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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 6, 1996
RailAmerica, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-20618 65-0328006
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State of Incorporation Commission File IRS Employer
Number Identification no.
301 Yamato Road, Suite 1190, Boca Raton, Florida 33431
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Address of Principal Executive Office
Registrant's telephone number, including area code: (561) 994-6015
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INFORMATION INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets
On September 6, 1996, RailAmerica, Inc. ( the "Company"), through
its newly formed subsidiary, Cascade and Columbia River Railroad Company
("CCRR"), completed the purchase of a 131 mile rail line in north central
Washington from Burlington Northern Santa Fe ("BNSF"). The purchase price paid
was $7,800,000 in cash. The cash was obtained through an acquisition loan
advance from the National Bank of Canada.
The 131 mile rail line extends from Wenatchee to Oroville,
Washington and interchanges at BNSF's Wenatchee yard. Currently, the railroad
hauls woodchips, lumber, minerals, cement and agricultural products. The
Company plans to have CCRR continue this line of business.
The assets acquired consist primarily of land, buildings, track and
track materials. The purchase price was arrived at through arms-length
negotiations between the parties.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized, on this 11th day of September, 1996.
RAILAMERICA, INC.
BY: /s/ Gary O. Marino
------------------------------------
Gary O. Marino
Chairman and Chief Executive Officer
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EXHIBIT INDEX
2.1 Asset Purchase Agreement, dated August 5, 1996, by and among
Burlington Northern Railroad Company and Cascade and Columbia River
Railroad Company, a subsidiary of RailAmerica, Inc. less exhibits
and schedules, which will be furnished supplementally to the
commission upon request.
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EXHIBIT 2.1
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AGREEMENT FOR
SALE OF CERTAIN ASSETS, RIGHTS
AND OBLIGATIONS
OF
BURLINGTON NORTHERN RAILROAD COMPANY
TO
CASCADE AND COLUMBIA RIVER RAILROAD COMPANY
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AGREEMENT FOR
SALE OF CERTAIN ASSETS, RIGHTS
AND OBLIGATIONS
OF
BURLINGTON NORTHERN RAILROAD COMPANY
TO
CASCADE AND COLUMBIA RIVER RAILROAD COMPANY
This Agreement is entered into as of this 5th day of August, 1996,
between BURLINGTON NORTHERN RAILROAD COMPANY, a Delaware corporation
(hereinafter referenced as "Seller"), and CASCADE AND COLUMBIA RIVER RAILROAD
COMPANY, a Delaware corporation (hereinafter referenced as "Buyer").
WHEREAS, Seller desires to sell and convey to Buyer, on the terms and
conditions set forth in this Agreement, Seller's interest in substantially all
of its Oroville Subdivision's operating railroad corridor, the rail freight
transportation business which Seller conducts on this railroad corridor, and
certain other rights, obligations and assets as specified in this Agreement; and
WHEREAS, Buyer desires to purchase, pursuant to the terms and
conditions set forth in this Agreement, Seller's interest in substantially all
of its Oroville Subdivision's operating railroad corridor, the rail freight
transportation business which Seller conducts on this railroad corridor, and
certain other assets, rights and obligations as specified in this Agreement.
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NOW THEREFORE, Buyer and Seller agree as follows:
1. Description of Business Sold.
(a) Seller shall convey to Buyer on the date of Closing, subject
to the terms and conditions set forth in this Agreement and the terms,
conditions, reservations and exceptions set forth in the Quitclaim Deed
conveying this property, all of Seller's interest in Seller's operating
railroad corridor, as specified in the Quitclaim Deed, plus certain related and
adjacent parcels as specified in the Quitclaim Deed, between Oroville
Subdivision Milepost 6.0, north of Olds Junction, Washington, and the northern
end of the rail line at about Oroville Subdivision Milepost 137.2, in Oroville,
Washington. This conveyance is expressly subject to Seller's retained
interests, as specified in detail in the Quitclaim Deed, for: (i) a
non-exclusive permanent easement for construction, maintenance and operation of
one or more pipelines or fiber optics communication lines, together with
related facilities and appurtenances, in, under, across, along and through all
or any portion of the Rail Line (as hereinafter defined); (ii) mineral rights
and related permanent access easements; and (iii) a nonexclusive permanent
right to use, develop and market water rights, together with related permanent
access, construction, maintenance and water pipeline rights. This rail line
real property and all improvements thereon, together with certain specified
related real property interests included in this conveyance, are described
specifically in Attachment 1 to the Quitclaim Deed set forth in
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Exhibit A attached hereto, and are referenced hereinafter as "Rail Line".
(b) Seller shall convey to Buyer, on the date of Closing, the rail
freight transportation business which Seller conducts on the Rail Line, subject
to the terms and conditions set forth in this Agreement, in the Quitclaim Deed,
or in any agreement assigned by Seller to Buyer in accordance with the terms of
this Agreement.
(c) Seller shall convey to Buyer, on the date of Closing, by a
Bill of Sale identical in form to the Bill of Sale set forth in Exhibit B
attached hereto, all of Seller's interest in all rail, ties, spikes, tie
plates, rail anchors, bridges, culverts, signalling equipment, and other
supporting structures, ballast, track materials and supplies (excluding any
vehicles, maintenance equipment on wheels, radios or computer equipment) that,
on the date of the Closing, are not improvements that constitute the Rail Line,
but which then are present on the real property comprising the Rail Line.
Seller shall leave on the Rail Line all uninstalled rail that is present on the
Rail Line on the date of this Agreement. Seller's conveyance of personal
property on the Rail Line shall be subject to the terms and conditions set
forth in this Agreement, including those set forth in Exhibit B, and the terms
and conditions set forth in any agreement assigned by Seller to Buyer in
accordance with the terms of this Agreement.
(d) Seller shall grant to Buyer, effective on the date of Closing,
limited trackage rights, for the purpose of operating overhead rail freight
service only over Seller's connecting rail
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lines between Oroville Subdivision Milepost 6.0, north of Olds Junction,
Washington, and Oroville Subdivision Milepost 1650.2, in Wenatchee, Washington,
including over any and all tracks in Seller's Wenatchee, Washington rail yard
(collectively, "Trackage Rights Lines") as directed by Seller, for the sole
purpose of interchanging rail traffic and equipment between Buyer and Seller
only, and no other party, in the Wenatchee, Washington rail yard. Buyer shall
conduct its operations over the Trackage Rights Lines using Buyer's trains,
operated by Buyer's employees, subject to dispatching control and direction of
Seller. Seller shall maintain the Trackage Rights Lines as reasonably required.
(e) Seller shall assign to Buyer, on the date of Closing, subject
to all terms and conditions set forth in this Agreement, or in any agreement
assigned by Seller to Buyer in accordance with the terms of this Agreement, all
assignable rights and obligations of Seller to the extent that they are related
to the Rail Line and are set forth in any agreement identified in Exhibit C,
which is attached hereto. Buyer on the date of Closing shall accept the
assignment of all such rights and obligations, as of the date of Closing, in
accordance with their terms and the terms of this Agreement. Seller shall
reserve all rights set forth in any agreement identified in Exhibit C to the
extent those rights are related to one or more other rail lines or property of
Seller. If any contract is related to the Rail Line and inadvertently is not
identified in Exhibit C, it is the intent of Seller and Buyer that such
contract be deemed to have been assigned by Seller to Buyer,
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in whole or in part as appropriate, effective the date of Closing. Seller
promptly shall provide to Buyer a copy of any such contract immediately upon
locating it. Buyer shall make no claim against Seller arising out of any
failure to obtain a consent to assignment from any party to an agreement
assigned by Seller to Buyer in whole or in part. It is the intent of both
Seller and Buyer that all assignments of rights and obligations related to the
Rail Line shall be effective on the date of Closing, whether or not any
consents to such assignments then have been obtained.
2. Consideration for the Sale.
(a) In consideration for Seller's sale of its interest in the Rail
Line, and conveyance of the other rights, interests and obligations described
in Paragraph 1 of this Agreement, Buyer agrees to all of the following:
(1) To accept all transferred real and personal property "AS IS,
WHERE IS" and "with all faults", except for the specific
representations and warranties set forth in this Agreement.
(2) To conduct rail freight transportation business on the Rail
Line for so long as it is economically reasonable to do so.
(3) To pay on the date of Closing a purchase price of SEVEN
MILLION, EIGHT HUNDRED THOUSAND DOLLARS ($7,800,000.00), by
wire transfer to either: (i) Seller, or (ii) Apex Property &
Burlington Exchange, Inc. ("APEX"), Seller's
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intended assignee of Seller's right to receive payment of the
purchase price for the Rail Line. The wire transfer by Buyer
shall be made in accordance with written wire transfer
instructions provided to Buyer by Seller. APEX is a qualified
intermediary within the meaning of Section 1031 of the Internal
Revenue Code of 1986, as amended, and Treasury Regulation
Section 1.1031(k)-1(g). Seller intends to assign to APEX
Seller's right to receive payment of the purchase price for
the Rail Line, for the purpose of Seller completing a
tax-deferred exchange.
(4) To cooperate with Seller with respect to any tax-deferred
exchange and to execute such documents as may be required to
effect any tax-deferred exchange. Seller shall indemnify,
defend and hold harmless Buyer fully against all reasonable
and necessary additional costs, expenses, and liabilities
which Buyer may incur as a result of any tax-deferred exchange.
(5) To pay in addition to the purchase price all costs of Closing
(except Seller's cost of preparation of documents to be
delivered at Closing). This includes, but is not limited to,
any escrow and service fees, real estate transfer taxes,
including excise taxes, recording fees and sales taxes
associated with this Agreement or any of the conveyances
governed by this Agreement.
(6) Not to build or allow to be built, or, either directly or
through any corporate affiliate, cooperate, finance or
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participate in building, any track or track structures to
connect any portion of the Rail Line to any railroad other
than Seller. Buyer is making this commitment because the
purchase price for the Rail Line is significantly less than
the franchise value and going concern value to Seller of the
business to and from the Rail Line.
(7) Not to request, participate in, cooperate with, or support any
effort in any legal or administrative proceeding to obtain the
right to interchange rail traffic at any location directly
with any railroad other than Seller.
This transaction and the consideration paid by Buyer is not divisible; however,
Buyer and Seller agree that the purchase price shall be allocated as follows
among the various assets being conveyed under the terms of this Agreement:
<TABLE>
<S> <C>
Rail $5,400,000.00
Ties 1,350,000.00
Ballast 700,000.00
Land 350,000.00
-------------
Total $7,800,000.00
</TABLE>
3. Governmental Approval.
(a) Buyer represents that Buyer is not a "carrier" within the
meaning of 49 U.S.C. Section 10102(2). Promptly following execution of this
Agreement, Buyer, at its sole expense, shall prepare and file such documents as
may be required to secure approval, or exemption from approval, of this
transaction by the Surface Transportation Board of the United States Department
of Transportation ("STB"), as
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appropriate. Buyer shall make all reasonable efforts to obtain this approval
or exemption in time for this transaction to close on or before August 23,
1996. Buyer shall permit Seller to review prior to filing all documents
proposed by Buyer to be filed with the STB or any court to secure legal
approval or exemption of this transaction.
4. Representations and Warranties.
(a) Seller hereby represents and warrants to Buyer, and Buyer's
successors and assignees, the following facts, as of the date of this Agreement
and as of the date of Closing:
(1) Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the
State of Delaware, and is qualified to do business as
a foreign corporation in the State of Washington;
(2) Seller has the corporate power and authority to enter
into this Agreement and carry out its obligations
under this Agreement;
(3) The execution, delivery and performance of this
Agreement have been duly authorized and approved by
all necessary corporate actions of Seller, and no
further corporate proceedings of Seller are required
to complete the transactions covered by this
Agreement;
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(4) All of Seller's obligations set forth in this
Agreement constitute legal, valid and binding
obligations of Seller which are enforceable against
Seller in accordance with their terms, except to the
extent enforcement may be limited by bankruptcy,
insolvency or reorganization laws;
(5) There is no provision in the Certificate of
incorporation or By-Laws of Seller which prohibits
the execution of this Agreement or consummation of
the transactions covered by this Agreement;
(6) The negotiations related to this Agreement have been
handled by Seller on its own behalf, without
intervention of any agent or other person, so that no
party has a valid claim on this basis for any
finder's fee, brokerage commission, or other similar
payment in connection with any of the transactions
included in this Agreement;
(7) Seller has duly filed with the appropriate agencies
of the United States, the State of Washington, and
appropriate local governments or political
subdivisions in Washington, all tax returns and
reports required to be filed; Seller either has paid
in full, or is agreeable to paying in full as finally
determined, all taxes, interest, penalties,
assessments or deficiencies which are due for the
period up to the date of Closing; and Seller has
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made all withholdings of tax which are required to be
made under all applicable regulations of the United
States, the State of Washington, and local
governments in Washington;
(8) To Seller's knowledge, there is no pending or
threatened litigation or arbitration proceeding, or
administrative proceeding or investigation, against
or affecting the properties or assets comprising the
Rail Line, or Seller's rights to conduct rail freight
transportation operations over the Rail Line as
Seller conducts those operations on the date of this
Agreement, the result of which forseeably would
materially adversely affect Buyer's ability to
conduct rail freight transportation operations over
the Rail Line on the day following the date of
Closing;
(9) Seller has received no written notice of any pending
civil, criminal, or administrative actions with
respect to any hazardous or toxic substance on or
adjacent to the Rail Line (As used herein, "written
notice" shall mean written notice delivered to either
Seller's Assistant Vice President-Environmental and
Hazardous Materials, or Seller's Director
Environmental Remediation and Special Projects, who
are the people designated by Seller to receive notice
of such matters);
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(10) The physical condition of the Rail Line will be
sufficient to enable Buyer to conduct rail freight
transportation operations over the Rail Line on the
day following the date of Closing; and
(11) No representation or warranty by Seller in this
Agreement contains any untrue statement of a
material fact, nor omits any material fact that is
necessary to make any representation or warranty not
materially misleading.
(b) Buyer hereby represents and warrants to Seller, and Seller's
successors and assignees, the following facts as of the date of this Agreement
and as of the date of Closing, except where specifically noted to be as of the
date of Closing only:
(1) Buyer is a corporation, duly organized, validly
existing and in good standing under the laws of the
State of Delaware, and by the date of Closing will be
qualified to do business in the State of Washington;
(2) Buyer has all requisite authority to purchase
Seller's rights and properties which are conveyed to
Buyer by this Agreement; to enter into this
Agreement; to conduct rail freight transportation
business on the Rail Line (as of the date of Closing
only); and to perform all of Buyer's obligations
under this Agreement;
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(3) The execution of this Agreement and consummation of
the transactions which are a part of this Agreement
have been duly authorized and approved by all
necessary company actions by Buyer, and immediately
upon execution of this Agreement by Buyer's
authorized representative, all of Buyer's obligations
set forth in or referenced in this Agreement shall
constitute legal, valid and binding obligations of
Buyer, or Buyer's successors or assignees, which
obligations are enforceable in accordance with their
terms against Buyer or Buyer's successors or
assignees;
(4) No provision in the Certificate of Incorporation or
By-Laws of Buyer prohibits the execution of this
Agreement or consummation of the transactions covered
by this Agreement;
(5) As of the date of Closing only, Buyer shall have
obtained all legal authority which is necessary to
enable Buyer lawfully to conduct rail freight
transportation operations over the Rail Line as a
common carrier and under one or more rail freight
transportation contracts, commencing at 12:01 a.m. on
the day following the date of Closing;
(6) The negotiations related to this Agreement have been
handled by Buyer on its own behalf, without
intervention of any agent or party, and in such
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manner as not to give rise to any valid claim by any
party for any finder's fee, brokerage commission, or
other similar payment in connection with any of the
transactions included in this Agreement;
(7) Neither Buyer nor any of Buyer's equity owners or
financing sources, nor any of their partners, is a
Class I railroad or affiliated with a Class I
railroad; and
(8) No representation or warranty by Buyer in this
Agreement contains any untrue statement of a material
fact, nor omits any material fact that is necessary
to make any representation or warranty not materially
misleading.
5. Inspection and Condition of Rail Line.
(a) By signing this Agreement, Buyer acknowledges that Buyer has
inspected the Rail Line, including all improvements and structures on the Rail
Line. Buyer further acknowledges that: (i) except as set forth in Paragraphs
4(a)(8), 4(a)(9), and 4(a)(10) of this Agreement, no representation has been
made by Seller to Buyer concerning the state or condition of the Rail Line, or
the age of any improvements on the Rail Line; (ii) Buyer has not relied upon
any statement or declaration of Seller, oral or in writing, as an inducement to
entering into this Agreement, other than as stated in
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this Agreement; and (iii) the sole consideration for execution of this
Agreement by Buyer is set forth in this Agreement.
(b) EXCEPT AS SET FORTH IN PARAGRAPH 4(a) OF THIS AGREEMENT,
SELLER HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR
IMPLIED, AS TO THE DESIGN OR CONDITION OF THE RAIL LINE, ITS MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OF THE MATERIAL OR WORKMANSHIP
OF THE RAIL LINE, OR THE CONFORMITY OF THE RAIL LINE TO ITS INTENDED USES.
SELLER SHALL NOT BE LIABLE TO BUYER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT) WITH RESPECT TO THE DESIGN, CONDITION,
QUALITY, SAFETY, MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE, OF THE
RAIL LINE, OR THE CONFORMITY OF THE RAIL LINE TO ITS INTENDED USES. SELLER
OFFERS, AND BUYER ACCEPTS, THE RAIL LINE IN "AS IS, WHERE IS" AND "WITH ALL
FAULTS" CONDITION, AND SUBJECT TO ALL LIMITATIONS ON SELLER'S RIGHTS, INTEREST,
AND TITLE TO THE PROPERTY COMPRISING THE RAIL LINE.
6. Liability and Indemnity.
(a) Cooperation in Defense. Buyer and Seller agree that, for
three years following the date of Closing, they will cooperate as necessary in
defense of any claim, demand, investigation or litigation arising out of
Seller's or Buyer's ownership or operation of the Rail Line.
(b) Definition of Losses. In this Agreement the term, "Losses"
shall include all costs, expenses, fees or liabilities of, or in any way
related to: (i) any violation of law or regulation,
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(ii) any damage to property, the environment or natural resources, (iii) any
bodily injury or death of any person, or (iv) the breach of any contract.
"Losses" shall include, but not be limited to, all costs of claims, activities
in response to enforcement, damages, judgments, awards, orders, decrees,
payments, fines, penalties, assessments, court costs, and attorney, consultant
and expert witness fees.
(c) General Liability and Indemnity.
(1) Seller's General Liability and Indemnity. Except as
provided in Paragraph 6(d) of this Agreement, Seller
shall be responsible for, and shall indemnify, defend
and hold harmless Buyer fully against, all Losses,
which: (i) except as limited by clause (iii) just
below, arise out of Seller's ownership or operation
of the Rail Line on or prior to the date of Closing;
(ii) result from any breach by Seller of any of its
representations or warranties set forth in Paragraphs
4(a) and 9 of this Agreement, or, except as covered
by clause (iv) just below, any failure by Seller to
perform any of its obligations under this Agreement;
(iii) result from claims of third parties caused by
Seller's performance or nonperformance, or Buyer's
nonperformance only where Buyer had no knowledge of
the existence of the duty to perform, under any
material contract, lease, permit, license, easement
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or commitment related to the Rail Line that is not
identified in this Agreement or on Exhibit C; or (iv)
are directly related to Buyer's activities or
operations on the Trackage Rights Lines, to the
extent such Losses are proximately caused by Seller's
negligence.
(2) Buyer's General Liability and Indemnity. Except as
provided in Paragraph 6(d) of this Agreement, and
further except for Losses resulting from one or more
of Seller's representations or warranties set forth
in this Agreement containing any untrue or materially
misleading statement of a material fact, or omitting
any material fact that is necessary to prevent that
representation or warranty from being materially
misleading, Buyer shall be responsible for, and shall
indemnify, defend and hold harmless Seller fully
against, regardless of any negligence or alleged
negligence of Seller, all Losses which: (i) except as
limited by clause (iii) just below, arise out of
Buyer's ownership or operation of the Rail Line after
12:01 a.m. on the day following the date of Closing;
(ii) result from any breach by Buyer of any of its
representations or warranties set forth in Paragraph
4(b) of this Agreement, or any failure by Buyer to
perform any of its obligations under this Agreement;
(iii) result from
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claims of third parties caused by Buyers's
nonperformance or required performance under any
material contract, lease, permit, license, easement
or commitment relating to the Rail Line, where that
contract, lease, permit, easement or commitment
either is identified in this Agreement or on Exhibit
C, or Buyer has specific knowledge of it, but then
only from the time when Buyer acquired such specific
knowledge; or (iv) arise out of, or are related or
attributable to, any of Buyer's activities or
operations on or near the Trackage Rights Lines,
regardless of Seller's negligence or alleged
negligence, except to the extent Losses are directly
related to Buyer's activities or operations on the
Trackage Rights Lines, and are proximately caused by
Seller's negligence.
(d) Environmental Liability and Indemnity.
(1) Buyer Accepts the Rail Line "As Is, Where Is". Buyer
acknowledges that Seller has provided Buyer with full
access to inspect the Rail Line. Buyer further
acknowledges that Seller makes only those
representations and warranties to Buyer concerning
the existence of any hazardous or toxic substances on
or near the Rail Line, or compliance of the Rail Line
with any statutes, ordinances, rules, regulations,
orders or decisions with regard to
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hazardous or toxic substances on or near the Rail
Line, which are expressly set forth in Paragraph
4(a)(9) of this Agreement.
(2) Seller's Environmental Liability and Indemnity.
Notwithstanding any other liability or
indemnification provision in this Agreement, Seller
shall be responsible for, and shall indemnify, defend
and hold harmless Buyer fully against, Losses
incurred due to any claim, demand or litigation
concerning violation of any applicable statute,
ordinance, rule, regulation, order or decision in any
way concerning any of the following: (i) any
chemical, material or substance that is now, or at
the time in question, is regulated or governed by any
law, the release of which creates any liability under
any applicable law; or (ii) any other material which,
when released, would cause significant ecological
damage (items described by (i) or (ii) above are
referenced hereinafter as "Hazardous Materials")
located on or near the Rail Line where such Losses:
(a) were caused by one or more acts of Seller
that occurred on or prior to the date of
Closing; and
(b) result from any written claim made by a party
other than Buyer or one of Buyer's affiliates
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("Claims") that is delivered to Seller within
two years following the date of Closing; and
(c) exceed $10,000 in the aggregate in any year.
(3) Buyer's Environmental Liability and Indemnity. As
part of the consideration for this Agreement, and
notwithstanding any other liability or
indemnification provision in this Agreement, Buyer
shall be responsible for, and shall indemnify,
defend, and hold harmless Seller fully against,
regardless of any negligence or alleged negligence of
Seller, Losses incurred due to any claim, demand or
litigation concerning violation of any applicable
statute, ordinance, rule, regulation, order or
decision in any way concerning any Hazardous
Materials located on or near the Rail Line where such
Losses either:
(a) were not caused by one or more acts of
Seller, or Seller's corporate predecessors,
regardless of when the act or omission giving
rise to the claim occurred; or
(b) regardless of cause, do not result from a
Claim delivered to Seller within three years
following the date of Closing; or
(c) were caused by Seller and result from a Claim
delivered to Seller within three years of the
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date following Closing, but only up to
$10,000 in the aggregate in any year.
Buyer also shall be responsible for, and shall
indemnify, defend and hold harmless Seller fully
against, regardless of any negligence or alleged
negligence of Seller, Losses incurred due to any
claim, demand or litigation concerning violation
of any applicable statute, ordinance, rule,
regulation, order or decision in any way concerning
any Hazardous Materials on or near the Trackage
Rights Lines, to the extent such Losses arise out of,
or are related or attributable to, any of Buyer's
activities or operations on or near the Trackage
Rights Lines, except to the extent such Losses are
proximately caused by Seller's negligence.
(4) Arbitration of Allocation of Liability Between Buyer
and Seller. Any dispute between Seller and Buyer as
to allocation between them of Losses for which both
Seller and Buyer are responsible under the terms of
this Paragraph 6 shall be settled by binding
arbitration in accordance with the rules of the
American Arbitration Association.
(5) Buyer To Comply With Hazardous Materials Laws. Buyer
agrees to comply with all federal, state and
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local laws, regulations and rules concerning handling
and disposal of Hazardous Materials.
(6) Liability Remedies and Obligations Are Exclusive.
Buyer and Seller agree that the remedies and
obligations set forth in this Paragraph 6 shall be
exclusive remedies and obligations of each one to
the other with respect to any Losses relating to the
release or existence of Hazardous Materials on or
near the Rail Line.
(e) Seller to Deliver Property Records to Buyer. Seller shall
deliver to Buyer, on or soon following the date of Closing, originals or copies
of whatever records, prints, archival information, or other evidence Seller
locates in a reasonable search of Seller's records, which bears upon the use
of, maintenance, or title to the real estate comprising the Rail Line during
the time the Rail Line was operated by Seller as a common carrier line of
railroad. If, at any time after Closing, Seller locates any other documents
which bear upon the use of, maintenance, or title to the real estate comprising
the Rail Line, Seller promptly shall provide originals or copies of those
documents to Buyer.
7. Liability Insurance.
(a) For so long as Buyer conducts any activities on any portion of
the Trackage Rights Lines, Buyer shall maintain a comprehensive general form of
insurance covering liability in
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connection with any of Buyer's activities or operations on or near the Trackage
Rights Lines, including but not limited to Public Liability, Personal Injury
and Property Damage, Federal Employers Liability Act Liability, Bill of Lading
and Foreign Rolling Stock Liability, and Contractual Liability, with such
limits, deductibles and exclusions as Seller may agree are satisfactory,
provided however, that: (i) such limits shall not be less than $2 million per
occurrence, or $4 million in the aggregate; and (ii) policy terms shall not
exclude or limit coverage where activities or operations are on or near
railroad tracks. Seller shall be named as an ADDITIONAL INSURED on such
liability insurance policy. Such liability insurance must be purchased from an
insurance company licensed to do business in Washington, and possessing a
current Best's Insurance Guide Rating of B and Class X, or better.
(b) Buyer shall provide Seller with evidence of its liability
insurance coverage at Closing, with copies of its insurance policies and any
amendments, as soon as they are available, and with evidence of continued
insurance coverage on January 1 and July 1 of each year. Buyer's failure to
provide such evidence shall entitle Seller, after Seller provides 30 days'
written notice to Buyer, to purchase such liability insurance, and withhold
from the divisions payment forwarded to Buyer the cost of this insurance.
8. Assignment; Seller's Right of First Refusal.
(a) Buyer shall not assign this Agreement, or any rights or
obligations under this Agreement, to another railroad, or any party
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or individual who at the time of the assignment is affiliated with or working
for another railroad, without the prior written consent of Seller. Any
assignee, including any successor in interest, of Buyer's or Seller's rights
under or property acquired by this Agreement, shall assume in writing all of
Buyer's or Seller's continuing and existing or thereafter arising obligations
under this Agreement, and under any then effective contract assigned by Seller
to Buyer, in whole or in part, in accordance with the terms of this Agreement,
which obligations are related to the property or rights involved in the
assignment.
(b) Any subsequent agreement by Buyer to sell either: (i) the
entire Rail Line; or (ii) any portion of the Rail Line route (i.e., any real
estate within 15 feet of any main line track) that is needed for through rail
freight movements via Oroville Subdivision Milepost 6.0 to or from any facility
that is located on or along any portion of the Rail Line with respect to which
Buyer does not have then effective authority from the STB, or any successor, to
abandon rail service, must contain the effective right for Seller to purchase
the Rail Line, or such portion thereof, from Buyer, on the same, or
substantially similar, basis as that set forth in the subsequent sale
agreement. Buyer shall deliver to Seller a copy of the executed subsequent
sale agreement within seven days following its execution. After receiving such
copy, Seller and Buyer then shall negotiate in good faith for thirty days
Seller's purchase of the Rail Line, or applicable portion thereof, from Buyer.
If Seller, at any time during these thirty days, offers in writing to
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purchase from Seller the Rail Line, or applicable portion thereof, on the same,
or substantially similar, basis as that set forth in the subsequent sale
agreement, Buyer, within seven days, shall accept such offer, and within thirty
days thereafter, shall convey such property to Seller.
9. Liens and Encumbrances.
The Rail Line is subject to two general mortgages of Seller: (i)
General Gold Bond Mortgage, dated January 1, 1921, between Great Northern
Railway Company and The First National Bank of the City of New York, as
supplemented; and (ii) Consolidated Mortgage, dated March 3, 1970, between
Burlington Northern, Inc., and Morgan Guaranty Trust Company of New York, as
supplemented (collectively, "Mortgages"). Seller shall deliver to Buyer on the
date of Closing executed releases of the Rail Line from the liens of the
Mortgages. Seller represents, warrants and covenants that, to the best of
Seller's current knowledge, other than the liens of the Mortgages, Seller has
not caused or suffered, and will not cause or suffer prior to the date of
Closing, any liens or encumbrances to be filed against the Rail Line which
would materially adversely affect Buyer's ability to conduct rail freight
transportation operations on the Rail Line on the day following the date of
Closing. Buyer agrees to take title to the Rail Line subject to all liens and
encumbrances on the Rail Line, except for the liens that would violate one or
more of Seller's representations and warranties in Paragraph 4(a) or this
Paragraph. Other than the Mortgages, the
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only encumbrances on the Rail Line of which Seller is aware are related to the
agreements identified in Part I of Exhibit C, attached hereto, and may encumber
the Rail Line on the terms and conditions set forth in those agreements. If,
other than the Mortgages, there is a lien for payment of money that exists as
of the date of Closing, and Buyer notifies Seller in writing that there is a
lien, Seller will release the lien within 30 days' of the date Seller receives
such notice, or indemnify Buyer for any harm to Buyer that results from
Seller's failure to so release any such lien.
10. No Pending Public Works Projects.
Currently, Seller is a party to no contracts with government agencies
involving street, road or highway crossings, or other public projects, along or
across the Rail Line where work is pending on the date of Closing.
11. Buyer to Offer to Hire Seller's Qualified Employees.
Buyer agrees to attempt to interview for employment positions on the
Rail Line all of Seller's employees who are eligible to work on the Rail Line
on the date of this Agreement, and to offer to hire before thirty days
following the date of Closing all of those employees who Buyer determines to be
qualified and needed by Buyer. Buyer promptly shall notify Seller of the name
of each of Seller's current employees who Buyer offers to hire, and also the
name of each of Seller's current employees who Buyer actually does hire.
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12. Closing.
(a) The closing of this transaction ("Closing") shall occur on
September 4, 1996, or a later date mutually agreeable to the parties.
(b) At Closing, Seller shall deliver to Buyer the following
documents:
(1) A sufficient number of original counterparts of an
executed Quitclaim Deed to the Rail Line, in
exact form as the Quitclaim Deed attached hereto as
Exhibit A, to enable Buyer to file an original
Quitclaim Deed in each county in which the real
property comprising the Rail Line is located;
(2) An original executed Bill of Sale in exact form as
the Bill of Sale attached hereto as Exhibit B;
(3) A copy of Seller's Articles of Incorporation and
By-Laws;
(4) Executed releases of the Rail Line from the liens of
the Mortgages; and
(5) An opinion of counsel for Seller to Buyer with
respect to those items represented by Seller to Buyer
in Paragraphs 4(a)(1), 4(a)(2), 4(a)(3), 4(a)(4),
4(a)(5) and 4(a)(8) of this Agreement.
(c) At Closing, Buyer shall deliver to Seller:
(1) A copy of Buyer's Certificate of Incorporation and
By-Laws;
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(2) A Certificate of Insurance establishing that Buyer
has effective liability insurance meeting the
requirements of Paragraph 7 of this Agreement; and
(3) An opinion of counsel for Buyer to Seller with
respect to those items represented by Buyer to
Seller in Paragraphs 4(b)(1), 4(b)(2), 4(b)(3),
4(b)(4), 4(b)(5) and 4(b)(7) of this Agreement.
(d) At Closing, Buyer shall deliver to Seller or APEX, as
designated by Seller, the purchase price of $7,800,000, as set forth in
Paragraph 2 of this Agreement.
13. Proration.
Real estate taxes, prepaid rentals, utilities, and other income and
fees attributable to the Rail Line interests transferred to Buyer under the
terms of this Agreement, shall be prorated between Seller and Buyer in such
manner as to allocate to Seller all income, taxes and expenses attributable on
or prior to the date of Closing, and to allocate to Buyer all income, taxes
and expenses attributable after the date of Closing. The sum paid by Buyer to
Seller or Apex at Closing shall not be adjusted based on this proration, but
payment settling in full all prorated items shall be made no later than 60 days
following the date of Closing.
14. Interchange.
(a) Buyer and Seller shall interchange rail freight cars and
equipment to and from each other at the Wenatchee,
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Washington rail yard. Each yard track at the Wenatchee,
Washington rail yard shall be referenced hereinafter as
"Interchange Track".
(b) Cars and their contents delivered by one party to the other on
an Interchange Track shall be deemed to be in the possession
of the receiving party as of the time they are placed
on the Interchange Track and uncoupled from the delivering
party's train or engine, except that if any such car is
rejected by the receiving party under the Interchange Rules of
the Association of American Railroads ("AAR") or any successor
rules, the refused car shall be deemed to remain in the
possession of the delivering party until that car is accepted
by the receiving party.
15. Car Hire Costs.
The party in possession of any car shall be responsible for all car
hire costs, per diem expenses and mileage allowances payable with respect to
such car, for any per diem charges for trailers or containers carried by such
car, or for any equipment use charges applicable to any RoadRailer equipment or
similar carless intermodal technology, except that Seller agrees that Buyer
shall be entitled to five days' per diem relief in connection with all loaded
and empty rail equipment moving in rail freight transportation service and
interchanged between Buyer and Seller on an Interchange Track. Seller shall
make reasonable efforts to make
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freight cars available at Buyer's request on an Interchange Track as needed by
Buyer, on a non-discriminatory basis between Seller's car needs on similar rail
lines and Buyer's car needs.
16. Obligations are Continuing.
The representations, warranties and obligations of Buyer and Seller in
this Agreement are continuing and survive the Closing. Terms of continuing
obligations in this Agreement are subject to amendment only by a written
contract signed by both Buyer and Seller, or their respective successors or
assignees.
17. Seller's Authority to Establish Through Routes and Offer
Through Routes.
Buyer and Seller agree that, for ninety-nine years following the date
of Closing, Seller shall have authority to establish through routes and offer
through freight rates via through routes involving both Buyer and Seller with
interchange between Buyer and Seller at Wenatchee, Washington. Seller shall
specify junctions and routes for all such traffic, effective the day following
the date of Closing. For this same ninety-nine year period, Buyer
automatically concurs in all such through rates established by Seller, whether
for present or future freight traffic, so long as Buyer shall receive for
transporting the traffic the division of revenues that is set forth in
Paragraph 18 of this Agreement.
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18. Division of Revenue.
(a) Buyer and Seller agree that, for so long as Seller establishes
through freight rates for interline freight transportation service involving
both Buyer and Seller, the through revenue accruing on all existing and future
carload traffic movements interchanged between Buyer and Seller at Wenatchee,
Washington to or from existing and future rail destinations or origins on or
along the Rail Line, shall be divided between Buyer and Seller on the following
basis:
For each such carload of freight, Buyer shall receive $345.00 per car
from Seller.
(b) For twenty-five (25) years following the date of Closing, the
divisions set forth in Paragraph 18(a) shall be adjusted annually, commencing
as of October 1, 1997, based on 50% of the increase or decrease between the
third quarter of 1997 compared to the third quarter of 1996, in the Rail Cost
Adjustment Factor, unadjusted for productivity (or, if it ceases to be used,
some similar rail cost index), and thereafter as of each October 1, based on
the 50% of increase or decrease in the Rail Cost Adjustment Factor in the third
quarter of that year compared to the third quarter of the prior year. After
October 1, 2002, if this index does not adequately allow Buyer to recover its
reasonable cost increases, then Buyer and Seller shall meet to determine
whether to adjust Buyer's division, and if they cannot agree, an arbitrator
acceptable to both parties shall determine whether an additional increase is
appropriate and what that increase shall be.
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Similarly, after October 1, 2002, if this index overstates Buyer's reasonable
cost increases, or understates Buyer's reasonable cost reductions per car, then
Buyer and Seller shall meet to determine whether to adjust Buyer's division,
and if they cannot agree, an arbitrator acceptable to both parties shall
determine whether a reduction in Buyer's division is appropriate and what that
reduction shall be. Any decision of an arbitrator with respect to these issues
shall be binding on both Buyer and Seller. After October 1, 2021, further
changes in Buyer's divisions shall be subject to mutual agreement between Buyer
and Seller.
(c) Nothing in this Agreement shall preclude Seller and Buyer from
negotiating and mutually agreeing to different divisions than those specified
in this Paragraph. Divisions of revenue shall be paid by Seller only where
Seller is entitled to receive linehaul revenues for a shipment. Buyer shall
not impose any surcharge on any traffic without Seller's prior written consent.
19. Transfer of Operations.
All rail operations on the Rail Line shall be transferred from Seller
to Buyer at 12:01 a.m. on the day following the date of Closing.
20. Collection of Revenues.
(a) Seller shall submit freight bills or interline settlements
for, and shall collect, all revenues due for movements over the Rail Line of
all shipments moved through Wenatchee,
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Washington, on or before the date of Closing. Seller shall assess and collect
all charges due for all switching services performed on the Rail Line on or
before the date of Closing. Seller shall assess and collect all demurrage and
miscellaneous charges relating to car supply and other services performed on
the Rail Line on or before the date of Closing.
(b) Except as otherwise provided by freight transportation
contracts, all shipments which are interchanged between Buyer and Seller at
Wenatchee, Washington after 12:01 a.m. on the day following the date of Closing
shall be settled between Buyer and Seller on the basis of a modified junction
settlement plan, with Seller paying division of revenue payments to Buyer on a
weekly basis within five working days following the date on which Seller issues
the revenue waybill for the movement. Seller shall submit freight bills for,
and shall collect all revenues due for, shipments originating or terminating on
the Rail Line which are interchanged between Buyer and Seller at Wenatchee,
Washington, including all prepaid shipments that originate on the Rail Line,
and all collect shipments that terminate on the Rail Line, except for shipments
where Seller does not receive line haul revenues. Seller has the right to
grant, or refuse to grant, credit to any customer on the Rail Line concerning
any shipments interchanged between Buyer and Seller at Wenatchee, Washington.
Buyer shall assess and collect all charges due for all switching services
performed on the Rail Line at and after 12:01 a.m. on the day following the
date of Closing. Buyer shall assess and collect all
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demurrage and miscellaneous charges relating to car supply and other services
performed on the Rail Line at and after 12:01 a.m. on the day following the
date of Closing.
21. Transfer of Liabilities; Payment of Charges.
For the period before and including the day of Closing, Seller shall
be responsible for: (a) all common carrier rail operations, including car
supply, on the Rail Line; (b) any freight loss and damage claims attributable
to rail operations over the Rail Line; and (c) all car accounting and all car
hire and car mileage allowance payments relating to rail operations over the
Rail Line. At and after 12:01 a.m. on the day following the date of Closing,
Buyer shall be responsible for: (d) all common carrier rail operations,
including car supply, on the Rail Line; (e) any freight loss and damage claims
attributable to rail operations over the Rail Line; and (f) all car accounting
and all car hire and car mileage allowance payments relating to rail operations
over the Rail Line.
22. Electronic Data Interchange.
Within six months following the date of Closing, Buyer must have the
ability to send and receive electronically waybills, advanced consists, and
bills of lading; as well as Train II reports and passing/placement reportings
for performance purposes. Transaction reporting must be at industry standard
levels or one level behind.
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23. Assignment of Freight Transportation Contracts.
The parties agree that, notwithstanding any other provision of this
Agreement, the only freight transportation contracts to be assigned by this
Agreement are: (a) freight transportation contracts that apply to traffic
moving to or from facilities on or along the Rail Line; or (b) freight
transportation contracts with or involving shippers or receivers that have
facilities on or along the Rail Line, and which would apply to one or more
shipments to or from a facility on or along the Rail Line. Seller agrees to
send on the date of Closing to each shipper (or consignee), and each railroad,
who is a party to any freight transportation contract involving any existing or
potential freight traffic movement to or from any rail origin or destination on
the Rail Line, a Notice of Assignment, advising those parties of the following:
(c) the occurrence of this sale; (d) the fact that all rates and service (and
in the case of other railroads, revenue divisions) terms in each such contract
will remain the same; and (e) the fact that Buyer will replace Seller as the
party responsible for all rail service to be performed over all or any portion
of the Rail Line under each such contract. Buyer agrees that, as between Buyer
and Seller, Seller's actions in accordance with the terms of this Paragraph
will discharge in full Seller's responsibility to assign freight transportation
contracts to Buyer.
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24. Applicable Law.
This agreement shall be governed by and construed in accordance with
the laws of the State of Texas.
25. Effect of Waiver.
Any waiver by either Buyer or Seller, or failure of either Buyer or
Seller to insist upon full and complete performance by Seller or Buyer of its
obligations set forth in this Agreement, shall not constitute a waiver or
release of such party's right to insist upon full and complete performance of
any other obligations in this Agreement, or a waiver or release of such party's
right to insist upon full and complete performance of the obligations that were
waived or not enforced for periods prior to, or following, the waiver or
failure to insist upon full and complete performance. This Agreement shall be
amended or modified only by written agreement signed by the parties hereto.
26. Notices.
All notices and other communications under this Agreement shall be in
writing and deemed properly served if delivered by hand to the party addressed
or, if mailed, when received by the United States Postal Service in registered
or certified mail, postage prepaid, or, if sent by a national overnight service,
when received
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by the carrier service in a prepaid mailer, return receipt requested, addressed
as follows:
Seller: Mr. Jerome M. Johnson
Assistant Vice President
Asset Planning & Rationalization
Burlington Northern Railroad Company
777 Main Street
Fort Worth, Texas 76102-5384
Buyer: Mr. Gary 0. Marino
Chairman
Rail America, Inc.
301 Yamato Road, Suite 1190
Boca Raton, Florida 33431
with a copy to:
Mr. W. Graham Claytor
Senior Vice President
Rail America, Inc.
Pier 33 North
San Francisco, California 94133
Either party hereto may change its address or addressee to which notices are to
be given by providing written notice of the change to the other party.
27. Confidentiality.
Except to the extent that the terms of this Agreement are required to
be disclosed by the STB, by order of any court of competent jurisdiction or any
governmental agency, or by parties involved in financing this purchase, each
party to this Agreement shall not disclose the contents of this Agreement to
any other party, without the prior written consent of the other party to this
Agreement. Any party who learns of any of the terms of this Agreement shall be
required by the party to this Agreement who is disclosing the information not
to disclose those terms to any other
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party without the prior written consent of both parties to this Agreement. The
parties agree to a joint press release announcing this transaction at Closing.
28. Entire Agreement; Integration of Agreement.
This document, together with all Exhibits attached hereto, constitutes
the entire agreement between Buyer and Seller relating to this transaction.
Any other prior or contemporaneous agreements, understandings, representations
or statements, whether oral or written, relating to this transaction are merged
herein. The headings and titles to provisions in this Agreement are for
convenience only, and shall not be deemed to modify or affect the rights or
duties of Buyer or Seller. All rights and obligations of Buyer and Seller set
forth in this Agreement, or in any Exhibit attached hereto, are integral parts
of this Agreement. The consideration inducing Buyer and Seller to enter into
this Agreement includes all of the commitments by Buyer to Seller, and all of
the commitments by Seller to Buyer, as set forth in this Agreement, including
terms set forth in the Exhibits attached hereto.
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IN WITNESS WHEREOF, authorized representatives of the parties have
executed this agreement as of this 5th day of August, 1996.
BURLINGTON NORTHERN RAILROAD COMPANY
By: /s/ Douglas J. Babb
--------------------------------
Senior Vice President and
Chief of Staff
CASCADE AND COLUMBIA
RIVER RAILROAD COMPANY
By: /s/ Gary O. Marino
--------------------------------
Chairman
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