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\ . 495592 THIS INSTRUMENT FILED AS AN ACCOMMODATION ONLY. IT HAS NOT BEEN EXAMIJ>4!D AS TO ITS EXECUTION, INSURABILITY < AFFECl::W:nn.E. - EXCHANGE AGREEMENT BETWEEN PALOUSE RIVER AND COULEE CITY RAILROAD, INC. AND CITY OF MOSCOW, IDAHO THIS EXCHANGE AGREEMENT ("Agreement") is entered into on }.l_p , 2005, by and between Palouse River and Coulee City Railroad, Inc., a Washington corporation ("Palouse"), and City of Moscow, Idaho, a municipal corporation of the State of Idaho ("City"). l. PROPERTY TO BE RECEIVED BY CITY. Palouse shall convey and City shall receive that certain real property located in the City of Moscow, County of Latah, State of Idaho, consisting of a small parcel in Ghormley Park, next to the existing south ball field, all current street crossings owned by Palouse, and a parcel east of the 1-95 couplet which will help complete City's pedestrian and bicycle path way, comprising of approximately six point seven three (6.73) acres, as shown on Exhibit attached hereto (hereinafter "Palouse Property") and made a part hereof, together with all easements, rights and appurtenances thereto all in accordance with the terms and conditions hereinafter set forth. The legal description of the Palouse Property shall be supplied by Palouse. 2. PROPERTY TO BE ACQUIRED BY PALOUSE. City shall convey and Palouse shall receive a Quitclaim Deed Reserving Easements for that certain real property located in the City of Moscow, County of Latah, State of Idaho, consisting of one parcel of land comprising approximately one acre, as more particularly described on Exhibit attached hereto and made a part hereof, together with all easements, rights and appurtenances thereto (hereinafter "City Property"), all in accordance with the terms and conditions hereinafter set forth. 3. PATHWAY AND UTILITY EASEMENTS TO BE CONVEYED BY PALOUSE. Palouse shall grant, or cause to be granted, to City non-exclusive, perpetual easements for the purpose of public utility and pathway construction and maintenance through and across the property lying between Perimeter Road and Styner Avenue according to the terms and conditions of such Pathway and Utility Easement Agreements attached hereto as Exhibit and made a part hereof (hereinafter "Palouse Easements"). The legal description of such Pathway and Utility easements shall be supplied by Palouse. In addition, Palouse hereby grants and causes to be granted to City non-exclusive utility easements over, through and across all properties owned by Palouse which contain public utilities as of the date of execution of this Agreement whether or not easements for such existing public utilities have been recorded. Such utility easements shall be for the purpose of public utility maintenance and shall consist of a twenty foot (20') easement width [ten feet on either side of the center line] where any such public utilities are located. 4. ALL PALOUSE LICENSES WITH CITY ARE EXTINGUISHED. Palouse hereby transfers any and all City licenses for Palouse Property crossing or encroachment, whether recorded or not, on all Palouse Property and Palouse Easements and forever extinguishes City's obligation, if any, to pay any such licenses following the date of execution of this Agreement. EXCHANGE AGREEMENT- AND CITY OF Moscow PAGE I OF9 ---PAGE BREAK--- 5. UCENSE FOR ENTRY. 495592 Each party hereto grants to the other a license to enter upon the properties subject to this Agreement for all purposes reasonably related to a full and adequate determination of the suitability of the property, including, without limitation, the right to conduct surveys, soils tests, engineering studies, and environmental tests and audits. 6. EXCHANGE CONDITIONS. In consideration for Palouse Property and Palouse Easements, City shall grant City Property to Palouse. In consideration for City Property, Palouse shall grant Palouse Property and Palouse Easements to City and shall extinguish all Palouse licenses on such Palouse Property and Palouse Easements. 7. CITY CONDITIONS SUBSEQUENT. Notwithstanding anything to the contrary in this Agreement, City shall not be obligated to transfer the City Property to Palouse's designee unless at or prior to closing each of the following conditions has been met or City has waived said conditions in writing. Palouse agrees to reasonably cooperate with City to execute any documents which may be necessary or convenient to the performance of these conditions: City and Regents of the University of Idaho (hereinafter "Regents") have entered into, upon terms and conditions reasonably acceptable to City, an Easement Agreement pertaining to extensions and connections for the Paradise Path and Chipman Trail. City has obtained or been provided with such surveys, soils tests, engineering studies, and environmental tests and audits as city may desire, which shall show the Palouse Property to be suitable to City, in City's sole opinion. City has obtained all proper approvals for this transaction, including approval from the City Council. City shall support Palouse's petition to the Surface Transportation Board (STB) for reactivation of City rail banked property from Perimeter Road to Line Street. After STB grants to Palouse the right to reactivate the north railroad line, City shall pay the sum of five thousand two hundred six dollars ($5,206) to the Pullman Civic Trust. 8. PALOUSE CONDITIONS SUBSEQUENT. Notwithstanding anything to the contrary in this Agreement, Palouse shall not be obligated to acquire the City Property unless at or prior to closing each of the following conditions has been met or Palouse has waived said conditions in writing. City agrees to reasonably cooperate with Palouse to execute any documents which may be necessary or convenient to the performance of these conditions: Palouse has entered into such agreements and received the necessary approvals, specifically including any applicable approvals from the U.S. Surface Transportation Board, to permit Palouse to reestablish the Palouse rail line adjacent to Highway 8. EXCHANGE AGREEMENT= A..'ID CITY OF Moscow PAGE20F9 ---PAGE BREAK--- Title to the Palouse Property and Palouse Easements shall be good and marketable and shall be free and clear of all liens, encumbrances, easements, assessments, restrictions, tenancies (whether recorded or unrecorded) and other exceptions to title, except easements of record at the date of closing, and except the lien of real property taxes not yet due and payable and those exceptions approved in writing by City (hereinafter "City Permitted Exceptions"). Palouse will remove within twelve ( 12) months from the date of closing the railroad tracks, ties, associated equipment and any other personal property not attached to the Palouse Property from all portions of the Palouse Property. Palouse shall indemnifY, defend, and save City, its successors assigns, and agents harmless from any and all claims liabilities, losses, costs, charges, or expenses (including without limitation reasonable attorneys' fees) which City may incur as a result of Palouse' personal property remaining after closing, except to the extent caused by the negligence, willful misconduct or breach of contract by City or their agent, officer, employee, contractor or director. Notwithstanding City's or Palouse's waiver of these conditions subsequent, the obligations and indemnification set forth in this paragraph shall survive closing and the termination of this Agreement, and shall continue so long as Palouse's personal real property remains on the subject real property. Palouse shall have approved the closing of this transaction and more particularly the Board of Directors of Palouse shall have specifically and finally approved the terms of this transaction in accordance with their policies and procedures. Palouse shall remove, at Palouse's sole cost and expense, all tracks, ties, couplings, and railroad hardware, from Palouse Property within twelve (12) months of the closing date on such Palouse Property. Should Palouse fail to remove, at Palouse's sole cost and expense, all tracks, ties, couplings, and railroad hardware in a timely manner pursuant to this Agreement, such property shall transfer automatically to City and City shall be owner thereof. 9. ESCROW HOLDER. Prior to closing, the parties shall open an escrow with Latah County Title (hereinafter "Escrow Holder"). After all of the conditions of closing as set forth in Sections 7 and 8 have been met or waived, Palouse shall deposit into escrow duly executed and acknowledged Quitclaim Deeds conveying the Palouse Property and Palouse Easements to City, subject only to those exceptions specifically approved in writing as the City Permitted Exceptions, together with instructions to deliver and record the Deeds and Easements when Escrow Holder is in a position to transfer the City Property to Palouse subject only to Palouse Permitted Exceptions and compliance by City, Palouse and Regents with all conditions of Exchange Agreement between City, Palouse, and Regents 10. CLOSING. Closing shall be the date on which the Deeds and Easements are recorded which shall be as soon as practicable after all conditions set forth in Sections 7, 8 and 9 have been satisfied or waived. Possession passes to each respective party on closing. 11. COSTS. Escrow fees, insurance and recording fees, if any, for all deeds and easement agreements shall be shared equally by the parties. Taxes, rentals and utilities shall be prorated as of the time of closing. City is a tax exempt entity and the City Property is not currently subject to property taxation. As such, property taxes EXCHANGE AGREEMENl- AND CITY OF MOSCOW PAGE 3 OF 9 ---PAGE BREAK--- 4 fl •I iJ 0 shall not be prorated for the City Property and Palouse shall be responsible for all property taxes charged against the City Property after the date of closing. 12. COMMISSIONS. Each party represents and warrants that it has not dealt with or contracted with any broker, agent or finder to act in their behalf in connection with this transaction except for Shelley L. Bennett, Bennett & Associates, Inc. (hereinafter "Broker") who was retained by Palouse. Palouse agrees that it shall be solely responsible for all brokerage commissions and fees due to Broker and that said commissions and fees shall be paid by Palouse. Subject to any applicable limits of liability specified in Idaho Code§§ 6-901 through 6- 929, known as the Idaho Tort Claims Act, each party agrees to indemnify and hold harmless the other party from all claims arising from any misrepresentation by the indemnifying party pursuant to this Agreement and Palouse further agrees to indemnify, defend and hold harmless City from all claims arising from Palouse's failure to pay all brokerage commissions and fees due to Broker. 13. REPRESENTATION CONFIRMATION. Check one box in Section 1 and one ( 1) box in Section 2 below to confirm that in this transaction, the brokerage(s) involved had the following relationship(s) with the City and Palouse. Section 1: 0 A. The brokerage working with the City is acting as an AGENT for the City. 0 B. The brokerage working with the City is acting as a LIMITED DUAL AGENT for the City, without an ASSIGNED AGENT. 0 C. The brokerage working with the City is acting as a NONAGENT for the City and has an ASSIGNED AGENT acting solely on behalf of the City. IZJ D. The brokerage working with the City is acting as a NONAGENT for the City. Section 2: IZJ A. The brokerage working with Palouse is acting as an AGENT for Palouse. 0 B. The brokerage working with Palouse is acting as a LIMITED DUAL AGENT for Palouse, without an ASSIGNED AGENT. 0 C. The brokerage working with Palouse is acting as a LIMITED DUAL AGENT for Palouse and has an ASSIGNED AGENT acting solely on behalf of Palouse. 0 D. The brokerage working with Palouse is acting as a NONAGENT for Palouse. Each party signing this document confirms that he or she has received, read and understood the Agency Disclosure Brochure and has elected the relationship confirmed above. In addition, each party confirms that the broker's agency office policy was made available for inspection and review. EACH PARTY UNDERSTANDS THAT HE OR SHE IS A 'CUSTOMER' AND IS NOT REPRESENTED BY A BROKER UNLESS THERE IS A SIGNED WRITTEN AGREEMENT FOR AGENCY REPRESENTATION. Each party signing this document understands that the above confirmation DOES NOT create an agency relationship between the Broker(s) and the BUYER(S)/SELLER(S) and they are a CUSTOMER and EXCHANGE AGREEMENT- M'D CITY OF MOSCOW PAGE40F9 ---PAGE BREAK--- NOT REPRESENTED by a Broker UNLESS there is a SEPARATE signed written agreement as required by Idaho statute to create that relationship. Listing Agency: Selling Agency: Responsible Broker: Bennett & Associates, Inc. None Shelley L. Bennett 14. PROPERTIES SOLD AS-IS. The provisions of this Section 14 shall survive closing. Each party is relying solely upon such party's inspections as to the condition of properties. Except as expressly set forth in this Agreement, neither party nor such party's employees or agents are making, have made and each party expressly disclaims any representations or warranties, express or implied, with respect to any aspect, feature or condition of the properties or this transaction including, without limitation, the existence of hazardous waste, or the suitability of the property for any intended use. Each party must independently verify all information and reports regarding any aspect or feature of the property. Each party is acquiring its respective property in "As Is" condition with all faults including both latent and patent defects and each party releases the other from any and all liability relating to any aspect or condition of the properties, known or unknown, foreseeable or unforeseeable, actual or contingent, arising by statute, common law or otherwise. As used herein "hazardous waste" shall mean any hazardous waste or pollutants, contaminants or hazardous waste as defined by the Federal Water Pollution Control Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1990 and any amendments thereto, the Resource Conservation and Recovery Act and any amendments thereto or any similar state, local or federal law, rule or regulation, including, without limitation, asbestos or asbestos containing materials, PCBs, petroleum and petroleum products and urea formaldehyde. 15. SUCCESSORS. This Agreement shall be binding on the heirs, successors, assigns and personal representatives of the parties hereto. 16. ATTORNEYS' FEES. In the event either party initiates or defends any legal action or proceeding in any way connected with this Agreement, the prevailing party in any such action or proceeding (in addition to any other relief which may be granted, whether legal or equitable), shall be entitled to recover from tbe losing party in any such action its reasonable costs and attorneys' fees (including, without limitation, its reasonable costs and attorneys' fees on any appeal). All such costs and attorneys' fees shall be deemed to have accrued on commencement of any legal action or proceeding and shall be enforceable whether or not such legal action or proceeding is prosecuted to judgment. 17. DEFAULT. Neither party shall be deemed to be in default of this Agreement except upon the expiration of thirty (30) days (ten [10] days in the event of failure to pay money) from receipt of written notice from the other party specifying the particulars in which such party has failed to perform its obligations (or breached any of its representations or warranties) under this Agreement unless such party, prior to expiration of said thirty (30) day period (ten [10] days in the event of failure to pay money), has rectified the particulars specified in said notice of default. In the event of a default, the nondefaulting party may: ExCHANGE AGREEMENTc A.t"lD CITY OF MOSCOW PAGE50F9 ---PAGE BREAK--- Terminate this Agreement upon written notice to the defaulting party, and recover from the defaulting party all damages incurred by the nondefaulting party; (ii) Seek specific performance of this Agreement, and, in addition, recover all damages incurred by the nondefaulting party. The parties declare it to be their intent that this Agreement may be specifically enforced; (iii) Perform or pay any obligation or encumbrance necessary to cure the default and offset the cost thereof from monies otherwise due the defaulting party or recover said monies from the defaulting party; and (iv) Pursue all other remedies available at law, it being the intent of the parties that remedies be cumulative and liberally enforced so as to adequately and completely compensate the nondefaulting party. 18. NOTICES. All notices given pursuant to this Agreement shall be in writing and shall be given by personal service, by United States mail or by United States express mail or other established express delivery service (such as Federal Express), postage or delivery charge prepaid, return receipt requested, addressed to the appropriate party at the address set forth below: Palouse: City: Brad Snow Palouse River and Coulee City Railroad 315 W Third St. Pittsburg, KS 66762 City of Moscow, Idaho Marshall H. Comstock, Mayor P0Box9203 Moscow, ID 83843 The person and address to which notices are to be given may be changed at any time by any party upon written notice to the other party. All notices given pursuant to this Agreement shall be deemed given upon receipt. For the purpose of this Agreement, the term "receipt" shall mean the earlier of any of the following: the date of delivery of the notice or other document to the address specified pursuant to subparagraph above as shown on the return receipt, (ii) the date of actual receipt of the notice or other document by the person or entity specified pursuant to subparagraph above, or (iii) in the case of refusal to accept delivery or inability to deliver the notice or other document, the earlier of the date of the attempted delivery or refusal to accept delivery, the date of the postmark on the return receipt, or the date of receipt of notice of refusal or notice of nondelivery by the sending party. 19. CAPTIONS AND HEADINGS. The captions and headings in this Agreement are for reference only and shall not be deemed to define or limit the scope or intent of any of the terms, covenants, conditions or agreements contained herein. EXCHANGE AGREEMENTb AND CITY OF Moscow PAGE60F9 ---PAGE BREAK--- 20. ENTIRE AGREEMENT. 49.5fi92 This Agreement contains the entire agreement between the parties hereto regarding the properties referenced herein and supersedes all prior agreements, oral or written, with respect to the subject matter hereof. The provisions of this Agreement shall be construed as a whole and not strictly for or against any party. 21. CONSTRUCTION. In construing the provisions of this Agreement and whenever the context so requires, the use of a gender shall include all other genders, the use of the singular shall include the plural, and the use of the plural shall include the singular. Furthermore, "person" shall include individuals, partnerships, firms, associations, corporations, trusts, governmental agencies, administrative tribunals or any other form of business or legal entity. 22. TIME PERIOD COMPUTATION. All time periods in this Agreement shall be deemed to refer to calendar days unless the time period specifically references business days; provided that if the last date on which to perform any act or give any notice under this Agreement shall fall on a Saturday, Sunday or local, state or national holiday, such act or notice shall be deemed timely if performed or given on the next succeeding business day. 23. BINDING AGREEMENT. This Agreement shall not be binding or enforceable until both parties have fully executed this Agreement and have delivered to each other an original counterpart of this Agreement fully exe.cuted by the delivering party. 24. 1031 EXCHANGE. City acknowledges that Palouse may wish to structure this transaction as a tax deferred exchange of like-kind property within the meaning of Section I 031 of the Code. City agrees to reasonably cooperate with Palouse to effect such an exchange; provided, however, that City not be required to acquire or take title to any exchange property, (ii) City shall not be required to incur any expense (excluding attorneys' fees) or liability whatsoever in connection with the exchange, including, without limitation, any obligation for the payment of any escrow, title, brokerage or other costs incurred with respect to the exchange, (iii) no substitution of Palouse shall release Palouse from any of its obligations, warranties or representations set forth in this Agreement or from liability for any prior or subsequent default under this Agreement by Palouse, its successors or assigns, which obligations shall continue as the obligations of a principal and not of a surety or guarantor, (iv) Palouse shall give City at least five business days' prior notice of the proposed changes required to effect such exchange and the identity of any party to be substituted in the escrow, Palouse shall be responsible for preparing all additional agreements, documents and escrow instructions (collectively, the "Exchange Documents") required by the exchange, at its sole cost and expense, and (vi) Palouse shall be responsible for making all determinations as to the legal sufficiency, tax considerations and other considerations relating to the proposed exchange, the Exchange Documents and the transactions contemplated thereby, and City shall in no event be responsible for, or in any way be deemed to warrant or represent any tax or other consequences of the exchange transaction arising by reason of City's performance of the acts required hereby. EXCHANGE AGREEMENT- AND CITY OF Moscow PAGE70F9 ---PAGE BREAK--- 25. NO TIDRD PARTY BENEFICIARY RIGHTS. This Agreement is not intended to create, nor shall it in any way be interpreted or construed to create, any third party beneficiary rights in any person not a party hereto unless otherwise expressly provided herein. EXECUTED as of the date first above written. PALOUSE: CITY: Palouse 7nd Conlee City Railroad, Inc. City of Moscow, Idaho ATTEST: ACKNOWLEDGMENT STATE OF -K[U\05 ) ) ss. county o'e" u Ju; . ) On this day of h 1 Q , 05, befor me, the undersigned, a Notary Public in and for said State of Idaho, persona y appeared , known or identified to me to be the person whose name is subscribed to the foregoi g and ackn !edged to me that he executed the same as a duly authorized representative of Palouse River Coulee City Railroad, Inc. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove written. EXCHA.""l"GE AGREEMENTd AND CITY OF MOSCOW PAGE80F9 ---PAGE BREAK--- LIST OF EXHIBITS AND SCHEDULES Exhibit A- Palouse Property 1. Map of Overall Transaction 2. Quitclaim Deed - Streets Properties 3. Quitclaim Deed- Ghormley South Ball Field 4. Quitclaim Deed- East ofl-95 Property Exhibit B- City Property Quitclaim Deed- ITD/I-95 Property Exhibit C - Pathway and Utility Easement Agreements 1. Ghormley South Ball Pathway and Public Utility Easement 2. Paradise Creek Pathway and Public Utility (north and south) Easement 3. Paradise Creek Pathway and Public Utility (east and west) Easement EXCHANGE AGREEMENT- AND CITY OF MOSCOW 49559,2 PAGE 90F 9 ---PAGE BREAK--- 'tiS AT THE REQUEST OF: , Al6!\aliiDJm t co