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Railamerica Inc/DE – ‘10KSB’ for 12/31/96 – EX-10.58

As of:  Monday, 3/31/97   ·   For:  12/31/96   ·   Accession #:  950144-97-3453   ·   File #:  0-20618

Previous ‘10KSB’:  None   ·   Next:  ‘10KSB/A’ on 5/7/97 for 12/31/96   ·   Latest:  ‘10KSB/A’ on 5/16/97 for 12/31/96

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/31/97  Railamerica Inc/DE                10KSB      12/31/96    4:420K                                   Bowne of Atlanta Inc/FA

Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Railamerica 10KSB 12/31/96                            75    359K 
 2: EX-10.57    Committment Letter                                    63    228K 
 3: EX-10.58    Agreement for Sale of Assets                          45     83K 
 4: EX-27       Financial Data Schedule                                1      6K

EX-10.58   —   Agreement for Sale of Assets
Exhibit Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
43Seller
"Buyer 
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AGREEMENT FOR 

SALE OF CERTAIN ASSETS, RIGHTS

AND OBLIGATIONS 

OF

BURLINGTON NORTHERN RAILROAD COMPANY

TO

MINNESOTA NORTHERN RAILROAD, INC. 


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 AGREEMENT FOR
SALE OF CERTAIN ASSETS, RIGHTS
 AND OBLIGATIONS
OF
BURLINGTON NORTHERN RAILROAD COMPANY
TO
 MINNESOTA NORTHERN RAILROAD, INC.

 TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                                                [Download Table]
                                                                                
          1.   Description of Business Sold.                                  2 
          2.   Consideration for the Sale.                                    8 
          3.   Governmental Approval.                                        12 
          4.   Representations and Warranties.                               12 
          5.   Inspection and Condition of Rail Lines.                       18 
          6.   Liability and Indemnity.                                      19 
          7.   Assignment; Seller's Right of First Refusal.                  26 
          8.   Obligations are Continuing.                                   27 
          9.   Liens and Encumbrances.                                       28 
         10.   Pending Public Works Projects.                                29 
         11.   Buyer to Offer to Hire Seller's Qualified Employees.          30 
         12.   Closing.                                                      30 
         13.   Proration.                                                    32 
         14.   Interchange.                                                  32 
         15.   Car Hire Costs.                                               33 
         16.   Liability Insurance.                                          34 
         17.   Seller's Authority to Establish Through Routes                   
                    and Offer Through Routes.                                35 
         18.   Division of Revenue.                                          36 
         19.   Transfer of Operations.                                       37 
         20.   Collection of Revenue                                         37 
         21.   Transfer of Liabilities; Payment of Charges.                  39 
         22.   Electronic Data Interchange.                                  39 
         23.   Assignment of Freight Transportation Contracts.               40 
         24.   Applicable Law.                                               40 
         25.   Effect of Waiver.                                             40 
         26.   Notices.                                                      41 
         27.   Confidentiality.                                              42 
         28.   Entire Agreement; Integration of Agreement.                   42 

Exhibit   A    Quitclaim Deed                                                   
Exhibit   B    Bill of Sale                                                     
Exhibit   C    Agreements To Be Assigned To Buyer In Whole                      
                    Or In Part                                                  
Exhibit   D    Division Payments to Buyer                                       


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 AGREEMENT FOR
SALE OF CERTAIN ASSETS, RIGHTS
 AND OBLIGATIONS
OF
BURLINGTON NORTHERN RAILROAD COMPANY
TO
 MINNESOTA NORTHERN RAILROAD, INC.

 This Agreement is entered into as of this ______ day of November, 1996,
between BURLINGTON NORTHERN RAILROAD COMPANY, a Delaware corporation            
(hereinafter referenced as "Seller"), and MINNESOTA NORTHERN RAILROAD, INC., a  
Delaware corporation (hereinafter referenced as "Buyer").                       

WHEREAS, Seller desires to sell and convey to Buyer, on the terms and 
conditions set forth in this Agreement, Seller's ownership interest in five rail
line segments located in northwest Minnesota, Seller's right to conduct rail    
operations over the rail line between Erskine and Thief River Falls, Minnesota, 
the rail freight transportation business which Seller conducts on these six rail
line segments, and certain other rights, obligations and assets as specified in 
this Agreement; and                                                             

WHEREAS, Buyer desires to purchase, pursuant to the terms and         
conditions set forth in this Agreement, Seller's interest in these five rail    
line segments in northwest Minnesota, Seller's trackage rights over the         
Erskine-Thief River Falls rail line, the rail freight transportation business   
which Seller conducts on these six rail line segments, and certain other        
assets, rights and obligations as specified in this Agreement.                  

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NOW THEREFORE, Buyer and Seller agree as follows:                     

1. Description of Business Sold.                                      

  (a) Seller shall convey to Buyer, on the date of Closing, by a Quitclaim
Deed delivered to Buyer on the date of Closing, all of Seller's interest, except
as set forth in this Agreement and in the Quitclaim Deed, in the following five 
rail line segments of Seller:                                                   

      1.   MN Junction - Ada, Minnesota, between Ada Subdivision Mileposts
80.25 and 47.0;                                     

2.   Redland Junction - Fertile, Minnesota, between Fertile   
Subdivision Mileposts 65.7 and 45.1;                

       3.   Tilden Junction - Red Lake Falls, Minnesota, between Grand Forks
Subdivision Mileposts 56.84 and 13.0 miles East;    

  4.   MN Junction - Perley, Minnesota, between P line Subdivision
Mileposts 65.25 and 21.0 ("Perley Line"); and       

    5.   St. Hilaire - Warroad, Minnesota, between Warroad Subdivision
Mileposts 11.0 and 104.0.                           

This conveyance shall be subject to the terms and conditions set forth in this  
Agreement, the Bill of Sale and/or any agreement assigned by Seller to Buyer by 
the terms of this Agreement, and the terms, conditions and reservations set     
forth in the Quitclaim Deed, including Seller's retained interests, as specified
in more detail in the Quitclaim Deed, plus Seller's retention of certain related
parcels as specified in Attachment 1 of the Quitclaim Deed, for: (i) a          
nonexclusive, permanent easement for construction,                              

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maintenance and operation or one or more pipelines or fiber optics communication
lines, together with related facilities and appurtenances in, under, across,    
along and through all of any portion of the rail line segments to be conveyed;  
(ii) mineral rights and related permanent access easements; (iii) a nonexclusive
permanent right to use, develop and market water rights, together with related  
permanent access, construction, maintenance and water pipeline rights; and (iv) 
overhead trackage rights to provide rail freight service over the Perley Line,  
on the following terms applicable to both Buyer and Seller:                     

 (A)  Seller shall provide to Buyer at least ten days' written notice of
 Seller's commencement of operations of these trackage rights;

(B)  Seller shall pay to Buyer a fee of $1.5 mils per gross ton mile  
         (lading and tare weight) for these trackage rights, this charge to be
       full compensation to Buyer for Buyer's maintenance, replacement and
        renewal of the Perley Line to the condition that the Perley Linen is
       in on the date of this Agreement, Buyer's dispatching and operating
     supervision of train movements over the Perley Line and all other
   amounts due to Buyer for Seller's use of these trackage rights;

    (C)  Seller shall conduct all of its operations over these trackage rights
     using Seller's trains, operated by Seller's employees, subject to
dispatching control and direction of Buyer.                 

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 (D)  Buyer shall maintain the Perley Line to at least the condition the
Perley Line is in on the date of this Agreement.            

   (E)  Seller shall have the right to require Buyer promptly to upgrade the
          Perley Line, at Seller's sole expense, to standards and specifications
established by Seller.                                      

The five rail line segments being sold, including Seller's related rail corridor
real property interests being conveyed, are described specifically in Attachment
1 to the Quitclaim Deed, set forth in Exhibit A attached hereto, and are        
referenced hereinafter as "Rail Lines". Seller's retained trackage rights, as   
described in item (iv) above, shall be referenced hereinafter as "Seller's      
Trackage Rights."                                                               

 (b) Seller shall convey to Buyer, effective on the date of Closing, the
rail freight transportation business which Seller conducts on the Rail Lines,   
subject to the terms and conditions set forth in this Agreement, in the         
Quitclaim Deed, the Bill of Sale and/or any agreement assigned by Seller to     
Buyer by the terms of this Agreement.                                           

    (c) Seller shall convey to Buyer, on the date of Closing, by delivering to
Buyer on the date of Closing a Bill of Sale identical in form to the Bill of    
Sale set forth in Exhibit B attached hereto, all of Seller's interest in all    
rail, ties, spikes, tie plates, rail anchors, bridges, culverts, signalling     
equipment, and other supporting structures, ballast, track materials and        
supplies                                                                        

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(excluding any vehicles, maintenance equipment on wheels, radios or computer    
equipment) that, on the date of the Closing, are not improvements that          
constitute the Rail Lines, but which then are present on the real property      
comprising the Rail Lines, and Seller shall leave behind all uninstalled rail   
and other track material. This conveyance shall be subject to the terms and     
conditions set forth in this Agreement, the Bill of Sale, the QuitClaim Deed    
and/or any agreement assigned by Seller to Buyer by the terms of this Agreement.

(d) Seller shall grant to Buyer, effective on the date of Closing,    
incidental trackage rights to operate overhead rail freight service only, for   
the sole purposes of: (1) interchanging rail freight cars and equipment between 
Buyer and Seller only at Seller's Crookston, Minnesota rail yard only; and (2)  
moving locomotives, cars and equipment between the Rail Lines over Seller's     
Grand Forks Subdivision rail line between Milepost 81.5, west of Crookston,     
Minnesota, and Milepost 31.0 at Erskine, Minnesota, and also over all yard      
tracks in Seller's Crookston, Minnesota rail yard. This line shall be referenced
in this Agreement as "Trackage Rights Line." Buyer may enter or leave the       
Trackage Rights Line at Erskine, Tilden Junction, Redland Junction and MN       
Junction. Buyer must block all traffic for Seller at Crookston into two blocks: 
eastbound and westbound from Crookston. Buyer shall conduct all of its          
operations over the Trackage Rights Line using Buyer's trains, operated by      
Buyer's employees, subject to dispatching control and direction of Seller.      
Seller shall                                                                    

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maintain the Trackage Rights Line as reasonably required.                       

(e) Seller shall assign to Buyer, effective on the date of Closing,   
Seller's trackage rights authority and, subject to final Soo Line Railroad      
Company consent, Seller's trackage rights agreement to operate over the Soo Line
Railroad Company between Milepost 273.0, at or near Erskine, Minnesota, and     
Milepost 309.5, at or near Thief River Falls, Minnesota.                        

(f) Seller hereby assigned to Buyer, effective on the date of Closing,
subject to all terms and conditions set forth in this Agreement, the QuitClaim  
Deed, the Bill of Sale and/or any agreement assigned by Seller to Buyer by the  
terms of this Agreement, all assignable rights and obligations of Seller which  
are performable after the Closing, to the extent that they are related to the   
Rail Lines and are set forth in any agreement identified in Exhibit C attached  
hereto. Buyer hereby accepts the assignment of all such rights and obligations, 
effective on the date of Closing in accordance with their terms and the terms of
this Agreement. Seller, and not Buyer, shall be responsible for performing all  
of Seller's duties in assigned agreements which are required to be performed on 
or before the date of Closing. Buyer, and not Seller, shall be responsible for  
performing all assigned duties in assigned agreements which are required to be  
performed after the date of Closing. Seller reserves all rights and             
obligations set forth in any agreement identified in Exhibit C to the extent    
those rights are related to one or more other rail lines or property of Seller. 
If any contract is related to the Rail                                          

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Lines and inadvertently is not identified in Exhibit C, Seller promptly shall   
provide to Buyer a copy of any such contract immediately upon locating it, and  
Buyer shall assume the rights and obligations in such contract to the extent    
they are related to the Rail Lines, so long as such assumption does not         
materially adversely affect Buyer or increase Buyer's risk in connection with   
its ownership and operation of the Rail Lines. Buyer shall make no claim against
Seller arising out of any failure to obtain a consent to assignment from any    
party to any agreement assigned by Seller to Buyer, in whole or in part. It is  
the intent of both Seller and Buyer that all assignments of rights and          
obligations related to the Rail Lines shall be effective on the date of Closing.

     (g) Seller further agrees to transport for Buyer the locomotives that Buyer
will use to operate over the Rail Lines, at no charge to Buyer, so that Buyer   
has sufficient locomotives to operate efficiently over the Rail Lines on the    
day following the date of Closing.                                              

 (h) Seller agrees that, subject to agreement on times and conditions of
operation by Seller's local transportation management, Buyer on occasion may    
operate only maintenance of way equipment or locomotives, but not any revenue   
freight trains, over Seller's rail lines between Perley, Minnesota, and the     
connection with Otter Tail Valley Railroad Company near Fargo, North Dakota,    
such operation to be conducted by Buyer's employees, to be subject to Seller's  
dispatching control and operating and safety rules, and to be subject to the    
liability allocation provisions of Paragraph                                    

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6 that are applicable to Buyer's activities or operations on or near the        
Trackage Rights Lines.                                                          

2.  Consideration for the Sale.                                       

   (a) In consideration for Seller's sale of its interest in the Rail Lines,
and Seller's conveyance to Buyer of the other rights, interests and obligations 
described in Paragraph 1 of this Agreement, Buyer agrees to all of the          
following:                                                                      

 (1)  To accept all transferred real and personal property "AS IS, WHERE
          IS" and "with all faults", except for the specific representations and
      warranties set forth in this Agreement, the Quitclaim Deed and the
Bill of Sale.                                               

    (2)  To conduct rail freight transportation business on the Rail Lines for
as long as it is economically reasonable to do so.          

  (3)  To pay Seller on the date of this Agreement, by certified check, an
     earnest money deposit toward the purchase price, in the amount of
        $180,000.00. This amount shall be applied at Closing toward the full
    purchase price for Seller's assets, rights and obligations to be
        conveyed to Buyer as set forth herein, of THREE MILLION, SIX HUNDRED
         AND FIFTY THOUSAND DOLLARS ($3,650,000.00). Consequently, at Closing,
         Buyer shall pay $3,470,000.00 by wire transfer to either: (i) Seller,
        or (ii) Apex Property & Burlington Exchange, Inc. ("APEX"), Seller's
intended assignee of Seller's right to                      

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      receive payment of the purchase price for the Rail Lines. The wire
   transfer by Buyer shall be made in accordance with written wire
          transfer instructions provided to Buyer by Seller. APEX is a qualified
   intermediary within the meaning of Section 1031 of the Internal
     Revenue Code of 1986, as amended, and Treasury Regulation Section
      1.1031(k)-1(g). Seller intends to assign to APEX Seller's right to
     receive payment of the purchase price for the Rail Lines, for the
      purpose of Seller completing a tax-deferred exchange. Seller shall
     retain the earnest money deposit as liquidated damages if for any
       reason this transaction does not close on December 27, 1996 or some
        earlier date agreed to by the parties in writing, except that Seller
       shall not have the right to retain this deposit if this transaction
         does not close because some event beyond Buyer's control, and despite
          Buyer's best efforts to control such event and close this transaction,
       occurs after November 26, which event either materially reduces the
   value of the Rail Lines or materially adversely affects Buyer's
ability to operate over the Rail Lines.                     

  (4)  To cooperate with Seller with respect to any tax-deferred exchange,
  and to execute such documents as may be required to effect any
  tax-deferred exchange. Seller shall indemnify, defend and hold
        harmless Buyer fully against all reasonable and necessary additional
costs, expenses, and liabilities which Buyer may incur as a 

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result of any tax-deferred exchange.                        

    (5)  To pay in addition to the purchase price all costs of Closing (except
          Seller's cost of preparation of documents to be delivered at Closing),
    including, but not limited to, any escrow and service fees, real
       estate transfer taxes, excise taxes, recording fees and sales taxes
        associated with this Agreement or any of the conveyances governed by
this Agreement.                                             

 (6)  Because the purchase price for the Rail Lines does not include the
        franchise value and going concern value to Seller of the traffic now
       or in the future originating or terminating on or along the Warroad
     Subdivision of the Rail Lines, Buyer agrees that, with respect to
          traffic originating or terminating on or along the Warroad Subdivision
          of the Rail Lines, in return for the lower purchase price set forth in
        this Agreement and the right to use the trackage rights set forth in
 Paragraph 1(d) of this Agreement, for each carload of traffic
     originating or terminating on the Warroad Subdivision of the Rail
      Lines, that Buyer interchanges to a railroad other than Seller, or
     Seller's successor or affiliate, at either Warroad or Thief River
         Falls, Buyer shall pay to Seller $600 per loaded car, adjusted as set
forth in Paragraph 18(b) of this Agreement.                 

   (7)  To submit to Seller monthly a report of all carloads originating and
terminating on the Warroad Subdivision of                   

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   the Rail Lines that Buyer interchanges to a railroad other than
         Seller, or Seller's successor or affiliate, and also to permit Seller
    to audit periodically Buyer's records to determine the number of
    carloads originating or terminating on the Rail Lines that Buyer
         interchanges to a railroad other than Seller or Seller's successor or
affiliate.                                                  

(8)  Because the purchase price of the Rail Lines does not include any
        payment to Seller for the franchise value and going concern value to
        Seller or traffic now or in the future originating or terminating on
      or along the Rail Lines, not to request, participate in, cooperate
        with (except in compliance with subpoenas), or support any effort in
 any legal or administrative proceeding to obtain the right to
         interchange rail traffic, at any location other than Warroad or Thief
        River Falls, Minnesota, directly with any railroad other than Seller
or Seller's successor or affiliate.                         

 (9)  Because the purchase price for the Rail Lines does not include any
        payment to Seller for the franchise value and going concern value to
         Seller of the traffic now or in the future originating or terminating
      on or along the Rail Lines, not to build or allow to be built, or,
          either directly or through any corporate affiliate, cooperate, finance
        or participate in building, any track or track structures to connect
the Rail Lines to any railroad                              

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other than Seller or Seller's successor or affiliate.       

    (b) This transaction and the consideration paid by Buyer is not divisable;
however, Buyer and Seller agree that the purchase price shall be allocated as   
follows among the various assets being conveyed under the terms of this         
Agreement:                                                                      

                                                                [Download Table]
                                 
Rail                  $ 2,400,000
Ties                      800,000
Ballast                   200,000
Land                      250,000
                       ----------
Total                 $ 3,650,000

3. Governmental Approval.                                             

    (a) Buyer represents that Buyer is not a "rail carrier" within the meaning
of 49 U.S.C. Section 10102(2). Promptly following execution of this Agreement,  
Buyer, at its sole expense, shall prepare and file such documents as may be     
required to secure approval, or exemption from approval, of this transaction by 
the Surface Transportation Board of the United State Department of              
Transportation ("STB"), as appropriate. Buyer shall make all reasonable efforts 
to obtain this approval or exemption in time for this transaction to close on   
December 20, 1996. Buyer shall permit Seller to review prior to filing all      
documents proposed by Buyer to be filed with the STB or any court to secure     
legal approval or exemption of this transaction.                                

4. Representations and Warranties.                                    

    (a) Seller hereby represents and warrants to Buyer, and Buyer's successors
and assignees, the following facts, as of the date of this Agreement and as of  
the date of Closing:                                                            

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    (1)  Seller is a corporation duly organized, validly existing, and in good
         standing under the laws of the State of Delaware, and is qualified to
   do business as a foreign corporation in the State of Minnesota;

(2)  Seller has the corporate power and authority to enter into this  
 Agreement and carry out its obligations under this Agreement;

  (3)  The execution, delivery and performance of this Agreement have been
      duly authorized and approved by all necessary corporate actions of
          Seller, and no further corporate proceedings of Seller are required to
complete the transactions covered by this Agreement;        

 (4)  All of Seller's obligations set forth in this Agreement constitute
        legal, valid and binding obligations of Seller which are enforceable
       against Seller in accordance with their terms, except to the extent
          enforcement may be limited by bankruptcy, insolvency or reorganization
law;                                                        

   (5)  There is no provision in the Certificate of Incorporation or By-Laws
of Seller which prohibits the execution of this Agreement or
consummation of the transactions covered by this Agreement; 

     (6)  The negotiations related to this Agreement have been handled by Seller
on its own behalf, without                                  

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     intervention of any agent or other person, so that no party has a
         valid claim on this basis for any finder's fee, brokerage commission,
       or other similar payment in connection with any of the transactions
included in this Agreement;                                 

(7)  Seller has duly filed with the appropriate agencies of the United
        States, the State of Minnesota, and appropriate local governments or
    political subdivisions in Minnesota, all tax returns and reports
        required to be filed; Seller either has paid in full, or will pay in
          full as finally determined, and will indemnify and hold Buyer harmless
     from, all taxes, interest, penalties, assessments or deficiencies
      which are due for the period up to the date of Closing; and Seller
        has made all withholdings of tax which are required to be made under
 all applicable regulations of the United States, the State of
Minnesota, and local governments in Minnesota;              

     (8)  To Seller's knowledge, there is no pending or threatened litigation or
arbitration proceeding, or administrative proceeding or     
investigation, against or affecting the properties or assets
         comprising the Rail Lines, or Seller's rights to conduct rail freight
          transportation operations over the Rail Lines as Seller conducts those
operations on the                                           

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date of this Agreement, the result of which forseeably would
       materially adversely affect Buyer's ability to conduct rail freight
       transportation operations over the Rail Lines following the date of
Closing;                                                    

 (9)  Seller has received no written notice of any pending or threatened
  civil, criminal, or administrative actions with respect to any
          hazardous or toxic substance on or adjacent to the Rail Lines (as used
          herein, "written notice" shall mean written notice delivered to either
   Seller's Assistant Vice President - Environmental and Hazardous
         Materials, or Seller's Director Environmental Remediation and Special
          Projects, who are the people designated by Seller to receive notice of
such matters);                                              

  (10) The physical condition of the Rail Lines, and Seller's title to the
         Rail Lines, will be sufficient on the date of Closing to enable Buyer
     to conduct rail freight transportation operations over all or any
       portion of the Rail Lines on the day following the date of Closing,
 and the rail corridors described in Attachment 1 to Exhibit A
          constitute continuous rail corridors between the endpoints of the Rail
Lines; and                                                  

     (11) No representation or warranty by Seller in this Agreement contains any
         untrue statement of a material fact, nor omits any material fact that
      is necessary to make any representation or warranty not materially
misleading.                                                 

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(b)  Buyer hereby represents and warrants to Seller, and Seller's     
successors and assignees, the following facts as of the date of this Agreement  
and as of the date of Closing, except where specifically noted to be as of the  
date of Closing only:                                                           

       (1)  Buyer is a corporation duly organized, validly existing and in
               good standing under the laws of the State of Delaware, and by the
              date of Closing will be qualified to do business in the State of
Minnesota;                                        

         (2)  Buyer has all requisite corporate authority to purchase Seller's
       rights and properties which are conveyed to Buyer by this
              Agreement; to enter into this Agreement; to conduct rail freight
          transportation business on the Rail Lines (as of the date of
            Closing only); and to perform all of Buyer's obligations under
this Agreement;                                   

(3)  The execution of this Agreement and consummation of the
            transactions which are a part of this Agreement have been duly
           authorized and approved by all necessary corporate actions by
        Buyer, and immediately upon execution of this Agreement by
               Buyer's authorized representative, all of Buyer's obligations set
              forth in or referenced in this Agreement shall constitute legal,
              valid and binding obligations of Buyer, or Buyer's successors or
assignees, which obligations are enforceable      

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           against Buyer in accordance with their terms against Buyer or
Buyer's successors or assignees;                  

          (4)  There is no provision in the Articles of Incorporation or By-Laws
         of Buyer which prohibits the execution of this Agreement or
         consummation of the transactions covered by this Agreement;

      (5)  As of the date of Closing only, Buyer shall have obtained all
            legal authority which is necessary to enable Buyer lawfully to
          conduct rail freight transportation operations over the Rail
          Lines as a common carrier and under one or more rail freight
           transportation contracts, commencing at 12:01 a.m. on the day
following the date of Closing;                    

        (6)  The negotiations related to this Agreement have been handled by
           Buyer on its own behalf, without intervention of any agent or
              party, and in such manner as not to give rise to any valid claim
               by any party for any finder's fee, brokerage commission, or other
        similar payment in connection with any of the transactions
included in this Agreement;                       

    (7)  Neither Buyer nor any of Buyer's equity owners or financing
          sources, nor any of their partners, is a Class I railroad or
affiliated with a Class I railroad; and           

(8)  No representation or warranty by Buyer in this         

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             Agreement contains any untrue statement of a material
                   fact, nor omits any material fact that is necessary to make
                 any representation or warranty not materially misleading.

(5) Inspection and Condition of Rail Lines.                           

    (a) By signing this Agreement, Buyer acknowledges that Buyer has inspected
the Rail Lines, including all improvements and structures on the Rail Lines.    
Buyer further acknowledges that: (i) except as set forth in Paragraphs 4(a)(8), 
4(a)(9), and 4(a)(10) of this Agreement, no representation has been made by     
Seller to Buyer concerning the state or condition of the Rail Lines, or the age 
of any improvements of the Rail Lines; (ii) Buyer has not relied upon any       
statement or declaration of Seller, oral or in writing, as an inducement to     
entering into this Agreement, other than as stated in the Agreement; and (iii)  
the sole consideration for execution of this Agreement by Buyer is set forth in 
this Agreement.                                                                 

   (b) EXCEPT AS SET FORTH IN PARAGRAPH 4(A) OF THIS AGREEMENT SELLER HEREBY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AS TO THE 
DESIGN OR CONDITION OF THE RAIL LINES, THEIR MERCHANTABILITY OR FITNESS FOR ANY 
PARTICULAR PURPOSE, THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE RAIL      
LINES, OR THE CONFORMITY OF THE RAIL LINES TO THEIR INTENDED USES. SELLER SHALL 
NOT BE LIABLE TO BUYER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING   
STRICT LIABILITY IN TORT) WITH RESPECT TO THE DESIGN, CONDITION, QUALITY,       
SAFETY, MERCHANTABILITY, OR FITNESS FOR                                         

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ANY PARTICULAR PURPOSE, OF THE RAIL LINES, OR THE CONFORMITY OF THE RAIL LINES  
TO THEIR INTENDED USES. SELLER OFFERS, AND BUYER ACCEPTS, THE RAIL LINES IN "AS 
IS, WHERE IS" AND "WITH ALL FAULTS" CONDITION, AND SUBJECT TO ALL LIMITATIONS ON
SELLER'S RIGHTS, INTEREST, AND TITLE TO THE PROPERTY COMPRISING THE RAIL LINES. 

6. Liability and Indemnity.                                           

  (a) Cooperation in Defense. Buyer and Seller agree that, for three years
following the date of Closing, they will cooperate as necessary in defense of   
any claim, demand, investigation or litigation arising out of Seller's or       
Buyer's ownership or operation of the Rail Line.                                

(b) Definition of Losses. In this Agreement, the term "Losses" shall  
include all costs, expenses, fees or liabilities of, or in any way related to:  
(i) any violation of law or regulation, (ii) any damage to property, the        
environment or natural resources, (iii) any bodily injury or death of any       
person, or (iv) the breach of any contract, including this Agreement of the     
extent set forth in this Agreement. "Losses" shall include, but not be limited  
to, all costs of claims, activities in response to enforcement, costs of        
investigation and remediation, damages, judgments, awards, orders, decrees,     
payments, fines, penalties, assessments, court costs, and attorney, consultant  
and expert witness fees, and shall include cost recovery or contribution claims 
made pursuant to CERCLA or similar federal or state laws.                       

(c) General Liability and Indemnity.                                  

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        (1)  Seller's General Liability and Indemnity. Except as provided in
         Paragraph 6(d) of this Agreement (environmental liability),
              Seller shall be responsible for, and shall indemnify, defend and
             hold harmless Buyer fully against, all Losses, which: (i) arise
            out of Seller's ownership or operation of the Rail Lines on or
          prior to the date of Closing; (ii) result from any breach by
              Seller of any of its representations and warranties set forth in
               Paragraphs 4(a) and 9 of this Agreement, or, except as covered by
             clause (iv) just below, any failure by Seller to perform any of
               its obligations under this Agreement; (iii) result from claims of
             third parties caused by Seller's performance or nonperformance,
            or Buyer's nonperformance only where Buyer has no knowledge of
      the existence of the duty to perform, under any material
              contract, lease, permit, license, easement or commitment related
              to the Rail Lines that is not identified in this Agreement or on
              Exhibit C; or (iv) are directly related to Buyer's activities or
              operations on the Trackage Rights Lines, or Seller activities or
               operations on Seller's Trackage Rights, to the extent such losses
are proximately caused by Seller's negligence.    

(2)  Buyer's General Liability and Indemnity. Except as     

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        provided in Paragraph 6(d) of this Agreement, and further except for
    Losses resulting from one or more of Seller's representations or
   warranties set forth in this Agreement containing any untrue or
       materially misleading statement of a material fact, or omitting any
     material fact that is necessary to prevent that representation or
         warranty from being materially misleading, Buyer shall be responsible
   for, and shall indemnify, defend and hold harmless Seller fully
          against, regardless of any negligence or alleged negligence of Seller,
        all Losses which: (i) arise out of Buyer's ownership or operation of
    the Rail Lines after 12:01 a.m. on the day following the date of
Closing; (ii) result from any breach by Buyer of any of its 
     representations or warranties set forth in Paragraph 4(b) of this
        Agreement, or any failure by Buyer to perform any of its obligations
          under this Agreement; (iii) result from claims of third parties caused
        by Buyer's nonperformance or required performance under any material
        contract, lease, permit, license, easement or commitment relating to
   the Rail Lines, where that contract, lease, permit, easement or
          commitment is identified in Exhibit C, or Buyer has specific knowledge
   of it, but then only from the time Buyer acquired such specific

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             knowledge, or (iv) arise out of, or are related or attributable
       to any of Buyer's activities or operations on or near the
             Trackage Rights Lines, or Seller's activities and operations on
            Seller's Trackage Rights, except to the extent such losses are
proximately caused by Seller's negligence.        

(d)  Environmental Liability and Indemnity.                           

      (1)  Buyer's Acknowledgments with Respect to the Rail Lines. Buyer
             acknowledges that Seller has provided Buyer with full access to
            inspect the Rail Lines. Buyer further acknowledges that Seller
      makes only those representations and warranties to Buyer
              concerning the existence of any hazardous or toxic substances on
              or near the Rail Lines, or compliance of the Rail Lines with any
           statutes, ordinances, rules, regulations, orders or decisions
              with regard to hazardous or toxic substances on or near the Rail
               Lines, which are expressly set forth in Paragraph 4(a)(9) of this
Agreement.                                        

        (2)  Seller's Environmental Liability and Indemnity. Notwithstanding
      any other liability or indemnification provision in this
              Agreement, Seller shall be responsible for, and shall indemnify,
          defend and hold harmless Buyer (including its successors and
assignees) fully against, Losses                  

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        incurred due to any claim, demand or litigation, to the extent it is
         based on any violation or requirement of any applicable environmental
    statute, ordinance, rule, regulation, order or decision, and the
      Losses arise from: (i) any chemical, material or substance that is
         now, or at the time in question is, regulated or governed by any law,
        the release of which creates any liability under any applicable law;
or (ii) any other material which, when released, would cause
       significant ecological damage (items described by (i) or (ii) above
          are referenced hereinafter as "Hazardous Materials") located on, under
or near the Rail Lines, where such Losses:                  

      (a)  were caused by one or more acts of Seller that occurred on or
prior to the date of Closing; and                 

          (b)  result from any written claim made by a party other than Buyer or
              one of Buyer's affiliates ("Claims") that is delivered to Seller
   within three years following the date of Closing; and

(c)  exceed $10,000 in the aggregate in any year.           

(3)  Buyer's Environmental Liability and Indemnity. As part of the    
   consideration for this Agreement, and notwithstanding any other
   liability or indemnification provision in this Agreement, Buyer

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             shall be responsible for, and shall indemnify, defend, and hold
            harmless Seller fully against, regardless of any negligence or
             alleged negligence of Seller, Losses incurred due to any claim,
              demand or litigation, to the extent it is based on any violation
     or requirement of any applicable environmental statute,
            ordinance, rule, regulation, order or decision, and the Losses
              arise from any Hazardous Materials located on, under or near the
Rail Lines, where such Losses either:             

              (a)  were not caused by Hazardous Materials located on, under or
               near the Rail Lines or prior to the date of Closing; or

               (b)  regardless of cause, do not result from a Claim delivered to
                   Seller within three years following the date of Closing; or

              (c)  were not caused by one of more acts of Seller that occurred
            prior to the date of Closing and result from a Claim
                    delivered to Seller within three years of the date following
               Closing, but only up to $10,000 in the aggregate in any
year.                                   

              Buyer also shall be responsible for, and shall indemnify, defend
            and hold harmless Seller fully against, Losses incurred due to
               any claim, demand or litigation, to the extent it is based on any

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           violation of any applicable environmental statute, ordinance,
            rule, regulation, order or decision, and the Losses arise from
             any Hazardous Materials on or near the Trackage Rights Line, to
              the extent such Losses arise out of, or are attributable to, any
             of the Buyer's activities or operations on or near the Trackage
            Rights Lines, except to the extent such Losses are proximately
caused by Seller's negligence.                    

         (4)  Arbitration of Allocation of Liability Between Buyer and Seller.
           Any dispute between Seller and Buyer as to allocation between
            them of Losses for which both Seller and Buyer are responsible
             under the terms of this Paragraph 6 shall be settled by binding
      arbitration in accordance with the rules of the American
Arbitration Association.                          

       (5)  Buyer To Comply With Hazardous Materials Laws. Buyer agrees to
            comply with all federal, state and local laws, regulations and
              rules concerning handling and disposal of Hazardous Materials in
               connection with Buyer's ownership of, and activities on, the Rail
Lines.                                            

    (6)  Liability Remedies and Obligations Are Exclusive. Buyer and
              Seller agree that the remedies and obligations set forth in this
             Paragraph 6 shall be exclusive remedies and obligations of each
one to                                            

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             the other with respect to any Losses relating to the release or
         existence of Hazardous Materials on or near the Rail Lines.

  (e) Seller to Deliver Property Records to Buyer. Seller shall deliver to
Buyer, on or soon following the date of Closing, originals or copies of whatever
records, prints, archival information, or other evidence Seller locates in a    
reasonable search of Seller's records, which bears upon the use of, maintenance,
or title to the real estate comprising the Rail Lines during the time the Rail  
Lines were operated by Seller as a common carrier lines of railroad. If, at any 
time after Closing, Seller locates any other documents which bear upon the use  
of, maintenance, or title to the real estate comprising the Rail Lines, Seller  
promptly shall provide originals or copies of those documents to the Buyer.     

7. Assignment; Seller's Right of First Refusal.                       

 (a) Buyer shall not assign this Agreement, or any rights or obligations
under this Agreement, to another railroad, or any party or individual who at the
time of the assignment is affiliated with or working for another railroad,      
without the prior written consent of Seller. Any assignee, including any        
successor in interest, of Buyer's or Seller's rights under or property acquired 
by this Agreement, shall assume in writing all of Buyer's or Seller's continuing
and existing or thereafter arising obligations under this Agreement, and under  
any then effective contract assigned by                                         

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Seller to Buyer, in whole or in part, in accordance with the terms of this      
Agreement, which obligations are related to the property or rights involved in  
the assignment.                                                                 

(b) Any subsequent agreement by Buyer to sell the Rail Lines, any     
individual Rail Line, or any portion of any Rail Line route (i.e. any real      
estate within 15 feet of any main line track) that has not been abandoned       
pursuant to applicable STB procedures, must contain the effective right for     
Seller to purchase from Buyer the Rail Lines or portions being sold on the same 
basis as that set forth in the subsequent sale agreement. Buyer shall deliver   
to Seller a copy of the executed subsequent sale agreement within seven days    
following its execution. After receiving such copy, Seller shall have thirty    
days to accept or reject purchase of the Rail Lines or portions being sold. If  
Seller, at any time during these thirty days, offers in writing to purchase     
from Buyer the Rail Lines or portions being sold, on the same basis as that set 
forth in the subsequent sale agreement, Buyer, within seven days, shall accept  
such offer, and within thirty days thereafter, shall convey such property to    
Seller.                                                                         

8. Obligations are Continuing.                                        

     The representations, warranties and obligations of Buyer and Seller in this
Agreement are continuing and survive the Closing, and delivery of the Quitclaim 
Deed. Terms of continuing obligations in this Agreement are subject to amendment
only by a written contract signed by both Buyer and Seller, or their            

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respective successors or assignees.                                             

9. Liens and Encumbrances.                                            

 The Rail Lines are subject to four general mortgages of Seller: (i) the
Prior Lien Mortgage, dated November 10, 1896, between Northern Pacific Railway  
Company and The Mercantile Trust Company, as supplemented; (ii) the General Lien
Mortgage, dated November 10, 1896, between Northern Pacific Railway Company and 
The Mercantile Trust Company, as supplemented; (iii) General Gold Bond Mortgage,
dated January 1, 1921, between Great Northern Railway Company and The First     
National Bank of the City of New York, as supplemented; and (iv) Consolidated   
Mortgage, dated March 3, 1970, between Burlington Northern, Inc., and Morgan    
Guaranty Trust Company of New York, as supplemented (collectively, "Mortgages").
Seller shall deliver to Buyer, within 30 days after the date of Closing,        
executed releases of the Rail Lines from the liens of the Mortgages. Seller     
shall pay the amount demanded by any of the Mortgages' Trustees as required to  
deliver executed releases of the Rail Lines from the liens of the Mortgages     
within 30 days after the date of Closing. Until such releases are delivered to  
Buyer, Seller shall indemnify Buyer, and the party lending to Buyer the purchase
price for the Rail Lines, against any Losses that Buyer incurs after Closing    
which result from Seller not yet having delivered to Buyer executed releases of 
the Rail Lines from the liens of the Mortgages. Seller represents, warrants and 
covenants that, to the best of Seller's current knowledge, other than the liens 
of the Mortgages, Seller has not caused or suffered, and will not cause or      
suffer prior to the date of Closing, any liens or encumbrances to be filed      
against the Rail Lines which would                                              

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materially adversely affect Buyer's ability to conduct rail freight             
transportation operations on the Rail Lines on the day following the date of    
Closing. Buyer agrees to take title to the Rail Lines subject to all liens and  
encumbrances on the Rail Lines, except for the liens that would violate one or  
more of Seller's representations and warranties in Paragraph 4(a) or this       
Paragraph. Other than the Mortgages, the only encumbrances on the Rail Lines of 
which Seller is aware are related to the agreements identified in Part I of     
Exhibit C, attached hereto, and may encumber the Rail Lines on the terms and    
conditions set forth in those agreements. If, other than the Mortgages, there is
a lien for payment of money that exists as of the date of Closing, and Buyer    
notifies Seller in writing that there is a lien, Seller will release the lien   
within 30 days of the date Seller receives such notice, or indemnify Buyer for  
any harm to Buyer that results from Seller's failure to so release any such     
lien.                                                                           

10. Pending Public Works Projects.                                    

Seller shall notify Buyer prior to closing of all pending public works
projects on the Rail Lines of which Seller is aware. Seller shall pay the       
railroad's share of the cost of whatever work is performed on pending public    
works projects before the date of Closing, and Buyer shall pay the railroad's   
share of the cost of whatever work is performed on these projects after the date
of Closing. Any payments received by Buyer or Seller from any government body   
for a pending public works project shall be                                     

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apportioned on the basis that Seller shall receive that share of the payments   
applicable to work performed on these projects prior to date of Closing, and    
Buyer shall receive that share of the payments applicable to work performed on  
these projects after the date of Closing. Buyer shall be responsible to         
determine who owns materials present on the Rail Lines in connection with       
pending public works projects.                                                  

11. Buyer to Offer to Hire Seller's Qualified Employees.              

Buyer shall attempt to interview for employment positions on the Rail 
Lines all of Seller's employees who are eligible to work on the Rail Lines on   
the date of this Agreement. Buyer shall give priority hiring consideration      
to employees of Seller who work on the Rail Lines and are representated by the  
Brotherhood of Maintenance of Way Employee. Buyer shall offer to hire, at       
salary levels and other terms and conditions of employment that are determined  
by Buyer to be appropriate, all of those employees who Buyer, in Buyer's        
discretion, determines to be qualified and needed by Buyer. Buyer promptly      
shall notify Seller of the name of each of Seller's current employees who Buyer 
offers to hire, and also the name of each of these employees who Buyer actually 
hires. Buyer shall assume a neutral stance in any Brotherhood of Maintenance of 
Way Employee union organizing effort.                                           

12. Closing.                                                          

(a) The closing of this transaction shall occur on December           

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27, 1996, or an earlier date mutually agreeable to the parties (referenced      
herein as "Closing").                                                           

 (b)  At Closing, Seller shall deliver to Buyer the following documents:

    (1)  A sufficient number of original counterparts of an executed
              Quitclaim Deed to the Rail Lines, in exact form as the Quitclaim
           Deed attached hereto as Exhibit A, to enable Buyer to file an
               original Quitclaim Deed in each county in which the real property
comprising the Rail Lines as located;             

   (2)  An executed Bill of Sale in exact form as the Bill of Sale
attached hereto as Exhibit B;                     

      (3)  A copy of Seller's Articles of Incorporation and By-Laws; and

        (4)  An opinion of counsel for Seller to Buyer with respect to those
         items represented by Seller to Buyer in Paragraphs 4(a)(1),
               4(a)(2), 4(a)(3), 4(a)(4), 4(a)(5) and 4(a)(8) of this Agreement.

(c)  At Closing, Buyer shall deliver to Seller:                       

 (1)  A copy of Buyer's Articles of Incorporation and By-Laws;

         (2)  A Certificate of Insurance establishing that Buyer has effective
             liability insurance meeting the requirements of Paragraph 16 of
this Agreement; and                               

        (3)  An opinion of counsel for Buyer to Seller with respect to those
items represented by Buyer to                     

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Seller in Paragraphs 4(b)(1), 4(b)(2), 4(b)(3), 4(b)(4) and 
4(b)(5) for this Agreement.                                 

  (d)  At Closing, Buyer shall deliver to Seller or APEX, as designated by
Seller, the balance of the purchase price, or $3,470,000, as set forth in       
Paragraph 2 of this Agreement.                                                  

(13) Proration.                                                       

 Real estate taxes, prepaid rentals, utilities, and other income or fees
attributable to the Rail Line interests transferred to Buyer under the terms of 
this Agreement, shall be prorated between Seller and Buyer in such manner as to 
allocate to Seller all income, taxes and expenses attributable to the Rail Lines
on or prior to the date of Closing, and to allocate to Buyer all income, taxes  
and expenses attributable to the Rail Lines after the date of Closing. The sum  
paid by Buyer to Seller or Apex at Closing shall not be adjusted based on this  
proration, but payment settling in full all prorated items shall be made no     
later than 60 days following the date of Closing.                               

(14) Interchange.                                                     

    (a)  Buyer and Seller shall interchange rail freight cars and equipment to
        and from each at the Crookston, Minnesota rail yard. All of Seller's
         yard tracks at the Crookston, Minnesota rail yard shall be referenced
hereinafter as "Interchange Tracks".                        

(b)  Cars and their contents that are delivered by one party          

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to the other an Interchange Track shall be deemed to be in the
         possession of the receiving party as of the time they are placed on the
      Interchange Track and uncoupled from the delivering party's train or
        engine, except that if any such car is rejected by the receiving party
      under the Interchange Rules of the Association of American Railroads
    ("AAR") or any successor rules, the refused car shall be deemed to
    remain in the possession of the delivering party until that car is
accepted by the receiving party.                              

15. Car Hire Costs.                                                   

  The party in possession of any car shall be responsible for all car hire
costs, per diem expenses and mileage allowances payable with respect to such    
car, for any per diem charges for trailers or containers carried by such car, or
for any equipment use charges applicable to any RoadRailer equipment or similar 
carless intermodal technology, except that Seller agrees that Buyer shall be    
entitled to per diem relief in connection with all loaded and empty rail        
equipment moving in rail freight transportation service and interchanged between
Buyer and Seller on an Interchange Track, according to the following schedule:  

   (a)  Three days of per diem relief at the stations of Wilds and Halstead,
Minnesota;                                                  

    (b)  Five days of per diem relief at the station of St. Hilaire, Minnesota
and on the MN Junction-Perley,                              

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              Minnesota rail line (except at Wilds and Halstead) and
                Tilden Junction-Red Lake Falls, Minnesota rail line; and

        (c)  Seven days of per diem relief on the MN Junction-Ada,
              Minnesota, Redland Junction-Fertile, Minnesota and St.
               Hilaire-Warroad, Minnesota (except at St. Hilaire) rail
lines.                                  

Seller shall make reasonable efforts to make freight cars available at Buyer's  
request on an Interchange Track, as needed by Buyer, on a non-discriminatory    
basis between Seller's car needs on similar rail lines and Buyer's shippers' car
needs.                                                                          

16. Liability Insurance.                                              

  (a) For so long as Buyer conducts any activities on or near the Trackage
Rights Line, Buyer shall maintain a comprehensive general form of insurance     
covering liability in connection with any of Buyer's activities or operations on
or near the Trackage Rights Line, including but not limited to Public Liability,
Personal Injury and Property Damage, Federal Employers Liability Act Liability, 
Bill of Lading and Foreign Rolling Stock Liability, and Contractual Liability,  
with such limits (consistent with the terms set forth below), deductibles and   
exclusions as Seller may agree are satisfactory, provided however, that: (i)    
such limits shall not be less than $2 million per occurrence or $4 million in   
the aggregate, except on the Erskine-Thief River Falls line of Soo Line Railroad
Company, where such limits shall not be less than $10                           

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million per occurrence and $10 million in the aggregate; and (ii) policy terms  
shall not exclude or limit coverage where activities or operations are on       
or near railroad tracks. Seller shall be named as an ADDITIONAL INSURED on such 
liability insurance policy. Such liability insurance must be purchased from an  
insurance company licensed to do business in Minnesota, and possessing a        
current Best's Insurance Guide Rating of B and Class X, or better.              

 (b) Buyer shall provide Seller with evidence of its liability insurance
coverage at Closing, with copies of its insurance policies and any amendments,  
as soon as they are available, and with evidence of continued insurance coverage
on January 1 and July 1 of each year. Buyer's failure to provide such evidence, 
within 7 days of any request therefore, shall entitle Seller to purchase such   
liability insurance, and withhold from the divisions payment forwarded to Buyer 
the cost of this insurance.                                                     

17.  Seller's Authority to Establish Through Routes and Offer Through 
Routes.                                                     

  Buyer and seller agree that, for ninety-nine years following the date of
Closing, Seller shall have authority to establish through routes and offer      
through freight rates via through routes involving both Buyer and Seller with   
interchange between Buyer and Seller at Crookston, Minnesota. Seller shall      
specify junctions and routes for all such traffic, effective the day following  
the date of Closing. For this same ninety-nine year period, Buyer automatically 
concurs in all such through rates established by Seller, whether for present or 
future freight traffic, so long as                                              

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Buyer shall receive for transporting the traffic the division of revenues that  
is set forth in Paragraph 18 of this Agreement.                                 

18. Division of Revenue.                                              

    (a) Buyer and Seller agree that, for so long as Seller establishes through
freight rates for interline freight transportation service involving both Buyer 
and Seller, the through revenue accruing on all existing and future carload     
traffic movements originating or terminating on or along the Rail Lines, and    
interchanged between Buyer and Seller at Crookston, Minnesota, shall be         
divided between Buyer and Seller as shown in Exhibit D.                         

     (b) For twenty-five (25) years following the date of Closing, the divisions
set forth in Paragraph 18(a) shall be adjusted annually, commencing as of       
January 1, 1998, based on 50% of the increase or decrease between the fourth    
calendar quarter of 1997 compared to the fourth quarter of 1996, in the Rail    
Cost Adjustment Factor, unadjusted for productivity (or, if it ceases to be     
used, some similar rail cost index), and thereafter as of each January 1, based 
on the 50% of increase or decrease (but for the first three years not any       
decrease) in the Rail Cost Adjustment Factor in the fourth calendar quarter of  
the preceding calendar year, compared to the fourth calendar quarter of the year
before that. After January 1, 2003, if this index does not adequately allow     
Buyer to recover its reasonable cost increases, then Buyer and Seller shall meet
to determine whether to adjust Buyer's division, and if they cannot agree, an   
arbitrator acceptable to both parties shall determine                           

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whether an additional increase is appropriate and what that increase shall be.  
Similarly, after January 1, 2003, if this index overstates Buyer's reasonable   
cost increases, or understates Buyer's reasonable cost reductions per car, then 
Buyer and Seller shall meet to determine whether to adjust Buyer's division, and
if they cannot agree, an arbitrator acceptable to both parties shall determine  
whether a reduction in Buyer's division is appropriate and what that reduction  
shall be. Any decision of an arbitrator with respect to these issues shall be   
binding on both Buyer and Seller. After December 6, 2021, further changes in    
Buyer's divisions shall be subject to mutual agreement between Buyer and Seller.

(c) Nothing in this Agreement shall preclude Seller and Buyer from    
negotiating and mutually agreeing to different divisions than those specified in
this Paragraph. Divisions of revenue shall be paid only where Seller earns      
linehaul revenues for a shipment. Buyer shall not impose any surcharge on any   
traffic without Seller's prior written consent.                                 

19. Transfer of Operations.                                           

   All rail operations on the Rail Lines shall be transferred from Seller to
Buyer at 12:01 a.m. on the day following the date of Closing.                   

20. Collection of Revenues.                                           

(a) Seller shall submit freight bills or interline                    

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settlements for, and shall collect, all revenues due for movements over the Rail
Line of all shipments moved through Crookston, Minnesota, on or before the date 
of Closing. Seller shall assess and collect all charges due for all switching   
services performed on the Rail Lines on or before the date of Closing. Seller   
shall assess and collect all demurrage and miscellaneous charges relating to car
supply and other services performed on the Rail Lines on or before the date of  
Closing.                                                                        

   (b) Except as otherwise provided by freight transportation contracts, all
shipments which move through Crookston, Minnesota, after 12:01 a.m. on the day  
following the date of Closing shall be settled between Buyer and Seller on the  
basis of a modified junction settlement plan, with Seller paying division of    
revenue payments to Buyer on a weekly basis within five working days following  
the date on which Seller issues the revenue waybill for the movement. Seller    
shall submit freight bills for, and shall collect all revenues due for, all     
shipments originating or terminating on the Rail Lines and interchanged between 
Seller and Buyer, including all prepaid shipments that originate on the Rail    
Lines, and all collect shipments that terminate on the Rail Lines, except for   
shipments where Seller does not receive line haul revenues. Seller has the right
to grant, or refuse to grant, credit to any customer on the Rail Lines          
concerning any such shipments. Buyer shall assess and collect all charges due   
for all switching services performed on the Rail Lines at and after 12:01 a.m.  
on the day following the date of Closing. Buyer shall assess and collect        

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all demurrage and miscellaneous charges relating to car supply and other        
services performed on the Rail Lines at and after 12:01 a.m. on the day         
following the date of Closing.                                                  

21. Transfer of Liabilities; Payment of Charges.                      

 For the period before and including the day of Closing, Seller shall be
responsible for: (a) all common carrier rail operations, including car supply,  
on the Rail Lines; (b) any freight loss and damage claims attributable to rail  
operations over the Rail Lines; and (c) all car accounting and all car hire and 
car mileage allowance payments relating to rail operations over the Rail Lines. 
At and after 12:01 a.m. on the day following the date of Closing; Buyer shall be
responsible for: (d) all common carrier rail operations, including car supply,  
on the Rail Lines; (e) any freight loss and damage claims attributable to rail  
operations over the Rail Lines; and (f) all car accounting and all car hire and 
car mileage allowance payments relating to rail operations over the Rail Lines. 

22. Electronic Data Interchange.                                      

Within nine months following the date of Closing, Buyer must have the 
ability to send and receive electronically waybills, advanced consists, and     
bills of lading; as well as Train II reports and passing/placement reportings   
for performance purposes. Transaction reporting should be at industry standard  
levels or one level behind.                                                     

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23. Assignment of Freight Transportation Contracts.                   

The parties agree that, notwithstanding any other provision of this   
Agreement, the only freight transportation contracts to be assigned by this     
Agreement are: (a) freight transportation contracts that apply to traffic moving
to or from facilities on or along the Rail Lines; or (b) freight transportation 
contracts with or involving shippers or receivers that have facilities on or    
along the Rail Lines, and which would apply to one or more shipments to or from 
a facility on or along the Rail Lines. Seller agrees to send on the date of     
Closing to each shipper (or consignee), and each railroad, who is a party to any
freight transportation contract involving any existing or potential freight     
traffic movement to or from any rail origin or destination on the Rail Lines, a 
Notice of Assignment, advising those parties of the following: (i) the          
occurrence of this sale; (ii) the fact that all rates and service (and in the   
case of other railroads, revenue divisions) terms in each such contract will    
remain the same; and (iii) the fact that Buyer will replace Seller as the party 
responsible for all rail service to be performed over all or any portion of the 
Rail Lines under each such contract.                                            

24. Applicable Law.                                                   

  This agreement shall be governed by and construed in accordance with the
laws of the State of Texas.                                                     

25. Effect of Waiver.                                                 

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    Any waiver by either Buyer or Seller, or failure of either Buyer or Seller
to insist upon full and complete performance by Seller or Buyer of its          
obligations set forth in this Agreement, shall not constitute a waiver or       
release of such party's right to insist upon full and completed performance of  
any other obligations in this Agreement, or a waiver or release of such party's 
right to insist upon full and complete performance of the obligations that were 
waived or not enforced for periods prior to, or following, the waiver or failure
to insist upon full and complete performance. This Agreement shall be amended or
modified only by written agreement signed by the parties hereto.                

26. Notices.                                                          

All notices and other communications under this Agreement shall be in 
writing and deemed properly served if delivered by hand to the party addressed  
or, if mailed, when received by the United States Postal Service in registered  
or certified mail, postage prepaid, or, if sent by a national overnight service,
when received by the carrier service in a prepaid mailer, return receipt        
requested, addressed as follows:                                                

Seller:           Mr. Jerome M. Johnson                           
Assistant Vice President      
  Asset Planning & Rationalization
      Burlington Northern Railroad Company
777 Main Street               
Fort Worth, Texas  76102-5384 

Buyer:            Mr. Gary Marino                                 
Rail America, Inc.            
301 Yamato Road, Suite 1190   
Boca Raton, Florida  33431    

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with a copy to:                                                                 

Jack Conser                   
Rail America, Inc.            
       Huron & Eastern Railway Company, Inc.
3720 E. Washington Road       
Saginaw, Michigan  48601      

Either party hereto may change its address or addressee to which notices are to 
be given by providing written notice of the change to the other party.          

27. Confidentiality.                                                  

  Except to the extent that the terms of this Agreement are required to be
disclosed by the STB, by order of any court of competent jurisdiction or any    
governmental agency, or by parties involved in financing this purchase, each    
party to this Agreement shall not disclose the contents of this Agreement to any
other party, without the prior written consent of the other party to this       
Agreement. Any party who learns of any of the terms of this Agreement shall be  
required by the party to this Agreement who is disclosing the information not to
disclose those terms to any other party without the prior written consent of    
both parties to this Agreement. The parties agree to a joint press release      
acknowledging this transaction at closing.                                      

28. Entire Agreement; Integration of Agreement.                       

    This document, together with all Exhibits attached hereto, constitutes the
entire agreement between Buyer and Seller relating to this transaction. Any     
other prior or contemporaneous                                                  

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agreements, understandings, representations or statements, whether oral or      
written, relating to this transaction are merged herein. The headings and titles
to provisions in this Agreement are for convenience only, and shall not be      
deemed to modify or affect the rights or duties of Buyer or Seller. All rights  
and obligations of Buyer and Seller set forth in this Agreement, or in any      
Exhibit attached hereto, are integral parts of this Agreement. The consideration
inducing Buyer and Seller to enter into this Agreement includes all of the      
commitments by Buyer to Seller, and by Seller to Buyer, as set forth in this    
Agreement, including terms set forth in the Exhibits attached hereto.           

     IN WITNESS WHEREOF, authorized representatives of the parties have executed
this agreement as of this ____ day of November, 1996.                           

BURLINGTON NORTHERN                        ------------------------             
RAILROAD COMPANY                           MINNESOTA NORTHERN                   
                    RAILROAD, INC.

By:/s/ Douglas J. Babb                     By:/s/ Gary O. Marino                
--------------------------                 ---------------------          
Title:  Senior Vice President              Title:  President                    
and Chief of Staff                                        

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Dates Referenced Herein   and   Documents Incorporated by Reference

Referenced-On Page
This ‘10KSB’ Filing    Date First  Last      Other Filings
12/6/2139
1/1/033839
1/1/9838
Filed on:3/31/9710-Q,  10-Q/A,  NT 10-Q
For Period End:12/31/9610KSB/A
12/27/9611
12/20/9614
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