EXHIBIT 10.8
RAILCAR CONSTRUCTION AGREEMENT
by and between
RADER RAILCAR II, INC.
and
FUN TRAINS, INC.
DATED OCTOBER 23, 1996
RAILCAR CONSTRUCTION AGREEMEENT
THIS RAILCAR CONSTRUCTION AGREEMENT ("AGREEMENT") is entered into this
23RD day of OCTOBER, 1996, by and between Rader Railcar II, Inc., a Colorado
corporation ("RADER") and Fun Trains, Inc., a Florida corporation ("FTI").
RECITALS:
A. Rader is engaged in the business of constructing specially outfitted
passenger railroad cars.
B. FTI is engaged in the business of providing rail services to the
public.
C. FTI desires to have Rader construct up to 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 FTIs rail operations.
D. Rader desires to construct the Railcars for FTI and to sell the
Railcars to FTI on the terms set forth in this Agreement.
E. Rader has furnished FTI with a report of its current financial
condition, and FTI has reviewed and accepted the report.
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 to this Agreement and shall be
substantive provisions of the Agreement:
1.1 "AAA" has the meaning assigned in Section 8 hereof.
1.2 "ACCEPTANCE NOTICE" has the meaning assigned in Section 7.2(f)
hereof.
1.3 "ADA" means the Americans with Disabilities Act, as amended.
1.4 APPLICABLE 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; (iii) the standards imposed by Amtrak regarding
private passenger Railcars plus the standard maintenance practices
of AMTRAK (Sup No. 46617) for the overhaul of heavy passenger
trucks, NEC electrical standards and Amtrak standards for passenger
railcar electrical systems; and (iv) operating rules, procedures and
standards (the "CSX STANDARDS") imposed by CSX Transportation, Inc.
("CXS"), operating rules, procedures and standards (the "FDOT
STANDARDS") imposed by the Florida Department of Transportation
("FDOT") and the operating rules, procedures and standards ("FEC
STANDARDS") of Florida East Coast Railway Company ("FEC"). (provided
however, that the CSX Standards, the FDOT Standards, and the FEC
standards (copies of which are to be delivered to Rader by FTI)
shall only apply to the extent they have been accepted by Rader and
FTI and attached hereto as APPENDIX J.)
1.5 "ARBITRATOR" shall have the meaning assigned in Section 8 hereof.
1.6 "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 Railcars.
1.7 "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 Railcars.
1.8 "CHANGE ORDER" means a change to the terms of this Agreement, any
appendix hereto or other change requested by FTI and agreed to in
writing by Rader, which is effectuated in accordance with Section 11
hereof. The form approved by the parties to effect a Change Order is
attached as APPENDIX C.
1.9 "CLEARANCE DIAGRAM" means the drawings and/or plans necessary for FTI
to request approval for interchange service and operation are
attached as APPENDIX I. Rader shall deliver to FTI on or before
November 15, 1996, a copy of the clearance diagrams for the Railcars.
FTI shall be required to obtain the approval of CSX regarding such
cleamce di on or before December 10, 1996. By executing this
Agreement, FTI acknowledges that Rader is under no obligaton to
obtain any information regarding clearance requirements for the
Railcars and that FTI shall be solely responsible for obtaining such
information and informing Rader thereof. Rader's sole obligation
under this Agreement is to meet the clem-ance requirements delivered
to Rader by FTI pursuant to this Section 1.9..
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1.10 "COMPLETE" whenever it appears in this Agreement or in Appendix G
shall refer to completion in all material respects of all work
required to be performed under this Agreement Completion also
contemplates that the Railcars will be free material cosmetic
incompletion or minor defects when delivered in accordance the terms
hereof. A minor defect shall consist of a condition that does not
interfere with the safe operation of the Railcar in question.
1.11 "CONTRACT PRICE" shall have the meaning assigned in Section 7.1
hereof.
1.12 "DELIVERY DATE" means the dates agreed to by the parties under
Section 2 hereof
1.13 "DISPUTE NOTICE' shall have the meaning assigned in Section 7.2(h).
1.14 "FORCE MAJEURE" shall have the meaning assigned in Section 10 hereof
1.15 "OPERATING TRIALS" shall have the meaning assigned in Section 9.2 of
this Agreement.
1.16 "OWNER'S REPRESENTATIVE" shall have the meaning assigned in Section 6
of this Agreement
1.17 "PAYMENT NOTICE" shall have the meaning assigned in Section 7.2(e).
1.18 "PLANS" shall mean the general arrangement drawings and plan
documents attached hereto as APPENDIX A.
1.19 "PRODUCTION AND PAYMENT SCHEDULE" is the production and payment
schedule for completion of the Work and corresponding payments to be
made to be agreed to by the parties in accordance with Sections 2 and
7.2(c) hereof as reflected in APPENDIX D.
1.20 "RAILCARS" means the passenger railcars (denoted by car letters and
numbers in Section 6 hereof) that Rader shall construct for and sell
to FTI in accordance with the terms of this Agreement.
1.21 "REFERENCE RATE" shall have the meaning assigned in Section 42
hereof.
1.22 "SHAKEDOWN TRIALS" shall have the meaning assigned in Section 9.3 of
this Agreement.
1.23 "SPECIFICATIONS" shall mean a description of the technical
responsibilities of Rader
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and the specific technical and design requirements to construct the
Railcars for use by FIT in its business. The Specifications will
consist of or include information addressing the following three
areas (i) general; (ii) car specific; and (iii)AMTRAK compatibility
practices for private passenger railcars and will be submitted to
FTI on or before October 28, 1996. The Specifications will 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 will be initialed and dated
by each party through their duly authorized representatives for
incorporation into APPPENDIX B. Rader will provide the proposed
Specifications to FTI on or before November 1, 1996. FTI will
provide Rader with its written comments and requested changes to the
Specifications on or before November 15, 1996, in the case of major
modifications. In the case of all remaining modifications, Rader
will submit the final revised Specifications to FTI on or before
December 10, 1996. The Specifications will also include the
Recommended Fire Safety Practices For Rail Transit Material
Selection.
1.24 "VENDOR Parts" shall have the meaning assigned in Section 12.8(a).
1.25 "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
2.1 DELIVERV DATE. Unless otherwise mutually agreed to by the parties
hereto pursuant to a Chance Order or subject to the options
specified in Section 2.2 hereof, the Delivery Date for the Railcars
shall be reflected in APPENDIX D as follows: (i) June 1, 1997 for
the Bar Car; E-1, the Electronic Game Car; E-2, and one (1) Domed
Passenger Car; C-1 as those terms are defined in Section 4-2; (ii)
September 1, 1997 for three (3) Domed Passenger Cars; C-2, C-3, and
C-4, the Lounge Car; E-3 and Multi Media Car, E-4; and (iii) March
1, 1998 for three (3) Domed Passenger Cars; C-5, C-6, and C-7. A
prototype car shall be refitted and delivered per separate
agreement. 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 and Payment
Schedule to be attached hereto as APPENDIX D and the Design Decision
Schedule to be attached hereto as APPENDIX E.
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2.2 OPTION TO DELETE BAGGAGE CAR AND LOCOMOTIVE COWLINGS. On or before
January 15, 1997, and provided FTI is not in default hereunder, FTI
has the option to notify Rader in writing and inform Rader that FTI
elects to exclude from this Agreement (i) the Baggage Car, as
defined in Section 4.2(c); and/or (ii) the Locomotive Cowlings as
defined in Section 4.2(d). At such time as FTI timely exercises its
option under this Section 2.2, the Contract Price shall be reduced
by $498,960 for the Baggage Car and $415,800 for the Locomotive
Cowlings. FTI may also elect to have the electrical generating
system omitted and instead elect to receive a generic baggage car at
a price and pursuant to Specifications to be agreed upon by the
parties; with an expected cost ranging between $80,000 and $120,000.
3 SCOPE OF WORK
(a) 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 FTI in accordance
with the Plans and in accordance with the Specifications for
completion in accordance with the schedule attached hereto as
APPENDIX D. Rader will provide FTI with drawings and/or plans
complying with the Clearance Diagram to assist FTI 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.
(b) Rader shall provide technical and maintenance manuals in
accordance with the final Specifications for the Railcars as
delivered. These manuals shall cover warranty maintenance, scheduled
maintenance, and trouble shooting and shall be in sufficient detail
to be used as a text and reference manual for training programs.
Rader will furnish preliminary manuals when the Railcars are sent to
Florida to be updated and replaced with final manual within 90 days
after completion of the Shakedown Trials. The warranty period shall
begin on the Transport Date as defined in Section 9.6. Provision of
the manuals under this Section 3(b) is not intended and shall not
extend any warranty period provided wwith Section 12 hereof.
(C) Rader and FTI shall agree upon an inventory of spare parts
required to maintain the Railcars in accordance with applicable
technical and maintenance manuals and their current purchase price
on or before December 16, 1996, which shall be attached hereto as
Appendix M.
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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. 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 Railcars 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. No rim stamp wheels
shall be used in the construction of the Railcars. All installed
components will be of new materials.
4.2 AT COMPLETION. Three different models of Railcars may 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, three (3) locomotive modifications may
be provided by Rader under this Agreement
(a) DOMED PASSENGER CARS. The seven (7) full dome cars ("DOMED
OR C PASSENGER CARS" designated C-1 through C-7) will be
single-level cars with dome glass windows the full length of
the car. Each full dome car will have an approximately 80
passenger capacity with food service capability as agreed to by
the parties in the Specifications.
(b) BILEVEL CARS. The bilevel cars will consist of one (1) bar
car ("the "BAR OR E-1 Car"), one (1) electronic game car
("ELECTRONIC GAME OR E-2 CAR"), one (1) lounge car ("LOUNGE OR
E-3 CAR"), and one (1) multi media car ("Multi Media or E-4
Car").
(c) POWER/BAG CAR. Subject to Section 2.2, the power/bag car
(the "BAGGAGE CAR") will feature a self-contained electrical
generating system capable of serving the power requirements of
the entire train consist and based upon the Specifications. A
portion of the car will be allocated to baggage storage.
(d) LOCOMOTIVE COWLINGS. Subject to Section 2.2 modifications
will be made to three (3) locomotives to be leased by FTI.
These modifications will consist of a fiberglass glass shell to
be attached to the locomotives to give the locomotives a more
streamlined appearance ("LOCOMOTIVE COWLINGS").
(e) RAILCAR IDENTIFICATION. The individual Railcars and the
applicable plan for construction will be identified prior to
construction.
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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
6.1 APPOINTMENT/SUPPORT. FTI shall have the right to appoint an owner's
representative (the "OWNERS 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 2 hours 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 Shakedown Trials under Section 9.3 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 reasonably designated bv FTI 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.
6.2 STOP WORK PROCEDURE. In the event Owner's Representative reasonably
believes that it is necessary for Rader to stop work on one or more
of the Railcars, the following procedures shall apply:
(a) NOTICE. The Owner's Representative shall immediately
notify Rader in writing and FTI's home office (the "NOTICE")
of the reason why the Owner's Representative believes the stop
work order should be honored.
(b) RESPONSE. Rader shall be required to respond ("RESPONSE")
in writing to the Notice within one (1) business day and
during such time period both parties shall endeavor to
understand and resolve the problem to their mutual
safisfaction.
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(c) CONTINUATION OF WORK. If after reviewing the problem,
Rader concludes in its Response that the stop work order
should not be honored, Rader shall be authorized to continue
work on the Railcars; provided however that if it is
subsequently determined (pursuant to Section 8 or otherwise)
that continuing the work caused or necessitated additional
costs to be incurred in the completion of the Railcars, Rader
shall be responsible for the payment of such additional costs.
If after reviewing the problem, Rader concludes in its
Response that the stop work order should be honored, Rader and
FTI shall mutually agree upon the circumstances required to
remedy the problem identified in the Notice and immediately
adjust the terms of the Agreement (including an adjustment
pursuant to Section 11 hereof) so as to recommence work as
soon as reasonably possible.
(d) Arbitration. In the event the partie are unable to resolve
their differences under this Section 6.2 within ten (10)
business days of the Response, the matter shall be submitted
to arbitration under Section 8 hereof
7 CONTRACT PRICE; TERMS OF PAYMENT
7.1 CONTRACT PRICE . The contract price for the performance of all Work
by Rader under this Agreement shall be $9,230,762 ("CONTRACT PRICE")
allocated as follows:
(a) FULL DOME CAR. The price for each of the seven (7) full
Dome Cars to be built for FTI pursuant to the terms of this
Agreement is $887,040, or $6,209,280 in the aggregate.
(b) BILEVEL CAR. The price for the Bar Car and Lounge Car to
be built for FTI pursuant to the terms of this Agreement is
$498,960 each or $997,920 in the aggregate. The price for the
Electronic Game Car and Multi Media Car is $554,400 each, or
$1,108,800 in the aggregate.
(c) BAGGAGE CAR. Subject to Section 2.2, the price for the
Baggage Car to be built for FTI pursuant to the terms of this
Agreement is $498,960.
(d) LOCOMOTIVE COWLINGS. The aggregate price for all three (3)
of the Locomotive Cowlings to be furnished to FTI pursuant to
this Agreement is $415,800.
7.2 TERMS OF PAYMENT
(a) DOWN PAYMENT. Upon execution of this Agreement by FTI, FTI
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Shall pay Rader the sum of $1,410,000 as an advance payment on
the Contract Price for the Railcars and Locomotive Cowlings 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, FTI shall be obligated
to pay Rader the installment payments shown on APPENDIX D
attached hereto. Periodic payments shall be made by FTI on a
per Railcar basis.
(c) PRODUCTION AND PAYMENT SCHEDULE. The schedules set out in
APPENDIX D set forth Work to be accomplished on each type of
Railcar, the date such work is to be accomplished, and the
payments to be made upon completion of the work. Further,
APPENDIX D sets forth payment schedules for each type of
Railcar once Work detailed in the Schedules is accomplished.
(d) DESIGN DECISIONS. APPENDIX E will set forth design and/or
material decisions to be made by FTI on each type of Railcar
and the dates by which such decisions must be finalized in
order for Rader to accomplish the Production and Payment
Schedule set forth in the above mentioned APPENDIX D. Rader
will furnish FTI with a preliminary Design Decision Schedule
on or before November 11, 1996 and FTI will furnish Rader with
proposed changes on or before November 22, 1996. Any delays in
design and/or material decisions by FTI shall extend,
day-for-day, delivery dates under of this Agreement. If Rader
has accomplished all Work as set forth in APPENDIX D, except
for items caused by delay in FTI 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 FTI. Late payments shall bear interest as provided in
Section 42 hereof.
(e) PAYMENT NOTICE. When all Work on each Railcar specified to
be accomplished as of such date has been performed, Rader will
provide FTI with written notice that the Work is performed
(the "PAYMENT NOTICE").
(f) ACCEPTANCE NOTICE. Upon receipt of the Payment Notice
specified in Section 7.2(e), FTI shall inspect the Railcar(s)
to determine that all work has been performed in accordance
with the Specifications. FTI shall be required to provide
written notice to Rader of its findings within two (2)
business days of receipt of the Payment Notice from Rader. If
the work
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complies with the Specifications in all material respects, FTI
will provide Rader with an acceptance notice ("ACCEPTANCE
NOTICE") and a list of minor items ("PUNCH LIST") that need to
be completed by Rader within two (2) business days of
receiving such Punch List. If the work does not comply with
the Specifications in all material respects, FTI will notify
Rader of the specific work that needs to be performed to
comply with the Specifications in all material respects ("SPEC
REQUIREMENTS"). Upon completion of the Spec Requirements, FTI
shall issue an Acceptance Notice to Rader within two (2)
business days of such completion.
(g) PAYMENT DUE DATES. Payments as provided in Appendix D
shall be due and payable before the close of banking in
Denver, Colorado on the seventh (7th) business day after the
Acceptance Notice or deemed acceptance of the Payment Notice,
but in no event later than the due date required by Appendix
D, 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.
(h) PAYMENT PROCEDURE. If there is a continuing disagreement
as to the Payment Notice or Acceptance Notice after Rader
receives notification of disagreement, FTI shall submit in
writing, within three (3) business days from receipt of
Payment Notice, a notice ("DISPUTE Notice with a copy to
Rader, that it is disputing the Payment Notice pursuant to
Section 8 hereof. If FTI fails to submit the dispute
identified in the Dispute Notice to arbitration under Section
8 hereof, within three (3) business days of receipt of the
Payment Notice, FTI shall be deemed to have accepted the
Payment Notice at the end of such 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, FTI
shall be deemed to have accepted the Payment Notice three (3)
business days 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 FTI which FTI may accept, dispute or resolve by submitting
a dispute identified in the Dispute Notice to arbitration
under Section 8 hereof
(i) FINAL PAYMENT. Upon acceptance of the Railcars after
completion of the Shakedown Trials as described in Section 9.3
hereof in accordance with and subject to the terms hereof, FTI
will pay Rader the final payment required to be paid pursuant
to the schedule attached on APPENDIX D in each
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case being an amount which, together with amounts previously
paid, equals the Contract Price for such Railcar specified in
Section 7.1 hereof Notwithstanding the provision of this
Section 7.2(i), FTI shall be entitled to withhold from final
payment an amount(the "PUNCH LIST AMOUNT"), for a period of no
longer that sixty (60) days after formal payment is due, in
order to assure completion of outstanding minor items and
Punch List items. In the event the cost of completing the
final Punch List items exceed the Punch List Amount, FTI shall
be authorized to withhold such excess costs from the final
payment if Rader has not paid for such costs or otherwise
reimbursed FTI therefor.
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
the American Arbitration Association ("AAA") for arbitadon under its
Commercial Arbitration Rules. 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 fim 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 specific issues to
arbitration at the time the dispute arises. The only matters subject
to arbitration under this Agreement shall be: (i) resolutions of
stop work disputes under Section 6; and (ii) 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: (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 FTI still
does not pay, then Rader or FTI may file such a decision or award
with the United States 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 of execution or
other appropriate action may be issued for its enforcement and Rader
may rely on such a decision to
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realize on its security interest provided for by Section 17 hereof
or to exercise any other remedy it may have at law or in equity for
breach by FTI 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 three (3) business days 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/SHAKEDOWN TRIALS
9.1 NOTIFICATION. Approximately thirty (30) days prior to the reasonably
expected date for completion of construction, Rader will notify FTI
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 Rader
demonstrating the reasonably satisfactory operation of: ride
quality, 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 CONDUCT OF SHAKEDOWN TRIALS. Shakedown Trials shall consist of FTI
conducting trouble shooting at a location of its choice for a period
of not longer than Ninety (90) days after successful completion of
the Operating Trials. Upon expiration of the 90 day period, the
Shakedown Trials shall be considered as having been concluded.
9.4 ACCEPTANCE. Following performance by FTI of its obligations to be
performed prior to acceptance, Rader will arrange for towage of the
cars to Florida for Acceptance and FTI win reimburse Rader for all
reasonable transportation and insurance costs related to moving the
Railcars from Colorado to Fort Lauderdale, Florida. Should a point
of destination, other than Fort Lauderdale, be identified by FTI,
which would not put Rader at risk for collection and/or payment of
sales or use or Similar taxes, Rader will not unreasoaably oppose
such alternate destination point provided FTI agrees to indemnify,
defend Rader and pay for all such delivery and insurance costs and
any related sales, use or similar tax (including interest and
penalties) that may arise all in accordance with Section 9.4 and
Section 9.5 hereof.
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9.5 INDEMNIFY AND INSURANCE.
(a) FTI 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 FTI. FTI shall at its cost arrange to provide liability
insurance coverage on Rader's behalf to cover delivery of the
Railcars to Florida and during the period of Shakedown Trials.
(b) As between FTI and Rader, and not in any manner between either
FTI or Rader and any carrier, FTI shall, to the fullest extent
permitted by law, indemnify defend (pursuant to 9.5 (c)) and save
harmless Rader (its officers, employees, directors, affiliates, and
agents) from any, and all claims, suits, losses, damages or expenses
(including reasonable attorneys fees and costs) whatsoever
(collectively "CLAIMS"), including but not limited to claims arising
on account of injuries or death of any and all persons whomsoever,
and any and all loss or damage to or destruction of the Railcars or
other property whatsoever to whomsoever belonging, arising or growing
out of, or in any manner connected with the transportation of a
Railcar to FTI from the time a Railcar is caused to be placed by
Rader on trackage for receipt by the initial carrier accompanied by
documentation permitting the transportation of a Railcar to FTI (the
"Transport Date") until the completion of the Shakedown Trial
pursuant to Section 9.3 hereof. As between FTI and Rader, before the
Transport Date such liability shall be borne solely by Rader and on
or after the Transport Date, liability shall be borne solely by FTI,
without regard to fault; notwithstanding the foregoing, nothing
herein contained is to be construed as an indemnification against the
sole negligence of Rader or its officers, employees or agents.
(c) FTI further agrees that it will defend as its own expense
(including reasonable attorney's fees and costs), in the name and on
behalf of Rader, all claims or suits for injuries to or death of
persons or loss or destruction or damage to property (including the
Railcars) arising or growing out of the foregoing indemnities, for
which FTI is liable, or is alleged to be liable.
9.6 DOCUMENTATION. Following the Operating Trials, FTI will execute a
document acknowledging receipt of the Railcars in the form attached
hereto as APPENDIX G. Contemporaneously with receiving final payment
under Section 7.2 (i), Rader will release its security interests in
the Railcars being delivered and title to the Railcars shall,
subject to Section 12-11, 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 Transfer of documents shall be accomplished at
such location in Florida as is reasonably designated by Rader or
13
Other mutually agreed upon location.
9.7 RISK OF LOSS. Risk of loss to Railcars shall each pass from Rader to
FTI at the time Rader delivers the Railcar to a carrier on the
Transport Date or defined in Section 9.5 (b), following successful
completion of the Operating Trials.
9.8 TITLE. Title to each Railcar shall transfer from Rader to FTI upon
successful completion of the Shakedown Trial and upon receipt by
Rader of full payment from FTI for each individual Railcar under
this Agreement.
9.9 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 FORCE MAJEURE CLAIMS
FORCE MAJEURE. In the event of such occurrence, Rader shall notify
FTI in writing 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
("FORCE MAJEURE") shall be defined to mean 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, and labor disputes
involving Rader employees or employees of suppliers, governmental
action, 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. Rader shall use all
reasonable efforts to minimize its nonperformance and to overcome,
remedy, cure, or remove such event as soon as reasonably practicable
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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 any decrease, to the Contract Price. A written Change
Order may be executed only:
ON BEHALF OF RADER, BY: AUTHORITY
Thomas G. Rader, President Unlimited
and Lowell Malo; Project Team Leader
ON BEHALF OF FTI. BY:
Raymond Monteleone, Unlimited
Vice President, Operations, or $50,000
Chief Financial Officer $20,000
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 required signatures of the above mentioned authorities
of both Rader and FTI shall be ineffective. Either of the parties
may change the person authorthorized 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 cost of materials and hourly wage rates, plus
an overhead and indirect cost burden (the "BURDENED RATE"). For
purposes of this Section 11.3, the Burdened Rate is defined to mean
an amount equal to the sum of (i) the amount of direct labor costs
multiplied by a factor of two; and (ii) the amount of direct
material costs multiplied by a factor of one hundred and twenty-five
percent (125%).
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12 WARRANTY
12.1 MATERIALS AND WORKMANSHIP. Subject to Section 12.5, Rader warrants
that the Railcars, commencing on the Transport Date (as defined in
Section 9.5) 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 as set forth in the Princess Tours
Ultra Dome power, spectral density test results of ride quality
study conducted in Alaska, a copy of which is attached hereto as
APPENDIX K. By acceptance of any Railcar at Operating Trials, FTI
agrees that the Railcars comply with this warranty for all purposes
under this Agreement. The ride quality shall be applicable for the
period prescribed in Section 12.5 of this Agreement.
12.3 ENGINEERING AND DESIGN WARRANTY. Railcars shall meet the Applicable
Standards. All welding shall conform to applicable recommendations
of AWS. Noise levels shall be equivalent to Princess Tours Ultra
Dome cars. Railcars shall comply with ADA regulations in effect as
of the date of this Agreement for trains not requiring access to
services in other cars.
Changes in the above mentioned Applicable 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 Domed Passenger 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, to be provided on or before January
1, 1997.
12.4 COMLIANCE. Rader warrants that the Railcars shall be constructed in
accordance with the Applicable Standards, Plans, and Specifications.
12.5 WARRANTY PERIOD. The warranty provided by Rader hereunder shall be
applicable solely to defects which occur or become apparent to FTI
within a period three
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hundred and sixty-five (365) days following the Transport Date as
defined in Section 9.5(b).Replacement parts shall be guaranteed for
thirty (30) days beyond the 365 day warranty period provided such
replacement parts are installed during the initial 365 day warranty
period. This warranty will include all and labor costs required to
correct the defect. With respect to defects which occur or come to
the attention of FTI after the Transport Date as defined in Section
9.5 (b) the responsibility for such defects shall rest solely with
FTI and FTI 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 indemnities Rader from any and all liabilities
and costs (including legal and attoney'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 5 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 FTI shall notify Rader within two (2) business days after
FTI learns of such defect, claim, or damage except that in all
events FTI shall be obligated to notify Rader of such an event in
writing not later than seven (7) consecutive business days after its
discovery by FTI. This notification is to be made by FAX
transmission and is to be followed by a written warranty claim
within fifteen (15) consecutive business days of initial
notification. Rader shall have fifteen (15) consecutive business
days from receipt of written notice of claim to respond in writing,
either denying or accepting financial responsibility for such claim
responm In the event that Rader refuses to accept financial
responsibility for such claim made by FTI with respect to the
Railcars, FTI may commence litigation. If any litigation is not
commenced by FTI within one (1) year of the date on which notice of
such rejection is received, such litigation shall be
17
barred forever and any remedy at law or in equity which FTI 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 FTI
under this Agreement.
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 FTI 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 FTI at the expiration of the period provided
for by this Section 12. Rader will FTI a list of all
reconditioned and remanufactured parts utilized in the
construction of the Railcars provided in the Specifications.
(b) WARRANTIES. EXCEPT AS OTHERWISE PROVIDED IN SECTION 12.5.
the warranties and all other terms and conditions of this
Section 12 shall apply to Vendor Parts provided for in the
Specifications for 365 days following acceptance as if the
Vendor Parts had been manufactured by Rader, and FIT will
cooperate with Rader in pursuing remedies against manufacturers
of Vendor Parts under the warranties assigned to FTI 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 FTI
against any and all claims from vendors supplying materials, parts
or labor relating to the construction of Railcars under this
Agreement Rader shall provide FTI with a list of sole source vendors
it intends to use in connection with construction of the Railcars
provided in the Specifications.
12.10 CONSEQUENTIAL DAMAGES PRECLUDED. Rader's sole obligation to FTI with
respect to the warranties provided for hereunder shall be to repair
or replace defective parts or components. FTI shall notify Rader of
any warranty repair needed. If Rader cannot
18
perform the required work within a reasonable time period under the
circumstances, FIT 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 thirty (3O) 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 limitations 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.
12.11 TITLE WARRANTY. Rader warrants that it has good and marketable title
to the Railcars free and clear of liens and encumbrances (other than
those in favor of FTI or expressly permitted by this Agreement) and
will deliver said title to FTI at the completion of the Shakedown
Trials and receipt by Rader of full payment from FTI for a Railcar
under this Agreement.
12.12 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
any Appendix to this Agreement) including: Rader's failure to
perform the Work in a skilled and expeditious manner; the
failure of the Railcars 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;
19
(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 FTI. 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 FTI:
(a) MATERIAL DEFAULT. FTI shall default in any material
respect in the observance or performance of any other covenant
condition or obligation of FTI contained herein and if such
Event of Default continues for thirty (30) days after written
notice to FTI specifying the default and demanding that the
same be remedied, provided, however, that such thirty (30) day
period shall be extended provided FTI has commenced and is
diligently pursuing such cure;
(b) BANKRUPTCY. FTI 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;
(c) RECEIVER. A custodian, receiver, trustee or liquidator
shall be appointed in any proceeding brought against FTI and
shall not be discharged within ninety (90) days after such
appointment
14 REMEDIES
14.1 REMEDIES OF FTI. Upon the occurrence of an Event of Default by
Rader, which is not cured, FTI may:
(a) FORECLOSE. Exercise its rights under Section 16.2 hereof.
(b) REMEDIES NOT EXCLUSIVE. Subject to Section 12.10, FTI's
remedies
20
set forth in this Section 14.1 shall not be exclusive, but
shall be cumulative and may be exercised concurrently or
consecutively, and shall be in addition to all other remedies
FTI may have under this Agreement or provided by law.
14.2 REMEDIES OF RADER. Upon the occurrence of an Event of Default by
FTI, which is not cured, Rader may:
(a) TERMINATION. Terminate this Agreement by written notice to
FTI, and recover from FTI any damages proximately caused by
the FTI default.
(b) FORECLOSE. Exercise its rights under Sections 16.3, 16.4
and Section 17 hereof. In the event the proceeds from said
foreclosure exceed the amount due Rader under this Agreement,
the surplus shall be promptly paid to FTI.
(c) REMEDIES NOT EXCLUSIVE. Raders remedies set forth in this
Section 14.2 shall not be exclusive, but shall be cumulative
and may be exercised 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 or damages, to deliver the
Railcars should the delay be the result of Force Majeure as defined
in Section 10 hereof.
15 FINANCIAL STATEMENT BY FTI
Commencing with financials for the calendar month ending November 30,
1996. FTI shall provide Rader with a monthly financial statement until the
final payment is made pursuant to Paragraph 7.2 (i) above.
16 FTI'S SECURITY INTEREST
16.1 GRANT. Rader hereby grants FTI 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, FIT 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
21
under Section 25 hereof at which private sale, FTI may be the
purchaser EXCEPT THAT in the event of realization on such security
interest by FTI, FTI'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 FTI. In the event of uncured breach by FTI of its
obligations under this Agreement, this security interest shall
terminate and FTI shall upon demand by Rader execute appropriate
security interest termination documents.
16.4 TERMINATION. FTI's security interest shall terminate upon delivery
of the Railcars in accordance with Section 9 hereof.
17 OWNERSHIP BY RADER; RADER'S SECURITY INTEREST
17.1 GRANT. Subject to Section 17.5 hereof, FTI 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 FTI 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 FTI'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 FTI. In the event of default by FTI, Rader
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 uncured breach by Rader of its
obligations under this Agreement, this security interest shall
terminate and Rader shall upon demand by FTI execute appropriate
security interest termination documents.
17.4 TERMINATION. Rader's security interest shall terminate when the
Purchase Price is paid in full as described in Section 9 hereof.
17.5 OWNERSHIP BY RADER. Notwithstanding anything contained in this
Agreement (including Section 17.1 through 17.4 hereof), the grant by
Rader of a security interest pursuant to this Section 17 shall not
detract from the fact of Rader's ownership of the Railcars, work in
process, and all goods, components and
22
materials identified to this Agreement, prior to receiving full
payment therefor in accordance with the terms of this Agreement.
18 REPRESENTATIONS
18.1 BY FTI. FTI represents to Rader, the following:
(a) AUTHORITY. Subject to Section 41, FTI 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 FTI of this Agreement has been duly authorized by all necessary
action on the part of FTI and requires no additional consent to be
effective.
(b) BINDING. This Agreement constitutes a legal, valid and binding
obligation of FTI 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 FTI, 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) BINDINIG. 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.
(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 FTI 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
FTI to deliver the Railcar to FTI free and clear from any and all
mechanic's liens.
23
19 CURRENCY
All references to currency in the Agreement are to be considered as stated
in US dollars.
20 INSURANCE
(a) BUILDERS RISK. Rader will purchase and maintain a builders all
risk insurance policy (or a similarly designated policy) and
installation coverage on the Railcars and work in progress in an
amount at least equal to the cumulative amount of payments received
from FTI hereunder at any time. Rader shall provide FTI with a true,
correct, and complete certificates of insurance for each such
insurance policy. In addition to any contractual Endorsement coverage
contained in any policy of insurance, if requested by FTI and at FTI's
expense, Rader shall exert its best efforts to be provided a specific
contractual insurance endorsement covering this Agreement. 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 FTI the amount
received on account of such insurance policy up to the total amount of
payments received from FTI 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 FTI since the most recent payment, and to
terminate this Agreement in which case neither FTI nor Rader shall
have any other or further obligation to the other hereunder. FTI may
request to receive the amount received on account of such insurance
policy up to the amount of payments received by Rader from FTI, 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 FTI since the most recent
payment, in which case if such request is approved by Rader neither
FTI nor Rader shall have any other or further obligation to the other
hereunder.
(b) COVERAGE. The insurance described above shall provide at least the
following coverage and limits of insurance which shall be taken out
and maintained with insurers and under forms of policies satisfactory
to FTI:
(i) COMPREHENSIVE GENERAL LIABILITY INSURANCE:
Bodily Injury - $10 million per occurrence
Property Damage - $10 million per occurrence
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Contractual Liability - $10 million per occurrence
(ii) PRODUCTS LIABILITY INSURANCE - $10 million per occurrence for
a period of two (2) years after delivery of the last Railcar under
this Agreement.
(iii) AUTOMOBILE LIABILITY INSURANCE:
Bodily Injury - $1 million per occurrence
Property Damage - $1 million per occurrence
(iv) INSTALLATION COVERAGE
(a) At the installation site - $40 million
(b) At any location other
than the installation
site - $2 million
(c) While in transit - $200 thousand
(d) For all coverage - $40 million
(c) ENDORSEMENT. All insurance policies described above shall contain
an endorsement providing that written notice shall be given to FTI at
least (30) days prior to termination, cancellation or reduction of
coverage.
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, 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 FTI in tourist rail operations. FTI
agrees to defend, indemnify, and hold Rader harmless against the payment of
any and all sales, use, value added, import duties or taxes as well as
related penalties and interest at any delivery point selected by Rader and
FTI. Should the payment of any of the foregoing taxes be required to be
paid by Rader as a result of changes in the law after the signing of the
25
Agreement, FTI 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 including
those items disclosed on APPENDIX L) 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. Notwithstanding the foregoing, any patents resulting
from the construction or design process of the Railcars being constructed
pursuant to the Agreement, which were jointly developed by Rader and FTI
during the term of the Agreement, shall be the joint patent of both parties
and shall be registered with the appropriate authorities in such manner.
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 to 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 ATTORNEYS 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 FTI:
FUN TRAINS, INC.
Hollywood Boulevard
26
Hollywood, Florida 33020
Attention: Mr. Raymond Monteleone
FAX: (954) 920-0602
TO RADER
RADER RAILCAR II, INC.
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 26, FTI may not assign any of
its rights or benefits under this Agreement. FTI 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 FTI'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 at least (30) days prior written notice of the
proposed assignment;
(b) the assignee delivers to Rader an instrument in writing
(acceptable to Rader's counsel) executed by the assignee confirming
that it is bound by and shall perform all of the obligations of FTI
under this Agreement as if it were an original signatory; and
(c) Notwithstanding the foregoing, FTI will be permitted to assign all
of its interest in its rights to purchase the Railcars to a third
party subject to Rader's prior written approval, which shall not be
unreasonably withheld provided said assignment is solely for the
purpose of FTI's leasing the Railcars from such assignor. FTI's
assignment of its interest in its right to purchase the Railcars shall
not require
27
prior approval by Rader if assigned to a directly or indirectly
controlled (i.e. 80% or more of the voting common stock) subsidiary of
FTI. The provision is not intended to release FTI from any guarantees
under this Agreement.
(d) Provided further that no assignment shall relieve FTI of its
obligations under this Agreement.
In the event of an assignment contemplated above, any reference in this
Agreement to "FTI" shall be deemed to include the assignee and any
corporation, entity or person which owns, either directly or indirectly,
all or any portion of the stock of FTI.
27 TIME OF THE ESSENCE
Time is of the essence of this Agreement.
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 Section 26 of 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
28
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 FTI 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
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.
29
40 CONFIDENTIALITY AND CONFIDENTIAL INFORMATION
This Agreement (including Appendixes hereto) and the terms and conditions
hereof 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, applicable law (i.e. securities law) or
other legal process.
41 CONTINGENT APPROVAL
This Agreement will continue in effect for a period of sixty (60) days
following its execution and its continued application to the parties
beyond that date shall be subject to FTI's negotiation of the required
trackage rights agreements with CSX, FDOT and/or Amtrak within that
period. In the event FTI is unable to conclude any of the required
trackage rights agreements that are necessary for its operations, it may
upon seven (7) days' advance written notice to Rader, terminate all
obligations under this Agreement. In the event FTI terminates this
Agreement, it shall be obligated to compensate Rader for all reasonable
expenses incurred in the construction of the Railcars through the date the
notice was served on Rader by FTI plus all reasonable demobilization costs
(i.e. including but not limited to equipment purchase/lease costs and
employee severance costs). The dates prescribed by this Section may be
modified by mutual agreement of the parties.
42 DELINQUENT PAYMENTS
In the event either party is delinquent in making payments required by
this Agreement, said party 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 it 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.
43 APPROVALS
This Agreement shall be subject to the approval of the Board of Directors
of First American Railways, Inc. And Fun Trains Inc.
44 GUARANTEES
The mutual guarantee of the parties are attached hereto and made part of
this Agreement N and O.
30
45 FURTHER ASSURANCES AND COOPERATION
FIT and Rader shall execute, acknowledge and deliver to the other any
further instruments that may be reasonably required to give full force and
effect to the provisions of this Agreement; provided, however, that
neither party shall be required to deliver any other instrument which
expands its duties, obligations or representations and warranties or which
diminishes its rights under this Agreement.
DATED THIS 23RD DAY OF OCTOBER, 1996.
RADER RAILCAR 11, INC., A COLORADO CORPORATION
BY:
---------------------------------------
NAME: THOMAS G. RADER
-------------------------------------
TITLE: PRESIDENT
-------------------------------------
FUN TRAINS, INC., A FLORIDA CORPORATION
BY:
---------------------------------------
NAME: RAYMOND MONTELEONE
-------------------------------------
TITLE: PRESIDENT AND TREASURER
-------------------------------------
31
SIGNATURE PAGE
TO BE ATTACHED
TO
RAILCAR CONSTRUCTION AGREEMENT
by and between
RADER RAILCAR II, INC.
and
FUN TRAINS, INC.
"RADER"
Rader Railcar II, Inc.
A Colorado Corporation
By: /s/ THOMAS G. RADER
-----------------------------
Thomas G. Rader
President
FTI
Fun Trains, Inc.
a Florida Corporation
By: /s/ RAYMOND MONTELEONE
-----------------------------
Raymond Monteleone
Vice President & Treasurer