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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) JULY 26, 1999
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RAILAMERICA, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-20618 65-0328006
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(Commission File Number) (IRS Employer Identification No.)
5300 BROKEN SOUND BLVD., N.W., 2ND FLOOR
BOCA RATON, FLORIDA 33487
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(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code (561) 994-6015
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N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 26, 1999, RailAmerica, Inc. (the "Company") acquired
approximately 98% of the outstanding shares of RaiLink Ltd. ("RaiLink"). Through
its wholly owned Canadian subsidiary, RL Acquisition Corp., the Company
commenced an all cash bid in May 1999 for all of the common shares of RaiLink at
a price of Cdn. $8.75 per share pursuant to a Pre-Acquisition Agreement dated
May 17, 1999 between the Company and RaiLink (the "Agreement"). RaiLink had
approximately 8.36 million common shares outstanding on a fully diluted basis,
giving the transaction an equity value of approximately Cdn. $73.2 million
(approximately U.S.$49.8 million at June 30, 1999). As more than 90% of the
outstanding shares were acquired under the offer, the Company intends to acquire
the remainder of the shares pursuant to the compulsory acquisition provisions of
applicable Canadian law.
RaiLink is a regional railway company based in Edmonton, Alberta and
provides freight transportation services to the national railways of Canada and
to a wide variety of shippers. RaiLink and its 26.3% owned affiliate, Quebec
Railway Corporation, currently operate 11 regional railways covering
approximately 2,500 miles of track in Alberta, the Northwest Territories,
Ontario, Quebec and New Brunswick.
A portion of the funding for the transaction was provided by a
consortium of banks with National Bank of Canada, as agent, through an increase
in the Company's revolving line of credit (the "Loan Facility") from $85 million
to $125 million.
The foregoing information contained in this Form 8-K with respect to
the Agreement and the Loan Facility is qualified in its entirety by reference to
the complete texts of the Agreement and the Loan Facility, which are filed
herewith as exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
It is currently impracticable to provide the financial
information required pursuant to Item 7(a) prior to the due date of
this Report. This Report will be amended within 60 days of the date
this Report is filed to include such financial information.
(b) Pro Forma Financial Information.
It is currently impracticable to provide the pro forma
financial information required pursuant to Item 7(b) prior to the due
date of this Report. This Report will be amended within 60 days of the
date this Report is filed to include such pro forma financial
information.
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(c) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
2.1 Pre-Acquisition Agreement dated May 17, 1999 between RailAmerica, Inc. and RaiLink Ltd.
10.1 Amended and Restated Loan Agreement dated July 22, 1999 by and among RailAmerica, Inc., certain
of its subsidiaries, National Bank of Canada, as Agent, and each other financial institution
executing and delivering a signature page thereto.
</TABLE>
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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 thereunto duly authorized.
RAILAMERICA, INC.
Dated: August 6, 1999 By:/s/ Gary O. Marino
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Name: Gary O. Marino
Its: Chairman of the Board, President and
Chief Executive Officer
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EXHIBIT 2.1
THIS PRE-ACQUISITION AGREEMENT entered into this 17th day of May, 1999
BETWEEN:
RAILAMERICA INC., a corporation under the laws of Delaware,
(hereinafter called the "Offeror")
and
RAILINK LTD., a corporation under the laws of Alberta,
(hereinafter called the "Company")
RECITALS
WHEREAS:
1. The board of directors of the Company wishes to encourage the
Offeror to propose an acquisition transaction to the shareholders of the
Company;
2. The board of directors of each of the Offeror and the Company
believe that it is in the best interests of their respective corporations and
shareholders that the Offeror and the Company combine their business interests
with the result that the Company shall be owned by the Offeror or the
shareholders of the Offeror. This combination shall be effected through an offer
by the Offeror to purchase all outstanding shares of the Company on the basis of
$8.75 (cash) for each share of the Company as described in Section 1.1 and any
second stage transaction as described in Section 1.5.
3. The Offeror is willing to make an offer subject to the terms and
conditions of this Agreement.
NOW THEREFORE IN CONSIDERATION of the mutual covenants hereinafter set
out, the parties hereby agree as follows:
ARTICLE 1
THE OFFER
1.1 THE OFFER
Subject to the terms and conditions of this Agreement, the Offeror
agrees to mail on or before May 28, 1999 to the holders of shares of
the Company an offer to purchase all of the outstanding shares
(including any associated rights issued pursuant to the Company's
Shareholder Rights Plan Agreement, as may be amended from time to time,
hereinafter called the "Rights" and together with the shares called the
"Shares" and the holders of Shares are hereinafter called
"Shareholders") on the basis of $8.75 for each share of the Company,
subject to the terms and conditions set out in Schedule "A" to this
Agreement (the "Offer"). The price per share to be paid by the Offeror
shall be subject to adjustment upon the occurrence of certain events as
described in Schedule "A" hereto. The Offeror further agrees that it
will not amend the terms of the Offer other than, at its option, to
increase the consideration payable thereunder or to extend the expiry
thereof, except with the prior consent of the Company.
1.2 COMPANY APPROVAL OF THE OFFER
(a) The Company represents that its board of directors, upon
consultation with its advisors and upon unanimous
recommendation of any special committee of the board of
directors established for the purpose of considering the
transaction contemplated by this Agreement, has determined
unanimously that:
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(i) the Offer is fair to the Shareholders and is in the
best interests of the Company and the Shareholders;
(ii) the board of directors will recommend that
Shareholders accept the Offer; and
(iii) this Agreement is in the best interests of the
Company and the Shareholders.
(b) The Company represents that the board of directors has
received an opinion from the Company's financial advisors that
the consideration to be offered under the Offer is fair from a
financial point of view to the Shareholders.
1.3 COMPANY COOPERATION
(a) The Company covenants to cooperate with the Offeror, to take
all reasonable action to support the Offer and to provide the
Offeror with a draft copy of any Directors' Circular issued by
the Company, from time to time, prior to the mailing thereof,
on a confidential basis, and to provide the Offeror with a
reasonable opportunity to review and provide comments thereon.
(b) As soon as practicable following the date hereof and in any
event prior to the close of business on May 21, 1999, the
Company shall cause to be delivered to the Offeror a list (in
paper and electronic form, if available) made up to a date not
more than two business days before the date hereof setting out
the matters set forth in paragraphs 21(5)(a) through (c) of
the Business Corporations Act (Alberta) together with
supplemental lists (as contemplated in subsection 21(6) of
such Act), and lists of holders of options or other rights to
acquire Shares, as and when reasonably requested by the
Offeror, until the expiry of the Offer. The Company shall
permit and request its registrar and transfer agent to assist
the Offeror and the Offeror's depositary under and in
connection with the Offer and shall from time to time furnish
the Offeror with such additional information, including
updated or additional lists of shareholders, mailing labels
and lists of securities positions, and other assistance as the
Offeror may reasonably request in order to be able to
communicate the Offer to the Company's Shareholders, at the
Offeror's expense, and to such other persons as are entitled
to receive the Offer under applicable laws.
1.4 JOINT PRESS RELEASE AND PUBLIC DISCLOSURE
The parties agree to issue jointly a press release as soon as
practicable in the form attached as Schedule "B" to this Agreement. The
parties shall consult with each other with respect to any public
disclosure regarding this Agreement, the Offer and any related matter
and neither party shall issue any press release or other public
statement relating to or referring to this Agreement, the Offer
(including the terms thereof) and any related matters without the prior
written consent of the other party hereto, unless such party is
compelled by law to do so, including pursuant to public disclosure
requirements under applicable securities legislation, and then only
with prior written notice to the other party.
1.5 POST-OFFER COVENANTS
If the Offeror takes up and pays for Shares pursuant to the Offer, the
Offeror and the Company agree to use all reasonable commercial efforts
to enable the Offeror to acquire the balance of the Shares as soon as
practicable after completion of the Offer by way of compulsory
acquisition, arrangement, amalgamation or other type of acquisition
transaction carried out for consideration per Share equal to the
consideration per share offered under the Offer or such other amount as
may be required by a court of competent jurisdiction.
1.6 OUTSTANDING STOCK OPTIONS
(a) The Company agrees and represents that its board of directors
has determined unanimously to use its and their respective
reasonable efforts to encourage all persons holding options to
purchase Shares pursuant to the Company's stock option plan
and other compensation arrangements or otherwise, to exercise
their options prior to the expiry of the Offer and to tender
all Shares issued in connection therewith to the Offeror. The
Company further agrees and represents that the board of
directors of the Company has also resolved and has authorized
and
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directed the Company to, subject to any required regulatory or
stock exchange approval, cause the vesting of option
entitlements under its stock option plan and other
compensation arrangements to accelerate prior to or concurrent
with the expiry of the Offer, such that all outstanding
options to acquire Shares are exercisable prior to or
concurrent with the expiry of the Offer, and to arrange for
all Shares that are fully paid thereunder to be distributed to
those persons entitled thereto so as to be able to be tendered
into the Offer and to thereafter satisfy all other obligations
of the Company under such plans or, upon the acquisition by
the Offeror of Shares pursuant to the Offer, to cause all
entitlements under such plans to terminate upon the payment of
an amount in respect of each outstanding option equal to the
amount, if any, by which $8.75 per Share exceeds the per share
exercise price of the option.
(b) The Offeror and the Company agree that the Company may agree
with holders of options that, in lieu of such optionholders
exercising the options, the Company before the expiry of the
Offer will enter into an agreement to pay to such
optionholders immediately after the expiry of the Offer the
amount, if any, by which $8.75 per Share exceeds the per share
exercise price of the option, in exchange for the termination
of the option. Upon the expiry of the Offer, the Company shall
take such steps or make such arrangements as are necessary to
(i) ensure that all then outstanding options are exercised or
terminated and (ii) terminate the Company's stock option plan.
1.7 SHAREHOLDER RIGHTS PLAN
(a) The Company covenants to take all action necessary pursuant to
the Shareholder Rights Plan to effect a waiver of the
application of the Shareholder Rights Plan as soon as
reasonably possible following receipt of written notice from
the Offeror advising that the Offeror intends to take up and
pay for the Shares deposited and not withdrawn under the
Offer, but in any event prior to the Effective Date, and to
ensure that the "Separation Time" (as defined in the
Shareholder Rights Plan) does not occur.
(b) The Company agrees and represents that its board of directors
has resolved to:
(i) not waive the application of the Shareholder Rights
Plan or to redeem any of the outstanding Rights or
take any action that would limit the application of
the Shareholder Rights Plan to any transaction other
than the Offer or a Superior Proposal that expires no
sooner than the Expiry Date; and
(ii) subject to receipt of any required approval from The
Toronto Stock Exchange, if requested by the Offeror
prior to the termination of this Agreement or receipt
by the Company of notice under subsection 1.7(a),
extend the Expiration Time (as defined under the
Shareholder Rights Plan) to a date not later than
August 15, 1999.
(c) The Offeror acknowledges and agrees that upon the application
of the Shareholder Rights Plan being waived in favor of the
Offer, the Shareholder Rights Plan shall be deemed to have
been waived in respect of any other Acquisition Proposal made
by means of a take-over bid circular to all holders of record
of Shares prior to the Expiry Date.
ARTICLE 2
COVENANTS OF THE COMPANY
2.1 ORDINARY COURSE OF BUSINESS
The Company covenants and agrees that, from the date of this Agreement
until the earlier of (x) the date on which this Agreement is terminated
and (y) such time as the Offeror's designees pursuant to Section 7.3
hereof shall constitute at least a majority of the Company's board of
directors (the "Effective Time"), unless the Offeror shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by
this Agreement:
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(a) the Company shall, and shall cause each of its direct and
indirect subsidiaries (collectively its "Subsidiaries") to,
conduct its and their respective business only in, and not
take any action except in, the usual, ordinary and regular
course of business and consistent with past practice;
(b) the Company shall not directly or indirectly do or permit to
occur any of the following (provided that the following shall
not limit the ability of the Company to comply with any
existing obligations which have been described or set forth in
the Disclosure Schedule attached hereto or in the material
referred to therein);
(i) issue, sell, pledge, lease, dispose of, encumber or
agree to issue, sell, pledge, lease, dispose of or
encumber (or permit any of its Subsidiaries to issue,
sell, pledge, lease, dispose of, encumber or agree to
issue, sell, pledge, lease, dispose of or encumber):
(A) any shares of its capital stock including
the Shares), or any options, warrants,
calls, conversion privileges or rights of
any kind to acquire any shares of, any
share. capital of the Company or any of its
Subsidiaries (other than pursuant to the
exercise of stock options or other
instruments outstanding on the date hereof
and set forth or described in the Disclosure
Schedule attached hereto or in the material
referred to therein), or
(B) except in the ordinary course of business,
any assets of the Company or any of its
Subsidiaries;
(ii) amend or propose to amend its articles or by-laws or
those of any of its Subsidiaries;
(iii) subdivide, consolidate or reclassify any outstanding
securities of the Company, or declare, set aside or
pay any dividend or other distribution payable in
cash, stock, property or otherwise with respect to
any outstanding securities of the Company;
(iv) redeem, purchase or offer to purchase (or permit any
of its Subsidiaries to redeem, purchase or offer to
purchase) any Shares or other securities of the
Company or any of its Subsidiaries;
(v) reorganize, amalgamate or merge the Company or any of
its Subsidiaries with any other person, corporation,
partnership or other entity, organization or division
whatsoever;
(vi) acquire or agree to acquire (by merger, amalgamation,
acquisition of shares or assets or otherwise) any
person, corporation, partnership or other business
organization or division or acquire or agree to
acquire any material assets other than in the
ordinary course of business;
(vii) incur or guarantee, or commit to incur or guarantee
any indebtedness for borrowed money or otherwise or
issue any debt securities except for the borrowing of
working capital not to exceed $2 million in the
aggregate;
(viii) make any loans, advances or capital contributions to,
or investments in, any other person or entity, other
than to a wholly-owned subsidiary of the Company or
otherwise in the ordinary course of business
(including in accordance with the Company's
established expense reimbursement policies)
consistent with past practice;
(ix) except as contemplated by the Company's capital
expenditure plan described or set forth in the
Disclosure Schedule attached hereto or in the
material referred to therein, make or agree to make
any new capital expenditures which in the aggregate
are in excess of $250,000;
(x) make or agree to make any tax election that could
reasonably be expected to have a material adverse
effect on the Company or settle or compromise any
material income tax liability;
(xi) make any change to its accounting methods, principles
or practices;
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(xii) pay, discharge or satisfy any material claims,
liabilities or obligations (whether absolute,
accrued, asserted or un-asserted, contingent or
otherwise), other than in the ordinary course of
business consistent with past practice, or fail to
pay or otherwise satisfy any material accounts
payable, liabilities or obligations when due and
payable; or
(xiii) except for transactions in the ordinary course of
business under existing contractual arrangements with
Quebec Railway Corporation or its subsidiaries and
consistent with past practice, engage in any
transactions with any of the Company's affiliates;
(c) the Company shall not, and shall cause each of its
Subsidiaries to not (otherwise than as may be contemplated in
section 1.6 of this Agreement or pursuant to existing offers
which are capable of acceptance and which are set forth or
described in the Disclosure Schedule attached hereto or in the
material referred to therein):
(i) enter into or modify any employment, severance,
collective bargaining, incentive stock option or
similar agreements, policies or arrangements with, or
grant any bonuses, salary increases, severance or
termination pay to, any officers or directors of the
Company other than pursuant to agreements, policies
or arrangements in effect (without amendment) on the
date hereof; or
(ii) in the case of employees who are not officers or
directors, take any action other than in the
ordinary, regular and usual course of business and
consistent with past practice (none of which actions
shall be unreasonable) with respect to the entering
into or modifying of any employment, severance,
collective bargaining or similar agreements, policies
or arrangements or with respect to the grant of any
bonuses, salary increases, stock options, pension or
other benefits, retirement allowances, deferred
compensation, severance or termination pay or any
other form of compensation or profit sharing or with
respect to any increase of benefits payable otherwise
than pursuant to agreements, policies or arrangements
in effect (without amendment) on the date hereof;
(d) the Company shall use its reasonable efforts to cause its
current insurance (or reinsurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized
standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies
for substantially similar premiums are in full force and
effect;
(e) the Company shall:
(i) use its reasonable efforts, and cause each of its
Subsidiaries to use its reasonable efforts, to
preserve intact their respective business
organizations and goodwill, to keep available the
services of its officers and employees as a group and
to maintain satisfactory relationships with
suppliers, agents, distributors, customers and others
having business relationships with it or its
Subsidiaries;
(ii) maintain all of its properties and assets in good
repair, order and condition;
(iii) maintain its books of account and records in the
usual, regular and ordinary manner, in accordance
with generally accepted accounting principles,
consistently applied;
(iv) comply with all laws, regulations and orders
applicable to it and the conduct of its business;
(v) maintain all existing operating authorities and
permits in good standing;
(vi) not take any action, or permit any of its
Subsidiaries to take any action that would render, or
that reasonably may be expected to render, any
representation or warranty made by it in this
Agreement untrue at any time prior to the Effective
Time if then made; and
(vii) promptly notify the Offeror orally and in writing of
any material adverse change in the normal course of
its or
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any of its Subsidiaries' businesses or in the
operation of its or any of its Subsidiaries'
businesses or in the operation of its or any of its
Subsidiaries' properties (in each case on a
consolidated basis), and of any material governmental
or third party complaints, investigations or hearings
(or communications indicating that the same may be
contemplated);
(f) the Company shall not settle or compromise any claim brought
by any present, former or purported holder of any securities
of the Company or any party to any agreement with the Company
in connection with the transaction contemplated by this
Agreement or the Offer prior to the Effective Time without the
prior written consent of the Offeror;
(g) the Company shall not enter into or modify any contract,
agreement, commitment or arrangement including those relating
to any of the matters set forth in this section 2.1;
(h) the Company shall ensure that its board of directors refrains
from taking any action pursuant to employment agreements or
similar agreements between the Company and any of its officers
or employees which would have the effect of permitting such
persons to terminate their employment with the Company and to
thereupon become entitled to receive payments from the
Company, as a result of the Offer or any other action
contemplated hereby; and
(i) the Company shall not authorize or commit or agree to take any
of the actions described in subsections 2.1(b), (c), (f) or
(g).
2.2 NON-SOLICITATION
(a) The Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the
Company or any of its Subsidiaries or otherwise,
(i) solicit or encourage (including by way of furnishing
information or entering into any form of agreement,
arrangement or understanding) the initiation of any
inquiries or proposal regarding any merger,
amalgamation, take-over bid, variation of a take-over
bid, sale of substantial assets, sale of treasury
shares or rights or interests therein or thereto or
similar transactions involving the Company or any
Subsidiaries of the Company (any of the foregoing
inquiries or proposals being referred to herein as an
"Acquisition Proposal"); or
(ii) provide any confidential information to, participate
in any discussions or negotiations relating to any
such transactions with, or otherwise cooperate with
or assist or participate in any effort to take such
action by, any person, corporation, partnership or
other entity, organization or division,
provided nothing contained in this section 2.2 or any other provision
of this Agreement shall,
(b) subject to compliance with section 2.2(c) and Article 3
hereof, prevent the Company or the board of directors of the
Company from considering, negotiating, approving and
recommending to the Shareholders an unsolicited bona fide
written Acquisition Proposal for which adequate financial
arrangements have been made, or are reasonably likely to, be
made, and which does not expire poor to the Expiry Date, which
the board of directors of the Company determines in good faith
(after consultation with its financial advisors) would, if
consummated in accordance with its terms, result in a
transaction financially superior to the Shareholders than the
transaction contemplated by this Agreement (any such
Acquisition Proposal being referred to herein as a "Superior
Proposal"); or
(i) prevent the Company and its officers and directors
from complying with Section 138 of the Securities Act
(Alberta) and similar provisions under applicable
Canadian securities laws relating to the provision of
directors' circulars and making appropriate
disclosure with respect thereto to the Company's
shareholders.
(c) The Company shall, and shall cause its officers, directors,
employees, representatives and agents to, immediately cease
and cause to be terminated any existing discussions or
negotiations with any parties (other than the Offeror) with
respect to any potential Acquisition Proposal.
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(d) The Company shall notify the Offeror within one business day
of receiving any request for confidential information or any
Acquisition Proposal or inquiry with respect to or which could
reasonably be expected to lead to any Acquisition Proposal,
the identity of the Person making such request, Acquisition
Proposal or inquiry and all of the terms and conditions
thereof. Such notification shall initially be made orally,
with subsequent written confirmation. In no event shall such
notification be made more than one day after the occurrence of
the relevant event. The Company will keep the Offeror fully
informed with respect to the status of such request,
Acquisition Proposal or inquiry.
(e) If the board of directors of the Company receives a request
for material non-public information from a party who proposes
to the Company a bona fide Acquisition Proposal and the board
of directors of the Company determines, after being so advised
in writing by the Company's financial advisors, that such
proposal is a Superior Proposal pursuant to section 2.2(a),
then, and only in such case, the Company may, subject to the
execution of a confidentiality agreement substantially similar
to that then in effect between the Company and the Offeror and
compliance by the Company with section 2.2(c) hereof, provide
such party with access to information regarding the Company.
2.3 ACCESS TO INFORMATION
Subject to the existing letter agreement in respect of confidentiality
between the Company and the Offeror dated March 19, 1999, upon written
request for access from the Offeror, the Company shall (and shall cause
each of its Subsidiaries to) afford the Offeror's officers, employees,
counsel, accountants and other authorized representatives, advisors and
agents ("Representatives") access, during normal business hours from
the date hereof and until the expiration of this Agreement, to its
properties, books, contracts and records and all information relating
to it and its Subsidiaries, as well as to its management personnel,
and, during such period,:
(a) the Company shall (and shall cause each of its Subsidiaries
to) furnish promptly to the Offeror all information concerning
it and its business, properties and personnel as the Offeror
may reasonably request; and
(b) cause the information in the data room established by the
Company at the offices of Fraser Milner and reviewed by the
Offeror and its representatives to be maintained intact.
2.4 NOTIFICATION OF CERTAIN MATTERS
The Company and the Offeror shall each give notice to the other of:
(a) the occurrence or failure to occur of any event, which
occurrence or failure would cause or may cause any
representation or warranty on its part contained in this
Agreement to be untrue or inaccurate in any respect at any
time from the date hereof to the Effective Time; and
(b) any failure of the Company or the Offeror, or any of its
respective officers, directors, employees, representatives or
agents, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
2.5 OTHER ACTIONS
Between the date of this Agreement and the Effective Time, the Company
and the Offeror shall use their commercially reasonable efforts to
cause the conditions of the Offer set forth in Schedule "A" hereto to
be satisfied. Except as contemplated by Section 2.2, the Company and
the Offeror shall not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that could reasonably
be expected to:
(a) result in any of the representations and warranties of such
party set forth in this Agreement becoming untrue;
(b) result in any of the conditions set forth in Schedule "A" not
being satisfied; or
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(c) prevent or delay consummation of the transactions contemplated
by this Agreement or to otherwise prevent the Company from
timely performance of its obligations under this Agreement.
ARTICLE 3
FEES AND OTHER ARRANGEMENTS
3.1 ACQUISITION PROPOSAL FEE
Provided that there is no material breach by the Offeror of its
obligations under this Agreement, if at any time after execution of
this Agreement:
(a) the board of directors of the Company has failed to make,
withdrawn or changed any of its recommendations or
determinations referred to in sections 1.2 or 1.7 in a manner
adverse to Offeror or shall have resolved to do so prior to
the expiry of the Offer provided that such failure, withdrawal
or change is not due to the Offeror's failure to perform its
obligations under this Agreement;
(b) during the period from the date of this Agreement to the
Expiry Date a bona fide Take-over Proposal is made to the
Shareholders or the Company and at least 50% of the Shares of
the Company (including any Shares then held by the party
making the Take-over Proposal) have been taken up and paid for
pursuant to the Takeover Proposal or the Take-over Proposal
otherwise results in a merger, consolidation, amalgamation or
other business combination involving the Company or any
acquisition in any manner of a 50% or greater equity or
beneficial interest in, or a material amount of the assets of,
the Company (whether prior to the Expiry Date or within a
three (3) month period thereafter);
(c) a bona fide Take-over Proposal that constitutes a Superior
Proposal is made to the Shareholders or the Company and the
Company elects to terminate this Agreement in accordance with
section 8.1 (e) hereof;
(d) the board of directors shall have failed to reaffirm its
recommendation of this Offer by press statements within five
(5) days after the public announcement or commencement of any
Take-over Proposal or in a Directors' Circular within ten (10)
days after the mailing of any such Take-over Proposal;
(e) during the period from the date of this Agreement to the
Effective Time the Company breaches any of its
representations, warranties or covenants made in this
Agreement which breach would have a Material Adverse Effect on
the Company or have a material adverse effect on the
completion of the Offer;
(f) during the period ending three (3) months after the
termination of this Agreement other than,
(i) by consent of the parties pursuant to and in
accordance with section 8.1 (a); or
(ii) by the Offeror pursuant to and in accordance with
section 8.1(e) because of the failure to satisfy one
of the conditions set forth in section 4 of Schedule
"A" hereto (other than section 4(i) thereof);
the Company or any of its subsidiaries shall enter into an
agreement to consummate, and shall thereafter (whether or not
prior to three (3) months after the termination of this
Agreement) consummate, all or any portion of a Take-over
Proposal,
(the occurrence of any such event being referred to as a "Fee Event"),
then the Company shall pay to the Offeror an amount equal to the
aggregate of:
(i) the Transaction Expenses; and
(ii) 4.00% of the greater of (A) $71,500,000 or (B) the
value (calculated based on the offer price per share
of any such proposal multiplied by the number of
Shares outstanding on
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<PAGE> 9
a fully diluted basis (but excluding any options not
then in-the-money)) of the Take-over Proposal having
the highest value from time to time considered by the
Company, whether or not there is a Take-over
Proposal. Such payment shall be made in immediately
available funds to an account designated by the
Offeror. In the event there is more than one
Take-over Proposal, or a Take-over Proposal is
proposed to the Company for the first time after a
fee has been paid to the Offeror pursuant to this
section, then the fee required to be paid hereby
shall be recalculated and any incremental fee shall
be paid to the Offeror within one business day after
the event that gives rise to the recalculation;
provided that, except as provided above with respect
to any incremental fee, the Company shall only be
obliged to make one payment under this section 3.1
In the event that any Take-over Proposal is for consideration other
than all cash, then the value of that Take-over Proposal shall be as
determined by agreement by the financial advisors to the Offeror and
the Company, or failing such agreement, the value of the Take-over
Proposal shall be calculated to be the greater of:
(i) $71,500,000; and
(ii) if the non-cash consideration consists of securities
listed on a stock exchange or other stock quotation
system, the aggregate of the amount of cash offered
in connection with such Take.-over Proposal and the
value of the non-cash consideration being offered,
valued on the basis of the weighted average of the
closing price of the relevant securities on such
stock exchange or system for the 20 business days
preceding the day the public announcement of the
Take-over Proposal is made.
3.2 RIGHT OF FIRST REFUSAL
The Company covenants that it will not enter into any agreement
regarding a Take-over Proposal (the "Proposed Agreement") without
providing the Offeror with an opportunity to amend this Agreement to
provide for substantially similar terms to those included in the
Proposed Agreement. In particular, the Company covenants to provide the
Offeror with a copy of any Proposed Agreement as executed by the party
making the proposal, at least 48 hours prior to its proposed execution
by the Company. In the event the Offeror agrees to amend this Agreement
as provided above, the Company covenants not to enter into the Proposed
Agreement.
3.3 OTHER FEES
If the Company breaches any of its covenants, representations or
warranties hereunder or otherwise fails to perform any of its
obligations hereunder in any material respect, the Company shall pay to
the Offeror an amount equal to the Offeror's Transaction Expenses. If
the Offeror breaches any of its covenants, representations or
warranties hereunder or otherwise fails to perform any of its
obligations hereunder in any material respect, the Offeror shall pay to
the Company an amount equal to the Company's Transaction Expenses.
Notwithstanding the foregoing, in the event that either party is
required to file suit to seek payment of any amount due to it
hereunder, and it ultimately succeeds on the merits, such party shall
be entitled to all expenses, including reasonable attorneys' fees,
which it has incurred in enforcing its rights hereunder.
3.4 LIMITATION
Nothing contained in this Article 3, including the payment of any
amount under section 3.1 or 3.3, shall, however, relieve or have the
effect of resulting in relieving any party in any way from liability
for damages incurred or suffered by a party as a result of a breach of
this agreement by a party acting in bad faith intended and designed to
result in the conditions precedent to this Agreement not being
satisfied.
3.5 DEFINITIONS
In this Article 3 and in the Schedules to this Agreement:
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<PAGE> 10
(a) "Material Adverse Effect" and "Material Adverse Change" means
an effect or change, respectively, in each case which is
materially adverse to the business, assets, properties,
condition (financial or otherwise), results of operations or
prospects of the Company and its Subsidiaries, taken as a
whole; provided that a Material Adverse Effect or Material
Adverse Change shall not include any adverse effect or change
in the Company's operations resulting from changes in general
economic conditions generally affecting the industries in
which the Company operates; and
(b) "Take-over Proposal" means any take-over bid for 50% or more
of the issued and outstanding Shares or any proposal or offer
for a merger, consolidation, amalgamation or other business
combination involving the Company or any proposal or offer to
acquire in any manner a 50% or greater equity or beneficial
interest in, or a material amount of the assets of, the
Company, other than pursuant to the Offer.
3.6 TRANSACTION EXPENSES
As used in this Agreement, the term "Transaction Expenses" means all
reasonable out-of-pocket expenses and fees actually incurred or accrued
by the Offeror or the Company, as the case may be, or on its behalf in
connection with this Agreement, the Offer and the other transactions
contemplated hereby (including, without limitation, all fees and
expenses of counsel, financial advisors, banks or other entities
providing financing to such party, accountants and other experts and
consultants to such party), and in connection with the negotiation,
preparation, execution, performance and termination of this Agreement
and the transactions contemplated hereby, provided that in no event
shall such expenses and fees exceed $150,000 in the aggregate.
3.7 FORM OF PAYMENTS
All payments made pursuant to this Articles 3 shall be paid within two
(2) days of demand in same day funds in accordance with written
instructions furnished by the payee to the payor at the time of
payment.
ARTICLE 4
COVENANTS OF THE OFFEROR
4.1 EMPLOYMENT AGREEMENTS
The Offeror covenants and agrees, and after the Effective Date will
cause the Company and any successor to the Company to agree, to honour
and comply with the terms of those existing employment and severance
agreements, plans or policies of the Company and its Subsidiaries which
are set forth or described in the Disclosure Schedule attached hereto
or in the material referred to therein.
4.2 DIRECTORS' AND OFFICERS' INSURANCE
The Offeror agrees to use reasonable efforts to secure directors' and
officers' liability insurance coverage for the Company's current and
former directors and officers on a six (6) year "trailing" or "run off"
basis from and after the Effective Date; provided that such insurance
coverage does not have an aggregate cost in excess of $250,000. If a
trailing policy is not available, then the Offeror agrees that for the
entire period from the Effective Date until three years after the
Effective Date, the Offeror will exercise its reasonable best efforts
to cause the Company or any successor to the Company to maintain the
Company's current directors' and officers' insurance policy or an
equivalent policy, subject in either case to terms and conditions, in
the aggregate, no less advantageous to the directors and officers of
the Company than those contained in the policy in effect on the date
hereof, for all present and former directors and officers of the
Company, covering claims made prior to or within three (3) years after
the Effective Date; provided however, that in the event the annual
premium required to maintain in effect the policy that is in effect on
the date hereof exceeds the annual premium currently paid by the
Company (which is acknowledged by the parties to be the sum of
$104,000), the Offeror (or other surviving corporation) shall obtain
such lesser coverage as may be obtained for the presently effective
premium. Further, the Offeror agrees that after the expiration of such
three (3) year period it will use reasonable
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<PAGE> 11
efforts to cause such directors and officers to be covered under its
then existing directors' and officers' insurance policy.
4.3 DIRECTORS' AND OFFICERS' INDEMNIFICATION
From and after the Effective Date, the Offeror shall indemnify, defend
and hold harmless, in each case to the full extent permitted under
applicable law and currently permitted in the by-laws of the Offeror,
each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Date, an officer or
director of the Company and any of its Subsidiaries, their respective
heirs, executors, administrators and other legal representatives (the
"Indemnified Individuals") against all losses, claims, damages, costs,
expenses, liabilities or judgements or amounts that are paid in
settlement of or in connection with any claim, action, suit, proceeding
or investigation based in whole or in part on or arising in whole or in
part out of the fact that such person is or was a director or officer
of the Company or any of its Subsidiaries, pertaining to any matter
existing or occurring at or prior to the Effective Date and whether
asserted or claimed prior to, or at or after, the Effective Date;
provided, however, that:
(a) the Offeror shall not be required to pay the fees and
disbursements of more than one Counsel for all Indemnified
Individuals in any single action unless there is a conflict of
interest between two or more of such Indemnified Individuals;
(b) the Offeror shall not be liable for any settlement effected
without its written consent (which consent will not be
unreasonably withheld or delayed); and
(c) such indemnification shall not be available to an officer or
director unless, in respect of the matter for which
indemnification is sought,
(i) he acted honestly and in good faith with a view to
the best interests of the Company; and
(ii) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he
had reasonable grounds for believing that his conduct
was lawful.
Notwithstanding the foregoing, the Offeror acknowledges and agrees
that:
(d) the Company is currently a party to an amended and restated
indemnification agreement (the "Existing Indemnity") in the
form attached as Schedule "E" to this Agreement, with each of
the directors and officers of the Company;
(e) the indemnity contained in this section 4.3 shall not derogate
from or lessen the obligations of the Company under the
Existing Indemnity; and
(f) the Offeror agrees to observe, adhere to and fulfill, and
cause the Company to observe, adhere to and fulfill, the
obligations of the Company under the Existing Indemnity as
though the Offeror was a party to the Existing Indemnity and
bound by the terms of the Existing Indemnity applicable to the
Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 REPRESENTATIONS
The Company hereby provides to the Offeror those representations and
warranties as set forth in Schedule "C" to this Agreement (and
acknowledges that the Offeror is relying upon those representations and
warranties in connection with entering into this Agreement). The
representations and warranties set forth in Schedule "C" hereto shall
not survive the Effective Time.
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<PAGE> 12
5.2 INVESTIGATION
Except as acknowledged in section 5.3 hereof, any investigation by the
Offeror and its directors, officers, employees, advisors or
representatives shall not mitigate, diminish or affect the
representations and warranties of the Company provided pursuant to this
Agreement.
5.3 ACKNOWLEDGEMENT
Except for such consents, waivers and approvals as may be required
under:
(a) the debenture granted by Central Western Railway Corporation
in favor of Canadian National Railway Company in respect of
the Lakeland & Waterways lines;
(b) any debenture granted by Central Western Railway Corporation
in favor of Canadian National Railway Company in respect of
the Coronado-Bonnyville lines;
(c) the business cooperation agreement between the Company,
RaiLink Canada Ltd. and Canadian National Railway Company in
respect of the Mackenzie Northern lines;
(d) the business cooperation agreement between the Company,
Central Western Railway Corporation and Canadian National
Railway Company in respect of the Coronado-Bonnyville lines;
and
(e) Article 11 of the amended and restated unanimous shareholders
agreement in respect of Quebec Railway Company,
(all as referred to in the Disclosure Schedule attached hereto), the
Offeror acknowledges and agrees that, based solely on the disclosure
made in the Disclosure Schedule attached hereto and the materials
referred to therein, it is not aware of any fact or circumstance that,
in its judgement, would cause the conditions under section 4(b) of
Schedule "A" to not be satisfied or to otherwise allow the Offeror to
avoid completing the Offer.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE OFFEROR
6.1 REPRESENTATIONS
The Offeror hereby represents and warrants to the Company as provided
in Schedule "D" to this Agreement (and acknowledges that the Company is
relying upon such representations and warranties in connection with the
entering into of this Agreement). The representations and warranties
set forth in Schedule "D" hereto shall not survive the Effective Time.
6.2 INVESTIGATION
Any investigation by the Company and its directors, officers,
employees, advisors or representatives shall not mitigate, diminish or
affect the representations and warranties of the Offeror provided
pursuant to this Agreement.
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ARTICLE 7
MUTUAL COVENANTS
7.1 CONSULTATION
The Offeror and the Company agree to consult with each other in issuing
any press releases or otherwise making public statements with respect
to the Offer or any other Acquisition Proposal and in making any
filings with any federal, provincial or state governmental or
regulatory agency or with any securities exchange with respect thereto.
Each party shall enable the other party to review and consent to all
such press releases prior to release thereof.
7.2 FURTHER ASSURANCE
Subject to the terms and conditions herein, the Offeror and the Company
agree to use their respective reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations,
to consummate the transactions contemplated by this Agreement and the
Offer. The Company and the Offeror will, and will cause each of their
respective Subsidiaries to, use their reasonable efforts to:
(a) obtain all necessary waivers, consents and approvals from
other parties to material loan agreements, leases and other
contracts or agreements (including, in particular but without
limitation, the agreement of any persons as may be required
pursuant to any agreement, arrangement or understanding
relating to the Company's operations),
(b) obtain all necessary consents, approvals and authorizations as
are required to be obtained under any federal, provincial or
foreign law or regulations with respect to this Agreement or
the Offer,
(c) lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby or by the
Offer, and
(d) fulfill all conditions and satisfy all provisions of this
Agreement and the Offer.
For greater certainty, the Company and the Offeror agree that an order
of a regulatory authority having jurisdiction which cease trades the
Rights issued pursuant to the Shareholder Rights Plan does not in and
of itself constitute a breach of this Agreement, or relieve either
party of its obligations hereunder.
7.3 COMPANY BOARD REPRESENTATION
Promptly upon the Minimum Condition being satisfied and the purchase by
the Offeror of Shares pursuant to the Offer, that number of directors
of the Company which applicable law permits to be replaced, upon their
resignation, by nominees of the Offeror without the calling of a
meeting of the Shareholders of the Company shall resign and shall be
replaced by nominees of the Offeror and the board of directors shall
take all steps necessary, in accordance with applicable law, to give
effect to the foregoing. Notwithstanding the foregoing, until the
Effective Time, the board of directors of the Company shall have at
least one director who is a director on the date hereof and who is not
a designee or officer, director, employee or affiliate of the Offeror
or officer or employee of the Company ("Independent Director").
Following the date hereof and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, extension
for the performance or waiver of the obligations of the Offeror by the
Company, or waiver of the Company's rights hereunder, shall require the
concurrence of the Independent Director.
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<PAGE> 14
ARTICLE 8
TERMINATION
8.1 TERMINATION
This Agreement may be terminated at any time prior to the first day
upon which the Offeror takes up and pays for all Shares deposited and
not withdrawn under the Offer (the "Effective Date"):
(a) by mutual written consent of the Offeror and the Company;
(b) by either the Offeror or the Company, if the Minimum Condition
or any other condition of the Offer has not been satisfied or
waived by August 15, 1999; provided however, that the right to
terminate this Agreement under this section 8.1(b) shall not
be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure to satisfy any such condition of the
Offer;
(c) by the Offeror, in the event that the fee contemplated in
Section 3.1 shall have been paid or become payable by the
Company to the Offeror in accordance with the terms thereof;
or
(d) by the Company if:
(i) the board of directors of the Company shall have
determined in good faith (after consultation with its
financial and legal advisors), that it is necessary
to terminate this Agreement to enter into a written
agreement with respect to or to consummate a
transaction constituting a Superior Proposal,
(ii) the Company shall have given notice to the Offeror
advising the Offeror that it has received a Superior
Proposal from a third party, specifying the material
terms and conditions of such Superior Proposal
(including the identity of the third party) and the
material terms and conditions of any agreements or
arrangements to be entered into in connection with a
Superior Proposal and that the Company intends to
terminate this Agreement in accordance with this
section 8.1 (d), and
(iii) either:
(A) the Offeror shall not have revised its Offer
within 48 hours after the date on which such
notice is deemed to have been given to the
Offeror hereunder, or
(B) if the Offeror within such period shall have
revised the Offer, the board of directors of
the Company, after receiving advice from its
financial advisor, shall have determined, in
its good faith reasonable judgement that the
third party's Acquisition Proposal is
superior to the Offeror's revised
Acquisition Proposal; provided that the
Company may not effect such termination
pursuant to this section 8.1(d) unless the
Company has complied with the provisions of
section 3.1 hereof contemporaneously with
such termination and tendered payment to the
Offeror of the Termination Fee and
Transaction Expenses that are due to the
Offeror pursuant to Article 3 hereof;
(e) by the Company, if the Offeror does not announce the Offer as
provided in section 1.4 or does not mail the Offer as provided
in section 1.1, provided in either case that no Fee Event has
occurred;
(f) by either the Company or the Offeror, in the event that the
other of them shall not have complied with or performed, in
all material respects, its covenants and obligations under
this Agreement to be complied with or performed at or prior to
the Expiry Date, or any of the representations and warranties
of the other of them under this Agreement are not true and
correct in all material respects at or prior to the Expiry
Date.
8.2 EFFECT OF TERMINATION
If this Agreement is terminated as provided in section 8.1 above, all
obligations of the parties hereto shall terminate, without any
liability or obligation on the part of the Company or the Offeror,
except obligations of the parties under section 2.3 (Access to
Information) and Article 3. No termination of this
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Agreement shall affect the obligations of the parties pursuant to the
letter agreement between the parties dated March 19, 1999, except to
the extent specified herein or therein.
ARTICLE 9
MISCELLANEOUS
9.1 AMENDMENT OR WAIVER
This Agreement may be amended, modified or superseded, and any of the
terms, covenants, representations, warranties or conditions hereof may
be waived, but only by written instrument executed by the Offeror and
the Company; provided, however, that either the Offeror or the Company
may in its discretion waive a condition herein which is solely for its
benefit without the consent of the other. No waiver of any nature, in
any one or more instances, shall be deemed or construed as a further or
continued waiver of any condition or any breach of any other term,
representation or warranty in this Agreement.
9.2 ENTIRE AGREEMENT
This Agreement and the documents referred to herein constitute the
entire agreement between the parties with respect to the subject matter
hereof and supersede all prior agreements, arrangements or
understandings with respect thereto, except the letter agreement
between the parties dated March 19, 1999.
9.3 HEADINGS
The insertion of descriptive headings in this Agreement are for
convenience of reference only and shall not control or affect the
meaning of construction of any provisions of this Agreement. Unless
otherwise stated, all references herein to sections and schedules are
to be sections and schedules in this Agreement.
9.4 NOTICES
All notices or other communications which are required or permitted
hereunder shall be communicated confidentially and in writing and shall
be sufficient if delivered personally, or sent by confidential
telecopier addressed as follows:
To the Offeror: Gary O. Marino
Chairman, President and CEO
Suite 1190, 301 Yamato Road
Boca Raton, Florida, USA 33431
Fax: (561) 994 - 3929
with a copy to: Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida, USA 33131
Attention: Gary M. Epstein
Fax: (305) 579-0717
with a copy to: Heenan Blaikie
1250 Rene-Levesque Blvd. West
Suite 2500
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<PAGE> 16
Montreal, Quebec
H3B 4Y1
Attention: Jean Clerk
Fax: (514) 846-3427
To the Company: RaiLink Ltd.
1165 Weber Centre
5555 Calgary Trail South
Edmonton, Alberta
T6H 5P9
Attention: Gordon J. Clanachan
President and CEO
Fax: (780) 439 - 5658
with a copy to: Fraser Milner
Banisters and Solicitors
2900 Manulife Place
10180 - 101 Street
Edmonton, Alberta
T5J 3V5
Attention: Robert R. Roth
Fax: (780) 423 - 7276
9.5 COUNTERPARTS
This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument but all
such counterparts together shall constitute one agreement.
9.6 EXPENSES
Except as otherwise provided in Article 3 hereof, each party will pay
its own expenses. The Offeror and the Company represent and warrant to
each other that, except for HSBC Securities in the case of the Company
and RBC Dominion Securities in the case of the Offeror, no broker,
finder or investment banker is entitled to any brokerage, finder's or
other fee or commission, or to the reimbursement of any of its
expenses, in connection with the Offer. The Company has provided to the
Offeror a correct and complete copy of all agreements between the
Company and each of its financial advisors as are in existence at the
date hereof. The Company covenants not to amend the terms of any such
agreement relating to the payment of fees and expenses or indemnities
without the prior written approval of the Offeror.
9.7 ASSIGNMENT
The Offeror may assign all or any part of its rights or obligations
under this Agreement to a direct or indirect wholly-owned subsidiary of
the Offeror, provided that if such assignment takes place, the Offeror
shall continue to be liable to the Company for any default in
performance by the assignee. This Agreement shall not otherwise be
assignable by either party without the prior written consent of the
other party.
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9.8 SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated and the
parties shall negotiate in good faith to modify the Agreement to
preserve each party's anticipated benefits under the Agreement.
9.9 CHOICE IN LAW
This Agreement shall be governed by, construed and interpreted in
accordance with the laws of the Province of Alberta. The parties hereby
agree to submit to the courts of the Province of Alberta for all
matters arising out of or in connection with this Agreement or any
transactions contemplated hereby.
9.10 CURRENCY
All references herein to monetary amounts refer to Canadian dollars
unless otherwise specified.
9.11 REMEDIES
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It
is accordingly unconditionally and irrevocably agreed that the parties
shall be entitled to an injunction or injunctions to remedy or prevent
noncompliance or breaches with the terms of this Agreement and to
enforce specifically the terms and provisions hereof in any court
having jurisdiction, without the requirement to post bond or other
security and without proof of actual damages in the event of any actual
or threatened non-compliance or breach; provided that such remedies
shall be in addition to, and not in substitution for, any other remedy
to which the parties may be entitled at law or in equity.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized as of the
date first written above.
RAILAMERICA INC.
Per: /s/ Hal Valeche
----------------------------
RAILINK LTD.
Per: /s/ Signature Illegible
----------------------------
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SCHEDULE "A"
TERMS OF THE OFFER
1. General Terms
The Offer shall be made by a circular bid prepared in compliance with
the Securities Act (Alberta) and other applicable provincial securities laws and
in accordance with applicable securities laws to United States Shareholders.
2. Expiry Date
The Offer shall be open until the date (the "Expiry Date") which is 21
days from the date of mailing of the Offer (provided that the Offeror may extend
such period of time in its sole discretion).
3. Offer Price
The Offer shall provide that the Offeror shall pay $8.75 for each Share
of the Company (including Shares which may become outstanding on the exercise of
options, warrants or other rights to purchase Shares (other than any rights
issued pursuant to the Shareholder Rights Agreement)("Shares"). In the event the
outstanding number of Shares is changed into a different number of shares or a
different class, by reason of any stock dividend, reclassification,
recapitalization, split, division, combination or exchange of shares, then the
purchase price per Share shall be correspondingly adjusted as necessary to
reflect such occurrence without increasing the aggregate purchase price to be
paid by the Offeror hereunder. The Offeror shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as the Offeror is required to deduct or
withhold with respect to any such payment under any provision of any applicable
state, local or foreign tax law. To the extent such amounts are so withheld and
paid over to the appropriate taxing authority or paying agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
by the Offeror to the applicable holder of the Shares.
4. Conditions of the Offer
Notwithstanding any other provision of the Offer, the Offeror shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, arid may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, at any time on or after the date of
this Agreement, and prior to the acceptance for payment of the Shares, if any of
the following conditions is not satisfied:
(a) at the expiry time there shall have been validly deposited
under the Offer and not withdrawn at least 66 2/3% of the
outstanding Shares (calculated on a fully diluted basis)
excluding Shares held by the Offeror and its associates and
affiliates and by persons whose Shares may not be voted as
part of the minority on any subsequent going private
transaction pursuant to Ontario Securities Commission Policy
9.1 and Quebec Securities Commission Policy Q-27 (the "Minimum
Condition");
(b) the Offeror shall have determined in its sole judgement that:
(i) no material right, franchise or license of the
Company or any of its Subsidiaries has been or may be
impaired or threatened to be impaired (which
impairment has not been cured or waived) or otherwise
adversely affected, whether as a result of the making
of the Offer, the taking up and paying for Shares
deposited under the Offer or otherwise which makes it
inadvisable for the Offeror to proceed with the Offer
and/or with the taking up and paying for the Shares
under the Offer, and
(ii) no covenant, term or condition of any instrument or
agreement of the Company or its Subsidiaries or by
which they or their assets are bound exists which
makes it inadvisable for the Offeror to proceed with
the Offer and/or with the taking up and paying for
the Shares under the Offer (including without
limitation any default, acceleration or other adverse
event that may ensue as a result of the Offeror
taking up and paying for the Shares under the Offer);
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<PAGE> 19
(c) no act, action, suit or proceeding shall have been taken
before or by any federal, provincial, state or foreign court
or other tribunal or governmental agency or other regulatory
or administrative agency or commission or by any elected or
appointed public official whether or not having the force of
law, and no law, regulation or policy shall have been
proposed, enacted, promulgated or applied, whether or not
having the force of law, which could reasonably be expected to
have the effect of:
(i) making illegal, or otherwise directly or indirectly
restraining or prohibiting or making materially more
costly, or adversely affecting the ability of the
Offeror to proceed with, the making of the Offer, the
acceptance for payment of, payment for, or ownership,
directly or indirectly, of some or all of the Shares
by the Offeror, the completion of a compulsory
acquisition or any subsequent acquisition transaction
or the consummation of any of the transactions
contemplated by the Offer;
(ii) prohibiting the ownership or operation by the Company
or any of its Subsidiaries, or by the Offeror,
directly or indirectly, of all or any material
portion of the business or assets of the Company, or
any of its Subsidiaries, on a consolidated basis, or
compelling the Offeror, directly or indirectly, to
dispose of or hold separate all or any material
portion of the business or assets of the Company, or
any of its Subsidiaries, on a consolidated basis, as
a result of the transactions contemplated by the
Offer;
(iii) imposing or confirming limitations on the ability of
the Offeror, directly or indirectly, effectively to
acquire or hold or to exercise full rights of
ownership of the Shares, including without limitation
the right to vote any Shares acquired or owned by the
Offeror, directly or indirectly, on all matters
properly presented to the Shareholders of the
Company, including without limitation the right to
vote any shares of capital stock of any Subsidiary
(other than immaterial Subsidiaries) directly or
indirectly owned by the Company;
(iv) requiring divestiture by the Offeror, directly or
indirectly, of any Shares or material assets of the
Company or its Subsidiaries; or
(v) materially adversely affecting the business,
financial condition or results of operations of the
Company and its Subsidiaries taken as a whole or the
value of the Shares to the Offeror;
(d) there shall not exist any prohibition at law against the
Offeror making the Offer or taking up and paying for all of
the Shares under the Offer or completing any compulsory
acquisition or any subsequent acquisition transaction;
(e) there shall not have occurred following the date of the
Pre-Acquisition Agreement, any change (or any condition, event
or development involving a prospective change) in the
business, operations, assets, capitalization, financial
condition, licenses, permits, rights, privileges, prospects or
liabilities (including without limitation any contingent
liabilities that may arise through outstanding, pending or
threatened litigation or otherwise), whether contractual or
otherwise, of the Company or any of its Subsidiaries which, in
the sole judgement of the Offeror, is or would be materially
adverse to the business or condition, financial or otherwise,
of the Company and its Subsidiaries considered on a
consolidated basis or to the value of the Shares to the
Offeror;
(f) the board of directors of the Company shall have redeemed all
outstanding Rights or waived the application of the Company's
Shareholder Rights Plan to the Offer;
(g) (i) the board of directors of the Company or any
committee thereof shall not have withdrawn or
modified in any manner adverse to the Offeror the
approval or recommendation of the Offer and shall not
have approved or recommended any proposal or any
other acquisition of Shares other than the Offer,
(ii) any corporation, partnership, person or other entity
or group, other than the Offeror, shall not have
entered into a definitive agreement or an agreement
in principle with the Company, with respect to a
take-over bid, tender offer or exchange offer,
acquisition of Shares other than pursuant to the
Offer, merger, sale of assets, amalgamation, plan of
arrangement, reorganization, consolidation, business
combination, recapitalization,
A-2
<PAGE> 20
liquidation, dissolution or similar transaction with
or involving the Company or any of its Subsidiaries,
or
(iii) the board of directors of the Company or any
committee thereof shall not have resolved to do any
of the foregoing;
(h) there shall not have occurred any breach by the Company of any
of the terms of the Pre-Acquisition Agreement that has had or
is reasonably likely to have a material adverse effect or
prevent or materially delay consummation of the transactions
contemplated by the Pre-Acquisition Agreement or the Offer or
any termination of the Pre-Acquisition Agreement pursuant to
the terms thereof, and all representations and warranties of
the Company thereunder shall be true and correct, in all
materials respects, on the Expiry Date as if made on such
date;
(i) it shall not have been publicly disclosed that beneficial
ownership of more than 25% of the outstanding Shares is held
or has been acquired by any corporation, partnership, person
or other entity or group of persons or entities, other than
the Offeror or any of the Offerors affiliates;
(j) all necessary governmental and regulatory consents, approvals
or exemptions necessary to enable the Offeror to acquire the
Shares pursuant to the Offer or a subsequent acquisition
transaction shall have been received on terms and conditions
satisfactory to the Offeror, acting reasonably, including,
without limitation any consent required under the Investment
Canada Act,
(k) the acquisition of an interest in controlled land as a result
of the Offeror's acquisition of the Shares shall be excluded
from the operation of the Regulations respecting the ownership
of Agricultural and Recreation Land in Alberta, pursuant to
section 14 of such regulations;
(l) there shall not have occurred any actual change (including a
proposal by the Minister of Finance of Canada to amend the
Income Tax Act (Canada) or regulations thereunder) or any
publicly stated administrative practice that directly or
indirectly increases materially the effective tax cost of, or
reduces the proceeds from, the sale or other disposition of
any assets or securities owned by the Company or any of its
Subsidiaries or that, in the judgement of the Offeror, has or
may have a material adverse effect on the Company and the
Subsidiaries (taken as a whole) or a material adverse
significance with respect to the financial condition and
prospects of the Offeror or in relation to the Offer and the
transactions contemplated thereby; and
(m) there shall not have occurred, developed or come into effect
or existence any event, action, state, condition or major
financial occurrence of national or international consequence
or any law, regulation, action, government regulation, enquiry
or other occurrence of any nature whatsoever which, in the
opinion of the Offeror, materially adversely or seriously
adversely affects or involves, or may materially adversely or
seriously adversely affect or involve, the financial markets
in Canada or the United States generally, or the financial
condition, business, operations, assets, affairs or prospects
of the Company and its Subsidiaries (taken as a whole).
The foregoing conditions are for the sole benefit of the Offeror and may be
asserted by the Offeror regardless of the circumstances giving rise to any such
condition or may be waived by the Offeror in whole or in part at any time and
from time to time in its sole and absolute discretion. The failure by the
Offeror at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right; the waiver of any such right with respect to
particular facts and circumstances; and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
A-3
<PAGE> 21
SCHEDULE "B"
JOINT PRESS RELEASE
FOR IMMEDIATE RELEASE
RaiLink Ltd.
TSE Symbol: RLK
RailAmerica, Inc.
NASDAQ NNM Symbol: RAIL
RAILINK LTD. AGREES TO CDN$8.75 PER SHARE ALL CASH BID BY RAILAMERICA, INC.
EDMONTON, ALBERTA, CANADA and BOCA RATON, FLORIDA, USA: May 17, 1999 -- RaiLink
Ltd. ("RaiLink") and RailAmerica, Inc. ("RailAmerica") announced today that they
have entered into an agreement pursuant to which RailAmerica will, on or prior
to May 28, 1999, commence an all cash bid for all of the common shares of
RaiLink at a price of Cdn. $8.75 per share. The agreement with RailAmerica is
the result of RaiLink's previously announced process to identify parties
interested in pursuing a transaction with the Company to enhance shareholder
value. Upon the unanimous recommendation of the independent special committee of
the Board of Directors established in connection with the Company's process, the
Board of Directors of RaiLink is unanimously recommending that shareholders
accept the offer.
Gordon Clanachan, President and Chief Executive Officer of RaiLink, said "we are
enthusiastic about the offer being made by RailAmerica. In addition to providing
an attractive price to our shareholders, the combined operations of RaiLink and
RailAmerica will provide further opportunities for growth and advancement in our
industry."
Gary O. Marino, RailAmerica, Inc. Chairman, President and CEO, said, "All of us
at RailAmerica look forward to the consolidation of RaiLink's fine portfolio of
Canadian rail properties with our North American rail operations. We believe
that there are significant synergies and benefits to be derived from a larger
core group of railroads. Upon completion of the transaction, RailAmerica will
operate more than 3,700 miles of railroads in North America and approximately
8,100 miles worldwide, making us one of the largest rail operators in the rail
industry."
The offer of Cdn. $8.75 per common share represents a substantial premium to the
RaiLink share price prior to the March 10, 1999 announcement that RaiLink had
commenced a process to identify parties interested in pursuing a possible
business combination. As of May 14, 1999, RaiLink had approximately 8.35 million
common shares outstanding on a fully diluted basis, giving the transaction a
potential equity value of approximately Cdn. $73.2 million.
The takeover bid offer will be made by a wholly-owned subsidiary of RailAmerica,
Inc. The offer will be open for acceptance for a period of 21 days from the date
of mailing of the offer, unless the offer is withdrawn or extended. The bid is
conditional upon, among other things, at least 66 2/3% (on a fully-diluted
basis) of the common shares of RaiLink being validly deposited under the offer
and not withdrawn, and the receipt of any required regulatory approvals.
In connection with the agreement, RaiLink has agreed not to initiate or seek a
competing transaction to RailAmerica's offer. RaiLink has also agreed to pay a
"break fee" equal to a minimum of Cdn. $2.86 million to RailAmerica in certain
specified circumstances, including if any other person acquires shares of
RaiLink carrying more than 50% of the outstanding voting rights.
HSBC Securities has provided RaiLink with an opinion that the consideration to
be offered under the offer by RailAmerica is fair, from a financial point of
view, to holders of common shares of RaiLink. RBC Dominion Securities has been
retained by RailAmerica as dealer manager for the offer.
B-2
<PAGE> 22
RaiLink is a publicly traded regional railway company based in Edmonton, Alberta
and provides freight transportation services to the national railways and to a
wide variety of shippers. RaiLink and its 26.3% owned affiliate, Quebec Railway
Corporation, currently operate eleven regional railways covering approximately
2,500 miles of track in Alberta, the Northwest Territories, Ontario, Quebec and
New Brunswick. RaiLink's common shares trade under the symbol RLK on the Toronto
Stock Exchange.
RailAmerica, Inc., a diversified international transportation company, operates
14 railroads over approximately 5,600 route miles in eight U.S. states,
Australia, Canada and the Republic of Chile. The Company holds a minority equity
interest in Australia's transcontinental passenger rail service and owns
Kalyn/Siebert, Inc., a specialty truck trailer manufacturer with production
facilities in Gatesville, Texas and Trois-Rivieres, Quebec, Canada.
This press release contains forward-looking statements regarding future events
and the future performance of the companies that involve risks and uncertainties
that could cause actual results to differ materially, including, but not limited
to, economic conditions, customer demand, increased competition in the relevant
market, and others. We refer you to the documents that RailAmerica files from
time to time with the Securities and Exchange Commission in the United States,
such as the Form 10-K, Form 10-Q and Form 8-K reports of RailAmerica, which
contain additional important factors that could cause its actual results to
differ from its current expectations and from the forward-looking statements
contained in this press release.
For information contact: RaiLink Ltd.
Gordon Clanachan
President and Chief Executive Officer
(780) 448-5855
RailAmerica Inc.
Wayne August
Director of Investor Relations
(561) 994-6015
B-2
<PAGE> 23
SCHEDULE "C"
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
1. ORGANIZATION
The Disclosure Schedule or the materials referred to therein sets forth, as of
the date hereof, a true and correct list of all of the Subsidiaries of the
Company, together with the jurisdiction of organization and qualification of
each Subsidiary and the percentage of the outstanding capital stock (or other
ownership interest) of each Subsidiary owned by the Company and each other
Subsidiary. Except as described or set forth in the Disclosure Schedule attached
hereto or in the material referred to therein, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
Each of the Company and its Subsidiaries, has been duly incorporated or formed
under applicable law, is validly existing and has full corporate or legal power
and authority to own its properties and conduct its businesses as presently
owned and conducted. All of the outstanding shares of capital stock and other
ownership interests of the Subsidiaries are validly issued, fully paid and
non-assessable and all such shares and other ownership interests owned directly
or indirectly by the Company are owned free and clear of all liens, claims or
encumbrances, and except as described or set forth in the Disclosure Schedule
attached hereto or in the material referred to therein, there are no outstanding
options, rights, entitlements, understandings or commitments (contingent or
otherwise) regarding the right to acquire any shares of capital stock or other
ownership interests in any of the Subsidiaries.
2. CAPITALIZATION
As of the date hereof, there are 8,043,746 Shares issued and outstanding, which
Shares constitute all of the issued and outstanding shares of the capital stock
of the Company. All of the Shares are validly issued, fully paid and
non-assessable and are not subject to preemptive rights. The Disclosure Schedule
or the materials referred to therein sets forth a complete and correct list, as
of the date hereof, of the holders of all options, warrants, stock appreciation
rights or other rights (excluding the Rights) relating to the issued or unissued
capital stock of the Company or any of its Subsidiaries, the number shares
subject to each such option, warrant, stock appreciation rights or other rights,
and the exercise prices thereof, As at the date hereof, up to a maximum of
427,284 Shares may be issued pursuant to outstanding stock option entitlements.
Except as set forth in the Disclosure Schedule or the materials referred to
therein, there are no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating the Company or any Subsidiary
to issue or sell any shares of any capital stock of the Company or any of its
Subsidiaries or securities or obligations of any kind convertible into or
exchangeable for any shares of capital stock of the Company, any Subsidiary or
any other person, nor is there outstanding any stock appreciation rights,
phantom equity or similar rights, agreements, arrangements or commitments based
upon the book value, income or any other attribute of the Company or any
Subsidiary. There are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares of
the Company's capital stock or any capital stock of any Subsidiary of the
Company.
3. AUTHORITY
The Company has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly authorized by the
board of directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or the transaction
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms subject to
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other laws relating to or affecting creditors' rights generally and to general
principles of equity. Except as described or set forth in the Disclosure
Schedule attached hereto or in the material referred to therein, the execution
and delivery by the Company of this Agreement and performance by it of its
obligations hereunder and the completion of the Offer and the transactions
contemplated thereby, will not:
(a) result in a violation or breach of, require any consent to be
obtained under or give rise to any termination rights under
any provision of:
C-1
<PAGE> 24
(i) its or any Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents,
including any shareholder agreement or any other
agreement or understanding with any party holding an
ownership interest in any Subsidiary;
(ii) any law, regulation, order, judgement or decree; or
(iii) any material contract, agreement, license, franchise
or permit to which the Company or any Subsidiary is
bound or is subject or is the beneficiary;
(b) give rise to any right of termination or acceleration of
indebtedness, or cause any indebtedness to come due before its
stated maturity or cause any available credit to cease to be
available; or
(c) result in the imposition of any encumbrance, charge or lien
upon any of its assets or the assets of any Subsidiary, or
restrict, hinder, impair or limit the ability of the Company
or any Subsidiary to carry on the business of the Company or
any Subsidiary as and where it is now being carried on or as
and where it may be carried on in the future.
4. ABSENCE OF CHANGES
Since March 31, 1999, and except as has been publicly disclosed in any document
filed with the Alberta Securities Commission:
(a) the Company and the Subsidiaries have conducted their
respective businesses only in the ordinary course,
(b) no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) material to the Company or
any Subsidiary has been incurred, and
(c) there has not been any material adverse change in the
financial condition, results of operations or businesses of
the Company or any Subsidiary.
5. BOOKS AND RECORDS
The corporate records and minutes books of the Company and the Subsidiaries have
been maintained in accordance with all applicable statutory requirements and are
complete and accurate in all material respects.
6. LITIGATION, ETC
Except as described or set forth in the Disclosure Schedule attached hereto or
in the material referred to therein, there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
relating to the Company or any Subsidiary or affecting any of their properties
or assets before any court or governmental or regulatory authority or body that,
if adversely determined, is likely to have a material adverse effect on the
Company or any Subsidiary or prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Offer, nor is the Company
aware of any basis for any such claim, action, proceeding or investigation.
Neither the Company nor any Subsidiary is subject to any outstanding order,
writ, injunction or decree that has had or is reasonably likely to have a
material adverse effect or prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Offer.
7. ENVIRONMENTAL
Except as described or set forth in the Disclosure Schedule attached hereto or
in the material referred to therein, neither the Company nor any Subsidiary:
(a) is aware of, or has received:
(i) any order or directive which relates to environmental
matters, and which requires any material work,
repairs, construction, or capital expenditures; or
C-2
<PAGE> 25
(ii) any demand or notice with respect to the material
breach of any environmental, health, or safety law
applicable to the Company or any Subsidiary,
including, without limitation, any regulations
respecting the use, storage, treatment,
transportation, or disposition of environmental
contaminants.
(b) is aware of any material adverse fact relating to the
environmental condition of its real property or any
environmental assessment or survey of their real property that
discloses an environmental condition which materially impairs
or would materially impair the value or utility of the
business of the Company or its Subsidiaries or which would
impose material remediation costs on the Offeror, the Company
or its Subsidiaries.
8. INSURANCE. Policies of insurance in force as of the date hereof naming
the Company as an insured adequately cover all risks reasonably and
prudently foreseeable in the operation and conduct of the business of
the Company and the Subsidiaries as would be customary in respect of
the business carried on by the Company. All such policies of insurance
shall remain in force and effect and shall not be cancelled or
otherwise terminated as a result of the transactions contemplated
hereby or by the Offer.
9. UNITED STATES ASSETS, SALES AND OWNERSHIP. The Company and its
Subsidiaries had no assets in the United States as at December 31,
1998, and had no sales attributable to United States operations or
assets in the fiscal year ended December 31, 1998. The Company does not
have actual knowledge that the level of ownership by U.S. holders of
the Company's Shares equals or exceeds 25% of the total of such
outstanding class of securities. The term "U.S. holder" means any
person whose address appears on the records of the Company, any voting
or other trustee, any depository, any share transfer agent or any
person acting in a similar capacity on behalf of the Company, as being
located in the United States.
10. TAX MATTERS.
(a) Definitions
For purposes of this Agreement, the following definitions
shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or
other additions that may become payable in respect
thereof, imposed by any federal, provincial,
territorial, state, local or foreign government or
any agency or political subdivision of any such
government, which taxes shall include, without
limiting the generality of the foregoing, all income
or profits taxes (including, but not limited to,
federal income taxes, provincial income taxes and
income tax of a non-Canadian jurisdiction), payroll
and employee withholding taxes, unemployment
insurance, social insurance taxes, sales and use
taxes, goods and services taxes, customs duties,
withholding taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal
property taxes, stamp taxes, environmental taxes,
transfer taxes, workers' compensation, health tax and
other governmental charges, and other obligations of
the same or of a similar nature to any of the
foregoing, which the Company or any of its material
Subsidiaries is required to pay, withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements
and returns relating to, or required to be filed in
connection with, any Taxes, including all reports
with respect to withholding at source or payments to
third parties, up until and including the date the
Offer is complete.
(b) Returns Filed and Taxes Paid
All Returns required to be filed by or on behalf of the
Company or any material Subsidiaries have been duly filed on a
timely basis and such Returns are true, complete and correct
in all material respects. All Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis, and no other Taxes are
payable by the Company or any material Subsidiaries with
respect to items or periods covered by such Returns which
would be material to the Company.
C-3
<PAGE> 26
The Company has filed on a timely basis all Returns required
to be filed from January 1, 1999 to the date hereof. All
installments or other payments on account of Taxes that relate
to periods for which Returns are not yet due have been paid on
a timely basis. The Company is not currently the beneficiary
of any extension of time within which to file any Return. The
Disclosure Schedule or the materials referred to therein
contains a complete and accurate summary of all Canadian
federal or provincial income tax assessments that have been
issued to the Company covering all past periods up to and
including the fiscal years ended on or before the date hereof
that remain open for reassessment. The Disclosure Schedule or
the materials referred to therein contains a complete and
accurate summary of all fiscal periods that remain open for
assessment of additional taxes.
The Company has withheld, collected and paid to the proper
governmental authority all Taxes required to have been
withheld, collected and paid in connection with:
(i) amounts paid, credited or owing to any employee,
independent or dependent contractor, creditor,
shareholder, non-resident of Canada or other third
party, and
(ii) goods and services received from or provided to any
person from December 31, 1998 to date.
(c) Tax Reserves
The Company has paid or provided adequate accruals in its
financial statements for the year ended December 31, 1998 for
Taxes, including income taxes and related deferred taxes, in
conformity with generally accepted accounting principles
applicable in Canada.
(d) Returns Furnished
For all periods ending on and after December 31,
1998, the Offeror has been furnished by the Company
true and complete copies of (i) relevant portions of
income tax audit reports, statements of deficiencies,
closing or other agreements received by the Company
or any material Subsidiary or on behalf of the
Company or any material Subsidiary relating to Taxes,
and (ii) all pro-forma separate federal and
provincial income or franchise tax returns for the
Company or any material Subsidiaries.
(e) Tax Deficiencies; Audits; Statues of Limitations
Except as described or set forth in the Disclosure Schedule
attached hereto or in the material referred to therein, no
deficiencies exist or have been asserted with respect to the
Taxes of the Company or any material Subsidiary. Neither the
Company nor any material Subsidiary is a party to any action
or proceeding for assessment or collection of Taxes, nor has
such event been asserted or threatened against the Company or
any material Subsidiary or any of their respective assets. No
waiver or extension of any statue of limitations is in effect
with respect to Taxes or Returns of the Company or any
material Subsidiary. Except as described or set forth in the
Disclosure Schedule attached hereto or in the material
referred to therein, the Returns of the Company and any
material Subsidiary have never been audited by a government or
taxing authority, nor is any such audit in process, pending or
threatened.
11. PENSION AND TERMINATION BENEFITS
Except as described or set forth in the Disclosure Schedule attached
hereto or in the material referred to therein, the Company has provided adequate
accruals in its financial statements for the year ended December 31, 1998 (or
such amounts are fully funded) for all pension or other employee benefit
obligations of the Company arising under or relating to each of the pension or
retirement income plans or other employee benefit plans or agreements or
policies maintained by or binding on the Company or any of its Subsidiaries as
well as for any other payment required to be made by the Company in connection
with the termination of employment or retirement of any employee of the Company
or any Subsidiary.
C-4
<PAGE> 27
12. PERMITS
(a) The Disclosure Schedule or the materials set forth therein
sets forth a list of all permits, licenses or other federal,
provincial or state governmental authorizations held by the
Company or its Subsidiaries (each, a "Company Permit" and,
collectively, the "Company Permits"). The Company Permits are
the only permits, licenses or federal, provincial or state
governmental authorizations that are required for the Company
and the Subsidiaries to conduct their respective businesses as
presently conducted, except for those the absence of which
will not have a Material Adverse Effect on the Company or the
Subsidiaries, or their ability to conduct their respective
businesses.
(b) Except as set forth or described in the Disclosure Schedule or
in the materials referred to therein, neither the Company nor
the Subsidiaries has received any written warning notice,
notice of violation or probable violation, or notice of
revocation from or on behalf of any federal, provincial or
state governmental authority, alleging:
(i) any violation of any Company Permit which violation
has not been corrected or otherwise settled as
confirmed in writing by the applicable governmental
authority, or
(ii) that the Company requires any permit other than the
Company Permits.
13. SECURITIES FILINGS
The Company has filed all forms, reports and documents required to be
filed by it with all applicable federal, provincial or state governmental
authorities in Canada (collectively, the "Securities Reports"). The Securities
Reports, after giving effect to any amendments thereto prior to the date hereof:
(a) were prepared in all material respects in accordance with the
requirements of applicable federal, provincial or state
securities legislation and the rules and regulations
promulgated thereunder, and
(b) did not, at the time they were filed, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances
under which they were made, not misleading. No Subsidiary is
currently required to file any form, report or other document
with any federal, provincial or state governmental authority.
14. FINANCIAL STATEMENTS
(a) Each of the financial statements (including, in each case, any
notes thereto) contained in the Securities Reports was
prepared in accordance with generally accepted accounting
principles in Canada, applied on a consistent basis ("GAAP")
throughout the periods indicated (except as may be indicated
in the notes thereto) and each fairly presented in all
material respects the financial position, results of
operations and changes in stockholders' equity and cash flows
of the Company and its consolidated Subsidiaries as of the
respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the
aggregate, to have a Material Adverse Effect on the Company).
(b) Except:
(i) to the extent set forth on the audited consolidated
balance sheet of the Company as of December 31, 1998,
including the notes to the audited financial
statements of which such balance sheet is a part and
which is included in the Company's Securities Reports
for the year ended December 31, 1998 (the "Company
Balance Sheet"), or
(ii) to the extent set forth in the consolidated balance
sheet of the Company as of March 31, 1999, including
the notes to the financial statements of which such
balance sheet is a part and which is included in the
Company's Securities Reports for the three months
ended March 31, 1999 (the "Company Interim Balance
Sheet"),
C-5
<PAGE> 28
Neither the Company nor any of its Subsidiaries has any
liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to
be reflected on a balance sheet, or in the notes thereto,
prepared in accordance with GAAP, except for liabilities and
obligations incurred in (X) the ordinary course of business
consistent with past practice since December 31, 1998 which
would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or
(Y) connection with the Agreement.
(c) The Company has heretofore delivered to the Offeror true,
complete and correct copies of all amendments and
modifications (if any) that have not been filed by the Company
with all appropriate federal, provincial or state governmental
authorities to all agreements, documents and other instruments
currently in effect.
15. INTELLECTUAL PROPERTY
The Disclosure Schedule or the materials set forth therein sets forth a
list of all patents, copyrights, trademarks, trade names and other intellectual
property or similar rights owned by the Company or any of the Subsidiaries, or
otherwise used directly in connection with the business of the Company or its
Subsidiaries (collectively, the "Intellectual Property"). Except as set forth or
described in the Disclosure Schedule or the materials set forth therein, neither
the Company nor the Subsidiaries has granted any third party any license to use
any of the Intellectual Property. The Disclosure Schedule or the materials set
forth therein lists any material contracts under which the Company or any
Subsidiary has a license from an unaffiliated person to use the Intellectual
Property. The Company has delivered to the Offeror complete copies of all
written documents evidencing the Intellectual Property as currently in effect.
To the knowledge of the Company:
(a) no other person has any rights to any such Intellectual
Property except pursuant to agreements or licenses specified
in the Disclosure Schedule or the materials referred to
therein; and
(b) no other person is infringing, violating or misappropriating
any such Intellectual Property.
The Company or the Subsidiaries, as applicable, own or have sufficient right to
use all such Intellectual Property used in the operation of their respective
businesses as presently conducted. Except as set forth or described in the
Disclosure Schedule or the materials referred to therein, (X) neither the
Company nor any Subsidiary has agreed to indemnify any person for or against any
infringement, misappropriation or other conflict relating to the Intellectual
Property and (Y) none of the Intellectual Property is the subject of any claim,
action, proceeding or pending investigation.
16. LABOUR AND EMPLOYMENT MATTERS
The Disclosure Schedule or the materials referred to therein lists:
(a) each collective bargaining agreement with a labour union or
similar organization covering any employee of the Company or
any Subsidiary; and
(b) each individual written employment or consulting agreement
that will remain in effect after the Effective Date between
the Company or any Subsidiary and any Company or Subsidiary
employee or third party. The Company has delivered or made
available to the Offeror complete copies of all such
agreements as currently in effect. In addition to the
foregoing, the Disclosure Schedule or the materials referred
to therein contains:
(i) a list identifying each employee of the Company and
the Subsidiaries,
(ii) a description of the rate and nature of all
compensation payable by the Company or any of the
Subsidiaries to each of its employees, and
(iii) a description of all existing severance, accrued
vacation or other leave policies or retiree or other
benefits of any current or former director, officer,
employee or consultant of the Company.
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The Company and the Subsidiaries have complied in all respects
with all applicable federal, provincial and state laws, rules
and regulations affecting or involving employment and
employment practices.
17. REAL PROPERTY; LEASES
(a) The Disclosure Schedule or the materials set forth therein
sets forth a description of any parcels of real property owned
by the Company and used in connection with the business of the
Company (collectively, the "Real Property"). Except as set
forth or described in the Disclosure Schedule or the materials
referred to therein, as of the date hereof the Company has
good and marketable title to all Real Property, free and clear
of all liens, charges and encumbrances and the right, title
and interest of the Company and its Subsidiaries to such Real
Property is sufficient to enable the Company and its
Subsidiaries to continue to conduct railway operations as they
are currently conducted by the Company and its Subsidiaries.
(b) The Disclosure Schedule sets forth a description of the
railway lines leased by the Company and used in connection
with the business of the Company (collectively, the "Leased
Real Property"). True and complete copies of all such leases
have been furnished to the Offeror. Except as set forth or
described in the Disclosure Schedule or the materials referred
to therein, the Company has good title to the leasehold
interests in the Leased Real Property free and clear of all
liens, charges and encumbrances. Each such lease is in full
force and effect, all accrued and payable payments have been
paid, the Company has not violated any term of any such lease
in any material respect and no event of default under any such
lease has occurred.
18. TANGIBLE PROPERTY; ASSETS
The Disclosure Schedule or the materials referred to therein contains a list of
all of the assets and tangible personal property owned or leased by the Company
with a book value (before depreciation) of U.S. $50,000 or more (the "Assets").
Except as set forth in the Disclosure Schedule, the Assets constitute all of the
assets which are necessary to operate the business of the Company. The
equipment, computer software and hardware and other tangible personal property
included in the Assets and all other Assets (whether owned or leased) have been
well-maintained in accordance with industry standards, are in good condition and
repair (subject to normal wear and tear) and are reasonably sufficient and
adequate in quantity and quality for the operation of the business of the
Company as previously and presently conducted. Except as set forth or described
in the Disclosure Schedule or in the materials referred to therein, the Assets
are not subject to any lien, charge or encumbrance, and there are no other
defects in the Company's title to any of the Assets that would materially
interfere with the continued use or operation thereof in the manner heretofore
used or operated by the Company in its business.
19. ACCOUNTS RECEIVABLE
Except as would not have a Material Adverse Effect on the Company, all of the
accounts receivable reflected in the Financial Statements or created thereafter:
(a) are valid receivables subject to no setoffs or counterclaims;
(b) are current and collectible in the ordinary course of
business; and
(c) will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts
set forth in the Financial Statements, as adjusted for
operations and transactions through the date hereof in
accordance with the past custom and practice of the Company
and its Subsidiaries.
20. CHANGE IN CONTROL
Except as set forth or described in the Disclosure Schedule or in the materials
referred to therein, neither the Company nor any Subsidiary is a party to any
contract, agreement or understanding which is currently expected to result in
the payment or receipt by the Company or any Subsidiary of U.S. $50,000 or more
individually and U.S. $100,000 or more in the aggregate which contains a "change
in control", "potential change in control" or similar provision, including any
provision which is triggered by the acquisition of 25% or more of the common
shares of the Company by a third party. Except as set forth or described in the
Disclosure Schedule or in the materials
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referred to therein, neither the execution and delivery of the Agreement nor the
consummation of the transactions contemplated thereby will:
(a) result in any payment (whether of severance pay or otherwise)
becoming due from the Company or any Subsidiary to any person;
(b) materially increase any benefits becoming due from the Company
or any Subsidiary; or
(c) result in the acceleration of the time of payment or vesting
of any such benefits.
21. RESTRICTIONS ON BUSINESS ACTIVITIES
Except as set out in the change of control provisions referred to in the
Disclosure Schedule and the materials referred to therein, there is no material
agreement, and to the knowledge of the Company, there is no judgement,
injunction, order or decree binding upon the Company or any Subsidiary, or any
of their respective assets or properties, that has, or reasonably could be
expected to have, the effect of prohibiting or materially impairing any current
or future business practice of the Company or any Subsidiary or the conduct of
business by the Company or any Subsidiary, any acquisition of property by the
Company or any Subsidiary or the conduct of business by the Company or any
Subsidiary as currently conducted or as proposed to be conducted by the Company
or any Subsidiary.
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SCHEDULE "D"
REPRESENTATIONS AND WARRANTIES OF THE OFFEROR
1. ORGANIZATION
The Offeror has been duly incorporated and organized, and is validly
existing, as a corporation under the laws of Delaware and has the requisite
corporate power and authority to carry on its business as it is now being
conducted.
2. AUTHORITY
The Offeror has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by the Offeror and the consummation by the Offeror of
the transactions contemplated by this Agreement have been duly authorized by the
board of directors of the Offeror and no other corporate proceedings on the part
of the Offeror are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Offeror and constitutes a valid and binding obligation of the Offeror,
enforceable against the Offeror in accordance with its terms subject to
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other laws relating to or affecting creditors' rights generally and to general
principles of equity. Except as disclosed in writing to the Company on or prior
to the date hereof, the execution and delivery by the Offeror of this Agreement
and performance by it of its obligations hereunder and the completion of the
Offer and the transactions contemplated thereby, will not result in a violation
or breach of, require any consent to be obtained under or give rise to any
termination rights under any provision of:
(a) its or any Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents, including any
unanimous shareholder agreement or any other agreement or
understanding with any party holding an ownership interest in
any Subsidiary;
(b) any law, regulation, order, judgement or decree; or
(c) any material contract agreement, license, franchise or permit
to which the Offeror or any Subsidiary is bound or is subject
or is the beneficiary.
3. OFFEROR FINANCING
The Offeror has sufficient funds or financing available to make the
Offer on the terms as contemplated hereby and to purchase all outstanding Shares
deposited pursuant to the Offer and to pay all related fees and expenses.
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<PAGE> 32
SCHEDULE "E"
RAILINK LTD.
AMENDED AND RESTATED INDEMNIFICATION AGREEMENT
THIS AGREEMENT made the 18th day of November, 1998.
BETWEEN:
RAILINK LTD., a body corporate having its registered office in
the City of Edmonton, Province of Alberta, ("RaiLink")
OF THE FIRST PART
- and -
_____________________, an individual having his principal
residence in the City of Edmonton, Province of Alberta, (the
"Indemnitee")
OF THE SECOND PART
WHEREAS RaiLink was incorporated under the Business Corporations Act
(Alberta) on September 22, 1983;
AND WHEREAS the Indemnitee is a Director and/or Officer of RaiLink or,
at the request of RaiLink, a Director and/or Officer of one or more bodies
corporate of which RaiLink is or was a shareholder (collectively, the
"Subsidiaries", and together with RaiLink, the "Corporations");
AND WHEREAS the Indemnitee may in the future become a Director and/or
Officer of other Corporations;
AND WHEREAS the board of directors of RaiLink provided by resolution on
the 7th day of February, 1997, that RaiLink adopt a policy of indemnifying all
Directors and Officers of RaiLink and all Directors and Officers of the
Subsidiaries acting as such at the request of RaiLink against all personal
liabilities incurred or losses of any kind suffered by any such Director or
Officer in connection with any proceedings to which a person is made party by
reason of being a Director or Officer of RaiLink or by reason of being a
Director or Officer of a Subsidiary at the request of RaiLink;
AND WHEREAS this Agreement is intended to give full effect to the
resolution referred to in the above and to set out in more precise detail the
nature and scope of the indemnification.
NOW THEREFORE THIS AGREEMENT WITNESSES that for good and valuable
consideration, the nature, receipt and sufficiency of which is acknowledged, the
parties hereto covenant and agree as follows:
1. DEFINITIONS
As used in this Agreement:
(a) the terms "Director" and "Directors" mean a person or persons
occupying the position of director by whatever name called and
"Directors" and "board of directors" includes a single
Director;
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<PAGE> 33
(b) the term "Expenses" shall include, without limitation,
expenses, costs, and charges of investigations, or of
investigating a claim, expenses of judicial or administrative
proceedings or appeals, amounts paid in settlement by or on
behalf of the Indemnitee, legal fees and disbursements and any
expenses of establishing a right to indemnification under
Section 4 of this Agreement, as well as the value of the time
of the Indemnitee, spent as a witness or in preparation for an
investigation or Proceeding, but shall not include the amount
of judgements, fines or penalties against the Indemnitee;
(c) the term "Officer" means a person or persons appointed to
occupy a position designated by the Directors of the
Corporations as being an office in their respective
Corporations; and
(d) the term "Proceeding" shall include any threatened, pending or
completed action now, or in the future, and any and all claims
of every nature and kind whatsoever which may be made against
the Indemnitee by any person, firm, corporation, government,
or by any governmental department, body, commission, board,
bureau, agency or instrumentality including the Crown in any
of its capacities arising out of or in any way in connection
with the management, operation, activities or existence of any
one or more of the Corporations of which the Indemnitee is
now, or in the future may become, a Director or Officer, but
shall exclude actions by or on behalf of any of the respective
Corporations to procure a judgement in its own favor.
2. EXTENDED MEANINGS
In this Agreement words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender shall
include the feminine and neuter genders and vice versa, and words importing
persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations and vice versa.
3. DISCLAIMER OF LIABILITY
The Indemnitee shall not be liable for the acts, receipts, neglects or
defaults of any other Director or Officer or any employee or for any liability
or expense sustained or incurred by the Corporations in the execution of the
duties of the Indemnitee's office, provided that nothing herein contained shall
relieve the Indemnitee of any liability in contravention of the Business
Corporations Act (Alberta) or any other applicable statute.
4. INDEMNIFICATION
RaiLink shall indemnify and save harmless the Indemnitee in accordance
with the provisions of this Section 4:
(a) if the Indemnitee is a party to or threatened with being made
a party to any Proceeding, against all Expenses, judgements,
fines and penalties actually and reasonably incurred by the
Indemnitee in connection with the defence or settlement of
such Proceeding, but only if:
(i) the Indemnitee acted in an official capacity,
honestly and in good faith with a view to the best
interests of the Corporations of which the Indemnitee
is or was a Director or Officer; and,
(ii) in the case of a criminal or administrative
Proceeding that is enforced by a monetary penalty,
the Indemnitee had reasonable grounds for believing
that his/her conduct was lawful;
(b) in respect of a Proceeding by or on behalf of a Corporation to
procure a judgement in its favor, to which the Indemnitee is
made, directly or indirectly, a party by reason of being or
having been a Director of Officer of the Corporation, RaiLink
shall make application at its expense for approval of the
court to indemnify and save harmless the Indemnitee and the
Indemnitee's heirs and legal representatives against all
Expenses, judgements, fines and penalties reasonably incurred
by the
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<PAGE> 34
Indemnitee in connection with such Proceeding, provided that
the Indemnitee fulfills the conditions set out in Subsections
4(a)(i) and (ii);
(c) notwithstanding anything to the contrary in this Agreement,
RaiLink shall indemnify and save harmless the Indemnitee
against all Expenses, judgements, fines and penalties actually
and reasonably incurred by the Indemnitee in connection with
the defence or settlement of a Proceeding, if the Indemnitee
was substantially successful on the merits of the Indemnitee's
defence of the Proceeding and the Indemnitee fulfills the
conditions set out in Subsections 4(a)(i) and (ii);
(d) in particular, and without in any way limiting the generality
of the foregoing, from and against all liabilities and
penalties at any time imposed upon the Indemnitee or any
claims at any time made against the Indemnitee:
(i) by virtue of the Canada Business Corporations Act,
the Business Corporations Act (Alberta), The Workers'
Compensation Act (Alberta), the Workers' Compensation
Act, R.S.O. 1990, c.W. 11 as amended, the Bankruptcy
Act (Canada) and The Income Tax Acts of Canada and
Alberta, or any re-enactment or amendment of any such
Acts, or
(ii) by virtue of any legislation of like tenor with and
effect to that referred to in Section 4(d)(i) above,
applicable in Canada, and which in any way involve
the affairs or business of any one or more of the
Corporations of which the Indemnitee is now, or in
the future may become, a Director or Officer;
(e) in the case of a dispute between the Indemnitee and RaiLink as
to whether indemnification should be available (including any
advances under Section 5), the disinterested and independent
members of the board of directors shall determine the question
and, if determined adverse to the position of the Indemnitee,
shall be finally resolved by arbitration pursuant to the
Arbitration Act (Alberta). Further, in the event of a change
of control in RaiLink (defined as there being a change in the
composition of the majority of members of the board of
directors), the question whether indemnification should be
available shall be determined exclusively by arbitration; and
(f) the settlement, conviction, or plea of NOLO CONTENDERE, or its
equivalent, shall not, of itself, create a presumption that
the Indemnitee did not act in good faith and in a manner which
the Indemnitee reasonably believed to be in, or not opposed
to, the best interests of the Corporations of which the
Indemnitee is a Director or Officer, and, with respect to any
criminal proceeding, that the Indemnitee intentionally engaged
in unlawful conduct.
5. ADVANCES
Expenses incurred by the Indemnitee against which indemnification is
provided pursuant to Section 4 shall be paid in advance promptly by RaiLink upon
request and reasonable justification and verification. The Indemnitee shall,
however, be required to refund any advance where the underlying indemnification
is determined not permissible under applicable law.
6. INDEMNIFICATION PROHIBITED
Notwithstanding the provisions of Section 4, no indemnification shall
be paid in connection with any Proceeding charging improper personal benefit to
the Indemnitee, whether or not involving action in an official capacity, in
which the Indemnitee was judged liable on the basis that personal benefit was
improperly received by the Indemnitee.
7. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE
(a) The Indemnification provided by this Agreement shall not be
deemed exclusive of any other rights to which the Indemnitee
may be entitled under the constating documents of any one or
more of the Corporations of which the Indemnitee is a Director
or Officer, the Bylaws of any one or more of the Corporations
of which the Indemnitee is a Director or Officer, any
agreement, any vote of shareholders or Directors of any one or
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<PAGE> 35
more of the Corporations of which the Indemnitee is a Director
or Officer, the corporation law applicable in Canada, or
otherwise.
(b) The Indemnification under this Agreement shall continue as to
the Indemnitee even though the Indemnitee may have ceased to
be a Director or Officer of any one or more of the
Corporations and shall inure to the benefit of the heirs and
personal representatives of the Indemnitee.
8. INSURANCE
Unless otherwise agreed between the parties hereto, RaiLink shall
purchase and maintain, or cause to be purchased and maintained, while the
Indemnitee remains a Director or Officer of the Corporations and for a period of
six (6) years thereafter, directors' and officers' errors and omissions
insurance for the benefit of the Indemnitee on terms no less favorable in terms
of coverage and amounts, to the extent permitted by law and available on
reasonable commercial terms than such insurance maintained in effect by RaiLink
on the date hereof, provided that such insurance shall not apply to any
liability incurred by the Indemnitee relating to any failure by the lndemnitee
to act honestly and in good faith with a view to the best interests of the
Corporations.
9. SAVING CLAUSE
Nothing in this Agreement is intended to require or shall be construed
as requiring any one or more of the Corporations of which the Indemnitee is a
Director or Officer to do or fail to do any act in violation of applicable law.
The provisions of this Agreement shall be severable in accordance with this
Section 9. If this Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, RaiLink shall nevertheless
indemnify the Indemnitee as to Expenses, judgements, fines and penalties with
respect to any Proceeding to the full extent permitted by any applicable portion
of this Agreement that shall not have been invalidated or by any other
applicable law.
10. TAXATION
In the event that any amount payable to the Indemnitee under the terms
of this contract (including amounts payable under this Section 10) is required
to be included in income subject to taxation under the laws of Canada or any
political subdivision of Canada, RaiLink will pay to the Indemnitee the amount
of any additional tax payable by the Indemnitee on account of such inclusion.
The Indemnitee shall forward to RaiLink a claim for such amount together with
proof of the amount so payable. The amount payable by RaiLink to the Indemnitee
under the terms of this Section 10 shall be calculated as the amount by which:
(a) the amount of tax payable to Canada, or any political
subdivision thereof, as shown in a tax return required to be
filed by the Indemnitee on which the amount payable under this
Agreement (including this Section 10) is required to be
included in income
exceeds
(b) the amount of tax that would be payable under that return of
income of the Indemnitee had the Indemnitee not received any
amount under the terms of this Agreement.
11. NOTICE
The Indemnitee shall, as a condition precedent to the right to be
indemnified under this Agreement, give to the Corporations of which the
Indemnitee is a Director or Officer notice in writing as soon as practicable of
any claim made against the Indemnitee for which indemnity will or could be
sought under this Agreement. Notice to the Corporations shall be directed to
them at the following address:
RaiLink Ltd.
1165 Weber Centre
5555 Calgary Trail South
Edmonton, Alberta
T6H 5P9
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<PAGE> 36
(or such other address as the Corporations shall designate in writing to the
Indemnitee). In addition, the Indemnitee shall give the Corporations such
information and cooperation as they may reasonably require and shall be within
the Indemnitee's power.
12. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall constitute an original.
13. APPLICABLE LAW
This Agreement shall be construed in accordance with and be governed by
the laws of the Province of Alberta. For greater certainty but not so as to
restrict the generality of the foregoing, it is expressly agreed that this
Agreement is intended to provide indemnification to the fullest extent not
prohibited by current law and that may be permitted under law in effect in the
future.
14. SUCCESSORS AND ASSIGNS
The duties and obligations of RaiLink under this Agreement shall be
binding upon, and enforceable by the Indemnitee and the Indemnitee's heirs and
legal representatives against, RaiLink and its successors and assigns, including
any corporation with which RaiLink is merged or amalgamated. RaiLink covenants
and agrees that it shall not, without the consent of the Indemnitee, transfer or
dispose of all or substantially all of its assets or undertakings to any entity
that does not agree to assume all of the obligations of RaiLink under this
Agreement.
15. LEGAL FEES
In the event that any action is instituted by the Indemnitee under this
Agreement to enforce or interpret any of the terms hereof, the Indemnitee shall
be entitled to be paid all court costs and expenses, including reasonable legal
fees, incurred by the Indemnitee with respect to such action, unless as a part
of such action, the court of competent jurisdiction determines that other
material assertions made by the Indemnitee as a basis for such action were not
made in good faith or were frivolous.
16. SUBSEQUENT INSTRUMENTS AND ACTS
The parties hereto agree that they will execute any further instruments
and perform any acts that may become necessary from time to time to carry out
the terms of this Agreement.
17. OBLIGATIONS OF RAILINK ABSOLUTE
The obligations of RaiLink under this Agreement are absolute and
unconditional and shall not be released, discharged or reduced, and the rights
of the Indemnitee hereunder shall not be prejudiced or impaired by any neglect,
delay or forbearance in demanding, requiring or enforcing payment or performance
by RaiLink of any of its obligations hereunder or by granting any extensions of
time for such performance or by waiving any performance (except as to any
particular performance which has been waived), or by permitting or consenting to
any assignment in bankruptcy, receivership, insolvency or any other creditor's
proceedings of or against RaiLink or by the winding-up or dissolution of RaiLink
or any other event or occurrence which would or might otherwise have the effect
at law of terminating the obligations of RaiLink under this Agreement.
18. COURT APPROVAL
RaiLink shall use its best efforts to obtain any approval of a court
required by law for the indemnification of the Indemnitee and the Indemnitee's
heirs and representatives pursuant to the provisions of this Agreement.
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<PAGE> 37
19. EFFECTIVE DATE
Notwithstanding the date of execution of this Agreement, the terms and
provisions hereof shall be effective, binding upon, and enforceable by the
parties as of and from the date on which the Indemnitee was first appointed or
elected a Director or Officer of a Corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed on the date first above written.
RAILINK LTD.
WITNESS By:
-----------------------------------
- ---------------------------------
By:
-----------------------------------
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<PAGE> 38
EXHIBIT 10.1
10.1 - 1
<PAGE> 1
Exhibit 10.1
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and entered into as of
the 22nd day of July, 1999, by and among RAILAMERICA, INC., a Delaware
corporation ("RailAmerica"), KALYN/SIEBERT I, INCORPORATED, a Texas corporation
("Kalyn Corp."), RAILAMERICA INTERMODAL SERVICES, INC., a Delaware corporation
("Intermodal"), RAILAMERICA CARRIERS INC., a corporation organized under the
laws of the Province of Ontario ("Carriers"), STEEL CITY CARRIERS INC., a
corporation organized under the laws of the Province of Ontario ("Steel City"),
SAGINAW VALLEY RAILWAY COMPANY, INC., a Delaware corporation ("Saginaw"), HURON
AND EASTERN RAILWAY COMPANY, INC., a Michigan corporation ("Huron"), WEST TEXAS
AND LUBBOCK RAILROAD COMPANY, INC., a Texas corporation ("West Texas"),
PLAINVIEW TERMINAL COMPANY, a Texas corporation ("Plainview"), CASCADE AND
COLUMBIA RIVER RAILROAD COMPANY, a Delaware corporation ("Cascade"), OTTER TAIL
VALLEY RAILROAD COMPANY, INC., a Minnesota corporation ("Otter Tail"), MINNESOTA
NORTHERN RAILROAD, INC., a Delaware corporation ("Minnesota"), DELAWARE VALLEY
RAILWAY COMPANY, INC., a Delaware corporation ("Delaware"), ST. CROIX VALLEY
RAILROAD COMPANY, a Delaware corporation ("St. Croix"), E & N RAILWAY COMPANY
(1998) LTD., a corporation incorporated under the laws of British Columbia
("E&N"), 3025619 NOVA SCOTIA LIMITED ("Nova Scotia"), FLORIDA RAIL LINES, INC.,
a Delaware corporation ("Florida Rail"), SOUTH CENTRAL TENNESSEE RAILROAD
CORPORATION, a Delaware corporation ("Tennessee"), KALYN/SIEBERT, L.P., a Texas
limited partnership ("Kalyn"), and RL ACQUISITION CORP., a corporation organized
under the Business Corporations Act (Alberta) ("RL"; RL, Kalyn, Tennessee,
Florida Rail, Nova Scotia, E&N, St. Croix, Delaware, Minnesota, Otter Tail,
RailAmerica, Kalyn Corp., Intermodal, Carriers, Steel City, Saginaw, Huron, West
Texas, Plainview and Cascade hereinafter individually and collectively referred
to as "Initial Borrower" or "Initial Borrowers"), NATIONAL BANK OF CANADA, a
Canadian Chartered Bank, as agent (the "Agent"), and in its capacity as a lender
("NBC"), and each other financial institution executing and delivering a
signature page hereto (NBC and each such financial institution are hereinafter
individually and collectively referred to as "Initial Lender" or "Initial
Lenders").
W I T N E S S E T H:
WHEREAS, RailAmerica (the sole owner, directly or indirectly, of all of
the shares of stock of the other Initial Borrowers, such that each other Initial
Borrower is owned by RailAmerica or by a Subsidiary Corporation (as hereinafter
defined)), on behalf of itself and on behalf of the Initial Borrowers, desires
to obtain extensions of credit of up to One Hundred Twenty Five Million and
00/100 Dollars ($125,000,000.00) (the "Initial Loan" or the "Initial Loans")
from the Lenders in order to (i) refinance an existing Eighty-Five Million and
00/100 Dollar ($85,000,000.00) line of credit/term loan facility currently
outstanding and due and owing by certain of the Initial Borrowers to NBC,
COMERICA BANK, a Michigan banking corporation ("Comerica"), SOUTHTRUST BANK,
NATIONAL ASSOCIATION, a national banking association ("SouthTrust"),
BANKATLANTIC, a Federal Savings Bank
1
<PAGE> 2
("BankAtlantic"), and CITIZENS BUSINESS CREDIT, a division of Citizens Leasing
Corporation ("Citizens"), (ii) support short term working capital requirements
of the Borrowers, and, (iii) provide for the financing of future acquisitions by
one or more of the Borrowers or by an entity owned by or affiliated with one or
more of the Borrowers (hereinafter referred to as an "Affiliate") of
transportation related businesses, said acquisitions to be subject to review by
Lender, and, in the case of acquisitions requiring Acquisition Advances (as
hereinafter defined) in excess of Five Million and 00/100 Dollars
($5,000,000.00) to be subject to the consent of the Majority Lenders (as
hereinafter defined), which consent shall not be unreasonably withheld; provided
further that the assets acquired pursuant to an acquisition financed by Lenders
shall be subject to a negative pledge, or in the event the pro-forma asset ratio
coverage of the Borrowers immediately after the time of the Acquisition Advance
does not meet the required Minimum Asset Ratio (as said term is defined herein)
of not less than 1.4 to 1 (as more particularly described herein), pledged in
favor of Agent, as agent, as security for the Loans; and
WHEREAS, Lenders are willing to extend such credit to RailAmerica, for
the benefit of RailAmerica and for the benefit of all of the Borrowers, of up to
such amounts and upon the terms and conditions set forth herein; and
WHEREAS, in connection with the existing Eighty Five Million and 00/100
Dollar ($85,000,000.00) line of credit/term loan facility currently outstanding
and due and owing by certain of the Initial Borrowers to NBC, Comerica,
SouthTrust, BankAtlantic and Citizens, certain of the Initial Borrowers (other
than St. Croix, E&N, Nova Scotia, Florida Rail and Tennessee), the Agent (as
Agent and as Lender) and Comerica entered into that certain Loan Agreement dated
as of the 23rd day of May, 1997, as amended by First Amendment to Loan Agreement
(with St. Croix joining in the agreement as a Borrower by virtue of St. Croix's
execution of a Borrower Joinder Agreement and SouthTrust joining in the
agreement as a Lender by virtue of SouthTrust's execution of a Lender Joinder
Agreement) entered into by, between and among certain of the Initial Borrowers
(other than E&N, Nova Scotia, Florida Rail and Tennessee), the Agent (as Agent
and as Lender), Comerica as a Lender, and SouthTrust as a Lender, dated as of
June 16, 1998, as amended by Second Amendment to Loan Agreement entered into by,
between and among the parties to the First Amendment to Loan Agreement, dated as
of July 1, 1998, as amended by Third Amendment to Loan Agreement entered into
by, between and among the parties to the First Amendment to Loan Agreement and
Second Amendment to Loan Agreement, dated as of January 7, 1999, as further
amended and restated by that certain Amended and Restated Loan Agreement entered
into by, between and among certain of the Initial Borrowers, the Agent (as Agent
and as Lender), Comerica, SouthTrust, BankAtlantic and Citizens, dated as of
March 30, 1999 (collectively the "Original Loan Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Original Loan
Agreement in its entirety in accordance with the terms and provisions of and as
provided herein.
NOW, THEREFORE, for and in consideration of the sum of Ten and 00/100
($10.00) Dollars and other good and valuable consideration, the receipt and
sufficiency of which is hereby
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acknowledged, and in consideration of the loans or extensions of credit
heretofore now or hereafter made or to be made for the benefit of the Borrowers
by the Lenders, the parties do hereby agree as follows:
Article 1.
RECITALS AND DEFINITIONS
1.1 Recitals. The foregoing recitals are acknowledged by the
parties to be true and correct, and are incorporated herein by reference.
1.2 Definitions. As used in this Agreement, the terms listed below
shall have the following meanings:
(a) "Acquisition Advance": A disbursement by the Lenders of a
portion of the Loan proceeds to finance future acquisitions by one or more of
the Borrowers, or by a newly formed wholly owned subsidiary corporation of
RailAmerica, of transportation related businesses in accordance with the terms
and provisions of this Agreement.
(b) "Additional Borrowers": Entities owned by or affiliated
with one or more of the Initial Borrowers, who become parties to this Agreement
by executing a Borrower Joinder Agreement in the form attached hereto as Exhibit
"A", who pledge assets acquired in connection with a Collateralized Acquisition
Advance.
(c) "Additional Lenders": The lending institutions which
become a party to this Agreement after the date hereof, either by (i) executing
a Lender Joinder Agreement in the form attached hereto as Exhibit "B", pursuant
to the provisions of Section 2.5 hereof, or by (ii) executing an Assignment and
Acceptance.
(d) "Additional Loans": Loans made after the date hereof in
accordance with the provisions of Section 2.5 hereof.
(e) "Additional Notes": Master Revolving/Term Promissory Notes
in the form attached hereto as Exhibit "C" (with blanks appropriately filled
herein) executed by the Borrowers in favor of a Lender.
(f) "Advance": A disbursement by the Lenders of a portion of
the Loan proceeds to RailAmerica to be utilized by the Borrowers for the
purposes set forth in Section 2.1 of this Agreement.
(g) "Agent": National Bank of Canada, a Canadian Chartered
Bank, in its capacity as agent for the Lenders pursuant to Article 14, and not
in its individual capacity as a Lender, and any successor Agent appointed
pursuant to Article 14.
(h) "Agreement" or "Loan Agreement": This Loan Agreement.
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(i) "Assignment and Acceptance": An Assignment and Acceptance
in the form attached hereto as Exhibit "D" (with blanks appropriately filled in)
delivered to the Agent in connection with an assignment of a Lender's interest
under this Agreement pursuant to the terms of Subsection 15.1(e) hereof.
(j) "Borrower" or "Borrowers": Individually and collectively,
the Initial Borrowers and the Additional Borrowers.
(k) "Borrower's Counsel Opinion Letter": Collectively, a
letter from Borrower's Florida counsel and Delaware counsel, a letter from
Borrower's Texas counsel, a letter from Borrower's Michigan counsel, a letter
from Borrower's Ontario counsel, a letter from Borrower's Washington counsel, a
letter from Borrower's Minnesota counsel, a letter from Borrower's Pennsylvania
counsel, a letter from Borrower's British Columbia counsel, a letter from
Borrower's Nova Scotia counsel, a letter from Borrower's Tennessee counsel, and
a letter from Borrowers' Surface Transportation Board counsel (if applicable), a
letter from Borrower's Illinois counsel (when applicable), a letter from
Borrower's Indiana counsel (when applicable), and a letter from Borrower's
Alberta and Canadian counsel, together with letters from such Canadian
Securities counsel as shall be required by the Lenders, in form and substance
satisfactory to the Majority Lenders and Lenders' Counsel, opining as to certain
matters concerning the Loans.
(l) "Business Days": Days upon which the Lenders are open for
normal business.
(m) "Canadian Borrower": Any Borrower which is an entity
formed under and governed by the laws of Canada.
(n) "Cascade Purchase Agreement": That certain Agreement for
Sale of Certain Assets, Rights, and Obligations of Burlington Northern Railroad
Company, a Delaware corporation ("BN"), to Cascade and Columbia River Railroad
Company dated as of August 5, 1996.
(o) "Change Date": July 21, 2000, the date upon which the
outstanding principal balances of the Loans shall convert from revolving lines
of credit to term loans, as more fully set forth in the Notes.
(p) "Closing": The time of the execution and delivery of this
Agreement by the Initial Borrowers, Agent and Initial Lenders.
(q) "Code": The Internal Revenue Code of 1986, as amended from
time to time, and applicable Department of Treasury regulations thereunder.
(r) "Collateral Assignments": Collectively, Collateral
Assignments of the Purchase Agreements in favor of Agent, as amended, restated
and/or reaffirmed from time to time.
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(s) "Collateralized Acquisition Advance": An Acquisition
Advance effectuated under the Loan which does not meet the required Minimum
Asset Ratio and therefore requires a pledge of the acquired assets in favor of
Agent.
(t) "Commitment": (i) with respect to each Initial Lender, the
obligation of such Lender to make a loan comprising part of the Loans in
accordance with its Percentage obligation to effectuate a portion of each
Advance and (ii) with respect to each Additional Lender, the obligation of such
Lender to make a loan comprising part of the Loans in accordance with its
Percentage obligation to effectuate a portion of each Advance.
(u) "CSX Purchase Agreement": That certain Purchase and Sale
Agreement dated April 13, 1998, between Saginaw and CSX Transportation, Inc., a
Virginia corporation (as the same may be amended from time to time).
(v) "Delaware Valley Purchase Agreement": Collectively, that
certain Option to Purchase Agreement between Delaware and James Cornell dated
November 15, 1996, and that certain Indemnification Agreement between Gettysburg
Railroad Company and Sloan Cornell dated November 15, 1996 (as the same may be
amended from time to time).
(w) "Discussion Letter": That certain discussion letter dated
July 6,1999 by and between the Agent and RailAmerica.
(x) "Dollars" or "$": United States Dollars, except as
specifically noted herein.
(y) "E & N Appraisal": A Value for Other Use appraisal
(Esquimalt and Nanaimo Valuation Study for RailAmerica) prepared by Mainline
Management Services, Inc. dated November 25, 1998.
(z) "E & N EPA Audit": That certain Phase One Environmental
Site Assessment Report of the E & N Real Property prepared by Environmental
Resources Management dated January 5, 1999, certified or to be certified to the
Agent, the results of which must be satisfactory to the Majority Lenders in
their sole and absolute discretion.
(aa) "E & N Mortgage and Security Documents": A Form B
Mortgage of Freehold and Assignment of Rents, a Form B Mortgage of Lease, a Form
B Statutory Right-of-Way Mortgage and Assignment of Rents, a Collateral
Assignment of Asset Purchase Agreement, an Assignment of VIA Agreement, an
Assignment of Agreements (General), a General Security Agreement and Personal
Property Security Act Financing Statements from E & N to the Agent and Lenders,
some of the above having been modified by modification and/or amendment and/or
reaffirmation agreements, which secure the Loan and which are a valid first lien
encumbering E & N's fee simple and leasehold interests, as applicable, in the E
& N Real Property, the E & N Railroad Trackage and all other property (real and
personal, tangible and intangible) now owned or hereafter acquired by E & N.
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(bb) "E&N Purchase Agreement": That certain Asset Purchase
Agreement made the 17th day of December, 1998 between Canadian Pacific Railway
Company and The Esquimalt and Nanaimo Railway Company, collectively as Vendor,
and E&N as Purchaser, and RailAmerica as Covenantor, as amended by First
Amendment to Asset Purchase Agreement and Escrow Letter dated as of the 31st day
of December, 1998.
(cc) "E & N Railroad Trackage": All rails, tracks, trackage,
track materials, ties and timber owned by E & N, whether now owned or hereafter
acquired by it, including but not limited to (i) all rail and track owned by E &
N, but not yet affixed to any real estate or incorporated within existing
railroad lines, and (ii) all rail and track owned by E & N and affixed to real
estate or incorporated within existing railroad lines, together with all
fixtures, equipment, machinery, structures, buildings, tracks, rails, ties,
switches, crossings, bridges, trestles, culverts, signals, crossing protection
devices, loading platforms, pools, communication lines, power lines and
appurtenances of every kind or nature, used or useful in connection with laying,
maintaining and operating such rail and track, including without limitation all
rails, tracks, trackage, track materials, ties and timber described and set
forth on Exhibit "E" appended hereto and made a part hereof.
(dd) "E & N Real Property": Certain real property lying and
being situate in the Province of British Columbia, as more particularly
described in the E&N Mortgage Documents.
(ee) "Eligible Inventory": Borrowers' raw material and
finished goods inventory, which inventory must be satisfactory to the Majority
Lenders, provided that the Majority Lenders shall determine in their reasonable
discretion which inventory shall be eligible for financing hereunder, provided
however, that in connection with Canadian inventory which constitutes Eligible
Inventory, the value of the same will be converted into U.S. Dollars for
valuation purposes.
(ff) "Eligible Receivables": Only those accounts receivable
which are accounts receivable of Borrowers arising out of sales of tangible
personal property made by Borrowers or services provided by Borrowers in the
ordinary course of their business which are no more than ninety (90) days old
from the invoice date, according to the original terms of sale and provisions of
the services, and the payment of which is not in dispute and in which the Agent
has a first priority security interest. The Lenders may treat any receivable or
any portion thereof, as ineligible: (i) if any warranty contained in this or any
related agreement is breached with respect thereto; (ii) if the customer or
account debtor has disputed liability or made any claim with respect to the
receivable or the merchandise covered thereby or with respect to any other
receivable due from said customer to a Borrower; (iii) if the customer or
account debtor has filed a petition for bankruptcy or any other application for
relief under the Bankruptcy Act (or similar statute in Canada), assigned for the
benefit of creditors, or if any petition or any other application for relief
under the Bankruptcy Act (or similar statute in Canada) has been filed against
the said customer or account debtor, or if the customer or account debtor has
failed, suspended business, become insolvent, or had or suffered a receiver or
trustee to be appointed for any of its assets or affairs; (iv) if the customer
or account debtor is located outside the United States, provided
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however, that Canadian receivables of Canadian Borrowers shall be included as
Eligible Receivables within the Borrowing Base, provided that Agent is able to
obtain a perfected first priority security interest in said Canadian
receivables, and provided further that the value of all Canadian receivables
will be adjusted to U.S. Dollars for purposes of inclusion within the Borrowing
Base; (v) if the receivable is offset, in whole or in part, by a credit due and
owing from a Borrower to that account debtor, or if the receivable is due and
owing from an account debtor who is also a creditor of a Borrower; (vi) if any
portion of the receivable represents finance and service charges due and owing
to a Borrower from said account debtor; (vii) if the receivable represents sums
due and owing for work and/or services currently being rendered by a Borrower
but not yet completed by Borrower; (viii) if the receivable is due and owing
from an affiliate corporation or related entity of any Borrower; (ix) if the
receivable represents a consignment sale or warranty work; (x) if the receivable
represents a C.O.D. sale; (xi) if the receivable represents sums due and owing
from an employee of any Borrower; (xii) if the receivable represents retainage
due and owing to Borrower; (xiii) if the receivable represents the billing for
inventory which has not been delivered to said account debtor; (xiv) if the
receivable represents a Bill and Hold Invoice for items which have been billed
and are not yet due and payable; (xv) if the receivable is a government
receivable in which the Agent will not be able to perfect its lien under the
Federal Assignment of Claims Act for any reason whatsoever; (xvi) if the
receivable arises from a progress billing for work not yet completed and
delivered to the customer; (xvii) the account debtor is located in the State of
Minnesota or State of New Jersey and the applicable Borrower, as the owner of
such receivable, has neither qualified as a foreign corporation to do business
in such state nor filed a Notice of Business Activities report with the
appropriate officials in such state for the then current year; or (xviii) if the
Majority Lenders believe, in their credit judgement based on Lenders' sole
discretion, that collection of such receivable is insecure or that it may not be
paid by reason of financial inability to pay or otherwise or that such
receivable is not suitable for use as collateral hereunder.
(gg) "ERISA": The Employee Retirement Income Security Act of
1974, as amended from time to time.
(hh) "Event of Default": The occurrence of any one or more of
the Events of Default described in Article 11 hereof.
(ii) "Facility Fee Letter": That certain letter agreement
entered into by and between Agent and Initial Borrower dated as of even date
herewith concerning the payment of certain fees due and payable in connection
with the Loan.
(jj) "Financing Statements": Financing Statements from
Borrowers to Agent to perfect Agent's security interest in the property
described in the Collateral Assignments, Security Agreements and the Mortgage
Documents.
(jj-b) "Florida EPA Audit": That certain Phase I Environmental
Property Assessment dated April, 1998 and that certain Phase II Environmental
Property Assessment Report dated May, 1998 of the Florida Real Property prepared
by Nutting Environmental of
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Florida, Inc., certified to the Agent, the results of which must be satisfactory
to the Majority Lenders in their sole and absolute discretion.
(kk) "Florida Mortgage Documents": Collectively, a Mortgage
Deed and Security Agreement, an Assignment of Rents, Leases and Deposits, and
UCC-1 Financing Statements from Plainview to Agent, as amended by Mortgage
Modification Agreements, as the same may be modified from time to time, which
secures the Notes to the extent of Four Million One Hundred Seventy Eight
Thousand Five Hundred Seventy One and 43/100 Dollars ($4,178,571.43) and are
valid first liens on the Florida Real Property and the personal property
associated therewith, together with all other documents associated therewith.
(ll) "Florida Real Property": Certain real property lying and
being situate in Palm Beach County, Florida, owned by Plainview, as more
particularly described in the Florida Mortgage Documents.
(mm) "Franchises": All franchises, sanctions, rights,
licenses, privileges and operating agreements or authorities, third party
agreements and interchange agreements, including without limitation agreement(s)
(direct and indirect) between Borrowers or any of them and the State of Michigan
Department of Transportation to operate over 153 miles of track, or thereabouts,
agreement(s) (direct and indirect) between Borrowers or any of them and the
State of Texas Department of Transportation to operate over 131 miles of track,
or thereabouts, agreement(s) (direct and indirect) between Borrowers or any of
them and the State of Washington Department of Transportation to operate over
131 miles of track, or thereabouts, agreement(s) (direct and indirect) between
Borrowers or any of them and the State of Minnesota Department of Transportation
to operate over 235 miles of tract, or thereabouts, agreement(s) (direct and
indirect) between Borrowers or any of them and the State of Pennsylvania
Department of Transportation to operate over 23 miles of track, or thereabouts,
agreement(s) (direct and indirect) between Borrowers or any of them and the
Province of British Columbia to operate over 181 miles of track or thereabouts,
agreement(s) (direct and indirect) between Borrowers or any of them and the
State of Tennessee Department of Transportation to operate over 50 miles of
track or thereabouts, agreement(s) (direct and indirect) between Borrowers or
any of them and certain provinces in Canada to operate over 2,500 miles of track
or thereabouts, and agreement(s) (direct and indirect) between Borrowers or any
of them and the States of Illinois and Indiana to operate over 369 miles of
track or thereabouts.
(nn) "Generally Accepted Accounting Principles" or "GAAP":
Those principles of accounting set forth in opinions of the Financial Accounting
Standards Board of the American Institute of Public Accountants or which have
other substantial authoritative support and are applicable in the circumstances
as of the date of any report required herein or as of the date of an application
of such principles as required herein.
(oo) "Gettysburg EPA Audit": That certain Phase I
Environmental Site Assessment report dated November 7, 1996, prepared by
Superior Environmental Corp., certified
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to Agent, the results of which must be satisfactory to the Majority Lenders, in
their sole and absolute discretion.
(pp) "Gettysburg Mortgage Documents": Collectively, Mortgage
Deed and Security Agreements and Assignments of Rents, Leases and Deposits, as
modified by Mortgage Modification Agreements, and as the same may be further
amended from time to time, from Delaware to Agent, which partially secure the
Notes to the extent of $1,250,000.00, and are valid first liens on the
Gettysburg Real Property and the personal property associated therewith,
together with UCC-1 Financing Statements and other documents associated
therewith.
(qq) "Gettysburg Real Estate Appraisal": That certain
Gettysburg Railroad Development of Net Liquidation Value report dated December
14, 1995, prepared by Main Line Management Services, Inc.
(rr) "Gettysburg Real Property": Collectively, certain real
property lying and being situate in Adams County and Cumberland County,
Pennsylvania, as more particularly described in the Gettysburg Mortgage
Documents.
(ss) "Governmental Authority": Any federal, state, province,
county, municipal or other governmental department, commission, board, bureau,
court, agency, or any instrumentality of any other governmental entity.
(tt) "Governmental Requirements": Any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, writ, injunction,
franchise, permit, certificate, license, authorization, or other direction or
requirement of any Governmental Authority now existing or hereafter enacted,
adopted, promulgated, entered or issued applicable to the Loan or to the
Borrower.
(uu) "Huron and Eastern Real Property": Certain real property
lying and being situate in Tuscola County, Michigan owned by Huron, more
particularly described in the Michigan Mortgage Documents as described under
Subsection (B) of Section 1.2(mmm) of this Agreement.
(vv) "Indebtedness": Collectively, all of the Borrowers'
presently existing or hereafter created or assumed obligations to the Lenders,
including without limitation, obligations for borrowed money, notes payable and
drafts accepted representing extensions of credit (whether or not representing
obligations for borrowed money), obligations representing the Loans and any
modifications or renewals thereof, obligations representing indebtedness to the
Lenders whether or not assumed, secured or unsecured, however and wherever
incurred, acquired or evidenced, whether primary or secondary, direct or
indirect, absolute or contingent, joint or several or due or to become due,
including without limitation all such obligations, liabilities and all
indebtedness and obligations now or hereafter owed by each Borrower to Lenders,
their affiliates, successors and/or assigns.
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(ww) "Initial Advance": The first Advance of the Loan
proceeds.
(xx) "Interest Period": A one (1) month period, three (3)
month period or six (6) month period, as applicable, during which Borrowers have
elected to have interest charged under the Notes based upon the Libor Rate.
(yy) "Issuing Lender": National Bank of Canada, a Canadian
Chartered Bank, and any other Lender which issues Letters of Credit pursuant to
the terms of Article 4 of this Agreement.
(zz) "Landlord's Waiver of Lien Agreement": Waiver Agreements
from all Landlords where any Borrower leases business properties waiving the
Landlord's lien at that location to the lien and effect of the Loans.
(aaa) "Leases": Leases for all locations where each Borrower
leases property in connection with its business operations.
(bbb) "Lender" or "Lenders": Individually and collectively,
(i) at the time of execution of this Agreement, the Initial Lenders, and (ii)
thereafter, the Initial Lenders and the Additional Lenders, and the respective
successors and permitted assigns of the foregoing.
(ccc) "Letters of Credit": Trade Letters of Credit and/or
Standby Letters of Credit issued by the Issuing Lender for the account of the
Borrowers in favor of a person advancing credit or securing an obligation on
behalf of the Borrowers, which Letters of Credit will be one hundred percent
(100%) reserved and will reduce availability for borrowings under the Loans on a
dollar-for-dollar basis in an amount equal to the face amount of the Letters of
Credit outstanding at any time.
(ddd) "Libor Rate": The "Libor Rate" as defined in each of the
Notes, which rate is not necessarily the best or lowest rate charged to
borrowing customers of the Lenders.
(eee) "Loan" or "Loans": Collectively, the Initial Loans and
the Additional Loans.
(fff) "Loan Account": Borrower's account on the books of the
Agent in which Acquisition Advances and Advances will be recorded, as well as
payments made on the Loan and other appropriate debits and credits as provided
in this Agreement.
(ggg) "Loan Disbursement Account": The account established by
Borrowers pursuant to Section 3.4 herein, maintained at any bank acceptable to
the Majority Lenders.
(hhh) "Locomotive Appraisals": Those certain appraisals of
locomotives prepared by Norman W. Seip & Associates, one (RailLink) being dated
June 7, 1999, and one (TPW) being dated June 4, 1999, together with that certain
(South Central Tennessee) appraisal of locomotives prepared by Stone Consulting
and Design, Inc. dated April 5, 1999.
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(iii) "Machinery and Equipment": All machinery, equipment,
furniture, fixtures, computer hardware and software, hand and power tools,
trucks, trailers, forklifts, automobiles, heavy equipment, railroad equipment
and other equipment, locomotives financed by Lenders, unimogs financed by
Lenders, rolling stock financed by Lenders and other motor vehicles, trucks,
trailers, machinery and equipment of all classes, together with all parts
thereof and all accessions thereto, wherever located, now owned or hereafter
acquired by any of the Borrowers. Notwithstanding the foregoing, locomotives and
unimogs acquired under leases are specifically excluded from the Collateral,
although specific units of the same may be added to the Collateral at a future
date, if financed by Lenders and evidenced by the filing of financing statement
amendments or new financing statements or filings with the Surface
Transportation Board.
(jjj) "Majority Lenders": At any time, (A) with respect to
non-monetary matters, decisions and approvals, the Lenders then holding Notes
having principal balances aggregating not less than sixty-six and two-thirds
percent (66.67%) of the principal balances of the Notes, and (B) with respect to
monetary matters, decisions and approvals, all of the Lenders.
(kkk) "Maturity Date": July 22, 2002, upon which date the
entire principal balance and accrued interest and all other applicable charges
under the Loans shall become due and payable in full.
(lll) "Michigan EPA Audit": Copies of all existing Phase I
and, if applicable, Phase II environmental audits and assessments, certified to
Agent, and other reports and evidence of any remediation which has been
effectuated to date with respect to the Michigan Real Property and the Huron and
Eastern Real Property, together with any new environmental audits of the
Michigan Real Property and the Huron and Eastern Real Property required by
Agent, the results of which must be satisfactory to the Majority Lenders in
their sole and absolute discretion.
(mmm) "Michigan Mortgage Documents": Collectively, (A)
(Railroad) Mortgage and Security Agreements and Assignments of Rents, Leases and
Deposits, as modified by Receipts for Future Advance, Mortgage Modification and
Spreader Agreements, as modified by Mortgage Modification Agreements, and as the
same may be further amended from time to time, from Saginaw and Huron, as
applicable, to Agent, which secure the Notes to the extent of $13,000,000.00 and
are valid first liens on the Michigan Real Property and the personal property
associated therewith, together with UCC-1 Financing Statements and other
documents associated therewith, and (B) a Mortgage and Security Agreement, as
modified by Mortgage Modification Agreements, and as the same may be amended
from time to time, from Huron to Agent, which secures the Notes to the extent of
$440,000.00 and is a valid first lien on the Huron and Eastern Real Property and
the personal property associated therewith, together with UCC-1 Financing
Statements and other documents associated therewith.
(nnn) "Michigan Real Property": Collectively, certain real
property lying and being situate in Lapeer County, Michigan, Saginaw County,
Michigan, and Tuscola County, Michigan owned by Saginaw, and, real property
lying and being situate in Saginaw County, Michigan, Tuscola County, Michigan,
Huron County, Michigan and Sanilac County, Michigan
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owned by Huron, as more particularly described in the Michigan Mortgage
Documents as described under Subsection (A) of Section 1.2(mmm) of this
Agreement.
(ooo) "Minimum Asset Ratio": The Borrowing Base divided by the
total outstanding principal amount of the Loans.
(ppp) "Minnesota EPA Audit": That certain Property Assessments
Minnesota Cluster Line Sale report prepared by Remediation Technologies, Inc.,
under RETEC Project No. 3-2649-100 dated October, 1996, and, if applicable,
Phase I and Phase II environmental audits and assessments, certified to Agent,
and other reports and evidence of any remediation which has been effectuated to
date with respect to the Minnesota Real Property, together with any new
environmental audits of the Minnesota Real Property required by the Agent, the
results of which must be satisfactory to the Majority Lenders in their sole and
absolute discretion.
(qqq) "Minnesota Mortgage Documents": Collectively, a
Mortgage, Security Agreement and Fixture Financing Statement and an Assignment
of Rents, Leases and Deposits from Minnesota to Comerica, as assigned by
Comerica to Agent, and as modified by an Amendment No. 1, Amendment No. 2,
Amendment No. 3 and Amendment No. 4 to Mortgage, Security Agreement and Fixture
Financing Statement and an Amendment No. 1, Amendment No. 2, Amendment No. 3 and
Amendment No. 4 to Assignment of Rents, Leases and Deposits, and as the same may
be further amended from time to time, which partially secure the Notes to the
extent of $1,500,000.00, and are valid first liens on the Minnesota Real
Property and the personal property associated therewith, together with UCC-1
Financing Statements, UCC-2 Fixture Financing Statements, UCC-3 Assignment and
Amendment Statements and other documents associated therewith.
(rrr) "Minnesota Purchase Agreement": That certain Agreement
for Sale of Certain Assets, Rights and Obligations of Burlington Northern
Railroad Company, a Delaware corporation to Minnesota Northern Railroad, Inc.,
dated as of November 27, 1996, as amended by First Amendment to Agreement for
Sale of Certain Assets, Rights and Obligations entered into by and between
Minnesota and BN dated as of the 26th day of December, 1996, as further amended
by Second Amendment to Agreement for Sale of Certain Assets, Rights and
Obligations entered into by and between Minnesota and BN dated as of the 7th day
of January, 1997, and as further amended by Third Amendment to Agreement for
Sale of Certain Assets, Rights and Obligations entered into by and between
Minnesota and BN dated as of the 9th day of January, 1997.
(sss) "Minnesota Real Property": Collectively, certain real
property lying and being situate in Red Lake County, Polk County, Norman County,
Pennington County, Marshall County, Roseau County, Pine County, Chisago County,
and Kanabec County, Minnesota, as more particularly described in the Minnesota
Mortgage Documents.
(ttt) "Mortgage Documents": Collectively, the Gettysburg
Mortgage Documents, the Michigan Mortgage Documents, the Minnesota Mortgage
Documents, the Ontario Mortgage
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Documents, the Texas Deed of Trust Documents, the Washington Deed of Trust
Documents, the West Texas and Lubbock Deed of Trust Documents, the Florida
Mortgage Documents, the E&N Mortgage Documents, the Tennessee Deed of Trust
Documents, the RailLink Mortgage Documents and the TPW Mortgage Documents.
(uuu) "Note" or "Notes": The separate promissory notes made by
the Borrowers payable to the order of each Lender, substantially in the form of
Exhibit "C" hereto, evidencing the Loan and any amendments and modifications
thereto, any substitutes therefor, any replacements, restatements, renewals or
extension thereof, in whole or in part, together with all Additional Notes.
(vvv) "Nova Scotia Security Documents": A Hypothecation -
Securities, together with a Power of Attorney to Transfer Bonds, as modified or
as amended, from Nova Scotia to Agent and the Lenders, which is a valid first
lien and encumbrance on all shares of stock in E & N owned by Nova Scotia, it
being acknowledged that Nova Scotia is the sole shareholder of E & N.
(www) "Ontario EPA Audit": An environmental audit or audits of
the Ontario Real Property, certified to Agent, which must result in findings
satisfactory to the Majority Lenders, in their sole and absolute discretion.
(xxx) "Ontario Mortgage Documents": A Charge/Mortgage of Land,
which secures the Notes to the extent of C$530,000.00 Canadian Dollars, which is
a valid first lien on the Ontario Real Property and the personal property
associated therewith, together with Personal Property Security Act Financing
Statements and other documents associated therewith.
(yyy) "Ontario Real Property": Certain real property lying and
being situate in the District of Algoma, Ontario, Canada, owned by Steel City,
as more particularly described in the Ontario Mortgage Documents.
(zzz) "Percentage": For each Lender, its percentage share, as
set forth on Exhibit "F" appended hereto and made a part hereof, as the same may
be modified or amended in connection with the addition of the Additional Lenders
as provided in Section 2.5 of this Agreement.
(aaaa) "Person": As the case may be, any corporation, natural
person, firm, joint venture, partnership, trust, unincorporated organization and
government, or any department or agency of any government.
(bbbb) "Plan": Any pension plan which is governed by the terms
and provisions of Title IV of ERISA and in respect of which the Borrower or a
commonly controlled entity of the Borrower is an "Employer" (as defined in
Section 407(d)(7) of ERISA).
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(cccc) "Prime Rate": The "Prime Rate" as defined in each of
the Notes, which rate is purely discretionary and is not necessarily the best or
lowest rate charged borrowing customers of the Lenders.
(dddd) "Principal Office": The office of the Agent and the
Issuing Lender, as applicable, located at 5100 Town Center Circle, Suite 430,
Boca Raton, Florida 33486, Attention: Michael Bloomenfeld, Vice President, or
such other office and address as the Agent and/or the Issuing Lender, as
applicable, may from time to time designate.
(eeee) "Purchase Agreements": Collectively, the Cascade
Purchase Agreement, the Minnesota Purchase Agreement, the CSX Purchase
Agreement, the St. Croix Purchase Agreement, the Delaware Valley Purchase
Agreement, the E&N Purchase Agreement, the TPW Purchase Agreement and the RL
Stock Purchase Agreement.
(ffff) "RL Stock Purchase Agreement": That certain
Pre-Acquisition Agreement made the 17th day of May, 1999 between RailAmerica and
RAILLINK, LTD., a corporation organized under the laws of Alberta ("RailLink"),
whereunder RL and/or RailAmerica is to acquire all shares of stock of RailLink.
(gggg) "RL Stock Pledge and Security Documents": An agreement
or agreements whereby and whereunder all shares of stock of RailLink acquired by
RL and/or RailAmerica (from time to time) are pledged, hypothecated and assigned
to Agent as security for the Loans, Registration of Share Pledge and Powers of
Attorney for all pledged shares, which agreements must be entered into and
acknowledged by the depository institution holding such shares, together with
such securities opinions from Canadian Securities counsel regarding the pledged
shares as shall be required by the Lenders and Lender's counsel, together with
an agreement or agreements whereby and whereunder all shares of stock of QUEBEC
RAILWAY CORPORATION, INC. owned and/or acquired by RaiLink (from time to time)
are subject to a negative pledge, such that the same shall not be pledged in
favor of any other entity as security for any other indebtedness.
(hhhh) "RailLink EPA Audit": That certain Phase One
Environmental Site Assessment Report of the RailLink Real Property prepared by
Environmental Resources Management dated as of July 20, 1999, certified or to be
certified to the Agent, the results of which must be satisfactory to the
Majority Lenders in their sole and absolute discretion.
(iiii) "RailLink Mortgage and Security Documents": Freehold
Mortgages, Freehold Assignments of Rents, a Mortgage Right of Way, Assignment of
Rents, a Leasehold Mortgage, a Leasehold Assignment of Rents, an Assignment of
License Agreement, a General Assignment of Railway Agreements, General Security
Agreements and Personal Property Security Act Financing Statements from
RailLink, RL (if and as applicable) and certain subsidiary corporations of
RailLink to the Agent and Lenders, which secure the Loan and which are a valid
first lien encumbering RailLink's, RL's (if and as applicable) and/or any of
RailLink's subsidiary corporations' fee simple, statutory and leasehold
interests, as applicable, in the
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RailLink Real Property, the RailLink Railroad Trackage and all other property
(real and personal, tangible and intangible) now owned or hereafter acquired by
RailLink, RL (if and as applicable) and the subsidiary corporations.
(jjjj) "RailLink Railroad Trackage": All rails, tracks,
trackage, track materials, ties and timber owned or leased by RailLink and/or
its subsidiary corporations, whether now owned or hereafter acquired by it or
them, including but not limited to (i) all rail and track owned by RailLink
and/or any of its subsidiary corporations, but not yet affixed to any real
estate or incorporated within existing railroad lines, and (ii) all rail and
track owned by RailLink and/or any of its subsidiary corporations, and affixed
to real estate or incorporated within existing railroad lines, together with all
fixtures, equipment, machinery, structures, buildings, tracks, rails, ties,
switches, crossings, bridges, trestles, culverts, signals, crossing protection
devices, loading platforms, pools, communication lines, power lines and
appurtenances of every kind or nature, used or useful in connection with laying,
maintaining and operating such rail and track, including without limitation all
rails, tracks, trackage, track materials, ties and timber described and set
forth on Exhibit "G" appended hereto and made a part hereof.
(kkkk) "RailLink Real Property": Certain real property lying
and being situate in several provinces in Canada, as more particularly described
in the RailLink Mortgage and Security Documents.
(llll) "Railroad Trackage": All rails, tracks, trackage, track
materials, ties and timber owned by the Borrowers or any of them (other than
E&N), whether now owned or hereafter acquired, by them or any of them, including
but not limited to (i) all rail and track owned by Borrowers (other than E&N),
but not yet affixed to any real estate or incorporated within existing railroad
lines, and (ii) all rail and track owned by Borrowers (other than E&N) and
affixed to real estate or incorporated within existing railroad lines, together
with all fixtures, equipment, machinery, structures, buildings, tracks, rails,
ties, switches, crossings, bridges, trestles, culverts, signals, crossing
protection devices, loading platforms, pools, communication lines, power lines
and appurtenances of every kind or nature, used or useful in connection with
laying, maintaining and operating such rail and track, including without
limitation all rails, tracks, trackage, track materials, ties and timber
described and set forth on Exhibit "H" appended hereto and made a part hereof.
(mmmm) "Railroad Trackage Appraisal":Collectively, (i) that
certain Railroad Trackage appraisal prepared by Rail Associated Services, Inc.
dated December 27, 1993, as updated by Main Line Management Services, Inc., by
two (2) updates, both updates dated August 30, 1996, (ii) that certain
Development of Net Liquidation Value Appraisal prepared by Main Line Management
Services, Inc., dated October 17, 1995, as updated by Main Line Management
Services, Inc., by virtue of update dated August 16, 1996, (iii) that certain
Fair Market Value of Real Property prepared by Main Line Management Services,
Inc., dated August 13, 1996, (iv) that certain fair market value appraisal of
the railroad trackage owned by Minnesota Northern Railroad, Inc. and prepared by
Main Line Management Services, Inc., dated December 12, 1996, (v) that certain
Development of Net Liquidation Value Appraisal prepared
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by Main Line Management Services, Inc., dated December 14, 1995, (vi) that
certain Railroad Trackage Appraisal prepared by Main Line Management Services,
Inc. dated March 20, 1998 (updating a Railroad Trackage Appraisal prepared by
Main Line Management Services, Inc. dated September, 1995), (vii) that certain
Evaluation Study of the North Branch and Mora Branch referred to as the St.
Croix Valley (railroad trackage appraisal) prepared by Main Line Management
Services, Inc. dated September 8, 1997, (viii) an appraisal of the E&N Railroad
Trackage consisting of A Value for Other Use appraisal (Esquimalt And Nanaimo
Valuation Study for RailAmerica) prepared by Main Line Management Services, Inc.
dated November 25, 1998, (ix) that certain South Central Tennessee Valuation
Study prepared by Main Line Management Services, Inc. dated January 14, 1999,
(x) that certain Valuation Study Toledo Peoria & Western Railway prepared by
Main Line Management Services, Inc. dated March 15, 1999, and (xi) that certain
Valuation Study and RailLink Lines prepared by Main Line Management Services,
Inc. dated May 28, 1999, the results of which appraisals must be satisfactory to
the Majority Lenders, in their reasonable discretion; provided however, that
Majority Lenders reserve the right to require Borrowers to provide Agent with
updated appraisals of the same at any time during the term of the Loans
(provided, however, that unless an Event of Default shall have occurred and be
continuing, that said appraisals shall be limited to one (1) appraisal per
year), said appraisals to be performed at Borrowers' sole cost and expense.
(nnnn) "Real Estate" or "Real Property": Collectively the
Gettysburg Real Property, the Michigan Real Property, the Huron and Eastern Real
Property, the Minnesota Real Property, the Ontario Real Property, the Texas Real
Property, the Washington Real Property, the West Texas and Lubbock Real
Property, the Florida Real Property, the Tennessee Real Property, the TPW Real
Property and the RailLink Real Property.
(oooo) "Real Estate Appraisals". Satisfactory fair market
value appraisals of each of the Gettysburg Real Property, the Texas Real
Property, the Michigan Real Property, the Huron and Eastern Real Property, the
Minnesota Real Property, the Ontario Real Property, the Washington Real
Property, the West Texas and Lubbock Real Property, the Florida Real Property,
the E&N Real Property, the Tennessee Real Property, the TPW Real Property and
the RailLink Real Property.
(pppp) "Receivables": All accounts, accounts receivable,
general intangibles, contract rights and other obligations of any kind, whether
now owned or hereafter acquired by each Borrower and all proceeds of the
foregoing and all rights now or hereafter existing in and to all security
agreements, leases and other contracts security or otherwise relating to any
such accounts, contract rights, chattel paper instruments, general intangibles
and obligations and all proceeds, profits, deposits, products and accessions of
and to all of the foregoing.
(qqqq) "Reimbursement Obligation": The obligation of the
Borrowers with respect to any Letter of Credit to reimburse the Issuing Lender
and the Lenders to the extent of their respective Percentages (including by the
receipt by the Issuing Lender of the proceeds of Loans pursuant to the
provisions of Section 4.2) for amounts paid by the Issuing Lender pursuant to a
drawing under such Letter of Credit, if Borrower does not first pay the same.
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(rrrr) "Regulatory Change": Any change effective after the
Closing Date in United States federal or state laws or regulations (including
Regulation D as adopted by the Board of Governors of the Federal Reserve System
and capital adequacy regulations (as the same may be amended or supplemented
from time to time)) or foreign laws or regulations or the adopting or making
after such date of any interpretations, directives or requests applying to a
class of banks, which includes any of the Lenders, under any United States
federal or state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof or compliance by any Lender with any
request or directive regarding capital adequacy, including those related to
"highly leveraged transactions" whether or not having the force of law, and
whether or not failure to comply therewith would be unlawful and whether or not
published or proposed prior to the date hereof.
(ssss) "Reportable Event": Any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
(tttt) "Security Agreements": A Security Agreement from
Borrowers to Agent and the Lenders, as reaffirmed by Reaffirmations of Security
Agreement entered into from time to time, as the same may be amended and
reaffirmed from time to time, securing the Notes and all other Indebtedness of
Borrower to the Agent and the Lenders, providing a valid first lien on the
property identified in the Security Agreements, together with and including,
without limitation, all general Security Agreements executed by any or all
Borrowers in favor of Agent and the Lenders, as amended and/or reaffirmed from
time to time, and the STB Security Agreements, as amended and/or reaffirmed from
time to time
(uuuu) "Solvent": That, at the time of termination with
respect to a Borrower, (i) the fair market value of the Borrower's assets (both
at fair valuation and at present fair saleable value on an orderly basis) is in
excess of the total amount of its liabilities, including contingent obligations;
(ii) it is then able and expects to be able to pay its debts as they mature; and
(iii) it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.
(vvvv) "Subordinated Debt": Indebtedness incurred by any one
or more of the Borrowers or an Affiliate which is inferior to the indebtedness
provided under the Loans and formally subordinated in writing to the lien and
effect of the Loans.
(wwww) "Subordination Agreement": If applicable, a
Subordination Agreement to be executed by Borrowers and certain shareholders of
each Borrower, whereby and whereunder said parties subordinate all outstanding
note(s) and other debt instrument(s) due and owing from Borrowers to said
parties, to the lien and effect of the Loans, the Indebtedness and all security
interests associated therewith.
(xxxx) "St. Croix Purchase Agreement": That certain Agreement
for Sale of Certain Assets, Rights and Obligations of The Burlington Northern
and Santa Fe Railway
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<PAGE> 18
Company to St. Croix Valley Railroad Company dated as of August 22, 1997 (as
the same may be amended from time to time).
(yyyy) "STB Security Agreements": Surface Transportation Board
Security Agreement(s) and their Canadian equivalent from certain of the
Borrowers to Agent and the Lenders securing the Notes and all other indebtedness
of Borrowers to the Agent and the Lenders, as the same may be amended,
reaffirmed and/or restated from time to time, providing a valid first lien on
the locomotives and/or rolling stock identified in the Surface Transportation
Board Security Agreement(s).
(zzzz) "TPW EPA Audit": An environmental audit or audits of
the TPW Real Property certified to Agent, with evidence of all remediation
effectuated to date in form and content satisfactory to the Majority Lenders, in
their sole discretion, which must result in findings satisfactory to the
Majority Lenders in their sole and absolute discretion.
(aaaaa) "TPW Mortgage Documents": A Mortgage Deed and Security
Agreement and/or a Deed of Trust and Security Agreement and Assignment of Rents,
Leases and Deposits, as the same may be amended from time to time, from TOLEDO,
PEORIA & WESTERN RAILWAY CORPORATION, a New Jersey corporation ("Toledo") to
Agent, which secures the Notes to the extent of $33,000,000.00, which is a valid
first lien on the TPW Real Property and the personal property associated
therewith, together with UCC-1 Financing Statements, Fixture Financing
Statements, if and as applicable, and other documents associated therewith.
(bbbbb) "TPW Purchase Agreement": That certain Stock Purchase
Agreement by and between RailAmerica, Florida Rail, Bank Austria AG, Grand
Cayman Branch, CSX Transportation, Inc., Delaware Otsego Corporation, the
Brenner Group and The Toledo, Peoria and Western Railroad Corporation, dated as
of June 25, 1999, as the same may be amended from time to time.
(ccccc) "TPW Real Property": Certain real property lying and
being situate in Henderson County, Hancock County, McDonough County, Fulton
County, Peoria County, Tazewell County, Woodford County, McLean County,
Livingston County, Ford County and Iroquois County, Illinois and Newton County,
Jasper County, White County and Cass County, Indiana, owned by Toledo, as more
particularly described in the TPW Mortgage Documents.
(ddddd) "Tennessee EPA Audit": An environmental audit or
audits of the Tennessee Real Property certified to Agent, with evidence of all
remediation effectuated to date in form and content satisfactory to the Majority
Lenders, in their sole discretion, which must result in findings satisfactory to
the Majority Lenders in their sole and absolute discretion.
(eeeee) "Tennessee Deed of Trust Documents": A Tennessee
Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, a Collateral Assignment of (Lease) Agreement, and
Non-Disturbance and Attornment Agreements, as the
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same may be amended from time to time, from Tennessee to Agent, which secure the
Notes to the extent of $5,000,000.00, which is a valid first lien on Tennessee's
leasehold and other interests in the Tennessee Real Property and the personal
property associated therewith, together with UCC-1 Financing Statements, UCC-2
Fixture Financing Statements and other documents associated therewith.
(fffff) "Tennessee Real Property": Certain real property lying
and being situate in Dickson County, Hickman County and Lewis County, Tennessee,
in which Tennessee owns a leasehold interest, as more particularly described in
the Tennessee Deed of Trust Documents.
(ggggg) "Texas EPA Audit": An environmental audit or audits of
the Texas Real Property certified to Agent, with evidence of all remediation
effectuated to date in form and content satisfactory to the Majority Lenders, in
their sole discretion, which must result in findings satisfactory to the
Majority Lenders in their sole and absolute discretion.
(hhhhh) "Texas Deed of Trust Documents": A Deed of Trust,
Assignment of Leases and Rents and Security Agreement, as modified by a Deed of
Trust, Assignment of Leases and Rents and Security Agreement Modification
Agreements, as further modified by a Deed of Trust, Assignment of Leases and
Rents and Security Agreement Modification and Assumption Agreement, and as the
same may be further amended from time to time, from Kalyn to Agent, which
secures the Notes to the extent of $2,045,000.00, which is a valid first lien on
the Texas Real Property and the personal property associated therewith, together
with UCC-1 Financing Statements and other documents associated therewith.
(iiiii) "Texas Real Property": Certain real property lying and
being situate in Coryell County, Texas, owned by Kalyn, as more particularly
described in the Texas Deed of Trust Documents.
(jjjjj) "Truck Locators, Inc. Appraisal". A Machinery and
Equipment appraisal prepared by Truck Locators, Inc. dated January 20, 1995.
(kkkkk) "Washington EPA Audit": An environmental audit or
audits of the Washington Real Property, together with evidence of remediation
effectuated to date, in form and content satisfactory to Lenders, in their sole
and absolute discretion, which must result in findings satisfactory to the
Majority Lenders in their sole and absolute discretion.
(lllll) "Washington Deed of Trust Documents". Collectively a
Deed of Trust Agreement and an Assignment of Rents, Leases and Deposits from
Cascade to Agent, as modified by a Receipt for Future Advance and Deed of Trust
Modification Agreement, as modified by Deed of Trust Modification Agreements,
and as the same may be further amended from time to time, which secure the Notes
to the extent of $12,000,000.00 and are valid first liens on the Washington Real
Property and the personal property associated therewith, together with UCC-1
Financing Statements and other documents associated therewith.
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(mmmmm) "Washington Real Property". Collectively certain real
property lying and being situate in Chelan County and Okanogan County,
Washington, owned by Cascade, as more particularly described in the Washington
Deed of Trust Documents.
(nnnnn) "West Texas and Lubbock EPA Audit": An environmental
audit or audits of the West Texas and Lubbock Real Property, certified to Agent,
in form and content satisfactory to the Majority Lenders, in their sole and
absolute discretion, which must result in findings satisfactory to the Majority
Lenders in their sole and absolute discretion.
(ooooo) "West Texas and Lubbock Deed of Trust Documents". A
Deed of Trust, Assignment of Leases and Rents and Security Agreement, as
modified by a Receipt for Future Advance, Deed of Trust, Assignment of Leases
and Rents and Security Agreement Modification Agreement, as modified by Deed of
Trust, Assignment of Leases and Rents and Security Agreement Modification
Agreements and as the same may be further amended from time to time, from West
Texas to Agent which secure the Notes to the extent of $7,250,000.00 and are
valid first liens on the West Texas and Lubbock Real Property and the personal
property associated therewith, together with UCC-1 Financing Statements and
other documents associated therewith.
(ppppp) "West Texas and Lubbock Real Property". Collectively
certain real property lying and being situate in Gaines County, Hockley County,
Cochran County, Lubbock County, and Terry County, Texas, owned by West Texas, as
more particularly described in the West Texas and Lubbock Deed of Trust
Documents.
1.3 Other Definitional Provisions. (a) The terms "material" and
"materially" shall have the meanings ascribed to such terms under Generally
Accepted Accounting Principles as such would be applied to the business of the
Borrower, except as the context shall clearly otherwise set forth; (b) all of
the terms defined in this Agreement shall have such defined meanings when used
in other documents issued under, or delivered pursuant to, this Agreement,
unless the context shall otherwise require; (c) all terms defined in this
Agreement in the singular shall have comparable meanings when used in the
plural, and vice versa; (d) accounting terms to the extent not otherwise defined
shall have the respective meanings given them under, and shall be construed in
accordance with Generally Accepted Accounting Principles; (e) the words
"hereby", "hereto", "hereof", "herein", "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; (f) the masculine and neuter genders
are used herein and whenever used shall include the masculine, feminine and
neuter as well; and (g) whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include their heirs, personal
representatives, successors and assigns of such parties unless the context shall
expressly provide otherwise.
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ARTICLE 2.
THE LOAN
2.1 Provided there does not exist an Event of Default, and no event
with which notice or lapse of time or both would become such an Event of
Default, and subject to the terms and provisions of this Agreement, each Lender
severally agrees to effectuate Advances to RailAmerica for the benefit of the
Borrowers under the Notes such that each Lender shall severally lend or advance
for the account of RailAmerica for the benefit of the Borrowers from time to
time, and, RailAmerica, on behalf of and for the benefit of the Borrowers, may
borrow, and the Borrowers shall repay and re-borrow (provided that unless
Borrowers intend to pay and satisfy the Loans in full, Borrowers shall not
reduce the outstanding principal balance under any of the Notes to a sum of less
than $1,000.00) such amounts as may be required for the purpose of (a)
refinancing an existing Eighty-Five Million and 00/100 Dollar ($85,000,000.00)
line of credit/term loan facility currently outstanding and due and owing by
certain of the Borrowers to certain of the Lenders, (b) supporting short term
working capital requirements of the Borrowers, and, (c) providing for the
financing of future acquisitions by one or more of the Borrowers or by an
Affiliate of transportation related businesses, said acquisitions to be subject
to review by Lenders, and, in the case of acquisitions requiring Acquisition
Advances in excess of Five Million and 00/100 Dollars ($5,000,000.00) to be
subject to the consent of the Majority Lenders, which consent shall not be
unreasonably withheld; provided further that the assets acquired pursuant to an
acquisition financed by Lenders shall be subject to a negative pledge, or in the
event the pro-forma asset ratio coverage of the Borrowers immediately after the
time of the Acquisition Advance does not meet the required Minimum Asset Ratio
of not less than 1.4 to 1, pledged in favor of Agent as security for the Loans,
not exceeding in the aggregate an amount equal to (i) the Eligible Receivables,
less such reserves as the Majority Lenders, in their reasonable discretion elect
to establish, provided further that a receivable may be devalued in such amount
as shall be determined by the Majority Lenders in their reasonable discretion
due to "Dilution" which is defined as and is the result of non-cash credits
posted against the receivable which results in payment or other satisfaction of
all or any portion of the receivable for reasons other than full payment of the
receivable in cash, together with an amount equal to (ii) the Eligible
Inventory, together with an amount equal to the (iii) appraised aggregate fair
market value of the Real Estate as determined by (A) that certain Real Property
"Market Value" Appraisal dated May 9, 1994, as updated by appraisal update dated
August 19, 1996, both the Appraisal and the update prepared by M.B. Valuation
Services, Inc. in connection with the Texas Real Property, (B) that certain
Appraisal of Corridors, Land and Buildings, HURON AND EASTERN RAILWAY COMPANY,
INC., SAGINAW VALLEY RAILWAY COMPANY, INC., State of Michigan, dated February
28, 1994 prepared by Oetzel Hanton Williams in connection with the Michigan Real
Property, said appraisals updated by two (2) appraisal updates prepared by Main
Line Management Services, Inc., both updates dated August 30, 1996, (C) that
certain Appraisal of Commercial Property located at 710 Second Line West, Sault
Ste. Marie, Ontario, prepared by Area Real Estate Appraisals, Inc. dated August
1994 in connection with the Ontario Real Property, (D) that certain Development
of Net Liquidation Value Appraisal prepared by Main Line Management Services,
Inc., dated October 17, 1995, as updated by
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update appraisal prepared by Main Line Management Services, Inc., dated August
16, 1996, in connection with the West Texas and Lubbock Real Property, (E) that
certain Fair Market Value of Real Property prepared by Main Line Management
Services, Inc., dated August 13, 1996, in connection with the Washington Real
Property, (F) that certain Fair Market Value Appraisal of the Minnesota Real
Property and the Minnesota Railroad Trackage prepared by Main Line Management
Services, Inc., dated December 12, 1996, in connection with the Minnesota Real
Property, (G) that certain Development of Net Liquidation Value Appraisal
prepared by Main Line Management Services, Inc., dated December 14, 1995, in
connection with the Gettysburg Real Property, (H) that certain Complete Summary
Appraisal of RailAmerica, Inc., 101 Enterprise Drive, Vassar, Michigan dated May
11, 1998, prepared by Johnson Appraisals, in connection with the Huron and
Eastern Real Property, (I) that certain Railroad Trackage Appraisal prepared by
Main Line Management Services, Inc. dated March 20, 1998 (updating a Railroad
Trackage Appraisal prepared by Main Line Management Services, Inc. dated
September, 1995), in connection with the Michigan Real Property, (J) that
certain Complete Summary Appraisal of Locomotive Maintenance Facility, 828 Omak
Avenue, Omak, Washington (File #98-11-8786) dated June 1, 1998, prepared by
Pacific Appraisal Associates, P.L.L.C., in connection with the Washington Real
Property (the "Washington Appraisal"), (K) Summary Appraisal of an Industrial
Property Located at 6010 Brownfield Highway, Lubbock, Texas dated April 2, 1998,
prepared by Harris Appraisal Company, Inc., in connection with the West Texas
and Lubbock Real Property (the "West Texas Appraisal"), (L) that certain
Appraisal of real property located at 5300 Broken Sound Boulevard, Boca Raton,
Florida 33431, dated as of June 1, 1998, prepared for National Bank of Canada by
Callaway & Price, Inc. in connection with the Florida Real Property based upon
the market value of the Florida Real Property in its "as is" condition and not
based upon the market value of the Florida Real Property prepared on an "as
completed" basis, provided further that the value attributed to the Florida Real
Property shall be removed from the Borrowing Base upon the earlier of
Plainview's refinancing of the Florida Real Property or the 31st day of
December, 1999, whichever shall first occur, such that the Plainview Advance
effectuated in connection with Plainview's acquisition of the Florida Real
Property must be repaid in full on or before the earlier of the above set forth
refinancing or the 31st day of December, 1999, (M) that certain South Central
Tennessee Valuation Study prepared by Main Line Management Services, Inc. dated
January 14, 1999 (the "Tennessee Appraisal"), (N) that certain Valuation Study
Toledo Peoria & Western Railway prepared by Main Line Management Services, Inc.
dated March 15, 1999 (the "TPW Appraisal), and (O) that certain Valuation Study
and RailLink Lines prepared by Main Line Management Services, Inc. dated May 28,
1999 (the "RailLink Appraisal), provided that no valuation attributed to Real
Estate or other assets included in the RailLink Appraisal, which are encumbered
by any liens in favor of other parties or are financed by other parties, shall
be included within the valuation attributable to Real Estate, provided further
that in the event the RailLink Mortgage and Security Documents have not been
duly authorized, executed, delivered and recorded, providing a first priority
lien, mortgage and security interest in favor of Agent, by no later than October
26,1999, with all entities which own Real Estate or other assets included in the
RailLink Appraisal having executed and delivered Borrower Joinder Agreements and
having become Additional Borrowers, on or before October 26, 1999, effective as
of October 27, 1999 and thereafter, there shall no
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longer be ANY value attributed to the Real Estate or other assets included in
the RailLink Appraisal (it being acknowledged that no valuation attributed to
(1) any of the Railroad Trackage as set forth in the above set forth Real Estate
Appraisals or (2) any of the underlying land as set forth in the Minnesota
Appraisal, the Washington Appraisal, the West Texas Appraisal, the Tennessee
Appraisal, the TPW Appraisal or the RailLink Appraisal shall be included within
the valuation attributable to the Real Property), which (aggregate) fair market
value as determined by the above set forth appraisals is subject to adjustment
by the Majority Lenders, together with an amount equal to (iv) the forced
liquidation value of the Machinery and Equipment as determined by (A) the Truck
Locators, Inc. Appraisal, and (B) the Locomotive Appraisal (related to
locomotives; provided that said locomotives must continue to be owned free and
clear of any liens, excepting for a lien in favor of Agent and the Lenders
provided by the STB Security Agreements which are still owned by a Borrower, in
order to be eligible for financing hereunder; provided further that in the event
STB Security Agreements and all other necessary documents and instruments
required to perfect a first priority security interest in locomotives under
Canadian law have not been duly authorized, executed delivered and recorded
providing a first priority lien and security interest in favor of Agent by no
later than October 26, 1999, with all entities which own such locomotives
included in the (RailLink) Locomotive Appraisal having executed and delivered
Borrower Joinder Agreements and having become Additional Borrowers on or before
October 26, 1999, effective as of October 27, 1999 and thereafter, there shall
no longer be ANY value attributed to the locomotives or other assets included in
the (RailLink) Locomotive Appraisal), which (aggregate) forced liquidation value
is subject to adjustment by the Lenders, together with an amount equal to (v)
the net liquidation value of the Railroad Trackage as determined by the Railroad
Trackage Appraisal (it being acknowledged that (a) no value attributed to any of
the Real Property as set forth in the Railroad Trackage Appraisal shall be
included in the valuation attributable to the Railroad Trackage, (b) upon such
time as the Borrowers (or any of them) apply to the Surface Transportation Board
and/or applicable governmental agencies of the State of Minnesota for
abandonment of any railroad lines operated by St. Croix in the State of
Minnesota (it being further acknowledged that the Borrowers are obligated to
immediately notify NBC of any proposed abandonment), the value of the Railroad
Trackage owned by St. Croix shall be reduced by an amount equal to the amount
required to be paid by St. Croix under the terms of the St. Croix Purchase
Agreement upon abandonment, and (c) no valuation attributed to Railroad Trackage
or other assets included in the RailLink Appraisal, which are encumbered by any
liens in favor of other parties or are financed by other parties, shall be
included within the valuation attributable to Railroad Trackage, provided
further that in the event the RailLink Mortgage and Security Documents have not
been duly authorized, executed, delivered and recorded, providing a first
priority lien, mortgage and security interest in favor of Agent, by no later
than October 26,1999, with all entities which own Railroad Trackage or other
assets included in the RailLink Appraisal having executed and delivered Borrower
Joinder Agreements and having become Additional Borrowers, on or before October
26, 1999, effective as of October 27, 1999 and thereafter, there shall no longer
be ANY value attributed to the Railroad Trackage or other assets included in the
RailLink Appraisal), which net liquidation value is subject to adjustment by the
Majority Lenders, together with an amount equal to (vi) the appraised fair
market value of the E & N Real Property and the net liquidation value of the E &
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N Railroad Trackage, the fair market value of the E & N Real Property and the
net liquidation value of the E & N Railroad Trackage to be as determined by the
E & N Appraisal, which fair market value of the E & N Real Property is subject
to adjustment by the Majority Lenders, provided, further that the fair market
value of E & N's leasehold interest in the E & N Real Property and the fair
market value of all other Borrower's leasehold interests in any Real Property is
subject to adjustment and/or removal from the Borrowing Base in the event that
the leasehold interest in the E&N Real Property or any other Real Property is
terminated without being replaced by fee title ownership or a statutory right of
way in favor of E&N or any other applicable Borrower, or, in the event E&N or
any other Borrower can no longer operate a rail line on the E&N Real Property or
any other Real Property, as applicable, for any other reason, and which net
liquidation value of the E & N Railroad Trackage and all other Railroad Trackage
is subject to adjustment by the Majority Lenders, all of the above set forth
appraisals and values to be subject to adjustment by the Majority Lenders, such
that the final amounts of the fair market values, the forced liquidation values
and the net liquidation value, shall be determined by the Majority Lenders in
their reasonable discretion (the "Borrowing Base"); or, the aggregate sum of One
Hundred Twenty-Five Million and 00/100 Dollars ($125,000,000.00), whichever is
less, provided that in connection with the Loans, that up to Ten Million and
00/100 Dollars ($10,000,000.00) of the Loan may be used for the issuance of
Letters of Credit provided however, that collateral for the Letters of Credit
will be one hundred (100%) percent reserved and will reduce availability for
direct borrowings under the Loans on a dollar-for-dollar basis in an amount
equal to the face amount of the Letters of Credit outstanding, and provided
further that the outstanding amount of the Loans shall in no event exceed the
maximum sum of One Hundred Twenty-Five Million and 00/100 Dollars
($125,000,000.00), provided further, that at no time shall the Minimum Asset
Ratio be less than 1.4 to 1, and in the event that the Minimum Asset Ratio is
less than 1.4 to 1, then the outstanding principal balance of the Loans must be
reduced by the amount necessary to achieve a Minimum Asset Ratio of equal to or
greater than 1.4 to 1. The principal payment necessary to effectuate such
reduction shall be due and payable in full on DEMAND.
In connection with the Borrowing Base and notwithstanding anything to
the contrary set forth above, there shall be no value attributable to Railroad
Trackage, Real Estate, locomotives or any other assets included in the TPW
Appraisal or Locomotives Appraisal prepared in connection with locomotives and
railcars owned by Toledo or any affiliated entity (the "TPW Locomotives
Appraisal") until such time as all of the following events have occurred: (i)
all entities which own Railroad Trackage, Real Estate, locomotives or other
assets included in the TPW Appraisal and/or TPW Locomotives Appraisal, as
applicable, shall have executed and delivered Borrower Joinder Agreement and
become Additional Borrowers; (ii) the TPW Mortgage and Security Documents and
all necessary STB Security Agreements have been duly authorized, executed and
delivered and recorded in the appropriate public records; (iii) a Collateral
Assignment of the TPW Stock Purchase Agreement has been duly executed and
delivered and joined in and acknowledged by each of the Sellers who are a party
to the TPW Stock Purchase Agreement; (iv) Borrower shall have provided Lender
and their counsel with evidence of title in connection with the TPW Real
Property in form and content satisfactory to
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Lender and their counsel in their sole and absolute discretion; and (v) Borrower
shall have provided to Lender and their counsel Borrower's counsel opinion
letters from Borrower's Indiana counsel and Borrower's Illinois counsel, in
form and content satisfactory to Lender and their counsel in their sole and
absolute discretion. Accordingly, the TPW Railroad Trackage, Real Estate,
locomotives and other assets included in the TPW Appraisal and/or TPW
Locomotives Appraisal, as applicable, shall not be included in the Borrowing
Base until such time as ALL of the above set forth events have occurred.
Each Advance hereunder shall be in an amount of at least One Hundred
Thousand and 00/100 Dollars ($100,000.00), and if greater than One Hundred
Thousand and 00/100 Dollars ($100,000.00), in integral multiples of Fifty
Thousand and 00/100 Dollars ($50,000.00).
Advances will be made based on the most recent "Minimum Asset Ratio
Certificate" submitted by Borrowers to Agent, which must be submitted by
Borrowers to Agent no less than one (1) time in each month within thirty (30)
days of the end of the prior month evidencing the Minimum Asset Ratio for the
immediately preceding month, provided however, that the Minimum Asset Ratio
Certificate must also be submitted by Borrowers to Agent each time an
Acquisition Advance is requested, reflecting the above borrowing formula. The
form of Minimum Asset Ratio Certificate is attached hereto and made a part
hereof as Exhibit "I".
In connection with any requests for an Acquisition Advance in an amount
in excess of Five Million and 00/100 Dollars ($5,000,000.00), said request shall
be subject to the approval of the Majority Lenders, which approval will not be
unreasonably withheld. ADDITIONALLY, ALL ACQUISITIONS IN AN AMOUNT IN EXCESS OF
FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00) BY ONE OR MORE OF THE BORROWERS
OR BY AN AFFILIATE OF TRANSPORTATION RELATED BUSINESSES OR ANY OTHER BUSINESSES
MUST BE APPROVED BY THE MAJORITY LENDERS, WHICH APPROVAL WILL NOT BE
UNREASONABLY WITHHELD; PROVIDED, HOWEVER, THAT ACQUISITIONS IN AN AMOUNT OF
TWENTY MILLION AND 00/100 DOLLARS ($20,000,000.00) OR LESS WHICH ARE FUNDED
UTILIZING MONEY RAISED THROUGH PUBLIC OFFERINGS, PRIVATE PLACEMENTS OR
SUBORDINATED DEBT SHALL ONLY REQUIRE NOTIFICATION TO THE LENDERS, BUT NOT THE
APPROVAL OF THE MAJORITY LENDERS, SO LONG AS NO MONETARY DEFAULT OR EVENT OF
DEFAULT HAS OCCURRED AND IS THEN CONTINUING, AND SUCH ACQUISITION (AND THE
FUNDING THEREFOR) WILL NOT RESULT IN A DEFAULT UNDER ANY FINANCIAL COVENANTS OR
RESULT IN ANY OTHER MONETARY DEFAULT OR EVENT OF DEFAULT, PROVIDED, FURTHER,
THAT BORROWER SHALL HAVE PROVIDED TO THE LENDERS A PRO FORMA LEVERAGE RATIO
EVIDENCING A 2.5 TO 1 OR LESS CALCULATION IN FORM AND CONTENT SATISFACTORY TO
THE LENDER, IN LENDER'S SOLE AND ABSOLUTE DISCRETION. NOTWITHSTANDING THE
FOREGOING, ACQUISITIONS IN AN AMOUNT IN EXCESS OF TWENTY MILLION DOLLARS
($20,000,000.00) BY ONE OR MORE OF THE BORROWERS OR BY AN AFFILIATE OF
TRANSPORTATION RELATED BUSINESSES OR ANY OTHER BUSINESSES MUST BE APPROVED BY
THE MAJORITY LENDERS,
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WHICH APPROVAL WILL NOT BE UNREASONABLY WITHHELD. In connection with the same,
Borrower shall provide to Agent at the time of the request for an Acquisition
Advance or at the time Borrower notifies the Lenders or seeks approval from the
Lenders in connection with a proposed acquisition by any of the Borrowers, as
applicable, certified copies of the Contract for Purchase and Sale and all
associated documentation associated with the applicable Borrower's acquisition
of a transportation related business, including, without limitation, all
contracts, breakout of purchase price, cash flow analysis, projected income from
the acquisition, historical performance of the business being acquired (if
available), and all appraisals and environmental audits related to the property
being acquired by a Borrower or an affiliate of a Borrower. Based upon Lenders'
review of all of the above, the Majority Lenders may effectuate or not
effectuate the Acquisition Advance or approve or not approve the acquisition, as
applicable, in Lender's reasonable discretion. Lender shall approve or not
approve each request for an Acquisition Advance, or approve or not approve an
acquisition, as applicable, no later than five (5) business days after the time
that Agent has received the last item required to be reviewed by Lenders in
connection with the applied for Acquisition Advance or approval of an
acquisition, as applicable. Lenders shall approve or not approve each request
for a Collateralized Acquisition Advance no later ten (10) business days after
the time that Agent has received the last item required to be reviewed by Lender
in connection with the applied for Collateralized Acquisition Advance. Borrowers
shall additionally provide to Agent copies of all closing documentation
associated with the acquisition and sale at the time of the closing of said
acquisition and shall execute and/or provide all documentation required by
Lenders and their counsel (including, without limitation, mortgages, deeds of
trust, security agreements, reaffirmations, collateral assignments, UCC-3
financing statements, UCC-3 statements of change, lien searches and opinions of
Borrowers' counsel), in order to evidence and perfect Agent's security interest
in the newly acquired assets. Finally, it is a condition precedent to the
effectuation of any Acquisition Advance that after the funding of the
Acquisition Advance the Borrowers, on a consolidated basis, shall have available
a combination of not less than Five Million and 00/100 Dollars ($5,000,000.00)
in cash on hand and/or availability under the Borrowing Base.
2.2 A Loan Closing Fee, a Loan Amendment Fee, Audit Fees, Unused
Line Fees, Letter of Credit Fees, Agent Fees and Prepayment Fees shall be
charged in connection with the Loans and, the following fees and rates shall
apply:
(a) LOAN CLOSING FEE: To be paid in accordance with the terms
and provisions of the Facility Fee Letter.
(b) LOAN AMENDMENT FEE: To be paid in accordance with the
terms and provisions of the Facility Fee Letter.
(c) AUDIT FEES: There shall be semi-annual audits (the
frequency of which may be adjusted at any time by Lenders, in the event Lenders
deem the same necessary due to an adverse change or trend in the Borrowers'
businesses) of the Borrowers performed in each fiscal year of Borrowers during
the term of the Loans. There shall be a semi-annual audit fee due and owing from
Borrowers to Agent in connection with said audits based upon a charge
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of Four Hundred and 00/100 Dollars ($400.00) per day plus expenses, provided
further that so long as audits are not conducted more often than on a
semi-annual basis, the annual fees for said audits shall not exceed the sum of
Ten Thousand and 00/100 Dollars ($10,000.00) plus expenses.
(d) UNUSED LINE FEE: An unused line fee shall be charged in
connection with the Loans, such that the unused portion of the Loans shall be
subject to an annual fee of three-eighths of one (.375%) percent per annum, to
be calculated and payable to Agent on a quarterly basis, for pro-rata
distribution to the Lenders. Upon the occurrence of either of the following
events and thereafter: (i) Borrower failing to complete an equity offering (or
other capital offering acceptable to all of the Lenders) by no later than
December 31, 1999 in the minimum amount of Sixty Seven Million Five Hundred
Thousand Dollars ($67,500,000.00) or in the aggregate minimum amount of Eighty
Seven Million Five Hundred Thousand Dollars ($87,500,000.00), inclusive of the
completion of a prior equity offering and/or placement of subordinated debt, or
(ii) Borrower failing to pay in full by no later than April 30, 2000 an existing
One Hundred Million Dollar ($100,000,000.00) loan due and owing by certain of
the Borrowers to BARCLAYS BANK (each of the events set forth in (i) and (ii)
above are hereinafter called an "Unused Line Fee Increase Event"), the unused
line fee charged in connection with the Loans from the time of the occurrence of
the Unused Line Fee Increase Event and thereafter shall increase to one-half of
one (.5%) percent per annum, and upon the occurrence of both Unused Line Fee
Increase Events and thereafter, the unused line fee charged in connection with
the Loans shall be increased to an annual fee of five-eighths of one (.625%)
percent per annum, in each case to be calculated and payable to Agent on a
quarterly basis, for pro rata distribution to the Lenders.
(e) LETTER OF CREDIT FEES: A fee of one and one-quarter
(1.25%) percent per annum shall be charged in connection with all standby
Letters of Credit. There shall be standard, customary Letter of Credit fees and
charges for all trade Letters of Credit issued under the Loans, which shall
include all customary bank charges associated therewith.
(f) AGENT FEES: To be paid in accordance with the terms and
provisions of the Facility Fee Letter.
(g) PREPAYMENT FEES: If during the term of the Loans (i) the
Loans are paid down to a zero (0) balance or (ii) the Lenders' obligation to
make Advances under the Loans ceases due to the occurrence of an uncured Event
of Default and Lenders' election to exercise their rights under the Loan
Documents, the Borrowers shall pay to the Agent (to be disbursed pro-rata to the
Lenders) a prepayment fee in an amount equal to (i) one-half of one (.50%)
percent of the aggregate face amount of the Notes during the first year of the
Loans; (ii) one-quarter of one (.25%) percent of the aggregate face amount of
the Notes during the second year of the Loans, and (iii) there shall be no
prepayment fee during the third year of the Loans, subject to the terms and
provisions set forth herein. The above set forth prepayment fee shall be due and
payable whether such prepayment or cessation of Lenders' obligation to make
Advances is voluntary or involuntary, or a result of an Event of Default and/or
the result of acceleration of all or other sums due as a result of such
acceleration or default.
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2.3 All Advances and Acquisition Advances hereunder and under the
Notes shall be recorded by Agent in the Loan Account.
2.4 Borrowers' obligation to repay the Loans is evidenced by the
Notes, which set forth the method for payment, rates of interest, and such
further terms as are therein set forth. IN CONNECTION WITH THE ELECTION MADE BY
BORROWERS AS TO THE INTEREST RAE WHICH IS TO BE CHARGED UNDER THE NOTES AT ANY
POINT IN TIME, THAT SAME RATE OF INTEREST SHALL BE CHARGED UNDER ALL OF THE
NOTES AT THAT TIME, SUCH THAT THE SAME RATE OF INTEREST SHALL BE CHARGED UNDER
ALL OF THE NOTES AT ALL TIMES. The repayment of the Notes and the Indebtedness
is to be secured by the following documentation, which documents Borrowers shall
deliver, or cause to be delivered, to Agent, and which documents must be
received prior to any funding hereunder:
(a) The Security Agreements (including the STB Security
Agreements), together with the General Security Agreement executed by E&N (which
constitutes a part of the E&N Mortgage Documents) and the General Security
Agreements to be executed in connection with and constitute a part of the
RailLink Mortgage and Security Documents (which RailLink Mortgage and Security
Documents must be delivered and recorded by no later than October 26, 1999), in
form and substance satisfactory to the Majority Lenders and their counsel,
granting Agent a first security interest in all of Borrowers' accounts, accounts
receivable, inventory, chattel paper, general intangibles, fixtures, furniture,
Railroad Trackage, the E&N Railroad Trackage, railroad rolling stock, railroad
equipment, corridor use rights, railroad rights of way, Franchises, instruments,
Machinery and Equipment and personal property now owned or hereafter acquired by
Borrowers and all proceeds of the foregoing.
(b) The Collateral Assignments shall have been executed and
delivered to Agent.
(c) The Mortgage Documents shall have been executed and
delivered to Agent to be recorded in the public records of the appropriate
offices.
(d) Financing statements executed and recorded or filed with
the appropriate secretaries of states, in the public records of applicable
cities and counties in the States of Florida, Michigan, Pennsylvania, Texas,
Washington, Minnesota, Delaware, Tennessee, Illinois, Indiana and in such
governmental offices as shall be required in Ontario, Canada, British Columbia,
Canada, Nova Scotia, Canada, Alberta, Canada and other parts of Canada, and in
all other public offices as the Majority Lenders and their counsel may deem
necessary to perfect a security interest in any of the items referred to in
Subsections 2.4(a) through 2.4(c) above.
(e) The RL Stock Pledge and Security Documents shall have been
executed and delivered to Agent.
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(f) If and as necessary, UCC-1 Financing Statements, Personal
Property Security Act Financing Statements, UCC-3 Statements of Change
(Amendments) executed and recorded or filed with the appropriate secretaries of
states, in the public records of applicable cities and counties in the States of
Florida, Michigan, Pennsylvania, Texas, Washington, Minnesota, Delaware,
Tennessee, Illinois, Indiana and in such governmental offices as shall be
required in Ontario, Canada, British Columbia, Canada, Nova Scotia, Canada,
Alberta, Canada and other parts of Canada, and in all other public offices as
the Majority Lenders and their counsel may deem necessary to perfect a security
interest in any of the items referred to in Subsections 2.4(a) through 2.4(e)
above.
(g) Borrowers' Counsel Opinion Letters, in form and substance
satisfactory to the Majority Lenders and their counsel, from Borrowers' Counsel
for Florida, Delaware, Michigan, Ontario, British Columbia, Nova Scotia,
Pennsylvania, Texas, Washington, Minnesota, Tennessee, Illinois (when
applicable), Indiana (when applicable), Alberta and various other provinces in
Canada opining as to certain matters concerning the Loans.
(h) Such policies of liability insurance, flood insurance,
worker's compensation insurance, and hazard insurance (with fire extended
coverage, vandalism and mischief protection) as the Majority Lenders may
request, subject to a standard loss-payee's and additional insured's endorsement
in the Agent's favor, in providing at least thirty (30) days prior written
notice of any cancellation, modification or non-renewal of the insurance
coverage.
(i) Incumbency Certificates and Resolutions of the directors
or partners, as applicable, of each Borrower authorizing the Loans.
(j) Certificates of Good Standing or Existence, as applicable,
evidencing that each Borrower is in good standing under the laws of the State or
Province of its incorporation or formation and is in good standing in each State
and Province where they conduct business, as applicable.
(k) Certified copy of the Articles of Incorporation and
By-Laws or Partnership Agreement of each Borrower or Certificate of
Incorporation and Articles of Association of each Borrower, as applicable.
(l) Evidence of compliance by each Borrower with the Florida
Fictitious Name Statute, if and as applicable.
(m) If applicable, certified copies of the Leases in
connection with all leased premises of each Borrower.
(n) If applicable, the Landlord's Waiver of Lien Agreement(s)
shall be executed by all landlords at business locations of each Borrower
waiving the landlord's lien to the lien and effect of the Loans.
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(o) If applicable, a Subordination Agreement executed by
certain shareholders of certain of the Borrowers.
(p) Such other documentation as may be required by the
Majority Lenders or their counsel.
The foregoing documents, this Agreement and all other documents relating hereto,
shall collectively be referred to as the "Loan Documents".
2.5 The Lenders shall have no obligation to make any Loans in
excess of the amount of the Initial Loans. However, upon request by the
Borrowers, the Majority Lenders, in their sole and absolute discretion, may
approve Additional Loans in such amounts as shall be determined by the Majority
Lenders. Such Additional Loans may be made by the Initial Lenders or the
Additional Lenders upon the following terms and conditions, and subject to the
other provisions of this Loan Agreement:
(a) The Additional Lender shall be selected by the Borrowers
or the Agent, and must be approved by the Majority Lenders;
(b) The Borrowers shall execute Additional Notes evidencing
the Additional Loans in favor of the appropriate Lenders;
(c) The Borrowers shall execute such Mortgage Modification
Agreements, Reaffirmations of Security Agreements, Financing Statements and
other associated Loan Documents as are required by the Agent in order to fully
secure the Additional Loans;
(d) The Additional Lenders, if any, shall execute a Joinder
Agreement in the form attached hereto as Exhibit "B" pursuant to which each such
Additional Lender becomes obligated as a Lender under this Agreement;
(e) The Borrowers, the Agent and the Lender shall execute an
Amendment to this Agreement revising Exhibit "F" to reflect the correct
Percentage of each Lender after giving effect to the addition of the Additional
Loans (and the Additional Lender, as applicable) and otherwise amending this
Agreement as required by the Agent and its counsel;
(f) The Borrower shall deliver to the Agent such opinions of
counsel covering such matters as shall be required by the Agent and its counsel;
and
(g) Each of the Borrowers and the Lender shall deliver such
other documents as the Agent and its counsel shall reasonably request in
connection with the Additional Loans.
2.6 In the event that the Borrowers request the Majority Lenders'
consent to the sale or other disposition of any collateral encumbered by the
Security Agreements and included in the Borrowing Base, the Borrowers shall
provide to Agent at the time of such request, and Agent
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shall deliver to Lenders within two (2) Business Days after Agent's receipt
thereof, certified copies of the Contract for Purchase and Sale of such assets
and all documentation associated therewith. Based upon Lenders' review of the
foregoing, the Majority Lenders, in their reasonable discretion, shall consent
or not consent to the request for the sale or disposition of collateral. Lenders
shall consent or not consent to the sale or disposition of collateral no later
than five (5) Business Days after the time that Agent receives the last item
required to be reviewed by Lenders in connection with the requested sale or
disposition of collateral. No consent shall be granted if, at the time of the
request, a default has occurred and is continuing under this Agreement or any
associated Loan Documents. In addition, in the event that after the sale or
other disposition of any collateral the Minimum Asset Ratio is less than 1.4 to
1, then the outstanding principal balance of the Loans must be reduced by an
amount necessary to achieve a Minimum Asset Ratio of equal to or greater than
1.4 to 1. The principal payments necessary to effectuate such reduction shall be
due and payable in full ON DEMAND. Borrower shall be responsible for the cost of
the preparation and recording of all documentation required by Lenders and their
counsel in order to evidence the release of collateral upon any sale or other
disposition.
ARTICLE 3.
MANNER OF MAKING LOAN ADVANCES
3.1 Except as set forth herein, each Advance and Acquisition
Advance to the Borrowers under the Loans shall be made by the Lenders upon
written request of RailAmerica to the Agent stating the date on which the
Advance is to be made (the "Borrowing Date"), and the principal amount of the
Advance or Acquisition Advance requested, said Advance request to be delivered
to Agent at least three (3) days prior to the day of the Advance, together with
a Cash Remittance Report, on National Bank of Canada form, in the form attached
hereto and made a part hereof as Exhibit "J" (the "Remittance Report"). The
above set forth written forms may be sent via facsimile, to be immediately
followed by delivery of the original forms to Agent. Any notice delivered under
this subsection shall be irrevocable and bind the Borrowers to consummate the
Advance on the Borrowing Date, provided however, that in connection with a
request for an Acquisition Advance, said notice shall not be irrevocable or bind
the Borrowers to consummate the Acquisition Advance on the Borrowing Date in the
event that the proposed acquisition does not close. Additionally, and as set
forth in Article 2, Section 2.1 above, the Borrowers shall provide the Agent
with a Minimum Asset Ratio Certificate at least one (1) day prior to the date of
an Acquisition Advance. The Borrowers shall also provide Agent with a Quarterly
Financial Covenant Compliance Certificate, the form of said Certificate being
appended hereto and made a part hereof as Exhibit "K" (the "Financial Covenant
Compliance Certificate"), to Agent no less than four (4) times in each fiscal
year, on a quarterly basis, within sixty (60) days of the end of each fiscal
quarter of Borrowers, excepting for the year end fiscal quarter after which the
Financial Covenant Compliance Certificate must be provided within one hundred
twenty (120) days.
3.2 Simultaneous with delivery of the Minimum Asset Ratio
Certificate, and in any event not less than one (1) time in each month in each
fiscal year of Borrowers, the Borrowers
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must additionally deliver a list of the receivables and Eligible Receivables to
the Agent, together with a list of all sales effectuated by each Borrower
between the time of delivery of the last Minimum Asset Ratio Certificate and the
time of delivery of the then current Minimum Asset Ratio Certificate, and, a
list of all inventory of Borrowers set forth in such detail as is satisfactory
to the Majority Lenders, evidencing that there are adequate sales, Eligible
Receivables and/or Eligible Inventory to support the Advances.
3.3 Notwithstanding anything to the contrary set forth above, and
as set forth in Section 2.1 above, in connection with any requests for an
Acquisition Advance in excess of Five Million and 00/100 Dollars
($5,000,000.00), said request shall be subject to approval by the Majority
Lenders, which approval will not be unreasonably withheld. In connection with
the same, Borrowers shall provide Agent at the time of the request for an
Acquisition Advance certified copies of the Contract for Purchase and Sale and
all associated documentation associated with the applicable Borrower's
acquisition of a transportation related business, which shall be purchased (in
part) from the proceeds of the Acquisition Advance, including without
limitation, all contracts, breakout of purchase price, cash flow analysis,
projected income from the acquisition and historical performance of the business
being acquired (if available). Based upon Lenders' review of all of the above,
Lenders may effectuate or not effectuate the Acquisition Advance in Lenders'
reasonable discretion. Lenders shall approve or not approve each request for an
Acquisition Advance no later than five (5) Business Days, and shall approve or
not approve each request for a Collateralized Acquisition Advance no later than
ten (10) Business Days, after the time that Agent receives the last item
required to be reviewed by Lenders in connection with the applied for
Acquisition Advance or Collateralized Acquisition Advance, as applicable.
Borrowers shall additionally provide to Agent copies of all closing
documentation associated with the acquisition and sale at the time of the
closing of said acquisition and shall execute all documentation required by the
Majority Lenders, including, without limitation, execution of a Borrower Joinder
Agreement by an Additional Borrower, in order to evidence and perfect Agent's
and Lenders' security interest in the newly acquired assets.
3.4 The proceeds of any Advance or Acquisition Advance to the
Borrowers shall be made available to the Borrowers no later than 4:00 p.m. (Boca
Raton, Florida time) on the Borrowing Date by deposit in immediately available
funds in the Loan Disbursement Account which shall consist of a demand deposit
account held with such financial institution(s), as the Borrowers may, from time
to time, designate in writing to the Agent, and which are acceptable to the
Majority Lenders.
3.5 At the time of the Advance, the Borrowers must deliver to
Agent such other reports and documentation as shall be required by Lenders to
support the Advance.
3.6 No Advances shall be made under the Loans after the Maturity
Date.
3.7 The Lenders agree that in order to facilitate the
administration of this Agreement and the Loan Documents, that settlement among
them may take place on a periodic basis in accordance with the provisions of
this Section. If the Agent elects in its discretion to settle
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accounts among the Lenders with respect to the principal amount of the Loans
less frequently than each Business Day, then the Agent shall designate periodic
settlement dates (the "Settlement Dates") which may occur on any Business Day
after Closing; provided, however, that the Agent shall designate as a Settlement
Date any Business Day upon which interest is due and payable under the Notes;
provided, further, that a Settlement Date shall occur at least once during each
seven (7) day period. The Agent shall designate a Settlement Date by delivering
to each Lender a Settlement Report not later than 12:00 noon (Boca Raton,
Florida time) on the proposed Settlement Date, which shall be with respect to
the period beginning on the next preceding Settlement Date and ending on such
designated Settlement Date. Any net increase or decrease in the amount
outstanding under the Loan shall, in the event of an increase, be paid by each
Lender to the Agent in accordance with their respective Percentage share of the
increased amount outstanding, and, in the event of a decrease, shall be paid by
the Agent to each Lender in accordance with their respective Percentage share of
the decreased amount outstanding; in each case said payment to be effectuated
via wire transfer by no later than 3:00 p.m. (Boca Raton, Florida time) on the
designated Settlement Date.
3.8 Each Lender shall make available to Agent its Percentage of
all Advances on a timely basis as provided in this Agreement. No Lender shall be
responsible for any default of any other Lender in respect to such other
Lender's obligation to make any Advance, nor shall the Commitment of any Lender
hereunder be increased as a result of default by any other Lender. Without
limiting the generality of the foregoing, in the event any Lender shall fail to
advance funds to the Agent for the Borrowers as herein provided, the Agent may,
in its sole discretion, but shall not be obligated to, advance under the Notes
in its favor as a Lender all or any portion of such amount or amounts (each a
"Deficiency Advance"), or the Agent, in its sole discretion, may effectuate a
Deficiency Advance in order to facilitate the administration of the Loan and the
settlement procedures set forth in Article 3, Section 3.7 above, and shall
thereafter be entitled to payments of principal of and interest on such a
Deficiency Advance in the same manner and at the same interest rate or rates to
which such other Lender would have been entitled had it made such advance under
its Note; provided that, upon payment to Agent from such other Lender of the
entire outstanding amount of such Deficiency Advance, together with accrued and
unpaid interest thereon from the most recent date or dates interest was paid to
the Agent by the Borrowers on the Loans comprising the Deficiency Advance at the
interest rate per annum for overnight borrowing by the Agent from the Federal
Reserve Bank, then such payment shall be credited against the applicable Note of
the Agent in full payment of such Deficiency Advance and the Borrowers shall be
deemed to have borrowed the amount of such Deficiency Advance from such other
Lender as of the most recent date or dates, as the case may be, upon which any
payments of interest were made by the Borrowers thereon.
ARTICLE 4.
LETTERS OF CREDIT
4.1 Letters of Credit. The Issuing Lender agrees, subject to the
terms and conditions of this Agreement, upon request of the Borrowers to issue
from time to time for the account of the Borrowers Letters of Credit upon
delivery to the Issuing Lender of an Application and
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Agreement for Letter of Credit relating thereto in form and content acceptable
to the Issuing Lender; provided, that (i) the aggregate face amount of Letters
of Credit outstanding shall not exceed the sum of Ten Million and 00/100 Dollars
($10,000,000.00), and (ii) no Letter of Credit shall be issued if, after giving
effect thereto, the face amount of Letters of Credit outstanding plus the
outstanding principal balance of the Loans shall exceed the Borrowing Base. No
Letter of Credit shall have an expiry date (including all rights of Borrowers or
any beneficiary named in such Letter of Credit to require renewal) or payment
date occurring later than the earlier to occur of (a) (i) in the case of standby
Letters of Credit, one (1) year after the date of its issuance and (ii) in the
case of documentary Letters of Credit, one hundred twenty (120) days after the
date of its issuance or (b) the Maturity Date.
4.2 Reimbursement.
(a) The Borrowers hereby unconditionally agree to pay the
Issuing Lender immediately on demand at the Issuing Lender's Principal Office
all amounts required to pay all drafts drawn or purporting to be drawn under the
Letters of Credit and all reasonable expenses incurred by the Issuing Lender in
connection with the Letters of Credit, and in any event and without demand to
place in possession of the Issuing Lender (which shall include Advances under
the Loan if permitted by Section 2.1) sufficient funds to pay all debts and
liabilities arising under any Letter of Credit. The Issuing Lender agrees to
give the Borrowers prompt notice of any request for a draw under a Letter of
Credit. The Issuing Lender may charge any account the Borrowers (or any of them)
may have with it for any and all amounts the Issuing Lender pays under Letters
of Credit, plus such other charges and reasonable expenses as may from time to
time be agreed to by the Issuing Lender and the Borrowers; provided that to the
extent permitted by Section 2.1, all such amounts shall be paid pursuant to
Advances under the Loans. The Borrower agrees to pay the Issuing Lender interest
on any Reimbursement Obligations not paid when due hereunder at the rate of
three percent (3.0%) in excess of the Prime Rate, or the maximum rate permitted
by applicable law, if lower, such rate to be calculated on the basis of a year
of 360 days for actual days elapsed.
(b) The Issuing Lender shall notify the Agent of any drawing
under any Letter of Credit promptly following the receipt by the Issuing Lender
of such drawing.
(c) Each Lender (other than the Issuing Lender) shall
automatically acquire on the date of issuance thereof, a participation in the
face amount of each Letter of Credit issued by the Issuing Lender in an amount
equal to such Lender's Percentage of such face amount, and to the extent that
the Borrowers are obligated to pay the Issuing Lender under Subsection 4.2(a),
each Lender (other than the Issuing Lender) thereby shall absolutely,
unconditionally and irrevocably assume, and shall be unconditionally obligated
to pay to the Issuing Lender as hereinafter described, its Percentage of the
face amount of such Letter of Credit, in the event the Borrowers do not first
pay the same.
(d) Each Lender (including the Issuing Lender in its capacity
as a Lender) shall, subject to the terms and conditions of Article 2, pay to the
Agent for the account of the
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Issuing Lender at the Principal Office in Dollars and in immediately available
funds, an amount equal to its Percentage of any drawing under a Letter of
Credit, such funds to be provided in the manner described in Subsection 4.2(g),
if Borrowers do not first pay the same.
(e) Simultaneously with the making of each payment by a Lender
to the Issuing Lender, such Lender shall, automatically and without any further
action on the part of the Issuing Lender or such Lender, acquire a participation
in an amount equal to such payment (excluding the portion thereof constituting
interest accrued prior to the date the Lender made its payment) in the related
Reimbursement Obligation of the Borrowers. The Reimbursement Obligations of the
Borrowers shall be immediately due and payable whether by Advances made in
accordance with Section 2.1, or otherwise.
(f) Each Lender's obligations to make payment to the Agent for
the account of the Issuing Lender, and the right of the Issuing Lender to
receive the same, shall be absolute and unconditional, shall not be affected by
any circumstance whatsoever and shall be made without any offset, abatement,
withholding or reduction whatsoever. If any Lender is obligated to pay but does
not pay amounts to the Agent for the account of the Issuing Lender in full upon
request, such Lender shall, on demand, pay to the Agent for the account of the
Issuing Lender interest on the unpaid amount for each day during the period
commencing on the date of notice given to such Lender until such Lender pays
such amount to the Agent for the account of the Issuing Lender in full at the
interest rate per annum for overnight borrowing by the Agent from the Federal
Reserve Bank.
(g) In the event the Lenders have purchased participations in
any Reimbursement Obligation as set forth in Subsection 4.2(c), then at any time
payment (in full collected, immediately available funds) of such Reimbursement
Obligation, in whole or in part, is received by Issuing Lender from the
Borrowers, Issuing Lender shall promptly pay to each Lender an amount equal to
its Percentage of such payment from the Borrowers.
(h) Promptly following the end of each week, the Issuing
Lender shall deliver to the Agent a notice describing the aggregate amount of
all Letters of Credit outstanding at the end of such week. Upon the request of
any Lender from time to time, the Issuing Lender shall deliver to the Agent, and
the Agent shall deliver to such Lender, any other information reasonably
requested by such Lender with respect to each Letter of Credit outstanding.
(i) The issuance by the Issuing Lender of each Letter of
Credit shall, in addition to the conditions precedent set forth in Article 6, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Lender consistent
with the then current practices and procedures of the Issuing Lender with
respect to similar letters of credit, and the Borrowers shall have executed and
delivered such other instruments and agreements relating to such Letters of
Credit as the Issuing Lender shall have reasonably requested consistent with
such practices and procedures. All Letters of Credit shall be issued pursuant to
and subject to the Uniform Customs and Practice for Documentary
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Credits, 1993 revision, International Chamber of Commerce Publication No. 500
and all subsequent amendments and revisions thereto.
(j) The Borrowers agree that the Issuing Lender may, in its
sole discretion, accept or pay, as complying with the terms of any Letter of
Credit, any drafts or other documents otherwise in order which may be assigned
or issued by an administrator, executor, trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver,
attorney in fact or other legal representative of a party who is authorized
under such Letter of Credit to draw or issue any drafts or other documents.
(k) Without limiting the generality of the provisions of
Section 17.20, the Borrowers hereby agree to indemnify and hold harmless the
Issuing Lender, each other Lender and the Agent from and against any and all
claims and damages, losses, liabilities reasonable costs and expenses which the
Issuing Lender, such other Lenders or the Agent may incur (or which may be
claimed against the Issuing Lender, such other Lenders or the Agent) by any
Person by reason of or in connection with the issuance or transfer of or payment
or failure to pay under any Letter of Credit; provided that the Borrowers shall
not be required to indemnify the Issuing Lender, any other Lenders or the Agent
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, (i) caused by the willful misconduct or gross negligence
of the party to be indemnified or (ii) caused by the failure of the Issuing
Lender to pay under any Letter of Credit after the presentation to it of a
request for payment strictly complying with the terms and conditions of such
Letter of Credit, unless such payment is prohibited by any law, regulation,
court order or decree. The indemnification and hold harmless provisions of this
Subsection 4.2(k) shall survive repayment of the Indebtedness, occurrence of the
Maturity Date and expiration or termination of this Agreement.
(l) Without limiting Borrowers' rights as set forth in
Subsection 4.2(k), the obligation of the Borrowers to immediately reimburse the
Issuing Lender for drawings made under Letters of Credit and the Issuing
Lender's right to receive such payment shall be absolute, unconditional and
irrevocable, and such obligations of the Borrowers shall be performed strictly
in accordance with the terms of this Agreement and such Letters of Credit and
the related Applications and Agreement for any Letter of Credit, under all
circumstances whatsoever.
4.3 Letter of Credit Facility Fees. The Borrower shall pay to the
Agent, for the pro-rata benefit of the Lenders based on their Percentages, the
Letter of Credit Fees specified in Subsection 2.2(e) of this Agreement. Such
fees shall be due with respect to each Letter of Credit at such times as are
determined by the Issuing Lender. The fees described in this Section 4.3 shall
be calculated on the basis of a year of 360 days for the actual number of days
elapsed.
4.4 Administrative Fees. The Borrowers shall pay to the Issuing
Lender such administrative fees and other fees, if any, in connection with the
Letters of Credit in such amounts and at such times as the Issuing Lender and
the Borrowers shall agree from time to time.
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ARTICLE 5.
PAYMENTS OF INTEREST AND PRINCIPAL
All interest under the Loans shall be computed on the basis of a year
containing three hundred sixty (360) days for the actual number of days elapsed.
Payments of interest (and principal after the Change Date) shall be due and
payable to the Agent for the account of each Lender in accordance with the terms
and provisions of the Notes, and interest shall accrue at the rate of interest
provided in the Notes for each Advance thereunder. Borrowers shall provide
written notice of payment to Agent one (1) Business Day prior to the making of
any payment of principal, interest and/or fees under the Notes. Each payment of
principal, interest and/or fees, and any other amounts required to be paid to
the Lenders with respect to the Loans, shall be made to the Agent at the Agent's
offices located at 125 W. 55th Street, 23rd Floor, New York, New York 10019, for
the account of each Lender, in Dollars and in immediately available funds before
12:00 p.m. (Boca Raton, Florida time) on the date such payment is due. The Agent
shall deem any payment made by or on behalf of the Borrowers that is not made in
immediately available funds and prior to 12:00 p.m. (Boca Raton, Florida time)
to be a non-conforming payment, which shall not be deemed to be received by the
Agent until the later of (a) the time such funds become available funds or (b)
the next Business Day. Any non-conforming payment may constitute or become an
Event of Default hereunder. Interest shall continue to accrue on any principal
as to which a non-conforming payment is made until the later of (a) the date
such funds become available funds or (b) the next Business Day. All payments to
be made by the Borrowers for the account of the Lenders on account of principal,
interest and/or fees, shall be made without diminution, setoff, recoupment or
counterclaim. The Agent will distribute to the Lenders the above set forth
payment in accordance with the terms and provisions of Article 3, Section 3.7 of
this Agreement.
ARTICLE 6.
CONDITIONS PRECEDENT TO FIRST ADVANCE
AND ADDITIONAL ADVANCES AND LETTERS OF CREDIT
6.1 The obligations of Lenders to make the Initial Advance and all
additional Advances under the Loans, and of the Issuing Lender to issue Letters
of Credit, are subject to the following conditions precedent:
(a) Representations and Warranties. The representations,
covenants and warranties made by Borrowers in this Agreement shall be true and
correct on and as of the date of such Advance.
(b) No Default. There shall be no outstanding and uncured
default, and no event which with notice or lapse of time or both would become
such an Event of Default, under this Agreement, any of the Notes, the Security
Agreements, any of the Mortgage Documents, the Collateral Assignments or any
other Loan Documents.
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(c) Railroad Trackage Appraisal. Agent hereby acknowledges
receipt of the Railroad Trackage Appraisal; provided however, that Lenders
reserve the right to require Borrowers to provide Agent with updated appraisals
of the Railroad Trackage at any time during the term of the Loans (provided
however, that unless an Event of Default shall have occurred and be continuing,
that said appraisals shall be limited to one (1) appraisal per year), said
appraisals to be performed at Borrowers' sole cost and expense.
(d) Machinery and Equipment Appraisals. Agent hereby
acknowledges receipt of the Truck Locators, Inc. Appraisal and the Locomotive
Appraisal; provided however, that Lenders reserve the right to require Borrowers
to provide Agent with updated appraisals of the Machinery and Equipment at any
time during the term of the Loans (provided however, that unless an Event of
Default shall have occurred and be continuing, or unless Borrowers are
refinancing Machinery and Equipment in accordance with the terms set forth in
the Security Agreements, that said appraisals shall be limited to one (1)
appraisal per year), said appraisals to be performed at Borrowers' sole cost and
expense. Additionally, Lenders reserve the right to additionally require an
appraisal in connection with any locomotive or locomotives which Borrower wishes
to add to the Borrowing Base.
(e) Real Estate Appraisals. Satisfactory fair market value
appraisals of each of the Texas Real Property, the Michigan Real Property, the
Huron and Eastern Real Property, the Ontario Real Property, the Gettysburg Real
Property, the West Texas and Lubbock Real Property, the Minnesota Real Property,
the Washington Real Property, the Florida Real Property, the E&N Real Property,
the Tennessee Real Property, the TPW Real Property and the RailLink Real
Property; provided however, that Lenders reserve the right to require Borrowers
to provide Agent with updated appraisals of the Real Property, or any portion
thereof, at any time during the term of the Loans (provided however, that unless
an Event of Default shall have occurred and be continuing, that said appraisals
shall be limited to one (1) appraisal per year), said appraisals to be performed
at Borrowers' sole cost and expense.
(f) EPA Audit - Michigan Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the Michigan EPA Audit.
(g) EPA Audit - Ontario Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the Ontario EPA Audit.
(h) EPA Audit - Texas Real Property. Receipt and satisfactory
review by the Majority Lenders, in their sole and absolute discretion, of the
Texas EPA Audit.
(i) EPA Audit - West Texas and Lubbock Real Property. Receipt
and satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the West Texas and Lubbock EPA Audit.
(j) EPA Audit - Minnesota Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the Minnesota EPA Audit.
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(k) EPA Audit - Washington Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the Washington EPA Audit.
(l) EPA Audit - Gettysburg Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the Gettysburg EPA Audit.
(m) EPA Audit - Florida Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the Florida EPA Audit.
NOTE: Agent acknowledges receipt of satisfactory environmental
audits in connection with the EPA Audits set forth above.
(n) EPA Audit - E&N Real Property. Receipt and satisfactory
review by the Majority Lenders, in their sole and absolute discretion, of the
E&N EPA Audit.
(o) EPA Audit - Tennessee Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the Tennessee EPA Audit.
(p) EPA Audit - TPW Real Property. Receipt and satisfactory
review by the Majority Lenders, in their sole and absolute discretion, of the
TPW EPA Audit.
(q) EPA Audit - RailLink Real Property. Receipt and
satisfactory review by the Majority Lenders, in their sole and absolute
discretion, of the RailLink EPA Audit.
(r) Delivery of Loan Documents. All of the Loan Documents
shall have been duly executed and delivered to Agent, and the Mortgage
Documents, the Security Agreements, the Financing Statements, and all filings
required in the Province of Ontario, the Province of British Columbia, Nova
Scotia, Alberta and all other applicable Canadian provinces and territories
shall have been recorded in the appropriate public offices.
(s) Satisfaction of Conditions in Discussion Letter. Borrower
shall have complied with and satisfied in full all of the Conditions Precedent
To Closing Credit Facility set forth in the Discussion Letter.
(t) Delivery of Other Documents. Borrowers shall have
delivered, or caused to be delivered to Agent, the other documents required
under Article 2 hereof, and shall have also delivered or caused to be delivered
to Agent, the following:
(i) Annual financial statements of each Borrower, in
form and substance acceptable to the Majority Lenders, prepared in
accordance with GAAP, by certified public accountants acceptable to the
Majority Lenders.
(ii) Report on receivables evidencing that there are
adequate Eligible Receivables to support the Initial Advance.
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(iii) Report on all of Borrowers' inventory
evidencing that there is adequate Eligible Inventory to support the
Initial Advance.
(iv) Such policies of liability insurance, worker's
compensation insurance, flood insurance and hazard insurance (with fire
extended coverage, vandalism and mischief protection) as the Agent may
request subject to a standard loss-payee's, mortgagee's and additional
insured's endorsement in the Agent's favor.
(v) Such other certification or documentation to be
executed by Borrowers as may be reasonably required by the Agent and
the Majority Lenders or their counsel pertaining to the closing of the
Loans, the disbursement of the Initial Advance and all subsequent
Advances of the proceeds hereunder, it being understood that all such
items shall be promptly delivered prior to Lenders' obligation to make
further Advances hereunder.
ARTICLE 7.
USE OF LOAN PROCEEDS; MARGIN STOCK
Borrowers desire to obtain extensions of credit of up to One
Hundred Twenty-Five Million and 00/100 Dollars ($125,000,000.00) from the
Lenders to be utilized by RailAmerica on behalf of and for the benefit of the
Borrowers for the purposes set forth in Section 2.1 of this Agreement. Borrowers
do not own any margin securities and no portion of any Advance or Acquisition
Advance or any of the Loans will be used for the purpose of reducing or retiring
any indebtedness which was originally incurred by any of the Borrowers to
purchase or carry any margin securities, and neither the making of any and all
loans, Advances and Acquisition Advances nor the use of the proceeds thereof
will violate or be inconsistent with the provisions of Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System of the United States.
ARTICLE 8.
YIELD PROTECTION AND ILLEGALITY
8.1 INTENTIONALLY OMITTED.
8.2 Suspension of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any Libor Rate Loan for any Interest Period, the Agent determines (which
determination made on a reasonable basis shall be conclusive absent manifest
error) that quotations of interest rates for the relevant deposits referred to
in the definition of "Libor Rate" in Section 1.2 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for such Libor Rate Loans as provided in this Agreement, then
the Agent shall give the Borrowers prompt notice thereof, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
Libor Rate Loans that are subject to such condition, or to convert Prime Rate
Loans into Libor Rate Loans, and the Borrowers shall on the last day(s) of the
then current Interest Period(s) for
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outstanding Libor Rate Loans, as applicable, convert such Libor Rate Loans into
another Libor Rate Loan if such Libor Rate Loan is not subject to the same or
similar condition, or Prime Rate Loans, if available hereunder. The Agent shall
give the Borrowers notice describing in reasonable detail any event or condition
described in this Section 8.2 promptly following the determination by the Agent
that the availability of Libor Rate Loans is, or is to be, suspended as a result
thereof.
8.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender to honor its
obligation to make or maintain Libor Rate Loans hereunder, then such Lender
shall promptly notify the Borrowers (with a copy to the Agent) and such Lender's
obligation to make or continue Libor Rate Loans, or to convert Prime Rate Loans
into Libor Rate Loans, shall be suspended until such time as such Lender may
again make and maintain Libor Rate Loans, and such Lender's outstanding Libor
Rate Loans shall be converted into Prime Rate Loans. The conversion of any Libor
Rate Loans into Prime Rate Loans shall apply only to any Lender who is affected
by such restrictions and who has provided the notice described above, and the
obligation of the other Lenders to make, and to convert Prime Rate Loans into,
Libor Rate Loans shall not be affected by such restrictions. In the event that
the obligation of some, but not all, of the Lenders to make, or to convert Prime
Rate Loans into, Libor Rate Loans is so suspended, then any request by the
Borrowers during the pendency of such suspension for a Libor Rate Loan shall be
deemed a request for such Libor Rate Loan from the Lender(s) not subject to such
suspension and for a Prime Rate Loan from the Lender(s) who are subject to such
suspension, in each case in the respective amounts based on the Lenders'
respective Percentages.
8.4 Compensation. The Borrowers shall promptly pay to each Lender,
upon the request of such Lender, such amount or amounts as shall be sufficient
(in the reasonable determination of Agent on behalf of such Lender) to
compensate it for any loss, cost or expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Libor Rate Loan
on a date other than the last day of the Interest Period for such Libor Rate
Loan, including without limitation any conversion required pursuant to Sections
8.2 or 8.3 above; or
(b) any failure by the Borrowers to borrow or convert a Libor
Rate Loan on the date for such borrowing or conversion determined in accordance
with the terms of this Agreement and the Notes;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the principal
amount so paid, prepaid or converted or not borrowed for the period from the
date of such payment, prepayment or conversion or failure to borrow or convert
to the last day of the then current Interest Period for such Loan (or, in the
case of a failure to borrow or convert, the Interest Period for such Loan which
would have commenced on the date scheduled for such borrowing or conversion) at
the applicable rate of interest provided for in the Notes over (ii) the Libor
Rate (as reasonably
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determined by the Agent on behalf of the Lenders) for Dollar deposits of amounts
comparable to such principal amount and maturities comparable to such period. A
determination by the Agent on behalf of the Lenders as to the amounts payable
pursuant to this Section 8.4 shall be conclusive, provided that such
determinations are made on a reasonable basis. The Lender requesting
compensation under this Section 8.4 shall promptly furnish to the Borrowers and
the Agent calculations in reasonable detail setting forth such Lender's
determination of the amount of such compensation.
8.5 Alternate Loan and Lender. In the event any Lender suspends
the making of any Libor Rate Loan pursuant to this Article 8 (herein a
"Restricted Lender"), the Restricted Lender's Percentage of any Libor Rate Loans
shall bear interest at the Prime Rate or the Libor Rate for which the suspension
does not apply, as selected by the Borrowers, until the Restricted Lender once
again makes available the applicable Libor Rate Loan. Interest shall be payable
to the Restricted Lender in respect of Loans to which the suspension applies at
the time and manner as paid to those Lenders making available Libor Rate Loans.
8.6 Taxes. (a) All payments by the Borrowers of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future excise, stamp
or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings
or other charges of any nature whatsoever imposed by any taxing authority, but
excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes)
that would not be imposed but for a connection between a Lender or the Agent and
the jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of such Lender or the Agent pursuant to or in respect
of this Agreement or any other Loan Document), (iii) any taxes imposed on or
measured by any Lender's assets, net income, receipts or profits, and (iv) any
taxes arising after the Closing Date solely as a result of or attributable to a
Lender changing its designated lending office after the date such Lender becomes
a party hereto (such non-excluded items being collectively called "Taxes"). In
the event that any withholding or deduction from any payment to be made by the
Borrowers hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrowers will
(i) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official
receipt or other documentation satisfactory to the Agent evidencing
such payment to such authority; and
(iii) pay to the Agent for the account of each Lender
such additional amount or amounts as is necessary to ensure that the
net amount actually received by each Lender will equal the full amount
such Lender would have received had no such withholding or deduction
been required.
(b) Prior to the date that any Lender or participant organized
under the laws of a jurisdiction outside the United States becomes a party
hereto, such Person shall deliver to the
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Borrowers and the Agent such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, properly
completed, currently effective and duly executed by such Lender or participant
establishing that payments to it hereunder and under the Notes are (i) not
subject to United States Federal backup withholding tax and (ii) not subject to
United States Federal withholding tax under the Code because such payment is
either effectively connected with the conduct by such Lender or participant of a
trade or business in the United States or totally exempt from United States
Federal withholding tax by reason of the application of the provision of a
treaty to which the United States is a party or such Lender is otherwise exempt.
(c) If the Borrowers fail to pay any Taxes when due to the
appropriate taxing authority or fail to remit to the Agent, for the account of
the respective Lender, the required receipts or other required documentary
evidence, the Borrowers shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 8.6 a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by or on behalf of the Borrowers.
ARTICLE 9.
REPRESENTATIONS AND WARRANTIES
9.1 Each Borrower represents and warrants to Agent and Lenders
that, so long as credit remains available to the Borrowers or there is any
outstanding balance due under any of the Notes as secured by the Loan Documents:
(a) Borrowers have the power to engage in all the transactions
contemplated by this Agreement and have full power, authority and legal right to
execute and deliver, and to comply with their respective obligations under the
Loan Documents, which documents constitute valid and legally binding obligations
of Borrowers enforceable against each Borrower in accordance with their
respective terms.
(b) To the best of their knowledge and belief, there is no
suit, action, or proceeding pending or threatened against or affecting any
Borrower, before or by any court, administrative agency or other Governmental
Authority which brings into question the validity of the transactions
contemplated hereby or would interfere with the ability of any Borrower to
comply with the terms hereof.
(c) Each Borrower is in good standing within the State or
Province in which it is incorporated and, in which it is required to be
registered in order to conduct business, and each Borrower as applicable, is
fully qualified and authorized to conduct business in the States of Texas,
Michigan, Florida, Delaware, Washington, Minnesota, Pennsylvania, Tennessee,
Illinois, Indiana, the Province of Ontario, the Province of British Columbia,
the Province of Alberta, Nova Scotia and all other applicable Canadian provinces
and territories. Borrowers, prior to Closing, will deliver to Lender: (i)
resolutions certified as true by the secretary of each
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Borrower, authorizing each Borrower's participation in connection with the
transactions contemplated herein and execution of the Notes and related Loan
Documents, (ii) incumbency certificates of each Borrower, (iii) a certified copy
of the Articles of Incorporation and By-laws of each Borrower and, (iv)
Corporate Certificates of Good Standing of each Borrower.
(d) If any Borrower is a Partnership or Limited Partnership,
the agreement governing its operation is in full force and effect and such
Borrower is otherwise fully qualified and authorized to do business in the State
of Florida. Borrowers, prior to closing, will deliver to Lender: (i) a copy of
the partnership agreement, including all modifications and amendments thereto,
or memorandum thereof in recordable form, (ii) partnership resolutions
identifying the full names of all partners, confirming the partnership as being
in full force and effect, empowering a partner to execute the Loan Documents and
acknowledging the subject transaction as being in the usual course of the
partnership business, (iii) if a limited partnership, a certificate of good
standing and, if applicable, a certified copy of its authorization to conduct
business in each state in which it conducts business, and (iv) a Certificate of
Limited Partnership to be executed by the partnership and recorded in the Public
Records of the appropriate county.
(e) Neither the execution nor delivery of any of the Loan
Documents, nor any other document relating hereto, will conflict with or result
in a breach of any of the provisions of the Charter, Articles of Incorporation,
By-Laws or Partnership Agreement, where applicable, of any Borrower or of any
applicable law, judgment, order, writ, injunction, decree, rule or regulation of
any court, administrative agency or other Governmental Authority, or of any
agreement or other instrument to which any Borrower is a party or by which any
of them is bound or constitute a default under any thereof, or result in the
creation or imposition of any lien, charge or encumbrance upon any property of
any Borrower, other than those created under this transaction in favor of
Lenders.
(f) Each of the Borrowers is Solvent after giving effect to
the transactions contemplated by the Loan Documents.
(g) Except as otherwise disclosed on Exhibit "L", during the
one year period preceding the Closing Date, none of the Borrowers has been known
or has used any corporate or fictitious name other than the corporate name of
such Borrower on the Closing Date. All trade names or styles under which any of
the Borrowers sells inventory or equipment or creates receivables, or to which
instruments in payment of receivables are made, are listed on Exhibit "L".
(h) No consent, approval or other authorization of or by any
Governmental Authority is required in connection with the execution or delivery
by any of the Borrowers of the Loan Documents, or compliance with the provisions
hereof or thereof.
(i) There are no actions, suits or proceedings pending or, to
the knowledge of any Borrower, overtly threatened against or affecting any
Borrower, at law or in equity, or before or by any Federal, State, Provincial,
municipal or other Governmental Authority, which
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involve any of the transactions herein contemplated or the possibility of any
judgment or liability which would, in the case of any Borrower, result in any
material adverse change in the business, operations, properties or assets or in
the financial condition of any Borrower. No Borrower is in default with respect
to (a) any judgment, order, writ, injunction or decree or (b) any rule or
regulation of any court or Federal (United States or Canada), State, Provincial,
municipal or other Governmental Authority, which would have a material adverse
effect on its business, properties or condition (financial or otherwise).
(j) Subject to any limitation stated thereon or by Borrowers,
in writing, all balance sheets, earnings statements and other financial data
which have been or shall hereafter be furnished to the Agent or the Lenders to
induce them to enter into this Agreement or otherwise in connection herewith, do
or will fairly represent the financial condition of each Borrower as of the
dates and the results of their operations for the period for which the same are
furnished to the Agent and/or the Lenders and have been or will be prepared in
accordance with Lenders' requirements, and that all other information, reports
and other papers and data furnished to the Agent and/or the Lenders are or will
be, to the best of Borrowers' knowledge, at the time the same are so furnished,
accurate and correct in all material respects and complete insofar as
completeness may be necessary to give the Agent and/or the Lenders a true and
accurate knowledge of the subject matter. There are no material liabilities of
any kind of any Borrower as of the date of the most recent financial statements
which are not reflected therein. There have been no materially adverse changes
in the financial condition or operation of any Borrower since the date of such
financial statements. Borrowers shall provide financial statements of Borrower
prepared in accordance with Lenders' requirements, certified by Borrower, or
their respective accountants that said financial statements are true and
accurate, on an annual basis within one hundred twenty (120) days of the end of
the Borrowers' fiscal year, and, on an interim basis as may be required by
Lenders.
(k) Borrowers will pay all obligations, including tax claims,
when due, except such as any Borrower contests in an appropriate proceeding, in
which event such Borrower shall furnish to Lenders, if requested, a bond or
other security satisfactory to Lenders in an amount sufficient to protect
Lenders and their interests herein.
(l) There is no default on the part of any Borrower under this
Agreement, any of the Notes, the Security Agreements, any of the Mortgage
Documents, the Collateral Assignments or any of the other Loan Documents.
(m) The Borrowers have dealt with no broker or finder in
connection with the Loans, and the Borrowers, jointly and severally hereby agree
to indemnify the Agent and the Lenders and to hold the Agent and the Lenders
harmless of and from any and all claims for broker's or finder's fees or
commissions in connection with the Loans, and agree to pay all expenses
(including but not limited to attorney's fees and expenses) incurred by the
Agent or the Lenders in connection with the defense of any action or proceeding
brought to collect any such fees and commissions, or otherwise relating to any
such broker's claims resulting from or arising
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out of any claim that any Borrower consulted, dealt or negotiated with the
person or entity making such brokerage claim.
(n) Each Plan, pension, profit sharing or other employee
benefit plan, maintained by each Borrower is in material compliance with ERISA,
the Code, and with respect to Canadian Borrowers all applicable laws of Canada
and all applicable Canadian provinces, and all applicable rules and regulations
adopted by regulatory authorities pursuant thereto. Each Borrower has filed all
material reports required to be filed by ERISA, the Code and with respect to
Canadian Borrowers all applicable laws of Canada and all applicable Canadian
provinces, and such rules and regulations. In addition, any qualified Plans
subject to the minimum funding standards, do not, as of the date hereof, have a
funding deficiency, as defined by ERISA. No Reportable Event material in
relation to the business operations, property, financial or other conditions of
any Borrower has occurred with respect to any Plan. No tax penalty nor other
liability in the aggregate material in relation to business operations,
property, or financial conditions of any Borrower has been assessed against any
Borrower with respect to a Plan.
(o) Each Borrower has filed or caused to be filed all tax
returns, which to the knowledge of the Borrowers, are required to be filed, and
has fully paid all taxes shown to be due and payable on said returns or any
assessments made against it or its property, and all other taxes, fees, or other
charges imposed on it or any of its property by any Governmental Authority. No
tax liens have been filed and, to the knowledge of Borrowers, no claims are
being made or may hereafter be asserted with respect to any such taxes, fees or
other charges except for (i) those, the amount or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with Generally Accepted Accounting Principles have
been provided on the books of Borrowers, as the case may be; and (ii) such
failures to file or pay such tax liens or claims as could not, in the aggregate,
reasonably be expected to have a material adverse effect on the business
operations, property or financial or other condition of the Borrowers, and
cannot be expected to have an adverse effect on the ability of the Borrowers to
perform any of their respective obligations in any material respect under this
Agreement, the other Loan Documents, or under any other contractual obligation.
(p) All copies of all documents, reports, and statements
heretofore furnished by or on behalf of each Borrower, or in connection with
this Agreement to the Lenders, are, and those delivered subsequent to the date
hereof, will be true and correct copies of the originals of such documents,
reports and statements. All matters stated or certified in any written
statement, certificate, report or other writing heretofore furnished pursuant to
this Agreement by or on behalf of each Borrower to the Lenders are, and all
matters stated or certified subsequent to the date hereof, will be true and
correct as of the date stated or certified. All such documents, reports,
statements, writings and certifications shall be in form and detail satisfactory
to the Lenders.
(q) The Borrowers own or lease all of their properties and
assets reflected on the balance sheets referred to in Subsection 9.1(j) hereof,
except for such properties and assets as
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have been disposed of since that date as no longer used or useful in the conduct
of their business or as have been disposed of in the ordinary course of
business.
(r) All of the properties and assets set forth in Subsection
9.1(j) are free and clear of all mortgages, pledges, liens, charges and other
encumbrances of any nature whatsoever, except as disclosed in any Mortgagee
title insurance commitments and/or policies issued to the Agent and/or the
Lenders in connection with this transaction, as to the Real Property, and as set
forth in lien searches obtained by the Agent and/or the Lenders on or before the
date hereof in connection with this transaction, as to personal property.
(s) To the best of their knowledge, the Borrowers are not in
default in the performance, observance of fulfillment of any of the obligations,
covenants or conditions contained in any lease for real or personal property,
which would have a material adverse affect on their business and all such leases
are valid and existing and in full force and effect.
(t) No Borrower is in default under any of the Franchises and
the Borrowers have full right and authority to operate the railroads thereunder.
Each of the Borrowers owns or has the right to use, under valid license
agreements or otherwise, all material patents, licenses, franchises, trademarks,
trademark rights, tradenames, tradename rights, trade secrets, and copyrights
necessary to or used in the conduct of its business as now conducted and as
contemplated by the Loan Documents, without known conflict with any patent,
license, franchise, trademark, trade secret, tradename, copyright or other
proprietary right of any other Person.
(u) Excepting for West Texas and E&N, which are parties to
collective bargaining agreements and/or unionized, none of the employees of any
of the Borrowers or any of their subsidiaries is subject to any collective
bargaining agreement and there are no strikes, work stoppages, election or
decertification petitions or proceedings, unfair labor charges, equal
opportunity proceedings, or other material labor/employee related controversies
or proceedings pending, or, to the best knowledge of the Borrowers, threatening
any of the Borrowers or any of their subsidiaries, or between any of the
Borrowers (or any of their subsidiaries) and any of their employees, other than
employee grievances arising in the ordinary course of business which could not
reasonably be expected, individually or in the aggregate, to have a materially
adverse affect on any of the Borrowers.
(v) No Borrower is an "investment company" within the meaning
of the Investment Company Act of 1940 and any amendments thereto.
ARTICLE 10.
COVENANTS OF BORROWER
10.1 Each Borrower shall do, or cause to be done, all of the things
necessary to preserve, renew and keep in full force and effect, its corporate
existence and its rights, licenses, Franchises and permits and shall comply with
all laws applicable to it, operate its business in a
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proper and efficient manner, and substantially as presently operated or proposed
to be operated, and at all times shall maintain, preserve and protect all
Franchises and trade names and preserve all property used or useful in the
conduct of its business (including, without limitation, the Railroad Trackage
and the Machinery and Equipment) and keep the same in good repair, working order
and condition, and from time to time make or cause to be made any needed and
proper repairs, renewals, replacements, betterments and improvements thereto so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
10.2 Each Borrower shall at all times maintain true and correct
books and records and shall keep its books and records in accordance with
Generally Accepted Accounting Principles, and shall furnish the Agent with such
financial statements as may be required by the Majority Lenders on a yearly and
interim basis as set forth in this paragraph and other parts of this Agreement.
10.3 Each Borrower shall properly pay and discharge (a) all taxes,
assessments and governmental charges upon or against such Borrower or its assets
prior to the date on which penalties are attached thereto, unless, and to the
extent, such taxes are being diligently contested in good faith by appropriate
proceedings and appropriate reserves therefor have been established; and (b) all
lawful claims for labor, materials, supplies, services or anything else which
might or could, if unpaid, become a lien or charge upon the properties or assets
of such Borrower, unless and to the extent only that the same are transferred to
bond, being diligently contested in good faith, and by appropriate proceedings
and appropriate reserves therefor have been established.
10.4 Each Borrower shall, at its expense, comply with all of the
insurance requirements set forth in this Agreement, the Mortgage Documents and
the Security Agreements throughout the term of the Loans.
10.5 The Borrowers, jointly and severally, shall indemnify and save
harmless the Agent and the Lenders from any and all loss or damage of whatsoever
kind and from any suits, claims, or demands, including, without limitation, the
Agent's and the Lenders' reasonable legal fees and expenses, at all trial and
appellate levels, on account of any matter or thing arising out of this
Agreement or in connection herewith, or on account of any act or omission to act
by any of the Borrowers in connection with this Agreement and the Loans. The
Borrowers, jointly and severally further agree to pay any and all taxes (other
than taxes on or measured by net income of the Lenders) incurred or payable in
connection with the execution and delivery of this Agreement and the Loans and
all other loans from Lenders (or any of them) to Borrowers (or any of them).
Such obligation shall survive repayment of the Loans.
10.6 Lenders shall have the right, at Lenders' cost, from time to
time hereafter and until the maturity of the Loans, to publicize and advertise
in any manner Lenders' participation as lenders in connection with the Loans.
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10.7 The Borrowers shall: (a) make full and timely payments of the
principal and interest due and owing under each of the Notes and the
Indebtedness of the Borrowers to the Lenders, whether now existing or hereafter
arising; (b) duly comply with all of the terms and covenants contained in each
of the Loan Documents; and (c) at all times maintain the liens and security
interests provided for under or pursuant to this Agreement and all other
applicable Loan Documents as valid and perfected liens and security interests on
the property intended to be covered thereby.
10.8 The Borrowers shall provide the Agent with prompt written
notice upon the commencement of any action, suit or claim or counter-claim or
proceeding against or investigation of any Borrower (except when such alleged
liability is not material or is fully covered by insurance).
10.9 The Borrowers shall promptly notify the Agent in writing of
(a) any material assessments by any taxing authorities for unpaid taxes as soon
as any Borrower has knowledge thereof; and (b) any alleged default by any
Borrower in the performance of or any modification of any of the terms and
conditions contained in any agreement, mortgage or indenture or instrument to
which such Borrower is a party, or which is binding upon any Borrower, and upon
any default by any Borrower in the payment of any of its indebtedness.
10.10 Each Borrower shall pay all indebtedness and obligations
promptly and in accordance with their respective terms and pay and discharge
promptly all taxes, assessments, and governmental charges or levies imposed upon
them or in respect of their property, before the same shall become in default,
as well as all lawful claims for labor, materials, and supplies or otherwise
which, if unpaid, might become a lien or charge upon such property or any part
thereof, and timely comply with all applicable laws and governmental rules and
regulations.
10.11 The Borrowers shall give the Agent prompt written notice of
any action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency, the outcome of which might
adversely affect the operations or financial condition of the Borrowers (or any
of them) or adversely affect the ability of the Borrowers to perform under the
Loan Documents.
10.12 The Borrowers shall give the Agent prompt written notice of
any Event of Default hereunder, or any event of default, with respect to their
obligations under any of the other Loan Documents to which any Borrower is a
party indicating the nature and status thereof and the action which the party
giving such notice proposes to take with respect thereto.
10.13 Borrowers shall not directly or indirectly engage in any
business activity which would represent a material change from the kind of
business activity currently engaged in by them, which in the aggregate would
have a substantial and material effect on the Borrowers' business, without the
prior written consent of Lenders, which consent shall be in Lenders' sole
discretion.
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10.14 No Borrower shall, upon the occurrence of an uncured Event of
Default or an event which, with the giving of notice or the passage of time, or
both, would constitute an Event of Default, as well as during the continuance
thereof: (a) declare any dividend or make any other distribution with respect to
its stock (whether by reduction of capital or otherwise), or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for value or set apart
any sum for the redemption, retirement, purchase or other acquisition of,
directly or indirectly, any shares of its common stock or warrants or options to
purchase any shares of its common stock; or (b) declare dividends or make any
other distribution with respect to its stock (whether by reduction of capital or
otherwise).
10.15 In connection with the Locomotive Appraisal, the Railroad
Trackage Appraisal, the Truck Locators, Inc. Appraisal and the Real Estate
Appraisals, Borrowers shall provide to the Agent updated appraisals of all or
any of the same as required by the Majority Lenders at any time during the term
of the Loans (provided however, that unless an Event of Default shall have
occurred and be continuing, or unless Borrowers are refinancing Machinery and
Equipment in accordance with the terms set forth in the Security Agreements,
that each of the above set forth appraisals shall be limited to one (1)
re-appraisal per year), said appraisals to be performed at Borrowers' sole cost
and expense. Additionally, Borrowers shall have the right to obtain updated
appraisals of all or any of the above set forth appraisals for the purpose of
determining the then current value of the assets which are re-appraised in order
to apply for an increased amount of availability under the Loans. Said
re-appraisals shall be performed at Borrowers' sole cost and expense, and, must
be in form and content acceptable to the Majority Lenders in their sole
discretion. The re-appraisal must additionally be based upon the same standards
as the initial appraisal related to the property which is being appraised was
based (e.g., if the original appraisal was based on a forced liquidation
valuation, the new appraisal must also be based upon a forced liquidation
valuation; if the original appraisal was based upon a fair market valuation, the
new appraisal must be based upon a fair market valuation). The determination as
to availability under the Loans, based upon said re-appraisal(s), shall be
determined by the Majority Lenders in their sole discretion; provided further,
that it is acknowledged by Borrowers that in the event that said re-appraisal
indicates a diminution in value of the reappraised assets that availability
under the Loans will be reduced accordingly.
10.16 Each of the Borrowers, together with all (directly owned or
indirectly owned) subsidiary corporations of RailAmerica (the "Subsidiary
Corporations") shall on a consolidated basis comply with all of the following
covenants, terms and conditions:
(a) Borrowers shall provide to the Agent annual consolidated
and consolidating audited financial statements of each Borrower, prepared in
accordance with GAAP, by certified public accountants acceptable to the
Majority Lenders, in form and substance acceptable to the Majority Lenders,
within one hundred twenty (120) days following the end of each fiscal year of
Borrowers.
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(b) Borrowers shall provide to the Agent quarterly internally
prepared financial statements of each Borrower, in form and substance acceptable
to the Majority Lenders, within sixty (60) days of the end of each quarterly
period in each fiscal year of the Borrowers.
(c) Borrowers shall allow the Agent to conduct semi-annual
audits (the frequency of which may be adjusted at any time by Agent, in the
event the Majority Lenders deem the same necessary due to an adverse change or
trend in the Borrowers' business) of the Borrowers performed in each fiscal year
of Borrowers during the term of the Loans. There shall be a semi-annual audit
fee due and owing from Borrowers to Agent in connection with said audits based
upon a charge of Four Hundred and 00/100 Dollars ($400.00) per day plus
expenses, provided further that so long as audits are not conducted more often
than on a semi-annual basis, the annual fees for said audits shall not exceed
the sum of Ten Thousand and 00/100 Dollars ($10,000.00) plus expenses.
(d) Borrowers must provide the Agent, within one hundred
twenty (120) days after the end of each fiscal year of Borrowers (12/31),
projections reflecting Borrowers' performance for the next three (3) fiscal
years, with said projections to be broken down on a quarterly basis.
(e) Borrowers shall provide to the Agent on a semi-annual
basis, a complete and updated listing of all of their customers and account
debtors, which listing shall include all of the customers' and account debtors'
addresses and phone numbers.
(f) At the option of the Majority Lenders, Borrowers shall
provide to the Agent at such times as shall be required by the Majority Lenders,
an aged analysis of all outstanding accounts receivable and accounts payable of
Borrowers, in form and content acceptable to the Majority Lenders, together with
an aged analysis of all inventory of Borrowers, in form and substance acceptable
to the Majority Lenders.
(g) Borrowers shall at all times maintain a Tangible Net Worth
(which is defined as net worth plus Subordinated Debt, less goodwill and other
intangibles) of not less than Fifty-Five Million and 00/100 Dollars
($55,000,000.00) plus (i) fifty (50%) percent of annual net income for each
fiscal year ended, beginning with the fiscal year ending December 31, 1999, it
being acknowledged that Borrower's annual net income must be in excess of Zero
and 00/100 Dollars ($-0-) in each fiscal year, plus (ii) seventy-five percent
(75%) of the aggregate net proceeds of any Subordinated Debt or equity
offerings. Additionally, excluding Canada, at all times foreign investments,
advances, joint ventures, and other similar investments outside of the United
States cannot exceed fifty percent (50%) of the Borrowers' consolidated Tangible
Net Worth.
(h) Borrowers shall maintain a Minimum Asset Ratio of not less
than 1.4 to 1 at all times during the term of the Loans.
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(i) Borrowers shall maintain a Leverage Ratio (which is
defined as total liabilities less Subordinated Debt and non-recourse
indebtedness divided by Tangible Net Worth) of not greater than 2.50 to 1 at all
times.
(j) Borrowers shall not declare or pay any dividend or make
any other distributions with respect to their stock, both common and preferred
(whether by reduction of capital or otherwise); provided, however, so long as
there is no then existing Event of Default and no event which with notice, or
lapse of time, or both, would constitute an Event of Default, that Borrowers may
declare and pay an annual dividend of up to twenty percent (20%) of annual net
income on the Borrowers' preferred and common stock.
(k) Borrowers shall maintain an Interest Coverage Ratio (which
is defined as earnings before interest and taxes divided by total senior
interest expense) of not less than 2.0 to 1 from Closing through the quarter
ending December 31, 1999, and of not less than 2.25 to 1 at all times
thereafter, said ratio to be calculated on a rolling four (4) quarter basis.
(l) Borrowers shall maintain a Cash Flow Coverage Ratio (which
is defined as total senior debt outstanding divided by pro forma earnings before
interest, taxes, depreciation and amortization) calculated on a rolling four (4)
quarter basis of not greater than 4.75 to 1 from Closing through the quarter
ending December 31, 1999; not greater than 4.50 to 1 from January 1, 2000
through the quarter ending December 31, 2000; and not greater than 4.25 to 1
thereafter. So long as Borrower shall have delivered to Agent financial
information, in form and substance satisfactory to the Majority Lenders,
regarding any domestic property acquired which disclose the prior operating
results of such domestic property, the pro forma effect of any acquisition by
Borrower during such twelve (12) month period shall be included in EBITDA under
this definition as if such acquisition occurred on the first day of such period.
NOTE: IN CONNECTION WITH THE COVERAGE RATIOS SET FORTH IN (k)
AND (l) ABOVE, ALL CALCULATIONS ARE EXCLUSIVE OF FOREIGN
SUBSIDIARY CORPORATIONS (OTHER THAN CANADIAN SUBSIDIARY
CORPORATIONS). ADDITIONALLY, BOTH EBIT AND EBITDA CALCULATIONS
SHALL INCLUDE CASH DIVIDENDS AND CASH PAYMENTS FROM
NON-BORROWING SUBSIDIARY CORPORATIONS OF RAILAMERICA.
(m) Borrowers shall provide to the Agent the Remittance
Reports, the Minimum Asset Ratio Certificates, the Financial Covenant Compliance
Certificates, the list of Receivables and Eligible Receivables, the list of all
sales effectuated by each Borrower and the list of all inventory of Borrowers in
accordance with and at the times required by the terms and provisions of
Sections 3.1 and 3.2 of this Agreement.
(n) Borrowers shall not loan money to any officers, directors,
shareholders and/or employees of Borrowers during the term of the Loans in the
aggregate exceeding One Million and 00/100 Dollars ($1,000,000.00) in any fiscal
year, without the consent of the Majority Lenders.
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NOTE: IN CONNECTION WITH THE ABOVE, ALL ACCOUNTING TERMS USED
SHALL BE CONSTRUED IN ACCORDANCE WITH GAAP. ADDITIONALLY, ALL
OF THE ABOVE SET FORTH RATIOS SHALL BE TESTED ON A QUARTERLY
BASIS, EXCEPTING FOR THE MINIMUM ASSET RATIO, WHICH SHALL BE
TESTED ON A MONTHLY BASIS, AND, EXCEPT AS SET FORTH IN
SUBSECTION 10.16(m) ABOVE. ADDITIONALLY, FOR PURPOSES OF THIS
SECTION 10.16, EACH REFERENCE TO THE BORROWERS SHALL REFER TO
THE BORROWERS, TOGETHER WITH THE SUBSIDIARY CORPORATIONS ON A
COLLECTIVE BASIS.
10.17 There shall be no subordinate financing of the Real Property,
or any portion thereof, or the other property included in the Collateral (as
defined in the Security Agreements), and no sale or transfer of ownership of the
Real Property, or any portion thereof, or other Collateral and no changes
(ownership or management) in the borrowing entities without the Majority
Lenders' prior written approval.
10.18 The Borrowers (collectively) shall establish no additional
employee benefit plans of any nature in excess of One Million and 00/100 Dollars
($1,000,000.00) in the aggregate without the prior written consent of the
Majority Lenders. Each pension, profit sharing, or other employee benefit plan,
at any time, maintained by any Borrower, shall be in material compliance with
ERISA, the Code, applicable laws of Canada and all applicable provinces and
territories in Canada and all applicable rules and regulations adopted by
regulatory authorities, pursuant thereto. Borrowers will cause to be filed all
material reports required to be filed by ERISA, the Code, applicable laws of
Canada, and all applicable provinces or territories in Canada, and such rules
and regulations.
10.19 The Borrowers within ten (10) days after written request from
the Agent, will furnish a written statement in form satisfactory to the Majority
Lenders, duly acknowledged: (i) setting forth the unpaid principal balance of,
and the interest and other sums due on, the Indebtedness evidenced by the Notes
and/or secured by any of the other Loan Documents; (ii) stating whether or not
any offsets or defenses exist against the payments due under the Notes or any of
the other Loan Documents; (iii) stating the current maturity date of the Notes;
and (iv) setting forth such other information as the Majority Lenders may
request from time to time.
10.20 The Borrowers shall notify the Agent immediately of any change
in the name of any Borrower, the principal place of business of any Borrower,
the office where the books and records of any Borrower are kept or any change in
the registered agent of any Borrower for the purpose of service of process.
10.21 The Borrowers shall use the funds borrowed by RailAmerica (for
the benefit of the Borrowers) under this Agreement solely for the purposes set
forth in this Agreement, excepting that up to Two Million and 00/100 Dollars
($2,000,000.00) of Advances in the aggregate outstanding at any one time, may be
used for the operations of foreign Subsidiary Corporations; provided, however,
that availability under the Borrowing Base created directly or
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as a result of the outstanding principal amount of the Loan being reduced from
the proceeds of an equity or Subordinated Debt offering may be used for Advances
to or investments in foreign subsidiaries so long as the Borrowers remain in
compliance with all other covenants set forth in this Agreement.
10.22 No Borrower shall provide any guaranty(s) in excess of Five
Million and 00/100 Dollars ($5,000,000.00) in the aggregate or outstanding at
any one time without the prior written approval of the Majority Lenders, as
determined by the Majority Lenders in their sole and absolute discretion.
Excluded from the above set forth provision are any guaranty(s) currently
outstanding in favor of Barclays Bank in connection with the One Hundred Million
and 00/100 Dollar ($100,000,000.00) loan described in Article 2, Section 2.2(d)
herein.
10.23 Borrowers shall take all actions necessary to assure that
Borrowers' computer based systems are able to operate and effectively process
data including dates on and after January 1, 2000. At the request of Agent,
Borrowers shall provide Agent assurance acceptable to Agent of Borrowers' Year
2000 compatibility. Borrowers hereby covenant and agree that all of Borrowers'
information systems, including without limitation all computer hardware and
software, networks, databases, and all other electronic data storage, retrieval
and computation hardware, software and devices of any kind (collectively, the
"Information Systems"), have been and/or will be updated and modified to
accommodate and conform to the Year 2000 date change, and are and/or will be in
full compliance with any and all federal, state and local laws, regulations and
ordinances relating to the same, whether now in effect, or hereafter enacted
(collectively, the "Information System Laws").
Borrowers hereby jointly and severally agree, unconditionally,
absolutely, and irrevocably, to indemnify, defend, and hold harmless Agent and
Lenders, their affiliates, successors, assigns, and their officers, directors,
employees, and agents against and in respect of any loss, liability, cost,
injury, expense, or damage of any and every kind whatsoever (including without
limitation, court costs and attorneys' fees and expenses) which at any time or
from time to time may be suffered or incurred, directly or indirectly, in
connection with, with respect to, or as a direct or indirect result of the
failure of Borrowers to update or modify their Information Systems to
accommodate and conform to the Year 2000 date change and/or fully comply with
all Information System Laws including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses, or claims asserted or arising
under the Information System Laws, whether now known or unknown.
10.24 BORROWERS AND LENDERS ACKNOWLEDGE THAT THE MINNESOTA
DEPARTMENT OF REVENUE MAY ASSERT THE POSITION THAT LIMITATION OF THE
INDEBTEDNESS SECURED BY THE MINNESOTA MORTGAGE DOCUMENTS REQUIRES THAT THE
MINNESOTA MORTGAGE DOCUMENTS BE RELEASED OR BE DEEMED RELEASED AT SUCH TIME AS
THE LENDERS HAVE RECEIVED ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($1,500,000.00) IN REPAYMENT OF PRINCIPAL UNDER THE LOANS, NOTWITHSTANDING ANY
OTHER ALLOCATION OF FUNDS AGREED TO BY BORROWERS AND LENDERS. NOTWITHSTANDING
ANY
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POSITION OF THE MINNESOTA DEPARTMENT OF REVENUE CONCERNING THIS MATTER,
BORROWERS HEREBY WAIVE ANY AND ALL CLAIMS ANY OF THEM MAY NOW OR HEREAFTER HAVE
TO CHALLENGE THE VALIDITY OF THE MINNESOTA MORTGAGE DOCUMENTS AS A RESULT OF THE
LIMITATION OF THE INDEBTEDNESS SECURED BY THE MINNESOTA MORTGAGE DOCUMENTS AND
THE REPAYMENT OF ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) OF
PRINCIPAL UNDER THE LOANS, AND BORROWERS FURTHER AGREE THAT THE MINNESOTA
MORTGAGE DOCUMENTS SHALL ONLY BE RELEASED UPON SATISFACTION OF THE TERMS AND
CONDITIONS CONTAINED THEREIN AND IN THE OTHER LOAN DOCUMENTS.
ARTICLE 11.
EVENTS OF DEFAULT
Each of the following is an Event of Default:
(a) If Borrowers fail to pay any installment of interest or
principal under any of the Notes when the same shall become due, subject to any
grace period(s) set forth in the applicable Note, if any, together with
Borrower's failure to pay any other monetary obligation in connection with the
Loans and/or any of the Loan Documents ("Monetary Default");
(b) The dissolution, termination of existence, merger,
consolidation or reorganization of any of the Borrowers (other than the merger
or consolidation of one or more of the Borrowers into each other);
(c) If there occurs any default under any other term of this
Agreement, any of the Notes, any of the Mortgage Documents, any of the Security
Agreements, any of the Collateral Assignments or any of the other Loan Documents
relating hereto or thereto;
(d) If any representation or warranty of any Borrower
hereunder shall prove to be incorrect in any material respect;
(e) The commencement of levy, execution or attachment
proceedings against any Borrower, or the application for or appointment of a
liquidator, receiver, custodian, sequester, conservator, trustee, or other
similar judicial officer (and such appointment continues for a period of thirty
(30) days in the case of an involuntary proceeding), or the insolvency, in the
bankruptcy or equity sense, of any Borrower;
(f) The assignment for the benefit of creditors, or the
admission in writing of any inability to pay any debts generally as they become
due, or ordering the winding up or liquidation of its affairs, by any Borrower,
or the commencement of a case by or against any Borrower, under any insolvency,
bankruptcy, creditor adjustment, debtor rehabilitation or similar law, state or
federal, and in the case of an involuntary proceeding, not otherwise dismissed
within thirty (30) days of such filing;
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(g) The determination by any Borrower to request relief under
any insolvency, bankruptcy, creditor adjustment, debtor rehabilitation or
similar proceeding, provincial, state or federal (United States or Canada),
including without limitation the consent by any of them to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for it or for any of its respective property or
assets;
(h) There shall have occurred any substantial adverse change
in the financial condition of RailAmerica or any other Borrower, which in the
case of a Borrower other than RailAmerica, must adversely impact the ability of
the Borrowers to repay the Notes or perform the Borrowers' obligations under
this Loan Agreement, the Mortgage Documents, the Security Agreements or any of
the other Loan Documents;
(i) If any Borrower shall have failed to comply with any other
material agreement, covenant, condition, provision or term contained in this
Agreement;
(j) There shall be entered against any Borrower one or more
judgments or decrees which have not been satisfied within thirty (30) days of
entry or appealed and transferred to bond within thirty (30) days of entry of
the same;
(k) There shall occur an Event of Default by any Borrower in
the performance of its obligations under the Indebtedness, or under any other
loan agreement with the Lenders (or any of them) and/or any other lender;
provided that such other lender files suit in connection with the same;
(l) If any Borrower loses any rights to operate on any portion
of the Railroad Trackage under any of the Franchises, excepting that it is
acknowledged by Lenders that the Vassar, Michigan section of the portion of the
railroad line operated pursuant to an existing operating agreement of Huron may
expire and not be renewed, which shall not be an Event of Default, and in the
case of E&N, such loss of Franchise rights or agreements must adversely affect
E&N's railroad operations, as determined by the Majority Lenders, for the same
to constitute an Event of Default; or
(m) If any change or event shall occur which in the Majority
Lenders' exclusive judgment materially impairs any security for the Loans,
increases Lenders' risk in connection with the Loans, or indicates that any
Borrower may be unable to perform its respective obligations under any Loan
Document.
ARTICLE 12.
SET-OFFS
In addition to any other rights the Lenders may have at law or in
equity, if any Borrower becomes insolvent howsoever evidenced, or any Event of
Default occurs and is continuing, any indebtedness from the Lenders to each
Borrower, and any other property of each Borrower held
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by the Agent or the Lenders, may be set-off and applied towards the payment of
the Indebtedness of Borrowers under this Agreement (including, but not limited
to, all indebtedness evidenced by the Notes) to the Lenders on a pro-rata basis,
including, without limitation, any note payable to any of the Lenders, whether
or not such Indebtedness of each Borrower to the Lenders on such note or any
part thereof shall then be due.
ARTICLE 13.
REMEDIES IN EVENT OF DEFAULT
13.1 Upon any Event of Default, subject only to any notice
requirement and grace period expressly provided in the Notes, the Mortgage
Documents, the Collateral Assignments or the Security Agreements, if any, the
Agent and the Lenders shall be entitled to all of their rights or remedies
hereunder, at law or in equity and under the Notes, the Mortgage Documents, the
Collateral Assignments, the Security Agreements and any other Loan Document,
including, without limitation, the right to declare the outstanding principal
balance of the Notes, the accrued interest thereon, and all other obligations of
the Borrowers to the Agent and the Lenders under this Agreement and the other
Loan Documents to be immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
anything in this Agreement or in the Notes and the other Loan Documents to the
contrary notwithstanding, and the Lenders' obligations to make any additional
Advances hereunder shall be permanently terminated.
13.2 All of the remedies herein given to the Agent and the Lenders
or otherwise available to them shall be cumulative and may be exercised
concurrently. Failure to exercise any of the remedies herein provided shall not
constitute a waiver thereof by the Agent or the Lenders, nor shall use of any
such remedies prevent the subsequent or concurrent resort to any other remedy or
remedies which shall be vested in the Agent and the Lenders by this Agreement or
at law or in equity. To be effective, any waiver by the Agent or the Lenders
must be in writing and such waiver shall be limited in its effect to the
condition or default specified therein; but no such waiver shall extend to any
subsequent condition or default or impair any right consequent thereon.
ARTICLE 14.
AGENT
14.1 Appointment of Agent. Each Lender and the holder of each Note
irrevocably appoints and authorizes the Agent to act on behalf of such Lender or
holder under this Agreement and the Loan Documents and to exercise such powers
hereunder and thereunder as are specifically delegated to Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto, including without limitation the power to execute or authorize the
execution of financing or similar statements or notices, and other documents. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for any of the Borrowers. Each Lender agrees
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(which agreement shall survive any termination of this Agreement) to reimburse
Agent for all reasonable out-of-pocket expenses (including in-house and outside
attorneys' fees and disbursements) incurred by Agent hereunder or in connection
herewith or with an Event of Default or in enforcing the obligations of
Borrowers under this Agreement or the Loan Documents or any other instrument
executed pursuant hereto, and for which Agent is not reimbursed by Borrowers,
pro-rata according to such Lender's Percentage. Agent shall not be required to
take any action under the Loan Documents, or to prosecute or defend any suit in
respect of the Loan Documents, unless indemnified to its reasonable satisfaction
by the Lenders against loss, costs, liability and expense. If any indemnity
furnished to Agent shall become impaired, Agent may call for additional
indemnity and cease to do the acts indemnified against until such additional
indemnity is given.
14.2 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement or otherwise, have a fiduciary relationship with any
Lender (and no implied covenants or other obligations shall be read into this
Agreement against the Agent). Neither Agent nor any of its directors, officers,
employees or agents shall be liable to any Lender for any action taken or
omitted to be taken by it under this Agreement or any document executed pursuant
hereto, or in connection herewith or therewith with the consent or at the
request of the Majority Lenders or in the absence of their own gross negligence
or willful misconduct, nor be responsible for or have any duties to ascertain,
inquire into or verify (a) any recitals or warranties herein or therein, (b) the
effectiveness, enforceability, validity or due execution of this Agreement or
any document executed pursuant hereto or any security thereunder, (c) the
performance by each of the Borrowers of its obligations hereunder or thereunder,
or (d) the satisfaction of any condition hereunder or thereunder. Agent shall be
entitled to rely upon any certificate, notice, document or other communication
(including any cable, telegraph, telex, facsimile transmission or oral
communication) believed by it to be genuine and correct and to have been sent or
given by or on behalf of a proper Person. Agent may treat the payee of any Note
as the holder thereof. Agent may employ agents and may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable to the Lenders (except as to money or property received by
Agent or its authorized agents), for the negligence or misconduct of any such
agent selected by it with reasonable care or for any action taken or omitted to
be taken by it in good faith in accordance with the advice of such counsel,
accounts or experts.
14.3 Successor Agent. Agent may resign as such at any time upon at
least thirty (30) days prior notice to Borrowers and all Lenders. In addition,
Agent may be removed at any time by the Majority Lenders (excluding, in the
computation thereof, NBC) upon the gross negligence or willful misconduct of
Agent or upon Agent's failure to comply with the terms and conditions of this
Agreement (but not otherwise). If Agent at any time shall resign or if the
office of Agent shall become vacant for any other reason, the Majority Lenders
shall, by written instrument, appoint successor agent(s) (satisfactory to such
Majority Lenders and to the Borrowers, which consent, in the case of the
Borrowers, shall not unreasonably be withheld) which shall thereupon become the
Agent hereunder, as applicable, and shall be entitled to receive from the prior
Agent
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such documents of transfer and assignment as such successor Agent may reasonably
request. Any such successor Agent shall be a commercial bank organized under the
laws of the United States or any state thereof and shall have a combined capital
and surplus of at least $500,000,000. If a successor is not so appointed or does
not accept such appointment before the resigning Agent's resignation becomes
effective, the resigning Agent may appoint a temporary successor to act until
such appointment by the Majority Lenders is made and accepted, or if no such
temporary successor is appointed as provided above by the resigning Agent, the
Majority Lenders shall thereafter perform all of the duties of the resigning
Agent hereunder until such appointment by the Majority Lenders is made and
accepted. Such successor Agent shall succeed to all of the rights and
obligations of the resigning Agent under this Agreement and the Loan Documents
as if originally named. The resigning Agent shall duly assign, transfer and
deliver to such successor Agent all moneys at the time held by the resigning
Agent hereunder after deducting therefrom its expenses for which it is entitled
to be reimbursed. Upon such succession of any such successor Agent, the
provisions of this Article 14 shall continue in effect for the benefit of the
resigning Agent in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
14.4 Loans by Agent. NBC and its successors and assigns, in its
capacity as a Lender hereunder, shall have the same rights and powers hereunder
as any other Lender and may exercise or refrain from exercising the same as
though it were not the Agent. NBC and its affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with any of the Borrowers as if it were not acting as Agent hereunder,
and may accept fees and other consideration therefor without having to account
for the same to the Lenders.
14.5 Credit Decisions. Each Lender acknowledges that it has,
independently of Agent and each other Lender and based on the financial
statements of the Borrowers and such other documents, information and
investigations as it has deemed appropriate, made its own credit decision to
extend credit hereunder from time to time. Each Lender also acknowledges that it
will, independently of Agent and each other Lender and based on such other
documents, information and investigations as it shall deem appropriate at any
time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under
this Agreement or any document executed pursuant hereto.
14.6 INTENTIONALLY OMITTED.
14.7 Authority of Agent to Enforce Notes and this Agreement. Each
Lender, subject to the terms and conditions of this Agreement, authorizes the
Agent with full power and authority as attorney-in-fact to institute and
maintain actions, suits or proceedings for the collection and enforcement of the
Notes and to file such proofs of debt or other documents as may be necessary to
have the claims of the Lenders allowed in any proceeding relative to any of the
Borrowers or its creditors or affecting its properties, and to take such other
actions which Agent reasonably considers to be necessary or desirable for the
protection, collection and enforcement of the Notes, this Agreement or the Loan
Documents.
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14.8 Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed by Borrowers, but without limiting any obligation of
Borrowers to make such reimbursement), ratably according to their respective
Percentages, from and against any and all claims, damages, losses, liabilities,
costs or expenses of any kind or nature whatsoever (including, without
limitation, fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement, any of the Loan Documents or the transactions contemplated hereby or
any action taken or omitted by the Agent under this Agreement or any of the Loan
Documents, provided, however, that no Lender shall be liable for any portion of
such claims, damages, losses, liabilities, costs or expenses resulting from the
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including, without limitation,
fees and expenses of counsel) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the Loan Documents, to the extent that the Agent is not reimbursed for
such expenses by Borrowers, but without limiting the obligation of Borrowers to
make such reimbursement. Each Lender agrees to reimburse the Agent promptly upon
demand for its ratable share of any amounts owing to the Agent by the Lenders
pursuant to this Section. If the indemnity furnished to the Agent under this
Section shall, in the reasonable judgment of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity from the Lenders
and cease, or not commence, to take any action until such additional indemnity
if furnished.
14.9 Knowledge of Default. It is expressly understood and agreed
that the Agent shall be entitled to assume that no Event of Default has occurred
and is continuing, unless the officers of the Agent immediately responsible for
matters concerning this Agreement shall have been notified in a writing
specifying such Event of Default and stating that such notice is a "notice of
default" by a Lender or by one or more of the Borrowers. Upon receiving such a
notice, the Agent shall promptly notify each Lender of such Event of Default.
14.10 Agent's Authorization; Action by Lenders. Except as otherwise
expressly provided herein, whenever the Agent is authorized and empowered
hereunder on behalf of the Lenders to give any approval or consent, or to make
any request, or to take any other action on behalf of the Lenders (including
without limitation the exercise of any right or remedy hereunder or under the
other Loan Documents), the Agent shall be required to give such approval or
consent, or to make such request or to take such other action only when so
requested in writing by the Majority Lenders. Action that may be taken by the
Majority Lenders (as provided for hereunder) may be taken (i) pursuant to a vote
at a meeting (which may be held by telephone conference call) as to which all of
the Lenders have been given reasonable advance notice, or (ii) pursuant to the
written consent of the requisite Percentages of the Lenders as required
hereunder, provided that all of the Lenders are given reasonable advance notice
of the requests for such consent.
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14.11 Enforcement Actions by the Agent. Except as otherwise
expressly provided under this Agreement or in any of the other Loan Documents
and subject to the terms hereof, Agent will take such action, assert such rights
and pursue such remedies under this Agreement and the other Loan Documents as
the Majority Lenders (as provided for hereunder) shall direct, provided,
however, that the Agent shall not be required to act or omit to act (except for
any action it is required to take pursuant to Article 13) if, in the judgment of
the Agent, such action or omission may expose the Agent to personal liability or
is contrary to this Agreement, any of the Loan Documents or applicable law.
Except as expressly provided above or elsewhere in this Agreement or the other
Loan Documents, no Lender (other than the Agent, acting in its capacity as
agent) shall be entitled to take any enforcement action of any kind under any of
the Loan Documents.
ARTICLE 15.
SUCCESSORS AND ASSIGNS: PARTICIPATIONS; ASSIGNMENTS
15.1 Successors and Assigns; Participations; Assignments.
(a) This Agreement shall be binding upon and shall inure to
the benefit of each of the Borrowers, the Agent and the Lenders, and their
respective successors and assigns.
(b) The foregoing shall not authorize any assignment by any of
the Borrowers of its rights or duties hereunder, and no such assignment shall be
made (or be effective) without the prior written approval of the Majority
Lenders.
(c) Each of the Lenders may at any time and from time to time,
subject to the terms and conditions hereof, grant participations (but not
assignments, except as expressly permitted hereunder) in such Lender's rights
and obligations hereunder and under the other Loan Documents to any commercial
bank, savings and loan association, insurance company, pension fund, mutual
fund, commercial finance company or other similar financial institution, the
identity of which institution is approved by Borrowers and Agent, such approval
not to be unreasonably withheld or delayed; provided, however, that (i) the
approval of Borrowers shall not be required upon the occurrence and during the
continuance of an unmatured default or Event of Default and (ii) the approval of
Borrowers and Agent shall not be required for the grant of a participation by a
Lender to its affiliate or to any other Lender, or to any Federal Reserve Bank;
and provided further that the aggregate participation interests sold by a Lender
(other than pursuant to subparagraph (ii) of this Subsection 15.1(c)) do not
exceed forty-nine percent (49%) of its original interest under this Agreement
and the other Loan Documents. Each of the Borrowers authorizes each Lender to
disclose to any prospective participant, once approved by Borrowers and the
Agent, any and all financial information in such Lender's possession concerning
the Borrowers which has been delivered to such Lender pursuant to this
Agreement; provided that each such prospective participant shall execute a
confidentiality agreement in form acceptable to the Borrowers and the Agent. A
Lender shall not be permitted to assign or otherwise transfer (except by
participation according to the terms hereof) its rights and obligations
hereunder, except to the affiliate of an assigning Lender, or to any Federal
Reserve Bank.
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(d) Each Lender agrees that any participation agreement
permitted hereunder shall comply with all applicable laws and shall be subject
to the following restrictions (which shall be set forth in the applicable
participation agreement):
(i) such Lender shall remain the holder of its
Notes hereunder, notwithstanding any such participation;
(ii) except as expressly set forth in this
Subsection 15.1(d) with respect to rights of setoff and the benefits of
Article 8 hereof, a participant shall have no direct rights or remedies
hereunder;
(iii) a participant shall not reassign or transfer,
or grant any sub-participations in its participation interest hereunder
or any part thereof; and
(iv) such Lender shall retain the sole right and
responsibility to enforce the obligations of the Borrowers relating to
the Notes and Loan Documents, or cause Agent to do so (subject to the
terms and conditions hereof), and the right to approve any amendment,
modification or waiver of any provision of this Agreement without the
consent of the participant, except for those matters covered by Section
17.5 hereof (provided that a participant may exercise approval rights
over such matters only on an indirect basis, acting through such
Lender, and Borrowers, Agent and the other Lenders may continue to deal
directly with such Lender in connection with such Lender's rights and
duties hereunder), and shall otherwise be in form satisfactory to
Agent.
Each of the Borrowers agrees that each participant shall be deemed to have the
right of setoff in respect of its participation interest in amounts owing under
this Agreement and the Loan Documents to the same extent as if the Indebtedness
were owing directly to it as a Lender under this Agreement, shall be subject to
the pro-rata recovery provisions of this Agreement, and that each participant
shall be entitled to the benefits of Article 8 hereof. The amount, terms and
conditions of any participation shall be as set forth in the participation
agreement between the issuing Lender and the Person purchasing such
participation, and none of the Borrowers, the Agent and the other Lenders shall
have any responsibility or obligation with respect thereto, or to any Person to
whom any such participation may be issued. No such participation shall relieve
any issuing Lender of any of its obligations under this Agreement or any of the
other Loan Documents, and all actions hereunder shall be conducted as if no such
participation had been granted.
(e) At any time after the Closing Date each Lender may, with
the prior consent of the Agent, assign all or a portion of its rights and
obligations under the Loan Documents by executing (together with the assignee
Lender and the Agent) an Assignment and Acceptance and such other documents as
shall be reasonably required by Agent or its counsel in connection with such
assignment. Upon such execution, from and after the effective date specified in
such Assignment and Acceptance, the assignee thereunder shall become a party to
this Agreement and have the rights and obligations of a Lender hereunder, and
the assigning
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Lender thereunder shall, to the extent of such assignment, relinquish its rights
and be released from its obligations under this Agreement. By executing and
delivering an Assignment and Acceptance, the assigning Lender and the assignee
Lender confirm to and agree with each other and the other parties to this
Agreement that:
(i) The assignment made under such Assignment and
Acceptance is made without recourse;
(ii) Such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of any of the Borrowers, or the performance or observance by
any of the Borrowers of any of their obligations under any of the Loan
Documents;
(iii) Such assignee Lender confirms it has received
a copy of this Agreement, together with such other Loan Documents and
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance;
(iv) Such assignee Lender will, independently and
without reliance upon the Agent, the assigning Lender or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under any of the Loan Documents;
(v)) Such assignee Lender appoints and authorizes
the Agent to take such action as agent on its behalf and exercise such
powers under the Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such other powers as are
reasonably incidental thereto; and
(vi) Such assignee Lender agrees that it will
perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a
Lender and a holder of the Notes.
(vii) If less than all of the assigning Lender's
Commitment is to be assigned, the Commitment so assigned shall not be
less than Five Million and 00/100 Dollars ($5,000,000.00).
(viii) The assigning Lender shall pay to the Agent
an assignment fee of Three Thousand Five Hundred and 00/100 Dollars
($3,500.00) upon the execution by such Lender of the Assignment and
Acceptance; provided that no such fee shall be payable upon any
assignment by a Lender to an affiliate thereof.
(ix) The Agent shall maintain at its Principal
Office a copy of each Assignment and Acceptance delivered to and
accepted by it, and a register for the recordation of the names and
addresses of the Lenders and the amount of the extensions of credit
with respect to each Lender from time to time (the "Register"). The
entries in
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the Register shall be conclusive, in the absence of manifest error, and
the Borrowers, the Agent and the Lenders may treat each person whose
name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by
the Borrowers or Lenders at any reasonable time and from time to time
upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and a permitted assignee Lender, together with any Note
or Notes subject to such assignment and the written consent to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed and is
substantially in the form of Exhibit "D":
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Lenders and
the Borrower; and
(iv) promptly deliver a copy of such Assignment and
Acceptance to the Borrower.
Within five (5) Business Days after receipt of notice, the Borrowers
shall execute and deliver to the Agent, in exchange for the surrendered Note or
Notes, an Additional Note or Additional Notes to the order of such Eligible
Assignee, in amounts equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance, and an Additional Note or Additional Notes to the
order of the assigning Lender in an amount equal to the Commitment retained by
it hereunder. Such Additional Note or Additional Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit "C".
15.2 Rights under Agreement, Notes and Loan Documents. Nothing in
this Agreement, the Loan Documents or the Notes, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement, the Notes or the other Loan Documents.
ARTICLE 16.
FLORIDA, DELAWARE, TEXAS, MICHIGAN,
WASHINGTON, MINNESOTA, PENNSYLVANIA, TENNESSEE,
ILLINOIS, INDIANA, ONTARIO, BRITISH COLUMBIA,
ALBERTA, NOVA SCOTIA AND CANADIAN TAXES
Borrowers hereby agree to and do hereby jointly and severally indemnify
and hold harmless Lenders of and from any and all liability in connection with
payment of any and all
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intangible, documentary stamp, transfer, recording and other taxes due and owing
to the State of Florida, the State of Delaware, the State of Texas, the State of
Michigan, the State of Washington, the State of Minnesota, the State of
Pennsylvania, the State of Tennessee, the State of Illinois, the State of
Indiana, the Province of Ontario, the Province of British Columbia, the Province
of Alberta, Nova Scotia, all other Canadian provinces and all other applicable
jurisdictions in connection with the execution, delivery and/or enforcement of
this Agreement, the Notes, the Security Agreements, the Mortgage Documents and
all associated Loan Documents, together with all penalties and interest
associated therewith, if any. Accordingly, Borrowers do hereby authorize Agent
to reimburse itself for any such taxes that Agent pays upon behalf of Borrowers
from the proceeds under the Notes, in the event Agent, at any time, in its sole
discretion, deems it necessary to pay such taxes, together with any penalties
and interest associated therewith. This indemnification shall survive repayment
of the Loans.
Article 17.
MISCELLANEOUS
17.1 Any condition of this Agreement which requires the submission
of evidence of the existence or non-existence of a specified fact or facts
implies as a condition the existence or non-existence, as the case may be, of
such fact or facts, and Lenders shall, at all times, be free independently to
establish to their satisfaction and in their absolute discretion such existence
or non-existence.
17.2 No part of any Loans will be, at any time, subject or liable
to attachment or levy at the suit of any creditor of Borrowers or of any other
interested party, or at the suit of any contractor, subcontractor,
sub-subcontractors or materialmen, or any of their creditors.
17.3 If performance of any provision hereof or any transaction
related hereto is limited by law, then the obligation to be performed shall be
reduced accordingly, and if any clause or provision herein contained operates or
would operate to invalidate this Agreement in part, then the invalid part of
said clause or provisions only shall be held for naught as though not contained
herein, and the remainder of this Agreement shall remain operative and in full
force and effect.
17.4 If the Agent or the Lenders shall waive any provisions of the
Loan Documents, or shall fail to enforce any of the conditions or provisions of
this Agreement, such waiver shall not be deemed to be a continuing waiver, and
shall never be construed as such, and the Agent and the Lenders shall thereafter
have the right to insist upon the enforcement of such conditions or provisions.
Furthermore, no provision of this Agreement shall be amended, waived, modified,
discharged or terminated except by instrument in writing, signed by the parties
hereto.
17.5 This Agreement and the documents expressly referred to herein
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to the subject matter hereof. No modification, amendment
or waiver of any provision of this Agreement or the Notes, nor any consent to
any departure by the Borrowers therefrom, in any event shall be effective unless
the
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same shall be in writing and signed by each of the Borrowers and by the Majority
Lenders (or by the Agent on their behalf), and then the waiver or consent shall
be effective only in the specific instance and for the purpose for which given;
provided, however, that no such modification, amendment or waiver shall, without
the consent of each Lender affected thereby:
(i) extend the maturity of the Loans or
any of the Notes or reduce or forgive the principal amount thereof, or
reduce the rate or extend the time of payment of interest or fees
thereon;
(ii) reduce the percentages specified in
the definition of the Majority Lenders;
(iii) increase the amount of the Commitment
of any Lender hereunder, or permit any of the Borrowers to assign its
rights under this Agreement;
(iv) release all or any portion of the
Real Property or the Collateral or any interest herein; or
(v) amend the definition of Borrowing
Base in such a manner that increases availability under the Borrowing
Base;
(vi) amend any financial covenant in such
a manner which makes the financial covenant less restrictive;
(vii) subordinate the Loans or any
collateral securing the Loans in favor of any other loan(s) to the
Borrowers or any collateral securing said other loan(s) to the
Borrowers;
(viii) amend this Section 17.5.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. No notice to or demand of
the Borrowers in any case shall entitle the Borrowers to any other or further
notice or demand in the same, similar or other circumstances.
17.6 The respective obligations of the Lenders hereunder are
several and not joint and no Lender shall be the partner or agent of any other
(except to the extent to which the Agent is authorized to act as such). The
failure of any Lender to perform any of its obligations hereunder shall not
relieve any other Lender from any of its obligations hereunder. This Agreement
shall not be construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective successors and
assigns.
17.7 The obligations and liabilities of the Borrowers under this
Agreement, the Notes and the other Loan Documents are the joint and several
obligations of the Borrowers.
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<PAGE> 67
17.8 Anything in this Agreement to the contrary notwithstanding, no
Lender shall be obligated to extend credit to the Borrowers in violation of any
limitation or prohibition provided by any applicable statute or regulation.
17.9 All notices given hereunder shall be in writing and addressed
as follows:
(a) Agent: NATIONAL BANK OF CANADA
5100 Town Center Circle
Suite 430
Boca Raton, Florida 33486
Attention: Michael S. Bloomenfeld
with copy to: GARY S. SINGER, ESQ.
Mombach, Boyle & Hardin, P.A.
500 East Broward Boulevard
Suite 1950
Fort Lauderdale, Florida 33394
(b) Borrowers: RAILAMERICA, INC.
KALYN/SIEBERT I, INCORPORATED
RAILAMERICA INTERMODAL SERVICES, INC.
RAILAMERICA CARRIERS INC.
STEEL CITY CARRIERS INC.
SAGINAW VALLEY RAILWAY COMPANY, INC.
HURON AND EASTERN RAILWAY COMPANY, INC.
WEST TEXAS AND LUBBOCK RAILROAD COMPANY
PLAINVIEW TERMINAL COMPANY
CASCADE AND COLUMBIA RIVER RAILROAD COMPANY
OTTER TAIL VALLEY RAILROAD COMPANY, INC.
MINNESOTA NORTHERN RAILROAD, INC.
DELAWARE VALLEY RAILWAY COMPANY
ST. CROIX VALLEY RAILROAD COMPANY
E& N RAILWAY COMPANY (1998) LTD.
3025619 NOVA SCOTIA LIMITED
FLORIDA RAIL LINES, INC.
SOUTH CENTRAL TENNESSEE RAILROAD
CORPORATION
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<PAGE> 68
KALYN/SIEBERT, L.P.
RL ACQUISITION CORP.
5300 Broken Sound Boulevard, N.W.
2nd Floor
Boca Raton, Florida 33487
Attn: Gary Marino
With a copy to: SCOTT G. WILLIAMS, ESQUIRE
SHUTTS & BOWEN
One Clearlake Centre
Suite 500
250 Australian Avenue South
West Palm Beach, Florida 33402-3555
(c) Lenders: At the addresses set forth
on the signature pages hereof and on
the signature pages of each
Assignment and Acceptance.
17.10 This Agreement, the Loan Documents and all other documents
relating hereto or thereto may be reproduced by the Agent or the Lenders, and,
the Agent and the Lenders may destroy any original documents so reproduced. The
Borrowers agree and stipulate that any such reproduction shall be admissible in
evidence as the original itself in any jurisdiction or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by the Lenders in the regular course of business) and that
any enlargement, facsimile, or further reproduction of said document shall
likewise be admissible in evidence.
17.11 In no event, shall the Agent's or the Lenders' rights
hereunder or under any of the Loan Documents, grant the Agent or the Lenders the
right to or be deemed to indicate that the Agent or the Lenders are in control
of the business, management or properties of the Borrowers, or have power over
the daily management functions and operating decisions made by the Borrowers.
The Agent and the Lenders are lenders only and shall not be considered
shareholders, joint venturers or partners of any Borrower.
17.12 The headings preceding the text of the sections of this
Agreement are used solely for convenience of reference and shall not affect the
meaning, construction, or effect of this Agreement.
17.13 Borrowers shall not assign this Agreement without the prior
written consent of the Majority Lenders, and any assignment in violation hereof
shall be of no force and effect and shall constitute an Event of Default herein.
Subject to the previous sentence, this Agreement shall extend to and bind the
parties hereto, and their respective successors and assigns.
17.14 Except as otherwise noted herein, all covenants, agreements,
representations and warranties made herein and in the Loan Documents shall
survive the respective dates of effectiveness thereof and shall continue in full
force and effect so long as the Loan Documents,
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<PAGE> 69
or any of them, remain in effect or any of the obligations evidenced thereby are
outstanding and unpaid.
17.15 In the event of any conflict, inconsistency or ambiguity
between the provisions of this Agreement and the provisions of the Notes, the
Mortgage Documents, the Collateral Assignments, the Security Agreements or any
of the other Loan Documents, the provisions of this Agreement shall control and
prevail.
17.16 This Agreement may be executed in one or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.
17.17 Any term used herein shall be equally applicable to both the
singular and plural forms.
17.18 Borrowers will pay all reasonable out-of-pocket expenses
incurred by the Agent and the Lenders in connection with the preparation of the
Loan Documents (whether or not the transactions contemplated hereby shall be
consummated), the making of the Loans, the enforcement and protection in any
legal or equitable proceeding of the rights of the Agent and the Lenders in
connection with the Loan Documents, and in connection with any action or claim
under the Loan Documents including the Notes, or in any way related thereto,
including, without limitation, the reasonable fees and disbursements of counsel
of the Agent and the Lenders.
17.19 Each of the Borrowers hereby waives any right to require a
proceeding first against any other Borrower or other party providing collateral,
or to exhaust any security for the performance of the Indebtedness. Each of the
Borrowers further covenants that no security now or subsequently held by the
Agent or the Lenders for the payment of the Indebtedness evidenced by the Notes
made by Borrowers under the Agreement, or for the payment of any other
Indebtedness of Borrowers to the Agent or the Lenders under this Agreement or
the other Loan Documents, whether in the nature of a security interest, pledge,
lien, assignment, setoff, suretyship, guaranty, indemnity, insurance or
otherwise, and no act, omission or other conduct of Agent or the Lenders in
respect of such security (excluding fraud, gross negligence or willful
misconduct), shall affect in any manner whatsoever the unconditional obligation
of each of the Borrowers under this Agreement and the Notes, and Agent and the
Lenders may release, exchange, enforce, apply the proceeds of and otherwise deal
with any such security without affecting in any manner the unconditional
obligation of each of the Borrowers under this Agreement and the Notes.
Without limiting the generality of the foregoing, such obligations, and
the rights of the Agent to enforce the same on behalf of the Lenders, by
proceedings, whether by action at law, suit in equity or otherwise, shall not be
in any way affected by (i) any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, winding up or other
proceeding involving or affecting any of the Borrowers or others, or (ii) any
change in the ownership of any of the capital stock of any of the Borrowers or
any other party providing collateral for any of the Indebtedness, or any of
their respective Affiliates.
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<PAGE> 70
Each of the Borrowers hereby waives to the fullest extent possible
under applicable law:
(a) any defense based upon the doctrine of marshalling of
assets or upon an election of remedies by Agent or the Lenders, including,
without limitation, an election to proceed by nonjudicial rather than judicial
foreclosure;
(b) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(c) any duty on the part of Agent or any of the Lenders to
disclose to any of the Borrowers any fact Agent or the Lenders may now or
hereafter know about any of the other Borrowers regardless of whether Agent or
any Lender has reason to believe that any such facts materially increase the
risk beyond that which each of the Borrowers intends to assume or has reason to
believe that such facts are unknown to any of the Borrowers or has a reasonable
opportunity to communicate such facts to each of the Borrowers, since each of
the Borrowers acknowledges that it is fully responsible for being and keeping
informed of the financial condition of each of the other Borrowers and of all
circumstances bearing on the risk of non-payment of any Indebtedness;
(d) any claim for reimbursement, contribution, exoneration,
indemnity or subrogation, or any other similar claim, which any such Borrower
may have or obtain against any other Borrower, or by reason of the payment by
any of the Borrowers of any Indebtedness or the performance of this Agreement,
the Notes or any other Loan Document; and
(e) any other event or action (excluding any of the Borrowers'
compliance with the provisions hereof) that would result in the discharge by
operation of law or otherwise of any of the Borrowers from the performance or
observance of any obligation, covenant or agreement contained in this Agreement,
the Notes or any other Loan Documents.
17.20 Each of the Borrowers shall indemnify and hold harmless the
Agent and each Lender, and their respective directors, officers, employees and
agents against all losses, claims, damages, penalties, judgments, liabilities
and expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent or any Lender is a party thereto)
which any of them may pay or incur arising out of or relating to, directly or
indirectly, this Agreement, the Notes, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Loans hereunder; provided, however,
that in no event shall the Agent or a Lender have the right to be indemnified
hereunder for its own gross negligence or willful misconduct nor shall the Agent
or any Lender be indemnified against any liabilities which arise as a result of
any claims made or actions, suits or proceedings commenced or maintained against
Agent or any Lender (including the Agent in its capacity as such) (i) by Agent's
or that Lender's shareholders or any governmental regulatory body or authority
asserting that Agent or such Lender or any of its directors, officers, employees
or agents violated any banking or securities law or regulation or any duty to
its own shareholders,
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<PAGE> 71
customers (excluding the Borrowers) or creditors in any manner whatsoever in
entering into or performing any of its obligations contemplated by this
Agreement or (ii) by Agent or any other Lender. The obligations of the Borrowers
under this Section 17.20 shall survive the termination of this Agreement.
17.21 This Agreement shall be governed by and construed in
accordance with the internal statutes and laws of the State of New York (other
than with respect to conflicts of laws), but giving effect to federal laws
applicable to national banks to the extent applicable, except as required by
mandatory provisions of laws and except to the extent that the validity or
perfection of the security interest created hereby, or remedies hereunder, in
respect of any particular Real Property or other Collateral are governed by the
laws of a jurisdiction other than the State of New York.
17.22 The Agent shall deliver, or cause to be delivered, to the
Lenders, within two (2) Business Days after the Agent's receipt thereof, copies
of all documents and other items to be delivered by the Borrowers to the Agent
under the terms of this Agreement.
17.23 THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO
THE NONEXCLUSIVE JURISDICTION OF ALL STATE AND FEDERAL COURTS SITTING IN NEW
YORK COUNTY, NEW YORK, AND AGREE THAT ALL SUMMONS AND OTHER COURT PROCESS ISSUED
BY SAID COURTS MAY BE SERVED UPON THE BORROWERS, WITHIN OR OUTSIDE OF SAID
COURTS' TERRITORIAL JURISDICTION, BY MAILING THE SAME, BY REGISTERED OR
CERTIFIED MAIL, OR BY PERSONAL SERVICE, TO THE BORROWERS AT THEIR ADDRESS
SPECIFIED HEREIN.
IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT NO SUIT OR ACTION SHALL BE
COMMENCED BY ANY BORROWER, OR BY ANY SUCCESSOR, PERSONAL REPRESENTATIVE OR
ASSIGN OF ANY BORROWER, WITH RESPECT TO THE LOANS, THIS LOAN AGREEMENT OR ANY
OTHER LOAN DOCUMENTS, OTHER THAN IN A STATE COURT OF COMPETENT JURISDICTION IN
AND FOR NEW YORK COUNTY, NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT IN THE UNITED STATES IN WHICH THE PRINCIPAL PLACE OF BUSINESS OF
THE AGENT IN THE STATE OF NEW YORK IS SITUATED, AND NOT ELSEWHERE. NOTHING
CONTAINED IN THIS PARAGRAPH SHALL PROHIBIT THE AGENT OR THE LENDERS FROM
INSTITUTING SUIT IN ANY COURT OF COMPETENT JURISDICTION FOR THE ENFORCEMENT OF
THEIR RIGHTS HEREUNDER, IN THE NOTES, IN THE MORTGAGE DOCUMENTS, IN THE SECURITY
AGREEMENTS, IN THE COLLATERAL ASSIGNMENTS OR IN ANY OTHER LOAN DOCUMENT.
17.24 Waiver and Release. AS A MATERIAL INDUCEMENT FOR THE LENDERS
TO EFFECTUATE THE LOANS AND THE LENDERS AND THE AGENT TO EXECUTE THIS AGREEMENT,
THE BORROWERS DO HEREBY RELEASE, WAIVE, DISCHARGE, COVENANT NOT TO SUE, ACQUIT,
SATISFY AND FOREVER DISCHARGE THE
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<PAGE> 72
AGENT AND THE LENDERS, THEIR OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND
AGENTS AND THEIR AFFILIATES AND ASSIGNS FROM ANY AND ALL LIABILITY, CLAIMS,
COUNTERCLAIMS, DEFENSES, ACTIONS, CAUSES OF ACTION, SUITS, CONTROVERSIES,
AGREEMENTS, PROMISES AND DEMANDS WHATSOEVER IN LAW OR IN EQUITY WHICH THE
BORROWERS EVER HAD, NOW HAVE, OR WHICH ANY PERSONAL REPRESENTATIVE, SUCCESSOR,
HEIR OR ASSIGN OF THE BORROWERS HEREAFTER CAN, SHALL OR MAY HAVE AGAINST THE
AGENT OR ANY OF THE LENDERS, THEIR OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND
AGENTS, AND THEIR AFFILIATES AND ASSIGNS, FOR, UPON OR BY REASON OF ANY MATTER,
CAUSE OR THING WHATSOEVER, THROUGH THE DATE HEREOF. THE BORROWERS FURTHER
EXPRESSLY COVENANT WITH AND WARRANT UNTO THE AGENT AND THE LENDERS AND THEIR
AFFILIATES AND ASSIGNS, THAT THERE EXIST NO CLAIMS, COUNTERCLAIMS, DEFENSES,
OBJECTIONS, OFFSETS OR CLAIMS OF OFFSET AGAINST THE AGENT OR THE LENDERS OR THE
OBLIGATION OF THE BORROWERS TO PAY THE AGENT AND THE LENDERS ALL AMOUNTS OWING
UNDER THE NOTES, THIS LOAN AGREEMENT, AND ALL ASSOCIATED LOAN DOCUMENTS AS AND
WHEN THE SAME BECOME DUE AND PAYABLE.
17.25 NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREIN,
CARRIERS, STEEL CITY AND RL SHALL EACH BE LIABLE UNDER THIS AMENDED AND RESTATED
LOAN AGREEMENT, THE NOTES AND THE INDEBTEDNESS ONLY TO THE EXTENT PERMITTED BY
THE LAWS OF THE JURISDICTION OF INCORPORATION OR ORGANIZATION OF CARRIERS, STEEL
CITY AND RL, AS APPLICABLE. ADDITIONALLY, IN CONNECTION WITH ANY ADDITIONAL
BORROWERS WHICH ARE CANADIAN BORROWERS AND WHICH ARE, PURSUANT TO THE LAWS OF
THE JURISDICTION OF THEIR INCORPORATION OR ORGANIZATION SUBJECT TO FINANCIAL
ASSISTANCE PROHIBITIONS (COLLECTIVELY THE "FUTURE CANADIAN BORROWERS"), THEN
SUCH FUTURE CANADIAN BORROWERS SHALL EACH BE LIABLE UNDER THIS AMENDED AND
RESTATED LOAN AGREEMENT THE NOTES AND THE INDEBTEDNESS ONLY TO THE EXTENT
PERMITTED BY THE LAWS OF THE JURISDICTION OF INCORPORATION OR ORGANIZATION OF
EACH FUTURE CANADIAN BORROWER, AS APPLICABLE. ALL OTHER BORROWERS HEREBY
ACKNOWLEDGE THIS LIMITATION OF LIABILITY OF CARRIERS, STEEL CITY, RL AND THE
FUTURE CANADIAN BORROWERS, AND BORROWERS DO HEREBY AGREE THAT EXCEPTING FOR THE
LIMITATION OF LIABILITY OF CARRIERS, STEEL CITY, RL AND THE FUTURE CANADIAN
BORROWERS SET FORTH ABOVE, THAT BORROWERS ARE JOINTLY AND SEVERALLY LIABLE FOR
ALL DEBTS, DUTIES, LIABILITIES AND OBLIGATIONS UNDER OR IN CONNECTION WITH THIS
AMENDED AND RESTATED LOAN AGREEMENT, THE NOTES, THE LOAN DOCUMENTS AND THE
INDEBTEDNESS.
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17.26 Amended and Restated Agreement. THIS AGREEMENT AMENDS AND
RESTATES THE ORIGINAL LOAN AGREEMENT SUCH THAT THE SECURITY INTERESTS, RIGHTS,
DUTIES AND OBLIGATIONS OF THE BORROWERS, THE AGENT AND THE LENDERS CREATED BY
THE ORIGINAL LOAN AGREEMENT ARE NOT EXTINGUISHED, BUT ARE REAFFIRMED AND REMAIN
IN FULL FORCE AND EFFECT AS MODIFIED BY AND AS PROVIDED IN THIS AMENDED AND
RESTATED LOAN AGREEMENT.
WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE BORROWERS HEREBY
MUTUALLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY MAY HAVE
TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED OR TO
BE EXECUTED IN CONJUNCTION HEREWITH, UNDER ANY OF THE LOAN DOCUMENTS, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF ANY PARTY. THE BORROWERS ACKNOWLEDGE THAT THIS WAIVER OF JURY TRIAL
IS A MATERIAL INDUCEMENT TO THE AGENT AND THE LENDERS IN ACCEPTING THIS
AGREEMENT, AND, THAT THE AGENT AND THE LENDERS WOULD NOT HAVE ACCEPTED THIS
AGREEMENT WITHOUT THIS JURY TRIAL WAIVER, AND, THAT THE BORROWERS HAVE BEEN
REPRESENTED BY AN ATTORNEY OR HAVE HAD AN OPPORTUNITY TO CONSULT WITH AN
ATTORNEY REGARDING THIS JURY TRIAL WAIVER, AND, UNDERSTAND THE LEGAL EFFECT OF
THIS JURY TRIAL WAIVER.
[Signatures on following pages].
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<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
Signed, sealed and delivered in
the presence of: BORROWERS:
RAILAMERICA, INC., a Delaware
corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
KALYN/SIEBERT I, INCORPORATED, a
Texas corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
RAILAMERICA INTERMODAL SERVICES,
INC., a Delaware corporation
- ---------------------------
/s/ Signature Illegible
By: /s/ Donald D. Redfearn
- --------------------------- -------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -1- OF 14
<PAGE> 75
RAILAMERICA CARRIERS INC.,
a corporation organized under the laws
of the Province of Ontario
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
STEEL CITY CARRIERS INC., a
corporation organized under the
laws of the Province of Ontario
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
SAGINAW VALLEY RAILWAY
COMPANY, INC., a Delaware corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -2- OF 14
<PAGE> 76
HURON AND EASTERN RAILWAY
COMPANY, INC., a Michigan
corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
WEST TEXAS AND LUBBOCK
RAILROAD COMPANY, INC., a Texas
corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
PLAINVIEW TERMINAL COMPANY, a
Texas corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
CASCADE AND COLUMBIA RIVER
RAILROAD COMPANY, a Delaware
corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- -----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -3- OF 14
<PAGE> 77
OTTER TAIL VALLEY RAILROAD
COMPANY, INC., a Minnesota corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
MINNESOTA NORTHERN RAILROAD,
INC., a Delaware corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
DELAWARE VALLEY RAILWAY
COMPANY, INC., a Delaware corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
ST. CROIX VALLEY RAILROAD
COMPANY, a Delaware corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -4- OF 14
<PAGE> 78
E & N RAILWAY COMPANY (1988) LTD., a
corporation incorporated under the
laws of British Columbia
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
3025619 NOVA SCOTIA LIMITED
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
FLORIDA RAIL LINES, INC., a Delaware
corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
SOUTH CENTRAL TENNESSEE
RAILROAD CORPORATION, a Delaware
corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- ----------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -5- OF 14
<PAGE> 79
KALYN/SIEBERT, L.P., a Texas limited
partnership
By: KALYN/SIEBERT I, INCORPORATED,
a Texas corporation, its
General Partner
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- --------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
RL ACQUISITION CORP., a corporation
organized under the Business
Corporations Act (Alberta)
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald D. Redfearn
- --------------------------- --------------------------------
DONALD D. REDFEARN,
Executive Vice President
(Corporate Seal)
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -6- OF 14
<PAGE> 80
STATE OF GEORGIA )
COUNTY OF COBB )
The foregoing instrument was acknowledged before me this 22nd day of
July, 1999, by DONALD D. REDFEARN, as the Executive Vice President of
RAILAMERICA, INC., a Delaware corporation, RAILAMERICA INTERMODAL SERVICES,
INC., a Delaware corporation, SAGINAW VALLEY RAILWAY COMPANY, INC., a Delaware
corporation, HURON AND EASTERN RAILWAY COMPANY, INC., a Michigan corporation,
WEST TEXAS AND LUBBOCK RAILROAD COMPANY, INC., a Texas corporation, PLAINVIEW
TERMINAL COMPANY, a Texas corporation, CASCADE AND COLUMBIA RIVER RAILROAD
COMPANY, a Delaware corporation, OTTER TAIL VALLEY RAILROAD COMPANY, INC., a
Minnesota corporation, MINNESOTA NORTHERN RAILROAD, INC.,a Delaware corporation,
DELAWARE VALLEY RAILWAY COMPANY, INC., a Delaware corporation, KALYN/SIEBERT I,
INCORPORATED, a Texas corporation, RAILAMERICA CARRIERS INC., a corporation
organized under the laws of the Province of Ontario, STEEL CITY CARRIERS INC., a
corporation organized under the laws of the Province of Ontario, ST. CROIX
VALLEY RAILROAD COMPANY, a Delaware corporation, E & N RAILWAY COMPANY (1988)
LTD., a corporation incorporated under the laws of British Columbia, 3025619
NOVA SCOTIA LIMITED, FLORIDA RAIL LINES, INC., a Delaware corporation SOUTH
CENTRAL TENNESSEE RAILROAD CORPORATION, a Delaware corporation, KALYN/SIEBERT I,
INCORPORATED, a Texas corporation, general partner of KALYN/SIEBERT, L.P., a
Texas limited partnership, and RL ACQUISITION CORP., a corporation organized
under the Business Corporation Act (Alberta), who is personally known to me or
has produced his Florida driver's license as identification.
/s/ Claudette T. Ferguson
---------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Claudette T. Ferguson
----------------------------------
My Commission Expires: stamp
-----------------------
Commission Number: stamp
---------------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -7- OF 14
<PAGE> 81
AGENT AND LENDER:
NATIONAL BANK OF CANADA, a
Canadian Chartered Bank
/s/ Signature Illegible
By: /s/ Michael S. Bloomenfeld
- ----------------------------- -----------------------------
Michael S. Bloomenfeld,
Vice President
STATE OF GEORGIA )
COUNTY OF COBB )
The foregoing instrument was acknowledged before me this 22nd day of
July, 1999, by Michael Bloomenfeld, as Vice President of and on behalf of
NATIONAL BANK OF CANADA, a Canadian Chartered Bank, who is personally known to
me or has produced his Florida driver's license as identification.
/s/ Claudette T. Ferguson
---------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Claudette T. Ferguson
----------------------------------
My Commission Expires: stamp
-----------------------
Commission Number: stamp
---------------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -8- OF 14
<PAGE> 82
COMERICA BANK, a Michigan Banking
Corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ Donald Phillips
- --------------------------- -------------------------------------
Title: First Vice President
---------------------------------
Address: Comerica Bank
100 N.E. Third Avenue
Suite 200
Fort Lauderdale, Florida 33301
STATE OF MICHIGAN )
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me this 21st day of
July, 1999, by Donald Phillips, as First Vice President of COMERICA BANK, a
Michigan Banking Corporation, who is personally known to me or has produced
his/her _________________ driver's license as identification.
/s/ Kathleen M. Flynn
---------------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Kathleen M. Flynn
-----------------------------------------
My Commission Expires: 6/18/00
-----------------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -9- OF 14
<PAGE> 83
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking
association
/s/ Signature Illegible
By: /s/ Daniel Gorman Jr.
- --------------------------- ------------------------------------
Title: Vice President
--------------------------------
Address: SouthTrust Bank, National
Association
One East Broward Boulevard
Third Floor
Fort Lauderdale, Florida 33301
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
The foregoing instrument was acknowledged before me this 21 day of
July, 1999, by Daniel Gorman Jr., as Vice President of SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking association, who is personally known to me or
has produced his/her n/a driver's license as identification.
/s/ Carrie L. Eddings
------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Carrie L. Eddings
-------------------------------
My Commission Expires: September 30, 2002
--------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -10- OF 14
<PAGE> 84
BANKATLANTIC, a Federal Savings Bank
/s/ Signature Illegible
- ---------------------------
By: /s/ Ana C. Bolduc
- --------------------------- -------------------------------------
Title: SVP
----------------------------------
Address: BankAtlantic
100 N. Biscayne Boulevard
Second Floor
Miami, Florida 33132
STATE OF GEORGIA )
COUNTY OF COBB )
The foregoing instrument was acknowledged before me this 22nd day of
July, 1999, by Ana C. Bolduc, as Sr. V.P. of BANKATLANTIC, a Federal Savings
Bank, who is personally known to me or has produced her Florida driver's license
as identification.
/s/ Claudette T. Ferguson
---------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Claudette T. Ferguson
----------------------------------
My Commission Expires: stamp
-----------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -11- OF 14
<PAGE> 85
CITIZENS BUSINESS CREDIT, a division of
Citizens Leasing Corporation
/s/ Signature Illegible
- ---------------------------
By: /s/ William L. Benning
- --------------------------- ------------------------------------
Title: SVP
--------------------------------
Address: Citizens Business Credit
100 Galleria Parkway
Suite 1655
Atlanta, Georgia 30339
STATE OF GEORGIA )
COUNTY OF COBB )
The foregoing instrument was acknowledged before me this 22nd day of
July, 1999, by Bill L. Benning, as Sr. V.P. of CITIZENS BUSINESS CREDIT, a
division of Citizens Leasing Corporation, who is personally known to me or has
produced his/her Georgia driver's license as identification.
/s/ Claudette T. Ferguson
---------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Claudette T. Ferguson
----------------------------------
My Commission Expires: stamp
-----------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -12- OF 14
<PAGE> 86
CAPITAL BUSINESS CREDIT, a division
of Capital Factors, Inc.
/s/ Signature Illegible
- ---------------------------
By: /s/ Robert Beard
- --------------------------- ---------------------------------------
Title: SVP
---------------------------------
Address: Capital Business Credit
2849 Paces Ferry Road
Suite 100
Atlanta, Georgia 30339
STATE OF GEORGIA )
COUNTY OF COBB )
The foregoing instrument was acknowledged before me this 22nd day of
July, 1999, by Robert Beard, as Sr. V.P. of CAPITAL BUSINESS CREDIT, a division
of Capital Factors, Inc., who is personally known to me or has produced his/her
Georgia driver's license as identification.
/s/ Claudette T. Ferguson
---------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Claudette T. Ferguson
----------------------------------
My Commission Expires: stamp
-----------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -13- OF 14
<PAGE> 87
ING (U.S.) CAPITAL LLC
/s/ Signature Illegible
- ---------------------------
By: /s/ Bill Redmond
- --------------------------- -----------------------------------
Title: VP
-----------------------------------
Address: ING (U.S.) Capital LLC
55 East 52nd Street
New York, New York 10055
STATE OF NEW YORK )
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 22nd day of
July, 1999, by Bill Redmond, as Vice President of ING (U.S.) CAPITAL LLC, who is
personally known to me or has produced his _________________ driver's license as
identification.
/s/ Miriam R. Mercado
------------------------------------------
Notary Public - State and County Aforesaid
Print Name: Miriam R. Mercado
-------------------------------
My Commission Expires: 2/16/01
--------------------
AMENDED AND RESTATED LOAN AGREEMENT
SIGNATURE PAGE -14- OF 14
