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AGREEMENT AND PLAN OF MERGER

by and among

SOO LINE CORPORATION,

BLACK BEAR ACQUISITION LLC,

RAILROAD ACQUISITION HOLDINGS LLC,

and

FORTRESS WORLDWIDE TRANSPORTATION AND INFRASTRUCTURE

GENERAL PARTNERSHIP

(solely in its capacity as the Seller Representative)

Dated as of November 19, 2019

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SECTION 4.14. Labor Relations.

 

(a)          Except as listed in Section 4.14(a) of the Company Disclosure Letter, as of the date hereof, no collective bargaining agreement is currently being negotiated by the Company or any of the Company Subsidiaries, and there is no labor strike, dispute, slowdown, stoppage or lockout, unfair labor practice charge, court action related to a union or collective bargaining agreement, or a material grievance actually pending or threatened in writing against or affecting the Company or any of the Company Subsidiaries. Except as listed in Section 4.14(a) of the Company Disclosure Letter, none of the Company or any of the Company Subsidiaries is party to any collective bargaining agreement or similar labor agreement. Except as listed in Section 4.14(a) of the Company Disclosure Letter, the Company and each Company Subsidiary is in compliance in all material respects with all applicable Laws respecting labor, employment and employment practices, terms and conditions of employment, wages, hours of work, pay equity, nondiscrimination, affirmative action, immigration and occupational safety and health, and, to the Knowledge of the Company, are not engaged in any material unfair labor practices as defined in the National Labor Relations Act of 1935, the Railway Labor Act of 1926 or other applicable Law.

 

(b)          Since the date of the Interim Balance Sheet, the Company and any Company Subsidiary have not effectuated (i) a “plant closing” as defined in the Worker Adjustment and Retraining Notification Act of 1988 (or similar foreign, state or local laws) (the “WARN Act”) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company or any of the Company Subsidiaries or (ii) a “mass layoff” or “group termination” as defined in the WARN Act or other applicable Laws affecting any site of employment or facility of the Company or any of the Company Subsidiaries.

 

SECTION 4.15. Intellectual Property.

 

(a)          Section 4.15(a) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of all Intellectual Property Rights registered, applied for, or recorded with any Governmental Entity or authorized private registrar, and all unregistered material Trademarks, owned by the Company or any Company Subsidiary, including without limitation domain name registrations and social media accounts. The Company or a Company Subsidiary owns, or is licensed or otherwise has the right to use, all Intellectual Property Rights necessary for the business of the Company and any Company Subsidiary as presently conducted. The conduct of the business of the Company and any Company Subsidiary as currently conducted does not, and as conducted in the past three years, did not, infringe, misappropriate or otherwise violate any Intellectual Property Rights of any Person. No claims are pending or, to the Knowledge of the Company, threatened alleging that the Company or any Company Subsidiary is infringing or misappropriating, or has infringed or misappropriated, the Intellectual Property Rights of any Person. To the Knowledge of the Company, as of the date of this Agreement, no Person is infringing or misappropriating the Intellectual Property Rights of the Company or any Company Subsidiary.

 

(b)          Section 4.15(b) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of all material licenses of Intellectual Property Rights granted to or by the Company or any Company Subsidiary, excluding licenses of Off-the-Shelf Software, and each such license is valid and binding on the Company or Company Subsidiary, as applicable, in accordance with its terms, and neither the Company nor any Company Subsidiary are in material breach of such licenses.

 

(c)          To the Knowledge of the Company, there have been no material unauthorized intrusions, incidents of exceeded authority, or breaches of the security of information technology systems with respect to Company or any Company Subsidiary. To the Knowledge of the Company, there have been no material unauthorized intrusions, incidents of exceeded authority, or breaches of the security of information technology systems at any information technology vendor, data center, or other hosting provider facility at which any software or data of the Company or any Company Subsidiary has been hosted or stored. The collection, use and dissemination of any personally-identifiable information concerning individuals by the Company and the Company Subsidiary is in material compliance with all applicable privacy policies, terms of use, and Laws applicable to the Company and the Company Subsidiary.

 

SECTION 4.16. Brokers. No broker, finder or investment banker (other than BMO Capital Markets Corp., the fees and expenses of which will be paid by the Company) is entitled to any brokerage, finder’s or other fee or commission in connection with this Agreement or the Transaction based upon arrangements made by or on behalf of the Company, the Company Subsidiaries or any of their respective directors, officers or employees.

 

SECTION 4.17. Environmental Matters.

 

(a)          Except as set forth in Section 4.17(a) of the Company Disclosure Letter, as otherwise provided in Section 4.17(c) with respect to the Lac Megantic Tracks or has not had, individually or in the aggregate, a Company Material Adverse Effect:

 

(i)          The Company and each Company Subsidiary are in compliance with, and for the past three years have been in compliance with, all applicable Environmental Laws and all Environmental Permits, except for such matters that have been resolved without any pending, ongoing or future obligation, cost or liability.

 

(ii)         (A) There are no underground or aboveground storage tanks or any surface impoundments, septic tanks, wells, pits, sumps or lagoons in which Hazardous Substances are being or, to the Knowledge of the Company, have been treated, stored or disposed of on any of the Real Property or, during the period of the Company’s or any Company Subsidiary’s ownership, lease, use or occupancy thereof, on any property formerly owned, leased, used or occupied by the Company or any Company Subsidiary, and (B) to the Knowledge of the Company, neither the Company nor any Company Subsidiary has engaged in operation or activities upon any of the Real Property for the purpose of, or in any way involving, the handling, manufacture, treatment, processing, storage, use, generation or Release of any Hazardous Substances, at, on, or under such Real Property, except in each case of (A) and (B), in compliance in all material respects with all applicable Environmental Laws.

 

(iii)        To the Knowledge of the Company, there has been no Release of any Hazardous Substance by the Company or any Company Subsidiary, other than in the ordinary course of business, on any of the Real Property or, during the period of the Company’s or any Company Subsidiary’s ownership, lease, use or occupancy thereof, by the Company or any Company Subsidiary on any property formerly owned, leased, used or occupied by the Company or any Company Subsidiary in a manner that could reasonably be expected to result in Liability to the Company or any Company Subsidiary under Environmental Laws.

 

(iv)        Neither the Company nor any Company Subsidiary is conducting or paying for or, to the Knowledge of the Company, is obligated to conduct or pay for, any Remedial Action at the Real Property or at any other location, either voluntarily or pursuant to the order of any Governmental Entity or the requirements of any Environmental Law or Environmental Permit.

 

(v)         To the Knowledge of the Company, there is no asbestos or asbestos-containing material on any of the Real Property.

 

(vi)        To the Knowledge of the Company, none of the Real Property is listed or proposed for listing on the National Priorities List, CERCLIS, SEMS, the Répertoire des terrains contaminés or on any analogous federal, state, provincial or local list.

 

(vii)       No Environmental Claim has been received by the Company or any Company Subsidiary, and there are no Environmental Claims pending or, to the Knowledge of the Company, threatened against the Company, any Company Subsidiary or the Real Property, and, to the Knowledge of the Company, there are no circumstances that can reasonably be expected to form the basis of any such Environmental Claim.

 

(viii)      None of the Company or the Company Subsidiaries is party to any Order that imposes any obligations under any Environmental Laws.

 

(ix)        There are no outstanding material requests from a Governmental Entity for information relating to Environmental Laws, Environmental Permits or Hazardous Substances.

 

(b)          The Company has made available to Parent copies of (i) any environmental assessment or audit reports or other similar environmental studies or analyses relating to the Company and the Company Subsidiaries, their operations and the Real Property that are in the Company’s or any Company Subsidiary’s possession or reasonable control and (ii) all insurance policies issued within the three-year period immediately prior to the date hereof that may currently provide coverage to the Company or any Company Subsidiary for any environmental matters.

 

(c)          Notwithstanding Section 4.17(a), neither the Company nor any other Person makes any express or implied representation or warranty with respect to the environmental condition of, compliance with Environmental Laws of, or the presence of Hazardous Substances on or along, the Lac Megantic Tracks.

 

(d)          Section 4.17(d) of the Company Disclosure Letter sets forth a list of all material Governmental Authorizations of the Company and the Company Subsidiaries related to environmental matters (the “Material Environmental Authorizations”).  Except as set forth in Section 4.17(d) of the Company Disclosure Letter, (i) to the Knowledge of the Company no event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a material breach or default under any Material Environmental Authorization or which permits or, after notice or lapse of time or both, would permit revocation or termination of any Material Environmental Authorization, or which might materially and adversely affect the rights of the Company or any Company Subsidiary under any such Material Environmental Authorization; (ii) no written notice of cancellation, of default or of any dispute concerning any Material Environmental Authorization, or of any event, condition or state of facts described in the preceding clause, has been received by the Company or any Company Subsidiary; and (iii) each of the Material Environmental Authorizations is valid, subsisting and in full force and effect.

 

(e)           Notwithstanding any other provision in this Agreement to the contrary, Section 4.05(b) and this Section 4.17 contain the sole and exclusive representations and warranties of the Company with respect to Hazardous Substances, Environmental Laws and Environmental Permits.

 

SECTION 4.18. Material Contracts.

 

(a)          Section 4.18(a) of the Company Disclosure Letter lists each of the following Contracts to which the Company or any Company Subsidiary is party or is bound as of the date hereof, excluding the Benefits Plans and the Leases (such Contracts, “Material Contracts”):

 

(i)          Contracts containing restrictions on the right of the Company or any Company Subsidiary to engage in activities competitive with any Person or to solicit customers or suppliers anywhere in the world;

 

(ii)         Contracts that provide for (A) Indebtedness (other than Indebtedness described in clause (c) of the definition thereof) or that relate to a swap or hedging transaction or other derivative agreement and (B) Indebtedness described in clause (c) of the definition thereof in excess of $100,000;

 

(iii)        Contracts with outstanding obligations for the Company or any Company Subsidiary to make any capital commitment or capital expenditure, other than acquisition of inventory, in excess of $500,000;

 

(iv)        Contracts that provide the Company or the Company Subsidiaries rights as to the operation, management or control of a partnership, joint venture or similar arrangement, unless such partnership, joint venture or similar arrangement is immaterial to the Company and any Company Subsidiary, taken as a whole;

 

(v)         Contracts that relate to any acquisition of a business by the Company or any Company Subsidiary;

 

(vi)        all material Contracts with any Governmental Entity;

 

(vii)       each lease of personal property involving more than $200,000 in the aggregate of rent over the remaining term of the lease;

 

(viii)      all Contracts to sell or otherwise dispose of any assets having a fair market value in excess of $500,000 other than in the ordinary course of business;

 

(ix)        all Contracts under which the Company or any Company Subsidiary is or may become obligated to pay any amount in respect of deferred or conditional purchase price (other than ordinary trade terms), indemnification obligations, purchase price adjustment or otherwise in connection with any (a) acquisition or disposition of all or substantially all of the assets or securities constituting a line of business of any Person, (b) merger, consolidation or other business combination, or (c) series or group of related transactions or events of a type specified in subclauses (a) and (b);

 

(x)         all Contracts for the pending purchase or sale of real property with a purchase price in excess of $500,000;

 

(xi)        all Contracts that require the Company or any Company Subsidiary to exclusively use a vendor or supplier or that contain a most favored nation provision;

 

(xii)       all material guarantees of the obligations of  officers, directors, employees, Affiliates (including Katahdin) or others entered into other than in the ordinary course of business;

 

(xiii)      all material Contracts containing “paper barriers” as such term is generally understood in the railroad industry;

 

(xiv)      all material Contracts granting demurrage relief to a shipper other than those entered into in the ordinary course of business;

 

(xv)       all material Contracts imposing car or other equipment supply obligations entered into other than in the ordinary course of business;

 

(xvi)      all material Contracts granting another common carrier the right to use all or any portion of the Real Property or rail lines, yards or other facilities of the Company or any Company Subsidiary (including yard(s) and other facilities) or the right to serve industries located on the Real Property or rail lines, yards or other facilities of the Company or any Company Subsidiary;

 

(xvii)     all material Contracts granting the right to use all or any portion of the rail line, yards or other facilities of another common carrier which relate to the Real Property;

 

(xviii)    all Contracts with shippers for rail transportation that entitles the Company or any Company Subsidiary to receive $200,000 or more in any consecutive 12-month period; and

 

(xix)      any other Contract that obligates the Company or any Company Subsidiary to pay, or that entitles the Company or any Company Subsidiary to receive, $500,000 or more in any consecutive 12-month period that is not terminable without penalty upon 90 days prior written notice or less by the Company or any Company Subsidiary.

 

(b)         Except as disclosed in Section 4.18(b) of the Company Disclosure Letter, (i) each Material Contract is valid and binding on the Company or the Company Subsidiary party thereto and, to the Knowledge of the Company, each other party thereto, and is in full force and effect, (ii) none of the Company or any Company Subsidiary is in material default under any Material Contract or has received notice of any asserted default by the Company or any Company Subsidiary party thereto under any Material Contract, (iii) no event or condition exists which constitutes, or after notice or lapse of time or both would constitute, a material default on the part of the Company or any Company Subsidiary under any Material Contract, (iv) as of the date of this Agreement, no other party to such Material Contract is, to the Knowledge of the Company, in material default in any respect thereunder, (v) as of the date of this Agreement, none of the Company or any Company Subsidiary has received written notice from any other party to a Material Contract that such other party intends to terminate, not renew, or renegotiate in any material respect the terms of, any such Material Contract and (vi) upon consummation of the Transaction, each Material Contract shall continue in full force and effect without any change in control or prepayment expense or penalty without the consent, approval or act of, or the making of any filing with, any other Person.

 

(c)          The Company has furnished or otherwise made available to Parent true and complete copies of each Material Contract.

 

SECTION 4.19. Absence of Certain Changes. Since December 31, 2018 until the date of this Agreement, except as set forth in Section 4.19 of the Company Disclosure Letter, the Company and each Company Subsidiary has conducted its business in the ordinary course consistent with past practice and neither the Company nor any Company Subsidiary has:

 

(a)          (i) granted any material increase, or announced any material increase, in the wages, salaries, cash compensation, bonuses, or other cash incentives payable by the Company or any Company Subsidiary to any of its employees, including, without limitation, any such increase pursuant to any Benefit Plan, or (ii) established or materially increased or promised to materially increase any benefits under any material Benefit Plan, in either case (i) or (ii), except (A) as required by Law or any collective bargaining agreement or (B) for annual merit increases or increases in connection with promotions in the ordinary course of business consistent with the past practices of the Company;

 

(b)          made any change in any method of accounting or accounting practice or policy used by the Company except as required by Law or GAAP;

 

(c)          (i) sold, leased to others or otherwise disposed of, or mortgaged or pledged, or imposed or suffered to be imposed any Lien on, any of its assets with a fair market value in excess of $500,000 other than in the ordinary course of business or (ii) entered into any contractual obligation relating to (A) the purchase of assets constituting a business, (B) any merger, consolidation or other business combination or (C) the acquisition of real property or undertaking capital expenditures in excess of $500,000;

 

(d)          entered into a collective bargaining agreement;

 

(e)          abandoned or discontinued service on all or any part of the rail lines owned by the Company or any Company Subsidiary; or

 

(f)           entered into any agreement or contractual obligation to do any of the things referred to in clauses (a) through (e) above.

 

SECTION 4.20. No Other Representations or Warranties. Except for the representations and warranties made by the Company in this Article IV, neither the Company nor any other Person makes any other express or implied representation or warranty with respect to the Company, the Company Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, or any estimates, projections, forecasts and other forward-looking information or business and strategic plan information regarding the Company or the Company Subsidiaries, notwithstanding the delivery or disclosure to Parent, Merger Sub or any of their respective Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing. In particular, and without limiting the generality of the foregoing, neither the Company nor any other Person makes or has made any express or implied representation or warranty to Parent, Merger Sub or any of their respective Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to the Company, the Company Subsidiaries or their respective businesses or (b) except for the representations and warranties made by the Company in this Article IV, any oral or written information presented to Parent, Merger Sub or any of their respective Representatives in the course of their due diligence investigation of the Company and any Company Subsidiary, the negotiation of this Agreement or the course of the Transaction. Each of the Company and any Company Subsidiary disclaims any and all other representations and warranties, whether express or implied.

 

ARTICLE V.

 

 

Each of Parent and Merger Sub jointly and severally represent and warrant to the Company as follows:

 

SECTION 5.01. Organization, Standing and Power. Each of Parent and Merger Sub (i) is a limited liability company, corporation or other entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the laws of its jurisdiction of formation, incorporation or organization, (ii) has full limited liability company, corporate or similar power and authority to own, lease and operate its properties and assets and to conduct its business as presently conducted, except where any failure to have such power or authority, individually or in the aggregate, has not had a material adverse effect on the ability of Parent or Merger Sub to perform its obligations under this Agreement or to consummate the Transaction (any such material adverse effect, a “Parent Material Adverse Effect”), and (iii) is duly qualified or licensed to do business as a foreign limited liability company, corporation or other entity and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed, individually or in the aggregate, has not had a Parent Material Adverse Effect.

 

SECTION 5.02. Authority; Execution and Delivery; Enforceability. Each of Parent and Merger Sub has all necessary limited liability company, corporate or other power and authority to execute and deliver this Agreement and any Ancillary Agreement to which it is, or is specified to be, a party, to perform its obligations hereunder and thereunder and to consummate the Transaction, subject, in the case of the consummation of the Merger by Merger Sub, to the approval of this Agreement by Parent, as the sole member of Merger Sub, which approval will be obtained and delivered to Seller Representative as soon as reasonably practicable following the execution of this Agreement. The execution, delivery and performance by Parent and Merger Sub of this Agreement and any Ancillary Agreement to which it is, or is specified to be, a party, and the consummation by Parent and Merger Sub of the Transaction, have been duly authorized by all necessary limited liability company, corporate or other action, subject, in the case of the consummation of the Merger by Merger Sub, to the approval of this Agreement by Parent, as the sole member of Merger Sub. This Agreement has been duly executed and delivered by Parent and Merger Sub, and each Ancillary Agreement to which Parent or Merger Sub is, or is specified to be, a party will at or prior to the Effective Time be duly executed and delivered by Parent or Merger Sub, as applicable. Assuming the due authorization, execution and delivery by the other parties thereto, this Agreement constitutes, and each Ancillary Agreement to which Parent or Merger Sub is, or is specified to be, a party will constitute, a legal, valid and binding obligation of Parent or Merger Sub, as applicable, enforceable against Parent or Merger Sub in accordance with its terms, except as enforcement thereof may be limited against Parent or Merger Sub by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing, or remedies in general, as from time to time in effect, or (ii) the exercise by courts of equity powers. No vote of holders of any class or series of equity interests of Parent is required in connection with the execution, delivery and performance by Parent of this Agreement and any Ancillary Agreement to which it is, or is specified to be, a party, and the consummation by Parent of the Transaction.

 

SECTION 5.03. No Conflicts; Consents.

 

(a)          The execution and delivery by Parent and Merger Sub of this Agreement do not, the execution and delivery of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the performance by Parent and Merger Sub of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party and the consummation of the Transaction will not, (i) conflict with or violate any provision of charter or organizational or similar documents of Parent, Merger Sub or any of their respective subsidiaries, (ii) assuming that all consents, approvals and authorizations contemplated by Section 5.03(b) below have been obtained, and all filings described therein have been made, conflict with or violate any Order or Law applicable to Parent, Merger Sub or any of their respective subsidiaries or by which any property or asset of Parent, Merger Sub or any of their respective subsidiaries is bound or affected or (iii) require any consent or other action by any Person under, result in a breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, give to others (immediately or with notice or lapse of time or both) any right of termination, amendment, acceleration or cancellation of, result (immediately or with notice or lapse of time or both) in triggering any payment or other obligations under, result in the loss of any right or benefit to which Parent, Merger Sub or any of their respective subsidiaries is entitled under or result (immediately or with notice or lapse of time or both) in the creation of any Lien on any property or asset of Parent, Merger Sub or any of their respective subsidiaries under, any Contract to which Parent, Merger Sub or any of their respective subsidiaries is a party or by which Parent, Merger Sub or any of their respective subsidiaries, or any property or asset of Parent, Merger Sub or any of their respective subsidiaries, is bound or affected, except in the case of clauses (ii) and (iii) above for any such conflicts, violations, breaches, defaults or other occurrences that, individually or in the aggregate, have not had a Parent Material Adverse Effect.

 

(b)          The execution and delivery by Parent and Merger Sub of this Agreement do not, the execution and delivery of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the performance by Parent and Merger Sub of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party and the consummation of the Transaction will not, require any Consent of, or filing with or notification to, or registration or qualification with, any Governmental Entity, except for (i) the filing of the Certificate of Merger with the Department of State of the State of Delaware, (ii) compliance with and such filings as may be required under applicable state property transfer laws or Environmental Laws, (iii) such filings as may be required in connection with the Transfer Taxes described in Section 7.09, (iv) STB Approval, CTA Approval and TC Approval and (v) such other items (A) required solely by reason of the participation of the Company (as opposed to any third party) in the Transaction or (B) that, individually or in the aggregate, have not had a Parent Material Adverse Effect.

 

SECTION 5.04. Brokers. No broker, finder or investment banker (other than CIBC World Markets Inc., the fees and expenses of which will be paid by Parent) is entitled to any brokerage, finder’s or other fee or commission in connection with this Agreement or the Transaction based upon arrangements made by or on behalf of Parent, Merger Sub or any of their respective directors, officers or employees.

 

SECTION 5.05. Available Funds. Concurrently with the execution of this Agreement, Guarantor has delivered to the Company a copy of the Guaranty duly executed by the Guarantor. The Guaranty is in full force and effect and is a valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, receivership and similar laws affecting the enforcement of creditors’ rights generally and general equitable principles) and no event has occurred which, with or without notice, lapse of time or both, could constitute a default on the part of the Guarantor under the Guaranty. As of the date of this Agreement, Guarantor has, and as of the Closing Date, Guarantor will have, cash on hand that is sufficient to enable Parent and the Merger Sub to consummate the Transaction.

 

SECTION 5.06. Litigation. As of the date of this Agreement, there is no Action pending or to the Knowledge of Parent, threatened – in writing against Parent, Merger Sub or any of their respective subsidiaries (i) to enjoin, prohibit or declare unlawful the Transaction, including the Merger, or (ii) that, individually or in the aggregate, has had a Parent Material Adverse Effect, nor are there any Orders outstanding against Parent, Merger Sub or any of their respective subsidiaries that, individually or in the aggregate, has had a Parent Material Adverse Effect.

 

SECTION 5.07. Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transaction. Except for Liabilities incurred in connection with its formation or the Transaction, Merger Sub has not, and prior to the Effective Time will not have, incurred, directly or indirectly through any Affiliate, any Liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any Person. All of the membership interests of Merger Sub have been, to the extent applicable, validly issued, are fully paid and nonassessable and are owned by Parent, free and clear of any Lien.

 

SECTION 5.08. Canada Insurance Indemnity. Each of Parent and Merger Sub acknowledges and agrees that the Indemnity Agreement between Sponsor and CMQR Canada dated as of June 15, 2015, as amended (the “Canada Insurance Indemnity”), will be terminated as of the Closing Date, and that Parent and Merger Sub may be required to provide a substitute indemnification arrangement with the CTA in order to maintain the Certificate of Fitness to operate as a railway company from and after the Closing Date.

 

SECTION 5.09. No Additional Representations; No Reliance.

 

(a)         Each of Parent and Merger Sub acknowledges and agrees that except for the representations and warranties made by the Company in Article IV, neither the Company nor any other Person makes any other express or implied representation or warranty with respect to the Company, the Company Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, or any estimates, projections, forecasts and other forward-looking information or business and strategic plan information regarding the Company or the Company Subsidiaries, notwithstanding the delivery or disclosure to Parent, Merger Sub or any of their respective Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing. Each of Parent and Merger Sub acknowledges and agrees that, without limiting the generality of the foregoing, neither the Company nor any other Person makes or has made any express or implied representation or warranty to Parent, Merger Sub or any of their respective Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to the Company, the Company Subsidiaries or their respective businesses or (b) except for the representations and warranties made by the Company in Article IV, any oral or written information presented to Parent, Merger Sub or any of their respective Representatives in the course of their due diligence investigation of the Company and any Company Subsidiary, the negotiation of this Agreement or the course of the Transaction.  Each of Parent and Merger Sub acknowledges and agrees that neither the Company nor any other Person will have or be subject to any liability or other obligation to Parent, Merger Sub, any of their respective Affiliates or Representatives or any Person resulting from the consummation of the Transaction or the use by Parent, Merger Sub or any of their respective Affiliates or Representatives of any such information, including information, documents, projections, forecasts or other material made available to Parent, Merger Sub or any of their respective Affiliates or Representatives in the Confidential Information Memorandum, any “data rooms”, teaser, confidential information or management presentations in connection with the Transaction, unless any such information is expressly and specifically included in a representation or warranty contained in Article IV; provided, however, that the limitation in this sentence shall not limit the liability of any Company Affiliate arising as a result of Acquired Company Fraud.  In addition to the foregoing, each of Parent and Merger Sub acknowledges and agrees that (x) neither the Company nor any other Person has made any express or implied representation or warranty with respect to the environmental condition of, compliance with Environmental Laws of, or the presence of Hazardous Substances on or along, the Lac Megantic Tracks, and (y) Parent and Merger Sub shall accept the Lac Megantic Tracks “as is, where-is” and with all faults and defects in their present condition.

 

(b)          Each of Parent and Merger Sub acknowledges and agrees that, in connection with Parent’s and Merger Sub’s investigation of the business of the Company and any Company Subsidiary, the Company has delivered, or made available to Parent, Merger Sub and their respective Affiliates and Representatives, certain projections and other forecasts, including but not limited to, projected financial statements, cash flow items and other data relating to the business of the Company and any Company Subsidiary and certain business plan information of such business. Each of Parent and Merger Sub acknowledges and agrees that there are uncertainties inherent in attempting to make such projections and other forecasts and plans and accordingly are not relying on them, that Parent and Merger Sub are familiar with such uncertainties, that Parent and Merger Sub are taking full responsibility for making their own evaluation of the adequacy and accuracy of all projections and other forecasts and plans so furnished to them, and that Parent, Merger Sub and their respective Affiliates and Representatives shall have no claim against any Person with respect thereto; provided, however, that the limitation in this sentence shall not limit the liability of any Company Affiliate arising as a result of Acquired Company Fraud. Accordingly, each of Parent and Merger Sub acknowledges and agrees that none of the Company or the Company Subsidiaries or any of their respective Representatives, agents or Affiliates has made any representation or warranty with respect to such projections and other forecasts and plans.

 

(c)          Each of Parent and Merger Sub acknowledges and agrees that the obligation of Parent and Merger Sub to consummate the Transaction is not conditioned by, or contingent upon, obtaining the CTA Approval and/or the TC Approval.

 

(d)          Notwithstanding anything contained in this Agreement, each of Parent and Merger Sub acknowledges and agrees that it is the explicit intent of the parties hereto that none of the Company or the Company Subsidiaries is making any representation or warranty whatsoever, express or implied, beyond those expressly given in Article IV, including any implied warranty or representation as to the value, condition, non-infringement, merchantability, suitability or fitness for a particular purpose with respect to any of the assets of the business of the Company or the Company Subsidiaries.

 

(e)          In furtherance of the foregoing, each of Parent and Merger Sub acknowledges and agrees that it is not relying on any representation or warranty of the Company or the Company Subsidiaries, other than those representations and warranties specifically set forth in Article IV.  Each of Parent and Merger Sub acknowledges and agrees it has conducted to its satisfaction an independent investigation of the financial condition, liabilities, results of operations and projected operations of the business of the Company and any Company Subsidiary and the nature and condition of their properties, assets and businesses and, in making the determination to proceed with the Transaction, and that it has relied solely on the results of its own independent investigation and the representations and warranties set forth in Article IV.

 

ARTICLE VI.

 

 

SECTION 6.01. Operation of the Business of the Company and any Company Subsidiary.

 

(a)          Except in respect of matters (i) required by applicable Law, Order or a Governmental Entity, (ii) set forth in Section 6.01 of the Company Disclosure Letter, (iii) consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned) or (iv) set forth in or as otherwise contemplated, permitted or required by this Agreement (including with respect to the Pre-Closing Reorganization), the Company covenants and agrees that between the date of this Agreement and the Effective Time, the Company shall and shall cause each of the Company Subsidiaries to use commercially reasonable efforts to, (x) maintain its existence in good standing under applicable Law, (y) subject to the restrictions and exceptions set forth in Section 6.01(b) or elsewhere in this Agreement, conduct its business and operations in the ordinary course of business and in a manner substantially consistent with prior practice and (z) preserve substantially intact its business organizations, keep available the services of its current officers and employees and preserve substantially intact the current relationships of the Company and any Company Subsidiary with customers, suppliers, distributors and other Persons with which the Company or any of the Company Subsidiaries has business relations that are material to the Company and any Company Subsidiary, taken as a whole; provided, however, that no action by the Company or any of the Company Subsidiaries with respect to matters specifically addressed by Section 6.01(b) shall be deemed to be a breach of this Section 6.01(a) unless such action would constitute a breach of Section 6.01(b).

 

(b)         Without limiting the foregoing, except in respect of matters (w) required by applicable Law, Order or a Governmental Entity, (x) set forth in Section 6.01 of the Company Disclosure Letter, (y) consented to by Parent in writing (which consent shall not be unreasonably withheld, delayed or conditioned) or (z) set forth in or as otherwise contemplated, permitted or required by this Agreement (including with respect to the Pre-Closing Reorganization), the Company covenants and agrees that between the date of this Agreement and the Effective Time, the Company shall not and shall cause each of the Company Subsidiaries not to:

 

(i)          in the case of the Company, (A) adjust, split, combine or reclassify any of its Units or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, Units or (B) repurchase, redeem or otherwise acquire or offer to repurchase, redeem or otherwise acquire, directly or indirectly, any Units or any Equity Rights;

 

(ii)         issue, deliver or sell any Units or any Equity Rights or any capital stock or membership interests in any of any of the Company Subsidiaries, other than issuances, deliveries or sales of capital stock or membership interests in any Company Subsidiary to the Company or another Company Subsidiary;

 

(iii)        amend or otherwise change the Company Charter or Company Agreement (whether by merger, consolidation or otherwise);

 

(iv)        purchase an equity interest in any Person or any division or business thereof if the aggregate amount of the consideration paid or transferred by the Company and any Company Subsidiary in connection with such purchase would reasonably be expected to exceed $500,000, except for any such action (A) pursuant to a Common Unit Award Agreement or (B) solely between or among the Company and any Company Subsidiary;

 

(v)         sell, lease, license or otherwise dispose of any of its properties or assets (including equity interests of any Company Subsidiary) other than (A) sales or other dispositions of inventory or other assets in the ordinary course of business and in a manner substantially consistent with past practice, including transfers of material intellectual property to distributors in the ordinary course of business, (B) leases and subleases of Owned Real Property and Other Real Property Interests leased by the Company or the Company Subsidiaries in the ordinary course of business and in a manner substantially consistent with past practice, (C) sales of obsolete or written off assets in the ordinary course of business and in a manner substantially consistent with past practice or (D) sales or other dispositions of assets utilized in the operations of the Company or the Company Subsidiaries the total value of which does not exceed $500,000 in the aggregate;

 

(vi)        pledge, encumber or otherwise subject to an Lien (other than a Permitted Lien) any properties or assets (including equity interests of any Company Subsidiary);

 

(vii)       make any loans or capital contributions to, or investments in, any Person, other than to or in the Company or any Company Subsidiary, except for extensions of trade credit in the ordinary course of business and in a manner substantially consistent with past practice;

 

(viii)      (A) grant any material increase, or announce any material increase, in the wages, salaries, compensation, bonuses, or other incentives payable by the Company or any Company Subsidiary to any of its employees, including, without limitation, any such increase pursuant to any Benefit Plan or (B) establish or materially increase or promise to materially increase any benefits under any Benefit Plan, in either case (A) or (B), except (1) as required by Law or any collective bargaining agreement or (2) for annual merit increases or increases in connection with promotions in the ordinary course of business consistent with the past practices of the Company;

 

(ix)        enter into, renew, or extend any agreement with any of its directors, officers, employees, or labor organizations (or with any relative, beneficiary, spouse or Affiliate of such Person) or take any action that has the effect of creating or triggering, any entitlement to benefits under the terms of any such agreement; provided, however, that CMQR US and CMQR Canada, as applicable, may continue the current negotiations, and may enter into an extended or modified collective bargaining agreement, with labor organizations representing CMQR US’s United States employees and CMQR Canada’s employees in Canada so long as such extensions or modifications provide no more than a 3% base salary increase per annum;

 

(x)         enter into, renew, or extend any agreement with any holder of Units (or with any relative, beneficiary, spouse or Affiliate of such Person);

 

(xi)        create, incur, guarantee or assume any Indebtedness in excess of $200,000 other than under the Existing Credit Agreement or the Existing Equipment Loan Agreement;

 

(xii)       adopt or enter into any plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiary;

 

(xiii)      change its present accounting methods or principles in any material respect, except as required by Law or GAAP;

 

(xiv)      cancel any material insurance policy or allow any material insurance policy to lapse unless it is replaced by another insurance policy containing substantially similar terms;

 

(xv)        lease any properties or assets of the Company or the Company Subsidiaries pursuant to a lease which provides for pre-paid rent or substantially all rent to be paid prior to the Closing in an aggregate amount in excess of $75,000;

 

(xvi)       except pursuant to the Pre-Closing Reorganization, make or pay any dividends or distributions (whether in cash, securities or other property) to any holder of Units or otherwise, except for redemptions, dividends or distributions (whether in cash, securities or other property) by any Company Subsidiary solely to the Company or to another Company Subsidiary;

 

(xvii)     make any capital or other expenditure or commitment for any capital or other expenditure in excess of $500,000, except for capital expenditures in connection with (A) work performed under the Company Subsidiaries’ existing 2019 capital program for track and facilities, and (B) work planned to be performed prior to the Effective Time under the Company Subsidiaries’ existing 2020 capital program for track and facilities; or

 

(xviii)    authorize, commit or agree to take any of the actions described in this Section 6.01(b).

 

ARTICLE VII.

 

 

SECTION 7.01. Access to Information.

 

(a)         Subject to applicable Law and any applicable Order, between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement pursuant to Section 9.01, upon reasonable notice, the Company shall, and shall cause each Company Subsidiary to, afford to Parent and its Representatives reasonable access during normal business hours to the officers, employees, agents, properties, books, Tax Returns, Contracts and records (other than any of the foregoing that relate to the negotiation and execution of this Agreement or any Ancillary Agreement or any proposals from other parties relating to any competing or alternative transactions) of the Company and any Company Subsidiary, and the Company shall, and shall cause each Company Subsidiary to, furnish promptly to Parent and its Representatives such information concerning its business, personnel, assets, liabilities and properties as Parent may reasonably request, provided, however, that Parent and its Representatives shall conduct any such activities in such a manner as not to interfere unreasonably with the business or operations of the Company or the Company Subsidiaries; provided further that the Company and any Company Subsidiary shall not be obligated to provide such access or information if the Company determines, in its reasonable judgment, that doing so could (a) result in the disclosure of trade secrets or competitively sensitive information, (b) violate applicable Law, an applicable Order or a Contract or obligation of confidentiality owing to a third party, (c) jeopardize the protection of an attorney-client privilege, attorney work product protection or other legal privilege, (d) be adverse to the interests of the Company or any of the Company Subsidiaries in any pending or threatened Action or (e) expose the Company or the Company Subsidiaries to risk of liability for disclosure of sensitive or personal information; provided further that Parent and its Representatives may only conduct a visual inspection of the properties of the Company and the Company Subsidiaries, and Parent agrees that neither it nor its Representatives may conduct any Invasive Activities on or inspections (other than a visual inspection) of the properties of the Company and the Company Subsidiaries or operate any equipment or machinery in the course of such visual inspection. All requests for information made pursuant to this Section 7.01 shall be directed to the executive officer or other Person designated by the Company. Until the Effective Time, all information provided will be subject to the terms of the letter agreement dated as of July 24, 2019 by and between the Company and Parent (the “Confidentiality Agreement”).

 

(b)          TO THE FULLEST EXTENT PERMITTED BY LAW, PARENT AND MERGER SUB SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS THE COMPANY, THE COMPANY SUBSIDIARIES, KATAHDIN, AND THEIR RESPECTIVE REPRESENTATIVES, FROM ANY AND ALL LOSSES, INCLUDING THOSE FOR (1) ANY INJURY, ILLNESS OR DEATH OF ANY PERSONS (INCLUDING THIRD PARTIES, PARENT, MERGER SUB, THE COMPANY, ANY COMPANY SUBSIDIARY, KATAHDIN OR ANY OF THEIR RESPECTIVE REPRESENTATIVES) AND (2) DAMAGE TO PROPERTY (INCLUDING DAMAGE TO PROPERTY OF THIRD PARTIES, PARENT, MERGER SUB, THE COMPANY, ANY COMPANY SUBSIDIARY, KATAHDIN OR ANY OF THEIR RESPECTIVE REPRESENTATIVES) TO THE EXTENT CAUSED BY, ARISING OUT OF, OR RESULTING FROM THE ACTIVITIES OF PARENT OR ANY OF ITS REPRESENTATIVES IN CONNECTION WITH THE RIGHTS OF ACCESS, EXAMINATION AND INSPECTION GRANTED UNDER THIS SECTION 7.01, EVEN IF SUCH INDEMNIFIED EVENT IS CAUSED BY, ARISES OUT OF OR RESULTS FROM THE ACTIVE OR PASSIVE, SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, BREACH OF DUTY (STATUTORY OR OTHERWISE), VIOLATION OF LAW (EXCEPT TO THE EXTENT SUCH VIOLATION IS AN ALLEGED VIOLATION OF A CRIMINAL CODE) OR OTHER FAULT OF THE AFORESAID INDEMNIFIED PARTIES, OR ANY PRE-EXISTING DEFECT, BUT NOT TO THE EXTENT THAT SUCH INDEMNIFIED EVENT OR OCCURRENCE IS CAUSED BY OR THE RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTIES. NOTWITHSTANDING THE FOREGOING, NEITHER PARENT NOR MERGER SUB SHALL HAVE ANY RESPONSIBILITY PURSUANT TO THIS SECTION 7.01(b) WITH RESPECT TO PRE-EXISTING HAZARDOUS SUBSTANCES, EXCEPT TO THE EXTENT EXACERBATED BY THE ACTIVITIES OF PARENT OR ANY OF ITS REPRESENTATIVES IN CONNECTION WITH THE RIGHTS OF ACCESS, EXAMINATION AND INSPECTION GRANTED UNDER THIS SECTION 7.01.

 

SECTION 7.02. Reasonable Best Efforts.

 

(a)         Upon the terms and subject to the conditions set forth in this Agreement, each of Parent, Merger Sub and the Company shall use its respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with each other in doing, all things necessary, proper or advisable to cause the conditions to Closing set forth in Article VIII of this Agreement to be satisfied as promptly as practicable and to consummate and make effective, in the most expeditious manner practicable, the Transaction, including:

 

(i)         obtaining in the most expeditious manner practicable the STB Approval,  (A) by filing, no later than five (5) Business Days after the date hereof, a request pursuant to 49 C.F.R. § 1013.3(a) for authorization of a voting trust (in the form attached as Exhibit H to this Agreement) under which all of the shares of capital stock of CMQR US shall be placed into an irrevocable voting trust as of the Effective Time pending receipt of final STB approval or exemption of the Transaction pursuant to 49 U.S.C. § 11323 et seq., and (B) by filing no later than twenty (20) Business Days after the date hereof an application pursuant to 49 U.S.C. § 11323 et seq. for approval of the Transaction (including all  necessary documentation), in each case at Parent’s sole cost and expense, and to promptly make any subsequent record filings with or presentations to the STB in connection with such application;

 

(ii)         obtaining in the most expeditious manner practicable the CTA Approval and the TC Approval, in each case at Parent’s sole cost and expense;

 

(iii)        obtaining in the most expeditious manner practicable all other Governmental Authorizations, Consents, Orders and approvals of the Transaction, and to make all filings with and to give all notices to all Governmental Entities and officials required to consummate the Transaction, and promptly supplying any information and documentary material that may be requested by any Governmental Entity in connection with this Agreement, the Transaction or such Governmental Authorizations, Consents, Orders and approvals;

 

(iv)        seeking to have lifted or rescinded any Order, decree or ruling issued by any Governmental Entity of competent jurisdiction which has the effect of making the Transaction illegal or otherwise prohibiting consummation of the Transaction;

 

(v)         vigorously defending any Actions, whether regulatory, judicial, administrative or other, to which it is a party challenging or affecting this Agreement, the Ancillary Agreements or the Transaction, or seeking to prohibit or delay the Closing, or which would prevent or make illegal the consummation of the Transaction; and

 

(vi)        executing and delivering any additional instruments necessary to consummate the Transaction and fully carry out the purposes of this Agreement.

 

(b)          Prior to Closing, and subject to the other provisions of this Section 7.02,  Parent, Merger Sub and the Company shall coordinate the overall development of the positions to be taken and the regulatory actions to be requested in any applications and filings related to the STB Approval and in connection with any investigation or other inquiry or litigation by or before, or any negotiations with, any Governmental Entity relating to the STB Approval and of all other matters incidental thereto. Subject to obtaining the cooperation of the Company in an expeditious manner at the request of Parent (including directing CMQR Canada to submit notices drafted by Parent) for purposes of giving effect to the Transaction, Parent shall be solely responsible for (x) devising the strategy for obtaining the CTA Approval, the TC Approval and any other Governmental Authorizations, Consents, Orders and approvals from Governmental Entities in connection with the Transaction other than the STB Approval and (y) coordinating the overall development of the positions to be taken and the regulatory actions to be requested in any applications and filings related to the CTA Approval, the TC Approval and any other Governmental Authorizations, Consents, Orders and approvals contemplated by this Agreement other than the STB Approval and in connection with any investigation or other inquiry or litigation by or before, or any negotiations with, any Governmental Entity relating to the Transaction and of all other matters incidental thereto other than the STB Approval.

 

(c)          Parent, Merger Sub and the Company shall promptly furnish to each other all information required for any necessary application or other filing under any applicable Law, rule or regulation in connection with the Transaction.

 

(d)          Prior to the Closing, the parties to this Agreement will provide each other with copies of all correspondence, filings or communications between them or any of their representatives, on the one hand, and any Governmental Entity or members of its staff, on the other hand, with respect to this Agreement, the Transaction, the STB Approval, the CTA Approval, the TC Approval and any other Governmental Authorizations, Consents, Orders and approvals, or any related declaration, filing, registration, notice, authorization, Consent or approval. Prior to the Closing, none of the parties to this Agreement shall agree to participate in any meeting with any Governmental Entity in respect of any filings, proceeding, investigation (including any settlement of the investigation), litigation or other inquiry made in connection with this Agreement or the Transaction unless it consults with the other parties in advance and, to the extent permitted by such Governmental Entity, gives the other parties the opportunity to attend and participate at such meeting; provided, however, that materials may be redacted (x) to remove references concerning the valuation of the business acquired hereunder, (y) as necessary to comply with contractual obligations, and (z) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns.

 

(e)          Prior to the Closing, Parent and Merger Sub, on the one hand, and the Company on the other, will provide each other with reasonable advance opportunity to review and comment upon, and will consider in good faith the views of the other party in connection with, all written communications with any Governmental Entity (including without limitation, any application, petition, motion filing, analysis, appearance, presentation, memorandum, brief, argument, opinion or proposal made or submitted to a Governmental Entity in connection with the STB Approval, the CTA Approval, the TC Approval and any other Governmental Authorizations, Consents, Orders and approvals), and will promptly provide the other party with copies of all written communications to or from any Governmental Entity relating to the same in connection with obtaining Government Authorization for the Transaction.

 

(f)           Neither Parent nor Merger Sub, on the one hand, nor the Company, on the other, shall consent to any voluntary delay of the Closing at the request of any Governmental Entity without the consent of the other.

 

(g)        Without limiting the foregoing, Parent and Merger Sub shall use reasonable best efforts to take, or cause to be taken, any and all steps and to make, or cause to be made, any and all undertakings necessary to avoid or eliminate each and every objection, impediment or concern asserted by any Governmental Entity in connection with obtaining the STB Approval, the CTA Approval, the TC Approval and any other Governmental Authorizations, Consents, Orders and approvals, so as to enable the Closing to occur as promptly as practicable, including:

 

(i)          entering into negotiations, providing information and making proposals;

 

(ii)         taking any and all reasonable steps necessary to vacate, modify or suspend any injunction or Order issued in a judicial or administrative proceeding brought under any Law by any Governmental Entity or any other Person that would make consummation of the Transaction at the Closing in accordance with the terms of this Agreement unlawful or that would prevent or delay such Closing prior to the Outside Date;

 

(iii)        taking promptly any and all other reasonable steps and  other actions and doing all other things reasonably necessary and proper to avoid or eliminate each and every impediment under any Law that may be asserted by any Governmental Entity or any other party to the consummation of the Transaction in accordance with the terms of this Agreement;

 

(iv)        agreeing to conditions imposed by any Governmental Entity in connection with its approval or authorization of the Transaction (including the STB Approval, the CTA Approval and the TC Approval), including conditions requiring the grant of operating, haulage or competitive access rights to another rail carrier over the lines currently operated by CMQR US and CMQR Canada, and/or conditions imposing interchange requirements, operational restrictions or standards of service, or otherwise limiting any of Parent’s or its Affiliates’ (including, after the Effective Time, the Surviving Company and the Company Subsidiaries) freedom of action with respect to, or its ability to retain or freely operate, any of the assets, properties, licenses, rights, operations or businesses of Parent, any of Parent’s Affiliates, the Company or any of the Company Subsidiaries, in each case as may be required in order to obtain the STB Approval and any other Governmental Authorizations, Consents, Orders and approvals, or to avoid the entry of, or to effect the lifting or dissolution of, any Order  which would otherwise have the effect of preventing or delaying the Closing; provided, however, that neither Parent nor Merger Sub shall be required to agree to any condition (other than standard labor protective conditions imposed pursuant to 49 U.S.C. § 11326) imposed by any Governmental Entity in connection with its approval or authorization of the Transaction if such condition will have a Company Material Adverse Effect; provided further that the Company shall not be required to, and Parent and Merger Sub shall not, in connection with obtaining the STB Approval, the CTA Approval, the TC Approval and any other Governmental Authorizations, Consents, Orders and approvals hereunder, or in connection with otherwise complying with any provisions of this Agreement, agree or consent to, or offer to agree or consent to, (x) the taking of any action or the imposition of any terms, conditions, limitations or standards of service the effectiveness or consummation of which is not conditional upon the occurrence of the Closing, (y) the imposition of any terms, conditions or limitations on or with respect to any holder of Units or any of their Affiliates, any of their respective businesses or any of the benefits of the Transaction to any such Person or (z) any amendments or modifications to any of the terms of the Ancillary Agreements.

 

(h)          Parent, Merger Sub and the Company shall, to the extent permitted by applicable Law:  (i) give each other prompt notice of the making or commencement of any request, inquiry or Action by or before any Governmental Entity with respect to the Transaction of which Parent or Company (as applicable) becomes aware; (ii) keep each other informed as to the status of any such request, inquiry or Action; and (iii) promptly inform each other of any communication to or from any Governmental Entity regarding the Transaction.

 

(i)           Nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company or any of the Company Subsidiaries prior to the Effective Time.  Prior to the Effective Time, the Company and each Company Subsidiary shall exercise, consistent with the terms and conditions of this Agreement, complete unilateral control and supervision over their business operations.

 

(j)         Prior to the earlier of  (x) STB’s determination with respect to Parent’s request for authorization pursuant to 49 C.F.R. § 1013.3(a) for the use of a voting trust transaction under which all of the shares of capital stock of CMQR US shall be placed into an irrevocable voting trust as of the Effective Time pending receipt of final STB approval or exemption of the Transaction pursuant to 49 U.S.C. § 11323 and (y) December 30, 2019, no party to this Agreement, directly or indirectly through one or more of their respective Affiliates, shall take any action, including entering  into an agreement to acquire or make any investment in any corporation, partnership, limited liability company or other business organization or any division or assets thereof, that would reasonably be expected to cause a material delay in the satisfaction of the conditions contained in Article VIII.  If the STB declines to approve Parent’s request for authorization for the use of a voting trust transaction, no party to this Agreement, directly or indirectly through one or more of their respective Affiliates, shall take any action, including entering into an agreement to acquire or make any investment in any rail carrier whose lines connect with, or provide rail services in competition with, the rail lines of CMQR US or CMQR Canada prior to receipt of final STB approval or exemption of the Transaction pursuant to 49 U.S.C. § 11323 et seq.  Nothing in this Section 7.02 will apply to or restrict communications or other actions by the Company or the Company Subsidiaries with or with respect to Governmental Entities in connection with their business in the ordinary course of business.

 

SECTION 7.03. Notification. The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of (a) the breach or failure to be true and correct of any representation or warranty made by it contained in this Agreement, which breach or failure to be true and correct would give rise to the failure of a condition in Section 8.02(a) or Section 8.03(a), as applicable, or (b) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. During the period prior to the Closing Date, the Company will notify Parent of (i) any Company Material Adverse Effect, (ii) any lawsuit, claim, proceeding or investigation that is threatened, brought, asserted or commenced against the Company or any Company Subsidiary which would have been listed in Section 4.07 of the Company Disclosure Letter if such lawsuit, claim, proceeding or investigation had arisen prior to the date hereof, (iii) any notice or other communication from any third Person alleging that the consent of such third Person is required in connection with the transactions contemplated by this Agreement, and (iv) any material default under any Material Contract or any event which, with notice or lapse of time or both, would, to Knowledge of the Company, become such a default on or prior to the Closing Date.

 

SECTION 7.04. Public Announcements. Prior to the Closing, the parties hereto shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the Transaction, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, Order, court process or the rules and regulations of any national securities exchange or national securities quotation system. The parties hereto agree that the initial press release to be issued with respect to the Transaction following execution of this Agreement shall be in a form agreed to by the parties hereto (the “Announcement”). Notwithstanding the forgoing, this Section 7.04 shall not apply to any press release or other public statement made by any of the parties hereto (a) which is consistent with the Announcement and the terms of this Agreement and does not contain any information relating to the Company that has not been previously announced or made public in accordance with the terms of this Agreement or (b) is made in the ordinary course of business and does not relate specifically to the signing of this Agreement or the Transaction.

 

SECTION 7.05. Employee and Employee Benefit Matters.

 

(a)          For a period of one (1) year following the Effective Time (the “Continuation Period”), Parent shall provide, or cause its subsidiaries (including the Surviving Company and the Company Subsidiaries) to provide, to each Company Employee who is employed by the Company or any of the Company Subsidiaries as of the Effective Time (each, a “Continuing Employee”), (i) base salary or wages, variable pay and bonus or incentive compensation opportunities, excluding equity compensation, that are, in each case, no less favorable than and (ii) employee benefits that, in the aggregate, are substantially comparable to, in the case of each of clauses (i) and (ii), those provided to such Continuing Employees immediately prior to the Effective Time; provided, however, that for all purposes of this Section 7.05, Parent shall provide to any Continuing Employee who is represented for purposes of collective bargaining by any labor organization with the compensation, hours, work rules and other terms and conditions of employment as provided for in any applicable collective bargaining agreement or as required pursuant to applicable Law. With respect to such represented Continuing Employees, Parent shall, and shall cause its subsidiaries (including the Surviving Company and its subsidiaries) to, assume and honor all obligations under the applicable collective bargaining agreements in accordance with their terms as in effect immediately prior to the Effective Time, unless and until such agreements are terminated or modified in accordance with applicable Law.

 

(b)          Parent shall provide (i) each Continuing Employee in the United States whose employment is terminated during the Continuation Period by the Company, a Company Subsidiary, or the Parent or its Affiliates with severance payments, termination of employment entitlements and benefits that are no less favorable than the most favorable of (A) the severance payments and severance benefits or entitlements to notice of termination of employment to which such Continuing Employee is entitled pursuant to 49 U.S.C. § 11326 or other applicable Laws or (B) those provided to similarly situated employees of Parent and its Affiliates (excluding, after the Effective Time, the Surviving Company and its subsidiaries) under severance or notice of termination of employment plans, agreements or arrangements in effect at the time of such termination of employment and (ii) each Continuing Employee in Canada whose employment is terminated during the Continuation Period by the Company, a Company Subsidiary, or the Parent or its Affiliates with severance payments, termination of employment entitlements and benefits that are no less favorable than the most favorable of (A) those required by applicable Laws or (B) those provided to similarly situated employees of Parent and its Affiliates (excluding, after the Effective Time, the Surviving Company and its subsidiaries) under severance or notice of termination of employment plans, agreements or arrangements in effect at the time of such termination of employment; provided, however, that entitlement to such benefits or notice of termination of employment shall be subject to, as applicable, the terms and conditions of applicable Law, the terms of the applicable Benefit Plan, and the terms of the plans, arrangements, or agreements governing the provision of such benefits to similarly situated employees of Parent and its Affiliates and further provided that, except as required by applicable Laws or under an applicable collective bargaining agreement and except for any Continuing Employee who has received notice of termination of employment during the Continuation Period and had been required to work through all or part of that reasonable notice period during the Continuation Period, no Continuing Employee who, following termination of employment during the Continuation Period, continues to provide services to the Company, a Company Subsidiary, Parent, or an Affiliate, or who terminates employment with the Company, a Company Subsidiary, or the Parent or its Affiliates in connection with the termination of the Katahdin Transition Services Agreement, whether because such Continuing Employee accepts or refuses employment with Katahdin, shall be entitled to any severance benefits based on this Section 7.05(b).

 

(c)          Parent shall, and shall cause its subsidiaries (including, after the Effective Time, the Surviving Company and its subsidiaries) to, cause any plans, programs, agreements and arrangements established or maintained by Parent or any of its Affiliates (including, after the Effective Time, the Surviving Company and its subsidiaries) (including any vacation, paid time-off and severance plans) to recognize each Continuing Employee’s service with the Company or any of the Company Subsidiaries (as well as service with any predecessor of the Company or any of the Company Subsidiaries, to the extent service with such predecessor is recognized by the Company or such Company Subsidiary), for all purposes, including determining eligibility to participate, level of benefits, vesting, eligibility for a rate of benefit accrual, and eligibility for early retirement subsidies; provided, however, that such service need not be recognized (i) for purposes of benefit accruals, level of benefits or rate of benefit accrual under any defined benefit pension plan, or (ii) to the extent that such recognition would result in any duplication of benefits.

 

(d)          Parent shall, and shall cause its subsidiaries (including, after the Effective Time, the Surviving Company and its subsidiaries) to use commercially reasonable efforts to (i) waive, or cause to be waived, any pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods under any Benefit Plan maintained by Parent or any of its subsidiaries in which Continuing Employees (and their eligible dependents) will be eligible to participate from and after the Effective Time, except to the extent that such pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the comparable Benefit Plan immediately prior to the Effective Time, and (ii) provide full credit for any co-payments, deductibles and similar expenses made or incurred by each Continuing Employee (and his or her eligible dependents) during the calendar year in which the Effective Time occurs for purposes of satisfying such year’s deductible and co-payment limitations under the relevant welfare benefit plans in which such Continuing Employee (and his or her eligible dependents) will be eligible to participate from and after the Effective Time.

 

(e)           From and after the Effective Time, Parent shall, or shall cause its subsidiaries (including the Surviving Company and its subsidiaries) to, pay, no later than March 15, 2020, annual bonuses to the Continuing Employees with respect to the 2019 fiscal year of the Company and the Company Subsidiaries consistent with past practices of the Company and the Company Subsidiaries, as applicable, and the aggregate amount of such annual bonuses shall be at least equal to the aggregate amount of annual bonuses paid by the Company and the Company Subsidiaries with respect to the 2018 fiscal year.

 

(f)          Parent and its subsidiaries (including the Surviving Company and its subsidiaries) shall be solely responsible for all Liabilities or obligations under the WARN Act or other applicable Laws regarding plant closings or layoffs (or similar triggering event) as they relate to the Transaction that result from or are triggered by the Effective Time or from Parent’s or its subsidiaries’ actions or omissions on or after the Effective Time, regardless of whether the employment losses (as defined in the WARN Act or other applicable Laws) aggregated to trigger such obligations occur prior to, on, or after the Effective Time.

 

(g)          No provision of this Agreement shall create any right in any employee to continued employment by the Company, any Company Subsidiary or Parent or any of its subsidiaries, or preclude the ability of the Company, any Company Subsidiary or Parent or any of its subsidiaries to terminate the employment of any employee for any reason, except as otherwise provided by applicable Law. This Section 7.05 shall be binding upon and shall inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 7.05, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 7.05 or is intended to be, shall constitute or be construed as an amendment to or modification of any collective bargaining agreement, employee benefit plan, program, arrangement or policy of the Company, any Company Subsidiary or Parent or any of its subsidiaries. No Company Employee (including any beneficiary or dependent thereof) shall be regarded for any purpose as a third-party beneficiary of this Agreement pursuant to this Section 7.05, and this Section 7.05 shall not create such rights in any such Person.

 

SECTION 7.06. Indemnification and Insurance.

 

(a)          From and after the Effective Time, the Surviving Company and each Company Subsidiary shall, to the fullest extent permissible by applicable Law, (i) indemnify and hold harmless each individual who at the Effective Time is, or at any time prior to the Effective Time was, a director or officer of the Company or any Company Subsidiary (each, an “Indemnitee” and, collectively, the “Indemnitees”) against all expenses, liabilities and losses (including attorney fees, judgments, fines, excise taxes or penalties) reasonably incurred or suffered by such Indemnitee (or one or more of such Indemnitee’s Affiliates other than a member of the Company) by reason of the fact that such Indemnitee was a director or is or was serving as a representative, officer, principal, employee or agent of the Company or any Company Subsidiary or is or was serving at the request of the Company or any Company Subsidiary as a representative, officer, director, manager, principal, member, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise; provided, however, that no Indemnitee shall be indemnified for any expenses, liabilities and losses suffered that are attributable to such Indemnitees fraud, gross negligence, willful misconduct or knowing violation of Law or for any present or future breaches of any representations, warranties or covenants by such Indemnitee contained in the Company Agreement or in any other agreement with the Company. Expenses, including reasonable attorneys’ fees, incurred by any such Indemnitee in defending such a proceeding shall be paid by the Company in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of an undertaking by or on behalf of such Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified by the Company hereunder. Without limiting the foregoing, Parent, from and after the Effective Time, shall cause, unless otherwise required by Law (A) the limited liability company agreement of the Surviving Company to contain provisions no less favorable to the Indemnitees with respect to limitation of liabilities of directors and officers and indemnification than are set forth as of the date of this Agreement in the Company Charter and the Company Agreement and (B) shall preserve similar exculpation and indemnification obligations currently existing in the Organizational Documents of the Company Subsidiaries, which provisions shall not be amended, repealed or otherwise modified in a manner that would adversely affect the rights thereunder of the Indemnitees.

 

(b)          For the six-year period commencing immediately after the Effective Time, the Surviving Company shall maintain in effect the Company’s and the Company Subsidiaries’ current directors’ and officers’ liability insurance covering acts or omissions occurring at or prior to the Effective Time with respect to those individuals who are currently (and any additional individuals who prior to the Effective Time become) covered by the Company’s and the Company Subsidiaries’ directors’ and officers’ liability insurance policies on terms and scope with respect to such coverage, and in amount, no less favorable to such individuals than those of such policy in effect on the date of this Agreement (or the Surviving Company may substitute therefor policies, issued by reputable insurers, of at least the same coverage with respect to matters existing or occurring prior to the Effective Time, including a “tail” policy), provided, however, that in no event will the Surviving Company be required to expend for such policies pursuant to this sentence an annual premium amount in excess of 250% of the annual premiums currently paid by the Company and the Company Subsidiaries for such insurance. The Company and the Company Subsidiaries shall have the right (subject to the consent of Parent, not to be unreasonably withheld) prior to the Effective Time to purchase a six-year prepaid “tail policy” on terms and conditions providing at least substantially equivalent benefits as the current policies of directors’ and officers’ liability insurance maintained by the Company and any Company Subsidiary with respect to matters existing or occurring prior to the Effective Time, covering without limitation the Transaction. If such prepaid “tail policy” has been obtained by the Company or any Company Subsidiary, it shall be deemed to satisfy all obligations to obtain insurance pursuant to this Section 7.06(b) and the Surviving Company shall use its reasonable best efforts to cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations thereunder.

 

(c)           The provisions of this Section 7.06 are (i) intended to be for the benefit of, and shall be enforceable by, each Indemnitee and his or her heirs and (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that any such individual may have under the Company Charter, the Company Agreement, or any Organizational Document of any Company Subsidiary, by contract or otherwise. The obligations of Parent and the Surviving Company under this Section 7.06 shall not be terminated or modified in such a manner as to adversely affect the rights of any Indemnitee to whom this Section 7.06 applies unless (x) such termination or modification is required by applicable Law or (y) the affected Indemnitee shall have consented in writing to such termination or modification (it being expressly agreed that the Indemnitees to whom this Section 7.06 applies shall be third party beneficiaries of this Section 7.06).

 

(d)          In the event that (i) Parent, the Surviving Company or any of their respective successors or assigns (A) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (B) transfers or conveys all or substantially all of its properties and assets to any Person, or (ii) Parent or any of its successors or assigns dissolves the Surviving Company, then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Company, as the case may be, shall assume all of the obligations thereof set forth in this Section 7.06.

 

(e)          Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or any of the Company Subsidiaries for any of their respective directors, officers or other employees, it being understood and agreed that the indemnification provided for in this Section 7.06 is not prior to or in substitution for any such claims under such policies.

 

(f)           Parent and the Surviving Company’s obligations under this Section 7.06 shall continue in full force and effect for a period of six years from the Effective Time; provided, however, that if any Claim (whether arising before, at or after the Effective Time) is brought against an Indemnitee on or prior to the sixth anniversary of the Effective Time, the provisions of this Section 7.06 shall continue in effect until the full and final resolution of such Claim.

 

SECTION 7.07. Repayment of Indebtedness. The Company shall, prior to the Closing Date, deliver to Parent (a) a copy of a customary payoff letter (the “Existing Credit Agreement Payoff Letter”), specifying the aggregate amount required to be paid with respect to the Existing Credit Agreement (together with such other Lien release documentation that may be reasonably required in connection therewith) and (b) a copy of a customary payoff letter (the “Existing Equipment Loan Payoff Letter”), specifying the aggregate amount required to be paid with respect to the Existing Equipment Loan Agreement (together with such other Lien release documentation that may be reasonably required in connection therewith).

 

SECTION 7.08. Fees and Expenses. Except as otherwise provided in this Agreement, all costs and expenses incurred by the parties hereto in connection with the Transaction shall be borne solely and entirely by the party that has incurred such expenses.

 

SECTION 7.09. Transfer Taxes. Notwithstanding anything to the contrary in this Agreement, all stock transfer, real estate transfer, sales, use, documentary, stamp, recording and other similar Taxes incurred in connection with the Transaction (“Transfer Taxes”) shall be borne by Parent. Parent and the Company shall reasonably cooperate to prepare and timely file any Tax Returns relating to Transfer Taxes, and Parent shall timely pay all Transfer Taxes.

 

SECTION 7.10. Tax Certificates and Member Releases. The Company will use its commercially reasonable efforts to deliver, or cause to be delivered, to Parent at the Closing (a) the applicable certificates of non-foreign status  pursuant to Treasury Regulation Section 1.1445-2(b)(2) and Section 1446(f) of the Code (“Tax Certificates”), duly completed and executed and dated as of the Closing Date with respect to each holder of Units (other than FTAI) as of immediately prior to the Effective Time and (b) a Member Release Agreement duly executed and dated as of the Closing Date with respect to each holder of Units (other than FTAI) as of immediately prior to the Effective Time. From and after Closing until the third anniversary of the Closing Date, with respect to each holder of Units (other than FTAI) that does not execute and delivery a Tax Certificate or a Member Release Agreement, the Seller Representative shall indemnify and hold harmless Parent and the Surviving Company from and against any Losses arising out of, or in connection with, the failure of such holder of Units to execute and deliver a Tax Certificate or a Member Release Agreement.  The maximum amount of indemnification provided by the Seller Representative with respect to each holder of Units pursuant to this Section 7.10 shall be an amount equal to 50% of the aggregate consideration received by such holder of Units pursuant to Section 3.04.

 

SECTION 7.11. Tax Returns.

 

(a)          Seller Representative shall prepare or cause to be prepared all Tax Returns for the Company or any Company Subsidiary (including partnership or other information Tax Return that reports income or other information to the beneficial owners of the Company) for any taxable year or period that ends on or before the Closing Date. All such Tax Returns shall be prepared in a manner consistent with past practice unless, and to the extent, otherwise required by applicable Law. The Company and the Company Subsidiaries shall provide reasonable access and assistance to Seller Representative for the purpose of preparing such Tax Returns.  Subject to Section 7.14, Parent shall pay any Tax due as a result of such Tax Returns (other than Taxes of the equity owners of the Company attributable to the reporting of income attributable to the Company’s status as a partnership for income tax purposes).  To the extent permitted by Law, Seller Representative shall submit each such Tax Return to Parent (together with schedules, statements and, to the extent requested by the Seller Representative, supporting documentation) at least thirty (30) days prior to the due date (including extensions) of such Tax Return. If so submitted Seller Representative shall consider such comments in good faith.

 

(b)          Parent shall prepare or cause to be prepared all income Tax Returns for the Company or any Company Subsidiary for any taxable year or period that includes but does not end on the Closing Date.  All such Tax Returns shall be prepared in a manner consistent with past practice unless, and to the extent, otherwise required by applicable Law.  The Company and the Company Subsidiaries shall provide reasonable access and assistance to Parent  for the purpose of preparing such Tax Returns.  To the extent the Seller Representative would have liability under Section 7.14 with respect to such Tax Return, Parent shall submit each such Tax Return to the Seller Representative (together with schedules, statements and, to the extent requested by the Seller Representative, supporting documentation) at least thirty (30) days prior to the due date (including extensions) of such Tax Return.  Parent shall reflect any comments by the Seller Representative on such Tax Returns unless such comment would have a material adverse impact on Parent or if such comment were objectively unreasonable.

 

(c)         If the Seller Representative objects in good faith to the inclusion of any of Parent’s comments to a Tax Return prepared by the Seller Representative in accordance with Section 7.11(a) or Parent objects in good faith to the inclusion of any of the Seller Representative’s comments to a Tax Return prepared by Parent in accordance with Section 7.11(b), Parent and the Seller Representative shall negotiate in good faith and use their reasonable best efforts to resolve such items. In the event of any disagreement that cannot be resolved between Parent and the Seller Representative, such disagreement shall be resolved by the Arbiter in accordance with the principles of Section 3.06(b).

 

SECTION 7.12. Acquisition Proposals. Neither the Company nor any Company Subsidiary will, and neither the Company nor any Company Subsidiary will authorize or permit any officer, director or employee of the Company or any Company Subsidiary or any Affiliate of the Company or any Company Subsidiary or authorize any investment banker, attorney, accountant or other representative retained by the Company or any Company Subsidiary or any Affiliate of the Company or any Company Subsidiary to, directly or indirectly, solicit or encourage, or furnish information with respect to the Company or any Company Subsidiary, or engage in any discussions with any Person in connection with, any proposal for the acquisition of any portion of the capital stock or assets or properties of the Company or any Company Subsidiary, other than as contemplated by this Agreement or permitted pursuant to Section 6.01. The Company and each Company Subsidiary will promptly cease or cause to be terminated any existing activities or discussions with any Person (other than Parent, Merger Sub or their Affiliates) with respect to any of the foregoing and will promptly request the return of any confidential information provided to any Person in connection with a prospective acquisition of the capital stock, assets or properties of the Company or any Company Subsidiary, other than as contemplated by this Agreement or permitted pursuant to Section 6.01.

 

SECTION 7.13. R&W Insurance Policy. Prior to Closing, Parent shall obtain and bind the R&W Insurance Policy in the form attached as Exhibit G hereto. Parent shall be responsible for any retention amount in the R&W Insurance Policy and shall also be responsible for the costs and expenses associated with the R&W Insurance Policy, including any premiums, underwriting fees and issuer due diligence expenses. Parent shall not agree to any amendment, modification or waiver to or of the R&W Insurance Policy after the date hereof that would adversely affect the Company’s or its related parties’ exposure to any subrogation claims with respect to the R&W Insurance Policy.

 

SECTION 7.14. Pre-Closing Taxes.  The Seller Representative shall promptly reimburse the Surviving Company for all actual out-of-pocket federal, state and local income Taxes of CMQR US or CMQR Canada but only to the extent such income Taxes are (a) properly allocable to any taxable year that ends on or before the Closing Date or, in the case of any taxable year that includes but does not end on the Closing Date, the portion of such taxable year that ends on the Closing Date (including any out-of-pocket federal, state and local income Taxes incurred in connection with the Pre-Closing Reorganization), (b) shown as due on the initial Tax Returns agreed to by the parties and otherwise filed in the manner consistent with Section 7.11, (c) not otherwise included in Final Working Capital, and (d) are not reimbursed under the R&W Insurance Policy.   The Seller Representative shall not be responsible for any Taxes attributable to the filing of an amended Tax Return or  resulting from an audit.  Any such reimbursements shall constitute an adjustment to the Purchase Price.  In calculating actual out-of-pocket Taxes, the parties shall assume that (x) all tax elections, tax accounting policies and methods of tax accounting remain consistent with prior years,  (y) any net operating losses shall be first used to reduce Taxes payable on account of the Pre-Closing Reorganization before being applied against other income or gain of the Surviving Company, and (z) in the case of any taxable year that includes but does not end on the Closing Date, the determination of the income Taxes attributable to the portion of the taxable year ending on and including the Closing Date shall be determined by assuming that the taxable year consisted of two taxable years or periods, one which ended at the close of the Closing Date and the other which began at the beginning of the day following the Closing Date and items of income, gain, deduction, loss or credit shall be allocated between such two taxable years or periods on a “closing of the books basis”, provided, however, that exemptions, allowances or deductions that are calculated on an annual basis, such as depreciation deductions, shall be apportioned between such two taxable years or periods on a daily basis.  The Surviving Company shall provide the Seller Representative written notice of a request for reimbursement under this Section 7.14 within 10 days of filing a Tax Return for which reimbursement is requested and otherwise provide the Seller Representative with information.

 

SECTION 7.15. Certain Events. In the event of a Casualty Loss with reasonably anticipated Costs of Repair (net of any insurance proceeds that the Company may be entitled to receive) in excess of Ten Million Dollars (US $10,000,000) that is not otherwise a Company Material Adverse Effect (a “Material Casualty Loss”), the Seller Representative may elect, by delivering written notice to Parent on or prior to Closing, to either (a) agree to indemnify the Company in an amount equal to the Costs of Repair incurred by the Company with respect to such Material Casualty Loss (net of any insurance proceeds actually received by the Company) that exceed Ten Million Dollars (US $10,000,000), in which event Parent and Merger Sub shall be required to proceed to Closing or (b) terminate this Agreement by delivering written notice to Parent.  If following the occurrence of a Material Casualty Loss the Company fails to make an election pursuant to this Section 7.15 on or prior to Closing, the Seller Representative shall be deemed to have made an election described in clause (a) immediately above.  If the Seller Representative makes (or is deemed to have made) an election described in clause (a) immediately above, from and after Closing, the Parent shall, and shall cause its subsidiaries (including the Surviving Company) to, use their respective reasonable best efforts to collect any and all amounts recoverable under any insurance policy of the Surviving Company or any of its subsidiaries with respect to such Casualty Loss.

 

SECTION 7.16. Section 280G Approval.  Prior to the Closing Date, the Company shall use reasonable best efforts to obtain valid waivers (collectively, the “Parachute Payment Waivers”) from each holder of Units who is a “disqualified individual” (within the meaning of Section 280G of the Code) and who is entitled to any payments and/or benefits that, separately or in the aggregate, would constitute “parachute payments,” within the meaning of Section 280G(b)(2) of the Code (“Waived 280G Benefits”), and shall submit to its shareholders for approval to the extent and in a manner intended to be consistent with Section 280G(b)(5)(B) of the Code all or a portion of such payments and/or benefits.  The form of the disqualified individuals waivers shall be subject to reasonable review and approval (which will not be unreasonably delayed, conditioned or withheld) by Parent.  Not less than three (3) days prior to distribution of any materials to shareholders or “disqualified individuals” (within the meaning of Code Section 280G) in connection with the Parachute Payment Waivers and vote described in this Section 7.16, the Company shall provide Parent for its reasonable review and approval (which will not be unreasonably delayed, conditioned or withheld) a copy of all such materials and a copy of its Code Section 280G calculations.  Any of the Waived 280G Benefits which fail to be approved by the shareholders of the Company as contemplated above shall not be made or provided.  Prior to the Closing Date, the Company shall deliver to the Parent evidence that a vote of the Company’s shareholders was solicited in accordance with the foregoing provisions of this Section 7.16 and that either (a) the requisite number of shareholder votes was obtained with respect to the Waived 280G Benefits (the “280G Approval”) or (b) that the 280G Approval was not obtained, and, as a consequence, the Waived 280G Benefits have not been and shall not be made or provided.

 

SECTION 7.17. Derby Facility License and Katahdin Transition Services Agreement.

 

(a)          From and after the date hereof, Parent and the Company shall negotiate in good faith to finalize the terms and conditions of the Derby Facility License and the Katahdin Transition Services Agreement on or before December 20, 2019.  In the event Parent and the Company are unable to come to agreement on the final terms and conditions of the Derby Facility License and the Katahdin Transition Services Agreement on or before December 20, 2019, either Parent or the Company may, by delivering written notice to the other prior to the Closing, cease negotiation of the Derby Facility License and the Katahdin Transition Services Agreement and, as a result thereof, clause (b) of the definition of Pre-Closing Reorganization shall no longer apply and Katahdin shall remain a subsidiary of CMQR US at and after the Closing and the Purchase Price shall be increased by $4,500,000 as described in the definition of Purchase Price.

 

(b)          If either Parent or the Company delivers a written notice to the other pursuant to Section 7.17, the Company shall have the unilateral right to supplement or otherwise amend or modify the Company Disclosure Letter to take into account that Katahdin shall be deemed to be a Company Subsidiary for purposes of this Agreement in accordance with the definition of Company Subsidiary by delivering such supplement or other amendment or modification to Parent on or before December 23, 2019.  For all purposes of this Agreement, including for purposes of determining whether the condition in Section 8.02(a) has been satisfied, the Company Disclosure Letter shall be deemed to include, as of the date hereof, any matter disclosed in any such supplement or other amendment or modification to the Company Disclosure Letter except for any fact, change, event, circumstance, occurrence, effect or development disclosed in any such supplement or other amendment or modification to the Company Disclosure Letter that has or is reasonably likely to have a Company Material Adverse Effect.

 

ARTICLE VIII.

 

 

SECTION 8.01. Conditions to Each Party’s Obligations to Effect the Closing. The respective obligations of each party to consummate the Transaction and effect the Merger are subject to the satisfaction (or, to the extent permitted by applicable Law, waiver) on or prior to the Closing Date of the following conditions:

 

(a)          No Injunctions or Restraints. No Order, decree or ruling issued by any Governmental Entity of competent jurisdiction or other Law is in effect and has the effect of making the Transaction illegal or otherwise prohibiting consummation the Transaction.  No Action instituted prior to the Closing by any Governmental Entity attempting to prevent or make illegal the consummation of the Transactions shall be pending.

 

(b)          STB. The STB Approval shall have been obtained.

 

SECTION 8.02. Conditions to Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the Transaction and effect the Merger are further subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by Parent) on or prior to the Closing Date of the following conditions:

 

(a)        Representations and Warranties of the Company.   The representations and warranties of the Company set forth in Sections 4.01(a), 4.02, and 4.09 shall be true and correct in all respects as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date).  Except for the representations and warranties of the Company set forth in Sections 4.01(a), 4.02, and 4.09, the representations and warranties of the Company contained Article IV shall be true and correct in all respects (without giving effect to any limitation indicated by the words “Company Material Adverse Effect,” “in all material respects,” “in any material respect,” “material,” or “materially”) as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date), except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

(b)          Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.

 

(c)        Ancillary Agreements. The Company and the Seller Representative shall have delivered or shall deliver concurrently with the Closing to Parent copies of each of the Ancillary Agreements to which the Company or the Seller Representative is a party, as applicable, duly executed by an authorized officer of the Company or the Seller Representative, as applicable.

 

SECTION 8.03. Conditions to Obligations of the Company. The obligations of the Company to consummate the Transaction and effect the Merger are further subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by the Company) on or prior to the Closing Date of the following conditions:

 

(a)         Representations and Warranties of Parent and Merger Sub. The representations and warranties of Parent and the Merger Sub contained Article V shall be true and correct in all respects (without giving effect to any limitation indicated by the words “Parent Material Adverse Effect,” “in all material respects,” “in any material respect,” “material,” or “materially”) as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date), except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

(b)         Performance of Obligations of Parent and Merger Sub. Parent and Merger Sub shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.

 

(c)          Ancillary Agreements. Parent and Merger Sub shall have delivered or shall deliver concurrently with the Closing to the Seller Representative copies of each of the Ancillary Agreements to which Parent or Merger Sub is a party, as applicable, duly executed by an authorized officer of Parent or Merger Sub, as applicable.

 

ARTICLE IX.

 

 

SECTION 9.01. Termination. This Agreement may be terminated at any time prior to the Effective Time:

 

(a)           by mutual written consent of the Company, Parent and Merger Sub;

 

(b)           by either the Company or Parent, by written notice to the other:

 

(i)          if the Merger shall not have been consummated by December 31, 2019 (the “Outside Date”) so long as, on the Outside Date and the date of such notice, the terminating party has not failed to fulfill any obligation under this Agreement which failure has been the cause of, or resulted in, the failure of the Merger to be consummated; provided, however, that if the condition to the Closing set forth in Section 8.01(b)has not been fulfilled but all other conditions to the Closing have been fulfilled or are capable of being fulfilled, the Company or Parent may extend the Outside Date until July 15, 2020 by delivering written notice to the other Person prior to December 30, 2019; or

 

(ii)         if any Governmental Entity of competent jurisdiction has issued an Order or takes any other Action permanently enjoining, restraining or otherwise prohibiting the Transaction and such Order or other Action shall have become final and nonappealable;

 

(c)          by Parent, if the Company shall have breached any of its representations or warranties or failed to perform any of its covenants or agreements set forth in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition contained in Section 8.02(a) or Section 8.02(b) and (ii) is incapable of being cured or is not cured prior to the Outside Date, or if capable of being cured by the Outside Date, the Company shall not have commenced good faith efforts to cure the breach or failure to perform within ten (10) business days following receipt by the Company of written notice of such breach or failure to perform from Parent stating Parent’s intention to terminate this Agreement pursuant to this Section 9.01(c) and the basis for such termination and thereafter be continuing such good faith efforts; provided however, that Parent shall not have the right to terminate this Agreement pursuant to this Section 9.01(c) if Parent is then in material breach of any of its representations, warranties, covenants or agreements hereunder;

 

(d)          by the Company, if Parent or Merger Sub shall have breached any of their respective representations or warranties or failed to perform any of their respective covenants or agreements set forth in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition contained in Section 8.03(a) or Section 8.03(b) and (ii) is incapable of being cured or is not cured prior to the Outside Date, or if capable of being cured by the Outside Date, Parent or Merger Sub, as applicable, shall not have commenced good faith efforts to cure the breach or failure to perform within ten (10) Business Days following receipt by Parent or Merger Sub, as applicable, of written notice of such breach or failure to perform from the Company stating the Company’s intention to terminate this Agreement pursuant to this Section 9.01(d) and the basis for such termination and thereafter be continuing such good faith efforts; provided however, that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.01(d) if the Company is then in material breach of any of its representations, warranties, covenants or agreements hereunder; or

 

(e)          by the Seller Representative pursuant to Section 7.15(b).

 

SECTION 9.02. Effect of Termination. In the event of termination of this Agreement by either the Company or Parent as provided in Section 9.01, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of any party, other than (i) the last sentence of Section 7.01(a), Section 7.01(b), Section 7.08, this Section 9.02 and Article X and the Confidentiality Agreement, all of which shall survive such termination, and (ii) to the extent that such termination results from a knowing and intentional breach by a party of any representation, warranty, covenant or agreement set forth in this Agreement. Nothing in this Section 9.02 shall be deemed to release any party from any liability for any knowing or intentional breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement.

 

SECTION 9.03. Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf of the all parties hereto; provided however, that, following the receipt of the Company Member Approval, there shall be no amendment that by Law requires further approval by the members of the Company without the further approval of such members.

 

SECTION 9.04. Extension; Waiver. At any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement or (c) waive compliance with any of the agreements or conditions contained in this Agreement; provided, however, that, following the receipt of the Company Member Approval, there shall be no extension or waiver that by Law requires further approval by the members of the Company without the further approval of such members. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.

 

SECTION 9.05. Survival. None of (a) the representations and warranties contained in this Agreement or any Ancillary Agreement and (b) the covenants and agreements contained in this Agreement or any Ancillary Agreement that only require performance prior to the Effective Time shall survive the Effective Time, at which time such representations, warranties, covenants and agreements shall terminate and thereafter be of no force and effect, and, except as a result of Acquired Company Fraud, Parent’s and the Surviving Company’s sole recourse with respect to any breach of such representations, warranties, covenants and agreements shall be under the R&W Insurance Policy (with respect to which, for the avoidance of doubt, the survival periods and all other terms contained therein shall control). This Section 9.05 shall not limit any covenant or agreement contained in this Agreement or any Ancillary Agreement that contemplates performance in whole after the Effective Time or to the extent in part after the Effective Time.

 

ARTICLE X.

 

 

SECTION 10.01. Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be delivered by hand, sent by email or sent, postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when so delivered by hand or email, or if mailed, three (3) calendar days after mailing (or one Business Day in the case of express mail or overnight courier service), as follows (or at such other address for a party as shall be specified by like notice):

 

(a)           if to Parent or Merger Sub, to:

 

Soo Line Corporation
c/o Canadian Pacific Railway Company
Building 1
7550 Ogden Dale Road SE
Calgary, Alberta  T2C 4X9
Attention:	James Clements
Email:	James_Clements@cpr.ca

with a copy to:

 

 

(b)          if to the Company, to:

 

with a copy to:

SECTION 10.02. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transaction is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Transaction is fulfilled to the extent possible.

 

SECTION 10.03. Counterparts. This Agreement may be executed in two or more counterparts (any of which may be delivered by facsimile or electronic transmission), all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties.

 

SECTION 10.04. Entire Agreement; No Third-Party Beneficiaries. This Agreement, together with the Confidentiality Agreement and the Ancillary Agreements, (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the Transaction and (b) except for Section 7.06 and Section 10.10, is not intended to confer any rights or remedies upon any Person other than the parties.

 

SECTION 10.05. Governing Law. This Agreement, and all matters, claims or causes of action (whether in contract or tort) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern this Agreement under applicable principles of conflicts of laws thereof.

 

SECTION 10.06. Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of Law or otherwise by any of the parties without the prior written consent of the other parties. Any purported assignment without such consent shall be null and void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

 

SECTION 10.07. Enforcement; Jurisdiction; Consent to Service of Process.

 

(a)          The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), without proof of damages or otherwise, this being in addition to any other remedy to which such parties are entitled at law or in equity. The right of specific enforcement is an integral part of the Transaction contemplated by this Agreement and without that right, none of the Company, Parent or Merger Sub would have entered into this Agreement. Each of the parties hereto agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that the other parties hereto have an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or in equity. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 10.07 shall not be required to provide any bond or other security in connection with any such order or injunction, and the party opposing such injunction or injunctions hereby agrees that it shall not contest the amount or absence of any such bond or other security requested or offered by the party seeking such injunction or injunctions.

 

(b)          Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) in the event any dispute arises out of this Agreement or the Transaction, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that it will not bring any Action relating to this Agreement or the Transaction in any court other than the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (iv) waives any right to trial by jury with respect to any Action related to or arising out of this Agreement or the Transaction, (v) waives the defense of an inconvenient forum to the maintenance of any Action related to or arising out of this Agreement or the Transaction and (vi) consents to service of process being made through the notice procedures set forth in Section 10.01. The parties hereto agree that a final judgment in any such Action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

 

SECTION 10.08. Affiliate Liability. Except in the case of Acquired Company Fraud, no Company Affiliate shall have any personal liability or personal obligation to Parent, Merger Sub, the Surviving Company or any Company Subsidiary of any nature whatsoever in connection with or under this Agreement, and each of Parent and Merger Sub hereby waives and releases all claims of any such liability and obligation; provided, however, that the foregoing waiver and release shall not apply to claims and obligations for liability arising under the reimbursement obligations under Section 7.06.

 

SECTION 10.09. Seller Representative.

 

(a)          As of the date hereof, the Seller Representative is hereby constituted, appointed and empowered to act, with full power of substitution, as a representative by and for the benefit of holders of Units, as the exclusive agent and attorney-in-fact to act on behalf of each holder of Units in connection with, and to facilitate the consummation of, the Transaction. The power and authority of the Seller Representative shall include the power and authority: (i) to consummate the Transaction on behalf of the holders of Units, (ii) to receive, give receipt of and disburse any funds received hereunder on behalf of or to each holder of Units, (iii) to hold back from disbursement to all of the holders of Units collectively any such funds to the extent it reasonably determines may be necessary or required under the terms and conditions of this Agreement or applicable Law or may be required for future expenses or obligations, (iv) to execute and deliver on behalf of each holder of Units all documents contemplated herein, any amendment or waiver hereto, and any consents, in each case, with such modifications or changes as to which the Seller Representative, in its sole discretion, determines is desirable, (v) to make, execute, acknowledge and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, powers, letters and other writings, and, in general, to do any and all things and to take any and all action that the Seller Representative, in its sole and absolute discretion, may consider necessary or proper or convenient in connection with or to consummate the Transaction, (vi) to enforce and protect the rights and interests of the holders of Units and to enforce and protect the rights and interest of the Seller Representative arising out of or under or in any manner relating to this Agreement and the Ancillary Agreements, (vii) to refrain from enforcing any right of the holders of Units or any of them or the Seller Representative arising out of or under or in any manner relating to this Agreement and the Ancillary Agreements; provided, however, that no such failure to act on the part of the Seller Representative, except as otherwise provided in this Agreement or in the Ancillary Agreements, shall be deemed a waiver of any such right or interest by the Seller Representative or by such holders of Units unless such waiver is in writing signed by the waiving party or by the Seller Representative, (viii) to negotiate, settle, compromise and otherwise handle all disputes with Parent, Merger Sub, or any of their respective Representatives under this Agreement, including disputes regarding any adjustment pursuant to Section 3.06, (ix) to give and receive notices on behalf of the holders of Units and to provide notice and instructions to the Escrow Agent and to authorize disbursement of funds from the Escrow Account in accordance with this Agreement and the Escrow Agreement, and (x) to do each and every act and exercise any and all rights which the holders of Units are permitted or required to do or exercise under this Agreement; provided, however, that the Seller Representative shall have no obligation to act on behalf of the holders of Units. The holders of Units, by accepting the consideration payable to them hereunder, irrevocably grant unto the Seller Representative as said attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or required to be done in connection with the Transaction as fully to all intents and purposes as the holders of Units might or could do in person and acknowledge and agree to the terms and provisions of this Section 10.09. Such agency and proxy are coupled with an interest, and are therefore irrevocable without the consent of the Seller Representative, and survive the death, incompetency, bankruptcy or liquidation of any holder of Units and the consummation of the Transaction. All actions, decisions and instructions of the Seller Representative taken, made or given pursuant to the authority granted to the Seller Representative pursuant to this Section 10.09 shall be conclusive and binding upon each holder of Units, and no such holder shall have the right to object to, dissent from, protest or otherwise contest the same. The terms and conditions of this Agreement are hereby made, and are hereby acknowledged to be, dependent on the determinations and actions that are contemplated or permitted to be made by the Seller Representative pursuant to this Section 10.09, and the rights of all holders of Units shall be qualified by and dependent upon such determinations and actions, irrespective of whether the Seller Representative is acting as an agent or power of attorney of such holder of Units.

 

(b)          All decisions, actions, consents and instructions of the Seller Representative authorized to be made, taken or given pursuant to Section 10.09(a) shall be final and binding upon all the holders of Units, and no such Person shall have any right to object, dissent, protest or otherwise contest the same. Neither the Seller Representative nor any agent employed by the Seller Representative shall incur any liability to any holder of Units relating to the performance of its duties as authorized hereunder except for actions or omissions constituting willful misconduct or gross negligence of the Seller Representative in connection therewith. The Seller Representative shall not have by reason of this Agreement a fiduciary relationship or other special relationship with any holder of Units, except in respect of amounts actually received on behalf of such Person. The relationship created between the Seller Representative and any holder of Units shall not be construed as a joint venture or any form of partnership for purposes of U.S. federal or state law, including federal or state Tax purposes. The Seller Representative shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement.

 

(c)          The holders of Units agree, severally (and not jointly and severally) based on their pro rata share of the consideration received hereunder, to indemnify the Seller Representative for, and to hold the Seller Representative harmless against, any Loss incurred on the part of the Seller Representative, arising out of or in connection with the Seller Representative’s carrying out its duties under this Agreement, including (x) amounts paid by the Seller Representative pursuant to Section 3.06(d)(ii)(B)(2), Section 7.11 or Section 7.14 and (y) costs and expenses of successfully defending the Seller Representative against any claim of liability with respect thereto, other than Losses resulting from the Seller Representative’s willful misconduct or gross negligence. The Seller Representative may consult with counsel of its own choice and will have full and complete authorization and protection for any action taken and suffered by it in good faith and in accordance with the opinion of such counsel.

 

(d)          Each of Parent, Merger Sub and the Company acknowledges that the Seller Representative is a party to this Agreement solely for purposes of serving as the “Seller Representative” hereunder and no claim shall be brought by or on behalf of Parent, Merger Sub the Company, any Company Subsidiary or, after the Effective Time, the Surviving Company, against the Seller Representative with respect to this Agreement or the Transaction or any certificate, opinion, instrument or other document delivered hereunder except with respect to matters where performance by the Seller Representative is expressly provided for herein (with it being understood that any covenant or agreement of or by the “parties” or “each of the parties” shall not be deemed to require performance by, or be an agreement of, the Seller Representative unless performance by the Seller Representative is expressly provided for in such covenant or the Seller Representative expressly so agrees in writing).

 

(e)          The Seller Representative shall be entitled to be reimbursed by the holders of Units proportionately in accordance with each such Person’s pro rata share of the consideration received hereunder for any fees and expenses incurred by the Seller Representative carrying out its duties under this Agreement, and the Seller Representative shall be entitled to deduct such amounts from the consideration payable to the holders of Units hereunder.

 

SECTION 10.10. Legal Representation. Parent, Merger Sub and the Company acknowledge and agree that each Law Firm has represented the Company and the Company Subsidiaries in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the Transaction, and that the holders of Units, their Affiliates and their respective Representatives, including the Seller Representative (the “Seller Group Members”), have a reasonable expectation that each Law Firm will represent them in connection with any claim involving any Seller Group Member, on the one hand, and Parent, Merger Sub, the Company, any Company Subsidiary or any of their respective Affiliates and Representatives (the “Parent Group Members”), on the other hand, arising under this Agreement, any Ancillary Agreement or the Transaction after the Effective Time. Each of the Company, Parent, and Merger Sub hereby, on behalf of themselves and the Company Subsidiaries and the other Parent Group Members, irrevocably: (a) acknowledge and agree that any attorney-client privilege arising from communications prior to the Effective Time between the Company or any Company Subsidiary (including any one or more officers, directors, employees or shareholders of the Company or any Company Subsidiary), on the one hand, and any Law Firm, on the other hand, related to the negotiation, preparation, execution, delivery and performance of this Agreement shall be excluded from the property, rights, privileges, powers, franchises and other interests that are possessed by or vested in the Company or any Company Subsidiary after the Effective Time, that such attorney-client privilege shall be deemed property of, and controlled solely by, the Seller Representative for the benefit and on behalf of the Seller Group Members, and that no Parent Group Member shall have any right to waive any such attorney-client privilege at any time after the Effective Time; (b) acknowledge and agree that the Seller Group Members shall have the right to retain, or cause each Law Firm to retain, any such documentation or information in the possession of such Law Firm or such Seller Group Members at the Effective Time; (c) agree not to access or retain any documentation or information subject to such attorney-client privilege or work product of any Law Firm; (d) disclaim the right to assert a waiver by any Seller Group Member with regard to the attorney-client privilege or work product solely due to the fact that such documentation or information is physically in the possession of the Surviving Company or the Company Subsidiaries after the Effective Time; (e) consent to each Law Firm’s representation after the Effective Time of any Seller Group Member in any claim that may relate to a Parent Group Member or the Transactions and consent to and waive any conflict of interest arising therefrom without the need for any future waiver or consent; (f) consent to the disclosure by each Law Firm to any Seller Group Member of any documentation or information obtained by such Law Firm during the course of its representation of the Company or any Company Subsidiary or any of their respective Affiliates prior to the Effective Time, whether related to this Agreement, any Ancillary Agreement, the Transaction or otherwise, whether or not such disclosure is made prior to or after the Effective Time and whether or not the documentation or information disclosed is subject to any attorney-client privilege or confidentiality obligation to the Company, any Affiliate of the Company or any other Person; and (g) covenant that it shall not assert any claim against any Law Firm in respect of legal services provided to the Company or any Company Subsidiary related to this Agreement, the Ancillary Agreements or the Transactions. To the extent that files of any Law Firm related to the negotiation, preparation, execution, delivery and performance of this Agreement in respect of its engagement by the Seller Group Members constitute property of the Surviving Company or its Subsidiaries, only the Seller Group Members shall hold such property rights. In the event that any claim arises after the Effective Time between any Parent Group Member and a Person other than a Seller Group Member, such Parent Group Member shall not disclose any documentation or information that is subject to an attorney-client privilege referenced in this Section 10.10 without the prior written consent of the Seller Representative; provided, however, that if such Parent Group Member is required by judicial order or other legal process to make such disclosure, such Parent Group Member shall promptly notify the Seller Representative in writing of such requirement (without making disclosure) and shall provide the Seller Representative with such cooperation and assistance as shall be necessary to enable the Seller Representative to prevent disclosure by reason of such attorney-client privilege. This Section 10.10 is for the benefit of the Seller Group Members and each Law Firm and such Persons are intended third-party beneficiaries of this Section 10.10. This Section 10.10 may not be amended, waived, revoked or modified without the prior written consent of each Law Firm.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Seller Representative have duly executed this Agreement, all as of the date first written above.

 

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Exhibit 99.1

UNAUDITED PRO FORMA FINANCIAL INFORMATION

On December 30, 2019, Fortress Transportation and Infrastructure Investors LLC (the “Company”) completed the previously announced disposition (the “Transaction”) of the Central Maine & Quebec Railway (“CMQR”) to Canadian Pacific Railway (“Purchaser”), as contemplated by the agreement and plan of merger, dated as of November 19, 2019, by and among Fortress Transportation and Infrastructure General Partnership, a subsidiary of the Company (“Holdco”), Railroad Acquisition Holdings LLC, a subsidiary of Holdco, Soo Line Corporation (“Parent”), a wholly-owned subsidiary of Purchaser, and Black Bear Acquisition LLC, a wholly-owned subsidiary of Parent.  The aggregate purchase price for the Transaction was $130,000,000 in cash paid at closing.

The following unaudited pro forma consolidated financial statements have been prepared by applying certain pro forma adjustments to our historical consolidated financial statements. The pro forma adjustments give effect to the Transaction.

The unaudited pro forma consolidated balance sheet as of September 30, 2019 is presented as if the disposition occurred on September 30, 2019. The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2019 and for each of the years ended December 31, 2018, 2017 and 2016 are presented as if the disposition occurred on January 1, 2016.

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not intended to represent what our results of operations or financial position would actually have been had this disposition occurred on the dates noted above, or project our results of operations or financial position for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma consolidated financial statements have been made. The actual results may differ materially from the estimates and assumptions within the accompanying unaudited pro forma consolidated financial statements.

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Notes to Unaudited Pro Forma Consolidated Financial Statements

(a)

Reflects the elimination of the respective assets and liabilities of CMQR.

(b)

The estimated net increase in cash and cash equivalents and retained earnings and the estimated gain on sale is comprised of the following:

(c)

Reflects the elimination of the operations of CMQR.

(d)

Reflects CMQR’s portion of the management fee which was previously reported within the Corporate and Other segment.