Membership Interest Purchase Agreement, among Brightline Holdings LLC, DesertXpress Enterprises, LLC and Benny's HoldCo, LLC, dated as of September 17, 2018

MEMBERSHIP INTEREST PURCHASE AGREEMENT dated as of September 17, 2018 (this “Agreement”), by and among BRIGHTLINE HOLDINGS LLC, a Delaware limited liability company (“Buyer”), DESERTXPRESS ENTERPRISES, LLC, a Nevada limited liability company (the “Company”), and BENNY’S HOLDCO, LLC, a Nevada limited liability Company (“Seller”).

WHEREAS Seller is the record and beneficial owner of 100% of the issued and outstanding Membership Interests of the Company; and

WHEREAS Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all the Membership Interests;

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties agree as follows:

Section 1.01          The Acquisition. On the terms and subject to the conditions of this Agreement, at the Closing Seller shall sell, transfer and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, all the Membership Interests, which Membership Interests shall be sold, transferred and delivered with full legal and beneficial title, free and clear of all Liens (other than transfer restrictions under applicable securities Laws) and together with all rights attached thereto, in exchange for the Closing Date Payment (as such payment may be adjusted pursuant to Article II, as applicable), on the terms and subject to the conditions set forth in Articles II and VII. The purchase and sale of the Membership Interests is referred to in this Agreement as the “Acquisition”.

Section 2.01          Acquisition Closing.

(a)           The closing of the Acquisition (the “Closing”) shall take place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, at 9:00 a.m. New York City time on the second business day following the satisfaction of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or written waiver of those conditions at such time) (or, to the extent permitted by applicable Law, waived in writing by the party entitled to the benefit thereof), or at such other place, time and date as may be agreed by Seller and Buyer. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

(b)          At least three business days prior to the Closing Date, the Company shall provide to Buyer reasonably detailed calculations of (i) the amount of Closing Debt and (ii) the amount of Unpaid Expenses, in each case calculated in accordance with the definition thereof set forth in this Agreement.

(c)           At the Closing:

(i)           Buyer shall pay, in cash by wire transfer of immediately available funds, the Cash Purchase Price (less the Deposit Amount (if any) previously paid pursuant to Section 2.03) to the bank account designated by Seller in writing at least three business days prior to the Closing Date;

(ii)          Buyer shall issue and deliver to Seller a number of Buyer Common Shares (rounded up to the nearest whole number of limited liability company interests or shares, as applicable) in book-entry form equal to (x) the Base Share Purchase Price minus (y) the Base Share Indemnity Escrow Amount (the “Base Share Closing Date Payment”);

provided, however, that if Buyer has not consummated a Buyer IPO on or prior to the Closing, Buyer shall have the option to elect, in lieu of paying the amount referred to in the foregoing clause (i), to issue and deliver to Seller a number of Buyer Common Shares (rounded up to the nearest whole number of limited liability interests) in book entry form equal to the Optional Share Closing Date Payment (such election, if any, the “Closing Date Share Election”);

(iii)         Seller shall deliver or cause to be delivered to Buyer such instruments of transfer sufficient to transfer the Membership Interests;

(iv)         Buyer shall deliver to Seller, and Seller shall deliver to Buyer, a duly executed copy of the Stockholder Agreement;

(v)          the Company and Seller shall deliver to Buyer all certificates, resignations and payoff letters required to be delivered by the Company or Seller on or prior to the Closing Date pursuant to this Agreement; and

(vi)         Buyer shall deliver to Seller all certificates required to be delivered by Buyer on or prior to the Closing Date pursuant to this Agreement.

(d)           Effective simultaneously with the Closing, (i) Seller shall cease to be a Member of the Company, (ii) Seller shall consent to Buyer becoming admitted as the sole Member of the Company and (iii) Buyer shall be admitted as the sole Member of the Company.

(e)           Notwithstanding anything in this Agreement to the contrary, Buyer shall be entitled to deduct and withhold from the portion of the Closing Date Payment, the Deposit Amount, the payments required to be made pursuant to Section 2.04 (if any) and any release of the Share Indemnity Escrow Amount (or any other amount) otherwise payable pursuant to this Agreement to Seller, or for the benefit of Seller, such amounts as Buyer or any of its affiliates is required to deduct and withhold with respect to the making of any such payment under the Internal Revenue Code of 1986, as amended (the “Code”), or any provision of state, local or non-U.S. tax Law. To the extent reasonably practicable, Buyer shall give Seller advance written notice of any intention to deduct or withhold any such amounts and the legal basis therefor and shall afford Seller the opportunity to provide documents and forms necessary to eliminate or reduce such deduction or withholding. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Buyer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to Seller in respect of which such deduction and withholding was made.

Section 2.02           Buyer IPO True-Up; Buyer Common Share Repurchase.

(a)           If (i) Buyer has not consummated a Buyer IPO on or prior to the Closing but consummates a Buyer IPO on or prior to the date that is twelve months after the Closing Date (the “IPO Outside Date”) and (ii) as of the IPO Date, Seller’s Aggregate IPO Holding is less than the Share Consideration Target Value, Buyer shall issue and deliver to Seller promptly following the IPO Date (but no later than 10 business days thereafter) a number of Buyer Public Shares (rounded up to the nearest whole number of shares) in book-entry form equal to the Share Purchase Price True-Up.

(b)           If (i) Buyer has not consummated a Buyer IPO on or prior to the Closing but consummates a Buyer IPO on or prior to the IPO Outside Date and (ii) as of the IPO Date, Seller’s Aggregate IPO Holding is less than the Share Consideration Target Value, any Share Indemnity Escrow Amount remaining as of the IPO Date shall be adjusted such that such remaining Share Indemnity Escrow Amount shall be a number of Buyer Public Shares equal to the quotient of (i) the product of (x) the Buyer Common Share Value multiplied by (y) the remaining Share Indemnity Escrow Amount as of the IPO Date divided by (ii) the Buyer IPO Price.

(c)           If (i) Buyer has not consummated a Buyer IPO on or prior to the Closing but consummates a Buyer IPO at any time thereafter and (ii) Buyer has issued and delivered to Seller (x) the Optional Share Closing Date Payment (in accordance with Section 2.01(c)) or (y) the Optional Supplemental Share Purchase Price (in accordance with Section 2.04)), then Seller shall have the right (on behalf of itself and each Exercising Permitted Transferee), by delivering written notice to Buyer on or prior to the date that is five business days following the IPO Date (such notice, if any, the “Buyer Common Share Repurchase Notice”), to elect to require Buyer to, on the date that is five business days following Seller’s delivery to Buyer of the Buyer Common Share Repurchase Notice, or such other date as may be agreed by Seller and Buyer (the “Buyer Common Share Repurchase Closing Date”), purchase, acquire and accept from Seller (and each Exercising Permitted Transferee) (and Seller (and each such Exercising Permitted Transferee) shall sell, transfer and deliver to Buyer), the aggregate number of Buyer Common Shares (not to exceed, in the aggregate, the Maximum Buyer Common Share Repurchase Amount) as Seller shall specify in the Buyer Common Share Repurchase Notice (such aggregate number of shares, the “Buyer Common Share Repurchase Amount”) (it being understood that Seller shall be required to specify in the Buyer Common Share Repurchase Notice the number of Buyer Common Shares that each of Seller and each Exercising Permitted Transferee desires to individually sell, transfer and deliver to Buyer pursuant to this Section 2.02(c)), and on the Buyer Common Share Repurchase Closing Date:

(A)           Buyer shall pay, in cash by wire transfer of immediately available funds, the relevant portion of the Buyer Common Share Repurchase Price to Seller and each Exercising Permitted Transferee to the bank account designated by Seller and each Exercising Permitted Transferee, as applicable, in writing at least three business days prior to the Buyer Common Share Repurchase Closing Date;

(B)          Seller and each Exercising Permitted Transferee shall deliver or cause to be delivered to Buyer such instruments of transfer sufficient to transfer the Buyer Common Share Repurchase Amount to Buyer; and

(C)          Seller and each Exercising Permitted Transferee shall execute and deliver to Buyer customary share transfer documentation reasonably requested by Buyer in connection with the transactions contemplated by this Section 2.02(c) and, without limiting the foregoing, Seller and each Exercising Permitted Transferee shall be required to make customary representations and warranties to Buyer in the definitive share transfer documentation related thereto.

Seller shall cause each Exercising Permitted Transferee to comply with this Section 2.02(c) and shall be entitled to enforce this Section 2.02(c) on behalf of each Exercising Permitted Transferee.

Section 2.03          Deposit Amount. If (a) the Closing shall not have occurred on or prior to November 30, 2018 (the “Deposit Date”) and (b) neither Seller nor the Company is then in breach (which breach has not been cured by Seller or the Company, as applicable) of any of its representations, warranties, covenants or agreements under this Agreement, then Buyer shall pay on the later of (i) the Deposit Date and (ii) the date such breach is so cured by the Company or Seller, as applicable, the Deposit Amount, in cash by wire transfer of immediately available funds, to the bank account designated by Seller in writing at least three business days prior to the Deposit Date.

Section 2.04          Supplemental Purchase Price. If Buyer has not obtained all of the Supplemental Approvals on or prior to the Closing but each of the Supplemental Approvals is thereafter obtained on or prior to the Supplemental Approvals Outside Date (the date on which all Supplemental Approvals have been obtained, if any, the “Supplemental Approval Date”; provided that the Supplemental Approval Date shall be deemed to have occurred for all purposes hereunder if a Change of Control or Commencement of Construction has occurred on or prior to the Supplemental Approvals Outside Date), then on the date that is 10 business days following the Supplemental Approval Date or such other date as may be agreed by Seller and Buyer (the “Supplemental Approval Closing Date”):

(a)           Buyer shall pay, in cash by wire transfer of immediately available funds, the Supplemental Cash Purchase Price to the bank account designated by Seller in writing at least three business days prior to the Supplemental Approval Closing Date; and

 

(b)           Buyer shall issue and deliver to Seller a number of Buyer Common Shares (rounded up to the nearest whole number of limited liability company interests or shares, as applicable) in book-entry form equal to (i) the Supplemental Share Purchase Price minus (ii) (x) in the event the Supplemental Approval Closing Date occurs prior to the Release Date, the Supplemental Share Indemnity Escrow Amount, or (y) in the event the Supplemental Approval Closing Date occurs on or after the Release Date, the Supplemental Indemnification Shortfall Amount calculated in accordance with Section 9.08(d) (the “Supplemental Share Closing Date Payment”);

Section 2.05          Certain Adjustments.

(a)           Notwithstanding anything in this Agreement to the contrary, if, from the date of this Agreement until the earlier of (i) the Closing or (ii) any termination of this Agreement in accordance with Article VIII, the outstanding Buyer Common Shares shall have been changed into a different number of shares or a different class by reason of any reclassification, stock split (including a reverse stock split), recapitalization, split-up, combination, exchange of shares, readjustment, conversion, or other similar transaction, or a stock dividend thereon shall be declared with a record date within such period, then the Share Indemnity Escrow Amount, Base Share Closing Date Payment, Buyer Common Share Value and any other similarly dependent items, as the case may be, shall be appropriately adjusted to provide Seller the same economic effect as contemplated by this Agreement prior to such event.

(b)           From and after the Closing, if, the outstanding Buyer Common Shares are changed into a different number of shares or a different class by reason of any reclassification, stock split (including a reverse stock split), recapitalization, split-up, combination, exchange of shares, readjustment, conversion, or other similar transaction, or, in connection with a Buyer IPO, a stock dividend thereon shall be declared with a record date prior to the IPO Date, then (x) for the avoidance of doubt, any shares comprising the remaining Share Indemnity Escrow Amount shall be subject to any such events and (y) all calculations in Section 2.02(a), Section 2.02(b) and Section 2.04 shall be appropriately adjusted to provide Seller the same economic effect as contemplated by this Agreement prior to such event.

 

(c)           Nothing in this Section 2.05 shall be construed to permit any party hereto to take any action that is otherwise prohibited or restricted by any other provision of this Agreement.

Except as set forth on the disclosure letter delivered by the Company to Buyer prior to the execution of this Agreement and dated the date hereof (the “Company Disclosure Letter”) (it being understood that any disclosure set forth in a section or subsection of such disclosure letter shall apply only to the corresponding section or subsection of this Agreement, except to the extent that it is reasonably apparent from the face of such disclosure that such disclosure is relevant to another section or subsection of this Agreement, in which case such disclosure shall also apply to such other section or subsection), the Company represents and warrants to Buyer as of the date of this Agreement and as of Closing as follows:

Section 3.01     Organization, Standing and Power.

(a)     The Company (i) is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Nevada and (ii) has all requisite limited liability company power and authority to enable it to use its name and to own, lease or otherwise hold and operate its properties or assets and to carry on its business as presently conducted. The Company is duly qualified or licensed to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties or assets makes such qualification or licensing necessary.

(b)     The Company has delivered to Buyer complete and accurate copies of its Organizational Documents and the Organizational Documents of its subsidiaries, in each case, as amended through the date of this Agreement.

(c)     Except as provided in Section 3.17, the Company does not own, directly or indirectly, any member’s interest in, membership units of, or other equity interests in, any person.

Section 3.02     Capital Structure.

(a)     Seller is the record and beneficial owner of 100% of the issued and outstanding Membership Interests. Except for the Membership Interests owned by Seller, no Membership Interests or other equity, membership, member’s or limited liability company interests in the Company are issued, reserved for issuance or outstanding. All outstanding Membership Interests are duly authorized and validly issued, with no obligation to make further payments to the Company for the purchase of Membership Interests or contributions to the Company solely by reason of the ownership of Membership Interests. No outstanding Membership Interests are subject to preemptive rights or were issued in violation of any preemptive rights. None of the issued and outstanding Membership Interests are subject to vesting or forfeiture conditions or a right of repurchase by the Company. There are no declared but unpaid dividends or other distributions in respect of any Membership Interests.

(b)     There are no bonds, debentures, notes or other Indebtedness of the Company that have or by their terms may have at any time the right to vote (or which are convertible into, or exchangeable for, securities having the right to vote) on any matters on which the holders of Membership Interests or other equity, membership, member’s or limited liability company interests in the Company may vote (“Voting Company Debt”).

(c)     There are no securities, options, warrants, calls, rights, equity-appreciation rights, restricted equity units, equity-based performance units or Contracts of any kind to which the Company is a party, or by which the Company or any of its properties or assets are bound, obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, Membership Interests or other equity, membership, member’s or limited liability company interests in, or securities convertible into, or exchangeable or exercisable for, Membership Interests or other equity, membership, member’s or limited liability company interests in, the Company or obligating the Company to issue, deliver, sell, grant, extend or enter into any such security, option, warrant, call, right, unit or Contract. There are no securities or other similar instruments or obligations of the Company, the value of which is in any way based upon or derived from any Membership Interests or other equity, membership, member’s or limited liability company interests in the Company. There are no outstanding contractual or other obligations of the Company to (A) repurchase, redeem or otherwise acquire any Membership Interests or other equity, membership, member’s or limited liability company interests in the Company or (B) vote or dispose of any Membership Interests or other equity, membership, member’s or limited liability company interests in the Company except as set forth in the Operating Agreement. The Company is not a party to any voting agreement with respect to any Membership Interests or other equity, membership, member’s or limited liability company interests in the Company. There are no irrevocable proxies and no voting agreements with respect to any Membership Interests or other equity interests in the Company other than the Operating Agreement.

(d)     Section 3.02(d) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of all outstanding Indebtedness and Guarantees of the Company and its subsidiaries.

Section 3.03     Authority; Noncontravention.

(a)     The Company has the requisite limited liability company power and authority to execute, deliver and perform this Agreement, to consummate the transactions contemplated hereby and to comply with the provisions hereof. The execution, delivery and performance of this Agreement by the Company, the consummation by the Company of the transactions contemplated hereby and the compliance by the Company with the provisions hereof have been duly authorized by all necessary limited liability company action on the part of the Company, and no other proceedings on the part of the Company are necessary to execute, deliver and perform this Agreement, to consummate the transactions contemplated hereby or to comply with the provisions hereof. No vote or approval of holders of any Membership Interests or other equity, membership, member’s or limited liability company interests in the Company or any of its subsidiaries is required in connection with the execution, delivery and performance of this Agreement by the Company, the consummation by the Company of the transactions contemplated hereby and the compliance by the Company with the provisions hereof. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Buyer and Seller, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by the Bankruptcy Exceptions.

(b)     The execution, delivery and performance of this Agreement by Seller and the Company, the consummation by Seller and the Company of the transactions contemplated hereby and the compliance by Seller and the Company with the provisions hereof do not and will not conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation or to a loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or assets of the Company or any of its subsidiaries under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, any provision of (i) the Company’s or any of its subsidiaries’ Organizational Documents, (ii) any Contract to which the Company or any of its subsidiaries is a party or any of their properties or assets are subject or (iii) subject to the governmental filings and other matters referred to in Section 3.03(c), any Law, Governmental Approval or Judgment, in each case applicable to the Company or any of its subsidiaries or any of their properties or assets.

(c)     No Consent of, or filing or submission with, or notification to, any Governmental Entity, is required to be obtained or made by or with respect to the Company or any of its subsidiaries in connection with the execution, delivery and performance of this Agreement by the Company, the consummation by the Company of the transactions contemplated hereby or the compliance by the Company with the provisions hereof, other than (i) those set forth on Section 3.03(c) of the Company Disclosure Letter, (ii) the Consents, filings or submissions as may be required under applicable requirements of the STB solely with respect to the STB’s approval or exemption of a change of control of the Company (the “Required STB Approvals”) and (iii) a decision by the Bureau of Land Management (“BLM”), pursuant to 43 C.F.R 2807.21, approving the assignment of the DesertXpress Right-of Way Grant in connection with the proposed acquisition of control by Buyer of the Company (the “Required BLM Approval”).

(d)     No Third-Party Consent is required to be obtained or made by or with respect to the Company or any of its subsidiaries in connection with the execution, delivery and performance of this Agreement by the Company, the consummation by the Company of the transactions contemplated hereby or the compliance by the Company with the provisions hereof.

Section 3.04     Financial Statements. The Company has made available to Buyer (i) the unaudited consolidated balance sheets of the Company and its subsidiaries as of December 31, 2016, December 31, 2015, December 31, 2014 and December 31, 2013 and the related unaudited consolidated statements of operations of the Company and its subsidiaries for the fiscal years ended on December 31, 2016, December 31, 2015, December 31, 2014 and December 31, 2013 (collectively, the “Yearly Financial Statements”), (ii) the unaudited consolidated balance sheets of the Company and its subsidiaries as of the end of each calendar month during the period beginning January 1, 2017 and ending September 30, 2017 and the related unaudited consolidated statements of operations of the Company and its subsidiaries for each calendar month during such period (collectively, the “Company Monthly Financial Statements”) and (iii) the unaudited consolidated balance sheets of Seller and its subsidiaries as of the end of each calendar month during the period beginning October 1, 2017 and ending July 31, 2018 and the related unaudited consolidated statements of operations of Seller and its subsidiaries for each calendar month during such period (collectively, the “Seller Monthly Financial Statements” and, together with the Yearly Financial Statements and the Company Monthly Financial Statements, the “Financial Statements”). The Financial Statements (i) are complete and accurate in all material respects, (ii) were derived from and prepared in accordance with the underlying books, records and accounts of the Company and its subsidiaries, (iii) were prepared in accordance with GAAP consistently applied throughout the periods covered thereby (except that the Financial Statements do not contain footnotes that may be required by GAAP, and the Company Monthly Financial Statements and the Seller Monthly Financial Statements are subject to normal and recurring year-end adjustments) and (iv) fairly and accurately present in all material respects the assets, Liabilities (including all reserves) and financial position of the Company and its subsidiaries as of the dates thereof and the results of comprehensive income (loss) of the Company and its subsidiaries for the periods then ended.

Section 3.05     Undisclosed Liabilities.

(a)      Neither the Company nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) (“Liabilities”), except Liabilities (i) reflected or reserved against in the unaudited balance sheet of Seller as of April 30, 2018 (the “Balance Sheet Date”), (ii) incurred after the Balance Sheet Date in the ordinary course of business consistent with past practices, or (iii) as would not, individually or in the aggregate, reasonably be expected to be material to the Company and its subsidiaries (taken as a whole).

(b)     There are no off-balance sheet arrangements of any type (including any off-balance sheet arrangement required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K promulgated under the Securities Act) pertaining to the Company or any of its subsidiaries.

Section 3.06     Absence of Certain Changes or Events.

(a)      Since April 30, 2018, (i) no Governmental Approval or Third-Party Consent required for the operation of the Business has expired or has been terminated, cancelled, revoked, suspended or otherwise lost; (ii) no new or additional conditions, restrictions or limitations have been imposed on any Governmental Approval or Third-Party Consent required for the operation of the Business; and (iii) the Company has not transferred, sold, disposed of, forfeited or lost its interests in or rights to any Company Properties.

(b)     Since April 30, 2018, neither the Company nor any of its subsidiaries has taken any Restricted Action.

Section 3.07      Proceedings. There are no Proceedings pending or, to the Knowledge of the Company, threatened against the Company or any of its subsidiaries or relating to the Business (including any Proceeding relating to or challenging (a) the issuance or approval of any Governmental Approval or Third-Party Consent required for the Business or (b) the Company’s or any of its subsidiary’s interests in or rights to any Company Properties), at law or in equity, or before or by any Governmental Entity, and neither the Company nor any of its subsidiaries is subject to any outstanding Judgment of any court or other Governmental Entity.

Section 3.08     Contracts.

(a)      Section 3.08(a) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of all Contracts to which the Company or any of its subsidiaries is a party to or bound by, or to which any of their properties or assets are subject (such Contracts, together with any Contract entered into after the date hereof that would have been required to be listed on Section 3.08 of the Company Disclosure Letter if such Contract had been entered into prior to the date hereof, the “Company Contracts”).

(b)     Each Company Contract is valid and binding on the Company or a subsidiary of the Company party thereto and, to the Knowledge of the Company, each other party thereto, and is in full force and effect, and (i) none of the Company, or any its subsidiaries is in material violation or default under any Company Contract or has received notice of any asserted material violation or default by the Company or any of its subsidiaries party thereto under any Company Contract, (ii) no event or condition exists which constitutes, or with or without notice or lapse of time or both would constitute, a default on the part of the Company or any of its subsidiaries under any material Contract, (iii) as of the date of this Agreement, no other party to the Company Contracts is, to the Knowledge of the Company, in material default in any respect thereunder and (iv) as of the date of this Agreement, none of the Company or any of its subsidiaries has received written notice from any other party to a Company Contract that such other party intends to terminate, not renew, or renegotiate in any material respect the terms of, any such Company Contract.

(c)      The Company has delivered to Buyer, prior to the execution of this Agreement, complete and accurate copies of all Company Contracts in effect as of the date hereof, and no such Company Contract has been modified, amended, waived or terminated since the date of such delivery.

Section 3.09     Compliance with Laws; Governmental Approvals; Third-Party Consents.

(a)      Since December 31, 2015, the Company and each of its subsidiaries has been and is in compliance in all material respects with all applicable Laws and Judgments, and, since December 31, 2015 to the date of this Agreement, the Company and its subsidiaries have not received any written notice or other written communication that they are in violation of any Law or Judgment or the subject of any investigation by any Governmental Entity with respect to any violation of any applicable Law or Judgment.

(b)     Section 3.09(b) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of, and the Company has provided Buyer with true and correct copies of, (i) all Environmental Reviews and Governmental Approvals obtained by or on behalf of the Company or any of its subsidiaries as of the date of this Agreement and (ii) to the extent not covered by the foregoing clause (i), all Governmental Approvals applied for within the twelve months preceding the date of this Agreement. No such Governmental Approvals or Environmental Reviews have been amended, modified or supplemented. There has occurred no material violation of, or default (with or without notice or lapse of time, or both) under, any such Governmental Approval, and all such Governmental Approvals are valid and in full force and effect. There are no (i) pending or, to the Knowledge of the Company, threatened, Proceedings which would reasonably be expected to result in the termination, revocation, cancellation, non-renewal or impairment of any such Governmental Approvals or any terms thereof, or which challenge the validity or outcome of any Environmental Review or (ii) conditions, limitations or other terms of such Governmental Approvals or findings or outcomes of such Environmental Reviews that would reasonably be expected to materially impair the ability of the Company or its subsidiaries to own, lease, develop or operate its properties and assets and to carry on the Business.

(c)      Section 3.09(c) of the Company Disclosure Letter sets forth all actions that, to the Knowledge of the Company, the Company or any of its subsidiaries must take within one year after the date of this Agreement to ensure that the Governmental Approvals listed in Section 3.09(b) of the Company Disclosure Letter remain in good standing without material impact for the Company and its subsidiaries to own, lease, develop or operate their properties and assets and to carry on the Business and to ensure such Governmental Approvals are final and non-appealable (with all statutory, regulatory and administrative periods related thereto having expired).

(d)     Section 3.09(d) of the Company Disclosure Letter sets forth, as of the date of this Agreement, all additional Governmental Approvals (other than those listed in Section 3.09(b) of the Company Disclosure Letter) that neither the Company nor any of its subsidiaries has yet obtained as of the date of this Agreement and, to the Knowledge of the Company, must be obtained in order for the Company and its subsidiaries to construct, operate, own, maintain and otherwise carry on the Business.

(e)      Section 3.09(e) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a true and complete list of, and the Company has provided Buyer with true and correct copies of, each Third-Party Consent (i) obtained by or on behalf of the Company or any of its subsidiaries in connection with the conduct of the Business and which is in effect as of the date of this Agreement and (ii) to the extent not covered by the foregoing clause (i), requested within the twelve months preceding the date of this Agreement. No such Third-Party Consents have been amended, modified or supplemented. There has occurred no material violation of, or default (with or without notice or lapse of time, or both) under, any such Third-Party Consent, and all such Third-Party Consents are valid and in full force and effect. There are no (i) pending or, to the Knowledge of the Company, threatened, Proceedings which would reasonably be expected to result in the termination, revocation, cancellation, non-renewal or impairment of any such Third-Party Consents or any terms thereof or (ii) conditions, limitations or other terms of such Third-Party Consents that would reasonably be expected to materially impair the ability of the Company or its subsidiaries to own, lease, develop or operate its properties and assets and to carry on the Business.

(f)       Section 3.09(f) of the Company Disclosure Letter sets forth all actions that, to the Knowledge of the Company, the Company or any of its subsidiaries must take within one year after the date of this Agreement to ensure that the Third-Party Consents listed in Section 3.09(e) of the Company Disclosure Letter remain in good standing without material impact for the Company and its subsidiaries to own, lease, develop or operate their properties and assets and to carry on the Business and to ensure such Third-Party Consents are final and non-appealable (with all statutory, regulatory and administrative periods related thereto having expired).

(g)      Section 3.09(g) of the Company Disclosure Letter sets forth, as of the date of this Agreement, all additional Third-Party Consents (other than those set forth on Section 3.09(e) of the Company Disclosure Letter) that neither the Company nor any of its subsidiaries has yet obtained as of the date of this Agreement and, to the Knowledge of the Company, the Company or its subsidiaries must obtain in order for the Company and its subsidiaries to construct, operate, own, maintain and otherwise carry on the Business.

(h)     To the Knowledge of the Company, each of the Company and its subsidiaries has completed all Environmental Reviews necessary for the operation of the Business.

Section 3.10     Benefit Plans.

(a)      None of the Company nor any of its subsidiaries employs or retains, or has since December 31, 2015 employed or retained, any individual as an employee, individual independent contractor or other individual service provider. None of the Company nor any of its subsidiaries is a party to, is bound by or has any obligation under, any collective bargaining agreement or any other labor-related agreement with any labor union or any labor organization. There does not exist now, nor do any circumstances exist that reasonably could be expected to result in, any liability or obligation of the Company or any of its subsidiaries with respect to any Participant.

(b)     None of the Company, its subsidiaries nor any of their respective ERISA Affiliates maintains, sponsors or contributes to or is a party to, or is required to maintain, sponsor, contribute to or be a party to, any Benefit Plan. There does not exist now, nor do any circumstances exist that reasonably could be expected to result in, any liability of the Company or any of its subsidiaries with respect to any (i) employee benefit plan, policy, program or arrangement now maintained or required to be maintained, or previously maintained or required to be maintained, by the Company, any of its subsidiaries or any of their respective ERISA Affiliates (or to which any such entity ever contributed or was required to contribute) or (ii) any compensation agreement or other similar arrangement to which the Company, any of its subsidiaries or any ERISA Affiliate is a party.

(c)      None of the Company nor any of its subsidiaries has or is reasonably likely to incur any liability or obligation arising out of (i) the misclassification of individuals hired to provide services to the Company and its subsidiaries and treating such individuals as consultants or independent contractors and not as employees, including for purposes for participation of such individuals in any Benefit Plans or (ii) any arrangement with any Person involving the (A) leasing of employees or (B) co-employment of individuals, in the case of this clause (ii), for purposes of providing services to the Company and its subsidiaries, including any liability or obligation under or on account of (x) any Benefit Plan or any benefit plan, program, Contract or arrangement of such Person or (y) the failure to comply with applicable Laws with respect to any such individuals.

Section 3.11         Additional Environmental Matters.

(a)          To the Knowledge of the Company, each of the Company and its subsidiaries are, and since December 31, 2015 have been, in compliance in all material respects with all Environmental Laws, and neither the Company nor any of its subsidiaries have received any (i) communication alleging that the Company or any of its subsidiaries is in violation of, or may have material Liability under, any Environmental Law or (ii) currently outstanding written request by any Governmental Entity for information pursuant to any Environmental Law; (b) there are no material Environmental Claims pending or, to the Knowledge of the Company, threatened against the Company or any of its subsidiaries; (c) to the Knowledge of the Company, there has been no Release of, or exposure to, any Hazardous Material, and there are no other facts or conditions, that would reasonably be expected to form the basis of any material Environmental Claim against the Company or any of its subsidiaries; (d) to the Knowledge of the Company, there are no underground or aboveground storage tanks or known or suspected asbestos-containing materials on, at, under or about any property owned, operated or leased by the Company or any of its subsidiaries; (e) neither the Company nor any of its subsidiaries have retained or assumed, either contractually or by operation of Law, any Liabilities that would reasonably be expected to form the basis of any material Environmental Claim against the Company or any of its subsidiaries; and (f) the Company has delivered to Buyer complete and accurate copies of all Phase I and Phase II environmental assessments, remedial reports, environmental compliance audits, Natural Hazard Disclosure Reports and other material environmental reports and correspondence relating to the Business, the Company Properties or any real properties or interest in real properties formerly owned, leased or otherwise possessed by the Company and its subsidiaries.

(b)          For all purposes of this Agreement, (i) “Environmental Claims” means any and all administrative, regulatory or judicial Proceedings, Judgments, demands, directives, Liens or notices of noncompliance or violation by or from any person alleging Liability of any kind or nature (including Liability or responsibility for the costs of enforcement Proceedings, cleanup, governmental response, removal or remediation, natural resource damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from (A) the presence or Release of, or exposure to, any Hazardous Material at any location or (B) the failure to comply with any Environmental Law; (ii) “Environmental Law” means any Law, Governmental Approval or Judgment enacted, entered, promulgated, enforced or issued by or with any Governmental Entity relating to pollution, the environment, the climate, natural resources, health and safety, noise, the protection of wetlands, wildlife, biota or endangered or threatened species or the management of waste, wastewater or storm water; (iii) “Hazardous Materials” means (a) any petroleum or petroleum products, by-products, fractions, additives or derivatives, (b) any methane gas, natural gas, natural gas liquid, liquefied natural gas, synthetic gas usable for fuel, radioactive materials or wastes, asbestos, polychlorinated biphenyls, chlorofluorocarbons and other ozone-depleting substances and (c) any other chemical, material, substance or waste that is regulated or can form the basis in liability under any Environmental Law; (iv) “Release” means any actual or threatened release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within any building, structure, facility or fixture; and (v) “Natural Hazards Disclosure Reports” means any reports disclosing whether a real property lies within the following natural hazard areas or zones: (a) a special flood hazard area designated by the Federal Emergency Management Agency (California Civil Code Section 1103(c)(1)); (b) an area of potential flooding (California Government Code Section 8589.4); (c) a very high fire hazard severity zone (California Government Code Section 51178 et seq.); (d) a wild land area that may contain substantial forest fire risks and hazards California Public Resources Code Section 4135; (e) earthquake fault zone (California Public Resources Code Section 2622); or (f) a seismic hazard zone (California Public Resources Code Section 2696).

Section 3.12         Taxes.

(a)          As used in this Agreement, (1) “taxes” means all taxes, levies, imposts, assessments, duties, tariffs, withholdings, fees or similar charges of any kind whatsoever, in each case in the nature of a tax, imposed by any Governmental Authority or other taxing authority, whether domestic or non-U.S. (including income, excise, property, sales use, transfer conveyance, payroll or other employment related tax or contribution, unemployment insurance premiums, license, registration, ad valorem, value added, social security, franchise, stamp taxes, taxes based upon or measured by capital stock, net worth or gross receipts and other taxes), together with all interest, fines, penalties and additions attributable to or imposed with respect to such amounts, whether disputed or not; (2) “taxing authority” means any governmental or quasi-governmental body (including any subdivision, agency or commission thereof) exercising regulatory authority in respect of taxes; and (3) “tax return” means any return, declaration, report, form, schedule, notice, claim for refund, estimate, information return or statement, including any related or supporting information with respect thereto, and including any amendment thereof, filed or required to be filed with any taxing authority.

(b)          Neither the Company nor any of its subsidiaries is currently classified as, or has made an election under U.S. Treasury Regulations Section ###-###-####-3 to be classified as, an association taxable as a corporation for U.S. Federal income tax purposes.

(c)          The Company and each of its subsidiaries has prepared (or caused to be prepared) and timely filed (taking into account valid extensions of time within which to file) all tax returns required to be filed by any of them, and all such filed tax returns (taking into account all amendments thereto) are complete and accurate in all material respects. Neither the Company nor any of its subsidiaries has requested any extension of time within which to file any tax return that has not yet been filed.

(d)          All taxes owed by the Company and each of its subsidiaries that are due (whether or not shown as due on a tax return) have been duly and timely paid in accordance with all applicable Laws. The Company and each of its subsidiaries has accrued on its books and records, in accordance with GAAP, all taxes that are not yet due and payable.

(e)          There are no Liens for taxes upon the properties or assets of the Company or any of its subsidiaries, except for statutory Liens for taxes not yet due and payable.

(f)          The Company and each of its subsidiaries has not received notice of any pending audits, examinations, investigations, proposed adjustments, claims or other proceedings in respect of any taxes of the Company or any of its subsidiaries. Each assessed deficiency resulting from any audit or examination by any taxing authority has been timely paid and there is no assessed deficiency, refund litigation, proposed adjustment or matter in controversy with respect to any taxes due and owing by the Company or any of its subsidiaries.

(g)          Neither the Company nor any of its subsidiaries has currently in effect or pending written requests, agreements, Consents or waivers of any statute of limitations in respect of taxes or any agreement to any extension of time with respect to an assessment or deficiency for taxes (other than pursuant to extension of time to file tax returns obtained in the ordinary course of business).

(h)          Neither the Company nor any of its subsidiaries is (i) liable with respect to taxes of any other person as a transferee or successor, by Contract or otherwise, or (ii) a party to or bound by any tax sharing agreement, tax indemnity obligation or similar agreement, arrangement or practice (whether express or implied) with respect to taxes (including any closing agreement or other agreement relating to taxes with any taxing authority).

(i)          Neither the Company nor any of its subsidiaries will be required to include in any taxable period ending after the Closing Date (i) taxable income attributable to income that accrued in a taxable period prior to the Closing Date but not recognized in such prior taxable period as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting or Section 481 of the Code (or any comparable provision of any Law), or for any other reason (including as a result of prepaid amounts or deferred revenue received on or prior to the Closing Date) or (ii) income deferred under Section 108(i) of the Code in a taxable period beginning prior to the Closing Date.

(j)          Each of the Company and its subsidiaries has complied in all material respects with all applicable Laws relating to the collection, payment and withholding and remittances of taxes.

(k)          No claim has ever been made by a taxing authority in a jurisdiction where the Company or any of its subsidiaries does not file tax returns that the Company or any of its subsidiaries is or may be subject to taxes assessed by such jurisdiction.

(l)          Neither the Company nor any of its subsidiaries has engaged in any “listed transaction” within the meaning of U.S. Treasury Regulation Section 1.6011-4(b)(2).

(m)          Section 3.12(m) of the Company Disclosure Letter sets forth a list of all tax returns required to be filed by the Company or any of its subsidiaries for which the applicable taxable period began before and ends after the Closing Date.

Section 3.13         Real and Personal Property.

(a)          Each of the Company and its subsidiaries has good and marketable title to, or valid leasehold interests in, all of its real and personal property and assets, free and clear of all Liens, other than Permitted Liens. The Company and its subsidiaries own, lease or otherwise possess a valid legal interest in all Company Properties necessary and sufficient for the conduct of the Business.

(b)          Section 3.13(b) of the Company Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of all land, buildings, facilities, locations, offices and other real property interests owned in fee simple by the Company or any of its subsidiaries (each, an “Owned Property”), including, for each such Owned Property, a legal description (with acreage and square footage), the name of the record owner, and the permitted use thereof. With respect to the Owned Properties, (i) none of the Company or its subsidiaries have leased or otherwise granted anyone the right to use or occupy any Owned Property or any portion thereof, (ii) there are no outstanding contracts, options, rights of first offer or rights of first refusal in favor of any third parties to purchase any Owned Property or any portion thereof or interest therein and (iii) there is no condemnation or other proceeding in eminent domain, pending or, to the Knowledge of the Company, threatened, affecting any parcel of Owned Property or any portion thereof or interest therein.

(c)          Section 3.13(c) of the Company Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of each lease, sublease, license or other occupancy agreement in respect of any real property to which the Company or any of its subsidiaries is a party as lessee, sublessee, licensee or occupant (each such lease, sublease, license or other occupancy agreement, together with any amendments thereto, and any lease, sublease, license or other occupancy agreement entered into after the date hereof that would have been required to be listed on Section 3.13(c) of the Company Disclosure Letter, a “Real Property Lease” and the real property demised under or subject to each Real Property Lease, a “Leased Property”). With respect to the Leased Properties, (i) each Real Property Lease is legal, valid, binding and in full force and effect and is enforceable by the Company or one of its subsidiaries (as applicable) against the other party or parties thereto in accordance with its terms, subject to the Bankruptcy Exceptions, (ii) the Company or one of its subsidiaries (as applicable) has performed all material obligations required to be performed by it under each Real Property Lease and is not (with or without notice or lapse of time, or both) in breach or default in any material respect thereunder, (iii) to the Knowledge of the Company, no other party to any Real Property Lease is (with or without notice or lapse of time, or both) in breach or default in any material respect thereunder, (iv) the delivery and execution of this Agreement and the consummation of the transactions contemplated hereunder do not require the consent of the landlord or any other person under any such Real Property Lease, (v) none of the Company or its subsidiaries have subleased, licensed or otherwise granted anyone the right to use or occupy any Leased Property or any portion thereof or have collaterally assigned or granted any other security interest in any such leasehold estate or any interest therein and (vi) there is no condemnation or other proceeding in eminent domain pending or, to the Knowledge of the Company, threatened, affecting any portion of a Leased Property. Complete and accurate copies of each Real Property Lease have been delivered to Buyer and no such Real Property Lease has been modified, amended, waived or terminated since the date of such delivery.

(d)          Section 3.13(d) of the Company Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of each material easement, access right, encroachment agreement, right of way, crossing agreement and other similar real property right to which the Company or any of its subsidiaries benefits from or is a party (the “Real Property Interests”, and the Owned Properties, Leased Properties and Real Property Interests, collectively, shall hereinafter be known as the “Company Properties”). With respect to the Real Property Interests, (i) such Real Property Interest is legal, valid, binding and in full force and effect and is enforceable by the Company or one of its subsidiaries (as applicable) against the other party or parties thereto in accordance with its terms, subject to the Bankruptcy Exceptions, (ii) the Company or one of its subsidiaries (as applicable) has performed all material obligations required to be performed by it under each Real Property Interest and is not (with or without notice or lapse of time, or both) in breach or default in any material respect thereunder, (iii) to the Knowledge of the Company, no other party to any Real Property Interest is (with or without notice or lapse of time, or both) in breach or default in any material respect thereunder, (iv) the delivery and execution of this Agreement and the consummation of the transactions contemplated hereunder do not require the consent of the land owner or any other person under any such Real Property Interest, (v) none of the Company or its subsidiaries have leased, licensed or otherwise granted anyone the right to use or occupy any Real Property Interest or any portion thereof or have collaterally assigned or granted any other security interest in any such Real Property Interest or any interest therein and (vi) there is no condemnation or other proceeding in eminent domain pending or, to the Knowledge of the Company, threatened, affecting any portion of a Real Property Interest.

(e)          Except for the Company Properties, none of the Company or any of its subsidiaries occupy, are legally obligated for, have an interest in, or otherwise use, any land, buildings, facilities, locations or offices, and nor do they have any rights or obligations to acquire such interests.

(f)          None of Seller, the Manager, any Member or any other affiliate of Seller (other than the Company and its subsidiaries) owns or has any interest in any of the assets, properties or rights utilized by the Company or any of its subsidiaries in the operation of the Business as presently conducted.

Section 3.14         Intellectual Property.

(a)          Section 3.14(a) of the Company Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of all registrations and applications for registrations of Intellectual Property owned by the Company or any of its subsidiaries (the “Scheduled Company Intellectual Property”).

(b)          (i) The Company or one of its subsidiaries exclusively owns all right, title and interest in and to the Scheduled Company Intellectual Property, free and clear of all Liens; (ii) all necessary filings, registrations, recordations and payments necessary to protect and maintain the Company’s or one of its subsidiaries’ interest in the Scheduled Company Intellectual Property have been made; (iii) there are no Proceedings (including for opposition, cancellation, revocation or rectification) pending or, to the Knowledge of the Company, threatened against the Company or any of its subsidiaries by any person with respect to the ownership, validity, enforceability, effectiveness, registration or use of the Scheduled Company Intellectual Property; (iv) neither the Company nor any of its subsidiaries is subject to any outstanding Judgment involving the Scheduled Company Intellectual Property; and (v) the Scheduled Company Intellectual Property is subsisting, valid and enforceable.

(c)          Since December 31, 2015, the activities of the Company and its subsidiaries and, to the Knowledge of the Company, of any licensee of Intellectual Property licensed by the Company or any of its subsidiaries have not infringed, misappropriated or otherwise conflicted with the Intellectual Property of any third-party. To the Knowledge of the Company, no third-party has infringed or misappropriated since December 31, 2015, or is infringing or misappropriating, any material Scheduled Company Intellectual Property. During the period from December 31, 2015 to the date hereof, neither the Company nor any of its subsidiaries has initiated or threatened in writing any claim, and after the date hereof neither the Company nor any of its subsidiaries will have initiated or threatened in writing any material claim, in each case against any person alleging that such person infringes any Company Intellectual Property. During the period from December 31, 2015 to the date hereof, no person has initiated or threatened in writing any claim, and after the date hereof no person will have initiated or threatened in writing any material claim, in each case against the Company or any of its subsidiaries alleging that the Company or any of its subsidiaries infringes Intellectual Property of any third-party.

Section 3.15         Transactions with Affiliates. There are no Contracts currently in effect or pursuant to which the parties thereto have current or future rights or obligations between, among or involving the Company or any of its subsidiaries, on the one hand, and Seller, the Manager, any Member or any other affiliate of Seller (other than the Company and its subsidiaries) or any Participant, on the other hand (such Contracts, “Affiliate Contracts”). No payments (including dividends, distributions, loans, service or trade payments, salary, bonuses, payments under any management, consulting, monitoring or financial advisory agreement, advances or otherwise) have been made to or received from the Company or any of its subsidiaries, on the one hand, and Seller or any of its affiliates (other than the Company and its subsidiaries) or any Participant, on the other hand. No affiliate of the Company or any of its subsidiaries (including Seller) owns, leases or holds any assets (including any Governmental Approvals and Third-Party Consents) used by the Company and its subsidiaries or which would reasonably be expected to be used in the Business.

Section 3.16         Brokers. No brokers or finders have acted for any of Seller, the Company or any other affiliate of any of Seller in connection with this Agreement or the transactions contemplated hereby and no person may be entitled to any brokerage fee, finder’s fee or commission in respect thereof.

Section 3.17         Subsidiaries.

(a)          Section 3.17 of the Company Disclosure Letter identifies each subsidiary of the Company, as of the date of this Agreement, together with the jurisdiction of its organization and the number of shares of each class of its capital stock (or other equity, membership or limited liability company interest) owned by the Company, any of its subsidiaries, or any other person, all of which have been duly authorized, validly issued and are fully paid and nonassessable, and none of which are subject to or have been issued in violation of any purchase option, call option, subscription right or forfeiture conditions or any similar right under the Organizational Documents of such subsidiary or any Contract to which such subsidiary is party or otherwise bound. The subsidiaries of the Company do not have any other capital stock (or other equity, membership or limited liability company interest) authorized, issued or outstanding, and there are no securities, options, warrants, calls, rights, equity-appreciation rights, restricted equity units, equity-based performance units or Contracts of any kind to which any subsidiary of the Company is a party, or by which any subsidiary of the Company or any of its properties or assets are bound, obligating any subsidiary of the Company to issue, deliver or sell, or cause to be issued, delivered or sold, capital stock (or other equity, membership or limited liability company interests) in, or securities convertible into, or exchangeable or exercisable for, capital stock (or other equity, membership or limited liability company interests) in, any subsidiary of the Company or obligating any subsidiary of the Company to issue, deliver, sell, grant, extend or enter into any such security, option, warrant, call, right, unit or Contract. There are no outstanding contractual or other obligations of any subsidiary of the Company to (A) repurchase, redeem or otherwise acquire any capital stock (or other equity, membership or limited liability company interests) in such subsidiary or (B) vote or dispose of any capital stock (or other equity, membership or limited liability company interests) in such subsidiary. No subsidiary of the Company is a party to any voting agreement with respect to any capital stock (or other equity, membership or limited liability company interests) in such subsidiary. There are no irrevocable proxies and no voting agreements with respect any capital stock (or other equity, membership or limited liability company interests) in any subsidiary of the Company.

(b)          There are no bonds, debentures, notes or other Indebtedness of any subsidiary of the Company that have or by their terms may have at any time the right to vote (or which are convertible into, or exchangeable for, securities having the right to vote) on any matters on which the holders of capital stock (or other equity, membership or limited liability company interests) in such subsidiary may vote (“Voting Subsidiary Debt”). There are no securities or other similar instruments or obligations of any subsidiary of the Company, the value of which is in any way based upon or derived from any capital stock (or other equity, membership or limited liability company interests) in any subsidiary of the Company.

(c)          Each subsidiary identified on Section 3.17 of the Company Disclosure Letter (i) is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and (ii) has all requisite corporate, or other legal entity, as the case may be, power and authority to enable it to use its name and to own, lease or otherwise hold and operate its properties or assets and to carry on its business as presently conducted. Each subsidiary identified on Section 3.17 of the Company Disclosure Letter is duly qualified or licensed to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties or assets makes such qualification or licensing necessary.

(d)          Each subsidiary identified on Section 3.17 of the Company Disclosure Letter is, directly or indirectly, wholly owned by the Company, free and clear of any Liens. There are no declared but unpaid dividends or other distributions in respect of any share of capital stock (or other equity or voting interest) in any of the subsidiaries of the Company.

Section 3.18         Exclusivity of Representations and Warranties. Neither the Company nor any of its affiliates is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied (including, but not limited to, any relating the financial condition, results of operations, assets or liabilities of the Company), except as expressly set forth in this Article III, Article IV and the Company Disclosure Letter, and the Company hereby disclaims any such other representations and warranties. The Company acknowledges and agrees that except for the representations and warranties made by Buyer in Article V and in the Buyer Disclosure Letter, neither Buyer nor any of its affiliates makes any other representation or warranty of any kind or nature whatsoever, oral or written, express or implied, with respect to Buyer or its affiliates.

Except as set forth on the Company Disclosure Letter, Seller represents and warrants to Buyer as of the date of this Agreement and as of the Closing as follows:

Section 4.01          Organization. Seller is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Nevada and has all requisite power and authority to carry on its business as presently conducted.

Section 4.02         Authority; Noncontravention.

(a)          Seller has the requisite capacity and authority to execute, deliver and perform this Agreement and the Stockholder Agreement, to consummate the transactions contemplated hereby and thereby and to comply with the provisions hereof and thereof. The execution, delivery and performance of this Agreement and the Stockholder Agreement by Seller, the consummation by Seller of the transactions contemplated hereby and thereby and the compliance by Seller with the provisions hereof and thereof have been duly authorized by all necessary limited liability company action on the part of Seller, and no other limited liability company proceedings on the part of Seller are necessary to execute, deliver and perform this Agreement or the Stockholder Agreement, to consummate the transactions contemplated hereby and thereby and to comply with the provisions hereof and thereof. Seller has duly executed and delivered this Agreement and, subject to the terms and conditions of this Agreement, will duly execute and deliver the Stockholder Agreement at the Closing, and, assuming due authorization, execution and delivery by Buyer and the Company, constitutes (or, in the case of the Stockholder Agreement, will constitute) a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as enforceability may be limited by the Bankruptcy Exceptions.

(b)          The execution, delivery and performance of this Agreement and the Stockholder Agreement by Seller, the consummation by Seller of the transactions contemplated hereby and thereby and the compliance by Seller with the provisions hereof and thereof do not and will not conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation or to a loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or assets of Seller under, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements under, any provision of (i) the Organizational Documents of Seller, (ii) any Contract to which Seller is a party or any of its properties or assets is subject or (iii) subject to the governmental filings and other matters referred to in Section 4.02(c), any Law or Judgment, in each case applicable to Seller or any of its properties or assets.

(c)          No Consent of, or filing or submission with, any Governmental Entity is required to be obtained or made by or with respect to Seller in connection with the execution, delivery and performance of this Agreement or the Stockholder Agreement by Seller, the consummation by Seller of the transactions contemplated hereby and thereby or the compliance by Seller with the provisions hereof and thereof, other than (i) the Required STB Approvals and (ii) the Required BLM Approval.

(d)          No Consent of, or filing or submission with, or notification to, any person (that is not a Governmental Entity) is required to be obtained or made by or with respect to Seller in connection with the execution, delivery and performance of this Agreement or the Stockholder Agreement by Seller, the consummation by Seller of the transactions contemplated hereby and thereby or the compliance by Seller with the provisions hereof and thereof.

Section 4.03         Title to Membership Interests. Seller (i) holds and has good and valid title to all of the outstanding Membership Units, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements (except for any such Liens or proxies arising hereunder and except for the Operating Agreement) and (ii) is the sole record and beneficial owner thereof. Without limiting the foregoing, Seller is not a party to any Contract pursuant to which any person (other than Buyer) has a right to acquire the Membership Units. Assuming Buyer has the requisite power and authority to be the lawful owner of such Membership Interests, upon delivery to Buyer at the Closing of an instrument sufficient to transfer such Membership Interests, and upon Seller’s receipt of the amount payable to Seller pursuant to Sections 2.01(c)(i) and 2.01(c)(ii), good and valid title to such Membership Interests will pass to Buyer, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements.

Section 4.04         Transactions with Affiliates. None of Seller or any of its affiliates (other than the Company and its subsidiaries) owns or has any interest in any of the assets, properties or rights utilized by the Company or any of its subsidiaries or otherwise related to the Business.

Section 4.05         Exclusivity of Representations and Warranties. Neither Seller nor any of its affiliates is making any representation or warranty of any kind or nature whatsoever, oral or written, express or implied (including, but not limited to, any relating to the financial condition, results of operations, assets or liabilities of the Company), except as expressly set forth in Article III, this Article IV and the Company Disclosure Letter, and Seller hereby disclaims any such other representations and warranties. Seller acknowledges and agrees that except for the representations and warranties made by Buyer in Article V and in the Buyer Disclosure Letter, neither Buyer nor any of its affiliates makes any other representation or warranty of any kind or nature whatsoever, oral or written, express or implied, with respect to Buyer or its affiliates.

(iv)       use reasonable best efforts to respond as promptly as reasonably practicable to any inquiries or requests received from any Governmental Entity for additional information or documentary material in connection with any Required Approvals and any other Consents required in connection with the transactions contemplated hereby;

 

(v)         use reasonable best efforts to take all actions necessary to cause the expiration or termination of any applicable waiting periods and the receipt of any Required Approvals and any other Consents required in connection with the transactions contemplated hereby as soon as practicable after the date of this Agreement and not extend any such waiting period or enter into any agreement with any Governmental Entities not to consummate any of the transactions contemplated hereby, except with the prior written consent of the other, which consent will not be unreasonably withheld, delayed or conditioned; and

(vi)        unless prohibited by applicable Law or by the applicable Governmental Entity, (A) to the extent reasonably practicable, not participate in or attend any meeting, or engage in any substantive conversation with, any Governmental Entity or other person in respect of the Required Approvals or the transactions contemplated hereby without the other, (B) to the extent reasonably practicable, give the other reasonable prior notice of any such meeting or conversation, (C) in the event one party is prohibited by applicable Law or by the applicable Governmental Entity from participating in or attending any such meeting or engaging in any such conversation, keep such party reasonably apprised with respect thereto, (D) cooperate in the filing of any substantive memoranda, white papers, filings, correspondence or other written communications explaining or defending this Agreement and the transactions contemplated hereby, articulating any regulatory or competitive argument or responding to requests or objections made by any Governmental Entity or any other person, and (E) deliver complete and accurate copies to the other of all filings, submissions, correspondence and other written communications (and memoranda setting forth the substance thereof) between it and its affiliates and their respective representatives, on the one hand, and any person (including any Governmental Entity or members of any Governmental Entity’s staff), on the other hand, with respect to this Agreement and the transactions contemplated hereby, subject to redaction of competitively sensitive information, valuation material or information subject to attorney-client privilege, and consider in good faith the views of the other in connection with such communications. Notwithstanding anything to the contrary in the foregoing, Buyer shall have the right to determine and direct the strategy and process (including all timing, substantive matters and decisions to propose, negotiate, commit to or effect any action) by which the parties will seek to cause the expiration or termination of any applicable waiting periods and the receipt of any Required Approvals and other Consents required in connection with the transactions contemplated hereby (including all elements of any Proceeding and any communications with Governmental Entities); provided that, Buyer will consult with the Company on a regular basis regarding such strategy and process.

 

Section 6.04        Tax Matters-In General.

 

(a)          Seller and Buyer anticipate that the sale of the Membership Interests will be treated, for U.S. federal income tax purposes, (i) if Buyer is classified as a partnership or as disregarded as an entity separate from its owner for U.S. federal income tax purposes as of immediately before the Closing, as a sale of an undivided interest in the assets of the Company (to the extent of the Cash Purchase Price plus any Company liabilities treated as consideration under Section 707 of the Code) and a contribution of the remaining undivided interest in the assets and liabilities of the Company to which Sections 721 and 752 of the Code apply; and (ii) if Buyer has, in connection with a Buyer IPO, become taxable as a corporation for U.S. federal income tax purposes as of the Closing Date, as a transfer of the assets and liabilities of the Company to which (in combination with all other actual or deemed transfers to the Buyer taken in connection with such Buyer IPO, including those resulting from Buyer’s incorporation for U.S. federal income tax purposes) Section 351 of the Code applies, assuming the sale of Membership Interests has occurred within a period of time consistent with the requirements of Section 351 of the Code and the Treasury Regulations thereunder following the effectiveness of Buyer’s incorporation for U.S. federal income tax purposes. Seller and Buyer shall cooperate in good faith to ensure, to the extent possible and reasonably practicable, that if Buyer becomes taxable as a corporation for U.S. federal income tax purposes before the Closing, the sale of the Membership Interests will be governed by Section 351 of the Code; provided that Buyer shall not be required to waive any condition to Buyer’s obligation to complete the Acquisition or to take or agree to any steps that would, in Buyer’s reasonable judgment, result in a material incremental cost to Buyer with respect to, or otherwise delay, frustrate or hinder the consummation of, the Buyer IPO. Unless otherwise required by applicable Law, Buyer and Seller intend to report such sale for U.S. federal income tax purposes in all respects consistently with such treatment and not take a position inconsistent with the foregoing in any tax return or otherwise with any taxing authority unless required by a final determination (as defined in Section 1313(a) of the Code).

(b)          At its sole cost and expense, Seller shall prepare, or cause to be prepared, all Pre-Closing Tax Returns other than a Pre-Closing Tax Return for a Straddle Period. Such Pre-Closing Tax Returns shall be prepared on a basis consistent with existing procedures for preparing such tax returns, except as otherwise required by applicable Law or agreed to in writing by the parties.

 

(i)         In the case of any Pre-Closing Tax Return subject to this Section 6.04(b), Seller shall deliver any such tax return to Buyer for review and comment at least 30 days before it is due (taking into account extensions). Seller shall consider in good faith Buyer’s reasonable comments, and, to the extent necessary, deliver an amended tax return to Buyer. Seller (or, if such Pre-Closing Tax Return is required to be filed after the Closing Date, Buyer) shall (x) timely file, or caused to be filed, such tax return (as amended, as applicable) with the relevant taxing authority and (y) timely pay, or cause to be paid, to the relevant taxing authority the amount shown as due on such tax return.

 

(ii)        Seller shall prepare a draft purchase price allocation schedule in a manner consistent with Section 1060 of the Code and the applicable U.S. Treasury Regulations (the “Draft Allocation Schedule”) and shall deliver the Draft Allocation Schedule to Buyer within 30 days after the Closing Date.

 

(iii)       Buyer shall deliver comments to the Draft Allocation Schedule to Seller within 60 days after receipt. Seller shall incorporate reasonable Buyer’s comments and deliver an amended Draft Allocation Schedule to Buyer within 10 days after receipt.

(l)          Seller and Buyer shall cooperate in good faith to develop an economically equivalent alternative to the transaction described in Section 2.02(c) that places each party in no worse tax position than it would have been in had the Buyer IPO occurred before the Closing Date and the consideration paid at Closing consisted of 50% cash and 50% Buyer Common Shares in a transaction governed by Section 351 of the Code; provided that Buyer shall not be required to agree to any such alternative that would, in Buyer’s reasonable judgment, result in a material incremental cost to Buyer with respect to, or would otherwise delay, frustrate or hinder the consummation of, the Buyer IPO. Additionally, if, as a result of any transfer or payment with respect to the transaction described in Section 2.02(c) or any alternative transaction agreed to by Seller and Buyer under this Section 6.04(l), Buyer is treated as recognizing any gain under Section 351(b) of the Code or otherwise in connection with the incorporation of Buyer, such gain (if any) shall be allocated 100% to Seller.

 

(a)          From and after the date hereof, the Company, its subsidiaries and Seller shall not, and shall cause their respective affiliates, officers, directors, employees, agents and representatives not to, directly or indirectly (i) solicit, initiate, induce or encourage, or take any other action to facilitate, any Takeover Proposal or any inquiry or proposal that could reasonably be expected to lead to a Takeover Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person (other than Buyer) any information with respect to, or otherwise cooperate in any way with, any Takeover Proposal or any inquiry or proposal that could reasonably be expected to lead to a Takeover Proposal or (iii) approve, endorse, recommend, execute or enter into any letter of intent, memorandum of understanding, agreement in principle, joint venture agreement, partnership agreement or merger, acquisition or similar agreement constituting, contemplating or otherwise relating to any Takeover Proposal or any inquiry or proposal that could reasonably be expected to lead to a Takeover Proposal. The term “Takeover Proposal” means any inquiry, proposal or offer from any person (other than Buyer) relating to (A) any direct or indirect acquisition, in one transaction or a series of transactions, including any merger, consolidation, tender offer, exchange offer, public offering, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture or similar transaction, of (1) assets or businesses of the Company and its subsidiaries or (2) Membership Interests or other equity, membership or limited liability company interests in the Company or any of its subsidiaries, in each case other than the transactions contemplated hereby, or (B) any other transaction or series of transactions that could reasonably be expected to (x) impair in any material respect the ability of the Company or Seller to perform their obligations under this Agreement or (y) prevent or materially impede, interfere with, hinder or delay the consummation of any of the transactions contemplated hereby. Seller and the Company shall promptly request that any materials provided to any person in connection with a Takeover Proposal (other than Buyer) shall be returned to the Company or destroyed.

(b)          From and after the date hereof, the Company and Seller shall promptly (but in any event within 24 hours) advise Buyer orally and in writing of any Takeover Proposal or any inquiry or proposal that could reasonably be expected to lead to a Takeover Proposal, the terms and conditions of such Takeover Proposal, inquiry or proposal and the identity of the person making such Takeover Proposal, inquiry or proposal. The Company and Seller shall keep Buyer informed on a current basis in all material respects of the status and details (including material amendments or proposed amendments) of any such Takeover Proposal, inquiry or proposal.

 

Section 6.15       SELLER RELEASE. EFFECTIVE AS OF THE CLOSING, SELLER DOES FOR ITSELF, AND ITS RESPECTIVE AFFILIATES, PARTNERS, SUCCESSORS AND ASSIGNS, IF ANY, RELEASE AND ABSOLUTELY FOREVER DISCHARGE THE COMPANY AND ITS SUBSIDIARIES AND THEIR RESPECTIVE OFFICERS, MANAGERS, DIRECTORS, MEMBERS OF ANY APPLICABLE GOVERNING BODY, SECURITYHOLDERS, AFFILIATES, EMPLOYEES, ADVISORS, REPRESENTATIVES AND AGENTS (EACH, A “RELEASED PARTY”) FROM AND AGAINST ALL RELEASED MATTERS. “RELEASED MATTERS” MEANS ANY AND ALL CLAIMS, DEMANDS, DAMAGES, DEBTS, LIABILITIES, OBLIGATIONS, COSTS, EXPENSES (INCLUDING ATTORNEYS’ AND ACCOUNTANTS’ FEES AND EXPENSES), LOSSES, ACTIONS AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER, WHETHER NOW KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, THAT SELLER NOW HAS, OR AT ANY TIME PREVIOUSLY HAD, OR SHALL OR MAY HAVE IN THE FUTURE, AS A SECURITYHOLDER (WHETHER DIRECT OR INDIRECT), INCLUDING AS A HOLDER OF THE EXCHANGEABLE SHARES, OFFICER, MANAGER, DIRECTOR, MEMBER OF ANY APPLICABLE GOVERNING BODY, CONTRACTOR, CONSULTANT OR EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, ARISING BY VIRTUE OF OR IN ANY MATTER RELATED TO ANY ACTIONS OR INACTIONS WITH RESPECT TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE AFFAIRS ON OR BEFORE THE CLOSING DATE; PROVIDED THAT RELEASED MATTERS SHALL NOT INCLUDE ANY RIGHT OF SELLER CONTAINED IN THIS AGREEMENT. IT IS THE INTENTION OF SELLER IN EXECUTING THIS RELEASE, AND IN GIVING AND RECEIVING THE CONSIDERATION CALLED FOR HEREIN, THAT THE RELEASE CONTAINED IN THIS SECTION 6.15 SHALL BE EFFECTIVE AS A FULL AND FINAL ACCORD AND SATISFACTION AND GENERAL RELEASE OF AND FROM ALL RELEASED MATTERS AND THE FINAL RESOLUTION BY SELLER AND THE RELEASED PARTIES OF ALL RELEASED MATTERS INCLUDING ACCRUED BUT UNPAID DISTRIBUTIONS AND PAYMENTS IN CONNECTION WITH A LIQUIDATION OR CHANGE OF CONTROL TRANSACTION. NOTWITHSTANDING ANYTHING HEREIN OR OTHERWISE TO THE CONTRARY, THE RELEASE CONTAINED IN THIS SECTION 6.15 WILL NOT BE EFFECTIVE SO AS TO BENEFIT A PARTICULAR RELEASED PARTY IN CONNECTION WITH ANY MATTER OR EVENT THAT WOULD OTHERWISE CONSTITUTE A RELEASED MATTER, BUT INVOLVED FRAUD, WILLFUL CONCEALMENT OR THE BREACH OF ANY APPLICABLE LAW ON THE PART OF SUCH RELEASED PARTY. SELLER HEREBY REPRESENTS TO THE COMPANY AND BUYER THAT SELLER HAS NOT VOLUNTARILY OR INVOLUNTARILY ASSIGNED OR TRANSFERRED OR PURPORTED TO ASSIGN OR TRANSFER TO ANY PERSON ANY RELEASED MATTERS AND THAT NO PERSON OTHER THAN SELLER HAS ANY INTEREST IN ANY RELEASED MATTER BY LAW OR CONTRACT BY VIRTUE OF ANY ACTION OR INACTION BY SELLER. THE INVALIDITY OR UNENFORCEABILITY OF ANY PART OF THIS SECTION 6.15 SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF THE REMAINDER OF THIS SECTION 6.15 WHICH SHALL REMAIN IN FULL FORCE AND EFFECT.

Section 6.16        Cooperation. If Buyer has not consummated a Buyer IPO on or prior to the Closing Date, Seller shall use commercially reasonable efforts to cooperate with any action reasonably requested by Buyer from and after the Closing to effect a Buyer IPO (including any corporate reorganization of Buyer or any of its subsidiaries or other reasonable activities, the expenses of which are reimbursed by Buyer).

 

Section 7.01        Conditions to Each Party’s Obligation to Effect the Acquisition. The respective obligation of each party to complete the Acquisition is subject to the satisfaction (or, if permitted by applicable Law, written waiver) at the Closing of the following conditions:

 

(a)          The Required STB Approvals shall have been obtained and/or shall have become effective (as applicable).

 

(b)          The Required BLM Approval shall have been obtained.

 

(c)          No Law or preliminary, temporary or permanent Judgment enacted, entered, promulgated, enforced or issued by any Governmental Entity or other legal restraint or prohibition (collectively, “Legal Restraints”) shall be in effect that prevents, makes illegal or prohibits the consummation of the Acquisition.

Section 7.02       Conditions to Obligation of Buyer. The obligation of Buyer to complete the Acquisition is also subject to the satisfaction (or, if permitted by applicable Law, written waiver by Buyer) as of the Closing of the following conditions:

 

(a)          (i)           (A) The Company Fundamental Representations shall be true and correct in all respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date and (B) each other representation and warranty of the Company shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, except in the case of clauses (A) and (B) to the extent such representations and warranties expressly relate to an earlier date, in which case the same shall continue on the Closing Date to be true and correct as of such earlier date.

 

(ii)           (A) The Seller Fundamental Representations shall be true and correct in all respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, and (B) each other representation and warranty of Seller shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, except in the case of clauses (A) and (B), to the extent such representations and warranties expressly relate to an earlier date, in which case the same shall continue on the Closing Date to be true and correct as of such earlier date.

 

(b)          (i) The Company shall have performed or complied with in all material respects all covenants and agreements required by this Agreement to be performed or complied with by the Company at or prior to the Closing.

 

(ii) Seller shall have performed or complied with in all material respects all covenants and agreements required by this Agreement to be performed or complied with by Seller at or prior to the Closing.

 

(c)          (i) The Company shall have delivered to Buyer a certificate, dated as of the Closing Date, stating that the conditions specified in Sections 7.02(a)(i) and 7.02(b)(i) have been satisfied.

 

(ii) Seller shall have delivered to Buyer a certificate, dated as of the Closing Date, stating that the conditions specified in Sections 7.02(a)(ii) and 7.02(b)(ii) have been satisfied.

 

Section 7.03       Conditions to Obligation of Seller. The obligation of Seller to complete the Acquisition is also subject to the satisfaction (or, if permitted by applicable Law, written waiver by Seller) as of the Closing of the following conditions:

 

Section 8.01        Termination.

 

(a)          Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the Acquisition and the other transactions contemplated hereby may be abandoned at any time prior to the Closing:

 

(i)         by mutual written consent of Seller and Buyer;

(iv)        by Seller, on the one hand, or Buyer, on the other hand, (A) if any Legal Restraint having the effect set forth in Section 7.01(c) shall be in effect and shall have become final and nonappealable or (B) on or after March 1, 2019 (the “Outside Date”), if the Acquisition shall not have been consummated for any reason; provided, however, that if on the Outside Date any of the conditions set forth in Section 7.01(a), 7.01(b), 7.01(c), 7.02(d), 7.02(e) or 7.02(f) shall not have been satisfied or waived but all other conditions set forth in Article VII shall have been satisfied or waived (other than those conditions that by their nature are to be satisfied at or immediately prior to the Closing, but provided that such conditions shall then be capable of being satisfied if the Closing were to take place on such date), then the Outside Date shall be automatically extended to May 30, 2019, and such date shall become the Outside Date for purposes of this Agreement; and provided, further, that the right to terminate this Agreement under this Section 8.01(a)(iv)(B) shall not be available to Seller or Buyer, as applicable, if the failure of any of the conditions set forth in Section 7.01(a), 7.01(b), 7.01(c), 7.02(d), 7.02(e) or 7.02(f) to have been satisfied or the failure of the Acquisition to have been consummated, as applicable, was caused by the failure of, in the case of Seller, Seller or the Company, or, in the case of Buyer, Buyer, to comply with its obligations under Section 6.03.

 

(b)          In the event of termination by Seller or Buyer pursuant to this Section 8.01, written notice thereof shall forthwith be given to the other and the transactions contemplated hereby shall be abandoned, without further action by any party.

Section 8.02        Termination; Effect of Termination.

 

(a)          If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in Section 8.01, this Agreement shall become null and void and of no further force and effect, except for the provisions of Sections 3.16, 5.07, 6.06, 6.07 and this 8.02 and Article X. Notwithstanding the immediately preceding sentence, nothing in this Article VIII shall (i) impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or (ii) release any party from any Liability for any willful and intentional breach by such party of the terms, conditions and other provisions of this Agreement or any Actual Fraud by or on behalf of such party.

(b)         If (i) this Agreement is terminated and the transactions contemplated hereby are abandoned pursuant to Section 8.01(a)(iii)(A), then Seller shall, within two business days after such termination, repay to Buyer the Deposit Amount if the Deposit Amount shall have been previously paid to Seller pursuant to Section 2.03 prior to such termination and (ii) this Agreement is terminated by Seller for any reason other than a termination pursuant to Section 8.01(a)(iii)(A), then Seller shall be entitled to retain the Deposit Amount if the Deposit Amount shall have been previously paid to Seller pursuant to Section 2.03 prior to such termination. For the avoidance of doubt, subject to Section 8.02(a), such repayment or retention of the Deposit Amount contemplated by the immediately foregoing sentence shall not constitute liquidated damages or any party’s sole remedy in the event of a breach by any other party of any of the terms, conditions or other provisions of this Agreement.

 

Section 9.01       Survival of Covenants, Agreements, Representations and Warranties. For purposes of this Article IX (and notwithstanding anything to the contrary contained in this Agreement or otherwise), the representations, warranties, covenants and agreements contained in this Agreement shall be deemed to survive the Closing and to remain in full force and effect, regardless of any investigation made by or on behalf of any party, until the indemnification obligation therefor terminates in accordance with Section 9.05.

 

Section 9.02        Indemnification by Seller.

 

(a)          Subject to Section 9.07, Seller agrees to indemnify and hold harmless each of Buyer and its affiliates (including the Company and its subsidiaries) and the officers, directors, employees, agents and representatives of Buyer and its affiliates (each, a “Buyer Indemnitee”) from and against any and all Losses (other than Losses relating to taxes, for which indemnification provisions are set forth in Section 9.02(b)) asserted against, imposed upon or incurred by such Buyer Indemnitee that arise out of, are related to or in connection with:

 

(i)         any inaccuracy or breach of (A) any Company Fundamental Representation or Seller Fundamental Representation or (B) any representation or warranty of the Company or Seller contained in this Agreement, other than any Company Fundamental Representation or Seller Fundamental Representation (it being agreed that, in the case of clauses (A) and (B), solely for purposes of determining the existence of any such inaccuracy or breach or the amount of any Loss with respect thereto, all such representations and warranties that are qualified as to “materiality” shall be deemed to be not so qualified);

 

(iv)        any Closing Debt or Unpaid Expenses not reflected in the calculations delivered pursuant to Section 2.01(b); and

 

(v)         any and all Proceedings, demands, assessments, Judgments, damages, awards, costs and expenses (including reasonable third-party fees and expenses) incident to any of the foregoing or incurred in connection with the enforcement of the rights of any Buyer Indemnitee with respect to the foregoing clauses (i) through (iv).

 

(b)          Seller agrees to indemnify and hold harmless each Buyer Indemnitee from and against any and all Losses asserted against, imposed upon or incurred by such Buyer Indemnitee that arise out of, are related to or in connection with: (A) all Liability for taxes of the Company or any of its subsidiaries for any Pre-Closing Tax Period; (B) taxes (as a result of any applicable tax Law) of any person other than the Company and its subsidiaries for which the Company or any of its subsidiaries becomes liable (x) as a result of being or having been, at any time before the Closing, part of any consolidated, combined, affiliated aggregate, unitary or similar group, (y) as a transferee or successor for tax purposes before the Closing or (z) as a result of a Contract entered into before the Closing; (C) any inaccuracy or breach of any representation or warranty set forth in Section 3.12 (it being agreed that for solely purposes of determining the existence of any such inaccuracy or breach or the amount of any Loss with respect thereto, such representations and warranties that are qualified as to “materiality” shall be deemed to be not so qualified); (D) the failure by the Company or Seller to perform or comply with any covenant or agreement of the Company or any of its subsidiaries or Seller in this Agreement relating to taxes; and (E) all Liability for taxes allocated to Seller under Section 6.04.

(i)          In the case of a portion of any Straddle Period included in any Pre-Closing Tax Period: (A) taxes imposed on a periodic basis (such as real, personal and intangible property taxes) for any Pre-Closing Tax Period shall be equal to the amount of such taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the total number of days in the Straddle Period; (B) taxes (other than taxes described in clause (A)) for any Pre-Closing Tax Period shall be computed (1) as if such taxable period ended as of the close of business on the Closing Date and (2) in the case of any such taxes attributable to the ownership of any equity interest in a partnership, other “flowthrough” entity or “controlled foreign corporation” (within the meaning of Section 957(a) of the Code or any comparable applicable Law), as if the taxable period of that entity ended as of the close of business on the Closing Date.

 

(c)          The parties acknowledge and agree that the rights of any Buyer Indemnitee to indemnification pursuant to this Section 9.02 with respect to a representation, warranty, covenant or agreement of the Company or Seller are an essential part of the economic terms of, and the allocation of risks contained in, this Agreement, and that any Buyer Indemnitee’s rights to indemnification therefor shall in no way be limited, eliminated or otherwise affected by the fact that such Buyer Indemnitee, or any of its directors, officers, employees or advisors, was at any time prior to the Closing or the execution of this Agreement aware (or should have become aware) that any such representation or warranty was inaccurate or had been breached or that any such covenant or agreement had not been performed or complied with.

Section 9.03        Indemnification by Buyer.

 

(a)          Subject to Section 9.07, Buyer agrees to indemnify and hold harmless Seller and its affiliates and the officers, directors, employees, agents and representatives of Seller and its affiliates (each, a “Seller Indemnitee”) from and against any and all Losses asserted against, imposed upon or incurred by such Seller Indemnitee that arise out of, are related to or in connection with:

 

(i)         any inaccuracy or breach of (A) any Buyer Fundamental Representation or (B) any representation or warranty of Buyer, other than any Buyer Fundamental Representation (it being agreed that, in the cases of clauses (A) and (B), solely for purposes of determining the existence of any such inaccuracy or breach or the amount of any Loss with respect thereto, all such representations and warranties that are qualified as to “materiality” shall be deemed to be not so qualified);

 

(ii)        the failure by Buyer to perform or comply with any covenant or agreement of Buyer in this Agreement; and

 

(iii)       any and all Proceedings, demands, causes of action, assessments, Judgments, damages, awards, costs and expenses (including reasonable third-party fees and expenses) incident to any of the foregoing or incurred in connection with the enforcement of the rights of any Seller Indemnitee with respect to the foregoing clauses (i) or (ii).

 

(b)          The parties acknowledge and agree that the rights of any Seller Indemnitee to indemnification pursuant to this Section 9.03 with respect to a representation, warranty, covenant or agreement of Buyer are an essential part of the economic terms of, and the allocation of risks contained in, this Agreement, and that any Seller Indemnitee’s rights to indemnification therefor shall in no way be limited, eliminated or otherwise affected by the fact that such Seller Indemnitee, or any of its directors, officers, employees or advisors, was at any time prior to the Closing or the execution of this Agreement aware (or should have become aware) that any such representation or warranty was inaccurate or had been breached or that any such covenant or agreement had not been performed or complied with.

 

Section 9.04        Indemnification Procedures.

 

(a)          Procedures for Third-Party Claims.

 

(i)         If a claim by a third-party is made against an Indemnitee arising out of a matter for which the Indemnitee is entitled to be indemnified pursuant to Section 9.02 or 9.03 (a “Third-Party Claim”), the Indemnitee shall promptly notify the indemnifying party in writing of such Third-Party Claim. The failure of the Indemnitee to promptly notify the indemnifying party hereunder shall not relieve the indemnifying party of its obligations hereunder except to the extent that the indemnifying party is actually prejudiced by such failure. 

(ii)        If a Third-Party Claim is made against an Indemnitee, the indemnifying party shall be entitled to participate in the defense thereof and, subject to the limitations contained in this Section 9.04(a), to assume and control the defense thereof of such Third-Party Claim if it so chooses with counsel selected by the indemnifying party and not reasonably objected to by the Indemnitee. Should the indemnifying party so elect to assume and control the defense of a Third-Party Claim, the indemnifying party shall not be liable to the Indemnitee for legal expenses subsequently incurred by the Indemnitee in connection with the defense thereof, unless (A) the employment of such counsel has been specifically authorized in writing by the indemnifying party, (B) the Indemnitee shall have been advised by counsel that the assumption and control of such defense by the indemnifying party would be inappropriate due to an actual or potential conflict of interest or (C) the Indemnitee shall have been advised by counsel that one or more defenses are available to the Indemnitee that are not available to the indemnifying party (provided that the indemnifying party shall not be liable for the fees and expenses of more than one firm of counsel for all Indemnitees, other than one local counsel in each relevant jurisdiction). If the indemnifying party assumes such defense, the Indemnitee shall have the right to participate in the defense thereof and to employ at its own expense counsel not reasonably objected to by the indemnifying party, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense and shall be empowered to make any settlement with respect to such Third-Party Claim, subject to the remaining terms of this Section 9.04(a). The indemnifying party shall be liable for the reasonable fees and expenses of counsel employed by the Indemnitee for any period during which the indemnifying party has not assumed the defense thereof. If the indemnifying party chooses to defend or prosecute any Third-Party Claim, all the parties shall cooperate and shall cause their affiliates to cooperate in the defense or prosecution thereof. Whether or not the indemnifying party assumes the defense of a Third-Party Claim, the Indemnitee shall not admit any liability with respect to, or settle, compromise or discharge, such Third-Party Claim without the indemnifying party’s prior written consent (such consent not to be unreasonably withheld or delayed), except if (x) the Indemnitee is reasonably expected to be liable for Losses in excess of amounts reasonably expected to be received from the indemnifying party or (y) such settlement or compromise is in respect of a proceeding that seeks an injunction or equitable relief against the Indemnitee. If the indemnifying party assumes the defense of a Third-Party Claim, the Indemnitee shall agree to any settlement, compromise or discharge of such Third-Party Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third-Party Claim and which releases the Indemnitee completely in connection with such Third-Party Claim, which does not contain any admission of wrongdoing or misconduct by the Indemnitee and which does not involve any non-monetary relief (other than customary confidentiality terms). Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume and control the defense of any Third-Party Claim (and shall be liable for the reasonable fees and expenses of counsel incurred by the Indemnitee in defending such Third-Party Claim) if (w) the Third-Party Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the Indemnitee that the Indemnitee reasonably determines, after conferring with its outside counsel, cannot be separated from any related claim for money damages, (x) in the event the Third-Party Claim were to be unfavorably decided, the Indemnitee would be reasonably likely to be liable for Losses in excess of amounts reasonably expected to be received from the indemnifying party, (y) the Third-Party Claim relates to the titling, ownership or enforceability of any Company Property or (z) the Third-Party Claim relates to any Governmental Approval or is otherwise brought by a Governmental Entity or relates to any Third-Party Consent. If such equitable relief or other relief portion of the Third-Party Claim can be so separated from that for money damages, the indemnifying party shall be entitled to assume and control the defense of the portion relating to money damages.

(b)          Procedures for Direct Claims.

 

Section 9.05        Termination of Indemnification. Except with respect to Actual Fraud by or on behalf of the Company, Seller or Buyer:

 

(c) The obligations to indemnify and hold harmless any Indemnitee pursuant to Sections 9.02(a)(i)(A), 9.02(a)(ii), 9.02(a)(iii), 9.02(a)(iv) and 9.02(a)(v) (as it relates to the foregoing), 9.03(a)(i)(A), 9.03(a)(ii) and 9.03(a)(iii) (as it relates to the foregoing) shall not terminate.

 

Section 9.06        Exclusive Remedy Against the Indemnifying Party. Except with respect to Actual Fraud by or on behalf of the Company, Seller or Buyer, an Indemnitee’s right to indemnification under this Article IX constitutes such Indemnitee’s sole and exclusive monetary remedy for Losses from the indemnifying party with respect to any inaccuracy or breach of any representation or warranty in this Agreement or any failure to perform or comply with any covenant or agreement in this Agreement.

 

Section 9.07        Limitation of Indemnification.

 

Section 9.08        Treatment of Share Indemnity Escrow Amount.

 

(a)          Promptly following the date that is eighteen (18) months after the Closing Date (the “Release Date”) Buyer shall issue and deliver to Seller a number of Buyer Common Shares (rounded up to the nearest whole number of limited liability company interests or shares, as applicable) in book-entry form equal to (x) the remaining Share Indemnity Escrow Amount as of the Release Date, if any, minus (y) the Share Projected Indemnity Amount as of the Release Date, if any.

 

Section 10.01      Assignment. Neither this Agreement nor any of the rights or obligations of the parties hereunder may be assigned by any of the parties (including by operation of Law or otherwise) without the prior written consent of the other parties, except that Buyer may, without the prior written consent of the Company or Seller, assign any of its rights hereunder (a) to any of its subsidiaries or (b) to any person that, directly or indirectly, acquires Buyer or all or substantially all of its assets, but, in each case, no such assignment shall relieve Buyer of any of its obligations hereunder to the extent that any such assignee does not perform. Subject to the immediately preceding sentence, this Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the parties and their respective successors and permitted assigns. Any attempted assignment in violation of this Section 10.01 shall be void.

Section 10.02      No Third-Party Beneficiaries. Except as provided in Article IX, this Agreement is for the sole benefit of the parties and their respective successors and permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties and such successors and permitted assigns, any legal or equitable rights, remedies, obligations or benefits hereunder.

 

Section 10.03     Notices. All notices, requests, permissions, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) three business days following sending by registered or certified mail, postage prepaid, (b) when sent, if sent by email (with written confirmation of receipt), (c) when delivered, if delivered personally to the intended recipient, and (d) one business day following sending by overnight delivery via a national courier service and, in each case, addressed to a party at the following address for such party:

 

	if to Buyer,
		Florida East Coast Industries
		161 NE 6th Street, Suite 900
		Miami, FL 33136
		Attention:	Patrick Goddard
		Email:	***@***
		Florida East Coast Industries
		117 NE 1st Ave., 11th Floor
		Miami, FL 33132
		Attention:	Kolleen Cobb
		Email:	***@***
	with a copy to:
		Cravath, Swaine & Moore LLP
		Worldwide Plaza
		825 Eighth Avenue
		New York, NY 10019-7475
		Attention:	Damien R. Zoubek, Esq.
			O. Keith Hallam, III, Esq.
		Email:	***@***
			***@***

	if to the Company,
		Marnell Companies
		222 Via Marnell Way
		Las Vegas, Nevada 89119
		Attention:	Anthony A. Marnell II
		Email:	***@***
	with a copy to:
		Holland & Hart LLP
		9555 Hillwood Drive
		2nd Floor
		Las Vegas, NV 89134
		Attention:	Gregory Gilbert, Esq.
		Email:	***@***
	if to Seller,
		Marnell Companies
		222 Via Marnell Way
		Las Vegas, Nevada 89119
		Attention:	Anthony A. Marnell II
		Email:	***@***
	with a copy to:
		Holland & Hart LLP
		9555 Hillwood Drive 2nd Floor
		Las Vegas, NV 89134
		Attention:	Gregory Gilbert, Esq.
		Email:	***@***

or to such other address(es) as shall be furnished in writing by any such party to the other parties in accordance with the provisions of this Section 10.03.

 

Section 10.04      Headings; Certain Definitions; Interpretation.

 

(a)          The descriptive headings of the several Articles and Sections of this Agreement, the Exhibits and Table of Contents to this Agreement and the Company Disclosure Letter are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. All references herein to “Articles”, “Sections” or “Exhibits” shall be deemed to be references to Articles or Sections hereof or Exhibits hereto unless otherwise indicated. 

(b)          For all purposes hereof:

 

“Accounting Methodologies” means GAAP as applied in the Financial Statements, it being understood that any amounts required hereunder to be calculated in accordance with the Accounting Methodologies shall be prepared and calculated in accordance with GAAP notwithstanding any deviations from GAAP in the Financial Statements.

 

“Actual Fraud” means an intentional and knowing misrepresentation of the truth or intentional and knowing concealment of a known fact (committed with actual knowledge) that constitutes common law fraud under the Laws of the State of New York.

 

“affiliate” means, with respect to any person, any other person controlling, controlled by or under common control with such first person.

 

“Bankruptcy Exceptions” means applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting the enforcement of creditors’ rights generally and general principles of equity.

 

“Base Share Indemnity Escrow Amount” means a number of Buyer Common Shares (rounded to the nearest whole number of limited liability company interests or shares, as applicable) equal to the quotient of (a) (x) if all of the Supplemental Approvals have been obtained on or prior to the Closing, $10,000,000, or (y) if any of the Supplemental Approvals have not been obtained on or prior to the Closing, $5,000,000, divided by (b) the Buyer Common Share Value.

 

“Base Share Purchase Price” means a number of Buyer Common Shares (rounded up to the nearest whole number of limited liability company interests or shares, as applicable) equal to the quotient of (a) (i) if all of the Supplemental Approvals have been obtained on or prior to the Closing, $60,000,000, or (ii) if any of the Supplemental Approvals have not been obtained on or prior to the Closing, $30,000,000, divided by (b) the Buyer Common Share Value.

 

“Benefit Plan” means (a) all “employee benefit plans” (within the meaning of Section 3(3) of ERISA) and (b) all other compensation or employee benefit plans, policies, programs, agreements or arrangements (in each case under clauses (a) and (b), whether or not subject to ERISA and whether written or oral), including cash or equity or equity-based, employment, retention, change of control, health, medical, dental, disability, accident, life insurance, vacation, paid time off, severance, retirement, pension, savings, termination and other employee benefit plans, programs, policies, agreements or arrangements that, in each case under clauses (a) and (b), are sponsored, maintained, contributed to or have been entered into or are required to be sponsored, maintained, contributed to or entered into by the Company, its subsidiaries or any of their respective ERISA Affiliates for the benefit of any Participant, or with respect to which the Company or any of its subsidiaries has any current or contingent liability.

 

“Business” means the business of developing and constructing the XpressWest high-speed, electrified passenger rail system along a contiguous corridor between Las Vegas, Nevada and Victorville, California, including all associated stations, track, switches, infrastructure and other improvements and including the ownership and operations of all associated vehicles and equipment, as contemplated by the specifications of such system described in the Company’s Request for Proposals—Implementation Team, dated December 23, 2009 and the Final Environmental Impact Statement and Final Section 4(f) Evaluation for the Proposed DesertXpress High-Speed Passenger Train issued by the U.S. Federal Railroad Administration, Department of Transportation in March 2011, and which includes (a) passenger stations in Las Vegas, Nevada and Victorville, California; (b) support facilities along the route described above, including the (i) Operation, Maintenance and Storage Facility in Victorville, California, (ii) Baker Maintenance of Way in Baker, California and (iii) Wigwam Maintenance and Storage Facility in Las Vegas, Nevada; and (c) the Frias Substation in Las Vegas, Nevada.

“business day” means a day, other than a Saturday or a Sunday, on which commercial banks are not required or authorized to close in each of New York City and Las Vegas, Nevada.

 

“Buyer Common Shares” means the limited liability company interests of Buyer; provided that, unless context requires otherwise, if Buyer consummates a Buyer IPO, all references herein to Buyer Common Shares shall be deemed to be references to Buyer Public Shares.

 

“Buyer Common Share Repurchase Price” means an amount in dollars (rounded to the nearest whole cent) equal to (a) the Buyer Common Share Repurchase Amount, multiplied by (b) the Buyer Common Share Value.

 

“Buyer Common Share Value” means an amount, determined as of the Closing, equal to the quotient of (a) the Buyer Equity Valuation divided by (b) the number of Buyer Common Shares issued and outstanding at the Closing (after giving effect to the issuance of (i) the Base Share Closing Date Payment, (ii) if Buyer makes the Closing Date Share Election, the Optional Share Closing Date Payment and (iii) the Base Share Indemnity Escrow Amount); provided that if Buyer consummates a Buyer IPO at or prior to the Closing, the Buyer Common Share Value shall be the Buyer IPO Price.

 

“Buyer Equity Valuation” means $3,000,000,000.

 

“Buyer Fundamental Representation” means the representations and warranties set forth in Sections 5.01, 5.03, 5.04 and 5.08.

 

“Buyer IPO” means an initial sale by Buyer of common shares to the public in an offering pursuant to an effective registration statement (other than a registration statement on Form S-4 or S-8 or any similar or successor form) filed under the Securities Act, after which such common shares are listed on one or more nationally recognized exchanges or quoted on one or more automated quotation systems, including the New York Stock Exchange or the Nasdaq Global Select Market.

 

“Calculation Time” means 12:01 a.m. (New York City time) on the Closing Date.

 

“Cash Purchase Price” means an amount in cash equal to (a) (i) if all of the Supplemental Approvals have been obtained on or prior to the Closing, $60,000,000, or (ii) if any of the Supplemental Approvals have not been obtained on or prior to the Closing, $30,000,000, minus (b) Closing Debt minus (c) Unpaid Expenses.

 

“Closing Debt” means an amount equal to the aggregate amount of Indebtedness and Guarantees of the Company and its subsidiaries as of the Calculation Time (plus the amount of any Indebtedness or Guarantees incurred between the Calculation Time and the Closing) and calculated in accordance with the Accounting Methodologies.

 

“Commencement of Construction” means the entry into binding construction agreements by the Company or any of its affiliates for the physical construction of all or substantially all of a passenger rail system along a contiguous corridor between Las Vegas, Nevada and Victorville, California (including with respect to any associated stations, track, switches, infrastructure and other improvements along this route), but excluding any design, surveying or other ancillary services in anticipation of such construction.

 

“Company Fundamental Representations” means the representations and warranties set forth in Sections 3.01, 3.02, 3.03, 3.15, 3.16 and 3.17.

 

“Confidentiality Agreement” means the Confidentiality and Non-Disclosure Agreement, dated June 14, 2018, by and between the Company and Brightline Investment Holdings, LLC, an affiliate of Buyer, as amended.

“Consent” means any consent, approval, waiver, license, permit, franchise, exemption, certificate, filing, notice, concession, right, grant, administrative decision or finding, certification, memorandum of understanding, right-of-way, easement, encroachment, authorization or order.

“Contract” means any loan or credit agreement, bond, debenture, note, mortgage, indenture, Guarantee, lease, sublease, purchase order or other contract, commitment, agreement, instrument, arrangement, understanding, obligation, undertaking, permit, concession, franchise or license, whether oral or written.

 

“Deposit Amount” means $2,000,000.

 

“Disposed Share Value” means an amount in dollars equal to the product of (a) the Buyer Common Share Value multiplied by (b) the number of Buyer Common Shares received by Seller pursuant to Section 2.01(c), Section 2.04 (if any) and Section 9.08 that are sold, disposed of or otherwise transferred by Seller from and after the Closing and through and including the IPO Date.

 

“Environmental Reviews” means all assessments, studies and reviews required under Environmental Law for each of the Company and its subsidiaries to own, lease, develop or operate its properties and assets or to carry on the Business, including any environmental impact statement required under the National Environmental Policy Act and the California Environmental Quality Act and any regulations thereunder.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” means, with respect to any Person, any trade or business, whether or not incorporated, that together with such Person is a single employer for purpose of Section 414(b), (c), (m) or (o) of the Code.

 

“Exchange Act” means the United States Securities Exchange Act of 1934.

 

“Exercising Permitted Transferee” means, as of any date of determination, any Permitted Transferee that (a) holds any Buyer Common Shares that were previously transferred to such Permitted Transferee in accordance with Article II of the Stockholder Agreement and (b) is identified by Seller in the Buyer Common Share Repurchase Notice as electing to sell, transfer and deliver to Buyer all or any portion of such Buyer Common Shares in accordance with Section 2.02(c).

 

“GAAP” means generally accepted accounting principles of the United States.

 

“Guarantee” means, with respect to any person, any obligation, contingent or otherwise, of such person guaranteeing any Indebtedness of any other person in any manner, whether directly or indirectly, and including any obligation of such first person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of such other person so as to enable such other person to pay such Indebtedness; provided, however, that endorsements for collection or deposit made in the ordinary course of business consistent with past practice shall not be Guarantees.

 

“Indebtedness” means, with respect to any person, (i) all obligations of such person for borrowed money or with respect to deposits or advances of any kind, (ii) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (iii) all obligations of such person upon which interest charges are customarily paid, other than trade credit incurred in the ordinary course of business consistent with past practice, (iv) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (v) all obligations of such person issued or assumed as the deferred purchase price of property or services, (vi) all indebtedness of others secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, (vii) all Guarantees by such person, (viii) all capital lease obligations of such person, (ix) all obligations of such person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements and (x) all obligations of such person as an account party in respect of letters of credit and bankers’ acceptances.

 

“Indemnitee” means a Buyer Indemnitee or a Seller Indemnitee, as applicable.

“Intellectual Property” means all intellectual property and other similar proprietary rights in any jurisdiction, including such rights in and to: (i) any patent (including all reissues, divisionals, continuations, continuations-in-part, reexaminations, supplemental examinations, inter partes reviews, post-grant oppositions, substitutions and extensions thereof), patent application, patent disclosure or other patent right; (ii) any trademark, service mark, trade name, business name, brand name, slogan, logo, trade dress or other indicia of origin, including any registration or any application for registration therefor, together with all goodwill associated therewith; (iii) any copyright, work of authorship (whether or not copyrightable), design or database rights (including in all website content and software), including any registration or any application for registration therefor; (iv) trade secrets (as defined in the Uniform Trade Secrets Act and under corresponding foreign statutory and common law) and/or nonpublic know-how, including, for example, inventions, discoveries, improvements, concepts, ideas, methods, processes, designs, schematics, drawings, technical data, specifications, research and development information, technology, databases, data collections, business plans and other technical information, and other rights in know-how and confidential or proprietary information and (iv) URLs and domain names (including any top level domain names and global top level domain names) and registrations and applications for registration therefor, and social media identifiers, handles and tags.

 

“IPO Date” means the closing date of a Buyer IPO.

 

“Judgment” means any judgment, order, writ, injunction, legally binding agreement with a Governmental Entity, stipulation or decree.

 

“Losses” of any person shall mean any and all Proceedings, assessments, losses, damages, Liabilities, taxes, costs and expenses asserted against, imposed upon or incurred by such person, including interest, penalties, attorneys’ fees and expenses, third-party expert and consultant fees and expenses, fines, Judgments, awards and financial responsibility for investigation, removal and cleanup costs, natural resource damages, and government oversight costs, in each case on a pre-tax basis.

“Manager” has the meaning assigned to such term in the Operating Agreement.

 

“Maximum Buyer Common Share Repurchase Amount” means a number of Buyer Common Shares (to the extent such Buyer Common Shares are owned by Seller or any Exercising Permitted Transferee as of the Buyer Common Share Repurchase Closing Date) equal to (a) the Optional Share Closing Date Payment (to the extent previously issued and delivered to Seller in accordance with Section 2.01(c)), plus (b) the Optional Supplemental Share Purchase Price (to the extent previously issued and delivered to Seller in accordance with Section 2.04), minus (c) the number of Buyer Common Shares that are sold, disposed of or otherwise transferred by Seller (other than to a Permitted Transferee in accordance with Article II of the Stockholder Agreement) from and after the Closing and through and including the IPO Date (but only to the extent such number of Buyer Common Shares referred to in this clause (c) exceeds the sum of (i) the Base Share Closing Date Payment, (ii) if any Buyer Common Shares have previously been issued pursuant to Section 2.04(b), the Supplemental Share Closing Date Payment, and (iii) the number of Buyer Common Shares received by Seller pursuant to Section 9.08).

“Member” has the meaning assigned to such term in the Operating Agreement.

 

“Membership Interests” has the meaning assigned to such term in the Operating Agreement.

 

“Operating Agreement” means the Fourth Amended and Restated Operating Agreement of the Company, dated as of October 13, 2017.

 

“Optional Share Closing Date Payment” means a number of Buyer Common Shares (rounded up to the nearest whole number of limited liability interests) equal to the quotient of (a) (i) (x) if all of the Supplemental Approvals have been obtained on or prior to the Closing, $60,000,000, or (y) if any of the Supplemental Approvals have not been obtained on or prior to the Closing, $30,000,000, minus (ii) the Deposit Amount (if previously paid pursuant to Section 2.03), minus (iii) Closing Debt, minus (iv) Unpaid Expenses, divided by (b) the Buyer Common Share Value.

 

“Organizational Documents” means any charter, certificate, articles or deed of incorporation, articles of organization, certificate of formation, articles of association, bylaws, operating agreement or similar formation or governing documents and instruments, including, for the avoidance of doubt, in the case of the Company, the Company’s articles of organization and the Operating Agreement.

 

“Permitted Holder” means Fortress Investment Group LLC and any affiliate thereof, and investment funds or partnerships managed by any of the foregoing.

 

“Permitted Liens” means (a) mechanics’, materialmen’s, carriers’, repairers’ and other similar Liens arising or incurred in the ordinary course of business consistent with past practice for amounts that are not yet due or are being contested in good faith by appropriate Proceedings, and for which adequate reserves have been made in accordance with GAAP, (b) Liens for taxes, assessments or other governmental charges not yet due and payable as of the Closing Date or which are being contested in good faith by appropriate Proceedings, and for which adequate reserves have been made in accordance with GAAP, (c) encumbrances, restrictions, easements, covenants, conditions, rights of way and similar matters of record affecting title to real property that, individually or in the aggregate, would not reasonably be expected to impair the conduct of the Business and (d) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over such real property and which are not violated by the conduct of the Business.

 “Permitted Transferee” has the meaning assigned to such term in the Stockholder Agreement.

 

“Pre-Closing Tax Returns” means any tax returns of the Company and each of its subsidiaries for any period ending on or before the Closing Date or any Straddle Period.

 

“Proceeding” means any action, complaint, threat, order, directive, citation, notice, suit, charge, hearing, proceeding, claim or counterclaim or legal, administrative, arbitration or other alternative dispute resolution proceeding or investigation.

 

“Purchase Price” means, subject to adjustment pursuant to Section 2.04, an amount in dollars equal to (a) the Cash Purchase Price plus (b) (x) if all of the Supplemental Approvals have been obtained on or prior to the Closing, $60,000,000, or (y) if any of the Supplemental Approvals have not been obtained on or prior to the Closing, $30,000,000.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Seller Fundamental Representations” means the representations and warranties set forth in Sections 4.01, 4.02, 4.03 and 4.04.

 

“Seller’s Aggregate IPO Holding” means an amount in dollars equal to the product of (x) the Buyer IPO Price multiplied by (y) the number of Buyer Public Shares held by Seller upon the closing of (and after giving effect to) a Buyer IPO (it being understood that, for purposes of this definition, (i) any Buyer Common Shares issued as part of the Optional Share Closing Date Payment or the Optional Supplemental Share Purchase Price and (ii) any Buyer Common Shares that continue to be included in the Share Indemnity Escrow Amount shall, in each case, not be considered held by Seller).

 

“Share Consideration Target Value” means, as of any date of determination, an amount in dollars equal to (a) (i) the Base Share Closing Date Payment (plus, if any Buyer Common Shares have previously been issued pursuant to Section 2.04(b), the Supplemental Share Closing Date Payment), multiplied by (ii) the Buyer Common Share Value, plus (b) the Share Indemnity Release Value, minus (c) the Disposed Share Value. 

“Share Indemnity Escrow Amount” means the Base Share Indemnity Escrow Amount (plus, from and after the Supplemental Approval Closing Date (if the Supplemental Approval Closing Date occurs prior to the Release Date), the Supplemental Share Indemnity Escrow Amount). The Share Indemnity Escrow Amount is subject to adjustment pursuant to Sections 2.02(b), 2.05, 9.08 and 9.09.

 

“Share Indemnity Release Value” means an amount in dollars equal to the product of (a) the Buyer Common Share Value multiplied by (b) the number of Buyer Common Shares, if any, that have been released to Seller pursuant to Section 9.08 prior to the IPO Date.

 

“Share Projected Indemnity Amount” means, as of any date, the number of Buyer Common Shares (rounded to the nearest whole number of limited liability company interests or shares, as applicable) equal to the quotient of (i) the maximum aggregate amount that is reasonably determined by Buyer in good faith to be necessary to satisfy all Claims that have been timely asserted in accordance with this Agreement, but not finally resolved by that date, including an amount with respect to fees and expenses reasonably projected by Buyer in good faith to be the maximum aggregate amount necessary to cover costs and expenses related to the enforcement of such Claims divided by (ii) the Buyer Common Share Value.

 

“Share Purchase Price True-Up” means a number of Buyer Public Shares (rounded to the nearest whole number of shares) equal to

 

(A + B-C-D)÷ E

where “A” is an amount in dollars equal to the product of (i) the Base Share Closing Date Payment (plus, if any Buyer Common Shares have previously been issued pursuant to Section 2.04(b), the Supplemental Share Closing Date Payment), multiplied by (ii) the Buyer Common Share Value; “B” is the Share Indemnity Release Value; “C” is the Disposed Share Value; “D” is Seller’s Aggregate IPO Holding; and “E” is the Buyer IPO Price.

 

“STB” means the Surface Transportation Board.

 

“Supplemental Approvals” means each of the Consents set forth under Category 2 of Section 7.02(f) of the Company Disclosure Letter.

“Supplemental Approval Interest Rate” means a rate of four percent (4.0%) per annum (provided that under no circumstances will such rate be less than the short-term Applicable Federal Rate, as defined in Section 1274(d) of the Code).

“Supplemental Approvals Outside Date” means the date that is ten years after the Closing Date.

 

“Supplemental Cash Purchase Price” means the sum of (a) $30,000,000 and (b) interest accrued on such amount from the Closing Date to but excluding the Supplemental Approval Closing Date, at the Supplemental Approval Interest Rate.

“Supplemental Share Indemnity Escrow Amount” means a number of Buyer Common Shares (rounded to the nearest whole number of limited liability company interests or shares, as applicable) equal to the quotient of (a) $5,000,000 divided by (b) the Buyer Common Share Value.

 

“Supplemental Share Purchase Price” means a number of Buyer Common Shares (rounded up to the nearest whole number of limited liability company interests or shares, as applicable) equal to the quotient of (a) the sum of (i) $30,000,000 and (ii) interest accrued on such amount from the Closing Date to but excluding the Supplemental Approval Closing Date, at the Supplemental Approval Interest Rate, divided by (b) the Buyer Common Share Value.

 

“Unpaid Expenses” means, to the extent not paid and discharged by the Company and/or Seller prior to or at the Closing, an amount equal to (i) all fees, costs and expenses (including fees, costs and expenses of legal counsel, investment bankers, brokers or other representatives, advisors and consultants; appraisal fees, costs and expenses; and travel, lodging, entertainment and associated expenses) incurred by or on behalf of the Company or any of its subsidiaries on or prior to Closing in connection with this Agreement, the Acquisition and the other transactions contemplated hereby, including all fees, costs and expenses of Holland & Hart LLP plus (ii) all accrued management fees and any other fees, expenses or other amounts payable to Seller, the Manager, any Member or any of other affiliate of Seller in connection with this Agreement and the transactions contemplated hereby (including any amounts payable upon termination of any Contracts, agreements or arrangements with any of Seller or any of their affiliates in connection with this Agreement or the transactions contemplated hereby).

 

(c)       For all purposes hereof, the terms “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation”. The words “hereof”, “hereto”, “hereby”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “will” shall be construed to have the same meaning as the word “shall”. The word “or” is not exclusive. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The phrase “date hereof” or “date of this Agreement” shall be deemed to refer to September 17, 2018. Whenever the words “made available to Buyer” or similar words are used in this Agreement with respect to any documents or other information, such words shall mean that such documents or information were available to Buyer at least one business day prior to the date of this Agreement in the electronic dataroom maintained on behalf of the Company (as evidenced by a DVD or CD-ROMs imprinted with all such documents or information and delivered by the Company to Buyer promptly following the date hereof). The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as the feminine and neuter genders of such terms. Any applicable Law defined or referred to herein means such applicable Law as from time to time amended, modified or supplemented. Any reference to any statute herein shall also be deemed to refer to all rules and regulations promulgated thereunder. References to a person are also to its successors and permitted assigns.

 

Section 10.05     Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered, in person or by facsimile, or by electronic image scan, receipt acknowledged, to the other parties.

 

Section 10.06     Integrated Contract. This Agreement, including the Company Disclosure Letter and Buyer Disclosure Letter, any written amendments to the foregoing satisfying the requirements of Section 10.13 hereof and the Confidentiality Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede any previous agreements and understandings between the parties with respect to such matters. Any term used in the Company Disclosure Letter or Buyer Disclosure Letter but not otherwise defined therein shall be defined as set forth in this Agreement.

 

Section 10.07     Severability. The invalidity, illegality or unenforceability of any portion of this Agreement shall not affect the validity, force or effect of the remaining portions of this Agreement. If it is ever held that any restriction hereunder is too broad to permit enforcement of such restriction to its fullest extent, each party agrees that a court of competent jurisdiction may enforce such restriction to the maximum extent permitted by Law, and each party hereby consents and agrees that such scope may be judicially modified accordingly in any Proceeding brought to enforce such restriction.

 

Section 10.08     Governing Law. This Agreement and disputes relating hereto (whether for breach of contract, tortious conduct or otherwise) shall be governed and construed in accordance with the Laws of the State of New York, without reference to its conflicts of law principles.

Section 10.09     Jurisdiction. Each party irrevocably agrees that any Proceeding against it arising out of or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto (whether for breach of contract, tortious conduct or otherwise) shall be brought exclusively in (a) any New York State Court sitting in the County of New York or (b) the United States District Court for the Southern District of New York, and irrevocably accepts and submits to the exclusive jurisdiction and venue of the aforesaid courts in personam with respect to any such Proceeding. Each of Buyer, Seller and the Company irrevocably and unconditionally waives any objection to the laying of venue of any Proceeding arising out of or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto (whether for breach of contract, tortious conduct or otherwise) in (x) any New York State Court sitting in the County of New York or (y) the United States District Court for the Southern District of New York and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Proceeding brought in any such court has been brought in an inconvenient forum.

 

Section 10.10     Service of Process. Each party agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth in Section 10.03 shall be effective service of process for any Proceeding in New York with respect to any matters for which it has submitted to jurisdiction pursuant to Section 10.09.

 

Section 10.11     Waiver of Jury Trial. Each party hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any Proceeding arising out of or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto (whether for breach of contract, tortious conduct or otherwise). Each party (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of any Proceeding, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 10.11.

 

Section 10.12     Enforcement. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at Law 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 seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the provisions of this Agreement in (i) any New York State Court sitting in the County of New York or (ii) the United States District Court for the Southern District of New York, without any requirement to post a bond, this being in addition to any other remedy to which the parties are entitled at Law or in equity.

Section 10.15     Transfer of Privilege; Conflict Waiver.

 

 

	BRIGHTLINE HOLDINGS LLC
		By:	/s/ Kolleen Cobb
			Name:	Kolleen Cobb
			Title:	Vice President
	DESERTXPRESS ENTERPRISES, LLC
		By:	BENNY’S HOLDCO, LLC
		Its:	Manager
		By:	/s/ Anthony A. Marnell II
			Name:	Anthony A. Marnell II
			Title:	Manager
	BENNY’S HOLDCO, LLC
		By:	DX, LLC
		Its:	Manager
		By:	/s/ Anthony A. Marnell II
			Name:	Anthony A. Marnell II
			Title:	Manager