AMERICAN RAILCAR INDUSTRIES, INC. (NASDAQ:ARII) Files An 8-K Entry into a Material Definitive AgreementItem 9.01 Entry into a Material Definitive Agreement.
On June 28, 2018, American Railcar Industries, Inc. (“ARI” or the “Company”)’s wholly owned subsidiary ARI Leasing, LLC (“ARI Leasing”) entered into a Railcar Purchase and Sale Agreement (the “Railcar Purchase and Sale Agreement”) with ACF Industries, LLC (“ACF”), a company controlled by Mr. Carl Icahn, ARI’s principal beneficial stockholder through Icahn Enterprises L.P. The Railcar Purchase and Sale Agreement was unanimously approved by the independent directors of ARI’s audit committee.
Subject to the terms and conditions of the Railcar Purchase and Sale Agreement, ARI Leasing has agreed to purchase from ACF certain tank railcars (the “Railcars”) to be manufactured at ACF’s Milton, Pennsylvania facility. The purchase price for the Railcars will be calculated based on ACF’s manufacturing costs with respect to the Railcars plus a certain margin and is subject to certain adjustments, as provided in the Railcar Purchase and Sale Agreement. ACF’s manufacturing costs include ACF’s standard costs for materials, parts, labor, and overhead. Certain of ACF’s start-up expenses related to the manufacture of the Railcars will also be included in the purchase price for the Railcars.
The Railcar Purchase and Sale Agreement prohibits ACF from engaging in the manufacturing or assembly of any railcars other than the Railcars or any other activity that may affect the timely delivery of the Railcars under the Railcar Purchase and Sale Agreement.
ARI Leasing has also agreed to provide ACF with certain designs, engineering, related rights and licenses to use such designs and engineering, and purchasing support necessary to manufacture the Railcars, including with respect to the sourcing of certain materials and components to be incorporated into the Railcars (“Materials”). ACF may purchase Materials directly from ARI Leasing or ARI Leasing may purchase Materials from third parties on ACF’s behalf.
ARI Leasing has agreed to indemnify ACF for any damages arising from (a) any breach of any representation, warranty or covenant of ARI Leasing under the Railcar Purchase and Sale Agreement or any purchase order for the Railcars; or (b) any injury to persons or property from the Railcars resulting from (i) any defects in designs or specifications provided by ARI Leasing, (ii) the design and engineering services provided by ARI Leasing described above or, (iii) the license provided by ARI Leasing described above.
The Railcar Purchase and Sale Agreement may be terminated by the non-defaulting party upon thirty (30) days’ written notice to the other party upon the occurrence of certain events of default, including the failure to pay the amounts due thereunder or perform its obligations thereunder and certain events related to insolvency or the bankruptcy of either party. The Agreement also requires ACF to make commercially reasonable efforts to obtain all appropriate certifications required by the American Association of Railroads for the manufacturing and sale of the Railcars (“AAR Certification”) as of such date that ACF commences production of the Railcars and to have obtained the AAR Certification as of the date that the Railcars are delivered to ARI Leasing. ARI Leasing may terminate the Railcar Purchase and Sale Agreement upon ten (10) days’ written notice to ACF should ACF fail to obtain AAR Certification after using its commercially reasonable efforts to do so.
The description above is a summary of the terms of the Railcar Purchase and Sale Agreement. The description does not purport to be complete and is qualified in its entirety by reference to the agreement itself. A copy of the Railcar Purchase and Sale Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
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Railcar Purchase and Sale Agreement, dated as of June 28, 2018, by and between ARI Leasing, LLC and ACF Industries, LLC † |
† Confidential treatment has been requested and/or granted with respect to the redacted portions of this agreement. A complete copy of this agreement, including the redacted portions has been filed separately with the SEC.
American Railcar Industries, Inc. ExhibitEX-10.1 2 ariiex101acfpurchaseands.htm EXHIBIT 10.1 ariiex101acfpurchaseands CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been omitted pursuant to a request for confidential treatment and,…To view the full exhibit click here
About AMERICAN RAILCAR INDUSTRIES, INC. (NASDAQ:ARII)
American Railcar Industries, Inc. is a designer and manufacturer of hopper and tank railcars. The Company designs, manufactures and sells railcars and a range of components for the North American railcar and industrial markets. The Company operates through three segments: manufacturing, railcar leasing and railcar services. The manufacturing consists of railcar manufacturing, and railcar and industrial component manufacturing. The railcar-leasing segment consists of railcars manufactured by the Company and leased to third parties under operating leases. The railcar services segment consists of railcar repair, engineering and field services. It manufactures over two types of railcars, hopper railcars and tank railcars. It also manufactures various components for railcar and industrial markets. It manufactures both general service and specialty hopper railcars at its Paragould plant. Its hopper railcars are designed for shipping a range of dry bulk products from light density products.
