EXECUTION COPY
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RECAPITALIZATION AGREEMENT
by and among
CSX CORPORATION,
a Virginia corporation,
VECTURA GROUP, INC.,
a Delaware corporation,
AMERICAN COMMERCIAL LINES HOLDINGS LLC,
a Delaware limited liability company,
AMERICAN COMMERCIAL LINES LLC,
a Delaware limited liability company, and
NATIONAL MARINE, INC., a Delaware
corporation.
Dated as of
April 17, 1998.
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TABLE OF CONTENTS
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Page
Number
ARTICLE I
Certain Definitions
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Section 1.1. "AAA" ...................................................... 2
Section 1.2. "Accounting Firm" .......................................... 2
Section 1.3. "Accounting Principles" .................................... 2
Section 1.4. "ACL" ...................................................... 3
Section 1.5. "ACL Amount"................................................ 3
Section 1.6. "ACL Assumed Funded Debt" .................................. 3
Section 1.7. [intentionally omitted] .................................... 3
Section 1.8. "ACL Balance Sheet" ........................................ 3
Section 1.9. "ACL Current Employees" .................................... 3
Section 1.10. "ACL Employee Benefit Plans" ............................... 3
Section 1.11. "ACL Employees" ............................................ 3
Section 1.12. "ACL Excluded Assets" ...................................... 3
Section 1.13. "ACL Excluded Liabilities" ................................. 3
Section 1.14. "ACL Financial Statements" ................................. 3
Section 1.15. "ACL Fixed Assets" ......................................... 3
Section 1.16. "ACL Foreign Plans" ........................................ 3
Section 1.17. "ACL Former Employees" ..................................... 4
Section 1.18. "ACL Holdings" ............................................. 4
Section 1.19. "ACL Holdings Indemnified Party" ........................... 4
Section 1.20. "ACL Holdings Savings Plan" ................................ 4
Section 1.21. "ACL Income Statement" ..................................... 4
Section 1.22. "ACL Indebtedness" ......................................... 4
Section 1.23. "ACL Intellectual Property Rights" ......................... 4
Section 1.24. "ACL Leased Real Property" ................................. 4
Section 1.25. "ACL Leases" ............................................... 4
Section 1.26. "ACL Licenses" ............................................. 4
Section 1.27. "ACL Litigation" ........................................... 4
Section 1.28. "ACL Multiemployer Plan".................................... 4
Section 1.29. "ACL-Only Employee Benefit Plans"........................... 4
Section 1.30. "ACL Owned Real Property" .................................. 4
Section 1.31. "ACL Permitted Encumbrances" ............................... 4
Section 1.32. "ACL Pro Forma Balance Sheet" .............................. 5
Section 1.33. "ACL Pro Forma Transactions" ............................... 5
Section 1.34. "ACL Savings Plan Employee" ................................ 5
Section 1.35. "ACL Target WC Level" ...................................... 5
Section 1.36. "ACL Transfer Date" ........................................ 5
Section 1.37. "Acquisition Proposal" ..................................... 5
Section 1.38. "Action" ................................................... 5
Section 1.39. "Adverse Consequences" ..................................... 5
Section 1.40. "Affiliate"................................................. 6
Section 1.41. "Agreement" ................................................ 6
Section 1.42. "Antitrust Laws" ........................................... 6
Section 1.43. "Assumed Vectura Employee Benefit Plans" ................... 6
Section 1.44. "Barging Liabilities" ...................................... 6
Section 1.45. "Business".................................................. 6
Section 1.46. "Claimant" ................................................. 7
Section 1.47. "Closing" .................................................. 7
Section 1.48. "Closing Date" ............................................. 7
Section 1.49. "Code" ..................................................... 7
Section 1.50. "Confidentiality Agreement" ................................ 7
Section 1.51. "Continuation Period" ...................................... 7
Section 1.51a. "Controlling Party" ........................................ 7
Section 1.52. "CSX" ...................................................... 7
Section 1.53. "CSX Savings Plan" ......................................... 7
Section 1.54. "CTC" ...................................................... 7
Section 1.55. "Current Portion of Long-Term Debt" ........................ 7
Section 1.56. "CVC" ...................................................... 7
Section 1.57. "Encumbrances" ............................................. 7
Section 1.58. "Environmental Law" ........................................ 7
Section 1.59. "Equity Contribution" ...................................... 8
Section 1.60. "Equity Letters"............................................ 8
Section 1.61. "ERISA" .................................................... 8
Section 1.62. "Estimated ACL Amount" ..................................... 8
Section 1.63. "Estimated NMI Holdings Amount" ............................ 8
Section 1.64. "Final Statement" .......................................... 8
Section 1.65. "Financing Letters" ........................................ 8
Section 1.66. "Funded Debt" .............................................. 8
Section 1.67. "GAAP" ..................................................... 8
Section 1.68. "Government Authority" ..................................... 9
Section 1.69. "Hazardous Material" ....................................... 9
Section 1.70. "hereof," "herein," and "herewith" ......................... 9
Section 1.71. "High Yield Letters" ....................................... 9
Section 1.72. "HSR Act" .................................................. 9
Section 1.73. "including" ................................................ 9
Section 1.74. "Income Taxes".............................................. 9
Section 1.75. "Indemnified Party" ........................................ 9
Section 1.76. "Indemnifying Party" ....................................... 9
Section 1.77. "Initial Funding Amount" ................................... 9
Section 1.78. "Initial Statement" ........................................ 9
Section 1.79. "Intellectual Property Rights".............................. 9
Section 1.80. "IRS" ...................................................... 9
Section 1.81. "Marked Materials" .........................................10
Section 1.82. "material," "materially," "material adverse change" and
"material adverse effect"...................................10
Section 1.83. "Multiemployer Plan" .......................................10
Section 1.84. "NBL" ......................................................10
Section 1.85. "NMI".......................................................10
Section 1.86. "NMI Holdings"..............................................10
Section 1.87. "NMI Holdings Amount".......................................10
Section 1.88. "NMI Holdings Target WC Level" .............................10
Section 1.89. "NMI Pro Forma Balance Sheets" .............................10
Section 1.90. "NMI Pro Forma Financial Statements"........................10
Section 1.91. "Noncompete Period".........................................10
Section 1.91a. "Noncontrolling Party"......................................10
Section 1.92. "Non-Qualified Plans" ......................................11
Section 1.93. "Notice of Disagreement" ...................................11
Section 1.94. "or"........................................................11
Section 1.95. "ordinary course consistent with past practice".............11
Section 1.96. "Parties" ..................................................11
Section 1.97. "Party Indemnified Party" ..................................11
Section 1.98. "person" ...................................................11
Section 1.99. "Recapitalization Transactions".............................11
Section 1.100. "Request" ..................................................11
Section 1.101. "Release"...................................................11
Section 1.102. "Respondent" ...............................................11
Section 1.103. "Returns"...................................................11
Section 1.104. "Rules" ....................................................11
Section 1.105. "Senior Credit Letter" .....................................11
Section 1.106. "Senior Common Amount"......................................11
Section 1.107. "Setoff"....................................................11
Section 1.108. "Subsidiary" ...............................................12
Section 1.109. "Taxes".....................................................12
Section 1.110. "Taxing Authority"..........................................12
Section 1.111. "to the knowledge of ACL"...................................12
Section 1.112. "to the knowledge of any Vectura Party".....................12
Section 1.113. "Total Current Assets"......................................12
Section 1.114. "Total Current Liabilities".................................12
Section 1.115. "Transferred ACL Subsidiaries" .............................12
Section 1.116. "Transferred Foreign ACL Subsidiaries" .....................12
Section 1.117. "Transferred NMI Holdings Subsidiaries" ....................12
Section 1.118. [intentionally omitted].....................................12
Section 1.119. "Vectura" ..................................................12
Section 1.120. "Vectura Balance Sheet" ....................................12
Section 1.121. "Vectura Continuing Employees" .............................13
Section 1.122. "Vectura Current Employees" ................................13
Section 1.123. "Vectura Employee Benefit Plans" ...........................13
Section 1.124. "Vectura Employees" ........................................13
Section 1.125 "Vectura Excluded Assets"...................................13
Section 1.126 "Vectura Excluded Liabilities"..............................13
Section 1.127. "Vectura Excluded Subsidiaries" ............................13
Section 1.128. "Vectura Financial Statements" .............................13
Section 1.129. "Vectura Fixed Assets" .....................................13
Section 1.130. "Vectura Foreign Plans".....................................13
Section 1.131. "Vectura Former Employees" .................................13
Section 1.132. "Vectura Income Statement" .................................13
Section 1.133. "Vectura Indebtedness" .....................................14
Section 1.134. "Vectura Intellectual Property Rights" .....................14
Section 1.135. "Vectura Leased Real Property" .............................14
Section 1.136. "Vectura Leases" ...........................................14
Section 1.137. "Vectura Licenses" .........................................14
Section 1.138. "Vectura Litigation" .......................................14
Section 1.139. "Vectura Matter" ...........................................14
Section 1.140. "Vectura Multiemployer Plan"................................14
Section 1.141. "Vectura-Only Employee Benefit Plans".......................14
Section 1.142. "Vectura Owned Real Property" ..............................14
Section 1.143 "Vectura Assumed Funded Debt"...............................14
Section 1.144 "Vectura Parties"...........................................14
Section 1.145 "Vectura Permitted Encumbrances" ...........................14
Section 1.146 "Vectura Savings Plan"......................................14
Section 1.147. "WARN Act" .................................................15
Section 1.148. "Working Capital" ..........................................15
ARTICLE II
Consummation of Recapitalization Transactions; Closing
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Section 2.1. Recapitalization Transactions ..............................15
Section 2.2. Closing Documents ..........................................17
Section 2.3. Time and Place of Closing ..................................18
Section 2.4. Adjustment .................................................18
ARTICLE III
Representations and Warranties of CSX
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Section 3.1. Incorporation; Authorization; Etc. .........................20
Section 3.2. Capitalization .............................................21
Section 3.3. Financial Statements .......................................22
Section 3.4. Undisclosed Liabilities ....................................23
Section 3.5. Properties .................................................23
Section 3.6. Absence of Certain Changes .................................24
Section 3.7. Litigation; Orders .........................................24
Section 3.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc..............................................24
Section 3.9. Labor Matters ..............................................25
Section 3.10. Compliance with Laws .......................................26
Section 3.11. Insurance ..................................................26
Section 3.12. Material Contracts .........................................26
Section 3.13. Fixed Assets ...............................................27
Section 3.14. Environmental Matters ......................................27
Section 3.15. Affiliate Transactions .....................................29
Section 3.16. Intellectual Property ......................................29
Section 3.17. Employee Benefit Plans .....................................30
Section 3.18. Brokers, Finders, Etc. .....................................32
Section 3.19. Acquisition for Investment..................................32
Section 3.20. Qualifications of ACL.......................................32
Section 3.21 No Outside Reliance.........................................33
ARTICLE IV
Representations and Warranties of the Vectura Parties
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Section 4.1. Incorporation; Authorization; Etc...........................33
Section 4.2. Capitalization..............................................34
Section 4.3. Financial Statements........................................35
Section 4.4. Undisclosed Liabilities.....................................36
Section 4.5. Properties..................................................36
Section 4.6. Absence of Certain Changes..................................37
Section 4.7. Litigation; Orders..........................................37
Section 4.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc..............................................38
Section 4.9. Labor Matters...............................................38
Section 4.10. Compliance with Laws........................................39
Section 4.11. Insurance...................................................39
Section 4.12. Material Contracts..........................................40
Section 4.13. Fixed Assets................................................41
Section 4.14. Environmental Matters.......................................41
Section 4.15. Affiliate Transactions......................................42
Section 4.16. Intellectual Property.......................................42
Section 4.17. Employee Benefit Plans......................................43
Section 4.18. Brokers, Finders, Etc.......................................45
Section 4.19. Qualifications of Vectura Parties...........................46
Section 4.20. Availability of Funds.......................................46
Section 4.21. No Outside Reliance ........................................46
Section 4.22. Acquisition for Investment .................................47
ARTICLE V
Covenants of the Parties
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Section 5.1. Investigation of Business; Access to Properties and
Records, Etc. ............................................47
Section 5.2. Efforts; Obtaining Consents; Antitrust Laws ................49
Section 5.3. Further Assurances .........................................50
Section 5.4. Conduct of Business ........................................50
Section 5.5. Pro Forma Transactions .....................................55
Section 5.6. Interim Financial Statements ...............................55
Section 5.7. Public Announcements; Non-Public Information ...............55
Section 5.8. Intercompany Items .........................................56
Section 5.9. Competition ................................................56
Section 5.10. Termination of Discussions .................................58
Section 5.11. No Solicitation ............................................58
Section 5.12. Use of Business Names.......................................58
ARTICLE VI
Employee Benefits
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Section 6.1. Termination of Participation ...............................58
Section 6.2. ACL Holdings' Obligations ..................................59
Section 6.3. Savings Plan................................................61
Section 6.4. Plan Transfers .............................................62
Section 6.5. WARN Act ...................................................62
ARTICLE VII
Tax Matters
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Section 7.1. Tax Returns ................................................62
Section 7.2. Definitions ................................................64
Section 7.3. Tax Indemnification by CSX .................................65
Section 7.4. Tax Indemnification by the Vectura Parties .................65
Section 7.5. Tax Indemnification by ACL Holdings ........................65
Section 7.6. Allocation of Certain Taxes.................................66
Section 7.7. Survival ...................................................66
Section 7.8. Cooperation and Exchange of Information ....................66
Section 7.9. Payment of Indemnified Taxes ...............................69
Section 7.10. Filing Responsibility ......................................69
Section 7.11. Refunds ....................................................70
Section 7.12. Limitation on Tax Indemnification ..........................71
Section 7.13. Article VII to Control .....................................71
Section 7.14. Tax Treatment...............................................71
ARTICLE VIII
Conditions of the Vectura Parties' Obligations to Close
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Section 8.1. Representations, Warranties and Covenants of CSX ...........72
Section 8.2. Filings; Consents; Waiting Periods .........................72
Section 8.3. No Injunction ..............................................72
Section 8.4. Financing ..................................................72
Section 8.5. Indebtedness ...............................................72
Section 8.6. Documents ..................................................72
Section 8.7. Material Adverse Change ....................................73
Section 8.8. Transition Services Agreement...............................73
ARTICLE IX
Conditions to CSX's Obligation to Close
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Section 9.1. Representations, Warranties and Covenants of the
Vectura Parties ..........................................73
Section 9.2. Filings; Consents; Waiting Periods .........................73
Section 9.3. No Injunction ..............................................73
Section 9.4. Indebtedness ...............................................73
Section 9.5. Documents ..................................................73
Section 9.6. Solvency Opinion............................................74
Section 9.7. Material Adverse Change ....................................74
ARTICLE X
Survival; Indemnification
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Section 10.1. Survival ...................................................74
Section 10.2. Indemnification ............................................74
Section 10.3. Certain Limitations ........................................75
Section 10.4. Payment of Indemnification .................................76
Section 10.5. ACL Holdings Indemnification ...............................76
Section 10.6. Vectura Indemnification ....................................76
Section 10.7. Procedures for Third-Party Claims ..........................77
Section 10.8. Procedures for Non-Third Party Claims ......................78
Section 10.9. Arbitration ................................................78
Section 10.10. Remedies Exclusive .........................................79
ARTICLE XI
Termination
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Section 11.1. Termination.................................................79
Section 11.2. Procedure and Effect of Termination.........................80
ARTICLE XII
Miscellaneous
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Section 12.1. Counterparts................................................80
Section 12.2. Governing Law; Jurisdiction and Forum.......................80
Section 12.3. Entire Agreement; Third-Party Beneficiary...................82
Section 12.4. Expenses....................................................82
Section 12.5. Notices.....................................................83
Section 12.6. Successors and Assigns......................................84
Section 12.7. Headings; Definitions.......................................84
Section 12.8. Amendments and Waivers......................................84
Section 12.9. Interpretation; Absence of Presumption......................85
Section 12.10. Severability................................................86
Section 12.11. Timing......................................................86
Section 12.12. NMI Holdings................................................86
SCHEDULES
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Schedule 1.12 ACL Excluded Assets
Schedule 1.13 ACL Excluded Liabilities
Schedule 1.66 Vectura Funded Debt
Schedule 1.125 Vectura Excluded Assets
Schedule 1.126 Vectura Excluded Liabilities
Schedule 1.143 Vectura Assumed Funded Debt
Schedule 2.1(d) ACL Assumed Funded Debt
Schedule 3.1 ACL Conflicts; Subsidiaries
Schedule 3.2 ACL Capitalization
Schedule 3.3 ACL Financial Statements
Schedule 3.4 ACL Undisclosed Liabilities
Schedule 3.5 ACL Properties
Schedule 3.6 ACL Absence of Certain Changes
Schedule 3.7 ACL Litigation; Orders
Schedule 3.8 ACL Licenses and Consents
Schedule 3.9 ACL Labor Matters
Schedule 3.10 ACL Compliance with Laws
Schedule 3.11 ACL Insurance
Schedule 3.12(a) ACL Contracts
Schedule 3.12(b) ACL Employment Agreements
Schedule 3.14 ACL Environmental Matters
Schedule 3.15 ACL Affiliate Transactions
Schedule 3.16 ACL Intellectual Property
Schedule 3.16(a) ACL Employee Benefit Plans
Schedule 3.16(c) ACL Pension Plans
Schedule 3.16(d) ACL Plan Triggers
Schedule 3.1 ACL Conflicts; Subsidiaries
Schedule 3.2 ACL Capitalization
Schedule 3.3 ACL Financial Statements
Schedule 3.4 ACL Undisclosed Liabilities
Schedule 3.5 ACL Properties
Schedule 3.6 ACL Absence of Certain Changes
Schedule 3.7 ACL Litigation; Orders
Schedule 3.8 ACL Licenses and Consents
Schedule 3.9 ACL Labor Matters
Schedule 3.10 ACL Compliance with Laws
Schedule 3.11 ACL Insurance
Schedule 3.12(a) ACL Contracts
Schedule 3.12(b) ACL Employment Agreements
Schedule 3.14 ACL Environmental Matters
Schedule 3.15 ACL Affiliate Transactions
Schedule 3.16 ACL Intellectual Property
Schedule 3.17(a) ACL Employee Benefit Plans
Schedule 3.17(c) ACL Pension Plans
Schedule 3.17(d) ACL Plan Triggers
Schedule 4.1 Vectura Conflicts; Subsidiaries
Schedule 4.2 Vectura Capitalization
Schedule 4.3 Vectura Financial Statements
Schedule 4.4 Vectura Undisclosed Liabilities
Schedule 4.5 Vectura Properties
Schedule 4.6 Vectura Absence of Certain Changes
Schedule 4.7 Vectura Litigation; Orders
Schedule 4.8 Vectura Licenses and Consents
Schedule 4.9 Vectura Labor Matters
Schedule 4.10 Vectura Compliance with Laws
Schedule 4.11 Vectura Insurance
Schedule 4.12(a) Vectura Contracts
Schedule 4.12(b) Vectura Employment Agreements
Schedule 4.14 Vectura Environmental Matters
Schedule 4.15 Vectura Affiliate Transactions
Schedule 4.16 Vectura Intellectual Property
Schedule 4.17(a) Vectura Employee Benefit Plans
Schedule 4.17(b) Vectura Plan Compliance
Schedule 4.17(c) Vectura Pension Plans
Schedule 4.17(d) Vectura Plan Triggers
Schedule 5.4(a) ACL Conduct of Business
Schedule 5.4(b) Vectura Conduct of Business
Schedule 7.1(a) ACL Taxes
Schedule 7.1(b) Vectura Taxes
EXHIBITS
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Exhibit A Certain Terms of ACL Holdings LLC Agreement
Exhibit B Substance of CSX Legal Opinion
Exhibit C Substance of Vectura Legal Opinion
This RECAPITALIZATION AGREEMENT (together with the Schedules and
Exhibits hereto, this "Agreement"), is dated as of April 17, 1998, is by and
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among CSX Corporation, a Virginia corporation ("CSX"), Vectura Group, Inc., a
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Delaware corporation ("Vectura"), National Marine, Inc., a Delaware corporation
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and a wholly owned Subsidiary of Vectura ("NMI" and, together with Vectura, the
---
"Vectura Parties"), American Commercial Lines Holdings LLC, a Delaware limited
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liability company and a wholly owned Subsidiary of CSX ("ACL Holdings"), and
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American Commercial Lines LLC, a Delaware limited liability company and a wholly
owned Subsidiary of ACL Holdings ("ACL", and, together with CSX, the Vectura
---
Parties and ACL Holdings, the "Parties").
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WHEREAS, ACL and the barging business of the Vectura Parties are
engaged in the business of owning, chartering and/or operating barges and
related vessels and other related businesses;
WHEREAS, ACL is the successor to American Commercial Lines, Inc.,
a Delaware corporation, all of the businesses of which (including each of its
Subsidiaries, but excluding, as of the Closing, the ACL Excluded Assets and the
ACL Excluded Liabilities) have been contributed (by merger) to ACL;
WHEREAS, upon the terms and subject to the conditions set forth
herein, the Vectura Parties shall organize a new Delaware limited liability
company ("NMI Holdings") as a wholly owned Subsidiary of NMI and shall cause to
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be transferred to NMI Holdings, and to one or more other Delaware limited
liability companies wholly owned by NMI Holdings, all assets and liabilities of
NMI and all assets and Barging Liabilities of Vectura and its Subsidiaries other
than any Vectura Excluded Assets and Vectura Excluded Liabilities;
WHEREAS, the Parties desire to combine the businesses of ACL and
NMI Holdings, to consummate the financing transactions contemplated hereby and
to recapitalize ACL Holdings, upon the terms and subject to the conditions set
forth herein;
WHEREAS, in connection with such combination, the Parties intend
that each corporate Subsidiary of ACL (other than any Transferred Foreign ACL
Subsidiary) and each corporate Subsidiary of NMI (other than any Vectura
Excluded Subsidiary) shall be merged with and into a separate limited liability
company organized under the laws of the State of Delaware, upon the terms and
subject to the conditions set forth herein;
WHEREAS, each of the Parties has received all requisite approvals
of its Board of Directors and stockholders (or comparable organizational bodies)
to enter into this Agreement and to consummate the transactions contemplated
hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Parties
hereby agree as follows:
ARTICLE I
Certain Definitions
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As used in this Agreement, the following terms shall have the following
respective meanings:
Section 1.1. "AAA" shall have the meaning set forth in Section
10.9.
Section 1.2. "Accounting Firm" shall mean Deloitte & Touche LLP,
or, if such firm is unable or unwilling to undertake the responsibilities
required of the Accounting Firm hereunder, such other nationally recognized
independent public accounting firm as shall be agreed upon by the Parties in
writing, provided that in any case the senior persons performing services as the
Accounting Firm hereunder shall not have any significant relationship with any
Party.
Section 1.3. "Accounting Principles," with respect to any
person, shall mean the following: (i) each accounting term used herein shall
have the meaning that is applied thereto in accordance with GAAP, unless a
different meaning is set forth herein for such term; (ii) the calculation of the
levels of the accounts shall be done based on a consistent application of
accounting principles as utilized in the preparation of the most recent balance
sheet of such person included in the Schedules hereto, including with respect to
the nature or classification of accounts, closing proceedings, levels of
reserves or levels of accruals, other than as a result of objective changes in
the underlying business or, for all purposes except for calculating the
Estimated ACL Amount, the Estimated NMI Holdings Amount, the ACL Amount, the NMI
Holdings Amount (and all components of any of the foregoing) and the adjustment
contemplated by Section 2.4, as may be required by GAAP or applicable law; and
(iii) for purposes of the preceding clause, the "consistent application of
accounting principles" shall exclude changes in accounting principles, policies,
practices, procedures or methodologies with respect to financial statements,
their classification or their presentation, as well as all changes in practices,
methods, conventions or assumptions used in making accounting estimates.
Notwithstanding the foregoing, for the purposes of calculating the Estimated ACL
Amount, the Estimated NMI Holdings Amount, the ACL Amount, the NMI Holdings
Amount (and all components of any of the foregoing) and the adjustment
contemplated by Section 2.4, the "Accounting Principles" shall mean GAAP as
modified by the rules and bases of accounting specifically described in the ACL
Pro Forma Balance Sheet or the NMI Pro Forma Balance Sheet, as applicable.
Section 1.4. "ACL" shall have the meaning set forth in the
first paragraph hereof.
Section 1.5. "ACL Amount" shall mean the level of Working
Capital of ACL and ACL Holdings (without duplication) as of the Closing Date
minus the ACL Target WC Level (such number to be either positive or negative),
provided that, if the ACL Amount shall be a positive number greater than
$3,000,000, then the "ACL Amount" shall be $3,000,000, and provided further
that, if both the ACL Amount and the NMI Holdings Amount are negative numbers,
then the ACL Amount (for purposes of Section 2.4 and the calculation of the
Estimated ACL Amount) shall be (A) if the ACL Amount is more negative than the
NMI Holdings Amount, the ACL Amount less the NMI Holdings Amount and (B) if the
NMI Holdings Amount is more negative than the ACL Amount, zero (together with
the setoff contemplated by the definition of NMI Holdings Amount, the "Setoff").
Section 1.6. "ACL Assumed Funded Debt" shall have the meaning
set forth in Section 2.1(d).
Section 1.7. [intentionally omitted].
Section 1.8. "ACL Balance Sheet" shall have the meaning set
forth in Section 3.3(a).
Section 1.9. "ACL Current Employees" shall have the meaning set
forth in Section 3.17(a).
Section 1.10. "ACL Employee Benefit Plans" shall have the
meaning set forth in Section 3.17(a).
Section 1.11. "ACL Employees" shall have the meaning set forth
in Section 3.17(a).
Section 1.12. "ACL Excluded Assets" shall mean those assets of
ACL listed on Schedule 1.12.
Section 1.13. "ACL Excluded Liabilities" shall mean those
liabilities of ACL listed on Schedule 1.13, including all Funded Debt of ACL
other than ACL Assumed Funded Debt.
Section 1.14. "ACL Financial Statements" shall have the meaning
set forth in Section 3.3(a).
Section 1.15. "ACL Fixed Assets" shall have the meaning set
forth in Section 3.13(a).
Section 1.16. "ACL Foreign Plans" shall have the meaning set
forth in Section 3.17(g).
Section 1.17. "A CL Former Employees" shall have the meaning set
forth in Section 3.17(a).
Section 1.18. "ACL Holdings" shall have the meaning set forth in
the first paragraph hereof.
Section 1.19. "ACL Holdings Indemnified Party" shall have the
meaning set forth in Section 10.2(a).
Section 1.20. "ACL Holdings Savings Plan" shall have the meaning
set forth in Section 6.3(a).
Section 1.21. "ACL Income Statement" shall have the meaning set
forth in Section 3.3(a).
Section 1.22. "ACL Indebtedness" shall have the meaning set
forth in Section 3.12(a).
Section 1.23. "ACL Intellectual Property Rights" shall have the
meaning set forth in Section 3.16(a).
Section 1.24. "ACL Leased Real Property" shall have the meaning
set forth in Section 3.5(a).
Section 1.25. "ACL Leases" shall have the meaning set forth in
Section 3.5(a).
Section 1.26. "ACL Licenses" shall have the meaning set forth in
Section 3.8(a).
Section 1.27. "ACL Litigation" shall have the meaning set forth
in Section 3.7.
Section 1.28. "ACL Multiemployer Plan" shall have the meaning
set forth in Section 3.17(h).
Section 1.29. "ACL-Only Employee Benefit Plans" shall have the
meaning set forth in Section 3.17(a).
Section 1.30. "ACL Owned Real Property" shall have the meaning
set forth in Section 3.5(a).
Section 1.31. "ACL Permitted Encumbrances" shall mean (i) those
Encumbrances listed in Schedule 3.5, (ii) liens for current ad valorem taxes not
yet due and payable and (iii) such Encumbrances not known to ACL or such
Encumbrances as do not have a material adverse effect on ACL.
Section 1.32. "ACL Pro Forma Balance Sheet" shall have the
meaning set forth in Section 3.3(b)
Section 1.33. "ACL Pro Forma Transactions" shall have the
meaning set forth in Section 3.3(b).
Section 1.34. "ACL Savings Plan Employee" shall have the meaning
set forth in Section 6.3(b).
Section 1.35. "ACL Target WC Level" shall mean a Working Capital
level of $43 million.
Section 1.36. "ACL Transfer Date" shall have the meaning set
forth in Section 6.3(b).
Section 1.37. "Acquisition Proposal" shall have the meaning set
forth in Section 5.10.
Section 1.38. "Action" shall mean any actual or threatened
action, suit, arbitration, inquiry, proceeding or investigation.
Section 1.39. "Adverse Consequences" shall mean all Actions,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, and all actual damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses, provided
that: (i) Adverse Consequences shall not include any lost profits or any
exemplary, punitive, consequential or other similar damages (other than
exemplary, punitive, consequential or other similar damages actually awarded to
a third party in an Action); (ii) Adverse Consequences shall not be determined
through any multiple of earnings approach or variant thereof; (iii) the ACL
Holdings Indemnified Parties shall not be deemed to have suffered any Adverse
Consequences with respect to any matter for which (and to the extent of) a
specific reserve or accrual of liabilities was established and reflected on the
ACL Financial Statements or the Vectura Financial Statements, as the case may
be, attached hereto or was established since the date of the most recent of such
statements in the ordinary course consistent with past practice and exists on
the relevant books and records as of the date hereof or, with respect to a
current liability reserve or accrual of current liabilities which is included in
Working Capital, as of the Closing Date by ACL or by NMI Holdings (in each case,
other than in respect of the Vectura Matter, Vectura Excluded Liabilities or the
ACL Excluded Liabilities) to the extent of such reserve or accrual of
liabilities; (iv) in determining Adverse Consequences, the Parties shall make
appropriate adjustments for insurance and indemnity recoveries actually received
by the relevant Indemnified Party (net of any out-of-pocket expenses, including
court costs and reasonable attorneys' fees and expenses, incurred in pursuing
such insurance and indemnity recoveries), under any indemnification or setoff
available under acquisition agreements with third parties, and under any
underground storage tank or similar environmental reimbursement program, and
provided further that Adverse Consequences shall not include (i) the loss of any
Tax attribute or (ii) any Tax liability resulting from the receipt of any
indemnification payment made under this Agreement but shall be net of any (iii)
Tax benefit, and provided further that, in respect of environmental matters,
"Adverse Consequences" shall not include any environmental investigation,
cleanup or other related costs or expenses unless such costs or expenses were
incurred to comply with any applicable Environmental Law, or to respond to any
other legal obligation (including any order or directive of a Governmental
Authority) or, if voluntarily incurred, only those expenditures necessary to
▇▇▇▇▇ a risk or other threat to health or the environment.
Section 1.40. "Affiliate" (and, with a correlative meaning,
"Affiliated") shall mean, with respect to any person, any other person that
directly, or through one or more intermediaries, controls or is controlled by or
is under common control with such person, and, if such a person is an
individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any person who is
controlled by any such member or trust. As used in this definition, "control"
(including, with correlative meanings, "controlled" and "under common control
with") shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
Section 1.41. "Agreement" shall have the meaning set forth in
the first paragraph hereof.
Section 1.42. "Antitrust Laws" shall mean and include the
▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal
Trade Commission Act, as amended, and all other federal, state, foreign and
multinational (including European Community) statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
Section 1.43. "Assumed Vectura Employee Benefit Plans" shall
have the meaning set forth in Section 6.2(a).
Section 1.44. "Barging Liabilities" shall mean all liabilities
arising from or incidental to the barging business of Vectura and its
Subsidiaries as conducted as of the date hereof.
Section 1.45. "Business" shall have the meaning set forth in
Section 5.9(a).
Section 1.46. "Claimant" shall have the meaning set forth in
Section 10.9.
Section 1.47. "Closing" (and, with a correlative meaning,
"Close") shall mean the consummation of the Recapitalization Transactions.
Section 1.48. "Closing Date" shall mean the date which is two
business days from the date on which the conditions set forth in Articles VIII
and IX shall be satisfied or duly waived, or, if the Parties agree on a
different date, the date upon which they have mutually agreed.
Section 1.49. "Code" shall mean the Internal Revenue Code of
1986, as amended, and any successor thereto.
Section 1.50. "Confidentiality Agreement" shall have the meaning
set forth in Section 5.1(b).
Section 1.51. "Continuation Period" shall have the meaning set
forth in Section 6.2(b).
Section 1.51a. "Controlling Party" shall have the meaning set
forth in Section 7.8(b).
Section 1.52. "CSX" shall have the meaning set forth in the
first paragraph hereof.
Section 1.53. "CSX Savings Plan" shall have the meaning set
forth in Section 6.3(a).
Section 1.54. "CTC" shall have the meaning set forth in Section
12.2(b).
Section 1.55. "Current Portion of Long-Term Debt" shall mean the
principal amount of any current portion of long-term Funded Debt, as determined
in accordance with the Accounting Principles.
Section 1.56. "CVC" shall have the meaning set forth in Section
5.1(b).
Section 1.57. "Encumbrances" shall mean mortgages, liens,
encumbrances, security interests, covenants, conditions, restrictions,
rights-of-way, easements, encroachments, options, rights of first offer, rights
of first refusal, claims and any other matters affecting title.
Section 1.58. "Environmental Law" shall have the meaning set
forth in Section 3.14(d).
Section 1.59. "Equity Contribution" shall have the meaning set
forth in Section 2.1(h).
Section 1.60. "Equity Letters" shall have the meaning set forth
in Section 4.20.
Section 1.61. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.
Section 1.62. "Estimated ACL Amount" shall mean an estimate,
reasonably prepared by CSX and not unreasonably disagreed with by Vectura, to be
finalized at least two business days prior to the Closing Date, of the ACL
Amount, provided that, if Vectura reasonably disagrees with such estimate, the
level of Working Capital of ACL as of the end of the month immediately preceding
the Closing Date (as reflected on financial statements delivered pursuant to
Section 5.6), giving effect to the ACL Pro Forma Transactions, shall be the
level of Working Capital of ACL as of the Closing Date for purposes of
calculating the Estimated ACL Amount.
Section 1.63. "Estimated NMI Holdings Amount" shall mean an
estimate, reasonably prepared by Vectura and not unreasonably disagreed with by
CSX, to be finalized at least two business days prior to the Closing Date, of
the NMI Holdings Amount, provided that, if CSX reasonably disagrees with such
estimate, the level of Working Capital of NMI Holdings as of the end of the
month immediately preceding the Closing Date (as reflected on financial
statements delivered pursuant to Section 5.6), shall be the level of Working
Capital of NMI Holdings as of the Closing Date for purposes of calculating the
Estimated NMI Holdings Amount.
Section 1.64. "Final Statement" shall have the meaning set forth
in Section 2.4(a).
Section 1.65. "Financing Letters" shall have the meaning set
forth in Section 4.20.
Section 1.66. "Funded Debt," as of any date, shall mean, without
duplication, the aggregate amount of all obligations due as of such date under
indebtedness for borrowed money and capitalized leases (as determined in
accordance with GAAP), including any guarantees of the same, including all
obligations for principal, interest, premiums, fees, expenses, over advances,
overdrafts, breakage costs and indemnities due as of such date thereunder.
"Funded Debt", when used in connection with Vectura or its Subsidiary, shall
also include those items set forth on Schedule 1.66.
Section 1.67. "GAAP" shall mean United States generally accepted
accounting principles, as in effect from time to time, consistently applied.
Section 1.68. "Government Authority" shall mean any government
or state (or any subdivision thereof), whether domestic, foreign or
multinational (including European Community), or any agency, authority, bureau,
commission, department or similar body or instrumentality thereof, or any
governmental court or tribunal.
Section 1.69. "Hazardous Material" shall have the meaning set
forth in Section 3.14(d).
Section 1.70. "hereof," "herein," and "herewith" shall have the
meaning set forth in Section 12.9(a).
Section 1.71. "High Yield Letters" shall have the meaning set
forth in Section 4.20.
Section 1.72. "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended.
Section 1.73. "including" shall have the meaning set forth in
Section 12.9(a).
Section 1.74. "Income Taxes" shall have the meaning set forth in
Section 7.2(a).
Section 1.75. "Indemnified Party" shall mean any person entitled
to indemnification pursuant to Article X.
Section 1.76. "Indemnifying Party" shall mean any person
providing indemnification pursuant to Article X.
Section 1.77. "Initial Funding Amount" shall mean (i)
$695,000,000 plus (ii) the Estimated ACL Amount minus (iii) the amount as of the
Closing Date of all Funded Debt of ACL other than any ACL Assumed Funded Debt.
Section 1.78. "Initial Statement" shall have the meaning set
forth in Section 2.4(a).
Section 1.79. "Intellectual Property Rights" shall mean all
patents and patent applications; inventions (whether or not patentable and
whether or not reduced to practice), trademarks, service marks, trade names and
corporate names and the goodwill associated therewith; and registered and
unregistered copyrights, and registrations, applications and renewals for any of
the foregoing.
Section 1.80. "IRS" shall mean the United States Internal
Revenue Service.
Section 1.81. "Marked Materials" shall have the meaning set
forth in Section 5.12.
Section 1.82. "material," "materially," "material adverse
change" and "material adverse effect" shall have the respective meanings set
forth in Section 12.9(b).
Section 1.83. "Multiemployer Plan" shall have the meaning set
forth in Section 3.17(c).
Section 1.84. "NBL" shall mean NBL, Inc., a Louisiana
corporation.
Section 1.85. "NMI" shall have the meaning set forth in the
first paragraph hereof.
Section 1.86. "NMI Holdings" shall have the meaning set forth in
the recitals hereof.
Section 1.87. "NMI Holdings Amount" shall mean the level of
Working Capital of NMI Holdings as of the Closing Date minus the NMI Holdings
Target WC Level (such number to be either positive or negative), provided that,
if the NMI Holdings Amount shall be a positive number, the "NMI Holdings Amount"
shall be zero, and provided further that, if both the ACL Amount and the NMI
Holdings Amount are negative numbers, then the NMI Holdings Amount (for purposes
of Section 2.4 and the calculation of the Estimated NMI Holdings Amount) shall
be (A) if the NMI Holdings Amount is more negative than the ACL Amount, the NMI
Holdings Amount less the ACL Amount and (B) if the ACL Amount is more negative
than the NMI Holdings Amount, zero (together with the setoff contemplated by the
definition of ACL Amount, the "Setoff").
Section 1.88. "NMI Holdings Target WC Level" shall mean a
Working Capital deficit of $1.5 million.
Section 1.89. "NMI Pro Forma Balance Sheet" shall have the
meaning set forth in Section 4.3(b).
Section 1.90. "NMI Pro Forma Financial Statements" shall have
the meaning set forth in Section 4.3(b).
Section 1.91. "Noncompete Period" shall have the meaning set
forth in Section 5.9(a).
Section 1.91a. "Noncontrolling Party" shall have the meaning
set forth in Section 7.8(b).
Section 1.92. "Non-Qualified Plans" shall have the meaning set
forth in Section 6.2(b).
Section 1.93. "Notice of Disagreement" shall mean a written
notice of disagreement with an Initial Statement.
Section 1.94. "or" shall have the meaning set forth in Section
12.9(a).
Section 1.95. "ordinary course consistent with past practice"
shall include, with respect to any of ACL Holdings, the Vectura Parties, NMI
Holdings or ACL, and their respective Subsidiaries, actions taken or not taken
in the ordinary course consistent with past practice, including with respect to
the predecessor(s) to such entity.
Section 1.96. "Parties" shall have the meaning set forth in the
first paragraph hereof.
Section 1.97. "Party Indemnified Party" shall have the meaning
set forth in Section 10.5.
Section 1.98. "person" shall mean any individual, corporation,
limited liability company, partnership, joint venture, trust, unincorporated
organization, other form of business or legal entity or Government Authority.
Section 1.99. "Recapitalization Transactions" shall mean the
transactions set forth in Section 2.1.
Section 1.100."Request" shall have the meaning set forth in
Section 10.9.
Section 1.101."Release" shall have the meaning set forth in
Section 3.14(d).
Section 1.102."Respondent" shall have the meaning set forth in
Section 10.9.
Section 1.103."Returns" shall have the meaning set forth in
Section 7.2(b).
Section 1.104."Rules" shall have the meaning set forth in
Section 10.9.
Section 1.105."Senior Credit Letter" shall have the meaning set
forth in Section 4.20.
Section 1.106."Senior Common Amount" shall have the meaning set
forth in Section 2.1(j).
Section 1.107."Setoff" shall have the meaning set forth in
Section 1.5 and Section 1.87.
Section 1.108."Subsidiary" of any person shall mean any
corporation, partnership, limited liability company or other business entity of
which at least a majority of the outstanding capital stock (or similar
interests) having voting power under ordinary circumstances to elect directors
(or similar governing body members) shall at the time be held, directly or
indirectly, by such person or by such person and one or more Subsidiaries of
such person.
Section 1.109."Taxes" shall have the meaning set forth in
Section 7.2(c).
Section 1.110."Taxing Authority" shall have the meaning set
forth in Section 7.2(d).
Section 1.111."to the knowledge of ACL" shall have the meaning
set forth in Section 12.9(a).
Section 1.112."to the knowledge of any Vectura Party" shall have
the meaning set forth in Section 12.9(a).
Section 1.113."Total Current Assets" shall mean, for any person
at any date, the total consolidated current assets of such person and its
Subsidiaries at such date, other than any ACL Excluded Assets or Vectura
Excluded Assets, as applicable, determined in accordance with the Accounting
Principles.
Section 1.114."Total Current Liabilities" shall mean, for any
person at any date, the total consolidated current liabilities of such person
and its Subsidiaries at such date, other than any ACL Excluded Liabilities or
Vectura Excluded Liabilities, as applicable, excluding the Current Portion of
Long-Term Debt, determined in accordance with the Accounting Principles.
Section 1.115."Transferred ACL Subsidiaries" shall mean ACL and
each Subsidiary of ACL.
Section 1.116."Transferred Foreign ACL Subsidiaries" shall mean
each Subsidiary of ACL organized in a jurisdiction outside the United States.
Section 1.117."Transferred NMI Holdings Subsidiaries" shall mean
NMI Holdings and each of its Subsidiaries.
Section 1.118.[intentionally omitted].
Section 1.119."Vectura" shall have the meaning set forth in the
first paragraph hereof.
Section 1.120."Vectura Balance Sheet" shall have the meaning set
forth in Section 4.3(a).
Section 1.121."Vectura Continuing Employees" shall have the
meaning set forth in Section 6.2(a).
Section 1.122."Vectura Current Employees" shall have the meaning
set forth in Section 4.17(a).
Section 1.123."Vectura Employee Benefit Plans" shall have the
meaning set forth in Section 4.17(a).
Section 1.124."Vectura Employees" shall have the meaning set
forth in Section 4.17(a).
Section 1.125."Vectura Excluded Assets" shall mean (i) the
capital stock of each Vectura Excluded Subsidiary (and NMI and NBL) and (ii)
those assets of Vectura or its Subsidiary listed on Schedule 1.125.
Section 1.126. "Vectura Excluded Liabilities" shall mean (i)
those liabilities of Vectura and its Subsidiaries listed on Schedule 1.126 or
otherwise noted as Vectura Excluded Liabilities herein, (ii) the Vectura Matter,
(iii) all liabilities of or relating to the Vectura Excluded Subsidiaries, (iv)
all liabilities of Vectura and its Subsidiaries (other than Barging Liabilities
and environmental liabilities relating to the Seneca, Illinois facility of NMI
and up to $30,000 per year of actual, out-of-pocket environmental monitoring
costs related to the landfill in Marietta, Ohio owned by EPS, Inc.) and (v) all
Funded Debt of Vectura or its Subsidiaries other than the Vectura Assumed Funded
Debt.
Section 1.127."Vectura Excluded Subsidiaries" shall mean EPS,
Inc., Houston Integrated Marine Corp., Houston Integrated Marine Services Corp.,
Maritrend, Inc., Vectura Cargo Services, Inc., VCS Realty Corp., Trustman
Maritime Services Corporation, VGI Marine Services Corporation and N.M.I. Realty
Corporation.
Section 1.128."Vectura Financial Statements" shall have the
meaning set forth in Section 4.3(a).
Section 1.129."Vectura Fixed Assets" shall have the meaning set
forth in Section 4.13.
Section 1.130."Vectura Foreign Plans" shall have the meaning set
forth in Section 4.17(g).
Section 1.131."Vectura Former Employees" shall have the meaning
set forth in Section 4.17(a).
Section 1.132."Vectura Income Statement" shall have the meaning
set forth in Section 4.3(a).
Section 1.133."Vectura Indebtedness" shall have the meaning set
forth in Section 4.12(a).
Section 1.134."Vectura Intellectual Property Rights" shall have
the meaning set forth in Section 4.16(a).
Section 1.135."Vectura Leased Real Property" shall have the
meaning set forth in Section 4.5(a).
Section 1.136."Vectura Leases" shall have the meaning set forth
in Section 4.5(a).
Section 1.137."Vectura Licenses" shall have the meaning set
forth in Section 4.8(a).
Section 1.138."Vectura Litigation" shall have the meaning set
forth in Section 4.7.
Section 1.139."Vectura Matter" shall mean all loss or liability
in connection with or relating to any dispute or claim concerning the ownership,
or transactions in the capital stock or derivatives thereof, of Vectura or its
Subsidiary.
Section 1.140."Vectura Multiemployer Plan" shall have the
meaning set forth in Section 4.17(h).
Section 1.141."Vectura-Only Employee Benefit Plans" shall have
the meaning set forth in Section 4.17(a).
Section 1.142."Vectura Owned Real Property" shall have the
meaning set forth in Section 4.5(a).
Section 1.143."Vectura Assumed Funded Debt" shall mean the
Funded Debt of Vectura or its Subsidiary set forth on Schedule 1.143, the
repayment obligations with respect to which shall not exceed $75 million in
cash.
Section 1.144."Vectura Parties" shall have the meaning set forth
in the first paragraph hereof.
Section 1.145."Vectura Permitted Encumbrances" shall mean (i)
those Encumbrances listed in Schedule 4.5, (ii) liens for current ad valorem
taxes not yet due and payable and (iii) such Encumbrances not known to Vectura
or such Encumbrances as do not have a material adverse effect on Vectura.
Section 1.146."Vectura Savings Plan" shall have the meaning set
forth in Section 6.3(a).
Section 1.147."WARN Act" shall have the meaning set forth in
Section 6.5.
Section 1.148."Working Capital" shall mean, at any date, in the
case of NMI Holdings, the amount of Total Current Assets minus the amount of
Total Current Liabilities at such date; and, in the case of ACL and ACL
Holdings, the amount of Total Current Assets minus the amount of Adjusted Total
Current Liabilities at such date; and, for purposes of the foregoing, Adjusted
Total Current Liabilities shall mean the amount of Total Current Liabilities
minus the amount of the line item entitled "Due To Affiliates" (other than that
portion representing federal Taxes), without duplication; in all cases
calculated in accordance with the Accounting Principles (and which shall exclude
any accrual with respect to the lease contemplated by Section 3.15).
ARTICLE II
Consummation of Recapitalization Transactions; Closing
------------------------------------------------------
Section 2.1. Recapitalization Transactions. On or prior to the
Closing Date, and subject to the terms and conditions set forth in this
Agreement:
Preliminary Transactions.
(a) Vectura and its Subsidiaries shall organize NMI Holdings,
and shall cause to be transferred to NMI Holdings, and to one or more other
Delaware limited liability companies wholly owned by NMI Holdings, all assets
and liabilities of NMI and all assets and liabilities of Vectura and its
Subsidiaries other than any Vectura Excluded Assets and Vectura Excluded
Liabilities.
(b) Each corporate Subsidiary of ACL (other than any Transferred
Foreign ACL Subsidiary), and each corporate Subsidiary of NMI Holdings (if any),
shall be merged with and into a separate limited liability company organized
under the laws of the State of Delaware.
(c) ACL Holdings shall be recapitalized as set forth herein and
its operative documents shall contain the terms set forth on Exhibit A hereto
and such other terms as reasonably may be agreed by the Parties.
(d) CSX shall repay, or shall provide funds to ACL to repay, all
Funded Debt of ACL other than the Funded Debt of ACL set forth on Schedule
2.1(d) (which shall be assumed by ACL Holdings) ("ACL Assumed Funded Debt").
(e) [intentionally omitted].
Acquisitions, Conveyances and Transfers.
(f) CSX (or its Subsidiary) shall exchange its membership
interests in ACL Holdings for the consideration set forth below (it being
understood that CSX (or its Subsidiary) shall retain all ACL Excluded Assets and
ACL Excluded Liabilities).
(g) NMI shall convey, assign, transfer and deliver to ACL
Holdings (and ACL Holdings shall convey, assign, transfer and deliver to ACL),
and ACL Holdings shall acquire from NMI (and ACL shall acquire from ACL
Holdings), all of Vectura's and its Subsidiaries' right, title and interest in
and to the membership interests in NMI Holdings in exchange for the
consideration set forth below (it being understood that the Vectura Parties
shall retain all Vectura Excluded Assets and all Vectura Excluded Liabilities).
(h) Vectura shall make an equity contribution (the "Equity
Contribution") to ACL Holdings in an amount of not less than $60 million.
Consideration.
(i) CSX (or any Subsidiary of CSX as CSX may designate) shall
receive:
(i) cash in the amount of the Initial Funding Amount by
wire transfer of immediately available funds to the account or
accounts specified by written notice delivered to Vectura at
least two business days prior to the Closing (which cash shall
represent the proceeds of borrowing by ACL Holdings or its
Subsidiary);
(ii) Senior Preferred Membership Interests in ACL
Holdings representing a $115,000,000 aggregate capital interest
in ACL Holdings;
(iii) Junior Preferred Membership Interests in ACL
Holdings representing a $39,656,364 aggregate capital interest in
ACL Holdings; and
(iv) Junior Common Membership Interests in ACL Holdings
representing a $343,636 aggregate capital interest in ACL
Holdings and, at Closing, a 34.36% residual future profits
interest in ACL Holdings (without giving effect to issuances of
equity securities to ACL management (the dilution of which shall
be borne pro rata)).
(j) NMI shall receive:
(i) Junior Preferred Membership Interests in ACL Holdings
representing a $1,500,000 aggregate capital interest in ACL
Holdings (which aggregate capital interest shall be (y) reduced
as set forth herein by the Estimated NMI Holdings Amount (if
negative) and (z) subject to further adjustment pursuant to
Section 2.4(c)).
(ii) Senior Common Membership Interests in ACL Holdings
representing a (A) $3,389,091 aggregate capital interest and a
(B) $32,500,000 aggregate future profits interest in ACL Holdings
(which future profits interest shall be (x) reduced as set forth
herein by the Estimated NMI Holdings Amount (if negative) if and
after the Junior Preferred Membership Interests held by NMI have
been reduced to zero, (y) increased by any amount by which the
Vectura Assumed Funded Debt is less than $75 million and (z)
subject to further adjustment pursuant to Section 2.4(c)) (such
amount in this clause (B), the "Senior Common Amount"); and
(iii) Junior Common Membership Interests in ACL Holdings
representing a $110,909 aggregate capital interest and, at
Closing, a 11.09% residual future profits interest in ACL
Holdings (without giving effect to issuances of equity securities
to ACL management (the dilution of which shall be borne pro
rata)).
(k) Vectura shall receive:
(i) Junior Preferred Membership Interests in ACL Holdings
representing a $59,454,545 aggregate capital interest in ACL
Holdings; and
(ii) Junior Common Membership Interests in ACL Holdings
representing a $545,455 aggregate capital interest in ACL
Holdings and, at Closing, a 54.55% residual future profits
interest in ACL Holdings (without giving effect to issuances of
equity securities to ACL management (the dilution of which shall
be borne pro rata)).
(l) ACL Holdings shall assume the Vectura Assumed Funded Debt
and shall thereafter, on the Closing Date, repay the Vectura Assumed Funded Debt
by wire transfer of immediately available funds to the accounts of the sources
of financing of the Vectura Assumed Funded Debt specified by written notice
delivered by Vectura to CSX at least two business days prior to the Closing.
Section 2.2. Closing Documents. (a) In addition to the other
things required to be done hereunder, at the Closing, CSX shall deliver or cause
to be delivered to the Vectura Parties the following: (i) a certificate, dated
the Closing Date and validly executed on behalf of CSX, to the effect that the
condition set forth in Section 8.1 has been satisfied; (ii) a copy of the
resolutions of the Board of Directors of CSX authorizing the execution, delivery
and performance of this Agreement by CSX, together with a certificate of the
secretary or assistant secretary of CSX, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect; (iii) evidence
or copies of any consents, approvals, orders, qualifications or waivers required
pursuant to Section 8.2; (iv) resignations of employees of CSX who will not be
employees of ACL Holdings or its Subsidiary following the Closing as directors
or officers of ACL or its Subsidiary, as may be reasonably requested by the
Vectura Parties; (v) an opinion of the assistant general counsel of CSX in
substance as set forth on Exhibit B hereto, dated as of the Closing Date and
addressed to the Vectura Parties; and (vi) such other instruments of conveyance,
assignment, transfer and delivery as may be reasonably requested by the Vectura
Parties and as may be necessary or appropriate to confirm or carry out the
provisions of this Agreement.
(b) In addition to the other things required to be done
hereunder, at the Closing, each Vectura Party shall deliver or cause to be
delivered to CSX the following: (i) a certificate, dated the Closing Date and
validly executed on behalf of such Vectura Party, to the effect that the
condition set forth in Section 9.1 shall have been satisfied; (ii) a copy of the
resolutions of the Board of Directors and stockholders of such Vectura Party
authorizing the execution, delivery and performance of this Agreement by such
Vectura Party, together with a certificate of the secretary or assistant
secretary of such Vectura Party, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect; (iii) evidence
or copies of any consents, approvals, orders, qualifications or waivers required
pursuant to Section 9.2; (iv) resignations of employees of the Vectura Parties
who will not be employees of ACL Holdings or its Subsidiary following the
Closing as directors or officers of NMI or its Subsidiary, as may be reasonably
requested by CSX; (v) an opinion of counsel to the Vectura Parties in substance
as set forth on Exhibit C hereto, dated as of the Closing Date and addressed to
CSX; and (vi) such other instruments as may be reasonably requested by CSX and
as may be necessary or appropriate to confirm or carry out the provisions of
this Agreement.
Section 2.3. Time and Place of Closing. The Closing shall take
place on the Closing Date at 10:00 a.m., New York City time at a location to be
mutually agreed by the Parties.
Section 2.4. Adjustment. (a) Within 90 days after the Closing
Date, (i) CSX shall prepare and deliver to the Vectura Parties a statement
setting forth a calculation of the level of Working Capital of ACL and ACL
Holdings as of the Closing Date and (ii) Vectura shall prepare and deliver to
CSX a statement setting forth a calculation of the level of Working Capital of
NMI Holdings as of the Closing Date (each, an "Initial Statement"). ACL Holdings
shall assist CSX and Vectura in the preparation of the Initial Statements, and
CSX and Vectura shall be provided full access to any properties, books and
records in ACL Holdings possession for such purpose. During the 30 days
immediately following receipt of each Initial Statement, each receiving Party
shall be permitted to review the working papers of the other relating to such
other Party's Initial Statement. An Initial Statement shall become final and
binding upon the Parties (and shall thereupon become a "Final Statement") on the
30th day following receipt thereof by the receiving Party unless such receiving
Party provides to the other a Notice of Disagreement prior to such 30th day. Any
Notice of Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted. If a timely Notice of Disagreement is received by the
applicable Party, then the Initial Statement relating thereto shall become final
and binding upon the Parties (and shall thereupon become a "Final Statement") on
the earlier of (x) the date on which the Parties resolve in writing any
differences they may have with respect to any matter specified in the Notice of
Disagreement with respect to such Initial Statement and agree upon a Final
Statement and (y) the date on which the Accounting Firm, after performing
appropriate procedures, finally resolves in writing any matters with respect to
such Initial Statement that are in dispute by providing the Parties with a Final
Statement. During the 30 days immediately following the delivery of a Notice of
Disagreement, the Parties shall seek in good faith to resolve in writing (and
thereby agree upon a Final Statement) any differences which they may have with
respect to any matter specified in such Notice of Disagreement. During such
period, the applicable Party shall have access to the working papers of the
other Party prepared in connection with the preparation of such Notice of
Disagreement. At the end of such 30-day period, the Parties shall submit to the
Accounting Firm for review and resolution any and all matters which remain in
dispute and which were included in such Notice of Disagreement, and, within 30
days of such submission, the Accounting Firm shall make a final written
determination (which shall thereupon become a "Final Statement"), binding on the
Parties, of the level of Working Capital as of the Closing Date of ACL and ACL
Holdings or NMI Holdings, as applicable, which determination shall be, by line
item, at or between the amount of such line item on the applicable Initial
Statement and the amount of such line item on the applicable Notice of
Disagreement. The fees of the Accounting Firm incurred pursuant to this Section
2.4(a) shall be borne by ACL.
[ (b) If the ACL Amount reflected on the Final Statement
respecting ACL exceeds the Estimated ACL Amount, ACL shall, and if the Estimated
ACL Amount exceeds the ACL Amount reflected on the Final Statements, CSX shall,
within 10 business days after the Final Statement respecting ACL becomes final
and binding on the Parties, make payment to the other by wire transfer in
immediately available funds of the amount of such excess with interest thereon
at a rate equal to the rate of interest from time to time announced publicly by
Citibank, N.A. as its base rate, calculated on the basis of the actual number of
days elapsed over 365 from and including the Closing Date to and excluding the
date of payment. Notwithstanding anything to the contrary contained herein, in
no event shall the net amount of the payment to CSX under this Section and the
payment to CSX of the Estimated ACL Amount, if any, as part of the Initial
Funding Amount exceed $3,000,000 (plus the interest contemplated hereby, to the
extent applicable).
(c) The aggregate redemption value of Junior Preferred
Membership Interests held by NMI shall be (i) increased (or if the Senior Common
Amount was decreased pursuant to Section 2.1(j)(ii)(B)(x), then the Senior
Common Amount shall be increased first by the amount of any such decrease up to
an aggregate future profits interest of $32,500,000 prior to any increase in the
Junior Preferred Membership Interests held by NMI), for any amount by which the
NMI Holdings Amount reflected on the Final Statement respecting NMI exceeds the
Estimated NMI Holdings Amount or (ii) decreased (or, if the aggregate principal
amount of such NMI Junior Preferred Membership Interests shall be insufficient,
the amount of Senior Common Amount shall be decreased) for any amount by which
the Estimated NMI Holdings Amount exceeds the NMI Holdings Amount reflected on
the Final Statement respecting NMI within 10 business days after the Final
Statement respecting NMI becomes final and binding on the Parties, by the amount
of such excess, with interest thereon at a rate equal to the rate of interest
from time to time announced publicly by Citibank, N.A. as its base rate,
calculated on the basis of the actual number of days elapsed over 365 from and
including the Closing Date to and excluding the date of such adjustment.
Notwithstanding anything to the contrary contained herein, in no event shall the
net amount of the adjustments to the aggregate principal amount of NMI Junior
Preferred Membership Interests and/or Senior Common Amount held by NMI under
this Section or in connection with the Estimated NMI Holdings Amount be greater
than zero (plus the interest contemplated hereby, to the extent applicable).
ARTICLE III
Representations and Warranties of CSX
-------------------------------------
CSX hereby represents and warrants to ACL Holdings and, in the
case of Sections 3.1, 3.18, 3.19, 3.20 and 3.21, to the Vectura Parties, as
follows:
Section 3.1. Incorporation; Authorization; Etc. (a) ACL is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each of ACL's Subsidiaries is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, except as would not have a material adverse effect on ACL. Each of
ACL and each Subsidiary of ACL (i) has all requisite power to own its properties
and assets and to carry on its business as it is now being conducted and (ii) is
in good standing and is duly qualified to transact business in each domestic and
foreign jurisdiction in which the nature of property owned or leased by it or
the conduct of its business requires it to be so qualified, except where the
failure to be in good standing or to be duly qualified to transact business
would not, individually or in the aggregate, have a material adverse effect on
ACL. Attached to Schedule 3.1 is a true and complete list of all Subsidiaries of
ACL as of the date hereof (noting which of such Subsidiaries will not be
Subsidiaries of ACL as of the Closing Date, noting the jurisdiction of
organization of each of such Subsidiaries and noting all domestic and foreign
jurisdictions in which ACL and such Subsidiaries are qualified to transact
business).
(b) CSX has full power to execute and deliver this Agreement and
to perform its obligations hereunder. The execution and delivery of this
Agreement and the performance of CSX's obligations hereunder have been duly and
validly authorized by all necessary proceedings on the part of CSX and no other
proceedings or actions on the part of CSX, its Board of Directors or
stockholders are necessary therefor. The execution, delivery and performance by
CSX of this Agreement will not (i) violate any provision of CSX's or ACL's
Certificate of Incorporation or By-laws or other organizational documents, (ii)
except as disclosed in Schedule 3.1, violate any provision of, or be an event
that is (or with notice or the passage of time or both will result in) a
violation of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the imposition of any lien, pledge or encumbrance
upon or the creation of a security interest in the assets or properties of ACL
or its Subsidiaries pursuant to, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment, injunction, decree, permit or
"employee benefit plan" (as defined in Section 3(3) of ERISA) to which ACL or
its Subsidiary is a party or by which ACL or its Subsidiary is bound and (iii)
except as disclosed in Schedule 3.8, violate or conflict with any statute, rule
or regulation applicable to ACL or its Subsidiary or any of its properties or
assets or any other material restriction of any kind or character to which ACL
or its Subsidiary is subject, that, in the case of clauses (ii) and (iii),
would, individually or in the aggregate, have a material adverse effect on ACL
or would prevent the consummation of the Recapitalization Transactions. This
Agreement has been duly executed and delivered by CSX and, assuming the due
execution and delivery hereof by the other Parties, constitutes the legal, valid
and binding obligation of CSX, enforceable against CSX in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether in equity
or at law).
Section 3.2. Capitalization. Schedule 3.2 lists the number of
authorized and outstanding shares of capital stock or membership interests of
ACL and each Subsidiary of ACL. No stock appreciation right, phantom stock or
similar right is outstanding with respect to any capital stock of ACL or any
Subsidiary of ACL. Except as set forth in Schedule 3.2, all outstanding shares
of capital stock of ACL and each Subsidiary of ACL are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights and owned by CSX
or its Subsidiary, free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on voting
rights, charges and other legal encumbrances. Except as set forth in Schedule
3.2 and except for this Agreement, there are no options, warrants, calls, rights
or agreements to which CSX or any of its Subsidiaries is a party or by which any
of them is bound obligating CSX or any of its Subsidiaries to issue, deliver,
sell, purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or other
equity interests of ACL or its Subsidiary, or securities convertible into or
exchangeable for such shares or obligating CSX or its Subsidiary to grant,
extend or enter into any such option, warrant, call, right or agreement. Except
as set forth in Schedule 3.2, there are no outstanding contractual obligations
of CSX or its Subsidiary (i) restricting the transfer of, (ii) affecting the
voting rights of, (iii) requiring the repurchase, redemption or disposition of,
(iv) requiring the registration for sale of or (v) granting any preemptive or
antidilutive right with respect to any shares of capital stock of ACL or its
Subsidiary.
Section 3.3. Financial Statements. (a) Attached to Schedule 3.3
are true and complete copies of the audited consolidated statements of financial
position of ACL and its Subsidiaries as of December 26, 1997, December 27, 1996
and December 29, 1995 and the related audited consolidated statements of
earnings and retained earnings and cash flows for the fiscal years ended
December 26, 1997, December 27, 1996 and December 29, 1995 together with the
respective reports thereon and certifications thereof by Ernst & Young LLP
(collectively, the "ACL Financial Statements"). Each consolidated statement of
financial position included in the ACL Financial Statements may be hereinafter
referred to as an "ACL Balance Sheet," and each consolidated statement of
earnings and retained earnings included in the ACL Financial Statements may be
hereinafter referred to as an "ACL Income Statement." The ACL Financial
Statements have been prepared from and are consistent with the books and records
of ACL and its Subsidiaries.
(b) Attached to Schedule 3.3 is a pro forma consolidated
statement of financial position of ACL and its Subsidiaries (the "ACL Pro Forma
Balance Sheet") as of December 26, 1997, giving effect to the exclusion of the
ACL Excluded Assets and ACL Excluded Liabilities, and the transactions listed in
the notes thereto (such transactions, the "ACL Pro Forma Transactions"). The ACL
Pro Forma Balance Sheet sets forth any deviations from GAAP used in the
preparation thereof.
(c) Except as indicated in Schedule 3.3 or in the ACL Financial
Statements (including any notes thereto), the ACL Financial Statements were
prepared in accordance with GAAP and, in the case of any ACL Balance Sheet,
fairly presents the consolidated financial position of ACL and its Subsidiaries
at the date thereof in all material respects and, in the case of any ACL Income
Statement, fairly presents the consolidated results of operations of ACL and its
Subsidiaries for the periods then ended in all material respects (subject, in
the case of unaudited ACL Financial Statements, to any other adjustments
described therein and normal year-end adjustments in accordance with GAAP which
would not, in the aggregate, have a material adverse effect with respect to
ACL).
Section 3.4. Undisclosed Liabilities. Except as reflected,
reserved against or otherwise disclosed in the ACL Balance Sheet as of December
26, 1997 (and specifically identified and described in the accompanying notes),
and except as set forth in Schedule 3.4, there are no liabilities, debts
(including obligations in respect of capital leases), or obligations of or
claims against ACL or its Subsidiary (other than those incurred in the ordinary
course consistent with past practice) which would, individually or in the
aggregate, have a material adverse effect on ACL and that would have been
required to be reflected on such balance sheet or otherwise specifically
identified and described in the notes thereto in accordance with GAAP.
Section 3.5. Properties. (a) Schedule 3.5 lists all real
property and interests in real property owned by ACL or any of its Subsidiaries
which is material to ACL (the "ACL Owned Real Property") or leased by ACL or any
of its Subsidiaries as lessee or lessor which is material to ACL (the "ACL
Leased Real Property"), such description including, (i) for each ACL Owned Real
Property, the location thereof, the approximate acreage thereof (where
available) and the manner in which such real property is used and (ii) for each
ACL Leased Real Property, an identification of the lease agreement therefor
(material amendments, modifications, side letters and other agreements relating
to any such lease agreement have been made available to the Vectura Parties),
the annual payment obligation thereon and the location and approximate size (or
other relevant dimension) of the premises leased thereunder. Except as set forth
on Schedule 3.5 and except for ACL Permitted Encumbrances, ACL or its Subsidiary
has good and valid fee title to ACL Owned Real Property free and clear of all
Encumbrances. All leases with respect to ACL Leased Real Property ("ACL Leases")
are in effect and, where ACL or its Subsidiary is lessee, create a valid and
binding interest in ACL Leased Real Property in favor of ACL or its Subsidiary
and, except as set forth in Schedule 3.5, there are no material defaults by the
lessor or lessee thereunder continuing in existence beyond any applicable notice
and cure periods, nor, to the knowledge of ACL, do there exist any circumstances
which, with the giving of notice, the passage of time or both, would become such
a default. Other than ACL or its Subsidiaries and third party lessees, to the
knowledge of ACL, there are no parties in possession or parties having any
current or future right to occupy any ACL Owned Real Property or ACL Leased Real
Property, except as would not have a material adverse effect with respect to
ACL. Except as set forth in Schedule 3.5, there are no condemnation proceedings,
special assessments, impact fees or similar charges pending or, to the knowledge
of ACL, threatened in connection with ACL Owned Real Property or, to the
knowledge of ACL, ACL Leased Real Property, and ACL has not received or been
served with any notice with respect to any of the foregoing. The current use by
ACL and its Subsidiaries of ACL Owned Real Property and ACL Leased Real Property
complies in all material respects with all applicable zoning laws and building
and use restrictions (including all agreements of ACL and its Subsidiaries
applicable thereto), except as would not, individually or in the aggregate, have
a material adverse effect on ACL.
(b) Except as set forth in Schedule 3.5, each ACL Owned Real
Property is in compliance with all material terms of the instruments which
constitute ACL Permitted Encumbrances, and none of the ACL Permitted
Encumbrances materially interferes with the use or operation of ACL Owned Real
Property in the manner in which such property is currently used or operated, and
there is not and has not been any uncured violation of the terms of any ACL
Permitted Encumbrance which would result in a forfeiture or otherwise adversely
affect the property, in any such case, except where the failure to so comply or
such interference and adverse effect would not, together with all other such
failures, interferences and adverse effects, have a material adverse effect on
ACL.
Section 3.6. Absence of Certain Changes. Except as otherwise set
forth in this Agreement, the ACL Financial Statements or Schedule 3.6, from
December 26, 1997 through the date hereof, there has been no material adverse
change in, and there has not been any occurrence which, when taken together with
all other such changes or occurrences, would have a material adverse effect on
ACL. Except as otherwise set forth in this Agreement, the ACL Financial
Statements or Schedule 3.6, from December 26, 1997 through the date hereof, ACL
has taken no action which would have required the consent of the Vectura Parties
under Section 5.4(a) hereof were such Section binding with respect to ACL as of
such time.
Section 3.7. Litigation; Orders. Except as disclosed in Schedule
3.7, there are no lawsuits, actions, administrative or arbitration or other
proceedings or Government Authority investigations, pending with respect to
which ACL or its Subsidiary has been duly served or otherwise received notice as
of the date hereof or, to the knowledge of ACL, threatened against ACL or its
Subsidiaries by any person or Government Authority (collectively, "ACL
Litigation") that would, individually or in the aggregate, have a material
adverse effect on ACL or would prevent the consummation of the Recapitalization
Transactions. Except as disclosed in Schedule 3.7, there are no judgments or
orders, injunctions, decrees, stipulations, settlements or awards (whether
rendered by a court or administrative agency, or by arbitration) outstanding
against ACL or its Subsidiary or affecting any of the properties of ACL or its
Subsidiary that would, individually or in the aggregate, have a material adverse
effect on ACL or would prevent the consummation of the Recapitalization
Transactions. Except for those matters disclosed in Schedule 3.7, the aggregate
amount of all claims and judgments pending with respect to which ACL has been
duly served or otherwise received notice as of the date hereof or, to the
knowledge of ACL, threatened against ACL or its Subsidiary would not have,
either individually or in the aggregate, a material adverse effect on ACL.
Section 3.8. Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc. (a) Schedule 3.8 includes all material licenses,
permits, franchises and other authorizations of any Government Authority
possessed by or granted to ACL or its Subsidiary or used in or necessary for the
operation of its business (the "ACL Licenses"). Except as disclosed in Schedule
3.8, all ACL Licenses are in full force and effect except for those whose
failure to be in full force and effect would not, individually or in the
aggregate, have a material adverse effect on ACL. Except as set forth in
Schedule 3.8, ACL or its Subsidiary, as the case may be, is in compliance with
the terms of the ACL Licenses, except where the failure to be in compliance
would not, individually or in the aggregate, have a material adverse effect on
ACL. Except as disclosed in Schedule 3.8, no investigation, review or proceeding
is pending with respect to which ACL has been duly served or otherwise received
notice as of the date hereof or, to the knowledge of ACL, threatened seeking the
revocation or limitation of any such ACL License that, individually or in the
aggregate, would have a material adverse effect on ACL.
(b) Schedule 3.8 lists all registrations, filings, applications,
notices, consents, approvals, orders, qualifications and waivers required to be
made, filed, given or obtained by ACL or its Subsidiary with, to or from any
person (including any Government Authority) in connection with the
Recapitalization Transactions except for with respect to the HSR Act and except
for those the failure to make, file, give or obtain which would not,
individually or in the aggregate, have a material adverse effect on ACL or
prevent consummation of the Recapitalization Transactions.
Section 3.9. Labor Matters. Except as described in Schedule
3.12(b), ACL and its Subsidiaries have no written contract of employment with
any employee. Except as described in Schedule 3.9, ACL and its Subsidiaries are
not presently a party to any collective bargaining agreement, subject to a legal
duty to bargain with any labor organization on behalf of employees or the object
of any attempt to organize employees for collective bargaining or similar
purposes or presently operating under an expired collective bargaining
agreement. Except as described in Schedule 3.9, ACL and its Subsidiaries are not
a party to or subject to any pending strike or pending work stoppage, organizing
attempt, union certification, picketing, boycott or similar activity. ACL and
its Subsidiaries have complied in all material respects with all applicable
federal, state and local laws, ordinances, rules and regulations and
requirements relating to the employment, payment and termination of labor,
including the provisions thereof relative to wages, hours, severance, layoffs,
vacation, collective bargaining, employee benefits, and employee benefit plans,
contributions, unemployment, withholding taxes and occupational health and
safety and equal opportunity and non-discrimination laws (including the
Americans with Disabilities Act), except as would not have a material adverse
effect on ACL. ACL and its Subsidiaries have made all deductions required by law
to be made for employees' wages and salaries and either remitted the same to
appropriate Government Authorities or provided for the same in its accounts and
is not liable for any arrears of wages or any taxes or penalties for failure to
comply with the payment or repayment of any of the foregoing, except as would
not have a material adverse effect on ACL.
Section 3.10. Compliance with Laws. Except as may be indicated
in Schedule 3.10, the conduct of business by ACL and its Subsidiaries complies
with all statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees of any Government Authority applicable thereto, except for violations or
failures so to comply, if any, that, individually or in the aggregate, would not
have a material adverse effect on ACL.
Section 3.11. Insurance. Schedule 3.11 sets forth a true and
complete list of all insurance policies currently held by ACL and its
Subsidiaries and in force as of the date hereof with respect to the assets,
properties, business, employees, officers, and directors of ACL or its
Subsidiaries, setting forth as to each policy a general description of type of
coverage, carrier, policy number, coverage limit, expiration date, annual
premiums, and deductibles. Such policies are in full force and effect as of the
date hereof, except where the failure of such policies to be in full force and
effect would not have a material adverse effect on ACL; and, except as set forth
in Schedule 3.11, such policies will remain in effect following the Closing or
be replaced by at least substantially comparable policies, except where the
failure of such policies to so remain or be so replaced would not have a
material adverse effect on ACL. The holders of those policies listed on Schedule
3.11 are in compliance with the terms and conditions thereof in all material
respects. As of the date hereof, all premiums covering all periods up to and
including the date hereof have been paid when due except where the failure to
pay such premiums when due would not have a material adverse effect on ACL.
Section 3.12. Material Contracts. (a) Except as disclosed in
Schedule 3.12(a), neither ACL nor its Subsidiary is as of the date hereof a
party to any (i) consulting agreement having a remaining term of at least one
year and requiring payments of base salary in excess of $100,000 per year or
aggregate payments of base salary in excess of $150,000, (ii) material sales
representative or agency contract which is not terminable on 12 months' (or
less) notice, (iii) material lease of real or personal property with an annual
base rental obligation of more than $250,000, or a total remaining rental
obligation of more than $1,000,000, (iv) joint venture or partnership agreement,
(v) agreement materially limiting in any way ACL's or its Subsidiary's ability
to compete with any person in any geographic location or any line of business,
(vi) agreement with any Affiliate (other than any agreement between Affiliates,
which will be Subsidiaries of ACL Holdings following the Closing), officer or
director of ACL or its Subsidiary or (vii) other material contract, agreement or
arrangement (including collective bargaining agreements) (other than any barge
charter or barge lease (whether as lessor or lessee) entered into in the
ordinary course of business) requiring future payment or payments in excess of
$3,000,000 per year. Schedule 3.12(a) lists all notes, mortgages, indentures and
other obligations and agreements and other instruments for or relating to any
lending or borrowing (including assumed debt, guarantees, capitalized lease
obligations and other agreement creating a security interest in assets or
properties of ACL or its Subsidiary) of $3,000,000 or more effected by ACL or
its Subsidiary or to which any assets of ACL or its Subsidiary are subject
(except with respect to any such lending or borrowing among ACL and its
Subsidiaries, other than foreign Subsidiaries) (collectively, "ACL
Indebtedness"). With respect to all contracts listed on Schedule 3.9, Schedule
3.12(a) or Schedule 3.12(b), except as disclosed on Schedule 3.9, Schedule
3.12(a) or Schedule 3.12(b), except as would not have a material adverse effect
on ACL: (i) assuming that such contracts are valid and binding on the other
parties thereto, such contracts are valid and binding on ACL or its Subsidiary,
as applicable; (ii) ACL has received no notice to the effect that such contracts
are not valid and binding on the other parties thereto; and (iii) ACL or its
Subsidiary, as applicable, is not in material breach thereof or material default
thereunder, and there does not exist under any provision thereof any event that,
with the giving of notice or the lapse of time or both, would constitute such a
breach or default.
(b) Schedule 3.12(b) sets forth (i) a list of all employment
agreements to which ACL or its Subsidiary is a party having a remaining term of
at least one year and requiring payments of base salary in excess of $100,000
per year or aggregate payments of base salary in excess of $150,000 and (ii) the
number of severance and retention agreements with employees of ACL or its
Subsidiary to which ACL or its Subsidiary is a party and the approximate
aggregate maximum amount of the payments which would be required to be made
thereunder. True and complete copies of all such employment and severance and
retention agreements have been made available to the Vectura Parties.
Section 3.13. Fixed Assets. (a) Schedule 3.13 lists (i) all
fixed assets of ACL and its Subsidiaries having a book value as of December 26,
1997 of $3,000,000 or more and (ii) all towboats and barges owned or leased by
ACL or its Subsidiary and used in ACL's business as of the date hereof, together
with the name, dimensions and year of construction of each such towboat and the
number, dimensions, general type and year of construction of each such barge
(collectively, "ACL Fixed Assets"). ACL or its Subsidiary, as applicable, has
good and marketable title to, or, in the case of leased or subleased ACL Fixed
Assets, valid and subsisting leasehold interests in, all ACL Fixed Assets, free
and clear of all Encumbrances other than ACL Permitted Encumbrances, except as
would not have a material adverse effect on ACL. The ACL Pro Forma Balance Sheet
reflects all material assets necessary and sufficient for the conduct of the
business of ACL and its Subsidiaries as conducted by ACL and its Subsidiaries as
of the date hereof (other than leased assets).
(b) Since January 1, 1998, ACL and its Subsidiaries have made
capital expenditures in respect of barges in an amount greater than $12,000,000
in the aggregate.
Section 3.14. Environmental Matters. (a) It is the intention of
the Parties that CSX is making no representation or warranty with respect to
environmental matters except as set forth in this Section 3.14 and that any and
all environmental matters shall be deemed an exception to each other
representation and warranty of CSX contained in this Agreement.
(b) Except as disclosed in Schedule 3.14, to the knowledge of
ACL, (i) ACL and its Subsidiaries have complied and currently comply with
applicable Environmental Laws, except for failures to comply that, individually
or in the aggregate, would not have a material adverse effect on ACL; (ii) ACL
and its Subsidiaries have obtained all environmental consents, approvals,
licenses and permits required for its current operations by any applicable
Environmental Laws, except for failures to obtain that, individually or in the
aggregate, would not have a material adverse effect on ACL; (iii) neither ACL
nor any of its Subsidiaries has received any written notice, claim or report
alleging any material liabilities or potentially material liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial, or corrective obligations arising under Environmental
Laws and for which the alleged liability or potential liability has not been
fully resolved; (iv) none of the following is present at any of the properties
which will be owned or leased by ACL or its Subsidiaries at the time ACL is
transferred to ACL Holdings, except where such presence, individually or in the
aggregate, would not have a material adverse effect on ACL: (A)
asbestos-containing material in any friable form or condition, (B)
polychlorinated biphenyls (PCBs), including any materials or equipment
contaminated with PCBs, (C) underground storage tanks, (D) surface impoundments,
or (E) nonpermitted landfills or other nonpermitted waste disposal areas; and
(v) neither ACL nor any of its Subsidiaries has treated, stored, disposed of,
arranged for the disposal of, transported, handled, or released any Hazardous
Material, or owned or operated any property or facility (and no such property or
facility is contaminated by any Hazardous Material) in a manner that has given
or would give rise to any liabilities or any investigative, corrective or
remedial obligations, pursuant to CERCLA or any other Environmental Law, except
for any such liabilities or obligations that, individually or in the aggregate,
would not have a material adverse effect on ACL.
(c) To the knowledge of ACL, CSX has provided to the Vectura
Parties copies of all material or potentially material environmental audits,
assessments, analyses, and reports, and any other documents materially bearing
on environmental liabilities or obligations of ACL or its Subsidiaries which are
in the possession or under the reasonable control of CSX, ACL or any of its
Subsidiaries.
(d) As used in this Agreement, "Environmental Law" means any and
all U.S. and foreign federal, state and local laws, ordinances and regulations,
all other requirements having the force and effect of law, and all common law,
relating to pollution, the protection of the environment, or the discharge or
release of materials into the environment; "Hazardous Material" means any
substance, chemical, compound, product, solid, gas, liquid, waste or byproduct
which is classified or regulated (including without limitation regulation as
"hazardous" or "toxic", or as a "pollutant", "contaminant" or "waste"), pursuant
to any Environmental Law, and includes asbestos, PCBs and petroleum (including
crude oil or any fraction thereof); and "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment.
Section 3.15. Affiliate Transactions. At the Closing Date,
except for the transactions listed in Schedule 3.15 and the ACL Pro Forma
Transactions, and except for the lease of assets by CSX to ACL as disclosed
prior to the date hereof (which shall survive and be in effect following the
Closing), neither ACL nor its Subsidiary shall be a party to any contract,
agreement or commitment with CSX or any person which following the Closing, will
be a director, officer, employee, stockholder or Affiliate of CSX or its
Subsidiary (assuming that ACL Holdings and its Subsidiaries are not Affiliates
of CSX or its Subsidiary), that are on terms and conditions in the aggregate
materially more burdensome to such Subsidiary than would be usual and customary
in similar contracts, agreements, commitments, transactions or business
arrangements negotiated on an arm's-length basis among unaffiliated parties.
Section 3.16. Intellectual Property. (a) Schedule 3.16 sets
forth a complete and correct list of all material: (i) patented or registered
Intellectual Property Rights and pending patent applications or other
applications for registrations of Intellectual Property Rights owned or filed by
or on behalf of ACL or its Subsidiary; (ii) computer software owned and/or used
by ACL or its Subsidiary (other than mass-marketed software); and (iii) licenses
or similar agreements or arrangements for Intellectual Property Rights to which
ACL or its Subsidiary is a party, either as licensee or licensor (collectively
"ACL Intellectual Property Rights").
(b) Except as set forth on Schedule 3.16: (i) ACL or its
Subsidiary owns or possesses all Intellectual Property Rights material to the
operation of its business as conducted as of the date hereof free and clear of
material encumbrances, licenses and other restrictions; (ii) to the knowledge of
ACL, no claim by any third party contesting the validity, enforceability, use or
ownership of any of ACL Intellectual Property Rights owned or used by ACL or its
Subsidiary has been made, is currently outstanding or is threatened; (iii)
neither ACL nor its Subsidiary has received any notices of any infringement or
misappropriation by, or conflict with, any third party with respect to the ACL
Intellectual Property Rights (including any demand or request that ACL or its
Subsidiary license any rights from a third party); and (iv) neither ACL nor its
Subsidiary has infringed, misappropriated or otherwise conflicted with any
Intellectual Property Rights of any third parties, and neither ACL nor its
Subsidiary is aware of any infringement, misappropriation or conflict which will
occur as a result of the continued operation of ACL's business as conducted as
of the date hereof, except, in each of the foregoing (i) through (iv), as would
not have a material adverse effect on ACL.
Section 3.17. Employee Benefit Plans. (a) Schedule 3.17(a) lists
(i) each "employee benefit plan" (as such term is defined in Section 3(3) of
ERISA) at any time contributed to, maintained or sponsored by ACL or any of its
Affiliates, or with respect to which ACL or any of its Affiliates has any
liability or potential liability; and (ii) each other retirement, savings,
deferred compensation, severance, stock, performance, bonus, incentive, or other
material employee benefit plan, policy, or arrangement of any kind, contributed
to, maintained or sponsored by ACL or any of its Affiliates, or with respect to
which ACL or any of its Affiliates has any liability or potential liability; in
each case for the benefit of any current employees (whether active or on leave
of absence) of ACL or any of its Subsidiaries ("ACL Current Employees") or
former employees of ACL or any of its Subsidiaries ("ACL Former Employees" and
together with ACL Current Employees, "ACL Employees") or their respective
beneficiaries and dependents (collectively, "ACL Employee Benefit Plans";
provided that "ACL Employee Benefit Plans" shall not include routine
administrative procedures, government-required programs or ACL Foreign Plans).
Schedule 3.17(a) also specifies which ACL Employee Benefit Plans are maintained
solely by ACL or its Subsidiaries or solely for the benefit of ACL Employees and
their beneficiaries and dependents ("ACL-Only Employee Benefit Plans").
(b) All ACL Employee Benefit Plans and any related trusts are in
compliance in all material respects with and have been administered in material
compliance with the terms of such plans and any applicable collective bargaining
agreements, and all applicable requirements of law and regulations, including
but not limited to the Code and ERISA, and all contributions and premium
payments required to be made by ACL or any of its Affiliates to or on account of
each such ACL Employee Benefit Plan under the terms thereof, ERISA or the Code
for all periods of time prior to the date hereof and the Closing Date have been
or will be, as the case may be, made or properly accrued.
(c) Except as set forth in Schedule 3.17(c), with respect to any
ACL Employee Benefit Plan which is intended to qualify under Section 401(a) of
the Code other than a Multi-employer Plan, a favorable determination letter as
to qualification under Section 401(a) of the Code has been issued by the IRS and
the related trust has been determined to be exempt from taxation under Section
501(a) of the Code and no events or circumstances have occurred that could be
reasonably expected to materially adversely affect the qualified status of any
such plan or trust. Except as set forth in Schedule 3.17(c), no ACL-Only
Employee Benefit Plan is subject to Title IV of ERISA or to Section 412 or 4971
of the Code. Except as set forth in Schedule 3.17(c), no ACL Employee Benefit
Plan is a "multiemployer plan," as defined in Section 3(37) of ERISA (a
"Multiemployer Plan"). Except as set forth in Schedule 3.17(c): with respect to
each ACL-Only Employee Benefit Plan that is subject to Section 412 of the Code
or Title IV of ERISA, there has been no application for or waiver of the minimum
funding standards imposed by Section 412 of the Code with respect to any
ACL-Only Employee Benefit Plan, and there are no facts or circumstances that
would materially change the funded status of any such ACL-Only Employee Benefit
Plan in an adverse manner; no material asset of ACL or its Subsidiaries that is
to be acquired by ACL Holdings, directly or indirectly, pursuant to this
Agreement is subject to any material lien under ERISA or the Code; and there are
no pending or threatened actions, suits, investigations or claims with respect
to any ACL Employee Benefit Plan (other than routine claims for benefits) which
could result in material liability to ACL Holdings or any of its Affiliates
after the Closing.
(d) Except as otherwise set forth in Schedule 3.17(d), neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) materially increase any benefits
otherwise payable under any ACL Employee Benefit Plan or (ii) result in the
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(e) ACL has delivered or made available to the Vectura Parties a
true, correct and complete copy of all plan documents and the current summary
plan descriptions (if any) for each ACL Employee Benefit Plan. In addition, with
respect to each ACL-Only Employee Benefit Plan, ACL has delivered or made
available to Vectura a true, correct and complete copy of: (i) the most recent
Annual Report (Form 5500 Series) and accompanying schedule, if any, or any
similar filing made with any foreign authority; (ii) the most recent annual
financial report, if any; (iii) the most recent actuarial report, if any; and
(iv) the most recent determination letter from the IRS or similar document
issued by any other taxing authority, if any.
(f) No event has occurred and, to the knowledge of ACL, no
circumstances now exist that could be reasonably expected to result in, any
material liability under Title IV of ERISA or Section 412 of the Code with
respect to any employee benefit plan sponsored by CSX or any of its Affiliates
that would be a liability of ACL Holdings or any of its Affiliates following the
Closing (other than the payment of contributions and premiums to the Pension
Benefit Guaranty Corporation that are not yet due).
(g) Except as set forth in Schedule 3.17(g), neither ACL nor any
of its Subsidiaries contributes to, maintains or sponsors or has any liability
with respect to any employee benefit plan, agreement or arrangement applicable
to employees of ACL or any Subsidiary located outside the United States (the
"ACL Foreign Plans"). Each ACL Foreign Plan is in compliance in all material
respects with all laws applicable thereto and the respective requirements of
such ACL Foreign Plan's governing documents. There are no material actions,
suits or claims (other than routine claims for benefits) with respect to any ACL
Foreign Plan, and no circumstances exist which could reasonably be expected to
give rise to any such material actions, suits or claims.
(h) Except as set forth in Schedule 3.17(h): (i) no
Multiemployer Plan in which ACL or any of its Subsidiaries has participated
within the past six years has been terminated; (ii) no proceeding has been
initiated to terminate any Multiemployer Plan that is an ACL Employee Benefit
Plan (an "ACL Multiemployer Plan") and there has been no "reportable event"
(within the meaning of Section 4043(c) of ERISA) with respect to any ACL
Multiemployer Plan within the past six years; (iii) no ACL Multiemployer Plan is
in reorganization as described in Section 4241 of ERISA and no ACL Multiemployer
Plan is insolvent as described in Section 4245 of ERISA; (iv) neither ACL nor
any of its Subsidiaries has incurred any liability on account of a "partial
withdrawal" or a "complete withdrawal" (within the meaning of Sections 4205 and
4203, respectively, of ERISA) from any Multiemployer Plan that has not been
satisfied in full, no such liability has been asserted that has not been
satisfied in full, and there do not now exist any events or circumstances which
could result in any such partial or complete withdrawal; and (v) neither ACL nor
any of its Subsidiaries is bound by any contract or agreement or has any
obligation or liability described in Section 4204 of ERISA.
(i) Except as set forth in Schedule 3.17(i): (i) ACL and its
Subsidiaries have complied with the health care continuation requirements of
Part 6 of Subtitle B of Title I of ERISA; and (ii) neither ACL nor any of its
Subsidiaries has any obligation under any ACL Employee Benefit Plan or otherwise
to provide medical, dental or life insurance benefits to ACL Former Employees or
to any other person, except as specifically required by Part 6 of Subtitle B of
Title I of ERISA and except in the amounts appropriately reflected on the
appropriate ACL Balance Sheet.
Section 3.18. Brokers, Finders, Etc. Neither CSX nor its
Affiliate has employed any broker, finder, consultant or other intermediary in
connection with the Recapitalization Transactions who would have a valid claim
for a fee or commission from any Vectura Party, ACL Holdings or any Subsidiary
of ACL Holdings in connection with the Recapitalization Transactions.
Section 3.19. Acquisition for Investment. CSX confirms that it
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the transactions contemplated
hereby, including any acquisition of securities hereunder. CSX is acquiring the
securities to be acquired by it hereunder for investment and not with a view
toward or for sale in connection with any distribution thereof, or with any
present intention of distributing or selling such securities within the meaning
of the Securities Act of 1933, as amended. CSX understands and agrees that such
securities may not be sold, transferred, offered for sale, pledged, hypothecated
or otherwise disposed of without registration under the Securities Act of 1933,
as amended, except pursuant to an exemption from such registration available
under such Act, and without compliance with state, local and foreign securities
laws, in each case, to the extent applicable.
Section 3.20. Qualifications of ACL. ACL is a "Citizen of the
United States" within the meaning of Section 2 of the Shipping Act of 1916, as
amended (42 U.S.C. 802), and is qualified to enter into this Agreement and to
acquire an ownership interest in marine vessels, and the provisions of said Act
imposing restrictions upon transfers to persons other than Citizens of the
United States and any proclamations, orders or regulations thereunder are
inapplicable to ACL and the transactions contemplated hereby.
Section 3.21. No Outside Reliance. Notwithstanding anything
contained in this Article III or any other provision hereof, it is the explicit
intent of each Party that CSX is making no representation or warranty
whatsoever, express or implied, beyond those expressly given in this Agreement,
including any implied warranty or representation as to condition, seaworthiness,
merchantability, suitability or fitness for a particular purpose as to any
assets of ACL or its Subsidiaries. Without limiting the generality of the
foregoing, it is understood that any cost estimates, financial or other
projections or other predictions contained or referred to in the Schedules
hereto and any cost estimates, projections or predictions or any other
information contained or referred to in other materials or oral presentations
that have been or shall hereafter be provided to any Vectura Party or any of its
Affiliates, agents or representatives are not and shall not be deemed to be
representations or warranties of CSX or its Affiliates.
ARTICLE IV
Representations and Warranties of the Vectura Parties
-----------------------------------------------------
Each of the Vectura Parties hereby represents and warrants to ACL
Holdings, and, in the case of Sections 4.1, 4.18, 4.19, 4.20, 4.21 and 4.22, to
CSX, as follows:
Section 4.1. Incorporation; Authorization; Etc. (a) Each Vectura
Party is duly incorporated, validly existing and in good standing under the laws
of its jurisdiction of organization. Each Vectura Party Subsidiary is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, except as would not have a material adverse effect
on the Vectura Parties. Each Vectura Party and each Vectura Party Subsidiary (i)
has all requisite power to own its properties and assets and to carry on its
business as it is now being conducted and (ii) is in good standing and is duly
qualified to transact business in each domestic and foreign jurisdiction in
which the nature of property owned or leased by it or the conduct of its
business requires it to be so qualified, except where the failure to be in good
standing or to be duly qualified to transact business would not, individually or
in the aggregate, have a material adverse effect on the Vectura Parties.
Attached to Schedule 4.1 is a true and complete list of all Vectura Party
Subsidiaries as of the date hereof (noting the ownership of each Vectura Party
and each Vectura Party Subsidiary, noting which of such Subsidiaries will not be
Subsidiaries of ACL Holdings following the Closing Date, noting the jurisdiction
of organization of each Vectura Party and each Vectura Party Subsidiary and
noting all domestic and foreign jurisdictions in which any Vectura Party and
each Vectura Party Subsidiary is qualified to transact business).
(b) Each Vectura Party has full power to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of each Vectura Party's
obligations hereunder have been duly and validly authorized by all necessary
proceedings on the part of such Vectura Party and no other proceedings or
actions on the part of such Vectura Party, its Board of Directors or
stockholders are necessary therefor. The execution, delivery and performance by
each Vectura Party of this Agreement will not (i) violate any provision of such
Vectura Party's Certificate of Incorporation or By-laws or other organizational
documents, (ii) except as disclosed in Schedule 4.1, violate any provision of,
or be an event that is (or with notice or the passage of time or both will
result in) a violation of, or result in the acceleration of or entitle any party
to accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the imposition of any lien, pledge or encumbrance
upon or the creation of a security interest in the assets or properties of any
Vectura Party or its Subsidiaries pursuant to, any mortgage, lien, lease,
agreement, instrument, order, arbitration award, judgment, injunction, decree,
permit or Vectura "employee benefit plan" (as defined in Section 3(3) of ERISA)
to which any Vectura Party or its Subsidiary is a party or by which any Vectura
Party or its Subsidiary is bound and (iii) except as disclosed in Schedule 4.8,
violate or conflict with any statute, rule or regulation applicable to any
Vectura Party or its Subsidiary or any of its properties or assets or any other
material restriction of any kind or character to which any Vectura Party or its
Subsidiary is subject, that, in the case of clauses (ii) and (iii), would,
individually or in the aggregate, have a material adverse effect on the Vectura
Parties or would prevent the consummation of the Recapitalization Transactions.
This Agreement has been duly executed and delivered by each Vectura Party and,
assuming the due execution and delivery hereof by CSX, constitutes the legal,
valid and binding obligation of each Vectura Party, enforceable against each
Vectura Party in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights and remedies of creditors generally and to general principles of
equity (regardless of whether in equity or at law).
Section 4.2. Capitalization. Schedule 4.2 lists the number of
authorized and outstanding shares of capital stock of each Vectura Party and
each Vectura Party Subsidiary. Except as set forth in Schedule 4.2, no stock
appreciation right, phantom stock or similar right is outstanding with respect
to any capital stock of any Vectura Party or any Vectura Party Subsidiary.
Except as set forth in Schedule 4.2, all outstanding shares of capital stock of
each Vectura Party and each Vectura Party Subsidiary are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights and
owned by a Vectura Party or its Subsidiary, free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other legal encumbrances. Except as
set forth in Schedule 4.2 and except for this Agreement, there are no options,
warrants, calls, rights or agreements to which any Vectura Party or any of its
Subsidiaries is a party or by which any of them is bound obligating any Vectura
Party or any of its Subsidiaries to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed or
acquired, additional shares of capital stock or other equity interests of any
Vectura Party or its Subsidiary, or securities convertible into or exchangeable
for such shares or obligating any Vectura Party or its Subsidiary to grant,
extend or enter into any such option, warrant, call, right or agreement. Except
as set forth in Schedule 4.2, there are no outstanding contractual obligations
of any Vectura Party or its Subsidiary (i) restricting the transfer of, (ii)
affecting the voting rights of, (iii) requiring the repurchase, redemption or
disposition of, (iv) requiring the registration for sale of or (v) granting any
preemptive or antidilutive right with respect to any shares of capital stock of
any Vectura Party or its Subsidiary.
Section 4.3. Financial Statements. (a) Attached to Schedule 4.3
are true and complete copies of (i) the audited consolidated statements of
financial position of each Vectura Party and its respective Subsidiaries, as of
December 31, 1996, December 31, 1995, December 31, 1994, and the related audited
consolidated statements of earnings and retained earnings and cash flows for the
fiscal years ended December 31, 1996, December 31, 1995 and December 31, 1994,
together with the respective reports thereon and certifications thereof by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. and (ii) the unaudited consolidated statement of financial
position of each Vectura Party and its respective Subsidiaries, as of December
31, 1997 of the related unaudited consolidated statement of earnings for the
12-month period then ended (collectively, the "Vectura Financial Statements").
Each consolidated statement of financial position included in the Vectura
Financial Statements may be hereinafter referred to as a "Vectura Balance
Sheet," and each consolidated statement of earnings and retained earnings and
each consolidated statement of earnings included in the Vectura Financial
Statements may be hereinafter referred to as a "Vectura Income Statement." The
Vectura Financial Statements have been prepared from and are consistent with the
books and records of the Vectura Parties and their Subsidiaries.
(b) Attached to Schedule 4.3 is a pro forma consolidated
statement of financial position and related pro forma consolidated statements of
earnings and retained earnings and cash flows of Vectura and its respective
Subsidiaries (collectively, the "NMI Pro Forma Financial Statements"), as of,
and for the fiscal year ended, December 31, 1997, giving effect to the exclusion
of the Vectura Excluded Assets and Vectura Excluded Liabilities, and the
transactions listed in the notes thereto. The balance sheet included in the NMI
Pro Forma Financial Statements (the "NMI Pro Forma Balance Sheet") sets forth
any deviations from GAAP used in the preparation thereof.
(c) Except as indicated in Schedule 4.3 or in the Vectura
Financial Statements (including any notes thereto), the Vectura Financial
Statements were prepared in accordance with GAAP and, in the case of any Vectura
Balance Sheet, fairly presents the consolidated financial position of each
Vectura Party and its respective Subsidiaries at the date thereof in all
material respects and, in the case of any Vectura Income Statement, fairly
presents the consolidated results of operations of the applicable Vectura Party
and its respective Subsidiaries for the periods then ended in all material
respects (subject, in the case of unaudited Vectura Financial Statements, to any
other adjustments described therein and normal year-end adjustments in
accordance with GAAP which would not, in the aggregate, have a material adverse
effect with respect to the Vectura Parties).
Section 4.4. Undisclosed Liabilities. Except as reflected,
reserved against or otherwise disclosed in the Vectura Balance Sheets as of
December 31, 1997 (and specifically identified and described in the accompanying
notes), and except as set forth in Schedule 4.4, there are no liabilities, debts
(including obligations in respect of capital leases), or obligations of or
claims against any Vectura Party or its Subsidiary (other than those incurred in
the ordinary course consistent with past practice) which would, individually or
in the aggregate, have a material adverse effect on the Vectura Parties and that
would have been required to be reflected on such balance sheet or otherwise
specifically identified and described in the notes thereto in accordance with
GAAP.
Section 4.5. Properties. (a) Schedule 4.5 lists all real
property and interests in real property owned by any Vectura Party or any of its
Subsidiaries which is material to any Vectura Party (the "Vectura Owned Real
Property") or leased by any Vectura Party or any of its Subsidiaries as lessee
or lessor which is material to any Vectura Party (the "Vectura Leased Real
Property"), such description including, (i) for each Vectura Owned Real
Property, the location thereof, the approximate acreage thereof (where
available) and the manner in which such real property is used and (ii) for each
Vectura Leased Real Property, an identification of the lease agreement therefor
(material amendments, modifications, side letters and other agreements relating
to any such lease agreement have been made available to CSX), the annual payment
obligation thereon and the location and approximate size (or other relevant
dimension) of the premises leased thereunder. Except as set forth on Schedule
4.5 and except for Vectura Permitted Encumbrances, the applicable Vectura Party
or its Subsidiary has good and valid fee title to each Vectura Owned Real
Property free and clear of all Encumbrances. All leases with respect to Vectura
Leased Real Property ("Vectura Leases") are in effect and, where a Vectura Party
or its Subsidiary is lessee, create a valid and binding interest in Vectura
Leased Real Property in favor of the applicable Vectura Party or its Subsidiary
and, except as set forth in Schedule 4.5, there are no material defaults by the
lessor or lessee thereunder continuing in existence beyond any applicable notice
and cure periods, nor, to the knowledge of any Vectura Party, do there exist any
circumstances which, with the giving of notice, the passage of time or both,
would become such a default. Other than a Vectura Party or its Subsidiaries and
third party lessees, to the knowledge of any Vectura Party, there are no parties
in possession or parties having any current or future right to occupy any
Vectura Owned Real Property or Vectura Leased Real Property, except as would not
have a material adverse effect with respect to the Vectura Parties. Except as
set forth in Schedule 4.5, there are no condemnation proceedings, special
assessments, impact fees or similar charges pending or, to the knowledge of any
Vectura Party, threatened in connection with Vectura Owned Real Property or, to
the knowledge of any Vectura Party, Vectura Leased Real Property, and no Vectura
Party has received or been served with any notice with respect to any of the
foregoing. The current use by each Vectura Party and its Subsidiaries of Vectura
Owned Real Property and Vectura Leased Real Property complies in all material
respects with all applicable zoning laws and building and use restrictions
(including all agreements of any Vectura Party or its Subsidiaries applicable
thereto), except as would not, individually or in the aggregate, have a material
adverse effect on the Vectura Parties.
(b) Except as set forth in Schedule 4.5, each Vectura Owned Real
Property is in compliance with all material terms of the instruments which
constitute Vectura Permitted Encumbrances, and none of the Vectura Permitted
Encumbrances materially interferes with the use or operation of Vectura Owned
Real Property in the manner in which such property is currently used or
operated, and there is not and has not been any uncured violation of the terms
of any Vectura Permitted Encumbrance which would result in a forfeiture or
otherwise adversely affect the property, in any such case, except where the
failure to so comply or such interference and adverse effect would not, together
with all other such failures, interferences and adverse effects, have a material
adverse effect on the Vectura Parties.
Section 4.6. Absence of Certain Changes. Except as otherwise set
forth in this Agreement, the Vectura Financial Statements or Schedule 4.6, from
December 31, 1997 through the date hereof, there has been no material adverse
change in, and there has not been any occurrence which, when taken together with
all other such changes or occurrences, would have a material adverse effect on
the Vectura Parties. Except as otherwise set forth in this Agreement, the
Vectura Financial Statements or Schedule 4.6, from December 31, 1997 through the
date hereof, no Vectura Party has taken any action which would have required the
consent of CSX under Section 5.4(b) hereof were such Section binding with
respect to such Vectura Party as of such time.
Section 4.7. Litigation; Orders. Except as disclosed in Schedule
4.7, there are no lawsuits, actions, administrative or arbitration or other
proceedings or Government Authority investigations, pending with respect to
which any Vectura Party or its Subsidiary has been duly served or otherwise
received notice as of the date hereof or, to the knowledge of any Vectura Party,
threatened against any Vectura Party or its Subsidiaries by any person or
Government Authority (collectively, "Vectura Litigation") that would,
individually or in the aggregate, have a material adverse effect on the Vectura
Parties or would prevent the consummation of the Recapitalization Transactions.
Except as disclosed in Schedule 4.7, there are no judgments or orders,
injunctions, decrees, stipulations, settlements or awards (whether rendered by a
court or administrative agency, or by arbitration) outstanding against any
Vectura Party or its Subsidiary or affecting any of the properties of any
Vectura Party or its Subsidiary that would, individually or in the aggregate,
have a material adverse effect on the Vectura Parties or would prevent the
consummation of the Recapitalization Transactions. Except for those matters
disclosed in Schedule 4.7, the aggregate amount of all claims and judgments
pending with respect to which the Vectura Parties have been duly served or
otherwise received notice as of the date hereof or, to the knowledge of any
Vectura Party, threatened against any Vectura Party or its Subsidiary would not
have, either individually or in the aggregate, a material adverse effect on the
Vectura Parties.
Section 4.8. Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc. (a) Schedule 4.8 includes all material licenses,
permits, franchises and other authorizations of any Government Authority
possessed by or granted to any Vectura Party or its Subsidiary or used in or
necessary for the operation of its business (the "Vectura Licenses"). Except as
disclosed in Schedule 4.8, all Vectura Licenses are in full force and effect
except for those whose failure to be in full force and effect would not,
individually or in the aggregate, have a material adverse effect on the Vectura
Parties. Each Vectura Party or its Subsidiary, as the case may be, is in
compliance with the terms of the Vectura Licenses, except where the failure to
be in compliance would not, individually or in the aggregate, have a material
adverse effect on the Vectura Parties. Except as disclosed in Schedule 4.8, no
investigation, review or proceeding is pending with respect to which any Vectura
Party has been duly served or otherwise received notice as of the date hereof
or, to the knowledge of any Vectura Party, threatened seeking the revocation or
limitation of any such Vectura License that, individually or in the aggregate,
would have a material adverse effect on the Vectura Parties.
(b) Schedule 4.8 lists all registrations, filings, applications,
notices, consents, approvals, orders, qualifications and waivers required to be
made, filed, given or obtained by any Vectura Party or its Subsidiary with, to
or from any person (including any Government Authority) in connection with the
Recapitalization Transactions except with respect to the HSR Act and except for
those the failure to make, file, give or obtain which would not, individually or
in the aggregate, have a material adverse effect on the Vectura Parties or
prevent consummation of the Recapitalization Transactions.
Section 4.9. Labor Matters. Except as described in Schedule
4.12(b), no Vectura Party or its Subsidiary has any written contract of
employment with any employee. Except as described in Schedule 4.9, no Vectura
Party or its Subsidiary is presently a party to any collective bargaining
agreement, subject to a legal duty to bargain with any labor organization on
behalf of employees or the object of any attempt to organize employees for
collective bargaining or similar purposes or presently operating under an
expired collective bargaining agreement. Except as described in Schedule 4.9, no
Vectura Party or its Subsidiary is a party to or subject to any pending strike
or pending work stoppage, organizing attempt, union certification, picketing,
boycott or similar activity. Each Vectura Party and its Subsidiaries have
complied in all material respects with all applicable federal, state and local
laws, ordinances, rules and regulations and requirements relating to the
employment, payment and termination of labor, including the provisions thereof
relative to wages, hours, severance, layoffs, vacation, collective bargaining,
employee benefits, and employee benefit plans, contributions, unemployment,
withholding taxes and occupational health and safety and equal opportunity and
non-discrimination laws (including the Americans with Disabilities Act), except
as would not have a material adverse effect on the Vectura Parties. Each Vectura
Party and its Subsidiaries have made all deductions required by law to be made
for employees' wages and salaries and either remitted the same to appropriate
Government Authorities or provided for the same in its accounts and is not
liable for any arrears of wages or any taxes or penalties for failure to comply
with the payment or repayment of any of the foregoing, except as would not have
a material adverse effect on the Vectura Parties.
Section 4.10. Compliance with Laws. Except as may be indicated
in Schedule 4.10, the conduct of business by each Vectura Party and its
Subsidiaries complies with all statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees of any Government Authority applicable thereto,
except for violations or failures so to comply, if any, that, individually or in
the aggregate, would not have a material adverse effect on the Vectura Parties.
Section 4.11. Insurance. Schedule 4.11 sets forth a true and
complete list of all insurance policies currently held by any Vectura Party and
its Subsidiaries and in force as of the date hereof with respect to the assets,
properties, business, employees, officers and directors of any Vectura Party or
its Subsidiaries, setting forth as to each policy a general description of type
of coverage, carrier, policy number, coverage limit, expiration date, annual
premiums, and deductibles. Such policies are in full force and effect as of the
date hereof, except where the failure of such policies to be in full force and
effect would not have a material adverse effect on the Vectura Parties; and,
except as set forth in Schedule 4.11, such policies will remain in effect
following the Closing or be replaced by at least substantially comparable
policies, except where the failure of such policies to so remain or be so
replaced would not have a material adverse effect on the Vectura Parties. The
holders of those policies listed on Schedule 4.11 are in compliance with the
terms and conditions thereof in all material respects. As of the date hereof,
all premiums covering all periods up to and including the date hereof have been
paid when due except where the failure to pay such premiums when due would not
have a material adverse effect on the Vectura Parties.
Section 4.12. Material Contracts. (a) Except as disclosed in
Schedule 4.12(a), no Vectura Party nor its Subsidiary is as of the date hereof a
party to any (i) consulting agreement having a remaining term of at least one
year and requiring payments of base salary in excess of $100,000 per year or
aggregate payments of base salary in excess of $150,000, (ii) material sales
representative or agency contract which is not terminable on 12 months' (or
less) notice, (iii) material lease of real or personal property with an annual
base rental obligation of more than $250,000, or a total remaining rental
obligation of more than $1,000,000, (iv) joint venture or partnership agreement,
(v) agreement materially limiting in any way any Vectura Party's or its
Subsidiary's ability to compete with any person in any geographic location or
any line of business, (vi) agreement with any Affiliate (other than any
agreement between Affiliates which will be Subsidiaries of NMI Holdings
following the Closing), officer or director of any Vectura Party or its
Subsidiary or (vii) other material contract, agreement or arrangement (including
collective bargaining agreements) (other than any barge charter or barge lease
(whether as lessor or lessee) entered into in the ordinary course of business)
requiring future payment or payments in excess of $1,000,000 per year. Schedule
4.12(a) lists all notes, mortgages, indentures and other obligations and
agreements and other instruments for or relating to any lending or borrowing
(including assumed debt, guarantees, capitalized lease obligations and other
agreement creating a security interest in assets or properties of any Vectura
Party or its Subsidiary) of $1,000,000 or more effected by any Vectura Party or
its Subsidiary or to which any assets of any Vectura Party or its Subsidiary are
subject (except with respect to any such lending or borrowing among Vectura
Parties and their Subsidiaries, other than foreign Subsidiaries) (collectively,
"Vectura Indebtedness"). With respect to all contracts listed on Schedule 4.9,
Schedule 4.12(a) or Schedule 4.12(b), except as disclosed on Schedule 4.9,
Schedule 4.12(a) or Schedule 4.12(b), except as would not have a material
adverse effect on the Vectura Parties: (i) assuming that such contracts are
valid and binding on the other parties thereto, such contracts are valid and
binding on the applicable Vectura Party or its Subsidiary; (ii) no Vectura Party
has received notice to the effect that such contracts are not valid and binding
on the other parties thereto; and (iii) no Vectura Party or its Subsidiary, as
applicable, is in material breach thereof or material default thereunder, and
there does not exist under any provision thereof any event that, with the giving
of notice or the lapse of time or both, would constitute such a breach or
default.
(b) Schedule 4.12(b) sets forth (i) a list of all employment
agreements to which any Vectura Party or its Subsidiary is a party having a
remaining term of at least one year and requiring payments of base salary in
excess of $100,000 per year or aggregate payments of base salary in excess of
$150,000 and (ii) the number of severance and retention agreements with
employees of any Vectura Party or its Subsidiary to which any Vectura Party or
its Subsidiary is a party and the approximate aggregate maximum amount of the
payments which would be required to be made thereunder. True and complete copies
of all such employment and severance and retention agreements have been made
available to CSX.
Section 4.13. Fixed Assets. Schedule 4.13 lists (i) all fixed
assets of any Vectura Party and its Subsidiaries having a book value as of
December 31, 1997 of $1,000,000 or more and (ii) all towboats and barges owned
or leased by any Vectura Party or its Subsidiary and used in any Vectura Party's
business as of the date hereof, together with the name, dimensions and year of
construction of each such towboat and the number, dimensions, general type and
year of construction of each such barge (collectively, "Vectura Fixed Assets").
The applicable Vectura Party or its Subsidiary has good and marketable title to,
or, in the case of leased or subleased Vectura Fixed Assets, valid and
subsisting leasehold interests in, all Vectura Fixed Assets, free and clear of
all Encumbrances other than Vectura Permitted Encumbrances, except as would not
have a material adverse effect on the Vectura Parties. The NMI Pro Forma Balance
Sheet reflects all material assets necessary and sufficient for the conduct of
the business of the Vectura Parties and their Subsidiaries as conducted by the
Vectura Parties and their Subsidiaries as of the date hereof (other than leased
assets).
Section 4.14. Environmental Matters. (a) It is the intention of
the Parties that the Vectura Parties are making no representation or warranty
with respect to environmental matters except as set forth in this Section 4.14
and that any and all environmental matters shall be deemed an exception to each
other representation and warranty of the Vectura Parties contained in this
Agreement.
(b) Except as disclosed in Schedule 4.14, to the knowledge of
the Vectura Parties, (i) each Vectura Party and its Subsidiaries have complied
and currently comply with applicable Environmental Laws, except for failures to
comply that, individually or in the aggregate, would not have a material adverse
effect on the Vectura Parties; (ii) each Vectura Party and its Subsidiaries have
obtained all environmental consents, approvals, licenses and permits required
for its current operations by any applicable Environmental Laws, except for
failures to obtain that, individually or in the aggregate, would not have a
material adverse effect on the Vectura Parties; (iii) no Vectura Party nor any
of its Subsidiaries has received any written notice, claim or report alleging
any material liabilities or potentially material liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any investigatory,
remedial, or corrective obligations arising under Environmental Laws and for
which the alleged liability or potential liability has not been fully resolved;
(iv) none of the following is present at any of the properties which will be
owned or leased by any Vectura Party or its Subsidiaries at the time of transfer
to ACL Holdings, except where such presence, individually or in the aggregate,
would not have a material adverse effect on the Vectura Parties: (A)
asbestos-containing material in any friable form or condition, (B)
polychlorinated biphenyls (PCBs), including any materials or equipment
contaminated with PCBs, (C) underground storage tanks, (D) surface impoundments,
or (E) nonpermitted landfills or other nonpermitted waste disposal areas; and
(v) no Vectura Party nor any of its Subsidiaries has treated, stored, disposed
of, arranged for the disposal of, transported, handled, or released any
Hazardous Material, or owned or operated any property or facility (and no such
property or facility is contaminated by any Hazardous Material) in a manner that
has given or would give rise to any liabilities or any investigative, corrective
or remedial obligations, pursuant to CERCLA or any other Environmental Law,
except for any such liabilities or obligations that, individually or in the
aggregate, would not have a material adverse effect on the Vectura Parties.
(c) To the knowledge of the Vectura Parties, the Vectura Parties
have has provided to CSX copies of all material or potentially material
environmental audits, assessments, analyses, and reports, and any other
documents materially bearing on environmental liabilities or obligations of any
Vectura Party or its Subsidiaries which are in the possession or under the
reasonable control of any Vectura Party or its Subsidiary.
Section 4.15. Affiliate Transactions. At the Closing Date,
except for the transactions listed in Schedule 4.15, no person that will be a
Subsidiary of ACL Holdings following the Closing shall be a party to any
contract, agreement or commitment with Vectura or any stockholder or Subsidiary
(other than any Transferred NMI Holdings Subsidiary) of Vectura or any person
which, following the Closing, will be a director, officer, employee, stockholder
or Affiliate of any such person, that are on terms and conditions in the
aggregate materially more burdensome to such Subsidiary than would be usual and
customary in similar contracts, agreements, commitments, transactions or
business arrangements negotiated on an arm's-length basis among unaffiliated
parties.
Section 4.16. Intellectual Property. (a) Schedule 4.16 sets
forth a complete and correct list of all material: (i) patented or registered
Intellectual Property Rights and pending patent applications or other
applications for registrations of Intellectual Property Rights owned or filed by
or on behalf of any Vectura Party or its Subsidiary; (ii) computer software
owned and/or used by any Vectura Party or its Subsidiary (other than
mass-marketed software); and (iii) licenses or similar agreements or
arrangements for Intellectual Property Rights to which any Vectura Party or its
Subsidiary is a party, either as licensee or licensor (collectively, "Vectura
Intellectual Property Rights").
(b) Except as set forth on Schedule 4.16: (i) each Vectura Party
or its Subsidiary owns or possesses all Intellectual Property Rights material to
the operation of its business as conducted as of the date hereof free and clear
of material encumbrances, licenses and other restrictions; (ii) to the knowledge
of any Vectura Party, no claim by any third party contesting the validity,
enforceability, use or ownership of any Vectura Intellectual Property Rights
owned or used by any Vectura Party or its Subsidiary has been made, is currently
outstanding or is threatened; (iii) no Vectura Party nor its Subsidiary has
received any notices of any infringement or misappropriation by, or conflict
with, any third party with respect to the Vectura Intellectual Property Rights
(including any demand or request that any Vectura Party or its Subsidiary
license any rights from a third party); and (iv) no Vectura Party nor its
Subsidiary has infringed, misappropriated or otherwise conflicted with any
Intellectual Property Rights of any third parties, and no Vectura Party nor its
Subsidiary is aware of any infringement, misappropriation or conflict which will
occur as a result of the continued operation of any Vectura Party's business as
conducted as of the date hereof, except, in each of the foregoing (i) through
(iv), as would not have a material adverse effect on the Vectura Parties.
Section 4.17. Employee Benefit Plans. (a) Schedule 4.17(a) lists
(i) each "employee benefit plan" (as such term is defined in Section 3(3) of
ERISA) at any time contributed to, maintained or sponsored by any Vectura Party
or any of its Affiliates, or with respect to which any Vectura Party or any of
its Affiliates has any liability or potential liability; and (ii) each other
retirement, savings, deferred compensation, severance, stock, performance,
bonus, incentive, or other material employee benefit plan, policy, or
arrangement of any kind, contributed to, maintained or sponsored by any Vectura
Party or any of its Affiliates, or with respect to which any Vectura Party or
any of its Affiliates has any liability or potential liability; in each case for
the benefit of any current employees (whether active or on leave of absence) of
any Vectura Party or its Subsidiaries ("Vectura Current Employees") or former
employees of any Vectura Party or any of its Subsidiaries ("Vectura Former
Employees" and together with Vectura Current Employees, "Vectura Employees") or
their respective beneficiaries and dependents (collectively, "Vectura Employee
Benefit Plans"; provided that "Vectura Employee Benefit Plans" shall not include
routine administrative procedures, government-required programs or Vectura
Foreign Plans). Schedule 4.17(a) also specifies which Vectura Employee Benefit
Plans are maintained solely by one or more of the Vectura Parties or their
respective Subsidiaries or solely for the benefit of Vectura Employees and their
beneficiaries and dependents ("Vectura-Only Employee Benefit Plans").
(b) Except as set forth in Schedule 4.17(b), all Vectura
Employee Benefit Plans and any related trusts are in compliance in all material
respects with and have been administered in material compliance with the terms
of such plans and any applicable collective bargaining agreements, and all
applicable requirements of law and regulations, including but not limited to the
Code and ERISA, and all contributions and premium payments required to be made
to or on account of each such Vectura Employee Benefit Plan under the terms
thereof, ERISA or the Code for all periods of time prior to the date hereof and
the Closing Date have been or will be, as the case may be, made or properly
accrued.
(c) Except as set forth in Schedule 4.17(c), with respect to any
Vectura Employee Benefit Plan which is intended to qualify under Section 401(a)
of the Code other than a Multiemployer Plan, a favorable determination letter as
to qualification under Section 401(a) of the Code has been issued by the IRS and
the related trust has been determined to be exempt from taxation under Section
501(a) of the Code and no events or circumstances have occurred that could be
reasonably expected to materially adversely affect the qualified status of any
such plan or trust. Except as set forth in Schedule 4.17(c), no Vectura-Only
Employee Benefit Plan is subject to Title IV of ERISA or to Section 412 or 4971
of the Code. Except as set forth in Schedule 4.17(c), no Vectura Employee
Benefit Plan is a "Multiemployer Plan." Except as set forth in Schedule 4.17(c):
with respect to each Vectura-Only Employee Benefit Plan that is subject to
Section 412 of the Code or Title IV of ERISA, there has been no application for
or waiver of the minimum funding standards imposed by Section 412 of the Code
with respect to any Vectura-Only Employee Benefit Plan, and there are no facts
or circumstances that would materially change the funded status of any such
Vectura-Only Employee Benefit Plan in an adverse manner; no material asset of
any Vectura Party or its Subsidiaries to be acquired by ACL Holdings, directly
or indirectly, pursuant to this Agreement is subject to any material lien under
ERISA or the Code; and there are no pending or threatened actions, suits,
investigations or claims with respect to any Vectura Employee Benefit Plan
(other than routine claims for benefits) which could result in material
liability to ACL Holdings or any of its Affiliates after the Closing.
(d) Except as otherwise set forth in Schedule 4.17(d), neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) materially increase any benefits
otherwise payable under any Vectura Employee Benefit Plan or (ii) result in the
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(e) Each Vectura Party has delivered or made available to CSX a
true, correct and complete copy of all plan documents and the current summary
plan descriptions (if any) for each Vectura Employee Benefit Plan. In addition,
with respect to each Vectura Employee Benefit Plan, the Vectura Parties have
delivered or made available to CSX a true, correct and complete copy of: (i) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if any,
or any similar filing made with any foreign authority; (ii) the most recent
annual financial report, if any; (iii) the most recent actuarial report, if any;
and (iv) the most recent determination letter from the IRS or similar document
issued by any other taxing authority, if any.
(f) No event has occurred and, to the knowledge of the Vectura
Parties, no circumstances now exist that could be reasonably expected to result
in, any material liability under Title IV of ERISA or Section 412 of the Code
with respect to any employee benefit plan sponsored by Vectura or any of its
Affiliates that would be a liability of ACL Holdings or any of its Affiliates
following the Closing (other than the payment of contributions and premiums to
the Pension Benefit Guaranty Corporation that are not yet due).
(g) Except as set forth in Schedule 4.17(g), no Vectura Party
nor any of its Subsidiaries contributes to, maintains or sponsors or has any
liability with respect to any employee benefit plan, agreement or arrangement
applicable to employees of any Vectura Party or any Subsidiary located outside
the United States (the "Vectura Foreign Plans"). Each Vectura Foreign Plan is in
compliance in all material respects with all laws applicable thereto and the
respective requirements of such Vectura Foreign Plan's governing documents.
There are no material actions, suits or claims (other than routine claims for
benefits) with respect to any Vectura Foreign Plan, and no circumstances exist
which could reasonably be expected to give rise to any such material actions,
suits or claims.
(h) Except as set forth in Schedule 4.17(h): (i) no
Multiemployer Plan in which any Vectura Party or any of their respective
Subsidiaries has participated within the past six years has been terminated;
(ii) no proceeding has been initiated to terminate any Multiemployer Plan that
is a Vectura Employee Benefit Plan (a "Vectura Multiemployer Plan") and there
has been no "reportable event" (within the meaning of Section 4043(c) of ERISA)
with respect to any Vectura Multiemployer Plan within the past six years; (iii)
no Vectura Multiemployer Plan is in reorganization as described in Section 4241
of ERISA and no Vectura Multiemployer Plan is insolvent as described in Section
4245 of ERISA; (iv) no Vectura Party nor any of its Subsidiaries has incurred
any liability on account of a "partial withdrawal" or a "complete withdrawal"
(within the meaning of Sections 4205 and 4203, respectively, of ERISA) from any
Multiemployer Plan that has not been satisfied in full, no such liability has
been asserted that has not been satisfied in full, and there do not now exist
any events or circumstances which could result in any such partial or complete
withdrawal; and (v) none of the Vectura Parties nor any of their respective
Subsidiaries is bound by any contract or agreement or has any obligation or
liability described in Section 4204 of ERISA.
(i) Except as set forth in Schedule 4.17(i): (i) each Vectura
Party and its Subsidiaries have complied with the health care continuation
requirements of Part 6 of Subtitle B of Title I of ERISA; and (ii) none of the
Vectura Parties nor any of their respective Subsidiaries has any obligation
under any Vectura Employee Benefit Plan or otherwise to provide medical, dental
or life insurance benefits to Vectura Former Employees or to any other person,
except as specifically required by Part 6 of Subtitle B of Title I of ERISA and
except in the amounts appropriately reflected on the appropriate Vectura Balance
Sheet.
Section 4.18. Brokers, Finders, Etc. No Vectura Party nor its
Affiliate has employed any broker, finder, consultant or other intermediary in
connection with the Recapitalization Transactions who would have a valid claim
for a fee or commission from CSX, ACL Holdings or any Subsidiary of ACL Holdings
in connection with the Recapitalization Transactions.
Section 4.19. Qualifications of Vectura Parties. Each Vectura
Party is a "Citizen of the United States" within the meaning of Section 2 of the
Shipping Act of 1916, as amended (42 U.S.C. 802), and is qualified to enter into
this Agreement and to acquire an ownership interest in marine vessels, and the
provisions of said Act imposing restrictions upon transfers to persons other
than Citizens of the United States and any proclamations, orders or regulations
thereunder are inapplicable to each Vectura Party and the transactions
contemplated hereby.
Section 4.20. Availability of Funds. The Vectura Parties have
delivered to CSX true and complete fully executed copies of the following
letters received in connection with the financing of the transactions
contemplated hereby and the payment of all related fees and expenses (the
"Financing Letters"): (i) the Commitment Letter, dated as of the date hereof,
from Chase Securities Inc. and The Chase Manhattan Bank to Vectura relating to
two Senior Secured Term Loan Facilities in an aggregate principal amount of $435
million and a Senior Secured Revolving Facility in an amount equal to $100
million (the "Senior Credit Letter"); (ii) (A) the Highly Confident Letter,
dated as of the date hereof, from Wasserstein, Perella & Co. to Vectura and (B)
the Highly Confident Letter, dated as of the date hereof, from Chase Securities
Inc. to Vectura, each relating to the issuance of Senior Unsecured Notes in an
aggregate principal amount of $200 million and Senior Unsecured Discount Notes
resulting in gross cash proceeds of $100 million (collectively, the "High Yield
Letters"); and (iii) the Commitment Letter, dated as of the date hereof, from
399 Venture Partners Inc. to Vectura relating to $60 million of equity capital
and the Commitment Letter, dated as of the date hereof, from Vectura to ACL
Holdings relating to $60 million of equity capital (collectively, the "Equity
Letters"), in each case as in effect on the date of this Agreement, and will
deliver to CSX, promptly following receipt thereof, a true and complete copy of
any proposed modification or amendment to any Financing Letter. The cash
proceeds of the financing contemplated by the Financing Letters is in amounts
sufficient to consummate the transactions contemplated hereby and the payment of
all related fees and expenses. The terms and conditions of the Financing Letters
are satisfactory to the Vectura Parties, and none of such parties knows of any
fact or circumstance which could reasonably be expected to lead to the failure
of the conditions to such financing to be satisfied.
Section 4.21. No Outside Reliance. Notwithstanding anything
contained in this Article IV or any other provision hereof, it is the explicit
intent of each Party that the Vectura Parties are making no representation or
warranty whatsoever, express or implied, beyond those expressly given in this
Agreement, including any implied warranty or representation as to condition,
seaworthiness, merchantability, suitability or fitness for a particular purpose
as to any assets of NMI or its Subsidiaries. Without limiting the generality of
the foregoing, it is understood that any cost estimates, financial or other
projections or other predictions contained or referred to in the Schedules
hereto and any cost estimates, projections or predictions or any other
information contained or referred to in other materials or oral presentations
that have been or shall hereafter be provided to CSX or any of its Affiliates,
agents or representatives are not and shall not be deemed to be representations
or warranties of the Vectura Parties or their Affiliates.
Section 4.22. Acquisition for Investment. Each Vectura Party
confirms that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
transactions contemplated hereby, including any acquisition of securities
hereunder. Each Vectura Party confirms that CSX has made available to the
Vectura Parties the opportunity to ask questions of the officers and management
employees of ACL and its Subsidiaries as well as access to the documents,
information and records of ACL and its Subsidiaries and to acquire additional
information about the business and financial condition of ACL and its
Subsidiaries, and each Vectura Party confirms that it has made an independent
investigation, analysis and evaluation of ACL and its Subsidiaries and their
properties, assets, business, financial condition, documents, information and
records. Each Vectura Party is acquiring the securities to be acquired by it
hereunder for investment and not with a view toward or for sale in connection
with any distribution thereof, or with any present intention of distributing or
selling such securities within the meaning of the Securities Act of 1933, as
amended. Each Vectura Party understands and agrees that such securities may not
be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act of 1933, as amended,
except pursuant to an exemption from such registration available under such Act,
and without compliance with state, local and foreign securities laws, in each
case, to the extent applicable.
ARTICLE V
Covenants of the Parties
------------------------
Section 5.1. Investigation of Business; Access to Properties and
Records, Etc. (a) After the date hereof, each Party shall cause to be afforded
to the other Parties and their representatives (including accountants, legal
counsel and sources of financing) reasonable access to the offices, properties,
contracts, commitments, books and records of ACL and the Vectura Parties during
normal business hours, in order that each Party may have full opportunity to
make such investigations as it may reasonably require of the affairs of ACL and
the Vectura Parties, provided that such investigation shall only be upon
reasonable notice and shall not unreasonably disrupt personnel and operations
and shall be at the investigating Party's sole risk and expense. All requests
for access to the offices, properties, books, and records of ACL or the Vectura
Parties shall be made to such representatives of ACL and the Vectura Parties as
such persons shall designate, who shall be solely responsible for coordinating
all such requests and all access permitted hereunder, and provided further that
such access may be limited to the extent required by preexisting obligations of
any party. It is further agreed that, prior to the Closing Date, no Party nor
its representatives shall contact any of the employees, customers, suppliers,
joint venture partners or other associates or Affiliates of any other Party in
connection with the Recapitalization Transactions, whether in person or by
telephone, mail or other means of communication, without the specific prior
written authorization of such representatives of such other Party. All notices
and applications to, filings with, and other contacts with any Government
Authority relating to the Recapitalization Transactions shall be made by any
Party only after prior consultation with and approval by the other Parties,
which approval shall not be unreasonably withheld. If, as of the date hereof or
at any time hereafter, any Party is aware of or discovers any breach of any
representation or warranty contained in this Agreement or any circumstance or
condition that upon Closing would constitute such a breach, such Party covenants
that it shall promptly so inform the other Parties of such event in writing,
provided that, except as otherwise provided herein, no such disclosure shall be
deemed to amend or supplement any schedule or exhibit hereto or prevent or cure
any misrepresentation, breach of warranty or breach of covenant unless otherwise
agreed upon in writing by the recipient Party.
(b) Any information provided to any Party or its representatives
pursuant to this Agreement or in connection with the transactions contemplated
hereby, whether prior to or after the date of this Agreement, shall be held by
such Party and its representatives in accordance with and subject to the terms
of that certain letter agreement, dated October 2, 1997 by and between
Wasserstein, Perella & Co., Inc. on behalf of CSX and Citicorp Venture Capital,
Ltd. ("CVC") (the "Confidentiality Agreement"). The Confidentiality Agreement
shall continue in full force and effect until the Closing Date, at which time
the Confidentiality Agreement and the obligations of the Parties under this
Section 5.1(b) shall terminate.
(c) The Parties agree (i) that they shall be entitled to retain
copies of their respective books and records contributed to or held by ACL
Holdings pursuant to Section 2.1, (ii) to continue to hold (or cause ACL
Holdings to hold, as applicable) all of the books and records of ACL and the
Vectura Parties existing on the Closing Date and not to destroy or dispose of
any thereof for a period of 10 years from the Closing Date (or, in the case of
any records, schedules and workpapers relating to any Returns or Tax audits,
until the expiration of all applicable statutes of limitations) or such longer
time as may be required by law or such shorter period as the Parties may agree
in writing, (iii) thereafter, if it is proposed to destroy or dispose of any of
such books and records, that CSX or the Vectura Parties, if the destroying
party, shall offer first in writing at least 60 days prior to such proposed
destruction or disposition to surrender them to ACL Holdings, and ACL Holdings
shall do the same to CSX or the Vectura Parties (as applicable) if ACL Holdings
is the destroying party, and (iv) that, at any time and from time to time
following the Closing Date, ACL Holdings shall afford CSX, its Affiliates,
representatives, accountants and counsel and other advisors, during normal
business hours, upon reasonable request and notice, full access to such books,
records and other data (including the right to photocopy the same) and to
appropriate employees to the extent that such access may be requested for any
legitimate purpose at no cost to CSX (other than for reasonable out-of-pocket
expenses), provided that such access shall not unreasonably disrupt personnel
and operations, and provided further that nothing herein shall limit any Party's
rights of discovery.
Section 5.2. Efforts; Obtaining Consents; Antitrust Laws. (a)
Subject to the terms and conditions herein provided, each Party shall use its
reasonable efforts to take or cause to be taken all actions and to do or cause
to be done all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated hereby, and
to cooperate fully with the other in connection with the foregoing, including
using all reasonable efforts (i) to obtain all necessary waivers, consents and
approvals from other parties to loan agreements, leases and other contracts with
third parties, (ii) to obtain all consents, approvals and authorizations that
are required to be obtained under any federal, state, local or foreign law or
regulation, (iii) to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the Parties to consummate the
transactions contemplated hereby, (iv) to effect all necessary registrations and
filings including filings under the HSR Act and submissions of information
requested by any Government Authority and (v) to fulfill all conditions set
forth in Articles VIII and IX of this Agreement. Each Party further shall, with
respect to any threatened or pending preliminary or permanent injunction or
other order, decree or ruling or statute, rule, regulation or executive order
that would adversely affect the ability of the Parties to consummate the
transactions contemplated hereby, use all reasonable efforts to prevent the
entry, enactment or promulgation thereof, as the case may be.
(b) Each Party shall promptly inform the other of any
communication from the Federal Trade Commission, the United States Department of
Justice or any other Government Authority regarding any of the transactions
contemplated hereby. If either Party or any Affiliate thereof receives a request
for additional information or documentary material from any such Government
Authority with respect to the transactions contemplated hereby, then such Party
will endeavor in good faith to make or cause to be made, as soon as reasonably
practicable and after consultation with the other Party, an appropriate response
in compliance with such request. The Parties shall cooperate with respect to all
discussions and negotiations with any Government Authority.
(c) In furtherance of and without limiting the generality of the
foregoing, the Vectura Parties shall use their best efforts to arrange and
consummate the financing contemplated by the Financing Letters, including using
their best efforts (A) to negotiate in good faith definitive agreements
respecting such financing on reasonable terms with respect thereto, (B) to
satisfy all conditions applicable to any of such persons or their Affiliates in
such definitive agreements, (C) to negotiate in good faith such modifications to
such financing as may be necessary or advisable to reflect any change in market
conditions which occurs after the date of this Agreement, (D) if any portion of
the financing contemplated by the Financing Letters has become unavailable,
regardless of the reason therefor, to obtain alternative financing from other
sources on and subject to substantially the same terms and conditions as that
portion which has become unavailable and (E) to satisfy at or prior to the
Closing all requirements of any agreements relating to the Financing Letters
which are conditions to closing under such agreements or to the drawdown of
proceeds thereunder (it being understood that such best efforts apply to both
High Yield Letters and not to one versus the other so long as such High Yield
Letters are in effect). The Parties acknowledge that "best efforts" as used in
the preceding or immediately following sentences shall not require agreement to
economic terms (including fees, expenses, interest rates, amortization schedules
and issuance of equity securities) that are, in the aggregate, materially more
burdensome than those contemplated by the Financing Letters. The Vectura Parties
agree that they will use their best efforts to exercise all of their rights to
enforce performance of the Financing Letters and will not waive, modify or amend
any of their rights under such letters in any material respect. CSX shall, and
shall cause ACL Holdings and its Subsidiaries to, cooperate with the efforts of
the Vectura Parties in respect of the foregoing, including providing such
assistance as may reasonably be requested in connection with the preparation of
any prospectus, offering memorandum or registration statement (including
providing any pro forma financial statements of ACL Holdings required in
connection therewith), provided that the foregoing shall not require CSX or its
Affiliate to incur or assume any financial obligation or incur any liability in
connection with any prospectus, offering memorandum or registration statement.
CSX acknowledges that the Vectura Parties shall be entitled to cause an
information memorandum reasonably acceptable to CSX to be prepared and used in
connection with the consummation of the financing of the transactions
contemplated hereby pursuant to the Financing Letters and agrees to use its best
efforts (as provided in Sections 5.1 and 5.2(a)) to furnish the Vectura Parties
access to, and to cause the cooperation of, all personnel necessary for the
Vectura Parties to consummate such financing. In addition, CSX shall request its
accountants, at the request and expense of the Vectura Parties, to consent to
the inclusion of their report or reports in, and to issue a comfort letter on
customary terms in connection with, any information memoranda or filings
required by such financing.
Section 5.3. Further Assurances. In addition to the other
agreements set forth herein, each Party shall, from time to time, whether
before, at or after the Closing Date, and shall cause its Affiliates to, execute
and deliver such further instruments of conveyance and transfer and to use
commercially reasonable efforts to take such other action as may be necessary to
carry out the purposes and intents hereof.
Section 5.4. Conduct of Business. (a) From the date hereof to
the Closing, except as set forth in Schedule 5.4(a) or as contemplated by ACL's
1998 Business Operating Plan and Budget or ACL's 1998 Capital Plan (true and
complete copies of which have been attached to Schedule 5.4(a)) or as otherwise
contemplated by this Agreement or as consented to or approved in writing by the
Vectura Parties (which consent or approval shall not be unreasonably withheld or
delayed), CSX agrees that (it being understood that, for purposes of the
following, Subsidiaries shall include only Subsidiaries of ACL Holdings which
will be Subsidiaries of ACL Holdings following the Closing):
(i) ACL and its Subsidiaries shall operate their respective
businesses in the ordinary course consistent with past practice
and shall use reasonable efforts to preserve their respective
businesses intact, to keep available the services of employees
and to preserve the goodwill of customers and others having
business relations with them;
(ii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not (A) create, incur or assume any
long-term or short-term debt (including obligations in respect of
capital leases) in excess of $3,000,000 per transaction or
$15,000,000 for all such transactions, except loans and advances
among ACL and its Subsidiaries, (B) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
contingently or otherwise) for any obligations of any person
other than ACL and its Subsidiaries in excess of $3,000,000 per
transaction or $15,000,000 for all such transactions, (C)
declare, set aside, or pay any dividend or make any distribution
with respect to its capital stock (other than in cash, cash
equivalents or other form comprising Working Capital) or redeem,
purchase, or otherwise acquire any of its capital stock or (D)
make any loans, advances or capital contributions to or
investments in any person other than its Subsidiaries (except for
customary loans or advances to employees) in excess of $3,000,000
per transaction or $15,000,000 for all such transactions;
(iii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not (A) increase in any manner the
base compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any of its directors, officers or
other key employees, (B) pay or agree to pay any material
pension, retirement allowance or similar employee benefit to any
such director, officer or key employee, whether past or present
not required or contemplated to be paid prior to the Closing Date
by any existing ACL Employee Benefit Plan as in effect on the
date hereof, (C) enter into or materially amend (provided that
any such amendment shall be subject to clause (A) above) any new
or existing employment, severance, consulting, or other
compensation agreement with any existing director, officer or key
employee or (D) commit to any additional material pension,
profit-sharing, deferred compensation, group insurance, severance
pay, retirement or other employee benefit plan, fund or similar
arrangement or amend or commit itself to amend any of such plans,
funds or similar arrangements;
(iv) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not (A) sell, transfer or otherwise
dispose of any assets with a fair market value in excess of
$3,000,000 per transaction or $15,000,000 for all such
transactions (other than floating vessels in connection with the
retirement thereof, swap transactions or other dispositions not
exceeding $15,000,000 in the aggregate), (B) create any new
material security interest, lien or encumbrance on properties or
assets or (C) enter into any material joint venture or
partnership;
(v) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not enter into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) providing for future payments by
ACL of more than $3,000,000 per agreement or $15,000,000 for all
such agreements;
(vi) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not make any capital expenditure (or
series of related capital expenditures) either involving more
than $3,000,000 per transaction or $15,000,000 for all such
transactions;
(vii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not make any capital investment in,
any loan to, or any acquisition of the securities or assets of,
any other person (or series of related capital investments, loans
and acquisitions) either involving more than $1,000,000 per
transaction or $10,000,000 for all such transactions;
(viii)except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not cancel, compromise, waive, or
release any right or claim (or series of related rights or
claims), except in respect of Taxes through audit proceedings not
exceeding $10,000,000 in the aggregate, involving more than
$3,000,000 per claim or $15,000,000 for all such claims;
(ix) ACL shall not make or authorize any change in its organizational
documents;
(x) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not make any loan to, or enter into
any other transaction with, any of its directors, officers, and
employees;
(xi) except as required by law or GAAP, ACL and its Subsidiaries shall
not change any of its Accounting Principles; and
(xii) ACL and its Subsidiaries shall not agree to take any action
prohibited by this Section.
(b) From the date hereof to the Closing, except as set forth in
Schedule 5.4(b) or as contemplated by the Vectura Parties' 1998 Capital
Expenditures Plan (a true and complete copy of which has been attached to
Schedule 5.4(b)) or as otherwise contemplated by this Agreement or as consented
to or approved in writing by CSX (which consent or approval shall not be
unreasonably withheld or delayed), the Vectura Parties agree that (it being
understood that, for purposes of the following, Subsidiaries shall include only
Transferred NMI Holdings Subsidiaries):
(i) The Vectura Parties and their Subsidiaries shall operate their
respective businesses in the ordinary course consistent with past
practice and shall use reasonable efforts to preserve their
respective businesses intact, to keep available the services of
employees and to preserve the goodwill of customers and others
having business relations with them;
(ii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not (A) create,
incur or assume any long-term or short-term debt (including
obligations in respect of capital leases) in excess of $1,000,000
per transaction or $3,000,000 for all such transactions, except
loans and advances among parties which will be Subsidiaries of
ACL Holdings following the Closing, (B) assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any obligations of any
person other than parties which will be Subsidiaries of ACL
Holdings following the Closing in excess of $1,000,000 per
transaction or $3,000,000 for all such transactions, (C) declare,
set aside, or pay any dividend or make any distribution with
respect to its capital stock (other than in cash, cash
equivalents or other form comprising Working Capital) or redeem,
purchase, or otherwise acquire any of its capital stock, or (D)
make any loans, advances or capital contributions to or
investments in any person other than its Subsidiaries (except for
customary loans or advances to employees) in excess of $1,000,000
per transaction or $3,000,000 for all such transactions;
(iii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not (A) increase in
any manner the base compensation of, or enter into any new bonus
or incentive agreement or arrangement with, any of its directors,
officers or other key employees, (B) pay or agree to pay any
material pension, retirement allowance or similar employee
benefit to any such director, officer or key employee, whether
past or present not required or contemplated to be paid prior to
the Closing Date by any existing Vectura Employee Benefit Plan as
in effect on the date hereof, (C) enter into or materially amend
(provided that any such amendment shall be subject to clause (A)
above) any new or existing employment, severance, consulting, or
other compensation agreement with any existing director, officer
or key employee or (D) commit to any additional material pension,
profit-sharing, deferred compensation, group insurance, severance
pay, retirement or other employee benefit plan, fund or similar
arrangement or amend or commit itself to amend any of such plans,
funds or similar arrangements;
(iv) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not (A) sell,
transfer or otherwise dispose of any assets with a fair market
value in excess of $500,000 per transaction or $2,000,000 for all
such transactions (other than floating vessels in connection with
the retirement thereof, swap transactions or other dispositions
not exceeding $3,000,000 in the aggregate), (B) create any new
material security interest, lien or encumbrance on properties or
assets or (C) enter into any material joint venture or
partnership;
(v) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not enter into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) providing for future
payments by the Vectura Parties of more than $1,000,000 per
agreement or $3,000,000 for all such agreements;
(vi) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not make any capital
expenditure (or series of related capital expenditures) either
involving more than $500,000 per transaction or $2,000,000 for
all such transactions;
(vii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not make any capital
investment in, any loan to, or any acquisition of the securities
or assets of, any other person (or series of related capital
investments, loans and acquisitions) either involving more than
$650,000 per transaction or $2,000,000 for all such transactions;
(viii)except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not cancel,
compromise, waive, or release any right or claim (or series of
related rights or claims), except in respect of Taxes through
audit proceedings not exceeding $2,000,000 in the aggregate,
involving more than $500,000 per claim or $2,000,000 for all such
claims;
(ix) the Vectura Parties and their Subsidiaries shall not make or
authorize any change in its charter or bylaws which would
materially adversely affect the ability of the Vectura Parties to
consummate the Recapitalization Transactions;
(x) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not make any loan
to, or enter into any other transaction with, any of its
directors, officers, and employees;
(xi) except as required by law or GAAP, the Vectura Parties and their
Subsidiaries shall not change any of its Accounting Principles;
and
(xii) the Vectura Parties and their Subsidiaries shall not agree to
take any action prohibited by this Section.
Section 5.5. Pro Forma Transactions. Notwithstanding anything to
the contrary contained in this Article or any other provision hereof, it is the
explicit intent of the Parties, and the Parties hereby acknowledge and consent,
that the ACL Pro Forma Transactions shall be consummated by CSX and ACL at or
prior to the Closing.
Section 5.6. Interim Financial Statements. Within 30 days after
the end of each calendar month following the date hereof, CSX shall deliver to
the Vectura Parties, and the Vectura Parties shall deliver to CSX, financial
statements for ACL or the Vectura Parties, respectively, of the type customarily
generated by ACL and delivered to CSX or by the Vectura Parties, respectively,
and prepared on a basis consistent with the adjustments set forth in the ACL Pro
Forma Financial Statements and the NMI Pro Forma Financial Statements,
respectively.
Section 5.7. Public Announcements; Non-Public Information. (a)
Subject to applicable securities laws and stock exchange requirements, from the
date hereof until the Closing Date, each Party shall consult with the other
Party before issuing, or permitting any agent or Affiliate to issue, any press
releases or otherwise making or permitting any agent or Affiliate to make, any
public statements with respect to this Agreement and the transactions
contemplated hereby. The Parties acknowledge that the provisions of this Section
shall not apply to any registration statement, prospectus, offering circular,
offering memorandum or similar document prepared in connection with the
financings contemplated by the Financing Letters, provided that such documents
are reasonably acceptable to CSX.
(b) From the date hereof until the earlier to occur of (x) the
termination of this Agreement pursuant to the terms and conditions hereof and
(y) the Closing, CSX shall not, and shall instruct its Subsidiaries,
representatives, directors, officers, agents and controlled Affiliates not to,
and the Vectura Parties shall not, and shall instruct their Subsidiaries,
representatives, directors, officers, agents, stockholders and controlled
Affiliates not to, initiate, solicit, negotiate, accept or discuss any
Acquisition Proposal; provided that this Agreement shall not prevent any such
action by or on behalf of CSX at any time following written advice to CSX by its
financial advisors (which advice is provided to the Vectura Parties) that there
is a significant likelihood that the conditions set forth in Article VIII will
not be satisfied.
Section 5.8. Intercompany Items. Immediately prior to Closing,
to the extent permitted by law, except for normal commercial transportation
arrangements consistent with past practice and for accounts payable for accrued
federal taxes (to the extent included in the calculation of Working Capital) for
periods prior to the Closing, for the transition services agreement contemplated
by Section 8.8 and the lease contemplated by Section 3.15, (i) ACL Holdings and
each Subsidiary of ACL Holdings shall dividend and distribute to CSX any and all
claims (including inchoate claims) which any such party may have against CSX,
its Affiliates or CSX's or such Affiliates' officers, directors or employees (or
shall otherwise forgive and terminate such claims), and such claims shall be
owned by CSX as of the Closing, and (ii) all intercompany accounts between (x)
CSX and any of its Affiliates, on the one hand, and ACL Holdings or any
Subsidiary of ACL Holdings which will be a Subsidiary of ACL Holdings following
the Closing, on the other hand, or (y) any Vectura Party and any of its
Affiliates, on the one hand, and NMI Holdings and any Vectura Party Subsidiary
which will be a Subsidiary of ACL Holdings following the Closing, on the other
hand (not to include any investments and related transactions of CVC and 399
Venture Partners Inc. with Vectura), shall be canceled and released.
Section 5.9. Competition. (a) Each of CSX and each Vectura Party
covenants and agrees that it and its post-Closing controlled Affiliates shall
not, without the consent of ACL Holdings, at any time within the four-year
period immediately following the Closing Date (the "Noncompete Period"), either
alone or jointly with, or through or as a manager, adviser, consultant,
significant investor or agent for any person, directly or indirectly, be engaged
in or manage any barging business which competes with ACL and its Subsidiaries
in any geographic area in which ACL and its Subsidiaries conduct barging
business as of the date hereof (or on the Yangtze river system, on the Amazon
river system, on the Ganges river system or in Indonesia or Bangledesh) (the
"Business"), provided that
(i)nothing herein shall apply to (A) container or railcar
barging operations or coastal or ocean barging operations of
CSX or its controlled Affiliate, (B) barging operations
ancillary and incidental to CSX's other transportation
businesses (which ancillary and incidental barging operations
shall (x) not be substantially different in scope or nature
than such barging operations as may be currently in effect or
(y) be a logical extension of such other transportation
businesses of CSX), (C) interests in ACL Holdings issued in
connection with the Recapitalization Transactions, or (D) the
chartering or hiring by MariTrend, Inc. of barges in the
ordinary course of business consistent with past practices and
ancillary and incidental to its stevedoring operations, and
(ii)CSX or any of its post-Closing controlled Affiliates may
acquire an interest in any business, a portion of which
includes any business which competes with the Business, so
long as (x) such portion represents no more than 50% of such
acquired business' overall revenues during the fiscal year
preceding the date of such acquisition, (y) such portion is
fully disposed of within 365 days after the date of such
acquisition and (z) during such 365 day period, CSX (A) does
not make any significant capital expenditures or investment in
such portion except for capital expenditures consistent with
the past practices of, and in the ordinary course of business
of, such portion or as may be required in connection with
regulatory needs or with the maintenance of the business and
operations of such portion and (B) maintains such portion
separate from CSX's other businesses.
(b) Notwithstanding the foregoing: the Noncompete Period, with
respect to any line of business, shall terminate immediately upon ACL Holdings
and its Subsidiaries ceasing to be engaged in such line of business, whether
through discontinuance of operations or divestiture or joint venture of such
line of business through a transaction in which ACL Holdings does not retain
control of such line of business.
(c) Subject to Section 12.2, the Parties specifically
acknowledge and agree that the remedy at law for any breach of the foregoing
provisions of this Section 5.9 shall be inadequate and that the nonbreaching
party, in addition to any other relief available to it, shall be entitled to
temporary and permanent injunctive relief without the necessity of posting a
bond or proving actual damages resulting from any breach of the provisions of
Section 5.9(a). In the event that the provisions of this Section 5.9 should ever
be deemed to exceed the limitations provided by applicable law, the Parties
agree that such provisions shall be reformed to the maximum extent permitted
under applicable law.
Section 5.10. Termination of Discussions. Each Party hereby
represents and warrants to the other Parties that as of the date hereof such
Party and its Subsidiaries, representatives, directors, officers, agents and
Affiliates have terminated all discussions and negotiations with third parties
respecting any proposal to acquire (whether by merger, purchase of stock,
purchase of assets or otherwise) all or substantially all or any significant
part of the business, properties, capital stock or capital stock equivalents of
ACL and its Subsidiaries or the Vectura Parties and their Subsidiaries other
than Maritrend, Inc., as applicable (an "Acquisition Proposal") and is not a
party to or bound by any agreement for an Acquisition Proposal (other than a
confidentiality agreement) other than pursuant to the terms and conditions of
this Agreement.
Section 5.11. No Solicitation. Each Party agrees that, for a
period of eighteen months from the date of this Agreement, such Party and its
Affiliates shall not, directly or indirectly, solicit for employment or hire any
employee of ACL Holdings or its Subsidiaries who was, prior to the Closing Date,
an employee of such Party or its Subsidiary and had base salary compensation in
excess of $100,000 per year, provided that the foregoing shall not apply to any
general solicitation not specifically directed at employees of ACL Holdings or
its Subsidiaries made in a newspaper or other periodical of mass distribution or
any solicitation by a third party not directed to so solicit by such Party.
Section 5.12. Use of Business Names. To the extent the
trademarks, service marks, brand names or trade, corporate or business names of
any Party or any of its Affiliates which will not be Subsidiaries of ACL
Holdings following the Closing Date are used as of the date hereof by ACL or NMI
on stationery, signage, invoices, receipts, forms, packaging, advertising and
promotional materials, product, training and service literature and materials,
computer programs or like materials or appear on any fixed assets or equipment
("Marked Materials"), after the Closing Date, ACL Holdings and its Subsidiaries
shall take efforts to minimize its usage of such Marked Materials, provided that
ACL Holdings and its Subsidiaries may use such Marked Materials for a period not
to exceed 60 days following the Closing Date without altering or modifying such
Marked Materials, or removing such trademarks, service marks, brand names, or
trade, corporate or business names, but shall not thereafter use such
trademarks, service marks, brand names or trade, corporate or business names in
any other manner without the prior written consent of the applicable Party.
ARTICLE VI
Employee Benefits
-----------------
Section 6.1. Termination of Participation. Except as otherwise
provided in this Article or in Schedule 6.1, the active participation of all ACL
Employees in each ACL Employee Benefit Plan, other than ACL-Only Employee
Benefit Plans, shall cease as of the Closing and no additional benefits shall be
accrued thereunder for such employees.
Section 6.2. ACL Holdings' Obligations. (a) ACL Holdings shall
continue, offer to continue, or cause one or more of its Subsidiaries to
continue or offer to continue the employment of all Vectura Current Employees,
other than those identified on Schedule 6.2(a) hereto, as of the Closing on
substantially the same terms and conditions as those enjoyed by such Vectura
Current Employees immediately prior to the Closing (all such Vectura Employees
whose employment is so continued or who accept such offers of employment being
referred to as "Vectura Continuing Employees"). ACL Holdings shall also take
such steps, or cause one or more of its Subsidiaries to take such steps, as may
be necessary to cause ACL Holdings and/or one or more of its Subsidiaries to
assume the Vectura Employee Benefit Plans identified on Schedule 6.2(a) (the
"Assumed Vectura Employee Benefit Plans"). Without limiting the generality of
the foregoing: (i) ACL Holdings shall take all steps necessary or appropriate so
as to cause ACL Holdings or one or more of its Subsidiaries to become, effective
as of the Closing, the sole sponsors of the ACL-Only Employee Benefit Plans and
the Assumed Vectura Employee Benefit Plans, including without limitation the
appointment or reappointment of all trustees, custodians, recordkeepers and
other fiduciaries and service providers to the ACL-Only Employee Benefit Plans
and the Assumed Vectura Employee Benefit Plans (whether by reappointing the
persons currently serving as such or appointing new persons), and CSX and its
Affiliates, and Vectura and its Affiliates, shall cease to be fiduciaries with
respect to the ACL-Only Employee Benefit Plans and the Assumed Vectura Employee
Benefit Plans, respectively, as of the Closing; and (ii) the Vectura Parties and
ACL Holdings shall take all steps necessary and appropriate to cause ACL
Holdings or one or more of its Subsidiaries to succeed to the rights and
obligations of the Vectura Parties under any and all insurance and/or service
provider contracts as may be necessary for the maintenance of any Assumed
Vectura Employee Benefit Plan.
(b) ACL Holdings and its Subsidiaries shall, for a period of one
year after the Closing (the "Continuation Period"): (i) provide all ACL
Employees and Vectura Continuing Employees with welfare benefits (other than
severance pay) no less favorable in the aggregate than such welfare benefits
provided to them immediately before the Closing, (ii) provide ACL Employees and
Vectura Continuing Employees with other employee benefits that are no less
favorable in the aggregate than those provided to them immediately before the
Closing, (iii) waive any limitations regarding preexisting conditions under any
welfare or other employee benefit plan maintained by ACL Holdings (and/or any of
its Subsidiaries) for the benefit of ACL Employees and Vectura Continuing
Employees or in which ACL Employees and Vectura Continuing Employees participate
after the Closing and to provide that to the extent any such individual has,
before the Closing, satisfied in whole or in part any annual deductible or paid
any out-of-pocket or co-payment expenses under the applicable Employee Benefit
Plan, such individual shall be credited therefor under the corresponding
provisions of the corresponding plan of ACL Holdings and its Subsidiaries in
which such individual participates after the Closing, (iv) for all purposes
under all compensation and benefit plans and policies applicable to employees of
ACL Holdings and its Subsidiaries, including those referred to in this Section
6.2, treat all service by ACL Employees with ACL or any of its Affiliates before
the Closing (including any service credited by ACL or any of its Affiliates),
and all service by Vectura Continuing Employees with Vectura or any of its
Affiliates before the Closing (including any service credited by Vectura or any
of its Affiliates), as service with ACL Holdings and its Subsidiaries, except to
the extent such treatment would result in duplication of benefits and except for
purposes of benefit accrual under defined benefit pension plans in which they
did not participate before the Closing, and (v) establish and maintain "mirror"
plans to CSX's Supplemental Retirement Plan, Special Retirement Plan and
Supplementary Savings and Incentive Award Deferral Plan (the "Non-Qualified
Plans") providing the same terms as the Non-Qualified Plans. Following the
Closing, the severance pay and benefits, if any, provided to Vectura Continuing
Employees and ACL Employees (other than those who are covered by the American
Commercial Lines, Inc. Severance Pay Plan and those who are party to individual
employment agreements providing for severance pay and benefits) shall be the
same for similarly situated individuals regardless of whether they are Vectura
Continuing Employees or ACL Employees. ACL Holdings shall assume all liabilities
and obligations with respect to ACL Employees under the Non-Qualified Plans as
of the Closing to the extent such liabilities are accrued on the appropriate ACL
Balance Sheet.
(c) Notwithstanding any provision of this Agreement, ACL
Holdings and its Subsidiaries shall not assume any liability or obligation under
the "American Commercial Lines, Inc. Severance Pay Plan" unless such plan is
amended prior to the Closing Date to eliminate all references to the "CSX
Administrative Committee" and replace such references with references to ACL.
(d) Notwithstanding any provision of this Agreement, ACL
Holdings and its Subsidiaries shall not assume sponsorship of, and shall not
assume any liability or obligation under, the "Vectura Group, Inc. 1997 Phantom
Stock Plan for Senior Management," except for the payment of amounts that become
due thereunder as a result of the consummation of the transactions contemplated
by this Agreement not in excess of the amounts set forth on Schedule 6.2(d)
hereto, and such liabilities and obligations that are not assumed by ACL
Holdings shall be Vectura Excluded Liabilities.
(e) No provision of this Article VI shall be construed to
require ACL Holdings and its Subsidiaries to continue the employment of any ACL
Employee or Vectura Continuing Employee for any period of time after the
Closing, nor that they enjoy any particular terms and conditions of employment
except as specifically provided in Section 6.2(b).
Section 6.3. Savings Plans. (a) Effective as of the Closing
Date, ACL Holdings shall adopt, establish or cause to be established a defined
contribution plan (the "ACL Holdings Savings Plan") (which may, but need not, be
the Vectura Group, Inc. Savings Plan (the "Vectura Savings Plan")) to accept a
transfer of assets and liabilities from the Tax Savings Thrift Plan for
Employees of CSX Corporation and Affiliated Companies (the "CSX Savings Plan"),
as provided for in this Section 6.3. The ACL Holdings Savings Plan shall have
features concerning the timing and method of distributions such that a spin-off
of assets and liabilities from the CSX Plan to the ACL Holdings Savings Plan
will not cause a violation of Section 411(d)(6) of the Code.
(b) As soon as practicable after the Closing, following the (i)
receipt by ACL of a copy of a favorable determination letter or ACL Holdings'
certification to ACL, in a manner reasonably acceptable to ACL, that the ACL
Holdings Savings Plan is qualified under Section 401(a) of the Code and the
related trust is exempt from tax under Section 501(a), of the Code, and (ii)
receipt by ACL Holdings of a copy of a favorable determination letter or a
certification by CSX to ACL Holdings, in a manner reasonably acceptable to ACL
Holdings, that the CSX Savings Plan is qualified under Section 401(a) of the
Code and the related trust is exempt from tax under Section 501(a) of the Code,
CSX shall direct the trustee of the trust funding the CSX Savings Plan to
transfer to the trustee of the trust established to fund the ACL Holdings
Savings Plan, the account balance in the CSX Savings Plan of each ACL Employee
with an account balance in the CSX Savings Plan (each such ACL Employee, an "ACL
Savings Plan Employee"). Without limiting the generality of the foregoing, if
the ACL Holdings Savings Plan is the Vectura Savings Plan, such transfer shall
not take place unless and until ACL Holdings or the Vectura Parties provide CSX
with evidence satisfactory to CSX that the IRS has approved the submission
described on Schedule 4.17(b) and any and all corrective action required with
respect thereto has been taken. Such transfer shall be made in kind or in cash
as mutually agreed by ACL Holdings and CSX, or in cash if no such agreement is
made; provided, that all outstanding participant loans with respect to the
account balances of the ACL Savings Plan Employees shall be transferred to the
ACL Holdings Savings Plan in kind. The amounts required to be transferred
pursuant to the preceding sentences shall be determined as of a valuation date
under the CSX Savings Plan occurring coincident with or immediately following
the Closing Date, or as of such later valuation date as may be mutually selected
by ACL Holdings and CSX. Such transfer shall account appropriately for earnings
and losses during the period from the applicable valuation date to the actual
date of the transfer (the "ACL Transfer Date"). From the Closing until the ACL
Transfer Date, ACL Holdings shall cause to be made continuous payroll deductions
each pay period from the pay of each ACL Savings Plan Employee who has one or
more loans outstanding from the CSX Savings Plan of amounts sufficient to pay
the installment payments of principal and interest on each such loan as required
by the promissory note or other evidence of indebtedness relating to such loan.
Such deducted amounts shall be paid by ACL Holdings to the trustee of the CSX
Savings Plan who shall accept such payments for a credit against such loans. On
or prior to the Closing, CSX, ACL or another Affiliate of CSX shall make a
contribution to the CSX Savings Plan of the amounts of any salary reduction
contributions, employer matching contributions, and profit sharing contributions
attributable to or payable on account of each ACL Savings Plan Employee under
the terms of the CSX Savings Plan for any time period ending on the Closing
Date. Following such transfer, ACL Holdings shall be responsible for all
obligations and liabilities with respect to the account balances of the ACL
Savings Plan Employees.
Section 6.4. Plan Transfers. (a) ACL Holdings, CSX, ACL and the
Vectura Parties shall cooperate in making all appropriate filings and taking all
appropriate actions required to implement the provisions of Section 6.3,
provided that the Parties acknowledge that ACL Holdings shall be responsible for
complying with any requirements and applying for any determination letters with
respect to the ACL Holdings Savings Plan. No transfer hereunder shall take place
prior to the 31st day following the filing of any required Forms 5310A in
connection therewith.
(b) ACL and Vectura acknowledge that the transfers of assets and
liabilities contemplated by Section 6.3 may occur before ACL Holdings receives a
favorable determination letter with respect to the ACL Holdings Savings Plan.
ACL Holdings accordingly shall indemnify CSX and its Affiliates from and against
any liabilities that they may incur as a result of a failure of the ACL Holdings
Savings Plan to be qualified under Section 401(a) of the Code or of the related
trust to be exempt from tax under Section 501(a) of the Code.
Section 6.5. WARN Act. ACL Holdings shall be responsible for,
and shall indemnify, defend and hold harmless the Vectura Parties and CSX and
its Affiliates with respect to, compliance with the federal Worker Adjustment
Retraining Notification Act and all similar state and local statutes and
regulations (collectively, the "WARN Act") and all liabilities and obligations
related thereto, in any case which arise as a result of any violation by ACL
Holdings of its obligation under Section 6.2 or any action by ACL Holdings or
any of its Affiliates on or after the Closing Date. All communications of ACL or
any of its Affiliates made before the Closing Date to Current Employees with
respect to WARN Act matters shall be reasonably acceptable to Vectura.
ARTICLE VII
Tax Matters
-----------
Section 7.1. Tax Returns.(a) CSX hereby represents and warrants
to the Vectura Parties that, except as set forth in Schedule 7.1(a) and except
as would not have a material adverse effect on ACL, (i) all Returns required to
be filed (taking into account extensions) on or before the Closing Date for
taxable periods ending on or before the Closing Date by, or with respect to any
activities of, or property owned by, ACL or its Subsidiaries, have been or will
be filed in accordance with all applicable laws and are true, correct and
complete as filed, and all Taxes shown as due on such Returns have been or will
be timely paid, (ii) all Taxes required to be withheld by ACL or its
Subsidiaries have been withheld, and such withheld Taxes have either been duly
and timely paid to the proper Government Authorities or set aside in accounts
for such purpose if not yet due, (iii) no Returns filed by ACL or any of its
Subsidiaries are currently under audit by any Taxing Authority or are the
subject of any judicial or administrative proceeding, and no Taxing Authority
has given notice in writing that it will commence any such audit, (iv) no Taxing
Authority is now asserting against ACL or any of its Subsidiaries any deficiency
or claim for Taxes or any adjustment of Taxes, (v) other than any Tax sharing
agreement between CSX, on the one hand, and ACL or a Transferred ACL Subsidiary,
on the other hand, neither ACL nor any of its Subsidiaries is subject to or
bound by any Tax sharing agreement, and since 1984, neither ACL nor any of its
Subsidiaries has ever been a member of a consolidated group, other than one for
which CSX was the common parent, (vi) neither ACL nor any of its Subsidiaries
has waived any statute of limitations with respect to any Tax or agreed to any
extension of time for filing any Return which has not been filed, and neither
ACL nor any of its Subsidiaries has consented to extend to a date later than the
date hereof the period in which any Tax may be assessed or collected by any
Taxing Authority, (vii) there are no liens for Taxes (other than ACL Permitted
Encumbrances (other than such encumbrances described in clause (iii) of the
definition of ACL Permitted Encumbrances)) upon any of the assets of ACL or any
of its Subsidiaries and (viii) no Transferred Foreign ACL Subsidiary has been a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(b) Each of the Vectura Parties hereby represents and warrants
to CSX that, except as set forth in Schedule 7.1(b) and except as would not have
a material adverse effect on the Vectura Parties or their Subsidiaries, (i) all
Returns required to be filed (taking into account extensions) on or before the
Closing Date for taxable periods ending on or before the Closing Date by, or
with respect to any activities of, or property owned by, any of the Vectura
Parties or any of their Subsidiaries, have been or will be filed in accordance
with all applicable laws and are true, correct and complete as filed, and all
Taxes shown as due on such Returns have been or will be timely paid, (ii) all
Taxes required to be withheld by any of the Vectura Parties or any of their
Subsidiaries have been withheld, and such withheld Taxes have either been duly
and timely paid to the proper Government Authorities or set aside in accounts
for such purpose if not yet due, (iii) no Returns filed by any of the Vectura
Parties or any of their Subsidiaries are currently under audit by any Taxing
Authority or are the subject of any judicial or administrative proceeding, and
no Taxing Authority has given notice in writing that it will commence any such
audit, (iv) no Taxing Authority is now asserting against any of the Vectura
Parties or any of their Subsidiaries any deficiency or claim for Taxes or any
adjustment of Taxes, (v) other than a Tax sharing Agreement between Vectura, on
the one hand, and a Subsidiary of Vectura, on the other hand, none of the
Vectura Parties or any of their Subsidiaries is subject to or bound by any Tax
sharing agreement, and, since March 1993, none of the Vectura Parties has ever
been a member of a consolidated group, other than one for which Vectura was the
common parent, (vi) none of the Vectura Parties nor any of their Subsidiaries
has waived any statute of limitations with respect to any Tax or agreed to any
extension of time for filing any Return which has not been filed, and none of
the Vectura Parties nor any of their Subsidiaries has consented to extend to a
date later than the date hereof the period in which any Tax may be assessed or
collected by any Taxing Authority, and (vii) there are no liens for Taxes (other
than Vectura Permitted Encumbrances (other than such encumbrances described in
clause (iii) of the definition of Vectura Permitted Encumbrances)) upon any of
the assets of the Vectura Parties or any of their Subsidiaries.
(c) Any Tax sharing agreement between CSX, on the one hand, and
ACL or any of the Transferred ACL Subsidiaries, on the other hand, shall be
terminated as of the Closing Date and shall thereafter have no further effect
for any taxable year (whether the current year, a future year, or a past year).
Any payments required by any such Tax sharing agreement shall be made at or
prior to the termination thereof. Any Tax sharing agreement between Vectura, on
the one hand, and any Transferred NMI Holdings Subsidiary, on the other hand,
shall be terminated as of the Closing Date and shall thereafter have no further
effect for any taxable year (whether the current year, a future year, or a past
year). Any payments required by any such Tax sharing agreement shall be made at
or prior to the termination thereof.
Section 7.2. Definitions. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them below:
(a) "Income Taxes" means federal, state, local or foreign income
taxes (including franchise taxes measured by or with respect to net income)
together with any interest or penalties imposed with respect thereto, including
any amendment thereto.
(b) "Returns" means returns, declarations, statements, reports,
forms or other documents or written information, including partnership Form
K-1s, required to be filed with or supplied to any Taxing Authority, including
any amendment thereto.
(c) "Taxes" means (i) all taxes (whether federal, state, county,
local or foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, windfall profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, stamp, premium, capital stock, production, business and occupation,
disability, severance, or real or personal property taxes, fees, assessments or
charges of any kind whatsoever imposed by any Taxing Authority together with any
interest or penalties imposed with respect thereto and (ii) any obligations
under any agreements or arrangements with respect to any taxes described in
clause (i) above.
(d) "Taxing Authority" means any Government Authority having
jurisdiction over the assessment, determination, collection or other imposition
of any Tax.
Section 7.3. Tax Indemnification by CSX. Subject to Section
7.4(b), CSX shall be liable for, and shall hold the Vectura Parties, CVC, ACL
Holdings, and their respective Subsidiaries, Affiliates and any successor
thereto harmless from and against any and all Taxes of CSX, American Commercial
Lines, Inc., ACL Holdings, ACL or any of their respective current or former
Subsidiaries that were Subsidiaries prior to the Closing, and any and all Taxes
with respect to the assets and liabilities of CSX acquired by ACL Holdings
pursuant to Section 2.1, in each case, attributable to any taxable period ending
on or before the Closing Date or allocable under Section 7.6 to the portion,
ending on the Closing Date, of a taxable period that begins on or before the
Closing Date and ends after the Closing Date (regardless of when a claim is made
by a Taxing Authority with respect to such Taxes) to the extent that such Taxes
are not reflected in the reserve for Tax liability included in Adjusted Total
Current Liabilities for purposes of determining the ACL Amount (as distinguished
from any reserve for deferred Taxes established to reflect timing differences
between book and Tax income).
Section 7.4. Tax Indemnification by the Vectura Parties. The
Vectura Parties shall be liable for, and shall hold CSX, ACL Holdings, and their
respective Subsidiaries, Affiliates and any successor thereto harmless from and
against (a) any and all Taxes of the Vectura Parties or any of their current or
former Subsidiaries that were Subsidiaries prior to the Closing, and any and all
Taxes with respect to the assets and liabilities of the Vectura Parties acquired
by ACL Holdings pursuant to Section 2.1, in each case, attributable to any
taxable period ending on or before the Closing Date or allocable under Section
7.6 to the portion, ending on the Closing Date, of a taxable period that begins
on or before the Closing Date and ends after the Closing Date (regardless of
when a claim is made by a Taxing Authority with respect to such Taxes) to the
extent that such Taxes are not reflected in the reserve for Tax liability
included in Total Current Liabilities for purposes of determining the NMI
Holdings Amount (as distinguished from any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) and (b)
any and all Taxes resulting from any acts taken, or caused to be taken, by any
of the Vectura Parties or CVC occurring not in the ordinary course of business
after the Closing on the Closing Date other than actions contemplated by this
Agreement and the documents implementing this Agreement (including the ACL
Holdings LLC Agreement).
Section 7.5. Tax Indemnification by ACL Holdings. ACL Holdings
and its Subsidiaries shall be liable for, and shall hold CSX, each Vectura Party
and each of their respective Subsidiaries and their respective officers,
directors and employees and any successor thereto harmless from and against any
and all Taxes of ACL Holdings and each of its Subsidiaries and any and all Taxes
with respect to the assets and liabilities acquired by ACL Holdings pursuant to
Section 2.1, in each case, for any taxable period beginning after the Closing
Date or allocable under Section 7.6 to the portion, beginning after the Closing
Date, of a taxable period that begins on or before the Closing Date and ends
after the Closing Date (other than Income Taxes for such periods or portions
thereof of any person that would not have been imposed on such person but for
such person's direct or indirect acquisition or ownership of membership
interests in ACL Holdings).
Section 7.6. Allocation of Certain Taxes. (a) The Parties agree
that if any Transferred Foreign ACL Subsidiary is permitted but not required
under applicable foreign Income Tax laws to treat the day before the Closing
Date or the Closing Date as the last day of a taxable period, such day shall be
treated as the last day of a taxable period.
(b) For purposes hereof, in the case of any Taxes that are
imposed on a periodic basis and are payable for a period that begins on or
before the Closing Date and ends after the Closing Date, the portion of such Tax
that shall be allocable to the portion of the period ending on the Closing Date
shall (i) in the case of any Taxes, other than Taxes based upon or related to
income or receipts, be deemed to be the amount of such Taxes for the entire
period, whether actually paid before, during, or after such period, multiplied
by a fraction the numerator of which is the number of calendar days in the
period ending on (and including) the Closing Date and the denominator of which
is the number of calendar days in the entire period, and (ii) in the case of any
Taxes based upon or related to income or receipts (including but not limited to
withholding Taxes), be deemed equal to the amount which would be payable if the
taxable year ended on the close of business on the Closing Date. Any credits or
refunds for such a period shall be prorated, based upon the fraction employed in
clause (i) or (ii) of the preceding sentence, as applicable. Such clause (i) of
the second preceding sentence shall be applied with respect to Taxes, if any,
for such period relating to capital (including net worth or long-term debt) or
intangibles by reference to the level of such items on the Closing Date. The
portion of any Taxes (or refunds) that are imposed on a periodic basis, payable
for a period that begins on or before the Closing Date and ends after the
Closing Date and not allocable to the portion of such period ending on the
Closing Date shall be allocable to the portion of the period beginning after the
Closing Date.
Section 7.7. Survival. The provisions of this Article VII,
other than Sections 7.1(a) and (b), shall survive the Closing until the
expiration of all applicable statutes of limitations.
Section 7.8. Cooperation and Exchange of Information.
(a) As soon as practicable, after the written request of CSX,
from and after the Closing Date, ACL Holdings shall, and shall cause its
Subsidiaries to, provide CSX with such cooperation and shall deliver to CSX such
information and data concerning ACL Holdings, its Subsidiaries and their
Affiliates and make available during normal business hours such knowledgeable
employees of ACL Holdings, the Transferred ACL Subsidiaries, or their
Subsidiaries as CSX may reasonably request, including providing the information
and data required by CSX's or ACL's customary tax and accounting questionnaires,
in order to enable CSX or any of its Subsidiaries to complete and file all
Returns which they may be required to file with respect to the operations and
business of ACL, ACL's Subsidiaries and their Affiliates for pre-Closing periods
or to respond to audits or other inquiries by any Taxing Authorities with
respect to such operations and to otherwise enable CSX and its Subsidiaries to
satisfy their accounting, tax and other legitimate requirements.
(b) ACL Holdings shall promptly notify CSX upon receipt of
notice of any Tax audit or any proposed assessment relating to ACL Holdings or
any or its Subsidiaries or with respect to the assets and liabilities of CSX
acquired by ACL Holdings pursuant to Section 2.1 if such audit or proposed
assessment could give rise to a claim against CSX for indemnification pursuant
to Section 7.3 and shall thereafter promptly forward to CSX copies of any
communications received from or sent to any Taxing Authority by ACL Holdings or
any of its Subsidiaries in connection with any audit or proceeding with respect
to which CSX is the Controlling Party (as defined below); provided, however,
that the failure of ACL Holdings to give CSX such prompt notice or to forward
such communications as required herein shall not relieve CSX of any obligations
under Section 7.3, except to the extent that CSX is actually prejudiced thereby.
CSX shall promptly notify ACL Holdings upon receipt of notice of any Tax audit
or any proposed assessment relating to any assets contributed by CSX or any of
its Subsidiaries to ACL Holdings or any of its Subsidiaries if such audit or
proposed assessment could adversely affect (including with respect to later
periods) ACL Holdings. Any such notice must describe the type of Tax involved in
the audit or proposed assessment and the tax year(s) at issue, and must include
a copy of any materials received from the applicable Taxing Authority in
connection therewith. In the case of any audit or other proceeding with respect
to a proposed assessment described in this Section 7.8(b), the Controlling Party
shall be entitled to appoint as lead counsel any legal counsel of its choice and
shall control the conduct of the audit or proceeding. In the case of any such
audit or other proceeding, (i) the Controlling Party shall provide the
Noncontrolling Party with a timely and reasonably detailed account of each stage
of such audit or proceeding and a copy of the portions of all documents relating
to such audit or proceeding which are relevant to any Tax for which the
Noncontrolling Party may be required to indemnify or may otherwise be liable,
(ii) the Controlling Party shall consult with the Noncontrolling Party before
taking any significant action in connection with such audit or proceeding that
might adversely affect the Noncontrolling Party, (iii) the Controlling Party
shall consult with the Noncontrolling Party and offer the Noncontrolling Party
an opportunity to comment before submitting any written materials prepared or
furnished in connection with such audit or proceeding (including, to the extent
practicable, any documents furnished to the applicable Taxing Authority in
connection with any discovery request) to the extent such materials concern
matters in such audit or proceeding that could adversely affect the
Noncontrolling Party, (iv) unless the Noncontrolling Party otherwise consents in
writing, the Controlling Party shall defend such audit or other proceeding
diligently and in good faith as if the Controlling Party were the only party in
interest in connection with such audit or other proceeding to the extent such
audit or proceeding might adversely affect the Noncontrolling Party, and the
Noncontrolling Party shall reasonably facilitate to the extent requested by the
Controlling Party, and shall not impede, such audit or proceeding, (v) except in
the case of any audit or proceeding with respect to consolidated, combined, or
unitary Tax Returns of CSX or any of its Subsidiaries (other than such a Return
that includes solely ACL Holdings or any of its Subsidiaries), the Controlling
Party shall not settle, compromise or abandon any such audit or proceeding
without obtaining the prior written consent, which consent shall not be
unreasonably withheld, of the Noncontrolling Party if such settlement,
compromise or abandonment might have an adverse impact on the Noncontrolling
Party. In the event that the Noncontrolling Party reasonably withholds such
consent pursuant to the preceding clause (v), the parties shall negotiate in
good faith to resolve their differences and, failing that, the arbitration
procedures described in Section 10.9 shall apply (with expedited time frames
where necessary to comply with governmental deadlines in connection with such
audit or proceeding) to resolve the parties' dispute in connection with such
audit or proceeding. "Controlling Party" shall mean (w) CSX for (i) any audit or
proceeding relating to a taxable period that ends on or before the Closing Date
and (ii) any audit or proceeding for any consolidated, combined or unitary
Return that includes CSX or any of its Subsidiaries (except in the case of this
clause (ii) for a consolidated, combined or unitary Return that includes solely
ACL Holdings or any of its Subsidiaries) and (x) ACL Holdings for any audit or
proceeding relating to a taxable period that includes but does not end on the
Closing Date with respect to ACL Holdings or the applicable Subsidiary, or any
taxable period that begins after the Closing Date with respect to ACL Holdings
or the applicable Subsidiary. "Noncontrolling Party" shall mean (y) CSX in the
case of audits or proceedings with respect to which ACL Holdings is the
Controlling Party and (z) ACL Holdings in the case of audits or proceedings with
respect to which CSX is the Controlling Party. The Controlling Party and the
Noncontrolling Party shall cooperate reasonably and in good faith in connection
with any audit or other proceeding that is subject to this Section 7.8(b). For
purposes of this Section 7.8(b), ACL Holdings shall be deemed to be adversely
affected or liable for Tax if the Vectura Parties or their transferees that are
or were, as the case may be, members of ACL Holdings are adversely affected or
liable for Tax. Notwithstanding any other provision, neither CVC, any of the
Vectura Parties nor any other person shall have any right to receive or obtain
any information relating to, or have any rights with respect to, any
consolidated, combined or unitary Taxes of CSX or any of its Subsidiaries other
than information and rights relating solely to items of ACL Holdings or its
Subsidiaries. Furthermore, any rights of ACL Holdings with respect to any
consolidated, combined or unitary Taxes of CSX or any of its Subsidiaries shall
apply only to the extent that ACL Holdings might be adversely affected, it being
understood that any claim or issue that would increase Tax for which CSX is
responsible and liable hereunder and decrease Tax for which ACL Holdings is
responsible and liable hereunder would not adversely affect ACL Holdings. CSX
shall not amend any consolidated, combined or unitary Return to the extent such
amendment would adversely impact ACL Holdings or any Subsidiary, except to the
extent otherwise required by law or pursuant to an audit or proceeding initiated
by a Taxing Authority.
(c) Section 5.1(c) shall govern the responsibilities of the
Parties and ACL Holdings with respect to records, schedules and work papers
relating to any Returns or Tax audits. All information obtained from the Parties
with respect to Taxes shall be kept confidential, subject to applicable legal
requirements.
(d) CSX shall deliver to ACL Holdings reasonably promptly after
the Closing a schedule setting forth the adjusted tax basis and holding period
of each of the assets of the Transferred ACL Subsidiaries (other than the
Transferred Foreign ACL Subsidiaries) and the tax basis and holding period of
the stock of the Transferred Foreign ACL Subsidiaries, in each case, as of the
Closing Date and shall provide ACL Holdings, as soon as practicable, but in any
event within 30 business days after the later of a written request from ACL
Holdings and the receipt by CSX from ACL Holdings of applicable information, if
any, required by CSX in order to satisfy such request, with any other reasonably
requested Tax information relating to such assets and stock. The Vectura Parties
shall deliver to ACL Holdings reasonably promptly after the Closing a schedule
setting forth the adjusted tax basis and holding period of each of the assets of
the Transferred NMI Subsidiaries and the assets acquired by ACL Holdings
pursuant to Section 2.1 from the Vectura Parties, in each case, as of the
Closing Date, and shall provide ACL Holdings as soon as practicable, but in any
event within 30 days after a request by ACL Holdings, with any other reasonably
requested Tax information relating to such assets.
Section 7.9. Payment of Indemnified Taxes. Any Taxes for which
an indemnifying party is liable under Section 7.3, 7.4 or 7.5 shall be paid
promptly by the indemnifying party.
Section 7.10. Filing Responsibility. (a) CSX shall, with the
reasonable cooperation and assistance of ACL Holdings and its Subsidiaries after
CSX's reasonable request, prepare and file or shall cause ACL Holdings or the
Transferred ACL Subsidiaries, as the case may be, to prepare and file, with
respect to ACL Holdings and the Transferred ACL Subsidiaries, all Returns with
respect to Taxes of ACL Holdings or the Transferred ACL Subsidiaries required to
be filed (taking into account extensions) prior to the Closing Date and any
consolidated, combined or unitary Returns that include CSX or any post-Closing
Subsidiary of CSX, and all such Returns shall be filed in a manner consistent
with past custom and practice (in the case of such consolidated, combined or
unitary Returns, to the extent such Returns relate to ACL Holdings or the
Transferred ACL Subsidiaries), except to the extent otherwise required by law.
Any Taxes required to be paid in connection with such Returns shall be paid by
CSX or the applicable taxpayer with respect to such Taxes.
(b) Subject to the provisions of Section 7.11(d), ACL Holdings
shall file or cause to be filed all Returns for which CSX does not have filing
responsibility pursuant to Section 7.10(a) with respect to ACL Holdings and its
Subsidiaries; provided, however, that any such Return for Taxes for a taxable
period that ends on or before the Closing Date or for a period that includes but
does not end on the Closing Date, in either case, for which CSX bears any
responsibility or liability under this Article VII shall be (i) presented at
least 35 business days prior to the due date (including extensions) of such
Return to CSX for its review, (ii) revised prior to filing to reflect any
reasonable comments requested in good faith by CSX in writing within 25 business
days after such presentation of such Return to CSX and (iii) filed in a manner
consistent with past custom and practice, except to the extent otherwise
required by law. CSX shall pay ACL Holdings on or before the due date (taking
into account extensions) of any such Return the excess, if any, of (x) the Taxes
required to be paid with such Return for which CSX is responsible pursuant to
Section 7.3 (determined without regard to Section 7.12) over (y) any previous
estimated Tax payments in respect of such Taxes borne by CSX (without
duplication of any estimated Tax payments taken into account pursuant to Section
2.4), or ACL Holdings shall pay CSX the excess, if any, of (y) over (x)on or
before such due date (including extensions).
(c) ACL Holdings (i) shall present at least 35 business days
prior to the due date (including extensions) any federal Income Tax Returns of
ACL Holdings to CSX for its review and shall revise such Returns prior to filing
to reflect any reasonable comments requested in good faith by CSX in writing
within 25 business days after such presentation of such Returns to CSX and (ii)
at CSX's written request, shall make available to CSX for CSX's review at least
30 business days prior to the due date (including extensions) any State, local
or foreign Income Tax Returns (other than estimated Returns) of ACL Holdings or
its Subsidiaries.
(d) Provisions comparable to clauses (a) through (c) above shall
apply with respect to the Vectura Parties in connection with the Vectura
contributed assets.
Section 7.11. Refunds. (a) CSX shall be entitled to any refunds
or credits of Taxes of or with respect to ACL Holdings or any Transferred ACL
Subsidiary and the assets acquired by ACL Holdings from CSX or any of its
Subsidiaries pursuant to Section 2.1, in each case, attributable to or arising
in taxable periods (or allocable under Section 7.6 to a portion of a taxable
period) ending on or before the Closing Date (plus any interest received with
respect thereto), but not in duplication of any refunds or credits taken into
account pursuant to Section 2.4.
(b) The Vectura Parties shall be entitled to any refunds or
credits of Taxes of or with respect to any of the Transferred NMI Subsidiaries
and the assets acquired by ACL Holdings from the Vectura Parties pursuant to
Section 2.1, in each case, attributable to or arising in taxable periods (or
allocable under Section 7.6 to a portion of a taxable period) ending on or
before the Closing Date (plus any interest received with respect thereto) but
not in duplication of any refunds or credits taken into account pursuant to
Section 2.4.
(c) ACL Holdings shall, or shall cause its Subsidiaries to,
promptly forward to CSX or the Vectura Parties, respectively, or reimburse CSX
or the Vectura Parties, respectively, for, any refund or credits due such
Parties (pursuant to the terms of this Article VII) after receipt thereof.
(d) None of the Transferred ACL Subsidiaries shall elect to
carry back any item of loss, deduction or credit which arises in any taxable
period ending after the Closing Date into any taxable period ending on or before
the Closing Date.
Section 7.12. Limitation on Tax Indemnification. No person
entitled to indemnification pursuant to Section 7.3 or 7.4 shall assert rights
of indemnification for Taxes unless and until the aggregate of all Taxes for
which such indemnification is sought pursuant to such Section exceeds $50,000.
Section 7.13. Article VII to Control. To the extent that there
is a conflict between any provision of Article VII and any other provision of
this Agreement, the provisions of Article VII shall control.
Section 7.14. Tax Treatment. Except (in the case of clauses (i)
and (ii)) in the event of certain post-Closing transactions specifically
contemplated by Exhibit A attached hereto, each of the Parties and ACL Holdings
shall take no action inconsistent with, and shall make or cause to be made all
applicable elections with respect to: (i) the treatment of ACL Holdings as a
partnership and each of the Transferred ACL Subsidiaries (other than the
Transferred Foreign ACL Subsidiaries) and each of the Transferred NMI
Subsidiaries as a division of ACL Holdings for United States federal Income Tax
purposes, (ii) the treatment of ACL Holdings as not a publicly traded
partnership for United States federal income tax purposes, and (iii) the
treatment of CSX as having contributed stock of the Transferred Foreign ACL
Subsidiaries and the assets of ACL and the Transferred ACL Subsidiaries (other
than the Transferred Foreign ACL Subsidiaries) to ACL Holdings without
recognition of gain at the time of such contribution for purposes of the Code
and (iv) the treatment of NMI as having contributed the assets and liabilities
of the Transferred NMI Subsidiaries to ACL Holdings without recognition of gain
at the time of such contribution for purposes of the Code.
ARTICLE VIII
Conditions of the Vectura Parties' Obligations to Close
-------------------------------------------------------
The Vectura Parties' obligations to consummate the
Recapitalization Transactions shall be subject to the satisfaction or waiver by
the Vectura Parties, on or prior to the Closing Date, of all of the following
conditions:
Section 8.1. Representations, Warranties and Covenants of
CSX. The representations and warranties of CSX contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date, except for representations and warranties that speak as of
a specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time), and the covenants and
agreements of CSX to be performed on or before the Closing Date in accordance
with this Agreement shall have been duly performed in all material respects.
Section 8.2. Filings; Consents; Waiting Periods. All significant
governmental consents or approvals that are required to be obtained in
connection with the Recapitalization Transactions shall have been received,
including, but not limited to, approvals under the HSR Act.
Section 8.3. No Injunction. At the Closing Date, there shall be
no injunction, restraining order or decree of any nature of any court or
Government Authority of competent jurisdiction that is in effect that restrains
or prohibits the consummation of the Recapitalization Transactions.
Section 8.4. Financing. ACL Holdings shall have received the
cash proceeds from the financing transactions contemplated by the Senior Credit
Letter and the High Yield Letters (or substitutes therefor) on economic terms,
in the aggregate, not materially more burdensome than those set forth in such
letters (as provided in the understanding regarding "best efforts" set forth in
Section 5.2(c)) (it being understood and agreed that consummation of the
financing transaction contemplated by the Equity Letters shall not be a
condition to the Vectura Parties' obligations under this Agreement).
Section 8.5. Indebtedness. There shall exist no Funded Debt of
ACL, other than ACL Assumed Funded Debt, that could be a liability of ACL
Holdings or its Subsidiary.
Section 8.6. Documents. All material documents required to
effect the Recapitalization Transactions (including in respect of the Financing
Letters) shall be reasonably satisfactory in form and substance to the Vectura
Parties.
Section 8.7. Material Adverse Change. From the date hereof
through the Closing Date, there shall have occurred no material adverse change
with respect to ACL.
Section 8.8. Transition Services Agreement. A transition
services agreement between ACL and CSX shall have been executed and delivered by
each of the parties thereto.
ARTICLE IX
Conditions to CSX's Obligation to Close
---------------------------------------
CSX's obligation to consummate the Recapitalization Transactions
shall be subject to the satisfaction or waiver by CSX, on or prior to the
Closing Date, of all of the following conditions:
Section 9.1. Representations, Warranties and Covenants of the
Vectura Parties. The representations and warranties of the Vectura Parties
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time), and the covenants and agreements of the
Vectura Parties to be performed on or before the Closing Date in accordance
with this Agreement shall have been duly performed in all material respects.
Section 9.2. Filings; Consents; Waiting Periods. All significant
governmental consents or approvals that are required to be obtained in
connection with the Recapitalization Transactions shall have been received,
including, but not limited to, approvals under the HSR Act.
Section 9.3. No Injunction. At the Closing Date, there shall be
no injunction, restraining order or decree of any nature of any court or
Government Authority of competent jurisdiction that is in effect that restrains
or prohibits the consummation of the Recapitalization Transactions.
Section 9.4. Indebtedness. There shall exist no Funded Debt of
the Vectura Parties that could be a liability of ACL Holdings or its Subsidiary.
Section 9.5. Documents. All material documents required to
effect the Recapitalization Transactions (including in respect of the Financing
Letters) shall be reasonably satisfactory in form and substance to CSX.
Section 9.6. Solvency Opinion. CSX shall have received a
solvency opinion with respect to ACL and ACL Holdings addressed to CSX and in
form and substance as provided to sources of financing for the Recapitalization
Transactions.
Section 9.7. Material Adverse Change. From the date hereof
through the Closing Date, there shall have occurred no material adverse change
with respect to the Vectura Parties.
ARTICLE X
Survival; Indemnification
-------------------------
[ Section 10.1. Survival. None of the representations, warranties, covenants or
agreements of the Parties contained in this Agreement or in any Schedule or any
certificate, document or other instrument delivered in connection herewith shall
survive the Closing, other than the covenants and agreements set forth in
Sections 5.1(b), 5.1(c), 5.3, 5.9, 5.11 and 5.12 and the covenants and
agreements set forth in Articles VI, VII, X and XII. Solely for the avoidance of
doubt, the foregoing shall not impair, limit or otherwise affect the rights of
the Parties in connection with any claim for indemnification otherwise properly
made within the time periods and pursuant to the procedures set forth below.
Section 10.2. Indemnification. (a) Following the Closing and
subject to the terms and conditions provided in this Article X, CSX shall
indemnify, defend and hold harmless ACL Holdings and its Subsidiaries and their
respective officers, directors and employees other than any holder of capital
interests in ACL Holdings or its Affiliate (each, an "ACL Holdings Indemnified
Party") from and against, and shall reimburse each ACL Holdings Indemnified
Party for, all Adverse Consequences imposed upon or incurred by such ACL
Holdings Indemnified Party with respect to any misrepresentation or breach of
warranty in Article III or covenant or agreement made by CSX herein in Section
2.1 or Section 5.4, unless waived in writing by ACL Holdings or any Vectura
Party (with ACL Holdings or any Vectura Party being deemed to have waived in
writing if CSX shall have delivered a written notice to the Vectura Parties
pursuant to Section 12.5 hereof disclosing any such matter at least two business
days prior to the Closing, or if any Vectura Party had actual knowledge of the
facts constituting or resulting in such misrepresentation or breach (as shown by
CSX), and nonetheless chose to consummate the Recapitalization Transactions).
(b) Following the Closing and subject to the terms and
conditions provided in this Article X, the Vectura Parties shall indemnify,
defend and hold harmless each ACL Holdings Indemnified Party from and against,
and shall reimburse each ACL Holdings Indemnified Party for, all Adverse
Consequences imposed upon or incurred by such ACL Holdings Indemnified Party
with respect to any misrepresentation or breach of warranty in Article IV or
covenant or agreement made by any Vectura Party herein in Section 2.1 or Section
5.4, unless waived by ACL Holdings with CSX's written consent (with ACL Holdings
being deemed to have waived if the Vectura Parties shall have delivered a
written notice to CSX disclosing any such matter at least two business days
prior to the Closing, or if CSX had actual knowledge of the facts constituting
or resulting in such misrepresentation or breach (as shown by the Vectura
Parties), and nonetheless chose to consummate the Recapitalization
Transactions).
Section 10.3. Certain Limitations. (a) The provisions of this
Section 10.3 shall not limit or impair any obligation to provide indemnification
under Article VI or Article VII or Section 10.5 for any liability relating to
ACL Excluded Assets, ACL Excluded Liabilities, Vectura Excluded Assets or
Vectura Excluded Liabilities or a breach of the covenants contained in Section
2.1, Section 5.4, Section 5.8 or Section 5.9 hereof.
(b) The obligations of CSX or the Vectura Parties to indemnify
any Indemnified Party pursuant to Section 10.2 shall terminate on May 31, 1999
except with respect to those representations and warranties set forth in
Sections 3.17 and 4.17, as applicable, which shall survive until the expiration
of the applicable statute of limitations, and in Sections 3.14 and 4.14, as
applicable, which shall survive for a period of three years hereafter.
(c) Notwithstanding anything contained herein to the contrary,
neither CSX nor any Vectura Party shall have any obligation to provide
indemnification under Section 10.2 relating to the matters disclosed in Schedule
3.14 or Schedule 4.14, nor for any breach of the representations and warranties
contained in Article VII (except as may be provided in Article VII).
(d) Notwithstanding anything contained herein to the contrary,
the maximum aggregate liability of CSX to all ACL Holdings Indemnified Parties
taken together for all Adverse Consequences shall be limited to $85 million, and
the maximum aggregate liability of the Vectura Parties to all ACL Holdings
Indemnified Parties taken together for all Adverse Consequences shall be limited
to $11,250,000.
(e) Notwithstanding anything contained herein to the contrary,
(i) CSX shall not be obligated to make any indemnification payment under Section
10.2 unless and until the aggregate amount of all Adverse Consequences sustained
by the ACL Holdings Indemnified Parties collectively exceed $10,000,000, and any
indemnification with respect to Adverse Consequences shall be made by CSX only
to the extent of such excess over such $10,000,000, and (ii) the Vectura Parties
shall not be obligated to make any indemnification payment under Section 10.2
unless and until the aggregate amount of all Adverse Consequences sustained by
the ACL Holdings Indemnified Parties collectively exceed $1,000,000, and any
indemnification with respect to Adverse Consequence shall be made by the Vectura
Parties to the extent of such excess over $1,000,000.
Section 10.4. Payment of Indemnification. To the extent that
either CSX or the Vectura Parties is required to provide indemnification to ACL
Holdings or its Subsidiary under Section 10.2, in lieu of making such payment in
cash, any such Party may satisfy such obligation by consenting to an offset by
ACL Holdings (i) to Senior Preferred Membership Interests issued to CSX (for
CSX) or (ii) first to Junior Preferred Membership Interests issued to NMI and
then to Senior Common Amount issued to NMI and then to Junior Preferred
Membership Interests issued to Vectura (for the Vectura Parties), as the case
may be, in each case in the amount of $1.5 of redemption value of such Interests
per $1 of cash indemnification payment, provided that CSX may exercise such
right of offset only up to a maximum of $10 million of cash indemnification
payments (i.e., $15 million of redemption value of Senior Preferred Membership
Interests).
Section 10.5. ACL Holdings Indemnification. Following the
Closing and subject to the terms and conditions provided in this Article X, ACL
Holdings and its Subsidiaries shall indemnify, defend and hold harmless CSX,
each Vectura Party and each of their respective Subsidiaries and their
respective officers, directors and employees (each, a "Party Indemnified Party")
from and against, and shall reimburse each Party Indemnified Party for, all loss
or liability imposed upon or incurred by such Party Indemnified Party with
respect to (i) any liability of ACL Holdings or its Subsidiary, including any
liability of ACL or any Vectura Party or any of their respective Subsidiaries to
be transferred to ACL Holdings or its Subsidiary under this Agreement in
connection with the Recapitalization Transactions, (ii) any failure of ACL
Holdings or its Subsidiary to satisfy any obligation under Article VI or Article
VII and (iii) any liability relating to or arising in connection with any
prospectus, offering memorandum or registration statement relating to the
financing contemplated by the Financing Letters (except to the extent that such
liability is caused by or contained in information furnished in writing to ACL
Holdings by such Party Indemnified Party and relates to such Party Indemnified
Party expressly for use in any such prospectus, offering memorandum or
registration statement), in either case other than any loss or liability which
is the subject of indemnification of the ACL Holdings Indemnified Parties under
Section 10.2 or Section 10.6.
Section 10.6. Vectura Indemnification. Following the Closing and
subject to the terms and conditions provided in this Article X, the Vectura
Parties shall indemnify, defend and hold harmless each ACL Holdings Indemnified
Party and each Party Indemnified Party from and against, and shall reimburse
each ACL Holdings Indemnified Party and each Party Indemnified Party for, all
Adverse Consequences imposed upon or incurred by such ACL Holdings Indemnified
Party and each Party Indemnified Party with respect to, the Vectura Matter, any
Vectura Excluded Asset and any Vectura Excluded Liability.
Section 10.7. Procedures for Third-Party Claims. (a) Promptly
after the receipt by any Indemnified Party of a notice of any claim, action,
suit or proceeding by any third party that may be subject to indemnification
hereunder, such Indemnified Party shall give written notice of such claim to the
Indemnifying Party stating the nature and basis of the claim and the amount
thereof, to the extent known, along with copies of the relevant documents
evidencing the claim and the basis for indemnification sought. Delay in or
failure of the Indemnified Party to give such notice shall not relieve the
Indemnifying Party from liability on account of this indemnification, except if
and to the extent that the Indemnifying Party is actually prejudiced thereby.
The Indemnifying Party shall have 30 days from receipt of any such notice of
claim (i) to give written notice to assume the defense thereof and thereby admit
to its liability for indemnification hereunder or to otherwise admit to its
liability for indemnification hereunder or (ii) to dispute the claim of
indemnification of the Indemnified Party. If written notice to the effect set
forth in clause (i) of the immediately preceding sentence is given by the
Indemnifying Party, the Indemnifying Party shall have the right to assume the
defense of the Indemnified Party against the third-party claim with counsel of
its choice reasonably satisfactory to the Indemnified Party. So long as the
Indemnifying Party has assumed the defense of the third-party claim in
accordance herewith, (A) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the third-party
claim, (B) the Indemnified Party will not file any papers or consent to the
entry of any judgment or enter into any settlement with respect to the
third-party claim without prior written consent of the Indemnifying Party (not
to be withheld or delayed unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the third-party claim without the prior written consent of the Indemnified
Party (not to be withheld or delayed unreasonably). In the event that the
Indemnifying Party fails to assume the defense, appeal or settlement of the
third-party claim within the thirty-day period described in this Section, the
Indemnified Party shall have the right to undertake the defense or appeal of
such third-party claim on behalf of, and for the account and risk of, the
Indemnifying Party, and the Indemnifying Party shall also be responsible for the
reasonable fees and expenses of one counsel for the Indemnified Party. In no
event shall the Indemnified Party compromise or settle any third-party claim
without the written consent of the Indemnifying Party (which consent shall not
be unreasonably withheld or delayed). Subject to the other provisions of this
Agreement, Indemnified Parties and Indemnifying Parties shall use commercially
reasonable efforts to minimize Adverse Consequences from claims by third parties
and shall act in good faith in responding to, defending against, settling or
otherwise dealing with such claims. Indemnified Parties and Indemnifying Parties
shall also cooperate in any such defense and give each other reasonable access
to all information relevant thereto. Whether or not the Indemnifying Party shall
have assumed the defense, such party shall not be obligated to indemnify the
Indemnified Party hereunder for any settlement entered into without the
Indemnifying Party's prior written consent, which consent shall not be
unreasonably withheld or delayed.
(b) Adverse Consequences, for purposes of third-party claims,
shall be considered actual and shall be paid by the Indemnifying Party (without
prejudice to any rights of challenge or appeal) promptly upon the earlier of (i)
the entry of a judgment against the Indemnified Party and the expiration of any
applicable appeal period; (ii) the entry of a nonappealable judgment or a final
appellate decision against the Indemnified Party; (iii) the closing under any
settlement agreement; or (iv) two business days prior to the date on which the
liability upon which the indemnity is based is otherwise required to be
satisfied by the Indemnified Party. With respect to direct claims for which
indemnification is payable hereunder, subject to the terms and conditions
provided in this Article X, the Indemnifying Party shall promptly pay the amount
of the Adverse Consequences for which indemnification is required. Any payment
for indemnification hereunder shall be treated as an adjustment to the Initial
Funding Amount.
Section 10.8. Procedures for Non-Third Party Claims. The
Indemnified Party shall notify the Indemnifying Party promptly of its discovery
of any matter giving rise to a claim of indemnity pursuant hereto with detail
reasonably sufficient to evaluate such matter. The Indemnifying Party shall have
30 days from receipt of any such notice to give written notice of dispute of the
claim to the Indemnifying Party with reasonably sufficient detail of the aspects
disputed of such claim for indemnification. The Indemnified Party shall
cooperate and assist the Indemnifying Party in determining the validity of any
claim for indemnity by the Indemnified Party and in otherwise resolving such
matters. Such assistance and cooperation will include providing access to and
copies of information, records and documents relating to such matters,
furnishing employees to assist in the investigation, defense and resolution of
such matters and providing legal and business assistance with respect to such
matters at the cost and expense of the Indemnifying Party, provided that such
access shall not unreasonably disrupt personnel and operations.
Section 10.9. Arbitration. In the event that an Indemnifying
Party delivers to an Indemnified Party a written notice of dispute and such
parties are unable to resolve any dispute as to whether a claim is subject to
indemnification hereunder and/or the amount thereof, the exclusive method for
resolving such dispute shall be binding, nonappealable arbitration in New York,
New York initiated by either such party by a written notice to the other party
demanding arbitration and specifying the clam to be arbitrated. Such arbitration
shall be conducted pursuant to the Expedited Procedures of the Commercial
Arbitration Rules ("Rules") of the American Arbitration Association ("AAA"),
with the following modifications. The arbitration shall be conducted by three
arbitrators, all of whom shall have experience in and familiarity with the
business and industry within which ACL operates. The party initiating
arbitration (the "Claimant") shall appoint its arbitrator in its request for
arbitration (the "Request"). The other party (the "Respondent") shall appoint
its arbitrator within 15 business days of receipt of the Request and shall
notify the Claimant of such appointment in writing. If the Respondent fails to
appoint an arbitrator within such 15 business-day period, the arbitrator named
in the Request shall decide the controversy or claim as a sole arbitrator.
Otherwise, the two arbitrators appointed by the parties shall appoint a third
arbitrator within 15 business days after the Respondent has notified Claimant of
the appointment of the Respondent's arbitrator. When the third arbitrator has
accepted the appointment, the two party-appointed arbitrators shall promptly
notify the parties of appointment. If the two arbitrators appointed by the
parties fail or are unable to so appoint a third arbitrator or so to notify the
parties, then the appointment of the third arbitrator shall be made by the AAA,
which shall promptly notify the parties of the appointment. The third arbitrator
shall act as chairperson of the panel. Upon appointment of the third arbitrator,
the arbitrators shall proceed to commence and conduct all proceedings promptly
and in accordance with the Rules. The arbitral award shall be in writing and
shall be final and binding on the parties. At the arbitrators' discretion, the
award may include an award of costs, including arbitration and arbitrators' fees
and reasonable attorneys' fees and disbursements. Judgment upon the award may be
entered by any court having jurisdiction thereof or having jurisdiction over the
parties or their assets.
Section 10.10. Remedies Exclusive. Except where any Party can
show, by the standards required at law and equity, a case of fraud in the
inducement (or similar or related fraud theory) which would permit such Party to
set aside or rescind this Agreement, and except with respect to those covenants
which survive pursuant to Section 10.1, the remedies set forth in this Article X
shall be exclusive and in lieu of any other remedies that may be available to
the Indemnified Parties under any other agreement or pursuant to any statutory
or common law, provided that, notwithstanding the second exception
hereinbeforesaid, the provisions set forth in Section 10.9 shall apply with
respect to those covenants which survive pursuant to Section 10.1.
ARTICLE XI
Termination
-----------
Section 11.1. Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual consent of the Parties; or
(b) by either Party, on or after July 15, 1998, if the Closing
shall not have occurred by such date, provided that the Party seeking to
terminate this Agreement under this clause (b) is not then in material breach of
this Agreement and provided further that the right to terminate this Agreement
under this clause (b) shall not be available to any Party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by either Party, if any court of competent jurisdiction or
other Government Authority shall have issued an order, decree or ruling
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement (unless such order, decree or ruling has been withdrawn, reversed or
otherwise made inapplicable), provided that the Party seeking to terminate this
Agreement under this clause (c) is not then in material breach of this Agreement
and provided further that the right to terminate this Agreement under this
clause (c) shall not be available to any Party who shall not have used best
efforts to avoid the issuance of such order, decree or ruling.
Section 11.2. Procedure and Effect of Termination. (a) In the
event of termination of this Agreement pursuant to Section 11.1, written notice
thereof shall forthwith be given by the terminating Party to the other Party,
and this Agreement shall thereupon terminate and become void and have no effect,
no Party shall have liability to any other Party in respect of this Agreement
and the transactions contemplated hereby shall be abandoned without further
action by the Parties, except that the provisions of the first sentence of
Section 5.1(b), Section 11.2 and Article XII shall survive the termination of
this Agreement, provided that such termination shall not relieve either Party of
any liability for any willful breach of any covenant or agreement contained in
this Agreement. If this Agreement shall be terminated, all filings, applications
and other submissions made in accordance with this Agreement shall, to the
extent practicable, be withdrawn from the persons to which they were made.
ARTICLE XII
Miscellaneous
-------------
Section 12.1. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the
Parties and delivered to the other Party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service
shall be considered original executed counterparts for purposes of this
Section, provided that receipt of copies of such counterparts is thereafter
confirmed.
Section 12.2. Governing Law; Jurisdiction and Forum. (a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without reference to the choice of law principles thereof,
except for the internal matters of any corporation or limited liability company,
as to which the corporate or limited liability company law of the jurisdiction
of organization of such corporation or limited liability company shall apply.
(b) Except as otherwise provided in Article X:
(i) The Parties agree that the appropriate and exclusive
forum for any disputes between the Parties arising out of
this Agreement or the transactions contemplated hereby
shall be any state or federal court in the State of New
York having venue in the County of New York. The Parties
further agree that no Party shall bring suit with respect
to any disputes arising out of this Agreement or the
transactions contemplated hereby, except as expressly set
forth below for the execution or enforcement of judgment,
in any court or jurisdiction other than the above
specified court. The foregoing shall not limit the rights
of any Party to obtain execution of judgment in any other
jurisdiction. The Parties further agree, to the extent
permitted by law, that a final and unappealable judgment
against any of them in any action or proceeding
contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of
the fact and amount of such judgment.
(ii)By the execution and delivery of this Agreement, each
Party (A) irrevocably designates and appoints The
Corporation Trust Company ("CTC") care of CT Corporation
System at its offices in the City of New York, County of
New York, State of New York, as its authorized agent and
attorney-in-fact upon which process may be served in any
Action or proceeding arising out of or relating to this
Agreement, (B) submits to the personal jurisdiction of
any state or federal court in the State of New York
having venue in the County of New York in any such Action
or proceeding and (C) agrees that service of process upon
CTC shall be deemed in every respect effective service of
process upon such person in any such Action or
proceeding. Each Party further agrees to take any and all
actions, including the execution and filing of any and
all such documents and instruments, as may be necessary
to continue such designation and appointment of CTC in
full force and effect so long as this Agreement shall be
in effect. The foregoing shall not limit the rights of
any Party to serve process in any other manner permitted
by law.
(iii) To the extent that any Party has or hereafter may
acquire any immunity from jurisdiction of any court or
from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to
itself or its property, such person hereby irrevocably
waives such immunity in respect of its obligations with
respect to this Agreement. Each Party hereby irrevocably
waives any claim to a trial by jury in any action
respecting matters arising out of this agreement and any
objection to the laying of venue or proceeding in the
courts specified in Section 12.2(b)(i) above.
(iv)All "Indemnified Parties" and "Indemnifying Parties"
shall be considered "Parties" and bound hereunder for the
purposes of this Section and Article X.
(v) In the event of any actual or threatened default in, or
breach of, any of the terms, conditions and provisions of
this Agreement, the Party or Parties who are or are to be
thereby aggrieved shall have the right of specific
performance and injunctive relief giving effect to its or
their rights under this Agreement, in addition to any and
all other rights and remedies at law or in equity, and
all such rights and remedies shall be cumulative. The
Parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are
inadequate compensation for any loss and that any defense
in any action for specific performance that a remedy at
law would be adequate is waived.
Section 12.3. Entire Agreement; Third-Party Beneficiary. This
Agreement (including agreements incorporated herein) and the Confidentiality
Agreement contain the entire agreement between the Parties with respect to the
subject matter hereof, and there are no agreements, understandings,
representations or warranties between the Parties other than those set forth or
referred to herein. Except for those provisions hereof respecting the
Indemnified Parties, which are intended to benefit and to be enforceable
(subject to the terms and conditions herein provided) by such Indemnified
Parties, this Agreement is not intended to confer upon any person not a Party
hereto (or its successors and assigns permitted hereby) any rights or remedies
hereunder.
Section 12.4. Expenses. Except as set forth in this Agreement,
whether or not the Recapitalization Transactions are consummated, all advisory,
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such costs and expenses (it being understood that such costs and expenses
incurred by ACL Holdings or ACL prior to the Closing shall be for the account of
CSX). Following the Closing, ACL Holdings shall pay (or reimburse the
appropriate Party for) any sales, use, transfer, recording or other Taxes (other
than Income Taxes) imposed in connection with the Recapitalization Transactions.
It is understood and agreed by the Parties that ACL Holdings and ACL shall have
no liability or expense under any Financing Letter except upon consummation of
the Recapitalization Transactions, all such liability or expense to be borne by
the Vectura Parties.
Section 12.5. Notices. All notices and other communications
hereunder shall be sufficiently given for all purposes hereunder if in writing
and delivered personally, sent by documented overnight delivery service or, to
the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth below.
Notices shall be effective only upon actual delivery to the persons and by the
means provided herein. Notices to the Vectura Parties shall be addressed to:
c/o Citicorp Venture Capital, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other person as the
Vectura Parties may designate by written notice to ACL Holdings. Notices to CSX
or ACL Holdings shall be addressed to:
CSX Corporation
One ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy, in the case of ACL Holdings, to:
American Commercial Lines LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other person as CSX or ACL
Holdings may designate by written notice to the Vectura Parties.
Section 12.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and assigns, provided that no Party may assign its rights or delegate
its obligations under this Agreement without the express prior written consent
of the other Party, provided that this Agreement may be assigned without the
consent of any Party as collateral security to lenders in connection with the
transactions contemplated by the Financing Letters if such collateral assignment
shall not result in such lenders having any right of consent to any waiver or
modification hereunder prior to such time as such lenders provide notice that
they are exercising remedies following an event of default under such collateral
assignment.
Section 12.7. Headings; Definitions. The Section, Article and
other headings contained in this Agreement are inserted for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement. All references to Sections or Articles contained herein mean Sections
or Articles of this Agreement unless otherwise stated. All capitalized terms
defined herein are equally applicable to both the singular and plural forms of
such terms.
Section 12.8. Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the Party against whom enforcement of any such modification or amendment is
sought. Any Party may, only by an instrument in writing, waive compliance by the
other Parties with any term or provision hereof on the part of any such other
Party to be performed or complied with. The waiver by any Party of a breach of
any term or provision hereof shall not be construed as a waiver of any
subsequent breach.
Section 12.9. Interpretation; Absence of Presumption. (a) For
purposes of this Agreement, (i) "to the knowledge of ACL" shall mean the actual
knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ after due inquiry and "to the knowledge of any Vectura Party" shall mean
to the actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
Verona or ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇ after due inquiry or to the actual knowledge of ▇▇▇▇▇
▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., (ii) words in the singular shall be held
to include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires, (iii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph and Schedule references are to the
Articles, Sections, paragraphs, Schedules and Exhibits to this Agreement unless
otherwise specified, (iv) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified, (v) the word "or"
shall not be exclusive and (vi) provisions shall apply, when appropriate, to
successive events and transactions.
(b) For purposes of this Agreement, "material adverse change"
or "material adverse effect," with respect to any person, means any change or
effect that either individually or in the aggregate with all other such changes
or effects is materially adverse to the business, operations, properties or
assets of such person (excluding the assets and liabilities of such person which
will not be transferred to or become part of ACL Holdings or its Subsidiary in
the Recapitalization Transactions), but excluding any such change or effect
resulting directly and primarily from (i) any change, effect, event or
occurrence relating to the United States economy generally or to such person's
industries generally which change, effect, event or occurrence does not or would
not reasonably be expected to have a materially disproportionate effect on such
person relative to other persons in the same industries or (ii) the announcement
or consummation of the transactions contemplated hereby; and the terms
"material" and "materially" shall have correlative meanings.
(c) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the Party
drafting or causing any instrument to be drafted.
(d) It is understood and agreed that neither the specification
of any dollar amount in the representations and warranties contained in this
Agreement nor the inclusion of any specific item in the Schedules or Exhibits to
this Agreement is intended to imply that such amounts or higher or lower
amounts, or the items so included or other items, are or are not material, and
neither Party shall use the fact of the setting of such amounts or the fact of
the inclusion of any such item in the Schedules or Exhibits to this Agreement in
any dispute or controversy between the Parties as to whether any obligation,
item or matter is or is not material for purposes hereof.
Section 12.10. Severability. Any provision hereof which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability, without affecting in any way the
remaining provisions hereof or the validity or enforceability of such provision
in any other jurisdiction. The Parties shall negotiate in good faith to replace
any provision so held to be invalid or unenforceable so as to implement most
effectively the transactions contemplated by such provision in accordance with
the Parties' original intent.
Section 12.11. Timing. Time shall be of the essence in the
performance of the obligations, covenants and agreements contained in this
Agreement.
Section 12.12. NMI Holdings. Upon formation, NMI Holdings shall
deliver to each Party a written undertaking to honor all commitments and
agreements made with respect to NMI Holdings herein.
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the Parties as of the day first above written.
CSX CORPORATION
by: \s\ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice
President and Chief
Executive Officer
VECTURA GROUP, INC.
by: \s\▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
---------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Title: President & Chief
Executive Officer
AMERICAN COMMERCIAL LINES
HOLDINGS LLC
by:CSX ▇▇▇▇▇ CORP., as
Manager
by: \s\ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
AMERICAN COMMERCIAL LINES LLC
by:AMERICAN COMMERCIAL LINES
HOLDINGS LLC, as
Manager
by:CSX ▇▇▇▇▇ CORP., as
Manager
by: \s\▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
NATIONAL MARINE, INC.
by: \s\ ▇▇▇▇▇▇▇ ▇. VERONA
---------------------
Name: ▇▇▇▇▇▇▇ ▇. Verona
Title: President & Chief
Executive Officer
Exhibit A
CERTAIN TERMS OF ACL HOLDINGS LLC AGREEMENT
Jurisdiction of Organization: Delaware.
Board: The business and affairs of ACL Holdings shall be
managed by a Board of Managers having duties
comparable to a corporate Board of Directors.
The Board of Managers shall be composed of
seven individuals as follows: two shall be
designated by CSX (so long as CSX holds 25% of the
Junior Common Membership Interests issued to CSX
at Closing or until a Qualified Public Offering (as
defined below) shall have been consummated,
following which CSX shall have the right to
designate one director), two shall be designated
by the Vectura Parties, one shall be the current
CEO of ACL Holdings, one shall be the current CEO
of Vectura and one shall be a director independent
of all Parties (and their Affiliates) designated
by the Vectura Parties. CSX and the Vectura
Parties will have like representation on each
committee (if any) of ACL Holdings' governing body.
Capitalization: ACL Holdings shall be authorized to issue
Senior Preferred Membership Interests, Junior
Preferred Membership Interests, Senior Common
Membership Interests and Junior Common Membership
Interests in amounts sufficient to consummate the
Recapitalization Transactions. Each Preferred
Membership Interest shall have an initial
Redemption Value of $100, which shall compound
annually at the rate per year of the lesser of (i)
12% and (ii) the maximum rate permitted for current
interest deductions under Section 163(e)(5) of
the Internal Revenue Code (the "Preferred Rate").
The Senior Common Membership Interests shall
represent an aggregate capital interest of
$3,389,091 and an aggregate future profits interest
in ACL Holdings of $32,500,000 (subject to
adjustment as described in the Recapitalization
Agreement) and shall accrue a compounded annual
yield at the Preferred Rate on a notional
principal amount of $35,889,091.
As to dividend, distribution and liquidation
preference, except as otherwise provided herein and
except with respect to redemptions of Membership
Interests held by management of ACL Holdings upon
their termination, Senior Preferred Membership
Interests shall rank prior to Junior Preferred
Membership Interests, Junior Preferred Membership
Interests shall rank prior to Senior Common
Membership Interests and Senior Common Membership
Interests shall rank prior to Junior Common
Membership Interests.
Voting Rights: Each Junior Common Membership Interest shall be
entitled to one vote. All other classes of
Membership Interests shall be non-voting, except as
otherwise provided herein or by law.
Redemption: ACL Holdings shall mandatorily redeem all Senior
Preferred Membership Interests and Junior Preferred
Membership Interests in year 15 at the amount of
the Redemption Value (plus accrued and unpaid yield
thereon) of such Membership Interests at such time.
Optional redemptions of such Membership Interests
and Senior Common Membership Interests shall be
permitted at ACL Holdings' option at any time,
subject to the priority of such Membership
Interests (other than as set forth below), without
premium or penalty, provided that CSX's consent
will be required (prior to an Initial Public
Offering or a Sale of ACL) to redeem Senior
Preferred Membership Interests held by CSX if,
following such redemption, CSX would hold Senior
Preferred Membership Interests with an aggregate
Redemption Value below $100 million, provided,
however, that CSX's consent will not be required
(i) in connection with, or after the consummation
of, transactions causing ACL Holdings not to be
treated as a partnership for tax purposes or (ii)
after CSX has sold its Senior Preferred Membership
Interests, provided further that if CSX does not so
consent, (x) ACL Holdings may use the proceeds that
would otherwise have been used to redeem the Senior
Preferred Membership Interests to redeem other
Membership Interests which are redeemable as
provided herein in their relative priorities (and
on a pro rata basis within a given priority) and
(y) the Parties will cooperate in good faith to
create a mutually satisfactory mechanism comparable
to a defeasance.
Holders of Preferred Membership Interests shall
have the option to have such Interests redeemed at
the Redemption Value (plus accrued but unpaid yield
thereon) upon consummation of a Change of Control.
Public Offering: Immediately prior to a public offering of
Membership Interests in ACL Holdings, all
Membership Interests shall be converted into
corporate interests so as to preserve the economic,
governance, priority and other rights and
privileges attendant to such Membership Interests.
For purposes hereof, a "Qualified Public Offering"
shall mean a public offering of common equity
interests in an amount which raises net cash
proceeds to ACL Holdings of at least $200 million.
Veto Rights: CSX shall be entitled to veto rights with respect
to the following transactions howsoever directly or
indirectly structured:
(i) any merger or other acquisition transaction
(other than the acquisition of new capital
assets as part of the regular capital
budgeting process) involving consideration
of $250 million or more;
(ii) any transaction through which ACL Holdings
or its Subsidiary would become a Subchapter
C corporation (other than an Initial Public
Offering consistent with the other terms
hereof, a transaction in which CSX has
tag-along or drag-along rights as provided
herein or a transaction in which ACL
Holdings or its Subsidiary would become a
Subchapter C corporation solely as a result
of CSX's actions, omissions or elections
or as a result of changes in tax (including
tax rules and regulations) or limited
liability company laws as a result of which
the tax or limited liability benefits of ACL
Holdings' status and/or operations are
adversely impacted);
(iii) [intentionally omitted]
(iv) any amendment to the LLC agreement of ACL
Holdings or its Subsidiary which would
adversely affect CSX;
(v) any definition of "Excess Cash Flow",
"Restricted Payments" and "Change of
Control" (and related definitions regarding
the Senior Preferred Membership Interests)
in financing agreements; and
(vi) transactions with Affiliates (including
provisions such that CSX and the Vectura
Parties, respectively, shall control the
enforcement or amendment of rights under the
Recapitalization Agreement vis-a-vis the
other and its Affiliates), other than
transactions expressly contemplated by the
Recapitalization Agreement or the ACL
Holdings LLC Agreement.
The veto rights set forth in (i), (ii) and (iv)
above shall survive so long as (and shall terminate
immediately thereafter)CSX (or its Subsidiary)
holds either(x) Junior Common Membership
Interests in an amount of at least 25% or more of
the Junior Common Membership Interests issued to
CSX (or its Subsidiary) at Closing or (y) an
interest in an amount of Senior Preferred
Membership Interests of 5% or more of the amount of
Senior Preferred Membership Interests issued to CSX
(or its Subsidiary) at Closing (or CSX refuses to
consent to an optional redemption by ACL Holdings
of Senior Preferred Membership Interests that would
have resulted in CSX (or its Subsidiary) holding
less than 5% of the amount of Senior Preferred
Membership Interests issued to CSX (or its
Subsidiary) at Closing). The veto rights set forth
in (v) above shall terminate once CSX (or its
Subsidiary) fails to hold an interest in any Senior
Preferred Membership Interests.
Pre-Emptive Rights: Prior to a Qualified Public Offering, each holder
of Junior Common Membership Interests will have the
opportunity to subscribe for its pro rata share
(based on ownership of Junior Common Membership
Interests) of any offering by ACL Holdings or any
of its Subsidiaries of additional preferred or
common equity securities, warrants or options
(except for such securities issued to
non-Affiliated sellers in acquisitions by ACL
Holdings, to sources of financing as
"equity kickers", to management as incentive
compensation or to the public in a registered
public offering).
Registration Rights: The Vectura Parties and CSX shall have the
following rights with respect to Junior Common
Membership Interests held by each of them (other
than with respect to the registration of an initial
public offering of common equity interests in
an amount which raises net cash proceeds to ACL
Holdings of at least $50 million (an "Initial
Public Offering"), registrations on Form S-8 and
registrations solely of "equity kickers"), and ACL
Holdings shall not register securities (other than
debt securities) otherwise: (a) CSX shall have two
Form S-1 demand rights commencing six months
following the consummation of an Initial Public
Offering, and (b) the Vectura Parties shall have
three Form S-1 demand rights (the "S-1 Demands");
provided, that in no event shall two S-1 Demands be
made by any Party within a single 90-day period and
the first S-1 Demand of the Vectura Parties, if
prior to an Initial Public Offering, shall result
in the registration of equity securities resulting
in an amount of net cash proceeds sufficient to
qualify as an Initial Public Offering, and (c) each
Party shall have unlimited piggyback (including
with respect to the Vectura Parties first such S-1
Demand) and Form S-3 demand (to the extent such
form is available to ACL Holdings) registration
rights. In addition, CSX will have one S-1 Demand
with respect to Senior Preferred Membership
Interests (or derivatives thereof) exercisable
after the earlier of (i) the third anniversary of
the Closing (provided that neither such
registration nor a sale pursuant to such
registration would cause ACL Holdings not to be
treated for tax purposes as a partnership or
would result in a Code Section 708 termination of
ACL Holdings (unless CSX makes the non-transferring
members whole for such termination)) and (ii) six
months following an Initial Public Offering, and
unlimited piggyback (including with respect to the
Vectura Parties first such S-1 Demand) and Form S-3
(to the extent such form is available to ACL
Holdings) demand registration rights with respect
to Senior Preferred Membership Interests (or
derivatives thereof), exercisable after six months
following an Initial Public Offering. ACL Holdings
shall bear all expenses incident to its compliance
with such registration rights. Membership
Interests shall not be transferable otherwise,
except as otherwise specifically provided herein,
and except that CSX may transfer its Senior
Preferred Membership Interests (or derivatives
thereof) subject to paragraph 4 of "Additional ACL
Holdings LLC Agreement Terms" or in a transaction
which does not require registration under the
Securities Act.
Tag-Along Rights: The Vectura Parties and CSX may participate pro
rata (based on ownership of Junior Common
Membership Interests) in any sale or transfer of
ACL Holdings equity securities by the other (other
than, following ACL Holdings' Initial Public
Offering, sales under Rule 144 of the Securities
Act of 1933, as amended, sales to specified
Affiliate transferees, pursuant to a sale described
in "Registration Rights" above in which piggyback
rights are available, pursuant to a drag-along
transaction and of up to a cumulative 5% of such
Party's initial holdings of Junior Common
Membership Interests (each, an "Exempt Transfer"),
and in any control transaction howsoever
structured, to any party, provided that (i)such
tag-along rights shall not apply to transfers made
pursuant to any first offer right under clause (i)
of "Rights of First Offer on Transfers" below and
(ii) such tag-along rights shall apply to any sale
or transfer (other than Exempt Transfers) of
Vectura's or NMI's (or any newly formed holding
company's) equity securities by the holders
thereof, giving effect to the relative economics of
such equity securities. In addition, CSX may
participate pro rata (based on ownership of Junior
Preferred Membership Interests) in any sale or
transfer of Junior Preferred Membership Interests
by the Vectura Parties. The foregoing shall
survive a Qualified Public Offering, but shall
terminate upon a Sale of ACL (as defined below).
Drag-Along Rights: In the event of a sale of all of ACL Holdings
approved by its Board of Managers (whether by sale
of Membership Interests, all or substantially all
assets or businesses, merger or otherwise (a "Sale
of ACL")), each holder of Membership Interests
shall consent to, approve and participate in such
transaction on the same terms and conditions and
such drag-along rights shall apply to any sale or
transfer (other than Exempt Transfers) of Vectura's
or NMI's (or any newly formed holding company's)
equity securities by the holders thereof, giving
effect to the relative economics of such equity
securities. Any such transaction shall also be a
Change of Control, and any such transaction which
would not also otherwise trigger tag-along rights
as provided above shall trigger a liquidation of
ACL Holdings. The foregoing shall survive a
Qualified Public Offering.
Rights of First Offer
on Transfers: Prior to a Initial Public Offering of
ACL Holdings, transfers of Membership Interests by
any holder thereof (a "Holder"), other than Exempt
Transfers, shall be subject to the following first
offer rights:
(i) with respect to any class of Membership
Interests held by members of management;
first, offer to ACL Holdings (which may hold
for or reissue such Membership Interests to
other active members of management); and
second, offer to all Holders of such class
of Membership Interest, pro rata; and
(ii) with respect to all other Membership
Interests of any class; first, offer to ACL
Holdings; and second, offer to all Holders
of such class of Membership Interest, pro
rata.
Exchange: At ACL Holdings' option, Senior Preferred
Membership Interests may be exchanged into
current-pay subordinated notes containing the same
features as such Membership Interests at any time
contemporaneously with or following ACL Holdings'
conversion to a Subchapter C corporation.
Covenants: Senior Preferred Membership Interests shall have
the benefit of covenants respecting restricted
payments (providing that ACL Holdings shall pay no
cash in respect of any Membership Interests ranking
junior in priority to the Senior Preferred
Membership Interests until all Senior Preferred
Membership Interests have been redeemed, except
with respect to redemptions of Membership Interests
held by management upon their termination or tax
distributions pursuant to "Additional Terms of ACL
Holdings LLC Agreement"), Affiliate transactions,
no issuance of Membership Interests senior in
priority to the Senior Preferred Membership
Interests and delivery of financial statements.
Other: During the Noncompete Period, CVC shall not sponsor
or co-sponsor an acquisition of any business which
is principally engaged in the Business (defined
with reference to the CSX non-compete), unless it
first offers to the Board of Managers the
opportunity for ACL Holdings (or its Subsidiary) to
make such acquisition; provided, that nothing
herein shall (i) be deemed to be binding on
Citibank, N.A., Citicorp or any of their respective
current or prospective Affiliates (other than CVC
and its Affiliates) or (ii) restrict the activities
of CVC's existing portfolio companies not
controlled by CVC, except that during the
Noncompete Period, CVC shall use its best efforts
to cause any such existing portfolio companies not
to participate in any acquisition of any business
which is principally engaged in the Business.
ADDITIONAL ACL HOLDINGS LLC AGREEMENT TERMS
1. Distributions
a. Tax Advances.
i. Tax advances for each taxable year shall be made quarterly
to CSX. The aggregate annual amount of such advances shall
equal the sum of:
(I) the excess of -
(X) the product of (a) the corporate Assumed
Tax Rate and (b) the excess of (A) taxable
income allocated to CSX for such year
(excluding allocations of income to the
Senior Preferred Units and excluding BIG, as
defined below) over (B) taxable losses
(determined by excluding gross income
allocated to CSX pursuant to its Senior
Preferred Units and excluding BIG)
previously allocated to CSX that have not
previously been taken into account for
purposes of calculating the amount of tax
advances due CSX pursuant to this clause (X)
over -
(Y) the Aggregate Amount (as defined below)
for such year;
plus
(II) the sum of (x) the amount required to be
distributed pursuant to a.iv.(III) below, (y) such
amount as is required to be distributed so that
CSX's "unreimbursed tax amount" (as defined below)
does not exceed $85 million and (z) the amount
required to be distributed pursuant to the last
sentence of a.iv..
To the extent that the amount distributed to CSX is
less than the aggregate amounts required to be
distributed pursuant to this clause (i), any amount
distributed pursuant to this clause a.i. shall be
treated as first distributed pursuant to (I) above
(to the extent of the distribution required
thereunder) and then (II) above.
ii. The "Aggregate Amount" for each of years 1 through 9 is
set forth in the table below and the Aggregate Amount for
each year after year 9 shall be zero. To the extent that
the Aggregate Amount for a year exceeds the amount
calculated pursuant to a.i.(I)(X) above, such excess shall
increase the Aggregate Amount for the following year (and,
if necessary, subsequent years) until such excess has been
applied; provided, however, that such excess shall in no
event create an Aggregate Amount in any year after year 9.
The Aggregate Amount shall be reduced as provided in iv.
below.
Year Aggregate Amount
---- ----------------
1 $4 million
2 4 million
3 4 million
4 4 million
5 4 million
6 6 million
7 6 million
8 6 million
9 6 million
- ---------
Total $44 million
iii. "BIG" shall mean the amount of (X) gain allocated to CSX
under Section 704(c) of the Code with respect to a sale,
disposition or other transfer of assets contributed by CSX
or its Subsidiaries to ACL Holdings, (Y) gain recognized
by CSX as a consequence of the conversion of ACL Holdings
to an entity taxed as a C corporation other than in
connection with an initial public offering (an "IPO")
meeting the requirements under "Certain Terms of ACL
Holdings LLC Agreement" for such public offering and (Z)
gain recognized by CSX as a consequence of a refinancing,
paydown or payoff of debt (other than a sale-leaseback of
CSX contributed assets or other structured finance
transaction in which ACL Holdings or its Subsidiary
retains use of the assets disposed of, but only to the
extent that such transaction is treated as a taxable
disposition of CSX contributed assets for purposes of the
Code (a "Sale-Leaseback")); provided, however, that for
purposes of this definition, the amount of gain may not
exceed the amount by which the book capital account of CSX
exceeds the aggregate tax basis of the assets contributed
by CSX or its Subsidiaries as determined on the date of
contribution. "BIG Tax" shall mean the product of the
corporate Assumed Tax Rate and BIG.
iv. If CSX is allocated a BIG Tax in any year, ACL Holdings
shall, at its election, either (I) apply the BIG Tax to
reduce the Aggregate Amount for subsequent years in
inverse chronological order beginning with year 9, (II)
make periodic payments, in year 8 and prior years in
inverse chronological order in an annual amount not in
excess of the product of the corporate Assumed Tax Rate
for the year of payment and the Senior Preferred annual
accrual for such year, of additional mandatory Senior
Preferred distributions in the aggregate amount of any BIG
Tax, (III) make a tax advance, in the year the BIG is
recognized (or, if such BIG is the result of a transaction
occurring in December, such distribution may be made in
the following January), to CSX in an amount equal to 50
percent of such BIG Tax or (IV) elect any combination of
the foregoing (collectively, the "BIG Regime"); provided,
however, that in the event that BIG is recognized at a
time when ACL Holdings is in monetary default on any
senior indebtedness (including the high-yield debt)
either currently or on a pro forma GAAP basis (absent the
asset sale generating the BIG) with respect to a monetary
payment due within 120 days thereafter (unless
distributions other than Permitted Payments (as defined
below) are made in such year to any other member), then
(A) the BIG Regime shall not apply with respect to such
BIG unless and until ACL Holdings is no longer in such
monetary default, and (B) if and when ACL Holdings is no
longer in such monetary default, (1) the BIG Regime shall
then apply, and (2) to the extent at such time an election
under clause (I) or (II) above may not be made with
respect to the BIG Tax on such BIG, any remaining BIG Tax
shall be paid in part or in full pursuant to clause (III)
above when and to the extent amounts may be distributed
pursuant to the terms of the then existing credit
agreement(provided, further, that any such payment
pursuant to clause (III) shall not be considered a Tax
Advance, as defined below, until such time as it is paid).
"Permitted Payment" means (i) any tax advance, (ii) any
payment to redeem membership interests held by management
of ACL Holdings upon their termination, (iii) any payment
on the Senior Preferred, and (iv) any other payment of a
nominal amount.
In all events, (a) CSX's total unreimbursed tax amount for
all years shall not exceed $85 million and (b) ACL
Holdings shall make additional tax advances to CSX as
necessary to satisfy the limitation described in clause
(a) of this sentence. CSX's "unreimbursed tax amount"
shall equal the excess of Total Taxes over Tax Advances.
"Total Taxes" means the product of the corporate Assumed
Tax Rate and the aggregate taxable income (reduced by
aggregate taxable losses) allocated by ACL Holdings to CSX
(excluding (i) allocations of taxable income to the Senior
Preferred Units and (ii) BIG allocated to CSX as a result
of any Exempt Transaction, as defined below). "Tax
Advances" means aggregate tax advances to CSX under 1.a.i
above.
Notwithstanding any other provision hereunder, in the
event of any Sale-Leaseback of any CSX contributed assets
by ACL Holdings, ACL Holdings shall make additional tax
advances to CSX equal to the product of the corporate
Assumed Tax Rate and the amount of any taxable BIG
allocated to CSX with respect to such Sale-Leaseback.
v. CSX shall not receive any tax advances, and the BIG Regime
shall not apply, with respect to any BIG triggered by any
of the following transactions (each, an "Exempt
Transaction"):
(A)an IPO meeting the requirements under "Certain Terms
of ACL Holdings LLC Agreement" for such public
offering;
(B)taxation of ACL Holdings as a C corporation except by
reason of (I) a breach by the Vectura members of the
covenant described in "Certain Terms of ACL Holdings
LLC Agreement" under clause (ii) of Veto Rights or
(II) treatment of ACL Holdings as a publicly traded
partnership as a result of transfers of interests in
ACL Holdings by Vectura members; provided, however,
that in the event of a change in law that could result
in taxation of ACL Holdings as a C corporation, the
parties shall cooperate in good faith to restructure
ACL Holdings to avoid such treatment;
(C)a direct or indirect sale, disposition or other
transfer (other than a Sale-Leaseback, an IPO not
described in (A) above and a transaction giving rise
to taxation of ACL Holdings as a C corporation by
reason of (B)(I) or (B)(II) above) of any assets of
ACL Holdings other than for (i) cash, (ii) marketable
securities, (iii) a note to the extent provided below,
or (iv) any other asset distributed in kind to Vectura
members;
(D)a refinancing, paydown or payoff of debt (unless
proceeds of such refinancing are distributed, loaned
or otherwise made available to Vectura members (other
than as Permitted Payments)) other than (I) a
Sale-Leaseback and (II) a substitution of debt that is
recourse (within the meaning of Section 752 of the
Code) for debt that is nonrecourse (within the meaning
of Section 752 of the Code) to the extent such
substitution is within the control of the Vectura
Parties or CVC.
In the case of a sale or other disposition described
in the preceding clause (C) in exchange for cash,
marketable securities, a note, or any other asset
distributed in kind, the BIG Regime will apply only
with respect to that portion of the BIG Tax triggered
by such transaction equal to such BIG Tax times a
fraction, the numerator of which is the amount of cash
or marketable securities received (or, in the case of
a note, the amount of cash payments of principal made
from time to time on such note, or, in the case of any
other asset distributed in kind, the fair value of
such asset at the time of distribution) and the
denominator of which is the amount of total
consideration received in such disposition. Newco
shall consult with CSX prior to any proposed taxable
disposition of any material CSX contributed asset. If
any property other than cash, marketable securities or
notes that was received in a transaction described in
the preceding clause (C) is thereafter disposed of in
a transaction in which cash, marketable securities or
notes are received, the later transaction shall
trigger the BIG Regime as if such items received had
been received in the original transaction. ACL
Holdings shall elect out of installment sale treatment
with respect to sales of assets contributed by CSX
unless CSX otherwise consents in writing.
vi. Tax advances for each taxable year shall be made quarterly
to each Member other than CSX. The aggregate annual amount
of such advances shall equal the product of:
(I) the Assumed Tax Rate for such Member and
(II) the excess of (a) taxable income allocated to such
Member for such year over (b) taxable losses
previously allocated to the Member that have not
previously been taken into account for purposes of
calculating the amount of tax advances due such
Member pursuant to this clause II.
Tax advances to each member (including CSX and the
transferee of any member) shall be adjusted to take
account of any special basis adjustment with respect to
such member arising as a result of an election by ACL
Holdings under Section 754 of the Code.
vii. The quarterly distributions described above shall be made
in a manner that is consistent with the estimated annual
taxable income or loss of ACL Holdings. Each quarter's
distribution shall be increased (or decreased) to the
extent that prior distributions underestimated (or
overestimated) annual income or loss of ACL Holdings. The
Aggregate Amount for any quarterly distribution to CSX
shall equal one-quarter of the Aggregate Amount for the
year.
viii. "Assumed Tax Rate" means (A) for a Member that is a C
corporation the highest marginal federal income tax rate
applicable to a C corporation, plus 2.3 percent, (B) for
all other Members except management, the highest marginal
blended federal, state and local income tax rate
applicable for the relevant period to an individual
residing in New York City, and (C) for management Members,
the highest marginal blended federal, state and local
income tax rate applicable for the relevant period to an
individual residing in the state and local jurisdictions
of residence of such individual, taking into account for
federal purposes, in the case of the preceding clauses (B)
and (C), the deductibility of state and local taxes. If
higher, federal tax distributions will be based on federal
alternative minimum taxable income (taking into account
solely ACL Holdings items) and rates (using the highest
marginal federal AMT rate applicable to a corporation or
an individual, as the case may be).
ix. Tax advances will reduce the recipient's Capital Account.
Tax advances shall not be treated as payment of Redemption
Value for purposes of computing the yield accrual on the
Senior Preferred, Junior Preferred or Senior Common.
Tax advances to CSX pursuant to 1.a.i. shall be applied
against CSX's Junior Common Membership Interests, then
against its Junior Preferred Membership Interests and then
against its Senior Preferred Membership Interests;
provided, however, that CSX shall not receive an economic
windfall in connection with any repayment of its Senior
Preferred Membership Interests or its Junior Preferred
Membership Interests.
b. Other Nonliquidating Distributions. Any distributions (other
than liquidating distributions or distributions pursuant to a.
above or d. below) shall be made in the following priority:
i. first, pro rata to the holders of the Senior Preferred
Units to the extent of their Redemption Value;
ii. second, pro rata to the holders of the Junior Preferred
Units to the extent of their Redemption Value;
iii. third, pro rata to the holders of the Senior Common Units
to the extent of any unpaid yield (based on a notional
principal amount of $35.9 million) and principal (based on
a notional principal amount of $35.9 million) thereon; and
iv. thereafter, pro rata in accordance with Capital Accounts
or a cash waterfall producing identical results.
c. Liquidating Distributions. Liquidating distributions shall be
made pro rata in accordance with Capital Accounts or a cash
waterfall producing identical results.
d. Senior Preferred Distributions. ACL Holdings shall make the
following cash distributions to the holders of the Senior
Preferred Units:
i. Beginning at the end of Year 9, an amount equal to the
product of the corporate Assumed Tax Rate and the Senior
Preferred annual accrual (including the full annual
accrual for Year 9).
ii. In Year 8 and prior years, any amounts required to be
distributed pursuant to 1.a.iv.(II).
iii. Beginning in Year 6, the lesser of (i) Excess Cash Flow
(as defined in the financing documents) for such year and
(ii) the Annual Limit, provided such payment otherwise is
permitted under the financing documents. The "Annual
Limit" shall mean $7.5 million in each of years 6 through
10 and $10 million in each of years 11 through 15,
increased in any year by the excess, if any, of the Annual
Limit for prior years over the amounts distributed in such
prior years pursuant to this clause d.iii.
iv. Any distribution pursuant to this d. will be treated as a
payment of Redemption Value of the Senior Preferred Units
for all purposes.
2. Built-In Gain and Section 704(c) Determinations
a. Section 704(c) method: to be agreed by the parties prior to the
contribution of assets by CSX to ACL Holdings.
b. Allocation of initial value among ACL's gross assets:
i. Domestic fleet: $450 million (estimated tax basis $140 -
$150 million).
ii. Nondepreciable nonamortizable goodwill associated with
domestic fleet: $112.5 million, including $2 million
associated with Liquids line
iii. Foreign stock: $125 million.
iv. Jeffboat, Waterway Communications, Terminals,
Headquarters: $112.5 million. The parties will agree on
suballocations within this category iv. prior to Closing.
v. Domestic current assets and other domestic nondepreciable
assets: allocate initial value equal to tax basis
(estimated at $138 million).
3. Allocation of Debt. Debt will be allocated pursuant to Treasury
Regulation ss. 1.752-3(a)(3) based on ownership of the Senior Preferred
Units, except that one tranche of debt with a principal amount not in
excess of $100 million will be allocated based on ownership of the
Senior Common Units.
4. Transferability of ACL Holdings Equity Securities; Section 754 Election
a. The Vectura group may transfer to Vectura's shareholders (and
other permitted transferees) all or part of the ACL Holdings
securities acquired by NMI in exchange for its assets or
purchased by Vectura for cash, provided such transfers occur no
later than the second anniversary of the Closing Date.
b. ACL Holdings shall make an election under Section 754 of the
Code.
c. No other direct or indirect transfer of ACL Holdings Units by any
holder will be permitted if it would cause ACL Holdings to be
taxed as a corporation or result in a termination of the entity
under Section 708 of the Code unless either CSX and CVC consent
to such transfer or, in the case of a Section 708 termination,
the transferring member or members make the nontransferring
members whole for such termination.
d. Transfers of Vectura Units. Notwithstanding any other provision
to the contrary, in any transaction that would require or permit
Vectura Group Inc. ("VGI") or any of its subsidiaries to transfer
or exchange (including, without limitation, in connection with an
IPO, tag-along, drag-along, or right of first offer) all or a
portion of any Units of ACL Holdings then owned by them ("Vectura
Units"), the Vectura Parties may elect to transfer, in lieu of
such Vectura Units, stock of VGI corresponding to the percentage
of Vectura Units to be transferred.
e. Notwithstanding any other provision to the contrary, as long as
the transfer does not result in ACL Holdings being taxed as a
corporation or, unless the transferring member or members make
the nontransferring members whole for such termination, result in
a termination of the partnership under Section 708 of the Code
taking into account any prior or anticipated transfers permitted
by 4.a. above, (i) CSX may sell, transfer, pledge or otherwise
dispose of its Senior Preferred Units, and (ii) CSX and the
Vectura members (including their transferees in transfers
permitted by 4.a) may transfer all or part of their interests in
ACL Holdings to their respective Affiliates.
f. CSX shall inform ACL Holdings of any transfer of membership
interests in ACL Holdings by CSX or its Subsidiary, and ACL
Holdings shall inform CSX of any transfer of membership interest
in ACL Holdings by any other member. Such information shall be
provided at least two weeks and no more than 60 days prior to
such intended transfer, as well as promptly after such transfer,
and shall describe such transfer in sufficient detail to enable
the party entitled to receive such information to evaluate the
consequences thereof for such party under Section 708 of the
Code.
5. Allocation of ACL Holdings Book Income and Loss. Subject to refinement
in the definitive documents to reflect the parties' intentions
accurately:
a. (I) The holders of Senior Preferred Units shall be allocated
quarterly (and at such other times that such allocation will make
a difference in connection with another allocation, distribution
or other event) in proportion to the number of such Units held,
items of gross income in an aggregate annual amount equal to the
unallocated preferred yield on the Senior Preferred Units. (II)
In addition, in the event that, in a prior period, there were
insufficient items of gross income to make the allocation
provided in (I) in full, the holders of the Senior Preferred
Units shall be allocated quarterly (and at such other times that
such allocation will make a difference in connection with another
allocation, distribution or other event), in proportion to the
number of such Units held, items of gross income in an amount
equal to the additional amount that would have been allocated to
the holders of the Senior Preferred Units in prior periods and
the current period pursuant to (I) above had there been no such
shortfall.
b. Subject to a. above and d. and f. below, book Net Income shall be
allocated at least annually (and at such other times that such
allocation will make a difference in connection with another
allocation, distribution or other event):
i. first, pro rata to the holders of Senior Preferred Units
until they have been allocated aggregate Net Income equal
to the previously allocated Net Losses under clause c.iv.
below that have not been offset by allocations under this
clause b.i.;
ii. second, pro rata to the holders of Junior Preferred Units
until they have been allocated aggregate Net Income equal
to the sum of (A) aggregate Net Losses previously
allocated under clause c.iii. below that have not been
offset by allocations under this clause b.ii.(A), and (B)
their unallocated preferred yield;
iii. third, pro rata to the holders of Senior Common Units
until they have been allocated aggregate Net Income equal
to the sum of (A) aggregate Net Losses previously
allocated under clause c.ii. below and not offset by
allocations under this clause b.iii.(A), (B) an amount
equal to $32.5 million to the extent previously
unallocated pursuant to this clause b.iii.(B), and (C)
their unallocated yield on a notional principal balance of
$35.9 million; and
iv. thereafter, pro rata to the holders of Junior Common Units.
c. Subject to a. above and d. and f. below, book Net Losses shall be
allocated at least annually (and at such other times that such
allocation will make a difference in connection with another
allocation, distribution or other event):
i. first, pro rata to the holders of Junior Common Units
until they have been allocated aggregate Net Losses equal
to the sum of (A) aggregate Net Income allocated under
b.iv above plus (B) $1,000,000;
ii. second, pro rata to the holders of Senior Common Units
until they have been allocated aggregate Net Losses equal
to the sum of (A) aggregate Net Income allocated under
b.iii above plus (B) $3,389,091;
iii. third, pro rata to the holders of Junior Preferred Units
until they have been allocated aggregate Net Losses equal
to the sum of (A) aggregate Net Income allocated under
b.ii above plus (B) $100,610,909; and
iv. fourth, pro rata to the holders of Senior Preferred Units
until they have been allocated aggregate Net Losses equal
to the sum of (A) aggregate income allocated under a. or
b.i. above plus (B) $115,000,000.
d. Notwithstanding c. above, to the extent any allocation of Net
Loss would cause a Member to have an Adjusted Capital Account
Deficit (an "Excess Loss"), such Excess Loss will be allocated to
the other Members in proportion to their positive Capital Account
balances. For this purpose, "Adjusted Capital Account Deficit"
of a Member means the deficit balance in a Member's capital
account as of the end of the fiscal year, after (i) crediting to
the capital account any amount the Member is deemed obligated to
restore under Treas. Reg. 1.704-2(g)(1) and 1.704-2(i)(5)
(determined after taking into account any changes during the year
in minimum gain) and (ii) debiting to the capital account the
items described in Treas. Reg. 1.704-1(b)(2)(ii)(d)(4), (5) and
(6). Prior to any allocations of Net Income under b. above,
after an Excess Loss has been allocated to one or more Members,
an equal amount of Net Income shall be allocated to such Members
in proportion to the Excess Losses previously allocated to them.
e. Foreign tax credits, if any, will be allocated in proportion to
the allocation to each partner of book Net Income or Net Loss.
Foreign tax credits will not be allocated to the Senior
Preferred.
f. Notwithstanding a. through d. above, items of income, gain, loss,
deduction and credit will be allocated (i) in a manner that meets
the alternate test for substantial economic effect within the
meaning of Treasury Regulation ss. 1.704-1(b)(2)(ii)(d),
including by means of a "qualified income offset" and (ii) in a
manner intended to be consistent with Treasury Regulation ss.
1.704-2, including by means of a "minimum gain chargeback" with
respect to partnership minimum gain and partner nonrecourse debt
minimum gain.
6. Miscellaneous.
a. ACL Holdings shall not enter into any loan or other agreement or
arrangement that would impede the making of any distributions or
payments that would otherwise be required to be made hereunder
(taking into account, without limitation, the provisions herein
relating to monetary default).