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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 28, 2002
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GENESEE & WYOMING INC.
(Exact Name of Registrant as Specified in Charter)
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Delaware 0-20847 06-0984624
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
66 Field Point Road 06830
Greenwich, Connecticut (Zip Code)
(Address of Principal Executive
Offices)
Registrant's telephone number, including area code (203) 629-3722
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2
TABLE OF CONTENTS
Item 2. Acquisition or Disposition of Assets.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
SIGNATURE PAGE
INDEX TO EXHIBITS
Exhibit 2.1 Stock Purchase Agreement by and among Mueller Industries,
Inc., Arava Natural Resources Company, Inc. and Genesee &
Wyoming Inc. relating to the purchase and sale of Utah
Railway Company, dated as of August 19, 2002.
Exhibit 4.1 Third Amended and Restated Revolving Credit Agreement
dated as of August 17, 1999 among the Registrant, certain
subsidiaries, Fleet National Bank (f/k/a BankBoston, N.A.)
and the banks named therein. This exhibit was previously
filed as part of, and is incorporated herein by reference
to, the Registrant's Report on Form 10-Q for the quarter
ended September 30, 1999 (to which it was Exhibit 4.1).
Exhibit 99.1 Press Release Issued on August 20, 2002.
Exhibit 99.2 Press Release Issued on August 29, 2002.
3
Item 2. Acquisition or Disposition of Assets
On August 28, 2002, the Registrant completed the purchase of all of
the issued and outstanding shares of common stock (the "Shares") of Utah
Railway Company ("URC") from Arava Natural Resources Company, Inc. ("ANRC").
The acquisition was consummated pursuant to the terms of a Stock Purchase
Agreement, dated as of August 19, 2002, among the Registrant, ANRC and Mueller
Industries, Inc. ("MLI") (the "Stock Purchase Agreement").
URC (either directly or through its wholly-owned subsidiary, Salt
Lake City Southern Railroad Company, Inc.) currently operates 23 locomotives
over 45 miles of owned track and 378 miles of track under track access
agreements. The tracks over which URC operates run from Ogden, Utah to Grand
Junction, Colorado. In addition, URC serves industrial customers in and around
Salt Lake City, Utah through trackage rights from the Utah Transit Authority.
Following the acquisition, the Registrant (through URC, its new wholly-owned
subsidiary) intends to continue to use the assets of URC for the same purposes
to which they were previously devoted.
Pursuant to the Stock Purchase Agreement, the total purchase price
paid by the Registrant to ANRC for the Shares was $54,000,000, which amount is
subject to adjustment post-closing based on the net working capital of URC on
the day immediately preceding the closing date.
The Registrant funded the acquisition under the Third Amended and
Restated Revolving Credit Agreement dated as of August 17, 1999 among the
Registrant, certain subsidiaries, Fleet National Bank (f/k/a BankBoston, N.A.)
and the banks named therein.
No material relationship exists between ANRC or MLI and the
Registrant or any of its affiliates, any director or officer of the
Registrant, or any associate of any such director or officer.
The foregoing information contained in this Form 8-K with respect to
the acquisition is qualified in its entirety by reference to the complete text
of the Stock Purchase Agreement, which is filed herewith as an Exhibit.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
At the time of the filing of this Report, it is impracticable to
provide the financial statements (including a manually signed accountants'
report) required by Item 7(a) of Form 8-K. The required financial statements
and manually signed accountants' report will be filed by Registrant, under
cover of Form 8-K/A, as soon as practicable, but not later than October 27,
2002.
(b) Pro Forma Financial Information
At the time of the filing of this Report, it is impracticable to
provide the unaudited pro forma financial information required by Item 7(b) of
Form 8-K. The required unaudited pro forma financial information will be filed
by Registrant, under cover of Form 8-K/A, as soon as practicable, but not
later than October 27, 2002.
4
(c) Exhibits.
2.1 Stock Purchase Agreement by and among Mueller Industries,
Inc., Arava Natural Resources Company, Inc. and Genesee &
Wyoming Inc. relating to the purchase and sale of Utah
Railway Company, dated as of August 19, 2002.
4.1 Third Amended and Restated Revolving Credit Agreement
dated as of August 17, 1999 among the Registrant, certain
subsidiaries, Fleet National Bank (f/k/a BankBoston, N.A.)
and the banks named therein. This exhibit was previously
filed as part of, and is incorporated herein by reference
to, the Registrant's Report on Form 10-Q for the quarter
ended September 30, 1999 (to which it was Exhibit 4.1).
99.1 Press Release issued on August 20, 2002.
99.2 Press Release issued on August 29, 2002.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
GENESEE & WYOMING INC.
By: /s/ John C. Hellmann
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Name: John C. Hellmann
Title: Chief Financial Officer
Dated: August 29, 2002
6
EXHIBIT INDEX
Exhibit No. Description
2.1 Stock Purchase Agreement by and among Mueller Industries,
Inc., Arava Natural Resources Company, Inc. and Genesee &
Wyoming Inc. relating to the purchase and sale of Utah
Railway Company, dated as of August 19, 2002.
4.1 Third Amended and Restated Revolving Credit Agreement
dated as of August 17, 1999 among the Registrant, certain
subsidiaries, Fleet National Bank (f/k/a BankBoston, N.A.)
and the banks named therein. This exhibit was previously
filed as part of, and is incorporated herein by reference
to, the Registrant's Report on Form 10-Q for the quarter
ended September 30, 1999 (to which it was Exhibit 4.1).
99.1 Press Release, dated August 20, 2002.
99.2 Press Release, dated August 29, 2002.
Exhibit 2.1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and among
MUELLER INDUSTRIES, INC.,
ARAVA NATURAL RESOURCES COMPANY, INC.
and
GENESEE & WYOMING INC.
relating to the purchase and sale
of
UTAH RAILWAY COMPANY
Dated as of August 19, 2002
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TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS......................................................1
ARTICLE 2. PURCHASE AND SALE OF COMPANY SHARES..............................7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
PARENT...........................................................9
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.....................22
ARTICLE 5. COVENANTS OF THE SELLER AND THE PARENT..........................24
ARTICLE 6. COVENANTS OF THE BUYER..........................................28
ARTICLE 7. INDEMNIFICATION.................................................30
ARTICLE 8. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER AND
THE PARENT......................................................33
ARTICLE 9. CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER................35
ARTICLE 10. TERMINATION.....................................................36
ARTICLE 11. TAX MATTERS.....................................................37
ARTICLE 12. MISCELLANEOUS...................................................39
INDEX TO SCHEDULES
3.3 Exceptions to No Conflict or Violation
3.4 Exceptions to Consents and Approvals
3.6 Subsidiaries
3.7 Exceptions to Financial Statements
3.8 Material Changes or Events
3.9 Tax Matter Exceptions
3.10 Undisclosed Liabilities
3.11 Owned Real Property
3.12 Leases
3.13(a) Listed Intellectual Property
3.13(b) Intellectual Property Agreements
3.16 Litigation
3.17 Contracts
3.18(a) Employee Plans
3.18(b) Multiemployer Plans
3.18(g) Plan Actions, Claims or Lawsuits
3.18(i) Retiree Benefits
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3.20 Transactions with Directors, Officers and Affiliates
3.21(a) Employment Agreements or Contracts
3.21(b) Exceptions to Compliance with Employment Laws
3.22 Environmental Exceptions
3.23 Principal Customers
3.24 Rail Facilities
5.1 Conduct of Business
6.3(a) Non-Continuing Employees
6.3(b) Company Plans
6.3(c) Seller Plans
8.3 Certain Consents and Approvals
9.3 Certain Consents and Approvals
12.4 Brokers' and Finders' Fees
INDEX TO EXHIBITS
A Form of Opinion of Counsel to the Buyer
B Form of Opinion of Counsel to the Seller
C Form of Transition Services Agreement
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT, dated as of August 19, 2002, by and among
Mueller Industries, Inc., a Delaware corporation (the "Parent"), Arava Natural
Resources Company, Inc., a Delaware corporation (the "Seller"), and Genessee &
Wyoming Inc., a Delaware corporation (the "Buyer"), in connection with the
purchase and sale of the outstanding shares of capital stock of Utah Railway
Company, a Utah corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is engaged in the business of operating a short
line railroad in Utah and Colorado (the "Business");
WHEREAS, the Seller owns beneficially and of record all of the
issued and outstanding shares (the "Company Shares") of the Company's common
stock, $100 par value per share (the "Company Common Stock"), and the Parent
owns beneficially and of record all of the issued and outstanding capital
stock of the Seller; and
WHEREAS, the Buyer desires to purchase from the Seller, and the
Seller desires to sell to the Buyer, the Company Shares, all in accordance
with and subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" shall mean any Person, directly or indirectly,
controlling, controlled by or under common control with such Person;
"Balance Sheet" shall mean the audited consolidated balance sheet of
the Company and its Subsidiaries as of December 29, 2001;
"Buyer" -- See Preamble hereto;
"Buyer Indemnitees" -- See Section 7.2(a);
"Buyer Material Adverse Effect" -- See Section 4.1;
"Buyer Plans" -- See Section 6.3(b);
"CERCLA" shall mean the Federal Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq.;
"Closing" -- See Section 2.2;
"Closing Date" -- See Section 2.2;
"Closing Working Capital Report" - See Section 2.3(a);
"Closing Working Capital Statement" - See Section 2.3(a);
"COBRA" -- See Section 3.18(i);
"Code" shall mean the Internal Revenue Code of 1986, as amended;
"Company" -- See Preamble hereto;
"Company Common Stock" -- See Recitals hereto;
"Company Plans" -- See Section 6.3(b);
"Company Shares" -- See Recitals hereto;
"Confidential Information" shall include information, both written
and oral, relating to trade secrets, and confidential and proprietary
information relating to technical data, products, services, finances, business
plans, marketing plans, legal affairs, suppliers, customers, prospects,
opportunities, contracts, assets and other information that has commercial
value, but shall not include information which (i) is already known by the
recipient when received; (ii) is or after the date of this Agreement becomes
obtainable from other sources other than pursuant to a violation of law or
breach of any Contract; (iii) is required to be disclosed to a Governmental
Entity; (iv) is independently developed by the receiving Person; (v) is
required to be disclosed by law or pursuant to the rules of any securities
exchange having jurisdiction over the disclosing Person; or (vi) is disclosed
pursuant to a written waiver from the nondisclosing Person of the
confidentiality requirements of Section 12.14;
"Continuing Employees" - See Section 6.3(a);
"Contracts" shall mean, collectively, the Leases, Purchase Orders,
Sales Orders and Other Contracts, including, without limitation, those
described in Section 3.17 hereto;
"Deductible Amount" -- See Section 7.2(a);
"Environmental Claim" means any claim, action, demand, or written
notice by or on behalf of, any Governmental Entity or Person alleging
potential liability under, or a violation of, any Environmental Law;
"Environmental Laws" shall mean all Federal, state and local laws,
regulations, orders, decrees, judgments and common law relating to the
protection of the environment or human health (to the extent relating to
exposure to Hazardous Substances);
"Environmental Report" shall mean any report, study, assessment,
audit, or other similar document that addresses any issue of actual or
potential noncompliance by the Company
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or any of its Subsidiaries with, or actual or potential liability of the
Company or any of its Subsidiaries under, any Environmental Laws;
"Equipment and Machinery" shall mean all the equipment, machinery,
furniture, fixtures and improvements, tooling, spare parts, supplies and
vehicles owned, leased or used by the Company and its Subsidiaries;
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
"ERISA Affiliate" -- See Section 3.18(b);
"Excluded Assets" -- See Section 2.6;
"Excluded Liabilities" -- See Section 2.7;
"Financial Statements" -- See Section 3.7;
"GAAP" shall mean generally accepted accounting principles;
"Governmental Entity" shall mean any Federal, state or foreign
governmental or public body, court, agency or regulatory authority;
"Hazardous Substances" shall mean any hazardous substance as defined
under CERCLA, petroleum, petroleum product, and any waste, pollutant or
contaminant regulated under applicable Environmental Law;
"Income Taxes" shall mean all Taxes based upon, measured by or
calculated with respect to: (i) gross or net income or gross or net receipts
or profits (including, but not limited to, any capital gains, minimum Taxes
and any Taxes on items of Tax preference, wage withholding and withholding on
payments to foreign persons, but not including sales, use, goods and services,
real or personal property transfer or other similar Taxes) and (ii) multiple
bases (including, but not limited to, corporate franchise, doing business or
occupation Taxes) if one or more of the bases upon which such Tax may be based
upon, measured by, or calculated with respect to, is described in clause (i)
above;
"Independent Accounting Firm" - See Section 2.3(a);
"Indebtedness" shall mean, with respect to any Person, without
duplication: (i) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments; (iii) all
obligations of such Person upon which interest charges are customarily paid;
(iv) all obligations of such Person under conditional sale or other title
retention agreements relating to assets purchased by such Person; (v) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued expenses
arising in the ordinary course of business in accordance with customary trade
terms); (vi) all Indebtedness of others secured by (or for which the holder of
such Indebtedness
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has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed by such Person; (vii) all guarantees by such
Person of Indebtedness of others; (viii) all capital lease obligations of such
Person; (ix) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements or other interest
or exchange rate hedging arrangements; and (x) all obligations of such Person
as an account party to reimburse any bank or any other Person in respect of
letters of credit and bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which
such Person is a general partner or member;
"Indemnified Party" -- See Section 7.1;
"Indemnifying Party" -- See Section 7.1;
"Insurance Claims" -- See Section 2.6;
"Intellectual Property" shall mean all of the following owned or
licensed by the Company or its Subsidiaries, as licensee or licensor, or used
exclusively in the Company's or its Subsidiaries' business: (i) registered and
material unregistered trademarks and service marks and trade names, and all
goodwill associated therewith; (ii) patents, patentable inventions and
computer programs (including password unprotected interpretive code or source
code); (iii) trade secrets; (iv) registered and material unregistered
copyrights in all works, including software programs; (v) domain names; (vi)
all rights in mask works; (vii) all computer software owned by the Company or
its Subsidiaries; (viii) all rights of the Company or its Subsidiaries under
software licenses; and (ix) all copies of software generally available for
purchase by the public pursuant to shrink-wrap licenses in the possession or
control of the Company or its Subsidiaries;
"Leased Real Property" -- See Section 3.12(a);
"Lease" and "Leases" -- See Section 3.12(a);
"Licenses and Permits" -- See Section 3.14;
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or other), deed of trust, conditional sale
agreement, claim, charge, limitation, restriction, assessment or defect in
title (except, in the case of the Company Shares, for restrictions arising
from applicable securities laws) that is not a Permitted Lien;
"Listed Intellectual Property" -- See Section 3.13(a);
"Losses" -- See Section 7.2(a);
"Material Adverse Effect" -- See Section 3.1;
"Multiemployer Plan" -- See Section 3.18(a);
"Net Working Capital" - See Section 2.5;
-4-
"Other Contracts" shall mean all Equipment and Machinery leases, and
all indentures, loan agreements, security agreements, partnership or joint
venture agreements, license agreements, maintenance contracts, service
contracts, employment, commission and consulting agreements, collective
bargaining agreements, suretyship contracts, letters of credit, reimbursement
agreements, distribution agreements, contracts or commitments limiting or
restraining the Company or its Subsidiaries from engaging or competing in any
lines of business or with any Person, documents granting the power of attorney
with respect to the affairs of the Company or its Subsidiaries, agreements not
made in the ordinary course of business of the Company or its Subsidiaries,
options to purchase any assets or property rights of the Company or its
Subsidiaries, working capital maintenance or other form of guaranty
agreements, trackage rights agreements, haulage agreements, interchange
agreements, joint facility agreements, switching agreements, marketing
agreements, rate and allowance agreements, division agreements, and all other
agreements to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their assets is bound,
but excluding Leases, Purchase Orders, Sales Orders and Plans;
"Owned Real Property" -- See Section 3.11(a);
"Parent" -- See Preamble hereto;
"PBGC" shall mean the Pension Benefit Guaranty Corporation, a wholly
owned United States government corporation established under Section 4002 of
Title IV of ERISA;
"Pension Plan" -- See Section 3.18(c).
"Permitted Liens" shall mean: (i) Liens for Taxes not yet due and
payable or Taxes being contested in good faith in appropriate proceedings and
for which adequate reserves have been made in accordance with GAAP; (ii) Liens
imposed by law and incurred in the ordinary course of business for obligations
not yet due to carriers, warehousemen, laborers, materialmen and the like;
(iii) Liens in respect of pledges or deposits under workers' compensation
laws; and (iv) Liens created in the ordinary course of business which, in the
case of the foregoing (i)-(iv), could not reasonably be expected to,
individually or in the aggregate, materially interfere with the present use of
or materially impair the value of affected assets or properties or otherwise
have a Material Adverse Effect;
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
unincorporated organization or Governmental Entity;
"Plans" -- See Section 3.18(a);
"Pre-Closing Tax Period" shall mean any taxable period (or portion
thereof) ending on or before the Closing Date and the portion of any Straddle
Period ending on and including the Closing Date;
"Property Taxes" -- See Section 7.2(d)(i);
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"Purchase Orders" shall mean all of the Company's and its
Subsidiaries' outstanding purchase orders, contracts or other commitments to
suppliers of goods and services for materials, supplies or other items used in
their businesses;
"Purchase Price" -- See Section 2.1;
"Rail Facilities" -- See Section 3.24;
"Sales Orders" shall mean all of the Company's and its Subsidiaries'
sales orders, contracts or other commitments to purchasers of goods and
services of their businesses;
"Section 338(h)(10) Elections" -- See Section 11.6(a);
"Section 338 Forms" -- See Section 11.6(b);
"Securities Act" shall mean the United States Securities Act of
1933, as amended, and all rules and regulations of the United States
Securities and Exchange Commission promulgated thereunder;
"Seller" -- See Preamble hereto;
"Seller Indemnitees" -- See Section 7.3(a);
"Seller Plans" -- See Section 6.3(c);
"Specified Persons" - See Section 3.20;
"STB" - See Section 3.4;
"Straddle Period" -- See Section 11.1;
"Subsidiary" shall mean, as to any Person, any Person of which (i)
at least a majority of the securities or ownership interests having by their
terms ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions or (ii) the power to direct or
cause the direction of the management and policies of such Person is directly
or indirectly owned or controlled by such Person or by one or more of its
respective Subsidiaries or by such Person and any one or more of its
respective Subsidiaries;
"Tax Claim" -- See Section 11.3(a);
"Tax Return" shall mean any report, return, declaration, statement,
information return, filing, claim for refund or other information, including
any schedules or attachments thereto, and any amendments to any of the
foregoing required to be supplied to a taxing authority in connection with
Taxes;
"Taxes" shall mean all Federal, state, local or foreign taxes,
including, without limitation, net income, gross income, gross receipts,
production, excise, employment, sales, use, transfer, ad valorem, profits,
license, capital stock, franchise, severance, stamp, withholding,
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Social Security, employment, unemployment, disability, worker's compensation,
payroll, utility, windfall profit, custom duties, personal property, real
property, registration, alternative or add-on minimum, estimated and other
taxes, governmental fees or like charges of any kind whatsoever, including any
interest, penalties or additions thereto; and "Tax" shall mean any one of
them; and
"Transition Services Agreement" shall mean the transition services
agreement between the Seller and the Company substantially in the form of
Exhibit C hereto.
ARTICLE 2. PURCHASE AND SALE OF COMPANY SHARES.
SECTION 2.1. Purchase Price. Subject to the terms and conditions set
forth in this Agreement and in reliance upon the representations and
warranties of the Seller and the Parent set forth below, on the Closing Date
the Buyer shall purchase from the Seller and the Seller shall sell to the
Buyer, the Company Shares, free and clear of all Liens. The aggregate purchase
price for the Company Shares being sold by the Seller shall be $54,000,000,
which shall be subject to adjustment after the Closing in the manner set forth
in Section 2.4 below (the "Purchase Price"). Such purchase and sale shall be
effected on the Closing Date by the Seller delivering to the Buyer a stock
certificate evidencing the Company Shares being purchased by the Buyer from
the Seller, duly endorsed for transfer, against delivery by the Buyer to the
Seller of the Purchase Price. Payment of the Purchase Price shall be made by
wire transfer of immediately available funds to such account as the Seller
shall designate in writing to the Buyer.
SECTION 2.2. Closing. Subject to the satisfaction or waiver of the
conditions set forth in Articles 8 and 9 hereof, the closing (the "Closing")
for the consummation of the transactions contemplated by this Agreement shall
take place at the offices of Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019 at 10:00 a.m. on August 28, 2002, or at such other place
and time as may be mutually agreed to by the parties hereto (the "Closing
Date").
SECTION 2.3. Post Closing Determination. (a) Within 45 calendar days
after the Closing Date, the Buyer shall deliver to the Seller a statement of
the Net Working Capital (the "Closing Working Capital Statement"). During the
preparation of the Closing Working Capital Statement by the Buyer and the
period of any dispute with respect to the application of this Section 2.3, the
Seller shall cooperate with the Buyer to the extent reasonably requested by
the Buyer to prepare the Closing Working Capital Statement or to investigate
the basis for any dispute. The Closing Working Capital Statement shall be
examined by the Seller, and the Seller shall, not later than 45 calendar days
after receipt of the Closing Working Capital Statement, render a report
thereon (the "Closing Working Capital Report"). During the preparation of the
Closing Working Capital Report and the period of any dispute with respect
thereto, the Buyer shall: (x) provide the Seller and the Parent with
reasonable access during normal business hours to the books, records
(including work papers, schedules, memoranda and other documents), facilities
and employees of the Company, and (y) cooperate with the Seller and the
Parent, including the provision on a timely basis of all information
reasonably requested by the Seller to prepare the Closing Working Capital
Report. The Closing Working Capital Report shall list those items, if any,
from the Closing Working Capital Statement to which the Seller takes exception
and the Seller's proposed adjustment. If the Seller fails to deliver to the
Buyer a
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Closing Working Capital Report within 45 calendar days following receipt of
the Closing Working Capital Statement, the Seller shall be deemed to have
accepted the Closing Working Capital Statement for the purposes of any
adjustment to the Purchase Price under Section 2.4. If the Buyer does not give
the Seller notice, within 45 calendar days following receipt of the Closing
Working Capital Report, of objections to the Closing Working Capital Report,
the Buyer shall be deemed to have accepted the determination of the Net
Working Capital as determined by the Seller in the Closing Working Capital
Report for the purposes of any adjustment to the Purchase Price under Section
2.4. If the Buyer gives the Seller notice of objections to the Closing Working
Capital Report, and if the Seller and the Buyer are unable, within 15 calendar
days after receipt by the Seller of the notice from the Buyer of objections,
to resolve the disputed exceptions, such disputed exceptions will be referred
to KPMG Peat Marwick or another firm of independent certified public
accountants ("Independent Accounting Firm") mutually acceptable to the Seller
and the Buyer. The Buyer and the Seller shall cooperate with the Independent
Accounting Firm to the extent reasonably requested by the Independent
Accounting Firm to prepare such written report. The Independent Accounting
Firm shall, within 60 days following its selection, deliver to the Seller and
the Buyer a written report determining such disputed exceptions, and its
determinations will be conclusive and binding upon the parties hereto for the
purposes of any adjustment to the Purchase Price under Section 2.4. The fees
and disbursements of the Independent Accounting Firm acting under this Section
2.3 shall be shared equally by the Buyer and the Seller.
(b) The Buyer agrees that following the Closing it will not take any
action, and the Seller and the Parent agree that prior to the Closing they
will not take any action, with respect to the accounting, books, records,
policies and procedures of the Company that would obstruct or prevent the
preparation of the Closing Working Capital Statement, the Closing Working
Capital Report or the report of the Independent Accounting Firm as provided in
this Section 2.3.
SECTION 2.4. Post-Closing Adjustment.
(i) If the Net Working Capital is less than $1,424,104.50, the
Seller shall, within three calendar days following the final determination,
pursuant to Section 2.3, of the Net Working Capital, and based upon such final
determination, pay to the Buyer an amount equal to such deficiency.
(ii) If the Net Working Capital is more than the $1,424,104.50,
the Buyer shall, within three calendar days following the final determination,
pursuant to Section 2.3, of the Net Working Capital, and based upon such final
determination, pay to the Seller an amount equal to such excess.
(iii) Any payment to the Buyer under this Section 2.4 shall be
made by wire transfer of immediately available funds to such account as the
Buyer shall designate in writing to the Seller. Any payment to the Seller
under this Section 2.4 shall be made in the manner set forth in Section 2.1.
SECTION 2.5. Net Working Capital. For purposes of this Section
2, "Net Working Capital" means the amount equal to the current assets (net of
Excluded Assets), less the
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current liabilities (net of Excluded Liabilities), of the Company and its
Subsidiaries (on a consolidated basis) each determined (i) as of the close of
business on the day immediately preceding the Closing Date, and (ii) in
accordance with the accounting principles, procedures, policies and methods
employed by the Company in preparing the Company's and its Subsidiaries'
consolidated net working capital as of February 28, 2002 and consistent with
the accounting principles, procedures, policies and methods used in preparing
the Financial Statements; provided, however, that current assets and current
liabilities shall exclude any amounts related to income Taxes.
SECTION 2.6. Excluded Assets. Notwithstanding anything contained in
this Agreement to the contrary, the following assets of the Company and its
Subsidiaries (the "Excluded Assets") shall be excluded from the assets of the
Company and its Subsidiaries at the Closing:
(i) All cash, cash equivalents and balances remaining in bank
accounts of the Company and its Subsidiaries;
(ii) All receivables of the Company and its Subsidiaries from
the Seller or any of its Affiliates; and
(iii) (a) All business interruption insurance claims of any
Affiliate of the Company and its Subsidiaries relating to the Willow Creek
Mine located in Helper, Utah and arising prior to the date of this Agreement,
(b) Union Pacific portion of personal injury claim -Hernandez - in the amount
of $60,000 (the "Insurance Claims") and (c) claim for damages arising out of
derailment on Salt Lake City Southern in the amount of $155,935.
SECTION 2.7. Excluded Liabilities. Notwithstanding anything
contained in this Agreement to the contrary, all payables of the Company and
its Subsidiaries owed to the Seller or any of its Affiliates shall be excluded
from the liabilities of the Company and its Subsidiaries at the Closing (the
"Excluded Liabilities").
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
PARENT.
The Seller and the Parent hereby represent and warrant to the Buyer
as follows:
SECTION 3.1. Corporate Organization. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted, except
where the failure to be in good standing or to have such power or authority
would not, individually or in the aggregate, either (i) have a material
adverse effect on the business, operations, assets or financial condition or
results of operations of the Company and its Subsidiaries taken as a whole or
(ii) materially impair the ability of the Seller to perform any of its
obligations under this Agreement (either of such effects, a "Material Adverse
Effect"). Copies of the Certificate of Incorporation and By-laws of the
Company, with all amendments thereto to the date hereof, have been furnished
to the Buyer or its representatives, and such copies are accurate and
complete.
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SECTION 3.2. Qualification to Do Business. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the character of the properties and assets owned
or leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.3. No Conflict or Violation; Authority and Validity. (a)
The execution, delivery and performance by the Seller and the Parent of this
Agreement and the transactions contemplated hereby do not and will not (i)
violate or conflict with any provision of the Certificate of Incorporation or
By-laws of the Company, the Seller or the Parent, (ii) violate any order,
judgment or decree of any Governmental Entity applicable to the Company, the
Seller or the Parent, except such violations which would not, individually or
in the aggregate, have a Material Adverse Effect, or (iii) except as set forth
on Schedule 3.3, violate, conflict with or result in a breach of or constitute
(with due notice or lapse of time or both) a default, termination or create a
right of termination under any contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company, the Seller or the Parent is a party or by which any of them are
bound or to which any of their respective properties or assets is subject, or
result in the acceleration of any Indebtedness created thereunder or give rise
to a right thereunder to require any payment to be made by the Company or any
of its Subsidiaries, or result in the creation or imposition of any Lien upon
any of the assets, properties or rights of the Company or any of its
Subsidiaries or result in the cancellation, modification, revocation or
suspension of any of the Licenses and Permits, except for any of the foregoing
matters which would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) The Seller and the Parent each have the requisite corporate
authority to enter into this Agreement, to consummate the transactions
contemplated hereby and to carry out their respective obligations hereunder.
The execution and delivery of this Agreement and the performance by the Seller
and the Parent of their respective obligations hereunder have been duly
authorized by all necessary corporate action by the Board of Directors of the
Seller and the Parent, and no other corporate proceedings on the part of the
Seller, the Parent or the Company are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed and delivered
by the Seller and the Parent and, assuming the due authorization, execution
and delivery of this Agreement by the Buyer, this Agreement constitutes the
valid and binding obligation of each of the Seller and the Parent, enforceable
against each of the Seller and the Parent in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and subject to the limitations imposed by general equitable
principles (regardless whether such enforceability is considered in a
proceeding at law or in equity).
SECTION 3.4. Consents and Approvals. Except as set forth on Schedule
3.4, neither the execution and delivery of this Agreement by the Seller and
the Parent nor the consummation of the transactions contemplated hereby by the
Seller and the Parent require any consent, waiver, approval, license,
authorization or permit of, or filing with or notification to, any Person,
except for (i) any consents or waivers required to be obtained from the
Surface
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Transportation Board (the "STB") and (ii) such consents, waivers, approvals,
authorizations, permits, filings or notifications which, if not obtained or
made, would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.5. Capital Stock and Related Matters. (a) The authorized
capital stock of the Company consists solely of 35,000 shares of Company
Common Stock, of which 30,648 Company Shares are issued and outstanding. The
Company Shares are the sole outstanding shares of capital stock of the
Company; the Company does not have outstanding any securities convertible into
or exchangeable for any shares of capital stock, any rights to subscribe for
or to purchase or any options or warrants for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any other character relating to the issuance,
voting or transfer of, any capital stock of the Company, or any stock or
securities convertible into or exchangeable for any capital stock of the
Company; and the Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire, or to register under
the Securities Act, any shares of its capital stock. The Company Shares have
been duly authorized and validly issued and are fully paid and nonassessable
and were not issued in violation of any preemptive rights, rights of first
refusal or any similar rights granted by the Seller or the Company.
(b) The Seller is the owner, beneficially and of record, of the
Company Shares and, at the Closing, the Seller will have title to all of the
Company Shares, free and clear of any Liens.
SECTION 3.6. Subsidiaries and Equity Investments. Schedule 3.6 sets
forth a complete and accurate list of each Subsidiary of the Company. Each of
the Company's Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
and has the corporate power and authority to own or lease its properties and
assets and to conduct its business as now conducted. Copies of the Certificate
of Incorporation and By-laws of each of the Company's Subsidiaries, with all
amendments thereto to the date hereof, have been furnished to the Buyer or its
representatives, and such copies are accurate and complete. Each of the
Company's Subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which the
character of the properties and assets owned or leased by it or the nature of
the business conducted by it makes such qualification necessary, except where
the failure to be so qualified and in good standing would not, individually or
in the aggregate, have a Material Adverse Effect. All the outstanding shares
of capital stock of each of the Company's Subsidiaries have been duly
authorized, validly issued and are fully paid and nonassessable and owned by
the Company free and clear of any Liens. Except as set forth on Schedule 3.6,
no shares of capital stock of any of the Company's Subsidiaries are
outstanding. None of the Company's Subsidiaries has outstanding any securities
convertible into or exchangeable for any shares of capital stock, any rights
to subscribe for or to purchase or any options or warrants for the purchase
of, or any agreements providing for the issuance (contingent or otherwise) of,
or any calls, commitments or claims of any other character relating to the
issuance, voting or transfer of, any capital stock, or any stock or securities
convertible into or exchangeable for any capital stock; and none of the
Company's Subsidiaries is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire, or to register under the
Securities Act, any shares of its capital stock.
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SECTION 3.7. Financial Statements. The Seller has heretofore
furnished to the Buyer copies of (a) the Balance Sheet, together with the
related audited consolidated statements of income and retained earnings and
cash flows for the year ended December 29, 2001, together with the report
thereon of Ernst & Young LLP, and (b) the unaudited consolidated balance sheet
of the Company as of June 29, 2002, together with the related unaudited
consolidated statements of income and retained earnings and cash flows for the
month then ended (all the financial statements referred to in clauses (a) and
(b) above being hereinafter collectively referred to as the "Financial
Statements"). Except as set forth on Schedule 3.7, the Financial Statements
(i) were prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby (except that the unaudited interim
Financial Statements do not include footnotes) and (ii) present fairly in all
material respects the financial position, results of operations and changes in
the financial position of the Company and its Subsidiaries as of such dates
and for the periods then ended (subject, in the case of the unaudited interim
Financial Statements, to normal year-end audit adjustments consistent with
prior periods).
SECTION 3.8. Absence of Certain Changes or Events.
(a) Except as set forth on Schedule 3.8, since December 29, 2001,
the Company and its Subsidiaries have (i) not suffered any change in their
respective businesses, operations or financial condition, except such changes
which, individually or in the aggregate, have not had and would not reasonably
be expected to have a Material Adverse Effect and (ii) conducted their
respective businesses in all material respects in the ordinary and usual
course of business and consistent with past practice;
(b) Since December 29, 2001, the Company and its Subsidiaries have,
in all material respects, operated in the ordinary course of business
consistent with past practice and, except as set forth on Schedule 3.8 and
except as provided in Section 2.6, have not:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise) except in the ordinary course of
business consistent with past practice;
(ii) failed to discharge or satisfy any Lien or pay or satisfy
any obligation or liability (whether absolute, accrued, contingent or
otherwise), other than liabilities being contested in good faith and for which
adequate reserves have been provided and Liens arising in the ordinary course
of business;
(iii) mortgaged, pledged or subjected to any Lien any of their
respective assets, properties or rights, except for Liens arising in the
ordinary course of business;
(iv) sold or transferred any of their respective assets or
canceled any debts or claims or waived any rights, except in the ordinary
course of business consistent with past practice;
(v) disposed of any patents, trademarks or copyrights or any
patent, trademark or copyright applications;
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(vi) entered into any transaction material to their respective
businesses, except in the ordinary course of business consistent with past
practice;
(vii) written down the value of any inventory or written off as
uncollectible any of their respective accounts receivable or any portion
thereof not reflected in the Balance Sheet, except in the ordinary course of
business consistent with past practice;
(viii) granted any increase in the compensation or benefits of,
or loaned or advanced any money or other property to, their respective present
or former directors, officers or employees, other than increases, loans or
advances in accordance with past practice, or entered into any material
employment or severance agreement or arrangement with any of their respective
present or former directors, officers or employees;
(ix) incurred any material obligation or liability for the
payment of severance benefits, except in the ordinary course of business
consistent with past practice;
(x) declared, paid or set aside for payment any dividend or
other distribution in respect of shares of their respective capital stock or
other securities, or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of their respective capital stock or other securities,
or agreed to do so;
(xi) laid off any employees except in the ordinary course of
business;
(xii) established, adopted, entered into, amended or terminated
any Plans, except to the extent that any such amendments are required by law,
are necessary to preserve the tax-qualified status of any Plan or do not
result in an increase in benefits for their respective present or former
directors, officers or employees;
(xiii) granted, amended, modified, extended or terminated any
trackage rights agreement, haulage agreement, power-run-through agreement,
marketing agreement, joint facilities agreement or other agreement with
carriers materially affecting the operations on, or marketing of traffic to,
from or over, the Rail Facilities;
(xiv) changed any financial or accounting policy or practice,
entered into any closing agreement with respect to Taxes or settled or
compromised any Tax liability;
(xv) make any capital expenditure in excess of $500,000, or
additions to property, plant or equipment used in its operations other than
ordinary repairs and maintenance; or
(xvi) entered into any agreement or made any commitment to do
any of the foregoing.
SECTION 3.9. Tax Matters. Except as set forth on Schedule 3.9, (i)
the Company and its Subsidiaries have filed when due all material Tax Returns
required by applicable law to be filed and the Company and its Subsidiaries
and have paid all Taxes required to be paid in respect of the periods covered
by such Tax Returns; (ii) the information contained
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in such Tax Returns is true, correct and complete in all material respects;
(iii) the Taxes of the Company and its Subsidiaries for periods ending on or
before the Closing Date (whether or not shown on any Tax Return), if required
to have been paid, have been paid (except for Taxes which are being contested
in good faith by appropriate proceedings); (iv) there is no action, suit,
proceeding, investigation, audit or claim now pending against, or with respect
to, the Company or any of its Subsidiaries in respect of any material Tax or
assessment, or with respect to any Tax Return, nor is there any claim for
additional material Tax or assessment asserted by any Tax authority; (v) any
liability of the Company or any of its Subsidiaries for Taxes that are not yet
due and payable with respect to any Pre-Closing Tax Period have been provided
for in the Financial Statements; (vi) none of the assets, properties or rights
of the Company or any of its Subsidiaries are "tax-exempt use property" within
the meaning of Section 168(h) of the Code; (vii) none of the assets,
properties or rights of the Company or any of its Subsidiaries include any
lease made pursuant to former Section 168(f)(8) of the Internal Revenue Code
of 1954; (viii) there is no Lien affecting any of the assets, properties or
rights of the Company or any of its Subsidiaries that arose in connection with
any failure or alleged failure to pay any Tax; (ix) the Seller is not a
"foreign person" within the meaning of Section 1445 of the Code; (x) neither
the Company nor any of its Subsidiaries (A) has been a member of an affiliated
group filing a consolidated, combined or unitary federal, state, local or
foreign income Tax Return (other than a group the common parent of which is
the Company) or (B) has any liability for the Taxes of any Person under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law) or as a transferee or successor, by contract or otherwise; (xi)
all Taxes required to be withheld, collected or deposited by or with respect
to the Company or any of its Subsidiaries have been timely withheld, collected
or deposited, as the case may be, and, to the extent required, have been paid
to the relevant Tax authority; (xii) neither of the Company nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any Tax
sharing or Tax indemnification agreement or similar contract or arrangement;
and (xiii) no closing agreement pursuant to Section 7121 of the Code (or any
similar provision of state, local or foreign law) has been entered into by or
with respect to the Company or any of its Subsidiaries.
SECTION 3.10. Absence of Undisclosed Liabilities. Except as and to
the extent set forth in the Financial Statements or on Schedule 3.10, neither
the Company nor any of its Subsidiaries had any Indebtedness or liabilities
required by GAAP to be reflected on a balance sheet which is not shown or
provided for on the Balance Sheet other than Indebtedness and liabilities as
shall have been incurred or accrued in the ordinary course of business since
December 29, 2001 or which, in the aggregate, are not material to the Company
and its Subsidiaries. Except as set forth on the Balance Sheet or on Schedule
3.10, neither the Company nor any of its Subsidiaries is directly or
indirectly liable upon or with respect to (by discount, repurchase agreement
or otherwise), or obliged in any other way to provide funds in respect of, or
to guarantee or assume, any Indebtedness of any Person, except endorsements in
the ordinary course of business in connection with the deposit, in banks or
other financial institutions, of items for collection or which, individually
or in the aggregate, are not material to the Company and its Subsidiaries.
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SECTION 3.11. Owned Real Property.
(a) Schedule 3.11 sets forth a list, which is complete and accurate
in all material respects, of the real property (including a general
description of the uses for such real property) owned by the Company or any of
its Subsidiaries (the "Owned Real Property"). The Company or one of its
Subsidiaries has title to the Owned Real Property and, except as, individually
or in the aggregate, would not have a Material Adverse Effect, the Owned Real
Property is free and clear of any Liens.
(b) None of the Seller, the Parent or the Company has knowledge of,
and none of the Seller, the Parent or the Company has received any written
notice of, any pending or contemplated rezoning or condemnation proceeding
affecting the Owned Real Property.
SECTION 3.12. Leases.
(a) Schedule 3.12 sets forth a list of all material leases,
subleases and occupancy agreements, together with all amendments and
supplements thereto, with respect to all real properties in which the Company
or any of its Subsidiaries has a leasehold interest, whether as lessor or
lessee (each, a "Lease" and collectively, the "Leases"; the property covered
by Leases under which the Company or such Subsidiary is a lessee is referred
to herein as the "Leased Real Property").
(b) Each Lease is in full force and effect and no Lease has been
modified or amended except pursuant to an amendment referred to on Schedule
3.12. Neither the Company nor any of its Subsidiaries nor, to the knowledge of
the Seller, the Parent and the Company, any other party to a Lease has given
to the other party written notice of or has made a claim with respect to any
breach or default, except for such breaches or defaults which, individually or
in the aggregate, would not have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is in default under any Lease and, to the
knowledge of the Seller, the Parent and the Company, no other party to a Lease
is in default, except for such defaults which, individually or in the
aggregate, would not have a Material Adverse Effect. There are no events which
with the passage of time or the giving of notice or both would constitute a
default by the Company or any of its Subsidiaries or, to the knowledge of the
Seller, the Parent and the Company, by any other party to such Lease, except
for such defaults which, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 3.13. Intellectual Property. (a) Schedule 3.13(a) sets forth
a complete and correct list of the material Intellectual Property (the "Listed
Intellectual Property") filed by or issued or registered to the Company or any
of its Subsidiaries in connection with their businesses. The Company or one of
its Subsidiaries owns or has a valid and enforceable license or otherwise has
the right to use all Intellectual Property necessary for the conduct of their
businesses as currently conducted and, to the knowledge of the Seller, the
Parent and the Company, such use does not violate or conflict with the rights
of any third party. Except as set forth on Schedule 3.13(a), to the knowledge
of the Seller, the Parent and the Company, all Listed Intellectual Property is
owned by the Company or one of its Subsidiaries, free and clear of all Liens.
There has not been communicated to the Seller, the Parent or the Company in
writing the threat of any claim that the holder of such Listed Intellectual
Property is in violation or
-15-
infringement of any Intellectual Property right of any third party, or
challenging the Company's or any of its Subsidiaries' ownership or use of, or
the validity or enforceability of, any of the Listed Intellectual Property.
(b) Schedule 3.13(b) sets forth a complete list of all material
licenses, sublicenses and other agreements in which the Company or any of its
Subsidiaries or any sublicensee of the Company or any of its Subsidiaries has
granted to any Person the right to use the Listed Intellectual Property.
Except as set forth on Schedule 3.13(b), neither Company nor any of its
Subsidiaries is under any obligation to pay royalties or other payments in
connection with any material license, sublicense or other agreement, nor is
the Company or any of its Subsidiaries restricted from assigning its rights
under any sublicense or agreement respecting the Listed Intellectual Property,
nor will Company or any of its Subsidiaries otherwise be, as a result of the
Seller's and the Parent's execution and delivery of this Agreement, in breach
of any material license, sublicense or other agreement relating to the Listed
Intellectual Property.
SECTION 3.14. Licenses and Permits. The Company or one of its
Subsidiaries holds all licenses, permits, variances, exemptions, franchises,
authorizations and approvals (the "Licenses and Permits") of all Governmental
Entities necessary to own, lease or operate their respective properties and to
permit the continued lawful conduct of their businesses in the manner now
conducted, except where the failure to hold such Licenses and Permits would
not, individually or in the aggregate, have a Material Adverse Effect. The
operations of the Company and its Subsidiaries are being conducted in a manner
that complies with the terms or conditions of the Licenses and Permits, except
where noncompliance with the terms and conditions of such Licenses and Permits
would not, individually or in the aggregate, have a Material Adverse Effect.
The consummation of the transactions contemplated by this Agreement will not
result in the termination or suspension of any License or Permit, except for
such terminations and suspensions that would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.15. Compliance with Law. The businesses of the Company and
its Subsidiaries are not being conducted in violation of any applicable order,
writ, judgment, injunction, decree, statute, ordinance, rule or regulation of
any Governmental Entity, except such violations which, individually or in the
aggregate, would not have a Material Adverse Effect.
SECTION 3.16. Litigation. Except as set forth on Schedule 3.16,
there are no claims, actions, suits, proceedings, labor disputes or
investigations pending or, to the knowledge of the Seller, the Parent and the
Company, threatened in writing, before any Governmental Entity or before any
arbitrator of any nature, brought by or against the Company or any of its
Subsidiaries, the assets, properties or rights of the Company or any of its
Subsidiaries or the transactions contemplated by this Agreement which, if
adversely determined, would be reasonably likely, individually or in the
aggregate, to result in a Material Adverse Effect. None of the Company, any of
its Subsidiaries, or any of their respective assets, properties or rights is
subject to any order, writ, judgment, award, injunction or decree of any
Governmental Entity or arbitrator that would be reasonably likely to have
either individually or in the aggregate a Material Adverse Effect or interfere
with the transactions contemplated by this Agreement.
-16-
SECTION 3.17. Contracts.
(a) Schedule 3.17 sets forth a complete and correct list of all
Contracts (as in effect on the date hereof) involving annual payments in
excess of $500,000.
(b) Each Contract is valid and binding upon the Company and its
Subsidiaries, as applicable, and, to the knowledge of the Seller, the Parent
and the Company, the other parties thereto in accordance with its terms, and
is in full force and effect, except to the extent where the failure to be so
valid or binding would not, individually or in the aggregate, have a Material
Adverse Effect. Neither Company nor any of its Subsidiaries is in default or
delinquent in performance, status or any other respect (claimed or actual) in
connection with any Contract to which it is a party, except to the extent such
defaults or delinquencies would not, individually or in the aggregate, have a
Material Adverse Effect. To the knowledge of the Seller, the Parent and the
Company, no other party to any Contract is in default in respect thereof,
except to the extent such defaults would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.18. Employee Plans.
(a) Schedule 3.18(a) sets forth a true and complete list of all
"employee benefit plans", as defined in Section 3(3) of ERISA, and all other
employee benefit arrangements, programs, policies or practices, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transactions contemplated by this
Agreement or otherwise), whether formal or informal, oral or written, legally
binding or not, including those with respect to, without limitation,
multiemployer plans within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"), severance pay, sick leave, vacation pay, salary
continuation for disability, retirement, deferred compensation, bonus,
incentive, stock purchase, stock option, hospitalization, medical and dental
insurance, cafeteria, life insurance, tuition reimbursement, scholarship,
employment, change-in-control, fringe benefit, or collective bargaining under
which any employee, director or consultant or former employee, director or
consultant of the Company or its Subsidiaries has any present or future right
to benefits and which is sponsored or maintained by the Parent, the Company or
its Subsidiaries or under which the Company or its Subsidiaries has had or has
any present or future liability (collectively referred to herein as the
"Plans"). True, correct, current and complete copies of the following
documents relating to the Plans, to the extent applicable, have been delivered
or made available to the Buyer: (i) the plan document and its related trust
document or other funding instrument, including any amendments thereto; (ii)
any summary plan description and other written communications (or a
description of any oral communications) by the Company or its Subsidiaries to
their employees or former employees concerning the extent of benefits provided
under a Plan; (iii) the most recent determination letter, if applicable; and
(iv) for the two most recent years (A) the Form 5500 and Annual Return/Report
of Employee Benefit Plan, including all related schedules, filed with respect
to each Plan, (B) audited financial statements, (C) actuarial valuation
reports and (D) attorney's response to an auditor's request for information
relating to the Plans.
(b) Schedule 3.18(b) sets forth all Plans that are Multiemployer
Plans. None of the Plans that are Multiemployer Plans are subject to Title IV
of ERISA. With respect to any
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Multiemployer Plan to which the Company, its Subsidiaries or any trade or
business (whether or not incorporated) which is or has ever been treated as a
single employer with the Company or any of its Subsidiaries under Section
414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") has any liability or
contributes (or has at any time contributed or had an obligation to
contribute): (i) none of the Company, any of its Subsidiaries or any ERISA
Affiliate has incurred any liability due to a complete or partial withdrawal
(as defined in ERISA Sections 4203 and 4205, respectively) from a
Multiemployer Plan or due to the termination or reorganization of a
Multiemployer Plan, except for any such liability which has been satisfied in
full, and no events have occurred and no circumstances exist that could
reasonably be expected to result in any such liability to the Company or any
of its Subsidiaries; and (ii) no such Multiemployer Plan is in reorganization
or insolvent (as those terms are defined in ERISA sections 4241 and 4245,
respectively).
(c) None of the Plans is a "single-employer plan", as defined in
Section 4001(a)(15) of ERISA, that is subject to Title IV of ERISA ("Pension
Plan"). With respect to any Pension Plan currently or previously sponsored by,
or to which contributions are or were required of, the Company, its
Subsidiaries or any ERISA Affiliate, there does not exist any accumulated
funding deficiency within the meaning of Section 412 of the Code or Section
302 of ERISA, whether or not waived. None of the Company, any of its
Subsidiaries or any ERISA Affiliate has any outstanding liability under
Section 4062 of ERISA to the PBGC or to a trustee appointed under Section 4042
of ERISA, and no events have occurred and no circumstances exist that could
reasonably be expected to result in any such liability to the Company or any
of its Subsidiaries. Except as a result of the transactions contemplated by
this Agreement, there has been no "reportable event" within the meaning of
Section 4043 of ERISA with respect to any Pension Plan that would require the
giving of notice to the PBGC or any other event requiring disclosure under
Section 4041(c)(3)(C) or 4063(a) of ERISA. None of the Company, any of its
Subsidiaries or any ERISA Affiliate has engaged in any transaction described
in Section 4069 or 4212 of ERISA that could result in liability to the Company
or any of its Subsidiaries with respect to any Pension Plan.
(d) With respect to each Plan (other than a Multiemployer Plan) that
is intended to qualify under Code Section 401(a), such Plan, and its related
trust, has received, has an application pending or remains within the remedial
amendment period for obtaining, a favorable determination letter from the
Internal Revenue Service that it is so qualified and that its trust is exempt
from Tax under Section 501(a) of the Code and, to the knowledge of the Seller,
the Parent and the Company, no facts or set of circumstances exist that could
reasonably be expected to cause such Plan and related trust not to qualify or
be so exempt from tax, or to lose such qualification or exemption from tax.
(e) All contributions (including all employer contributions and
employee contributions) required to have been made under the Plans (other than
contributions required to have been made to any Multiemployer Plan by any
Person other than the Company, its Subsidiaries or any of their employees) or
by law to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid
extension), and all such contributions for any period ending on or before the
Closing Date which are not yet due will have been paid or accrued by the
Closing Date. No event has occurred and no condition
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exists with respect to the Plans or any "employee benefit plan" as defined in
Section 3(3) of ERISA that could reasonably be expected to subject the Company
or its Subsidiaries, either directly or by reason of their affiliation with
any ERISA Affiliate, to any material tax, fine, lien, penalty or other
liability imposed by ERISA, the Code or other applicable laws, rules and
regulations.
(f) There has been no material violation of ERISA or the Code with
respect to the filing of applicable documents, notices or reports (including,
but not limited to, annual reports filed on Form 5500) regarding the Plans
(and, to the knowledge of the Seller, the Parent and the Company, with respect
to Plans that are Multiemployer Plans) with the Department of Labor or the
Internal Revenue Service, or the furnishing of such required documents to the
participants or beneficiaries of the Plans (or, to the knowledge of the
Seller, the Parent and the Company, with respect to Plans that are
Multiemployer Plans). For each Plan (to the knowledge of the Seller, the
Parent and the Company with respect to Plans that are Multiemployer Plans)
with respect to which a Form 5500 has been filed, no material change has
occurred with respect to the matters covered by the most recent Form since the
date thereof.
(g) Except as set forth on Schedule 3.18(g) (to the knowledge of the
Seller, the Parent and the Company, with respect to Plans that are
Multiemployer Plan), (i) there are no pending material actions, claims or
lawsuits which have been asserted, instituted or, to the knowledge of the
Seller, the Parent and the Company, threatened, against the Plans, the assets
of any of the trusts under the Plans or the sponsor or the administrator of
the Plans, or, to the knowledge of the Seller, the Parent and the Company,
against any fiduciary of the Plans with respect to the operation of the Plans
(other than routine benefit claims), (ii) no facts or circumstances exist that
could reasonably be expected to give rise to any such actions, claims or
lawsuits, and (iii) no administrative investigation, audit or other
administrative proceeding by the Department of Labor, the PBGC, the Internal
Revenue Service or other governmental agencies are pending, in progress or, to
the knowledge of the Seller, the Parent and the Company, threatened.
(h) Except with respect to any Multiemployer Plan, the Plans have
been established and administered in all material respects in accordance with
their express terms, and in compliance with all provisions of ERISA and the
Code (including rules and regulations thereunder) and other applicable federal
and state laws and regulations, and, to the knowledge of the Seller, the
Parent and the Company, no "party in interest" or "disqualified person" with
respect to the Plans has engaged in a non-exempt "prohibited transaction", as
defined in Section 4975 of the Code or Section 406 of ERISA, or taken any
actions, or failed to take any actions, which could reasonably result in any
material liability to the Company or any of its Subsidiaries under ERISA or
the Code.
(i) The Company, its Subsidiaries and each ERISA Affiliate that
maintains a "group health plan", as defined in Section 5001(b)(1) of the Code,
has complied in all material respects with the requirements of Section 4980B
of the Code and Section 601 of ERISA and the regulations thereunder ("COBRA").
Except as set forth on Schedule 3.18(i), none of the Plans provide retiree
health or life insurance benefits except as may be required by COBRA (or any
applicable state law) or at the expense of the participant or the
participant's beneficiary.
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(j) There has been no mass layoff or plant closing as defined by the
Worker Adjustment and Retraining Notification Act or any similar state or
local "plant closing" law with respect to the employees of the Company or any
of its Subsidiaries.
(k) No plan exists that, as a result of the execution of this
Agreement or the transactions contemplated by this Agreement (whether alone or
in connection with a subsequent event), could result in the payment to any
employee or former employee of the Company or its Subsidiaries of any money or
other property or could result in the increase, acceleration or provision of
any payments, other rights or benefits to any employee or former employee of
the Company or its Subsidiaries, whether or not any such payment, right or
benefit would constitute a parachute payment within the meaning of Code
Section 280G.
SECTION 3.19. Insurance. Prior to the date hereof, the Seller has
furnished to the Buyer a true, complete and accurate copy or other proof of
all policies of title, liability, fire, casualty, business interruption,
workers' compensation and other forms of insurance insuring the Company, its
Subsidiaries and their respective assets, properties and operations. All such
policies are in full force and effect and all premiums due thereunder have
been paid. Neither the Company nor any of its Subsidiaries has received notice
of cancellation of any such insurance. There is no claim by the Company or any
of its Subsidiaries pending under any of such policies as to which coverage
has been denied by the underwriters of such policies.
SECTION 3.20. Transactions with Directors, Officers and Affiliates.
Except as set forth on Schedule 3.20, neither Company nor any of its
Subsidiaries is a party to any agreement or arrangement with the Seller, the
Parent or any of the directors, executive officers or stockholders of the
Company, any Subsidiary of the Company or any Affiliate or family member of
any of the foregoing Persons ("Specified Persons") (other than stockholders of
the Parent who are not Specified Persons) under which it: (a) leases any real
or personal property (either to or from such Person); (b) licenses technology
(either to or from such Person); (c) is obligated to purchase any tangible or
intangible asset from or sell such asset to such Person; (d) purchases
products or services from such Person; (e) pays or receives commissions,
rebates or other payments; or (f) provides or receives any other material
benefit.
SECTION 3.21. Labor Matters.
(a) Except as set forth on Schedule 3.21(a): (i) neither the Company
nor any of its Subsidiaries is a party to any outstanding employment
agreements or contracts with officers or employees of the Company or any of
its Subsidiaries that are not terminable at will; (ii) neither the Company nor
any of its Subsidiaries is a party to any agreement, policy or practice that
requires it to pay termination or severance pay to salaried, non-exempt or
hourly employees of the Company or any of its Subsidiaries (other than as
required by law); and (iii) neither the Company nor any of its Subsidiaries is
a party to any collective bargaining agreement or other labor union contract
applicable to employees of the Company or any of its Subsidiaries nor does the
Seller, the Parent or the Company know of any activities or proceedings of any
labor union to organize any such employees.
(b) Except as set forth on Schedule 3.21(b): (i) the Company and its
Subsidiaries are in compliance in all material respects with all applicable
laws relating to
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employment and employment practices, wages, hours and terms and conditions of
employment; (ii) there are no open notices pending under Section 6 of the
Railway Labor Act; (iii) there are no disputes under existing collective
bargaining agreements pending before a tribunal established pursuant to
Section 3 of the Railway Labor Act or under labor protection conditions
imposed by the Interstate Commerce Commission or the STB; (iv) there is no
labor strike, material slowdown or material work stoppage or lockout pending
or, to the knowledge of the Seller, the Parent and the Company, threatened
against or affecting the Company or any of its Subsidiaries; and (v) there is
no representation dispute pending or, to the knowledge of the Seller, the
Parent and the Company, threatened before the National Mediation Board and no
question concerning representation exists relating to the employees of the
Company or any of its Subsidiaries.
SECTION 3.22. Environmental Matters.
(a) Except as set forth on Schedule 3.22 and other than any
exceptions to any of the following that, individually or in the aggregate,
would not have a Material Adverse Effect:
(i) the Company and its Subsidiaries are in compliance, and for
the last three (3) years have been in compliance, with all applicable
Environmental Laws and Licenses and Permits required under applicable
Environmental Laws;
(ii) there is no Environmental Claim pending or, to the
knowledge of the Seller, the Parent and the Company, threatened against the
Company or any of its Subsidiaries; and
(iii) no Hazardous Substances are present at any of the Owned
Real Property or the Leased Real Property under circumstances that would
reasonably be expected to result in any Environmental Claim against the
Company or any of its Subsidiaries, and none of the Company and its
Subsidiaries has released, or arranged for the disposal of, Hazardous
Substances at any other location in a manner that would reasonably be expected
to result in any Environmental Claim against the Company or any of its
Subsidiaries.
(b) The Company has provided to the Buyer true and complete copies
of all material Environmental Reports in the possession or control of the
Company or any of its Subsidiaries regarding any environmental matter that
could reasonably be expected to be material to the Company or any of its
Subsidiaries.
SECTION 3.23. Relations with Principal Customers. Schedule 3.23
lists, by dollar volume paid for the fiscal year ended December 29, 2001, the
top ten customers of the Company. Except as set forth on Schedule 3.23, no
customer listed on Schedule 3.23 has, since December 29, 2001, threatened in
writing to cancel or otherwise terminate the relationship of such customer
with the Company.
SECTION 3.24. Rail Facilities and Related Contracts. The Company and
its Subsidiaries hold sufficient property interests and operating rights in
and to the rail line depicted on the map appended to Schedule 3.24, and to the
adjacent yards, spur tracks and other rail facility appurtenances thereto
(collectively, the "Rail Facilities") to permit the Company and its
Subsidiaries to conduct rail freight operations on and over the Rail
Facilities as such operations
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are conducted by the Company and its Subsidiaries on the date of this
Agreement. Neither the Company nor any of its Subsidiaries is a party to any
contract or subject to any order that would deprive the Company or any of its
Subsidiaries of the ability to operate substantially as the Company and its
Subsidiaries operate over the Rail Facilities on the date of this Agreement,
or that would deprive the Company and its Subsidiaries of the ability to (i)
serve directly all customers that may be served directly by them on the date
of this Agreement or (ii) interchange with the carriers listed on Schedule
3.24 at or near the locations listed on Schedule 3.24.
SECTION 3.25. Disclaimer. Except as expressly set forth herein, the
Company and its Subsidiaries and their respective assets are "as is, where is"
and the Seller and the Parent expressly disclaim any express or implied
representation or warranty and, except as otherwise expressly set forth
herein, the Buyer agrees that no warranties, expressed or implied, contained
in the Uniform Commercial Code or otherwise (including, without limitation,
the implied warranties of merchantability and fitness for particular purpose)
shall apply to the transactions contemplated herby or said assets, and the
Buyer acknowledges that, except as otherwise expressly set forth herein, the
assets are "as is, where is."
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer hereby represents and warrants to the Seller and the
Parent as follows:
SECTION 4.1. Corporate Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted, except
where the failure to be so organized, existing and in good standing or to have
such power or authority would not, individually or in the aggregate, either
(i) have a material adverse effect on the business, operations, assets or
financial condition of the Buyer or (ii) materially impair the ability of
Buyer to perform any of its obligations under this Agreement (either of such
effects, a "Buyer Material Adverse Effect").
SECTION 4.2. Qualification to Do Business. The Buyer is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the character of the properties and assets owned
or leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in
good standing would not, individually or in the aggregate, have a Buyer
Material Adverse Effect.
SECTION 4.3. Authorization and Validity of Agreement. The Buyer has
the requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
by the Buyer of this Agreement and the performance by the Buyer of its
obligations hereunder have been duly authorized by all necessary corporate
action by the Board of Directors of the Buyer, and no other corporate
proceedings on the part of the Buyer are necessary to authorize such
execution, delivery and performance. This Agreement has been duly executed and
delivered by the Buyer and, assuming the due authorization, execution and
delivery of this Agreement by the Seller and the Parent, this Agreement
constitutes the Buyer's valid and binding obligation enforceable against the
Buyer in accordance with its terms, except as such enforceability may be
limited by applicable
-22-
bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and subject to the limitations imposed
by general equitable principles (regardless whether such enforceability is
considered in a proceeding at law or in equity).
SECTION 4.4. No Conflict or Violation. The execution, delivery and
performance by the Buyer of this Agreement and the transactions contemplated
hereby do not and will not (i) violate or conflict with any provision of the
Certificate of Incorporation or By-laws of the Buyer, (ii) violate any order,
judgment or decree of any Governmental Entity applicable to the Buyer, except
such violations which, individually or in the aggregate, would not have a
Buyer Material Adverse Effect or (iii) violate, conflict with or result in a
breach of or constitute (with due notice or lapse of time or both) a default,
termination or right of termination under any contract, lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement or instrument
to which the Buyer is a party or by which it is bound or to which any of its
properties or assets is subject, or result in the acceleration of any
Indebtedness created thereunder or give rise to a right thereunder to require
any payment to be made by the Buyer, or result in the creation or imposition
of any Lien upon any of the assets, properties or rights of the Buyer, except
for any of the foregoing matters which would not, individually or in the
aggregate, have a Buyer Material Adverse Effect.
SECTION 4.5. Consents and Approvals. Neither the execution and
delivery of this Agreement by the Buyer nor the consummation of the
transactions contemplated hereby by the Buyer require any consent, waiver,
approval, license, authorization or permit of, or filing with or notification
to, any Person, except for (i) any consents or waivers required to be obtained
from the STB and (ii) such consents, waivers, approvals, authorizations,
permits, filings or notifications which, if not obtained or made, would not,
individually or in the aggregate, have a Buyer Material Adverse Effect.
SECTION 4.6. Sophisticated Investor. The Buyer is a sophisticated
investor, represented by independent legal counsel with experience in the
acquisition of ongoing businesses and acknowledges that it has received, or
has had access to, all information which it considers necessary or advisable
to enable it to make an informed investment decision concerning its purchase
of the Company Shares. The Buyer is acquiring the Company Shares for
investment purposes only, and not with a view to, or for, any public resale or
other distribution thereof. The Buyer understands that the Company Shares have
not been registered under the Securities Act or any state securities law, by
reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act and such laws, which exemption depends
upon, among other things, the bona fide nature of the Buyer's investment
intent as expressed herein. The Buyer also understands that such securities
must be held indefinitely unless they are subsequently registered under the
Securities Act and such laws or a subsequent disposition thereof is exempt
from registration. The Buyer is an "accredited investor" as such term is
defined in the regulations promulgated under the Securities Act.
SECTION 4.7. Other Investment Representations. (i) The Buyer and its
employees, agents and accounting and legal representatives have been afforded
reasonable
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access to the books, records, key personnel, facilities and other information
reasonably related to the Company Shares and the business of the Company and
is Subsidiaries; (ii) the Buyer and its employees, agents and accounting and
legal representatives have been given reasonable opportunity to ask questions
relating to the Company Shares and the business and affairs of the Company and
its Subsidiaries and to receive answers thereto; (iii) the Buyer has performed
such due diligence as the Buyer has deemed necessary in order to review the
business and affairs of the Company and its Subsidiaries in connection with
its acquisition of the Company Shares; (iv) in completing the transactions
contemplated by this Agreement, the Buyer has not and is not relying on any
representation or warranty whether by the Seller, the Parent, the Company or
any other Person, which is not expressly stated in this Agreement; and (v) the
Buyer understands that neither the Seller, the Parent, the Company nor any of
their respective Affiliates, representatives or agents is making any
representation whatsoever, oral or written, express or implied, other than as
set forth in this Agreement, and the Buyer is not relying on any statement,
representation or warranty, oral or written, express or implied, made by the
Seller, the Parent, the Company, any of their respective Affiliates,
representatives or agents, or any other Person, except as set forth in this
Agreement.
SECTION 4.8. Available Funds. As of the Closing Date, the Buyer will
have sufficient funds available to satisfy the obligation of Buyer to pay the
Purchase Price and to pay all fees and expenses of the Buyer related to the
transactions contemplated hereby.
ARTICLE 5. COVENANTS OF THE SELLER AND THE PARENT.
The Seller and the Parent hereby covenant as follows:
SECTION 5.1. Conduct of Business Before the Closing Date. Except as
set forth on Schedule 5.1 or as otherwise expressly contemplated by this
Agreement, without the prior written consent of the Buyer, between the date
hereof and the Closing Date, the Seller and the Parent shall not permit the
Company or any of its Subsidiaries to:
(i) make any material change in the conduct of the business of
the Company or any of its Subsidiaries or enter into any transaction other
than in the ordinary course of business consistent with past practice;
(ii) make any change in its Certificate of Incorporation or
By-laws; issue any additional shares of capital stock or equity securities or
grant any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for capital
stock or alter in any way any of its outstanding securities or make any change
in outstanding shares of capital stock or other ownership interests or the
capitalization of the Company or any of its Subsidiaries, whether by reason of
a reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;
(iii) make any sale, assignment, transfer, abandonment or other
conveyance or disposition of the assets, properties or rights (including any
Intellectual Property) of the Company or any of its Subsidiaries or any
material part thereof, except transactions pursuant to Contracts and
dispositions of inventory or of worn-out or obsolete equipment for fair or
reasonable value in the ordinary course of business consistent with past
practice;
-24-
(iv) subject any of the assets, properties or rights of the
Company or any of its Subsidiaries, or any part thereof, to any Lien or suffer
such to exist, other than (A) Permitted Liens and (B) such Liens as may arise
in the ordinary course of business consistent with past practice by operation
of law and that will not, individually or in the aggregate, have a Material
Adverse Effect;
(v) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of the capital stock or other securities of the Company
or any of its Subsidiaries or declare, set aside or pay any dividends or other
distribution in respect of such shares or other securities of the Company or
any of its Subsidiaries;
(vi) acquire any assets, raw materials or properties, or enter
into any other transaction, other than in the ordinary course of business
consistent with past practice;
(vii) (A) establish, adopt, enter into, amend or terminate any
Plan or any plan, agreement, program, policy, trust, fund or other arrangement
that would be a Plan if it were in existence as of the date of this Agreement,
except to the extent that any such amendments are required by law, are
necessary to preserve the tax-qualified status of any Plan or do not result in
an increase in benefits for the present or former directors, officers or
employees of the Company or its Subsidiaries; (B) grant any increase in the
compensation or fringe benefits of any present or former directors,
consultants, officers or employees of the Company or its Subsidiaries
(including without limitation any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment), except in accordance
with pre-existing contractual provisions or for increases in salary or wages
in the ordinary course of business consistent with past practice; (C) grant
any severance or termination pay to any present or former director, officer or
employee of the Company or its Subsidiaries; or (D) loan or advance money or
other property to any present or former directors, officers or employees of
the Company or its Subsidiaries;
(viii) pay, lend or advance any amount to, or sell, transfer or
lease any properties or assets to, or enter into any agreement or arrangement
with, any of their Affiliates, other than in the ordinary course of business
consistent with past practice;
(ix) take any other action which the Company or any of its
Subsidiaries reasonably expects would cause any of the representations and
warranties made by the Seller or the Parent in this Agreement not to remain
true and correct in any material respect;
(x) make any change in any method of accounting or accounting
principle, method, estimate or practice, except for any such change required
by reason of a concurrent change in GAAP, or write down the value of any
inventory or write off as uncollectible any accounts receivable or any portion
thereof except in the ordinary course of business consistent with past
practice;
(xi) make, change or revoke any election or method of
accounting with respect to Taxes affecting or relating to the Company or any
of its Subsidiaries or surrender any right to claim a Tax refund;
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(xii) enter into any closing or other agreement or settlement
with respect to Taxes affecting or relating to the Company or any of its
Subsidiaries or agree to an extension of the statute of limitations with
respect to the assessment or determination of any Taxes;
(xiii) settle, release or forgive any claim or litigation or
waive any right thereto other than in the ordinary course of business
consistent with past practice;
(xiv) make, enter into, modify, amend in any material respect
or terminate any Contract, bid or expenditure, except in the ordinary course
of business consistent with past practice;
(xv) except in the ordinary course of business consistent with
past practice, amend, terminate or surrender any Lease;
(xvi) except in the ordinary course of business consistent with
past practice, create, incur, assume or suffer to exist any Indebtedness;
(xvii) make any capital expenditure in excess of $100,000, or
addition to property, plant or equipment used in its operations other than
ordinary repairs and maintenance;
(xviii) lay off any employees;
(xix) grant, amend, modify, extend or terminate any trackage
rights agreement, haulage agreement, power-run-through agreement, marketing
agreement, joint facilities agreement or other agreement with carriers
materially affecting the operations on, or marketing of traffic to, from or
over, the Rail Facilities;
(xx) abandon or discontinue service over all or any portion of
the Rail Facilities, or commence a regulatory proceeding to facilitate any
such abandonment or discontinuance;
(xxi) enter into, materially amend or renew any agreement with
a shipper or receiver for movement of traffic over the Rail Facilities, except
in the ordinary course of business consistent with past practice;
(xxii) enter into any agreement with a shipper or receiver that
would cause or facilitate the diversion of a material amount of traffic from
the Rail Facilities; or
(xxiii) commit to do any of the foregoing.
SECTION 5.2. Consents and Approvals. The Seller and the Parent
shall, and shall cause the Company and its Subsidiaries to, at the cost and
expense of the Seller, (i) use their commercially reasonable efforts to obtain
all necessary consents, waivers, authorizations and approvals of all Persons
required in connection with the execution, delivery and performance by the
Seller and the Parent of this Agreement and the consummation of the
transactions contemplated hereby and (ii) diligently assist and cooperate with
the Buyer, at the Buyer's cost and expense, in preparing and filing all
documents required to be submitted by the Buyer to any
-26-
Governmental Entities, in connection with such transactions and in obtaining
any consents, waivers, authorizations or approvals of Governmental Entities
which may be required to be obtained by the Buyer in connection with such
transactions (which assistance and cooperation shall include, without
limitation, timely furnishing to the Buyer all information concerning the
Company, its Subsidiaries, the Seller and the Parent that counsel to the Buyer
reasonably determines is required to be included in such documents or would be
helpful in obtaining any such required consent, waiver, authorization or
approval).
SECTION 5.3. Access to Properties and Records. The Seller and the
Parent shall cause the Company and its Subsidiaries to afford to the Buyer,
and to the accountants, counsel and representatives of the Buyer, access
during normal business hours throughout the period prior to the Closing Date
(or the earlier termination of this Agreement pursuant to Article 10) to all
properties, books, Contracts, commitments, title reports relating to the Owned
Real Property, title insurance policies currently in effect with respect to
the Owned Real Property and files and records (excluding any Tax Returns filed
on a consolidated, combined or unitary basis with the Seller and the Parent)
of the Company and its Subsidiaries and, during such period, shall furnish
promptly to the Buyer all other information concerning the Company and its
Subsidiaries and their respective properties and personnel as the Buyer may
reasonably request; provided, however, that any such access shall be conducted
at a reasonable time and in such a manner as not to interfere unreasonably
with the operations of the business of the Company and its Subsidiaries;
provided, further, (i) that the Buyer and its authorized representatives shall
not contact or hold discussions with customers, suppliers, employees or
management of the Company or any of its Subsidiaries without the prior written
consent of the Seller and (ii) that the foregoing access shall not include the
right to conduct any environmental testing or procedures on, at or within any
of the properties or facilities of the Company or any of its Subsidiaries,
including, without limitation, air or water sampling or any invasive or other
testing of soil, groundwater or other media or materials or equipment.
Notwithstanding the foregoing, (i) no investigation or receipt of information
pursuant to this Section 5.3 shall qualify any representation or warranty of
the Seller or the Parent or the conditions to the obligations of the Seller,
the Parent or the Buyer and (ii) neither the Company nor any of its
Subsidiaries shall be required to disclose any information to the Buyer or its
authorized representatives if doing so could violate any agreement or Federal,
state, local or foreign law, rule or regulation to which the Company or any of
its Subsidiaries is a party or to which the Company or any of its Subsidiaries
is subject.
SECTION 5.4. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions of this Agreement insofar as such matters are within
the control of the Seller, the Parent or the Company, the Seller and the
Parent will use, and will cause the Company and its Subsidiaries to use, their
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable
consistent with applicable law to consummate and make effective the
transactions contemplated hereby.
SECTION 5.5. Midvale Superfund Sites. The Seller and the Parent
shall not, and shall cause their respective Subsidiaries to not, assert any
claim against the Company or any of its Subsidiaries for any costs incurred by
the Seller or the Parent or any of their Subsidiaries to respond to historic
contamination at the Midvale Slag (CERCLIS ID UTD 081834277) or
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Sharon Steel (Midvale Tailings) (CERCLIS ID UTD 980951388) Superfund sites
located in Midvale, Utah; provided, however, that the foregoing shall in no
way limit any rights or remedies that the Seller or the Parent may have with
respect to events or releases attributable to the Company or its Subsidiaries
on or after the Closing Date.
SECTION 5.6. Certain Other Actions Before Closing Date. Except as
contemplated by the Transition Services Agreement, the Seller and the Parent
shall cause all of the agreements and arrangements set forth on Schedule 3.20
to be terminated prior to the Closing. The Seller and the Parent shall not
take any action which shall cause either of them to be in breach of any of
their respective representations, warranties, covenants or agreements
contained in this Agreement.
ARTICLE 6. COVENANTS OF THE BUYER.
SECTION 6.1. Actions Before Closing Date. The Buyer shall not take
any action which shall cause it to be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
SECTION 6.2. Consents and Approvals. The Buyer shall, at the cost
and expense of the Buyer, (i) use its commercially reasonable efforts to
obtain all necessary consents, waivers, authorizations and approvals of all
Persons required in connection with the execution, delivery and performance by
the Buyer of this Agreement and the transactions contemplated hereby and (b)
diligently assist and cooperate with the Seller and the Parent, at the
Seller's and the Parent's cost, in preparing and filing all documents required
to be submitted by the Seller or the Parent to any Governmental Entities, in
connection with such transactions and in obtaining any consents, waivers,
authorizations or approvals of Governmental Entities which may be required to
be obtained by the Seller or the Parent in connection with such transactions
(which assistance and cooperation shall include, without limitation, timely
furnishing to the Seller and the Parent all information concerning the Buyer
that counsel to the Seller and the Parent reasonably determines is required to
be included in such documents or would be helpful in obtaining any such
required consent, waiver, authorization or approval).
SECTION 6.3. Employees and Employee Benefits.
(a) Except with respect to the employees whose names are set forth
on Schedule 6.3(a), all employees of the Company and its Subsidiaries (the
"Continuing Employees") shall continue their employment with the Company and
its Subsidiaries without interruption at the same base annual salary or hourly
wage rate, as applicable, and a comparable position as pertained to such
employees immediately prior to the Closing Date. Except as may be specifically
required by applicable law or the terms of any collective bargaining agreement
relating to the employees of the Company and its Subsidiaries, the Company and
its Subsidiaries shall not have any obligation to continue any employment
relationship with any Continuing Employee for any specific period of time
after the Closing Date. Anything herein to the contrary notwithstanding, in
the event that the employment of any Continuing Employee shall be terminated
by the Company or its Subsidiaries without cause prior to the first
anniversary of the Closing Date, the Buyer shall cause the Company or its
Subsidiaries, as applicable, to provide (i) each such non-union employee with
a severance benefit that is equal to one week's salary for
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each year of service with the Company or its Subsidiaries, but not in excess
of 52 weeks' total salary, and (ii) each such union employee with the
severance benefit specified by the applicable collective bargaining agreement
relating to such employee; provided, however, that in no event shall the
amount of the severance benefit be less than the benefit required under
applicable law.
(b) As of the Closing Date, the Buyer shall cause the Company and
its Subsidiaries to: (i) honor and satisfy all obligations and liabilities
that have accrued as of the Closing Date under the Plans that are sponsored by
the Company or any of its Subsidiaries solely for their respective employees
or former employees, and the dependents of any such employees, and which are
set forth on Schedule 6.3(b) (the "Company Plans"), pursuant to the terms
thereof, and (ii) provide the Continuing Employees with employment benefits
that are comparable, in the aggregate, to the employee benefit plans (other
than equity-based compensation) provided to the Continuing Employees
immediately prior to the Closing Date until the first anniversary of the
Closing Date; provided, however, that the employee benefit plans maintained
for the benefit of the Continuing Employees who are covered by a collective
bargaining agreement will in all events satisfy the terms of such agreement.
To the extent that Continuing Employees are eligible to participate in a
benefit arrangement maintained by the Buyer or its Affiliates (the "Buyer
Plans"), (i) such participants shall receive full credit for all service with
the Company, its Subsidiaries and their Affiliates for purposes of recognition
of service for eligibility, vesting and the amount of benefits other than
benefit accrual under a Buyer Plan that is a defined benefit plan, (ii) the
Buyer shall waive, or cause its insurance carriers to waive, all limitations
as to pre-existing and at-work conditions, if any, with respect to
participation and coverage requirements applicable to the participants under
the Buyer's welfare plans (except for limitations or waiting periods that are
already in effect and that have not been satisfied with respect to such
participants), and (iii) shall provide credit to the participants for any
co-payments and deductibles paid by such participants under the Company Plans.
(c) As of the Closing Date, the Company and its Subsidiaries shall
withdraw from and shall cease to participate in the Plans that are sponsored
by the Seller or the Parent as set forth on Schedule 6.3(c) hereto (the
"Seller Plans"). As of the Closing Date, the Company and its Subsidiaries
shall have no further obligations or liabilities with respect to matters
occurring on or after the Closing Date under the Seller Plans. Anything herein
to the contrary notwithstanding, any obligations or liabilities of the Company
and its Subsidiaries with respect to accrued bonus payments that remain
outstanding as of the Closing Date under the Seller Plans shall continue as
obligations and liabilities of the Company and its Subsidiaries after the
Closing Date until satisfied in full.
SECTION 6.4. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions of this Agreement insofar as such matters are within
the control of the Buyer, the Buyer will use commercially reasonable efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable consistent with applicable law to
consummate and make effective the transactions contemplated hereby.
SECTION 6.5. Insurance Claims.
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(a) The Seller and the Parent acknowledge and agree that they shall
be solely responsible for performing any work that is required to procure any
proceeds in connection with the Insurance Claims.
(b) Notwithstanding Section 6.5(a), but subject to Section 12.14,
the Buyer shall provide the Seller and the Parent access to the books and
records of the Company and its Subsidiaries, during normal business hours, as
the Seller and the Parent may reasonably deem necessary in connection with
processing the Insurance Claims. In addition, from and after the Closing Date,
the Buyer agrees that it will provide access to the Seller and the Parent,
their successors and assigns, and their respective attorneys, accountants and
other representatives (after reasonable notice and during normal business
hours and without charge to the Seller or the Parent), access to the books,
records, documents and other information relating to the business of the
Company and its Subsidiaries and to employees of the Company and its
Subsidiaries as the Seller and the Parent may reasonably deem necessary to
administer or pursue any course of action in connection with the Insurance
Claims. Notwithstanding the foregoing, the Buyer shall not be required to
prepare any documents or determine any information not then in its possession
in response to a request under this Section 6.5(b). The Seller and the Parent
shall reimburse the Buyer for any reasonable out-of-pocket costs (including
regular wages, salaries and traveling expenses) of making employees or office
facilities available to the Seller and the Parent pursuant to this Section
6.5(b), upon receipt of reasonable documentation of such costs.
ARTICLE 7. INDEMNIFICATION.
SECTION 7.1. Survival. The representations and warranties made by
the Seller, the Parent and the Buyer in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Closing and the
consummation of the transactions contemplated by this Agreement, for a period
terminating on the eighteen-month anniversary date of the Closing Date;
provided, however, that the representations and warranties contained in
Section 3.9 and 3.18 shall survive for a period equal to the applicable
statute of limitations, the representations and warranties contained in
Section 3.15 and 3.16 shall survive for a period equal to the statue of
limitations applicable to a third party bringing the suit, action, claim or
proceeding that is the basis for the breach of such representations and
warranties, the representations and warranties contained in Section 3.22 shall
survive for a period terminating on the third anniversary of the Closing Date
and the representations and warranties contained in Section 3.5 (second
sentence) shall survive indefinitely. No claim or action for indemnification
under this Article 7 shall be asserted or maintained by any party hereto after
the expiration of the period referred to in the preceding sentence with
respect to the reason for which indemnification is sought; provided, however,
that any claim made in writing by the party seeking indemnification (the
"Indemnified Party") to the party from which indemnification is sought (the
"Indemnifying Party") within the time periods set forth in the preceding
sentence shall survive (and be subject to indemnification) until it is finally
and fully resolved. All covenants and agreements contained in this Agreement
shall survive the Closing. The sole and exclusive remedy with respect to
matters addressed in this Agreement and the transactions contemplated hereby,
including, without limitation, any breach of any representation, warranty,
covenant or agreement contained herein, shall be pursuant to Sections 7.2 and
7.3 hereof, except in the case of fraud. Under no circumstances shall the
Seller or the Parent be liable to the Buyer for consequential, incidental or
punitive
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damages including but not limited to loss of profits, loss of operating time
or increased operating or maintenance expenses.
SECTION 7.2. Indemnification by the Seller.
(a) Notwithstanding the Closing and, except as provided herein,
regardless of any investigation at any time made by or on behalf of the Buyer
or of any knowledge or information that the Buyer may have, the Seller and the
Parent shall indemnify and fully defend, save and hold the Buyer, any
Affiliate of the Buyer, and their respective directors, officers, agents and
employees (the "Buyer Indemnitees"), harmless if any Buyer Indemnitee shall at
any time or from time to time suffer any damage, liability, obligation, loss,
cost, expense (including all reasonable attorneys' fees), deficiency,
interest, penalty, impositions, assessments or fines (collectively, "Losses")
arising out of or resulting from, or shall pay or become obliged to pay any
sum on account of, one or more of the following:
(i) any untruth or inaccuracy in any representation or
certification of the Seller or the Parent or the breach of any warranty of the
Seller or the Parent contained in this Agreement or in any certificate
delivered to the Buyer in connection with the Closing;
(ii) any failure of the Seller or the Parent to duly perform or
observe any term, provision, covenant, agreement or condition contained in
this Agreement on the part of the Seller or the Parent to be performed or
observed; or
(iii) (A) any and all Income Taxes of the Company and its
Subsidiaries for any Pre-Closing Tax Period (other than the payroll
withholding taxes on Schedule 3.9), and (B) all liability (as a result of
Treasury Regulation 1.1502-6 or any similar provision of state, local or
foreign law or as a transferee or successor, by contract or otherwise) imposed
on the Company or any of its Subsidiaries for Income Taxes of the Seller or
any other Person (other than the Company or any of its Subsidiaries) which is
or has been affiliated with the Company or any of its Subsidiaries prior to
the Closing Date;
provided, however, that neither the Seller nor the Parent shall have
any obligation to make any payment under Section 7.2(a)(i) with respect to any
representation or warranty unless and until the aggregate amount to which all
Buyer Indemnitees are entitled by reason of all such claims under Section
7.2(a)(i) exceeds $500,000 (the "Deductible Amount"), in which case the party
entitled to such indemnification shall be entitled to receive only the amount
in excess of the Deductible Amount.
(b) Notwithstanding anything herein to the contrary, the maximum
aggregate liability of the Seller and the Parent to the Buyer Indemnitees
under this Section 7.2(a)(i) hereof shall not exceed $29,000,000.
(c) Notwithstanding anything herein to the contrary, none of the
Buyer Indemnitees shall be entitled to indemnification by the Seller or the
Parent for any liability included as a current liability in the Closing
Working Capital Report or any Losses arising from any matter of which the
Buyer had received written notice at or prior to Closing by reason of the
Seller or the Parent having delivered such notice by means of a supplemented
disclosure
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schedule or an officer's certificate, at or prior to Closing, if (i) the
conditions to the Buyer's obligation set forth in Article 9 hereof fail to be
satisfied at Closing by reason of the matters disclosed in such supplemented
disclosure schedule or officer's certificate and the Buyer waives its right
not to close unless (ii) the Seller or the Parent made a knowing
misrepresentation with respect to such matter on the date of this Agreement.
(d) For purposes of Section 7.2(a), whenever it is necessary to
determine the liability for Taxes of the Company and its Subsidiaries for a
portion of a Straddle Period:
(i) real, personal and intangible property Taxes ("Property
Taxes") for the Pre-Closing Tax Period shall be equal to the amount of such
Property Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that are
in the Pre-Closing Tax Period and the denominator of which is the number of
days in the Straddle Period; and
(ii) all other Taxes for the Pre-Closing Tax Period shall be
determined by assuming that the Company and its Subsidiaries had a taxable
year or period that ended at the close of the Closing Date.
SECTION 7.3. Indemnification by the Buyer. Notwithstanding the
Closing and regardless of any investigation at any time made by or on behalf
of the Seller or the Parent or of any knowledge or information that the Seller
or the Parent may have, the Buyer shall indemnify and fully defend, save and
hold the Seller, any Affiliate of the Seller, the Parent, any Affiliate of the
Parent and their respective directors, officers, agents, employees and
directors of the Company designated by the Seller, the Parent or any Affiliate
of the Seller or the Parent (the "Seller Indemnitees"), harmless if any Seller
Indemnitee shall at any time or from time to time suffer any Losses arising
out of or resulting from, or shall pay or become obliged to pay any sum on
account of, one or more of the following:
(a) any untruth or inaccuracy in any representation or certification
of the Buyer or the breach of any warranty of the Buyer contained in this
Agreement or in any certificate delivered to the Seller in connection with the
Closing;
(b) any failure of the Buyer duly to perform or observe any term,
provision, covenant, agreement or condition contained in this Agreement on the
part of the Buyer to be performed or observed;
(c) any claim arising after the Closing Date (for which the Seller
and the Parent are not obligated to indemnify the Buyer, including but not
limited to any such claim (i) made by any Person in the employment of the
Company or any of its Subsidiaries on the Closing Date, resulting from the
imposition of employee protective arrangements by the STB or any successor
Person resulting from the transaction contemplated by this Agreement or (ii)
resulting from any amendment or discontinuance of any post-retirement welfare
benefit obligation under any Company Plan that the Buyer has agreed to assume
pursuant to Section 6.3(b) of this Agreement;
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provided, however, that the Buyer shall have no obligation to make
any payment under Section 7.3(a) with respect to any representation or
warranty unless and until the aggregate amount to which all Seller Indemnitees
are entitled by reason of all such claims under Section 7.3(a) exceeds the
Deductible Amount, in which case the party entitled to such indemnification
shall be entitled to receive only the amount in excess of the Deductible
Amount.
(d) Notwithstanding anything herein to the contrary, the maximum
aggregate liability of the Buyer to the Seller Indemnitees under Section
7.3(a) (other than in respect of any untruth or inaccuracy of Section 4.8)
shall not exceed $29,000,000.
SECTION 7.4. Procedures for Indemnification. Upon receipt by the
Indemnified Party of notice of any action, suit, proceeding, claim, demand or
assessment against such Indemnified Party which might give rise to a claim for
Losses, the Indemnified Party shall give written notice thereof to the
Indemnifying Party indicating the nature of such claim and the basis therefor;
provided, however, that failure to give such notice shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure. A claim for
indemnity hereunder may, at the option of the Indemnified Party, be asserted
as soon as Losses have been threatened by a third party orally or in writing,
regardless of whether actual harm has been suffered or out-of-pocket expenses
incurred, provided the Indemnified Party shall reasonably determine that it
may be liable or otherwise incur such Losses. However, payments for Losses for
third party claims shall not be required except to the extent that the
Indemnified Party has expended out-of-pocket sums. The Indemnifying Party
shall have the right, at its option, to assume the defense of, at its own
expense and by its own counsel, any such matter involving the asserted
liability of the Indemnified Party as to which the Indemnifying Party shall
have acknowledged its obligation to indemnify the Indemnified Party. If any
Indemnifying Party shall undertake to compromise or defend any such asserted
liability, it shall promptly notify the Indemnified Party of its intention to
do so, and the Indemnified Party agrees to cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against,
any such asserted liability; provided, however, that the Indemnifying Party
shall not settle any such asserted liability without the written consent of
the Indemnified Party (which consent will not be unreasonably withheld).
Notwithstanding an election to assume the defense of such action or
proceeding, such Indemnified Party shall have the right to employ separate
counsel and to participate in the defense of such action or proceeding, and
the Indemnifying Party shall bear the reasonable fees, costs and expenses of
such separate counsel, if (A) the Indemnifying Party shall not have employed
counsel to represent such Indemnified Party within a reasonable time after
notice of the institution of such action or proceeding, or (B) the
Indemnifying Party shall authorize such Indemnified Party to employ separate
counsel at the Indemnifying Party's expense. In any event, the Indemnified
Party and its counsel shall cooperate with the Indemnifying Party and its
counsel and shall not assert any position in any proceeding inconsistent with
that asserted by the Indemnifying Party. All reasonable costs and expenses
incurred in connection with an Indemnified Party's cooperation shall be borne
by the Indemnifying Party. In any event, the Indemnified Party shall have the
right at its own expense to participate in the defense of such asserted
liability.
ARTICLE 8. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER AND THE
PARENT.
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The obligations of the Seller and the Parent to consummate the
transactions contemplated by this Agreement are subject to the fulfillment, at
or before the Closing Date, of the following conditions, any one or more of
which (other than Section 8.4 and Section 8.6) may be waived (in writing) in
whole or in part by the Seller and the Parent in their sole discretion at or
prior to the Closing Date:
SECTION 8.1. Representations and Warranties of the Buyer. All
representations and warranties made by the Buyer in this Agreement shall be
true and correct in all material respects (except for each of the
representations and warranties made by the Buyer that are limited by
materiality, which shall be true and correct in all respects) on and as of the
date hereof and on and as of the Closing Date as if again made by the Buyer on
and as of such date, except to the extent such representations and warranties
are made on and as of a specified date, in which event such representations
and warranties shall be true and correct in all material respects on and as of
such specified date and the Seller and the Parent shall have received a
certificate to that effect dated the Closing Date and signed by an authorized
officer of the Buyer.
SECTION 8.2. Performance of the Obligations of the Buyer. The Buyer
shall have performed in all material respects all obligations required under
this Agreement to be performed by it on or before the Closing Date, and the
Seller and the Parent shall have received a certificate to that effect dated
the Closing Date and signed by an authorized officer of the Buyer.
SECTION 8.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any Person required in connection with the
execution, delivery and performance of this Agreement and set forth on
Schedule 8.3 shall have been duly obtained and shall be in full force and
effect on the Closing Date.
SECTION 8.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any Governmental Entity, nor any statute,
rule, regulation, decree or executive order promulgated or enacted by any
Governmental Entity that declares this Agreement invalid or unenforceable in
any respect or which prevents the consummation of the transactions
contemplated hereby shall be in effect; and no action or proceeding before any
Governmental Entity shall have been instituted or threatened by any
Governmental Entity or by any other Person, which seeks to prevent or delay
the consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement, and which in any
such case has a reasonable likelihood of success in the reasonable opinion of
counsel to the Seller and the Parent.
SECTION 8.5. Opinion of Counsel. The Seller and the Parent shall
have received an opinion, dated as of the Closing Date, from Simpson Thacher &
Bartlett, covering the matters set forth on Exhibit A hereto, subject to
customary qualifications, limitations and qualifications for opinions given in
transactions of the kind contemplated hereby.
SECTION 8.6. STB. Exemption or approval for the transactions
contemplated by this Agreement shall have been obtained from the STB and such
exemption or approval shall be in full force and effect.
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SECTION 8.7. Transition Services Agreement. The Parent and the
Company shall have executed and delivered the Transition Services Agreement
and the Transition Services Agreement shall be in full force and effect.
ARTICLE 9. CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER.
The obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before
the Closing Date, of the following conditions, any one or more of which (other
than Section 9.4 and Section 9.6) may be waived (in writing) in whole or in
part by the Buyer in its sole discretion at or prior to the Closing Date:
SECTION 9.1. Representations and Warranties of the Seller and the
Parent. All representations and warranties made by the Seller and the Parent
in this Agreement shall be true and correct in all material respects (except
for each of the representations and warranties made by the Seller and the
Parent that are limited by materiality, which shall be true and correct in all
respects) on and as of the date hereof and on and as of the Closing Date as if
again made by the Seller and the Parent on and as of such date, except to the
extent such representations and warranties are made on and as of a specified
date, in which event such representations and warranties shall be true and
correct in all material respects on and as of such specified date, and the
Buyer shall have received a certificate to that effect dated the Closing Date
and signed by an authorized officer of the Seller and the Parent.
SECTION 9.2. Performance of the Obligations of the Seller and the
Parent. The Seller and the Parent shall have performed in all material
respects all obligations required under this Agreement to be performed by it
on or before the Closing Date and the Buyer shall have received a certificate
to that effect dated the Closing Date and signed by an authorized officer of
the Seller and the Parent.
SECTION 9.3. Consents and Approvals. All consents, waivers,
authorizations and approvals of any Person required in connection with the
execution, delivery and performance of this Agreement and set forth on
Schedule 9.3 shall have been duly obtained and shall be in full force and
effect on the Closing Date.
SECTION 9.4. No Violation of Orders. No preliminary or permanent
injunction or other order issued by any Governmental Entity, nor any statute,
rule, regulation, decree or executive order promulgated or enacted by any
Governmental Entity, which declares this Agreement invalid or unenforceable in
any respect or prevents the consummation of the transactions contemplated
hereby shall be in effect; and no action or proceeding before any Governmental
Entity shall have been instituted or threatened by any Governmental Entity or
by any other Person which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the validity
or enforceability of this Agreement, and which in either such case has a
reasonable likelihood of success in the reasonable opinion of counsel to the
Buyer.
SECTION 9.5. Opinion of Counsel. The Buyer shall have received an
opinion, dated as of the Closing Date from Willkie Farr & Gallagher and
Pruitt, Gushee & Bachtell,
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covering the matters set forth on Exhibit B hereto, subject to customary
qualifications, limitations and qualifications for opinions given in
transactions of the kind contemplated hereby.
SECTION 9.6. STB. Exemption or approval for the transactions
contemplated by this Agreement shall have been obtained from the STB and such
exemption or approval shall be in full force and effect.
ARTICLE 10. TERMINATION.
SECTION 10.1. Conditions of Termination. Notwithstanding anything to
the contrary contained herein, this Agreement may be terminated by written
notice at any time before the Closing:
(a) By mutual consent of the Seller, the Parent and the Buyer;
(b) By the Buyer if the Seller or the Parent has breached any
representation, warranty, covenant or agreement contained in this Agreement
and has not cured such breach within thirty (30) days after written notice to
the Seller (provided, that the Buyer is not then in material breach of the
terms of this Agreement; and provided, further, that no cure period shall be
required for a breach which by its nature cannot be cured) such that the
conditions set forth in Section 9.1 or Section 9.2 hereof, as the case may be,
will not be satisfied;
(c) By the Seller or the Parent if the Buyer has breached any
representation, warranty, covenant or agreement contained in this Agreement
and has not cured such breach within thirty (30) days after written notice to
the Buyer (provided, that the Seller and the Parent are not then in material
breach of the terms of this Agreement; and provided, further, that no cure
period shall be required for a breach which by its nature cannot be cured)
such that the conditions set forth in Section 8.1 or Section 8.2 hereof, as
the case may be, will not be satisfied;
(d) By the Seller, the Parent or the Buyer if: (i) there shall be a
final, non-appealable order of a Federal or state court in effect preventing
consummation of the transactions contemplated hereby; or (ii) there shall be
any final action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated
hereby by any Governmental Entity which would make consummation of the
transactions contemplated hereby illegal; or
(e) By the Seller, the Parent or the Buyer if the Closing shall not
have been consummated by December 31, 2002, provided that the right to
terminate this Agreement under this Section 10.1(e) shall not be available to
any party whose failure to fulfill any material obligation under this
Agreement has been both willful and the cause of, or resulted in, the failure
of the Closing to occur on or before such date.
SECTION 10.2. Effect of Termination. Except as provided herein, in
the event of the termination of this Agreement as provided in Section 10.1
hereof, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Seller, the Parent or the Buyer, or
their respective officers, directors, stockholders, partners or other Persons
under their control. If this Agreement is terminated as provided herein (i)
the Buyer will
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redeliver, and will cause its agents (including, without limitation, attorneys
and accountants) to redeliver, all documents, work papers and other material
of the Seller, the Parent, the Company or its Subsidiaries relating to the
transactions contemplated hereby, whether obtained before or after the
execution hereof, and (ii) except as otherwise expressly set forth herein, no
party to this Agreement shall have any liability hereunder to any other party,
except (x) for any breach by such party of the terms and provisions of this
Agreement (including Section 12.14 hereof) and (y) as stated in (i) and (ii)
of this Section 10.2.
ARTICLE 11. TAX MATTERS.
The following provisions shall govern the allocation of
responsibility between the Buyer and the Seller for certain tax matters
following the Closing Date:
SECTION 11.1. Tax Returns. Seller shall prepare and file all Tax
Returns with the appropriate Federal, state, local and foreign governmental
agencies relating to the Company and its Subsidiaries for periods ending on or
before the Closing Date. The Buyer shall prepare and file, or cause to be
prepared and filed, all Tax Returns required to be filed by the Company and
its Subsidiaries covering a Tax year commencing prior to the Closing Date and
ending after the Closing Date (a "Straddle Period") and shall cause the
Company and its Subsidiaries to pay the Taxes shown to be due thereon;
provided, however, that the Seller and the Parent shall reimburse the Buyer
for any amount owed by the Seller pursuant to Section 7.2(a)(iii) with respect
to the taxable periods covered by such Tax Returns. The Seller will furnish to
the Buyer all information and records reasonably requested by the Buyer for
use in preparing any Tax Returns relating to a Straddle Period. The Buyer
shall allow the Seller to review and comment upon any such Tax Returns at any
time during the 45 (forty-five) day period immediately preceding the filing of
such Tax Returns and the Buyer shall revise such Tax Returns to reflect the
reasonable comments of the Seller. The Buyer and the Seller agree to cause the
Company and its Subsidiaries to file all Tax Returns for any Straddle Period
on the basis that the relevant taxable period ended as of the close of
business on the Closing Date, unless the relevant taxing authority will not
accept a Tax Return filed on that basis.
SECTION 11.2. Tax Cooperation. The Buyer and the Seller shall
reasonably cooperate, and shall cause its respective Affiliates (including the
Company and its Subsidiaries), officers, employees, agents, auditors and
representatives reasonably to cooperate (including by maintaining and making
available to each other all relevant records), in preparing and filing all Tax
Returns and in resolving all disputes and audits with respect to Taxes of the
Company and its Subsidiaries for any Pre-Closing Tax Period and for any
Straddle Period.
SECTION 11.3. Procedures Relating to Indemnification of Tax Claims.
(a) If a claim shall be made by any Tax authority which, if
successful, might result in an indemnity payment to any Indemnified Party
pursuant to Section 7.2 or 7.3 hereof, the Indemnified Party shall notify the
Indemnifying Party promptly of such claim (a "Tax Claim").
(b) With respect to any Tax Claim relating to a Pre-Closing Tax
Period, the Seller shall have the right, at its own expense, to control all
proceedings and may make all
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decisions taken in connection with such Tax Claim. The Buyer shall deliver its
consent, or any objections, within 15 (fifteen) days of receipt of any
settlement proposal. The Buyer, the Company and its Subsidiaries shall
cooperate with the Seller in contesting any Tax Claim under this Section
11.3(b), which cooperation shall include the retention and, upon request of
the Seller, the provision of records and information which are reasonably
relevant to such Tax Claim and making employees available to provide
additional information or explanation of any material provided hereunder. The
Buyer and the Seller shall jointly control all proceedings with respect to any
Tax Claim relating to any Straddle Period.
(c) The party bearing the liability or obligation to indemnify for
any Taxes described under Sections 7.2 and 7.3 hereof shall be entitled to any
refunds or credits of such Taxes. The Buyer shall cause the Company and its
Subsidiaries to promptly forward to the Seller, or after the Buyer's receipt
reimburse the Seller, for any refunds or credits due the Seller (pursuant to
the terms of this Section 11.3(c) and the Seller shall promptly forward to the
Company or after the Seller's receipt reimburse the Company, for any refunds
or credits due the Buyer (pursuant to the terms of this Section 11.3(c)).
SECTION 11.4. Tax Sharing Agreements. The Seller will cause any tax
sharing agreement or similar arrangement with respect to Taxes involving the
Company or any of its Subsidiaries to be terminated as of the Closing Date, to
the extent any such agreement or arrangement relates to the Company or any of
its Subsidiaries.
SECTION 11.5. Transfer Taxes. All transfer, documentary, sales, use,
registration and similar Taxes (including all applicable real estate transfer
or gains Taxes and stock transfer Taxes) and related fees (including any
penalties, interest and additions to Tax) incurred in connection with the sale
of the Company Shares or otherwise in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Buyer, and the Seller
and the Buyer shall cooperate in timely preparing and filing all Tax Returns
as may be required to comply with the provisions of such Tax laws.
SECTION 11.6. Section 338(h)(10).
(a) The Seller shall join with the Buyer in making an election under
Section 338(h)(10) of the Code and any corresponding or similar provisions of
state or local law (the "Section 338(h)(10) Elections") with respect to the
purchase and sale of the Company Shares hereunder.
(b) The Seller shall assist the Buyer in the preparation of Form
8023 and any accompanying schedules required under Section 338(h)(10) of the
Code and any corresponding or similar provisions of foreign, state or local
law and the Seller agrees that the Buyer may make any determination or
election required or permitted to be made in connection with the Section
338(h)(10) Elections. The Seller shall execute Form 8023 and any accompanying
schedules and such other documents or forms (the "Section 338 Forms") at the
Closing or at such other time as the Buyer may request or as required by the
Code in order to effectuate the Section 338(h)(10) Elections. The Buyer and
the Seller shall file all Tax Returns in a manner consistent with the
Section 338(h)(10) Elections, Form 8023 and any accompanying schedules and
such other documents and forms as are requested by the Buyer to effectuate the
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Section 338(h)(10) Elections. The Seller agrees to take no position
inconsistent therewith in any Tax Return.
(c) The Purchase Price, liabilities of the Company and its
Subsidiaries and other relevant items shall be allocated to the assets of the
Company and its Subsidiaries for all purposes in a manner consistent with the
fair market values set forth on a schedule which shall be prepared by the
Buyer and provided to the Seller within 90 days following the Closing Date.
The allocations set forth on such schedule shall be as reasonably determined
by the Buyer and shall be reasonably satisfactory to the Seller. All
allocations contained in such schedule shall be used by each party in
preparing the forms required under Section 338(h)(10) and all relevant Tax
Returns, subject to adjustment to reflect (1) the Seller's selling expenses as
a reduction of sales proceeds, and (2) the Buyer's acquisition expenses as an
addition to the Purchase Price, except as required by law.
(d) Notwithstanding any other provision of this Agreement to the
contrary, the Seller agrees that any income Taxes attributable to the Section
338(h)(10) Elections will be paid by the Seller.
SECTION 11.7. Tax Treatment. Any indemnification payments made
pursuant to this Agreement shall be treated by the parties, to the extent
permitted by applicable law, as a Purchase Price adjustment, unless determined
otherwise in a final determination as defined in Section 1313 of the Code.
SECTION 11.8. Coordination With Article 7. In the event the
provisions of this Article 11 and the provisions of Article 7 hereof conflict
or otherwise each apply by their terms, this Article 11 shall exclusively
govern all matters concerning Taxes; provided that Sections 11.3, 11.4 and
11.5 of this Article 11 shall apply in any event.
ARTICLE 12. MISCELLANEOUS.
SECTION 12.1. Successors and Assigns. Except as otherwise provided
in this Agreement, no party hereto shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other party
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect; provided, however, that the Buyer
may assign its rights hereunder to any wholly owned subsidiary of the Buyer
(unless to do so would restrict or delay the consummation of the transactions
contemplated by this Agreement); provided, further, however, that no such
assignment shall reduce or otherwise vitiate any of the obligations of the
Buyer hereunder. This Agreement shall inure to the benefit of and shall be
binding upon the successors and permitted assigns of the parties hereto.
SECTION 12.2. Governing Law, Jurisdiction. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the
laws of the State of New York. The parties hereto irrevocably elect as the
sole judicial forum for the adjudication of any matters arising under or in
connection with this Agreement, and consent to the jurisdiction of, the court
of the United States of America for the Southern District of New York.
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SECTION 12.3. Expenses. The Seller shall pay any legal, accounting
and other fees, expenses and costs incurred by the Company and its
Subsidiaries prior to the Closing Date in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby. All of the other fees, expenses and costs incurred in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the
party hereto incurring such fees, expenses and costs.
SECTION 12.4. Brokers' and Finders' Fees. Except as set forth on
Schedule 12.4, the Buyer represents and warrants that it has dealt with no
broker or finder in connection with any of the transactions contemplated by
this Agreement and, insofar as the Buyer knows, no broker or other person is
entitled to any commission or finder's fee in connection with any of these
transactions. The Seller and the Parent represent and warrant that none of the
Seller, the Parent, the Company or any of its Subsidiaries has dealt with a
broker or finder in connection with any of the transactions contemplated by
this Agreement and, insofar as the Seller, the Parent or the Company know, no
broker or other Person is entitled to any commission or finder's fee in
connection with any of these transactions.
SECTION 12.5. Severability. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it
is not so declared, and all of the other provisions of this Agreement shall
remain in full force and effect.
SECTION 12.6. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given; (ii) on the day of transmission if sent
via facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission;
(iii) on the day after delivery to Federal Express or similar overnight
courier or the Express Mail service maintained by the United States Postal
Service; or (iv) on the fifth day after mailing, if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid and properly addressed, to the party as follows:
If to the Buyer:
Genesee & Wyoming Inc.
66 Field Point Road
Greenwich, Connecticut 06830
Attn: Mark Hastings
Telecopy: (203) 661-4106
Copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Philip T. Ruegger, Esq.
-40-
Telecopy: (212) 455-2502
If to the Seller or the Parent:
c/o Mueller Industries, Inc.
8285 Tournament Drive
Suite 150
Memphis, Tennessee 38125
Attn: General Counsel
Telecopy: (901) 753-3254
Copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attn: Neil Novikoff, Esq.
Telecopy: (212) 728-8111
Any party may change its address for the purpose of this Section by
giving the other party written notice of its new address in the manner set
forth above.
SECTION 12.7. Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance.
Any waiver by any party of any condition, or of the breach of any provision,
term, covenant, representation or warranty contained in this Agreement, in any
one or more instances, shall not be deemed to be nor construed as a further or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
SECTION 12.8. Public Announcements. The parties agree that after the
signing of this Agreement and prior to the Closing Date, the Seller and the
Parent shall not, and shall not permit the Company or any of its Subsidiaries
to, and the Buyer shall not, make any press release or public announcement
concerning this transaction without the prior approval of the other party or
parties hereto unless a press release or public announcement is required by
law. Before a party to this Agreement makes any such announcement or other
disclosure, it agrees to give the other party or parties hereto prior notice
and an opportunity to comment on the proposed disclosure.
SECTION 12.9. Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the transactions
contemplated hereby and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to such
transactions. All Exhibits and Schedules hereto and any documents and
instruments delivered pursuant to any provision hereof are expressly made a
part of this Agreement as fully as though completely set forth herein.
-41-
SECTION 12.10. Parties in Interest. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this Agreement
on any Person other than parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement is intended to relieve or
discharge the obligations or liability of any third Person to the Seller, the
Parent or the Buyer. No provision of this Agreement shall give any third
parties any right of subrogation or action over or against the Seller, the
Parent or the Buyer.
SECTION 12.11. Scheduled Disclosures. Disclosure of any matter, fact
or circumstance in a Schedule to this Agreement shall be specific as to the
Section and SubSection of this Agreement to which such disclosure applies and
shall not be deemed to be disclosure thereof for purposes of any other
section, subsection or Schedule hereto.
SECTION 12.12. Section and Paragraph Headings; Transactions
Contemplated by this Agreement. The Section and paragraph headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
SECTION 12.13. Knowledge. References in this Agreement to (i) the
knowledge of the Seller shall refer to the knowledge of any of the Seller's
executive officers or directors, (ii) the knowledge of the Parent shall refer
to the knowledge of the Parent's executive officers, (iii) the knowledge of
the Company shall refer to the knowledge of the Company's executive officers
or directors and (iv) the knowledge of the Buyer shall refer to the knowledge
of any of the Buyer's executive officers or directors.
SECTION 12.14. Confidentiality. For a period of two (2) years
following the Closing or the termination of this Agreement pursuant to Section
10.1 hereof, unless otherwise required by law, (i) the Seller and the Parent
shall, and shall cause their Affiliates to, keep secret and retain in
strictest confidence, and shall not (other than as expressly permitted by this
Agreement) use for the benefit of itself or others any Confidential
Information relating to (A) the Buyer or its business to the extent such
Confidential Information was disclosed by the Buyer, its Affiliates, or their
representatives and agents in the preparation, negotiation and delivery of
this Agreement and the transactions contemplated herein, or (B) the Company
including with respect to the business thereof, and (ii) the Buyer shall keep
secret and retain in strictest confidence, and shall not use for the benefit
of itself or others any Confidential Information relating to the Seller or the
Parent or their respective businesses (other than, following the Closing,
insofar as such information relates to the Company) to the extent such
Confidential Information was disclosed by the Seller, the Parent, their
Affiliates or their representatives and agents in the preparation, negotiation
and delivery of this Agreement (including without limitation such information
that was disclosed to the Buyer during the course of the Buyer's due diligence
investigation of the Company) and the transactions contemplated herein.
SECTION 12.15. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
shall constitute the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
MUELLER INDUSTRIES, INC.
By: /s/ John P. Fonzo
-----------------------------------------
Name: John P. Fonzo
Title: Vice President
ARAVA NATURAL RESOURCES COMPANY, INC.
By: /s/ Gary L. Barker
-----------------------------------------
Name: Gary L. Barker
Title: President
GENESEE & WYOMING INC.
By: /s/ Mark W. Hastings
-----------------------------------------
Name: Mark W. Hastings
Title: Executive Vice President
-43-
Exhibit A
---------
Form of Opinion of the Buyer's Counsel
[Capitalized terms used but not defined herein shall have the
meaning set forth in the Stock Purchase Agreement]
1. The Buyer has been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware and has full corporate
power and authority to conduct its business as described in the Buyer's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001.
2. The Stock Purchase Agreement has been duly authorized, executed and
delivered by the Buyer and, assuming that the Stock Purchase Agreement is
a valid and legally binding obligation of the Seller and Parent,
constitutes a valid and legally binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms.
Exh-A
Exhibit B
---------
Form of Opinion of the Seller's Counsel
[Capitalized terms used but not defined herein shall have the
meaning set forth in the Stock Purchase Agreement]
1. The Company is a corporation validly existing and in good standing under
the laws of the State of Utah and has full corporate power and authority
to conduct its business as now conducted.*
2. The Stock Purchase Agreement has been duly executed and delivered by the
Seller and the Parent and, assuming that the Stock Purchase Agreement is
a valid and binding obligation of the Buyer, constitutes a valid and
binding obligation of the Seller and the Parent, enforceable against the
Seller and the Parent in accordance with its terms.**
3. The Company Shares have been duly authorized and validly issued and are
fully paid and nonassessable.*
4. Immediately prior to the Closing, the Seller was the registered owner of
all the shares of Company Common Stock. Upon registration of the Company
Shares in the Buyer's name in the stock records of the Company and
assuming the Buyer has purchased the Company Shares for value in good
faith and without notice of any adverse claim, the Buyer will have
acquired all of the Seller's rights in the Company Shares free of any
adverse claim, any Lien in favor of the Company and any restrictions on
transfer imposed by the Company.*
-------------------------------
* To be rendered by Pruitt, Gushee & Bachtell.
** To be rendered by Willkie Farr & Gallagher.
Exh-B
Exhibit 99.1
Genesee & Wyoming to Acquire Utah Railway;
Also Announces Underwriting Commitment for New $250 Million Senior
Credit Facilities;
Schedules Conference Call to Discuss Acquisition
GREENWICH, Conn., August 20, 2002 /PRNewswire/ -- Genesee & Wyoming
Inc. (GWI) (Nasdaq: GNWR) announced today that it has signed an agreement to
acquire the Utah Railway Company (UTAH), a wholly owned subsidiary of Mueller
Industries, Inc. (NYSE: MLI) for $54 million in cash, subject to working
capital adjustments. UTAH operates over 423 miles of track from Ogden, Utah to
Grand Junction, Colorado and interchanges with both Union Pacific (NYSE: UNP)
and Burlington Northern Santa Fe (NYSE: BNI).
Founded in 1912, UTAH operates over 45 miles of owned track and 378
miles under track access agreements. These trackage rights include agreements
with the Union Pacific from Provo, Utah to Grand Junction, Colorado and with
BNSF from Provo, Utah to Ogden, Utah. In addition, UTAH serves industrial
customers in and around the Salt Lake City area through trackage rights from
the Utah Transit Authority. UTAH serves its customers using 23 locomotives.
GWI has appointed James N. Davis, currently Vice President-Field Operations of
its Rail Link subsidiary, as General Manager to head its new UTAH region.
For the twelve months ended June 30, 2002, UTAH reported
approximately $23.7 million of revenue. UTAH serves three principal business
segments: (i) a unit coal train business, primarily shipping low sulfur, high
BTU coal to utilities in Utah and Nevada as well as to export and other
industrial markets, (ii) a switching service for BNSF, and (iii) the Salt Lake
City Southern Railroad (SLCS), which serves industrial customers in the Salt
Lake City area. GWI projects that the UTAH acquisition will be immediately
accretive to its earnings per share.
GWI initially plans to fund the acquisition under its existing $103
million revolving credit facility. As of June 30, 2002, pro forma for UTAH,
GWI's total debt to capitalization is approximately 36.2%. The Company has
agreed to purchase the stock of UTAH and its wholly owned subsidiary, the Salt
Lake City Southern Railroad, under Section 338 (h)(10) of the U.S. Tax Code
and will therefore benefit from the stepped-up tax basis of the UTAH assets.
The Boards of Directors of both GWI and Mueller have approved the transaction,
which is subject to regulatory approval as well as other customary closing
conditions. The acquisition is expected to be completed by the end of the
third quarter.
GWI also announced that it has received an underwriting commitment
from Fleet National Bank ("Fleet") for $250 million in new senior secured
credit facilities (the "Facilities"), subject to customary conditions. Fleet's
commitment provides GWI with access to capital for general corporate purposes
including additional acquisitions. It is expected that the syndication of the
Facilities to a broader group of lenders will commence shortly after the
closing of the UTAH acquisition and will be completed approximately 30 days
thereafter. Upon completion of the new financing, including the debt incurred
to finance UTAH, GWI expects to have approximately $150 million of unused
borrowing capacity available under the Facilities.
Mortimer B. Fuller III, Chairman and CEO of GWI, commented, "The
Utah Railway has provided 90 years of excellent service to the coal producing
region of Utah and has been well operated by its parent company. In recent
years it has increased its presence by providing
switching for BNSF and by the acquisition of the Salt Lake City Southern
Railroad. As our most significant domestic acquisition to date, we believe
that under our ownership we will be able to build upon the long history of
UTAH and create new opportunities for growth."
GWI has scheduled a conference call for Tuesday, August 20th at
11:00 a.m. Eastern Time to discuss the UTAH acquisition. The dial-in number
for the teleconference will be 1-800-288-8967.
GWI is a leading operator of short line and regional freight
railroads in the United States, Canada, Mexico, Australia and Bolivia, and
provides freight car switching and related services to industrial companies
that have extensive railroad facilities within their complexes. The Company
operates in five countries on three continents over 8,000 miles of owned and
leased track. It also operates over an additional 2,700 miles under track
access arrangements.
This press release contains forward-looking statements regarding
future events and the future performance of Genesee & Wyoming Inc. that
involve risks and uncertainties that could cause actual results to differ
materially including, but not limited to, economic conditions, customer
demand, increased competition in relevant markets, and others. The Company
refers you to the documents that Genesee & Wyoming Inc. files from time to
time with the Securities and Exchange Commission, such as the Company's Forms
10-Q and 10-K which contain additional important factors that could cause its
actual results to differ from its current expectations and from the
forward-looking statements contained in this press release.
Exhibit 99.2
Genesee & Wyoming Inc. Completes Acquisition of Utah Railway Company
GREENWICH, Conn., August 29, 2002 /PRNewswire/ -- Genesee & Wyoming
Inc. (GWI) (Nasdaq: GNWR) announced today that it has completed the
acquisition of the Utah Railway Company (UTAH), a wholly owned subsidiary of
Mueller Industries, Inc. (NYSE: MLI). GWI funded the $54 million cash purchase
under its $103 million revolving credit facility. UTAH operates over 423 miles
of track from Provo, Utah to Grand Junction, Colorado.
GWI management held a conference call to discuss the acquisition on
August 20, 2002. Replay of the teleconference is available through September
20 at 800-475-6701 with the access code 649640.
GWI is a leading operator of short line and regional freight
railroads in the United States, Canada, Mexico, Australia and Bolivia, and
provides freight car switching and related services to industrial companies
that have extensive railroad facilities within their complexes. The Company
operates in five countries on three continents over 8,050 miles of owned and
leased track. It also operates over an additional 3,000 miles under track
access arrangements.