Exhibit 10(i)
ASSET PURCHASE AGREEMENT
BETWEEN
UNION PACIFIC RAILROAD COMPANY
AND
SAULT STE. XXXXX BRIDGE COMPANY
DATED AS OF
NOVEMBER 30, 1996
TABLE OF CONTENTS
1. DEFINITIONS.................................................... 1
2. PURCHASE AND SALE OF ASSETS
2.1 General........................................... 4
2.2 Special Inventory................................. 4
3. EXCLUSION OF ASSETS
3.1 Contracts......................................... 4
3.2 Current Assets.................................... 5
3.3 Corporate Records................................. 5
3.4 Claims And Litigation............................. 5
4. PURCHASE PRICE
4.1 Amount Of Cash Purchase Price..................... 5
4.2 Adjustment Of Purchase Price...................... 5
4.3 Payment Of Purchase Price......................... 5
4.4 Allocation Of Purchase Price...................... 5
4.5 Qualified Intermediary............................ 6
5. CHANGES IN ASSETS
5.1 Loss Of And Damage To Assets...................... 6
5.2 Determination Of Value Absent Agreement........... 7
5.3 Estimation And Final Determination Procedures..... 7
6. TAX ALLOCATION, LEASE INCOME, CAPITALIZED
LEASES AND LABOR PROTECTION
6.1 Proration Of Taxes................................ 8
6.2 Lease Rentals And License Income.................. 8
6.3 Labor Protection.................................. 9
7. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
7.1 Liabilities To Be Assumed......................... 9
7.2 Liabilities Not To Be Assumed..................... 10
7.3 Insurance......................................... 10
7.4 No Third Party Rights............................. 10
8. REPRESENTATIONS AND WARRANTIES
8.1 Disclaimer Of Representations And Warranties...... 11
8.2 General Representations And Warranties Of Seller.. 11
8.3 Environmental Representations And
Warranties Of Seller.............................. 13
8.4 Representations And Warranties By Purchaser....... 14
8.5 Survival.......................................... 15
8.6 Condition Of Assets............................... 15
9. CONDITIONS TO THE CLOSING
9.1 Obligation Of Purchaser To Close.................. 16
9.2 Obligation Of Seller To Close..................... 17
10. CLOSING
10.1 Place Of Closing.................................. 18
10.2 Time Of Closing................................... 18
10.3 Deliveries By Purchaser At Closing................ 18
i
10.4 Deliveries By Seller At Closing................... 19
11. BOOKS AND RECORDS
11.1 Access To Books And Records....................... 19
11.2 Securities Law Compliance......................... 20
12. OPERATIONS PRIOR TO CLOSING
12.1 Operations Prior To Closing....................... 21
13. EMPLOYEES.................................................. 22
14. CONSENTS AND APPROVALS
14.1 Board and HSR Approvals........................... 22
15. INDEMNIFICATION
15.1 Purchaser's Indemnification....................... 23
15.2 Seller's Indemnification.......................... 23
15.3 Procedures........................................ 23
16. TERMINATION
16.1 Grounds For Termination............................... 25
17. MISCELLANEOUS
17.1 Title And Other Descriptions.......................... 26
17.2 Waiver................................................ 26
17.3 Expenses.............................................. 26
17.4 Transitional Matters.................................. 26
17.5 Car Supply............................................ 27
17.6 Entire Agreement...................................... 27
17.7 Choice Of Law......................................... 27
17.8 Severability.......................................... 27
17.9 Counterparts.......................................... 27
17.10 Headings............................................. 28
17.11 Successors And Assigns............................... 28
17.12 Notice............................................... 28
Appendix A - Description of Assets
Appendix A-1 - Legal Description of Real Estate
Appendix A-2 - Personal Property Excluding Special Inventory
Schedule I - Operating Contracts
Schedule II - Transportation Contracts
Schedule III - Excluded Contracts
Appendix B - Allocation of Purchase Price
Appendix C - Administration and Proration Procedures
Appendix D - Special Inventory
Appendix E - Environmental Operations Obligations Schedule
Appendix F - Map
Exhibit 1 - Form of Sellers' Counsel's Opinion
Exhibit 2 - Form of Purchaser's Counsel's Opinion
Exhibit 3 - Disclosure Schedule
Exhibit 4 - Form of Quit Claim Deed
Exhibit 5 - Form of Personal Property Sale Order
ii
ASSET PURCHASE AGREEMENT
Sault Ste. Xxxxx Bridge Company ("Purchaser"), a Michigan corporation, and Union
Pacific Railroad Company ("Seller"), a Utah corporation agree as follows:
1. DEFINITIONS
The following terms when used with initial capitalization in this
Agreement, whether in the singular or the plural, have the meanings
ascribed to them below:
"Agreement" means this Asset Purchase Agreement, including its
Appendices and Exhibits.
"Assets" means the assets of Seller identified in Appendix A to this
Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. ss.9601 et seq.
"Closing Place" has the meaning given to it in Section 10.1 of this
Agreement.
"Closing Date" has the meaning given to it in Section 10.2 of this
Agreement.
"Board" means the Surface Transportation Board established under 49
U.S.C. ss.10101 et seq. or any successor agency.
"Contracts" means contracts, rate contracts, leases, commitments,
agreements and arrangements.
"Designated Qualified Intermediary" means a "qualified intermediary" as
defined in United States Treasury Regulations under Internal Revenue
Code Section 1031 designated by Seller pursuant to Section 4.5 of this
Agreement.
"Environmental Law" means any law, judgment, decree, order, license,
rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. ss.6901 et seq.), CERCLA,
the Superfund Amendments and Reauthorization Act of 1986, as amended
(Pub. L. 99-499, Pub. L. 99563, Pub. L. 100-202 and Pub. L. 101-144),
the Clean Water Act, as amended (33 U.S.C. ss.1251 et seq.), the Clean
Air Act, as amended (42 U.S.C. ss.7401 et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. ss.2601 et seq.), the Safe Drinking
Water Act, as amended (42 U.S.C. ss.300 et seq.), the Emergency
Planning and Community Right-to-Know Act of 1986, as amended (42 U.S.C.
ss.1101 et seq.) and
1
any other federal, state or local statute, regulation, ordinance, order
or decree pertaining to the environment.
"Hazardous Substances" means any "hazardous waste" as defined by 42
U.S.C. ss.6903(5), any "medical waste" as defined by 42 U.S.C.
ss.6903(40), any "hazardous substance" as defined by 42 U.S.C.
ss.9601(14), any "pollutant or contaminant" as defined by 42 U.S.C.
ss.9601(33), any "hazardous chemical" pursuant to 29 CFR ss.
1910.1200(c), any substance designated pursuant to 40 CFR Part 302, any
"extremely hazardous substance" pursuant to 40 CFR Part 355, any "toxic
chemical" pursuant to 40 CFR Part 372, and any toxic substance, oil,
petroleum, hazardous material or other chemical or substance deemed
hazardous by an Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, 15 U.S.C. ss.18a.
"Special Inventory" means inventory and miscellaneous tools associated
with the normal operation and maintenance of the ore cars, ore docks
and associated ore dock facilities and other materials and supplies
unique to the current operations on the Rail Lines. All Special
Inventory is listed on Appendix D.
"Knowledge" and "Known" when used in this Agreement to modify a
representation, warranty or other statement of a party, means that the
facts or situations described in the representation, warranty or other
statement as being to the knowledge of such party are believed to be
true and correct by the president, each vice president (including
senior vice presidents, executive vice presidents, and vice presidents
with other similar designations), and each senior officer or such party
who is principally responsible for the subject matter involved, and, if
an additional person is specified, also by such additional person,
after suitable investigation.
"Labor Protection" means those reasonable and necessary costs incurred
in connection with the affected employees relative to the transaction
contemplated by this Agreement, but which are limited to: (1) labor
protection costs which may be mandated by any governmental agency; (2)
contractual obligations of the Seller to affected employees as of the
date of execution of the Agreement to the extent such obligations
necessarily arise as a result of the transaction and are not mitigated
by any governmental agency action; and (3) any portion of labor costs
related to this transaction which may be incurred by the Seller and
which Purchaser agrees in writing to reimburse Seller.
2
"Permitted Encumbrances" means any
A. liens for taxes, assessments, levies, fees and other
governmental charges not yet due or payable or which,
if due and unpaid, are being contested in good faith
and by appropriate proceedings,
B. mechanics' and materialmen's liens and similar
charges incurred in the ordinary course of Seller's
business,
C. utility easements, licenses or permits located on or
crossing any portion of the Assets that do not
materially interfere with railroad operations on the
Rail Lines,
D. road crossing agreements with governmental
authorities or private parties that do not materially
interfere with railroad operations on the Rail Lines,
E. leases, easements, trackage rights agreements and
tenancy agreements existing as of the date of this
Agreement which are assumed by Purchaser in
accordance with this Agreement,
F. easements, licenses, permits, or similar rights of
others that do not materially affect the value, use,
enjoyment or occupancy of the real or personal
property so encumbered,
G. rights of reverter which have not been violated and
will not be violated as long as the affected real
property is used for railroad purposes,
H. encumbrances specifically agreed to by Purchaser in a
separate writing delivered to the Seller,
I. matters customarily excepted by title companies in
their commitments for title insurance or title
policies as "standard exceptions",
X. xxxxx defects or irregularities of title or interest,
K. rights reserved to or vested in any governmental
authority with respect to the Assets or their
regulation, and
L. acts done by, through or under Purchaser, its
employees, agents and contractors.
3
"Purchase Price" has the meaning given to it in Section 4.1 of this
Agreement.
"Purchaser" means Sault Ste. Xxxxx Bridge Company, a Michigan
corporation.
"Quit Claim Deed" means the Quit Claim Deed for the real property
included in the Assets, the form of which is set forth as Exhibit 4 to
this Agreement.
"Rail Lines" means the lines of railroad shown generally on Appendix F,
railroad track and the handling, storage, loading, unloading and dock
facilities included in the Assets which are owned or operated by
Seller.
"Seller" means Union Pacific Railroad Company, a Utah corporation.
"Special Inventory" means inventory and miscellaneous tools associated
with the normal operation and maintenance of the ore cars, ore docks
and associated ore dock facilities and other materials and supplies
unique to the current operations on the Rail Lines. All Special
Inventory is listed on Appendix D.
2. PURCHASE AND SALE OF ASSETS
2.1 GENERAL
Under the terms and subject to the conditions contained in this
Agreement, Seller agrees to sell and transfer to Purchaser free and
clear of all liens and encumbrances (other than Permitted
Encumbrances), and Purchaser agrees to purchase on an "as is, where is"
basis, on the Closing Date all of the Assets.
2.2 SPECIAL INVENTORY
Purchaser agrees to purchase from Seller, in addition to the Assets, on
or before the Closing Date, not less than $500,000 worth of the Special
Inventory from that listed on Appendix D.
3. EXCLUSION OF ASSETS
3.1 CONTRACTS
The Assets do not include any rights under Contracts not
assumed by Purchaser under this Agreement and all records of
Seller relating to such Contracts.
4
3.2 CURRENT ASSETS
The Assets do not include any accounts receivable, cash on
hand or deposit and cash equivalents, inventory and other
current assets of the Seller, except Special Inventory
purchased pursuant to Section 2.2 above, and Contracts and
intangibles specifically identified in Appendix A-2.
3.3 CORPORATE RECORDS
The Assets do not include general ledgers, minute books, tax
returns and similar records required for the Seller's
corporate and tax purposes.
3.4 CLAIMS AND LITIGATION
The Assets do not include rights under claims and litigation
or settlements of such claims and litigation by or against
Seller.
4. PURCHASE PRICE
4.1 AMOUNT OF CASH PURCHASE PRICE
The purchase price ("Purchase Price") for the Assets is
$85,000,000 in cash plus the price of Special Inventory
purchased pursuant to Section 2.2 above.
4.2 ADJUSTMENT OF PURCHASE PRICE
The Purchase Price is subject to adjustment in accordance with
Sections 5 and 6 below.
4.3 PAYMENT OF PURCHASE PRICE
The Purchase Price, as adjusted, shall be paid at the Closing
by wire transfer of immediately available funds to one or more
bank accounts designated by Seller's Designated Qualified
Intermediary prior to the Closing or, at the Seller's
Designated Qualified Intermediary's sole election, by one or
more cashier's checks.
4.4 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated to the Assets as set
forth on Appendix B. In order to facilitate a like kind
exchange under I.R.C. 1031, the Purchaser agrees to make
payment to the Designated Qualified Intermediary. Purchaser
shall have no responsibility to the Seller for the application
of the Purchase Price paid pursuant to instructions given
pursuant to this Section.
5
4.5 QUALIFIED INTERMEDIARY
Notwithstanding any other term or condition of this Agreement,
if so required by Seller, Purchaser will fully cooperate with
Seller in all respects in structuring and completing this sale
pursuant to this Agreement so as to effect a disposition of
Relinquished Property, as hereinafter defined, in connection
with a multiple party deferred like-kind exchange transaction
for Seller's purposes pursuant to Section 1031 of the Internal
Revenue Code of 1986, as amended ("Code"). In particular, but
not by way of limitation, Purchaser will consent to the
assignment by Seller of Seller's rights with respect to the
transfer of the property described in this Agreement (or any
portion thereof) to a Qualified Intermediary prior to the
closing of this sale, including the Assignment by Seller to
such Qualified Intermediary of Seller's right to receive the
Purchase Price. The terms Relinquished Property and Qualified
Intermediary as used herein shall have the meanings ascribed
to them in Treasury regulations under Code Section 1031.
Transfer of any rights or interest to a Qualified Intermediary
should not relieve either party of its obligations under this
Agreement.
5. CHANGES IN ASSETS
5.1 LOSS OF AND DAMAGE TO ASSETS
If between the date of this Agreement and the Closing Date,
Assets with a fair market value in excess of $100,000 in the
aggregate are sold, lost, destroyed or condemned, or suffer
any material damage and are not replaced or repaired prior to
the Closing Date, then,
A. at the option of Seller, Seller may cancel this
Agreement.
B. if Seller does not cancel this Agreement, at the
option of Purchaser, either
(i) the Cash Purchase Price shall be reduced by
the excess of
(a) the fair market value of the Assets
immediately prior to the sale, loss,
destruction, condemnation or damage,
over
(b) the salvage value, if any, of the
Assets immediately following the
sale, loss, destruction,
condemnation or damage, or
6
(ii) no reduction to the Cash Purchase Price
shall be made, and the Seller shall, on the
Closing Date, assign to Purchaser all sale,
insurance or condemnation proceeds payable
to the Seller on account of the loss,
destruction, condemnation or damage pursuant
to an assignment reasonably satisfactory to
Purchaser and pay to Purchaser that portion,
if any, of any deductible amount under any
insurance applicable to the claim for loss,
destruction or damage.
5.2 DETERMINATION OF VALUE ABSENT AGREEMENT
If the parties cannot agree upon the fair market value and the
salvage value of the Assets which are sold, lost, destroyed or
condemned or suffer material damage prior to Closing, such
amounts shall be estimated for the purpose of Closing and
determined by an independent appraiser as provided in Section
5.3.
5.3 ESTIMATION AND FINAL DETERMINATION PROCEDURES
If the fair market value and the salvage value of Assets need
to be estimated for purposes of Closing, Purchaser and Seller
shall each deliver to the other within 30 days after Closing a
written estimate of the fair market value and salvage value,
and for purposes of Closing the Cash Purchase Price shall be
provisionally adjusted based upon the arithmetic mean of the
two written estimates. Within 30 days after the Closing,
Purchaser and Seller shall jointly designate an appraiser or
other expert ("Expert"). The Expert so selected shall sit in
Chicago, Illinois, and may hear evidence and examine any
property or equipment he considers appropriate for purposes of
rendering a decision. Except as otherwise provided in this
Agreement, the rules of the American Arbitration Association
shall control the proceedings. After hearing or viewing any
evidence he considers appropriate (but in any event within 90
days after the designation of the Expert), the Expert shall
render a decision, which shall consist of the selection of
either Purchaser's or Seller's written estimate (and the
Expert shall not render any decision other than the selection
of one of the two written estimates). The decision of the
Expert shall be final and shall not be subject to appeal.
After the decision has been rendered, the losing party shall
pay in immediately available funds the difference between the
amount paid at Closing based upon the provisional adjustment
and the amount that should have been paid based upon the final
decision, together with interest on the difference from the
Closing Date until paid, calculated on the basis of the
variable prime rate (corporate base rate) established by The
First National Bank of Chicago plus 150 basis points. The fees
and costs of the Expert shall be shared equally by the
parties.
7
6. TAX ALLOCATION, LEASE INCOME,
CAPITALIZED LEASES AND LABOR PROTECTION
6.1 PRORATION OF TAXES
Purchaser shall declare and pay any and all applicable sales,
use or property taxes, fees or assessments payable by a buyer
in the jurisdictions in which the Rail Lines are located and
shall reimburse Seller for any such payments required of and
made by Seller (if any) as a result of the sale of the Rail
Lines. Real property ad valorem taxes, franchise fees, and
special assessments, if any, shall be prorated between Seller
and Purchaser as of the date of Closing. Purchaser shall be
responsible for paying any and all such taxes, fees or
assessments accruing for the period on or after the date of
Closing. Seller shall pay or reimburse Purchaser for
Purchaser's payment, if any, of 1996 ad valorem taxes, 1996
franchise fees and the pro rata portion of special assessments
attributable to 1996. In addition, Seller shall be liable to
Purchaser for Seller's pro-rata portion of the ad valorem
taxes, franchise fees and special assessments on the Rail
Lines as determined by the formula in the following sentence.
On or before the Closing Date, Seller shall pay to Purchaser
an amount equal to Seller's 1995 ad valorem taxes, franchise
fees and special assessments as the case may be on the Rail
Lines multiplied by a fraction, the numerator of which is the
number of days from January 1, 1997 to and including the
Closing Date and the denominator of which is 365. The Seller's
pro rata portion shall be recalculated when 1997 ad valorem
taxes, franchise fees and special assessments, as the case may
be, are known, and the parties shall settle any differences
owing within 30 days. Notwithstanding the foregoing, with
respect to any abandoned right-of-way transferred by Seller to
Purchaser by this Agreement, Purchaser shall assume
responsibility for the payment of any unpaid locally assessed
property taxes, special assessments or similar unpaid charges
with respect to such abandoned right-of-way.
6.2 LEASE RENTALS AND LICENSE INCOME
Lease rentals and license income received by Seller or
expected to be received by Seller (which is not already by its
terms calculated on a per diem basis) shall be prorated to the
Closing Date and the amount due Purchaser, if any, paid within
90 days after Closing.
6.3 LABOR PROTECTION
The parties acknowledge that they anticipate that Purchaser, a
Class III carrier, shall acquire the Assets pursuant to 49 USC
ss.10902 and will not be subject to the imposition of labor
protection on the transaction under that section. Seller may
separately provide labor protection, including relocation and
severance costs, under applicable collective bargaining
agreements
8
between Seller and various representatives of certain of its
employees or other labor protection actions deemed necessary
by the Seller, in Seller's sole determination, as a result of
this transaction. Purchaser agrees to reimburse Seller for up
to but no more than $1,000,000 of the Labor Protection cost
actually paid by Seller as a result of this transaction.
Payment shall be made by Purchaser to Seller no more than
monthly on the basis of written statements indicating the
aggregate amount and character of Labor Protection costs
actually paid. Purchaser shall be responsible for no Labor
Protection reimbursement to Seller submitted later than 24
months after the Closing. If this transaction is subject to
the imposition of Labor Protection in excess of Class III
labor protection, Purchaser agrees to reimburse Seller for the
first $1,000,000 of Labor Protection cost actually paid by
Seller as a result of this transaction. Seller will use
reasonable efforts to minimize all Labor Protection costs.
Purchaser will seek to fill its job requirements on the Rail
Lines first from employees of Seller currently working on the
Rail Lines provided, however, Purchaser shall have no
obligation to hire any individual who does not meet
Purchaser's employment standards as established solely at the
discretion of Purchaser.
7. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
7.1 LIABILITIES TO BE ASSUMED
As of the Closing, Purchaser agrees to assume, discharge and
pay in accor dance with their respective terms and to become
responsible for the liabilities and obligations of the Seller
associated with the Assets including but not limited to all
orders, licenses, permits and ordinances issued by any court,
governmental entity, body, agency, or commission related to
the liabilities and obligations of the Seller associated with
the Assets and which have been disclosed to Purchaser in
writing, and under all executory Contracts expressly assumed
by Purchaser, to the extent those liabilities and obligations
accrue or apply after the Closing. Notwithstanding the
foregoing, Purchaser shall (i) assume responsibility for all
claims, loss, damage and liability with respect to the Assets
which occurs, is discovered or is claimed after the Closing
which arises out of any action or failure to act on the part
of Purchaser which subsequently results in a violation of
Environmental Law; and (ii) abide by all court orders and all
amendments thereto as they apply to Seller as scheduled on the
Environmental Operations Obligations Schedule attached hereto
as Appendix E and hereby made a part of this Agreement.
Purchaser shall not be responsible for any monetary damages
specified in such orders.
9
7.2 LIABILITIES NOT TO BE ASSUMED
Except as expressly provided elsewhere in this Agreement,
Purchaser shall not be obligated to assume any liability or
obligation in connection with the matters described in the
following clauses:
A. any litigation, arbitration, claim or similar
liability of any type with respect to the Assets or
Seller's ownership thereof, which is based on or
arises out of an event or circumstance occurring
prior to the Closing;
B. obligations under any plan to which the Seller
contributes pursuant to the applicable provisions of
the Employee Retirement Income Security Act of 1974,
as amended, or under any other employee benefit plan,
pension plan or similar plan;
C. all claims against or obligations of Seller arising
out of or in connec tion with any labor agreement or
arrangement; and
D. any other liability not specifically assumed pursuant
to the terms of this Agreement.
7.3 INSURANCE
The provisions of this Section shall not be construed to
constitute the assumption of any liabilities or obligations in
a manner which would avoid the applicability of any insurance
policy with respect to any event or circumstance arising prior
to the Closing.
7.4 NO THIRD PARTY RIGHTS
This Section is not intended to create any rights in favor of
any person other than Purchaser and Seller.
8. REPRESENTATIONS AND WARRANTIES
8.1 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THE SALE AND PURCHASE AND THE OTHER TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT SHALL BE WITHOUT REPRE SENTATION OR WARRANTY
OF ANY KIND BY THE SELLER, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF THE SELLER SET FORTH IN SECTIONS 8.2 AND 8.3
BELOW. WITHOUT LIMITING THE GENERALITY OF THE PRECEDING
SENTENCE, THE SELLER DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS OR
10
IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO THE ASSETS, AND AVERS THAT SUCH ASSETS
ARE BEING SOLD "AS IS, WHERE IS". All instruments of transfer
may negate all express or implied representations or
warranties (except those contained in this Agreement).
8.2 GENERAL REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
A. Seller is a validly organized and existing
corporation, in good standing under the laws of the
State of Utah. Seller has the necessary authority to
own property and conduct its business as now
conducted in the States of Wisconsin and Michigan.
B. All necessary corporate action of Seller required in
connection with the execution and delivery of this
Agreement and the consummation of the transactions
contemplated by this Agreement has been author ized
and obtained. Subject to the effectiveness of the
exemption or approval by the Board and any applicable
requirements under the HSR Act, (i) Seller has
obtained all necessary governmental authorizations
and approvals (or waivers of such authorizations or
approvals) required in connection with this
Agreement, and (ii) this Agreement constitutes the
valid and binding obligation of Seller enforceable
against Seller in accordance with its terms, except
as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws
affecting rights of creditors generally and general
principles of equity.
C. Except as set forth on Exhibit 3, the sale of the
Assets and the consummation of the other transactions
contemplated by this Agreement will not result in any
breach of or default under, violate the conditions
of, or accelerate any obligation under, either
Seller's articles of incorporation or bylaws or any
agreement, mortgage, lease, deed, order, law,
judgment or rule to which either Seller is a party or
by which either Seller or its property is bound,
which breach, default, violation or acceleration
would have a materially adverse effect on that
Seller, the Assets or the business currently
conducted with the Assets.
D. No agent, broker or other person acting pursuant to
the authority or direction of Seller is entitled to
any commission or finder's fee in connection with the
transactions contemplated by this Agreement for which
Purchaser is or may become liable.
11
E. Except as set forth on Exhibit 3, there are no
actions, suits, or proceedings pending or, to the
Knowledge of Seller, threatened against Seller or its
properties in any court or before any federal, state,
local or other governmental agency which, if decided
adversely to Seller, would prohibit the execution,
delivery and performance of this Agreement by Seller
or would materially adversely affect the Assets or
the business currently conducted with the Assets.
F. As of the Closing, the Assets will not be subject to
any liens, security interests or other encumbrances,
except for Permitted Encumbrances.
G. Seller has sufficient interest in the Assets to
permit the operation of the Rail Lines as presently
conducted, and to the Knowledge of Seller there are
no claims which would affect in any material respect
its interest in the Assets so as to materially
adversely affect Purchaser's ability to conduct
operations with the Assets following the Closing as
currently conducted.
H. To the Knowledge of Seller, each material Contract to
be assigned to Purchaser is in full force and effect
and no default has occurred under the Contract which
would have a materially adverse effect on the Assets
or Purchaser's ability to conduct operations with the
Assets as currently conducted following the Closing.
Seller has not expressly waived or assigned to any
other person any of its rights under any of the
Contracts, and each of the Contracts may be assigned
to Purchaser without impairment of any rights under
the Contract, except (1) as set forth on Exhibit 3
and (2) those Contracts the loss of rights under
which would not have a materially adverse effect on
the Assets or Purchaser's ability to conduct
operations following the Closing with the Assets as
currently conducted.
I. The traffic and revenue data for the Rail Lines for
the 1994 and 1995 calendar years of Seller provided
to Purchaser by Seller accurately reflect in all
material respects actual operating history of Seller
for the periods indicated.
J. To the Knowledge of Seller, Seller is not a party to
any indenture, security, contract or other agreement
or subject to any judgment, order, writ or decree
which would (1) impose any materially adverse
condition upon Purchaser, the Assets or the operation
of the Rail Lines or result in the loss of any
material rights currently possessed or used by Seller
or otherwise materially adversely affect or
materially restrict the Assets or the operation of
the Rail Lines as a result of the sale of the Assets
to Purchaser as contemplated by this Agreement
12
or (2) materially adversely affect Purchaser's
ability to conduct the operations of the Rail Lines
following Closing as currently conducted.
8.3 ENVIRONMENTAL REPRESENTATIONS OF SELLER
Seller represents as follows, except as set forth on the
Disclosure Schedule which is attached hereto as Exhibit 3 and
hereby made a part of this Agreement and on the
Environmental-Operations Obligations Schedule which is
attached hereto as Appendix E and hereby made a part of this
Agreement:
A. There are no actions, suits or proceedings pending
or, to the Knowl edge of Seller, threatened against
Seller with respect to the Assets or the operation of
the Rail Lines in any court or before any federal,
state, local or other governmental agency under any
Environmental Law.
B. Seller is in material compliance with all applicable
Environmental Laws with respect to the Assets and the
operation of the Rail Lines.
C. To the Knowledge of Seller's Assistant Vice President
Environmental Management, Seller has received no
written notice from any third party (including,
without limitation, any federal, state or local
govern mental agency) (1) that it has been identified
by the United States Environmental Protection Agency
as a potentially responsible party under CERCLA with
respect to a site included within the Assets listed
on the National Priorities List (40 CFR Part 000
Xxxxxxxx X (1990)); (2) that any Hazardous Substance
has been discovered on a site included within the
Assets; or (3) that any site included within the
Assets is the subject of any ongoing or ordered
remedial investigation, removal or other response
action pursuant to any Environmental Law.
D. Seller has undertaken a review of assets and
operations, the results of which are reflected in the
Disclosure Schedule to determine whether; (1) any
portion of the Assets has been used for the handling,
storage, disposal or processing of Hazardous
Substances except in material compliance with
applicable Environmental Laws, (2) any underground
storage tanks for Hazardous Substances are located
in, on or about the Assets, (3) the Assets contain
asbestos, urea formaldehyde foam insulation or
transformers or other equipment containing
polychlorinated biphenyls, and (4) there have been
releases of Hazardous Substances in, on, under or
from the Assets except in material compliance with
Environmental Laws. The Disclosure Schedule is
Seller's good faith effort to identify any such
13
Assets or operations. Seller specifically disclaims
any representation with respect to such matters.
8.4 REPRESENTATIONS AND WARRANTIES BY PURCHASER
Purchaser represents and warrants to Seller as follows:
A. Purchaser is a validly organized and existing
Michigan corporation, in good standing. Purchaser has
the necessary authority to purchase and own property
and conduct its business as now conducted in the
states of Michigan and Wisconsin.
B. All necessary corporate action of Purchaser required
in connection with the execution and delivery of this
Agreement and the consumma tion of the transactions
contemplated by this Agreement has been authorized
and obtained. Subject to the effectiveness of the
exemp tion or approval by the Board and any
applicable requirements under the HSR Act, (i)
Purchaser has obtained all necessary governmental
authorizations and approvals (or waivers of such
authorizations or approvals) required in connection
with this Agreement, and (ii) this Agreement
constitutes the valid and binding obligation of
Purchaser enforceable against Purchaser in accordance
with its terms, except as enforcement may be limited
by applicable bankruptcy, insolvency, moratorium or
similar laws affecting rights of creditors generally
and general principles of equity.
C. The purchase of the Assets and the consummation of
the transactions contemplated by this Agreement will
not result in any default under, violate the
conditions of or accelerate any obligation under any
material agreement, order, law, judgment or rule to
which Purchaser is a party or by which it is bound.
D. No agent, broker or other person acting pursuant to
the authority or direction of Purchaser is entitled
to any commission or finder's fee in connection with
the transactions contemplated by this Agreement for
which Sellers are or may become liable.
E. There are no actions, suits or proceedings pending
or, to the Knowl edge of Purchaser, threatened
against Purchaser in any court or before any federal,
state, local or other governmental agency which, if
decided adversely to the Purchaser, would prohibit
the execution, delivery and performance of this
Agreement by Purchaser.
F. The sale of the Assets and the consummation of the
other transactions contemplated by this Agreement
will not result in any
14
breach of or default under, violate the conditions
of, or accelerate any obligation under, either
Purchaser's articles of incorporation or bylaws or
any agreement, mortgage, lease, deed, order, law,
judgment or rule to which either Purchaser is a party
or by which either Purchaser or its property is
bound, which breach, default, violation or
acceleration would have a materially adverse effect
on the Purchaser, the Assets or the business
currently conducted with the Assets or any other
assets of the Purchaser.
8.5 SURVIVAL
The representations and warranties contained in this Agreement
shall survive the Closing and any termination of this
Agreement and shall remain in full force and effect for three
years after the Closing (five years after the Closing with
respect to the representations and warranties contained in
Sections 8.3 and 8.4).
8.6 CONDITION OF ASSETS
Except as specifically provided in this Section 8, neither
Seller nor Purchaser makes, and each expressly disclaims, any
representation or warranty regard ing the condition of the
Assets, including any Hazardous Substances or any other
conditions, whether or not hazardous, affecting the surface or
subsur face (including groundwater) thereof.
9. CONDITIONS TO THE CLOSING
9.1 OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to effect the Closing of the
transactions contem plated by this Agreement is subject to the
satisfaction at or prior to the Closing of the following
conditions:
A. The representations and warranties of Seller
contained in Section 8 of this Agreement shall have
been true in all material respects when made and at
the time of Closing as if those representations and
warranties had been made at that time.
B. Seller shall have performed and complied in all
material respects with all agreements and conditions
required by this Agreement to be performed or
complied with by Seller prior to or at the Closing.
15
C. Purchaser shall have received the opinion of Seller's
counsel dated as of the Closing Date, substantially
in the form attached to this Agreement as Exhibit 1.
D. Any waiting period (including any extensions) under
the HSR Act applicable to the consummation of the
transactions contemplated by this Agreement shall
have expired or been terminated.
E. The Board shall have approved the transactions
contemplated by this Agreement under the ICC
Termination Act of 1995 or exempted the transactions
contemplated by this Agreement from the provisions of
the ICC Termination Act of 1995 requiring Surface
Transportation Board approval, and that approval or
exemption shall have become final or effective (as
the case may be).
F. No condition, other than Labor Protection, shall have
been imposed by the Board in connection with the
transactions contemplated by this Agreement which has
a material and significant adverse effect on the cost
of the transaction or value of the transaction to
Purchaser or on Purchaser's ability to own, use or
operate the Assets taken as a whole in substantially
the same manner as Seller owned, used or operated the
Assets.
G. Between the date of this Agreement and the Closing,
no unrepaired physical loss or damage shall have
occurred to the Assets resulting in a shut-down of
any material portion of the operation of the Rail
Lines as of the Closing.
H. Purchaser shall have received an executed copy of
each document, agreement and instrument referred to
in this Agreement required to be executed and
delivered by Seller prior to or at the Closing.
The satisfaction of any of the conditions set forth in this
subsection may be waived by Purchaser in writing delivered at
or prior to the Closing.
9.2 OBLIGATION OF SELLER TO CLOSE
The obligation of Seller to effect the transactions
contemplated by this Agreement is subject to the satisfaction
prior to or at the Closing of the following conditions:
A. The representations and warranties of Purchaser set
forth in Section 8 of this Agreement shall have been
true in all material respects when
16
made and at the time of the Closing as if those
representations and warranties had been made at that
time.
B. Purchaser shall have performed and complied in all
material respects with all agreements and conditions
required by this Agreement to be performed or
complied with by them prior to or at the Closing.
C. Any waiting period (including any extensions) under
the HSR Act applicable to the consummation of the
transactions contemplated by this Agreement shall
have expired or been terminated.
D. The Board shall have approved the transactions
contemplated by this Agreement under the ICC
Termination Act of 1995 or exempted the transactions
contemplated by this Agreement from the provisions of
the ICC Termination Act of 1995 requiring Board
approval, and that approval or exemption shall have
become final or effective (as the case may be).
E. Seller shall have received the opinion of Purchaser's
counsel dated as of the Closing, substantially in the
form attached to this Agreement as Exhibit 2.
F. Seller shall have received an executed copy of each
document, agreement and instrument referred to in
this Agreement required to be executed and delivered
by Purchaser prior to or at the Closing.
G. No condition other than Labor Protection shall have
been imposed by the Board in connection with the
transactions contemplated by this Agreement which has
a significant and adverse effect on the cost of the
transaction or value of the transaction to Seller.
The satisfaction of any condition set forth in this subsection
may be waived by Seller in writing delivered at or prior to
the Closing.
10. CLOSING
10.1 PLACE OF CLOSING
The Closing of the transactions contemplated by this Agreement
shall take place at the offices of Seller at Chicago, Illinois
or at such- other mutually agreed upon location (the "Closing
Place").
17
10.2 TIME OF CLOSING
The Closing shall take place on a mutually agreeable date not
later than the 20th business day following the date on which
an order by the Board approv ing the acquisition of the Assets
by Purchaser has become final or the date on which an
exemption from approval by the Board becomes effective, but in
no event shall the Closing Date, as hereinafter defined, occur
prior to January 2, 1997. The date on which the Closing occurs
is referred to in this Agreement as the "Closing Date".
10.3 DELIVERIES BY PURCHASER AT CLOSING
At the Closing, Purchaser shall pay to Seller the Cash
Purchase Price, through Seller's Designated Qualified
Intermediary, if so requested, as adjusted, deliver to Seller
its undertakings to assume, perform and discharge the
liabilities and obligations of Seller to the extent assumed by
Purchaser under this Agreement, and deliver such other
documents or instruments as are required of Purchaser in order
to effect or evidence the consummation of the actions
contemplated by this Agreement.
18
10.4 DELIVERIES BY SELLER AT CLOSING
At the Closing, Seller shall:
A. Effect the transfer of the Assets to Purchaser by the
Quit Claim Deed(s) in recordable form (as permitted
for filing by a railroad or transmitting utility
where allowed) in substantially the form attached as
Exhibit 4 to this Agreement, Personal Property Sale
Order in substantially the form attached as Exhibit 5
to this Agreement, assignments and other documents of
transfer reasonably required to transfer the
interests of Seller in the Assets to Purchaser
consistent with the terms of this Agreement (which
deeds, Personal Property Sale Order, assignments and
other documents may reflect payment of such specific
portions of the Purchase Price as requested by
Purchaser, provided that such allocations and
direction will not be inconsistent with Appendix B or
the provisions of Section 1060 of the Internal
Revenue Code of 1986, as amended).
B. Furnish to Purchaser an affidavit of the type
referred to in Section 1445 (b) (2) of the Internal
Revenue Code of 1986, as amended, if Seller wishes to
avoid the withholding of taxes as provided in Section
1445.
C. Take all other reasonable steps that Purchaser
reasonably requests in order to effectuate the
transactions contemplated by this Agreement,
including the assignment of all Contracts that
Purchaser is to assume pursuant to this Agreement.
11. BOOKS AND RECORDS
11.1 ACCESS TO BOOKS AND RECORDS
A. Prior to Closing, Seller will permit employees and
agents of Purchaser (including consultants) and its
lenders, during normal business hours and on
reasonable notice, to have access to Seller's
properties for the purpose of inspecting the Assets
and to inspect and copy Contracts, books, agreements,
plans, reports and other records reflecting or
reasonably relating to the Assets. Seller may have
representatives present during any inspection, and
may obtain any written reports produced by
environmental consultants to Purchaser in connection
with inspections of the Assets. Seller will cooperate
with Purchaser's and its lenders', investigation of
the Assets and the status of title to the Assets, and
shall use its reasonable efforts to obtain consents
from third parties necessary for Purchaser or its
consultants to inspect
19
transportation contracts with those third parties.
Prior to Closing (including if Closing never occurs),
Purchaser agrees that all information and records
obtained by Purchaser or its lenders pursuant to this
Section shall be maintained as confidential. If, due
to competitive factors, Seller refuses to deliver
information to Purchaser for review, Seller shall
deliver such information to an independent consultant
retained by Purchaser who agrees to keep such
information confidential from all parties, including
Purchaser, except for summaries that have been
previously reviewed by Seller and reasonably
determined not to have a competitive impact. If
Seller does not respond to a request to review a
summary within three days, the summary will be
considered not to have a competitive impact.
Purchaser shall not be obligated to maintain as
confidential or to require its lenders to maintain as
confidential any information obtained from Seller
which is publicly available, which is readily
ascertainable from public sources, which is either
known to them at the time the information was
disclosed or is rightfully obtained from a third
party, and in either case was not subject to an
obligation of confidentiality, or which is the
subject of a subpoena or other legal process. No
investigation involving the collection of air, water,
soil or other samples or any other physically
invasive or disruptive procedure, shall be conducted
without Seller's prior consent.
B. From and after the Closing,
(i) Purchaser will make available to Seller,
under reasonable conditions, any records of
Seller transferred to Purchaser pursuant to
this Agreement necessary for Seller's
corporate or tax purposes; and
(ii) Seller will cooperate with Purchaser to make
available to Purchaser, under reasonable
conditions, any records of Seller that may
be useful to Purchaser in the ownership or
operation of the Assets or the performance
of obligations assumed by Purchaser.
11.2 SECURITIES LAW COMPLIANCE
Seller shall, if requested by Purchaser or its corporate
parent in connection with any document required to be filed
with the Securities and Exchange Commission with respect to
the transactions contemplated by this Agreement (whether
before or after the Closing Date), provide Purchaser with
financial information and financial statements necessary to
permit Purchaser to comply with its obligations under the
federal securities laws.
20
12. OPERATIONS PRIOR TO CLOSING
12.1 OPERATIONS PRIOR TO CLOSING
Seller agrees that, except with the written consent of
Purchaser, from the date of this Agreement to the Closing:
A. Seller shall operate the Rail Lines in the ordinary
course and will use its reasonable efforts to
preserve for Purchaser the good will of suppli ers,
customers and others having business relationships
with Seller;
B. Seller will not grant (or make any material amendment
to) any track age rights, operating rights, licenses,
permits, easements or encum brances affecting the
Assets;
C. Seller will not sell, lease, assign, mortgage,
hypothecate or otherwise transfer or dispose of any
of the Assets (other than Inventory used in the
ordinary course of business);
D. Seller shall maintain, repair and renew the Assets in
the ordinary course, consistent with past practices
(and in any event to a condition equal to their
condition on the date of this Agreement, ordinary
wear and tear excepted);
E. Seller shall maintain in full force and effect
insurance coverage (including any self-insurance
programs) of the types and in the amounts in
existence on April 1, 1996 with respect to the
Assets;
F. Seller shall maintain in full force and effect all
Contracts, licenses, authorizations and approvals
necessary for or related to the operation and use of
the Assets as currently operated and used; provided,
however, that Seller may amend, extend or terminate
Contracts, licenses, authorizations and approvals in
the ordinary course of business; and
G. Seller shall cause all transportation contracts
entered into after the date of this Agreement to
either specifically permit or not prohibit assignment
to a purchaser of the Rail Lines.
13. EMPLOYEES
Purchaser shall bear the sole obligation of negotiating with and
entering into employment relationships with prospective employees of
Purchaser, and Seller shall have no obligation in that regard. Seller
agrees that Purchaser may solicit any of
21
its employees on the Rail Lines for employment. Nothing in this
Agreement shall be interpreted to require Purchaser to hire any
specific employee or any specific number of employees, whether or not
currently covered by a collective bargaining agreement or employment
contract.
14. CONSENTS AND APPROVALS
14.1 BOARD AND HSR APPROVALS
Purchaser and Seller each will cooperate with one another and
use their best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
prepare all necessary documentation (including, without
limitation, furnishing all information required under the HSR
Act, if applica ble), to effect promptly all necessary filings
and to satisfy all other conditions and obtain all necessary
permits, consents, approvals, orders and authoriza tions of or
any exemptions by, all third parties and all governmental
entities necessary to consummate the transactions contemplated
by this Agreement. Purchaser shall be solely responsible for
filings or proceedings before the Board with respect to the
approval of the acquisition of the Assets or securing an
exemption from that approval and Purchaser's corporate parent
shall be solely responsible for filings or proceedings before
the Board with respect to approval of the common control of
two or more carriers following the acquisition of the Assets
by Purchaser or securing an exemption from that approval.
Seller will, without cost to Purchaser or its parent,
cooperate in the filings and proceedings before the Board and
provide any necessary data in connection with securing
approvals or exemptions. Prior to filing any application for
approval or exemption with the Board, Purchaser will deliver a
draft copy to Seller with sufficient time for Seller to
comment upon the application. Any costs, including filing
fees, associated with any filing before the Board or under the
HSR Act shall be borne solely by Purchaser.
Each party will keep the others apprised of the status of any
inquiries made of such party by the Board, the Federal Trade
Commission, the Department of Justice, the Securities and
Exchange Commission or any other governmental agency or
authority (or members of their respective staffs) with respect
to this Agreement or the transactions contemplated by this
Agreement.
15. INDEMNIFICATION
15.1 PURCHASER'S INDEMNIFICATION
22
Purchaser shall defend, indemnify and hold harmless the Seller
from and against all claims, losses, costs and expenses
(including attorneys fees and expenses) which arise out of or
are based on (i) the ownership or operation of the Assets
after the Closing, (ii) any material misrepresentation or
material breach of warranty by Purchaser and (iii) all
liabilities of Seller assumed by Purchaser pursuant to this
Agreement.
15.2 SELLER'S INDEMNIFICATION
Subject to the terms of all Allocation and Proration
Agreements and alloca tion and proration provisions in this
Agreement, and except to the extent liabilities are assumed by
Purchaser under paragraph 7.1 of this Agreement, Seller shall
defend, indemnify and hold harmless Purchaser from and against
all claims, losses, costs and expenses (including attorneys,
fees and expenses) which arise out of or are based on (i) the
ownership or operation of the Assets by Seller prior to the
Closing; (ii) any material misrepresentation or material
breach of warranty by Seller; (iii) any lien, encumbrance,
claim or security interest (including Permitted Encumbrances
only to the extent described in clauses A. and B. of the
definition of Permitted Encumbrances) that arose or attached
as a result of events, operations or ownership prior to the
Closing, (iv) all liabilities of Seller that are not assumed
by Purchaser pursuant to this Agreement and (v) any breach of
an Environmental Law by Seller or any contamination in, on,
about or under the Assets at any time prior to the Closing
(whether or not remaining after the Closing).
15.3 PROCEDURES
The party seeking indemnification pursuant to Sections 15.1 or
15.2 above (the "Indemnified Party') shall give the party
obligated to indemnify (the "Indemnifying Party") written
notice in accordance with Section 17.12 of any claim or
assertion of liability by a third party with respect to which
the Indemnified Party is seeking indemnification (a "Claim").
The Indemnifying Party shall have the right to undertake the
defense of such Claim (by counsel or other representatives of
its own choosing and reasonably acceptable to the Indemnified
Party) at the Indemnifying Party's sole risk and cost.
Notwithstanding the fact that the Indemnifying Party
undertakes the defense of a Claim, if there is a reasonable
probability that the Claim may materially and adversely affect
the Indemnified Party, the Indemnified Party (by counsel or
through other representatives of its own choosing) shall have
the right, at its expense, to participate in the defense,
compromise or settlement of the Claim.
23
If the Indemnifying Party undertakes the defense of a Claim,
(i) the Indemni fying Party shall keep the Indemnified Party
informed of the status of the defense and furnish the
Indemnified Party with copies of all documents, instruments
and information reasonably requested by the Indemnified Party
in connection with the Claim; (ii) the Indemnified Party (by
counsel or other representatives of its own choosing and at
its own expense) shall have the right to consult with the
Indemnifying Party (and its counsel and representa tives)
concerning the Claim, and the Indemnifying Party and the
Indemnified Party (and their respective counsel and
representatives) shall cooperate with respect to the Claim;
and (iii) the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise
a Claim or consent to the entry of a judgment without
obtaining from the claimant or plaintiff an unconditional
release of all liability of the Indemnified Party in respect
of such Claim in a form satisfactory to the Indemnified Party
and under circumstances which do not require the Indemnified
Party to pay any money or consent to the taking or withholding
of any action affecting it or any of its properties, assets or
businesses.
If the Indemnifying Party does not elect to undertake the
defense of a Claim or fails to defend the Claim within a
reasonable time after notice of the Claim, the Indemnified
Party shall have the right to undertake the defense,
compromise or settlement of the Claim (by counsel or other
representatives of the Indemnified Party's own choosing) on
behalf of, for the account of and at the risk and cost of the
Indemnifying Party. In such event, the Indemnify ing Party
shall pay (in addition to any other sums required to be paid
under the terms of this Agreement) the costs and expenses
incurred by the Indemnified Party in connection with the
defense, settlement or compromise of the Claim as and when
those costs are incurred.
16. TERMINATION
16.1 GROUNDS FOR TERMINATION
This Agreement and the consummation of the transactions
contemplated by this Agreement may be terminated prior to the
Closing:
A. By the agreement in writing of Seller and Purchaser
at any time,
B. By either Purchaser or Seller if the Closing does not
occur prior to March 31, 1997 and the failure of the
Closing to occur is not due to the fault of, or
breach of this Agreement by, any party,
C. By Purchaser, if Seller has made a material
misrepresentation in, or if Seller is guilty of a
material breach of the representations and
24
warranties of Seller contained in, this Agreement, or
if there has been a failure by Seller to comply with
any of its material obligations under this Agreement,
and such material misrepresentation or breach of
warranty or material failure has not been cured after
30 days' written notice from Purchaser to Seller,
D. By Seller, if Purchaser has made a material
misrepresentation in, or if Purchaser is guilty of a
material breach of the representations and warranties
of Purchaser contained in, this Agreement, or if
there has been a failure by Purchaser to comply with
any of its material obliga tions under this
Agreement, and such material misrepresentation or
breach of warranty or material failure has not been
cured after 30 days written notice from Seller to
Purchaser,
E. By either Purchaser or Seller if the Board shall have
disapproved the transactions contemplated by this
Agreement and such disapproval shall have become
final and not subject to further proceedings or
appeal, whether by lapse of time or otherwise, or
F. By either Purchaser or Seller, if any conditions
imposed by the Board materially change the economics
of this transaction for that party.
Termination by Purchaser or Seller pursuant to paragraphs C.
or D. above shall not relieve the non-terminating party of any
liability for misrepresenta tion or breach.
25
17. MISCELLANEOUS
17.1 TITLE AND OTHER DESCRIPTIONS
Prior to the Closing, the description of the Assets may be
changed by mutual agreement of Purchaser and Seller to add or
delete items of tangible property or Contracts. From time to
time after the Closing, at Purchaser's request and without
further consideration, Seller will execute and deliver other
instruments of conveyance and transfer and take other actions
as Purchaser reasonably requires to convey, transfer to and
vest in Purchaser whatever title Seller may have in and to the
Assets, and to put Purchaser in possession of the Assets. In
the case of Contracts and rights, if any, that cannot be
transferred effectively without the consent of third parties,
Seller will request these consents promptly and will make all
reasonable efforts to obtain the consents. From time to time
after the Closing, at Seller's request and without further
consideration, Purchaser will execute and deliver other
instruments of conveyance, transfer and assumption and take
other actions as Seller reasonably requires to assume the
liabilities and obligations of Seller to be assumed by
Purchaser pursuant to this Agreement.
17.2 WAIVER
Purchaser may in writing extend the time for or waive
performance of any of the obligations, representations or
warranties of Seller under this Agreement. Seller may in
writing take similar action with respect to the obligations,
repre sentations or warranties of Purchaser under this
Agreement.
17.3 EXPENSES
Purchaser shall be responsible for and shall pay all expenses,
including attorney's fees, incurred by Purchaser in connection
with this Agreement and the consummation of the transactions
contemplated by this Agreement, and Seller shall be
responsible for and shall pay all expenses, including
attorney's fees, incurred by Seller in connection with this
Agreement and the consummation of the transactions
contemplated by this Agreement.
17.4 TRANSITIONAL MATTERS
A. Seller and Purchaser agree to the Administration and
Proration Procedures contained in attached Appendix
C.
B. Prior to the Closing, Purchaser and Seller may agree
on different or additional procedures to implement
their respective rights and obliga tions, including
procedures which are required to minimize or avoid
any disruption of the settlement of interline
accounts by draft in the normal course of business.
26
17.5 CAR SUPPLY
Seller will, for a period of up to six months after the
Closing Date, permit the non-ore cars customarily used for
loading on the Rail Lines to remain in service on the Rail
Lines on a normal car hire basis. Purchaser will use its best
efforts to acquire sufficient replacement equipment during
that six month period, and Seller shall have the right to
remove from availability any non-ore cars that are not needed
to service shippers on the Rail Lines.
17.6 ENTIRE AGREEMENT
This Agreement, including the Appendices and Exhibits attached
to this Agreement, constitutes the entire agreement and
understanding between Seller and Purchaser with respect to the
sale and purchase of the Assets and the other transactions
contemplated by this Agreement. All prior representations,
understandings and agreements between the parties with respect
to the purchase and sale of the Assets and the other actions
contem plated by this Agreement are superseded by the terms of
this Agreement.
17.7 CHOICE OF LAW
The provisions of this Agreement shall be construed and
interpreted in accor dance with the laws of the State of
Illinois, including for the purposes of choice of law, as
though all acts and omissions related to this Agreement
occurred in that State.
17.8 SEVERABILITY
The provisions of this Agreement shall, where possible, be
interpreted in a manner necessary to sustain their legality
and enforceability; the unenforceability of any provision of
this Agreement in a specific situation shall not affect the
enforceability of that provision in other situations or of
other provisions of this Agreement.
17.9 COUNTERPARTS
This Agreement may be executed in two or more original
counterparts, each of which shall for all purposes be
considered an original of this Agreement.
17.10 HEADINGS
27
Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and
shall not in any way define or affect the meaning,
construction or scope of any of the provisions of this
Agreement.
17.11 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon, and inure to the benefit
of the respec tive successors and assigns of the parties.
Purchaser may assign its rights under this Agreement, in whole
or in part, to a wholly-owned subsidiary of Purchaser or any
wholly-owned subsidiary of Wisconsin Central Transporta tion
Corporation.
17.12 NOTICE
All notices given pursuant to this Agreement shall be
delivered by hand, sent by United States registered or
certified mail, postage prepaid, delivered by recognized
express mail or overnight courier service, or delivered by
electronic facsimile with a confirmation copy delivered by any
of the preced ing methods, addressed as follows (or to another
address or person as a party may specify on notice to the
other):
A. If to Seller:
Union Pacific Railroad Company
0000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx,
Senior Manager Rail Line Planning
with copies to:
0000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Director Joint Facilities
28
B. If to Purchaser:
Wisconsin Central Ltd.
One X'Xxxx Centre
Suite 9000
0000 X. Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx,
Xxxxxx X. Power,
Xxxxxxx Xxxxxxx
with copies to:
Xxxxxx Xxxxxxx, Esq.
McLachlan, Xxxxxxx & Doll
0 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
29
Dated as of November 30, 1996.
UNION PACIFIC RAILROAD COMPANY
/s/ Xxxxx Xxxxx
By: Xxxxx Xxxxx
Its: President & Chief Operating
Officer
Attest:
By: /s/ X.X. Xxxxxxx
Title: Asst. Secretary
SAULT STE. XXXXX BRIDGE COMPANY
/s/ X. Xxxxxx XxXxxxxx
By: X. Xxxxxx XxXxxxxx
Its: EVP/COO
Attest:
By: /s/ Xxxxxx X. Xxxxxxx
Title: Secretary
30
APPENDIX A
DESCRIPTION OF ASSETS
The Assets consist of the real estate legally described in Appendix A-1 and
personal property, rights, intangibles and interests described in Sections A and
B below, but exclude the assets described in Section C below. Section A contains
a general description of the Assets. Section B more specifically identifies
certain Assets described in Section A; however, the omission of any Asset from
Section B shall not imply the exclusion of any Asset described in Section A. If
there is any conflict or contradiction between Sections A, B and C, Section C
shall in all cases supersede Sections A and B.
A. GENERAL DESCRIPTION
The Assets consist of Seller's estate, right, title and interest in the
following:
1. The Rail Lines, which consist of the following continuous
lines of railroad:
(i) The Escanaba Subdivision from North Green Bay, WI to
Ishpeming, MI;
(ii) The Iron Mountain Branch and the Antoine Industrial
Lead from Powers, MI to Antoine, MI;
(iii) The Niagara Industrial Lead from Quinnesec, MI to
Niagara, WI; and
(iv) The Xxxxxx Industrial Lead from Cascade, MI to
Xxxxxx, MI.
2. All written interchange agreements, all joint facility
agreements, all trackage agreements, all paired track
agreements and all trackage and operating rights granted to or
otherwise owned, used, held for use or otherwise held by
Seller which relate to the Rail Lines;
3. All interests in and agreements relating to industry and side
tracks and facilities which form a part of or relate to the
Rail Lines;
4. All operating rail property, including without limitation, the
roadbed, rail, track (including the main track, side tracks,
spur tracks, drill tracks, connecting tracks, yard tracks,
industry tracks and team tracks), connections, bridges,
stations, culverts, structures, and signal facilities, parking
and storage areas, depots, yards, shops, signaling and related
equipment, buildings (including fixtures) owned, used, held
for use or otherwise held by Seller in connection with or that
relate to the operation, use or enjoyment of the Rail Lines,
Appendix A-Page 1
wherever located and any other personal property used for rail
operations and not removed by Seller within thirty (30) days
after Closing;
5. All leases, easements, licenses, rights-of-way or other
interests in real property owned, leased, used, held for use
or otherwise held by Seller in connection with the operation,
use or enjoyment of the Rail Lines;
6. Personal Property as listed on Appendix A-2;
7. All Contracts in connection with the operation, use or
enjoyment of the Rail Lines or the other Assets (including,
without limitation, public and private grade crossing
agreements, and pipeline, wireline, fiber optic and other
utility service agreements);
8. All franchises, privileges, licenses and permits conferred,
given, owned, acquired, appropriated, used or useful for any
purpose in connection with the operation, use or enjoyment of
the Rail Lines or the other Assets (including, without
limitation, an assignment of the radio frequency licenses used
in operation of the Rail Lines);
9. All manufacturers, or other third-party's warranties with
respect to the Assets;
10. All rights, benefits and privileges of Seller in its capacity
as grantor, licensor, lessor or franchiser, or in any similar
capacity, arising out of or under any Contract, easement,
franchise, right-of-way, license or lease relating to the Rail
Lines or other Assets;
11. All Contracts between Seller and any receiver or shipper for
the movement of traffic over the Rail Lines, and any Contracts
with participating transportation companies pertaining to the
movement of traffic; to the extent that transportation
contracts cover both the Rail Lines and movements by Seller
over other rail lines which it will continue to operate after
closing, all rights in such contracts as related to the Rail
Lines;
12. All of Sellers' rights relating to the ownership or operation
of the Rail Lines under Contracts (including, without
limitation, any Contracts, environmental indemnifications,
trackage rights, joint facility or car agreements with other
railroads, any transportation contracts with shippers and any
other indemnification and similar agreements relating to
environmental matters);
13. All yards, intermodal terminals, lumber transfer facilities,
bulk transfer facilities, distribution centers or other
facilities associated with the Rail Lines;
14. The current records for: historical traffic and revenue data,
(in machine readable form, where applicable), customer and
supplier lists,
Appendix A-Page 2
correspondence and legal files, freight tariffs, switching
tariffs, demurrage agreements, track profiles, schematics,
blueprints, drawings, valuation, track and other maps,
surveys, acquisition deeds, instruments, diagrams of railroad
plant and structures, specifications, signal diagrams,
engineering photographs, engineering data, easement and
betterment maps, real estate documents and records,
construction, repair, maintenance and asset history records,
and other books, papers, appraisals, files and records
pertaining primarily to the Rail Lines or the other Assets,
wherever located;
15. The Escanaba Ore Dock including all fixtures, material
handling facilities including but not limited to ore unloading
facilities, conveyor systems, ore storage and reclaim
equipment and ore vessel loading equipment.
16. All other real and personal property of every kind and
character whatsoever and every estate and interest therein.
B. SPECIFIC IDENTIFICATION OF CERTAIN ASSETS
The Assets described generally above include, without limitation, the assets
identified in this Section B.
Purchaser shall acquire the following material Contracts:
1. Contracts Relating to Rail Operations, Real Property
Contracts, Leases, Licenses and Easements. The Contracts
listed on Attached Schedule I.
2. Transportation Contracts. Purchaser shall assume Seller's
rights and obligations with respect to the Rail Lines under
the Price Documents listed on Schedule II.
3. Contracts Relating to Environmental Matters. None. See Exhibit
3.
C. EXCLUDED ASSETS
The Assets do not include the following assets:
1. Any labor or employment agreement;
2. Any lease of office space or other Contract with affiliates of
Seller providing for shared overhead expense, tax sharing or
similar inter-corporate matters;
3. The Contracts listed on attached Schedule III.
Appendix A-Page 3
4. The exclusions of real property and real property interests as
set forth on Appendix A-1 and on Exhibit 4 to the Agreement.
5. Except as set forth on Xxxxxxxx X-0, all inventory, fuel,
supplies and other materials relating to or acquired or used
for locomotive or car repair, trackage, signal, structure and
building maintenance, or otherwise in connection with the
operation, use or enjoyment of the Rail Lines or the other
Assets;
6. Except as set forth on Xxxxxxxx X-0, all furniture, fixtures
and equipment, signal and dispatching equipment, other
equipment, tools (both heavy and light), power tools,
machinery, and maintenance of way equipment owned, used or
held for use or otherwise held in, on or in connection with
the Rail Lines or the other Assets;
7. Except as set forth on Xxxxxxxx X-0, the motor vehicles and
maintenance vehicles used on or in connection with the Rail
Lines;
8. Subsurface and mineral rights as referenced or excepted on
Exhibit 4 to the Agreement.
Appendix A-Page 4
APPENDIX C
ADMINISTRATION AND PRORATION PROCEDURES
1. DEFINITIONS.
In addition to the other definitions contained in the Agreement to
which this Appendix is attached, the following terms when used with
initial capitalization in this Appendix, whether in the singular or the
plural, have the meanings ascribed to them below:
A. "Closing Effectiveness" means 11:59 p.m. on the Closing Date.
B. "Waybill" means a shipment document generated from a valid
xxxx of lading tendered to the originating railroad or from a
customarily equivalent industry practice.
2. ALLOCATION OF REVENUES.
A. Seller shall be entitled to tariff, division, or contractual
share of all freight revenue, switching revenue, and loss and
damage collectible, and shall be liable for tariff, division,
or contractual share of all freight revenue (including shipper
allowances and interline divisions), switching revenue,
switching absorptions, and loss and damage payable, with
respect to (i) revenue freight originated on the Rail Lines
with a xxxx of lading date on or prior to the Closing
Effectiveness and (ii) revenue freight traffic terminated at
Waybill destination by Seller on the Rail Lines on or prior to
the Closing Effectiveness. In all cases, the amounts described
in this subparagraph (a) shall include subsequent corrections,
statements of differences, overcharge claims and other
adjustments.
B. Purchaser shall be entitled to tariff, division, or
contractual share of all freight revenue, switching revenue,
and loss and damage collectible, and shall be liable for
tariff, division, or contractual share of all freight revenue
(including shipper allowances and interline divisions),
switching revenue, switching absorptions, and loss and damage
payable, with respect to (i) revenue freight traffic
originated on the Rail Lines with a xxxx of lading date
subsequent to the Closing Effectiveness and (ii) revenue
freight traffic terminated at Waybill destination by
Appendix C-Page 1
Purchaser on the Rail Lines subsequent to the Closing
Effectiveness. In all cases, the amounts described in this
subparagraph (b) shall include subsequent corrections,
statements of differences, overcharge
claims and other adjustments.
C. All Waybills and bills of lading for revenue freight traffic
located on the Rail Lines as of the Closing Effectiveness
shall be the property of Purchaser and Seller will take such
steps as necessary to secure such documents for Purchaser
prior to Closing Effectiveness. Following the Closing,
Purchaser shall provide Seller with such copies as Seller
reasonably requests for hazardous material documentation or
billing purposes.
3. SHIPPER ALLOWANCES.
Seller shall be responsible for all shipper allowances accruing before
the Closing Effectiveness, and Purchaser shall be responsible for all
shipper allowances accruing after the Closing Effectiveness with
respect to movements over the Rail Lines (and not over Seller's
remaining lines of railroad). Certain transportation contracts that are
to be assigned to and assumed by Purchaser may include shipper
allowance provisions that contain incentive payments or measurements
affecting the ultimate amount that will be due to the shipper under the
contract that cannot be determined at Closing. Examples include,
without limitation, shipper allowances based upon volume, revenue,
production percentage or service guarantees during a period that
extends beyond the Closing Date. If the amount of a shipper allowance
becomes determinable after Closing and results in either a payment to
or refund from a shipper, such payment or refund, as determined under
the contract as in effect immediately prior to Closing, shall be
prorated between Seller and Purchaser on the basis of the factors
affecting such allowance (e.g., volume or revenue) arising from
Waybills dated before and after the Closing Effectiveness. Purchaser
will settle with the shipper and pay or invoice Seller its proportional
share of the receivable or payable. In addition, with respect to any
shipper allowances that are accrued for as of the Closing Date,
Purchaser shall settle with the shipper and will invoice Seller for the
amount due (unless that amount was included in an adjustment of the
Purchase Price at Closing).
4. DEMURRAGE AND DETENTION.
Appendix C-Page 2
For shippers other than "average agreement shippers," all demurrage and
detention revenue accruing on cars released prior to the Closing
Effectiveness will be Seller's. All demurrage and detention revenue
accruing on cars released after the Closing Effectiveness will be
Purchaser's. For "average agreement shippers," any demurrage revenues
on cars relating to any period in which the Closing occurs shall be
prorated for such period on the basis of the actual number of calendar
days in such period before and after the Closing Effectiveness and will
be settled upon collection from the shipper. Seller will provide copies
of all demurrage and detention agreements and related records as soon
as possible, and in any event within 5 days after Closing.
5. EQUIPMENT RENTALS.
For purposes of equipment rentals, all freight cars, trailers and
containers that are not a part of the Assets (equipment leased under a
lease that is included in the Assets shall be considered equipment that
is a part of the Assets) but that are located on the Rail Lines shall
be considered interchanged by Seller to Purchaser as of the Closing
Effectiveness. Seller shall be liable for or entitled to equipment
rentals for periods before that time and Purchaser for periods after
that time.
6. PAYROLL TAXES.
If Purchaser is able to, and elects to, calculate its liability for
Railroad Retirement (Tiers I and II), Railroad Unemployment and
Railroad Unemployment Repayment taxes (collectively, "Payroll Taxes")
for the year in which the Closing occurs and with respect to employees
hired by Purchaser who were former Seller employees, by taking into
account compensation paid to such employees by Seller prior to Closing,
then Purchaser shall be liable to Seller for 50% of the Payroll Tax
Savings (as defined below). The "Payroll Tax Savings" shall be the
amount equal to the excess, if any, of (i) the liability for Payroll
Taxes Purchaser would have been required to pay with respect to its
employees who were former Seller employees if Purchaser could not have
calculated such liability for Payroll Taxes by taking into account
compensation paid to such employees by Seller prior to Closing over
(ii) the actual amount of liability for such Payroll Taxes payable by
Purchaser with respect to its employees who were former Seller
employees for the year of Closing. The amount payable to Seller, if
any, will be paid no later than March 31 of the year following the year
in which Closing occurs. Seller agrees to provide Purchaser with all
necessary information required to allow Purchaser
Appendix C-Page 3
to calculate Payroll Taxes by taking into account compensation paid
prior to Closing to Purchaser's employees who were former Seller
employees.
7. JOINT FACILITIES.
Joint facility bills (both payable and receivable) relating to any
period in which the Closing occurs, shall be prorated for that period,
and liability or entitlement shall be apportioned between Seller and
Purchaser, on the basis of the dates before and after the Closing Date
on which the underlying work was performed, if available, or if not
available on the basis of the actual number of calendar days in the
applicable period occurring before and after the Closing Date.
Appendix C-Page 4
8. CASUALTIES TO FOREIGN EQUIPMENT.
Liability for repairs to, or the casualty value of, foreign cars or
locomotives damaged or destroyed while in service on the Rail Lines
shall be allocated on the basis of the time and date such cars or
locomotives were damaged or destroyed, with liability being Seller's if
the damage or destruction occurred in an incident prior to the Closing
Effectiveness and Purchaser's if the damage or destruction occurred in
an incident after the Closing Effectiveness.
9. ALLOCATION OF OTHER EXPENSES.
All other expense items payable, including but not limited to
utilities, patron switching and purchased services, relating to any
period in which the Closing occurs, shall be prorated for that period,
and liability shall be apportioned between Seller and Purchaser, on the
basis of the dates before and after the Closing Date on which the
underlying work was performed, if available, or if not available on the
basis of the actual number of calendar days in the applicable period
occurring before and after the Closing Date.
10. ACCOUNTS PAYABLE.
Purchaser shall not be responsible for any accounts payable of Seller
of any type including, but not limited to, accounts payable with
respect to interline accounts, joint facilities and trackage rights
payments owed, incurred or in any way in whole or in part expended but
not yet paid as of the Closing Date. Purchaser shall promptly forward
to Seller any invoices or demands with respect to those accounts
payable. All accounts payable of Seller with regard to goods received
or services rendered on or subsequent to the Closing Date shall be the
responsibility of Purchaser. Seller shall promptly forward to Purchaser
any invoices or demands with respect to those accounts. If Purchaser or
Seller receives an invoice or demand for payment for goods received in
part by Seller and in part by Purchaser or services rendered in part to
Seller and in part to the Purchaser, the invoice or demand shall be
forwarded, if necessary, to Purchaser, and shall be paid by Purchaser
on or before its due date. Purchaser shall invoice Seller for the
portion of the invoice or demand that relates to goods received or
services rendered prior to the Closing Date.
11. ACCOUNTS RECEIVABLE.
Appendix C-Page 5
All accounts receivable of Seller, of any type, including but not
limited to accounts receivable representing interline accounts, joint
facilities and trackage rights revenues owed, incurred or in any way
earned but not yet received as of the Closing Date, shall be Seller's
property. Purchaser shall promptly forward to Seller any checks or
other payments it receives with respect to these accounts. If Purchaser
receives a check or other payment for goods delivered in part by Seller
and in part by the Purchaser or services rendered in part by Seller and
in part by Purchaser, Purchaser shall promptly remit to Seller that
portion of the payment received with respect to goods delivered by
Seller or services rendered by Seller.
12. PAYMENT.
Seller and Purchaser shall each pay any invoice rendered by the other
pursuant to this Appendix within 30 days of receipt.
Appendix C-Page 6
APPENDIX E
ENVIRONMENTAL OPERATIONS OBLIGATIONS SCHEDULE
1. Consent Order dated December 19, 1974.
2. Amendment to consent order dated November 8, 1978.
3. Order terminating jurisdiction of the federal court
dated January 5, 1984.
EXHIBIT 3
DISCLOSURE SCHEDULE
My name is Xxxxxx X. York and I am Manager Environmental Field Operations for
the Union Pacific Railroad Company (UPRR). I have conducted a survey of all
environmentally related activities or facilities on the following former Chicago
and North Western Railway Company sub-divisions now owned and operated by Union
Pacific Railroad Company:
1. Duck Creek North
2. Oconto Falls
3. Marinette
4. Xxxxxxxxx (Including Ore Dock)
5. Antoine
6. Xxxxxx Spur
7. Niagara Spur
Based upon system surveys conducted by various UPRR personnel in 1996 and
verified this year, the following are noted:
Fueling Areas (all tanks above ground)
Presently in operation
Escanaba - 50,700 gallon capacity
storage tank at P&H
Facility
Iron Mountain - 20,000 gallon storage tank
No longer in operation but still at site
Marinette - 20,000 gallon - empty
Pollution Control Facilities
Escanaba - Gravity oil separator installed in leased facility.
- Baghouse filter system at dumper building, wet
suppressant spray systems at dumper, transfer
point, and belts.
Asbestos Locations
Marinette - Piping inside baggage room building next to depot.
Exhibit 3-Page 1
No other reported asbestos locations.
Hazardous Waste Generation
Escanaba - Mineral spirits used in parts cleaning
operations - when loaded with oil, mixed
with waste oil and shipped to Proviso Yard,
Northlake, Illinois for disposal -
considered non-hazardous when spent.
- Chlorinated electrical parts cleaner sprayed
on parts using aerosol cans - evaporates.
Underground Storage Tanks
All known underground fuel storage tanks reported to me have
been removed. Two underground storage tanks remain at
Escanaba, one containing Nalco Magnesium Chloride for road
spraying, the other containing Nalco dust suppressant for
dumper building and conveyor belts.
Noise/Dust Complaints
There have been periodic complaints from adjoining property
owners of noise and dust from the Escanaba Ore Dock. There are
no current proceedings relating to noise or dust. (See
Appendix E to Asset Purchase Agreement dated as of November
30, 1996 between Union Pacific Railroad Company and Sault Ste.
Xxxxx Bridge Company.)
Based on reports provided to me, I am not aware of any other environmentally
related activities or facilities in connection with the property subject to the
sale.
Remediation Sites
In compliance with an order from the Michigan Department of
National Resources, the UPRR is currently remediating property
in Rock, Michigan, the site of a former leased bulk oil
facility.
NIOSH
Employees at the Escanaba Ore Dock have filed a complaint with
NIOSH complaining of dust generated by the handling of mine
tailings at the facility. The UPRR is not aware of the status
of this complaint.
Exhibit 3-Page 2
