EXHIBIT 10.8
RAILCAR CONSTRUCTION AGREEMENT
BY AND BETWEEN
RADER RAILCAR II, INC.
AND
FIRST AMERICAN RAILWAYS, INC.
DATED __________, 199__
TABLE OF CONTENTS
PAGE
1. DEFINITIONS...............................................................1
1.1 "AAA"................................................................1
1.2 "ADA"................................................................1
1.3 "Applicable U.S. Standards"..........................................1
1.4 "Arbitrator".........................................................1
1.5 "ARC"................................................................2
1.6 "ARC Report".........................................................2
1.7 "Change Order".......................................................2
1.8 "Clearance Diagram"..................................................2
1.9 "Complete"...........................................................2
1.10 "Completion Costs"...................................................2
1.11 "Contract Price".....................................................2
1.12 "Damages"............................................................2
1.13 "Delivery Date"......................................................2
1.14 "Dispute Notice".....................................................2
1.16 "Force Majeure"......................................................2
1.17 "Other Costs"........................................................2
1.18 "Operating Trials"...................................................2
1.19 "Owner's Representative".............................................2
1.20 "Payment Notice......................................................2
1.21 "Plans"..............................................................3
1.22 "Production Schedule"................................................3
1.23 "Railcars"...........................................................3
1.24 "Reference Rate".....................................................3
1.25 "Reimbursable Costs".................................................3
1.26 "Specifications".....................................................3
1.27 "Vendor Parts".......................................................3
1.28 "Work"...............................................................3
2. DELIVERY DATE; SCHEDULES.................................................3
3. SCOPE OF WORK............................................................3
4. GENERAL DESCRIPTION OF THE RAILCARS......................................4
4.1 Prior to Construction...............................................4
4.2 At Completion.......................................................4
5. INTERPRETATION...........................................................5
Table of Contents
Page i
PAGE
6. OWNER'S REPRESENTATIVE...................................................5
7. CONTRACT PRICE; TERMS OF PAYMENT AND CONDITIONS PRECEDENT................5
7.1 Contract Price......................................................5
7.2 Terms of Payment....................................................6
8. LIMITED ARBITRATION......................................................7
8.1 Designation.........................................................7
8.2 Limitation of Issues Subject to Arbitration.........................8
8.3 Determination.......................................................8
8.4 Initiation..........................................................8
8.5 Costs...............................................................8
9. DELIVERY AND ACCEPTANCE-OPERATING TRIALS.................................8
9.1 Notification........................................................8
9.2 Conduct of Operating Trials.........................................8
9.3 Completion..........................................................9
9.4 Delivery............................................................9
9.5 Indemnity...........................................................9
9.6 Documentation.......................................................9
9.7 Title and Risk of Loss..............................................9
9.8 Interchange Requirements............................................9
10. LIQUIDATED DAMAGES AND FORCE MAJEURE CLAIMS..............................9
10.1 Liquidated Damages..................................................9
10.2 Force Majeure......................................................10
10.3 Delay In Applying Liquidated Damages...............................10
11. CHANGE ORDERS...........................................................10
11.1 Authorized Parties.................................................10
11.2 Procedure..........................................................11
11.3 Cost of Changes....................................................11
12. WARRANTY................................................................11
12.1 Materials and Workmanship.........................................11
12.2 Ride Quality......................................................11
12.3 Engineering and Design Warranty...................................11
12.4 Regulatory Compliance.............................................12
12.5 Warranty Period...................................................12
12.6 Notice of Claim -- Breach of Warranty.............................12
Table of Contents
Page ii
PAGE
12.7 Exterior Dimensions...............................................13
12.8 Third Party Warranties............................................13
12.9 Payments to Vendors...............................................13
12.10 Consequential Damages Precluded...................................13
12.11 Warranty Limitation...............................................14
13. DEFAULT.................................................................14
13.1 Default by Rader..................................................14
13.2 Default by FARI...................................................14
14. REMEDIES................................................................15
14.1 Remedies of FARI..................................................15
14.2 Remedies of Rader.................................................15
14.3 Delays Due to Force Majeure.......................................16
15. FARI STANDBY LETTER OF CREDIT...........................................16
15.1 Posting of Letter of Credit.......................................16
15.2 Draw Procedure....................................................16
15.3 Issuing Bank......................................................16
15.4 Payment Under Letter of Credit....................................16
16. FARI'S SECURITY INTEREST................................................17
16.1 Grant.............................................................17
16.2 Rights Upon Default By Rader......................................17
16.3 Breach by FARI....................................................17
16.4 Termination.......................................................17
17. RADER'S SECURITY INTEREST...............................................17
17.1 Grant.............................................................17
17.2 Right Upon Default by FARI........................................17
17.3 Breach by Rader...................................................17
17.4 Termination.......................................................17
18. REPRESENTATIONS.........................................................18
18.1 By FARI...........................................................18
18.2 By Rader..........................................................18
19. CURRENCY.................................................................8
20. INSURANCE...............................................................18
21. TAX LIABILITY...........................................................19
Table of Contents
Page iii
PAGE
22. PATENTS, TRADEMARKS, TRADE SECRETS AND COPYRIGHTS.......................19
23. JURISDICTION, VENUE AND GOVERNING LAW...................................19
24. ATTORNEY'S FEES.........................................................20
25. NOTICE..................................................................20
26. ASSIGNMENT..............................................................20
27. TIME OF THE ESSENCE.....................................................21
28. WAIVER..................................................................21
29. BINDING AGREEMENT.......................................................21
30. SEVERABILITY............................................................22
31. ASSIGNMENT AND SUBCONTRACTING...........................................22
32. SURVIVAL................................................................22
33. AMENDMENTS..............................................................22
34. INDEPENDENT CONTRACTOR..................................................22
35. HEADINGS................................................................22
36. PUBLICITY...............................................................22
37. COUNTERPARTS............................................................23
38. NEGOTIATED AGREEMENT....................................................23
39. ENTIRE AGREEMENT........................................................23
40. CONFIDENTIALITY AND CONFIDENTIAL INFORMATION............................23
Table of Contents
Page iv
TABLE OF APPENDICES
APPENDIX A PLANS
APPENDIX B SPECIFICATIONS
APPENDIX C CHANGE ORDER FORM
APPENDIX D PRODUCTION SCHEDULE
APPENDIX E DESIGN DECISION SCHEDULE
APPENDIX F BILL OF SALE
APPENDIX G ACKNOWLEDGMENT OF DELIVERY
APPENDIX H FINITE ELEMENT ANALYSIS
APPENDIX I CLEARANCE DIAGRAM
Table of Appendices
Page 1
RAILCAR CONSTRUCTION AGREEMENT
THIS RAILCAR CONSTRUCTION AGREEMENT ("AGREEMENT") is entered into
this _____ day of __________, 199__, by and between Rader Railcar II, Inc., a
Colorado corporation ("Rader") and First American Railways, Inc., a Florida
corporation ("FARI").
RECITALS:
A. Rader is engaged in the business of constructing specially
outfitted passenger railroad cars.
B. FARI is engaged in the business of providing rail services to
the public.
C. FARI desires to have Rader construct twelve (12) Railcars to
the Specifications set forth in this Agreement and to purchase such Railcars
from Rader on the terms set forth in this Agreement for use in FARI's rail
operations in Florida.
D. Rader desires to construct the Railcars for FARI and to sell
the Railcars to FARI on the terms set forth in this Agreement.
AGREEMENT:
NOW THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS
In addition to other defined terms contained in this
Agreement, the following definitions shall apply:
1.1 "AAA" has the meaning assigned in Section 8 hereof.
1.2 "ADA" means the Americans with Disabilities Act, as
amended.
1.3 APPLICABLE U.S. "STANDARDS" means those standards in
effect on the effective date hereof imposed on the Railcars by: (i) the
Association of American Railroads ("AAR"); (ii) the Federal Railroad
Administration; and (iii) the standard maintenance practices of AMTRAK (Sup No.
46617) for the overhaul of heavy passenger trucks.
1.4 "ARBITRATOR" shall have the meaning assigned in Section 8
hereof.
1.5 "ARC" means ARC Group, Inc., which company has been
engaged by Rader to review engineering and design of the modification and
reconstruction specifications that Rader will implement with respect to the
Railcar.
1.6 "ARC REPORT" means the document to be prepared by ARC at
the request of Rader to review engineering and design of the modification and
reconstruction specifications that Rader will implement with respect to the
Railcar.
1.7 "CHANGE ORDER" means a change to the terms of this
Agreement or any appendix hereto effectuated in accordance with Section 11
hereof. The form approved by the parties to effect a Change Order is attached as
APPENDIX C.
"CLEARANCE DIAGRAM" means the clearance plate requirements imposed
by AMTRAK for railcar interchange service and operation. The drawings and/or
plans necessary for FARI to request approval for interchange service and
operation are attached as APPENDIX I.
1.9 "COMPLETE" whenever it appears in this Agreement or on
APPENDIX G shall refer to substantial completion without regard to whether the
term "SUBSTANTIAL" also appears, provided that the Railcars shall be
substantially complete and will be free from material cosmetic incompletion when
delivered in accordance with the terms hereof.
1.10 "COMPLETION COSTS" has the meaning assigned in Section
14.1(b) hereof.
1.11 "CONTRACT PRICE" shall have the meaning assigned in
Section 7.1 hereof.
1.12 "DAMAGES" has the meaning assigned in Section 14.1(b)
hereof.
1.13 "DELIVERY DATE" means the date agreed to by the parties
under Section 2 hereof.
1.14 "DISPUTE NOTICE" shall have the meaning assigned in
Section 7.2(f).
1.15 "EXPIRATION DATE" has the meaning assigned in Section 2
hereof.
1.16 "FORCE MAJEURE" shall have the meaning assigned in
Section 10.2 hereof.
1.17 "OTHER COSTS" has the meaning assigned in Section 14
hereof.
1.18 "OPERATING TRIALS" shall have the meaning assigned in
Section 9 of this Agreement.
1.19 "OWNER'S REPRESENTATIVE" shall have the meaning assigned
in Section 6 of this Agreement.
-2-
1.20 "PAYMENT NOTICE" shall have the meaning assigned in
Section 7.2(e).
1.21 "PLANS" shall mean the general arrangement drawings and
plan documents attached hereto as APPENDIX A.
1.22 "PRODUCTION SCHEDULE" is the schedule for completion of
the Work to be agreed to by the parties in accordance with Section 2 hereof.
1.23 "RAILCARS" means the passenger railcars (denoted by car
numbers in Section 6 hereof) that Rader shall construct for and sell to FARI in
accordance with the terms of this Agreement.
1.24 "REFERENCE RATE" shall have the meaning assigned in
Section 7.2(g) hereof.
1.25 REIMBURSABLE COSTS" has the meaning assigned in Section
14.1(b) hereof.
1.26 "SPECIFICATIONS" shall mean a description of the
technical responsibilities of Rader and the specific technical and design
requirements to construct the Railcars for use by FARI in its business. The
Specifications are attached hereto as APPENDIX B. The Specifications also
include outlines and listings of Specifications pertaining to the furniture,
fixtures, equipment and fabrics that will be installed on or in the Railcars,
which Specifications have been or will be initialed and dated by each party
through their duly authorized representatives for incorporation into APPENDIX B.
The Specifications also include the Recommended Fire Safety Practices For Rail
Transit Material Selection which are attached hereto as a part of APPENDIX B.
1.27 "VENDOR PARTS" shall have the meaning assigned in Section
12.8(a).
1.28 "WORK" means all design services, fabrication,
supervision, assembly, labor, materials, systems, supplies, tools, equipment and
machinery provided by Rader and required to complete and deliver the Railcars in
accordance with the requirements set forth in this Agreement, the Plans and the
Specifications.
2. DELIVERY DATE; SCHEDULES
The Delivery Date for the Railcars shall be September 1, 1997
unless otherwise mutually agreed to by the parties hereto. The parties
acknowledge that they shall each execute this Agreement and, within thirty (30)
days after such execution, the parties shall mutually agree upon the Production
Schedule to be attached hereto as APPENDIX D and the Design Decision Schedule to
be attached hereto as APPENDIX E. Upon completion of such Schedules, such
Schedules shall be attached to this Agreement.
-3-
3. SCOPE OF WORK
Rader shall construct the Railcars at one of its plants in the
Denver, Colorado area and will furnish all labor, materials, supplies and
equipment and perform all Work necessary to design, build, test, complete and
deliver the Railcars to FARI in accordance with the Plans and in accordance with
the Specifications. Rader will provide FARI with drawings and/or plans complying
with the Clearance Diagram to assist FARI in requesting approvals for
interchange service and operations on a timely basis as to permit such approvals
of the Railcars before or forthwith upon delivery.
4. GENERAL DESCRIPTION OF THE RAILCARS
4.1 PRIOR TO CONSTRUCTION. The Railcars will be existing
railcars, which are being extensively modified in accordance with the Plans and
Specifications, utilizing only the existing railcar lower level steel frame and
end collision posts. As and when called for in the Plans and Specifications,
Rader will inspect and take necessary steps to repair the existing railcar
structures to make them suitable for rebuilding in accordance with the Plans and
Specifications. As and when required by the Plans and Specifications, the
Railcar will be outfitted with new crossbearers, new sidesill members, rebuilt
trucks, new steel framework, new steel walls on both levels, and a glass and
steel dome for panoramic viewing. All installed components will be of new
materials.
4.2 AT COMPLETION. Three different models of Railcars are to
be constructed pursuant to the terms of this Agreement: (i) seven (7) full dome
car(s); (ii) four (4) bilevel car(s); and (iii) one (1) power/bag
car. In addition, two (2) locomotive modifications are being provided by Rader
under this Agreement.
(a) FULL DOME CARS. The seven (7) full dome cars will be
single-level cars with dome glass windows the full length of
the car. Each full dome car will have an 80 passenger capacity with food service
capability.
(b) BILEVEL CARS. The bilevel cars will consist of one
(1) dance/lounge car, one (1) video game car, one (1) gift
shop/lounge car, and one (1) show (theater) car.
(c) POWER/BAG CAR. The power/bag car will feature a
self-contained electrical generating system capable of serving the power
requirements of the entire train consist. A portion of the car will be allocated
to baggage storage.
(d) LOCOMOTIVE MODIFICATIONS. Modifications will be made
to two (2) locomotives to be leased by FARI. These modifications will consist of
a fiberglass shell to be attached to the locomotives to give the locomotives a
more streamlined appearance.
-4-
(e) RAILCAR IDENTIFICATION. The individual Railcars and
the applicable plan for construction will be identified prior to construction.
5. INTERPRETATION
The general language of the Plans and Specifications is
intended to amplify, explain and implement the provisions of this Agreement. If
any language or provision of the Plans and Specifications is subject to an
interpretation inconsistent with the provisions of this Agreement or an
interpretation which would render this Agreement ambiguous, the terms of the
applicable provision of this Agreement shall control and shall be interpreted
without reference to the Plans and Specifications. The Plans and Specifications
explain each other such that anything in the Plans not in the Specifications or
anything in the Specifications not in the Plans shall be considered to be
embodied in both; however, in the event of a conflict between the Plans and
Specifications, the Specifications shall control.
6. OWNER'S REPRESENTATIVE
FARI shall have the right to appoint an owner's representative
(the "OWNER'S REPRESENTATIVE") to act as its representative throughout the
construction period of the Railcars. Rader will provide, without charge, office
space, computer, telephone and facsimile machine and reasonable access (i.e,
approximately 1 hour per day) to a typist, for one Owner's Representative at all
times during the construction period. For purposes of this Agreement the
construction period commences on the execution date of this Agreement and
continues until completion of the Operational Trials under Section 9 of this
Agreement. The construction of the Railcars and all materials and parts procured
by Rader for this purpose may be inspected by the Owner's Representative or any
other persons designated by FARI in writing at Rader's plant during normal
business hours. All inspections by such persons will be made in such a way that
the construction process is not hindered or delayed.
7. CONTRACT PRICE; TERMS OF PAYMENT AND CONDITIONS PRECEDENT
7.1 CONTRACT PRICE. The contract price for the performance of
all Work by Rader under this Agreement shall be $9,092,162 ("CONTRACT PRICE")
allocated as follows:
(a) FULL DOME CAR. The price for each of the seven (7)
full dome cars to be built for FARI pursuant to the terms of this Agreement is
$887,040 or $6,209,280 in the aggregate.
(b) BILEVEL CAR. The price for each of the two (2) lounge
bilevel cars to be built for FARI pursuant to the terms of this
Agreement is $498,960 or $997,920 in the aggregate. The price for each of the
video game and show cars is $554,400 or $1,108,800 in the aggregate.
-5-
(c) POWER/BAG CAR. The price for the single power/baggage
car to be built for FARI pursuant to the terms of this Agreement is $498,960.
(d) LOCOMOTIVE MODIFICATION. The aggregate price for both
of the locomotive modifications to be furnished to FARI pursuant to this
Agreement is $277,200.
7.2 TERMS OF PAYMENT.
(a) DOWN PAYMENT. Upon execution of this Agreement by
FARI, FARI shall pay Rader the sum of $1,818,432 or 20% of the aggregate
Contract Price (as adjusted) described in Section 7.1 hereof, as an advance
payment on the Contract Price for the Railcars and locomotive modifications to
be constructed and purchased under this Agreement.
(b) PERIODIC PAYMENTS. Provided that each stage of the
Work for each Railcar as set out below has been performed and Payment Notice (as
hereinafter defined) has been delivered and not disputed in any material
respect, FARI shall be obligated to pay Rader thirteen (12) monthly installments
of $362,001 for full dome Railcars; $122,821 for the bilevel Railcars; $29,089
for the power/bag Railcar and $16,160 for locomotive modifications.
(c) PRODUCTION SCHEDULE. The schedules set out in
APPENDIX D set forth Work to be accomplished on each type of Railcar and the
date such work is to be accomplished. Further, APPENDIX D sets forth payment
schedules for each type of Railcar once Work detailed the Schedules is
accomplished.
(d) DESIGN DECISIONS. Subject to Section 2, APPENDIX E
sets forth design and/or material decisions to be made by FARI on each type of
Railcar and the dates by which such decisions must be finalized in order for
Rader to accomplish the Production Schedule set forth in the above mentioned
APPENDIX D. Any delays in design and/or material decisions by FARI shall extend,
day-for-day, delivery dates and dates for commencement of liquidated damages set
forth in Section 10 of this Agreement. If Rader has accomplished all Work as set
forth in APPENDIX D, except for items caused by delay in FARI meeting the
design/materials decision schedule as set forth in APPENDIX E, for purposes of
this Agreement all Work shall be considered performed by Rader and the scheduled
payments shall be due and payable in full by FARI. Late payments shall bear
interest as provided in Section 7.2(g) hereof.
(e) PAYMENT NOTICE. When all Work on each Railcar
specified to be accomplished as of such date has been performed, Rader will
provide FARI with written notice that the Work is performed (the "PAYMENT
NOTICE").
-6-
(f) PAYMENT PROCEDURE. Within 24 hours of receipt of a
Payment Notice, FARI shall either accept the Payment Notice or convey to Rader
through written notification its disagreement as to the stage of Work identified
in the Payment Notice. If there is a continuing disagreement as to the Payment
Notice after Rader receives notification of disagreement, FARI shall submit in
writing, within 72 hours from receipt of Payment Notice, a notice ("DISPUTE
NOTICE") to the Arbitrator as described in Section 8 hereof, with a copy to
Rader, that it is disputing the Payment Notice pursuant to Section 8 hereof. If
FARI fails to submit the Dispute Notice to the Arbitrator within 72 hours of
receipt of the Payment Notice, FARI shall be deemed to have accepted the Payment
Notice at the end of such 72 hour period. If the Arbitrator finds that the Work
specified in the Payment Notice has been performed on the date of delivery of
the Payment Notice, FARI shall be deemed to have accepted the Payment Notice 24
hours after receiving the Payment Notice. If the Arbitrator finds that the Work
specified in the Payment Notice has not been performed on the date of delivery
of the Payment Notice, Rader shall, upon completion of the uncompleted Work
identified by the Arbitrator, deliver a further Payment Notice to FARI which
FARI may accept, dispute or resolve by submitting a Dispute Notice to the
Arbitrator. The making of a payment shall not be construed to be an agreement by
FARI that the applicable Work has been performed.
(g) PAYMENT DUE DATES. Payments shall be due and payable
before the close of banking in Denver, Colorado on the fourth (4th) day after
the date of acceptance or deemed acceptance of the Payment Notice and shall be
made by wire transfer in U.S. funds to an account designated in writing by
Rader. In the event a payment is not made when due, the delivery date for all
the Railcars specified in Section 9 hereof shall be extended one day for each
day payment is late. FARI shall pay interest on any late payment at a rate equal
to the higher of 12% per annum or the reference rate of Bank of America, N.A. &
S.A., plus 2% ("REFERENCE RATE"), in addition to any other remedy available to
Rader at law or in equity. Interest shall accrue at the Reference Rate beginning
on the day after payment is due and shall accrue at the effective Reference Rate
thereafter.
-7-
(h) FINAL PAYMENT. Upon acceptance of the Railcars after
completion of the Operating Trials as described in Section 9 hereof, in
accordance with the terms hereof, FARI will pay Rader $89,059 for each of the
full dome cars and $50,096 for each of the lounge bilevel cars and $55,662 for
each of the game and show bilevel cars; in each case being an amount which,
together with amounts previously paid, equals the Contract Price for such
Railcar specified in Section 7.1 hereof. FARI shall also pay Rader $50,096 for
the power/bag car and $27,830 for locomotive modifications, which are to be
delivered to FARI with the Railcars. The amounts due upon acceptance shall be
reduced by any amounts owing by Rader as liquidated damages pursuant to Section
10 of this Agreement.
8. LIMITED ARBITRATION
8.1 DESIGNATION. For purposes of this Agreement, the
"ARBITRATOR" shall be appointed by mutual agreement of the parties within ten
(10) days after the parties are unable to resolve a dispute hereunder. If the
"Arbitrator" is unable or unwilling to serve at any time, the substitute
Arbitrator shall be assigned by mutual agreement of the parties. If the parties
are unable to mutually agree upon the appointment of an Arbitrator hereunder,
one shall be appointed by a court of competent jurisdiction as provided in
Section 23 hereof. Once an individual commences to act as Arbitrator with
respect to a dispute, he shall act as Arbitrator until resolution of that
dispute unless he becomes unable to continue in which case his next successor
shall act and the first act of a successor who replaces an acting Arbitrator
with respect to an ongoing dispute shall be to determine procedural rules with
respect to succession of future Arbitrators, if needed.
8.2 LIMITATION OF ISSUES SUBJECT TO ARBITRATION. The
arbitration provided for hereunder is not a general agreement by the parties to
submit all disputes under this Agreement to arbitration but is instead a limited
agreement to submit only one kind of issue to arbitration at the time the
dispute arises. The only matter subject to arbitration under this Agreement
shall be: whether or not the Work prerequisite to an installment progress
payment has been performed in accordance with Section 7.2 of this Agreement.
8.3 DETERMINATION. A determination by the Arbitrator that the
Work prerequisite to an installment progress payment has been performed as
provided for by Section 7.2 and the installment payment is due: (i) shall have
the legal effect of a judgment entered by a court of competent jurisdiction;
(ii) shall be the sole and exclusive remedy of the parties hereunder regarding
such issue; and (iii) shall be final and binding on the parties and not subject
to appeal or reconsideration. If after receiving such a ruling from the
Arbitrator and FARI still does not pay, then Rader may file such a decision or
award with the United States Federal District Court Clerk of Colorado (or other
court of competent jurisdiction) in Denver, Colorado, in which case it shall be
the basis for judgment and an order or execution or other appropriate action may
be issued for its enforcement and Rader may rely on such a decision to draw (if
not previously drawn by Rader) on the FARI letter of credit provided for by
Section 15 hereof or realize on its security interest provided for by Section 17
hereof or to exercise any
-8-
other remedy it may have at law or in equity for breach by FARI of its duty to
make the installment payments provided for hereunder.
8.4 INITIATION. Arbitration of a matter subject to
arbitration hereunder shall be initiated by the Dispute Notice. The Arbitration
hearing or such fact or evidentiary submission shall be made as specified by the
Arbitrator no more than 96 hours after the Dispute Notice is effective under the
notice provision of Section 25 hereof.
8.5 COSTS. The Arbitrator shall have the power to allocate
and assess against a non-prevailing party costs and fees of arbitration
including the fees of the Arbitrator as the Arbitrator shall deem just and
equitable.
9. DELIVERY AND ACCEPTANCE-OPERATING TRIALS
9.1 NOTIFICATION. Approximately thirty (30) days prior to the
reasonably expected date for completion of construction, Rader will notify FARI
of the expected schedule for Operating Trials, delivery of the Railcars and the
reasonably estimated cost of delivery as herein set forth.
9.2 CONDUCT OF OPERATING TRIALS. Operating Trials shall
consist of demonstrating the reasonably satisfactory operation of: ride qualify,
air-conditioning and heating systems, airbrake and handbrake systems, coupling
of Railcars, electrical and lighting systems, plumbing systems, doors and entry
ways, a demonstration pull on track, weighing of Railcars and trucks and testing
for water leakage.
9.3 COMPLETION. Upon completion of the Operating Trials FARI
shall make the payments as per Section 7.2 hereof. FARI shall be obligated: (1)
to pay Rader the remaining balance of the Contract Price for each
Railcar and locomotive modifications as set out in Section 7.2; (2) to pay
balances due on any outstanding Change Orders and (3) to accept delivery of the
Railcars when tendered for delivery in the State of Florida.
9.4 DELIVERY. Following performance by FARI of its
obligations to be performed prior to delivery and after completion of Operating
Trials, Rader will arrange for towage of the cars to Florida for delivery and
FARI will reimburse Rader for all reasonable transportation and insurance costs
related to moving the Railcars from Denver to Fort Lauderdale, Florida. Should
another delivery point be identified by FARI, other than Fort Lauderdale, which
would not put Rader at risk for collection and/or payment of sales or use or
similar taxes, Rader will not unreasonably oppose such alternate delivery point
provided FARI agrees to pay for all such delivery and insurance costs and any
related sales, use or similar tax (including interest and penalties) that may
arise.
9.5 INDEMNITY. FARI agrees to indemnify, defend, and hold
Rader harmless from and against the payment of any and all sales, use, or
similar taxes as well as related penalties and interest at any
delivery point selected by Rader or FARI.
-9-
9.6 DOCUMENTATION. Delivery shall occur when the Railcars are
located in Florida pursuant to towage arrangements as provided for upon delivery
of a bill of sale and such other documents as are reasonably required to
transfer title to the purchased Railcars being delivered to FARI. At delivery
FARI will execute a document acknowledging delivery of the Railcars in the form
attached hereto as APPENDIX G. Contemporaneously with delivery, FARI will
release its security interests in the Railcars being delivered and title to the
Railcars at delivery shall be free and clear of any liens and encumbrances other
than Rader's security interest which shall terminate only when the Contract
Price is paid in full in accordance with this Agreement. Rader will also
surrender the letter of credit provided for by Section 15 hereof when the
Contract Price is paid in full in accordance with this Agreement. Delivery and
transfer of documents shall be accomplished at such location in Florida as is
reasonably designated by Rader or other mutually agreed upon location.
9.7 TITLE AND RISK OF LOSS. Title and risk of loss to the
Railcars shall pass from Rader to FARI at the time Rader delivers the Railcars
to a Class 1 railroad in Florida.
9.8 INTERCHANGE REQUIREMENTS. For all purposes under this
Agreement, the approval by any Class 1 Railroad to move the Railcars in
interchange service shall be deemed to constitute compliance with interchange
requirements.
10. LIQUIDATED DAMAGES AND FORCE MAJEURE CLAIMS
10.1 LIQUIDATED DAMAGES. Subject to the provisions of this
Section 10, Rader has agreed to complete construction and Operating Trials for
the Railcars according to the Production Schedule attached as APPENDIX D.
Subject to the provisions of this Section 10, Rader agrees to pay as liquidated
damages on a per Railcar basis, for any delay, and not as a penalty, $500 with
respect to each day of delay or part thereof beginning with 15 days after
Delivery Date as scheduled in APPENDIX D.
10.2 FORCE MAJEURE. Upon of occurrence of a force majeure
("FORCE MAJEURE") event, the date for commencement of the daily liquidated
damages amount shall be extended for each day the Force Majeure event causes
delay in delivery of the Railcars. In the event of such occurrence, Rader shall
notify FARI of the occurrence as promptly as possible and furnish an estimate of
the period of time which delivery will be delayed as a consequence of the
occurrence of such event. A Force Majeure event shall be any event or occurrence
beyond the control of Rader which has the effect of delaying performance of
Rader's obligations hereunder and shall include, but not be limited to, war
(including undeclared conflicts, police actions and revolutions), sabotage,
strikes, labor disputes of any nature, governmental action, interruption of the
transportation, banking or financial system, and shall include weather or other
local conditions that have the effect of delaying completion of Operating Trials
or delay in the delivery of the Railcars provided that no such event shall
constitute a Force Majeure event if it could be avoided by reasonable prudence
of Rader, or could be rectified or terminated by the reasonable efforts of
Rader, acting in good faith.
-10-
10.3 DELAY IN APPLYING LIQUIDATED DAMAGES. The dates for
commencement of operation of the liquidated damages amount shall be further
extended by one (1) day for each day by which there are delays on the part of
FARI in meeting the payment schedule set forth in Section 7 and shall be further
extended by one (1) day for each day FARI is in default in delivering an
additional letter of credit to replace any funds drawn down by Rader under the
letter of credit described in Section 15 hereof and shall be further extended by
one (1) day for each day FARI delays design or material selection as required
under APPENDIX E.
11. CHANGE ORDERS
11.1 AUTHORIZED PARTIES. Changes to this Agreement or the
Plans and Specifications may be requested by either party in accordance with
this section; however, such changes shall be effective only when incorporated in
a written document executed on behalf of both parties specifying the change to
be effected in sufficient detail, the effect of the change on the Delivery Date
and the Contract Price, and the timing of payment of any increase, or credit in
respect of and decrease to the Contract Price. A written change may be executed
only:
On behalf of Rader, by: Authority
Thomas G. Rader, President Unlimited
On behalf of FARI, by:
----------------------------- $------------
----------------------------- $------------
----------------------------- $------------
11.2 PROCEDURE. Oral directions, agreements or other
attempted modifications shall be ineffective to modify the obligations of the
parties hereto even if they would otherwise amount to effective amendments to
this Agreement at law. A written agreement which does not bear the signatures of
one of the above mentioned authorities of both Rader and FARI shall be
ineffective. Either of the parties may change the person authorized to execute
Change Orders by written directive executed by an authorized officer and
delivered to the other party under Section 25. The form of the Change Order to
be used is attached as APPENDIX C.
11.3 COST OF CHANGES. Rader shall determine the cost of
changes based on the incremental direct costs of materials and labor, plus 200%
of such incremental direct labor costs to cover overhead expenses and 25% of
such incremental direct material and labor costs for profit.
-11-
12. WARRANTY
12.1 MATERIALS AND WORKMANSHIP. Subject to Section 12.5,
Rader warrants that the Railcars, at the time of delivery by Rader, shall be
free from:
(a) Material defects in material, components, and
workmanship.
(b) Material defects arising from failure to conform
to the Plans and Specifications, except as to
portions thereof stated to be estimates or
approximations or stated to be design objectives.
12.2 RIDE QUALITY. Subject to Section 12.5, Rader warrants
that at completion of the Operating Trials in accordance with Section 9, the
Railcars will have a ride quality and comfort level equivalent to Princess Tours
Ultra Dome cars. By acceptance of any Railcar at Operating Trials, FARI agrees
that the Railcars comply with this warranty for all purposes under this
Agreement.
12.3 ENGINEERING AND DESIGN WARRANTY. Railcars shall meet the
Applicable U.S. Standards. All electrical work shall conform to applicable
sections in effect as of date of this Agreement of the NEC and with AMTRAK
standards for passenger railcar electrical systems. All welding shall conform to
applicable recommendations of AWS. Noise levels shall be equivalent to Princess
Tours Ultra Dome cars. Car shall comply with ADA regulations in effect as of
date of this Agreement for trains not requiring access to services in other
cars.
Changes in above mentioned Applicable U.S. Standards
after the date of signing this Agreement and during the construction period
which require design or construction modifications will be incorporated into the
construction process through the Change Order process detailed in Section 11.
ARC will have performed a Finite Element Analysis of the
proposed structure for construction of the Full Dome Car and a Finite Element
Analysis of the Collision Posts of the Full Dome and Bilevel cars and will have
rendered an opinion in substantially the form attached hereto as APPENDIX H.
12.4 REGULATORY COMPLIANCE. Rader warrants that the Railcar
shall be constructed in accordance with the Applicable U.S. Standards and shall
comply with the interchange requirements of Class 1 railroads provided by the
AAR.
12.5 WARRANTY PERIOD. The warranty provided by Rader
hereunder shall be applicable solely to defects which occur or become apparent
to FARI within a period three hundred and sixty-five (365) days following
delivery and acceptance of the Railcars by FARI. This warranty will include all
material and labor costs required to correct the defect. With respect to defects
which occur or come to the attention of FARI on or after the three hundred and
-12-
sixty-sixth (366) day following delivery and acceptance of the Railcars under
this Agreement, responsibility for such defects shall rest solely with FARI and
FARI hereby releases Rader from any and all liability associated therewith and
does further agree to defend, indemnify, and hold Rader harmless and hereby
releases Rader from any liability related thereto and indemnifies Rader from any
and all liabilities and costs (including legal and attorney's fees) associated
therewith.
(a) NO REMOVAL OF SYSTEM FROM SERVICE. If any installed
system on a Railcar is defective and the Railcar is not removed from service,
the warranty on such system will be extended by one (1) day for each day during
the warranty period in excess of 10 cumulative days that such system is out of
service;
(b) REMOVAL FROM SERVICE. If any Railcar is removed from
service as a result of a defect, the warranty for such Railcar shall be extended
1 day for each day during the warranty period in excess of 5 cumulative days
that such Railcar is out of service;
(c) TIME PERIOD. In each case described in Section
12.5(a) or (b), for other than regularly scheduled maintenance, the number of
days removed from service will be calculated from the date written notice of
defect is received by Rader until the date such defect is rectified so as to be
fit to return to service, regardless of whether such Railcar is actually
returned to service.
12.6 NOTICE OF CLAIM -- BREACH OF WARRANTY. In the event of
claim, defect or damage for which Rader would be liable under the terms of this
Agreement, FARI shall notify Rader within 48 hours after FARI learns of such
defect, claim, or damage except that in all events FARI shall be obligated to
notify Rader of such an event in writing not later than seven (7) consecutive
days after its discovery by FARI. This notification is to be made by FAX
transmission and is to be followed by a written warranty claim within fifteen
(15) consecutive days of initial notification. Rader shall have fifteen (15)
consecutive days from receipt of written notice of claim to respond in writing,
either denying or accepting financial responsibility for such claim. In the
event that Rader refuses to accept financial responsibility for such claim made
by FARI with respect to the Railcars, FARI may commence litigation. If any
litigation is not commenced by FARI within one (1) year of the date on which
notice of such rejection is received, such litigation shall be barred forever
and any remedy at law or in equity which FARI or any of its affiliates might
have shall be deemed released, waived and terminated. This Agreement strictly
establishes the time periods within which claims for breach of warranties may be
brought by FARI under this Agreement.
-13-
12.7 EXTERIOR DIMENSIONS. Rader does not represent, warrant,
or covenant (either expressly or implied) that the exterior dimensions of the
Railcars, as provided for by the Plans and Specifications, permit operation on
the rail track system to be used by FARI including tunnels, structures, and
repair and maintenance facilities, but does warrant that the exterior dimensions
of the Railcars, as built, will not exceed the exterior dimensions set out in
the Clearance Diagram attached as APPENDIX I.
12.8 THIRD PARTY WARRANTIES.
(a) VENDOR PARTS. Rader has made or shall make
reasonable efforts to obtain standard manufacturers' warranties from third party
manufacturers with respect to components, parts, and materials supplied by such
manufacturers ("VENDOR PARTS") and to the extent obtained will assign to the
extent lawfully permitted such warranties to FARI at the expiry of the warranty
period provided for by this Section 12.
(b) WARRANTIES. The warranties and all other terms and
conditions of this Section 12 shall apply to Vendor Parts for 365 days following
delivery and acceptance as if the Vendor Parts had been manufactured by Rader,
and FARI will cooperate with Rader in pursuing remedies against manufacturers of
Vendor Parts under the warranties assigned to FARI pursuant to the foregoing
paragraph, provided that Rader's obligations with respect to Vendor Parts under
this Section 12 shall be independent of the performance by the manufacturers of
Vendor Parts of any obligations under applicable warranties.
12.9 PAYMENTS TO VENDORS. Rader will indemnify and hold
harmless FARI against any and all claims from vendors supplying materials, parts
or labor relating to the construction of Railcars under this Agreement.
12.10 CONSEQUENTIAL DAMAGES PRECLUDED. Rader's sole
obligation to FARI with respect to the warranties provided for hereunder shall
be to repair or replace defective parts or components. FARI shall notify Rader
of any warranty repair needed. If Rader cannot perform the required work within
a reasonable time period under the circumstances, FARI may proceed to repair or
replace the parts or components at Rader's expense in a reasonable economic
manner and be reimbursed by Rader within 30 days for all reasonable direct
material and labor costs for such repair or replacement, subject to such works
being a valid warranty claim, under the circumstances.
Notwithstanding anything contained in this Agreement, Rader
shall have no liability or responsibility other than as specifically set forth
herein, and without limitation, Rader shall have no liability or responsibility
for breach of warranty (express or implied) except as expressly set forth in
this Agreement or for consequential or punitive damages, that is, any claim for
damage other than repair or replacement of defective parts or components.
-14-
12.11 WARRANTY LIMITATION. THE FOREGOING EXPRESS LIMITED
WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED AND ALL OTHER
WARRANTY OR OTHER CONTRACTUAL OBLIGATION IS EXPRESSLY EXCLUDED. SUCH EXCLUSION
SHALL BE APPLICABLE GENERALLY AND SPECIFICALLY TO IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE (except for the express
warranty set forth above).
13. DEFAULT.
13.1 DEFAULT BY RADER. During the term of this Agreement, the
occurrence of one or more of the following events (after applicable notice and
cure has expired) shall be deemed an "EVENT OF DEFAULT" by Rader:
(a) MATERIAL DEFAULT. Rader shall default in any material
respect in the observance or performance of any covenant, condition or
obligation of Rader contained herein, including: Rader's failure to perform the
Work in a skilled and expeditious manner; the failure of the Railcar to meet any
warranty obligation provided herein; and if such Event of Default continues for
thirty (30) days after written notice to Rader specifying the Event of Default
and demanding that the same be remedied; provided, however, that such thirty
(30) day period shall be extended provided Rader has commenced and is diligently
pursuing such cure;
(b) BANKRUPTCY. Rader shall: (i) file a petition
commencing a voluntary bankruptcy or similar proceeding under any applicable
bankruptcy or similar law, (ii) be declared bankrupt or insolvent under any law
relating to bankruptcy, or (iii) admit in writing its inability to pay its debts
as they become due; or
(c) RECEIVER. A custodian, receiver, trustee or
liquidator shall be appointed in any proceeding brought against Rader and shall
not be discharged within ninety (90) days after such appointment.
13.2 DEFAULT BY FARI. During the term of this Agreement, the
occurrence of one or more of the following events (after applicable notice and
cure has expired) shall be deemed an "EVENT OF DEFAULT" as to FARI:
(a) MATERIAL DEFAULT. FARI shall default in any material
respect in the observance or performance of any other covenant, condition or
obligation of FARI contained herein, and if such Event of Default continues for
thirty (30) days after written notice to FARI specifying the default and
demanding that the same be remedied; provided, however, that such thirty (30)
day period shall be extended provided FARI has commenced and is diligently
pursuing such cure;
-15-
(b) BANKRUPTCY. FARI shall: (i) file a petition
commencing a voluntary bankruptcy or similar proceeding under any applicable
bankruptcy or similar law, (ii) be declared bankrupt or insolvent under any law
relating to bankruptcy, or (iii) admit in writing its inability to pay its debts
as they become due; or
(c) RECEIVER. A custodian, receiver, trustee or
liquidator shall be appointed in any proceeding brought against FARI and shall
not be discharged within ninety (90) days after such appointment.
14. REMEDIES.
14.1 REMEDIES OF FARI. Upon the occurrence of an Event of
Default by Rader, which is not cured, FARI may:
(a) PENALTY. Continue to rely on the liquidated damages
provision set forth in Section 10 above.
(b) FORECLOSE. Exercise its rights under Section 16.2
hereof.
(c) COMPLETE CAR. Rader shall transfer, and FARI shall
accept title to an unfinished Railcar and FARI shall complete construction of
the Railcar and Rader shall pay to FARI: (i) any and all costs of completing the
Railcar ("COMPLETION COSTS"); plus (ii) $100,000 US representing complete
payment and satisfaction of any and all damages arising as a result of Rader's
failure to complete the renovation of the Railcar (the "DAMAGES"); plus (iii)
any and all costs associated with enforcing FARI's rights hereunder, including
reasonable attorneys' fees and court costs ("OTHER COSTS"). The above Completion
Costs, Damages and Other Costs shall collectively be referred to as the
"REIMBURSABLE COSTS," and in no event shall such Reimbursable Costs exceed more
than $150,000 per unfinished Railcar.
14.2 REMEDIES OF RADER. Upon the occurrence of an Event of
Default by FARI, which is not cured, Rader may:
(a) TERMINATION. Terminate this Agreement by written
notice to FARI, and recover from FARI any damages proximately
caused by the FARI default, including the profit earned by Rader prior to the
FARI default.
(b) FORECLOSE. Exercise its rights under Sections 16.3,
16.4 and Section 17 hereof.
(c) REMEDIES NOT EXCLUSIVE. Rader's remedies set forth in
this Section 14.2 shall not be exclusive, but shall be cumulative and may be
exercised
-16-
concurrently or consecutively, and shall be in addition to all other
remedies Rader may have under this Agreement or provided by law.
14.3 DELAYS DUE TO FORCE MAJEURE. Rader shall be granted an
extension of time, without incurring delay penalties, to deliver the Railcar
should the delay be the result of Force Majeure as defined in Section 10.2
hereof.
15. FARI STANDBY LETTER OF CREDIT
15.1 POSTING OF LETTER OF CREDIT. Within five (5) business
days after signing this Agreement, FARI will furnish to Rader a clean
irrevocable standby letter of credit for the sum of $2,000,000, in form
satisfactory to Rader's legal counsel, in favor of Rader, payable at the counter
of Norwest Bank, N.A., in Denver, Colorado, USA, or other financial institution
acceptable to Rader having an expiration date of December 31, 1997 or a date 30
days later than the date of the letter of credit, whichever is later. At any
time Rader draws on the letter of credit provided hereunder, on the day
following the day on which the draw occurs, FARI will deliver to Rader a new
additional clean irrevocable standby letter of credit in the amount of the draw
which additional letter of credit shall be in the same form as the letter of
credit provided for herein.
15.2 DRAW PROCEDURE. In the event of a default by FARI that
has not been timely cured, Rader may draw on the letter of credit for the entire
amount of any unpaid amount due Rader under this Agreement plus
interest as provided for by Section 7.2.
15.3 ISSUING BANK. Norwest Bank N.A. of Denver, Colorado, or
other financial institution acceptable to Rader shall be the issuing or
negotiating bank and is authorized to reimburse itself for drawings by debiting
the account of the issuing bank with Norwest Bank of Denver, Colorado, or other
financial institution acceptable to Rader.
15.4 PAYMENT UNDER LETTER OF CREDIT. The letter of credit is
to be payable immediately and without further condition against presentation of
a draft drawn on Norwest Bank N.A. or other financial institution acceptable to
Rader in the amount of the draw and a certificate executed on behalf of Rader by
a person authorized to execute such a certificate that FARI is in default under
this Agreement, such default has not been timely cured and the amount that Rader
desires to draw.
-17-
16. FARI'S SECURITY INTEREST.
16.1 GRANT. Rader hereby grants FARI a security interest
under Article 9 of the Uniform Commercial Code as adopted in the State of
Colorado or other applicable law in and to the Railcars, work in process,
and all goods and materials identified to performance of this contract and in
addition in and to all Plans and Specifications for the Railcars to secure
Rader's performance under this Agreement.
16.2 RIGHTS UPON DEFAULT BY RADER. In the event of default,
FARI shall have all the rights of a secured party under the Uniform Commercial
Code including but not limited to the right to sell the collateral at a private
sale to be held on thirty (30) days notice under Section 25 hereof at which
private sale, FARI may be the purchaser EXCEPT THAT in the event of realization
on such security interest by FARI, FARI's right as a secured party and the right
of any successor in interest whether by private sale or sale following a
judicial foreclosure to use the Plans and Specifications for the Railcars shall
be limited to the right to use such Plans and specifications for the sole
purpose of completing the Railcars which are the subject matter of this
Agreement and not for the purpose of constructing other Railcars.
16.3 BREACH BY FARI. In the event of breach by FARI of its
obligations under this Agreement, this security interest shall terminate and
FARI shall upon demand by Rader execute appropriate security interest
termination documents.
16.4 TERMINATION. FARI's security interest shall terminate
upon delivery of the Railcars in accordance with Section 9 hereof.
17. RADER'S SECURITY INTEREST.
17.1 GRANT. FARI hereby grants Rader a security interest
under Article 9 of the Uniform Commercial Code as adopted in the State of
Colorado or other applicable law in and to any interest FARI may have in
the Railcars, work in process and all goods, components, and materials
identified to performance of this Agreement. Such security interest shall secure
FARI's performance of its obligations under this Agreement including but not
limited to its duty to make payments on account of the Purchase Price when due.
17.2 RIGHT UPON DEFAULT BY FARI. In the event of default by
FARI, Rader shall have all of the rights of a secured party under the Uniform
Commercial Code as in effect in the State of Colorado
including but not limited to the right of private sale to be held on thirty (30)
days notice hereunder at which private sale, at which private sale Rader may be
the purchaser.
17.3 BREACH BY RADER. In the event of breach by Rader of its
obligations under this Agreement, this security interest shall terminate and
Rader shall upon demand by FARI execute appropriate security interest
termination documents.
-18-
17.4 TERMINATION. Rader's security interest shall terminate
when the Purchase Price is paid in full as described in Section 9 hereof.
18. REPRESENTATIONS.
18.1 BY FARI. FARI represents to Rader, the following:
(a) AUTHORITY. FARI has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement,
and each of the execution, delivery and performance by FARI of this Agreement
has been duly authorized by all necessary action on the part of FARI and
requires no additional consent to be effective.
(b) BINDING. This Agreement constitutes a legal, valid
and binding obligation of FARI enforceable against it in accordance with its
terms except to the extent that enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency or moratorium laws affecting the
enforcement of creditors' rights or by the principles governing the availability
of equitable remedies.
18.2 BY RADER. Rader represents to FARI, the following:
(a) AUTHORITY. Rader has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement,
and each of the execution, delivery and performance by Rader of this Agreement
has been duly authorized by all necessary action on the part of Rader and
requires no additional consent to be effective.
(b) BINDING. This Agreement constitutes a legal, valid
and binding obligation of Rader enforceable against it in accordance with its
terms except to the extent that enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency or moratorium laws affecting the
enforcement of creditors' rights or by the principles governing the availability
of equitable remedies.
-19-
(c) MECHANICS LIENS. Rader shall obtain supplier lien
releases from all suppliers with cumulative invoices of $50,000 US or greater
related to the Railcar. In the event a lien is filed against the Railcar, Rader
shall be required to notify FARI of such filing and endeavor to take such steps
to remove such lien prior to the Delivery Date. Prior to the Delivery Date,
Rader represents and warrants to FARI to deliver the Railcar to FARI free and
clear from any and all mechanic's liens.
19. CURRENCY.
All references to currency in the Agreement are to be
considered as stated in US dollars.
20. INSURANCE.
Rader will purchase and maintain a builders all risk
insurance policy on the Railcars in an amount at least equal to the cumulative
amount of payments received from FARI hereunder at any time. Rader shall provide
FARI with a true, correct, and complete copy of the binder for such insurance
policy. In the event of a loss to the Railcars of any nature, Rader may elect to
apply any amount received on account of such insurance policy to construction of
the Railcars and performance of Rader's obligations hereunder in which case this
Agreement shall continue in force or in the alternative, Rader may elect to pay
over to FARI the amount received on account of such insurance policy up to the
total amount of payments received from FARI hereunder, less any amount necessary
to compensate Rader for any materials, parts or work-in-process costs relating
to this Agreement in excess of the aggregate amount of payments received from
FARI since the most recent payment, and to terminate this Agreement in which
case neither FARI nor Rader shall have any other or further obligation to the
other hereunder. FARI may request to receive the amount received on account of
such insurance policy up to the amount of payments received by Rader from FARI,
less any amount necessary to compensate Rader for any materials, parts or
work-in-process costs relating to this Agreement in excess of the aggregate
amount of payments received from FARI since the most recent payment, in which
case if such request is approved by Rader neither FARI nor Rader shall have any
other or further obligation to the other hereunder.
21. TAX LIABILITY.
Payments on account of the Contract Price hereunder shall be
due in full on the dates specified without regard to claims or offsets and the
amount of such payments shall be increased by any sales (State or Federal), use,
value-added or import duty tax liabilities levied on or collected by Rader based
on receipt of the gross amount of the payment or on the transaction contemplated
by this Agreement. The Railcars are not intended to be operated in Colorado and
are to be delivered in Florida for use by FARI in tourist rail operations. FARI
agrees to defend, indemnify, and hold Rader harmless against the payment of any
and all sales (State or Federal), use, value added, import duties or similar
taxes as well as related penalties and interest at any delivery point selected
by Rader and FARI. Should the payment of any of the foregoing taxes be
-20-
required to be paid by Rader as a result of changes in the law after the signing
of the Agreement, FARI agrees to reimburse Rader, in full, in advance of the
payment of such taxes by Rader.
22. PATENTS, TRADEMARKS, TRADE SECRETS AND COPYRIGHTS.
The parties acknowledge that all property rights (including,
but not limited to, patents, trademarks, trade secrets and copyrights) related
to the Railcar as described in the Specifications and any drawings, designs and
other intellectual property rights associated therewith are retained by and
remain the sole property of Rader.
23. JURISDICTION, VENUE AND GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
Colorado other than choice of law rules of that jurisdiction which shall not be
applicable. In the event of litigation, such litigation shall be laid only in
the United States Federal District Court of Colorado at Denver. Jurisdiction in
the event of such litigation may be obtained by service of process in accordance
with applicable court and statutory rules or by thirty (30) days written notice
under the notice provision of this Agreement.
24. ATTORNEY'S FEES.
In the event of litigation arising as a consequence of this
Agreement or the transactions contemplated hereby, the prevailing party shall be
entitled to recover, in addition to other relief available at law or equity, all
allowable costs and reasonable legal and attorney's fees.
25. NOTICE.
Notice hereunder shall be in writing and shall be effective
no later than actual receipt by the party to be notified. Notice may be by any
method reasonably calculated to inform, including deposit in the United States
mail, certified mail, return receipt requested adequate postage prepaid, FAX, or
overnight courier, and properly addressed as follows:
To FARI:
FIRST AMERICAN RAILWAYS, INC.
201 South Biscayne Boulevard, Suite 1402
Miami, Florida 33131
FAX: (305) 565-5144
-21-
To Rader:
RADER RAILCAR II, INC.
10525 E. 40th Avenue, Suite 207
Denver, Colorado 80239
Attention: Mr. Thomas G. Rader
FAX: (303) 375-1895
Notice by mail shall be deemed to be received on the fifth
(5th) business day following deposit in the mail as specified. Notice by FAX
which is received prior to 10:00 A.M. EDT on any weekday which is not a banking
holiday at the place of receipt shall be effective on the date received. Any
other notice by FAX shall be effective at 10:00 A.M. EDT on the first weekday
which is not a banking holiday at the place of receipt following the day on
which such FAX is received.
26. ASSIGNMENT.
Except as expressly provided in this Section, FARI may not
assign its rights or benefits under this Agreement. FARI may, otherwise at any
time with the prior written approval of Rader, such approval not to be
unreasonably withheld (and for the purposes of such approval, Rader may exact
evidence of any proposed assignee's financial capacity to meet FARI's
obligations under this Agreement) assign all (but not less than all) of its
rights and benefits under this Agreement to any person if:
(A) Rader is given thirty (30) days prior written notice of
the proposed assignment; and
(B) the assignee delivers to Rader an instrument in writing
executed by the assignee confirming that it is bound by
and shall perform all of the obligations of FARI under
this Agreement as if it were an original signatory;
provided that no assignment shall relieve FARI of its obligations under this
Agreement. In the event of an assignment contemplated above, any reference in
this Agreement to "FARI" shall be deemed to include the assignee.
27. TIME OF THE ESSENCE.
Time is of the essence of this Agreement.
-22-
28. WAIVER.
Except as expressly provided in this Agreement, no amendment,
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision nor shall any waiver
of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
29. BINDING AGREEMENT.
This Agreement shall inure to the benefit of and be binding
upon the undersigned and their respective legal representatives, successors and
assigns. Whenever in this Agreement a reference to any party is made, such
reference shall be deemed to include a reference to the legal representatives,
successors, and assigns of such party.
30. SEVERABILITY.
The remainder hereof shall not be voided or otherwise
affected by the invalidity of one or more of the terms herein.
31. ASSIGNMENT AND SUBCONTRACTING.
Except as permitted pursuant to this Agreement, neither party
shall assign, subcontract or otherwise delegate any of its rights or obligations
hereunder without the prior written consent of the other party hereto.
32. SURVIVAL.
All warranties, indemnities, intellectual property and
confidentiality rights and obligations provided herein shall survive the
termination, completion or cancellation hereof.
33. AMENDMENTS.
No amendment, modification or waiver of any term hereof shall
be effective unless set forth in a writing signed by FARI and Rader.
34. INDEPENDENT CONTRACTOR.
Rader is an independent contractor for all purposes hereof.
The contract evidenced by this Agreement is not intended to be one of hiring
under the provisions of any workers' compensation or other laws and shall not be
so construed.
35. HEADINGS.
-23-
Headings contained herein are inserted for convenience and
shall have no effect on the interpretation or construction hereof.
36. PUBLICITY.
Each party agrees that no information relative to this
Agreement shall be released for publication, advertising or any other purpose
without the other party's prior written consent.
37. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken together
shall constitute one and the same document.
38. NEGOTIATED AGREEMENT.
This Agreement represents the negotiated agreement of both
parties and shall not be construed against the drafting party.
39. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the
parties with respect to the subject matter herein and supersedes any prior or
contemporaneous agreement or understanding between the parties. No course of
dealing, no usage of trade and no course of performance shall be used to
supplement or explain any term, condition or instruction herein, nor be deemed
to effect any amendment.
40. CONFIDENTIALITY AND CONFIDENTIAL INFORMATION.
This Agreement and the terms and conditions herein are
considered confidential. Neither party hereto shall disclose this Agreement or
its terms to any third party except: (i) their respective accountants, attorneys
or banking and lending institutions; or (ii) pursuant to court order or other
legal process.
-24-
DATED this _____ day of __________, 199__.
RADER RAILCAR II, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
FIRST AMERICAN RAILWAYS, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-25-
APPENDIX A
PLANS
Appendix A
Page 1
APPENDIX B
SPECIFICATIONS
Appendix B
Page 1
APPENDIX C
CHANGE ORDER FORM
Appendix C
Page 1
APPENDIX D
PRODUCTION SCHEDULE
Appendix D
Page 1
APPENDIX E
DESIGN DECISION SCHEDULE
Appendix E
Page 1
APPENDIX F
BILL OF SALE
Appendix F
Page 1
APPENDIX G
ACKNOWLEDGMENT OF DELIVERY
Appendix G
Page 1
APPENDIX H
FINITE ELEMENT ANALYSIS
Appendix H
Page 1
APPENDIX I
CLEARANCE DIAGRAM
Appendix I
Page 1