ASSET PURCHASE AGREEMENT
CANADIAN NATIONAL RAILWAY COMPANY
AND
CHEMIN DE FER ST-LAURENT & ATLANTIQUE (QUEBEC) INC./
ST.▇▇▇▇▇▇▇▇ & ATLANTIC RAILROAD (QUEBEC) INC.
ASSET PURCHASE AGREEMENT dated November 25, 1998.
B E T W E E N:
CHEMIN DE FER ST-LAURENT & ATLANTIQUE (QUEBEC) INC./
ST.▇▇▇▇▇▇▇▇ & ATLANTIC RAILROAD (QUEBEC) INC.
duly incorporated under the laws of Quebec (hereinafter called "SLQ" )
- and -
CANADIAN NATIONAL RAILWAY COMPANY
duly incorporated under the laws of Canada
(hereinafter called "CN" )
RECITALS:
--------
A. The transactions contemplated by this Agreement involve the sale of certain
real and personal property comprising CN's Sherbrooke Line, as herein
defined, by CN to SLQ on the terms and subject to the conditions contained
in this Agreement, in consideration of the Purchase Price, as herein
defined, and the undertakings of SLQ specified in this Agreement and in the
other agreements referred to herein.
B. the parties will execute an Operating, Marketing and Interchange Agreement,
as herein defined;
C. At the Closing, as herein defined:
(1) CN will convey the Purchased Assets, as herein defined, to SLQ by
transfer or assignment, as appropriate and in the case of the
Purchased Assets that are immovable property by way of a notarial Deed
of Sale ;
(2) SLQ will pay to CN the Purchase Price;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the payments,
conveyances, and covenants herein, SLQ and CN hereby agree as follows:
ARTICLE 1 - DEFINITIONS
-----------------------
1.1 Unless stated otherwise, the following terms shall, for the purposes of
this Agreement, have the respective meanings hereinafter specified:
(a) "Agency Orders" means orders of regulatory agencies disclosed in
Schedule H;
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(b) "Agreement" means this Agreement, including the Schedules hereto, for
the sale and purchase of the Purchased Assets;
(c) "Assumed Contracts" means all leases, licenses, contracts, agreements
and commitments by or with third parties affecting or relating to the
operation or ownership of the Sherbrooke Line, which are included in
the Purchased Assets as set forth and described in Paragraph 3.1 (d)
and are listed on Schedule E;
(d) "Commencement Date : December 1st, 1998 at 21:00 hours;
(e) "Closing" means the completion of the sale to and purchase by SLQ of
the Purchased Assets under this Agreement by the transfer and delivery
of documents of title and the payment of the Purchase Price therefor
as contemplated herein;
(f) "Closing Date" means the date on which Closing shall have occurred;
(g) "Employee Liabilities" means all employment liabilities owed to the
employees of CN employed in connection with the Sherbrooke Line (the
"Employees"), up to and including the Commencement Date, computed on
the basis that CN will have terminated such employees' employment
with CN on the Commencement Date, without notice and without cause,
including, without limitation, all accrued expense reimbursements,
salaries, benefits, vacation pay, pension and other benefits,
appropriate amounts for severance and termination pay under any
applicable collective bargaining agreement or legislation and for
termination without cause or notice at law and any other amount that
may be owed with regard to said Employee's employment for CN and/or
termination thereof;
(h) "Excluded Assets" means those CN assets listed on Schedule D;
(i) "Excluded Lands" means that real property listed on Schedule C;
(j) "Execution Date" means November 25, 1998;
(k) "Information binder" means the information supplied to SLQ as listed
in Schedule F;
(l) "Sherbrooke Line" means those portions of CN's lines of railway and
right of way, as follows:
(i) That part of Sherbrooke Subdivision situated in the Province of
Quebec extending from MP 15.8 to MP 109.45 representing
approximately 93.65 miles of rail; and
(ii) all connecting branch lines and spurs.
The Sherbrooke Line is geographically situated as shown on the maps
attached as Schedule A1 and is illustrated in detail on the maps of
the rails constituting Schedule A2;
(m) "Operating, Marketing and Interchange Agreement" means the agreement,
to be executed by SLQ and CN at Execution Date;
(n) Intentionally left blank.
(o) "Purchase Price" means the payment to be made by SLQ as provided in
Article 4;
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(p) "Purchased Assets" means those assets set forth and described in
Paragraphs 3.1, (a) - (e) inclusive;
(q) "Purchased Lands" means the lands and premises consisting of the
right-of-way of the Sherbrooke Line, including extra width right-of-
way, all real estate contiguous to the right-of-way or associated with
the rail operations thereon, including without limitation station
grounds and yards, the whole having a superficial area of
approximately 1,243 acres and as shown on Schedule A-2, but excluding
the Excluded Lands;
(r) "Right-of-Way Plans" means such right-of-way plans and associated
record plans maintained by CN's Land Management Department in the
ordinary course of business, on which maps and plans are recorded the
alignment of CN's right-of-way and other properties adjacent thereto,
and which are marked to classify CN's assets in two categories for
purposes hereof, specifically Purchased Assets and Excluded Assets.
1.2 The index and headings are inserted for convenience of reference only and
do not form a part of, and are not to be used in the construction or
interpretation of this Agreement or any portions thereof.
1.3 All reference to "dollars" or "$" or to any amount used in this Agreement
means the lawful currency of Canada;
1.4 All words, terms and phrases used in this Agreement shall be construed in
accordance with the generally applicable definition or meaning of such
words, terms and phrases in the railroad industry at the Commencement Date,
unless otherwise provided herein.
1.5 This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Quebec and the applicable laws of Canada.
ARTICLE 2 - SCHEDULES
---------------------
2.1 The following schedules are hereby incorporated into and constitute part of
this Agreement:
Schedule A - Map of Sherbrooke Line
Schedule B - Intentionally Left Blank
Schedule C - Excluded Lands
Schedule D - Excluded Assets
Schedule E - Assumed Contracts
Schedule F - Information Binder
Schedule G - Intentionally Left Blank
Schedule H - Orders of Regulatory Agencies
Schedule I - Pending Litigation
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ARTICLE 3 - SALE OF PURCHASED ASSETS
------------------------------------
3.1 PURCHASED ASSETS
----------------
On the terms and subject to the fulfillment of the conditions hereof, CN
hereby agrees to sell, transfer and assign to SLQ, and SLQ hereby agrees to
purchase and accept from CN, as at the Closing Date, all of CN's right,
title and interest in the following real and personal property comprising
CN's Sherbrooke Line, but excluding the Excluded Assets:
(a) the Purchased Lands;
(b) all other real property and appurtenances and operating rights now
held and used by CN in providing rail service on the Sherbrooke Line,
including without limitation, all attached railway works and
facilities, including without limitation subgrade, grade, rails, ties,
rail fastenings, ballast, other track structure and materials, track
inventory, trestles, bridges, culverts, signals, communication
facilities (radio towers, signal bungalows and base station radios;
excluding fibre optics and fibre optic right-of-way corridor as
defined in Section 18.1), buildings, crossing protection devices, and
other railway fixtures and appurtenances located on the Purchased
Lands;
(c) all those hand tools, in the engineering section buildings located on
the Purchased Lands, subject to ordinary wear and tear and such other
changes thereto as may occur in the ordinary course of business up to
the Closing Date;
(d) all leases, licenses, contracts, agreements and commitments by or with
third parties affecting or relating to the operation or ownership of
the Sherbrooke Line, whether or not known to CN (excluding CN's labour
agreements, interline traffic agreements and CN's interswitching
agreement with Quebec Southern Railway), including without limitation
CN's rights and obligations under those leases, licenses, contracts
and agreements listed in Schedule E, subject, however, to
(i) Section 3.4 in reference to confidential contracts;
(ii) the limitations set out in Section 7.2 on the assignment of
leases, licenses, contracts and agreements without consent; and
(iii) obligations or liabilities of CN arising out of or related to
events occurring or conditions existing on the Purchased Assets
prior to the Commencement Date or the operation of CN's
business thereon prior to the Commencement Date, and those that
accrue after the Commencement Date which are for benefits
received by CN;
(e) except as otherwise provided in this Agreement or in other agreements
referred to herein, all of the rights and benefits and all of the
duties and obligations associated with the Sherbrooke Line and the
operation of the railroad business thereon, to which SLQ shall hereby
succeed and assume.
3.2 PERMITTED ENCUMBRANCES
----------------------
Those parts of the Purchased Assets specified in Paragraphs 3.1(a) and (b)
shall, on the Closing Date, be free and clear of all mortgages,
encumbrances, charges and other third party rights or interests, with the
exception of the Assumed Contracts, Agency Orders, all other statutory
rights,
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duties obligations and liabilities, and the reservations and exceptions
appearing in the existing certificates of title in respect of the Purchased
Lands and any statutory exceptions.
3.3 MINES AND MINERALS
------------------
Notwithstanding anything to the contrary herein contained, CN will exempt
and reserve to itself all of the oil, gas and other minerals on, in and
under the Purchased Lands, together with the right of access thereto,
provided however that said exemption, reservation and right do not
interfere with SLQ'S operations and business of the Sherbrooke Line.
3.4 CONFIDENTIAL CONTRACTS
----------------------
Confidential contracts entered into by CN, pursuant to the provisions of
the National Transportation Act, 1987 and the Canada ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇, shall not be disclosed or assigned to SLQ as part of the Purchased
Assets; provided, however, that in respect of any confidential contract for
intraline traffic on the Sherbrooke Line, such confidential contract may be
assigned to SLQ with the prior written consent of the applicable customer.
If the prior written consent of such intraline customer is not obtained, CN
will pay to SLQ all rates and other compensation paid to CN by the customer
under such confidential contract, provided SLQ is prepared to and does
carry out the terms and conditions and assumes all responsibility for the
fulfillment of such confidential contract, provided however that such non
assignable confidential contracts shall be disclosed to SLQ.
3.5 TAXES
-----
SLQ shall be liable for and pay all applicable Federal and Provincial sales
tax (including any Goods and Services Tax, retail sales taxes and transfer
taxes) and all other taxes, duties, fees or other similar charges of any
jurisdiction properly payable in connection with the transfer of Purchased
Assets by CN to SLQ.
3.6 GOODS AND SERVICES TAX AND SALES TAX PROCEDURES FOR REAL PROPERTY
-----------------------------------------------------------------
Notwithstanding the foregoing, SLQ and CN agree that the purchase by SLQ of
those Purchased Assets that are real property within the meaning of
subsection 123 (1) of the Excise Tax Act (Canada) (the "GST Legislation"),
and Section 1 of the Quebec Sales Tax Act (the "QST Legislation") including
without limitation the Purchased Assets described in Paragraphs 3.1(a) and
(b) hereof, is governed by the provisions of paragraphs 221(2)(b) and
228(4)(a) of the GST Legislation and Sections 423 and 438 of the QST
Legislation. Accordingly, CN has no obligation to collect goods and
services tax and SLQ shall self-assess the goods and services tax to which
it is liable in respect of the purchase of such real property.
SLQ will hold harmless and indemnify CN from and against all liabilities,
claims and demands whatsoever in connection with SLQ failing to be a
recipient described in paragraph 221(2)(b) of the GST Legislation and
Section 423 of the QST Legislation, or failing to self-assess the goods and
services tax in respect of the purchase of such real property in the time
and manner contemplated by paragraph 228(4)(a) and subsection 228(6) of the
GST Legislation and by Sections 438 and 441 of the QST Legislation. This
indemnity shall survive the completion of this Agreement.
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3.7 NO WARRANTY OF TITLE
--------------------
Subject to the provisions of Sections 3.2 and 8.1, it is understood and
agreed that CN will convey the Lands to SLQ on Closing without warranty as
to the titles and without guarantee as to the compliance of the sold assets
with respect to any legislation, including legislation applicable to
environmental protection.
ARTICLE 4 - PURCHASE PRICE
--------------------------
4.1 CONSIDERATION
-------------
The consideration to be paid by SLQ to CN for the Purchased Assets shall
be:
(i) the sum of Seven Million Dollars ($7,000,000.00), payable as set out
herein;
(ii) SLQ's undertaking to abide by the contractual arrangements described
in the Operating, Marketing and Interchange Agreement, as well as the
contractual arrangements described herein;
(iii) The granting by SLQ to CN of perpetual running rights over the
Sherbrooke Line for the purpose of overhead traffic.
All payments shall be paid in the form of cash, certified cheque or the
equivalent unless otherwise specified.
4.2 DEPOSIT
-------
The parties acknowledge that SLQ has deposited with CN the initial deposit
amount of One Hundred Thousand Dollars ($100,000.00). SLQ shall deposit the
further sum of one Million Dollars ($1,000,000.00) with CN on execution of
this Agreement, and SLQ's total deposit of One Million One Hundred Thousand
Dollars ($1,100,000.00), plus any interest earned on that amount, will be
held by CN in accordance with the following terms and conditions:
(a) In the event of the termination of this Agreement pursuant to
Paragraphs 14.1 (a), (b), (d), (e), (f), or (h) hereof, SLQ's full
deposit of One Million One Hundred Thousand Dollars ($1,100,000.00),
together with any interest earned, shall be returned to SLQ.
(b) In the event of the termination of this Agreement pursuant to
Paragraphs 14.1(c) and (g) hereof, One Hundred Thousand Dollars
($100,000.00) of SLQ's full deposit shall be retained by CN as
liquidated damages and the remainder of the full deposit, together
with any interest earned thereon, shall be returned to SLQ.
(c) In the event of a dispute between SLQ and CN over the disbursement of
SLQ's deposit, CN shall continue to hold One Hundred Thousand Dollars
($100,000.00) of the deposit and any interest thereon pending the
final resolution of such dispute, and the remainder of the deposit,
with any interest earned thereon, shall be returned to SLQ.
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4.3 PURCHASE PRICE
--------------
The Purchase Price shall, subject to adjustments as provided for herein, be
paid by SLQ to CN in the manner set forth below:
(a) One Million One Hundred Thousand Dollars ($1,100,000.00) by way of
credit of the full deposit, as provided in Section 4.2, towards the
Purchase Price; and
(b) the balance of the Purchase Price, namely Five Million Nine Hundred
Thousand Dollars ($5,900,000.00) in cash, paid on the Closing Date, in
the manner provided in Section 5.2. The amount payable on the Closing
Date shall be reduced by any interest earned on the deposits made
pursuant to Section 4.2 until the Closing Date.
4.4 ADJUSTMENTS
-----------
The Purchase Price shall be adjusted effective as of the Closing Date in
respect of the following matters:
(a) real property taxes and utilities for the Purchased Lands and the
improvements on the Purchased lands;
(b) pre-payments or regularly scheduled payments made in advance or in
arrears under the Assumed Contracts, where such amounts are in excess
of One Thousand Dollars ($1,000.00);
(c) charges and allocation of revenues; and
(d) accrued interest on the deposit amount up to the Commencement Date.
The foregoing adjustments will be estimated by CN and SLQ at the Closing,
with a final reconciliation to be completed no later than 45 days following
the Closing.
4.5 ALLOCATION
----------
SLQ and CN agree to allocate the Purchase Price among the Purchased Assets,
as follows, and report the sale and purchase of the Purchased Assets for
all federal, provincial and local tax purposes, in a manner consistent with
such allocation:
i) Land $ 1.5M
ii) Railway Structure $ 5.3M
iii) Buildings $ 0.2M
4.6 EMPLOYEE LIABILITIES
--------------------
All Employee Liabilities shall be for the account of CN, including Employee
Liabilities owed to those Employees who may be offered and who may accept
employment with SLQ on or after the Closing Date. CN agrees to pay or
satisfy all Employee Liabilities and to indemnify and save harmless SLQ for
any liability that SLQ may incur after Closing in respect of any and all
Employee Liabilities.
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ARTICLE 5 - CLOSING
-------------------
5.1 CLOSING DATE AND PLACE
----------------------
The Execution of the Agreement shall take place at the offices of CN's
counsel in Montreal, Quebec on November 25, 1998 at 11:00 hours, or on such
other date and at such other time as may be mutually agreed.
5.2 PAYMENT OF FUNDS
----------------
As of the Closing Date, SLQ shall deliver the balance of the Purchase
Price, namely Five Million Nine Hundred Thousand Dollars ($5,900,000.00) to
the instrumenting notary, such amount to be held in trust until the
registration of the notarial Deed of Sale wherever necessary, without
adverse entries.
However from December 1/st/, 1998, interest on the full purchase price will
accrue to the benefit of CN and be payable by SLQ at the Closing Date.
5.3 EXECUTION OF AGREEMENTS
-----------------------
At or before November 25, 1998, or as otherwise mutually agreed, SLQ and CN
will execute and deliver the Operating, Marketing and Interchange
Agreement, together with such other executed documents as may be required
or necessary as set out herein.
5.4 CLOSING DOCUMENTS
-----------------
At the Closing, subject to the satisfaction of all conditions and
conditions precedent, CN shall execute and deliver to SLQ all registerable
instruments of transfer, assignments, bills of sale and other documents as
shall be necessary to effectively transfer to SLQ the Purchased Assets, and
shall deliver to SLQ possession thereof on Closing.
5.5 OPINION OF CN'S COUNSEL
-----------------------
At the Closing, CN shall deliver to SLQ the opinion of CN's counsel, dated
as of the Closing Date, in a form satisfactory to SLQ's counsel, to the
effect that the corporate existence, good standing, and authorization of CN
are as represented and warranted in Paragraph 8.1(a), and that the
execution, validity and enforceability of this Agreement are as represented
and warranted in Section 8.1(a).
5.6 OPINION OF SLQ'S COUNSEL
------------------------
At the Closing, SLQ shall deliver to CN the opinion of SLQ's counsel, dated
as of the Closing Date, to the effect that the corporate existence, good
standing and authorization of SLQ are as represented and warranted in
Paragraph 8.3(a), that the execution, validity and enforceability of this
Agreement are as represented and warranted in Paragraph 8.3(a), and that
SLQ holds a Certificate of Fitness, or such regulatory approval as
required, and has full power and authority to operate a railway as provided
in Paragraph 8.3(a).
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ARTICLE 6 - INVESTIGATION BY SLQ
--------------------------------
6.1 INFORMATION BINDER
------------------
CN has provided to SLQ the Information Binder, which contains descriptions
and historical data relating to the Sherbrooke Line and the results of
operations of the rail service along the Sherbrooke Line (See Schedule
"F"). The description and data in the Information Binder and in the books
and records of CN were prepared by CN in the ordinary course of business.
CN makes no warranty of completeness or accuracy of such descriptions and
data, which are being made available to SLQ for information purposes only.
6.2 INSPECTION OF LINE
------------------
SLQ understands that it is acquiring the Purchased Assets in "as is, where
is" condition. SLQ acknowledges that CN has provided a reasonable
opportunity to SLQ for inspection and review of the Sherbrooke Line prior
to the execution of this Agreement. SLQ represents that it has undertaken
such inspection and review of the Sherbrooke Line as SLQ deems appropriate
to SLQ's determination of the suitability of the Sherbrooke Line for SLQ's
operations. Prior to Closing, SLQ shall have a reasonable opportunity for
such further inspection and review as SLQ shall, in its sole discretion,
deem appropriate to confirm the suitability of the Sherbrooke Line for
SLQ's operations.
6.3 INSPECTION OF RECORDS AND ASSETS
--------------------------------
Subject to Section 3.4, CN has, between the date of the Agreement in
Principle and the date hereof, provided SLQ with reasonable opportunity,
during regular business hours, to inspect books, contracts, agreements,
plans, reports and records reflecting or relating to the Sherbrooke Line
and Purchased Assets, and SLQ represents that it has completed its due
diligence with respect thereto by Closing. At Closing, CN will turn over to
SLQ all original books, contracts, agreements, plans, reports and records
with respect to the Sherbrooke Line and the Purchased Assets, provided,
however, that SLQ agrees to make any such original records available to CN
under reasonable terms and conditions for use in any litigation or
investigation involving CN.
6.4 RIGHT-OF-WAY PLANS
------------------
SLQ shall acknowledge receipt, as at the Closing Date, of a copy of CN's
Right-of-way Plans covering the Sherbrooke Line, with such changes as have
been made by CN in the ordinary course of business. CN makes no warranty of
completeness, currency or accuracy of such Right-of-way Plans, which have
been provided to SLQ for informational purposes only. SLQ shall be
responsible for any costs associated with the provision of any information
or documentation requested by SLQ, including surveys, not in the possession
of CN or which CN cannot reasonably provide.
6.5 SURVEYS
-------
SLQ acknowledges that CN shall have no obligation with respect to any
survey, severance, and subdivision costs relating to the Sherbrooke Line
after the Closing Date. Any survey which SLQ may undertake shall be at
SLQ's risk and expense.
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6.6 CONFIDENTIALITY
---------------
CN and SLQ agree that:
(a) Each party will treat in confidence this Agreement, including all
documents, materials and other information relating to this
Agreement, and all documents, materials and other information which
it shall have obtained regarding the other party during the course
of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of
this Agreement), the investigation provided for herein and the
preparation of this Agreement and all other related documents. The
obligation of each party to treat such agreements, documents,
materials and other information in confidence shall not apply to any
information which (i) was already lawfully in its possession prior
to the disclosure thereof by the other party, (ii) is known to the
public and did not become so known through any violation of a legal
obligation, (iii) became known to the public through no fault of
such other party, or (iv) is later lawfully acquired by such party
from other sources.
(b) This Agreement and any information obtained from CN shall be treated
as confidential and shall not be disclosed to any third party (other
than to a government or regulatory authority entitled to the
disclosure thereof by law and to each party's affiliates,
consultants or their respective representative, solicitors and
accountants) except in situations where a valid judicial decision
may order the Agreement to be disclosed either in whole or in part.
The parties submitting the Agreement to such governmental or
regulatory authority shall request the governmental or regulatory
authority to preserve the confidentiality of the business sensitive
portions of the Agreement.
(c) In the event the transaction contemplated herein is not completed
and this Agreement is terminated, each party will treat in
confidence all documents, materials and other information and
findings which it or any of its consultants, affiliates or their
respective representatives, solicitors and accountants shall have
obtained or made regarding the other party during the course of the
negotiations relating to this Agreement, the investigation of the
other party and the preparation of this Agreement and other
documents relating to this Agreement, and shall promptly return to
the other party all copies of non-public documents and materials
which may have been furnished in connection therewith.
(d) Other than as specified herein, neither of the parties hereto shall
make any public announcement or disclosure concerning this
Agreement, the transactions contemplated hereby or the information
required to be kept confidential hereunder to any party without the
prior written consent of the other party unless, in the written
opinion of counsel, such party is compelled by law to do so,
including pursuant to public disclosure requirements under
applicable securities legislation, and then only with prior written
notice to the other party, except that the parties acknowledge the
Emons Transportation Group Inc., an affiliate of the Purchaser, is
required pursuant to US securities law applicable to it to file a
copy of this Agreement with the SEC in electronic form. Both SLQ and
CN shall consult with each other and give each other the opportunity
to comment on the text of any announcement proposed to be made by it
in this regard.
6.7 RISK
----
The Purchased Assets shall be at the risk of CN until the Closing has been
completed.
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ARTICLE 7 - LEASES, LICENSES, CONTRACTS AND ORDERS
--------------------------------------------------
7.1 ASSUMED CONTRACTS AND AGENCY ORDERS
-----------------------------------
It is understood and agreed that the Purchased Assets will be sold subject
to the Assumed Contracts and Agency Orders in effect on the Closing Date,
whether or not shown on the Right-of-way Plans and whether or not recorded
in the public land records. Subject to Section 3.4, CN represents that
Schedule E is a list of all leases, licenses, contracts and agreements
known to CN. CN represents and warrants that no contract not listed on
Schedule E will have a material adverse effect on SLQ's ability to operate
the Sherbrooke Line or to conduct its business.
7.2 BENEFITS AND OBLIGATIONS
------------------------
Subject to Paragraph 3.1(d) and Section 3.4, SLQ shall, to the extent
assignable, succeed to all of the rights and benefits and shall assume all
of the duties and obligations under the Assumed Contracts and Agency Orders
as and from the Commencement Date. CN agrees to indemnify and save
harmless SLQ against all claims or obligations associated with an Assumed
Contract and Agency Order to the extent such claim can be attributable to
an incident which occurred before the Commencement Date. To CN's
knowledge, such Assumed Contracts and Agency Orders will not have a
material adverse effect on SLQ's ability to operate the Sherbrooke Line in
substantially the same manner as operated by CN. To the extent that the
assignment of any agreement, contract, lease, commitment, or undertaking to
be assigned, as provided herein, shall require the consent of another party
thereto, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof, but CN
agrees that it will use its best efforts to obtain the written consent of
the other parties to all material agreements, contracts, leases,
commitments, and undertakings to the assignment thereof, and if such
consent is not obtained, CN will cooperate with SLQ in any reasonable
arrangement designed to provide for SLQ the benefits under any such
material agreements, contracts, leases, commitments, and undertakings,
including enforcement at SLQ's cost of any and all rights of CN against
another party thereto arising out of the breach or cancellation thereof by
another party or otherwise. CN makes no representation with respect to the
effect of any failure to obtain any such consent to the transfer or
assignment of any such material leases, licenses, contracts, or orders on
SLQ's ability to operate the Sherbrooke Line. Nothing herein shall require
CN to make any payments to a lessor or other party to any such agreement or
to incur any legal or enforcement costs in furtherance of the objectives
described in this paragraph.
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
------------------------------------------
8.1 CN'S REPRESENTATIONS AND WARRANTIES
-----------------------------------
Subject to the fulfillment of matters set out in Article 9, CN undertakes,
represents and warrants to SLQ that:
(a) CN is a validly organized and existing corporation, and in good
standing, under the laws of Canada, with full power and authority to
enter into and perform all of its obligations under this Agreement
and the agreements referred to or set forth in the Schedules;
(b) On the Closing Date, subject to prior performance of the conditions
and conditions precedent set out in this Agreement, and subject only
to the Assumed Contracts, and Agency Orders, CN will have good and
valid title to all of the Purchased Assets, and CN's title and
interest in the Purchase Assets will be free and clear of adverse
claims;
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(c) CN is the sole and beneficial owner of the Purchased Assets and is
not a non-resident of Canada within the meaning and intent of the
Income Tax Act (Canada);
(d) On the Execution Date and as of the Closing Date, there is no
litigation pending nor, to the best knowledge of CN threatened,
including without limitation claims made by or on behalf of
aboriginal peoples, with respect to the Purchased Assets, other than
as disclosed in Schedule I;
(e) There is no material adverse change in the physical condition of the
Purchased Assets or the business conducted thereron between the date
of the Agreement in Principle and the Commencement Date, subject
always to ordinary wear and tear;
(f) CN will operate and manage the Sherbrooke Line up to the
Commencement Date, in the same manner that it has been operated
prior to the date hereof and as would a reasonably competent and
prudent owner of comparable assets;
(g) As of the Execution Date of this Agreement, the only Agency Orders
affecting the Sherbrooke Line are those set forth in Schedule H, and
CN shall advise SLQ of any additional such orders as of the
Commencement Date. CN makes no representation or warranty that any
or all of such orders will or will not be binding upon the operation
of SLQ;
(h) As of the Execution Date of this Agreement, to the best knowledge of
CN, the only Assumed Contracts affecting the Sherbrooke Line are
those set forth in Schedule E, all of the Assumed Contracts are
valid and subsisting, with no default existing thereunder, and CN
shall advise SLQ of any change as of the Commencement Date;
(i) Subject to Section 7.2, CN has good right and lawful authority to
assign the Assumed Contracts to SLQ;
(j) CN shall not, from the date of the Agreement in Principle, enter
into any new agreements relating to the Purchased Assets (except any
renewals of subsisting agreements on subsisting terms and
conditions), except upon such terms and conditions as may be
approved by SLQ in writing;
(k) As of the Execution Date and as of the Commencement Date, to the
best knowledge of CN, neither CN nor any person for whom in law CN
is responsible has caused or permitted any contaminant to be
disposed of on or under the Purchased Lands, other than oil, grease
and similar petroleum products inherent in a rail operation, and
that there are no pending claims or proceedings arising out of
alleged or actual violations of environmental laws or regulations on
or relating to the Sherbrooke Line. CN holds all permits and has
obtained all environmental authorizations required to possess the
Purchased Assets and for its operations. CN acts and continues to
act in compliance with all environmental obligations;
(l) As of the Execution Date and as of the Commencement Date, CN has not
received any complaint, order or direction remaining unremedied from
any competent authority concerning the use of the Sherbrooke Line,
or the non-compliance of the use of the Sherbrooke Line with any
applicable statute, law, bylaw, regulation or ordinance affecting
the same;
(m) As of Closing, all necessary corporate action will have been taken
by CN to validly approve, ratify, confirm and adopt this Agreement
and any agreement referred to or set forth in the Schedules, and to
authorize the execution and delivery of all documents
13
contemplated or required herein and the performance of all acts and
consummation of all transactions on the part of CN to be done or
performed hereunder;
(n) Neither this Agreement nor any document to be delivered by CN, nor
any certificate, report, statement or other document furnished by CN
in connection with the negotiation of this Agreement, contains any
untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading;
(o) CN has sufficient title to the Purchased Assets used in the conduct
of its rail operations to conduct those operations in the manner in
which they are currently being conducted which titles are subject to
the Assumed Contracts to be assumed by SLQ, Permitted Encumbrances
and orders of regulatory authorities; and
(p) As of the Commencement Date, CN has complied in all material
respects with all applicable laws, rules, obligations, regulations
and orders relating to the Employees working on or for the
Sherbrooke Line including those relating to fees, contributions and
assessments to be paid by an employer in the normal course of
business and there are no outstanding amounts to be paid to the
Commission de la sante et de la securite du travail ("CSST") or any
Governmental body or agency with regard to CN employees who worked
on or for the Sherbrooke Line for which SLQ could be held liable.
8.2 DISCLAIMER
----------
SLQ acknowledges and agrees that the Purchased Assets are being sold and
purchased on an "as is, where is" basis and, subject to the express
representations and warranties given in Section 8.1, CN makes no further
representations or warranties to SLQ of any kind, character or nature,
whether express or implied, statutory or otherwise, with respect to the
Purchased Assets, including, without limitation, the design or condition of
the Sherbrooke Line and the Purchased Assets, their safety, their
compliance with governmental laws and regulations, their merchantability or
fitness for any particular purpose, the quality of the material or
workmanship or conformity to their intended use or marketability of title
to the lands.
8.3 SLQ'S REPRESENTATIONS AND WARRANTIES
------------------------------------
Subject to the fulfillment of matters set out in Article 9, SLQ undertakes,
represents and warrants to CN that:
(a) SLQ is a validly organized and existing corporation, and in good
standing under the laws of Canada, authorized to carry on business
as a railway in the Province of Quebec and holding a Certificate of
Fitness pursuant to the provisions of the Canada Transportation Act,
with full power and authority as of the Commencement Date to operate
a railway in accordance with the provisions of the Canada
Transportation Act, and to enter into and perform all of its
obligations under this Agreement and the agreements referred to or
set forth in the Schedules;
(b) SLQ is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, charter or bylaw
provision, statute, rule, regulation, judgment, order, writ, decree
or law which would be violated, contravened, breached by or under
which default would occur as a result of the execution, delivery and
performance of this Agreement or any agreement referred to or set
forth in the Schedules, or the performance by it of any of the terms
of this Agreement or any such agreement;
14
(c) As of the Execution Date, all necessary corporate action will have
been taken by SLQ to validly approve, ratify, confirm and adopt this
Agreement and any agreement referred to or set forth in the
Schedules, and to authorize the execution and delivery of all
documents contemplated or required herein and the performance of all
acts and consummation of all transactions on the part of SLQ to be
done or performed hereunder;
(d) SLQ will, during the term of the Operating, Marketing and
Interchange Agreement, or any renewal thereof, abide at all time
with the rules of the Association of American Railroads (AAR) and
adhere to standard AAR equipment maintenance standards and become
and remain a member of the Railway Association of Canada;
(e) SLQ will maintain and operate the Sherbrooke Line as an operating
line providing services to existing and future rail users, in
accordance with rail common carrier standards during the term of the
Operating, Marketing and Interchange Agreement, and as may be
prescribed from time to time by authorities having jurisdiction,
unless relieved from such standards by authorities having such
jurisdiction; and
(f) Neither this Agreement nor any document to be delivered by SLQ, nor
any certificate, report, statement or other document furnished by
SLQ in connection with the negotiation of this Agreement, contains
any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein
not misleading.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
All undertakings, representations and warranties set out in Section 8.1 and
paragraphs 8.3(a), (b), (c) and (f), with the exception of Paragraphs
8.1(b) to (d) inclusive, (h), (k), (o), and (p) which shall survive forever
after the Closing Date, shall survive and shall continue in full force and
effect for the benefit of CN or SLQ, as the case may be, for a period of
two years after the Closing Date, after which time, if no claim shall have
been made prior to the expiry of the two-year period against a party with
respect to any incorrectness or with respect to any breach of any
undertaking, representation or warranty made by that party, that party
shall have no further liability with respect to the undertakings,
representations or warranties.
ARTICLE 9 - CONDITIONS PRECEDENT
--------------------------------
9.1 MUTUAL CONDITIONS PRECEDENT
---------------------------
This Agreement is executed subject to each of the following mutual
conditions precedent being satisfied and/or performed:
(a) Approvals, consents, orders and authorizations of any persons or
governmental bodies having authority, including without limitation,
all registrations, recordings and filings with public authorities,
all agency orders, government and regulatory permits and licenses
and all other authorities required to enable SLQ to carry on the
operation of a railway line in the manner contemplated herein,
including the approval under the ICC Termination Act regarding the
existing trackage rights granted by St.▇▇▇▇▇▇▇▇ & Atlantic Railroad
Company to CN, if necessary;
(b) The issuance of a Certificate of Fitness, or such regulatory
approval as required, to SLQ in conformance with the provisions of
Paragraph 8.3(a);
15
(c) Agreement being reached between SLQ and the trade unions that
represent the various scheduled employees involved in the operation
and maintenance of the Sherbrooke Line immediately prior to the
Commencement Date, setting out the terms and conditions of employment
of such employees;
(d) Agreement being reached between CN and the trade unions that represent
the various scheduled employees of CN involved in the operation and
maintenance of the Sherbrooke Line, settling any and all employment
security or similar issues;
(e) CN to notify SLQ of any material change in the business, affairs,
operations, assets, liabilities (contingent or otherwise) which are
material to the business of the Sherbrooke Line; and
(f) The physical condition of the Purchased Assets and state of the
business affairs and operations of the Sherbrooke Line not being
substantially and materially different from such physical condition
and state on the date of the updated Booklets.
9.2 MUTUAL WAIVER
-------------
Subject to the satisfaction and performance of SLQ's conditions, set out in
Article 10, and CN's conditions, set out in Article 11, and the mutual
conditions precedent set out in Section 9.1, this Agreement shall be in
full force and effect and binding on the parties, but otherwise it shall be
null and void without liability between the parties. It is acknowledged by
both parties that the conditions set out in Section 9.1 are for the benefit
of both CN and SLQ and may not be unilaterally waived by either CN or SLQ.
ARTICLE 10 - SLQ'S CONDITIONS
-----------------------------
10.1 CONDITIONS
----------
The obligations of SLQ to complete the purchase of the Purchased Assets
under this Agreement shall be subject to the following conditions:
(a) all of the written representations and warranties of CN made in this
Agreement are true and correct in all material respects as of the
Closing;
(b) CN has performed or complied with, in all respects, all of its
obligations, covenants and agreements required under this Agreement to
be performed or complied with as of the Closing;
(c) SLQ being satisfied, in its sole discretion, with the investigation
conducted pursuant to Sections 6.1 to 6.3; and
10.2 FINANCING
---------
SLQ shall not be obligated to complete the purchase and sale of the
Purchased Assets under this Agreement if as a reason of unsettled
conditions in general financial markets it has not been able to conclude
financing for such acquisition.
16
10.3 WAIVER BY SLQ
-------------
In the event that any of SLQ's conditions are not performed or satisfied at
or before the Closing and SLQ does not waive that condition in accordance
with this Section 10.3, this Agreement shall be null and void without
liability between the parties. It is acknowledged by both parties that the
conditions set forth in Section 10.1 are for the sole benefit of SLQ and
may be unilaterally waived by SLQ by notice in writing delivered to CN on
or before the Closing Date.
ARTICLE 11 - CN'S CONDITIONS
----------------------------
11.1 CONDITIONS
----------
The obligation of CN to complete the sale of the Purchased Assets under
this Agreement shall be subject to the following conditions:
(a) All of the written representations and warranties of SLQ made in this
Agreement are true and correct in all material respects as of the
Closing; and
(b) SLQ has performed or complied with, in all respects, all of its
obligations, covenants and agreements required under this Agreement to
be performed or complied with as of the Closing.
11.2 WAIVER BY CN
------------
In the event that any of CN's conditions are not performed or satisfied at
or before the Closing and CN does not waive that condition in accordance
with this Section 11.2, this Agreement shall be null and void without
liability between the parties. It is acknowledged by the parties that the
conditions set forth in Section 11.1 are for the sole benefit of CN and may
be unilaterally waived by CN by notice in writing delivered to SLQ on or
before Closing Date.
ARTICLE 12 - INDEMNITY
----------------------
12.1 CN shall indemnify, protect, defend and hold harmless SLQ, its officers,
agents and employees, from and against any and all liability of whatsoever
kind or degree, cost and expense arising out of or connected with any
personal injury, property loss or damage, occurring on or about the
Sherbrooke Line, or arising out of the use of the Sherbrooke Line or the
Purchased Assets, or any portion thereof, by parties other than SLQ, its
officers, agents and employees, or violation of any law or regulation and
relating to events occurring prior to the Commencement Date, except for any
such liability caused by the deliberate or negligent acts of SLQ, its
officers, agents or employees. SLQ shall indemnify, protect, defend and
hold harmless CN, its officers, agents and employees from and against any
and all liability of whatsoever kind or degree, cost and expense arising
out of or connected with any personal injury, property loss or damage,
occurring on or about the Sherbrooke Line, or arising out of the use of the
Sherbrooke Line or the Purchased Assets, or any portion thereof, by parties
other than CN, its officers, agents and employees, or violation of any law
or regulation and relating to events occurring on or subsequent to the
Commencement Date, except for any such liability caused by the deliberate
or negligent acts of the CN, its officers, agents or employees.
12.2 Effective as and from the Closing, each of CN and SLQ shall indemnify and
save harmless the other from and against any and all damage, loss or
liability of whatsoever kind or degree, cost and expense arising out of or
connected with any non-fulfillment of any covenant or agreement on the
17
part of such party under this Agreement or any incorrectness in or breach
of any representation or warranty of such party contained in this Agreement
or any certificate or other document furnished by such party pursuant to
this Agreement.
12.3 The obligations of indemnification contained in Sections 12.1 and 12.2
above, in respect of the damage, loss or liability described therein, shall
be subject to the requirement that the party obligated to indemnify the
other party (the "Indemnifying Party") shall, in respect of any claim made
by any third party, be notified of all material particulars thereof and be
afforded an opportunity, at its sole expense, to resist, defend and
compromise the same provided that the Indemnifying Party shall not be
obligated to do so; and further provided that if the Indemnifying Party
does not assume the defense of that claim, the party to be indemnified may
defend against the claim in a manner it deems appropriate and may take such
action as may be reasonably prudent in the circumstances to settle any such
claim, the reasonable costs of such defense and other action to be at the
sole expense of the Indemnifying Party.
ARTICLE 13 - ENVIRONMENTAL MATTERS
----------------------------------
13.1 ACKNOWLEDGMENT OF ENVIRONMENTAL STATUS
--------------------------------------
SLQ hereby acknowledges that the Sherbrooke Line is, and has been, utilized
as active freight railway line. CN agrees to make available to SLQ all
environmental assessments, surveys and information currently in CN's
possession, and agrees to cooperate with SLQ with respect to any
environmental survey it may need to undertake. SLQ acknowledges receipt of
a Phase I Environmental Assessment in respect of the Sherbrooke Line. CN
makes no representation or warranty with respect to the accuracy or
completeness of said environmental assessment, survey and information.
13.2 SLQ AND CN'S INDEMNITIES
------------------------
(a) SLQ will:
(i) indemnify and hold harmless CN and its officers, directors,
agents, employees, parent corporation, subsidiaries, affiliates,
successors and assigns from all liability, costs, expenses, lawyers'
fees and costs, fines, penalties or civil judgments resulting from any
violation or claimed violation for which SLQ is responsible under the
Agreement or the Operating, Marketing and Interchange Agreement, of
any federal, provincial or local law, rules, regulation or ordinance
controlling track maintenance standards and soil, air, water, noise,
hazardous waste, solid waste or other pollution or relating to the
storage, transport, release or disposal of hazardous materials,
substances, wastes or other pollutants arising after the Commencement
Date and from any violations of this section; and
(ii) reimburse CN and its officers, directors, agents, employees,
parent corporation, subsidiaries, affiliates, successors and assigns
for all costs and expenses incurred by CN or its officers, directors,
agents, employees, parent corporation, subsidiaries, affiliates,
successors and assigns in eliminating or remedying such violations,
pollution or contamination for which SLQ is responsible under this
Agreement or the Operating, Marketing and Interchange Agreement.
(b) CN will:
(i) indemnify and hold harmless SLQ and its officers, directors,
agents, employees, parent corporation, subsidiaries, affiliates,
successors and assigns from all liability, costs,
18
expenses, lawyers' fees and costs, fines, penalties or civil judgments
resulting from any violation or claimed violation of any federal,
provincial or local law, rules, regulation or ordinance controlling
track maintenance standards and soil, air, water, noise, hazardous
waste, solid waste or other pollution or relating to the storage,
transport, release or disposal of hazardous materials, substances,
wastes or other pollutants arising prior to the Commencement Date and
from any violations of this section; provided that the burden of proof
that such occurred prior to the Commencement Date shall rest with SLQ.
(ii) reimburse SLQ and its officers, directors, agents, employees,
parent corporation, subsidiaries, affiliates, successors and assigns
for all costs and expenses incurred by SLQ or its officers, directors,
agents, employees, parent corporation, subsidiaries, affiliates,
successors and assigns in eliminating or remedying the violations,
pollution or contamination set out in Paragraph 13.2(b)(i) hereof
provided that the burden of proof that such has occurred prior to the
Commencement Date shall rest with SLQ.
13.3 REMEDIATION BY CN
-----------------
In the event that as a result of the condition of the Sherbrooke Line or
occurrences prior to the Commencement Date a competent governmental
authority (the "Authority") requires all or a portion of the Sherbrooke
Line to be remediated in accordance with applicable environmental laws (the
"Remediated Lands"), CN shall, at its own expense, carry out the
remediation of the Remediated Lands required by an Authority to the extent
required under applicable environmental laws and consistent with the use of
the Sherbrooke Line as set out herein.
ARTICLE 14 - TERMINATION
------------------------
14.1 This Agreement and the consummation of the transactions contemplated by
this Agreement may be terminated prior to the Closing Date:
(a) by the mutual agreement of CN and SLQ at any time;
(b) by SLQ, if there has been a material failure of CN to comply with its
obligations under this Agreement, including the obligation to deliver
the opinions specified in Section 5.5, or a breach of CN's
representations and warranties at Closing that would have a material
adverse effect on the value of the Purchased Assets or SLQ's ability
to operate the Sherbrooke Line substantially in the manner previously
operated by CN;
(c) by CN, if there has been a material failure by SLQ to comply with its
obligations under this Agreement
(d) by either party, in the event of the issuance of any required approval
of any government agency having jurisdiction which imposes conditions
related to the operation of the Sherbrooke Line which are unacceptable
to either party;
(e) by either party, in the event there is a material adverse change in
the physical condition of the Purchased Assets or the business
conducted thereon between the date of the Agreement in Principle and
the Commencement Date which CN is not prepared to remedy and SLQ is
not prepared to waive;
(f) by either party, in the event one or more of the conditions precedent
specified in Section 9.1 are not fulfilled;
19
(g) by CN, in the event one or more of the CN's conditions specified in
Section 11.1 are not fulfilled; and
(h) by SLQ, in the event one or more of the SLQ's conditions specified in
Section 10.1 are not fulfilled and/or if SLQ has not been able to
conclude the financing referred to at Section 10.2.
ARTICLE 15 - NOTICE
-------------------
15.1 Any notice, request, demand or other document required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by prepaid registered mail or if
transmitted by a form of recorded electronic communication,
(a) To CN at:
CANADIAN NATIONAL RAILWAY COMPANY
▇▇▇, ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ etage
Montreal (Quebec)
H3B 2M9
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Assistant Vice-President - Strategic and Financial
Planning
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) To St.▇▇▇▇▇▇▇▇ & Atlantic Railroad (Quebec) Inc. at:
ST.▇▇▇▇▇▇▇▇ & ATLANTIC RAILROAD (QUEBEC) INC.SLQ
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
EMONS TRANSPORTATION GROUP INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
15.2 Any writing given in the manner set out in Section 15.1 shall be deemed
given if and when personally delivered or if mailed in the manner therein
provided shall be deemed given ten business days after posting. Any notice
transmitted by a form of recorded electronic
20
communication shall be deemed given and received on the date of
transmission if received during the normal business hours of the recipient
and on the first business day after its transmission if it is received
after the end of normal business hours on the date of transmission.
15.3 In the event of disruption or threatened disruption of regular mail
services by strike or threatened strike, all such notices, requests and
other communications shall be deemed to have been duly given only if
personally delivered in the manner provided in Section 15.1 or sent by
recorded electronic communication.
ARTICLE 16 - OPERATING LEASE
----------------------------
CN hereby grants to SLQ for the consideration set out herein, in respect of the
Purchased Assets, a right in the nature of a lease (the "Lease") to operate with
SLQ crews and locomotives over the Purchased Assets, upon the following terms
and conditions:
(a) The term of the Lease shall commence on the Commencement Date and shall
continue until the Closing Date; and
(b) Notwithstanding anything herein to the contrary, the terms of this
Agreement and of the Operating Marketing and Interchange Agreement shall
apply to the Purchased Assets during the term of the Lease.
ARTICLE 17 - GENERAL
--------------------
17.1 FURTHER ACTION
--------------
Each of the parties shall take all actions as are within its power to
control, and use its best efforts to cause other actions to be taken which
are not within their power to control, so as to further comply with any
conditions set out in this Agreement.
17.2 EXPENSES
--------
All costs and expenses, including, without limitation, the fees and
disbursements of legal counsel, incurred in connection with this Agreement
and the transaction contemplated, shall be paid by the party incurring that
expense.
17.3 ENTIRE AGREEMENT
----------------
This Agreement and the Schedules constitute the entire agreement
between the parties and, except as stated, contain all of the
representations and warranties of the respective parties. There are no
verbal statements, representations, warranties, undertakings or agreements
between the parties. This Agreement may not be amended or modified in any
respect, except by written instrument executed by the parties.
17.4 TIME OF THE ESSENCE
-------------------
Time shall be of the essence of this Agreement.
21
17.5 ASSIGNMENT
----------
Subject to the provisions of this Section 17.5, neither this Agreement
nor any rights or obligations under it shall be assignable by either party
without the prior written consent of the other party, such consent not to
be unreasonably withheld. CN consents to the assignment of this Agreement
to the LaSalle National Bank or other lender for the purposes of security
for financing the Sherbrooke Line, but such consent will not be deemed to
waive or modify in any respect any of the rights of CN or to relieve SLQ of
any of its obligations hereunder.
Subject thereto, this Agreement shall enure to the benefit of and be
binding on the parties and their respective successors, including any
successor by reason of amalgamation of any party, and permitted assigns.
17.6 INTERPRETATION
--------------
The provisions of this Agreement shall, where possible, be interpreted
in a manner necessary to sustain their legality and enforceability, and for
that purpose the provisions of this Agreement shall be read as if they
cover only the specific situation to which they are being applied. The
unenforceability of any provision of this Agreement in a specific situation
shall not affect the enforceability of that provision in other situations
or of other provisions of this Agreement.
17.7 COUNTERPARTS
------------
This Agreement may be executed in counterparts, each of which shall be
considered an original.
17.8 FURTHER ASSURANCES
------------------
The parties shall, with reasonable diligence, do all things and
provide all reasonable assurances as may be required to consummate the
transactions contemplated by this Agreement, and each party shall provide
those further documents or instruments required by any other party as may
be reasonably necessary or desirable to effect the purpose of this
Agreement and to carry out its provisions, whether before or after the
Closing Date.
17.9 APPLICABLE LAW
--------------
This Agreement shall be governed and interpreted in accordance with
the applicable laws of the Province of Quebec and Canada.
ARTICLE 18 - MISCELLANEOUS ITEMS
--------------------------------
18.1 FIBRE OPTICS FACILITIES AND OTHER UTILITIES FACILITIES
------------------------------------------------------
CN reserves the exclusive right to locate on the Sherbrooke Line, without
charge to CN, an easement for those purposes described in Section II of
Schedule D and to retain for such purpose a right-of-way corridor through
the Sherbrooke Line (the "utility right-of-way corridor"). Revenues
derived from the use of the utility right-of-way corridor shall accrue
solely to CN. If CN exercises its right under this provision, CN will
provide SLQ with 30 days' written notice before undertaking any such work.
In no event, shall CN's use of the utility right-of-way corridor interfere
with SLQ's ability to provide uninterrupted rail service on or across the
Sherbrooke Line, or interfere with any utility lines or other than existing
use of the utility right-of-way corridor.
22
If works to be performed by CN for the use of the utility right-of-way
corridor render it necessary to relocate the trackage of the Sherbrooke
Line or portions thereof in order for SLQ to continue to provide
uninterrupted rail service on the Sherbrooke Line, outside of the purchased
lands, CN shall not be entitled to commence such work unless or until it
has acquired for and on behalf of SLQ necessary contiguous land for the
relocation of the trackage in order for SLQ to continue to provide
uninterrupted rail service despite CN's work. Further, if such work or the
resulting facilities interfere with SLQ's ability to provide uninterrupted
rail service on or over the Sherbrooke Line, CN, or its successors or
assigns, shall bear all reasonable costs associated with any necessary
relocation of the trackage, if such relocation is performed by SLQ and all
costs if performed by CN or by a third party. CN shall retain an easement
in, under and across the Purchased Lands for the purpose of constructing,
maintaining, repairing, operating and relocating any fibre optic or utility
facilities. SLQ will not locate nor grant the right to any party other
than CN to locate any other fibre optic or other utility facilities on the
Sherbrooke Line, except for the purposes of a local network.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
CHEMIN DE FER ST-LAURENT & ATLANTIQUE (QUEBEC)
INC./ST.▇▇▇▇▇▇▇▇ & ATLANTIC RAILROAD (QUEBEC) INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and CEO
_______________________________________________
CANADIAN NATIONAL RAILWAY COMPANY
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice-President,
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Assistant Vice-President
