<PAGE>
Exhibit 2.5
----------------------------
ASSET PURCHASE AGREEMENT
----------------------------
Among
Huron and Eastern Railway Company, Inc.,
as Buyer
RailAmerica Transportation Corp.,
and
Central Michigan Railway Company
and
The Straits Corporation,
as Sellers
November 25, 2003
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S>
<C>
<C>
ARTICLE I. - SALE AND PURCHASE OF ACQUIRED
ASSETS.................................................................1
1.01
Sale
and Purchase of Acquired
Assets............................................................1
1.02
Earnest Money Deposit; Closing
Instruction......................................................3
1.03
Payment for Acquired
Assets.....................................................................3
1.04
Estimated Purchase Price Adjustment; Closing Balance Sheet;
Disputes............................3
1.05
Allocation......................................................................................4
1.06
Additional
Payment..............................................................................5
1.07
Excluded
Assets.................................................................................5
ARTICLE II. -
CLOSING.............................................................................................6
2.01
Closing.........................................................................................6
2.02
Deliveries by
Sellers...........................................................................6
2.03
Deliveries by
Buyer.............................................................................6
ARTICLE III. - REPRESENTATIONS AND
WARRANTIES OF THE SELLERS AND THE
COMPANY......................................6
3.01
Corporate Existence and
Qualification...........................................................6
3.02
Authority, Approval and
Enforceability..........................................................7
3.03
Corporate
Records...............................................................................7
3.04
No
Defaults or
Consents.........................................................................7
3.05
No
Proceedings..................................................................................7
3.06
Equipment
Leases................................................................................7
3.07
Equipment And Other Tangible
Property...........................................................8
3.08
Condition Of Personal Property Other Than
Tracks................................................8
3.09
Condition Of Track And
Bridges..................................................................8
3.10
Real
Estate
Owned...............................................................................8
3.11
Real
Estate
Leased..............................................................................9
3.12
Operating
Agreements...........................................................................10
3.13
Labor and Employee Benefit
Matters.............................................................10
3.14
Compliance with
Laws...........................................................................10
3.15
Litigation.....................................................................................11
3.16
Commitments....................................................................................11
3.17
Insurance......................................................................................11
3.18
Intangible Personal Property
Rights............................................................11
3.19
Environmental
Matters..........................................................................12
3.20
Licenses and
Permits...........................................................................12
3.21
Customers and
Suppliers........................................................................12
3.22
Taxes..........................................................................................12
3.23
Accounts Receivable and Payable;
Inventory.....................................................13
ARTICLE IV. - REPRESENTATIONS AND
WARRANTIES OF
BUYER............................................................13
4.01
Corporate Existence and
Qualification..........................................................13
4.02
Authority, Approval and
Enforceability.........................................................13
4.03
No
Default or
Consents.........................................................................14
4.04
No
Proceedings.................................................................................14
ARTICLE V. - OBLIGATIONS PRIOR TO
CLOSING........................................................................14
5.01
Buyer's Access to Information and Acquired
Assets..............................................14
5.02
Company's Conduct of Business and
Operations...................................................14
5.03
General
Restrictions...........................................................................15
5.04
Notice Regarding
Changes.......................................................................15
5.05
Ensure Conditions
Met..........................................................................15
5.06
Employee
Matters...............................................................................16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>
<C>
<C>
5.07
Surface Transportation
Board...................................................................16
5.08
Payoff and Estoppel
Letters....................................................................16
5.09
No
Shop........................................................................................16
5.10
Labor
Notice...................................................................................16
5.11
North Bay City
Yard............................................................................17
ARTICLE VI. - CONDITIONS TO SELLERS' AND
BUYER'S
OBLIGATIONS.....................................................17
6.01
Conditions to Obligations of the
Sellers.......................................................17
6.02
Conditions to Obligations of
Buyer.............................................................17
ARTICLE VII. - POST-CLOSING
OBLIGATIONS.........................................................................18
7.01
Survival of Representations and
Warranties.....................................................18
7.02
Indemnification................................................................................18
7.03
Further
Assurances.............................................................................20
7.04
Publicity......................................................................................20
7.05
Post-Closing
Transfers.........................................................................20
7.06
Record
Retention...............................................................................20
7.07
Post-Closing
Cooperation.......................................................................20
7.08
Commercially Reasonable Efforts; Purchase of Uncollected Accounts
Receivable...................21
7.09
Annual Railroad Property Tax
Filing............................................................21
ARTICLE VIII. - CLOSING AND COORDINATION
ISSUES..................................................................21
8.01.
Proration......................................................................................21
8.02. Transfer
of
Operations.........................................................................21
8.03. Collection
of
Revenues.........................................................................21
8.04. Transfer
of Liabilities; Payment of
Charges....................................................21
8.05. Assignment
of Freight Transportation
Contracts.................................................22
ARTICLE IX. - I-75 BRIDGE ABANDONMENT
PROCEEDING.................................................................22
ARTICLE X. -
TERMINATION.........................................................................................22
10.01
Termination....................................................................................22
10.02 Effect of
Termination..........................................................................23
ARTICLE XI. -
MISCELLANEOUS......................................................................................23
11.01
Confidentiality................................................................................23
11.02 Risk of
Loss...................................................................................24
11.03
Brokers........................................................................................24
11.04 Costs and
Expenses.............................................................................24
11.05
Notices........................................................................................24
11.06 Governing
Law;
Arbitration.....................................................................25
11.07 Entire
Agreement; Amendments and
Waivers.......................................................26
11.08 Binding
Effect and
Assignment..................................................................26
11.09
Remedies.......................................................................................26
11.10 Exhibits
and
Schedules.........................................................................26
11.11 Multiple
Counterparts..........................................................................27
11.12 References
and
Construction....................................................................27
11.13 Attorneys'
Fees................................................................................27
11.14 Section
1031
Exchange..........................................................................27
ARTICLE XII. -
DEFINITIONS.......................................................................................27
12.01
Affiliate......................................................................................27
12.02 Affiliated
Group...............................................................................27
12.03
Code...........................................................................................27
12.04
Company........................................................................................27
12.05
Contracts......................................................................................27
12.06 Current
Assets.................................................................................28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>
<C>
<C>
12.07 Current
Liabilities............................................................................28
12.08
Customer/Employee Due
Diligence................................................................28
12.09
Governmental
Authority.........................................................................28
12.10 Hazardous
Materials............................................................................28
12.11 Knowledge
of the
Company.......................................................................28
12.12 Legal
Requirements.............................................................................28
12.13
Material.......................................................................................28
12.14 Material
Adverse Change; Material Adverse
Effect...............................................28
12.15
Permits........................................................................................28
12.16
Person.........................................................................................28
12.17
Properties.....................................................................................29
12.18 Related
Agreements.............................................................................29
12.19
STB............................................................................................29
12.20
Subsidiary.....................................................................................29
12.21
Tax............................................................................................29
12.22 Tax
Return.....................................................................................29
12.23
Track..........................................................................................29
12.24 Union
Contract.................................................................................29
12.25
Used...........................................................................................29
</TABLE>
<PAGE>
TABLE OF CONTENTS
LIST OF SCHEDULES
Schedule A
Map of Rail Lines
Schedule 1.01(a)(i) Rail Lines
Schedule 1.01(a)(v) Tangible Personal Property
Schedule 1.07
Excluded Assets
Schedule 1.07(III) Consumers Power Leases
Schedule 1.07(iv)(A) Location of Relocated
Operating Easement for St. Mary's
Schedule 1.07(iv)(E) Location of Relocated
Maintenance-of-Way Crew Facilities
for St. Mary's
Schedule 2.02(i) Bill of Sale for
Acquired Assets
Schedule 2.02(ii) Assignment and
Assumption of Leases, Contracts and Permits
Schedule 2.02(iii) Covenant Deed for Real
Estate
Schedule 3.04
Sellers' Required Consents
Schedule 3.06
Equipment Leases
Schedule 3.07
Liens on Owned
Equipment
Schedule 3.08
Condition of Personal Property
Schedule 3.09
Condition of Track and Bridges (Inspection Reports)
Schedule 3.10
Owned Real Estate
Schedule 3.11
Leased Real Estate
Schedule 3.12
Operating Agreements
Schedule 3.13(a) List of Company
Employees
Schedule 3.13(d) Employee Benefit
Plans
Schedule 3.16
Commitments
Schedule 3.17
Insurance Policies
Schedule 3.18
Intangible Personal Property
Schedule 3.19(d) Bay City River
Lot Description
Schedule 3.20
Permits
Schedule 3.23
Accounts Receivable and Payable
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and
entered
into as of the 25th day of November, 2003,
by and among Huron and Eastern
Railway Company, Inc., a Michigan
corporation (the "Buyer"), RailAmerica
Transportation Corp., a Delaware
corporation, the parent corporation of the
Buyer ("RATC"), Central Michigan Railway
Company, a Michigan corporation (the
"Company"), and The Straits Corporation, a
Michigan corporation and the sole
shareholder of the parent corporation of
the Company ("Straits" and collectively
with the Company, the "Sellers"). Certain
capitalized terms are defined in
Article XII hereof.
Recitals
A. The Company operates and provides rail freight and
transportation
services for both on-line customers and
other railroads that interchange traffic
with the Company and owns or has valid
rights to use the operating assets
associated with such business (the
"Business"). Such services primarily relate
to the transportation of products to and
from the railroad interchanges at the
terminal points of the Company's rail
lines, which are reflected on the map
attached as Schedule A.
B. Buyer desires to purchase substantially all of the rail line
segments used in the Business and certain
other rights, obligations and assets
associated with the Business, as more fully
described below, and the Company
desires to sell such assets and rights,
upon the terms and subject to the
conditions set forth herein.
C. Simultaneously herewith, Straits Financial Services, L.L.C.,
a
Michigan limited liability company ("SFS"),
is entering into a Locomotive
Purchase Agreement with Buyer pursuant to
which it is agreeing to sell, and the
Buyer is agreeing to purchase, the
Locomotives which are described in the
Locomotive Purchase Agreement between the
Buyer and SFS (the "SFS Purchase
Agreement").
D. The Company has provided the due diligence information and
documentation requested of it, and Buyer
has completed its due diligence
investigation of the Company and is
satisfied with the results of this
investigation.
Agreement
NOW, THEREFORE, in consideration of the premises and of the
mutual
covenants contained herein, the parties
agree as follows:
ARTICLE I. - SALE AND PURCHASE OF ACQUIRED ASSETS
1.01 SALE AND PURCHASE OF ACQUIRED ASSETS.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in
Section 2.01 hereof, the Company shall
sell, convey, assign, transfer and deliver
to Buyer, and Buyer shall purchase,
acquire and accept delivery of, the
Business, including those operating assets
used by the Company in or otherwise
associated with its Business (the "Acquired
Assets"), except as may be limited herein,
free and clear of any and all liens,
mortgages, adverse claims, charges,
security interests or encumbrances. The
Acquired Assets shall include all of the
assets used by the Company in the
conduct of its Business, and include the
following:
(i) The following rail line segments of the Company
(the "Rail Lines"):
Midland Sub
15.81 miles
Wheeler to Durand
57.06 miles
Genesee to Paines
5.06 miles
I-75 to CSX Yard
.86 miles
Durand to M21
11.83 miles
Anderson Lead
2.19 miles
Owosso Industrial Track
.65 miles
<PAGE>
Marquette to Yard Board
1.56 miles
Essexville
3.16 miles
Wheeler to MDOT Ownership
1.69 miles
-----------
TOTAL
99.87 miles
which Rail Lines are set forth in Schedule 1.01(a)(i) with line
segment
endpoints, and together with Sellers' leasehold interests,
easements,
rights of
way, leases, minerals and water rights over, under, across,
and attributable to the Rail Lines;
(ii) All buildings, track improvements, facilities,
fixtures, and leasehold and other improvements located on the
Rail
Lines;
(iii) The Business which the Company conducts on the
Rail Lines, subject to the terms and conditions set forth
herein;
(iv) All of the Company's Track;
(v) All tangible personal property listed on Schedule
1.01(a)(v), with only such additions and deletions as may occur in
the
ordinary and necessary conduct of the Business between the date
hereof
and the Closing Date in connection with the replacement of any
such
items (all items described in this provision being collectively
referred to as the "Tangible Personal Property");
(vi) All Leases and Equipment Leases utilized in the
Business, or otherwise, as listed on Schedules 3.06 and 3.11;
(vii) All agreements relating to the Business
including, without limitation, all operating agreements, joint
facility
contracts, Michigan Department of Transportation contracts,
freight
transportation contracts, licenses, other contracts, commitments
and
understandings with governmental agencies, car leases, vehicle
financing agreements with GMAC, and customers relating to the
Business
including, but not limited to, those agreements listed on Schedule
3.12
and the easement for the North Bay City Yard described in Section
5.11
below (collectively, the "Contracts");
(viii) All of the Company's trackage rights to
operate over and across any lines connecting with the Rail Lines,
if
any;
(ix) All customer lists, technical information and
data, warranties and service contracts, trademarks (and any
goodwill
related thereto), permits, licenses, authorizations and
regulatory
approvals, and all other files, information and intangible
rights
relating to the operation of the Business, including its goodwill
and
going concern value relating to the operation of the Business
(collectively, the "Intangible Personal Property");
(x) Current Assets, as defined below;
(xi) Current
Liabilities, as defined below;
(xii) All subsurface rights associated with the Rail
Lines, except as specifically excluded as part of the Excluded
Assets
in Section 1.07 below;
(xiii) All operational safeguards associated with the
contracts and agreements specifically excluded as part of the
Excluded
Assets in Section 1.07 below; and
-2-
<PAGE>
(xiv) All existing property records, tax and
assessment records, valuation maps, data and information related
to
railroad operations, including, without limitation, inventory
records,
vendor lists, customer lists and records (the "Records").
(b) To effect the transfers contemplated by Section 1.01(a),
at the Closing, Sellers shall deliver or
cause to be delivered to Buyer, against
payment therefore in accordance with
Section 1.03 hereof, Bills of Sale,
Assignments and Covenant Deeds for transfer
to Buyer as outlined in Section 2.02
below.
1.02 EARNEST MONEY DEPOSIT; CLOSING INSTRUCTION.
(a) Simultaneously with execution of this Agreement, Buyer
shall deposit with Stone, Biber &
O'Toole, P.L.L.C., as escrow agent (the
"Escrow Agent"), the sum of Five Hundred
Thousand Dollars ($500,000.00) as an
earnest money deposit (the "Earnest Money
Deposit"), to be held in an interest
bearing account pending disbursement in
accordance with the terms and conditions
of this Agreement and a certain Escrow
Agreement of even date. Accrued interest
is to be paid to whichever party is
ultimately entitled to receive such deposit.
(b) If such Earnest Money Deposit is to be paid to the Company
at the Closing of this transaction, the
Earnest Money Deposit, and all accrued
interest earned thereon, shall be credited
against the payment of the purchase
price by Buyer.
(c) If the Buyer shall fail to close on the transaction by
January 30, 2004 other than as a result of
(i) the failure to obtain STB
approval, (ii) a Material Adverse Change in
the Business or Acquired Assets,
(iii) the failure of one or more conditions
to closing outlined in Section 6.02
which is not waived by the applicable
party, or (iv) the Sellers'
non-performance of its obligations
hereunder, the Escrow Agent shall release the
Earnest Money Deposit and all interest
accrued thereon to the Company, and the
Company shall have the right to retain the
Earnest Money Deposit and accrued
interest earned thereon. The delivery of
the Earnest Money Deposit to the
Company as a result of the Buyer's failure
to close shall not be deemed to be
liquidated damages, and shall not otherwise
limit the remedies available to the
Company as a result of the Buyer's
breach.
(d) If the Agreement is terminated in accordance with one or
more of the provision outlined in Section
10.01 below, the Escrow Agent shall
deliver the Earnest Money Deposit and all
interest accrued thereon to the Buyer.
1.03 PAYMENT FOR ACQUIRED ASSETS. As payment in full for the
Acquired
Assets being acquired by the Buyer
hereunder, Buyer shall pay, in the manner set
forth in this Section 1.03, the sum of (i)
Twenty-Four Million Dollars
($24,000,000), plus (ii) the amount, if
any, by which the Company's Current
Assets exceed the Company's Current
Liabilities or minus the amount, if any, by
which the Company's Current Liabilities
exceed the Company's Current Assets, in
each case as of the Closing (the "Purchase
Price Adjustment"), subject to
further adjustment as provided in Sections
7.02 and 8.02 hereof (such sum, as so
adjusted from time to time, is herein
referred to as the "Purchase Price"). On
the Closing Date, the Buyer shall make
payment of the Purchase Price as follows:
(a) Subject to Section 1.06(a) hereof, Buyer shall deliver to
the Company, by wire transfer (to an
account specified by Sellers in writing at
least three business days prior to
Closing), of immediately available funds, the
sum of Twenty-Three Million Five Hundred
Thousand Dollars ($23,500,000), less
the amount of accrued interest earned on
the Earnest Money Deposit, and
increased or reduced by the Estimated
Purchase Price Adjustment, as applicable,
in accordance with Section 1.04(a);
(b) The Escrow Agent shall deliver to the Company the Earnest
Money Deposit and all accrued interest
earned thereon.
1.04 ESTIMATED PURCHASE PRICE ADJUSTMENT; CLOSING BALANCE
SHEET;
DISPUTES.
(a) Not later than two (2) business days prior to the
scheduled Closing Date, the Buyer and the
Sellers shall jointly estimate the
Purchase Price Adjustment (the "Estimated
Purchase Price Adjustment"). The
-3-
<PAGE>
Estimated Purchase Price Adjustment shall
be deducted from or added to the
payment otherwise required to be made by
Buyer to the Company pursuant to
Section 1.03(a) hereof.
(b) If the Purchase Price Adjustment reflected on the Closing
Date Balance Sheet is greater than the
Estimated Purchase Price Adjustment, then
the Company shall pay to the Buyer an
amount equal to the amount of such excess.
If the Purchase Price Adjustment reflected
on the Closing Date Balance Sheet is
less than the Estimated Purchase Price
Adjustment, then the Buyer shall pay to
the Company an amount equal to the amount
of such shortfall. Any payments made
by the Buyer to the Company or by the
Company to the Buyer pursuant to this
Section 1.04(b), shall be made by wire
transfer of immediately available funds
to the account or accounts designated by
the Sellers or the Buyer, as the case
may be, within ten (10) days after the date
in which the Closing Date Balance
Sheet (defined below) is final and binding
on the parties.
(c) As soon as practicable (and in no event later than 45 days
after the Closing Date), the Company shall
cause to be prepared and delivered to
the Buyer (i) a balance sheet for the
Company dated as of the Closing Date (the
"Closing Date Balance Sheet"), and (ii) a
calculation of the Purchase Price
Adjustment, including such schedules and
data as may be appropriate to support
such calculation. The Buyer and its
accountants shall be entitled to review the
Closing Date Balance Sheet, the Company's
calculations of the Purchase Price
Adjustment, and any working papers, trial
balances and similar materials
relating to the Closing Date Balance Sheet
prepared by the Company or its
accountants. The Company shall also provide
Buyer and its accountants with
timely access, during the Company's normal
business hours, to the Company's
personnel, properties, books and records to
the extent related to the
determination of the Purchase Price
Adjustment. The collection of accounts
receivable included in Current Assets is
addressed in Section 7.08 below.
(d) The following clauses (i) and (ii) set forth the
procedures for resolving disputes among the
parties with respect to the
determination of the Purchase Price
Adjustment:
(i) Within thirty (30) days after delivery to the
Buyer of the Company's calculation of the Purchase Price
Adjustment
pursuant to this Article I, the Buyer may deliver to the Company
a
written report
(the "Buyer's Report") prepared by the Buyer's
accountants (the "Buyer's Accountants") advising the Company that
the
Buyer's Accountants deem that one or more adjustments to the
Company's
calculation are required. The costs and expenses of the services of
the
Buyer's Accountants shall be borne by the Buyer. If the Company
shall
concur with the adjustments proposed by the Buyer's Accountants, or
if
the Company shall not object thereto in a writing delivered to
the
Buyer within thirty (30) days after the Company's receipt of
the
Buyer's Report, the calculations of the Purchase Price Adjustment
set
forth in such Buyer's Report shall become final and shall not
be
subject to further review, challenge or adjustment absent fraud. If
the
Buyer does not submit a Buyer's Report within the 30-day period
provided herein, then the Purchase Price Adjustment as calculated
by
the Company shall become final and shall not be subject to
further
review, challenge or adjustment absent fraud.
(ii) In the event that the Buyer submits a Buyer's
Report and the Company and the Buyer's Accountants are unable
to
resolve the disagreements set forth in such report within (30)
days
after the date of the Buyer's Report, then such disagreements shall
be
referred to Deloitte & Touche (the "Settlement Accountants"),
and the
determination of the Settlement Accountants shall be final and
shall
not be subject to further review, challenge or adjustment absent
fraud
or manifest error. The Settlement Accountants shall use their
best
efforts to reach a determination not more than forty-five (45)
days
after such referral. The costs and expenses of the services of
the
Settlement Accountants shall be paid by the Company if (A) the
difference between (i) the Purchase Price Adjustment resulting from
the
determinations of the Settlement Accountants, and (ii) the
Purchase
Price Adjustment resulting from the determinations set forth in
the
Buyer's Report, is less than (B) the difference between (i) the
Purchase Price Adjustment resulting from the determinations of
the
Settlement Accountants, and (ii) the Purchase Price Adjustment
resulting from the Company's calculations as set forth in the
deliveries pursuant to this Section 1.04 hereof; otherwise, such
costs
and expenses of the Settlement Accountants shall be paid by the
Buyer.
1.05 ALLOCATION. The purchase price shall be allocated among
the
Acquired Assets general as follows:
-4-
<PAGE>
Land, Rail Right-of-Way, Rail,
Ties, Ballast and Buildings
$21,900,000.00
Equipment (non-locomotives)
2,100,000.00
--------------
TOTAL
$24,000,000.00
1.06 ADDITIONAL PAYMENT. In the event that on or before the
fifteenth
(15th) anniversary of the Closing Date: (i)
RATC or Buyer, or their Affiliates,
subsidiaries and/or their respective
successors complete the acquisition of all
or a significant part of that specific line
segment which is part of CSX
Corporation's rail system running parallel
to the Company's current operation
from Bay City, Michigan to Durand,
Michigan, (ii) RATC or Buyer, their
Affiliates, subsidiaries and/or their
respective successors complete a
conveyance to CSX Corporation or its
successor of all or a significant portion
of that specific line segment of the
Company's rail system running parallel to
CSX Corporation's current operation from
Bay City, Michigan to Flint, Michigan,
or (iii) another arrangement is completed
whereby either the Buyer, CSX
Corporation or their respective
successor(s) operates as the primary connecting
carrier for the current traffic on the
lines described in (i) and (ii) above
(all of the foregoing collectively referred
to as the "Plan"), then Buyer shall
within thirty (30) days of the completion
of such transaction pay to Straits the
sum of Six Million Dollars ($6,000,000), in
immediately available funds (the
"Additional Payment").. Notwithstanding the
foregoing, the parties acknowledge
and agree that the amount of the Additional
Payment is predicated upon the
combined rail system described above
benefiting from the synergies and
increasing current operating revenues
and/or reduced costs resulting from the
Company's rail freight business. In the
event such a combination is primarily
motivated by significantly reduced (i)
traffic volumes and/or (ii) aggregate
operating revenues on the parallel lines,
then the Additional Payment shall be
reduced proportionately. Prior to Closing
hereunder, the parties will discuss
the framework within which to pursue the
Plan. The Buyer will keep the Sellers
generally informed of progress toward
achieving the Plan.
1.07 EXCLUDED ASSETS. The parties acknowledge and agree that
the
Company is selling, and the Buyer is
purchasing, substantially all of the assets
associated or used in the Business, but the
Company is retaining the following
assets which will be excluded from this
transaction and not part of the Acquired
Assets at Closing: (i) approximately 1.77
miles of railroad, extending from
milepost 2.83 at the western end of the
Company's railroad bridge over
Interstate Highway 75 to milepost 4.60, in
Saginaw County, Michigan which was
the subject of STB Docket No. AB-308
(Sub-No. 3X) (the "I-75 Bridge") as
provided in Article IX below and any
proceeds paid by the State of Michigan
either in the past or in the future to the
Company for removal, relocation, or
purchase of the I-75 Bridge, (ii) certain
real estate located in the State of
Florida, (iii) certain preferred membership
interests in Gentz Industries,
L.L.C., a Michigan limited liability
company, (iv) certain real property which
is under negotiation for sale to St. Mary's
Hospital and/or the expected
proceeds from the transfer of this real
estate to St. Mary's Hospital, but with
the understanding that (A) Buyer shall be
granted a perpetual operating easement
to the existing right-of-way or, if
applicable, the relocated right-of-way, (B)
the Company will have the right to relocate
the easement at a later date to a
location described on Schedule 1.07(iv)(A)
attached and which relocated easement
shall be for an area which is at least
forty (40) feet wide and the centerline
of which will be not less than ten (10)
feet from the outer limits of the
easement on either side of the centerline,
(C) Sellers shall bear responsibility
for all expense associated with the sale
and relocation of the track and
right-of-way, (D) the operating easement
for the relocated right-of-way shall
(1) be consistent with customary railroad
operating easements, (2) be subject to
the Buyer's approval, which approval will
not be unreasonably withheld, and (3)
include a term providing if the Buyer or
its successor(s) ceases to use this
right-of-way for railroad purposes and/or
the right-of-way is abandoned, the
operating easement would extinguish and
terminate upon such cessation or
abandonment, and (E) prior to Closing on
this Agreement, the Company will
relocate the maintenance-of-way crew
facilities now located on the subject
property to a lot bound by Sheridan and
Warren Road as reflected on Schedule
1.07(iv)(E) attached, (v) certain
subsurface property rights which are described
on Schedule 1.07, provided the Company
shall assign to Buyer any operational
safeguards associated with such subsurface
rights, (vi) certain Consumers Power
leases described on Schedule 1.07 which are
being replaced by an Easement with
Consumers Power, provided the Company shall
assign to Buyer any operational
safeguards associated with such Consumers
Power leases and/or easement, (vii)
Flushing parcel, (viii) the Central
Michigan Railway Company name and any
derivations thereof used by the Company in
its Business, and (ix) other
non-operating real estate situated at a
remote location from the operating
right-of-way, the exclusion of which will
have no Material Adverse Effect upon
rail operations, and/or any surface
property rights (such as leases, easements,
licenses, crossings, etc.), or other
rights, assets, or contract generating
non-operating revenues reflected on the
Company's financial statements, as more
particularly described on Schedule 1.07.
The foregoing described assets shall be
referred to as the "Excluded Assets."
-5-
<PAGE>
ARTICLE II. - CLOSING
2.01 CLOSING. Subject to the conditions stated in Article VI of
this
Agreement, the closing of the transactions
contemplated hereby (the "Closing")
shall be held at 10:00 a.m., Eastern Time,
by January 30, 2004 or, if the
conditions set forth in Section 6.02 have
not been satisfied or waived on such
date, on the second (2nd) business day
after all such conditions shall have been
satisfied or waived, and provided Closing
will occur on or before December 31,
2003 if the STB grants the waiver of the
sixty (60) day labor notice provision
in accordance with Section 5.07 below to
such earlier date and the conditions
set forth in Section 6.02 have been then
satisfied or waived, at the offices of
RailAmerica, Inc. in Boca Raton, Florida,
or at such other time and place as the
parties mutually agree but subject to the
terms of Article X below. The date
upon which the Closing occurs is
hereinafter referred to as the "Closing Date."
2.02 DELIVERIES BY SELLERS. At or prior to the Closing, the
Sellers
shall deliver to Buyer:
(i) Bill of Sale for the Acquired Assets, except as
provided in (ii) and (iii) below, in the form attached as
Schedule
2.02(i);
(ii) Assignment and Assumption of Leases, Contracts
and Permits included in the Acquired Assets, in the form attached
as
Schedule 2.02(ii);
(iii) Covenant Deeds for the Real Estate included in
the Acquired Assets, which will be in a form recordable with
the
appropriate register of deeds for each of the counties in which
the
Real Estate is located, in the form attached as Schedule
2.02(iii);
(iv) third party consents to assignment of all
Contracts and Permits which by their terms require the consent of
the
third party(ies) to the assignment of the Contracts or Permits by
the
Company which are described in Schedule 3.04;
(v) a certificate executed by the Sellers to the
effect that the conditions set forth in Section 6.02(a) have
been
satisfied; and
(vi) subject to the record keeping provisions of
Section 7.06, possession of all Records within the possession of
the
Sellers or any Affiliate of the Sellers pertaining to the
Acquired
Assets; provided, however, that the Sellers may retain (1) copy of
any
Records that the Sellers are reasonably likely to need for
complying
with requirements of law.
2.03 DELIVERIES BY BUYER. At or prior to the Closing, Buyer
shall
deliver to the Company:
(i) the amount and form of Purchase Price required to
be paid at Closing pursuant to Section 1.03(a) hereof;
(ii) Assignment and Assumptions of Leases, Contracts
and Permits included in the Acquired Assets; and
(iii) a certificate executed by an authorized officer
of the Buyer, on behalf of the Buyer, to the effect that the
conditions
set forth in Section 6.01(a) have been satisfied.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES OF THE SELLERS
AND THE COMPANY
In order to induce the Buyer to consummate the transactions under
this
Agreement, Straits and the Company hereby
jointly and severally represent and
warrant to Buyer that the following are
true and correct as of the date hereof
and as of the Closing Date:
3.01 CORPORATE EXISTENCE AND QUALIFICATION. Straits and the Company
are
corporations duly organized, validly
existing and in good standing under the
laws of the State of Michigan, and each has
the corporate power to
-6-
<PAGE>
own, manage, lease and hold its Properties
and to carry on its business as
presently conducted. The Company is not
required to be qualified to do business
as a foreign corporation in any other
jurisdiction.
3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has
been
duly executed and delivered by the Company
and Straits, and each of Straits and
the Company has all requisite power and
legal capacity to execute and deliver
this Agreement and all Related Agreements
executed and delivered or to be
executed and delivered in connection with
the transactions provided for hereby,
to consummate the transactions contemplated
hereby and by the Related
Agreements, and to perform its obligations
hereunder and under the Related
Agreements. This Agreement and each Related
Agreement to which either of Straits
and/or the Company is a party constitutes,
or upon execution and delivery will
constitute, the legal, valid and binding
obligation of such party, enforceable
in accordance with its terms, except as
such enforcement may be limited by
general equitable principles or by
applicable bankruptcy, insolvency,
moratorium, or similar laws which affect
creditors' rights generally.
3.03 CORPORATE RECORDS. The copies of the Articles of Incorporation
and
Bylaws of the Company provided to Buyer are
true, accurate and complete and
reflect all amendments made through the
date of this Agreement.
3.04 NO DEFAULTS OR CONSENTS. Neither the execution and delivery
of
this Agreement nor the consummation of any
of the transactions contemplated
hereby (including but not limited to the
assignment and assumption of the
Leases, Contracts and Permits) will:
(i) violate or conflict with any of the terms,
conditions or provisions of the Articles of Incorporation or bylaws
of
the Sellers;
(ii) to the Knowledge of the Company, violate any
provision of law or any judgment, award or decree to which the
Company
or Straits is a party, or by which the properties or assets of
the
Company or Straits is bound or affected;
(iii) to the Knowledge of the Company, violate,
conflict with, result in a breach of, constitute a default
under
(whether with or without notice or the lapse of time or both),
or
accelerate or permit the acceleration of the performance required
by,
or give any other party the right to terminate, any material
indenture,
agreement or other instrument or Permit binding upon or applicable
to
the Company or Straits;
(iv) result in the creation of any lien, charge or
other encumbrance on any Acquired Assets; or
(v) except as otherwise set forth in Schedule 3.04
attached hereto, require any of Straits or the Company to obtain
or
make any waiver, consent, action, approval or authorization of,
or
registration, declaration, notice or filing with, any third party
or
any Governmental Authority.
3.05 NO PROCEEDINGS. No suit, action or other proceeding is pending
or,
to the Knowledge of the Company, threatened
before any Governmental Authority
seeking to restrain the Company or Straits
or prohibit their entry into this
Agreement or prohibit the Closing, or
seeking damages against either Straits,
the Company or their Properties as a result
of the consummation of this
Agreement.
3.06 EQUIPMENT LEASES. Schedule 3.06 attached hereto contains
an
accurate and complete list and description
of all equipment or other tangible
personal property, including, without
limitation, locomotives and railcars,
leased by the Company in regard to the
Business, including the name of the
lessor, the expiration date of the lease,
and the rent payable under each such
lease (the "Equipment Leases"). Except as
set forth on Schedule 3.06, each such
Equipment Lease may be cancelled by the
Company on not more than 90 days'
notice. True and complete copies of all
such Equipment Leases have been
furnished to the Buyer. All such Equipment
Leases are in full force and effect
and constitute legal, valid and binding
obligations of the respective parties
thereto enforceable in accordance with
their terms, and grant the leasehold
estates they purport to grant free and
clear of all liens or other encumbrances
whatsoever, except as stated on Schedule
3.06. The Company is not in default
under any railcar
-7-
<PAGE>
or locomotive lease, and there is no fact
which, with notice and/or passage of
time would constitute such a default,
including, without limitation, the
consummation of the transactions
contemplated by this Agreement. To the
Knowledge of the Company, except as
described in Schedule 3.06, none of the
parties contracting with the Company is in
default under any material provision
of such Equipment Leases.
3.07 EQUIPMENT AND OTHER TANGIBLE PROPERTY. The Company has good
and
merchantable title to all of the railcars,
vehicles, Track and railcar repair
equipment, radios, fixtures, equipment and
other tangible personal property and
a valid lease for all locomotives which the
Company uses in connection with its
Business and/or purports to own as
reflected on its financial books and records,
including, without limitation those
reflected on the Annual Financial Statements
and the Interim Financial Statements, or
acquired after such date (other than
personal property sold or otherwise
disposed of in the ordinary and usual course
of business subsequent to June 30, 2003),
and, except as disclosed on Schedule
3.07 attached, are free and clear of all
mortgages, liens, security interests
and encumbrances of any nature whatsoever
except for Permitted Liens (as defined
in Section 3.10 below) and as described on
Schedule 3.07 attached hereto. The
Company shall at Closing have an inventory
of expendable material and supplies
(not including rails and ties) in amounts
routinely maintained by it, including
diesel fuel, to allow for continued
operation after Closing until such
expendable materials and supplies can be
obtained in the ordinary course of
business.
The parties agree that the locomotives used by the Company will
be
owned by SFS and conveyed by SFS to Buyer
at Closing pursuant to the SFS
Purchase Agreement.
3.08
CONDITION OF PERSONAL PROPERTY OTHER THAN TRACKS. All tangible
personal property (other than Track and
bridges) owned by the Company or used by
the Company in its Business is in all
material respects and to the Knowledge of
the Company in good condition, normal wear
and tear excepted, and is in good
operating order except as otherwise
described on Schedule 3.08 attached. To the
Knowledge of the Company, all of the
equipment owned or operated by the Company
is maintained and operated in material
compliance with all federal, state and
local laws and regulations.
3.09 CONDITION OF TRACK AND BRIDGES. True and complete copies of
all
periodic Track and bridge inspections and
exemption reports in the possession or
under the control of the Company or any of
its agents describing the condition
of all of the Track and bridges owned or
operated by the Company have been
provided to the Buyer. To the Knowledge of
the Company and except as otherwise
disclosed in the inspection reports listed
on Schedule 3.09 attached hereto
conducted in accordance with (i) the
Railroad Code of 1993, Public Act 354 of
1993 of the State of Michigan, and (ii) the
Company's monthly inspection of lift
rails (connectors) required for moveable
bridges in accordance with the U.S.
Department of Transportation, Federal
Railroad Administration Office of Safety
Inspections, all of such Track and bridges
are in good, safe operating order. To
the Knowledge of the Company, all of the
Track and bridges owned or operated by
the Company are maintained and operated in
Material compliance with all federal,
state and local laws and regulations,
requirements of grants, loan documents or
any other agreements with third
parties.
3.10 REAL ESTATE OWNED. Schedule 3.10 attached hereto provides
a
summary description of all real estate
assets and owned rights-of-way, including
easements, held by the Company and used in
the Business (the "Real Estate"),
other than trackage rights held by the
Company which are described in Schedule
3.12 hereof and the Excluded Assets. Except
as set forth on Schedule 3.10, the
Company holds sufficient rights in and to
all easements or other rights
necessary for perpetual access thereto, and
owns outright all buildings and
other structures, improvements and fixtures
thereon, free and clear of all
mortgages, liens or other encumbrances
whatsoever, except for (i) liens for
taxes, assessments, levies, fees and other
governmental charges which are not
due and payable or which may hereafter be
paid without penalty, (ii) road
crossing agreements or similar rights of
use with or by governmental authorities
or private parties; (iii) leases, pole and
wire agreements, easements, licenses,
permits and similar agreements; (iv)
matters of public record; (v) rights of
reverter that will not be violated as long
as the affected real property is used
for rail freight operations; and (vi)
rights reserved to or vested in any
governmental authority with respect to the
properties or assets or their
regulation, including but not limited to
the rights of the State of Michigan to
require crossing improvements
(collectively, "Permitted Liens"), none of which
Permitted Liens, individually or in the
aggregate, (x) materially interferes
with the ability of the Company to conduct
rail freight operations substantially
as those operations are conducted by the
Company as of the date of the
Agreement, or (y) secures any indebtedness
of the Company. The Company is not in
receipt of any notice that any
structures,
-8-
<PAGE>
improvements, fixtures and equipment on the
Real Estate fail to conform in any
Material respect to any applicable state,
federal and local laws, regulations,
zoning and building ordinances and health
and safety ordinances. To the
Knowledge of the Company, the Real Estate
is zoned for the various purposes for
which such real estate is currently being
used. Except as set forth on Schedule
3.10, no notice from any governmental body
has been served upon, or received by,
the Company or either of the Sellers
claiming any violation of any such law,
regulation, code or ordinance, or requiring
any substantial work, repairs,
construction, alterations or installation
on or in connection with the Real
Estate which has not been complied with.
Except as disclosed on Schedule 3.10,
there are no outstanding assessments or
pending assessments to which the Real
Estate is subject. The physical condition
of the Track, the Tangible Personal
Property and the Rail Lines, and the
Company's title to same, will be sufficient
on the date of Closing to enable Buyer to
conduct rail freight transportation
operations over all or any portion of the
Rail Lines on the day following the
date of Closing, and the rail corridors
described on Schedule 1.01(a)(i)
constitute continuous rail corridors
between the endpoints of the Rail Lines.
The Rail Lines constitute a continuous rail
corridor between the various end
points, and the Company has continuously
conducted rail operations over and
across the Rail Lines during the period of
the Company's ownership thereof.
3.11 REAL ESTATE LEASED.
(a) Schedule 3.11 attached hereto sets forth a list and
summary description of all real estate
leased to or by the Company (including
leases for right-of-way, licenses and other
right of access documents) ("Leased
Real Estate"), other than trackage rights
held by the Company which are
described in Schedule 3.12 hereof and the
Excluded Assets, and all leases,
subleases, licenses and other agreements by
which the Leased Real Estate was
leased to or by the Company ("Leases")
including the name of the landlord and
the name of the tenant. The Leased Real
Estate and the Leases are separately
categorized and listed on Schedule 3.11
based upon whether the Company is
ultimately the landlord or tenant pursuant
to the Leases. Accurate and complete
copies of all leases of Leased Real Estate
shall be furnished to Buyer by or
before Closing.
All Leases are in full force and effect and constitute legal,
valid and binding obligations of the
respective parties thereto enforceable in
accordance with their terms, except as such
enforcement may be limited by
general equitable principles or by
applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial
decisions from time to time in effect
which affect creditors' rights generally,
and grant the leasehold estates they
purport to grant free and clear of all
mortgages, liens or other encumbrances
whatsoever, except as stated on Schedule
3.11. To the Knowledge of the Company,
there is not under any of such instruments
any existing or claimed default,
event of default or event which with notice
or lapse of time or both would
constitute an event of default, including
the consummation of the transactions
contemplated by this Agreement. The Company
is not in receipt of any notice that
any structures, improvements, fixtures and
equipment on the Leased Real Estate
fail to conform in any Material respect to
any applicable state, federal and
local laws, regulations, zoning and
building ordinances and health and safety
ordinances. To the Knowledge of the
Company, the Leased Real Estate is zoned for
the various purposes for which such real
estate is currently being used. Except
as set forth on Schedule 3.11, no notice
from any governmental body has been
served upon, or received by, the Company or
either of the Sellers claiming any
violation of any such law, regulation, code
or ordinance, or requiring any
substantial work, repairs, construction,
alterations or installation on or in
connection with the Leased Real Estate
which has not been complied with. Except
as set forth on Schedule 3.11, rental
and/or license payments owing under such
Leases have been collected by the Company
in the ordinary course of business,
all rental or license payments owing to the
Company as landlord under such
Leases have been collected by the Company
in the ordinary course of business.
(b) Schedule 3.11 includes all licenses, crossing right
agreements and other agreements encumbering
or affecting any of the Real Estate
or Leased Real Estate which is owned by the
Company, granting access to third
parties from the Company. The rents or
revenues derived from these licenses,
crossing right agreements, and other
agreements are paid and current and listed
on Schedule 3.11, but no more than one
installment is paid in advance and the
rents and revenues are consistent with
those reflected on the Financial
Statements.
(c) The Company shall provide the Buyer with addresses and
contact information for all tenants and
licensees and, if requested by Buyer,
the Company shall notify all such tenants
and licensees of this transaction and
the need to forward future rents and
revenues to the Buyer.
-9-
<PAGE>
3.12 OPERATING AGREEMENTS. Schedule 3.12 attached hereto contains
an
accurate and complete list of all current
operating agreements between the
Company and any third party (the "Operating
Agreements"); provided, however, the
parties acknowledge that certain operating
rights of the Company result from
agreements entered into by the Company's
predecessors in interest and the
attached list is based upon the Company's
commercially reasonable efforts to
locate all such operating agreements. Such
Operating Agreements include trackage
rights agreements, interchange agreements,
joint facility contracts, Michigan
Department of Transportation contracts, car
hire agreements, contract switching
agreements and marketing agreements. All of
such agreements are in full force
and effect and constitute legal, valid and
binding obligations of the respective
parties thereto enforceable in accordance
with their terms, except as such
enforcement may be limited by general
equitable principles or by applicable
bankruptcy, insolvency, moratorium, or
similar laws and judicial decisions from
time to time in effect which affect
creditors' rights generally, and to the
Knowledge of the Company there is not under
any of such instruments any existing
or claimed default or event which with
notice or lapse of time or both would
constitute an event of default, including
the consummation of the transactions
contemplated by this Agreement. Accurate
and complete copies of all agreements
referred to in Schedule 3.12 have been
furnished to Buyer.
3.13 LABOR AND EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.13(a) provides a list, as of the date of this
Agreement, showing the names of all
employees of the Company associated with the
Business, their original dates of
employment, job titles and salary rates of pay
for salaried employees and hourly rates for
hourly compensation employees. The
Company is not indebted to nor a creditor
of any employee of the Company,
except, for accrued wages and salaries
payable by their employer.
(b) Except for employees represented by the Transportation
Communications International Union, no
employees of the Company are represented
by any labor union or similar organization
and there are no pending or, to the
Knowledge of the Company, threatened
activities the purpose of which is to
achieve such representation of all or some
of such employees.
(c) The Company is operating and has been operating in
compliance in all material respects with
all Legal Requirements covering
employment and employment practices, terms
and conditions of employment and
wages and hours; and (ii) there is no labor
strike, dispute, slowdown or
stoppage pending or, to the Knowledge of
the Company, threatened against or
affecting the Company, and the Company has
not experienced any work stoppage or
other labor difficulty.
(d) Schedule 3.13(d) provides a description of each "employee
benefit plan" (as defined in Section 3(3)
of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"))
and each personnel policy, employee
manual or other written statements of rules
or policies concerning employment,
stock option plan, collective bargaining
agreement, bonus plan or arrangement,
which is sponsored, maintained or
contributed to by the Sellers or the Company
for the benefit of the employees or agents
of the Company, which has been so
sponsored, maintained or contributed to at
any time during the Company's
existence or with respect to which the
Company has or may have any actual or
contingent liability. True, correct and
complete copies of each of the employee
benefit plans and all other agreements,
policies or arrangements described on
Schedule 3.13(d), including all amendments
thereto, have been furnished to
Buyer. There has also been furn
