<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
-------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File Number 2-89530
-------
FLORIDA EAST COAST INDUSTRIES, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
FLORIDA 59-2349968
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
ONE MALAGA STREET, ST. AUGUSTINE, FL 32084
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (904) 829-3421
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
CLASS OUTSTANDING AT JUNE 30, 1999
----- ----------------------------
Common Stock-no par value 36,353,160 shares
Collateral Trust 5% Bonds $11,956,100
<PAGE> 2
FLORIDA EAST COAST INDUSTRIES, INC.
PART I
FINANCIAL INFORMATION
<TABLE>
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
INDEX
PAGE NUMBERS
------------
Consolidated Condensed Balance Sheets -
June 30, 1999 and December 31, 1998 2
Consolidated Condensed Statement of Income -
Three months and six months ending June 30, 1999 and 1998 3
Consolidated Condensed Statements of Cash Flows -
Six months ending June 30, 1999 and 1998 4
Notes to Consolidated Condensed Financial Statements 5-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of Second Quarter 1999 versus Second Quarter 1998
and Six Months 1999 versus Six Months 1998 9-20
Changes in Financial Condition, Liquidity and Capital Resources 20-21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 22
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 23
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 23
ITEM 5. OTHER INFORMATION 24
ITEM 6. EXHIBITS AND REPORTS 24-25
</TABLE>
1
<PAGE> 3
FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
--------- ---------
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 57,180 $ 14,450
Short-term investments 46,132 36,471
Accounts receivable (net) 27,055 29,282
Materials and supplies 6,677 10,131
Other current assets 10,868 10,482
Income taxes 4,189 (1,446)
--------- ---------
Total current assets 152,101 99,370
OTHER INVESTMENTS 12,457 34,502
PROPERTIES, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION 721,994 720,891
OTHER ASSETS AND DEFERRED CHARGES 8,527 11,546
--------- ---------
TOTAL ASSETS $ 895,079 $ 866,309
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 24,886 $ 26,559
Accrued property taxes 6,471 308
Accrued casualty and other reserves 4,827 4,992
Other accrued liabilities 6,263 2,998
--------- ---------
Total current liabilities 42,447 34,857
DEFERRED INCOME TAXES 136,762 133,463
ACCRUED CASUALTY AND OTHER LONG-TERM LIABILITIES 11,566 11,158
SHAREHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares authorized;
37,152,244 shares issued and 36,353,160 shares outstanding
at June 30, 1999 and 1998, respectively 62,735 62,000
Retained earnings 652,623 634,126
Accumulated other comprehensive income-unrealized gain on securities (net) 13 1,217
Restricted stock deferred compensation (1,712) (1,157)
Treasury stock at cost (799,084 shares) (9,355) (9,355)
--------- ---------
Total shareholders' equity 704,304 686,831
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 895,079 $ 866,309
========= =========
</TABLE>
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.*
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
------------------------------- -------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating revenues $ 62,006 $ 62,073 $ 172,555 $ 118,829
Operating expenses (50,106) (46,664) (135,632) (93,167)
Special charges (7,487) 0 (7,487) 0
------------------------------- -------------------------------
Operating profit $ 4,413 $ 15,409 $ 29,436 $ 25,662
Other income (net, including special charges) 983 2,985 2,755 6,003
------------------------------- -------------------------------
Income before taxes 5,396 18,394 32,191 31,665
Provision for income taxes:
Current (1,478) 6,395 7,820 11,122
Deferred 3,315 346 4,055 604
------------------------------- -------------------------------
Total income taxes 1,837 6,741 11,875 11,726
------------------------------- -------------------------------
Net income $ 3,559 $ 11,653 $ 20,316 $ 19,939
------------------------------- -------------------------------
Per share data:
Basic & diluted net income per share $ 0.10 $ 0.32 $ 0.56 $ 0.55
=============================== ===============================
Average shares outstanding, basic 36,286,360 36,286,360 36,286,360 36,286,360
Average shares outstanding, diluted 36,468,483 36,286,360 36,416,117 36,286,360
</TABLE>
*This statement excludes the intersegment revenues shown on Note 8.
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,316 $ 19,939
Adjustments to reconcile net income to cash
generated by operating activities:
Depreciation and amortization 14,263 13,345
Gain on sales and other disposition of properties (10,471) (476)
Purchase of trading investments (net) (11,709) 0
Realized gains on investments (949) (2,266)
Deferred taxes 4,055 604
Stock compensation plans 180 0
Non-monetary fiber optic transaction 0 (3,011)
Changes in operating assets and liabilities:
Accounts receivable 2,227 2,516
Other current assets 3,068 935
Other assets and deferred charges 3,019 1,486
Accounts payable (1,673) 848
Income taxes payable (5,635) 3,228
Accrued property taxes 6,163 5,644
Other current liabilities 3,100 (743)
Reserves and other long-term liabilities 408 (665)
-------- --------
Net cash generated by operating activities 26,362 41,384
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of properties (52,407) (40,738)
Purchases of investments:
Available-for-sale (33,977) (20,527)
Maturities and redemption of investments:
Available-for-sale 57,061 36,347
Proceeds from disposition of assets 47,510 713
-------- --------
Net cash provided by (used in) investing activities 18,187 (24,205)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (1,819) (1,812)
-------- --------
Net cash used in financing activities $ (1,819) $ (1,812)
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 42,730 $ 15,367
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 14,450 30,845
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 57,180 $ 46,212
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 13,585 $ 7,297
======== ========
Cash paid for interest $ 140 $ 143
======== ========
</TABLE>
(See accompanying notes)
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FLORIDA EAST COAST INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. General
In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements reflect all accruals and adjustments considered necessary
to present fairly the financial position as of June 30, 1999 and December 31,
1998, and the results of operations and cash flows for the six-month periods
ended June 30, 1999 and June 30, 1998. Results for interim periods may not be
necessarily indicative of the results to be expected for the year. These interim
financial statements should be read in conjunction with the Company's 1998
Annual Report on Form 10-K for the year ended December 31, 1998 filed with the
Securities and Exchange Commission.
NOTE 2. Special Charges
In the second quarter, the Company incurred special charges of approximately
$8.2 million related to a work force reduction, including curtailment of a
supplemental executive retirement plan first adopted in late 1998, and inventory
reductions arising out of a modification to the Company's inventory management
practices. Exclusive of the special charges, the Company reported net income of
$8.6 million ($.24 per share) for the second quarter and net income of $25.5
million for the six months ended June 30, 1999 ($.70 per share).
NOTE 3. Commitments and Contingencies
The Company is a defendant in a number of lawsuits arising in the ordinary
course of business, including bodily injury claims and contract claims. While
the Company cannot predict the outcome of such litigation and other proceedings,
management does not expect these matters to have a materially adverse effect on
the consolidated financial condition, cash flows or results of operations of the
Company. The Company carries comprehensive liability insurance for such claims,
but maintains a significant self-insured retention amount consistent with the
transportation industry's standards.
The Company is currently a party to, or involved in proceedings with the United
States Environmental Protection Agency (USEPA) directed at the cleanup of four
sites in Florida. The Company's involvement in three of these sites is
attributed to the sale or delivery of used oil to various parties which
delivered the oil to sites that now require remediation, or which have been
remediated under the direction of USEPA. Used oil is not a regulated hazardous
waste. The Company has accrued its estimated share of the total cleanup costs
for these sites and, together with other potentially responsible parties, is
engaging in discussions with USEPA to resolve these matters. In addition, the
Company has been notified by USEPA that the agency intends to seek recovery of
certain costs to remediate a portion of a site, which the Company had leased to
an adjoining landowner who is alleged to have caused contamination of both the
Company's property and the adjacent site. The Company is also engaged in
assessment and remediation of
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three sites owned by the Company pursuant to agreement with the Florida
Department of Environmental Protection.
It is difficult to quantify future environmental costs because many issues
relate to actions by third parties or changes in environmental regulation.
However, based on information presently available, management believes that the
ultimate disposition of currently known matters will not have a material effect
on the financial position, liquidity or results of operations of the Company.
Gran Central Corporation, a wholly-owned subsidiary of the Company, entered into
an agreement with the State of Florida Department of Transportation to furnish
all land necessary for the construction of the NW 106th Street Interchange on
the Homestead Extension of the Florida Turnpike, and to subsidize any annual
operating deficit of the Department for 15 years related to the interchange
which is not covered by toll revenues. The maximum assessment amount over the 15
years would be approximately $9.3 million with no annual assessment to exceed
$1.1 million. No assessment or related accruals to this agreement have been made
to date.
NOTE 4. Comprehensive Income
On January 1, 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes standards for reporting and presentation of comprehensive income and
its components in a full set of financial statements. Comprehensive income for
the six months ended June 30, 1999 and 1998 was $19.1 and $20.1 million,
respectively. Comprehensive income for the three months ending June 30, 1999 and
1998 was approximately $2.9 and $11.1 million, respectively. These amounts
differ from net income due to changes in the net unrealized holding gains
generated from available-for-sale securities.
NOTE 5. Earnings Per Share
The following weighted-average number of shares of common stock were used in the
calculations for earnings per share. The diluted weighted-average number of
shares includes the net shares that would be issued upon the exercise of stock
options and restricted shares (using the treasury stock method).
1999 1998
---- ----
BASIC:
Quarter 36,286,360 36,286,360
YTD 36,286,360 36,286,360
DILUTED:
Quarter 36,468,483 36,286,360
YTD 36,416,117 36,286,360
NOTE 6. Reclassification
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
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NOTE 7. Segment Information
During 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosure about Segments of an Enterprise and Related Information" ("SFAS
131"). SFAS 131 provides guidance for reporting information about operating and
geographic segments based on a management approach.
Under the provisions of SFAS 131, the Company determined it has three reportable
operating segments all within the same geographic area. These are the
transportation rail segment, transportation trucking segment and realty segment.
The transportation rail segment provides rail freight transportation along the
East Coast of Florida between Jacksonville and Miami. The
transportation-trucking segment provides truckload transportation for a wide
range of general commodities throughout the Midwest and Southeastern United
States. The realty segment is engaged in the development, leasing, management,
operation and sale of its commercial and industrial property.
The Company evaluates the transportation segments' performance based on
operating profit or loss from operations before other income and income taxes.
Operating profit is operating revenue less directly traceable costs and
expenses. The Company evaluates the realty segment based on operating profit and
EBITDA. EBITDA is defined as earnings before interest expense, income taxes,
depreciation and amortization. EBITDA excludes other income. EBITDA, as a
measure of operating cash flow, is considered a key financial performance
indicator in the realty industry.
Intersegment revenues for transactions between the transportation rail and
transportation trucking segments are based on quoted rates, which are believed
to approximate the cost that would have been incurred had similar services been
obtained from an unrelated third party.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies.
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INFORMATION BY INDUSTRY SEGMENT (IN THOUSANDS):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
------------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating Revenues
Transportation-Rail $ 41,309 $ 39,877 $ 80,075 $ 78,798
Transportation-Trucking 7,417 7,484 14,557 14,396
Transportation-Rail-Fiber Leases 1,182 3,981 2,204 4,955
Realty:
Realty-Rents & Other 12,098 10,731 25,314 20,411
Realty Sales (gross) 0 0 50,405 269
--------- --------- --------- ---------
Total Revenues (consolidated) $ 62,006 $ 62,073 $ 172,555 $ 118,829
Intersegment:
Transportation-Rail $ 1,071 $ 1,205 $ 2,227 $ 2,257
Realty 72 65 211 21
--------- --------- --------- ---------
Total Segment Operating Revenues $ 63,149 $ 63,343 $ 174,993 $ 121,107
========= ========= ========= =========
OPERATING PROFIT (LOSS) - SEGMENT & CONSOLIDATED
(INCLUSIVE OF SPECIAL CHARGES)
Transportation-Rail $ 4,532 $ 12,996 $ 14,826 $ 21,860
Transportation-Trucking 222 63 124 (100)
Realty 3,341 2,864 19,078 4,988
--------- --------- --------- ---------
Segment Operating Profit 8,095 15,923 34,028 26,748
Corporate General & Administrative Expenses (3,682) (514) (4,592) (1,086)
Other Income (net) 983 2,985 2,755 6,003
--------- --------- --------- ---------
INCOME BEFORE TAXES $ 5,396 $ 18,394 $ 32,191 $ 31,665
========= ========= ========= =========
NET INCOME $ 3,559 $ 11,653 $ 20,316 $ 19,939
========= ========= ========= =========
EBITDA-REALTY $ 6,869 $ 5,996 $ 25,903 $ 11,061
========= ========= ========= =========
</TABLE>
(Transportion-Rail segment operating profit includes profit from fiber leases.)
NOTE 8. Dividends
On May 19, 1999, the Company declared a dividend of $.025 (2 1/2 cents) per
share on its outstanding common stock, payable June 18, 1999 to shareholders of
record June 4, 1999.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FORWARD-LOOKING STATEMENTS
This "Management's Discussion and Analysis" contains forward-looking statements
within the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended. These forward-looking statements represent the Company's present
expectations or beliefs concerning future events. The Company cautions that such
statements are necessarily based on certain assumptions which are subject to
risks and uncertainties, including, but not limited to, changes in general
economic conditions and changing competition which could cause actual results to
differ materially from those indicated. Important factors that could cause such
differences include, but are not limited to, contractual relationships, industry
competition, regulatory developments, natural events, such as weather
conditions, floods and earthquakes, forest fires, the effects of adverse general
economic conditions, changes in the real estate markets and interest rates, fuel
prices, changes in telecommunications technology and the ultimate outcome of
environmental investigations or proceedings and other types of claims and
litigation.
COMPANY OVERVIEW
In the second quarter 1999, the Company recorded special charges of
approximately $8.2 million primarily related to work force reduction in the
Company's railway subsidiary, including curtailment of a supplemental executive
retirement plan adopted in late 1998, and inventory reductions implemented as a
result of improvements in the Company's inventory management practices. Net
income, including special charges, amounted to approximately $3.6 million ($.10
per share) for the second quarter compared to net income of $11.7 million ($.32
per share) for the same period 1998. Net income for the six-months' period
ending June 30, 1999, including special charges, was $20.3 million ($.56 per
share) compared to $19.9 million ($.55 per share) for six months ending June 30,
1998.
Excluding special charges, net income for the quarter ended June 30, 1999
amounted to approximately $8.6 million ($.24 per diluted share) compared to
approximately $11.7 million ($.32 per share) for the same period in 1998. This
decrease in net income was primarily attributable to a non-recurring,
non-monetary gain of approximately $3.0 million recorded in the second quarter
1998 related to an exchange involving ownership of dark fiber optic
communication components.
Excluding special charges, net income for the six months ending June 30, 1999
amounted to approximately $25.5 million ($.70 per diluted share) compared to
approximately $19.9 million ($.55 per share) for the six months ended June 30,
1998. This increase of approximately $5.6 million for the six months 1999 versus
1998 was primarily represented by sales of realty properties in the first
quarter 1999, which resulted in a pre-tax profit of approximately $11.3. In the
six-months' period of 1999, operating revenues rose approximately $53.8 million,
inclusive
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of realty sales with gross proceeds of $50.4 million, while operating expenses
increased approximately $50.0 million, including costs of realty sales of $39.1
million.
COMPARISON OF SECOND QUARTER 1999 VERSUS SECOND QUARTER 1998 AND SIX MONTHS 1999
VERSUS SIX MONTHS 1998
SUMMARY OF OPERATING REVENUES*
SECOND QUARTER 1999 VS. SECOND QUARTER 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SECOND QUARTER ENDING 6/30
TRANSPORTATION OPERATING REVENUES 1999 1998 % CHANGE
- --------------------------------- ------- ------- --------
<S> <C> <C> <C>
Rail Revenues $42,379 $41,082 3.16
Trucking Revenues 7,417 7,484 (0.90)
Rail Revenues-Fiber Leases 1,182 3,981 (70.31)
------- ------- -----
Total Transportation Revenues $50,979 $52,547 (2.98)
REALTY OPERATING REVENUES
Realty Rental Revenues $12,170 $10,796 12.73
Realty Sales-Gross 0 0 0
------- ------- -----
Total Realty Revenues $12,170 $10,796 12.73
</TABLE>
SUMMARY OF OPERATING REVENUES
SIX MONTHS 1999 VS. SIX MONTHS 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDING 6/30
TRANSPORTATION OPERATING REVENUES 1999 1998 % CHANGE
- --------------------------------- ------- ------- --------
<S> <C> <C> <C>
Rail Revenues $82,302 $81,055 1.54
Trucking Revenues 14,557 14,396 1.12
Rail Revenues-Fiber Leases 2,204 4,955 (55.52)
------- ------- -----
Total Transportation Revenues $96,859 $95,451 1.34
REALTY OPERATING REVENUES
Realty Rental Revenues $25,525 $20,432 24.93
Realty Sales-Gross 50,405 269 --
------- ------- -----
Total Realty Revenues $75,930 $20,701 --
</TABLE>
*Revenue figures include intercompany transactions.
REVENUES
Total operating revenues remained approximately the same at $62.0 million for
the second
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quarter 1999 as compared to second quarter 1998. When comparing six months 1999
with six months 1998, total operating revenues increased approximately $53.7
million primarily attributed to a first quarter 1999 sale of realty properties
in the amount of $50.4 million
TRANSPORTATION-RAIL
SECOND QUARTER
Revenues from the rail subsidiary increased to $42.4 million from $41.1 million,
approximately $1.3 million, or 3.0%, when comparing second quarter 1999 with
second quarter 1998. A robust Florida economy continues to support increases in
rail carload traffic offset by decreases in intermodal traffic. The Company's
rail subsidiary, Florida East Coast Railway (FECR), handled 48,700 carload
shipments in the second quarter 1999, an increase of 4,548 carloads, or 10.3%
over the same period last year. FECR handled approximately 76,000 intermodal
units in the second quarter 1999 versus approximately 87,900 units in the second
quarter 1998, a decrease of 11,900, or 13.5%. Carload traffic increases were
comprised of increases in aggregate of 6.0%, automotive of 10.3%, and all other
carload traffic of 23.6%. The reduction in intermodal traffic included a 21.5%
decrease in containers, and a 9.6% decrease in trailers handled. The decline is
attributed, in part, to service redesign by a connecting carrier, along with
offshore competition for intermodal shipments destined to South America now
being vessel transshipped at Freeport, Bahamas, rather than through the United
States via rail.
SIX MONTHS
The rail revenues increased to $82.3 million from $81.0 million, an increase of
$1.3 million, or 1.6%. Carload shipments increased to 89,522 from 80,282, an
increase of 9,240 carloads, or 11.5%. Increases in carload shipments were
comprised of 9.5% in aggregate, 8.1% in automotive, and 19.5% in all other
carload traffic. The increases in carload shipments were offset by decreases in
intermodal shipments of 22,690 units, or 13.6%. These decreases in intermodal
shipments were comprised of decreases in container shipments of 10,143 units, or
19.5%, and a decrease in trailer shipments of 12,547 units, or 10.9%.
RAIL REVENUES-FIBER LEASES
Revenue from transportation-rail-fiber leases, comprised generally of annual
payments from third party telecommunications companies for licenses or leases
for fiber optic cables on the Railway's right-of-way, decreased approximately
$2.8 million to $1.2 million compared to $4.0 million in the same period last
year, because the second quarter of 1998 included recognition of a non-monetary
gain of approximately $3.0 million on an exchange involving fiber optic cables.
TRANSPORTATION-TRUCKING
Operating revenues generated by the Company's trucking subsidiary remained at
approximately $7.4 million for the second quarter 1999 compared with the same
period 1998. Operating revenues rose to $14.6 million from $14.4 million for the
six months ended 1999 compared to the
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same period 1998.
REALTY
SECOND QUARTER
Realty revenues increased to approximately $12.2 million for the second quarter
1999 from approximately $10.8 million for the same period last year, an increase
of $1.4 million, or 13%. Of the $1.4 million increase, approximately $1.3
million represented increases in rental revenues generated by the Company's real
estate subsidiary, Gran Central Corporation (GCC).
SIX MONTHS
For the six months ending June 30, 1999, realty rental revenues increased to
approximately $25.5 million from approximately $20.4 million, an increase of
$5.1 million, or 24.9%. Of the $4.9 million increase, approximately $4.8 million
represented increases in revenues generated by GCC. Gross revenues from realty
sales for the six months ended June 30, 1999 rose to $50.4 million from $.3
million for the same period in 1998.
PORTFOLIO
At the end of the second quarter, GCC held 54 finished buildings with 5.3
million square feet and an 83% occupancy rate. "Same store" occupancy (comprised
of 50 buildings with 4.7 million square feet held for a year or more) increased
to 90% at June 30, 1999 compared with 83% at June 30, 1998. Four new operating
properties with 590,000 square feet were placed into service in the 12 months
ended June 30, 1999 (two of these located in Orlando and Miami were completed
near the conclusion of the second quarter and were 43% occupied at the end of
the quarter). At the conclusion of the second quarter 1999, GCC had nine
buildings with a total of 1.2 million square feet in various stages of
development (999,000 square feet under construction; 230,000 square feet in
predevelopment).
RENTAL ACTIVITY
GCC's increase in rental revenues in the second quarter 1999 of $1.4 million was
comprised of increases of $1.8 million in "same store" performance generated by
increased rents and improved occupancy levels; $.4 million in "new store"
operations, and $.3 million in recoverable revenues offset by the decrease of
$1.2 million in revenues previously generated by the two industrial parks GCC
sold in the first quarter 1999.
Realty rental revenues increased to $25.3 million for the first six months of
1999 from $20.4 million for six months of 1998, an increase of $4.9 million, or
24.9%. Of this increase, approximately $4.6 million was derived from GCC
operations. Of the $4.6 million increase, approximately $4.3 million was derived
from the "same store" operations, and $.8 million derived from "new store"
operations offset by adjustments in recoverable revenues.
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Rental revenues generated by FECR increased $.1 million in the second quarter
1999, and $.3 million for the six-month period, compared to the same periods
last year.
SALES
There were no sales of properties in the second quarters of 1999 and 1998. Net
gain from property sales in the first quarter 1999 rose approximately $11.3
million and was primarily represented by the sale of two large properties in
South Florida. These two dispositions included approximately 1.2 million square
feet of leasable space in two industrial parks. The remaining sales for the
quarter included approximately 810 acres of undeveloped land parcels in Manatee
County, Florida.
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SUMMARY OF OPERATING EXPENSES
SECOND QUARTER 1999 VS. SECOND QUARTER 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SECOND QUARTER ENDING 6/30
TRANSPORTATION OPERATING EXPENSES 1999 1998 % CHANGE
- --------------------------------- ------- ------- --------
<S> <C> <C> <C>
Compensation & Benefits $11,791 $12,388 (4.8)
Materials 3,310 3,445 (3.9)
Purchased Services 8,018 6,732 19.1
General Expenses 1,206 692 74.3
Repairs Billed to/by Others 33 54 (38.9)
Taxes & Licenses 1,151 1,149 0.2
Fuel 2,427 2,608 (6.9)
Equipment Rents (net) 894 748 19.5
Depreciation 3,713 3,719 (0.2)
Casualty & Insurance 730 1,519 (52.0)
General & Administrative 6,405 5,229 22.5
------- ------- -------
Total Transportation Oper. Exp., excl. spl. chgs $39,678 $38,283 3.7
------- ------- -------
Special Charges $ 5,476 $ 0
------- -------
Total Operating Expenses-Transportation $45,154 $38,283 18.0
======= ======= =======
REALTY EXPENSES
RENTAL & OPERATING EXPENSES 1999 1998 % CHANGE
- --------------------------- ------- ------- --------
Property Management & Maintenance $ 421 $ 589 (28.5)
Purchased Services 413 371 11.3
General Expenses 1,125 950 18.4
Repairs & Maintenance 235 164 43.3
Property Taxes 2,027 1,900 6.7
Depreciation 3,087 2,839 8.7
Casualty & Insurance 68 82 (17.1)
General & Administrative 1,381 972 42.1
------- ------- -------
Total Realty Operating Expenses $ 8,757 $ 7,867 11.3
======= ======= =======
REALTY COST OF SALES $ 0 $ 0
======= =======
Total Realty Operating Expenses $ 8,757 $ 7,867 11.3
======= ======= =======
CORPORATE GENERAL & ADMINISTRATIVE $ 1,671 $ 514 225.1
Special Charges 2,011 0
------- -------
Total Corporate General & Administrative $ 3,682 $ 514
======= =======
</TABLE>
Page 14
<PAGE> 16
SUMMARY OF OPERATING EXPENSES
SIX MONTHS 1999 VS. SIX MONTHS 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDING 6/30
TRANSPORTATION OPERATING EXPENSES 1999 1998 % CHANGE
- --------------------------------- -------- -------- --------
<S> <C> <C> <C>
Compensation & Benefits $ 23,661 $ 24,746 (4.4)
Materials 6,230 6,532 (4.6)
Purchased Services 14,903 13,583 9.7
General Expenses 1,917 1,318 45.5
Repairs Billed to/by Others (309) 536 (157.7)
Taxes & Licenses 2,313 2,293 0.9
Fuel 4,411 5,284 (16.5)
Equipment Rents (net) 1,772 1,274 39.1
Depreciation 7,405 7,366 (.5)
Casualty & Insurance 1,767 3,143 (43.8)
General & Administrative 12,340 10,314 19.7
-------- -------- --------
Total Transportation Oper. Exp., excl. spl. chgs $ 76,410 $ 76,389
-------- --------
Special Charges 5,476 0
-------- --------
Total Operating Expenses-Transportation $ 81,886 $ 76,389 7.2
======== ======== ========
REALTY EXPENSES
RENTAL & OPERATING EXPENSES 1999 1998 % CHANGE
- --------------------------- -------- -------- --------
Property Management & Maintenance $ 1,319 $ 1,243 6.1
Purchased Services 939 811 15.8
General Expenses 2,429 2,008 21.0
Repairs & Maintenance 262 341 (23.2)
Property Taxes 4,303 3,812 12.9
Depreciation 5,874 5,505 6.7
Casualty & Insurance 137 (10)
General & Administrative 2,287 1,911 19.7
-------- -------- --------
Total Realty Operating Expenses $ 17,550 $ 15,621 12.4
======== ======== ========
REALTY COST OF SALES $ 39,090 $ 71
======== ========
Total Realty Operating Expenses $ 56,640 $ 15,692
======== ========
CORPORATE GENERAL & ADMINISTRATIVE $ 2,581 $ 1,086 137.7
Special Charges 2,011 0
-------- --------
Total Corporate General & Administrative $ 4,592 $ 1,086
======== ========
</TABLE>
Page 15
<PAGE> 17
EXPENSES
OVERVIEW
Total operating expenses for the three months ending June 30, 1999 compared to
same period in 1998 increased approximately $10.9 million. Of the $10.9 million
increase, approximately $7.5 million was related to special charges principally
involving a work force reduction, including the curtailment of a supplemental
executive retirement plan first adopted in late 1998. Of the $7.5 million in
special charges, $5.5 million involves rail operations, while $2.0 million
involves corporate general and administrative. Exclusive of special charges,
operating expenses increased approximately $3.4 million.
Comparing six months 1999 to six months 1998, total operating expenses increased
approximately $50.0 million, including approximately $39.1 million in costs of
realty sales and special charges of approximately $7.5 million. Excluding these
non-recurring costs of $46.6 million, total operating expenses increased
approximately $3.4 million, or 3.7%. This increase of approximately $3.4 million
was primarily attributed to increases in realty operating expenses of
approximately $1.9 million, and approximately $1.5 million in corporate general
and administrative expenses. Transportation operating expenses remained
approximately the same for the six months ended June 30, 1999 compared to six
months ended June 30, 1998 at approximately $76.4 million.
TRANSPORTATION
SECOND QUARTER
For the quarter ended June 30, 1999, transportation operating expenses,
excluding special charges of $5.5 million in the Railway, increased
approximately $1.4 million, or 3.7%, compared to second quarter 1998. This
increase of $1.4 million was attributable $1.0 million to railway and $.4
million to trucking and was comprised of approximately $1.2 million increase in
purchased services; approximately $.6 million in general expenses, and
approximately $1.1 million increase in general and administrative expenses,
offset by decreases of approximately $.5 million in compensation and benefits;
approximately $.2 million in fuel expense, and approximately $.8 million in
casualty and insurance.
The aforementioned increase of $1.2 million in purchased services was
attributable to an accrual of approximately $.8 million for a derailment which
occurred April 1999, and $.4 million in expenses related to third party
contractors and consultants. The $.6 million increase in general expenses was
primarily related to increasing the accrual for doubtful accounts. The increase
of approximately $1.1 million in general and administrative expenses primarily
related to expenditures of approximately $.7 million related to the Company's
information systems technology software and hardware, and to an accrual of
approximately $.4 million for 1999's management bonus plan. This plan was put in
place beginning third quarter 1998 and, therefore, was not reflected in the
prior year's quarter.
Page 16
<PAGE> 18
A decrease of approximately $.5 million in compensation and benefits was
related to an earlier reduction in work force implemented in the third quarter
of 1998. The Company continued to enjoy lower fuel costs as evidenced by the
decrease of approximately $.2 million in second quarter 1999 compared to same
period 1998. The Company has also experienced a reduction in personal injury
claims and, therefore, lower accruals associated with casualty and insurance of
approximately $.8 million.
SIX MONTHS
When comparing six months 1999 with the same period 1998, transportation
operating expenses remained approximately the same. Although total
transportation operating expenses remained the same, significant changes should
be noted. General and administrative expenses increased approximately $2.0
million, consisting of the accrual for 1999's bonus plan of approximately $.8
million and expenditures of approximately $1.2 million for the management of the
Company's information systems, in particular expenses for network maintenance,
installation of new systems and Year 2000 compliance issues. Offsetting these
increases were decreases of approximately $1.1 million in transportation
compensation and benefits; $.8 million in fuel costs, and $1.4 million in
casualty and insurance.
Special Charges
During the second quarter 1999, the Railway recorded pre-tax charges of $5.5
million for severance, pensions, medical and other costs for the voluntary and
involuntary separation of twenty-six management and exempt employees,
curtailment of benefits of a supplemental executive retirement plan first
adopted in late 1998, as well as recognition of liabilities associated with
other retirement benefits and inventory reductions generated by revamping of the
Company's railway inventory management practices.
Page 17
<PAGE> 19
RAIL OPERATING INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues $ 42,379 $ 41,082 $ 82,302 $ 81,055
Operating expenses (32,891) (31,989) (63,554) (64,148)
Special charges (5,476) 0 (5,476) 0
-------- -------- -------- --------
Total operating expenses (38,367) (31,989) (69,030) (64,148)
-------- -------- -------- --------
Operating income, incl. special charges 4,012 9,093 13,272 16,907
-------- -------- -------- --------
Operating income, excl. special charges 9,488 9,093 18,748 16,907
-------- -------- -------- --------
Operating ratio, incl. special charges 90.5 77.9 83.9 79.1
-------- -------- -------- --------
Operating ratio, excl. special charges 77.6 77.9 77.2 79.1
-------- -------- -------- --------
(Rail operating income excludes income from fiber leases.)
</TABLE>
REALTY
SECOND QUARTER
Total realty operating expenses increased approximately $.9 million in the
second quarter 1999 versus 1998. Expenses at "same store" properties, comprised
of 50 buildings containing 4.7 million square feet of leasable space, increased
approximately $.7 million in second quarter 1999 versus second quarter 1998.
Expenses for new properties added to the portfolio, (four buildings containing
.6 million square feet of leasable space), increased approximately $.2 million.
Expenses of $.1 million related to the two industrial parks sold in the first
quarter 1999 were eliminated in the second quarter 1999, while expenses for
undeveloped land increased $.1 million in the second quarter 1999 compared to
second quarter 1998.
No sales of realty properties occurred during the second quarters of 1999 and
1998.
SIX MONTHS
Comparing six months 1999 with six months 1998, realty operating expenses
increased approximately $1.9 million. For "same store" buildings, realty
operating expenses increased approximately $1.9 million, and new buildings
generated approximately $.4 million in increased expenses. Operating expenses
for undeveloped land decreased by approximately $.4 million primarily relating
to the sale of property in December 1998. Expenses were higher for property
taxes, administrative costs, casualty and general expense.
Page 18
<PAGE> 20
REALTY EBITDA
SECOND QUARTER
The realty segment of the Company generated overall EBITDA of approximately $6.9
million for the second quarter 1999, an increase of approximately $.9 million
over second quarter 1998 EBITDA of $6.0 million. EBITDA generated during second
quarter 1999 for "same store" operations was approximately $8.2 million compared
to second quarter 1998 EBITDA of approximately $6.8 million, an increase of $1.4
million, or 20.6%. This increase was attributable to occupancy increases at
"same store" properties from 83% at June 30, 1998 to 90% at June 30, 1999, and
rental rate increases. EBITDA generated during the second quarter for "new
store" operations was approximately $.2 million.
SIX MONTHS
For the first six months of 1999, the realty segment generated an EBITDA of
approximately $25.9 million, an increase of $14.8 million. EBITDA generated
during the first six months of 1999 for "same store" operations was
approximately $16.1 million, or 25.8%, an increase of approximately $3.3 million
over first six months' 1998's "same store" operations. "New store" operations
and the sale of two industrial parks in the first quarter 1999 added to EBITDA
approximately $.4 million and $11.3, respectively.
CORPORATE EXPENSES
SECOND QUARTER
Total corporate general and administrative expenses increased approximately $3.2
million when comparing second quarter 1999 with same period 1998. Of the $3.2
million increase, approximately $2.0 million related to special charges which
involved the separation of Company management employees, in addition to
Railway's force reduction, amounting to approximately $.2 million, and the
curtailment of benefits of the executive retirement plan of approximately $1.8
million. In addition to the special charges, increased expenses include
increases in compensation and benefits for the Company's new senior management
employees of approximately $.2 million; increases in professional services of
approximately $.8 million, most of which related to the costs incurred in
examining a potential restructuring of the Company, and an accrual of
approximately $.2 million for the Company's bonus plan, which was put in place
in the third quarter of 1998 and is now accrued for the 1999 year.
SIX MONTHS
When comparing first six months of 1999 with 1998, corporate general and
administrative expenses increased approximately $1.5 million. This increase was
comprised of an increase of approximately $.4 million in compensation and
benefits for senior management; an accrual for the 1999 bonus plan of
approximately $.3 million, and approximately $.8 million related to professional
services provided by consultants.
Page 19
<PAGE> 21
OTHER INCOME
SECOND QUARTER
Other income decreased approximately $2.0 million in the second quarter 1999
compared to second quarter 1998. This decrease was comprised of decreases of
approximately $1.0 million in gains on dispositions of properties other than
realty, and approximately $1.0 million in the Company's investment portfolio.
Capital expenditures on transportation and realty construction projects are
funded, in part, from the Company's investment portfolio.
SIX MONTHS
Comparing six months 1999 with 1998, other income decreased by approximately
$3.2 million. This decrease was comprised of decreases of approximately $1.3
million in gains on dispositions of properties and approximately $1.9 million in
the investment portfolio.
SPECIAL CHARGES
The Company recorded approximately $.8 million for information systems hardware
and software rendered obsolete by the installation of new intermodal facilities'
systems (Oasis) at its three major intermodal locations.
INCOME TAXES
Income tax expenses increased to $11.9 million in second quarter 1999 from $11.7
million in 1998, an increase of approximately $.2 million.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
FECI's principal sources of liquidity include cash generated from operations;
earnings on invested cash; and earnings on its investment portfolios. Cash
required for capital expenditures in the transportation and realty segments, for
payment of dividends, and future requirements of the Company's recently formed
telecommunications subsidiary are or will be funded, in part, from these
resources.
Cash and short-term investments increased approximately $52.4 million to $103.3
million at June 30, 1999 from $50.9 million on December 31, 1998. This increase
was primarily attributed to the completion of sales of two industrial parks in
the Miami area in the amount of approximately $50.4 million at the end of the
first quarter. The investment portfolio decreased approximately $22.0 million to
$12.5 million on June 30, 1999 from $34.5 million on December 31, 1998 as the
Company liquidated cash equivalent investments to fund capital expenditures,
including transportation projects and new commercial and industrial building
construction. The Company's current ratio changed from 2.78 to 1.00 on December
31, 1998 to 3.87 to 1.00 on June 30, 1999.
Page 20
<PAGE> 22
Current liabilities increased $2.0 million from year-end 1998 to second quarter
1999. This increase was primarily attributable to increases of $6.2 million in
property taxes, and $3.3 million in other accrued liabilities, and $.2 million
in accrued casualties and other reserves.
The increase of $6.2 million in accrued property taxes represents the 1999
estimate of property taxes to be paid in November 1999. The decrease of $5.6
million in income taxes represents a May 1999 payment of the Company's estimated
federal and state corporate tax, which did not consider the recording of the
$8.2 million of special charges recorded in June 1999.
Management believes that the cash generated from operations, the Company's
liquid resources, and borrowing capacity, if appropriate, will be sufficient to
fund the costs of operations, all anticipated capital expenditures, and other
obligations of the Company.
YEAR 2000 COMPLIANCE
GENERAL. The Company continues to take the necessary action, both with in-house
resources, as well as external consulting services, to resolve anticipated Year
2000 issues related to certain of its computer systems. Overall, the Company's
Year 2000 Project efforts are proceeding on schedule. In mid-1998, the Company
decided to revamp its information systems by replacing rail processing systems
and acquiring new intermodal systems, upgrading its main servers (AS 400), and
acquiring new technology for the Company's intermodal processing needs.
STATE OF READINESS. Management believes that the four phases of Inventory,
Assessment, Conversion and Implementation are approximately 100%, 100%, 80% and
60% complete, respectively, as of June 30, 1999, and anticipates that all
mission critical systems should be Year 2000 capable by September 30, 1999. The
Company's readiness efforts continue to be focused on the continued safe
operation of its transportation system, employee safety, and the safety of the
general public and the environments in which the Company operates. The Company
has met with or surveyed third parties with whom the Company has material
relationships, including its interline rail connections, the Association of
American Railroads, and key suppliers, including fuel and power suppliers. Based
on the results of these meetings and surveys, the Company is reasonably
satisfied that these third parties' Year 2000 plans are adequately addressing
Year 2000 readiness, and that the possibility of extended failures is not
significant.
The Company continues to develop contingency plans for Year 2000 issues as part
of its ongoing effort to address many types of potential operating disruptions.
For example, emergency operating plans already exist for unanticipated outages
of electricity, telecommunications, and other essential services.
These plans may include identifying alternate suppliers, manual generation of
data necessary for train movements and billing, staff training, and developing
communication plans.
BUDGET. The Company expects to spend approximately $9.3 million for the
revamping of its
Page 21
<PAGE> 23
information systems, which is also addressing Year 2000 issues. This amount
includes $2.6 million to upgrade or replace computer hardware; $2.5 million for
external consulting services, including remediation efforts, and $4.2 million
for software replacements and upgrades. As of June 30, 1999, the Company has
committed or expended approximately two-thirds of its budget for information
systems revamping.
STATUS. During the second quarter 1999, the Company accomplished the following
key activities related to its systems changes and Y2K readiness:
- -- Implemented new Y2K compliant Transportation System
- -- Implemented new Y2K compliant Intermodal System
- -- Implemented compliant software upgrades for network routers
- -- Completed Legacy application conversions
- -- Began implementing "Hot-Site" backup center
- -- Began developing Y2K Contingency Plans
- -- Began Compliance Stress Testing of upgraded Legacy Systems
- -- Implemented Y2K compliant FrameRelay connection to Railinc
It is the opinion of management that, due to its replacement of information
systems as described above, Year 2000 problems in the Company's information
systems and technology infrastructure will not have a materially adverse affect
on the results of operations, liquidity or financial position of the Company.
However, there can be no assurance that the systems or equipment of other
parties which interact with the Company's systems will be compliant on a timely
basis. The Company believes that the failure of systems or equipment of one or
more of its key third parties or customers is the most reasonably likely worst
case Year 2000 scenario, and that an extended failure could have a material
adverse effect on the results of operations, liquidity or financial position of
the Company. Where appropriate, the Company continues to develop contingency
plans in the event that the Company's key third parties do not become Year 2000
compliant on a timely basis, which effort includes the modification of existing
disaster recovery plans.
Management continues to make every effort to ensure that the Year 2000 problems
will not have any adverse affect on the Company's daily operations. The Company
maintains a current status of the overall Year 2000 activities on the corporate
web site, which can be found at www.feci.com.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's primary market risk exposure is interest rate risk related
primarily to the Company's investment portfolio. The portfolio is materially
comprised of fixed rate municipal securities with active secondary or resale
markets to ensure portfolio liquidity. The Company does not use derivative
financial instruments to hedge its investment portfolio. The Company manages its
interest rate exposure by monitoring the effects of market changes in interest
rates.
Page 22
<PAGE> 24
PART II
ITEM 1
LEGAL PROCEEDINGS
There are no new legal or regulatory proceedings pending or known to be
contemplated which, in Management's opinion, are other than normal and
incidental to the kinds of businesses conducted by the Company.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held on May 19, 1999. Of the 36,353,160
shares of common stock entitled to vote, 32,188,378.3 shares were present, in
person or by proxy.
All Directors of the Company are elected on an annual basis, and the following
were so elected at this Annual Meeting:
R.W. Anestis, J.C. Belin, R.S. Ellwood, J.N. Fairbanks, A.C. Harper, A.
Henriques, J.J. Parrish, III, P.S. Rummell and W.L. Thornton. Each Director
received the following votes:
(in thousands)
---------------------
NAMES FOR WITHHELD
----- --- --------
R.W. Anestis 32,090 29
J.C. Belin 32,086 32
R.S. Ellwood 32,091 27
J.N. Fairbanks 32,089 29
A.C. Harper 32,090 28
A. Henriques 32,090 29
J.J. Parrish, III 32,088 31
P.S. Rummell 26,617 5,501
Proposal No. 2: Amendments to the 1998 Stock Incentive Plan (in thousands):
For: 30,555 Against: 1,280 Abstain: 283
Proposal No. 3: Ratification of KPMG LLP as independent auditors for the Company
for 1999 (in thousands):
For: 31,867 Against: 13 Abstain: 239
Page 23
<PAGE> 25
ITEM 5
OTHER INFORMATION
FEC Telecom, Inc.
On May 7, 1999, the Company announced the formation of a wholly-owned
subsidiary, FEC Telecom, Inc., a Delaware company, which intends to enter the
wholesale carrier's carrier telecommunications bandwidth business. FEC Telecom,
Inc. is based in Orlando, Florida and will utilize the Company's
telecommunications assets, which include 12,600 fiber miles of dark fiber cable
between Jacksonville and Miami and conduit comprising a 780-mile
telecommunication loop in Florida, including along the Company's railroad
right-of-way extending from Jacksonville to Miami and in a loop in a
northwesterly direction from Miami through Fort Myers, Tampa, and turning
easterly to Orlando and connecting with the railroad right-of-way corridor at
Daytona Beach ("Western Loop").
FEC Telecom is actively building its management team, negotiating with suppliers
to acquire and install the electronics necessary to transform the dark fiber to
active capacity, and marketing the fiber and utilization of active capacity to
third parties. It is also developing capital expenditure plans to install fiber
optic cable and ancillary electronics on the Company's conduit in the Western
Loop. The level of capacity and the costs thereof are dependent on the needs and
service requirements of the telecommunications customers, as well as the nature
of relationships with such companies which may include in kind property and
technology exchanges. These relationships are not yet fully defined.
GCC Interchange Agreement
In the second quarter, GCC executed an Interchange Development Agreement with
the City of Jacksonville, Florida, pursuant to which GCC agreed to construct, at
its cost, an interchange with Interstate 95 near GCC's Gran Park at Jacksonville
properties. Pursuant to the Agreement, Gran Central expects reimbursement of the
interchange development costs over a period of time extending from the
completion of the project to May 15, 2019. Reimbursement to Gran Central is
limited to $17.4 million plus a construction funds factor of 3% per annum.
ITEM 6
EXHIBITS AND REPORTS
(a) Exhibit 10. Florida East Coast Industries, Inc.'s 1998 Stock Incentive
Plan, as amended.
(b) Exhibit 10. Interchange Development Agreement between the City of
Jacksonville, Florida and Gran Central Corporation.
(c) Exhibit 10. Employment Agreement dated July 15, 1999, Basic Stock
Option Agreement, Restricted Stock Agreement, Restricted Stock
Agreement (Signing Bonus) and Supplemental
Page 24
<PAGE> 26
Stock Option Agreement dated July 27, 1999 between FEC Industries and
Robert H. Nazarian.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLORIDA EAST COAST INDUSTRIES, INC.
(REGISTRANT)
Date: 8/16/99 /s/ Robert H. Nazarian
-------------- -----------------------------------------------
Robert H. Nazarian, Executive Vice President &
Chief Financial Officer
Date: 8/16/99 /s/ T.N. Smith
-------------- -----------------------------------------------
T.N. Smith, Vice President-Finance & Accounting
Page 25
<PAGE> 1
EXHIBIT 10(a)
FLORIDA EAST COAST INDUSTRIES, INC.
1998 STOCK INCENTIVE PLAN
(ADOPTED EFFECTIVE JUNE 1, 1998)
(AMENDED EFFECTIVE MAY 19, 1999)
A-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1. INTRODUCTION.............................................. A-4
ARTICLE 2. ADMINISTRATION............................................ A-4
2.1 Committee Composition....................................... A-4
2.2 Committee Responsibilities.................................. A-4
ARTICLE 3. SHARES AVAILABLE FOR GRANTS............................... A-5
3.1 Basic Limitations........................................... A-5
3.2 Additional Shares........................................... A-5
ARTICLE 4. ELIGIBILITY............................................... A-5
4.1 Non-statutory Stock Options................................. A-5
4.2 Incentive Stock Options..................................... A-5
4.3 Prospective Employees....................................... A-5
4.4 Restricted Stock............................................ A-5
ARTICLE 5. OPTIONS................................................... A-5
5.1 Stock Option Agreement...................................... A-5
5.2 Number of Shares............................................ A-6
5.3 Exercise Price.............................................. A-6
5.4 Exercisability and Term..................................... A-6
5.5 Effect of Change in Control................................. A-6
5.6 Modification or Assumption of Options....................... A-6
5.7 Buyout Provisions........................................... A-6
ARTICLE 6. PAYMENT FOR OPTION SHARES................................. A-6
6.1 General Rule................................................ A-6
6.2 Surrender of Stock.......................................... A-7
6.3 Exercise/Sale............................................... A-7
6.4 Exercise/Pledge............................................. A-7
6.5 Promissory Note............................................. A-7
6.6 Other Forms of Payment...................................... A-7
ARTICLE 7. PROTECTION AGAINST DILUTION............................... A-7
7.1 Adjustments................................................. A-7
7.2 Dissolution or Liquidation.................................. A-7
7.3 Reorganization.............................................. A-8
ARTICLE 8. LIMITATION ON RIGHTS...................................... A-8
8.1 Retention Rights............................................ A-8
8.2 Stockholders' Rights........................................ A-8
8.3 Regulatory Requirements..................................... A-8
</TABLE>
A-2
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 9. WITHHOLDING TAXES......................................... A-8
9.1 General..................................................... A-8
9.2 Share Withholding........................................... A-9
ARTICLE 10. FUTURE OF THE PLAN....................................... A-9
10.1 Term of the Plan............................................ A-9
10.2 Amendment or Termination.................................... A-9
ARTICLE 11. RESTRICTED STOCK......................................... A-9
11.1 Restricted Stock Grants..................................... A-9
11.2 Transferability............................................. A-9
11.3 Rights as a Stockholder..................................... A-9
11.4 Terms and Conditions of Award............................... A-10
11.5 Modifications of Restricted Stock Awards.................... A-10
ARTICLE 12. DEFINITIONS.............................................. A-10
ARTICLE 13. EXECUTION................................................ A-12
SCHEDULE A........................................................... A-1
</TABLE>
A-3
<PAGE> 4
FLORIDA EAST COAST INDUSTRIES, INC.
STOCK INCENTIVE PLAN
ARTICLE I
INTRODUCTION
The Plan was adopted by the Board effective March 26, 1998. The purpose of
the Plan is to promote the long-term success of the Company and the creation of
stockholder value by (a) encouraging Employees and Outside Directors to focus on
critical long-range objectives, (b) encouraging the attraction and retention of
Employees and Outside Directors with exceptional qualifications and (c) linking
Employees and Outside Directors directly to stockholder interests through
increased stock ownership. The Plan seeks to achieve this purpose by providing
for Awards in the form of Options and Restricted Stock.
The Plan shall be governed by, and construed in accordance with, the laws
of the State of Florida (excluding their choice-of-law provisions).
ARTICLE II
ADMINISTRATION
2.1 Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of two or more Directors of
the Company, who shall be appointed by the Board. In addition, the composition
of the Committee shall satisfy:
(a) Such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(b) Such requirements as the Internal Revenue Service may establish
for Outside Directors acting under plans intended to qualify for exemption
under Section 162(m)(4)(C) of the Code.
2.2 Committee Responsibilities. The Committee shall (a) select the
Employees and Outside Directors who are to receive Awards under the Plan, (b)
determine the type, number, vesting requirements and other features and
conditions of such Awards, (c) interpret the Plan, and (d) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons. The Committee may make any other provision in individual Awards,
including provisions for dispute resolution, that the Committee deems
appropriate.
A-4
<PAGE> 5
ARTICLE III
SHARES AVAILABLE FOR GRANTS
3.1 Basic Limitations. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Options awarded under the Plan shall not exceed 1,600,000. The limitations of
this Section 3.1 shall be subject to adjustment pursuant to Article 7.
3.2 Additional Shares. If Awards are forfeited or terminated for any
reason, then the corresponding Common Shares shall again become available for
the grant of Awards under the Plan.
ARTICLE IV
ELIGIBILITY
4.1 Non-statutory Stock Options. Only Employees and Outside Directors
shall be eligible for the grant of NSOs.
4.2 Incentive Stock Options. Only Employees who are common-law employees
of the Company, a parent, or a subsidiary shall be eligible for the grant of
ISOs. In addition, an Employee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the Company or any of its
parents or subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in Section 422(c)(6) of the Code are satisfied.
4.3 Prospective Employees. For purposes of this Article 4, the terms
"Employee" shall include a prospective Employee who receives an Award after
accepting a written offer of employment from the Company, a parent or a
subsidiary. If an ISO is granted to a prospective Employee, the date when his or
her service as an Employee commences shall be deemed to be the date of grant of
such ISO for all purposes under the Plan (including, without limitation, Section
5.3). No Award granted to a prospective Employee shall become exercisable or
vested unless and until his or her service as an Employee commences.
4.4 Restricted Stock. Only Employees and Outside Directors shall be
eligible for the grant of Restricted Stock.
ARTICLE V
OPTIONS
5.1 Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are consistent with the Plan. The Stock Option
Agreement shall specify whether the Option is an ISO or an NSO. The provisions
of the various Stock Option Agreements entered into under the Plan need not be
identical. Options may be granted in consideration of a cash payment, or in
consideration of a reduction in the Optionee's other compensation.
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5.2 Number of Shares. Each Stock Option Agreement shall specify the number
of Common Shares subject to the Option and shall provide for the adjustment of
such number in accordance with Article 9. Options granted to any Optionee in a
single fiscal year of the Company shall not cover more than 500,000 Common
Shares, except that Options granted to a new Employee in the fiscal year of the
Company in which his or her service as an Employee first commences shall not
cover more than 750,000 Common Shares. The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 7.
5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price; provided that the Exercise Price shall in no event be less than 100% of
the Fair Market Value of a Common Share on the most recent trading day before
the date of grant. In the case of an NSO, a Stock Option Agreement may specify
an Exercise Price that varies in accordance with a predetermined formula while
the NSO is outstanding.
5.4 Exercisability and Term. Each Stock Option Agreement shall specify the
date or event when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option; provided that the term of an Option shall in no event exceed 10 years
from the date of grant. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's service.
5.5 Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that all or part of such Option shall
become exercisable as to all Common Shares subject to such Option in the event
that a Change in Control occurs with respect to the Company.
5.6 Modification or Assumption of Options. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding Options or may
accept the cancellation of outstanding Options (whether granted by the Company
or by another issuer) in return for the grant of new Options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.
5.7 Buyout Provisions. The Committee may at any time (a) offer to buy out
for a payment in cash or cash equivalents an Option previously granted, or (b)
authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
ARTICLE VI
PAYMENT FOR OPTION SHARES
6.1 General Rule. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash or cash equivalents at the time
when such Common Shares are purchased, except that the Stock Option Agreement
may specify that payment may be made in any form(s) described in this Article 6.
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6.2 Surrender of Stock. To the extent that this Section 6.2 is applicable,
payment for all or any part of the Exercise Price may be made with Common Shares
which are already owned by the Optionee. Such Common Shares shall be valued at
their Fair Market Value on the most recent trading day before the date when the
new Common Shares are purchased under the Plan. Except as otherwise provided in
an Award, the Optionee shall not surrender Common Shares in payment of the
Exercise Price if such surrender would cause the Company to recognize
compensation expense with respect to the Option for financial reporting
purposes.
6.3 Exercise/Sale. To the extent that this Section 6.3 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Common Shares, and to deliver all or a part of the sales proceeds to the Company
in payment of all or part of the Exercise Price and any withholding taxes.
6.4 Exercise/Pledge. To the extent that this Section 6.4 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Common Shares to a securities broker or lender
approved by the Company, as security for a loan, and to deliver all or part of
the loan proceeds to the Company in payment of all or part of the Exercise Price
and any withholding taxes.
6.5 Promissory Note. To the extent that this Section 6.5 is applicable,
payment may be made with a full-recourse promissory note.
6.6 Other Forms of Payment. To the extent that this Section 6.6 is
applicable, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.
ARTICLE VII
PROTECTION AGAINST DILUTION
7.1 Adjustments. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such equitable adjustments as it, in its sole
discretion, deems appropriate in one or more of (a) the number of Common Shares
available for future Awards under Article 3, (b) the limitations set forth in
Section 5.2, (c) the number of Common Shares covered by each outstanding Option
or (d) the Exercise Price under each outstanding Option. Except as provided in
this Article 7, a Participant shall have no right by reason of any issue by the
Company of stock of any class or securities convertible into stock of any class,
any subdivision or consolidation of shares of stock of any class, the payment of
any stock dividend, or any other increase or decrease in the number of shares of
stock in any class.
7.2 Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Committee shall notify each Optionee as soon
as practicable prior to the effective date of such proposed transaction. The
Committee, at its discretion, may provide for an Optionee to have the right to
exercise his or her Options until 10 days prior to such transaction as to some
or all of the Common
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Shares covered thereby, including Common Shares as to which the Options would
not otherwise be exercisable. In addition, the Committee may provide that any
Company repurchase options applicable to any Shares purchased upon exercise of
an Option shall lapse as to some or all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent not previously exercised, Options shall terminate
immediately prior to the consummation of such proposed action.
7.3 Reorganization. In the event that the Company is a party to a merger
or other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement may provide, without limitation, for
the continuation of outstanding Awards by the Company (if the Company is a
surviving corporation), for their assumption by the surviving corporation or its
parent or subsidiary, for the substitution by the surviving corporation or its
parent or subsidiary of its own awards for such Awards, for accelerated vesting
and accelerated expiration, or for settlement in cash or cash equivalents.
ARTICLE VIII
LIMITATION ON RIGHTS
8.1 Retention Rights. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an Employee or
Outside Director. The Company and its parents, subsidiaries and affiliates
reserve the right to terminate the service of any Employee or Outside Director
at any time, with or without cause, subject to applicable laws, the Company's
Certificate of Incorporation and By-Laws and a written Employment Agreement (if
any).
8.2 Stockholders' Rights. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, in the case of an Option, the time when he or she
become entitled to receive such Common Shares by filing a notice of exercise and
paying the Exercise Price. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to such time, except as
expressly provided in the Plan or in the Award.
8.3 Regulatory Requirements. Any other provision of the Plan,
notwithstanding the obligation of the Company to issue Common Shares under the
Plan, shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.
ARTICLE IX
WITHHOLDING TAXES
9.1 General. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any
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withholding tax obligations that arise in connection with the Plan. The Company
shall not be required to issue any Common Shares or make any cash payment under
the Plan until such obligations are satisfied.
9.2 Share Withholding. The Committee may permit a Participant to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Common Shares that otherwise would be
issued to him or her or by surrendering all or a portion of any Common Shares
that he or she previously acquired. Such Common Shares shall be valued at their
Fair Market Value on the most recent trading day before the date when taxes
otherwise would be withheld in cash.
ARTICLE X
FUTURE OF THE PLAN
10.1 Term of the Plan. The Plan, as set forth herein, shall become
effective on June 1, 1998. The Plan shall remain in effect until it is
terminated under Section 10.2, except that no ISOs shall be granted after May
31, 2008.
10.2 Amendment or Termination. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the Plan
after the termination thereof. The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.
ARTICLE XI
RESTRICTED STOCK
11.1 Restricted Stock Grants. The Committee may make grants of Restricted
Stock to Participants. Whenever the Committee deems it appropriate to grant
Restricted Stock, notice shall be given to the Participant, stating the number
of shares of Restricted Stock granted and the terms and conditions to which the
Restricted Stock is subject. This notice, when accepted in writing by the
Participant, shall become an Award Agreement between the Company and the
Participant. Restricted Stock may be awarded by the Committee at its discretion
without cash consideration.
11.2 Transferability. No shares of Restricted Stock may be sold, assigned,
transferred, pledged, hypothecated, or otherwise encumbered or disposed of until
the restrictions on such shares, as set forth in the Participant's Award
Agreement, have lapsed or been removed pursuant to Section 11.4 below.
11.3 Rights as a Stockholder. Upon the acceptance by a Participant of an
Award of Restricted Stock, such Participant shall, subject to the restrictions
set forth in the Award, have all the rights of a shareholder with respect to
such shares of Restricted Stock, including, but not limited to, the right to
vote such shares of Restricted Stock and the right to receive all dividends and
other distributions paid thereon. Certificates representing Restricted Stock
shall bear a legend referring to the restrictions set forth in the Plan and
Participant's Award Agreement.
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11.4 Terms and Conditions of Award. The Committee shall establish as to
each Award of Restricted Stock the terms and conditions upon which the
restrictions above shall lapse. Such terms and conditions may include, without
limitation, the lapsing of such restrictions as a result of the disability,
death or retirement of the Participant or the occurrence of a Change in Control.
Notwithstanding the provisions of Section 11.2 above, the Committee may at any
time, at its sole discretion, accelerate the time at which any or all
restrictions will lapse or remove any and all such restrictions.
11.5 Modifications of Restricted Stock Awards. The Committee may modify or
extend Awards of Restricted Stock, or may accept the cancellation of an
outstanding Award in return for the grant of a new Award of Restricted Stock.
The foregoing notwithstanding, no modification of an Award of Restricted Stock
shall, with but the consent of the Participant, alter or impair his or her
rights or obligations under the Award.
ARTICLE XII
DEFINITIONS
12.1 "Affiliate" means any entity other than a subsidiary, if the Company
and/or one or more subsidiaries own not less than 80% of such entity.
12.2 "Award" means any award of an Option or Restricted Stock under the
Plan.
12.3 "Board" means the Company's Board of Directors, as constituted from
time to time.
12.4 "Change in Control" means that:
(a) 30% or more of the outstanding vote stock of the Company is
acquired by any person or group other than The St. Joe Company, except that
this Subsection (a) shall not apply as long as The St. Joe Company owns
more voting stock than such person or group; or
(b) Stockholders of the Company, other than The St. Joe Company, vote
in a contested election for Directors of the Company and through exercise
of their votes cause the replacement of 50% or more of the Company's
Directors (the mere change of 50% or more of the members of the Board does
not cause a Change in Control unless it occurs as a result of a contested
election); or
(c) The Company is a party to a merger or similar transaction as a
result of which the Company's stockholders own 50% or less of the surviving
entity's voting securities after such merger or similar transaction; or
(d) In connection with the execution of an Employment Agreement for
senior officers of the Company, the Committee may approve an Award which
defines "Change in Control" to mean:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Act"), other
than the present majority owner, The St. Joe Company, or any
majority-owned subsidiary of The St. Joe Company becomes the "beneficial
owner" (as defined in Rule 13-d under the Act) directly or indirectly,
of securities
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representing more than fifty percent (50%) of the total voting power
represented by the Company's then outstanding voting securities; or
(ii) A change in the composition of the Board, as a result of which
fewer than a majority of the Directors are Incumbent Directors.
"Incumbent Directors" shall mean Directors who either (a) are Directors
of the Company as of the date hereof, or (b) are elected or nominated
for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest
relating to the election of Directors of the Company); or
(iii) The Company merges or consolidates with any other
corporation, including The St. Joe Company or any subsidiary thereof, or
the Company adopts, and the stockholders approve, if necessary, a plan
of complete liquidation of the Company, or the Company sells or disposes
of substantially all of its assets.
A transaction shall not constitute a Change in Control if its sole purpose
is to change the state of the Company's incorporation or to create a holding
company that will be owned insubstantially the same proportions by the persons
who held the Company's securities immediately before such transaction.
12.5 "Code" means the Internal Revenue Code of 1986, as amended.
12.6 "Committee" means the Compensation Committee of the Board, as further
described in Article 2.
12.7 "Common Share" means one share of the common stock of the Company.
12.8 "Company" means Florida East Coast Industries, Inc., a Florida
corporation.
12.9 "Employee" means a common-law employee of the Company, a parent, a
subsidiary or an affiliate.
12.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
12.11 "Exercise Plan" means the amount for which one Common Share may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement.
12.12 "Fair Market Value" means the closing price of Common Shares, as
stated in The New York Stock Exchange Composite Transactions Report and reported
in The Wall Street Journal. If a closing price of Common Shares is not stated in
The New York Stock Exchange Composite Transactions Report, the Fair Market Value
of Common Shares shall be determined by the Committee in good faith on such
basis as it deems appropriate. The determination of Fair Market Value by the
Committee shall be conclusive and binding on all persons.
12.13 "ISO" means an incentive stock option described in Section 422(b) of
the Code.
12.14 "NSO" means a stock option not described in Sections 422 or 423 of
the Code.
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12.15 "Option" means an ISO or NOS granted under the Plan and entitling the
holder to purchase Common Shares.
12.16 "Optionee" means an individual or estate who holds an Option.
12.17 "Outside Director" means a member of the Board who is not an
Employee. Service as an Outside Director shall be considered employment for all
purposes of the Plan other than Section 4.2.
12.18 "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 80% or more of the
total combined voting power of all classes of stock in one or the other
corporations in such chain. A corporation that attains the status of a parent on
a date after the adoption of the Plan shall be considered a parent commencing as
of such date.
12.19 "Participant" means an individual or estate who holds an Award.
12.20 "Plan" means this Florida East Coast Industries' 1998 Stock Incentive
Plan, as amended from time to time.
12.21 "Stock Option Agreement" means the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
his or her Option.
12.22 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one or the other corporations in such chain. A corporation that attains
the status of a subsidiary on a date after the adoption of the Plan shall be
considered a subsidiary commencing as of such date.
12.23 "Restricted Stock" means Common Stock awarded upon the terms and
subject to the restrictions set forth in Article 12.
ARTICLE XIII
EXECUTION
To record the adoption of the Plan by the Board, the Company has caused it
duly authorized officer to affix the corporate name and seal thereto.
FLORIDA EAST COAST INDUSTRIES, INC.
By:
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SCHEDULE A
PERFORMANCE CRITERIA
<TABLE>
<S> <C>
Cash Flow Expense Reduction
Earnings Revenue Growth
Earnings Per Share Stock Price Increase
Operating Income
Return on Assets
Return on Equity
Return on Invested Capital
Total Shareholder Return
Growth in any of the above
measures
</TABLE>
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EXHIBIT 10(b)
CITY OF JACKSONVILLE
INTERCHANGE DEVELOPMENT AGREEMENT
This Interchange Development Agreement is made and entered into by and
between the CITY OF JACKSONVILLE, Florida, a municipal corporation and a
political subdivision of the State of Florida, hereinafter referred to as the
"City", and GRAN CENTRAL CORPORATION, a Florida corporation, hereinafter
referred to as "Gran Central", all as of the ______ day of ___________, 1999.
RECITATION OF FACTS
A. WHEREAS, Interstate 95 currently serves as a primary north-south
artery for traffic in and around the City. There currently exists no
interchange south of US 1 on Interstate 95 to serve the southern end of the
City. The southern end of the City is presently experiencing significant growth
thereby increasing significantly the traffic congestion on other roads which
traffic could be served by Interstate 95 if an interchange were constructed.
The construction of an interchange at the intersection of Interstate 95 and Old
St. Augustine Road (hereinafter referred to as the "Interchange") is not
currently planned by State or Federal authorities and will not be constructed
for a number of years by State or Federal authorities. In light of this growth
and in light of the acute and critical stress being placed on other
transportation facilities in the vicinity, the City recognizes the immediate
and critical need for the Interchange.
B. WHEREAS, the City recognizes that construction of the Interchange
will also make a significant beneficial contribution to current and future
regional transportation needs and constitutes "large regional impact" as
provided for in the Incentive Policy of Jacksonville Economic Development
Commission as such Incentive Policy has been approved by the City.
C. WHEREAS, the City does not currently have funds appropriated or a
source of funds dedicated to construction of the Interchange; however, it
anticipates that the enhanced property values and growth potential generated by
the Interchange will generate sufficient funds to pay for a number of
transportation improvements, including but not limited to the Interchange.
D. WHEREAS, recognizing the enhanced property values it will enjoy as a
result of the Interchange, Gran Central is willing to cause the Interchange to
be immediately designed, constructed and approved in accordance with the
standards and requirements of the State of Florida Department of Transportation
(the "DOT"), at its cost, provided that such costs may be reimbursed through
increased County ad valorem revenues generated from the Interchange
<PAGE> 2
Development Area as hereinafter defined and from other sources as provided for
herein.
E. WHEREAS, the purpose of this Interchange Development Agreement
("Agreement") is to set forth the respective rights and obligations of the City
and Gran Central concerning the Interchange, including but not limited to:
1. The agreement of Gran Central to:
(a) conduct such studies and analysis as may be
required to obtain regulatory approval of the location of the Interchange;
(b) use its good faith efforts to obtain DOT and
other regulatory approvals;
(c) convey to the DOT certain real property necessary
or desirable for the construction of the Interchange;
(d) design and construct the Interchange; and
(e) terminate the Access Easement.
2. The agreement of the City to:
(a) obtain title to real property by eminent domain
or otherwise as necessary or desirable to develop the Interchange, the cost of
which shall be advanced by Gran Central;
(b) establish a developer contribution fund for
investment recoupment by Gran Central (the "Investment Recouping Fund"); and
(c) from amounts paid into the Investment Recouping
Fund so established, pay to Gran Central and make an economic development grant
to Gran Central to be funded in an amount equal to the Project Grant, as
hereinafter defined, in consideration of the acquisition, permitting, design and
construction of the Interchange and New Access Road, as hereinafter defined.
F. WHEREAS, pursuant to the terms of related agreements, DOT will
monitor and inspect construction of the Interchange to confirm compliance with
the DOT standards and requirements; accept conveyance of the real property
including those lands when acquired by the City and accept conveyance of
improvements constituting the Interchange upon completion; and maintain the
Interchange as part of the interstate highway system upon its completion.
1. Gran Central is qualified to carry out and complete the
Interchange in accordance with this Agreement.
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2. Gran Central's willingness to assume responsibility for
financing the cost and expense of the Interchange and to accept payment of the
Interchange Development Costs in annual installments will enable the City to
fund and pay the Interchange Development Costs as and when incremental property
tax revenues generated from the Interchange in the Interchange Development Area
are received by the City.
3. Funding from the sources provided herein for the
Interchange Development Costs is necessary to enable Gran Central to construct
the Interchange on a basis that will be economically viable and competitive.
4. The authorizations provided by this Interchange Development
Ordinance are for public uses and purposes for which the City may use its powers
as a municipality and a political subdivision of the State of Florida in order
to provide essential economic development assistance for the Interchange, and
the necessity in the public interest for the provisions herein enacted is hereby
declared as a matter of legislative determination.
G. WHEREAS, Gran Central recognizes the importance of the role of
community service in good corporate citizenship. Gran Central provides
significant community service and support to the City of Jacksonville and its
citizens by participation in numerous voluntary community activities and has
pledged to continue it's efforts toward community service in Jacksonville.
H. WHEREAS, the Jacksonville Economic Development Commission has
recommended approval of the Interchange proposal; and
I. WHEREAS, Gran Central has agreed to finance the cost of the
Interchange and to accept payment of the Interchange Development Costs in
installments as provided in this Agreement, enabling the City to fund and pay
the Interchange Development Costs if and when incremental property tax revenues
generated by the Interchange within the Interchange Development Area and
Investment Recouping Funds are received by the City and thereby eliminate the
necessity for the City to borrow funds in order to pay the Interchange
Development Costs.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, together with other good and valuable consideration, the City and Gran
Central agree to the terms of this Agreement.
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AGREEMENT OF THE PARTIES
1. Accuracy of Recitals and Definitions.
1.1 The matters set forth in the Recitation of Facts paragraphs of this
Agreement are true and correct as of the date hereof and are incorporated herein
by reference.
1.2 Definitions. The terms used in this Agreement shall have the
following meanings:
(a) "ACCESS EASEMENT" shall have the meaning ascribed in
Section 3 below.
(b) "AGREEMENT" shall mean this Interchange Development
Agreement.
(c) "APPLEBAUM PROPERTY" shall mean the Property described on
Exhibit "B" attached hereto.
(d) "CITY" shall mean the City of Jacksonville, Florida, a
municipal corporation and a political subdivision of the State of Florida.
(e) "COMMENCEMENT" shall have the meaning ascribed in Section
4 below.
(f) "CONSTRUCTION FUNDS FACTOR" shall have the meaning
ascribed in Section 5.3 below.
(g) "DOT" shall have the meaning ascribed in Section D of the
Recitation of Facts herein.
(h) "DOT AGREEMENT" shall have the meaning ascribed in Exhibit
"A" attached hereto.
(i) "GRAN CENTRAL" shall mean Gran Central Corporation, a
Florida corporation.
(j) "GRAN CENTRAL PROPERTY" shall be the Property described on
Exhibit "B" attached hereto.
(k) "INTERCHANGE" shall mean the interchange improvements to
be constructed by Gran Central pursuant to the DOT Agreement at the
intersection of Interstate 95 and Old St. Augustine Road.
(1) "INTERCHANGE COMMENCEMENT DATE" shall have the meaning
ascribed in Section 9.16 below.
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(m) "INTERCHANGE DEVELOPMENT AREA" shall have the meaning
ascribed in Section 6.2 below.
(n) "INTERCHANGE DEVELOPMENT COSTS" shall have the meaning
ascribed in Section 5.1 below.
(o) "INTERCHANGE DEVELOPMENT ORDINANCE" shall have the meaning
ascribed in Section 6.1 below.
(p) "INTERCHANGE LANDS" shall be those lands described on
Exhibit "B" attached hereto.
(q) "INVESTMENT RECOUPING CONTRIBUTIONS" shall have the
meaning ascribed in Section 7 below.
(r) "INVESTMENT RECOUPING FUND" shall have the meaning
ascribed in Section E(2)(c) of the Recitation of Facts above.
(s) "MAXIMUM IDF REIMBURSEMENT COST" shall have the meaning
ascribed in Section 5.3 below.
(t) "NEW ACCESS ROAD" shall have the meaning ascribed in
Section 3 below.
(u) "NOTICE" shall have the meaning ascribed in Section 4
below.
(v) "PROJECT GRANT" shall have the meaning ascribed in
Section 6.2 below.
(w) "VENDORS" shall have the meaning ascribed in Section 9.11
below.
2. Predesigned Studies and Approvals. Within 90 days from the execution
hereof, Gran Central shall commence or commission such studies, analyses and
evaluations as may be necessary to obtain the DOT's approval of the location of
the Interchange. Upon obtaining such approval, Gran Central shall, subject to
the terms hereof, enter into the State of Florida Department of Transportation
Interchange Development Agreement substantially in the form attached hereto as
Exhibit "A" (the "DOT Agreement"). The execution and delivery of the DOT
Agreement by Gran Central and the DOT shall be a condition precedent to the
obligation of the City to commence acquisition of the Applebaum Property as
defined in and pursuant to Section 3 below and the obligation of Gran Central to
commence design and permitting of the Interchange pursuant to Sections 4.1 and
4.2 below.
3. Real Estate Acquisition and Transfer. The Interchange shall be
located on the lands described on Exhibit "B" hereto (the
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<PAGE> 6
"Interchange Lands"). The Interchange Lands are comprised of (i) property
presently owned in fee simple by Gran Central (the "Gran Central Property") as
described on Exhibit "B", and (ii) property owned in fee simple by the
Applebaum Trust (the "Applebaum Property") as described on Exhibit "B". A
portion of the Applebaum Property is subject to an easement in favor of Gran
Central which provides the sole means of ingress and egress to additional lands
of Gran Central adjacent to the Applebaum Property (the "Access Easement"). In
addition to and simultaneously with conveyance of the Gran Central Property to
the DOT, Gran Central shall terminate its rights to the Access Easement in
consideration of the agreements of the City and the DOT as contained herein to
include the design, permitting and construction of a new access road over and
upon a portion of the Interchange Lands which will provide access to remaining
lands owned by Gran Central (the "New Access Road") as part of the reimbursed
costs of Gran Central as provided for herein.
3.1 Acquisition of Applebaum Property.
(a) Subject to and conditioned upon: (i) execution of the DOT
Agreement; and (ii) receipt of all permits and approvals required under Section
4.2 hereof, the City shall exercise its powers of eminent domain if necessary to
acquire title to the Applebaum Property for purposes of constructing the
Interchange and New Access Road. If condemnation under the power of eminent
domain is commenced and prosecuted, it shall be under the authority of Chapter
73, F.S. and no declaration of taking or other provisions of Chapter 74, F.S.
shall be filed or utilized without the prior written approval of Gran Central.
Gran Central shall pay the cost and expenses of the condemnation proceedings
for the Applebaum Property, including but not limited to any appraisal reports.
The City shall have no responsibility for any such costs or expenses.
(b) Upon completion of the condemnation, the City will convey
the Applebaum Property to the DOT by Special Warranty Deed pursuant to the DOT
Agreement subject only to those matters that were disclosed by title search and
which are not removed as part of the condemnation proceeding. The City agrees to
remove all objectionable title matters pursuant to the condemnation proceeding
to the extent possible. Gran Central shall pay the cost of recording the
Special Warranty Deed, the documentary stamps due thereon, if any, and the cost
of any title insurance premium which may be required by law as a condition to
acceptance of the conveyance by DOT.
(c) The Applebaum Property shall be conveyed "as is." The City
shall have no obligation to remove any existing improvements, structures or
obstructions from the condemned property. It shall be the sole responsibility of
Gran Central, at its expense, to investigate and determine the soil conditions
of
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the condemned property. The City makes no representation as to the presence on
or under, or the escape, seepage, leakage, spillage, emission, discharge or
release from the condemned property of any hazardous substance as defined by the
United States Environmental Protection Agency or in any Federal, state or local
law, rule or regulation.
3.2 Timing Termination Events. If the City shall not have successfully
and finally completed the acquisition of the Applebaum Property as herein
provided within twelve (12) months of Commencement, as such term is defined in
Section 4 below, for any reason whatsoever, then Gran Central may elect to
terminate this Agreement by providing written notice to the City not later than
thirteen (13) months after commencement.
3.3 Cost Termination Event.
(a) Should the estimated Interchange Development Costs exceed
the Maximum IDF Reimbursement Cost, as such term is defined in Section 5.3
below, then Gran Central shall have the right, at any time within ten (10) days
after Gran Central receives notice of the rendition of a judgment in the
condemnation proceeding by notice to the City and its condemnation attorney, to
terminate this Agreement unless the City agrees prior thereto in its sole
discretion to reimburse to Gran Central the Interchange Development Costs in
excess of the Maximum IDF Reimbursement Cost in the manner provided in Section 6
hereof. If Gran Central does not elect to so terminate this Agreement, then all
costs and expenses incurred by Gran Central in the development of the
Interchange and New Access Road in excess of the Maximum IDF Reimbursement Cost
shall be paid by Gran Central without any right to reimbursement from the
Project Grant or the Investment Recouping Fund.
(b) Upon receiving Gran Central's notice of termination, the
City's condemnation attorney shall file a voluntary dismissal. Thereafter, Gran
Central shall continue to be responsible for all related costs, including but
not limited to the attorneys' fees payable to the City's condemnation attorney
plus those fees and costs assessed against the City by the court in the
condemnation proceeding.
3.4 Termination. Upon termination of this Agreement, at the option of
Gran Central for either reason as aforesaid, Gran Central shall be relieved of
any further obligation hereunder except for the payment of fees and costs
incurred in the condemnation proceedings up to the date of termination. Upon
termination of this Agreement pursuant to this Section 3.4, Gran Central shall
have no obligation to pay any condemnation award for the Applebaum Property.
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3.5 Conveyance of Gran Central Property.
(a) Subject to and conditioned upon: (i) execution of the DOT
Agreement; (ii) satisfaction of all conditions of construction commencement set
forth in Section 2.1 of the DOT Agreement; (iii) receipt of all permits and
approvals required under Section 4.2 hereof; (iv) acquisition of the Applebaum
Property pursuant to the condemnation described in Section 3.1 above; and (v)
City establishment of the Investment Recouping Fund as set forth in Section 8(g)
below, Gran Central shall convey to the DOT the Gran Central Property and its
rights in and to the Access Easement.
(b) Gran Central shall convey the Gran Central Property to the
DOT by Special Warranty Deed and its rights in the Access Easement to the DOT by
Quitclaim Deed. Gran Central shall pay the cost of recording the Special
Warranty Deed and Quitclaim Deed, the documentary stamps due thereon, if any,
and the cost of any title insurance policy premium which may be required by law
as a condition to acceptance of the conveyances by the DOT.
4. Design, Permitting and Construction of the Interchange and New
Access Road. Gran Central shall design, obtain the necessary permits and
construct the Interchange in accordance with the DOT Agreement. The DOT
Agreement may not be modified, altered or amended without the prior written
consent of the City which consent shall not be unreasonably delayed or withheld.
Gran Central shall not be required to commence final design of the Interchange
unless and until (i) the DOT executes and delivers the DOT Agreement and (ii)
the City has commenced acquisition of the Applebaum Property pursuant to
Section 3.1 hereof ("Commencement"). Notwithstanding the foregoing, however, as
a condition to the City's obligation to commence condemnation proceedings as to
the Applebaum Property, Gran Central shall be required to commence and complete
the Project Development and Environmental Study, the Interchange Modification
Report and permitting of the Interchange as set forth in Section 4.2 hereof, and
shall notify the City in writing within thirty (30) days of satisfaction of such
conditions that such conditions have been satisfied (the "Notice"). The City
shall introduce legislation necessary to commence the condemnation proceedings
as to the Applebaum Property within thirty (30) days of receipt of the Notice
from Gran Central and shall diligently prosecute such condemnation proceedings
to final conclusion.
4.1 Interchange Design. Gran Central shall, at its expense, retain the
services of appropriate professionals to design the Interchange and to produce
working plans and specifications for the construction of the Interchange. The
parties acknowledge that the design criteria shall include (i) efforts to
minimize the quantity of land necessary to be condemned or acquired and (ii)
applicable Federal and State requirements. The City shall assist
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Gran Central in obtaining the required approval of the design of the Interchange
from the DOT. Gran Central shall pay the costs and fees incurred in the
production of the design of the Interchange, together with the costs and fees
associated with the production of the working drawings containing the plans and
specifications of the Interchange.
4.2 Interchange Permits. Gran Central shall obtain all permits required
for the construction of the Interchange, including, but not limited to, any
permits required by the Federal Highway Administration, United States Army Corps
of Engineers, the DOT, Florida Department of Environmental Protection, St. Johns
River Water Management District and the City. The City shall support Gran
Central in obtaining all required permits for the design and construction of the
Interchange.
4.3 New Access Road. Simultaneously with design, permitting and
construction of the Interchange, Gran Central shall cause to be designed,
permitted and constructed the New Access Road upon the Interchange Lands (which
property shall be adjacent to or in reasonable proximity to the Interchange) for
the purpose of replacing the Access Easement. Such New Access Road shall be
reasonably adequate to serve the property previously served by the Access
Easement and property of Gran Central adjacent thereto, as developed. Such New
Access Road shall be designed and constructed as a dedicated public roadway and
in accordance with specifications, approved by the DOT and the City. The cost of
the New Access Road shall be included as part of the Interchange Development
Costs described in Section 5.1 below. The City agrees to accept dedication of
the New Access Road in accordance with its normal and customary procedures for
right-of-way dedication.
4.4 Construction.
(a) Following execution of the DOT Agreement and upon
completion of the scope of design as may be necessary for solicitation of bids
and upon receipt of such permits and approvals as Gran Central shall deem
necessary, Gran Central shall solicit bids for a lump sum contract for
construction of the Interchange and New Access Road. The successful bidder shall
be selected by Gran Central on such terms and such conditions as Gran Central
shall deem appropriate.
(b) The contractor selected by Gran Central shall be approved
by the DOT pursuant to the terms of the DOT Agreement. Construction of the
Interchange and New Access Road shall commence as soon as reasonably practicable
after (i) conveyance of the Applebaum Property to the DOT under Section 3.1
hereof; (ii) conveyance of the Gran Central Property to the DOT pursuant to
Section 3.5 hereof; (iii) completion of the plans and specifications pursuant to
Section 4.1 above; and (iv) all
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necessary permits and approvals have been obtained. Gran Central shall pay all
costs and fees incurred in the construction of the Interchange and New Access
Road.
5. Reimbursement of Interchange Development Costs.
5.1 In consideration of the conveyance of the Gran Central Property
pursuant to Section 3.5 hereof, the design, permitting and construction of the
Interchange and New Access Road pursuant to Section 4 hereof and other good and
valuable consideration, the City shall pay to Gran Central from Investment
Recouping Contributions out of the Investment Recouping Fund, as defined in
Sections E2 and 7 and to Gran Central in amounts equal to the Project Grant as
defined in Section 6, up to an amount equal to the total sum of items (a)
through (g) below, which have been previously paid by Gran Central, (the
"Interchange Development Costs"), subject to the limitations set forth in
Section 5.3 below:
(a) land acquisition costs incurred in acquiring the Applebaum
Property through condemnation or otherwise pursuant to Section 3.1 hereof,
including legal fees and expenses incurred in the eminent domain proceedings
contemplated hereby;
(b) closing costs (including, but not limited to, title
insurance premiums, survey expense, environmental studies, deed stamps and
recording fees) incurred in conveying the Interchange Lands to the DOT and
dedicating the New Access Road to the City;
(c) the cost of the design of the Interchange and the New
Access Road;
(d) the cost of construction of the Interchange and the New
Access Road, determined pursuant to Section 4.4(a) hereof;
(e) the cost of all change orders or construction change
directives necessitated by unforeseen and unanticipated costs or expenses in an
amount not to exceed five percent (5%) of the lump sum contract for construction
of the Interchange and New Access Road awarded pursuant to Section 4.4(a)
hereof;
(f) all professional fees (including but not limited to legal
fees and other consultants' fees) incurred by Gran Central in the development of
the Interchange and the New Access Road pursuant to this Agreement and pursuant
to the DOT Agreement, but excluding internal overhead costs of Gran Central; and
(g) all permit fees and assessments paid by Gran Central
issued in connection with the Interchange and New Access Road, including the
cost and expense of any mitigation or
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remediation required by any regulatory agency as a condition to or requirement
of any permit.
5.2 The City shall be permitted to inspect and audit the records of
Gran Central relating to the determination of the Interchange Development Costs.
Such right of inspection and audit shall be for the sole purpose of confirming
the fact of and amount of payment of the Interchange Development Costs. Gran
Central shall supply status reports and information to the City upon request as
may be reasonably necessary to provide evidence of costs incurred as part of the
Interchange Development Costs. During the term of this Agreement, Gran Central
shall also furnish to the City on an annual basis, not later than January 30 of
each year, a statement showing the amount of the Construction Funds Factor
accrued for the prior calendar year.
5.3 The amount of Interchange Development Costs to be reimbursed from
the Project Grant and Investment Recouping Fund shall not exceed (x) the lesser
of (i) the actual Interchange Development Costs or (ii) Seventeen Million Four
Hundred Thousand and No/100 Dollars ($17,400,000.00), plus (y) a cost of
construction funds factor (the "Construction Funds Factor") equal to three
percent (3%) per annum calculated on the basis of a 360 day year and multiplied
by the amount of unreimbursed Interchange Development Costs incurred by Gran
Central during the term of this Agreement, which Construction Funds Factor shall
be compounded annually. The sum of (x) + (y) shall constitute the "Maximum IDF
Reimbursement Cost". No additional amounts shall be reimbursed from the Project
Grant or Investment Recouping Fund without further City approval.
6. City Reimbursement of Interchange Development Costs and Construction
Funds Factor.
6.1 The amount of Project Grant, as hereinafter defined, shall be
accrued by the City in favor of Gran Central annually as determined in
accordance with subsection 6.2, and shall be due and payable to Gran Central on
or before May 15 of each calendar year, commencing on the later of (x) May 15,
2000 or (y) Conditional Acceptance of the Interchange by FDOT and ending (i) May
15, 2019 or; (ii) upon the City's payment of the Maximum IDF Reimbursement Cost,
whichever first occurs, shall have been paid to the Developer. The City shall
have no liability for any payments in excess of the Maximum IDF Reimbursement
Cost or after payment of the final installment due May 15, 2019.
6.2 The City shall make an economic development grant annually in an
amount equal to the "Project Grant" (as defined and determined in this Section
6.2) received by the City during the twelve (12) month period ended April 1 last
preceding the due date of such annual installment; provided, however, the first
annual
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installment paid to Gran Central shall also include any Project Grant unpaid to
Gran Central as of such first installment. For the purposes of this Agreement,
"Project Grant" means as follows:
For the calculation for the years 1999 through 2008, 100% of the
following and for the calculation for the years 2009 through 2018, 75% of the
following:
That dollar amount equal to the difference between (i) the municipal
and county ad valorem tax, exclusive of any amount from any debt service
millage, actually paid by any taxpayer (net of any discount pursuant to Section
197.162, F.S., or any successor provision, actually taken by the taxpayer)
during such period with respect to all real property and tangible personal
property comprising the "Interchange Development Area" as described on Exhibit
"C" attached hereto (regardless of the ownership of such property) and (ii) the
amount of such taxes which would have been levied or imposed within the
Interchange Development Area using the assessed value for the year 1998 (the
base year) which for purposes of this Agreement, shall be $43,367,515.00.
Notwithstanding the foregoing, should Gran Central not receive a minimum of
$5,000,000 paid from the Investment Recouping Fund by January 1, 2010, then in
that event the applicable percentage of Project Grant to be paid to Gran Central
will remain at 100% for each year thereafter until May 15, 2019 or until the
Maximum IDF Reimbursement Cost is paid to Gran Central, should such date be
earlier. The foregoing reference to ad valorem taxes shall be deemed to include
any other municipal or county taxes, or other municipal or county fees or
charges in the nature of or in lieu of taxes, that may hereafter be levied or
imposed on Gran Central or other taxpayer or with respect to real property or
tangible personal property comprising the Interchange Development Area in lieu
of or in substitution for the aforesaid taxes and which are levied or imposed
for general municipal or county purposes or shall be available for the City's
general fund. By April 15 of each calendar year, commencing April 15, 2000 and
ending April 15, 2019, the City shall calculate and give written notice to Gran
Central of the amount of the Project Grant received during the preceding twelve
(12) month period ended April 1, together with a copy of the City's detailed
calculations. If Gran Central does not give written notice to the City of
objection to the City's calculations within thirty (30) days after its receipt
thereof, the City's calculations shall be considered acceptable.
6.3 The City covenants and agrees with Gran Central that it shall
budget and appropriate for each City fiscal year, solely out of non-ad valorem
revenues and other legally available funds, a sum equal to the amount of the
Project Grant due for the twelve (12) month period ending on April 15 of each
year. Each annual payment by the City of the amount equal to the Project Grant
to reimburse Gran Central for the Interchange Development Costs and
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the Construction Cost Factor shall be payable by the City to Gran Central
solely out of non-ad valorem revenues and other legally available funds, and
shall not constitute a pledge of or lien upon any other revenues or funds of
the City, and Gran Central and any person, firm or entity claiming by, through
or under Gran Central shall have no right to require the imposition of any tax
or the establishment of any rate of taxation in order to obtain the amounts
necessary to fully pay the Interchange Development Costs and/or the
Construction Funds Factor or any such interest. No pledge or lien shall attach
to any non-ad valorem revenues or other legally available funds prior to the
time when the amount equal to the amount of the Project Grant for any calendar
year has been so appropriated for payment of the next annual installment
payment and the related funds equal to the amount of the Project Grant have
been received by the City. Gran Central acknowledges that this pledge shall be
considered junior and subordinate to any senior pledges the City may designate
to this revenue source in the future.
6.4 The City's reimbursement of the Interchange Development Costs and
the Construction Funds Factor shall not be deemed to constitute a debt,
liability or obligation of the City or of the State of Florida or any political
subdivision thereon within the meaning of any constitutional or statutory
limitation, or a pledge of the faith and credit or taxing power of the City or
of the State of Florida or any political subdivision thereof, but shall be
payable solely from the funds provided therefor in this Section 6.4. The City
shall not be obligated to pay the Interchange Development Costs or the
Construction Funds Factor or any installment thereof or interest thereon except
from the non-ad valorem revenues or other legally available funds provided for
that purpose, and neither the faith or credit nor the taxing power of the City
or of the State of Florida or any political subdivision thereof is pledged to
the payment of the Interchange Development Costs or the Construction Funds
Factor or any installment thereof or interest thereon. Gran Central, or any
person, firm or entity claiming by, through or under Gran Central, or any other
person whomsoever, shall never have any right, directly or indirectly, to compel
the exercise of the ad valorem taxing power of the City or of the State of
Florida or any political subdivision thereof for the payment of the Interchange
Development Costs or the Construction Funds Factor or any installment thereof or
interest thereon.
6.5 Any payments not paid by the City to Gran Central on the due date
shall bear interest from and after ten (10) days from the due date until paid,
at the rate of thirteen percent (13%) per annum. The City shall be obligated to
pay to Gran Central any accrued portion of the Project Grant upon Conditional
Acceptance of the Interchange by the DOT in accordance with the DOT Agreement,
and on May 15 of each year thereafter until such time as the
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Interchange Development Costs, as limited by Section 5.3 above, and the
Construction Funds Factor are repaid, or until May 15, 2019, whichever first
occurs. Amounts paid by the City to Gran Central shall be applied first to
reduce the balance of Interchange Development Costs and second to the
Construction Funds Factor.
6.6 Upon the completion of the construction of the Interchange and New
Access Road and upon acceptance of the Interchange by the DOT and upon
acceptance of the New Access Road by the City in accordance with City standards,
Gran Central shall provide the City with a certified statement of the
Interchange Development Costs.
6.7 In order to facilitate the City's calculation of the Project Grant,
on or before April 1 of each annual period for which the Project Grant is to be
calculated, Gran Central shall provide the City with a list of all City Property
Appraiser's Real Estate Identification Numbers for all real estate and tangible
personal property owned by Gran Central within the Interchange Development Area
and the names and addresses of any tenants of Gran Central located within the
Interchange Development Area. The City shall be responsible for obtaining the
same information for any third party owners or tenants within the Interchange
Development Area.
6.8 Should the City receive payment from the DOT, the Federal Highway
Administration or other governmental agency for the express purpose of
development of the Interchange or any of the improvements constructed or to be
constructed by Gran Central as part of the Interchange Development Costs, such
funds shall be paid by the City to Gran Central in the year of receipt, subject
to the Maximum IDF Reimbursement Cost.
7. Investment Recouping as Source of Reimbursement. The Director of
Planning of the City and Gran Central have agreed upon a system of charge and
collection from future development within the City as an investment recouping
schedule meeting the requirements of Section 655.210, Ordinance Code, which
Investment Recoupment Schedule is attached hereto as Exhibit "D" (the
"Schedule"). Pursuant to the Schedule, Fair Share Contributions shall be paid
into the Investment Recouping Fund and paid by the City to Gran Central as
provided for herein and in the Schedule until payment in full of the
Interchange Development Costs and the accrued and unpaid Construction Funds
Factor, but not to exceed the Maximum IDF Reimbursement Cost.
8. Termination Rights of Gran Central. In addition to particular and
specified termination provisions set forth herein, Gran Central shall have the
right to terminate this Agreement as follows:
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(a) Upon the failure or refusal of the DOT to execute the DOT
Agreement pursuant to Section 2 of this Agreement on or before twelve (12)
months from the date hereof;
(b) Should the City fail to finally complete the acquisition
of the Applebaum Property in the time period and for the amount approved by Gran
Central pursuant to Section 3.2 hereof;
(c) Should Gran Central be unable to satisfy the conditions of
construction commencement set forth in Section 2.2 of the DOT Agreement within
the time period prescribed therein;
(d) Should Gran Central be unable to obtain all necessary
permits and approvals for the construction of the interchange pursuant to
Section 4.2 hereof and the DOT Agreement;
(e) Should Gran Central determine that the Interchange
Development Costs will exceed the Maximum IDF Reimbursement Costs and the City
fails to approve a corresponding increase in the Maximum IDF Reimbursement
Costs, which termination notice must be delivered to the City as prescribed by
Section 5.3 hereof;
(f) Should the City fail to establish the Investment Recouping
Fund pursuant to an Addendum to this Agreement on terms approved by Gran Central
as provided for in Section 7, on or before one hundred twenty (120) days from
the date hereof;
Upon any such termination of this Agreement, at the option of Gran
Central for any of the reasons aforesaid, Gran Central shall be relieved of its
remaining obligations hereunder except for the payment of those attorneys' fees
and costs and expenses incurred by the City pursuant to this Agreement in the
design or permitting of the Interchange and New Access Road and in the
condemnation proceedings up to the date of termination.
9. Miscellaneous Provisions.
9.1 Remedies. If for any reason the City or Gran Central does not
perform or delays the performance of any of its obligations
hereunder, unless the applicable time is extended in writing by the
other party, the nondefaulting party shall have the right, at its
option, and upon thirty (30) days prior written notice to the
defaulting party, to institute an action for mandamus (if the City
is the defaulting party) or to institute an action for specific
performance or other appropriate relief to compel performance by
the defaulting party.
9.2 Notices, Demands and Communications Between the Parties.
Notices, demands and communications between the parties
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shall be given by depositing the same in the United States Mail, postage
prepaid, registered or certified mail, return receipt requested, addressed
as follows:
Notices, demands and communications to the City:
City of Jacksonville
Office of the Mayor
City Hall
Jacksonville, Florida 32202
Attention: Mayor
With a copy to:
Jacksonville Economic Development Commission
City Hall Annex, 14th Floor
Jacksonville, Florida 32202
Attention: Executive Director
and
Office of General Counsel
City of Jacksonville
City Hall
Jacksonville, FL 32202
Attention: General Counsel
Notices, demands and communications to Gran Central:
Gran Central Corporation
1 Malaga Street
St. Augustine, Florida 32084
Attention: President and General Counsel
With a copy to:
David Fitch
Senior Vice President
The St. Joe Company
1650 Prudential Drive, Suite 400
Jacksonville, Florida 32207
Notices given as provided above shall be deemed given and shall be
effective when delivered to the addressee at the address set forth above, or
when deposited in the United States Mail, postage prepaid. Either party may
change its address to which notices, demands and communications shall be sent by
giving written notice thereof to the other party.
9.3 No Liability of Officials, Officers or Employees. No
official, officer or employee of the City, or Gran Central
shall
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be personally liable for any nonperformance or delay in performance by the City,
or Gran Central, respectively, or for any amount which may become due under any
provisions of this Agreement.
9.4 Approvals. Approvals required of the City or Gran Central shall not
be unreasonably withheld or delayed. Unless otherwise required by this Agreement
and except to the extent in conflict with general law, all approvals or
disapproval shall be provided within thirty (30) days of submission of any
documents requiring approval. If no approval or disapproval is given within the
time required by this Section, the approval shall be deemed given and
conclusively established.
9.5 Additional Benefits and Projects. The parties contemplate the
possibility of additional projects of Gran Central or affiliated entities and
their successors and assigns in the City at any time in the future. Nothing
herein shall preclude Gran Central or any affiliated entities and their
successors and assigns from claiming, taking advantage of or receiving the
benefits of any tax credits or other benefits afforded by law with respect to
any such additional projects, nor shall anything herein preclude Gran Central or
any affiliated entities and their successors and assigns from requesting, or the
City or any federal, state or local government, governmental unit, subdivision,
agency or authority from granting, any additional incentives or other economic
development assistance for any such additional projects.
9.6 Agreement, Waivers and Amendments. This Agreement shall be executed
in two or more counterparts, each of which is considered and shall be deemed to
be an original.
This Agreement constitutes the entire understanding and agreement of
the parties as to the subject matter hereof, and supersedes all negotiations or
previous agreements between the parties with respect to all or any part of the
subject matter. Section and section headings included in this Agreement are for
convenience only and shall have no effect upon the meaning or construction of
this Agreement.
No waiver or consent to any departure from any term, condition or
provision of this Agreement shall be effective or binding upon any party hereto
unless such waiver or consent is in writing, signed by an authorized officer of
the party giving the same, and delivered to the other party.
No amendment or modification of this Agreement shall be effective or
binding upon any party hereto unless such amendment or modification is in
writing, signed by an authorized officer of the party claiming to be bound and
delivered to the other party. This Agreement and any provision hereof may be
amended as aforesaid to carry out the purposes and intent of the Interchange
Development
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Ordinance and this Agreement, without further City Council action, except that
no increase in the City's financial commitments shall be made without City
Council approval.
9.7 Compliance with Laws. The parties shall comply with any and all
applicable federal, state and local laws, ordinances, codes, rules and
regulations as the same exist and may be amended from time to time.
9.8 Prohibition Against Contingent Fees. Gran Central has employed and
retained bona fide employees working for Gran Central and attorneys and
consultants to solicit or secure this Agreement. Gran Central warrants that it
has not paid or agreed to pay any person, company, corporation, individual or
firm, other than a bona fide employee working for Gran Central, any fee,
commission, percentage, gift, or any other consideration, contingent upon or
resulting from the award or making of this Agreement.
9.9 Consolidated Municipal/County Government. In entering into this
Agreement and its obligations hereunder, the City is acting in its capacity as a
consolidated municipal and county government, with all of the powers, including
but not limited to home rule powers, it has or is entitled to exercise under its
Charter and the Constitution and laws of the State of Florida, and it is acting
as a municipality as well as a county and a political subdivision of the State
of Florida. If any provision hereof or obligation of the City hereunder is
within the powers of the City as a municipality but not as a county, or is
within the powers of the City as a county but not as a municipality, the City is
and shall be deemed to be acting in the capacity in which it has the greatest or
broadest power to so act or which most fully supports and upholds the validity
of such action.
9.10 Independent Develolper. In performing this Agreement, planning,
developing, and constructing the Interchange, or carrying out any of the
activities to be carried out by Gran Central, Gran Central will be acting
independently, in the capacity of an independent developer, and not as a joint
venturer, partner, associate, employee, agent or representative of the City.
Gran Central or the architect, engineer, contractor or subcontractors for the
Interchange, as the case may be, shall be solely responsible for the means,
methods, techniques, sequences and procedures utilized.
9.11 Non-Discrimination. Gran Central understands the importance that
all economic segments of the City's population be included in capital
construction projects within the City. Gran Central covenants and agrees that it
will not discriminate against or segregate, or permit the discrimination against
or segregation of any person, or group of persons, on account of race, color,
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religion or creed, sex, or national origin in the development of the
Interchange. The selection approval, hiring and discharge of engineers,
architects, contractors, subcontractors, professionals and other third parties
(collectively, the "Vendors") on such terms and conditions as Gran Central deems
appropriate; provided, however, that to the extent that the City furnishes to
Gran Central the names and identities of the City based Vendors, including
without limitation, City based minority Vendors, and to the extent that Gran
Central has the need to enter into contracts with Vendors outside of persons
employed by Gran Central, or companies controlled by Gran Central, then Gran
Central agrees to include all such City based Vendors in the process established
by Gran Central for obtaining bids for construction of the Interchange.
9.12 No Third Party Beneficiaries. This Agreement is made for the sole
benefit of the parties hereto and their respective successors and assigns,
including any successor in interest to Gran Central's interest in the Gran
Central Property, and is not intended to and shall not benefit any third party.
No third party shall have any rights hereunder or as a result of this Agreement
or any right to enforce any provisions of this Agreement.
9.13 Successors and Assigns. This Agreement is binding upon and inures
to the benefit of the City and Gran Central, and their respective successors and
assigns. Gran Central shall not assign its rights and obligations under this
Agreement prior to conditional acceptance of the Interchange by DOT, without the
prior written consent of the City which shall not be unreasonably withheld.
9.14 Term of Agreement. The term of this Agreement shall commence as of
the date first written above and shall expire upon completion of all payments by
the City hereunder, unless sooner terminated as provided herein.
9.15 Cooperation and Further Assurances. The parties hereto agree to
cooperate in all reasonable respects to insure the performance of their
obligations pursuant to this Agreement and agree to execute such additional
documents and instruments as may be reasonably required to carry out the intent
of this Agreement.
9.16 Failure to Commence Construction. In the event Gran Central shall
have failed to commence physical construction of the Interchange Improvements by
July 1, 2004 (the "Interchange Commencement Date"), the City may, at its option,
terminate this Agreement and any amounts deposited in the Investment Recoupment
Fund shall be retained by the City and the parties shall be relieved of any
further obligations under this Agreement; provided, however, the Interchange
Commencement Date shall be automatically extended for any period during which
Gran Central shall diligently pursue the defense or appeal of any judicial or
administrative
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<PAGE> 20
proceedings which delay or enjoin the Interchange Commencement Date. For
purposes of this Section 9.16, the term "physical construction" shall mean earth
moving or grading activity.
ATTEST: THE CITY OF JACKSONVILLE, FLORIDA
- ----------------------------------- ---------------------------------------
Linnie C. Williams John A. Delaney
Corporation Secretary Mayor
ATTEST: GRAN CENTRAL CORPORATION, a Florida
corporation
/s/ Mary C. Mueller By: /s/ Robert F. MacSwain
- ----------------------------------- ----------------------------------
Corporation Assistant Secretary (Print Name) Robert F. MacSwain
--------------------
Title: Vice President
---------------------------
(CORPORATE SEAL)
20
<PAGE> 21
EXHIBIT LIST
DOT Agreement .....................................................Exhibit A
Interchange Lands .................................................Exhibit B
Interchange Development Area ......................................Exhibit C
Investment Recoupment Schedule ....................................Exhibit D
<PAGE> 22
CITY OF JACKSONVILLE
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "A"
[DOT AGREEMENT]
<PAGE> 23
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
INTERCHANGE DEVELOPMENT AGREEMENT
THIS INTERCHANGE DEVELOPMENT AGREEMENT (this "Agreement"), made and
entered into this ____ day of _____, 1999, by and between the STATE OF FLORIDA
DEPARTMENT OF TRANSPORTATION, an agency of the State of Florida, hereinafter
called the "DOT", and Gran Central Corporation hereinafter called the "Gran
Central".
WITNESSETH:
WHEREAS, Gran Central has the authority to enter into this Agreement
and to undertake the project hereinafter described, and the Department has been
granted the authority to enter into this Agreement and to function adequately in
all areas of appropriate jurisdiction including the implementation of an
integrated and balanced transportation system;
NOW, THEREFORE, in consideration of the mutual covenants, promises and
representations herein, the parties agree as follows:
1. PURPOSE OF AGREEMENT: The purpose of this Agreement is to provide
for the requirements to be fulfilled by Gran Central and the DOT prior to
undertaking construction of an interchange on Interstate 95 and Old St.
Augustine Rd. in Duval County hereinafter called the "Interchange", and to
state the terms and conditions upon which the Interchange will be constructed
and the understandings as to the manner in which the Interchange will be
undertaken and completed. The DOT acknowledges that Gran Central will
substantially rely on the various
<PAGE> 24
agreements and commitments of the DOT contained in this Agreement and will incur
substantial expense in realization of the construction activities contemplated
under the terms of this Agreement which will be funded solely by Gran Central in
reliance upon reimbursement by the City of Jacksonville and the lands upon
which the Interchange will be constructed will be contributed to the DOT without
compensation by DOT to Gran Central. Further, the DOT represents that it has the
authority to enter into this Agreement pursuant to the provisions of the
Transportation Code of the Florida Statutes.
2. Accomplishment of the Interchange:
2.1 REQUIREMENTS TO COMMENCE: As a condition to commencement of the
construction of the Interchange, the following conditions precedent shall have
been satisfied:
2.1.1 Each regulatory agency exercising jurisdiction over the
development of the Interchange shall have issued such approvals or permits as
may be necessary for the development of the Interchange, including but not
limited to:
(1) Florida Department of Transportation work within the
right-of-way permit;
(2) Florida Department of Transportation driveway
connection permit;
(3) Florida Department of Transportation drainage
connection permit;
(4) Federal Highway Administration interchange
modification report;
2
<PAGE> 25
(5) St. Johns River Water Management
District environmental resource permit;
(6) City of Jacksonville Department of
Public Works approval;
(7) Army Corps of Engineers dredge and fill
permit.
(8) Florida Department of Environmental
Protection water and sewer permits; and
(9) National Pollutant Discharge Elimination
System permit.
(The foregoing are collectively referred to herein as the "Regulatory
Permits").
2.1.2 The DOT through the District Secretary, and the
FHWA through its authorized representative shall have issued their letter
approval of the Plans and Specifications, as defined in paragraph 6 below, which
shall constitute (i) approval of the Interchange Plans and Specifications by the
DOT and the Federal Highway Administration ("FHWA") and (ii) evidence that no
further permits or approvals are required of the DOT or FHWA for construction of
the Interchange.
2.1.3 Upon receipt of the Regulatory Approvals and
approval of the Plans and Specifications pursuant to subsection 2.1.2 above:
(1) Gran Central shall have conveyed to the
DOT those lands as described on Exhibit A attached hereto by Special Warranty
Deed in the form attached as Exhibit A-1.
(2) The City of Jacksonville, either through
condemnation or otherwise, shall have caused title to lands described on Exhibit
B to be conveyed to the
3
<PAGE> 26
DOT by deed in the form attached as Exhibit B-1. The lands described
in Exhibits A and B are hereinafter defined as the "Property".
2.1.4 Gran Central shall have provided to the DOT,
and the DOT shall have approved as to form and content, a performance bond,
letter of credit or completion guaranty in the amount of the estimated
construction costs of the Interchange as provided in Section 3 or a three-party
agreement between the DOT, Gran Central and a development lender providing for
the right of the DOT, upon declaration of default by the lender, to draw upon
the funds made available to Gran Central for construction of the Interchange in
the amount of the estimated construction costs of the Interchange for the
purpose of completion of construction of the Interchange in accordance with the
terms of the development loan. If Gran Central shall provide a performance bond
or letter of credit as security, Gran Central may reduce the dollar amount of
the performance bond or letter of credit from time to time on the basis of the
percentage of the Work completed as certified by the Inspecting Engineer and
approved by the DOT's project engineer, but such amount shall not be reduced
below that amount which is equal to one hundred and twenty five percent (125%)
of the cost of the percentage of the Work remaining to be completed as certified
by the Inspecting Engineer.
2.1.5 Gran Central shall have delivered the payment
and performance bond of the Contractor, as hereinafter defined, naming the DOT
as an additional beneficiary in an amount equal to the estimated construction
cost of the Interchange as provided in Section 3.
2.2 GENERAL REQUIREMENTS: Upon commencement, the Interchange
will be completed by Gran Central, in accordance with the Plans and
Specifications with all practical
4
<PAGE> 27
dispatch in a sound, economical and efficient manner, and in accordance with the
provisions herein and all applicable laws.
2.3 PURSUANT TO FEDERAL, STATE, AND LOCAL LAW: In the event
that any election, referendum, approval, permit, notice, or other proceeding or
authorization is requisite under applicable law by any governmental agency,
other than the DOT or FHWA, to enable Gran Central to enter into this Agreement
or to undertake the Interchange hereunder, or to observe, assume or carry out
any of the provisions of the Agreement, Gran Central will initiate and
consummate, as provided by Law, all actions necessary with respect to any such
matter so requisite.
2.4 FUNDS OF GRAN CENTRAL: Gran Central shall initiate and
prosecute to completion all proceedings necessary to enable Gran Central to
provide the necessary funds for completion of the Interchange.
2.5 SUBMISSION OF CONTRACTS AND OTHER DOCUMENTS: Gran Central
shall submit to the DOT those documents relating to the Interchange as listed in
Exhibit C and such other documents, if any, as Gran Central may be required to
disclose pursuant to Chapter 119, Florida Statutes.
3. INTERCHANGE COSTS: The total estimated cost of the Interchange is
Seventeen Million Four Hundred Thousand and No/100 Dollars ($17,400,000.00). The
total estimated cost is subject to change based on bids actually received and is
subject to change orders for unforeseen conditions and other customary
occurrences. This total estimated cost is based upon the estimate summarized in
Exhibit D hereof. Gran Central agrees to bear all expenses of the
5
<PAGE> 28
total estimated cost of the Interchange and any deficits involved (other than
the costs of inspections and approvals required by DOT). The DOT acknowledges
that the actual cost of the Interchange may be re-paid to Gran Central by the
City of Jacksonville pursuant to the Interchange Development Agreement dated
_______ 199_ (the "Interchange Development Agreement").
4. INSURANCE: Gran Central shall carry or shall cause the Interchange
contractor selected by Gran Central (the "Contractor") to carry property and
casualty insurance on Interchange equipment and facilities and provide evidence
of said insurance for the Interchange amount stated in paragraph 3 of this
Agreement.
4.1 INSURANCE AND WORKER'S COMPENSATION: During the entire
time for performance of the Work, the Contractor and all other subcontractors
shall maintain insurance policies with carriers satisfactory to Gran Central and
in amounts and limits satisfactory to Gran Central as hereinafter provided.
Certificates of such insurance coverage shall be furnished to Gran Central
before commencement of the Interchange work, and shall be in form and substance
satisfactory to Gran Central. These certificates shall provide that the insurer
shall give ten (10) days written notice to Gran Central prior to change or
cancellation of any policy. The Contractor shall maintain:
4.1.1 Worker's Compensation and Employers Liability
Insurance in complete compliance with all federal and state laws, applicable in
the states where the Work is to be performed, which coverage shall be not less
than One Million and No/100 Dollars ($1,000,000.00);
6
<PAGE> 29
4.1.2 Comprehensive General Bodily Injury and
Property Damage Liability, including Contractual Liability (to cover obligations
as set forth in various "Hold Harmless" and "Indemnity" clauses herein), which
coverage shall not be less than Five Million and No/100 Dollars ($5,000,000.00);
4.1.3 Comprehensive Automobile Liability (owned,
non-owned, hired) which coverage shall be not less than Five Hundred Thousand
Dollars and No/100 Dollars ($500,000.00);
4.1.4 Aircraft Public Liability including passenger
liability and property damage, if owned or chartered aircraft shall be used in
connection with the work, which coverage shall not be less than Five Hundred
Thousand and No/100 Dollars ($500,000.00);
4.1.5 Marine Liability Insurance, including collision
liability and protection and indemnity, if owned or chartered watercraft shall
be used in connection with the work, which coverage shall not be less than Five
Hundred Thousand and No/100 Dollars ($500,000.00).
4.1.6 Builder's risk insurance, in an amount as may
be required by Gran Central insuring against all loss or damage to the work by
reason of any hazard.
4.2 WAIVER OF SUBROGATION: All policies of insurance shall
contain a waiver of subrogation of the Contractor's rights against Gran Central,
the DOT or the City of Jacksonville, or their employees, agents, servants, and
representatives, as related to any or all losses, expenses, demand, claims, or
suits caused or occasioned by, attributed to, arising out of
7
<PAGE> 30
or incident to any negligence, misfeasance on the part of Gran Central's
employees, agents, servants or representatives, or of the DOT or the County.
4.3 ADDITIONAL INSUREDS: Gran Central, Gran Central's lender,
the DOT and the City of Jacksonville shall be named as additional insureds under
each policy carried pursuant to this paragraph 4.0 with coverage extended to
such parties for all risks protected against by such policies. Each policy shall
require the insurer named therein to provide each insured with not less than
thirty (30) days notice of lapse, termination or expiration of such policy. Gran
Central, Gran Central's lender, DOT or the County shall have the right to take
any action to continue such insurance policies in full force and effect,
including, but not limited to paying premiums. Each such insurance policy
carried by the Contractor shall be primary, whether or not Gran Central, Gran
Central's lender the DOT or the County have other collectible insurance.
5. INSPECTIONS AND INTERCHANGE ACCEPTANCE:
5.1 PARTIAL INSPECTIONS: During construction, the DOT shall,
at its cost, make continuous inspections of the Interchange. Within fifteen (15)
days of receipt of a certification to the DOT by the project engineer selected
by Gran Central (the "Inspecting Engineer") as to partial completion of the
progress of the Interchange in accordance with the Plans and Specifications,
the DOT, through the District Secretary, shall issue its written acceptance of
the Interchange through the applicable stage of completion, as evidenced by the
Inspecting Engineer's certificate and as approved by the DOT's project engineer,
which certificate shall be issued not more frequently than monthly.
8
<PAGE> 31
5.2 CONDITIONAL ACCEPTANCE: The DOT, through the District
Secretary, shall issue its written conditional acceptance of the Interchange
within fifteen (15) days of receipt by the DOT of certification by the
Inspecting Engineer to the DOT of substantial completion of the Interchange in
accordance with the Plans and Specifications upon the Property conveyed to the
DOT and the County ("Conditional Acceptance"), as approved by the DOT's project
engineer, and shall issue such permits and approvals and shall obtain such
permits and approvals from FHWA as may be necessary to allow for the opening and
utilization of the Interchange as a whole for public transportation. The
Conditional Acceptance shall include a statement certified by the project
engineer of any remaining punch list items to be completed to cause the
Interchange to conform to the Plans and Specifications and which are a condition
to issuance of the Final Acceptance by the DOT as described in paragraph 5.3
below. Gran Central shall be responsible to obtain any permits and approvals
necessary from the City of Jacksonville as to portions of Old St. Augustine Road
outside of the Interchange limited access right-of-way of the DOT, however, the
DOT shall cooperate with Gran Central and the City of Jacksonville to the extent
necessary to obtain such permits.
5.3 FINAL ACCEPTANCE. The DOT, through the District Secretary
shall issue its written final acceptance of the entire Interchange with fifteen
(15) days of receipt by the DOT of certification by the Inspecting Engineer to
the DOT of substantial completion of all punch list items as identified in the
Conditional Acceptance as approved by the DOT's project engineer (the "Final
Acceptance"). From and after the issuance of Final Acceptance of the Interchange
by the
9
<PAGE> 32
DOT, Gran Central shall be relieved from any obligation pertaining to the
Interchange under this Agreement, including, but not limited to, the
indemnification set forth in paragraph 9.6 hereof.
5.4 APPROVAL OF DOT'S ENGINEER: Approval by the DOT's project
engineer of any certificate of completion by the Inspecting Engineer or
certificate supporting Conditional Acceptance or Final Acceptance by the DOT
shall be granted based upon the percentage of completion of the Work and shall
be granted when the Work is performed in compliance with the Plans and
Specifications.
6. PLANS AND SPECIFICATIONS:
6.1 INTERCHANGE PLANS: The Plans and Specifications for the
Interchange shall be submitted to DOT for approval prior to commencement of
construction. Compliance with the Plans and Specifications shall be evaluated by
the DOT with reference to (i) the 1991 Edition of the Florida Department of
Transportation Standard Specifications, Division II Construction Details, and
Division III - Materials, and (ii) the 1990 Edition of the Roadway and Traffic
Design Standards and respective Special Provisions and Design Memoranda bearing
an effective date which precedes the date of execution of this Agreement by Gran
Central.
6.2 PLAN MODIFICATIONS: Changes in the Plans and
Specifications may be implemented by Gran Central from time to time, provided
that any material changes in (i) roadway and traffic design, (ii) maintenance of
traffic or (iii) environmental permit conditions, shall require the prior
written approval of the DOT which approval will not be unreasonably withheld or
denied. Gran Central shall submit any requested changes in the Plans and
Specifications which require the DOT's approval to the District Secretary. The
District
10
<PAGE> 33
Secretary shall accept or reject the requested change in writing within thirty
(30) days of receipt of such request. Any rejection of a requested change shall
be accompanied by an explanation of the reasons for such rejection. If no
approval or disapproval is given within the time required by this section, the
approval shall be deemed given and conclusively established. The term "Plans and
Specifications" as utilized in this Agreement shall refer to those documents as
approved by DOT in accordance with this paragraph 6.0.
7. SPECIFIC PERFORMANCE: If either Gran Central or the DOT shall
default in their obligations under this Agreement, subject only to the
provisions of Section 8 below, and such default is not cured or cure commenced
and diligently prosecuted within thirty (30) days of written notice of such
default, the non-defaulting party shall be entitled to maintain a cause of
action for specific performance against the defaulting party. The parties
acknowledge that the foregoing remedy of specific performance is the sole and
exclusive remedy available in the event of a default, except as set forth in
Section 8 below, and except for the right to realize upon the performance
guaranties provided to the DOT as set forth in Section 2.1.5 above, and the
parties hereby waive all other remedies that may be available to them at law or
in equity.
8. TERMINATION OR SUSPENSION OF INTERCHANGE:
8.1 TERMINATION OR SUSPENSION BY DOT: If Gran Central abandons
or, before completion, finally discontinues the Interchange, or for any reason,
the commencement, prosecution, or completion of the Interchange in accordance
with paragraph 10 hereof by Gran Central is rendered legally impossible, the DOT
may as its sole remedy, by thirty (30) days written notice to Gran Central, (i)
suspend any or all of its obligations under this Agreement
11
<PAGE> 34
until such time as the event or condition resulting in such suspension has
ceased or been corrected, (ii) terminate any or all of its obligations under
this Agreement, or (iii) realize upon the performance guaranties provided to the
DOT as set forth in Section 2.1.5 above, provided that Gran Central shall have a
period of thirty (30) days from notice from the DOT within which to recommence
the Interchange and prosecute to completion, in which event the DOT shall no
longer have the right to terminate this Agreement.
8.2 TERMINATION BY GRAN CENTRAL: Gran Central shall be
entitled to terminate this Agreement at any time prior to the conveyance of the
Property to the DOT, by written notice of termination to the DOT, whereupon all
parties shall be relieved from any further obligations hereunder.
9. MISCELLANEOUS PROVISIONS:
9.1 Environmental Pollution: All Plans and Specifications have
been presented to the DOT for acceptance. Prior to rendering such acceptance,
the DOT shall take into consideration whether such facility or equipment is
designed and equipped to prevent and control environmental pollution.
9.2 HOW AGREEMENT IS AFFECTED BY PROVISIONS BEING HELD
INVALID: If any provision of this Agreement is held invalid, the remainder of
this Agreement shall not be affected. In such an instance the remainder would
then continue to conform to the terms and requirements of applicable law.
9.3 STATE OR TERRITORIAL LAW: Nothing in the Agreement shall
require Gran Central or the DOT to observe or enforce compliance with any
provision thereof, perform any
12
<PAGE> 35
other act or do any other thing in contravention of any presently applicable
State law; provided, however, if any of the provisions of this Agreement violate
any presently applicable State law, Gran Central and the DOT will, upon
notification of such noncompliance, notify one another in writing in order that
appropriate changes and modifications may be made by the DOT and Gran Central to
the end that Gran Central may proceed as soon as possible with the Interchange.
9.4 USE AND MAINTENANCE OF INTERCHANGE FACILITIES AND
EQUIPMENT: Gran Central agrees that the Interchange will be used by the DOT
upon completion to provide or support public transportation. The DOT further
agrees to maintain the Interchange in good working order and to comply with any
applicable permit conditions of governmental agencies applicable to the
Interchange from and after acceptance of the Interchange, as provided for in
subparagraph 5.3 above and after the assignment of all Contractor warranties
from Gran Central to the DOT.
9.5 CONTRACTUAL INDEMNITY:
9.5.1 BY GRAN CENTRAL: Gran Central shall indemnify,
hold harmless and defend the DOT and all of its officers, agents and employees,
from and against any and all losses, claims or suits (including costs and
attorneys' fees, whether at the trial level or on appeal) arising directly or
indirectly as a result of breach of this Agreement or caused by, resulting from,
growing out of, or incident to the Interchange, occasioned by the acts or
omissions of Gran Central or any of its subcontractors. The DOT reserves the
right, in the event it so elects, to participate in any litigation caused by,
resulting from, incident to, or arising out of the performance of the
Interchange and for which indemnity is provided pursuant to this
13
<PAGE> 36
Section 9.5.1, but such participation shall not excuse Gran Central from the
indemnification obligations set forth herein. This indemnification obligation of
Gran Central shall terminate upon the issuance of Final Acceptance of the
Interchange by the DOT.
9.5.2 BY DOT: DOT shall indemnify, hold harmless and
defend Gran Central and all of its officers, agents and employees, from and
against any and all losses, claims or suits (including costs and attorney's
fees, whether at the trial level or on appeal) arising directly or indirectly as
a result of (i) breach of this Agreement (ii) caused by, resulting from, growing
out of, or incident to the Interchange, occasioned by the acts or omissions of
DOT or any of its agents or (iii) resulting from, growing out of or incident to
the design of the Interchange in accordance with DOT specifications. Gran
Central reserves the right, in the event it so elects to participate in any
litigation caused by, resulting from, incident to, or arising out of the
performance of the Interchange and for which indemnity is provided pursuant to
this Section 9.5.2 but such participation shall not excuse DOT from the
indemnification obligations set forth herein. This indemnifications obligation
of DOT shall terminate upon the issuance of Final Acceptance of the Interchange
by the DOT.
10. INTERCHANGE COMPLETION: Gran Central agrees proceed with
commencement of design and construction of the Interchange upon satisfaction of
all conditions precedent thereto set forth in the Interchange Development
Agreement described in paragraph 3 hereof. Gran Central shall proceed with
design and construction using reasonable and due diligence until its completion.
Subject to force majeure and extensions otherwise approved by DOT, the
14
<PAGE> 37
construction of the Interchange shall be completed within twenty-four months of
commencement of construction.
11. FORCE MAJEURE: Gran Central shall be excused for the period of any
delay in the performance of any obligations hereunder when prevented from doing
so by cause or causes beyond Gran Central's control which shall include, without
limitation, all labor disputes, civil commotion, war, war-like operations,
invasion, rebellion, hostilities, military or usurped power, sabotage,
governmental regulations or control, fire or other casualty, inability to obtain
any material, services, insurance proceeds, or financing or through acts of God
including floods, hurricanes, tornadoes or other adverse weather conditions.
12. AGREEMENT FORMAT: All words used herein in the singular form shall
extend to and include the plural. All words used in the plural form shall extend
to and include, the singular. All words used in any gender shall extend to and
include all genders.
13. EXECUTION OF AGREEMENT: This Agreement may be simultaneously
executed in a minimum of two counterparts, each of which so executed shall be
deemed to be an original, and such counterparts together shall constitute one in
the same instrument.
14. NOTICES: For purposes of this Agreement, all notices provided
herein shall be sent Certified Mail, Return Receipt Requested, by hand delivery,
by overnight courier, or by facsimile machine with receipt confirmed, to the
address referenced below:
If to DOT: Florida Department of Transportation
1901 South Marion Street
P. 0. Box 1089
Lake City, Florida 32056
ATTENTION: District Secretary
15
<PAGE> 38
If to Gran Central: Gran Central Corporation
Attention: Robert M. Rhodes, Esq.
1650 Prudential Drive, Suite 400
Jacksonville, Florida 32207
15. ASSIGNMENT: This Agreement may be assigned by Gran Central without
the consent of the DOT. If such assignee shall specifically assume and agree to
perform the obligations of Gran Central set forth herein, then Gran Central
shall thereafter be fully and forever released from any and all obligations
under the terms of this Agreement.
16. EFFECT OF THIS AGREEMENT: This Agreement constitutes the complete
agreement between the parties with respect to its subject matter and all
antecedent or contemporaneous negotiations, undertakings, representations,
warranties, inducements and obligations are merged into this Agreement and
superseded by its delivery. No provision of this Agreement may be waived unless
such waiver is set forth in writing signed by the party to be charged and this
Agreement otherwise may be modified or amended only by a written instrument
signed by both Gran Central and the DOT.
Gran Central Corporation
By
--------------------------------------
Department of Transportation
By
--------------------------------------
16
<PAGE> 39
EXHIBITS
A - Interchange Description
Al- Special Warranty Deed/Gran Central
B - Property/Gran Central
B1- Special Warranty Deed/City
C - Documents Submitted to DOT
D - Interchange Costs
17
<PAGE> 40
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "A"
INTERCHANGE DESCRIPTION
18
<PAGE> 41
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "A-1"
SPECIAL WARRANTY DEED - GRAN CENTRAL
19
<PAGE> 42
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "B"
PROPERTY/GRAN CENTRAL
20
<PAGE> 43
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "B-1"
SPECIAL WARRANTY DEED - CITY
21
<PAGE> 44
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "C"
DOCUMENTS SUBMITTED TO DOT
22
<PAGE> 45
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "D"
INTERCHANGE COSTS
23
<PAGE> 46
CITY OF JACKSONVILLE
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "B"
[INTERCHANGE LANDS]
<PAGE> 47
[MAP OF 1-95/ST. AUGUSTINE ROAD INTERCHANGE]
<PAGE> 48
CITY OF JACKSONVILLE
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "C"
[INTERCHANGE DEVELOPMENT AREA]
<PAGE> 49
[MAP OF GRAN PARK AT JACKSONVILLE]
<PAGE> 50
TRACT ONE
- ---------
Portions of Sections 19, 20, 29, and [XXXX] Township 4 South, Range 28
East, Jacksonville, Duval County, Florida, being more particularly described as
follows:
For point of beginning, commence at [XXXX] point of intersection of the
Southeasterly right of way [XXXX] of Old St. Augustine Road (County Road No. 1)
with [XXXX] Southwesterly right of way line of Florida East Coast Railway right
of way, and run S-41 degrees 00'00"E., along [XXXX] Southwesterly right of way
line, a distance of 8,032.19 [XXXX] to its point of intersection with the
Easterly line [XXXX] Section 29, Township and Range aforementioned; run the S-1
degree 02'55"E., along said Easterly section line, a distance of 278.39 feet to
a point; run thence S-88 degrees 41'20"W. [XXXX] distance of 5,349.70 feet to a
point on the line dividing said Section 29 and Section 30, Township and Range
aforementioned; run thence N-88 degrees 13'35"W., a distance 1,789.94 feet to a
point on the Northeasterly right of way line of Interstate 95; run thence N-40
degrees 25'39"W., along said right of way line, a distance of 7,314.04 feet to a
point of curvature; run thence Northwesterly, along said right of way line and
along the arc of a curve, concave Northeasterly with a radius of 11,309.16 feet,
an arc distance of 131.1 [XXXX] feet to a point on the Westerly line of Section
19, Township and Range aforementioned, said arc being subtended by a chord
bearing and distance of N-40 degrees 05'43"W., 131.12 feet [XXXX] run thence N-0
degrees 43'10"W., along said Westerly section line, a distance of 70.36 feet to
its point of intersection with the Southerly right of way line of Old St.
Augustine Road, County Road No. 1; run thence along said right of way line, as
follows: first course, S-88 degrees 14'07"E. a distance of
<PAGE> 51
437.06 feet to a point; second course, N-86 degrees 32'27"E. a distance of
302.66 feet to a point; third course S-85 degrees 51'52"E. a distance of 287.18
feet to a point; fourth course, S-85 degrees 57'50"E. a distance of 3,287.81
feet to a point; run thence S-1 degree "36'25"W. a distance of 327.77 feet a
point; run thence S-88 degrees 23'35"E. a distance of 602.28 feet to a point;
run thence N-1 degree 36'25"E. a distance of 302.[XX] feet to a point on the
aforementioned Southerly right of way line of Old St. Augustine Road; run thence
S-85 degrees 57'50"E. along said right of way line, a distance of 20.14 feet to
a point of curvature; run thence Easterly, along said right of way line and
along the arc of a curve, concave Northwesterly with a radius of 1,482.40 feet,
an arc distance of 79.9[X] feet to the Northwesterly corner of that certain
tract described in deed recorded at Official Records Volume 6062, Page 2169,
said arc being subtended by a chord bearing and distance of S-87 degrees
30'29"E., 79.89 feet; run thence along the boundary of said tract, as follows:
first course, S-1 degree 36'25"W. a distance of 977.27 feet to a point; second
course, S-88 degrees 23'353"E. a distance of 1,376.00 feet to a point; third
course, N-1 degree 36'25"E. a distance of 633.14 feet to a point; fourth course,
N-88 degrees 23'35"W. a distance of 809.47 feet to a point; fifth course, N-1
degree 36'25"E. a distance of 463.74 feet to a point on the aforementioned
Southeasterly right of way line of Old St. Augustine Road, County Road No. 1;
run thence Northeasterly, along said right of way line and along the arc of a
curve, concave Northwesterly with a radius of 1,482.40 feet, and arc distance of
505.49 feet to the point of tangency of said curve, said arc being subtended by
a chord bearing and distance of N-58 degrees 39'18"E., 503.05 feet; run thence
N-48 degrees 53'10"E., along said right of way line, a distance of 909.88 feet
to the point of beginning.
<PAGE> 52
CITY OF JACKSONVILLE
INTERCHANGE DEVELOPMENT AGREEMENT
EXHIBIT "D"
[INVESTMENT RECOUPMENT SCHEDULE]
<PAGE> 53
EXHIBIT "D"
INVESTMENT RECOUPMENT SCHEDULE
1. DEFINITIONS
1. 1. "Added Capacity" shall mean capacity made available on the
Improved Links by construction of the Interchange Development Improvements as
such capacity is described on Schedule 1 attached.
1.2. "Available Capacity" shall have the meaning set forth in the
Concurrency Ordinance.
1.3. "CCAS" or "CRC" shall have the meanings defined in Section 655,
Ordinance Code and shall include any successor form of transportation
concurrency certificate or approval issued by the City of Jacksonville pursuant
to Chapter 655 or otherwise.
1.4. "City" shall mean the City of Jacksonville.
1.5. "CMSO" shall mean the City's Concurrency Management System Office,
as established pursuant to Section 655, Ordinance Code.
1.6. "Concurrency Ordinance" shall mean and refer to Chapter 655,
Ordinance Code.
1.7. "Development" shall have the meaning set forth in Chapter 655,
Ordinance Code.
1.8. "Existing Capacity" shall mean the existing capacity on the
Improved Links as such capacity is described on Schedule 2 attached.
1.9. "Fair Share Contribution" shall mean the amount charged to
applicants impacting the Improved Links pursuant to Objective _______ of the
City 2010 Comprehensive Plan Traffic Circulation Element as a condition to
transportation concurrency approval on deficit transportation links under the
Concurrency Ordinance, as such charges may be modified from time to time;
provided such Fair Share Contribution charged for the Improved Links until the
Investment Recoupment Termination Date, shall be not less than the amount per
Trip for the Improved Links set forth on Schedule 3 attached (the "Minimum Fair
Share Payment").
1.10. "Final Development Order" shall have the meaning set forth in
Chapter 655, Ordinance Code.
<PAGE> 54
1.11. "Gran Central" shall mean Gran Central Corporation, its
successors or assigns, as a party to that certain Interchange Development
Agreement with the City of Jacksonville, dated _____________________, 1999.
1.12. "Improved Links" shall mean those links identified on Schedule 1
and Schedule 2 attached.
1.13. "Interchange Development Costs" shall have the meaning set forth
in Section 5.1 of the Interchange Development Agreement.
1.14. "Interchange Development Improvements" shall mean those
improvements constructed or to be constructed by Gran Central pursuant to
Section 5.1 of the Interchange Development Agreement.
1.15. "Investment Recoupment Charge Date" shall mean the date upon
which the Interchange Development Improvements are incorporated into any
transportation model used by the City to measure Available Capacity, which date
shall be noticed in writing by the CMSO to Gran Central, but not later than the
date of Conditional Acceptance of the Interchange by FDOT, whichever first
occurs.
1.16. "Investment Recoupment Fund" shall mean the account identified by
the City pursuant to the Interchange Development Agreement into which all Fair
Share Contributions will be deposited.
1.17. "Investment Recoupment Termination Date" shall mean the first to
occur of (i) the date all sums which may become due and payable to Gran Central
under the Interchange Development Agreement are paid in full; (ii) the date upon
which Gran Central has received the Fair Share Contribution for Added Capacity
on each Improved Link; or (iii) May 15,2019.
1.18. "Maximum Link Cost Recovery" shall mean the maximum amount of
Interchange Development Costs which may be recovered through Fair Share
Contributions for each Improved Link as described on Schedule 4 attached hereto.
1.19. "Planning Department" shall mean the City of Jacksonville
Planning Department.
1.20. "Planning Director" shall mean the Director of the City of
Jacksonville Planning Department.
1.21. "Trip" shall mean each pm peak hour trip generated from
development which impacts the Improved Links, pursuant to the CCAS and CRC
testing under the Concurrency Ordinance, as in effect on the date hereof and as
such trips are measured in
2
<PAGE> 55
accordance with the Institute of Traffic Engineers Trip Generation Manual (6th
edition) or such other measurement adopted by or utilized by the City and
administered by the CMSO.
2. FAIR SHARE CONTRIBUTION CHARGE
2.1. From and after the Investment Recoupment Charge Date and to and
including the Investment Recoupment Termination Date, the City shall charge all
applicants for Final Development Orders for Development coincident with
application for transportation concurrency approval by the CMSO pursuant to the
Concurrency Ordinance, a Fair Share Contribution which would be charged by the
City for any portion of the Added Capacity reserved to such Development as if
the Improved Links were a deficit link to the extent of the Added Capacity
(notwithstanding that the Added Capacity may then be included in the Concurrency
Ordinance as "Available Capacity"). These amounts shall be deposited by the City
upon receipt into the Investment Recoupment Fund and remitted by the City to
Gran Central on a monthly basis not later than the 15th day of each month
following receipt of such Fair Share Contributions by the City by written
requisition from the Director of the Planning Department or his or her designee.
2.2. Fair Share Contributions shall be paid over to Gran Central by the
City as to any Improved Link until the Added Capacity is reduced to zero for
such Improved Link. No Fair Share Contributions will be charged by the City or
paid to Gran Central for the Existing Capacity.
2.3. All Fair Share Contributions to be paid to Gran Central under
subsection 2.1 above shall be deposited by the City into the Investment
Recoupment Fund and if not paid to Gran Central on or before the due date, shall
bear interest at the rate of thirteen percent (13%) per annum until paid.
2.4. Fair Share Contributions shall be charged by the City for impacts
to the Improved Links as a condition to issuance of any Final Development Order,
regardless of the amount of Available Capacity on the Improved Links under the
Concurrency Ordinance at the time of such charge and payment, recognizing that
these Fair Share Contributions are committed by the City to be charged and paid
to Gran Central pursuant to Section 655.215, Ordinance Code, to reimburse Gran
Central for advancing the cost of the Interchange Development Improvements.
2.5. Gran Central shall notify the CMSO in writing not later than (i)
thirty (30) days after the date of Conditional Acceptance of the Interchange by
FDOT of the date of such Conditional Acceptance and (ii) not later than forty
five (45) days after Final Acceptance of the Interchange by FDOT of the total
amount of the Interchange Development Costs. Gran Central shall also certify to
the City and the CMSO in writing the amount of any Interchange Development
Costs previously funded by Gran Central or contractually committed by Gran
Central prior to disbursement of funds to Gran Central from the Investment
Recoupment Fund.
3
<PAGE> 56
If at any time the amount of Fair Share Contributions payable to Gran Central
under this Agreement exceeds the amount of Interchange Development Costs
advanced by Gran Central, payments to Gran Central from the Investment
Recoupment Fund shall be tolled until advances by Gran Central are equal to or
greater than the Fair Share Contributions to be advanced.
2.6. The City shall be responsible to establish a system within the
CMSO to insure that all applicants for Final Development Orders will be charged
the Fair Share Contribution prior to and as a condition to issuance of Final
Development Orders and as part of any issuance of CCAS or CRC by the City. If
the City shall fail to collect and deposit any such Fair Share Contributions
into the Investment Recoupment Fund which are due and owing to Gran Central
under the terms of this Schedule, then the city shall be obligated to
appropriate and deposit into the Investment Recoupment Fund such amounts from
its legally available funds not later than fifteen (15) days from the date of
issuance of any Final Development Order as to which such charges are owed but
unpaid.
2.7. No separate administration fees to establish or administer Fair
Share Contributions shall be charged by the City under this Schedule. Such
administrative costs shall be incurred as part of and paid out of fees for
issuance of CCAS and CRC by the CMSO pursuant to Chapter 655, Ordinance Code.
2.8. The Planning Director has determined that the Fair Share
Contribution constitutes a fair and reasonable method of charge which reflects
the estimated cost of construction of transportation improvements which would be
required to be paid for by applicants for development approvals under Chapter
655, Ordinance Code or the City as part of the Capital Improvements Program, to
create the Available Capacity resulting from construction of the Interchange
Development Improvements.
3. MISCELLANEOUS
3.1. The City shall be exempt from payment of Fair Share Contributions
for Development funded solely by the City.
3.2. If and to the extent the existing "fair share" formula charged
under the Comprehensive Plan or the Concurrency Ordinance approval process is
modified or terminated for any reason, the City acknowledges that the Fair Share
Contribution will continue to be charged by the City and paid over to Gran
Central for the duration set forth in this Schedule, recognizing that but for
the commitment of the City to establish and maintain a method of charge and
collection for Investment Recoupment by Gran Central, Gran Central would not
enter into the Interchange Development Agreement or advance the Interchange
Development Costs.
3.3. This Investment Recoupment Schedule and the obligations of the
City set forth herein shall be administered by the Planning Department and the
CMSO or such successor
4
<PAGE> 57
department responsible for administration of the Concurrency Ordinance and are
adopted pursuant to the authority granted under Section 655.210 of the
Concurrency Ordinance.
3.4. All Final Development Orders issued by the City from and after the
date hereof shall incorporate the Fair Share Contribution requirements set
forth herein for Development impacting the Improved Links under the Concurrency
Ordinance.
3.5. This Schedule forms a part of and shall be governed by the terms
and provisions of the Interchange Development Agreement between the City and
Gran Central dated ____________, 1999.
5
<PAGE> 58
SCHEDULE 1
ADDED CAPACITY
6
<PAGE> 59
SCHEDULE 1 - ADDED CAPACITY DUE TO THE CONSTRUCTION OF THE INTERCHANGE
<TABLE>
<CAPTION>
Existing Existing Change in
Maximum Plus Traffic due to
Service Committed Available due to the
Rd Name Segment Volume(1) Trips(1) Capacity(1) Interchange(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I-95 St. Johns County to Old St. Augustine Rd 5,900 4,444 1,458 -8.8%
Old St. Augustine Rd to I-295(3) 8,200 4,444 3,756 30.3%
Old St. Augustine Rd Philips Hwy (US-1) to I-95 1,950 1,637 313 7.3%
I-95 to Hood Landing 1,950 1,637 313 -4.1%
Hood Landing to I-295 3,890 6,016 (2,126) -14.8%
Philips Hwy (US-1) St. Johns County to Old St. Augustine Rd 5,510 2,332 3,178 30.0%
Old St. Augustine Rd to Greenland Rd 5,510 2,332 3,178 -35.5%
Greenland Rd to Southside Blvd 5,340 4,593 747 -31.8%
Southside Blvd to Baymeadows Rd 4,260 4,199 61 -6.5%
</TABLE>
<TABLE>
<CAPTION>
Added
Estimated Maximum Capacity
Traffic Service Available due to the
Volume w/ Volume w/ Capacity w/ Interchange
Rd Name Segment Interchange Interchange Interchange Construction
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I-95 St. Johns County to Old St. Augustine Rd 4,053 5,900 1,847 391
Old St. Augustine Rd to I-295(3) 5,791 8,200 2,409 N/A
Old St. Augustine Rd Philips Hwy (US-1) to I-95 1,757 1,950 193 N/A
I-95 to Hood Landing 1,570 1,950 380 67
Hood Landing to I-295 5,126 3,890 (1,236) 890
Philips Hwy (US-1) St. Johns County to Old St. Augustine Rd 3,032 5,510 2,478 N/A
Old St. Augustine Rd to Greenland Rd 1,504 5,510 4,006 828
Greenland Rd to Southside Blvd 3,132 5,340 2,208 1,461
Southside Blvd to Baymeadows Rd 3,926 4,260 334 273
</TABLE>
Notes
1) The existing traffic data was obtained from the Jacksonville Planning
Department's Rdway Link Status Report, dated 1/12/99.
2) The change in traffic due to the construction of the Interchange was
determined using the FSUTMS traffic model and the JUATS data files used by
the Jacksonville Planning Department for Concurrency determinations.
3) FHWA has required that this segment of I-95 be widened before the
interchange is constructed. The Existing Maximum Service Volume has been
increased to 8,200 vph to reflect that this improvement has been included
in the FDOT Tentative Work Program (FY 1999/00-FY 2003/04).
Revised 21-May-99
<PAGE> 60
SCHEDULE 2
EXISTING CAPACITY
7
<PAGE> 61
SCHEDULE 2 - EXISTING CAPACITY
<TABLE>
<CAPTION>
Existing Existing
Maximum Plus Existing
Service Committed Available
Rd Name Segment Volume(1) Trips(1) Capacity(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I-95 St. Johns County to Old St. Augustine Rd 5,900 4,444 1,456
Old St. Augustine Rd to I-295(2) 8,200 4,444 3,756
Old St. Augustine Rd Philips Hwy (US-1) to I-95 1,950 1,637 313
I-95 to Hood Landing 1,950 1,637 313
Hood Landing to I-295 3,890 6,016 (2,126)
Philips Hwy (US-1) St. Johns County to Old St. Augustine Rd 5,510 2,332 3,178
Old St. Augustine Rd to Greenland Rd 5,510 2,332 3,178
Greenland Rd to Southside Blvd 5,340 4,568 774
Southside Blvd to Baymeadows Rd 4,260 4,199 61
</TABLE>
Notes
1) The existing traffic data was obtained from the Jacksonville Planning
Department's Roadway Link Status Report, dated 1/12/99.
2) This improvement has been included in the FDOT Tentative Work Program
(FY 1999/00-FY 2003/04).
<PAGE> 62
SCHEDULE 3
MINIMUM FAIR SHARE PAYMENT
8
<PAGE> 63
SCHEDULE 3 - MINIMUM FAIR SHARE PAYMENT SCHEDULE
<TABLE>
<CAPTION>
Existing Proposed
Total Maximum Maximum
Improvement Estimated Service Service
Rd Name Segment Description Cost Volume(1) Volume
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I-95 St. Johns County to Old St. Augustine Rd Widen to 6-lanes $ 6,920,760 5,900 8,500
Old St. Augustine Rd I-95 to Hood Landing Widen to 4-lanes $10,965,012 1,950 3,320
Hood Landing to I-295 Widen to 6-lanes $ 1,704,480 3,690 5,000
Philips Hwy (US-1) Old St. Augustine Rd to Greenland Rd Widen to 6-lanes $ 3,603,258 5,510 8,210
Greenland Rd to Southside Blvd Widen to 6-lanes $ 2,059,004 5,510 8,210
Southside Blvd to Baymeadows Rd Widen to 6-lanes $ 6,348,597 5,340 8,210
</TABLE>
<TABLE>
<CAPTION>
Increase in Minimum
Maximum "Fair Share"
Service Payment
Rd Name Segment Volume per Trip
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I-95 St. Johns County to Old St. Augustine Rd 2,600 $2,662
Old St. Augustine Rd I-95 to Hood Landing 1,370 $8,004
Hood Landing to I-295 1,110 $1,536
Philips Hwy (US-1) Old St. Augustine Rd to Greenland Rd 2,700 $1,335
Greenland Rd to Southside Blvd 2,700 $ 763
Southside Blvd to Baymeadows Rd 2,870 $2,212
</TABLE>
Notes
1) The existing traffic data was obtained from the Jacksonville Planning
Department's Rdway Link Status Report, dated 1/12/99.
<PAGE> 64
SCHEDULE 4
MAXIMUM LINK COST RECOVERY
9
<PAGE> 65
SCHEDULE 4 - MAXIMUM REPAYMENT CALCULATIONS
<TABLE>
<CAPTION>
Increase or
"Fair Share" (Decrease)
Per in Maximum
Trip Available Link Cost
Rd Name Segment Increase Capacity Recovery
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I-95 St. Johns County to Old St. Augustine Rd $2,662 391 $1,040,842
Old St. Augustine Rd I-95 to Hood Landing $8,004 67 $ 536,268
Hood Landing to I-295 $1,536 890 $1,367,040
Philips Hwy (US-1) Old St. Augustine Rd to Greenland Rd $1,335 828 $1,105,380
Greenland Rd to Southside Blvd $ 763 1,461 $1,114,743
Southside Blvd to Baymeadows Rd $2,212 273 $ 603,876
Total Maximum Cost Recovery $5,768,149
</TABLE>
Notes
1) The existing traffic data was obtained from the Jacksonville Planning
Department's Roadway Link Status Report, dated 1/12/99.
<PAGE> 1
EXHIBIT 10(c)
EMPLOYMENT AGREEMENT
BETWEEN
ROBERT H. NAZARIAN
AND
FLORIDA EAST COAST INDUSTRIES, INC.
July 15, 1999
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
1. Employment Period..................................................... 1
2. Terms of Employment................................................... 1
(a) Position and Duties............................................ 1
(b) Compensation................................................... 2
3. Termination of Employment............................................. 6
(a) Death or Disability............................................ 6
(b) Cause.......................................................... 6
(c) Good Reason.................................................... 7
(d) Commuting Arrangements......................................... 7
(e) Termination for Other Reasons.................................. 7
(f) Notice of Termination.......................................... 8
(g) Date of Termination............................................ 8
4. Obligations of Employer Upon Termination.............................. 8
(a) Accelerating Event............................................. 8
(b) Good Reason; Other than for Cause, Death or Disability......... 8
(c) Death.......................................................... 9
(d) Cause; Other Than for Good Reason.............................. 9
(e) Disability..................................................... 9
(f) Commuting...................................................... 9
(g) Non-Disclosure to Media........................................ 10
5. Change in Control..................................................... 10
(a) Defined........................................................ 10
(b) Entitlement to Benefits........................................ 11
(c) Accelerating Event............................................. 11
(d) Supplemental Payment to Executive.............................. 11
6. Non-Exclusivity of Executive's Rights................................. 11
7. Confidential Information.............................................. 12
8. Non-Competition; Non-Solicitation..................................... 12
9. Remedies for Executive's Breach....................................... 13
10. Dispute............................................................... 13
<PAGE> 3
TABLE OF CONTENTS (CONT.)
PAGE
----
11. No Conflicting Obligations of Executive............................... 14
12. Certain Obligations of the Employer Regarding Stock Awards............ 14
13. Indemnity of Executive................................................ 14
14. Successors............................................................ 15
15. Miscellaneous......................................................... 15
- ii -
<PAGE> 4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement), dated as of July
15, 1999, between ROBERT H. NAZARIAN, an individual (the "Executive"), and
FLORIDA EAST COAST INDUSTRIES, INC. ("Employer"), a Florida corporation, recites
and provides as follows:
WHEREAS, the Board of Directors of Employer (the "Board")
desires that Employer retain the services of the Executive, and the Executive
desires to be employed with Employer, all on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, Employer and the Executive agree as
follows:
1. EMPLOYMENT PERIOD. Employer hereby agrees to employ the
Executive, and the Executive hereby agrees to accept employment by Employer, in
accordance with the terms and provisions of this Agreement, for the period
commencing on July 27, 1999 (the "Effective Date") and continuing until
terminated by either party hereto (the "Employment Period").
2. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, the
Executive shall serve as Executive Vice President and Chief Financial Officer of
Employer and shall have such authority and perform such executive duties as are
commensurate with such positions and as are otherwise assigned by the Board.
(ii) The Executive's services shall be
performed at the headquarters of Employer and its subsidiaries in Florida and
other facilities of Employer and otherwise at such location(s) as Employer may
select.
(iii) During the Employment Period, and
excluding any periods of vacation and leave to which the Executive is entitled,
the Executive agrees to devote his full business attention and time to the
business and affairs of Employer and, to the extent necessary to discharge the
duties assigned to the Executive hereunder, to use the Executive's reasonable
efforts to perform faithfully such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, charitable, and professional association boards or
committees, subject to the approval of the Chairman of Employer, in each
instance, which approval shall not be unreasonably withheld (service on the
Board of Ansett Australia through the end of 1999 being hereby approved), (B)
deliver lectures or fulfill speaking engagements and (C) manage personal
investments, so long as such activities
<PAGE> 5
do not materially interfere with the performance of the Executive's
responsibilities as an employee of Employer in accordance with this Agreement.
(b) COMPENSATION.
(i) Base Salary. During the Employment
Period, the Executive shall receive a base salary ("Annual Base Salary"), which
shall be paid in equal installments on a semi-monthly basis, at the annual rate
of not less than Two Hundred Twenty-Five Thousand Dollars ($225,000) per year.
During the Employment Period, the Annual Base Salary shall be reviewed at least
annually by the Board. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced and the term "Annual Base Salary" as
used in this Agreement shall mean the Annual Base Salary as so increased.
(ii) Signing Bonus. The Executive shall
receive a grant of restricted stock for one thousand five hundred (1,500) shares
of the Employer's Common Stock issued under the FECI 1998 Stock Incentive Plan.
Such shares shall be subject to restrictions which shall provide that the
Executive shall not transfer such shares during the restriction period and shall
forfeit such shares if during the restriction period he is discharged by the
Employer for Cause (as hereinafter defined in Section 3(b)) or pursuant to
Section 3(d) or resigns from employment with FECI without Good Reason (as
hereinafter defined in Section 3(c)). The restriction period shall lapse with
respect to such shares in equal annual installments on each of the first and
second anniversaries of the Effective Date. Notwithstanding the foregoing, the
restriction period shall lapse immediately as to all such shares in the event
that an Accelerating Event (as hereinafter defined in Section 4(a)) occurs. The
Executive shall be entitled to receive any dividends or other distributions
payable with respect to such shares of restricted stock beginning on the date of
award of such shares. Such stock award shall be evidenced by a written
restricted stock award agreement between the Employer and the Executive, the
terms of which shall be agreed to by the parties in good faith as soon as
practical.
(iii) Short-Term Incentive Bonus. In
addition to Annual Base Salary, during the Employment Period the Executive shall
participate in an annual incentive bonus plan. Such plan shall provide the
Executive with the opportunity to earn a bonus based on achievement of
performance criteria. The incentive bonus plan shall be structured such that the
Executive shall receive up to fifty percent (50%) of Annual Base Salary for
attainment of certain target performance goals (prorated for any partial year of
employment), with a maximum bonus of one hundred percent (100%) of Annual Base
Salary for extraordinary performance (pro rated for any partial year of
employment). The Compensation Committee of the Board will establish the
performance criteria and goals in consultation with the Executive. The bonus
payable pursuant to this Section 2(b)(iii) for any fiscal year shall be paid to
the Executive no later than (A) the thirtieth (30th) day following the issuance
of the audited financial statements of Employer for such year, or (B) ninety
(90) days after the end of such year, whichever occurs first and for Employer's
fiscal 1999 shall be in an amount not less than twenty-two percent (22%) of the
Annual Base Salary.
(iv) Long-Term Incentives: Restricted Stock.
The Executive shall receive a grant of restricted stock for seven thousand five
hundred (7,500) shares of
-2-
<PAGE> 6
Employer's Common Stock issued under the FECI 1998 Stock Incentive Plan. Such
shares shall be subject to restrictions which shall provide that the Executive
shall not transfer such shares during the restriction period and shall forfeit
such shares if during the restriction period he is discharged by Employer for
Cause (as hereinafter defined in Section 3(b)) or pursuant to Section 3(d) or
resigns from employment with Employer without Good Reason (as hereinafter
defined in Section 3(c)). The restriction period shall lapse with respect to
such shares in five (5) equal annual installments on each of the first through
the fifth anniversaries of the Effective Date. Notwithstanding the foregoing,
the restriction period shall lapse immediately as to all such shares in the
event that an Accelerating Event (as hereinafter defined in Section 4(a))
occurs. The Executive shall be entitled to receive any dividends or other
distributions payable with respect to such shares of restricted stock beginning
on the date of award of such shares. Such stock award shall be evidenced by a
written restricted stock award agreement between Employer and the Executive, the
terms of which shall be agreed to by the parties in good faith as soon as
practical.
(v) Long-Term Incentives: Stock Options. The
Executive shall receive a grant of non-statutory stock options on forty thousand
five hundred (40,500) shares of Employer's Common Stock issued under the FECI
1998 Stock Incentive Plan. The options shall have a term of ten (10) years
(subject to earlier expiration as hereinafter provided), shall have an exercise
price equal to one hundred percent (100%) of the fair market value, as of the
date of this Agreement (being $39.50 per share) of the shares of common stock
subject to such stock options, and shall vest and become exercisable in five (5)
equal annual installments on the first through the fifth anniversaries of the
Effective Date; provided, however, that such stock options shall vest
immediately and become exercisable in their entirety in the event that an
Accelerating Event (as hereinafter defined in Section 4(a)) occurs. To the
extent not previously exercised, all such stock options shall expire immediately
following the Date of Termination (as hereinafter defined in Section 3(g));
provided, however, that the Executive, or his heirs or legal representatives in
the event of the Executive's death, may exercise all or any part of such stock
options as were exercisable as of the close of business on the Date of
Termination for a period of two (2) years following such Date of Termination in
the event (i) an Accelerating Event (as hereinafter defined in Section 4(a))
occurs, or (ii) the Executive retires at normal retirement age under any
retirement plan of Employer. Such stock options shall include a provision for
adjustment in the option price to reflect any extraordinary distribution made
with respect to the common stock during the term of the options. In the event of
a capital adjustment resulting from a stock dividend, stock split,
reorganization, merger, consolidation, spinoff, a combination or exchange of
shares or other transaction having a similar substantive effect, the number
shares of stock subject to the stock options and the option price shall be
equitably adjusted. Such stock options shall be evidenced by a written stock
option award agreement between Employer and the Executive, the terms of which
shall be agreed to by the parties in good faith as soon as practical.
(vi) Long Term Incentives: Supplemental
Stock Options. The Executive shall receive a grant of non-statutory stock
options on thirty-seven thousand five hundred (37,500) shares of Employer's
Common Stock issued under the FECI 1998 Stock Incentive Plan. The options shall
have a term of ten (10) years (subject to earlier expiration as hereinafter
provided), shall have an exercise price equal to one hundred percent (100%) of
the fair market value, as of the date of this Agreement (being $39.50 per
share), of the shares of Common Stock subject to such stock options, and shall
vest and become exercisable immediately
-3-
<PAGE> 7
upon the earlier of (i) the first date as of which the average closing price of
a share of Employer's Common Stock over twenty (20) consecutive trading days is
not less than Fifty Dollars ($50.00); (ii) the occurrence of an Accelerating
Event (as hereinafter defined in Section 4(a)); or (iii) the fifth anniversary
of the Effective Date. To the extent not previously exercised, all such stock
options shall expire immediately following the Date of Termination (as
hereinafter defined in Section 3(g)); provided, however, that the Executive, or
his heirs or legal representatives in the event of the Executive's death, may
exercise all or any part of such stock option as was exercisable as of the close
of business on the Date of Termination for a period of two (2) years following
such Date of Termination in the event (i) the occurrence of an Accelerating
Event (as hereinafter defined in Section 4(a)); or (ii) the Executive retires at
normal retirement age under any retirement plan of FECI. Such stock options
shall include a provision for adjustment in the option price to reflect any
extraordinary distribution made with respect to the common stock during the term
of the options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff, a
combination or exchange of shares or other transaction having a similar
substantive effect, the number shares of stock subject to the stock options and
the option price shall be equitably adjusted. Such stock option shall be
evidenced by a written stock option award agreement between Employer and the
Executive, the terms of which shall be agreed to by the parties in good faith as
soon as practical.
(vii) Long-Term Incentives: Subsequent
Option Grants. During the Employment Period, the Executive shall be entitled to
participate in long-term equity incentive plans and programs applicable
generally to other peer executives of Employer. Such participation shall
commence with respect to Employer's 2000 fiscal year. Such plans and programs
shall be structured such that the Executive shall receive option grants with
targeted annual grant value (using valuation methods consistent with those used
by Employer for financial reporting purposes) between seventy-five (75%) and one
hundred percent (100%) of Annual Base Salary for attainment of certain target
performance goals (prorated for any partial year of employment). The Employer
will establish the performance criteria and goals in consultation with the
Executive.
(viii) Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of Employer.
(ix) Welfare Benefit Plans. During the
Employment Period, the Executive and/or the Executive's family and dependents,
as the case may be, shall be eligible for participation in and shall receive all
benefits under all welfare benefit plans, practices, policies and programs
provided by Employer (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of Employer.
(x) Apartment Expense. The Executive shall
obtain temporary housing and thereafter a furnished apartment for his use during
the Employment Period in the vicinity of St. Augustine/Jacksonville, Florida.
Employer shall pay directly or reimburse the Executive for the room charges for
such temporary housing and all reasonable rental and utility charges incurred in
connection with such furnished apartment during the Employment Period.
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Employer shall also pay directly or reimburse the Executive for all reasonable
moving charges incurred in relocating personal effects and business materials
from his primary residence to such temporary housing and apartment. If the
Executive purchases a residence in the St. Augustine/Jacksonville, Florida area
during the Employment Period, Employer shall continue reimbursement to Executive
in amounts corresponding to the charges associated with the furnished apartment
until Executive has relocated his family to St. Augustine/Jacksonville, Florida.
(xi) Travel Expenses. Employer shall pay
directly or reimburse the Executive for reasonable direct out-of-pocket costs
incurred in making one roundtrip between the city in which Employer's
headquarters is located and his home in Edina, Minnesota, each week during the
Employment Period, exclusive only of vacation weeks; provided, however, that in
no event shall the Employer be obligated to make such reimbursement with respect
to more than thirty-three (33) trips in any twelve (12) month period; and,
provided, further, if the Executive desires to bring up to three family members
to Florida for a visit on any one trip, Employer will likewise reimburse their
expenses in lieu of a trip reimbursement for the Executive (provided that not
more than four of such trips are made in any one year); and, provided, further,
that the Executive shall at his sole expense make full use of the reduced fare
plan awarded to him by Northwest Airlines in making such travel.
(xii) Other Expenses. The Executive shall be
entitled to receive prompt reimbursement for all employment-related expenses
incurred by the Executive during the Employment Period in accordance with the
most favorable policies, practices and procedures of Employer as in effect
generally from time to time after the Effective Date with respect to other peer
executives of Employer.
(xiii) Fringe Benefits. During the
Employment Period, the Executive and/or the Executive's family and dependents
shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of Employer as in effect generally from
time to time after the Effective Date with respect to other peer executives of
Employer.
(xiv) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office and support
staff at the Employer's headquarters at least equal to the most favorable of the
foregoing provided generally from time to time after the Effective Date with
respect to other peer executives of Employer.
(xv) Vacation. During the Employment Period,
the Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of Employer as in effect
generally from time to time after the Effective Date with respect to other peer
executives of Employer.
(xvi) Car Allowance. During the Employment
Period, the Executive shall be entitled to a car allowance in accordance with
Employer's car allowance policy, in lieu of expenses associated with the
operation of his automobile.
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(xvii) Golden Parachute Excise Tax. If any
amounts payable under this Agreement are subject to the excise tax imposed under
Section 4999 of the Internal Revenue Code on "excess parachute payments,"
Employer will in good faith compute the excise tax imposed under Code Section
4999 and shall pay that amount to the Executive, including any federal, state,
local and excise taxes imposed on the foregoing payment under this Section
2(b)(xvii). The determination will be made before the taxes are due and payable
by the Executive, to the extent possible. The calculations under this Section
will be made in a manner consistent with the requirements of Code Section 280G
and 4999, as in effect at the time the calculations are made.
(xviii) Right to Change Plans. Employer
shall not be obligated to institute, maintain or refrain from changing, amending
or discontinuing any benefit plan, program, or perquisite referred to in
Sections 2(b)(viii), 2(b)(ix) and 2(b)(xiii), so long as such changes are
similarly applicable to other executives of Employer.
3. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment
shall terminate automatically upon the Executive's death during the Employment
Period. If Employer determines in good faith that the Disability of the
Executive has occurred (pursuant to the definition of disability set forth
below), it may give to the Executive notice of its intention to terminate the
Executive's employment. In such event, the Executive's employment with Employer
shall terminate upon a date selected by Employer and set forth in such notice
(the "Disability Effective Date"), provided that, prior to such date, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with Employer on a full-time basis for
one hundred eighty (180) consecutive business days as a result of incapacity due
to mental or physical illness which is determined to be total and permanent by a
physician selected by Employer or its insurers and acceptable to the Executive
or the Executive's legal representative (such agreement as to acceptability not
to be withheld unreasonably).
(b) CAUSE. Employer may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause" shall mean (i) a
material breach by the Executive of the Executive's obligations under this
Agreement (other than as a result of incapacity due to physical or mental
illness) which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such breach is
in the best interest of Employer and which is not remedied in a reasonable
period of time after receipt of notice from Employer specifying such breach;
(ii) the conviction of the Executive for committing an act of fraud,
embezzlement, theft or other act constituting a felony or the guilty or nolo
contendere plea of the Executive to such a felony; (iii) insubordination or the
willful engaging by Executive in gross misconduct or the willful violation of an
Employer policy which results in material and demonstrable injury to Employer;
or (iv) a material act of dishonesty or breach of trust on the part of the
Executive resulting or intending to result directly or indirectly in material
personal gain or enrichment at the expense of Employer. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for Employer shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of Employer.
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(c) GOOD REASON. The Executive may terminate his
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, in the absence of the consent of the Executive, a reasonable determination
by the Executive that any of the following has occurred:
(i) the assignment to the Executive of any
duties inconsistent in any material respect with the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 2(a) of this Agreement, or
any other action by Employer which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated and insubstantial action not taken in bad faith and which is remedied
by Employer promptly after receipt of notice thereof given by the Executive; or
(ii) any failure by Employer to comply with
any of the provisions of this Agreement applicable to it, other than any
isolated and insubstantial failure not occurring in bad faith and which is
remedied promptly after notice thereof from the Executive.
(d) COMMUTING ARRANGEMENTS. The Executive initially
intends to commute to his place of work hereunder from his home in Edina,
Minnesota, where he will reside on two out of every three weekends during the
Employment Period. The Executive and the Employer will make a good faith effort
to make this arrangement work to the Employer's reasonable satisfaction.
However, if, at any time prior to January 1, 2001, the Employer determines that
it is not satisfied with this arrangement, it may provide a notice to such
effect to the Executive. If the Executive does not agree, within thirty (30)
days of receipt of such notice, to promptly (taking into account school years
and the significant family considerations) relocate his primary residence to the
St. Augustine/Jacksonville, Florida area, then the Employer may at any time
within thirty (30) days following the expiration of such thirty (30) day period
terminate the employment of Executive by giving notice to the Executive, which
notice shall set forth the Date of Termination. If the Executive does so
relocate (whether at the request of Employer or otherwise), Employer will
reimburse him for the reasonable direct costs incurred by him in connection with
such relocation upon such terms and conditions as are substantially comparable
to relocation packages typically provided by Employer to other senior executives
within the last twelve (12) months.
(e) TERMINATION FOR OTHER REASONS. Employer may
terminate the employment of the Executive without Cause and without regard to
the provisions of Section 3(d) by giving notice to the Executive, which notice
shall set forth the Date of Termination. The Executive may resign from his
employment without Good Reason hereunder by giving notice to Employer at least
thirty (30) days prior to the Date of Termination.
(f) NOTICE OF TERMINATION. Any termination shall be
communicated by Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" means a notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) in the case
of a termination under Section 3(b) or 3(c), to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated (the failure by the Executive or Employer to set forth in the Notice
of Termination any fact or circumstance
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<PAGE> 11
shall not waive any right of the Executive or Employer hereunder or preclude the
Executive or Employer from asserting such fact or circumstance in enforcing the
Executive's or Employer's rights hereunder), and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than fifteen (15)
days after the giving of such notice, unless otherwise required by Section
3(g)).
(g) DATE OF TERMINATION. "Date of Termination" shall
mean (i) if the Executive's employment is terminated by Employer due to the
Executive's Disability, the Date of Termination shall be the Disability
Effective Date, (ii) if the Executive's employment is terminated by reason of
the Executive's death, the Date of Termination shall be the date of death of the
Executive, and (iii) in all other case, the date of receipt of the Notice of
Termination or any permitted later date specified therein, as the case may be.
4. OBLIGATIONS OF EMPLOYER UPON TERMINATION.
(a) ACCELERATING EVENT. As used in this Agreement,
the term "Accelerating Event" shall mean any of the following: (i) the
Executive's employment terminates under the circumstances described in Section
3(a), (ii) the Executive is discharged without Cause, (iii) the Executive
resigns with Good Reason, or (iv) a Change in Control Entitlement (as defined in
Section 5(b)) occurs.
(b) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR
DISABILITY. If, during the Employment Period, Employer shall terminate the
Executive's employment other than for Cause, death or Disability or the
Executive shall terminate employment for Good Reason:
(i) Employer shall pay to the Executive in a
lump sum in cash within thirty (30) days after the Date of Termination the sum
of (A) the Executive's Annual Base Salary through the Date of Termination to the
extent not theretofore paid; (B) to the extent not theretofore paid, any annual
bonus payable to the Executive for any prior completed fiscal year; (C) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) to the extent not theretofore paid; and (D) any
accrued vacation pay, expense reimbursement and any other entitlements accrued
by the Executive under Section 2(b), to the extent not theretofore paid (the sum
of the amount described in clauses (A), (B), (C) and (D) shall be hereinafter
referred to as the "Accrued Obligations"); and
(ii) Employer shall pay to the Executive in
eighteen (18) monthly installments beginning thirty (30) days following the Date
of Termination an amount equal to the sum of (A) one hundred fifty percent
(150%) of the Executive's Annual Base Salary plus (B) fifty percent (50%) of the
payment made under Section 2(b)(iii), if any, with respect to the most recently
completed fiscal year of Employer; and
(iii) For eighteen (18) months following the
Date of Termination, or such longer period as any plan, program, practice or
policy may provide, Employer shall continue benefits to the Executive and/or the
Executive's family and dependents at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 2(b)(ix) if the Executive's employment had not been
terminated, in accordance with the most favorable plans, practices, programs or
policies of
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Employer as in effect generally at any time thereafter with respect to other
peer executives of Employer and their families ("Welfare Benefit Continuation").
If the Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period of
eligibility.
(c) DEATH. If the Executive's employment is
terminated by reason of the Executive's death, this Agreement shall terminate
without further obligation to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations (which shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within thirty (30) days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the
Executive's employment shall be terminated for Cause or the Executive terminates
his employment without Good Reason, this Agreement shall terminate without
further obligation to the Employer other than the obligation to pay to the
Executive the Accrued Obligations and the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore unpaid, all of
which shall be paid in cash within thirty (30) days of the Date of Termination.
(e) DISABILITY. If the Executive's employment shall
be terminated by reason of the Executive's Disability, this Agreement shall
terminate without further obligation to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision of the Welfare Benefit
Continuation. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within thirty (30) days of the Date of Termination. The Executive shall
be entitled after the Disability Effective Date to receive disability and other
benefits as in effect at the Disability Effective Date with respect to other
peer executives of Employer and their families.
(f) COMMUTING. If the Executive's employment shall be
terminated pursuant to Section 3(d), this Agreement shall terminate without
further obligation to Employer other than:
(i) Employer shall pay to the Executive the
Accrued Obligations in cash within thirty (30) days of the Date of Termination;
(ii) Employer shall pay to the Executive in
nine (9) monthly installments beginning thirty (30) days following the Date of
Termination an amount equal to seventy-five percent (75%) of the Executive's
Annual Base Salary; and
(iii) For nine (9) months following the Date
of Termination, or such longer period as any plan, program, practice or policy
may provide, Employer shall continue benefits to the Executive and/or the
Executive's family and dependents at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 2(b)(ix) if the Executive's Employment had not been
terminated, in accordance with the most favorable plans, practices, programs or
policies of
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Employer as in effect generally at any time thereafter with respect to other
peer executives of Employer and their families ("Welfare Benefit Continuation").
If the Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable period of
eligibility.
(g) NON-DISCLOSURE TO MEDIA. After the Date of
Termination, the Executive and Employer agree that they will not discuss the
Executive's employment and resignation or termination (including the terms of
this Agreement) with any representatives of the media, either directly or
indirectly, without the consent of the other party hereto.
5. CHANGE IN CONTROL.
(a) DEFINED. For purposes of this Agreement, a
"Change in Control" of the Employer shall be deemed to have occurred as of the
first day that any one or more of the following conditions shall have occurred:
(i) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Act")), other than the present majority owner, The St. Joe Company, or any
majority-owned subsidiary of The St. Joe Company becomes the "beneficial owner"
(as defined in Rule 13-d under the Act) directly or indirectly, of securities
representing more than fifty percent (50%) of the total voting power represented
by the Employer's then outstanding voting securities;
(ii) A change in the composition of the
Board of Directors of the Employer (the "Board"), as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Employer as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors of the Employer); or
(iii) The Employer merges or consolidates
with any other corporation, including The St. Joe Company or any subsidiary
thereof, or the Employer adopts, and the stockholders approve, if necessary, a
plan of complete liquidation of the Employer, or the Employer sells or disposes
of substantially all of its assets.
(b) ENTITLEMENT TO BENEFITS. The Executive shall be
entitled to certain additional benefits upon a Change in Control if:
(i) within two (2) years following a Change
in Control, the Employer either (A) substantially reduces the duties or
responsibilities of the Executive from those in effect immediately prior to such
occurrence or (B) reduces the Annual Base Salary other than a reduction which is
a part of an organization-wide salary reduction plan; or
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(ii) within the period which is the last
ninety (90) days of the first year after the occurrence of a Change in Control,
the Executive voluntarily resigns his employment hereunder for any reason.
The accrual of such entitlements is referred to herein as "Change in Control
Entitlement."
(c) ACCELERATING EVENT. A Change in Control
Entitlement shall be an Accelerating Event as defined in Section 4(a).
(d) SUPPLEMENTAL PAYMENT TO EXECUTIVE. Upon the
accrual of Change in Control Entitlement, the Employer shall pay to the
Executive in a lump sum in cash within thirty (30) days of the date of such
Change in Control, an amount equal to two (2) times the Annual Base Salary.
6. NON-EXCLUSIVITY OF EXECUTIVE'S RIGHTS. Except as provided
in Sections 4(b)(iii), 4(c) and 4(e), nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by Employer and for which the Executive may qualify,
nor shall anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with Employer. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with Employer at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
7. CONFIDENTIAL INFORMATION.
(a) The Executive shall hold in a fiduciary capacity
for the benefit of Employer all secret or confidential information, knowledge or
data relating to Employer or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive's employment by Employer or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with Employer, the Executive
shall not, without the prior written consent of Employer or except as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than Employer and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 6 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
(b) All records, files, memoranda, reports, price
lists, customer lists, drawings, designs, proposals, plans, sketches, documents,
computer programs, CAD systems, CAM systems, disks, computer printouts and the
like (together with all copies thereof) relating to the business of Employer,
which Executive shall use or prepare or otherwise have in his possession in the
course of, or as a result of, his employment hereunder shall, as between the
parties hereto, remain the sole property of Employer. Executive shall use such
materials solely for the benefit of Employer and shall not divulge any such
materials other than in furtherance of
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Employer's interests. Executive hereby agrees that he will return all such
materials, including copies, to Employer upon demand, or upon the cessation of
his employment.
(c) Any termination of the Executive's employment
hereunder or of this Agreement shall have no effect on the continuing operation
of this Section 6.
8. NON-COMPETITION; NON-SOLICITATION.
(a) In consideration of Employer undertaking to employ the
Executive under the terms provided for herein, including, without limitation,
the grant of the substantial number of shares of restricted stock options
provided for in Section 2(b), and to protect the Employer's valuable trade
secrets and other business and professional information and its relationships
with existing and prospective customers and suppliers, the Executive agrees
that, except as is set forth below, for a period commencing on the Effective
Date hereof and ending on the first anniversary of the date the Executive ceases
to be employed by Employer (the "Non-Competition Period"), the Executive shall
not, directly or indirectly, either for himself or any other person, own,
manage, control, materially participate in, invest in, permit his name to be
used by, act as consultant or advisor to, render material services for (alone or
in association with any person, firm, corporation or other business
organization) or otherwise assist in any manner any business which is a
competitor of a substantial portion of the Employer's business at the date the
Executive ceases to be employed by the Employer (a "Competitor").
Notwithstanding the foregoing, the restrictions set forth above shall
immediately terminate and shall be of no further force or effect (i) in the
event of a default by Employer of the performance of any of the obligations
hereunder, which default is not cured within ten (10) days after notice thereof,
or (ii) if the Executive's employment has been terminated by Employer other than
for Cause, or (iii) if the Executive resigns for Good Reason. Nothing herein
shall prohibit the Executive from being a passive owner of not more than five
percent (5%) of the equity securities of an enterprise engaged in such business
which is publicly traded, so long as he has no active participation in the
business of such enterprise.
(b) During the Non-Competition Period, the Executive shall
not, directly or indirectly, (i) induce or attempt to induce or aid others in
inducing an employee of Employer to leave the employ of Employer, or in any way
interfere with the relationship between Employer and an employee thereof except
in the proper exercise of the Executive's authority, or (ii) in any way
interfere with the relationship between Employer and any customer, supplier,
licensee or other business relation thereof.
(c) If, at the time of enforcement of this Section 8, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.
(d) The covenants made in this Section 8 shall be construed as
an agreement independent of any other provisions of this Agreement, and shall
survive the termination of this Agreement. Moreover, the existence of any claim
or cause of action of the
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Executive against Employer or any of its affiliates, whether or not predicated
upon the terms of this Agreement, shall not constitute a defense to the
enforcement of these covenants.
9. REMEDIES FOR EXECUTIVE'S BREACH. In the event Executive
violates any provision of Sections 7 or 8 and such violation continues after
notice thereof to the Executive and the expiration of a reasonable opportunity
to cure, then Employer may thereafter terminate the payment of any
post-termination benefits hereunder, and Employer will have no further
obligation to Executive under this Agreement. The parties acknowledge that any
violation of Section 7 or 8 can cause substantial and irreparable harm to
Employer. Therefore, Employer shall be entitled to pursue any and all legal and
equitable remedies, including but not limited to any injunctions.
10. DISPUTE. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration, which
shall be the sole and exclusive method of resolving any questions, claims or
other matters arising under this Agreement or any claim that Employer has in any
way violated the non-discrimination and/or other provisions of Title VII of the
Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act
of 1967, as amended; the Americans with Disabilities Act; the Family and Medical
Leave Act; the Employee Retirement Income Security Act of 1974, as amended; and,
in general, any federal law or the law of the State of Florida. Such proceeding
shall be conducted by final and binding arbitration before a panel of one or
more arbitrators under the administration of the American Arbitration
Association, and in a location mutually agreed to by the Executive and Employer.
The Federal and State courts located in the United States of America are hereby
given jurisdiction to render judgment upon, and to enforce, each arbitration
award, and the parties hereby expressly consent and submit to the jurisdiction
of such courts. Notwithstanding the foregoing, in the event that a violation of
the Agreement would cause irreparable injury, Employer and the Executive agree
that in addition to the other rights and remedies provided in this Agreement
(and without waiving their rights to have all other matters arbitrated as
provided above) the other party may immediately take judicial action to obtain
injunctive relief.
11. NO CONFLICTING OBLIGATIONS OF EXECUTIVE. Executive
represents and warrants that he is not subject to any duties or restrictions
under any prior agreement with any previous employer or other person, and that
he has no rights or obligations except as previously disclosed to Employer which
may conflict with the interests of Employer or with the performance of the
Executive's duties and obligations under this Agreement. Executive agrees to
notify Employer immediately if any such conflicts occur in the future.
12. CERTAIN OBLIGATIONS OF THE EMPLOYER REGARDING STOCK
AWARDS. At its expense, and as soon as practicable hereafter, with respect to
the shares of Common Stock described in Section 2(b)(ii) and 2(b)(iv) and the
shares of Common Stock issuable upon exercise of the stock options described in
Section 2(b)(v) and 2(b)(vi), the Employer shall (i) seek the approval of its
shareholders with regard to the grant of such restricted stock and stock
options, (ii) register such shares under the Securities Act of 1933, as amended,
on Form S-8, (iii) qualify such shares for issuance under all applicable state
securities laws and (iv) ensure that such shares are listed for trading on the
New York Stock Exchange. Notwithstanding any other provision of this Agreement
to the contrary, the Employer shall be under no obligation to issue any shares
of Common Stock to the Executive pursuant to this Agreement until, in accordance
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with the immediately preceding sentence, such shares are so registered and
qualified and either (x) the Employer is able to repurchase in the open market
or private transactions, on a legal, practical and prudent basis, a number of
shares of Common Stock equal to the number issuable to the Executive or (y)
shares of Common Stock which are listed for trading on the New York Stock
Exchange are otherwise available for issuance by the Employer hereunder. With
respect to the shares of Common Stock described in Section 2(b)(ii) and Section
2(b)(iv), in the event that the issuance of any such shares to the Executive
shall be delayed by reason of the provisions of this Section, the Employer shall
pay to the Executive in cash on the date of issuance of such shares in the
amount or cash-equivalent thereof that would have been paid to the Executive as
dividends or other distributions payable with respect to such shares had such
issuance not been so delayed.
13. INDEMNITY OF EXECUTIVE. Employer shall indemnify and
defend the Executive against all claims relating to the performance of his
duties hereunder to the fullest extent permitted by Employer's Certificate of
Incorporation and Bylaws, the relevant provisions of which shall not be amended
in their application to the Executive to be any less favorable to him than as at
present, except as required by law. During the continuance of the Executive's
employment hereunder, Employer shall maintain in effect uninterrupted standard
directors and officers liability insurance coverage insuring the Executive
against such claims, with limits of coverage of not less than Ten Million
Dollars ($10,000,000) per occurrence and without deductibles.
14. SUCCESSORS.
(a) This Agreement is personal to the Executive and
without the prior consent of Employer shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon Employer and its successors and assigns.
(c) Employer will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that Employer would be required to perform it if no such succession had taken
place. As used in this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
15. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
-14-
<PAGE> 18
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid, or by
telecopier, or by courier, addressed as follows:
If to the Executive to: If to the Employer to:
Robert H. Nazarian Florida East Coast Industries, Inc.
5800 Long Brake Trail One Malaga Street
Edina, MN 55439 St. Augustine, FL 32084
Facsimile: 612/829-9655 Attention: Chairman
Facsimile: 904/826-2213
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior understandings with respect thereto.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be entitled to its
reasonable attorneys' fees and costs incurred with respect to obtaining such
remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Employer may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(g) The Executive's or Employer's failure to insist
upon strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or Employer may have
hereunder, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(h) Any entitlements to the Executive created under
Section 2(b) shall be contract rights to the extent not prohibited by law,
except as provided in Section 2(b)(xviii).
-15-
<PAGE> 19
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
Employer has caused these presents to be executed in its name on its behalf, all
as of the day and year first above written.
EMPLOYER:
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anastis
------------------------------------------
Chairman
EXECUTIVE:
/s/ Robert H. Nazarian
--------------------------------------------
Robert H. Nazarian
-16-
<PAGE> 20
RESTRICTED STOCK AGREEMENT
(Long Term Incentive)
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT H. NAZARIAN
July 27, 1999
<PAGE> 21
THIS AGREEMENT, dated July 27, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Robert H. Nazarian (the "Employee") is
made pursuant to the provisions of Section 2(b)(iv) of that certain Employment
Agreement dated July 15, 1999 between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the Company hereby grants to the
Employee, subject to the terms and conditions herein set forth, seven
thousand five hundred (7,500) shares of the Company's Common Stock (the
"Restricted Stock").
2. Terms and Conditions. The Restricted Stock is subject to the
following terms and conditions:
(a) Limited Nontransferability. This Restricted Stock shall be
nontransferable during the term of the Restrictions (as hereinafter set
forth) except by will or by the laws of descent and distribution.
(b) Restrictions and Lapse of Restrictions. The Restricted
Stock shall be subject to the Employee's continued employment by the
Company or a parent or subsidiary corporation (the "Restrictions"),
which shall lapse according to the following schedule as of the stated
yearly anniversaries of the date hereof (each an "Anniversary Date"):
ANNIVERSARY UNRESTRICTED
DATE PERCENTAGE
----------- ------------
First 20%
Second 40%
Third 60%
Fourth 80%
Fifth 100%
<PAGE> 22
Notwithstanding the foregoing, upon the occurrence of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement), all
Restrictions shall lapse upon the date of such Accelerating Event.
3. Forfeiture of Restricted Stock Upon Termination of Employment. The
rights of the Employee and his successors in interest in Restricted
Stock on which the Restrictions have not lapsed pursuant to paragraph
2(b) shall terminate in full when the Employee's employment with the
Company or a parent or subsidiary corporation is terminated by the
Company for Cause (as defined in Section 3(b) of the Employment
Agreement) or pursuant to Section 3(d) of the Employment Agreement or
by the Employee without Good Reason (as defined in Section 3(c) of the
Employment Agreement).
4. Dividends/Distributions. The Company shall pay to the Employee any
dividends or other distributions payable with respect to the Restricted
Stock, notwithstanding the Restrictions, beginning on the date hereof
but not beyond the date of any forfeiture thereof pursuant to the
provisions of paragraph 3.
5. Withholding. The Employee agrees to make arrangements satisfactory
to the Company to comply with any income tax withholding requirements
that may apply upon the lapse of the Restrictions on the Restricted
Stock. The Employee will be entitled to elect to satisfy his tax
withholding obligation by the withholding by the Company, at the
appropriate time, of shares of the Company's Common Stock from the
Restricted Stock in a number sufficient, based upon the fair market
value (as defined below) of such Common Stock on the relevant date, to
satisfy such tax withholding requirements. For purposes of this
Agreement, "fair market value" means, as of any given date, the closing
price of the Company's Common Stock on such date as quoted in the NYSE
Composite Transactions Report in the Wall Street Journal. If there were
no sales reported as of a particular date, fair market value will be
computed as of the last date preceding such date on which a sale was
reported.
6. Delivery of Certificates. The Company may delay delivery of the
certificate for shares granted hereunder until (i) the admission of
such shares to listing on any stock exchange on which the Company's
Common Stock may then be listed, (ii) completion of
2
<PAGE> 23
any registration or other qualification of such shares under any state
or federal law regulation that the Company's counsel shall determine as
necessary or advisable, and (iii) receipt by the Company of advice by
counsel that all applicable legal requirements have been complied with.
7. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement. Such
proceeding shall be conducted by final and binding arbitration before a
panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) This Agreement and Section 12 of the Employment Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the
provisions of this Agreement shall govern.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, or by telecopier, or by courier, addressed as follows:
3
<PAGE> 24
If to the Employee to: If to the Company to:
Robert H. Nazarian Florida East Coast Industries, Inc.
5800 Long Brake Trail One Malaga Street
Edina, MN 55439 St. Augustine, FL 32084
Facsimile: 612/829-9655 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be
entitled to its reasonable attorneys' fees and costs incurred with
respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Employee or the
Company may have hereunder, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anastis
--------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert H. Nazarian
- --------------------------------
ROBERT H. NAZARIAN
4
<PAGE> 25
RESTRICTED STOCK AGREEMENT
(Signing Bonus)
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT H. NAZARIAN
July 27, 1999
<PAGE> 26
THIS AGREEMENT, dated July 27, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Robert H. Nazarian (the "Employee") is
made pursuant to the provisions of Section 2(b)(ii) of that certain Employment
Agreement dated July 15, 1999 between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the Company hereby grants to the
Employee, subject to the terms and conditions herein set forth, one
thousand five hundred (1,500) shares of the Company's Common Stock (the
"Restricted Stock").
2. Terms and Conditions. The Restricted Stock is subject to the
following terms and conditions:
(a) Limited Nontransferability. This Restricted Stock shall be
nontransferable during the term of the Restrictions (as hereinafter set
forth) except by will or by the laws of descent and distribution.
(b) Restrictions and Lapse of Restrictions. The Restricted
Stock shall be subject to the Employee's continued employment by the
Company or a parent or subsidiary corporation (the "Restrictions"),
which shall lapse according to the following schedule as of the stated
yearly anniversaries of the date hereof (each an "Anniversary Date"):
ANNIVERSARY UNRESTRICTED
DATE PERCENTAGE
----------- ------------
First 50%
Second 50%
<PAGE> 27
Notwithstanding the foregoing, upon the occurrence of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement), all
Restrictions shall lapse upon the date of such Accelerating Event.
3. Forfeiture of Restricted Stock Upon Termination of Employment. The
rights of the Employee and his successors in interest in Restricted
Stock on which the Restrictions have not lapsed pursuant to paragraph
2(b) shall terminate in full when the Employee's employment with the
Company or a parent or subsidiary corporation is terminated by the
Company for Cause (as defined in Section 3(b) of the Employment
Agreement) or pursuant to Section 3(d) of the Employment Agreement or
by the Employee without Good Reason (as defined in Section 3(c) of the
Employment Agreement).
4. Dividends/Distributions. The Company shall pay to the Employee any
dividends or other distributions payable with respect to the Restricted
Stock, notwithstanding the Restrictions, beginning on the date hereof
but not beyond the date of any forfeiture thereof pursuant to the
provisions of paragraph 3.
5. Withholding. The Employee agrees to make arrangements satisfactory
to the Company to comply with any income tax withholding requirements
that may apply upon the lapse of the Restrictions on the Restricted
Stock. The Employee will be entitled to elect to satisfy his tax
withholding obligation by the withholding by the Company, at the
appropriate time, of shares of the Company's Common Stock from the
Restricted Stock in a number sufficient, based upon the fair market
value (as defined below) of such Common Stock on the relevant date, to
satisfy such tax withholding requirements. For purposes of this
Agreement, "fair market value" means, as of any given date, the closing
price of the Company's Common Stock on such date as quoted in the NYSE
Composite Transactions Report in the Wall Street Journal. If there were
no sales reported as of a particular date, fair market value will be
computed as of the last date preceding such date on which a sale was
reported.
2
<PAGE> 28
6. Delivery of Certificates. The Company may delay delivery of the
certificate for shares granted hereunder until (i) the admission of
such shares to listing on any stock exchange on which the Company's
Common Stock may then be listed, (ii) completion of any registration or
other qualification of such shares under any state or federal law
regulation that the Company's counsel shall determine as necessary or
advisable, and (iii) receipt by the Company of advice by counsel that
all applicable legal requirements have been complied with.
7. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any
questions, claims or other matters arising under this Agreement. Such
proceeding shall be conducted by final and binding arbitration before a
panel of one or more arbitrators under the administration of the
American Arbitration Association, and in a location mutually agreed to
by the Employee and the Company. The Federal and State courts located
in the United States of America are hereby given jurisdiction to render
judgment upon, and to enforce, each arbitration award, and the parties
hereby expressly consent and submit to the jurisdiction of such courts.
8. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) This Agreement and Section 12 of the Employment Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Plan, the
provisions of this Agreement shall govern.
3
<PAGE> 29
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
Robert H. Nazarian Florida East Coast Industries, Inc.
5800 Long Brake Trail One Malaga Street
Edina, MN 55439 St. Augustine, FL 32084
Facsimile: 612/829-9655 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law
or in equity, which is final and not subject to appeal shall be
entitled to its reasonable attorneys' fees and costs incurred with
respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert
4
<PAGE> 30
any right the Employee or the Company may have hereunder, shall not be
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anastis
--------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert H. Nazarian
- --------------------------------
ROBERT H. NAZARIAN
5
<PAGE> 31
BASIC STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT H. NAZARIAN
July 27, 1999
<PAGE> 32
THIS AGREEMENT, dated July 27, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Robert H. Nazarian (the "Employee") is
made pursuant to the provisions of Section 2(b)(v) of that certain Employment
Agreement dated July 15, 1999 between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
40,500 shares of the Company's Common Stock. The exercise price of the
NSO is $39.50 per share, being the fair market value of the Company's
Common Stock on the date hereof.
2. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. One-fifth of the NSO, 8,100 shares,
shall vest on and may be exercised at any time on or after
July 27, 2000. Another one-fifth of the NSO, 8,100 shares,
shall vest on and may be exercised at any time on or after
July 27, 2001. Another one-fifth of the NSO, 8,100 shares,
shall on vest and may be exercised at any time on or after
July 27, 2002. Another one-fifth of the NSO, 8,100 shares,
shall vest on and may be exercised at any time on or after
July 27, 2003. The remaining one-fifth of the NSO, 8,100
shares, shall vest on and may be exercised at any time on or
after July 27, 2004. In addition, all of the NSO shall vest on
and may be exercised at any time on or after an Accelerating
Event (as defined in Section 4(a) of the Employment
Agreement). The vesting of any portion of the NSO is
conditioned on the Employee's continued employment by the
Company or a parent or subsidiary of the Company as of the
relevant vesting date.
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part,
<PAGE> 33
from the dates described in subsections (a) above until the
earliest of (i) July 27, 2009, (ii) two years following the
effective date that the Employee's employment terminates by
reason of an Accelerating Event (as defined in Section 4(a) of
the Employment Agreement) or normal retirement (as determined
under any retirement plan of the Company), or (iii) the
effective date that the Employee terminates employment for any
other reason (but in no event earlier than two years following
the accrual of Change in Control Entitlement (as defined in
Section 5(b) of the Employment Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation, then the person to whom the Employee's rights
under the NSO shall have passed by will or by the laws of
distribution may exercise any of the NSO within two years
after the Employee's death.
3. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
4. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
5. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger,
2
<PAGE> 34
consolidation, spinoff, a combination or exchange of shares or other
transaction having a similar substantive effect, the number of shares
of stock subject to the NSO and the exercise price shall be equitably
adjusted.
6. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock, and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of notice stating the number of
shares elected to be purchased, and by payment to the Company as
described in paragraph 3.
7. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
8. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as necessary or advisable, and (iii) receipt by the Company
of advice by counsel that all applicable legal requirements have been
complied with.
9. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising under this Agreement.
Such proceeding shall be conducted by final and binding
3
<PAGE> 35
arbitration before a panel of one or more arbitrators under the
administration of the American Arbitration Association, and in a
location mutually agreed to by the Employee and the Company. The
Federal and State courts located in the United States of America are
hereby given jurisdiction to render judgment upon, and to enforce, each
arbitration award, and the parties hereby expressly consent and submit
to the jurisdiction of such courts.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, or by telecopier, or by courier, addressed as follows:
If to the Employee to: If to the Company to:
Robert H. Nazarian Florida East Coast Industries, Inc.
5800 Long Brake Trail One Malaga Street
Edina, MN 55439 St. Augustine, FL 32084
Facsimile: 612/829-9655 Attention: Treasurer
Facsimile: 904/396-4042
4
<PAGE> 36
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this
Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anastis
--------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert H. Nazarian
- --------------------------------
ROBERT H. NAZARIAN
5
<PAGE> 37
SUPPLEMENTAL STOCK OPTION AGREEMENT
between
FLORIDA EAST COAST INDUSTRIES, INC.
and
ROBERT H. NAZARIAN
July 27, 1999
<PAGE> 38
THIS AGREEMENT, dated July 27, 1999 between Florida East Coast
Industries, Inc. (the "Company"), and Robert H. Nazarian (the "Employee") is
made pursuant to the provisions of Section 2(b)(vi) of that certain Employment
Agreement dated July 15, 1999 between the Company and the Employee (the
"Employment Agreement").
In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:
1. Non-Statutory Option. Under the Company's 1998 Stock
Incentive Plan, as amended (the "Plan"), the Company hereby grants the
Employee a non-statutory option ("NSO") to purchase from the Company
37,500 shares of the Company's Common Stock. The exercise price of the
NSO is $39.50 per share, being the fair market value of the Company's
Common Stock on the date hereof.
2. Entitlement to Exercise the NSO. The grant of the NSO is
subject to the following terms and conditions:
(a) Vesting. The NSO shall vest and become
exercisable immediately upon the earlier of (i) the first date
as of which the average closing price of a share of the
Company's Common Stock over twenty (20) consecutive trading
days is not less than Fifty Dollars ($50.00); (ii) the
occurrence of an Accelerating Event (as defined in Section
4(a) of the Employment Agreement); or (iii) July 27, 2004.
(b) Exercise Period. Except as otherwise stated
in this Agreement, the vested portion of the NSO may be
exercised, in whole or in part, from the dates described in
subsections (a) above until the earliest of (i) July 27, 2009,
(ii) two years following the effective date that the
Employee's employment terminates by reason of an Accelerating
Event (as defined in Section 4(a) of the Employment Agreement)
or normal retirement (as determined under any
<PAGE> 39
retirement plan of the Company), (iii) the effective date that
the Employee terminates employment for any other reason (but
in no event earlier than two years following accrual of Change
in Control Entitlement (as defined in Section 5(b) of the
Employment Agreement)).
(c) Exercise Following Death. If the Employee
dies while employed by the Company or a parent or subsidiary
corporation and at a time when any portion of the NSO is
vested and exercisable, then the person to whom the Employee's
rights under the NSO shall have passed by will or by the laws
of distribution may exercise any of the vested and exercisable
portion of the NSO within two years after the Employee's
death.
3. Payment Under NSO. Payment of the NSO price may be made in
cash, in shares of the Company's Common Stock, or in any combination
thereof. If shares of the Company's Common Stock are delivered to make
any such payment, the shares shall be valued at the fair market value
(as defined below) thereof on the date of exercise of the NSO. For
purposes of this Agreement, "fair market value" means, as of any given
date, the closing price of the Company's Common Stock on such date as
quoted in the NYSE Composite Transactions Report in the Wall Street
Journal. If there were no sales reported as of a particular date, fair
market value will be computed as of the last date preceding such date
on which a sale was reported.
4. Limited Transferability of NSO. The NSO is not transferable
(other than by will or by the laws of descent and distribution) and,
except as otherwise stated in this Agreement, may be exercised during
the Employee's lifetime only by the Employee.
5. Adjustments. The NSO shall be equitably adjusted with
respect to the exercise price to reflect any extraordinary distribution
made with respect to the Company's Common Stock during the term of the
options. In the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger, consolidation, spinoff,
a combination or exchange of shares or other transaction having a
2
<PAGE> 40
similar substantive effect, the number of shares of stock subject to
the NSO and the exercise price shall be equitably adjusted.
6. Exercise. The vested portion of the NSO may be exercised in
whole or in part, but only with respect to whole shares of the
Company's Common Stock and may be exercised more than once until all
shares which are subject to the NSO have been purchased. An NSO may be
exercised by delivery to the Company of notice stating the number of
shares elected to be purchased, and by payment to the Company as
described in paragraph 3.
7. Withholding. By signing this Agreement, the Employee agrees
to make arrangements satisfactory to the Company to comply with any
income tax withholding requirements that may apply upon the exercise of
the NSO or the disposition of the Company's Common Stock received upon
the exercise of the NSO. The Employee will be entitled to elect to
satisfy his tax withholding obligation by the withholding by the
Company, at the appropriate time, of shares of the Company's Common
Stock otherwise issuable to the Employee under this Agreement in a
number sufficient, based upon the fair market value (as defined above)
of such Common Stock on the relevant date, to satisfy such tax
withholding requirements.
8. Delivery of Certificates. The Company may delay delivery of
the certificate for shares purchased pursuant to the exercise of an NSO
until (i) the admission of such shares to listing on any stock exchange
on which the Company's Common Stock may then be listed, (ii) completion
of any registration or other qualification of such shares under any
state or federal law regulation that the Company's counsel shall
determine as necessary or advisable, and (iii) receipt by the Company
of advice by counsel that all applicable legal requirements have been
complied with.
9. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement shall be settled by binding
arbitration, which shall be the sole and exclusive method of resolving
any questions, claims or other matters arising
3
<PAGE> 41
under this Agreement. Such proceeding shall be conducted by final and
binding arbitration before a panel of one or more arbitrators under the
administration of the American Arbitration Association, and in a
location mutually agreed to by the Employee and the Company. The
Federal and State courts located in the United States of America are
hereby given jurisdiction to render judgment upon, and to enforce, each
arbitration award, and the parties hereby expressly consent and submit
to the jurisdiction of such courts.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) This Agreement and Section 12 of the Employment
Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the provisions of this Agreement and the provisions of the
Plan, the provisions of this Agreement shall govern.
(c) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, or by telecopier, or by courier, addressed as follows:
4
<PAGE> 42
If to the Employee to: If to the Company to:
Robert H. Nazarian Florida East Coast Industries, Inc.
5800 Long Brake Trail One Malaga Street
Edina, MN 55439 St. Augustine, FL 32084
Facsimile: 612/829-9655 Attention: Treasurer
Facsimile: 904/396-4042
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) In the event of a dispute arising out of this
Agreement, any party receiving any monetary or injunctive remedy,
whether at law or in equity, which is final and not subject to appeal
shall be entitled to its reasonable attorneys' fees and costs incurred
with respect to obtaining such remedy from the other party.
(e) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) The Employee's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, shall not be
5
<PAGE> 43
deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
FLORIDA EAST COAST INDUSTRIES, INC.
By /s/ Robert W. Anastis
--------------------------------------
Chairman and Chief Executive Officer
Agreed and Accepted:
/s/ Robert H. Nazarian
- --------------------------------
ROBERT H. NAZARIAN
6
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 57,180
<SECURITIES> 46,132
<RECEIVABLES> 27,055
<ALLOWANCES> 0
<INVENTORY> 6,677
<CURRENT-ASSETS> 10,868
<PP&E> 996,271
<DEPRECIATION> (274,277)
<TOTAL-ASSETS> 890,890
<CURRENT-LIABILITIES> 38,258
<BONDS> 0
0
0
<COMMON> 62,735
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 890,890
<SALES> 172,554
<TOTAL-REVENUES> 175,310
<CGS> 0
<TOTAL-COSTS> 143,119
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 32,191
<INCOME-TAX> 11,875
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,316
<EPS-BASIC> 0.56
<EPS-DILUTED> 0.56
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