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UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999
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Commission File Number 0-19150
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WISCONSIN CENTRAL TRANSPORTATION
CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 36-3541743
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6250 North River Road, Suite 9000
Rosemont, Illinois 60018
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (847) 318-4600
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Indicate by check [X] 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.
X YES NO
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Indicate the number of shares outstanding of the
Issuer's common stock as of July 31, 1999: 51,243,865 shares
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<PAGE>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
FORM 10-Q
Quarter Ended June 30, 1999
CONTENTS PAGE
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets.......................... 1
Consolidated Statements of Income.................... 3
Consolidated Statements of Cash Flows................ 4
Notes to Consolidated Financial Statements........... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 6
Item 3. Quantitative and Qualitative Disclosures
About Market Risk.................................... 11
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders.. 12
Item 5. Other Information.................................... 13
Item 6. Exhibits and Reports on Form 8-K..................... 13
Signatures.............................................................. 14
Index to Exhibits....................................................... 15
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
Assets
June 30, December 31,
1999 1998
------------ -----------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 2,692 $ 2,972
Receivables, net of allowance for doubtful accounts of $1,850
and $1,847 at June 30, 1999 and December 31, 1998................................ 78,064 78,525
Materials and supplies.............................................................. 31,122 23,610
Deferred income taxes............................................................... 1,295 1,295
Other current assets................................................................ 2,919 1,418
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Total current assets............................................................. 116,092 107,820
Investments in international affiliates................................................. 208,077 173,750
Properties:
Roadway and structures.............................................................. 744,210 706,995
Equipment........................................................................... 124,447 118,990
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Total properties................................................................. 868,657 825,985
Less accumulated depreciation....................................................... (103,911) (94,850)
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Net properties................................................................... 764,746 731,135
Other assets, principally deferred financing costs...................................... 2,955 3,335
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Total assets..................................................................... $ 1,091,870 $ 1,016,040
============ ===========
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share amounts)
Liabilities and Stockholders' Equity
June 30, December 31,
1999 1998
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(Unaudited) (Audited)
<S> <C> <C>
Current liabilities:
Short-term debt.................................................................... $ 2,481 $ 2,118
Accounts payable................................................................... 46,692 46,116
Accrued expenses................................................................... 85,084 87,404
Accrued disputed switching charges and associated interest......................... -- 21,797
Income taxes payable............................................................... -- 4,219
Interest payable................................................................... 2,327 2,560
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Total current liabilities....................................................... 136,584 164,214
Long-term debt......................................................................... 332,321 271,681
Other liabilities...................................................................... 8,158 4,722
Deferred income taxes.................................................................. 134,320 121,116
Deferred income........................................................................ 9,644 10,313
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Total liabilities............................................................... 621,027 572,046
Stockholders' equity:
Preferred stock, par value $1.00; authorized 1,000,000
shares; none issued or outstanding.............................................. -- --
Common stock, par value $.01; authorized 150,000,000 shares;
issued and outstanding, 51,152,874 shares at June 30, 1999
and 51,142,644 shares at December 31, 1998...................................... 512 511
Paid in capital.................................................................... 114,963 114,833
Retained earnings.................................................................. 362,468 329,941
Accumulated other comprehensive income............................................. (7,100) (1,291)
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Total stockholders' equity...................................................... 470,843 443,994
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Total liabilities and stockholders' equity...................................... $ 1,091,870 $ 1,016,040
============ ===========
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
For the Quarter Ended For the Six Months
June 30, Ended June 30,
------------------------ -----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenues.......................................... $ 90,772 $ 84,959 $ 179,292 $ 168,916
Operating expenses:
Roadway and structures.................................. 12,472 11,880 26,370 25,552
Equipment ............................................ 16,988 14,240 35,413 31,161
Transportation.......................................... 26,655 25,708 55,551 53,416
General and administrative.............................. 9,508 9,192 18,850 18,860
--------- --------- --------- ---------
Operating expenses.................................. 65,623 61,020 136,184 128,989
--------- --------- --------- ---------
Income from operations....................................... 25,149 23,939 43,108 39,927
Other income (expense):
Sale of rights under transportation agreement........... -- -- -- 5,445
Interest expense........................................ (4,131) (4,276) (8,335) (8,484)
Other, net ............................................. 307 236 579 374
--------- --------- --------- ---------
Total other income (expense), net................... (3,824) (4,040) (7,756) (2,665)
--------- --------- --------- ---------
Income before income taxes and
equity in net income of international affiliates........ 21,325 19,899 35,352 37,262
Provision for income taxes................................... 8,444 7,879 13,998 14,754
--------- --------- --------- ---------
Income before equity in
net income of international affiliates.................. 12,881 12,020 21,354 22,508
Equity in net income of international affiliates............. 5,973 7,007 11,173 16,948
--------- --------- --------- ---------
Net income................................................... $ 18,854 $ 19,027 $ 32,527 $ 39,456
========= ========= ========= =========
Earnings per common share outstanding
Basic................................................... $ 0.37 $ 0.37 $ 0.64 $ 0.77
========= ========= ========= =========
Diluted................................................. $ 0.37 $ 0.37 $ 0.63 $ 0.77
========= ========= ========= =========
Average common shares outstanding
Basic................................................... 51,148 51,028 51,145 51,021
========= ========= ========= =========
Diluted................................................. 51,343 51,354 51,281 51,361
========= ========= ========= =========
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
For the Six Months Ended
June 30,
-----------------------
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net income ..................................................................... $ 32,527 $ 39,456
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization............................................... 11,130 9,813
Deferred income taxes .................................................. 13,204 14,279
Equity in net income of international affiliates............................ (11,173) (16,948)
Gains on property sales..................................................... (176) (134)
Net amortization of deferred gain on sale-leaseback of equipment............ (669) (560)
Changes in working capital:
Accounts receivable...................................................... 461 (1,746)
Materials and supplies................................................... (7,512) (7,090)
Other current assets, excluding deferred income taxes.................... (1,501) 93
Accrued disputed switching charges and related interest.................. (21,797) 610
Current liabilities...................................................... (6,196) 8,100
Other, net.................................................................. 3,436 (405)
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Net cash provided by operating activities......................................... 11,734 45,468
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Cash flows from investing activities:
Property additions............................................................. (43,489) (47,904)
Property sales and other transactions.......................................... (372) 1,454
Investment in affiliate........................................................ (30,386) --
Dividend from affiliate........................................................ 1,099 1,167
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Net cash used for investing activities............................................ (73,148) (45,283)
-------- --------
Cash flows from financing activities:
Long-term debt issued.......................................................... 61,003 --
Proceeds from sale of debt securities.......................................... -- 150,000
Repayments of long-term debt................................................... -- (148,636)
Debt issuance costs............................................................ -- (3,258)
Issuance of common stock under stock option plans.............................. 131 314
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Net cash provided by (used for) financing activities.............................. 61,134 (1,580)
-------- --------
Net decrease in cash and cash equivalents......................................... (280) (1,395)
Cash and cash equivalents, beginning of period.................................... 2,972 4,630
-------- --------
Cash and cash equivalents, end of period.......................................... $ 2,692 $ 3,235
======== ========
Supplemental cash flow information: Cash paid during the period for:
Interest ...................................................................... $ 8,758 $ 7,230
Income taxes................................................................... 5,013 278
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
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<PAGE>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
June 30, 1999
Basis of Presentation
The consolidated financial statements present the results of operations of
Wisconsin Central Transportation Corporation ("WCTC") and its wholly owned
subsidiaries, Wisconsin Central Ltd., Fox Valley & Western Ltd., WCL Railcars,
Inc., Sault Ste. Marie Bridge Company, Wisconsin Central International, Inc.
("WCI"), WC Canada Holdings, Inc. and Algoma Central Railway Inc. ("ACRI").
WCTC, through WCI, also holds a 39% equity interest in English Welsh and
Scottish Railway Holdings Limited ("EWS"), whose subsidiaries operate railways
in Great Britain, a 24% equity interest in Tranz Rail Holdings Limited ("Tranz
Rail"), which operates a nationwide railway in New Zealand, and a 33% equity
interest in Australian Transport Network Limited ("ATN") which provides all the
commercial rail freight service in Tasmania, an island state of Australia. WCTC
and its subsidiaries are hereinafter referred to as the Company. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. Accordingly, these unaudited consolidated financial
statements should be read in conjunction with the Company's audited financial
statements and the notes thereto for the year ended December 31, 1998. In the
opinion of management, the information provided in these statements reflects all
adjustments, which are of a normal recurring nature, necessary to present fairly
such information. The results of operations for any interim period are not
necessarily indicative of the results of operations for an entire year.
Reclassifications
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
Comprehensive Income Information
In January 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income". The Company's comprehensive
income consists of (a) net income as reported in the statements of income and
(b) other comprehensive income (loss), which is comprised solely of foreign
currency translation adjustments. The Company has not recorded income tax
effects of its foreign currency translation adjustments. For the first six
months of 1999, comprehensive income was $26.7 million, as compared to
comprehensive income of $35.5 million for the first six months of 1998. The
accumulated amount of other comprehensive income through the date of each
balance sheet is presented as a component of stockholders= equity. Comprehensive
income is reported in the statement of changes in stockholders' equity in the
Company's annual financial statements.
English Welsh & Scottish Railway Holdings Limited
In June 1999, the Company increased its ownership interest in EWS by
acquiring an additional 6.3 million shares and options of the privately held
stock. The additional investment, which totaled $30.4 million, increased the
Company's ownership interest in EWS from approximately 33% to approximately 39%.
The transaction was funded from the Company's existing credit facilities.
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<PAGE>
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited
consolidated financial statements and related notes included herein.
Results of Operations: Second Quarter 1999 Compared to Second Quarter 1998
The Company's net income for the quarter ended June 30, 1999 was $18.9
million compared to $19.0 million for the same period in 1998.
Operating revenues. Operating revenues during the quarter ended June 30,
1999 were $90.8 million compared with $85.0 million for the same period in 1998,
an increase of 7%. Gross freight revenues for the quarter ended June 30, 1999
increased in three of six commodity groups, compared with the same period in
1998. Traffic volume, as measured by carloads handled (including as a carload
each loaded trailer or container), for the quarter ended June 30, 1999
approximated 148,000 carloads compared with approximately 138,400 carloads in
1998.
Volume and gross freight revenues for minerals increased 13% and 9%,
respectively, primarily due to increases in shipments of construction
aggregates, increased demand for roofing material and increases in rail
shipments of iron ore sourced from the upper Midwest. Intermodal volume and
gross freight revenues increased 43% and 37%, respectively, primarily due to
increased market share resulting from service improvements in the second quarter
of 1999. Volume and gross freight revenues for food and grain increased 15% and
9%, respectively, primarily due to increases in market share of wheat and corn
shipments related to reduction of inventory levels.
Volume and gross freight revenues for industrial products decreased 10% and
7%, respectively, primarily due to a reduction in steel shipments from a major
customer of ACRI caused by continued pressure on the steel industry from low
priced imports from offshore countries. Volume and gross freight revenues for
paper and other forest products decreased 4% and 6%, respectively, primarily due
to higher levels of imported paper products. Other volume and gross freight
revenues decreased 8% and 11%, respectively, primarily due to decreases in
shipments of scrap metal from steel producers in the Company's operating
territory.
The Company began providing haulage services in August 1998 for Canadian
National Railway's ("CN") carload and bulk commodity trains between Superior,
Wisconsin and Chicago. Operating revenues for the second quarter of 1999 include
$6.4 million related to this service.
Operating expenses and operating income. Operating expenses for the second
quarter of 1999 were $65.6 million, $4.6 million or 8% higher than last year.
The increase consists primarily of higher equipment rents, labor costs and
depreciation. The Company's operating ratio (operating expenses as a percentage
of operating revenues) was 72.3% in the second quarter of 1999, compared to
71.8% in the second quarter of 1998. Operating income for the second quarter of
1999 was $25.1 million, $1.2 million or 5% higher than last year.
Equipment rents increased by $2.9 million or 58% in the second quarter of
1999, primarily due to additional lease costs associated with freight cars which
the Company sold and leased back in December 1998, new leases entered into
during the second half of 1998 and increased car rents paid to other railroads
related to the increase in carloads. Labor expense increased by $0.9 million or
3%, primarily due to an overall increase in wage rates as compared to the second
quarter of 1998. Depreciation increased by $0.6 million or 13% primarily due to
higher capital spending programs on track and structures to support increasing
volume levels related to the haulage arrangement with CN.
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<PAGE>
Interest expense and income taxes. Interest expense for the second quarter
of 1999 was $4.1 million, a decrease of $0.1 million from the second quarter of
1998, due to a lower effective rate on the Company's floating rate borrowings.
The income tax provision for the second quarter of 1999 was $8.4 million,
an increase of $0.6 million compared to the second quarter of 1998, due to
higher pre-tax income.
Equity in net income of international affiliates. The Company's 1999 second
quarter results included equity in net income of its international affiliates of
$6.0 million as compared to $7.0 million for the same period of 1998.
The Company's equity in the net income of EWS for the second quarter of
1999 was $1.8 million versus $5.6 million in the same quarter a year ago. EWS's
operating revenues in the quarter declined 7%, reflecting weakness in
infrastructure traffic and continued weakness in the steel market. EWS's
operating expenses in the quarter increased 1% as incremental locomotive lease
expense more than offset cost reductions in other categories.
The Company's equity in the net income of Tranz Rail for the second quarter
of 1999 was $4.8 million versus $1.4 million in the same quarter a year ago.
Tranz Rail's second quarter 1999 results reflect several significant one-time
items. The after-tax impact of the major items on the Company's equity in net
income from Tranz Rail includes a $6.2 million tax credit resulting from a
review of its deferred tax provisioning, a $1.3 million charge related to an
increase in its redundancy provision and a $1.0 million write-off for certain
previously capitalized feasibility costs.
The contribution from ATN for the second quarter of 1999 was a loss of $0.6
million versus income of $30 thousand in the year-ago quarter. In the second
quarter 1999, ATN recognized a charge for costs incurred in an unsuccessful
attempt to acquire V-Line Freight. The after-tax impact of this charge on the
Company's equity in net income of ATN was $1.0 million.
Results of Operations: First Six Months of 1999 Compared to First Six Months of
1998
The Company's net income for the six months ended June 30, 1999 was $32.5
million compared to $39.5 million for the same period in 1998.
Operating Revenues. Operating revenues during the six months ended June 30,
1999 were $179.3 million compared with $168.9 million for the same period in
1998. Gross freight revenues for the six months ended June 30, 1999 increased in
three of six commodity groups, compared with the same period in 1998. Volume, as
measured by carloads handled, for the six months ended June 30, 1999
approximated 283,100 compared with approximately 275,000 carloads in 1998.
Volume and gross freight revenues for minerals increased 4% and 6%,
respectively, primarily due to increased demand for roofing material and
increases in rail shipments of iron ore sourced from the upper Midwest.
Intermodal volume and gross freight revenues increased 30% and 27%,
respectively, primarily due to increased market share resulting from service
improvements in the first six months of 1999. Volume and gross freight revenues
for food and grain increased 21% and 10%, respectively, primarily due to
increases in shipments of corn and other grains in the Company's operating
territory.
Volume and gross freight revenues for industrial products decreased 11% and
10%, respectively, primarily due to a reduction in steel shipments from a major
customer of ACRI caused by continued pressure on the steel industry from low
priced imports from offshore countries. Both volume and gross freight revenues
for paper and other forest products decreased 3% primarily due to weak market
demand for coated paper. Other gross freight revenues decreased 4% primarily due
to decreases in shipments of scrap metal from steel producers in the Company's
operating territory.
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<PAGE>
Operating revenues related to the haulage services for CN, which began in
August 1998, totaled $12.9 million for the six months ended June 30, 1999.
Operating expenses and operating income. Operating expenses for the first
six months of 1999 were $136.2 million compared with $129.0 million for the same
period in 1998. Operating expenses for 1999 included increases in equipment
rents, depreciation and casualty costs, offset in part by a decrease in fuel
costs. The Company's operating ratio was 76.0% for the first six months of 1999,
compared to 76.4% for the same period of 1998. Operating income for the first
six months of 1999 was $43.1 million, $3.2 million or 8% higher than last year.
Equipment rents increased by $4.1 million or 37% in the first six months
of 1999 primarily due to additional lease costs associated with freight cars
which the Company sold and leased back in December 1998, new leases entered into
during the second half of 1998 and increased car rents paid to other railroads
related to the increase in carloads. Depreciation increased by $1.3 million or
13% primarily due to higher capital spending programs on track and structures to
support increasing volume levels related to the haulage arrangement with CN.
Casualty costs increased by $1.9 million or 55% due to an increase in personal
injury claims related to train accidents during the first six months of 1999.
Fuel expense decreased by $0.9 million or 9% in the first six months of
1999 primarily due to a 12% decrease in fuel prices partially offset by a 2%
increase in fuel consumption.
Interest expense and income taxes. Interest expense for the first six
months of 1999 was $8.3 million, a decrease of $0.2 million from the same period
last year, due to a lower effective interest rate on the Company's floating rate
borrowings partially offset by an increase in average outstanding borrowings
during the period.
The income tax provision for the first six months of 1999 was $14.0
million, a decrease of $0.8 million from the first six months of 1998, due to
lower pre-tax income.
Equity in net income of international affiliates. The Company's results
for the first six months of 1999 included equity in net income of its
international affiliates of $11.2 million as compared to $16.9 million for the
same period in 1998. The Company's equity in the net income of EWS for the first
six months of 1999 was $5.2 million, versus $13.5 million for the same period a
year ago. EWS's operating revenues for the first six months of 1999 declined by
10%, while operating expenses decreased by 2% over the same period. Factors
contributing to EWS's results were the weakness in Great Britain's steel market,
weakness in infrastructure traffic and the reduction of certain freight rates to
market levels. The Company's equity in the net income of Tranz Rail for the
first six months of 1999 was $6.3 million, versus $3.4 million for the same
period a year ago. The increase in Tranz Rail's contribution is largely the
result of several significant one-time items that had a favorable after tax
impact of $3.9 million on the Company's equity in net income of Tranz Rail.
These one-time items included a tax credit resulting from a review of deferred
tax provisioning partially offset by redundancy provisions and the write-off of
certain previously capitalized pre-commencement costs. The Company recognized
equity in the net loss of ATN of $0.3 million for the first six months of 1999
as a result of a charge recognized by ATN for costs incurred in the unsuccessful
attempt to acquire V-Line Freight. This charge had a $1.0 million after tax
effect on the Company's equity in ATN for the first six months of 1999.
Financial Condition: June 30, 1999 Compared to December 31, 1998
The Company generated cash in the amount of $12.5 million during the first
six months of 1999 from operations and a cash dividend received from Tranz Rail
and the sale of assets and $61.1 million from financing activities. These
resources, as well as cash on hand, were used to finance capital-related
expenditures of $43.5 million and a $30.4 million investment in EWS. The amount
of cash provided by operating activities includes a $21.8 million use of cash to
satisfy the BOCT judgment as described under "BOCT Complaint" in Item 3 of Part
I of the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
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<PAGE>
The Company had $334.8 million of total debt outstanding at June 30, 1999,
which constituted 41.6% of its total capitalization, compared to 38.1% at
December 31, 1998. In June 1999, the Company entered into a revolving credit
agreement with a capacity of $50 million that expires on December 31, 1999 to
augment its existing loan facilities. The addition of this facility brought the
Company's aggregate unused borrowing availability under its loan facilities to
$63.5 million at June 30, 1999. The Company plans to issue debt in the public
market and/or replace this aforementioned additional facility with a similar
facility prior to its expiration on December 31, 1999. The Company's other
revolving credit facilities, which have a capacity of $183 million, are
scheduled to expire on October 31, 2000. The Company expects to either extend or
replace these facilities prior to their expiration.
Year 2000
In 1997 WCTC began to assess and modify its computer systems so that they
can process transactions involving the Year 2000 ("Y2K") and beyond. The
Company's Y2K efforts have been a high priority since then. Costs to modify
these systems are currently estimated to be $1.6 million and are expensed as
incurred. Of this amount, approximately $0.7 million was expensed through June
30, 1999. In addition the Company plans to replace certain hardware and systems
with a total cost estimated to be approximately $1.0 million. Through June 30,
1999, approximately $0.8 million of this amount has been spent and capitalized.
As of June 30, 1999, approximately 90% of the Company's systems have been
modified or replaced and Y2K modifications and testing will continue throughout
1999.
Railroad Operating Systems - The Company's wholly owned operating
subsidiaries lease or license certain railroad operating systems from Union
Pacific Technologies ("UPT"), a division of the Union Pacific Corporation. These
systems represent a significant portion of the Company's total systems and UPT
has the responsibility for making such systems Y2K compliant. UPT reported that
all of the mainframe and client server systems leased or licensed from it by the
Company are Y2K compliant. The Company generally incurs no additional charges
from UPT for making its systems Y2K compliant. UPT, along with the Company, will
continue to review and test these systems throughout 1999.
Financial and Administrative Systems - The Company generally utilizes
off-the-shelf software which it runs on IBM AS/400 hardware for its financial
and administrative systems. In addition, the IBM AS/400 platform along with
personal computers, including client-server systems, are utilized in a variety
of ways throughout the operations of the Company. This hardware and software is
expected to be modified or replaced by October 31, 1999 and tested throughout
that year.
Electronic Interchange - WCTC has electronic exchange of information with
customers, vendors, other railroads, and financial institutions. The Company is
in the process of contacting other parties with whom it exchanges data to
determine the status of their Y2K modification efforts. The Company is able to
process electronic interchange transactions in existing formats with proper
interpretation of the century date. The Company is working with UPT in testing
the new standard with other railroads and with its trading partners.
Vendor Supplied and Embedded Systems - In addition to traditional computer
hardware and software, the Company utilizes a variety of vendor supplied
equipment, machinery and systems which contain embedded systems or software that
could experience Y2K problems. The Company is contacting and working with its
suppliers on those items that are critical to operations or safety related and
with other railroads on those items that are common to the industry. As of June
30, 1999, these efforts were approximately 80% complete with the remainder
expected to be substantially completed by September 30, 1999. Testing will
continue throughout 1999.
Contingency Plans - The Company plans to develop and have in place
contingency plans for areas of particular concern by the end of the third
quarter of 1999.
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<PAGE>
WCTC believes that its systems will be successfully and timely modified.
However the failure to do so, or the failure to become Y2K compliant on the part
of third parties with whom the Company does business or is dependent upon, could
materially impact the operations and financial results of the Company for the
year 2000.
The Company's international affiliates are also dealing with Y2K
compliance. The Company's investments in those affiliates and its equity in
their earnings could be affected by the outcome of their Y2K efforts.
EWS - EWS is replacing approximately one-third of its information systems
with Y2K compliant systems, retiring some non-compliant systems, and remediating
the remainder of its systems so that it will be Y2K compliant. EWS projects that
it will be Y2K compliant on all critical systems, components and processes by
August 1999. EWS's expenditures for Y2K compliance were approximately $4.8
million through June 30, 1999, and it estimates that an additional $4.6 million
will be required, in addition to the cost of replacement systems. The railway
system used by EWS is owned and operated by Railtrack, and EWS's operations and
financial results could be materially adversely affected if Railtrack fails to
achieve Y2K compliance. Railtrack has indicated that it will be Y2K compliant,
and EWS is maintaining close liaison with Railtrack's Y2K program. EWS is
developing contingency plans within each of its business areas and with key
customers to deal with problems that may arise out of Y2K non-compliance.
Tranz Rail - Tranz Rail has replaced its core financial systems with a new
system that is Y2K compliant and is updating its other systems to be Y2K
compliant. Tranz Rail reports that it is substantially Y2K compliant at June 30,
1999. Tranz Rail's capital expenditures for new financial systems and Y2K
compliance were approximately NZ$20.0 million through June 30, 1999 and it
estimates that an additional NZ$0.3 million of such expenditures will be
required. Tranz Rail is currently developing contingency plans to cover
unexpected failures of essential supplies or undetected internal process faults
should they occur.
Both the Company and its affiliates could be adversely affected, directly
and indirectly, by any general disruption in business activity that results from
actual or feared failures related to Y2K problems.
Disclaimer Regarding Forward-Looking Statements
This report contains certain statements that are "forward-looking", within
the meaning of Section 21E of the Securities Exchange Act of 1934, including
statements regarding, among other matters, the beliefs, expectations, plans and
estimates of the Company with respect to certain future events, including
without limitation the impact of Y2K issues on computer systems, the impact of
governmental regulation, the impact of litigation and regulatory proceedings and
the actions to be taken by others (including collective bargaining
organizations) and similar expressions concerning matters that are not
historical facts. Such forward-looking statements are not guarantees of future
performance and involve known and unknown risks, uncertainties and other factors
that could cause actual events to differ materially from those expressed in
those statements.
-10-
<PAGE>
Item 3 - Quantitative And Qualitative Disclosures About Market Risk
In the ordinary course of business, the Company utilizes various financial
instruments which inherently have some degree of market risk. The quantitative
and qualitative information presented below describe significant aspects of the
Company's financial instrument programs which have material market risk.
Interest Rate Sensitivity. The Company is exposed to changes in interest
rates primarily as a result of its borrowing activities, which include fixed and
floating rate debt used to maintain liquidity and fund its business operations.
The nature and amount of long-term debt can be expected to vary as a result of
future business requirements, market conditions and other factors. The Company
is not currently a party to any interest rate risk management transactions. The
table below presents principal cash flows and related weighted average interest
rates by contractual maturity dates of debt instruments as of June 30, 1999.
<TABLE>
<CAPTION>
Fixed Rate Debt Variable Rate Debt Total Debt
-------------------- -------------------- Interest --------------------
Average Average Free Average
Interest Interest Debt Interest
Maturity Amount Rate Amount Rate Amount Amount Rate
- -------- --------- -------- --------- --------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $ -- $ -- $ 1,252 $ 1,252 0.0%
2000 -- 169,647 5.4% 2,380 172,026 5.3%
2001 -- -- 2,202 2,202 0.0%
2002 -- -- 2,103 2,103 0.0%
2003 -- -- 1,640 1,640 0.0%
Thereafter 150,000 6.6% -- 5,579 155,579 6.4%
--------- --------- -------- ---------
Total $ 150,000 6.6% $ 169,647 5.4% $ 15,156 $ 334,802 5.7%
========= ========= ======== =========
Fair Value $ 143,961 $ 169,647 $ 11,976 $ 325,583
========= ========= ======== =========
</TABLE>
Commodity Price Sensitivity. The Company has a program to hedge against
fluctuations in the price of its diesel fuel purchases. This program includes
forward purchases for delivery at fueling facilities, and various commodity swap
and collar transactions which are accounted for as hedges. Swap transactions are
typically based on the delivery price of #2 heating oil and require the Company
to purchase a defined quantity at a defined price. Swap transactions are
generally settled in cash with the counterparty. Based on historical
information, the Company believes there is a significant correlation between the
market prices of diesel fuel and #2 heating oil. As of June 30, 1999, the
Company had hedge arrangements covering approximately 60% of its expected fuel
consumption for balance of 1999. As of June 30, 1999, 8.7 million notional
gallons were included in diesel fuel swaps at a weighted average contract price
of $.4942 per gallon. This price does not include taxes, transportation costs
and certain other fuel handling costs. As of June 30, 1999, the unrealized loss
on these swaps was $137 thousand. Additionally, at June 30, 1999, the Company
maintained fuel inventories used in normal operations which were not material to
the Company's overall financial position and therefore represent no significant
market exposure.
Investment in Affiliates. The value in U.S. dollars of the Company's
investment in companies outside the United States and of the Company's equity in
the earnings of those companies fluctuates from time to time as the value in
U.S. dollars of the currencies of those countries fluctuates. The Company has
entered into a zero cost collar arrangement to hedge a portion of it foreign
currency exposure on future management fee transactions in pounds sterling from
EWS. The collar has a put strike of $1.5500 and a call strike of $1.6520 with a
notional amount of 1.8 million pounds sterling as of June 30, 1999. As of June
30, 1999, there was no unrealized gain or loss on this collar arrangement.
The Company does not purchase or hold derivative financial instruments for
trading purposes.
-11-
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's annual stockholders' meeting was held on May 20, 1999. At
the meeting, the following proposals were submitted to a vote of security
holders:
Proposal I. Approval of By-law amendments which establish a classified Board of
Directors and related procedures. This proposal passed with 26,536,981 votes
cast for the proposal, 15,188,927 votes cast against the proposal and 3,430,634
abstentions and broker non-votes.
Proposal II. Approval and adoption of an amendment to the Restated Certificate
of Incorporation to provide that stockholders of the Company may act only at a
duly and validly called meeting and not by written consent. This proposal was
not passed by the shareholders, with 25,221,012 votes cast for the proposal,
15,466,231 votes cast against the proposal and 4,469,299 abstentions and broker
non-votes.
Proposal III. Approval of an amendment to the Director Stock Option Plan. This
proposal passed with 38,194,686 votes cast for the proposal, 6,833,151 votes
cast against the proposal and 128,705 abstentions.
Proposal IV. Election of ten directors, who (upon approval of Proposal I) were
divided into three classes. The shareholders elected ten directors in three
classes summarized as follows:
Number of Shares/Votes
----------------------------------
For Against
---------- ---------
For Three-Year Term:
Edward A. Burkhardt 44,756,440 400,102
Thomas W. Rissman 44,755,880 400,662
John W. Rowe 44,834,751 321,791
For Two-Year Term:
Thomas E. Evans 44,834,341 322,201
Thomas F. Power, Jr. 44,761,112 395,430
Robert H. Wheeler 44,758,285 398,257
For One-Year Term:
Carl Ferenbach 44,764,113 392,429
J. Reilly McCarren 44,613,567 542,975
Roland V. McPherson 44,808,120 348,422
A. Francis Small 44,702,054 454,488
-12-
<PAGE>
Item 5. Other Information
Labor Matters
In April 1999, employees of the Company's U. S. subsidiaries represented by
the Brotherhood of Locomotive Engineers ratified a labor agreement which had
been reached in February 1999. The agreement settles wage and work rule issues
for approximately 300 of the Company's locomotive engineers for a term ending in
2001.
As reported in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, 336 conductors employed by the Company's North American
operating subsidiaries have been represented by the United Transportation Union
("UTU") since 1997. During 1998 the Company and the UTU negotiated an initial
labor agreement which was not ratified by the employees represented by the UTU.
On August 5, 1999, the Company and the UTU negotiated a revised labor agreement
which will become effective on October 1, 1999 if ratified by the employees
represented by the UTU. The Company is unable to predict whether this agreement
with the UTU will be ratified and if not, whether there will be a labor
disruption.
Resignation of Chief Executive Officer
As previously disclosed on Form 8-K filed with the Securities and Exchange
Commission on July 9, 1999, Edward A. Burkhardt, the Company's Chairman, Chief
Executive Officer and a Director, will resign effective August 31, 1999. In
connection with this resignation, Mr. Burkhardt and the company have entered
into agreements which will result in an estimated $3.0 million charge ($1.8
million, after income taxes), in the third quarter of 1999.
Item 6. Exhibits and Reports on Form 8-K
The exhibits set forth on the accompanying Index to Exhibits are filed as
part of this report.
The Company filed no reports on Form 8-K during the quarter ended June 30,
1999.
-13-
<PAGE>
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WISCONSIN CENTRAL TRANSPORTATION
CORPORATION
Date: August 12, 1999 By: /s/ Walter C. Kelly
---------------------------
Walter C. Kelly
Vice President, Finance and
Chief Accounting Officer
-14-
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
3.1 Amendment dated May 20, 1999 to the By-laws of the registrant
3.2 By-laws of the Registrant, as amended to date
10.1 1999 Non-Employee Director Compensation Plan of the registrant
dated May 20, 1999
10.2 Agreement dated July 7, 1999 by and between the registrant and
Edward A. Burkhardt pertaining to resignation and related
matters
10.3 Registration Rights Agreement dated July 17, 1999 by and between
the registrant and Edward A. Burkhardt
10.4 Deed Relating to the Sale and Purchase of Shares and Options in
English Welsh & Scottish Railway Holdings Limited dated
August 6, 1999 by and between Wisconsin Central International,
Inc. and Edward A. Burkhardt
10.5 Assignment dated August 6, 1999 by Wisconsin Central International,
Inc. to Edward A. Burkhardt pertaining to potential railroad
transaction in Estonia
27.1 Financial Data Schedule
-15-
EXHIBIT 3.1
-----------
AMENDMENT TO BY-LAWS
OF
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
May 20, 1999
Section 3.2. is amended to read in its entirety as follows:
ss. 3.2. Number, Election, Term of Office and Qualifications. The
number of directors which shall constitute the whole board shall consist of not
less than four (4) nor more than twelve (12) persons. The exact number of
directors within the minimum and maximum limitations specified in the preceding
sentence shall be fixed from time to time by the board of directors pursuant to
a resolution adopted by two-thirds of the entire board of directors, but no
decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director. At the 1999 annual meeting of
stockholders, the directors shall be divided into three classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 2000 annual meeting of stockholders, the term of office of the second class
to expire at the 2001 annual meeting of stockholders and the term of office of
the third class to expire at the 2002 annual meeting of stockholders, and with
each class to hold office until its successors are elected and qualified or
until his or her earlier death, resignation or removal in a manner permitted by
statute or these by-laws. At each annual meeting of stockholders following such
initial classification and election, directors elected to succeed those
directors whose terms expire shall be elected for a term of office to expire at
the third succeeding annual meeting of stockholders after their election.
Directors need not be stockholders.
Section 3.3. is amended to read in its entirety as follows:
ss. 3.3. Vacancies. Except as provided in the certificate of
incorporation of the corporation, vacancies occurring in the board of directors
and newly-created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. Any newly-created
directorships shall be allocated among the classes of directors so as to cause
the three classes to be as nearly equal in number as possible. Any director
elected in accordance with this paragraph will hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or such vacancy occurred or until his or her earlier death, resignation
or removal in a manner permitted by statute or these by-laws.
Section 3.13. is amended to read in its entirety as follows:
ss. 3.13. Removal. Except as otherwise provided by statute or the
certificate of incorporation of the corporation, so long as the board of
directors is classified in accordance with Section 141(d) of the General
Corporation Law of Delaware, any director or the entire board of directors may
be removed by the stockholders only for cause by a majority of the votes
entitled to be cast at an election of directors.
Approved by the Shareholders on May 20, 1999.
EXHIBIT 3.2
-----------
BY-LAWS
OF
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
(A Delaware corporation)
as amended through May 20, 1999
ARTICLE 1
OFFICES; REGISTERED AGENT
-------------------------
ss. 1.1. Registered Office And Agent. The corporation shall maintain in the
State of Delaware, a registered office and a registered agent whose business
office is identical with such registered office.
ss. 1.2. Principal Business Office. The corporation shall have its
principal business office at such location within or without the State of
Delaware as the board of directors may from time to time determine. The
corporation may have other offices within or without the State of Delaware.
ARTICLE 2
STOCKHOLDERS
------------
ss. 2.1. Annual Meeting. The annual meeting of the stockholders shall
be held at such date and time as the directors shall determine by resolution;
provided, however, that if by April 1 of any year the directors have not
determined a date and time, the annual meeting in that year shall be held on the
second Tuesday in June at 10:00 a.m. Each annual meeting shall be held for the
purpose of electing directors and for the transaction of such other business as
may properly come before the meeting. If the date fixed for an annual meeting
shall be a holiday, such meeting shall be held on the next succeeding business
day.
ss. 2.2. Special Meetings. Special meetings of the stockholders of the
corporation may be called by the president or by the board of directors and
shall be called promptly by or at the direction of the secretary at the request
in writing of the holders of outstanding shares of stock of the corporation
having not less than 60% of the voting power of all of the outstanding shares of
stock of the corporation (considered as a single class) entitled to vote at
elections of directors, provided that such request shall state the purpose or
purposes of the proposed meeting, or as otherwise required by the certificate of
incorporation.
ss. 2.3. Place Of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors, but if no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal business office of the
corporation; provided, however, that for any meeting of the stockholders for
which a waiver of notice designating a place is signed by all of the
stockholders, then that shall be the place for the holding of such meeting.
ss. 2.4. Notice Of Meetings. Written or printed notice stating the
place, date and hour of the meeting of the stockholders and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given to each stockholder of record entitled to vote at the meeting, not less
than 10 nor more than 60 days before the date of the meeting, or in the case of
a meeting called for the purpose of acting upon a merger or consolidation not
less than 20 nor more than 60 days before the meeting. Such notice shall be
given by or at the direction of the secretary. If mailed, such notice shall be
deemed to be given when deposited in the United States mail addressed to the
stockholder at his or her address as it appears on the records of the
corporation, with postage thereon prepaid. If delivered (rather than mailed) to
such address, such notice shall be deemed to be given when so delivered.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken, unless the adjournment is for
more than 30 days or unless a new record date is fixed for the adjourned
meeting.
<PAGE>
ss. 2.5. Waiver of Notice. A waiver of notice in writing signed by a
stockholder entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Attendance of
a stockholder in person or by proxy at a meeting of stockholders shall
constitute a waiver of notice of such meeting except when the stockholder or his
or her proxy attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
ss. 2.6. Meeting Of All Stockholders. If all of the stockholders shall meet
at any time and place, either within or without the State of Delaware, and
shall, in writing signed by all of the stockholders, waive notice of, and
consent to the holding of, a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any corporate action may be
taken.
ss. 2.7. Record Dates.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by this chapter, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation at its registered office in the State of Delaware or at its
principal place of business. If no record date has been fixed by the board of
directors and prior action by the board of directors is required by this
chapter, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall not be more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
board of directors adopts the resolution relating thereto.
(d) Only those who shall be stockholders of record on the record date
so fixed as aforesaid shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to consent to such corporate action in
writing, or to receive payment of such dividend or other distribution, or to
receive such allotment of rights, or to exercise such rights, as the case may
be, notwithstanding the transfer of any stock on the books of the corporation
after the applicable record date.
ss. 2.8. Lists Of Stockholders. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least 10 days before each
meeting of stockholders, a complete list of the stockholders entitled to vote
thereat, arranged in alphabetical order, and showing the address of and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least 10 days prior
to the meeting, either at a place within the municipality where the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where said meeting is to be held, and the list
shall be produced and kept at the time and place of meeting during the whole
time thereof, for inspection by any stockholder who may be present.
<PAGE>
ss.2.9. Quorum And Vote Required For Action. Except as otherwise
provided in the certificate of incorporation of the corporation, the holders of
stock of the corporation having a majority of the total votes which all of the
outstanding stock of the corporation would be entitled to cast at the meeting,
when present in person or by proxy, shall constitute a quorum at any meeting of
the stockholders; provided, however, that where a separate vote by a class or
classes is required, the holders of stock of such class or classes having a
majority of the total votes which all of the outstanding stock of such class or
classes would be entitled to cast at the meeting, when present in person or by
proxy, shall constitute a quorum entitled to take action with respect to the
vote on that matter; provided, further, that if a quorum is not present, then
holders who are present in person or by proxy representing a majority of the
votes cast may adjourn the meeting from time to time without further notice and
where a separate vote by a class or classes is required, then holders of shares
of such class or classes who are present in person or by proxy representing a
majority of the votes of such class or classes cast may adjourn the meeting with
respect to the vote on that matter from time to time without further notice. If
a quorum is present at any meeting of the stockholders, (a) in all matters other
than the election of directors, a majority of the votes entitled to be cast by
those stockholders present in person or by proxy shall be the act of the
stockholders except where a separate vote by class or classes is required, in
which case a majority of the votes entitled to be cast by the stockholders of
such class or classes present in person or by proxy shall be the act of the
stockholders of such class or classes, and (b) each director shall be elected by
a plurality of the votes entitled to be cast by those stockholders present in
person or represented by proxy at the meeting and entitled to vote on the
election of such director, unless, in each case, a different number of votes is
required by statute or the certificate or incorporation of the corporation. At
any adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the original meeting. Withdrawal
of stockholders from any meeting shall not cause failure of a duly constituted
quorum at that meeting.
ss. 2.10. Proxies.
(a) Each stockholder entitled to vote at a meeting of the stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no proxy
shall be valid after three years from its date unless otherwise provided in the
proxy.
(b) Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as a proxy pursuant to subsection (a)
of this Section, the following shall constitute a valid means by which a
stockholder may grant such authority.
(1) A stockholder may execute a writing authorizing another person or
persons to act for him as proxy. Execution may be accomplished by the
stockholder or his authorized officer, director, employee or agent signing such
writing or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature.
(2) A stockholder may authorize another person or persons to act for him as
proxy by transmitting or authorizing the transmission of a telegram, cablegram,
or other means of electronic transmission to the person who will be the holder
of the proxy or to a proxy solicitation firm, proxy support service organization
or like agent duly authorized by the person who will be the holder of the proxy
to receive such transmission, provided that any such telegram, cablegram or
other means of electronic transmission must either set forth or be submitted
with information from which it can be determined that the telegram, cablegram or
other electronic transmission was authorized by the stockholder. If it is
determined that such telegrams, cablegrams or other electronic transmissions are
valid, the inspectors or, if there are no inspectors, such other persons making
that determination shall specify the information upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable reproduction of
the writing or transmission created pursuant to subsection (b) of this Section
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
ss. 2.11. Voting Of Shares. Each stockholder of the corporation shall be
entitled to such vote (in person or by proxy) for each share of stock having
voting power held of record by such stockholder as shall be provided in the
certificate of incorporation of the corporation or, absent provision therein
fixing or denying voting rights, shall be entitled to one vote per share.
ss. 2.12. Voting By Ballot. Any question or any election at a meeting of
the stockholders may be decided by voice vote unless the presiding officer shall
order that voting be by ballot or unless otherwise provided in the certificate
of incorporation of the corporation or required by statute.
<PAGE>
ss. 2.13. Inspectors. At any meeting of the stockholders the presiding
officer may, or upon the request of any stockholder shall, appoint one or more
persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting, based upon their
determination of the validity and effect of proxies; count all votes and report
the results; and do such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the stockholders. Each report of an
inspector shall be in writing and signed by him or a majority of them if there
is more than one inspector acting at such meeting. If there is more than one
inspector, the report of a majority shall be the report of the inspectors. The
report of the inspector or inspectors on the number of shares represented at the
meeting and the results of the voting shall be prima facie evidence thereof.
ss. 2.14. Informal Action. Any corporate action upon which a vote of
stockholders is required or permitted may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the corporation at the office of its
registered agent within the State of Delaware or at its principal place of
business. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered to the corporation, written consents signed by
a sufficient number of holders to take action are delivered to the corporation
at the office of its registered agent within the State of Delaware or at its
principal place of business. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not so consented in writing.
ARTICLE 3
DIRECTORS
---------
ss. 3.1. Powers. The business and affairs of the corporation shall be
managed under the direction of its board of directors which may do all such
lawful acts and things as are not by statute or by the certificate of
incorporation of the corporation or by these by-laws directed or required to be
exercised or done by the stockholders.
ss. 3.2. Number, Election, Term of Office and Qualifications. The
number of directors which shall constitute the whole board shall consist of not
less than four (4) nor more than twelve (12) persons. The exact number of
directors within the minimum and maximum limitations specified in the preceding
sentence shall be fixed from time to time by the board of directors pursuant to
a resolution adopted by two-thirds of the entire board of directors, but no
decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director. At the 1999 annual meeting of
stockholders, the directors shall be divided into three classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 2000 annual meeting of stockholders, the term of office of the second class
to expire at the 2001 annual meeting of stockholders and the term of office of
the third class to expire at the 2002 annual meeting of stockholders, and with
each class to hold office until its successors are elected and qualified or
until his or her earlier death, resignation or removal in a manner permitted by
statute or these by-laws. At each annual meeting of stockholders following such
initial classification and election, directors elected to succeed those
directors whose terms expire shall be elected for a term to expire at the third
succeeding annual meeting of stockholders after their election. Directors need
not be stockholders.
ss. 3.3. Vacancies. Except as provided in the certificate of incorporation
of the corporation, vacancies occurring in the board of directors and
newly-created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. Any newly created
directorships shall be allocated among the classes of directors so as to cause
the three classes to be as nearly equal in number as possible. Any director
elected in accordance with this paragraph will hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or such vacancy occurred or until his or her earlier death, resignation
or removal in a manner permitted by statute or these by-laws.
ss. 3.4. Regular Meetings. A regular meeting of the board of directors
shall be held immediately following the close of, and at the same place as, each
annual meeting of stockholders. No notice of any such meeting, other than this
by-law, shall be necessary in order legally to constitute the meeting, provided
a quorum shall be present. In the event such meeting is not held at such time
and place, the meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of the board of
directors or as shall be specified in a written waiver signed by all of the
directors. The board of directors may provide, by resolution, the time and place
for the holding of additional regular meetings without notice other than such
resolution.
<PAGE>
ss. 3.5. Special Meetings. Special meetings of the board may be called by
the president or any three directors. The person or persons calling a special
meeting of the board shall fix the time and place at which the meeting shall be
held and such time and place shall be specified in the notice of such meeting.
ss. 3.6. Notice. Notice of any special meeting of the board of
directors shall be given at least two business days previous thereto by written
notice to each director at his or her business address or such other address as
he or she may have advised the secretary of the corporation to use for such
purpose. If delivered, such notice shall be deemed to be given when delivered to
such address or to the person to be notified. If mailed, such notice shall be
deemed to be given four business days after deposit in the United States mail so
addressed, with postage thereon prepaid. If given by telegraph, such notice
shall be deemed to be given the next business day following the day the telegram
is given to the telegraph company. Such notice may also be given by telephone or
other means not specified herein, and in each such case shall be deemed to be
given when actually received by the director to be notified. Notice of any
meeting Of the board of directors shall set forth the time and place of the
meeting. Neither the business to be transacted at, nor the purpose of, any
meeting of the board of directors (regular or special) need be specified in the
notice or waiver of notice of such meeting.
ss. 3.7. Waiver Of Notice. A written waiver of notice, signed by a director
entitled to notice of a meeting of the board of directors or of a committee of
such board of which the director is a member, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice to that
director. Attendance of a director at a meeting of the board of directors or of
a committee of such board of which the director is a member shall constitute a
waiver of notice of such meeting except when the director attends the meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
ss. 3.8. Quorum. At all meetings of the board of directors, a majority
of the number of directors which constitute the whole board shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the board of directors except as may be otherwise specifically provided by
statute, the certificate of incorporation of the corporation or these by-laws.
If a quorum shall not be present at any meeting of the board of directors, a
majority of the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
ss. 3.9. Attendance By Conference Telephone. Members of the board of
directors or any committee designated by the board may participate in a meeting
of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such a meeting.
ss. 3.10. Presumption Of Assent. A director of the corporation who is
present at a duly convened meeting of the board of directors at which action on
any corporate matter is taken shall be conclusively presumed to have assented to
the action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless he or she shall file his or her written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered or certified
mail to the secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
ss. 3.11. Informal Action. Unless otherwise restricted by statute, the
certificate of incorporation of the corporation or these by-laws, any action
required or permitted to be taken at any meeting of the board of directors or of
any committee thereof may be taken without a meeting, if a written consent
thereto is signed by all the directors or by all the members of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the board of directors or of such committee.
ss. 3.12. Compensation. The directors may be paid their expenses, if any,
of attendance at each meeting of the board of directors and at each meeting of a
committee of the board of directors of which they are members. The board of
directors, irrespective of any personal interest of any of its members, shall
have authority to fix compensation of all directors for services to the
corporation as directors, officers or otherwise.
ss. 3.13. Removal. Except as otherwise provided by statute or the
certificate of incorporation of the corporation, so long as the board of
directors is classified in accordance with Section 141(d) of the General
Corporation Law of Delaware, any director or the entire board of directors may
be removed by the stockholders only for cause by a majority of the votes
entitled to be cast at an election of directors.
<PAGE>
ARTICLE 4
COMMITTEES
----------
ss. 4.1. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which,
to the extent provided in the resolution, shall have and may exercise the powers
of the board of directors with respect to the management of the business affairs
of the corporation and may authorize the seal of the corporation to be affixed
to all papers which may require it; but no such committee shall have the power
or authority of the board in reference to amending the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), adopting an agreement of
merger or consolidation recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or these by-laws expressly so provide, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the board of
directors, and the board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee.
ss. 4.2. Committee Records. Each committee shall keep regular minutes of
its meetings and report the same to the board of directors when required.
ARTICLE 5
OFFICERS
--------
ss. 5.1. Designation; Number; Election. The board of directors, at its
initial meeting and thereafter at its first regular meeting after each annual
meeting of stockholders, shall choose the officers of the corporation. Such
officers shall be a president, a secretary, and a treasurer, and such vice
presidents, assistant secretaries and assistant treasurers as the board of
directors may choose. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board. Any two or more offices may be held by the same
person. Except as provided in Article 6, election or appointment as an officer
shall not of itself create contract rights.
ss. 5.2. Salaries. The salaries of all officers and agents of the
corporation chosen by the board of directors shall be fixed by the board of
directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ss. 5.3. Term Of Office; Removal; Vacancies. Each officer of the
corporation chosen by the board of directors shall hold office until the next
annual appointment of officers by the board of directors and until his or her
successor is appointed and qualifies, or until his or her earlier death,
resignation or removal in the manner hereinafter provided. Any officer or agent
chosen by the board of directors may be removed at any time by the board of
directors whenever in its judgment the best interests of the corporation would
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any vacancy occurring in any office of
the corporation at any time or any new offices may be filled by the board of
directors for the unexpired portion of the term.
<PAGE>
ss. 5.4. President. The president shall be the principal executive
officer of the corporation and, subject to the direction and control of the
board of directors, shall be in charge of the business of the corporation. In
general, the president shall discharge all duties incident to the principal
executive office of the corporation and such other duties as may be prescribed
by the board of directors from time to time. Without limiting the generality of
the foregoing, the president shall see that the resolutions and directions of
the board of directors are carried into effect except in those instances in
which that responsibility is specifically assigned to some other person by the
board of directors; shall preside at all meetings of the stockholders and, if he
or she is a director of the corporation, of the board of directors; and, except
in those instances in which the authority to execute is expressly delegated to
another officer or agent of the corporation or a different mode of execution is
expressly prescribed by the board of directors, may execute for the corporation
certificates for its shares of stock (the issue of which shall have been
authorized by the board of directors), and any contracts, deeds, mortgages,
bonds, or other instruments which the board of directors has authorized, and may
(without previous authorization by the board of directors) execute such
contracts and other instruments as the conduct of the corporation's business in
its ordinary course requires, and may accomplish such execution in each case
either under or without the seal of the corporation and either individually or
with the secretary, any assistant secretary, or any other officer thereunto
authorized by the board of directors, according to the requirements of the form
of the instrument. Subject to ss. 10.3, the president may vote all securities
which the corporation is entitled to vote except as and to the extent such
authority shall be vested in a different officer or agent of the corporation by
the board of directors.
ss. 5.5. Vice Presidents. The vice president (and, in the event there
is more than one vice president, each of the vice presidents) shall render such
assistance to the president in the discharge of his or her duties as the
president may direct and shall perform such other duties as from time to time
may be assigned by the president or by the board of directors. In the absence of
the president or in the event of his or her inability or refusal to act, the
vice president (or in the event there may be more than one vice president, the
vice presidents in the order designated by the board of directors, or by the
president if the board of directors has not made such a designation, or in the
absence of any designation, then in the order of seniority of tenure as vice
president) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent of the corporation or a
different mode of execution is expressly prescribed by the board of directors or
these by-laws, the vice president (or each of them if there are more than one)
may execute for the corporation certificates for its shares of stock (the issue
of which shall have been authorized by the board of directors), and any
contracts, deeds, mortgages, bonds or other instruments which the board of
directors has authorized, and may (without previous authorization by the board
of directors) execute such contracts and other instruments as the conduct of the
corporation's business in its ordinary course requires, and may accomplish such
execution in each case either under or without the seal of the corporation and
either individually or with the secretary, any assistant secretary, or any other
officer thereunto authorized by the board of directors, according to the
requirements of the form of the instrument.
ss. 5.6. Treasurer. The treasurer shall perform all the duties incident to
the office of treasurer and such other duties as from time to time may be
assigned by the board of directors or the president. Without limiting the
generality of the foregoing, the treasurer shall have charge and custody of all
funds and securities of the corporation and be responsible therefor and for the
receipt and disbursement thereof. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the board of directors may
determine.
ss. 5.7. Secretary. The secretary shall perform all duties incident to
the office of secretary and such other duties as from time to time may be
assigned by the board of directors or president. Without limiting the generality
of the foregoing, the secretary shall (a) record the minutes of the meetings of
the stockholders and the board of directors in one or more books provided for
that purpose and shall include in such books the actions by written consent of
the stockholders and the board of directors; (b) see that all notices are duly
given in accordance with the provisions of these by-laws or as required by
statute; (c) be the custodian of the corporate records and the seal of the
corporation; (d) keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder; (e) sign with the
president, or a vice president, or any other officer thereunto authorized by the
board of directors, certificates for shares of stock of the corporation (the
issue of which shall have been authorized by the board of directors), and any
contracts, deeds, mortgages, bonds, or other instruments which the board of
directors has authorized, and may (without previous authorization by the board
of directors) sign with such other officers as aforesaid such contracts and
other instruments as the conduct of the corporation's business in its ordinary
course requires, in each case according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors; and (f) have general charge of the stock transfer books
of the corporation.
<PAGE>
ss. 5.8. Assistant Treasurers And Assistant Secretaries. The assistant
treasurers and assistant secretaries shall perform such duties as shall be
assigned to them by the treasurer, in the case of assistant treasurers, or the
secretary, in the case of assistant secretaries, or by the board of directors or
president in either case. Each assistant secretary may sign with the president,
or a vice president, or any other officer thereunto authorized by the board of
directors, certificates for shares of stock of the corporation (the issue of
which shall have been authorized by the board of directors), and any contracts,
deeds, mortgages bonds, or other instruments which the board of directors has
authorized, and may (without previous authorization by the board of directors)
sign with such other officers as aforesaid such contracts and other instruments
as the conduct of the corporation's business in its ordinary course requires, in
each case according to the requirements of the form of the instrument, except
when a different mode of execution is expressly prescribed by the board of
directors. The assistant treasurers shall, if required by the board of directors
give bonds for the faithful discharge of their duties in such sums and with such
sureties as the board of directors shall determine.
ARTICLE 6
INDEMNIFICATION
---------------
ss. 6.1. Contract With The Corporation. The provisions of Article 7 of
the corporation's certificate of incorporation shall be deemed to be a contract
between the corporation and each person who serves as such officer, director,
employee or agent in any such capacity at any time while Article 7 of the
certificate of incorporation, these by-laws and the relevant provisions of the
General Corporation Law of Delaware or other applicable laws, if any, are in
effect, and any repeal or modification of any such law or of Article 7 of the
certificate of incorporation or of these by-laws shall not affect any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
ss. 6.2. Other Rights of Indemnification. The indemnification and the
advancement of expenses provided or permitted by Article 7 of the corporation's
certificate of incorporation shall not be deemed exclusive of any other rights
to which those indemnified may be entitled by law or otherwise, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such person.
ARTICLE 7
LIMITATION ON DIRECTOR'S LIABILITY
----------------------------------
The personal liability for monetary damages to the corporation or its
stockholders of a person who serves as a director of the corporation shall be
limited to the extent provided at the time in the certificate of incorporation
of the corporation as then amended.
ARTICLE 8
CERTIFICATES OF STOCK AND THEIR TRANSFER
----------------------------------------
ss. 8.1. Form And Execution Of Certificates. Every holder of stock in
the corporation shall be entitled to have a certificate signed by, or in the
name of, the corporation by the president or a vice president and by the
secretary or an assistant secretary of the corporation, certifying the number of
shares owned. Such certificates shall be in such form as may be determined by
the board of directors. During the period while more than one class of stock of
the corporation is authorized there will be set forth on the face or back of the
certificates which the corporation shall issue to represent each class or series
of stock a statement that the corporation will furnish, without charge to each
stockholder who so requests, the designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. In case any officer, transfer agent or registrar of the
corporation who has signed, or whose facsimile signature has been placed upon,
any such certificate shall have ceased to be such officer, transfer agent or
registrar of the corporation before such certificate is issued by the
corporation, such certificate may nevertheless be issued and delivered by the
corporation with the same effect as if the officer, transfer agent or registrar
who signed, or whose facsimile signature was placed upon, such certificate had
not ceased to be such officer, transfer agent or registrar of the corporation.
<PAGE>
ss. 8.2. Replacement Certificates. The board of directors may direct a
new certificate to be issued in place of any certificate evidencing shares of
stock of the corporation theretofore issued by the corporation alleged to have
been lost, stolen or destroyed, upon the making of an affidavit of the fact by
the person claiming the certificate to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require and may
require such owner to give the corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or destroyed. The
board of directors may delegate its authority to direct the issuance of
replacement stock certificates to the transfer agent or agents of the
corporation upon such conditions precedent as may be prescribed by the board.
ss. 8.3. Transfers Of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares of stock of the
corporation duly endorsed or accompanied by proper evidence of succession,
assignment, or other authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books, provided the
corporation or a transfer agent of the corporation shall not have received a
notification of adverse interest and that the conditions of Section 8-401 of
Title 6 of the Delaware Code have been met.
ss. 8.4. Registered stockholders. The corporation shall be entitled to
treat the holder of record (according to the books of the corporation) of any
share or shares of its stock as the holder in fact thereof and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other party whether or not the corporation shall have
express or other notice thereof, except as expressly provided by the laws of the
State of Delaware.
ARTICLE 9
CONTRACTS, LOANS, CHECKS AND DEPOSITS
-------------------------------------
ss. 9.1. Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances; provided, however, that
thisss.9.1 shall not be a limitation on the powers of office granted under
Article 5 of these by-laws.
ss. 9.2. Loans. No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness shall be issued in its name unless authorized
by a resolution of the board of directors. Such authority may be general or
confined to specific instances.
ss. 9.3. Checks, Drafts And Other Instruments. All checks, drafts or other
orders for the payment of money and all notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers or such agent or agents of the corporation and in such manner as from
time to time may be determined by the resolution of the board of directors or by
an officer or officers of the corporation designated by the board of directors
to make such determination.
ss. 9.4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositaries as the board of directors, or an
officer or officers designated by the board of directors, may select.
ARTICLE 10
MISCELLANEOUS PROVISIONS
------------------------
ss. 10.1. Dividends. Subject to any provisions of any applicable statute or
of the certificate of incorporation of the corporation, dividends may be
declared upon the capital stock of the corporation by the board of directors at
any regular or special meeting thereof; and such dividends may be paid in cash,
property or shares of stock of the corporation.
ss. 10.2. Reserves. Before payment of any dividends, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the board of directors from time to time, in its discretion, determines
to be proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the board of directors shall determine to be conducive
to the interests of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
<PAGE>
ss. 10.3. Voting Stock Of Other Corporations. Subject to applicable
provisions of any written agreement to which the corporation and the
stockholders of the corporation are parties and subject to specific direction of
the board of directors, the president shall have authority to represent the
corporation and to vote, on behalf of the corporation, the securities of other
corporations, both domestic and foreign, held by the corporation.
ss. 10.4. Fiscal Year. The fiscal year of the corporation shall begin on
the first day of January in each year and end on the last day of the next
following December.
ss. 10.5. Seal. The corporate seal shall have inscribed thereon the name of
the corporation and the words "Corporate Seal, Delaware". The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise applied.
ss. 10.6. Severability. If any provision of these by-laws, or its
application thereof to any person or circumstances, is held invalid, the
remainder of these by-laws and the application of such provision to other
persons or circumstances shall not be affected thereby.
ss. 10.7. Amendment. Except as otherwise provided in the certificate of
incorporation of the corporation, these by-laws may be amended or repealed, or
new by-laws may be adopted, by resolution of the board of directors of the
corporation adopted in accordance with these by-laws. These by-laws may also be
amended or repealed, or new by-laws may be adopted, by action taken by the
stockholders of the corporation subject to any applicable provision of the
certificate of incorporation of the corporation.
EXHIBIT 10.1
------------
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
1999 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
The purpose of the Wisconsin Central Transportation Corporation 1999
Non-Employee Director Compensation Plan ("Plan") is to attract and retain
qualified and experienced persons to serve as directors of Wisconsin Central
Transportation Corporation ("Company") through cash payments and the provision
of incentive and deferred compensation in the form of phantom stock units
("Units"), the value of which is related to the value of the common stock of the
Company.
ARTICLE 1
COMPENSATION
Effective as of the date of the 1999 annual meeting of stockholders,
the compensation of each director who is not an employee of the Company or its
subsidiaries ("Participant") shall be $30,000 per year (from the date of an
annual meeting to the date of the next annual meeting), with one-half of such
amount payable in Units pursuant to Article 2 of this Plan and one-half payable
in cash or, at the written election of the Participant, in additional Units. Any
cash compensation shall be payable in four equal quarterly installments. No
additional compensation shall be payable for attendance at board meetings or
committee meetings.
ARTICLE 2
PHANTOM STOCK
2.1 Issuance of Phantom Stock Units. Phantom stock issued to
Participants pursuant to this Plan shall be in the form of Units, each having a
value for purposes of the Plan equal to the Fair Market Value (defined below) of
a share of the common stock of the Company. On the date of each annual meeting
each Participant shall be issued Units with a Fair Market Value on that date
equal to the amount of compensation payable to such Participant in Units. "Fair
Market Value" means, with respect to the common stock of the Company on any
date, the closing price per share of the common stock on the last trading day
prior to that date, as reported by NASDAQ and published in The Wall Street
Journal (Midwest Edition) or, if listed on a stock exchange, as reported in the
published reports of composite transactions for the exchange. For purposes of
issuing Units with an aggregate value of $15,000 or $30,000 (as the case may
be), fractional shares shall be disregarded.
2.2 Adjustments to the Number of Units. In the event of any stock
dividend or stock split, recapitalization, merger, consolidation, combination,
spin-off, distribution of assets to the stockholders, exchange of shares or
other similar corporate change, the number of Units outstanding and the stated
value of the Units shall be appropriately adjusted by the board of directors of
the Company ("Board"), whose determination shall be conclusive. Upon notice of a
merger of the Company in which the Company will not be the surviving
corporation, the Board shall take such action as appropriate to result in
equitable treatment of the Units in connection with such event.
2.3 Redemption of Units. On the day after a Participant ceases for any
reason to be a director of the Company, the Company shall redeem the
Participant's outstanding Units for a price per Unit equal to the Fair Market
Value of one share of common stock of the Company on that date. The redemption
price shall be payable in cash as soon as reasonably practical or, to the extent
the Participant has elected to have such Units be subject to Article 3 of this
Plan, on a deferred basis.
2.4 Cash Dividends. If the Company pays a cash dividend on its common
stock, the Company shall pay each Participant an amount per Unit than held by
such Participant equal to the amount of the dividend paid on each share of
common stock of the Company.
2.5 No Voting Rights. The Participants shall not be entitled to any
voting rights.
2.6 Nontransferability. Units granted under this Plan, and any rights
and privileges pertaining thereto, may not be transferred, assigned, pledged or
hypothecated in any manner, by operation of law or otherwise, and shall not be
subject to execution, attachment or similar process.
<PAGE>
ARTICLE 3
DEFERRED COMPENSATION
3.1 Redemption Subject to Deferral. Each Participant may elect, as
provided in this Article 3, to have redemption of such Participant's Units be
subject to a deferred payment plan. Such election shall be made (i) with respect
to the first issuance of Units to a Participant, not later than the date of
issuance of the Units and (ii) with respect to each subsequent issuance of Units
to such Participant, not later than the date of the annual meeting which falls
approximately one year before the date of such issuance. Each election to have
redemption of specified Units be subject to a deferred payment plan shall be
irrevocable with respect to the Units subject to the election.
3.2 Deferred Payment Plans.
a. All deferred payment plans shall permit payouts on June 1st of each year
during the payout period.
b. Each deferral election shall indicate (i) the year in which the
Participant elects to have the deferred payments begin and (ii) the number of
years over which the Participant elects to have the deferred payments made. If
the date on which the Participant ceases to be director occurs at any time
before June 1st of the requested start year, the first deferred payment shall be
made on June 1st of the requested start year. If the date on which the
Participant ceases to be director occurs at any time after June 1st of the
requested start year, the first deferred payment shall be made on the first June
1st following the date on which the Participant ceases to be a director.
c. The total redemption amount to be paid in accordance with a deferred
payment plan for specified Units, including interest accrued prior to the payout
period, shall be divided as evenly as possible over the years of the payout for
such Units.
d. Notwithstanding the foregoing subsections, upon the death of a
Participant who is then serving as a director all outstanding Units shall be
redeemed in cash, and upon the death of a Participant who has ceased to be a
director, any remaining unpaid redemption price and accrued but unpaid interest
shall be payable in cash.
3.3 Interest. Any amounts subject to a deferred payment plan shall
accrue interest beginning on the day following the day on which the relevant
Participant ceases to be a director. The annual rate shall be determined by the
Board in its sole discretion and shall be a rate which in the Board's judgment
fairly reflects the Company's cost of unsecured borrowing. Interest shall be
accrued and compounded quarterly. Interest accrued after the beginning of the
payout period shall be paid with the next annual payment of the redemption
price.
ARTICLE 4
MISCELLANEOUS
4.1 Adoption of this Plan. Adoption of this Plan by the Board shall be
the only action required to authorize the issuance of the Units to the
Participants under this Plan.
4.2 Powers of the Board. The Board shall have no power to determine the
granting of Units under this Plan (other than by adoption of this Plan). All
Units shall be granted as provided in Article 1 of this Plan without further
action by the Board.
4.3 Administration. Subject to the provisions of Section 4.2 of this
Plan, the Board shall be responsible for the administration of this Plan. The
Board, by majority action, shall have the sole and absolute power and authority
to prescribe, amend and rescind rules and regulations relating to this Plan, to
provide for conditions and assurances deemed necessary or advisable to protect
the interests of the Company and to make all other determinations necessary or
advisable for the administration and interpretation of this Plan in order to
carry out its provisions and purposes. Determinations, interpretations, or other
actions made or taken by the Board pursuant to the provisions of this Plan shall
be final, binding and conclusive for all purposes and upon all persons.
Notwithstanding anything to contrary contained in this Section 4.3, no action
taken pursuant to this Section 4.3 shall alter, impair or reduce a Participant's
rights under this Plan relating to Units which have been granted and are
outstanding without the written consent of the affected Participant.
4.4 Recordkeeping. The Company shall maintain records of all Units
granted and redeemed and of deferred payout amounts and accrued interest. Upon
written request, the Company shall provide a Participant with a statement of the
Participant's Units and such amounts. The Company's records shall be conclusive
absent manifest error.
<PAGE>
4.5 Tax Disclaimer. The Company intends that payments of redemption
price of Units subject to a deferred payment plan will not be included in the
income of the Participant for tax purposes until the time of payment, but the
Company does not warrant this tax treatment and shall have no liability if this
tax treatment is not available to a Participant. Participants are advised to
consult with their own tax advisors with respect to the tax consequences of
their participation in this Plan.
4.6 Election Form. A Participant may make elections under this Plan by
completing and signing a Participant Election in the form of Annex A to this
Plan or by any other method reasonably acceptable to the Company.
4.7 Withholding Taxes. The Company shall have the right to withhold
from payments under this Plan any applicable withholding tax, as determined by
the Company.
4.8 Effectiveness and Termination of Plan. This Plan shall be effective
upon its adoption by the Board. At any time after the effective date, the Board
may terminate this Plan. Unless sooner terminated, this Plan shall terminate 10
years after the date it was adopted by the Board. All Units which have been
granted prior to the date of termination shall survive and be unaffected by such
termination.
4.9 Amendment or Modification of Plan. The Board at any time may amend
or modify this Plan; provided, however, that no amendment or modification of
this Plan shall in any manner adversely affect any Unit which has been granted
pursuant to this Plan without the written consent of the affected Participant.
4.10 Unfunded. This Plan shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating assets of the
Company for payment of any benefits under this Plan. Neither the Participants
nor any other persons shall have any interest in any particular assets of the
Company by reason of the right to receive benefits under this Plan.
4.11 Relationship to Director Stock Option Plan. Compensation of
non-employee directors under this Plan is in addition to the grant of options
provided by the Company's Director Stock Option Plan as in effect from time to
time.
4.12 Requirements of Law. The granting and redemption of Units shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national exchanges as may be required.
4.13 Governing Law. This Plan shall be construed in accordance with
and governed by the laws of the State of Illinois.
4.14 Severability. Wherever possible, each provision of this Plan shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Plan shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Plan.
Adopted by the Board of Directors on May 20, 1999.
<PAGE>
Annex A
WISCONSIN CENTRAL TRANSPORTATION CORPORATION
1999 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
PARTICIPANT ELECTION
Re: Issuance of Phantom Stock Units in ____ [year]
- --------------------------------------------------------------------------------
Section I
[___] Participant elects to receive Participant's entire compensation in
Phantom Stock Units.
- --------------------------------------------------------------------------------
Section II
[___] Participant elects to have payment of redemption price of all Phantom
Stock Units received next year be subject to a deferred payment plan.
- --------------------------------------------------------------------------------
Section III
Only For Participants Who Are Participating in the Plan for the First Time
[___] Participant elects to have payment of redemption price all Phantom
Stock Units received this year be subject to a deferred payment plan.
- --------------------------------------------------------------------------------
Section IV
Any Participant Who Elected to Utilize a Deferred Payment Plan
Pursuant to Section II or Section III Above
Must Complete This Section
Participant elects to have (complete both blanks):
(a) the first deferred payment with respect to Phantom Stock Units
described in Section II and Section III (as applicable) above
made on June 1, ________ [ year]; and
(b) the deferred payments be made annually during a payout period
totaling __ years. (These elections are subject to Section 3.2b.)
- --------------------------------------------------------------------------------
By:
Printed Name:
Date:
EXHIBIT 10.2
------------
AGREEMENT
This Agreement is entered into between Wisconsin Central Transportation
Corporation, a Delaware corporation (the "Company"), and Edward A. Burkhardt
("Executive"), this 7th day of July, 1999. Executive has been employed as
Chairman, President and Chief Executive Officer of the Company and has served as
a director of the Company, as well as chief executive officer and a director of
subsidiaries that are directly or indirectly wholly owned by the Company
("Subsidiaries"). The purpose of this Agreement is to reflect the agreement
between the Company and Executive with respect to his resignation as an officer,
director and employee of the Company and its Subsidiaries and other related
matters. Accordingly, the Company and Executive hereby agree as follows:
1. Effective Date. The effective date of Executive's separation from all
positions and employment with the Company and its Subsidiaries is August 31,
1999 (the "Effective Date"). Executive has today submitted his resignation as a
director and officer of the Company and its Subsidiaries (a copy of which is
attached to this Agreement), effective August 31, 1999, and the Company's Board
of Directors has accepted the resignation and approved this Agreement. Executive
has likewise today submitted his resignation as chairman and a director of Tranz
Rail Holdings Limited ("TRHL") and Australian Transport Network Limited ("ATN")
effective August 31, 1999 and as an officer and director of English Welsh &
Scottish Railway Holdings Limited ("EWS") effective July 22, 1999.
2. Payment. In consideration of the agreements and subject to Executive's
performance of the undertakings set forth in this Agreement, the Company, in
full and final settlement of all of Executive's stated and unstated claims,
including any claim for severance, reimbursement of vacation or sick pay,
incentive compensation under the Company's management incentive compensation
plan for the year 1999 or otherwise, agrees to make the following payments to
Executive:
a. The Company shall pay Executive the amount of earned and previously unpaid
salary for the period ending on the Effective Date in accordance with its
customary practice.
b. The Company shall make a $1,311,000 cash payment to Executive on the
Effective Date.
c. The Company shall make regular cash payments, at the same time as it makes
salary payments to its officers, at the rate of $36,417 per month, for the
36-month period commencing on the Effective Date and ending August 31,
2002.
3. Expense Reimbursement. The Company will reimburse Executive for business
expenses he incurred or incurs on its behalf during the period ending on the
Effective Date, subject to compliance with the Company's existing expense
reimbursement policies; provided that any such request for reimbursement shall
be made prior to September 30, 1999.
4. Withholding. All amounts otherwise payable under this Agreement shall be
subject to customary tax withholding and other employment taxes and shall be
subject to such other withholding as may be required in accordance with
applicable law.
5. Benefit Plans; Automobile. The Company shall take such steps, whether
pursuant or supplemental to its existing employee benefit plans, to provide to
Executive, from the date of this Agreement until he attains age 65, the same or
comparable insurance and welfare benefit arrangements in which he currently
participates. The Company shall provide Executive, until he attains age 65, an
automobile allowance comparable to that currently provided, which will permit
him to lease one new automobile comparable to that currently leased for his
benefit.
6. Stock Options. Executive currently holds options to purchase Company
common stock under the Company's Director Stock Option Plan and its Long Term
Incentive Plan. All such options are currently exercisable and will expire as
provided under the terms of the respective plan. The Company will take such
action as it deems appropriate to assure that Executive is provided with the
economic benefits of his current options under the Long Term Incentive Plan for
the period ending on the first anniversary of the Effective Date.
<PAGE>
7. Holding and Disposition of Shares. In order to permit Executive to
effect an orderly disposition of his shares of Company common stock, within 10
days after the date of this Agreement, the Company and Executive shall enter
into a registration rights agreement with customary terms and generally
comparable to the Company's original shareholders' agreement, providing for two
demand rights as well as piggyback rights. The Company shall pay the expenses
incurred in connection with the registration rights agreement (other than
underwriting and brokerage commissions and any fees of legal counsel for
Executive). The Company will purchase Executive's EWS shares and options within
30 days after the date of this Agreement at the same price and on the same terms
on which it purchased EWS securities from another former director in June 1999.
8. Non-Competition. For the period beginning on the date of this Agreement
and ending on August 31, 2002, Executive agrees that he will not (other than on
behalf of one of the Class 1 railroads in the United States or Canada) directly
or indirectly engage in, assist, perform services for, establish, or have any
equity interest (other than ownership of 1% or less of the outstanding stock of
any corporation listed on the New York or American Stock Exchanges or included
in the Nasdaq National Market System) in, whether as an employee, officer,
director, agent, security holder, creditor, consultant or otherwise, any entity
or person which conducts rail operations in the State of Wisconsin, the Upper
Peninsula of Michigan, the Chicago Switching District, the Minneapolis-St. Paul
Switching District, the Province of Ontario, the United Kingdom, New Zealand,
Australia or Jordan.
9. Corporate Opportunity. For the period beginning on the date of this
Agreement and ending on February 28, 2001, without the Company's prior written
consent, Executive agrees that he will not directly or indirectly interfere or
compete with the Company's opportunity to make an investment in or acquire
either of the two freight railroad or railroad holding companies that the
Company has actively considered acquiring in the United States within one year
prior to the date of this Agreement. The Company shall assign to Executive its
interest in a proposed venture in Estonia.
10. Protective Covenant. For the period beginning on the date of this
Agreement and ending on August 31, 2002, without the Company's prior written
consent, Executive shall not solicit to employ or solicit to engage as a
consultant any person who is then, or who during the preceding 12 months was, an
employee of the Company or any Subsidiary or any of the Company's affiliated
entities (i.e., TRHL, EWS and ATN and their respective subsidiaries (together,
"Affiliates")).
11. Covenants Generally. The parties agree and acknowledge that the
duration, scope and geographic areas applicable to the covenant set forth in
paragraphs 8 through 10 hereof are fair, reasonable and necessary and that
adequate compensation has been received by Executive for these obligations. If,
however, for any reason any court determines that the restrictions in this
Agreement are not reasonable, that the consideration to Executive therefor is
inadequate or that Executive has been prevented from earning a livelihood, such
restrictions shall be deemed without further action by the parties to be
interpreted, modified or rewritten to include as much of the duration, scope and
geographic area of such restrictions as are valid and enforceable.
12. Confidentiality. Executive agrees that he will not, without the prior
written consent of the Company, during the period after the date of this
Agreement, directly or indirectly disclose to any individual, corporation or
other entity (other than the Company, its Subsidiaries or Affiliates or their
respective officers, directors or employees entitled to such information) or use
for his own or such another's benefit, any information, whether or not reduced
to written or other tangible form, which (a) is not generally known to the
public or in the industry; (b) has been treated by the Company or any of its
Subsidiaries or Affiliates as confidential or proprietary; and (c) is of
competitive advantage to the Company or any of its Subsidiaries or Affiliates
(such information being referred to in this paragraph as "Confidential
Information"). Confidential Information which becomes generally known to the
public without violation of this Agreement shall cease to be subject to the
restrictions of this paragraph.
13. Non-Disparagement.
a. Executive agrees that he shall not make any disparaging statements about
the Company, its Subsidiaries or Affiliates or the directors, officers or
employees of any of them; provided that the provisions of this clause shall
not apply to truthful testimony as a witness, compliance with other legal
obligations, or truthful assertion of or defense against any claim of
breach of this Agreement, or to his truthful statements or disclosures to
officers or directors of the Company, and shall not require Executive to
make false statements or disclosures; and provided further that, if at May
31, 2000, and for so long thereafter as, Executive has not sold or
otherwise disposed of shares constituting at least 90% of the Company's
common stock held by him at the date of this Agreement, he may, in good
faith, make fair and truthful comment about the Company, its Subsidiaries
or Affiliates or the directors, officers or employees or any of them with
respect to events arising or circumstances existing after the Effective
Date.
<PAGE>
b. The Company agrees that neither the directors nor the officers of the
Company or its Subsidiaries nor any spokesperson for any of them shall make
any disparaging statements about Executive; provided that the provisions of
this clause shall not apply to truthful testimony as a witness, compliance
with other legal obligations, truthful assertion of or defense against any
claim of breach of this Agreement or truthful statements or disclosures to
Executive, and shall not require false statements or disclosures to be
made; and provided further that the Company may, in good faith, make fair
and truthful comment in response to any statements that may be made by
Executive pursuant (or purportedly pursuant) to the last proviso of
paragraph 13(a) hereof.
14. Publicity. After the execution and delivery of this Agreement, the
Company shall issue a press release in the form attached as Exhibit 1. Neither
Executive nor the Company or its Subsidiaries or Affiliates or any of their
officers, directors or spokespersons shall make any public statement
inconsistent with the statements made in the press release. Prior to the
Effective Date, Executive plans to speak with members of the Board of Directors
of the Company and its Affiliates and with vice presidents and other senior
executive officers of the Company and its Affiliates. After the date of this
Agreement, Executive shall have no substantive contact, relating to the Company
or its Subsidiaries or Affiliates or the directors, officers or employees of any
of them, with securities analysts, with governmental agencies (other than as
required by law), with labor unions, with representatives of any of the
foregoing or with employees of the Company or its Subsidiaries or Affiliates
(other than (i) contacts with employees not otherwise in violation of this
Agreement and (ii) communications with members of the Board of Directors of the
Company or its Affiliates or vice presidents or more senior executive officers
of the Company and its Affiliates). All subsequent public disclosures by the
Company with respect to the termination of Executive's employment and this
Agreement shall be consistent with the statements in the press release. The
Company shall make only such disclosure with respect to the terms of this
Agreement as reasonably required by applicable securities laws, including in
particular the Securities and Exchange Commission rules with respect to
information to be disclosed in Company proxy statements, or the rules of the
Nasdaq National Market System.
15. Releases. Except for a claim based upon a breach of this Agreement and
except as provided in paragraph 20 hereof, Executive hereby releases the
Released Parties (as defined below), and the Company hereby releases Executive,
from any and all claims, suits, demands, actions or causes of action of any kind
or nature whatsoever, whether the underlying facts are known or unknown, which
Executive or the Released Parties has or now claims, or might have or claim,
pertaining to or arising out of Executive's employment by the Company or his
separation therefrom or under any local, state or federal common law, statute,
regulation or ordinance, including without limitation those claims dealing with
employment discrimination, including without limitation, Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. ss. 2000e et seq., 42 U.S.C. ss. 1981,
Americans with Disabilities Act, the Illinois Human Rights Act or claims for
breach of contract, for misrepresentation, for defamation, for wrongful
discharge under the common law of any state, for infliction of emotional
distress or for any other tort under the common law of any state. This release
shall run to and be binding upon the Company and each of its Subsidiaries and
Affiliates, and all predecessors, successors and assigns thereof and each of
their members, trustees, shareholders, partners, principals, members, directors,
officers, trustees, employees, agents and attorneys, past or present, and all
predecessors, successors, heirs and assigns thereof (collectively, "Released
Parties"). This release shall also run to and be binding upon Executive and his
heirs and assigns. In exchange for this general release and waiver hereunder,
Executive hereby acknowledges that he has received separate consideration beyond
that which he is otherwise entitled to under the Company's policy or applicable
law. Executive acknowledges that he has consulted with an attorney of his
choosing prior to executing this Agreement which contains a general release and
waiver.
16. Covenant Not to Sue. To the maximum extent permitted by law, the
Company and Executive covenant not to sue or to institute or cause to be
instituted any action in any federal, state or local agency or court against the
other party regarding the matters covered by the release contained in paragraph
15 above (except to enforce the terms of this Agreement). If either the Company
or Executive breaches the terms of the release and covenant not to sue, then the
other party shall be entitled to recover its costs, including reasonable
attorneys' fees incurred in defending such action.
<PAGE>
17. Specific Enforcement. Executive agrees that any breach by him of
paragraphs 8 through 14 of this Agreement will cause the Company great injury
which will be difficult, if not impossible, to measure and that such injury will
be immediate and irreparable for which the Company will have no adequate remedy
at law. Consequently, Executive agrees that any material breach by Executive of
the foregoing paragraphs 8 through 14 of this Agreement shall entitle the
Company to injunctive relief, and shall entitle the Company to cancel its
obligations under this Agreement, provided that if a material breach occurs, the
Company shall notify Executive of such breach and Executive may, if possible,
attempt to cure such material breach. Executive agrees that, in the event of a
breach by Executive of the foregoing provisions of this Agreement the Company
would be more harmed by the denial of an injunction or other equitable relief
than Executive would be harmed by the issuance of an injunction or other
equitable relief and that the public interest would be furthered by the issuance
of an injunction or other equitable relief to prevent further or additional
breach of the foregoing provisions of this Agreement.
18. Third Party Legal Proceedings. Executive agrees to cooperate, at
reasonable times and on reasonable notice, with the Company in the truthful and
honest prosecution or defense of any claim in which the Released Parties may
have an interest (subject to reasonable limitations concerning time and place),
which may include without limitation making himself available to participate in
any proceeding involving any of the Released Parties, allowing himself to be
interviewed by representatives of the Company, appearing for depositions and
testimony without requiring a subpoena, and producing and providing any
documents or names of other persons with relevant information.
19. No Mitigation. Executive shall have no obligation to seek or accept
employment, and any compensation earned or provided to Executive from any person
or entity other than the Company and its Subsidiaries for the performance of
such employment or other services shall not reduce or otherwise affect the
amount due to Executive from the Company in accordance with this Agreement, so
long as such employment or service does not violate Executive's obligations
under paragraphs 8 through 10 of this Agreement.
20. Indemnification; Insurance. Executive shall continue to be eligible for
indemnification from the Company with respect to acts or omissions on or prior
to the Effective Date pursuant to the indemnification provisions of the
Company's charter and/or bylaws to the same extent as other current or former
directors and officers of the Company. Executive shall be entitled to coverage
with respect to acts or omissions on or prior to the Effective Date under the
directors and officers liability insurance coverage maintained by the Company
(at the Effective Date and as may be in effect from time to time thereafter) to
the same extent as other current or former officers and directors of the
Company.
21. Company Property. After the Effective Date, Executive shall return any
material personal property to the Company or its Subsidiary or Affiliate, as the
case may be, except that Executive may retain the Company fax machine and laptop
computer that he has been using; provided, however, that his retention of the
laptop computer is subject to his obligations under paragraph 12 hereof with
respect to any Confidential Information contained therein.
22. Miscellaneous. This Agreement shall be construed in accordance with the
laws of the State of Illinois. This Agreement may be signed in multiple
counterparts, each of which shall be deemed to be an original for all purposes.
Executive agrees that neither this Agreement nor performance hereunder
constitutes an admission by the Company of any violation of any federal, state
or local law, regulation, common law, of any breach of any contract or any other
wrongdoing of any type. This instrument constitutes the entire agreement between
the parties. No modification of this Agreement shall be valid unless signed by
the party against whom such modification is sought to be enforced. If any
provision, section, subsection or other portion of this Agreement shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable in whole or in part, and such determination shall become final,
such provision or portion shall be deemed to be severed or limited, but only to
the extent required to render the remaining provisions and portions of this
Agreement enforceable. This Agreement as thus amended shall be enforced so as to
give effect of the intention of the parties insofar as that is possible. In
addition, the parties hereby expressly empower a court of competent jurisdiction
to modify any term or provision of this Agreement to the extent necessary to
comply with existing law and to enforce this Agreement as modified. If any
payment to be made under this Agreement by the Company is not paid within 30
days after it has become due, the Company will pay interest on such unpaid
amount at the Company's then cost of borrowings. Executive acknowledges that he
has carefully read and fully understands the terms and provisions of this
Agreement and all of his rights and obligations thereunder, has had an
opportunity to be represented by legal counsel of his choosing and that his
execution of this Agreement is voluntary.
<PAGE>
23. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice). Such notices, demands, claims and other communications shall be
deemed given:
a. in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
b. in the case of certified or registered U.S. mail, five days after deposit
in the U.S. mail; or
c. in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service are to be delivered to
the addresses set forth below:
If to the Company:
Wisconsin Central Transportation Corporation
One O'Hare Centre, Suite 9000
6250 North River Road
Rosemont, IL 60018
Attention: Mr. Thomas F. Power, Jr.
Phone: 847-318-4602
Facsimile: 847-318-4628
with a copy to:
Schiff Hardin & Waite
6600 Sears Tower
Chicago, IL 60606
Attention: Frederick L. Hartmann
Phone: 312-258-5656
Facsimile: 312-258-5600
and
McLachlan, Rissman & Doll
676 N. Michigan Avenue, Suite 2800
Chicago, Illinois 60611
Attention: Thomas R. Rissman / John H. Doll
Phone: 312-527-2300
Facsimile: 312-527-2023
If to Executive:
Edward A. Burkhardt
573 Earlston Road
Kenilworth, IL 60043
Phone: 847-256-2758
Facsimile: (Same number, call first.)
with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, IL 60606
Attention: Paul J. Miller / Roger Siske
Phone: 312-876-8074
Facsimile: 312-876-7934
Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall be
effective only upon receipt.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
WISCONSIN CENTRAL TRANSPORTATION
CORPORATION
By:
Name:
Its:
EXECUTIVE
Name: Edward A. Burkhardt
<PAGE>
EXHIBIT 1
TEXT OF PRESS RELEASE
Wisconsin Central Transportation Corporation announced today that Edward A.
Burkhardt, 60, its Chairman, President and CEO, has resigned his director and
officer positions with the Company and its Affiliates, effective as of August 31
to establish an independent railway investment and consulting firm operating
internationally. Mr. Burkhardt was one of the Company's founders, and has served
as its President and CEO for the past 12 years. During his tenure, the Company
grew from a start-up regional railroad in the upper Midwest to a global
transportation holding company with interests in the UK, Canada, New Zealand and
Australia.
Thomas F. Power, Jr., 58, will succeed Mr. Burkhardt as the Company's President
and CEO. Mr. Power is a 31-year veteran of the transportation industry. Mr.
Power was also one of the founders of the Company and has served as its
Executive Vice President and Chief Financial Officer for the past 12 years. Mr.
Power is a member of the Board of Directors of English Welsh & Scottish Railway
Holdings Limited, Tranz Rail Holdings Limited, and Australian Transport Network
Limited. Mr. Power began his railroad career at the New York Central Railroad,
and served as Chief Financial Officer and later Chief Executive Officer at the
Chicago, Milwaukee, St. Paul and Pacific Railroad before founding the Company
with Mr. Burkhardt.
Mr. Power said, "Ed Burkhardt has built a strong foundation for WCTC, both
domestically and internationally. It is my plan to build on this foundation to
deliver greater shareholder value in the months and years ahead."
Wisconsin Central also announced that J. Reilly McCarren will be promoted to
President and Chief Executive Officer of all of the Company's North American
operating subsidiaries, succeeding Mr. Burkhardt in those roles. Mr. McCarren
said that, "We intend to continue the Company's long- standing policy of
providing superior customer service and competing vigorously in the
transportation markets we serve."
<PAGE>
RESIGNATION
I, Edward A. Burkhardt, do hereby resign from the following positions:
1. Effective August 31, 1999, as chairman, director, officer and employee of
Wisconsin Central Transportation Corporation and each of its subsidiaries;
2. Effective July 22, 1999, as chairman, director and officer of English Welsh
& Scottish Railway Holdings Limited and each of its subsidiaries;
3. Effective August 31, 1999, as chairman and director of Tranz Rail Holdings
Limited and each of its subsidiaries; and
4. Effective August 31, 1999, as chairman and director of Australian Transport
Network Limited and each of its subsidiaries.
Dated July 7, 1999
Edward A. Burkhardt
EXHIBIT 10.3
------------
Registration Rights Agreement
This Registration Rights Agreement ("Agreement") is entered into as of the
16th day of July 1999 by and between Wisconsin Central Transportation
Corporation, a Delaware corporation ("Company"), and Edward A. Burkhardt
("Burkhardt").
The Company and Burkhardt agree as follows:
1. Definitions
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "Common Stock" means the outstanding common stock of the Company.
(c) "Maximum Feasible Quantity" is defined pursuant to Section 8 of
this Agreement.
2. Demand Registration
Burkhardt may exercise demand registration rights pursuant to this
Agreement by providing the Company with a written notice during the term of this
Agreement. The notice shall specify that it is being made pursuant to this
Section 2 and include a request by Burkhardt that the Company file a
registration statement, or a similar document pursuant to any other statute then
in effect corresponding to the 1933 Act, covering the registration of Common
Stock owned by Burkhardt with a proposed aggregate offering price to the public
of not less than $25,000,000. Subject to Section 8 of this Agreement and receipt
of proper notice, the Company shall use its best efforts to cause the Common
Stock specified in the notice to be registered under the 1933 Act.
Notwithstanding the foregoing, the Company shall not be obligated to effect a
registration pursuant to this Section 2 (i) during the period starting with the
date 45 days prior to the Company's estimated date of filing of, and ending on a
date 120 days following the effective date of, a registration statement
pertaining to an underwritten public offering of Common Stock for the account of
the Company, provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective and
that the Company's estimate of the date of filing such registration statement is
made in good faith and (ii) during any period of up to 90 days during which the
Company reasonably determines that the registration would be materially adverse
to the Company, provided that the Company makes such determination in good
faith. The Company shall be obligated to effect only two registrations pursuant
to this Section 2. Subject to the provisions of Section 8 of this Agreement, the
Company shall be permitted to cause to be registered shares of its Common Stock
in connection with any registration effected pursuant to this Section 2. If the
Company registers and sells a number of shares of Common Stock equal to 50% or
more of the total number of shares registered and sold pursuant to a
registration requested pursuant to this Section 2, the registration shall be
considered a registration pursuant to Section 3 of this Agreement. Any request
for registration pursuant to this Section 2 may be for either a firmly
underwritten public offering or a "best efforts" offering, in each case to be
managed by an underwriter or underwriters of recognized national standing
designated by Burkhardt and reasonably acceptable to the Company.
3. Piggyback Registration
If at any time during the term of this Agreement the Company determines to
register any of its Common Stock (whether newly issued or outstanding and
whether pursuant to a demand made under Section 2 of this Agreement or
otherwise) under the 1933 Act in connection with the public offering of such
Common Stock solely for cash on a form that would also permit the registration
of Common Stock owned by Burkhardt, the Company shall, each such time, promptly
give Burkhardt written notice of that determination. Burkhardt may exercise
piggyback registration rights by providing a written request within 30 days
after receipt of such notice from the Company. Subject to Section 8 of this
Agreement and receipt of a proper request from Burkhardt, the Company shall use
its best efforts to cause the Common Stock specified in the request to be
registered under the 1933 Act. The Company may elect either not to file or to
withdraw the filing of any registration statement filed pursuant to this Section
3 at any time prior to the effectiveness of the registration statement.
<PAGE>
4. Withdrawal of Requests
At any time prior to the effectiveness of a requested registration,
Burkhardt may withdraw his request for registration. If the request for
registration was made pursuant to Section 2 of this Agreement, upon withdrawal
Burkhardt shall forfeit one demand right unless (i) prior to the effective date
of the registration statement, there shall have occurred a material adverse
change in the business or condition (financial or otherwise) of the Company and
its subsidiaries, which change was not known to Burkhardt at the time of his
request or (ii) the request was made within 45 days after the end of the fiscal
year and the audited financial statements of the Company for that year and at
that year-end when subsequently available materially and adversely differ from
the information known to Burkhardt at the time of his request.
5. Obligations of the Company
Whenever required pursuant to Section 2 or Section 3 of this Agreement to
use its best efforts to effect the registration of any Common Stock, the Company
shall:
(a) as expeditiously as reasonably possible, prepare and file with the
Securities and Exchange Commission ("SEC", which term includes any
successor agency) a registration statement with respect to that Common
Stock and use its best efforts to cause that registration statement to
become and remain effective under the 1933 Act, provided that the Company
shall not be required to file a registration statement pursuant to Section
2 of this Agreement prior to 60 days after receipt of the proper notice;
(b) as expeditiously as reasonably possible, prepare and file with the SEC such
amendments and supplements to the registration statement and the prospectus
used in connection with the registration statement as may be necessary to
comply with the provisions of the 1933 Act with respect to the disposition
of all securities covered by the registration statement;
(c) as expeditiously as reasonably possible, furnish to Burkhardt such numbers
of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other documents
as he may reasonably request in order to facilitate the disposition of the
Common Stock owned by him; and
(d) as expeditiously as reasonably possible, use its best efforts to register
and qualify the securities covered by the registration statement under the
securities or Blue Sky laws of such jurisdictions as shall be reasonably
appropriate or reasonably requested by the underwriter for the distribution
of the securities covered by the registration statement; provided, however,
that the Company shall not be required by this provision to qualify to do
business or to file a general consent to service of process in any
jurisdiction.
6. Obligations of Burkhardt
It shall be a condition precedent to the obligations of the Company to take
any action pursuant to this Agreement that Burkhardt shall furnish to the
Company such information and documents regarding himself, the Common Stock held
by him and the intended method of disposition of that Common Stock as the
Company shall reasonably request in connection with the action to be taken by
the Company.
7. Expenses
In the case of a registration pursuant to Section 2 or Section 3 of this
Agreement, the Company shall bear all expenses incurred in connection with the
registration excluding underwriters' discounts and commissions and fees and
disbursements of legal counsel for Burkhardt.
8. Underwriting Requirements
(a) In connection with any offering involving an underwriting of shares of
Common Stock pursuant to Section 2 of this Agreement, the Company shall be
permitted to include shares in the underwriting to the extent those shares
do not cause the total number of shares in the underwriting, in the written
opinion of the underwriters, to exceed the maximum number of shares that
can be marketed at a price reasonably related to the then current market
price for those shares or otherwise materially and adversely affect the
offering ("Maximum Feasible Quantity"). If the quantity of shares that the
Company requests be included in the offering, when added to the shares of
Common Stock being registered at Burkhardt's request, exceeds the Maximum
Feasible Quantity, the Company shall include in the offering only so many
shares as do not, when added to the shares of Common Stock being registered
at Burkhardt's request, exceed the Maximum Feasible Quantity. In such
event, the Company shall have the right to sell the shares which exceeded
the Maximum Feasible Quantity to the underwriters for the purpose of
covering over-allotments, if any.
<PAGE>
(b) In connection with any offering involving an underwriting of shares of
Common Stock pursuant to Section 3 of this Agreement, the Company shall not
be required to include any of Burkhardt's Common Stock in the underwriting
unless Burkhardt accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it. Furthermore, the
Company shall only be required to include Burkhardt's shares of Common
Stock in the underwriting to the extent that his shares do not cause the
total number of shares in the underwriting, in the written opinion of the
underwriters, to exceed the Maximum Feasible Quantity for that
registration. If the quantity of shares of Common Stock that Burkhardt
requests be included in the offering, when added to the shares being issued
by the Company, exceeds the Maximum Feasible Quantity, the Company shall be
required to include in the offering only so many shares of Burkhardt's
Common Stock as do not, when added to the shares being issued by the
Company, exceed the Maximum Feasible Quantity. In such event, Burkhardt
shall have the right, prior to any right of the Company, to sell his Common
Stock which exceeded the Maximum Feasible Quantity to the underwriters for
the purpose of covering over-allotments, if any. Upon the sale by Burkhardt
of all such Common Stock which exceeded the Maximum Feasible Quantity, the
Company shall then have the right to sell additional shares for the
purposes of covering additional over-allotments.
9. Indemnification
In the event any Common Stock is included in a registration statement
pursuant to this Agreement:
(a) To the extent permitted by law, the Company shall indemnify and hold
harmless Burkhardt, any underwriter (within the meaning of the 1933 Act)
for the Company or acting on behalf of Burkhardt and each person who
controls such underwriter (within the meaning of the 1933 Act) against any
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based on any untrue or allegedly untrue statement of any material
fact contained in the registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arise out of any violation by the Company of the 1933 Act or the Securities
Exchange Act of 1934 or any rule or regulation promulgated under either of
those Acts applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, and shall
reimburse Burkhardt or any such underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action. Notwithstanding any provision to the contrary contained in this
Section 9, the Company shall not be liable for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based
upon an untrue statement or allegedly untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements
thereto in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by
Burkhardt or any such underwriter or controlling person.
(b) To the extent permitted by law, Burkhardt shall indemnify and hold harmless
the Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company
(within the meaning of the 1933 Act), each agent and any underwriter
(within the meaning of the 1933 Act) for the Company or acting on behalf of
Burkhardt and each person, if any, who controls such underwriter (within
the meaning of the 1933 Act) against any losses, claims, damages or
liabilities, joint or several, to which they may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any untrue or allegedly untrue statement of any material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or allegedly untrue statement or
omission or alleged omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by
Burkhardt expressly for use in connection with such registration, and
Burkhardt shall reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, agent, underwriter or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action. Notwithstanding any provision to
the contrary contained in this Section 9, Burkhardt shall not be required
to make any indemnification or reimbursement payments pursuant to this
Section 9 in an amount in excess of the proceeds received by Burkhardt from
the sale pursuant to such registration.
<PAGE>
(c) If a party entitled to indemnification under this Section 9 intends to
pursue a claim for indemnification pursuant to this Section 9 with respect
to any action, such party shall notify the party from whom they will be
seeking indemnification promptly after receipt of notice of the
commencement of such action. The indemnifying party shall have the right to
participate in and, to the extent the indemnifying party so desires,
jointly with any other indemnifying parties similarly notified, to assume
the defense thereof with counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial in any material respect to his, her or its ability to defend
such action, shall relieve such indemnifying party of liability to the
indemnified party pursuant to this Section 9 to the extent, but only to the
extent, that the indemnified party was prejudiced by the delay. The
omission to so notify the indemnifying party shall not relieve him, her or
it of any liability that he, she or it may have to any indemnified party
otherwise than pursuant to this Section 9.
10. Miscellaneous
Entire Agreement. This Agreement sets forth the entire understanding of the
parties and supersedes all prior agreements, arrangements and communications,
whether oral or written, with respect to the subject matter of this Agreement.
Assignment. This Agreement shall inure to the benefit of Burkhardt and his
heirs, executors and personal representatives. Burkhardt may not otherwise
assign any of his rights under this Agreement.
Amendment and Modification. This Agreement shall not be amended or modified
without the consent of both the Company and Burkhardt.
Termination. This Agreement shall terminate three years from the date of
this Agreement.
Headings. The headings appearing in this Agreement are for convenience only
and shall not be deemed to explain, limit or amplify the provisions of this
Agreement.
Notices. All notices and other communications necessary or contemplated
pursuant to this Agreement shall be in writing and shall be delivered
personally, sent by certified or registered U.S. mail, return receipt requested,
postage prepaid or sent prepaid by a nationally recognized overnight courier
with guaranteed delivery at the addresses set forth below (or such other
addresses as shall be specified by the parties). Such notices or other
communications shall be deemed given:
In the case of certified or registered U.S. mail, five days after deposit
in the U.S. mail; or
In the case of delivery by a nationally recognized overnight courier, the
day designated for delivery;
provided, however, that in no event shall any such notices or communications be
deemed to be given later than the date they are actually received.
Communications that are to be delivered by the U.S. mail or by overnight courier
shall be delivered to the following addresses:
If to the Company:
Wisconsin Central Transportation Corporation
One O'Hare Centre, Suite 9000
6250 North River Road
Rosemont, Illinois 60018
Attention: Mr. Thomas F. Power, Jr.
Phone: 847-318-4602
Facsimile: 847-318-4628
With a copy to:
Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606
Attention: Frederick L. Hartmann
Phone: 312-258-5656
Facsimile: 312-258-5600
and
McLachlan, Rissman & Doll
676 North Michigan Avenue, Suite 2800
Chicago, Illinois 60611
Attention: Thomas W. Rissman / John H. Doll
Phone: 312-266-2444
Facsimile: 312-266-3330
<PAGE>
If to Burkhardt:
Edward A. Burkhardt
573 Earlston Road
Kenilworth, Illinois 60043
Phone: 847-256-2758
Facsimile: same number (call first)
With a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Paul J. Miller / Roger Siske
Phone: 312-876-8074
Facsimile: 312-876-7934
Each party, by written notice to the other party, may modify the applicable
delivery address, except that notice of change of address shall be effective
only upon receipt.
Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware without giving effect
to principles of conflicts of laws.
Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
Wisconsin Central Transportation Corporation
Edward A. Burkhardt
By:
Printed Name:
Title:
EXHIBIT 10.4
------------
Dated: August 6, 1999
(1) WISCONSIN CENTRAL INTERNATIONAL, INC.
AND
(2) EDWARD A. BURKHARDT,
an individual
---------------------------------------------------
DEED RELATING TO THE SALE AND PURCHASE OF
SHARES AND OPTIONS IN ENGLISH WELSH AND
SCOTTISH RAILWAY HOLDINGS LIMITED
---------------------------------------------------
<PAGE>
THIS DEED is made on August 6, 1999.
BETWEEN:
(1) WISCONSIN CENTRAL INTERNATIONAL, INC., a Delaware corporation whose
principal place of business is at One O'Hare Centre, Rosemont, Illinois
60018, USA ("WCI" or "Transferee"); and
(2) EDWARD A. BURKHARDT, an individual ("Burkhardt" or "Seller").
WHEREAS:
(A) Seller owns 200,000 ordinary shares in English Welsh & Scottish Railway
Holdings Limited ("EWS") and Directors Share Options to acquire an
additional 100,000 ordinary shares in EWS (together the "Burkhardt EWS
Shares"); and
(B) Seller has agreed to sell and Transferee has agreed to buy and pay for
the Burkhardt EWS Shares on the terms set forth in this Deed.
THIS DEED WITNESSES as follows:
1. INTERPRETATION
1.1 In this Deed:
"Burkhardt EWS Shares" has the meaning given in Recital (A);
"Completion" means completion of the sale and purchase of the
Burkhardt EWS Shares in accordance with the provisions of this Deed;
"Directors Share Options" means the options granted to Burkhardt to
acquire 100,000 ordinary shares in EWS for (pound)1.00 per share;
"Encumbrance" means a mortgage, charge, pledge, lien, option,
restriction, right of preemption, third party right or interest, any
other encumbrance or security interest of any kind, and any other type
of preferential arrangement (including, without limitation, title
transfer and retention arrangements) having a similar effect (but
excluding the Shareholder Agreement among certain shareholders of EWS).
1.2 In this Deed a reference to a clause, paragraph or schedule, unless the
context otherwise requires, is a reference to a clause, paragraph or
schedule to this Deed.
1.3 The headings in this Deed shall not affect the interpretation of this
Deed.
2. TRANSFER OF SHARES
2.1 In accordance with and subject to the terms of this Deed, Seller:
2.1.1 agrees to transfer to WCI the 200,000 shares in EWS
included in the Burkhardt EWS Shares; and
2.1.2 agrees to assign to WCI (subject to the consent of EWS
to be obtained by WCI) the Directors Share Options included in
the Burkhardt EWS Shares representing the right to acquire
100,000 shares in EWS.
3. SALE AND PURCHASE
3.1 In accordance with and subject to the terms of this Deed, Burkhardt
agrees to sell and WCI agrees to buy the Burkhardt EWS Shares and each
right attaching thereto at or after the date of this Deed on the
following basis:
3.1.1 200,000 Burkhardt EWS Shares free from any Encumbrance for a
price of $4.788586 per share and an aggregate price of
$957,717.20;
3.1.2 (subject to EWS's consent) an assignment of the Directors
Share Options included in the Burkhardt EWS Shares
representing the right to acquire 100,000 shares in EWS, free
from any Encumbrance for a price of $2.3397 per option and an
aggregate price of $233,970.00.
3.2 The total purchase price to be paid to Burkhardt by WCI for the
Burkhardt EWS Shares referred to in Clause 3.1 of this Deed is
$1,191,687.20.
<PAGE>
4. COMPLETION
4.1 Completion shall take place at the offices of WCI on the signing of
this Deed.
4.2 At Completion Burkhardt shall deliver to WCI duly executed transfers in
respect of the 200,000 Burkhardt EWS Shares and the share certificate
for such shares and an assignment of the Director Share Options
granting WCI the right to acquire 100,000 shares in EWS for (pound)1.00
per share by giving notice of exercise directly to EWS.
4.3 At Completion WCI shall pay the amount stated in Clause 3.2 of this
Deed to Burkhardt or as Burkhardt directs by wire transfer of
immediately available funds.
5. FURTHER ASSURANCE; REPRESENTATIONS AND WARRANTIES; CONSENTS
5.1 Seller shall do and execute, or procure to be done and executed, all
acts, deeds, documents and things as may be reasonably requested of him
by the Transferee to give effect to this Deed.
5.2 Seller represents and warrants to Transferee that:
5.2.1 He is the legal and beneficial owner of all rights in
and to the Burkhardt EWS Shares, free and clear of any
Encumbrance, and, in the case of shares covered by Directors
Share Options, subject to exercise of such Directors Share
Options;
5.2.2 The transfer of legal and beneficial ownership of the
Burkhardt EWS shares to Transferee pursuant to this Deed is
rightful and does not violate any law, regulation or agreement
applicable to Burkhardt; and
5.2.3 Upon Completion the Transferee will be the sole legal
and beneficial owner of the Burkhardt EWS Shares subject in
the case of shares covered by Directors Share Options, to
exercise by the Transferee of the Directors Share Options.
6. COSTS
Each party shall pay its own costs relating to the negotiation,
preparation, execution and performance by it of this Deed and of each
document referred to in it.
7. PARTIAL INVALIDITY, ILLEGALITY OR UNENFORCEABILITY
The invalidity, illegality or unenforceability of any provision of this
Deed shall not affect the continuation in force of the remainder of
this Deed.
8. EXCLUSION OF IMPLIED RELATIONSHIPS
Nothing in this Deed shall be deemed or construed to constitute any
party a partner, agent or representative of any other party and no
party shall have the authority to act for, or to incur any obligation
on behalf of, any other party.
9. NOTICES
9.1 A notice or other communication under or in connection with this Deed
shall be in writing and shall be delivered personally or sent by first
class post prepaid recorded delivery (or air mail if overseas) or by
telex, or by fax, to the party due to receive the notice or
communication, at its address set out in this Deed or another address
specified by that party by written notice to the other.
<PAGE>
9.2 In the absence of evidence of earlier receipt, a notice or other
communication under or in connection with this Deed is deemed given:
9.2.1 if delivered personally, when left at the address referred to
in Clause 9.1 of this Deed;
9.2.2 if sent by mail, two days after posting it;
9.2.3 if sent by air mail, six days after posting it;
9.2.4 if sent by telex, when the proper answer-back is received; and
9.2.5 if sent by fax, on completion of its transmission.
10. NO RELIANCE
Each of the parties to this Deed is a beneficial holder of shares in
EWS, and each party has made its own determination to effect the
transactions contemplated by this Deed without reliance on any
statements or representations, express or implied, of any party, other
than the express representations and warranties in this Deed.
11. GOVERNING LAW
This Deed is governed by, and shall be construed in accordance with,
the law of Illinois and each party submits to the non-exclusive
jurisdiction of the courts of Illinois.
12. COUNTERPARTS
This Deed may be executed in any number of counterparts each of which
when executed and delivered shall be deemed an original, but all the
counterparts together shall constitute the same document.
13. DELIVERY
This Deed is delivered on the date written at the start of this Deed.
EXECUTED by the parties as a deed
Executed as a deed by
- --------------------------------
EDWARD A. BURKHARDT
Executed as a deed by WISCONSIN CENTRAL INTERNATIONAL, INC.
By___________________________
Title:
EXHIBIT 10.5
------------
ASSIGNMENT
Wisconsin Central International, Inc., a Delaware corporation ("WCI"), hereby
assigns (to the extent assignable) to Rail World, Inc. ("Assignee"), at the
request of Edward A. Burkhardt ("Burkhardt"), all of WCI's rights with respect
to WCI's proposed participation in the privatization of the freight rail
business in Estonia, including without limitation all rights under the Teaming
Agreement dated as of April 29, 1999 ("Teaming Agreement") among WCI, Jarvis
International Limited and OU Ganiger Invest and all agreements with Firstchase
Mercantile Limited and Jarvis International Limited.
All expenses incurred, contractual payments accrued and payable, and obligations
performable, by WCI or its affiliates through July 7, 1999 in connection with
the Estonia privatization will be for the account of WCI. All expenses incurred,
contractual payments accrued or payable, and obligations performable, by WCI,
WCI's affiliates, Assignee or Burkhardt after July 7, 1999 in connection with
the Estonia privatization will be for the account of Assignee, and Assignee or
Burkhardt will reimburse WCI for any such expenses, payments or obligations that
are paid or performed by WCI or its affiliates. Without limiting the generality
of the foregoing allocation, any amounts payable under agreements between WCI or
its affiliates and Firstchase Mercantile Limited or Jarvis International Limited
that are attributable to the period after July 7, 1999 shall be for the account
of Assignee, and Assignee or Burkhardt will reimburse WCI and its affiliates for
any payments made under those agreement that are attributable to the period
after July 7, 1999; obligations under any other agreements related to the
Estonia privatization will be similarly allocated. In order to satisfy
Burkhardt's reimbursement obligations under this paragraph, Burkhardt grants WCI
and its affiliates a right of setoff against other amounts payable by them to
Burkhardt.
Burkhardt agrees not to hold himself out as representing WCI or any of its
affiliates in connection with the Estonia privatization and to conduct his
activities in connection with the Estonia privatization in a name other than the
name of WCI or any of its affiliates.
WCI will give notice under Section 8 of the Teaming Agreement that (i) it has
elected not to continue pursuing the Business defined therein, (ii) it has
assigned (to the extent assignable) its rights under the Teaming Agreement to
Assignee at Burkhardt's request and (iii) it has no objection to participation
by Burkhardt and Assignee in acquisition of the Business.
<PAGE>
This Assignment is made by WCI without any representation or warranty, including
any representation or warranty as to assignability of WCI's interests or the
requirement of third party consents.
This Assignment will be effective upon its signed acceptance by Assignee and
Burkhardt.
Dated August 6, 1999
Wisconsin Central International, Inc.
By_____________________________
Agreed and accepted:
Rail World, Inc.
______________________ By______________________________
Edward A. Burkhardt Edward A. Burkhardt, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at June 30, 1999 (unaudited) and the
Condensed Consolidated Statement of Income for the Three Months Ended June 30,
1999 (unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2692
<SECURITIES> 0
<RECEIVABLES> 79914
<ALLOWANCES> (1850)
<INVENTORY> 31122
<CURRENT-ASSETS> 116092
<PP&E> 868657
<DEPRECIATION> (103911)
<TOTAL-ASSETS> 1091870
<CURRENT-LIABILITIES> 136584
<BONDS> 332321
0
0
<COMMON> 512
<OTHER-SE> 470331
<TOTAL-LIABILITY-AND-EQUITY> 1091870
<SALES> 0
<TOTAL-REVENUES> 90772
<CGS> 0
<TOTAL-COSTS> 65623
<OTHER-EXPENSES> (307)
<LOSS-PROVISION> 89
<INTEREST-EXPENSE> 4131
<INCOME-PRETAX> 21325
<INCOME-TAX> 8444
<INCOME-CONTINUING> 12881
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18854
<EPS-BASIC> 0.37
<EPS-DILUTED> 0.37
</TABLE>
