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EXHIBIT 10.34
STOCK PURCHASE AGREEMENT
among
GUNDERSON RAIL SERVICES LLC,
the Sellers party hereto,
and
MERIDIAN RAIL HOLDINGS CORP.
October 15, 2006
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
October
15, 2006, by and among Gunderson Rail Services LLC, an Oregon
limited liability
company ("Buyer"), Meridian Rail Holdings Corp., a Delaware
corporation (the
"Company"), the Persons listed on the signature pages hereto under
the heading
"Sellers" (collectively referred to herein as the "Sellers" and
individually as
a "Seller") and Olympus Growth Fund IV, L.P. as the "Seller
Representative".
Capitalized terms used and not otherwise defined herein have the
meanings set
forth in Article XII.
WHEREAS, the Sellers collectively own (i) all of the issued and
outstanding capital stock of the Company as of the date hereof,
which consists
of 33,392.43 shares of the Company's Common Stock, par value $0.01
per share
("Common") and 48,880 shares of the Company's Series A Preferred
Stock, par
value $0.01 per share ("Preferred" and together with the Common,
the "Shares")
and (ii) warrants currently exercisable to purchase 542.97 shares
of Common and
794.80 shares of Preferred (the "Warrants"), which are collectively
the only
outstanding equity securities of Company.
WHEREAS, upon the terms and subject to the conditions set forth
herein, Buyer desires to acquire from the Sellers, and the Sellers
desire to
sell to Buyer, all of the Shares which are issued and outstanding
and owned by
the Sellers as of the Closing Date.
WHEREAS, simultaneously with the Closing (as defined below),
Buyer
will contribute a sufficient amount of cash to cancel the Warrants
in exchange
for the cash payment provided for and on the terms and conditions
herein.
NOW, THEREFORE, in consideration of the premises, representations
and
warranties and mutual covenants contained herein and of other good
and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01
Delivery of Estimates; Calculation of Estimated Common Purchase
Price.
(a) At least two business days before the Closing Date, the
Company
shall deliver to Buyer a certificate (the "Closing Payment
Certificate"), which
Closing Payment Certificate shall be subject to the review and
approval of the
Seller Representative, setting forth (i) its good faith estimate of
the Cash On
Hand (such estimate is referred to as the "Estimated Cash on
Hand"), (ii) its
good faith estimate of the Net Working Capital Amount (such
estimate is referred
to as the "Estimated Net Working Capital Amount"), (iii) its good
faith estimate
of the Pre-Closing Tax Amount (such estimate is referred to as the
"Estimated
Pre-Closing Tax Amount"), (iv) the Aggregate Preferred Purchase
Price and the
portion of the Aggregate Preferred Purchase Price to be delivered
to each holder
of Preferred, (v) its good faith estimate of the Estimated Common
Purchase Price
(as defined below), (vi) the Indebtedness Payoff Amount, (vii) the
individual
Common Warrant Cancellation Payments (as defined below) to be
delivered to each
holder of Warrants to purchase Common and the individual Preferred
Warrant
Cancellation Payments (as defined below) to be delivered to each
holder of
Warrants to purchase Preferred, as more fully set forth on Section
1.05 of the
Disclosure Schedules (such estimates are collectively referred to
as the
"Estimated Warrant Cancellation Payments") and (viii) the aggregate
amount of
Sellers' Expenses
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(such estimate is referred to as the "Estimated Sellers'
Expenses"). Section
1.01(a) of the Disclosure Schedules sets forth a calculation of the
amounts
described in this Section 1.01(a) and the payments to be made
pursuant to
Section 1.03(b) based on information available as of the date of
this Agreement
and certain assumptions as to items that cannot be determined until
the Closing
Date.
(b) For purposes hereof, the "Estimated Common Purchase Price"
means
an amount equal to (A) $227,500,000, plus (B) the Estimated Cash on
Hand, minus
(C) the Indebtedness Payoff Amount, plus (D) the amount, if any, by
which the
Estimated Net Working Capital Amount exceeds the Target Net Working
Capital
Amount (such amount, if any, the "Closing Date Working Capital
Increase
Amount"), minus (E) the amount, if any, by which the Target Net
Working Capital
Amount exceeds the Estimated Net Working Capital Amount, minus (F)
the Estimated
Pre-Closing Tax Amount, minus (G) the Aggregate Preferred Purchase
Price, minus
(H) without duplication, the aggregate amount, if any, of Estimated
Sellers'
Expenses (as detailed in the Closing Payment Certificate), minus
(I) the
aggregate amount of the Estimated Warrant Cancellation Payments.
The Estimated
Common Purchase Price shall be adjusted after Closing as set forth
in Section
1.04 below.
1.02
Purchase and Sale of Shares.
(a) Purchase and Sale of Preferred. As of the Closing, upon the
terms
and subject to the conditions set forth in this Agreement, each
Seller shall
sell, assign, transfer and convey to Buyer, and Buyer shall
purchase and acquire
from each Seller, all of the shares of Preferred held by such
Seller as such
ownership is set forth on Section 1.02 of the Disclosure Schedules.
The purchase
price to be paid by Buyer to each Seller for the shares of
Preferred held by
such Seller shall consist of a payment at the Closing, by wire
transfer of
immediately available funds to the account designated by such
Seller at least
two business days before the Closing, of an amount of cash equal to
the sum of
the Preferred Per Share Prices for all shares of Preferred held by
such Seller
as of immediately prior to the Closing.
(b) Purchase and Sale of Common. As of the Closing, upon the terms
and
subject to the conditions set forth in this Agreement, each Seller
shall sell,
assign, transfer and convey to Buyer, and Buyer shall purchase and
acquire from
each such Seller, all of the shares of Common held by such Seller
as such
ownership is set forth on Section 1.02 of the Disclosure Schedules.
The purchase
price to be paid by Buyer at the Closing to each Seller for the
shares of Common
held by such Seller shall consist of a payment at the Closing, by
wire transfer
of immediately available funds to the account designated by such
Seller at least
two business days before the Closing, of an amount of cash equal to
the product
of (x) the Estimated Common Purchase Price, multiplied by (y) the
number of
shares of Common held by such Seller as of immediately prior to the
Closing
divided by (z) the number of shares of Common issued and
outstanding immediately
prior to the Closing. Such payment shall be subject to the Purchase
Price
True-Up Holdback as described below.
1.03
The Closing; Payment for Shares, Indebtedness and Sellers'
Expenses.
(a) The closing of the transactions contemplated by this
Agreement
(the "Closing") shall take place at the offices of Kirkland &
Ellis LLP located
at 200 East Randolph Drive, Chicago, Illinois at 12:00 noon on
November 7, 2006
(via facsimile, telephone, mail and other mutually acceptable means
of
communication and delivery) or if any of the conditions to the
Closing set forth
in Article II (other than those to be satisfied at the Closing)
have not been
satisfied or waived by the party entitled to the benefit thereof
then on the
second business day following satisfaction or waiver of all of the
closing
conditions set forth in Article II (other than those to be
satisfied at the
Closing) or on such other date as is mutually agreeable to Buyer
and the Seller
Representative. The date on which the Closing shall occur is
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referred to herein as the "Closing Date." Except as otherwise
provided in this
Agreement, all proceedings to be taken and all documents to be
executed at the
Closing shall be deemed to have been taken, delivered and
executed
simultaneously, and no proceeding shall be deemed taken nor
documents deemed
executed or delivered until all have been taken, delivered and
executed.
(b) Upon the terms and subject to the conditions set forth in
this
Agreement, the parties hereto shall consummate the following
transactions as of
the Closing:
(i) Buyer shall disburse (or cause such disbursement to be
made)
the
amount (without duplication) of the Aggregate Preferred Purchase
Price,
the
Estimated Warrant Cancellation Payments, the Estimated Sellers'
Expenses and the Estimated Common Purchase Price as set forth on
the
Closing Payment Certificate and in accordance with the flow of
funds
memorandum attached to the Closing Payment Certificate and as
follows:
(A) Buyer shall deliver to each of the Sellers who are selling
Preferred, the Preferred Per Share Price in exchange for each share
of
Preferred held by such Seller immediately prior to the Closing;
(B) Buyer shall deliver (on behalf of the Company in accordance
with Section 1.05) to each of the Sellers who are canceling
Warrants
to purchase Preferred, its share of the Preferred Warrant
Cancellation
Payments in exchange for canceling the Warrants to purchase
Preferred
held by such Seller immediately prior to Closing;
(C) Buyer shall disburse an amount equal to (i) $1,000,000 plus
(ii) the Closing Date Working Capital Increase Amount (if any)
(collectively, the "Purchase Price True-Up Holdback") and the
Escrow
Amount to U.S. Bank National Association, as the escrow agent
(the
"Escrow Agent") by wire transfer of immediately available
funds,
pursuant to instructions delivered to Buyer by the Escrow Agent to
be
held pursuant to the Holdback Agreement;
(D) Buyer shall disburse an amount equal to the Seller
Representative Reserve to the Seller Representative by wire
transfer
of immediately available funds, pursuant to instructions delivered
to
Buyer by the Seller Representative to be held in accordance
with
Section 10.05;
(E) after payment of the amounts set forth above, Buyer shall
deliver to each of the Sellers who are selling Common the
consideration specified in Section 1.02(b) in exchange for all
shares
of Common held by such Seller immediately prior to Closing, minus
such
Seller's Holdback Share of the sum of the Purchase Price
True-Up
Holdback, and such Seller's Percentage Share of the Escrow Amount
and
the Seller Representative Reserve;
(F) after payment of the amounts set forth above, Buyer shall
deliver (on behalf of the Company in accordance with Section 1.05)
to
each of the Sellers who are canceling Warrants to purchase Common,
its
share of the Common Warrant Cancellation Payments in exchange
for
canceling the Warrants to purchase Common held by such Seller
immediately prior to Closing, minus such Seller's Holdback Share
of
the sum of the Purchase Price True-Up Holdback, and such
Seller's
Percentage Share of the Escrow Amount and the Seller
Representative
Reserve;
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(G) Except as provided below in subsection (H) with respect to
bonuses to employees of the Company, Buyer shall pay, or cause to
be
paid, on behalf of the Sellers and the Company, (i) the
Estimated
Sellers' Expenses by wire transfer of immediately available funds
to
accounts specified by the Seller Representative prior to the
Closing
in the Closing Payment Certificate, and (ii) the Indebtedness
Payoff
Amount in accordance with the terms of payoff letters with
respect
thereto;
(H) Buyer shall contribute to the Company that portion of
Sellers' Expenses which represents the bonuses to be paid to
certain
employees at the Closing and that portion of Sellers' Expenses
which
represents the employer portion of any and all applicable
federal,
state and local employer payroll-related Taxes, employer
matching
contributions on 401(k) deferrals, FICA, Medicare and other
employer
liabilities, obligations or payments with respect to such bonuses
and
the Company shall withhold any applicable withholding Tax,
which
amounts are required to be deducted and withheld pursuant to
applicable Tax law, before the Company remits the remaining amount
of
such bonuses to the employees. The Company shall remit such
withholding Taxes to the appropriate Taxing authority;
(ii) Each Seller shall deliver to Buyer the certificates
representing the Shares held by such Seller, duly endorsed for
transfer or
accompanied by appropriate transfer documents, and each holder of a
Warrant
shall deliver to Buyer the Warrant Cancellation Agreement
referenced in
Section 1.05 with respect to each Warrant held by such holder;
and
(iii) Buyer, the Company and the Sellers shall make such other
deliveries as are required by and in accordance with Article II
hereof.
1.04
Final Calculations.
(a) Determination. As promptly as possible, but in any event within
75
days after the Closing Date, Buyer will deliver to the Seller
Representative a
consolidated balance sheet of the Company as of 11:59 p.m. (New
York City time)
on the day immediately preceding the Closing Date and a reasonably
detailed
statement (the "Closing Statement") setting forth Buyer's
calculations of (i)
Cash on Hand, (ii) the Net Working Capital Amount, (iii) the
Pre-Closing Tax
Amount, (iv) the Sellers' Expenses, (v) a recalculation of the
Common Purchase
Price and (vi) a recalculation of the Common Warrant Cancellation
Payments.
After delivery of the Closing Statement, the Seller Representative
and its
accountants shall be permitted reasonable access to review the
Company's and its
Subsidiaries' books and records and work papers related to the
preparation of
the Closing Statement. The Seller Representative and its
accountants may make
inquiries of Buyer, the Company and their respective accountants
and officers
regarding questions concerning or disagreements with the Closing
Statement
arising in the course of their review thereof, and Buyer shall use
its, and
shall cause the Company and its Subsidiaries to use their,
reasonable best
efforts to cause any such accountants and officers to cooperate
with and respond
to such inquiries. If the Seller Representative has any objections
to the
Closing Statement, the Seller Representative shall deliver to Buyer
a written
statement setting forth its objections thereto (an "Objections
Statement"). If
an Objections Statement is not delivered to Buyer within 60 days
after delivery
of the Closing Statement, the Closing Statement shall be final,
binding and
non-appealable by the parties hereto. The Seller Representative and
Buyer shall
negotiate in good faith to resolve any objections set forth in the
Objections
Statement (and all such discussions related thereto shall, unless
otherwise
agreed by Buyer and the Seller Representative, be governed by Rule
408 of the
Federal Rules of Evidence (and any applicable similar state rule)),
but if they
do not reach a final resolution within 15 days after the
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delivery of the Objections Statement, the Seller Representative and
Buyer shall
submit such dispute for resolution to and by KPMG LLP (the
"Independent
Auditor"). Each of Buyer and the Seller Representative agrees to
execute, if
requested by the Independent Auditor, an engagement letter
containing reasonable
and customary terms, including an indemnification against claims
asserted by the
respective parties. The Seller Representative and Buyer shall use
their
commercially reasonable efforts to cause the Independent Auditor to
resolve all
such disagreements as soon as practicable. The resolution of the
dispute by the
Independent Auditor shall be final, binding and non-appealable on
the parties
hereto. The Independent Auditor shall act as an arbitrator to
determine, based
upon the provisions of this Section 1.04(a), only the disputed
items and the
determination of each amount of the disputed items shall be made in
accordance
with the procedures set forth in Section 1.04(a) and, in any event,
shall be no
less than the lesser of the amount claimed by either Buyer or the
Seller
Representative, and shall be no greater than the greater of the
amount claimed
by either Buyer or the Seller Representative. The Closing Statement
shall be
modified if necessary to reflect such determination. The fees and
expenses of
the Independent Auditor shall be allocated to be paid by Buyer, on
the one hand,
and the Sellers (from the Purchase Price True-Up Holdback, to the
extent the
Deficiency (if any) plus any such fees and expenses payable by the
Sellers to
the Independent Auditor hereunder are less than or equal to the
amount of funds
in the Purchase Price True-Up Holdback), on the other hand, based
upon the
percentage which the portion of the contested amount not awarded to
each party
bears to the amount actually contested by such party, as determined
by the
Independent Auditor. The obligation of any Seller to pay such fees
and expenses
to the Independent Auditor shall be several and limited to such
Seller's
Holdback Share.
(b) Final Adjustment Amount. Without duplication, all amounts
owed
based on the calculations in the Closing Statement shall be
aggregated, and the
net amount (if any) owed by Buyer to the Sellers, on the one hand,
or the
Sellers to Buyer, on the other hand, is referred to as the "Final
Adjustment
Amount." The Final Adjustment Amount shall be calculated as an
adjustment to
each of the Estimated Common Purchase Price and the Common Warrant
Cancellation
Payments and the Common Purchase Price, as so adjusted, is referred
to herein as
the "Final Common Purchase Price."
(c) Adjustments.
(i) Positive Adjustment. If the Final Common Purchase Price is
equal to or greater than the Estimated Common Purchase Price
estimated at
Closing (such amount that is greater than the Estimated Common
Purchase
Price shall be referred to as the "Excess"), Buyer shall pay to the
Seller
Representative the Excess, if any, which shall be paid by the
Seller
Representative to each Seller based on such Seller's Holdback
Share, and
the
Seller Representative, on behalf of the Sellers, and Buyer shall
direct
the
Escrow Agent to pay to such Sellers their Holdback Share of all
funds
deposited and remaining in the Purchase Price True-Up Holdback.
(ii) Negative Adjustment. If the Final Common Purchase Price is
less
than the Estimated Common Purchase Price estimated at Closing
(such
amount that is less than the Estimated Common Purchase Price shall
be
referred to as the "Deficiency") and the Deficiency is less than or
equal
to
the amount of funds deposited in the Purchase Price True-Up
Holdback,
the
Seller Representative, on behalf of the Sellers, and Buyer shall
direct
the
Escrow Agent to pay to Buyer the amount of the Deficiency from
the
funds deposited and remaining in the Purchase Price True-Up
Holdback and
direct that the balance of the Purchase Price True-Up Holdback (if
any) be
paid
to the Sellers in accordance with their Holdback Share.
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(iii) Other Adjustment. If the Deficiency is greater than the
amount of funds deposited in the Purchase Price True-Up Holdback
(such
difference, the "Shortfall"), the Seller Representative, on behalf
of the
Sellers, and Buyer shall direct the Escrow Agent to pay to Buyer
all funds
deposited and
remaining in the Purchase Price True-Up Holdback, and (x) at
the
sole election of Buyer, Buyer shall be entitled to take all or
any
portion of the Shortfall from the Escrow Amount and (y) the Sellers
shall
pay
the Shortfall to Buyer, or such portion of the Shortfall not
received
by
Buyer from the Escrow Amount to Buyer, with each Seller's
obligation
being several and limited to such Seller's Holdback Share of the
Shortfall.
(iv) Payment of the Adjustments. Payment of these adjustment
amounts shall be paid by delivery of immediately available funds to
the
account designated by the recipient party(ies) (or if such payor is
a
Seller, such Seller may, with the consent of Buyer, pay by
certified check
or
money order) within three business days of the date of final
determination. All such adjustments shall be deemed adjustments to
the
Final Common Purchase Price for all Tax purposes.
(d) Enforcement. If any Seller does not pay the amounts required to
be
paid to Buyer under Section 1.04(c)(iii) within the time frame
specified under
Section 1.04(c)(iv) once such amounts are finally determined
hereunder,
notwithstanding anything to the contrary in this Agreement, Buyer
shall be
entitled to recover from such Seller all costs, fees and expenses,
including
attorneys' fees, incurred in connection with any action brought by
Buyer to
enforce payment of such amounts, and in any petition for appeal or
appeals
therefrom or in bankruptcy, in addition to any other relief to
which Buyer may
be entitled. If Buyer does not pay the amounts required to be paid
to the
Sellers under Section 1.04(c)(iii) within the time frame specified
under Section
1.04(c)(iv) once such amounts are finally determined hereunder,
notwithstanding
anything to the contrary in this Agreement, the Seller
Representative shall be
entitled to recover from Buyer all costs, fees and expenses,
including
attorneys' fees, incurred in connection with any action brought by
the Seller
Representative on behalf of the Sellers to enforce payment of such
amounts, and
in any petition for appeal or appeals therefrom or in bankruptcy,
in addition to
any other relief to which the Sellers may be entitled.
1.05
Warrants. Immediately prior to the Closing (and subject to the
terms
and conditions hereof), the Company shall cause each holder of
Warrants set
forth on Section 1.05 of the Disclosure Schedules attached hereto
to cancel and
deliver to the Company for cancellation all Warrants held by such
Person in
exchange for the Warrant Cancellation Payments to be made by the
Company on the
Closing Date, in each case pursuant to an executed warrant
cancellation
agreement substantially in the form of Exhibit A attached hereto
(the "Warrant
Cancellation Agreements"). Buyer shall cause the Company to make
such Warrant
Cancellation Payments concurrently with the consummation of the
Closing. For
purposes hereof, the "Common Warrant Cancellation Payments" means
an amount
equal to (i) the aggregate number of shares of Common subject to
the Warrant,
times the aggregate amount the holders of the Warrant would have
been entitled
to receive under Section 1.02(b) assuming the Warrant had been
exercised as of
the Closing, minus (ii) the aggregate amount of the applicable
exercise prices
per share of Common subject to such Warrant. For purposes hereof,
the "Preferred
Warrant Cancellation Payments" means an amount equal to (i) the
aggregate number
of shares of Preferred subject to the Warrant, times the aggregate
amount the
holders of the Warrant would have been entitled to receive under
Section 1.02(a)
assuming the Warrant had been exercised as of the Closing, minus
(ii) the
aggregate amount of the applicable exercise prices per share of
Preferred
subject to such Warrant. The Common Warrant Cancellation Payments
and the
Preferred Warrant Cancellation Payments are referred to
collectively herein as
the "Warrant Cancellation Payments." The Common Warrant
Cancellation Payments
shall be subject to the Purchase Price True-Up Holdback as
described herein.
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1.06
Termination of Agreements. Reference is hereby made to that
certain
Stockholders Agreement of the Company, dated on or about November
23, 2004 (as
amended, modified or supplemented from time to time, the "Company
Stockholders
Agreement"). Each of the Sellers, to the extent such Seller is a
party to any of
the agreements and documents referenced in this Section 1.06,
acknowledges and
agrees for the benefit of the other parties thereto and hereto
that, upon
consummation of the Closing, all of such agreements and documents
and all rights
and obligations of the parties under (i) the Company Stockholders
Agreement and
(ii) all agreements and documents identified in the Disclosure
Schedules as
terminating in connection with the Closing, shall each terminate
without
obligation or liability to any party thereunder or hereunder. The
Company hereby
acknowledges and agrees for the benefit of the other parties hereto
that
effective upon the Closing the 2005 Management Bonus Plan will
terminate and all
bonuses earned and accrued under those plans, including those
listed on item 13
of Section 4.13(a) of the Disclosure Schedules, shall be paid out
of Cash by the
Company at Closing. The parties hereto further acknowledge and
agree that such
payment by the Company is payment in full, and as of the Closing
the 2005
Management Bonus Plan shall be of no further force or effect, and
neither the
Company nor the Sellers shall have any further obligations
thereunder or any
continuing liability to any party thereto.
ARTICLE II
CONDITIONS TO CLOSING
2.01
Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is
subject to the
satisfaction (or Buyer's written waiver) of the following
conditions as of the
Closing Date:
(a) The representations and warranties set forth in Articles III
and
IV shall be true and correct at and as of the Closing Date as
though then made
(without giving effect to any materiality or Material Adverse
Effect qualifiers
contained in such representations and warranties and in the case
of
representations and warranties that address matters as of
particular dates which
shall be true and correct at and as of such particular dates),
except where the
failure of such representations and warranties to be so true and
correct would
not, individually or in the aggregate, have a Material Adverse
Effect;
(b) The Company and the Sellers shall have performed in all
respects
the covenants and agreements under Section 6.01(b)(xii) and 6.01(c)
and in all
material respects all of the other covenants and agreements
required to be
performed by them under this Agreement at or prior to the
Closing;
(c) The applicable waiting periods, if any, under the HSR Act
shall
have expired or been terminated;
(d) Since the date of this Agreement, there shall have been no
Material Adverse Effect;
(e) Since the date of this Agreement, there has been no new
litigation
commenced or, to the Company's knowledge, threatened, against the
Company or its
Subsidiaries other than which would not, individually or in the
aggregate, be
reasonably expected to have a Material Adverse Effect;
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(f) No statute, rule, regulation, judgment, decree, ruling,
injunction
or order shall have been enacted or entered and no action, suit or
proceeding
shall have been instituted which restrains, enjoins, prohibits,
invalidates or
otherwise prevents the consummation of the transactions
contemplated hereby;
(g) All consents, approvals, filings, notices and waivers which
are
set forth on Section 2.01(g) of the Disclosure Schedules shall have
been
obtained;
(h) At or prior to the Closing, each Seller shall deliver to Buyer
a
certificate in the form of U.S. Treasury Regulations Section
1.1445-2(b)(2)(iv)(A) or (B), as the case may be, or, at the option
of the
Sellers, an affidavit, under penalties of perjury, stating that the
Company is
not and has not been a United States real property holding
corporation, dated as
of the Closing Date and in form and substance required under
Treasury Regulation
Section 1.897-2(h) so that Buyer is exempt from withholding any
portion of the
Purchase Price thereunder;
(i) The Wheelset Supply and Services Agreement dated November 9,
1999
shall be in full force and effect to the same extent such agreement
was in
effect prior to the Closing (subject to among other things, for the
avoidance of
doubt, the disclosures set forth in Section 2.01(i) of the
Disclosure
Schedules);
(j) The existing Employment Agreements with each of Rick Turner
and
Frank Cristelli, as amended and restated by the Employment
Agreement Amendments,
executed prior to the date hereof and the Employment Agreement with
William
Holcomb executed prior to the date hereof, shall have been duly
authorized and
be in full force and effect against each of Rick Turner, Frank
Cristelli and
William Holcomb;
(k) Buyer shall have received evidence reasonably satisfactory to
it
that the following agreements of the Company have been terminated
in connection
with the Closing: (i) the Advisory Services Agreement dated as of
November 23,
2004 between the Company and Olympus Advisory Partners, Inc. and
(ii) the
Company Stockholders Agreement dated as of November 23, 2004 among
the Company
and the stockholders party thereto;
(l) Buyer shall have received, dated as of the Closing Date and
addressed to Buyer, substantially in the form of Exhibit B attached
hereto an
opinion of Kirkland & Ellis LLP, legal counsel to Olympus
Growth Fund IV, L.P.
("Olympus") and the Company; and
(m) The Company or the Seller Representative (on behalf of the
Sellers), as the case may be, shall have delivered to Buyer each of
the
following:
(i) a certificate of the Company in a form reasonably
satisfactory to Buyer, dated as of the Closing Date, stating that
the
preconditions specified in Sections 2.01(a) and (b), as they relate
to the
Company have been satisfied;
(ii) a certificate of Olympus in a form reasonably satisfactory
to
Buyer, dated as of the Closing Date, stating that the
preconditions
specified in Sections 2.01(a) and (b), as they relate to Olympus
have been
satisfied;
(iii) a certificate of each Seller other than Olympus in a form
reasonably
satisfactory to Buyer, dated as of the Closing Date, stating
that
the preconditions specified in Sections 2.01(a) and (b), as
they
relate to such Seller have been satisfied, or, at the option of
the
8
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Company, a certificate of the Company in a form reasonably
satisfactory to
Buyer, dated as of the Closing Date, stating that, to the
Company's
knowledge, the preconditions specified in Sections 2.01(a) and (b),
as they
relate to such Seller have been satisfied;
(iv) copies of customary payoff letters from all holders of
Indebtedness for borrowed money to be paid at Closing as part of
the
Indebtedness Payoff Amount in a form reasonably satisfactory to
Buyer
(which payoff letters shall be attached to the Closing Payment
Certificate), and provide to Buyer recordable lien releases
simultaneously
with
the Closing;
(v) fully executed Warrant Cancellation Agreements which shall
be
in
full force and effect;
(vi) the Holdback Agreement fully executed by Sellers and the
Escrow Agent which shall be in full force and effect;
(vii) resignations effective as of the Closing Date from such
officers and directors
of the Company and its Subsidiaries as Buyer shall
have
requested in writing and delivered to the Company and the
Seller
Representative not less than five days prior to the Closing
Date;
(viii) a copy of the certificate of incorporation of the
Company
(certified by the Secretary of State of Delaware) and a certificate
of good
standing from the State of Delaware for the Company dated within
fifteen
days
of the Closing Date; and
(ix)
certified copies of the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery
and
performance of this Agreement and the other agreements contemplated
hereby,
and
the consummation of the transactions contemplated hereby and
thereby,
including termination of the agreements and documents identified in
Section
1.06
above.
(n) The Sellers and the Company shall have delivered to Buyer
such
other documents as Buyer may reasonably request for the purpose of
facilitating
the consummation or performance of any of the transactions
contemplated by this
Agreement, including, without limitation, the Shares and
appropriate stock
powers.
If the Closing occurs, all closing conditions set forth in this
Section 2.01
which have not been fully satisfied as of the Closing shall be
deemed to have
been fully waived by Buyer.
2.02
Conditions to the Sellers' and the Company's Obligations. The
obligations of the Sellers and the Company to consummate the
transactions
contemplated by this Agreement are subject to the satisfaction (or
the written
waiver by the Seller Representative on behalf of the Sellers and
the Company) of
the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article V shall
be
true and correct at and as of the Closing as though then made
(without giving
effect to any materiality or material adverse effect qualifiers
contained in
such representations and warranties and in the case of those
representations and
warranties that address matters as of particular dates which shall
be true and
correct at and as of such particular dates), except where the
failure of such
representations and warranties to be so true and correct would not,
in the
aggregate, have a material and adverse effect on Buyer's ability to
consummate
the transactions contemplated by this Agreement;
9
<PAGE>
(b) Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it under this
Agreement at
or prior to the Closing;
(c) The applicable waiting periods, if any, under the HSR Act
shall
have expired or been terminated;
(d) No statute, rule, regulation, judgment, decree, ruling,
injunction
or order shall have been enacted or entered and no action, suit or
proceeding
shall have been instituted which restrains, enjoins, prohibits,
invalidates or
otherwise prevents the consummation of the transactions
contemplated hereby;
(e) All consents and approvals which are set forth on Section
2.02(e)
of the Disclosure Schedules attached hereto shall have been
obtained;
(f) The Seller Representative shall have received, dated as of
the
Closing Date and substantially in the form of Exhibit C attached
hereto an
opinion of Tonkon Torp LLP, legal counsel to Buyer and
Guarantor;
(g) Buyer shall have delivered to the Seller Representative
certified
copies of the resolutions duly adopted by Buyer's and the
Guarantor's board of
directors (or its equivalent governing body) authorizing the
execution, delivery
and performance of this Agreement and the other agreements
contemplated hereby,
and the consummation of all transactions contemplated hereby and
thereby; and
(h) Buyer shall have delivered to the Seller Representative a
certificate in the form reasonably satisfactory to the Seller
Representative,
dated as of the Closing Date, stating that the preconditions
specified in
Sections 2.02(a) and (b) have been satisfied.
If the Closing occurs, all closing conditions set forth in this
Section 2.02
which have not been fully satisfied as of the Closing shall be
deemed to have
been fully waived by the Sellers and the Company.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF EACH SELLER
Except as disclosed in the disclosure schedules attached hereto
(the
"Disclosure Schedules"), each Seller, solely for himself, herself
or itself (on
a several and not joint basis), represents and warrants to Buyer as
of the date
hereof and as of the Closing Date, as follows:
3.01
Organization and Standing. Each Seller that is an entity
represents
and warrants that it is duly organized, formed or incorporated and
is validly
existing and in good standing under the laws of the state of its
incorporation
or organization.
3.02
Authority. Such Seller has all requisite legal capacity, power
and
authority (including, if applicable, full organizational power and
authority) to
execute and deliver this Agreement and to perform such Seller's
obligations
hereunder.
3.03
Execution and Delivery; Valid and Binding Agreement. This
Agreement
and the other Transaction Documents to which such Seller is a party
has been
duly authorized, executed and delivered by such Seller. Assuming
this Agreement
and the other Transaction Documents are the valid and binding
10
<PAGE>
agreement of each of the other parties thereto, this Agreement and
the
Transaction Documents to which such Seller is a party constitute a
valid and
binding agreement of such Seller, enforceable against such Seller
in accordance
with its terms, except as enforceability may be limited by
bankruptcy laws,
other similar laws affecting creditors' rights and general
principles of equity
affecting the availability of specific performance and other
equitable remedies.
3.04
No Breach. Except for the applicable requirements of the HSR Act
and
compliance with applicable federal and state securities laws, such
Seller is not
subject to or obligated under any applicable law, or rule or
regulation of any
governmental authority, or any material agreement or instrument, or
any license,
franchise or permit, or its certificate of incorporation, its
bylaws or similar
organizational documents if such Seller is a corporation or other
entity, or
subject to any order, writ, injunction, judgment or decree, which
would be
breached or violated in any material respect by such Seller's
execution,
delivery or performance of this Agreement, the Transaction
Documents or the
consummation of the transactions contemplated hereby.
3.05
Governmental Authorization. Except for the applicable requirements
of
the HSR Act and compliance with applicable federal and state
securities laws,
such Seller is not required to submit or obtain any notice,
consent, approval,
authorization, report or other filing with any governmental or
regulatory
authority in connection with the execution, delivery or performance
by such
Seller of this Agreement, the Transaction Documents or the
consummation of the
transactions contemplated hereby or thereby.
3.06
Ownership of Capital Stock. As of the date hereof, each Seller is
the
record owner of, beneficially owns and has good title to the Shares
and Warrants
set forth opposite such Seller's name on Section 4.04(a) of the
Disclosure
Schedules, which Shares and Warrants constitute all of the Shares
and Warrants
owned beneficially or held of record by such Seller. At Closing,
and upon
termination of those agreements listed on Section 4.04 of the
Disclosure
Schedules, such Seller shall transfer to, and Buyer will acquire,
good title to
such Seller's Shares, free and clear of any liens or other
restrictions on
transfer, other than applicable federal and state securities law
restrictions
and those liens and restrictions listed on Section 3.06 of the
Disclosure
Schedules which are being released at the Closing.
3.07
Litigation. There are no actions, suits or proceedings pending or,
to
Seller's knowledge, threatened against or affecting such Seller at
law or in
equity, or before or by any federal, state, municipal or other
governmental
department, commission, board, bureau or agency, domestic or
foreign, which
would adversely affect such Seller's performance under this
Agreement, the
Transaction Documents or the consummation of the transactions
contemplated
hereby or thereby.
3.08
Brokers Fees. Such Seller has no liability or obligation to pay
any
fees or commissions to any broker, finder or agent with respect to
the
transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Disclosure Schedules (including,
without
limitation, any schedule update), the Company represents and
warrants to Buyer
as of the date hereof and as of the Closing Date, as follows:
4.01
Organization and Corporate Power. The Company is a corporation
duly
organized, validly existing and in good standing under the laws of
the State of
Delaware, and the Company has all
11
<PAGE>
requisite corporate power to own and operate its properties and to
carry on its
businesses as now conducted. The Company is duly qualified to do
business and is
in good standing in every jurisdiction in which its ownership of
property or the
conduct of businesses as now conducted requires it to qualify,
except where the
failure to be so qualified or in good standing would not,
individually or in the
aggregate, have a Material Adverse Effect. The Company has made
available to
Buyer true and complete copies of the organizational documents of
the Company as
currently in effect.
4.02
Subsidiaries. Except as set forth on Section 4.02 of the
Disclosure
Schedules, neither the Company nor any of its Subsidiaries owns any
stock,
partnership interest, joint venture interest or other equity
ownership interest
in any other Person. Each Subsidiary of the Company is wholly owned
by the
Company or another Subsidiary of the Company as indicated on
Section 4.02 of the
Disclosure Schedules. Each Subsidiary of the Company identified on
Section 4.02
of the Disclosure Schedules (i) is validly existing and in good
standing under
the laws of the jurisdiction of its incorporation, (ii) has all
requisite
corporate power and authority to carry on its businesses as now
conducted and
(iii) is duly qualified to do business and is in good standing in
every
jurisdiction in which its ownership of property or the conduct of
its business
as now conducted requires it to qualify, except, in each case,
where the failure
to be so qualified or in good standing would not, individually or
in the
aggregate, have a Material Adverse Effect. The Company has made
available to
Buyer true and complete copies of the organizational documents of
each of its
Subsidiaries as currently in effect.
4.03
Authorization; Valid and Binding Agreement; No Breach.
(a) This Agreement and the other Transaction Documents have been
duly
authorized, executed and delivered by the Company. Assuming that
this Agreement
and the other Transaction Documents are the valid and binding
obligation of each
of the other parties thereto, this Agreement and the other
Transaction Documents
constitute a valid and binding obligation of the Company,
enforceable in
accordance with its terms, except as enforceability may be limited
by bankruptcy
laws, other similar laws affecting creditors' rights and general
principles of
equity affecting the availability of specific performance and other
equitable
remedies.
(b) Except (i) as set forth on Section 4.03(b) of the
Disclosure
Schedules, and (ii) for the applicable requirements of the HSR Act,
the
execution, delivery and performance of this Agreement and the
Transaction
Documents by the Company and each Subsidiary and the consummation
of the
transactions contemplated hereby or thereby do not and will not (A)
result in
any breach of or require any authorization, consent or approval by
or notice to
any court, other governmental body or Person under the provisions
of the
Company's or any of its Subsidiaries' certificate or articles of
incorporation
or bylaws or equivalent organizational documents, or (B) result in
any material
breach of, constitute a material default under, result in a
material violation
of, result in the creation of any material lien, security interest,
charge or
encumbrance (other than a Permitted Lien) upon any asset of the
Company or any
of its Subsidiaries, or require any authorization, consent or
approval by or
notice to any court, other governmental body or Person (1) under
any indenture,
mortgage, lease or loan agreement or any Significant Contract to
which the
Company or any of its Subsidiaries is bound, (2) under any law,
statute or
regulation or (3) under any order, judgment or decree to which the
Company or
any of its Subsidiaries is subject.
4.04
Capital Stock.
(a)
Section 4.04(a) of the Disclosure Schedules sets forth, as of
the
date of this Agreement, (i) the authorized and issued and
outstanding shares of
each class of capital stock of the Company and its Subsidiaries,
the name of
each record holder of such shares of the Company's capital
12
<PAGE>
stock, and the number of shares of such class of the Company's or
its
Subsidiaries' capital stock held by each such record holder and
(ii) all
outstanding Warrants issued by the Company, the name of each record
holder of
such Warrants and the class and number of shares of capital stock
issuable upon
exercise of each such Warrant.
(b) All outstanding Shares of the Company and all outstanding
shares
of capital stock of each of its Subsidiaries have been duly
authorized and
validly issued and are fully paid and non-assessable. Except for
the Warrants
which will be cancelled in connection with the Closing and except
as set forth
on Section 4.04(a) or 4.04(b)(i) of the Disclosure Schedules, there
are no
outstanding (i) shares of capital stock of the Company or any of
its
Subsidiaries, (ii) securities of the Company, whether debt or
equity, or any of
its Subsidiaries convertible into or exchangeable for shares of
capital stock of
the Company or any of its Subsidiaries or (iii) options, warrants
or other
rights to acquire from the Company or any of its Subsidiaries, or
other
obligations of the Company or any of its Subsidiaries to issue, any
capital
stock or securities convertible into or exchangeable for capital
stock of the
Company or any of its Subsidiaries (the items in clauses
4.04(b)(i), 4.04(b)(ii)
and 4.04(b)(iii) being referred to collectively as the "Company
Securities").
There are no outstanding obligations of the Company or any of its
Subsidiaries
to repurchase, redeem or otherwise acquire or retire for value any
Company
Securities.
4.05
Financial Statements.
(a) The Company has furnished Buyer with true and complete copies
of
its (i) unaudited consolidated balance sheet as of July 1, 2006
(the "Latest
Balance Sheet"), and the related consolidated statement of income
and cash flow
of the Company and its Subsidiaries for the six month period then
ended (the
"Unaudited Financial Statements") and (ii) the audited consolidated
balance
sheet as of December 31, 2005, and the related consolidated
statement of income
and cash flow of the Company and its Subsidiaries for the fiscal
year ended
December 31, 2005 (the "Audited Financial Statements" and, together
with the
Unaudited Financial Statements, the "Financial Statements"). Except
as set forth
on Section 4.05 of the Disclosure Schedules, such Financial
Statements have been
based upon the information concerning the Company and its
Subsidiaries contained
in the Company's and its Subsidiaries' books and records, and
present fairly and
accurately in all material respects the financial condition and
results of
operations of the Company and its Subsidiaries (taken as a whole)
as of the
times and for the periods referred to therein and have been
prepared in
accordance with GAAP consistently applied (which is subject to such
exceptions
set forth on Schedule 4.05 of the Disclosure Schedules).
(b) To the Company's knowledge, neither the Company nor any of
its
Subsidiaries is subject to any liability (other than any liability,
together
with the liabilities arising from all related items or events, as
would not
result in a Loss to the Company and its Subsidiaries in excess of
$250,000)
arising out of events, transactions or actions or inactions arising
prior to the
date hereof, except (i) liabilities under leases, licenses,
contracts and
agreements which are not required to be disclosed on the Disclosure
Schedules
arising out of or related to the transactions contemplated hereby,
(ii)
liabilities reflected on the Latest Balance Sheet or liabilities
which have
arisen after the date of the Latest Balance Sheet in the ordinary
course of
business consistent with past practices and (iv) liabilities
otherwise disclosed
on the Disclosure Schedules (including, without limitation,
liabilities under
leases, licenses, contracts and agreements described in the
Disclosure
Schedules). Notwithstanding the foregoing, this representation and
warranty will
not apply to (and will exclude) any liability arising out of or
related to
facts, events, transactions, actions or inactions, which are
covered by,
addressed in or are of the same nature or subject matter as any
liability which
is covered by or addressed in another representation or warranty
set forth in
this Article IV. (By way of example, as to the foregoing sentence,
pending and
threatened litigation is covered in the representations and
warranties in
Section 4.11 and therefore all pending and threatened
13
<PAGE>
litigation (regardless of whether such litigation is covered by
the
representation and warranties in Section 4.11) is covered by
Section 4.11 for
the purposes of the foregoing sentence and not this Section.)
4.06
Absence of Certain Developments. Since the date of the Latest
Balance
Sheet, there has not been any Material Adverse Effect. Except as
set forth on
Section 4.06 of the Disclosure Schedules or except as contemplated
by this
Agreement, since the date of the Latest Balance Sheet, neither the
Company nor
any Subsidiary of the Company has:
(a) mortgaged, pledged or subjected to any material lien, charge
or
other encumbrance, any portion of its assets, except Permitted
Liens;
(b) sold, assigned or transferred any material portion of its
tangible
assets, except in the ordinary course of business;
(c) sold, assigned or transferred any Intellectual Property, except
in
the ordinary course of business;
(d) forgiven or cancelled any material Indebtedness or suffered
any
material extraordinary losses (whether or not covered by
insurance), or
condemnation, taking or other similar proceedings, or waived any
claims or
rights of material value (including any Indebtedness owed by any
stockholder,
officer, director, employee or affiliate of the Company or any
Subsidiary);
(e) redeemed or repurchased, directly or indirectly, any shares
of
capital stock or declared, set aside or paid any dividends or made
any other
distributions (whether in cash or in kind) with respect to any
shares of its
capital stock;
(f) issued, sold or transferred any of its capital stock,
securities
convertible into its capital stock or warrants, options or other
rights to
acquire its capital stock;
(g) made any capital expenditures or commitments therefore in
excess
of $250,000, except in the ordinary course of business;
(h) changed any of its accounting policies, practices or
procedures,
including internal control procedures, except those changes
required by GAAP;
(i) amended or modified its charter or bylaws;
(j) increased the salary of any senior management-level employee
of
the Company or any of its Subsidiaries (i.e., Vice President or
above) or
entered into any agreement with such senior management-level
employee, except
for increases in salary in the ordinary course of business;
(k) taken any action or entered into or agreed to enter into
any
transaction, agreement or commitment which is reasonably expected
to result in
more than $250,000 of liability to the Company, other than in the
ordinary
course of business; or
(l) agreed in writing or, to the Company's knowledge, orally, to
take
any of the foregoing actions.
14
<PAGE>
4.07
Title to Properties.
(a) Except as set forth on Section 4.07(a) of the Disclosure
Schedules, the Company and its Subsidiaries own good title to, or
hold pursuant
to valid and enforceable leases, all of the personal property shown
to be owned
by them on the Latest Balance Sheet (except for such personal
property sold or
disposed of subsequent to the date thereof in the ordinary course
of business),
free and clear of all liens, security interests and other
encumbrances, except
for Permitted Liens.
(b) Section 4.07(b)(i) of the Disclosure Schedules sets forth
the
addresses of all land, together with all buildings, structures,
improvements and
fixtures located thereon, and all easements and other rights and
interests
appurtenant thereto, owned by the Company or its Subsidiaries
(collectively, the
"Owned Real Property"). With respect to each parcel of Owned Real
Property,
except as set forth in Section 4.07(b)(ii) of the Disclosure
Schedules: (i) the
Company or one of its Subsidiaries has fee simple title thereto,
free and clear
of all liens, security interests and other encumbrances, except
Permitted Liens;
(ii) neither the Company nor any of its Subsidiaries has leased to
any Person
the right to use or occupy such Owned Real Property or any portion
thereof;
(iii) there are no outstanding options, rights of first offer or
rights of first
refusal to purchase such Owned Real Property or any portion
thereof; (iv) the
Company has received no written notice from any governmental agency
of any
violation of any statute, law, ordinance, deed restriction, rule or
regulation
with respect to the Owned Real Property; and (v) there is no
pending or, to the
Company's knowledge, threatened litigation, condemnation
proceeding, or
annexation proceeding affecting any of the Owned Real Property, and
there are no
governmental assessments against any of the Owned Real Property
other than those
that constitute Permitted Liens.
(c) The real property demised by the leases described on
Section
4.07(c)(i) of the Disclosure Schedules (the "Leased Real Property")
constitutes
all of the material real property leased by the Company and its
Subsidiaries.
Except as set forth on Section 4.07(c)(ii) of the Disclosure
Schedules, the
leases demising the Leased Real Property are in full force and
effect, subject
to proper authorization and execution of such lease by the other
party and the
limitations of bankruptcy laws, other similar laws affecting
creditors' rights
and general principles of equity affecting the availability of
specific
performance and other equitable remedies. The Company has made
available to
Buyer true and complete copies of the leases demising the Leased
Real Property.
Neither the Company nor any of its Subsidiaries is in payment
default under any
such leases or any other default under any of such leases that
would permit the
landlord to terminate such lease.
4.08
Tax Matters.
(a) Each of the Company and its Subsidiaries has filed all
federal
Income Tax Returns and all other material Tax Returns that it was
required to
file. All such Tax Returns were correct and complete in all
material respects.
All Taxes due and owing by the Company or any of its Subsidiaries
(whether or
not shown on any Tax Return) have been paid. Except as set forth on
Section
4.08(a) of the Disclosure Schedules, neither the Company nor any of
its
Subsidiaries currently is the beneficiary of any extension of time
within which
to file any Tax Return. There are no liens for Taxes (other than
Taxes not yet
due and payable) upon any of the assets of the Company or any of
its
Subsidiaries.
(b) Except as set forth on Section 4.08(b) of the Disclosure
Schedules, there is no material dispute or claim concerning any Tax
liability of
the Company or any of its Subsidiaries either (i) claimed or raised
by any Tax
authority in writing or (ii) as to which any of Sellers or any of
the directors
and officers of the Company and its Subsidiaries has knowledge
based upon
personal contact with any agent of such authority.
15
<PAGE>
(c) Section 4.08(c) of the Disclosure Schedules lists (i) all
federal,
state, local, and foreign Income Tax Returns filed with respect to
the Company
or any of its Subsidiaries and (ii) all states in which sale or use
Tax Returns
were filed with respect to the Company or any of its Subsidiaries,
in each case
for taxable periods ended on or after December 31, 2003, and (iii)
indicates
those Tax Returns that have been audited, and indicates those Tax
Returns that
currently are the subject of audit. Sellers have delivered to Buyer
true and
complete copies of all federal Income Tax Returns, examination
reports, and
statements of deficiencies assessed against, or agreed to by the
Company or any
of its Subsidiaries since November 23, 2004. Neither the Company
nor any of its
Subsidiaries has waived any statute of limitations in respect of
Taxes or agreed
to any extension of time with respect to a Tax assessment or
deficiency.
(d) Neither the Company nor any of its Subsidiaries is a party to
or
bound by any tax allocation or sharing agreement. Neither the
Company nor any of
its Subsidiaries (i) has been a member of an Affiliated Group
filing a
consolidated federal Income Tax Return (other than a group the
common parent of
which was the Company or Meridian Rail Acquisition Corp.) or (ii)
has any
liability for the Taxes of any Person (other than the Company or
any of its
Subsidiaries) under Reg. Section 1.1502-6 (or any similar provision
of state,
local, or foreign law), as a transferee or successor, by contract,
or otherwise.
(e) Except as set forth in Section 4.08(e) of the Disclosure
Schedules, neither the Company nor any of its Subsidiaries will be
required to
include any item of income in, or exclude any item of deduction
from, taxable
income for any taxable period (or portion thereof) ending after the
Closing Date
as a result of any:
(i) change in method of accounting for a taxable period ending
on
or
prior to the Closing Date;
(ii) "closing agreement" as described in Internal Revenue Code
Section 7121 (or any corresponding or similar provision of state,
local or
foreign income Tax law) executed on or prior to the Closing
Date;
(iii) intercompany transactions or any excess loss account
described in Treasury Regulations under Internal Revenue Code
Section 1502
(or
any corresponding or similar provision of state, local or
foreign
income Tax law);
(iv) installment sale or open transaction disposition made on
or
prior to the Closing Date; or
(v) prepaid amount received on or prior to the Closing Date.
(f) Neither the Company nor any of its Subsidiaries has
distributed
stock of another Person, or has had its stock distributed by
another Person, in
a transaction that was purported or intended to be governed in
whole or in part
by Internal Revenue Code Section 355 or Internal Revenue Code
Section 361.
(g) Any claim of breach of representation or warranty regarding
Taxes
shall be made only under this Section 4.08 and shall not be made
under any other
representation or warranty contained in this Agreement. For the
avoidance of
doubt, (i) this Section 4.08(g) shall not apply to the covenants
set forth under
Section 11.03 and (ii) representations and warranties regarding
ERISA will not
be considered a representation or warranty regarding Taxes for the
purposes of
this Section 4.08(g) and such
16
<PAGE>
representations and warranties regarding ERISA shall be made only
in Section
4.13 below and not this Section 4.08.
4.09
Contracts and Commitments.
(a) Except as set forth on Section 4.09(a) of the Disclosure
Schedules, neither the Company nor any of its Subsidiaries is party
to any
written: (i) collective bargaining agreement or contract with any
labor union;
(ii) pension, profit sharing, retirement, deferred compensation
plan or other
material bonus plan, other than as described in Section 4.13(a) of
the
Disclosure Schedules relating thereto; (iii) agreement for the
employment of any
officer, individual employee or other individual on a full-time or
consulting
basis with annual payments in excess of $100,000 which is not
terminable on 60
or fewer days notice by the Company or any Subsidiary without
liability for any
penalty or severance payment greater than $30,000; (iv) loan
agreement or
indenture relating to Indebtedness; (v) stockholders agreement or
other
agreement among the Company's stockholders governing voting of the
Company's
equity securities; (vi) lease or agreement under which it is lessee
of, or holds
or operates any personal property owned by any other party, for
which the annual
rental exceeds $250,000 and which is not terminable on 60 or fewer
days notice
by the Company or any Subsidiary without liability for any penalty
greater than
$30,000; (vii) lease or agreement under which it is lessor of or
permits any
third party to hold or operate any personal property, for which the
annual
rental exceeds $250,000 and which is not terminable on 60 or fewer
days notice
by the Company or any Subsidiary without liability for any penalty
greater than
$30,000; (viii) contract or group of related contracts with the
same party for
the purchase of products or services by the Company or any of its
Subsidiaries
with such products and services having a selling price in excess of
$250,000 and
which is not terminable on 60 or fewer days notice by the Company
or any
Subsidiary without liability for any penalty greater than $30,000;
(ix) contract
or group of related contracts with the same party for the sale of
products or
services by the Company or any of its Subsidiaries with such
products and
services having a selling price in excess of $250,000 and which is
not
terminable on 60 or fewer days notice by the Company or any
Subsidiary without
liability for any penalty greater than $30,000; (x) contract or
agreement
containing covenants limiting the freedom of the Company or any
Subsidiary of
the Company to compete in any line of business or with any Person
which is not
terminable on 60 or fewer days notice by the Company or any
Subsidiary without
liability for any penalty greater than $30,000; (xi) guarantees,
letters of
credit, performance bonds and/or sureties issued by or on behalf of
the Company
or any Subsidiary in connection with any customer contracts,
proposals or
otherwise; or (xii) contract involving any commitment of
suretyship, guaranty or
indemnification by the Company or any Subsidiary with respect to
any side frames
or bolsters which could reasonably be expected to require payments
by the
Company or any Subsidiary in excess of $100,000.
(b) The Company has made available to Buyer true and complete
copies
of all contracts listed on Section 4.09(a) of the Disclosure
Schedules (the
"Significant Contracts"). With respect to the Significant
Contracts, except as
set forth on Section 4.09(b) of the Disclosure Schedules, (i)
neither the
Company nor any of its Subsidiaries is in default under any such
contract, and
(ii) to the Company's knowledge, no other party thereto, is in
default under any
such contract, except, in each case, where such default would not,
individually
or in the aggregate, have a Material Adverse Effect. Each
Significant Contract
is a valid, binding obligation of the Company or its Subsidiaries
and
enforceable in accordance with its terms, except as to the effect,
if any, of
(a) applicable bankruptcy and other similar laws affecting the
rights of
creditors generally and (b) rules of law governing specific
performance,
equitable relief and other equitable remedies. To the knowledge of
the Company,
neither the Company nor any Subsidiary has received written notice
of alleged
nonperformance, violation of or other noncompliance with respect to
its
obligations under any of the Significant Contracts which alleged
nonperformance,
violation or other
17
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noncompliance is currently unresolved, nor any written notice that
is currently
unresolved that any of the Significant Contracts may be totally or
partially
terminated or suspended by any other party thereto.
(c) Section 4.09(c)(i) of the Disclosure Schedules contains a true
and
complete list setting forth the ten largest suppliers (the "Major
Suppliers")
and the ten largest customers (excluding scrap purchasers and
intercompany
purchases) (the "Major Customers") of the Company or any
Subsidiary, by dollar
amount for the six-month period covered by the Unaudited Financial
Statements.
Since the Latest Balance Sheet, to the knowledge of the Company, no
Major
Customer has cancelled or otherwise materially modified its
agreement with the
Company or any Subsidiary in a manner adverse to the Company or any
Subsidiary.
Except as set forth in Section 4.09(c)(ii) of the Disclosure
Schedules, since
the Latest Balance Sheet, to the knowledge of the Company, no Major
Supplier has
cancelled or otherwise materially modified its agreement with the
Company or any
Subsidiary in a manner adverse to the Company or any
Subsidiary.
4.10
Intellectual Property. Section 4.10(a) of the Disclosure
Schedules
contains a list of all of the material registered Intellectual
Property owned by
the Company or any of its Subsidiaries and used in the conduct of
the businesses
of the Company and its Subsidiaries. Except as set forth on Section
4.10(b) of
the Disclosure Schedules or as would not, individually or in the
aggregate, have
a Material Adverse Effect: (i) the Company or one of its
Subsidiaries owns and
possesses all right, title and interest in and to, or possesses the
valid and
enforceable right to use, the Intellectual Property used in the
conduct of the
businesses of the Company and its Subsidiaries; (ii) since November
23, 2004,
and to the knowledge of the Company since January 1, 2003, neither
the Company
nor any of its Subsidiaries has received any written notices of
infringement or
misappropriation from any third party with respect to the Company
or any
Subsidiary's use of any Intellectual Property; (iii) to the
Company's knowledge,
no third party is infringing or misappropriating any registered
Intellectual
Property owned by the Company or any of its Subsidiaries, and (iv)
to the
Company's knowledge, neither the Company nor any of its
Subsidiaries is
infringing any registered Intellectual Property owned by a third
party.
4.11
Litigation. Except as set forth on Section 4.11(a) of the
Disclosure
Schedules, there are no actions, suits or proceedings pending or,
to the
Company's knowledge, threatened against the Company or any of its
Subsidiaries,
at law or in equity, or before or by any federal, state, municipal
or other
governmental department, commission, board, bureau or agency,
domestic or
foreign, nor are there any that questions the validity of this
Agreement, the
Transaction Documents or any action taken or to be taken by the
Company or any
Subsidiary pursuant to this Agreement, the Transaction Documents or
in
connection with the transactions contemplated hereby or thereby.
Except as set
forth on Section 4.11(b) of the Disclosure Schedules, neither the
Company nor
any of its Subsidiaries is subject to any outstanding judgment,
order or decree
of any court or governmental body. Except as set forth on Section
4.11(c) of the
Disclosure Schedules, to the Company's knowledge, since November
23, 2004, there
have been no claims made, or any written threat of a claim
received, against the
Company or any Subsidiary for liability arising out of the
production or sale of
side frames or bolsters.
4.12
Governmental Consents, etc. Except as set forth on Section 4.12 of
the
Disclosure Schedules, and except for the applicable requirements of
the HSR Act,
no material permit, consent, approval or authorization of, or
declaration to or
filing with, any governmental or regulatory authority is required
in connection
with any of the execution, delivery or performance of this
Agreement or the
Transaction Documents by the Company or the consummation by the
Company of the
transactions contemplated hereby or thereby.
18
<PAGE>
4.13
Employee Benefit Plans.
(a) Section 4.13(a) of the Disclosure Schedules contains a true
and
complete list of (i) all employee benefit plans (within the meaning
of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended
("ERISA")) and (ii) all other material bonus, stock option, stock
purchase,
restricted stock, incentive, deferred compensation, retiree medical
and life
insurance, supplemental retirement, severance and other material
benefit plans,
programs and arrangements, and all material retention, termination,
severance or
other similar contracts or agreements maintained, contributed to or
sponsored by
the Company or any Subsidiary for the benefit of any current or
former employee,
officer or director of the Company or any Subsidiary (collectively,
excluding
any Multiemployer Plan, the "Plans"). The Company and its
Subsidiaries have
previously made available to Buyer a true and complete copy of each
Plan or
summary Plan (or, in the case of any unwritten Plan, a
description), as
currently in effect, and a true and complete copy of each of the
following
documents, to the extent applicable, prepared in connection with
each such Plan:
(A) a copy of each trust or other funding arrangement, (B) the
three most
recently filed Internal Revenue Service Forms 5500, (C) the most
recently
received Internal Revenue Service prototype opinion letter, and (D)
the most
recently prepared actuarial report. Neither the Company nor any
Subsidiary has
communicated to employees any intent to or has expressly or
impliedly committed
to modify, change or terminate any Plan, other than with respect to
a
modification, change or termination required to bring the Plan into
compliance
with applicable law. Each Plan that is intended to be qualified
under Section
401(a) and/or 401(k) or 501(c)(9) of the Internal Revenue Code of
1986, as
amended (the "Internal Revenue Code"), so qualifies, has received a
favorable
prototype opinion letter from the Internal Revenue Service to such
effect and
its trust is exempt from taxation under Section 501(a) of the
Internal Revenue
Code. To the knowledge of the Company, except as set forth on
Section 4.13(a) of
the Disclosure Schedules, no fact or event has occurred since the
date of any
prototype opinion letter from the Internal Revenue Service which is
reasonably
likely to affect adversely such favorable determination or such
qualification or
to result in a filing under Rev. Proc. 2003-44 or any predecessor
or successor
thereto that would be reasonably likely to result in material
liability to the
Company. The Company and its Subsidiaries have timely paid all
contributions,
premiums and expenses payable to or in respect of each Plan and
workers'
compensation arrangement under the terms thereof and in accordance
with
applicable law, including ERISA and the Internal Revenue Code, and
to the extent
any such contributions, premiums or expenses are not yet due, the
liability
therefor has been properly and adequately accrued on the Financial
Statements in
accordance with GAAP.
(b) None of the Plans (i) is a Multiemployer Plan, or a pension
plan
within the meaning of Section 4001(a)(15) of ERISA, (ii) is subject
to Section
302 or Title IV of ERISA or Section 412 of the Internal Revenue
Code, or (iii)
except as set forth on Section 4.13(b) of the Disclosure Schedules,
provides or
promises to provide retiree medical or life insurance benefits,
other than to
the extent required by Section 4980B(f) of the Internal Revenue
Code, and
Sections 601 through 609 of ERISA or other similar laws.
(c) Except as set forth on Section 4.13(c) of the Disclosure
Schedules, with respect to each Plan, neither the Company, any
Subsidiary nor
any ERISA Affiliate is currently liable for any material Tax,
including, without
limitation, any material Tax under Section 4971, 4972, 4975, 4976,
4979, 4980 or
4980B of the Internal Revenue Code, and, to the knowledge of the
Company, no
fact or event exists which could reasonably be expected to give
rise to any such
material liability. Neither the Company, any Subsidiary nor any
ERISA Affiliate
has incurred any material liability (which will not be satisfied
prior to the
Closing) under, arising out of or by operation of Title IV of
ERISA, including,
without limitation, any liability in connection with the
termination or
reorganization of any employee pension benefit plan subject to
Title IV of
ERISA. To the knowledge of the Company, no fact or event
19
<PAGE>
exists which could reasonably be expected to give rise to any such
material
liability. "ERISA Affiliate" is any trade or business whether or
not
incorporated, which together with the Company would be deemed to be
a "single
employer" within the meaning of Section 4001(b) of ERISA or Section
414 of the
Internal Revenue Code.
(d) No Plan subject to a funding requirement has been terminated at
a
time when such Plan was not sufficiently funded.
(e) Except as set forth on Section 4.13(e) of the Disclosure
Schedules, and except as would not, individually or in the
aggregate, have a
Material Adverse Effect, each Plan has been operated in compliance
with its
terms and applicable laws, including, without limitation, ERISA and
the Internal
Revenue Code.
(f) There are no actions, suits or claims (other than routine
claims
for benefits in the ordinary course) pending or, to the knowledge
of the
Company, threatened with respect to any Plan. With respect to the
Plans, no
Plan, the Company or any Subsidiary is under audit or, to the
knowledge of the
Company, investigation by the Internal Revenue Service, the U.S.
Department of
Labor, the Pension Benefit Guaranty Corporation or any other
federal or state
governmental agency, nor is any such audit or investigation pending
or, to the
knowledge of the Company, threatened.
(g) Except as set forth on Section 4.13(g) of the Disclosure
Schedules, neither the execution and delivery of this Agreement,
nor the
consummation of the transactions contemplated hereby, either alone
or in
combination with another event (whether contingent or otherwise)
will (i)
entitle any current or former employee, consultant or director of
the Company or
any Subsidiary to any increased or modified benefit or payment,
including any
bonus payments, severance or change in control benefits; (ii)
increase the
amount of compensation due to any such employee, consultant or
director; (iii)
accelerate the vesting, payment or funding of any compensation,
stock-based
benefit, incentive or other benefit; or (iv) result in any
"parachute payment"
under Section 280G of the Internal Revenue Code (whether or not
such payment is
considered to be reasonable compensation for services
rendered).
(h) The Company and its Subsidiaries has workers compensation
insurance from a bona fide third party insurance carrier in amounts
sufficient
to satisfy applicable workers compensation insurance requirements
in the
jurisdictions where the Company and its Subsidiaries conduct
business.
(i) Except as set forth on Section 4.13(i) of the Disclosure
Schedules, neither the Company nor any Subsidiary contributes to,
nor has any
liability with respect to, any Multiemployer Plan.
4.14
Insurance. Section 4.14(a) of the Disclosure Schedules lists
each
material insurance policy maintained by the Company and its
Subsidiaries
identifying the name of the insurance carrier, type of coverage,
policy limits
and deductibles for each such policy. All of such insurance
policies are in full
force and effect, and to the Company's knowledge, neither the
Company nor any
Subsidiary of the Company is in default with respect to its
obligations under
any of such insurance policies, except where such default would
not,
individually or in the aggregate, have a Material Adverse Effect.
Except as set
forth in Section 4.14(b) of the Disclosure Schedules, none of such
insurance
policies will terminate or lapse by reason of any of the
transactions
contemplated by this Agreement. All premiums covering all periods
up to and
including the Closing have been paid, and to the knowledge of the
Company, no
notice of cancellation or termination has been received with
respect to any such
policy or binder. Since November 23, 2004, neither the Company nor
any
Subsidiary has been refused any insurance with respect to its
assets or
operations. True and complete copies of all policies have been made
available to
Buyer.
20
<PAGE>
4.15
Compliance with Laws. Except as set forth on Section 4.15 of
the
Disclosure Schedules, the Company and its Subsidiaries are in
compliance with
all applicable laws and regulations of foreign, federal, state,
provincial and
local governments and all agencies thereof which affect the
business, operations
or Owned Real Property or Leased Real Property of the Company or
its
Subsidiaries and to which the Company or its Subsidiaries may be
subject, and no
claim has been filed or commenced against any of them alleging any
failure to so
comply, except with respect to compliance with where the failure to
comply would
not, individually or in the aggregate, have a Material Adverse
Effect; provided,
however, that with respect to compliance with applicable laws
regarding bribes,
kickbacks, any other illegal payments to obtain or retain business
or to receive
favorable treatment with regard to business, illegal contributions
made to any
political party, political candidate or holder of governmental
office and
compliance with the United States Corrupt Foreign Practices Act or
any other
similar laws, statute, rule or regulation of any country, this
representation
shall not be subject to the Material Adverse Effect qualifier.
4.16 Environmental,
Health and Safety Matters. Except as set forth on
Section 4.16 of the Disclosure Schedules:
(a) The Company and each Subsidiary are, and since November 23,
2004
have been, in material compliance with all applicable
Environmental
Requirements.
(b) Without limiting the generality of the foregoing, the Company
and
each Subsidiary have obtained all permits, licenses and other
authorizations
required under applicable Environmental Requirements
("Environmental Permits"),
and are in material compliance with such permits, licenses and
authorizations. A
list of all material Environmental Permits owned or possessed by
the Company or
its Subsidiaries is set forth on Section 4.16 of the Disclosure
Schedules.
(c) Neither the Company nor any of its Subsidiaries has since
November
23, 2004, received any written notice from any government entity,
that alleges
that any of them is in material violation of Environmental
Requirements or OSHA
rules or regulations, or has any material liability arising under
applicable
Environmental Requirements or OSHA rules or regulations, including
any material
investigatory, remedial or corrective obligation, relating to the
Company, any
Subsidiary or their facilities, the subject of which is
unresolved.
(d) To the knowledge of the Company, none of the following exists
at
or under the Real Property: (1) underground storage tanks in
violation of
Environmental Requirements, (2) friable or potentially friable
asbestos-containing material requiring abatement under
Environmental
Requirements, (3) materials or equipment containing polychlorinated
biphenyls in
violation of Environmental Requirements, or (4) unpermitted
landfills, surface
impoundments, or disposal areas in violation of Environmental
Requirements.
(e) Since November 23, 2004, neither the Company nor any
Subsidiary
has treated, stored, disposed of, arranged for or permitted the
disposal of,
transported, handled, or released any hazardous substance in
material violation
of any Environmental Requirements.
(f) Since November 23, 2004, neither the Company nor any
Subsidiary
has materially violated any Environmental Requirements at any real
property
previously owned or operated by the Company or any Subsidiary.
(g) The Company and each Subsidiary possess all material
manifests,
reports, policies, manuals, safety data sheets, hazard
communications program
documents and all other material
21
<PAGE>
records they are required to retain pursuant to any Environmental
Requirements,
in the manner so required in all material respects.
(h) Neither the Company nor any of its Subsidiaries is in
material
violation of any applicable OSHA rules and regulations.
(i) This Section 4.16 constitutes the sole and exclusive
representations and warranties of the Company with respect to any
environmental,
health and safety matters, including without limitation any arising
under
Environmental Requirements and OSHA.
(j) To the Company's knowledge, the environmental reports (the
"Vanguard Reports") delivered to the Company by Vanguard
Environmental, Inc.
("Vanguard") (in 2005 and/or 2006) do not disclose any liability
which would be
required to be disclosed on Section 4.16 of the Disclosure
Schedules which is
not otherwise disclosed on such Section 4.16 of the Disclosure
Schedule (or
otherwise set forth in any other environmental report listed
thereon). The scope
of the Vanguard Reports do not contain a Phase II environmental
investigation
(or the results of any soil or groundwater sampling done by
Vanguard in
connection therewith).
4.17
Affiliated Transactions. Except as set forth on Section 4.17 of
the
Disclosure Schedules and except for payments to be made in
connection with the
Closing to the extent reflected in the Closing Statement, no
officer, director,
stockholder or Affiliate of any of them or an Affiliate of the
Company or any
Subsidiary is a party to any agreement, contract, commitment or
transaction with
the Company or any of its Subsidiaries or has any interest in any
property used
by the Company or its Subsidiaries.
4.18
Employees. Except as set forth on Section 4.18(a) of the
Disclosure
Schedules, neither the Company nor any Subsidiary of the Company
has experienced
any strike or material grievance, claim of unfair labor practices,
or other
material collective bargaining dispute since November 23, 2004 that
has not been
dismissed or settled. Except as set forth on Section 4.18(b) of the
Disclosure
Schedules, to the Company's knowledge, no organizational effort is
presently
being made or threatened by or on behalf of any labor union with
respect to
employees of the Company or any of its Subsidiaries. Except as set
forth on
Section 4.18(c) of the Disclosure Schedules, no collective
bargaining agreements
are in effect with respect to the Company or any Subsidiary.
4.19
Brokerage. Except as set forth on Section 4.19 of the
Disclosure
Schedule, there are no claims for brokerage commissions, finders'
fees or
similar compensation in connection with the transactions
contemplated by this
Agreement based on any arrangement or agreement made by or on
behalf of the
Company or any Subsidiary.
4.20
Governmental Licenses and Permits. Section 4.20 of the
Disclosure
Schedules contains a list of all permits (temporary or otherwise),
licenses,
authorizations and approval of federal, foreign, state and local
governmental
entities and zoning bodies (collectively, the "Licenses") owned or
possessed by
the Company or its Subsidiaries all of which are currently valid
and in full
force and effect and no other permits, licenses, authorizations and
approval of
federal, foreign, state and local governmental entities and zoning
bodies are
required in the conduct of their respective businesses and
operations or used by
the Company and its Subsidiaries in the conduct of th
