the past five (5) years. Progress Fuels has not
received any reservation of rights or declination of coverage from
insurers on any claim. With respect to any casualty that has
occurred, all claims have been reported to the appropriate
insurance carrier in connection with the policies listed on
Schedule 4.11 .
4.12 Employee Benefits
.
(a)
Progress Fuels has made available to Holdings true and complete
copies of each plan, agreement or arrangement providing for
compensation or benefits, including any employee benefit plan
within the meaning of Section 3(3) of ERISA (whether or not subject
to ERISA), and each pension, retirement, supplemental pension,
savings, retirement savings, profit-sharing, bonus, incentive,
deferred compensation, severance pay, stock option, stock bonus, or
other stock-based compensation plan, change of control, life
insurance, medical, hospital, dental care, vision care, drug, sick
leave, short-term or long-term disability, salary continuation,
unemployment benefits, vacation, incentive, compensation or other
employee benefit plan, program, arrangement, policy or practice,
formal or informal, funded or unfunded, registered or unregistered,
insured or self-insured (any of the foregoing, a
“Plan”) that covers any current or former employee of
the Companies or any of the Subsidiaries (individually, a
“Benefit Plan” and, collectively, the “Benefit
Plans”). All Benefit Plans are set forth in Schedule
4.12 , and are sponsored or maintained solely by the Companies
or any of the Subsidiaries.
(b)
Except as set forth in Schedule 4.12 , (i) each Benefit Plan
that is an “employee pension benefit plan” within the
meaning of Section 3(2) of ERISA that is intended to qualify under
Section 401(a) of the Code or other applicable Law has at all times
within the past six (6) years been so qualified and has received a
favorable determination letter from the Internal Revenue Service
(the “IRS”), or it is being requested or the remedial
amendment period for requesting such determination letter has not
expired, or if required under other Law is otherwise duly
registered with the relevant Governmental Authority; (ii) all
required employer contributions or premiums to each Benefit Plan
have been made when due (or, in the case of contributions not yet
due, as of the date hereof have been accrued on the
Companies’ and the Subsidiaries’ financial statements
and records to the extent required by GAAP or the generally
accepted accounting principles applicable in the country under
which the financial statements and records are prepared); (iii)
Progress Fuels has made available to Holdings as to each Benefit
Plan, if applicable, a true and correct copy of (A) the most recent
annual report (Form 5500) filed with the IRS, if applicable, or
with any other applicable Governmental Authority, (B) the most
recent actuarial valuation report and the most recent accounting
and certified financial statement, if applicable, of each Benefit
Plan for which such statement is made (it being understood that, to
the Knowledge of the Companies, there has been no event or
occurrence which could affect, to any material extent, the
information described in (A) and (B)), (C) each current plan
document, trust agreement, group annuity contract and insurance
contract, if any, relating to such Benefit Plan, (D) the most
recent summary plan description, (E) the most recent forms filed
with the PBGC, DOL or IRS (other than for premium payments), or
other relevant non-US Governmental Authority, (F) the most recent
determination letter issued by the IRS, (G) any Form 5310 or Form
5330 filed with the IRS, and (H) the most recent nondiscrimination
tests performed under ERISA and the Code (including 401(k) and
401(m) tests); (iv) each Benefit Plan has been administered in
substantial compliance with the applicable provisions of ERISA and
the Code or of the applicable Laws and the terms of such Benefit
Plan; (v) there are no pending or, to the Knowledge of the
Companies, threatened investigations or claims by the Internal
Revenue Service, Department of Labor, Pension Benefit Guaranty
Corporation or any other Governmental Authority, relating to any of
the Benefit Plans; (vi) there are no pending or, to the Knowledge
of the Companies, threatened termination proceedings, pending
claims (except claims for benefits payable in the normal operation
of the Benefit Plans), suits or proceedings against or involving
any Benefit Plan or asserting any rights to or claims for benefits
under any Benefit Plan and, to the Knowledge of the Companies,
there are not any facts that could reasonably be expected to give
rise to any such investigation, claim, suit or proceeding; (vii) no
Benefit Plan is, or has been within the past 6 years, a
“multiemployer plan” within the meaning of Section
3(37) of ERISA, or of any applicable Law, or is a multiemployer
pension or benefit plan in Canada, is described in Section
401(a)(1) of ERISA, or provides post retirement, or health or death
benefit coverage beyond the termination of an employee’s
employment, except as required by Part 6 of Subtitle B of Title I
of ERISA or Section 4980B of the Code or any state or other
applicable Laws requiring continuation of benefits coverage
following termination of employment; (viii) with respect to each
Benefit Plan that is an “employee benefit pension plan”
within the meaning of Section 3(2) of ERISA, the Companies have not
incurred any “accumulated funding deficiency” within
the meaning of Section 302 of ERISA or Section 412 of the Code, and
no “reportable event” (within the meaning of Section
4043 of ERISA) has occurred that is reasonably likely to result in
a material liability to the Companies or the Subsidiaries; (ix) the
tax deductibility of any amount paid or payable as compensation or
under any Benefit Plan as a result of the transactions contemplated
by this Agreement, whether alone or in combination with any other
event (e.g., termination of employment), will not be limited by
operation of Section 280G of the Code; (x) no liability for any tax
imposed under Section 4971 through 4980G of the Code, under Section
502(i) or (l) of ERISA, or under Title IV of ERISA, has been
imposed against the Companies or the Subsidiaries and, to the
Knowledge of the Companies, no circumstances exist which could give
rise to any such liability; (xi) neither the Companies nor the
Subsidiaries participate in any Benefit Plan that is sponsored or
maintained by Progress Fuels or any Affiliate of Progress Fuels
(other than the Companies or the Subsidiaries) and each Benefit
Plan covers only employees or former employees of the Companies or
the Subsidiaries; (xii) the only Benefit Plan that provides
benefits to employees located in Canada (a “Canadian Benefit
Plan”) that is a registered pension plan as defined under the
applicable pension Laws of Canada (a “Canadian Pension
Plan”) is a defined contribution plan; (xiii) no promises or
commitments have been made by any of the Companies or the
Subsidiaries to amend any Canadian Benefit Plan, to provide
increased benefits thereunder or to establish any new benefit plan,
except as required by applicable Law; and (xiv) to the Knowledge of
the Companies, no event has occurred and there has been no failure
to act on the part of either Progress Fuels, the Companies or any
Subsidiary that could reasonably be expected to subject the
Companies or the Subsidiaries, the Canadian Pension Plan or any
successor plan to the imposition of any tax, penalty, penalty tax
or other liability, whether by way of indemnity or
otherwise.
(c)
Except as set forth in Schedule 4.12 , no employee of the
Companies or the Subsidiaries will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of
any benefits under any Benefit Plan or agreement as a result of the
transactions contemplated by this Agreement either alone or in
conjunction with another event (e.g. termination of
employment).
(d)
Neither Company nor any Subsidiary is subject to any liability with
respect to any employee benefit plan, program or arrangement
sponsored or contributed to by Progress Fuels or any of its
Affiliates (other than the Companies and the
Subsidiaries).
4.13 Employment Matters
.
(a)
Except as set forth in Schedule 4.13(a) , all directors,
employees, contractors and consultants of the Companies and their
Subsidiaries may be terminated by the Companies or the relevant
Subsidiary at any time with or without cause and without any
severance or other Liability to the Companies or such Subsidiary,
except for those directors, employees, contractors or consultants
who are employed or engaged on an indefinite basis in Canada
requiring notice of termination or severance pay under applicable
Laws.
(b)
Except as set forth in Schedule 4.13(b) :
(i) No
Company or Subsidiary is party to, bound by, or negotiating in
respect of any collective bargaining agreement or any other
agreement with any labor union, association or other employee
group. No Company or Subsidiary is a party to or has any obligation
under any white paper or side agreement with any labor union or
organization, or any obligation to recognize or deal with any labor
union or organization, and there are no such contracts, white
papers or side agreements pertaining to or which dete
