<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 26, 1998
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICAN COMMERCIAL LINES LLC
ACL CAPITAL CORP.
AMERICAN COMMERCIAL BARGE LINE LLC
AMERICAN COMMERCIAL MARINE SERVICE LLC
LOUISIANA DOCK COMPANY LLC
WATERWAY COMMUNICATIONS SYSTEM LLC
AMERICAN COMMERCIAL TERMINALS LLC
AMERICAN COMMERCIAL TERMINALS --
MEMPHIS LLC
JEFFBOAT LLC
AMERICAN COMMERCIAL LINES
INTERNATIONAL LLC
ORINOCO TASA LLC
ORINOCO TASV LLC
BREEN TAS LLC
BULLARD TAS LLC
SHELTON TAS LLC
LEMONT HARBOR & FLEETING SERVICES LLC
TIGER SHIPYARD LLC
WILKINSON POINT LLC
HOUSTON FLEET LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C> <C>
DELAWARE 4400 52-210660 52-2106599
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL N/A 52-2106588
OF CLASSIFICATION CODE NUMBER) 52-2106602 52-2106587
INCORPORATION OR N/A 52-2106595
ORGANIZATION) 52-2106589 52-2106594
52-2106585 52-2106586
52-2106596 52-2106582
52-2106598 52-2106593
52-2106590 52-2106584
52-2106591
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
1701 EAST MARKET ST. MICHAEL C. HAGAN
JEFFERSONVILLE, INDIANA 47130 1701 EAST MARKET ST.
TELEPHONE: (812) 288-0100 JEFFERSONVILLE, INDIANA 47130
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE TELEPHONE: (812) 288-0100
NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT
EXECUTIVE OFFICES) FOR SERVICE)
</TABLE>
COPY TO:
LANCE C. BALK
KIRKLAND & ELLIS
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4675
TELEPHONE: (212) 446-4800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Series B 10 1/4% Senior Notes due 2008..... $300,000,000 $1,000 $300,000,000 $88,500
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* Not Applicable.
(1) Estimated solely for the purpose of calculating the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED AUGUST 26, 1998
PROSPECTUS
AMERICAN COMMERCIAL LINES LLC
ACL CAPITAL CORP.
AMERICAN COMMERCIAL BARGE LINE LLC
AMERICAN COMMERCIAL MARINE SERVICE LLC
LOUISIANA DOCK COMPANY LLC
WATERWAY COMMUNICATIONS SYSTEM LLC
AMERICAN COMMERCIAL TERMINALS LLC
AMERICAN COMMERCIAL TERMINALS-MEMPHIS LLC
JEFFBOAT LLC
AMERICAN COMMERCIAL LINES INTERNATIONAL LLC
ORINOCO TASA LLC
ORINOCO TASV LLC
BREEN TAS LLC
BULLARD TAS LLC
SHELTON TAS LLC
LEMONT HARBOR & FLEETING SERVICES LLC
TIGER SHIPYARD LLC
WILKINSON POINT LLC
HOUSTON FLEET LLC
OFFER TO EXCHANGE SERIES B 10 1/4% SENIOR NOTES
[ACL LOGO] DUE 2008 FOR ANY AND ALL OUTSTANDING SERIES A
10 1/4% SENIOR NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED.
American Commercial Lines LLC ("ACL" or the "Company"), a Delaware limited
liability company and wholly-owned subsidiary of American Commercial Lines
Holdings LLC (the "Parent"), a Delaware limited liability company, ACL Capital
Corp. ("ACL Capital"), a Delaware Corporation, American Commercial Barge Line
LLC, a Delaware limited liability company, American Commercial Marine Service
LLC, a Delaware limited liability company, Louisiana Dock Company LLC, a
Delaware limited liability company, Waterway Communications System LLC, a
Delaware limited liability company, American Commercial Terminals LLC, a
Delaware limited liability company, American Commercial Terminals-Memphis LLC, a
Delaware limited liability company, Jeffboat LLC, a Delaware limited liability
company, American Commercial Lines International LLC, a Delaware limited
liability company, Orinoco TASA LLC, a Delaware limited liability company,
Orinoco TASV LLC, a Delaware limited liability company, Breen TAS LLC, a
Delaware limited liability company, Bullard TAS LLC, a Delaware limited
liability company, Shelton TAS LLC, a Delaware limited liability company, Lemont
Harbor & Fleeting Services LLC, a Delaware limited liability company, Tiger
Shipyard LLC, a Delaware limited liability company, Wilkinson Point LLC, a
Delaware limited liability company, and Houston Fleet LLC, a Delaware limited
liability company (each a "Subsidiary Guarantor" and, collectively, the
"Subsidiary Guarantors") (ACL Capital, together with the Company, and the
Subsidiary Guarantors, the "Issuers"), hereby offer (the "Exchange Offer"), upon
the terms and conditions set forth in this Prospectus (the "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
$1,000 principal amount of Series B 10 1/4% Senior Notes due 2008 (the "Exchange
Notes"), which will have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
this Prospectus is a part, for each $1,000 principal amount of its outstanding
Series A 10 1/4% Senior Notes due 2008 (the "Notes"), of which $300,000,000
principal amount is outstanding. The form and terms of the Exchange Notes are
the same as the form and terms of the Notes (which they replace) except that the
Exchange Notes will bear a Series B designation and will have been registered
under the Securities Act and, therefore, will not bear legends restricting their
transfer and will not contain certain provisions relating to an increase in the
interest rate which were included in the terms of the Notes in certain
circumstances relating to the timing of the Exchange Offer. The Exchange Notes
will evidence the same debt as the Notes (which they replace) and will be issued
under and be entitled to the benefits of the Indenture dated June 23, 1998 among
the Issuers and United States Trust Company of New York (the "Indenture")
governing the Notes. See "The Exchange Offer" and "Description of the Exchange
Notes."
The Exchange Notes will be general unsecured senior obligations of the
Issuers, will rank pari passu in right of payment with all existing and future
senior indebtedness of the Issuers and will rank senior in right of payment to
all subordinated indebtedness of the Issuers. The Issuers' obligations under the
Exchange Notes will be jointly and severally guaranteed on a senior basis (the
"Subsidiary Guarantees") by all of the Company's domestic Subsidiaries (as
defined) (other than ACL Capital, any Accounts Receivable Subsidiary and certain
Subsidiaries of the Company without substantial assets or operations). See
"Description of the Exchange Notes -- Subsidiary Guarantees." The Exchange Notes
will be effectively subordinated in right of payment to any secured debt of the
Issuers and the Subsidiary Guarantors (as defined) to the extent of the value of
the assets serving as security for such secured debt. As of June 30, 1998, the
Issuers had approximately $445.0 million in outstanding secured indebtedness to
which the Exchange Notes are effectively subordinated, all of which is
outstanding under the Senior Credit Facilities. The outstanding secured
indebtedness is net of $24.4 million of terminal revenue refunding bonds (the
"Terminal Revenue Refunding Bonds") which were defeased with funds invested in
U.S. government obligations deposited in an irrevocable trust. The Company has
approximately $90.0 million available for additional borrowings, under the
Senior Credit Facilities. The Exchange Notes will be effectively subordinated to
all liabilities of subsidiaries of the Issuers which are not Subsidiary
Guarantors, initially the Foreign Subsidiaries (as defined). As of June 30,
1998, the Foreign Subsidiaries had no outstanding indebtedness other than
inter-company indebtedness. The Indenture governing the Exchange Notes also
permits the Issuers and their subsidiaries to incur additional indebtedness
(including senior indebtedness), subject to certain limitations. See
"Description of the Senior Credit Facilities" and "Description of the Exchange
Notes."
ACL Capital is a wholly owned subsidiary of ACL that was incorporated for
the sole purpose of serving as a co-issuer of the Senior Notes in order to
accommodate the issuance of the Senior Notes by the Company. ACL Capital does
not have any operations or assets of any kind and does not have any revenues
(other than as may be incidental to its activities as co-issuer of the Senior
Notes). Prospective holders of Exchange Notes should not expect ACL Capital to
participate in servicing the interest, principal obligations or Liquidated
Damages, if any, on the Exchange Notes. See "Description of the Exchange
Notes -- Certain Covenants -- Restrictions on Activities of ACL Capital."
The Issuers will accept for exchange any and all Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on , 1998, unless
extended by the Issuers in their sole discretion (the "Expiration Date").
Notwithstanding the foregoing, the Issuers will not extend the Expiration Date
beyond , 1998. Tenders of Notes may be withdrawn at any time prior to
5:00 p.m. on the Expiration Date. The Exchange Offer is subject to certain
customary conditions. The Notes were sold by the Issuers on June 23, 1998 to the
Initial Purchasers (as defined) in a transaction not registered under the
Securities Act in reliance upon an exemption under the Securities Act. The
Initial Purchasers subsequently placed the Notes with qualified institutional
buyers in reliance upon Rule 144A under the Securities Act and certain persons
outside the United States pursuant to Regulation S under the Securities Act that
agreed to comply with certain transfer restrictions and other conditions.
Accordingly, the Notes may not be reoffered, resold or otherwise transferred in
the United States unless registered under the Securities Act or unless an
applicable exemption from the registration requirements of the Securities Act is
available. The Exchange Notes are being offered hereunder in order to satisfy
the obligations of the Issuers under the Registration Rights Agreement entered
into by the Issuers in connection with the offering of the Notes. See "The
Exchange Offer."
(Continued on next page)
------------------------------
SEE "RISK FACTORS" ON PAGE 14 FOR A DESCRIPTION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR NOTES IN THE EXCHANGE OFFER.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 3
(Continued from previous page)
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Securities and Exchange Commission (the "Commission") set forth in
no-action letters issued to third parties, the Issuers believe the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder that
is an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the distribution
of such Exchange Notes. See "The Exchange Offer -- Purpose and Effect of the
Exchange Offer" and "The Exchange Offer -- Resales of the Exchange Notes." Each
broker-dealer (a "Participating Broker-Dealer") that receives Exchange Notes for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus meeting the
requirements of the Securities Act, a participating Broker-Dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with resales of
Exchange Notes received in exchange for Notes where such Notes were acquired by
such Participating Broker-Dealer as a result of market-making activities or
other trading activities. The Issuers have agreed that, for a period of up to
one year from the Effective Date (as defined), they will make this Prospectus
available to any Participating Broker-Dealer for use in connection with any such
resale. See "Plan of Distribution."
If any holder of Notes is an affiliate of the Issuers, is engaged in or
intends to engage in or has any arrangement or understanding with any person to
participate in the distribution of the Exchange Notes to be acquired in the
Exchange Offer, such holder (i) cannot rely on the applicable interpretations of
the Commission and (ii) must comply with the registration requirements of the
Securities Act in connection with any resale transaction.
Holders of Notes not tendered and accepted in the Exchange Offer will
continue to hold such Notes and will be entitled to all the rights and benefits
and will be subject to the limitations applicable thereto under the Indenture
and with respect to transfer under the Securities Act. The Issuers will pay all
the expenses incurred by them incident to the Exchange Offer. See "The Exchange
Offer."
<PAGE> 4
AVAILABLE INFORMATION
The Issuers have filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Notes being offered hereby. This Prospectus includes a discussion of all
material elements of the Exchange Offer Registration Statement, but does not
contain all of the information set forth therein. For further information with
respect to the Issuers and the Exchange Offer, reference is made to the Exchange
Offer Registration Statement. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Exchange Offer Registration Statement, including
the exhibits thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, DC 20549, at the Regional Offices of the Commission at 7 World Trade
Center, Suite 1300, New York, NY 10048 and at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, DC 20549, at prescribed rates. Additionally,
the Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission, including the Issuers.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, the Issuers will become subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith will be required to file periodic reports and
other information with the Commission. The obligation of the Issuers to file
periodic reports and other information with the Commission will be suspended if
the Exchange Notes are held of record by fewer than 300 holders as of the
beginning of any fiscal year of the Issuers other than the fiscal year in which
the Exchange Offer Registration Statement is declared effective. The Issuers
will nevertheless be required to continue to file reports with the Commission if
the Exchange Notes are listed on a national securities exchange. In the event
the Issuers cease to be subject to the informational requirements of the
Exchange Act, the Issuers will be required under the Indenture to continue to
file with the Commission the annual and quarterly reports, information,
documents or other reports, including, without limitation, reports on Forms
10-K, 10-Q and 8-K, which would be required pursuant to the informational
requirements of the Exchange Act. Under the Indenture, the Issuers shall file
with the Trustee such annual, quarterly and other reports. Further, to the
extent that annual, quarterly or other financial reports are furnished by the
Issuers to their members or stockholders, as the case may be, generally they
will mail such reports to holders of Exchange Notes. The Issuers will furnish
annual and quarterly financial reports to members or stockholders, as the case
may be, of the Issuers and will mail such reports to holders of Exchange Notes
pursuant to the Indenture, thus holders of Exchange Notes will receive financial
reports every quarter. Annual reports delivered to the Trustee and the holders
of Exchange Notes will contain financial information that has been examined and
reported upon, with an opinion expressed by an independent public or certified
public accountant. The Issuers will also furnish such other reports as may be
required by law.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements under "Prospectus Summary," "Risk Factors," "The
Transactions," "Use of Proceeds," "Unaudited Pro Forma Combined Financial Data,"
"Selected Historical Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere in this Prospectus constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions or future events or performance (often,
but not always, through the use of words or phrases such as "will likely
result," "are expected to," "will
iii
<PAGE> 5
continue," "anticipates," "expects," "estimates," "intends," "plans,"
"projects," and "outlook") are not historical facts and may be forward-looking.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, levels of activity, cost
savings, performance or achievements of the Company, or industry results, to be
materially different from any future results, levels of activity, cost savings,
performance or achievements expressed or implied by such forward-looking
statements, and accordingly, such statements should be read in conjunction with
and are qualified in their entirety by reference to, such risks, uncertainties
and other factors, which are discussed throughout this Prospectus. Such factors
include, among others, the following: (i) substantial leverage and ability to
service debt; (ii) changing market trends in the barge and inland shipping
industries; (iii) general economic and business conditions including a prolonged
or substantial recession in the United States or certain international commodity
markets such as the market for grain exports; (iv) annual worldwide weather
conditions, particularly those weather conditions affecting North and South
America; (v) the ability of the Company to implement its business strategy and
maintain and enhance its competitive strengths; (vi) the ability of the Company
to obtain financing for general corporate purposes; (vii) the ability of the
Company to successfully comply with Year 2000 issues; (viii) competition; (ix)
availability of key personnel; (x) industry overcapacity; and (xi) changes in,
or the failure to comply with, government regulations. See "Risk Factors." As a
result of the foregoing and other factors, no assurance can be given as to
future results, levels of activity and achievements, and neither the Issuers nor
any other person assumes responsibility for the accuracy and completeness of
these forward-looking statements. Any forward-looking statements contained
herein speak solely as of the date on which such statements are made, and the
Issuers undertake no obligation to update any forward-looking statements to
reflect events or circumstances after the date on which such statements were
made or to reflect the occurrence of unanticipated events.
------------------------
The Exchange Notes will be available initially only in book-entry form. The
Issuers expect that the Exchange Notes will be issued in the form of one or more
Global Notes. The Rule 144A Global Notes will be deposited with, or on behalf
of, DTC and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the Rule 144A Global Notes will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
Direct and Indirect Participants (as defined). Beneficial interests in the
Regulation S Temporary Global Notes may be held only through the Euroclear
System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"). Upon delivery of
certification that the beneficial owners thereof are not U.S. Persons or that
such beneficial owners acquired such Exchange Notes in an offshore transaction
that did not require registration under the Securities Act, a beneficial
interest in the Regulation S Temporary Global Notes may be exchanged for an
interest in the Regulation S Permanent Global Notes. The Regulation S Permanent
Global Notes are expected to be deposited with the Trustee (as defined) as
custodian for DTC, and beneficial interests therein may be held through
Euroclear, Cedel Bank or any other Participant. After the initial issuance of
the Global Notes, Exchange Notes will be issued in registered form in minimum
denominations of $1,000 and integral multiples thereof on the terms set forth in
the Indenture.
------------------------
INDUSTRY DATA
The industry data presented herein are based upon estimates by management
of the Company, utilizing Barge Fleet Profile, Eleventh Edition (March 1998),
compiled by Jack Lambert and Sparks Companies, Inc. While management believes
that such estimates are reasonable and reliable, in certain cases, such
estimates cannot be verified by information available from independent sources.
Accordingly, no assurance can be given that such market share data are accurate
in all material respects. In addition, industry data presented herein are based
upon industry sources which the Company believes are reliable. However, no
assurance can be given that such industry data are accurate in all material
respects.
iv
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, included elsewhere in this Prospectus. Unless
otherwise noted or the context otherwise requires, "ACL" or the "Company" refers
to American Commercial Lines LLC and its wholly owned subsidiaries after giving
effect to the Transactions (as defined), except that when referring to prior
periods, "ACL" or the "Company" refers to American Commercial Lines, Inc., the
predecessor to the Company, and its wholly owned subsidiaries.
THE COMPANY
ACL is an integrated marine transportation and service company, providing
barge transportation services. The principal cargoes carried are grain, coal,
steel and other bulk commodities and liquids. The Company supports its barging
operations by providing towboat and barge design and construction, terminal
services and ship-to-shore voice and data telecommunications services to the
Company and third parties. The Company is the leading provider of river barge
transportation throughout the inland United States and Gulf Intracoastal
Waterway Systems, which include the Mississippi, Illinois, Ohio, Tennessee and
the Missouri Rivers and their tributaries and the Intracoastal canals that
parallel the Gulf Coast (collectively, the "Inland Waterways"). In addition,
since expanding its barge transportation operations to South America in 1993,
the Company has become the leading provider of barge transportation services on
the Orinoco River in Venezuela and the Parana/Paraguay River system serving
Argentina, Brazil, Paraguay, Uruguay and Bolivia. The Company believes that its
leadership position provides it with significant competitive advantages in terms
of its ability to generate revenue, manage costs and expand its operations. For
the twelve months ended June 26, 1998, pro forma for the Transactions, the
Company generated operating revenue, EBITDA and adjusted EBITDA of $732.3
million, $137.7 million and $146.7 million, respectively.
The Company, through its Jeffboat LLC ("Jeffboat") subsidiary, designs and
manufactures towboats and barges for the Company and third-party customers.
Through its American Commercial Terminals LLC ("ACT") subsidiary, which operates
16 river terminal sites along the Inland Waterways, the Company supports its
barging operations with transfer and warehousing capabilities for steel, bulk,
liquid and other general commodity products moving between barge, truck and
rail. Through its Louisiana Dock Company LLC ("LDC") subsidiary, the Company
operates 22 facilities throughout the Inland Waterways that provide fleeting,
shifting, cleaning and repair services for both towboats and barges, primarily
to the Company as well as to third-party customers. The Company, through its
Waterway Communications System LLC ("Watercom") subsidiary, is the premier
provider of automated ship-to-shore voice and data telecommunications services
throughout the Inland Waterways.
ACL launched its international barging operations in South America in 1993.
The Company currently operates on the Orinoco River, with headquarters in Puerto
Ordaz, Venezuela, and the Parana/Paraguay River system, with headquarters in
Rosario, Argentina. A significant portion of the Company's planned capital
expenditures for the next few years will be dedicated to international growth.
While South American operations generated only 5% of ACL's 1997 operating
revenue, management expects revenue from South American operations to increase
significantly in the coming years. The Company's expansion in South America has
been effected by introducing new equipment and technology to the South American
river systems, transplanting systems used in the United States and developing
new processes to meet local requirements. ACL expects to use its expertise to
expand its barging operations into new regions.
The U.S. barge industry has experienced modest cargo tonnage growth over
the past ten years. Tonnage carried on the Inland Waterways has grown from 570
million tons in 1987 to 622 million tons in 1996 (the latest year for which data
are available). During this same time period, the overall barge fleet has grown
from 19,967 barges to 21,731 barges. Barge transportation provides the lowest
unit cost of delivery of any major form of transportation for high volume, bulk
products, delivering 12% of the volume of U.S. freight for 2% of the total U.S.
freight cost, according to data available from the U.S. Department of
Transportation ("USDT"). One standard hopper barge has the equivalent carrying
capacity of 15 railcars or 58 trucks. In areas where shippers have access to
water transportation, the rate per ton-mile is significantly less than rail
1
<PAGE> 7
rates and approximately 10% to 20% of truck rates. While it is generally less
expensive to move large volumes of certain liquids by pipeline when both the
origin and destination have a direct connection to the pipeline, barge
transportation of liquids has greater flexibility with respect to the origins
and destinations that can be served.
The Company intends to pursue synergistic acquisitions in its core business
lines. ACL believes that there will continue to be opportunities to make such
acquisitions that create value through a combination of enhanced revenue
opportunities and cost reductions. In particular, some major companies have
recently sold or are considering the sale of their barging operations in an
effort to focus on their core business lines. In conjunction with these
divestitures, companies often establish long-term shipping contracts with the
purchasers of their fleets in order to secure reliable transportation for their
cargoes. In 1996, ACL acquired Continental Grain's barge fleet in such a
transaction. Based upon the success of this acquisition and other similar
transactions, combined with the Company's ability to provide long-term, reliable
service to its customers, ACL believes that it is particularly well-positioned
to continue to grow through strategic acquisitions.
COMPANY STRENGTHS
The Company believes that it benefits from the following competitive
strengths:
Market Leadership. ACL is the premier provider of river barge
transportation in North America. The Company leads the industry in terms of
revenues, gross tons hauled and fleet size. ACL is the largest provider of dry
cargo transportation on the Inland Waterways, with leading positions in grain
and bulk cargo shipments. In addition, the Company is the second largest
provider of coal and liquid cargo river transportation. In recent years, ACL
also has become the leading provider of river barge transportation in South
America. The Company believes that its leadership position provides it with
significant competitive advantages in terms of its ability to generate revenues,
manage costs and expand its operations.
Full Service Fleet. ACL has the largest fleet on the Inland Waterways,
consisting of the largest number of hopper barges and towboats and the second
largest number of tankers in the industry. The Company's barge fleet is nearly
double the size of that of its largest competitor. The barge fleet meets all
current regulatory requirements and has already met the Federal requirement that
all tank barges be double-skinned by 2015. The size and diversity of ACL's fleet
allow it to service the most ports with the greatest frequency, thereby
providing superior customer service and maximizing profitable backhaul
opportunities. These advantages allow ACL to maximize the tonnage that a barge
can transport over a given time period, significantly enhancing the Company's
ability to generate revenues.
Long-standing Customer Relationships. ACL has a strong and diverse
customer base consisting of several of the leading industrial and agricultural
companies in the United States. The Company has a number of long-standing
customer relationships, with 20 of ACL's top 25 customers having been customers
of the Company for over 20 years. In many cases, these relationships have
resulted in multi-year contracts with these customers. Long-term contracts
generally provide for minimum tonnage or requirements guarantees, which allow
the Company to plan its logistics more effectively. A majority of the Company's
contracts for non-grain cargoes are also at a fixed price, increasing the
stability and predictability of operating revenue. As of July 1, 1998, ACL had
contracted to transport 69 million tons domestically in 1998, of which 64
million tons are fixed as to price.
Fully Integrated Operator. As a fully integrated inland river
transportation company, ACL believes it has a substantial cost advantage over
some of its competitors. Through effective coordination of its barging,
shipbuilding, terminals, fleeting, repair and communications services, ACL
reduces costs while maintaining each business unit's ability to generate
third-party revenues. In addition, the Company believes it is a technology
leader in the barging industry. ACL has made significant investments that allow
it to maximize operating efficiency through technologies such as real-time cargo
tracking. This investment in technology strengthens the Company's ability to
compete by lowering its cost structure and enhancing the quality of the services
and products provided.
2
<PAGE> 8
Low Cost Operator. As a fully integrated operator, ACL believes it is able
to minimize costs through economies of scale and savings generated across its
vertically integrated business lines. In addition, the Company closely manages
operating expenses and continuously undertakes cost-cutting initiatives such as
a two-year staff review and restructuring effort, the adoption of best practices
and the utilization of process improvement teams. These initiatives have
resulted in aggregate first-year savings of at least $70 million since 1992.
Management believes that many of these savings are recurring in nature.
Successful Track Record of Integrating Acquisitions. Over the past several
years, ACL has been able to successfully complete and integrate multiple large
acquisitions, including SCNO Barge Lines, Inc., Hines, Inc., The Valley Line
Company and Continental Grain's barging operations. ACL believes that it will be
able to use this expertise to rapidly integrate the barge operations of National
Marine, Inc. ("NMI"), which are being combined with those of the Company as part
of the Recapitalization (as defined), permitting it to realize substantial
synergies quickly. In addition to the $17.7 million of synergies reflected in
adjusted pro forma EBITDA, ACL believes that the integration of NMI's operations
into its fleet will improve logistics and thus increase overall fleet capacity,
resulting in additional annual operating income of approximately $4 million by
fiscal 1999. The Company believes that its previous successes, combined with its
size and extensive organizational infrastructure, make it well-positioned to
acquire additional barging operators, thereby continuing to improve its cost
structure and service capability.
Management Experience. ACL's senior management team, which has an average
of 20 years with ACL and its affiliates and an average of more than 27 years of
transportation industry experience, is among the most qualified in the industry.
The management team has a detailed knowledge of each of the Company's businesses
and markets. Their knowledge and depth of experience will help ACL to continue
to improve its competitive position. In addition, certain members of senior
management (the "Management Investors") will own membership interests in the
Parent.
THE TRANSACTIONS
Concurrent with the consummation of the Offering, American Commercial Lines
Holdings LLC (the "Parent") was recapitalized (the "Recapitalization") in a
series of transactions in which (i) the barge business of Vectura Group, Inc.
("Vectura") and its subsidiaries was combined with that of ACL (the "NMI
Contribution"); (ii) ACL used the net proceeds of the Offering and borrowings
under the Senior Credit Facilities (as defined) together with the Vectura Cash
Contribution (as defined) to fund a cash distribution of $695.0 million (subject
to post-closing working capital adjustments) to CSX Brown Corp. ("CSX Brown"),
an affiliate of CSX Corporation ("CSX") (the "CSX Cash Distribution") and to
fund the assumption and immediate repayment of approximately $75 million of
existing indebtedness and other obligations of Vectura and its subsidiaries (the
"Vectura Debt"); and (iii) Vectura, CSX and NMI, a wholly owned subsidiary of
Vectura, holds approximately 52%, 33% and 11% of the junior common membership
interests of the Parent, which were allocated between voting and non-voting and
which represent the residual future profits interests in the Parent, on a fully
diluted basis, respectively (prior to giving effect to the investment by the
Management Investors and the Independent Investors (as defined)). See "Security
Ownership." In connection with the Recapitalization, the Parent issued
approximately $218.9 million of preferred and common membership interests, and
the Company issued 100% of its membership interests to the Parent.
The CSX Cash Distribution, the assumption and immediate repayment of the
Vectura Debt and the fees and expenses of the Transactions were funded by: (i)
$435.0 million of term loan borrowings by the Company pursuant to the Senior
Credit Facilities; (ii) $10.0 million of revolving credit borrowings pursuant to
the Senior Credit Facilities; (iii) the Offering, with aggregate gross proceeds
of $300.0 million from the issuance of the Notes; and (iv) a cash equity
investment in the Parent by Vectura and certain other third party investors (the
"Independent Investors") of approximately $60 million (the "Vectura Cash
Contribution"). The Recapitalization, the Offering, the borrowings under the
Senior Credit Facilities, the Vectura Cash Contribution, the NMI Contribution,
the assumption and immediate repayment of the Vectura Debt and the issuance of
preferred and common membership interests of the Parent are collectively
referred to herein as the "Transactions." Each of the Transactions were
conditioned upon each of the others, and consummation of all of the Transactions
occurred simultaneously. See "The Transactions."
3
<PAGE> 9
The structure of the Parent and the Company (excluding inactive and
immaterial subsidiaries) after consummation of the Transactions is set forth
below:
[American Commercial structure chart]
- ---------------
(1) The Exchange Notes are being offered by the Company and ACL Capital, a
wholly owned subsidiary of the Company.
(2) The assets comprising the NMI Contribution are held by the Company and its
subsidiaries.
(3) The Company indirectly owns 79% and 80% of ACBL de Venezuela, C.A. and ACBL
Hidrovias, S.A., respectively.
4
<PAGE> 10
The following table sets forth the estimated sources and uses of funds of
the Transactions which were consummated on June 30, 1998:
<TABLE>
<CAPTION>
AMOUNT
-------------
(IN MILLIONS)
<S> <C>
SOURCES OF FUNDS
Senior Credit Facilities(1)
Tranche B Term Loan.................................... $200.0
Tranche C Term Loan.................................... 235.0
Revolving Credit Facility.............................. 10.0
10 1/4% Senior Notes due 2008............................... 300.0
Parent Senior Preferred Membership Interests(2)............. 115.0
Parent Junior Preferred Membership Interests(2)............. 40.0
Parent Senior Common Membership Interests(2)................ 3.4
Parent Junior Common Membership Interests(2)................ 0.4
Vectura Cash Contribution to the Parent(3).................. 60.0
------
Total sources of funds............................ $963.8
======
USES OF FUNDS
Recapitalization(4)......................................... $851.3
Consideration for NMI Contribution(5)....................... 78.9
Estimated fees and expenses of the Transactions............. 27.5
Working capital............................................. 6.1
------
Total uses of funds............................... $963.8
======
</TABLE>
- ---------------
(1) The Company received commitments of up to $535.0 million for the Senior
Credit Facilities, of which $100.0 million is in the form of a Revolving
Credit Facility (as defined) and $435.0 million is in the form of Term Loans
(as defined), consisting of a $200.0 million Tranche B Term Loan (as
defined) and a $235.0 million Tranche C Term Loan (as defined). At June 30,
1998, the Company had drawn $435.0 million under the Term Loans and had
$10.0 million outstanding under the Revolving Credit Facility. See
"Description of the Senior Credit Facilities."
(2) Represents non-cash consideration. See "The Transactions."
(3) Reflects the issuance of $59.4 million of Junior Preferred Membership
Interests and $0.6 million of Junior Common Membership Interests in exchange
for a cash capital contribution of approximately $60 million. See "The
Transactions."
(4) Includes $696.3 million in cash proceeds (comprised of $695.0 million, plus
$1.3 million which represents an estimated adjustment for working capital to
be finalized) and $155.0 million of non-cash consideration in the form of
membership interests to CSX Brown. See "The Transactions."
(5) Includes $75.0 million of cash to repay assumed debt and related obligations
and $3.9 million of non-cash consideration in the form of membership
interests in respect of the NMI Contribution. See "The Transactions."
5
<PAGE> 11
THE OFFERING
Notes......................... The Notes were sold by the Company on June 23,
1998 to Wasserstein Perella Securities, Inc.
and Chase Securities Inc. (the "Initial
Purchasers") pursuant to a Purchase Agreement
dated June 23, 1998 (the "Purchase Agreement").
The Initial Purchasers subsequently resold the
Notes to qualified institutional buyers
pursuant to Rule 144A under the Securities Act
and to certain persons outside the United
States pursuant to Regulation S under the
Securities Act that agreed to comply with
certain transfer restrictions and other
conditions.
Registration Rights
Agreement.................... Pursuant to the Purchase Agreement, the
Company, ACL Capital, the Subsidiary Guarantors
and the Initial Purchasers entered into a
Registration Rights Agreement dated June 23,
1998, which grants the holder of the Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy such
exchange rights which terminate upon the
consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered............ $300,000,000 aggregate principal amount of
Series B 10 1/4% Senior Notes due 2008.
The Exchange Offer............ $1,000 principal amount of the Exchange Notes
in exchange for each $1,000 principal amount of
Notes. As of the date hereof, $300,000,000
aggregate principal amount of Notes are
outstanding. The Company will issue the
Exchange Notes to holders on or promptly after
the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters
issued to third parties, the Issuers believe
that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Notes may be
offered for resale, resold and otherwise
transferred by any holder thereof (other than
any such holder which is an "affiliate" of the
Issuers within the meaning of Rule 405 under
the Securities Act) without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary
course of such holder's business and that such
holder does not intend to participate and has
no arrangement or understanding with any person
to participate in the distribution of such
Exchange Notes.
Each Participating Broker-Dealer that receives
Exchange Notes for its own account pursuant to
the Exchange Offer must acknowledge that it
will deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus
meeting the requirements of the Securities Act,
a Participating Broker-Dealer will not be
deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This
Prospectus, as it may be amended or
supplemented from time to time, may be used by
a Participating Broker-Dealer in connection
with resales of Exchange Notes received in
6
<PAGE> 12
exchange for Notes where such Notes were
acquired by such Participating Broker-Dealer as
a result of market-making activities or other
trading activities. The Issuers have agreed
that, for a period of up to one year from the
Effective Date, they will make this Prospectus
available to any Participating Broker-Dealer
for use in connection with any such resale. See
"Plan of Distribution."
Any holder who tenders in the Exchange Offer
with the intention to participate, or for the
purpose of participating, in a distribution of
the Exchange Notes could not rely on the
position of the staff of the Commission
enunciated in no-action letters and, in the
absence of an exemption therefrom, must comply
with the registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction. Failure
to comply with such requirements in such
instance may result in such holder incurring
liability under the Securities Act for which
the holder is not indemnified by the Issuers.
Expiration Date............... 5:00 p.m., New York City time, on ,
1998 unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange
Offer is extended.
Accrued Interest on the
Exchange Notes and the
Notes....................... Each Exchange Note will bear interest from its
issuance date. Holders of Notes that are
accepted for exchange will receive, in cash,
accrued interest thereon to, but not including,
the issuance date of the Exchange Notes. Such
interest will be paid with the first interest
payment on the Exchange Notes. Interest on the
Notes accepted for exchange will cease to
accrue upon issuance of the Exchange Notes.
Conditions to the Exchange
Offer....................... The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Issuers. See "The Exchange Offer --
Conditions."
Procedures for Tendering
Notes....................... Each holder of Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
the Notes and any other required documentation
to the Exchange Agent (as defined) at the
address set forth herein. By executing the
Letter of Transmittal, each holder will
represent to the Issuers that, among other
things, the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such Exchange Notes, whether or not
such person is the holder, that neither the
holder nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such
Exchange Notes and that neither the holder nor
any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act,
of the Issuers. See "The Exchange
Offer -- Purpose and Effect of the Exchange
Offer" and "-- Procedures for Tendering."
7
<PAGE> 13
Untendered Notes.............. Following the consummation of the Exchange
Offer, holders of Notes eligible to participate
but who do not tender their Notes will not have
any further exchange rights and such Notes will
continue to be subject to certain restrictions
on transfer. Accordingly, the liquidity of the
market for such Notes could be adversely
affected.
Consequences of Failure
to Exchange................. The Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Notes may be
resold only: (i) to the Company; (ii) pursuant
to Rule 144A or Rule 144 under the Securities
Act or pursuant to some other exemption under
the Securities Act; (iii) outside the United
States to a foreign person pursuant to the
requirements of Rule 904 under the Securities
Act; or (iv) pursuant to an effective
registration statement under the Securities
Act. See "The Exchange Offer -- Consequences of
Failure to Exchange."
Shelf Registration
Statement................... If any holder of the Notes (other than any such
holder which is an "affiliate" of the Issuers
within the meaning of Rule 405 under the
Securities Act) is not eligible under
applicable securities laws to participate in
the Exchange Offer, and such holder has
provided information regarding such holder and
the distribution of such holder's Notes to the
Issuers for use therein, the Issuers have
agreed to register the Notes on a shelf
registration statement (the "Shelf Registration
Statement") and use their best efforts to cause
it to be declared effective by the Commission
as promptly as practicable on or after the
consummation of the Exchange Offer. The Issuers
have agreed to maintain the continuous
effectiveness of the Shelf Registration
Statement for, under certain circumstances, a
maximum of two years, to cover resales of the
Notes held by any such holders.
Special Procedures for
Beneficial Owners........... Any beneficial owner whose Notes are registered
in the name of a broker, dealer, commercial
bank, trust company or other nominee and who
wishes to tender should contact such registered
holder promptly and instruct such registered
holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering its Notes,
either make appropriate arrangements to
register ownership of the Notes in such owner's
name or obtain a properly completed bond power
from the registered holder. The transfer of
registered ownership may take considerable
time. The Issuers will keep the Exchange Offer
open for not less than twenty days in order to
provide for the transfer of registered
ownership.
Guaranteed Delivery
Procedures.................. Holders of Notes who wish to tender their Notes
and whose Notes are not immediately available
or who cannot deliver their Notes, the Letter
of Transmittal or any other documents required
by the Letter of Transmittal to the Exchange
Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration
Date must tender their Notes according to the
guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."
8
<PAGE> 14
Withdrawal Rights............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date.
Acceptance of Notes and
Delivery of Exchange Notes.. The Company will accept for exchange any and
all Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The Exchange
Notes issued pursuant to the Exchange Offer
will be delivered promptly following the
Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Use of Proceeds............... There will be no cash proceeds to the Issuers
from the exchange pursuant to the Exchange
Offer.
Exchange Agent................ United States Trust Company of New York
THE EXCHANGE NOTES
General....................... The form and terms of the Exchange Notes are
the same as the form and terms of the Notes
(which they replace) except that: (i) the
Exchange Notes bear a Series B designation;
(ii) the Exchange Notes have been registered
under the Securities Act and, therefore, will
not bear legends restricting the transfer
thereof; and (iii) the holders of Exchange
Notes will not be entitled to certain rights
under the Registration Rights Agreement,
including the provisions providing for an
increase in the interest rate on the Notes in
certain circumstances relating to the timing of
the Exchange Offer, which rights will terminate
when the Exchange Offer is consummated. See
"The Exchange Offer -- Purpose and Effect of
the Exchange Offer." The Exchange Notes will
evidence the same debt as the Notes and will be
entitled to the benefits of the Indenture. See
"Description of the Exchange Notes." The Notes
and the Exchange Notes are referred to herein
collectively as the "Senior Notes."
Securities Offered............ $300,000,000 aggregate principal amount of
Series B 10 1/4% Senior Notes due 2008.
Maturity...................... June 30, 2008.
Interest...................... Interest on the Exchange Notes will be payable
in cash at a rate of 10 1/4% per annum,
semi-annually in arrears on June 30 and
December 31 of each year, commencing December
31, 1998.
Sinking Fund.................. None.
Optional Redemption........... The Exchange Notes will be redeemable at the
option of the Issuers, in whole or in part, at
any time on or after June 30, 2003, in cash at
the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated
Damages (as defined), if any, thereon to the
date of redemption. In addition, at any time
prior to June 30, 2001, the Issuers may on any
one or more occasions redeem up to 35% of the
aggregate principal amount of the Senior Notes
originally issued, at a redemption price of
110.25% of the principal amount thereof plus
accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption
date, with the net cash proceeds of one or more
Equity Offerings (as
9
<PAGE> 15
defined); provided, that at least 65% of the
aggregate principal amount of the Senior Notes
originally issued remains outstanding
immediately after the occurrence of such
redemption (excluding Senior Notes held by the
Company and its Subsidiaries); and provided
further, that such redemption shall occur
within 60 days of the date of the closing of
such Equity Offering. See "Description of the
Exchange Notes -- Optional Redemption."
Subsidiary Guarantees......... The Company's obligations under the Exchange
Notes will be jointly and severally guaranteed
on a senior basis (the "Subsidiary Guarantees")
by the Company's domestic Subsidiaries other
than ACL Capital, any Accounts Receivable
Subsidiary and certain Subsidiaries of the
Company without substantial assets or
operations. See "Description of the Exchange
Notes -- Subsidiary Guarantees."
Ranking....................... The Exchange Notes will be general unsecured
senior obligations of the Issuers, will rank
pari passu in right of payment with all
existing and future senior indebtedness of the
Issuers and will rank senior in right of
payment to all subordinated indebtedness of the
Issuers. The Exchange Notes will be effectively
subordinated to all liabilities of subsidiaries
of the Issuers that are not Subsidiary
Guarantors. As of June 30, 1998, such
subsidiaries had no third-party indebtedness
outstanding except for $24.4 million of
Terminal Revenue Refunding Bonds which were
defeased with funds invested in U.S. government
obligations deposited in an irrevocable trust.
The Exchange Notes will also be effectively
subordinated in right of payment to any secured
debt of the Issuers to the extent of the assets
serving as security for such secured debt. As
of June 30, 1998, the Company and the
Subsidiary Guarantors had approximately
$445.0 million in outstanding secured
indebtedness under the Senior Credit Facilities
to which the Exchange Notes are effectively
subordinated. The Company has available
additional borrowings of up to $90.0 million
under the Revolving Credit Facility. The
Indenture (as defined) pursuant to which the
Exchange Notes will be issued permits the
Issuers and their Subsidiaries to incur
additional indebtedness (including senior
indebtedness), subject to certain limitations.
See "Description of the Senior Credit
Facilities" and "Description of the Exchange
Notes."
Change of Control............. Upon the occurrence of a Change of Control (as
defined) (i) at any time prior to June 30,
2003, the Issuers will have the option to
redeem the Exchange Notes at any time within
180 days after a Change of Control, in whole or
in part, at a redemption price equal to 100% of
the principal amount thereof, together with
accrued and unpaid interest thereon to the
redemption date plus the Applicable Premium (as
defined), together with Liquidated Damages, if
any, thereon to the redemption date, and (ii)
if the Issuers do not so redeem all of the
Exchange Notes or if a Change of Control occurs
on or after June 30, 2003, each holder of
Exchange Notes will have the right to require
the Issuers to make an offer to repurchase all
or any part of such holder's Exchange Notes at
a purchase price in cash equal to 101% of the
principal amount thereof plus accrued
10
<PAGE> 16
and unpaid interest and Liquidated Damages, if
any, thereon to the date of repurchase. See
"Description of the Exchange Notes --
Repurchase at the Option of Holders -- Change
of Control." There can be no assurance that, in
the event of a Change of Control, the Issuers
would have sufficient funds to repurchase all
Exchange Notes tendered. See "Risk
Factors -- Risks Relating to the Exchange
Notes -- Limitations on Ability to Make Change
of Control Payments."
Certain Covenants............. The Indenture contains certain covenants that
limit, among other things, the Issuers' ability
to (i) pay dividends or make distributions,
redeem capital stock or membership interests or
make certain other restricted payments or
investments, (ii) incur additional indebtedness
or issue certain preferred equity interests,
(iii) merge, consolidate or sell all or
substantially all of their assets, (iv) create
liens on assets and (v) enter into certain
transactions with affiliates or related
persons. These covenants are subject to
important exceptions and qualifications. See
"Description of the Exchange Notes -- Certain
Covenants."
Certain Federal Income Tax
Considerations.............. See "Certain Federal Income Tax
Considerations."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH TENDERING NOTES FOR EXCHANGE NOTES, SEE "RISK FACTORS."
The principal executive offices of the Issuers are located at 1701 East
Market St., Jeffersonville, IN 47130, and its telephone number is (812)
288-0100.
11
<PAGE> 17
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL AND OPERATING DATA
The following table sets forth (i) summary historical consolidated
financial data of ACL for the three years ended December 29, 1995, December 27,
1996 and December 26, 1997, (ii) summary historical interim financial data of
ACL for the six months ended June 27, 1997 and June 26, 1998 and (iii) summary
unaudited pro forma combined financial data for the fiscal year ended December
26, 1997 and the twelve months ended June 26, 1998. The summary historical
consolidated financial data for the three years ended December 29, 1995,
December 27, 1996 and December 26, 1997 were derived from the audited
consolidated financial statements of ACL which are included elsewhere herein,
together with the report of Ernst & Young LLP, independent auditors. The summary
historical interim financial data of ACL for the six months ended June 27, 1997
and June 26, 1998 were derived from the unaudited consolidated financial
statements of ACL for such periods, which, in the opinion of management of ACL,
reflect all adjustments necessary to present fairly the financial position and
results of operations for the periods presented, such adjustments being of a
normal recurring nature. The summary unaudited pro forma combined financial data
for the fiscal year ended December 26, 1997 and the twelve months ended June 26,
1998 give effect to the Transactions as if each had occurred on December 28,
1996. The unaudited pro forma combined statement of financial position data give
effect to the Transactions as if they had occurred on June 26, 1998. Other
operating data is derived from non-financial operating information maintained by
the Company. The following table should be read in conjunction with "Unaudited
Pro Forma Combined Financial Data," "Selected Historical Consolidated Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the historical consolidated financial statements and the
notes thereto of ACL included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
--------------------------
FISCAL YEARS ENDED SIX MONTHS ENDED FISCAL YEAR TWELVE
------------------------------ ------------------- ENDED MONTHS ENDED
DEC. 29, DEC. 27, DEC. 26, JUNE 27, JUNE 26, DEC. 26, JUNE 26,
1995 1996 1997 1997 1998 1997 1998
-------- -------- -------- -------- -------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Operating revenue....................... $553,582 $622,140 $618,233 $275,423 $266,858 $742,677 $732,319
Operating expense....................... 458,126 521,476 559,600 261,872 249,666 655,138 642,942
Operating income........................ 95,456 100,664 58,633 13,551 17,192 87,539 89,377
Other expense........................... 1,808 2,726 1,930 (411) 687 1,503 2,282
Interest expense........................ 11,385 11,780 12,472 6,166 6,068 71,008 71,008
Earnings before income taxes............ 82,263 86,158 44,231 7,796 10,437 15,028 16,087
Income tax expense (benefit)............ 30,861 28,733 18,287 3,688 (62,225) 2,127 1,868
Net earnings............................ 51,402 57,425 25,944 4,108 72,662 12,901 14,219
OTHER OPERATING DATA:
Towboats (at period end)................ 127 148 145 147 145 201 201
Barges (at period end).................. 3,228 3,718 3,818 3,778 3,833 4,540 4,497
Ton-miles (millions, for period
ended)................................ 52,235 55,842 56,026 27,219 26,811 64,826 64,326
Tonnage (thousands, for period ended)... 61,055 64,929 65,998 31,989 31,725 78,099 77,061
OTHER FINANCIAL DATA:
EBITDA(1)............................... $126,208 $135,419 $97,852 $34,091 $37,074 $135,569 $137,719
Adjusted EBITDA(2)...................... 144,569 146,719
Depreciation and amortization........... 32,560 37,481 41,149 20,129 20,569 49,533 50,624
Property additions...................... 33,425 90,551 51,500 38,212 25,034
Net cash provided (used) by:
Operating activities.................. 99,080 113,620 52,069 (4,337) 12,673
Investing activities.................. (36,504) (93,655) (49,300) (42,050) (51,022)
Financing activities.................. (36,226) (52,484) (28,134) 38,262 43,826
Cash interest expense................... 68,208 68,208
EBITDA to interest expense.............. 1.9x 1.9x
EBITDA to cash interest expense......... 2.0x 2.0x
Adjusted EBITDA to interest expense..... 2.0x 2.1x
Adjusted EBITDA to cash interest
expense............................... 2.1x 2.2x
Debt to EBITDA.......................... 5.6x
Debt to adjusted EBITDA................. 5.2x
Ratio of earnings to fixed charges(3)... 6.9x 5.8x 3.3x 1.8x 2.1x 1.2x 1.2x
</TABLE>
12
<PAGE> 18
<TABLE>
<CAPTION>
PRO FORMA
------------
DEC. 29, DEC. 27, DEC. 26, JUNE 27, JUNE 26, JUNE 26,
1995 1996 1997 1997 1998 1998
-------- -------- -------- -------- ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF FINANCIAL POSITION DATA (AT
PERIOD END):
Cash and cash equivalents................. $56,803 $24,284 $(1,081) $(679) $4,396 $6,448
Working capital (deficit)................. 71,291 21,005 7,445 (19,298) (36,210) 36,483
Properties -- net......................... 394,717 449,221 460,295 467,835 457,341 542,758
Total assets.............................. 658,499 667,095 632,132 656,763 671,583 796,615
Long-term debt, including current
portion................................. 57,198 52,714 48,230 50,472 45,988 769,400
Shareholder's equity/member's equity
(deficit)............................... 285,932 292,557 299,501 287,166 329,816 (143,301)
</TABLE>
- ---------------
(1) EBITDA represents earnings before interest, income taxes, depreciation and
amortization. EBITDA is presented because management believes it is a widely
accepted financial indicator used by certain investors and securities
analysts to analyze and compare companies on the basis of operating
performance. EBITDA is not intended to represent cash flows for the period,
nor has it been presented as an alternative to operating income as an
indicator of operating performance and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
generally accepted accounting principles. The Company understands that while
EBITDA is frequently used by securities analysts in the evaluation of
companies, EBITDA, as used herein, is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the method of calculation. See the historical and
unaudited pro forma financial statements of ACL and NMI and the related
notes thereto included elsewhere herein.
(2) The Company estimates it will realize certain additional cost reductions as
a result of the Transactions. The effect of such additional reductions on
pro forma EBITDA are as follows (dollars in thousands):
<TABLE>
<CAPTION>
PRO FORMA
-------------------------
TWELVE
YEAR MONTHS
ENDED ENDED
DEC. 26, JUNE 26,
1997 1998
------------- --------
<S> <C> <C>
EBITDA...................................................... $135,569 $137,719
Adjustments to EBITDA:
Estimated cost savings from operating combined barge
fleet(a).................................................. 4,200 4,200
Estimated fuel savings(b)................................... 2,300 2,300
Estimated reduction in third-party towing, fleet boats and
maintenance costs(c)...................................... 2,500 2,500
-------- --------
Adjusted EBITDA............................................. $144,569 $146,719
======== ========
</TABLE>
- ---------------
(a) The estimated cost savings from operating a combined barge fleet relates
to operating NMI barges at ACL's lower equivalent cost. NMI's average
historical barge miles were used in estimating the cost savings.
(b) The estimated cost savings are expected to be derived from the use of
ACL's proprietary software on NMI towboats, which is expected to reduce
fuel consumption, and from the reduction in fuel price to reflect ACL's
vendor discounts.
(c) The estimated cost savings represent discontinuing the use of external
vendors for certain NMI towing, repair and maintenance services, with no
additional infrastructure cost to the combined entity. The combined
towboat fleet will have sufficient capacity to reduce externally
contracted towing services and reduce the number of fleet boats as the
fleets are consolidated.
(3) For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings before income taxes plus interest expense on
indebtedness, amortization of debt discount, the interest portion of fixed
rent expense, and undistributed earnings of affiliates accounted for using
the equity method. Fixed charges include interest on indebtedness (whether
expensed or capitalized), amortization of debt discount, and the interest
portion of fixed rent expense.
13
<PAGE> 19
RISK FACTORS
Holders of the Notes should carefully consider the risk factors set forth
below, as well as the other information appearing elsewhere in this Prospectus,
before tendering their Notes in the Exchange Offer.
RISKS RELATING TO THE EXCHANGE NOTES
Substantial Leverage and Ability to Service Indebtedness
The Company incurred significant debt in connection with the Transactions.
As of June 30, 1998, the Company had outstanding indebtedness of $745.0 million,
including $435.0 million drawn under the Term Loans, $300.0 million aggregate
principal amount of Notes and $10.0 million drawn under the Revolving Credit
Facility. In addition, the Company has available borrowings of up to an
additional $90.0 million under the Revolving Credit Facility. Subject to
restrictions in the Senior Credit Facilities and the Indenture, the Company may
incur additional indebtedness from time to time to finance acquisitions or
capital expenditures. The outstanding indebtedness of $745.0 million is net of
$24.4 million of Terminal Revenue Refunding Bonds which were defeased with funds
invested in U.S. government obligations deposited in an irrevocable trust.
The Company's ability to make scheduled payments of principal of, or to pay
the premium, if any, interest or Liquidated Damages, if any, on, or to
refinance, its indebtedness (including the Exchange Notes), or to fund planned
capital expenditures will depend on its future performance, which, to a certain
extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond its control. There can be no
assurance that the Company's business will generate sufficient cash flow from
operations, that anticipated revenue growth and operating improvements will be
realized or that future borrowings will be available under the Senior Credit
Facilities or otherwise in an amount sufficient to enable the Company to service
its indebtedness, including the Exchange Notes, or to fund its other liquidity
needs. The Company may be required to refinance all or a portion of the
principal of the Exchange Notes on or prior to maturity. There can be no
assurance, however, that such refinancing would be available on commercially
reasonable terms or at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
The degree to which the Company is leveraged could have important
consequences to holders of the Exchange Notes, including, but not limited to:
(i) making it more difficult for the Company to satisfy its obligations with
respect to the Exchange Notes; (ii) increasing the Company's vulnerability to
general adverse economic and industry conditions; (iii) limiting the Company's
ability to obtain additional financing to fund future working capital, capital
expenditures and other general corporate requirements; (iv) requiring the
dedication of a substantial portion of the Company's cash flow from operations
to the payment of principal of, and interest on, its indebtedness, thereby
reducing the availability of such cash flow to fund working capital, capital
expenditures or other general corporate requirements; (v) limiting the Company's
flexibility in planning for, or reacting to, changes in its business and the
industry in which it competes; and (vi) placing the Company at a competitive
disadvantage compared to less leveraged competitors. In addition, the Indenture
and the Senior Credit Facilities contain financial and other restrictive
covenants that limit the ability of the Company to, among other things, borrow
additional funds. Failure by the Company to comply with such covenants could
result in an event of default which, if not cured or waived, could have a
material adverse effect on the Company's business, financial condition and
results of operations. If the Company cannot generate sufficient cash to meet
its obligations as they become due or refinance such obligations, the Company
may have to sell assets or reduce capital expenditures. In addition, the degree
to which the Company is leveraged could prevent it from repurchasing all of the
Exchange Notes tendered to it upon the occurrence of a Change of Control. See
"Description of the Senior Credit Facilities" and "Description of the Exchange
Notes -- Repurchase at the Option of Holders -- Change of Control."
Restrictions Imposed by the Senior Credit Facilities and the Indenture
The Senior Credit Facilities and the Indenture limit the Company's
financial flexibility in a number of ways. The Senior Credit Facilities require
the Company to maintain specified financial ratios and tests, among other
obligations, including a minimum interest expense coverage ratio, a maximum
leverage ratio, a minimum fixed charge coverage ratio and a minimum net worth
test. In addition, the Senior Credit Facilities
14
<PAGE> 20
restrict, among other things, the Company's ability to incur additional
indebtedness, sell assets, create liens or other encumbrances, incur guarantee
obligations, repay the Exchange Notes or amend the Indenture, make certain
payments, including dividends or other distributions, make investments, loans or
advances and make acquisitions and capital expenditures beyond a certain level.
A failure to maintain specified financial ratios or otherwise to comply with the
restrictions contained in the Senior Credit Facilities could lead to an event of
default thereunder, which could result in an acceleration of such indebtedness.
In such event, the lenders under the Senior Credit Facilities could elect to
declare all amounts outstanding thereunder, together with accrued and unpaid
interest, to be immediately due and payable, and, if the Company were unable to
repay such amounts, such lenders would have the right to proceed against the
collateral granted to them to secure such indebtedness and other amounts (which
is expected to be substantially all of the assets of the Company). Such an
acceleration would constitute an event of default under the Indenture relating
to the Exchange Notes. In addition, the Indenture restricts, among other things,
the Company's ability to incur additional indebtedness, sell assets, create
liens or other encumbrances, make certain payments, including dividends or other
distributions, or merge or consolidate. A failure to comply with the
restrictions in the Indenture could result in an event of default under the
Indenture. See "Description of the Senior Credit Facilities" and "Description of
the Exchange Notes -- Certain Covenants."
Asset Encumbrances
In connection with the Senior Credit Facilities, the Parent granted the
lenders thereunder a first priority lien on all of the membership interests of
the Company owned by it as security for its guarantee of the Company's
obligations under the Senior Credit Facilities. In the event of a default under
the Senior Credit Facilities or such guarantee, the lenders under the Senior
Credit Facilities could foreclose upon the assets pledged to secure the Senior
Credit Facilities, including such membership interests, and the holders of the
Exchange Notes might not be able to receive any payments until any payment
default was cured or waived, any acceleration was rescinded, or the indebtedness
of the Senior Credit Facilities was discharged or paid in full. See "Description
of the Senior Credit Facilities."
Fraudulent Transfer
All of the net proceeds of the Offering were distributed to the Parent and
used to consummate the Recapitalization. Under applicable provisions of the
United States Bankruptcy Code (the "Bankruptcy Code") or comparable provisions
of state fraudulent transfer or conveyance laws, a court could void, in whole or
in part, the Senior Notes, including the Exchange Notes, or, in the alternative,
subordinate the Senior Notes, including the Exchange Notes to existing and
future indebtedness of the Company, if the Company, at the time it issued the
Notes, (i) incurred such indebtedness with intent to hinder, delay or defraud
creditors or (ii)(a) received less than reasonably equivalent value or fair
consideration for incurring such indebtedness and (b)(1) was insolvent at the
time of incurrence, (2) was rendered insolvent by reason of such incurrence (and
the application of the proceeds thereof), (3) was engaged or was about to engage
in a business or transaction for which the assets remaining with the Company
constituted unreasonably small capital to carry on its businesses or (4)
intended to incur, or believed that it would incur, debts beyond its ability to
pay such debts as they mature.
The analysis of insolvency for purposes of the foregoing would vary
depending upon the law applied in such case. Generally, however, the Company
would be considered insolvent if the sum of its debts, including contingent
liabilities, was greater than all of its assets at fair valuation or if the
present fair saleable value of its assets was less than the amount that would be
required to pay the probable liability on its existing debts, including
contingent liabilities, as they become absolute and matured. While there can be
no assurance that a court passing on such questions would agree with the
Company's view, the Company believes that, for purposes of all such insolvency,
bankruptcy and fraudulent transfer or conveyance laws, the Senior Notes were and
the Exchange Notes are being issued without the intent to hinder, delay or
defraud creditors and for proper purposes and in good faith. The Company, after
the issuance of the Notes and the application of the proceeds thereof, was
solvent, and believes it has sufficient capital for carrying on its business and
will be able to pay its debts as they mature.
15
<PAGE> 21
Effective Subordination
The Exchange Notes will be effectively subordinated to all existing and
future liabilities of the Company's subsidiaries that are not Subsidiary
Guarantors (including all current and future foreign subsidiaries). As of June
30, 1998, there were no liabilities of the Company's subsidiaries to which
holders of the Exchange Notes will be effectively subordinated.
Any right of the Company to participate in any distribution of assets of
its subsidiaries upon the liquidation, reorganization or insolvency of any such
subsidiary (and the consequent right of the holders of the Exchange Notes to
participate in the distribution of those assets) will be subject to the prior
claims of the creditors of the respective non-Subsidiary Guarantors. The
obligations of the Company under the Senior Credit Facilities are secured by
substantially all of its assets. Additionally, the Parent will guarantee the
Company's obligations under the Senior Credit Facilities, and such guarantee
will be secured by a first priority pledge of all the membership interests of
the Company owned by the Parent. See "Description of the Senior Credit
Facilities."
Limitation on the Payment of Funds to the Company by its Subsidiaries
The Company's cash flow, and consequently its ability to pay dividends and
to service debt, including its obligation under the Exchange Notes, is dependent
upon the cash flows of its subsidiaries and the payment of funds by such
subsidiaries to the Company in the form of loans, dividends or otherwise.
Limitations on Ability to Make Change of Control Payments
Upon the occurrence of a Change of Control (as defined) (i) at any time
prior to June 30, 2003, the Issuers will have the option to redeem the Exchange
Notes at any time within 180 days after a Change of Control, in whole or in
part, at a redemption price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest thereon to the redemption date plus
the Applicable Premium, together with Liquidated Damages, if any, thereon to the
redemption date, and (ii) if the Issuers do not so redeem all of the Exchange
Notes or if a Change of Control occurs on or after June 30, 2003, each holder of
Exchange Notes will have the right to require the Issuers to make an offer to
repurchase all or any part of such holder's Exchange Notes at a purchase price
in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of repurchase.
Such provisions may not, however, afford holders of the Exchange Notes
protection in the event of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction involving the Company that may
adversely affect holders of Exchange Notes, if such transaction does not result
in a Change of Control. A Change of Control will result in an event of default
under the Senior Credit Facilities and may result in a default under other
indebtedness of the Company that may be incurred in the future. The Senior
Credit Facilities will prohibit the purchase of outstanding Exchange Notes prior
to repayment of the borrowings under the Senior Credit Facilities and any
exercise by the holders of the Exchange Notes of their right to require the
Issuers to repurchase the Exchange Notes will cause an event of default under
the Senior Credit Facilities. In addition, prior to repurchasing the Notes upon
a Change of Control, the Company must either repay all outstanding indebtedness
under the Senior Credit Facilities or obtain the consent of the lenders. If the
Company does not obtain such consent or repay its outstanding indebtedness under
the Senior Credit Facilities, the Company would remain effectively prohibited
from redeeming or offering to purchase the Exchange Notes. Finally, there can be
no assurance that the Company will have the financial resources necessary or be
able to arrange financing to repay obligations under the Senior Credit
Facilities and to redeem or repurchase the Exchange Notes upon a Change of
Control. See "Description of the Exchange Notes -- Repurchase at the Option of
Holders -- Change of Control."
Lack of Public Market; Transfer Restrictions
Prior to the Exchange Offer, there has been no public market for the Notes.
The Notes have not been registered under the Securities Act and will be subject
to restrictions on transferability to the extent that they are not exchanged for
Exchange Notes by holders who are entitled to participate in this Exchange
Offer. The
16
<PAGE> 22
holders of Notes (other than any such holder that is an "affiliate" of the
Issuers within the meaning of Rule 405 under the Securities Act) who are not
eligible to participate in the Exchange Offer are entitled to certain
registration rights, and the Issuers are required to file a Shelf Registration
Statement with respect to such Notes. The Exchange Notes are new securities for
which there currently is no market. The Exchange Notes are eligible for trading
by qualified buyers in the Private Offerings, Resale and Trading though
Automated Linkages (PORTAL) market. The Issuers do not intend to apply for
listing of the Exchange Notes, on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System. Although the Exchange Notes are eligible for trading through PORTAL, the
Exchange Notes may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities, the
Company's performance and other factors. The Issuers have been advised by the
Initial Purchasers that the Initial Purchasers currently intend to make a market
in the Exchange Notes. However, they are not obligated to do so and any
market-making activities with respect to the Exchange Notes may be discontinued
at any time without notice. In addition, such market-making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act and may
be limited during the Exchange Offer and the pendency of any Shelf Registration
Statement. Although under the Registration Rights Agreement, the Issuers are
required to consummate an offer to exchange the Notes for equivalent registered
securities, or to register the Notes under the Securities Act, there can be no
assurance that an active trading market for the Notes or the Exchange Notes will
develop. If a market were to exist, the Exchange Notes could trade at prices
that may be lower than the initial offering price thereof depending on many
factors, including prevailing interest rates and the markets for similar
securities, general economic conditions and the financial condition and
performance of, and prospects for, the Company. See "Description of the Exchange
Notes -- Registration Rights; Liquidated Damages."
The Exchange Notes generally will be permitted to be resold or otherwise
transferred (subject to the restrictions described under "Description of
Exchange Notes") by each holder without the requirement of further registration.
The Exchange Notes, however, will also constitute a new issue of securities with
no established trading market. The Exchange Offer will not be conditioned upon
any minimum or maximum aggregate principal amount of Notes being tendered for
exchange. No assurance can be given as to the liquidity of the trading market
for the Exchange Notes, or, in the case of non-exchanging holders of Notes, the
trading market for the Notes following the Exchange Offer.
The liquidity of, and trading market for, the Exchange Notes also may be
adversely affected by general declines in the market or by declines in the
market for similar securities. Such declines may adversely affect such liquidity
and trading markets independently of the financial performance of, and prospects
for, the Company.
Exchange Offer Procedures
Issuance of the Exchange Notes in exchange for the Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Issuers of such
Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of the Notes desiring to tender
such Notes in exchange for Exchange Notes should allow sufficient time to ensure
timely delivery. The Issuers are under no duty to give notification of defects
or irregularities with respect to the tenders of Notes for exchange. Notes that
are not tendered or are tendered but not accepted will, following the
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof and, upon consummation of the Exchange Offer,
certain registration rights under the Registration Rights Agreement will
terminate. In addition, any holder of Notes who tenders in the Exchange Offer
for the purpose of participating in a distribution of the Exchange Notes may be
deemed to have received restricted securities and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transactions. Each Participating
Broker-Dealer that receives Exchange Notes for its own account in exchange for
Notes, where such Notes were acquired by such Participating Broker-Dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Notes. See "Plan of
Distribution." To the extent that Notes are tendered and accepted in the
Exchange Offer,
17
<PAGE> 23
the trading market for untendered and tendered but unaccepted Notes could be
adversely affected. See "The Exchange Offer."
COMPANY-SPECIFIC RISKS
Risks of Adverse Weather and River Conditions
The Company's barging operations are affected by weather and river
conditions. Varying weather patterns can affect river levels and cause ice in
northern river areas. For example, the Upper Mississippi River closes annually
from approximately mid-December to mid-March and ice conditions can hamper
navigation on the upper reaches of the Illinois River during the winter months.
In addition, adverse river conditions affect towboat speed, tow size and loading
drafts and can delay barge movements. Lock outages due to lock maintenance
and/or other interruptions in normal lock operation can also delay barge
movements. Jeffboat's waterfront location is subject to occasional flooding.
Jeffboat's manufacturing operations that are conducted outdoors are also subject
to weather conditions, which may adversely impact production schedules.
Terminals may also experience operational interruptions as a result of weather
and river conditions. It is likely that the Company's operations will be subject
to adverse weather or river conditions in the future and there can be no
assurance that such weather or river conditions will not have a material adverse
effect on the Company's business, financial condition and results of operations.
Exposure to Grain Exports
The Company's dry cargo barging business in North America is significantly
affected by the level of grain export volume handled through the Gulf of Mexico
ports. Grain exports can vary due to, among other things, crop harvest yield
levels in the United States and abroad. Overseas grain shortages can increase
demand for U.S. grain, while worldwide over-production can decrease the demand
for U.S. grain. This variable nature of grain exports can result in temporary
barge oversupply which can drive down freight rates. There can be no assurance
that historical levels of North American grain export volume will be maintained
in the future and, to the extent supply imbalances were to prevail for a
significant period of time, they could have a material adverse effect on the
Company's business, financial condition and results of operations.
Seasonality
The Company's business is seasonal, and its quarterly revenues and profits
historically have been lower during the first and second fiscal quarters of the
year (January through June) and higher during the third and fourth fiscal
quarters (July through December) due to the fall grain harvest. In addition,
working capital requirements fluctuate throughout the year. Adverse market or
operating conditions during the last four months of the year could have a
greater effect on the Company's business, financial condition and results of
operations than during other periods.
Variability
Freight transportation rates may fluctuate from season to season and year
to year, which could result in varying levels of cash flow. The level of dry and
liquid cargoes requiring transportation on the Inland Waterways will vary due to
numerous factors, including global economic conditions and business cycles,
domestic agricultural production/demand as well as international agricultural
production/demand and the value of the U.S. dollar relative to other currencies.
In addition, the number of barges and towboats in the overall industry fleet
available to transport these cargoes will vary from year to year as older
vessels are retired and scrapped and new vessels are constructed and placed into
service. The resulting relationship between available cargoes and available
vessels will vary with periods of low vessel availability and high cargo demand
causing higher freight rates and periods of high vessel availability and low
cargo demand causing lower freight rates. Significant periods of high vessel
availability and low cargo demand could have a material adverse effect on the
Company's business, financial condition and results of operations.
The foregoing factors can also affect market rates. As contracts expire and
terms are renegotiated at then current market rates, the level of revenue can
vary relative to prior years. This has become more pronounced as the industry
has shifted to shorter term contracts. The impact of these factors could be
material and there can be no assurance that the rates at which contracts are
renewed will not have a material adverse effect on the
18
<PAGE> 24
Company's business, financial condition or results of operations. In particular,
one of the Company's electric utility customers is in proceedings under Chapter
11 of the Bankruptcy Code. The contract with such customer for the
transportation of coal is at attractive margins. The Company believes that this
contract will be restructured during 1999 as a long-term contract having a term
of at least five years at reduced rates as part of such proceedings, and that as
a result the revenue from such contract could be reduced by up to $12 to $16
million annually.
Competition
The barge business is highly competitive and there are few significant
barriers to entry. Certain of the Company's principal competitors have greater
financial resources and/or are less leveraged than the Company and may be better
able to withstand and respond to adverse market conditions within the barging
industry. There can be no assurance that such competition will not have a
material adverse effect on the Company's business, financial condition or
results of operations or that the Company will not encounter increased
competition in the future, which also could have a material adverse effect on
the Company's business, financial condition or results of operations. See
"Business -- Competition."
Exposure to International Economic and Political Factors
The Company's operations may be affected by actions of foreign governments
and global or regional economic developments. For example, economic events in
Asia, such as Chinese import/export policy or currency fluctuations, could
affect the level of imports and exports. Foreign agricultural subsidies can also
impact demand for U.S. agricultural exports. In addition, foreign trade
agreements and each country's adherence to the terms of such agreements can
raise or lower demand for U.S. imports and exports. National and international
boycotts and embargoes of other countries' or U.S. imports and/or exports
together with the raising or lowering of tariff rates will affect the level of
cargoes requiring transportation on the Inland Waterways. Changes in the value
of the U.S. dollar relative to other currencies will raise or lower demand for
U.S. exports as well as U.S. demand for foreign produced raw materials and
finished good imports. Such actions or developments could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Risk of Providing Services Abroad
Barging services provided to customers outside the United States
represented approximately 5% of 1997 operating revenue and are expected to
increase in the future. Demand for the Company's services may be affected by
economic and political conditions in each of the countries in which the Company
provides services. The Company's foreign operations are also subject to other
risks of doing business abroad, including fluctuations in the value of
currencies (which may affect demand for products priced in U.S. dollars as well
as local labor and supply costs), import duties, changes to import and export
regulations (including quotas), possible restrictions on the repatriation of
capital and earnings, labor or civil unrest, long payment cycles, greater
difficulty in collecting accounts receivable and the burdens and cost of
compliance with a variety of foreign laws, changes in citizenship requirements
for purposes of doing business and government expropriation of operations and/or
assets. There can be no assurance that foreign governments will not adopt
regulations or take other actions that would have a direct or indirect adverse
impact on the business or market opportunities of the Company or that the
political, cultural or economic climate outside the United States will be
favorable to the Company's operations and growth strategy.
Exposure to Fuel Prices
Fuel costs represented approximately 11% of the Company's operating expense
in fiscal 1997. Fuel prices are subject to fluctuation as a result of domestic
and international events. There can be no assurance that the Company will not
experience increased fuel prices in the future, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
19
<PAGE> 25
Replacement Needs
Barge and towboat replacement represents a significant cost for the
Company, and the Company expects to replace an average of 140 barges per year
during the next five years. Due to the variable nature of the barging industry
and the freight transportation industry in general and the relatively long life
of marine equipment, it is difficult for the Company and other barge companies
to accurately predict equipment requirements. Accordingly, no assurance can be
given that the Company will have sufficient equipment to satisfy market demand
or that the industry will not have an oversupply of equipment. An oversupply of
equipment could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
Combined Operations
The integration of the NMI operations will require substantial management
time and financial and other resources and may pose risks with respect to
operations, customer service and customer acceptance. While the Company's
management has successfully combined other barging operations into the Company
and the Company believes that it has sufficient financial and management
resources to accomplish the rationalization and integration of the NMI
operations, there can be no assurance that such operations can be integrated
successfully or that the Company will not experience difficulties with
customers, personnel or others. In addition, although the Company believes that
the NMI operations will enhance the competitive position and business prospects
of the Company, there can be no assurance that such benefits will be fully
realized.
Dependence on Key Personnel
The Company is dependent on the continued services of its senior management
team. The loss of such key personnel could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Management."
Labor Relations
As of June 30, 1998, the Company employed approximately 4,140 individuals.
Of these, approximately 1,025 are represented by unions, most of whom
(approximately 985) are represented by the International Brotherhood of
Teamsters at the Company's Jeffboat shipyard facility, where the contract with
the union was recently renewed for a term of three years. Although the Company
believes that its relations with its employees and with the recognized labor
unions are generally good, there can be no assurance that the Company will not
be subject to work stoppages or other labor disruption and, if such events were
to occur, that there would not be a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Employees."
Environmental, Health and Safety Requirements
The Company's operations are subject to extensive Federal, state and local
environmental laws and regulations which, among other things, specify
requirements for the management of oil, hazardous wastes, and hazardous
substances and impose liability for releases of these materials into the
environment. A release of oil, hazardous waste, hazardous substances or other
pollutants into the environment at or by the Company's properties or vessels, as
a result of the Company's current or past operations, or at a facility to which
the Company has shipped wastes, or the existence of historical contamination at
any of the Company's properties, could result in material liability to the
Company. The Company is in discussions with the Environmental Protection Agency
("EPA"), the Department of Justice ("DOJ") and local law enforcement authorities
regarding alleged violations of various environmental laws and has also been
identified as a potentially responsible party ("PRP") with respect to the
cleanup of certain waste disposal sites. Tiger Shipyard and certain of its
employees have been indicted by the Parish of West Baton Rouge, Louisiana based
on alleged criminal violations of certain environmental laws. Such matters could
have a material adverse effect on the Company's business, financial condition
and results of operations.
20
<PAGE> 26
Federal, state and local governments could in the future enact laws or
regulations concerning environmental matters that affect the Company's
operations or facilities, increase the Company's costs of operation, or
adversely affect the demand for the Company's services. The Company cannot
predict the effect that such future laws or regulations could have on the
Company. Nor can the Company predict what environmental conditions may be found
to exist at the Company's current or past facilities or at other properties
where the Company or its predecessors have arranged for the disposal of wastes
and the extent of liability that may result from the discovery of such
conditions. It is possible that such future laws or undiscovered conditions
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Environmental Matters."
The Company's domestic vessel operations are primarily regulated by the
U.S. Coast Guard for occupational health and safety standards. The Company's
domestic shore operations are subject to the U.S. Occupational Safety and Health
Administration regulations. There can be no assurance that claims will not be
made against the Company for work related illness or injury, or that the further
adoption of occupational health and safety regulations in the United States or
in foreign jurisdictions in which the Company operates will not adversely affect
the Company's business, financial condition and results of operations. See
"Business -- Occupational Health and Safety Matters."
Other Government Regulation
The Company's barging operations are subject to various laws and
regulations, including international treaties, conventions, national, state and
local laws and regulations and the laws and regulations of the flag nations of
the Company's vessels, all of which are subject to amendment or changes in
interpretation. Further, the Company is required by various governmental and
quasi-governmental agencies to obtain and/or maintain certain permits, licenses
and certificates respecting its operations. The Company's domestic towboats are
in certain circumstances subject to a significant Federal fuel use tax, which
may be increased. Any significant changes in laws or regulations affecting the
Company's operations, or in the interpretation thereof, could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Government Regulation."
Controlling Shareholders
Vectura, NMI, CSX, the Independent Investors and the Management Investors
(collectively, the "Investors") beneficially own a majority of the outstanding
voting securities of the Parent and collectively control the affairs and
policies of the Company. See "Security Ownership" and "Certain Relationships and
Related Transactions." In addition, each of CSX and the Vectura Parties (as
defined) have certain veto rights. Circumstances may occur in which the
interests of the Investors could be in conflict with the interests of the
holders of the Exchange Notes. In addition, the Investors may have an interest
in pursuing acquisitions, divestitures or other transactions that, in their
judgment, could enhance their equity investment, even though such transactions
might involve risks to the holders of the Exchange Notes. See "Security
Ownership."
21
<PAGE> 27
THE TRANSACTIONS
The following description of certain terms of the Recapitalization
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Recapitalization Agreement.
OVERVIEW
Pursuant to a recapitalization agreement, dated as of April 17, 1998 (the
"Recapitalization Agreement"), among CSX, Vectura, NMI, a wholly owned
subsidiary of Vectura, the Company and the Parent, the Parent was recapitalized
in a series of transactions in which (i) the barge business of Vectura and its
subsidiaries was combined with that of ACL; (ii) ACL used the net proceeds of
the Offering and borrowings under the Senior Credit Facilities together with the
Vectura Cash Contribution to fund a cash distribution of $695.0 million (subject
to post-closing working capital adjustments) to CSX Brown and to fund the
assumption and immediate repayment of approximately $75 million of existing
indebtedness and other obligations of Vectura and its subsidiaries; and (iii)
Vectura, CSX and NMI hold approximately 52%, 33% and 11% of the junior common
membership interests of the Parent, which were allocated between voting and
non-voting and which represent the residual future profits interests in the
Parent, respectively (before giving effect to the investment by the Management
Investors). In connection with the Recapitalization, (a) CSX or one of its
affiliates received (i) an aggregate amount of cash equal to $695.0 million plus
an estimated working capital adjustment of $1.3 million, (ii) senior preferred
membership interests (the "Senior Preferred Membership Interests") of the Parent
with a liquidation value of approximately $115 million which are mandatorily
redeemable in 2013, (iii) junior preferred membership interests (the "Junior
Preferred Membership Interests") of the Parent with a liquidation value of
approximately $39.7 million which are mandatorily redeemable in 2013 and (iv)
junior common membership interests (the "Junior Common Membership Interests") of
the Parent with a fair market value of approximately $0.3 million, representing
approximately 34% of the voting membership interests of the Parent and an
approximately 33% residual future profits interest in the Parent (before giving
effect to any issuance of membership interests to Management Investors); (b)
Vectura acquired (i) Junior Preferred Membership Interests with a liquidation
value of approximately $59.4 million and (ii) Junior Common Membership Interests
with a fair market value of approximately $0.6 million, representing
approximately 15.8% of the voting membership interests of the Parent and an
approximately 55% residual future profits interest in the Parent (before giving
effect to any issuance of membership interests to Management Investors); and (c)
Vectura caused substantially all the consolidated assets of Vectura and its
subsidiaries, including NMI, to be contributed to NMI's subsidiary, NMI Holdings
LLC ("NMI Holdings"), and NMI then caused NMI Holdings to be contributed to the
Parent (and thereafter combined with the Company), through the NMI Contribution,
in exchange for (i) the assumption and immediate repayment of the Vectura Debt,
(ii) Junior Preferred Membership Interests with a liquidation value of $0.4
million (subject to post-closing working capital adjustments), (iii) senior
common membership interests (the "Senior Common Membership Interests") of the
Parent with a fair market value of approximately $3.4 million (with an
additional future profits interest of approximately $32.5 million) and (iv)
Junior Common Membership Interests with a fair market value of approximately
$0.1 million, representing approximately 3.2% of the voting membership interests
of the Parent and an 11% residual future profits interest in the Parent (before
giving effect to any issuance of membership interests to Management Investors).
In addition, (x) certain of the Management Investors acquired membership
interests in the Parent in amounts of voting Junior Common Membership Interests
representing 17% of all such interests and (y) the Independent Investors
acquired membership interests of the Parent in amounts of non-voting Junior
Common Membership Interests determined prior to the Closing and in amounts of
voting Junior Common Membership Interests representing 30% of all such
interests. It is anticipated that the Management Investors will acquire
membership interests in the Parent.
The Recapitalization Agreement contains various other provisions customary
for transactions of this size and type, including representations and warranties
with respect to the condition and operations of the business, covenants with
respect to the conduct of the business prior to the Closing (as defined),
post-closing working capital adjustment provisions, and various closing
conditions.
22
<PAGE> 28
The CSX Cash Distribution, the assumption and immediate repayment of the
Vectura Debt and the fees and expenses of the Transactions were funded by: (i)
$435.0 million of term loan borrowings by the Company pursuant to the Senior
Credit Facilities; (ii) $10.0 million of revolving credit borrowings by the
Company pursuant to the Senior Credit Facilities, (iii) the Offering, with
aggregate gross proceeds of $300.0 million from the issuance of the Notes; and
(iv) the Vectura Cash Contribution of approximately $60 million. Each of the
Transactions was conditioned upon each of the others, and consummation of all of
the Transactions occurred simultaneously.
Following consummation of the Recapitalization, the activities of the
Parent and the Company are subject to the constituent documents of the Parent.
See "Certain Relationships and Related Transactions."
SENIOR CREDIT FACILITIES
In connection with the Transactions, the Company and the Parent entered
into a credit agreement (the "Senior Credit Facilities") with certain financial
institutions to be parties thereto as lenders (the "Lenders") and The Chase
Manhattan Bank ("Chase Bank"), as administrative agent. The Senior Credit
Facilities are comprised of a $100.0 million revolving credit facility (the
"Revolving Credit Facility") maturing in 2005, and a term loan facility
aggregating $435.0 million, consisting of a Tranche B term loan facility
aggregating $200.0 million (the "Tranche B Term Loan") which matures in 2006 and
a Tranche C term loan facility aggregating $235.0 million (the "Tranche C Term
Loan" and, together with the Tranche B Term Loan, the "Term Loans") which
matures in 2007. The Tranche B Term Loan will amortize at the rate of $1.0
million per year for years one through five, $20.0 million for year six, $75.0
million for year seven and $100.0 million for year eight, and the Tranche C Term
Loan will amortize at the rate of $1.0 million per year for years one through
eight and $227.0 million for year nine. The borrowings under the Term Loans,
together with the aggregate gross proceeds from the issuance of the Notes,
borrowings under the Revolving Credit Facility and proceeds from the Vectura
Cash Contribution, were used to consummate the Recapitalization, to assume and
repay the Vectura Debt and to pay fees and expenses in connection with the
Transactions. In addition, the Revolving Credit Facility provides a source of
financing for future working capital and other general corporate purposes. See
"Description of the Senior Credit Facilities."
23
<PAGE> 29
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Issuers'
obligations under the Registration Rights Agreement. The Issuers will not
receive any cash proceeds from the issuance of the Exchange Notes in the
Exchange Offer. The aggregate gross cash proceeds from the issuance of the
Notes, together with the borrowings under the Term Loans, borrowings under the
Revolving Credit Facility and cash proceeds from the Vectura Cash Contribution,
were used to fund the cash payments and debt assumption and repayment
contemplated by the Recapitalization Agreement and pay fees and expenses in
connection with the Transactions. See "The Transactions."
<TABLE>
<CAPTION>
AMOUNT
-------------
(IN MILLIONS)
<S> <C>
SOURCES OF FUNDS
Senior Credit Facilities(1)
Tranche B Term Loan.................................... $200.0
Tranche C Term Loan.................................... 235.0
Revolving Credit Facility.............................. 10.0
10 1/4% Senior Notes due 2008............................... 300.0
Parent Senior Preferred Membership Interests(2)............. 115.0
Parent Junior Preferred Membership Interests(2)............. 40.0
Parent Senior Common Membership Interests(2)................ 3.4
Parent Junior Common Membership Interests(2)................ 0.4
Vectura Cash Contribution to the Parent(3).................. 60.0
------
Total sources of funds............................ $963.8
======
USES OF FUNDS
Recapitalization(4)......................................... $851.3
Consideration for NMI Contribution(5)....................... 78.9
Estimated fees and expenses of the Transactions............. 27.5
Working capital............................................. 6.1
------
Total uses of funds............................... $963.8
======
</TABLE>
- ---------------
(1) The Company received commitments of up to $535.0 million for the Senior
Credit Facilities, of which $100.0 million are in the form of a Revolving
Credit Facility and $435.0 million are in the form of Term Loans, consisting
of a $200.0 million Tranche B Term Loan and a $235.0 million Tranche C Term
Loan. At June 30, 1998, the Company had drawn $435.0 million under the Term
Loans and had $10.0 million outstanding under the Revolving Credit Facility.
See "Description of the Senior Credit Facilities."
(2) Represents non-cash consideration. See "The Transactions."
(3) Reflects the issuance of $59.4 million of Junior Preferred Membership
Interests and $0.6 million of Junior Common Membership Interests in exchange
for a cash capital contribution of approximately $60 million. See "The
Transactions."
(4) Includes $696.3 million in cash proceeds (comprised of $695.0 million plus
$1.3 million which represents an estimated adjustment for working capital to
be finalized) and $155.0 million of non-cash consideration in the form of
membership interests to CSX Brown. See "The Transactions."
(5) Includes $75.0 million of cash to repay assumed debt and $3.9 million of
non-cash consideration in the form of membership interests in respect of the
NMI Contribution. See "The Transactions."
24
<PAGE> 30
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
26, 1998, as adjusted to give effect to the Transactions, including the sale of
the Notes pursuant to the Offering, as if they had occurred on June 26, 1998.
This table should be read in conjunction with the "Unaudited Pro Forma Combined
Financial Data," "Selected Historical Consolidated Financial Data" and the
consolidated historical financial statements of the Company and notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
JUNE 26, 1998
---------------------
(IN MILLIONS)
<S> <C>
Long-term debt:
Senior Credit Facilities:
Tranche B Term Loan(1)................................. $200.0
Tranche C Term Loan(2)................................. 235.0
Revolving Credit Facility(3)........................... 10.0
10 1/4% Senior Notes due 2008............................. 300.0
------
Total long-term debt(4)........................... 745.0
------
Member's Equity(5)
Membership interest....................................... 218.9
Other capital............................................. 150.2
Deficit................................................... (512.4)
------
Total member's deficit............................ (143.3)
------
Total capitalization.............................. $601.7
======
</TABLE>
- ---------------
(1) The Tranche B Term Loan will amortize at the rate of $1.0 million per year
for years one through five, $20.0 million for year six, $75.0 million for
year seven and $100.0 million for year eight, resulting in a
weighted-average life of 7.3 years.
(2) The Tranche C Term Loan will amortize at the rate of $1.0 million per year
for years one through eight and $227.0 million for year nine resulting in a
weighted-average life of 8.8 years.
(3) The Revolving Credit Facility provides for revolving loans in the aggregate
principal amount of $100.0 million, matures in 2005. At closing, $10.0
million was drawn under the Revolving Credit Facility.
(4) Total long-term debt is net of $24.4 million of Terminal Revenue Refunding
Bonds which were defeased with funds invested in U.S. government obligations
deposited in an irrevocable trust.
(5) See "The Transactions" and "Use of Proceeds."
25
<PAGE> 31
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following unaudited pro forma combined financial data have been
prepared by applying pro forma adjustments to the financial statements of
American Commercial Lines LLC (an indirect wholly owned subsidiary of CSX) and
subsidiaries included elsewhere in this Registration Statement. The unaudited
pro forma combined condensed statements of operations for the periods presented
give pro forma effect to the Transactions as if they had been consummated as of
December 28, 1996 and exclude certain nonrecurring items directly attributable
to the Transactions. The unaudited pro forma combined condensed balance sheet
gives pro forma effect to the Transactions as if they were consummated on June
26, 1998.
The pro forma adjustments are described in the accompanying notes and are
based upon available information and upon certain assumptions deemed reasonable
by management. The unaudited pro forma combined financial data should be read in
conjunction with the financial statements (including the notes thereto)
appearing elsewhere in this Prospectus.
The unaudited pro forma combined financial data are provided for
informational purposes only and should not be considered indicative of actual
results that would have been achieved had the Transactions been consummated on
the date or for the periods indicated and do not purport to indicate the balance
sheet data or results of operations as of any future date or for any future
period.
The pro forma adjustments reflect the Transactions as a recapitalization of
the Company and the acquisition of the assets of NMI Holdings using the purchase
method of accounting.
26
<PAGE> 32
AMERICAN COMMERCIAL LINES LLC
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 26, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EXCLUDED
EXCLUDED RECAPITALIZATION HISTORICAL ASSETS AND
HISTORICAL ASSETS AND PRO FORMA PRO FORMA VECTURA LIABILITIES
ACL LIABILITIES ADJUSTMENTS ACL GROUP, INC. AND OTHER
---------- ----------- ---------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents........... $4,396 (4,989)(a) $805,047(c) $81,102 $4,378 $(3,533)(g)
(722,000)(c) 1(h)
(1,352)(c)
Accounts Receivable, Net............ 68,266 68,266 20,099 (2,208)(g)
Materials and Supplies.............. 50,466 (8,572)(b) 41,894 2,707 (233)(g)
Deferred Income Taxes............... 1,288 (1,288)(f) --
Other Current Assets................ 10,847 214(a) 11,061 4,685 (2,483)(g)
90(h)
-------- --------- --------- -------- -------- --------
Total Current Assets.............. 135,263 (14,635) 81,695 202,323 31,869 (8,366)
Properties-Net....................... 457,341 (3,242)(b) 454,099 77,761 (1,430)(g)
18,689(h)
Restricted Investments............... 26,128 26,128
Pension Asset........................ 20,265 20,265
Other Assets......................... 32,586 24,500(d) 57,086 4,491 (1,312)(g)
(1,937)(h)
-------- --------- --------- -------- -------- --------
Total Assets...................... $671,583 $(17,877) $106,195 $759,901 $114,121 $5,644
======== ========= ========= ======== ======== ========
LIABILITIES
Current Liabilities
Accounts Payable.................... $13,465 $13,465 $20,718 $(1,245)(g)
(17)(h)
Accrued Payroll and Fringe
Benefits.......................... 15,516 (124)(a) 15,392 7,577 (701)(g)
15(h)
Due to Affiliates................... 18,329 (16,377)(a) 1,952
Short-Term Borrowings from
Affiliates........................ 74,656 (74,656)(a) --
Short-Term Borrowings............... 10,000(c) 10,000
Current Portion of Long-Term Debt... 2,000(c) 2,000 20,473 (1,553)(g)
2,050(h)
Other Current Liabilities........... 49,507 (5,231)(a) 44,276
-------- --------- --------- -------- -------- --------
Total Current Liabilities......... 171,473 (96,388) 12,000 87,085 48,768 (1,451)
Long-Term Note Payable to
Affiliate........................... 56,000 (56,000)(a) --
Deferred Income Taxes................ 7,778 (7,778)(f) --
Long-Term Debt....................... 41,504 (17,104)(a) 733,000(c) 757,400 38,231 (2,396)(g)
13,258(h)
Pension Liability.................... 24,158 24,158
Other Long-Term Liabilities.......... 40,854 (2,400)(a) 38,454 15,061 (9,142)(g)
542(h)
-------- --------- --------- -------- -------- --------
Total Liabilities................. 341,767 (179,670) 745,000 907,097 102,060 811
MANDATORILY REDEEMABLE PREFERRED
STOCK............................... 4,083 (4,083)(g)
STOCKHOLDER'S EQUITY/MEMBER'S EQUITY
Member's Equity..................... 6,006 (6,006)(e) 215,047
155,000(e)
60,047(c)
Common Stock........................ -- -- 1
Other Capital....................... 141,271 6,490(f) (1,352)(c) 150,218 45 7,920(g)
(11,814)(b) (2,500)(d) 996(h)
167,117(a) (148,994)(e)
Retained Earnings (Deficit)......... 182,539 (695,000)(e) (512,461) 7,932
-------- --------- --------- -------- -------- --------
Total Stockholder's
Equity/Member's Equity.......... 329,816 161,793 (638,805) (147,196) 7,978 8,916
-------- --------- --------- -------- -------- --------
Total Liabilities, Mandatorily
Redeemable Preferred Stock and
Stockholder's Equity/Member's
Equity.......................... $671,583 $(17,877) $106,195 $759,901 $114,121 $5,644
======== ========= ========= ======== ======== ========
<CAPTION>
ACQUISITION
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents........... $(75,500)(i) $6,448
Accounts Receivable, Net............ 86,157
Materials and Supplies.............. 44,368
Deferred Income Taxes............... --
Other Current Assets................ 13,353
--------- ---------
Total Current Assets.............. (75,500) 150,326
--
Properties-Net....................... (6,861)(j) 542,758
500(j)
Restricted Investments............... 26,128
Pension Asset........................ 20,265
Other Assets......................... (1,190)(j) 57,138
--------- ---------
Total Assets...................... $(83,051) $796,615
========= =========
LIABILITIES
Current Liabilities
Accounts Payable.................... (689)(i) $32,232
Accrued Payroll and Fringe
Benefits.......................... $1,100(k) 23,383
Due to Affiliates................... 1,952
Short-Term Borrowings from
Affiliates........................ --
Short-Term Borrowings............... 10,000
Current Portion of Long-Term Debt... (20,970)(i) 2,000
Other Current Liabilities........... 44,276
--------- ---------
Total Current Liabilities......... (20,559) 113,843
Long-Term Note Payable to
Affiliate........................... --
Deferred Income Taxes................ --
Long-Term Debt....................... (49,093)(i) 757,400
Pension Liability.................... 24,158
Other Long-Term Liabilities.......... (400)(i) 44,515
--------- ---------
Total Liabilities................. (70,052) 939,916
MANDATORILY REDEEMABLE PREFERRED
STOCK............................... --
STOCKHOLDER'S EQUITY/MEMBER'S EQUITY
Member's Equity..................... 3,895(e) 218,942
Common Stock........................ (1)(l) --
Other Capital....................... (8,961)(l) 150,218
Retained Earnings (Deficit)......... (7,932)(l) (512,461)
--------- ---------
Total Stockholder's
Equity/Member's Equity.......... (12,999) (143,301)
--------- ---------
Total Liabilities, Mandatorily
Redeemable Preferred Stock and
Stockholder's Equity/Member's
Equity.......................... $(83,051) $796,615
========= =========
</TABLE>
27
<PAGE> 33
AMERICAN COMMERCIAL LINES LLC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) Represents the elimination of the intercompany borrowing from CSX, retained
liabilities under certain stock incentive plans maintained by CSX and
certain other indebtedness, including related accrued interest as set forth
in the Recapitalization Agreement. This adjustment also includes the
transfer of liabilities from CSX to ACL arising under certain employee
savings plans.
(b) Under the Recapitalization Agreement, barges with a book value of
approximately $11.8 million will be transferred to an affiliate of CSX and
leased back by ACL.
(c) Recapitalization
<TABLE>
<CAPTION>
TOTAL
---------
<S> <C> <C> <C>
Total Sources of Cash:
Borrowings under Tranche B Term Loan........... $ 200,000
Borrowings under Tranche C Term Loan........... 235,000
Proceeds from issuance of Senior Notes......... 300,000
Borrowings under the Revolving Credit
Facility..................................... 10,000
---------
Total Borrowings............................... 745,000
Issuance of Membership Interests............... 60,047
---------
$ 805,047
=========
</TABLE>
<TABLE>
<CAPTION>
RECAPITALIZATION ACQUISITION
PRO FORMA PRO FORMA TOTAL
---------------- ----------- ---------
<S> <C> <C> <C>
Total Uses of Cash:
Cash to CSX.................................... $(695,000) $(695,000)
Payment of debt issuance costs and fees related
to the Recapitalization...................... (27,000) $ (500) (27,500)
Payment of NMI Debt............................ (75,000) (75,000)
Working Capital................................ (6,195) (6,195)
Working Capital payment to CSX per
Recapitalization Agreement................... (1,352) (1,352)
--------- -------- ---------
$(729,547) $(75,500) $(805,047)
========= ======== =========
</TABLE>
The Recapitalization Agreement provides for a cash adjustment based on
levels in working capital at ACL at the Closing relative to agreed target
levels. The estimated working capital adjustment at closing resulted in a
payment to CSX of $1,352. However, such amount is subject to final
determination of both ACL and NMI working capital amounts at closing.
(d) The allocation of estimated costs and fees are as follows:
<TABLE>
<CAPTION>
RECAPITALIZATION ACQUISITION
PRO FORMA PRO FORMA TOTAL
---------------- ----------- -------
<S> <C> <C> <C>
Debt issuance costs............................ $24,500 $24,500
Recapitalization fees.......................... 2,500 2,500
NMI Contribution............................... $ 500 500
------- ------ -------
$27,000 $ 500 $27,500
------- ------ -------
</TABLE>
28
<PAGE> 34
AMERICAN COMMERCIAL LINES LLC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET -- (CONTINUED)
<TABLE>
<S> <C>
(e) Reflects Recapitalization of Assets and Liabilities:
Issuance of Membership Interests to Parent:
As part of the recapitalization of ACL.................... $155,000
As part of the NMI Contribution........................... 3,895
Elimination of historical members' equity................... (6,006)
Adjustment to eliminate historical other capital due to
Recapitalization.......................................... (148,994)
</TABLE>
(f) Elimination of deferred U.S. Federal and state income taxes due to ACL's
status as a limited liability company, which passes through its U.S. (but
not foreign) taxable income to its members who are responsible for income
taxes on such taxable income.
(g) Elimination of certain assets and liabilities of Vectura which are to be
excluded from the NMI Contribution under the Recapitalization Agreement.
(h) Reflects acquisition of net assets of NBL, Inc. and the elimination of the
historical carrying amount of the investment.
(i) Reflects the following:
<TABLE>
<S> <C>
Repayment of existing long-term debt, including current
portion and accrued interest.............................. $70,752
Prepayment penalties related to retirement of long-term
debt...................................................... 3,913
Payment of other liabilities................................ 335
Estimated allocated costs and fees.......................... 500
-------
$75,500
=======
</TABLE>
29
<PAGE> 35
AMERICAN COMMERCIAL LINES LLC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET -- (CONTINUED)
(j) The NMI Contribution will be accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16. The purchase price is less than
the fair market value of the net assets being acquired, based upon
preliminary estimates of their fair market values. Given the nature of these
estimates and assumptions, the final allocation of the purchase price may
differ from the allocations as described below. A final allocation of the
purchase price will be performed when additional information concerning
asset and liability valuations becomes available. A reconciliation of the
allocation of the purchase price follows:
<TABLE>
<S> <C>
Purchase price:
Purchase price......................................... $3,895
Transaction costs and fees............................. 500
--------
Total............................................. $4,395
--------
Allocation of purchase price:
Existing book value of NMI............................. $16,894
Liabilities assumed.................................... (4,948)
Elimination of existing capitalized financing fees and
NBL Inc. goodwill..................................... (1,190)
Estimated decrease in property, plant and equipment to
adjust to purchase price.............................. (6,861)
Transaction costs and fees............................. 500
--------
Total purchase price.............................. $4,395
========
</TABLE>
The Recapitalization Agreement provides for a cash adjustment based on
levels of working capital at NMI at the Closing relative to agreed target
levels. The computation is interrelated to the working capital of ACL. The
estimated working capital adjustment amounts at closing reduced the
originally contemplated member's equity by $1,105 from $5,000 resulting in
a purchase price of $3,895. However, such amount is subject to final
determination of both ACL and NMI working capital amounts at closing.
(k) Reflects estimated severance costs for approximately 70 administrative and
operational employees resulting from closing NMI headquarters.
(l) Adjustments to reflect purchase accounting
<TABLE>
<S> <C>
Elimination of common stock................................. $(1)
Elimination of historical stockholder's equity.............. (8,961)
Elimination of retained earnings............................ (7,932)
</TABLE>
30
<PAGE> 36
AMERICAN COMMERCIAL LINES LLC
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 26, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EXCLUDED RECAPITALIZATION HISTORICAL EXCLUDED
HISTORICAL AND OTHER PRO FORMA PRO FORMA VECTURA OPERATIONS
ACL OPERATIONS ADJUSTMENTS ACL GROUP, INC. AND OTHER
---------- ---------- ---------------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE................. $618,233 $(4,861)(a) $613,372 $134,839 $(5,534)(f)
OPERATING EXPENSE
Materials, Supplies and Other.... 289,394 (2,718)(a) $(14,475)(b) 273,627 133,644 (5,603)(f)
1,426(e) (65,990)(g)
(3,827)(h)
Labor and Fringe Benefits........ 150,960 (4,887)(a) 365(b) 146,438 -- 36,102(g)
Fuel............................. 56,982 (15)(a) 56,967 -- 16,237(g)
Depreciation and Amortization.... 41,149 (208)(a) 40,615 -- 7,064(g)
(326)(d) 2,853(h)
Taxes, Other Than Income Taxes... 21,115 (357)(a) 20,758 -- (635)(f)
6,587(g)
-------- -------- -------- -------- -------- --------
559,600 (7,085) (14,110) 538,405 133,644 (7,212)
-------- -------- -------- -------- -------- --------
OPERATING INCOME.................. 58,633 2,224 14,110 74,967 1,195 1,678
OTHER EXPENSE (INCOME)
Interest Expense................. 3,720 (3,720)(a) 71,008(c) 71,008 6,828 (598)(f)
1,734(h)
Interest Expense, Affiliate...... 8,752 (8,752)(a) -- --
Other, Net....................... 1,930 6(a) 1,936 (4,097) 3,960(f)
(128)(h)
-------- -------- -------- -------- -------- --------
14,402 (12,466) 71,008 72,944 2,731 4,968
-------- -------- -------- -------- -------- --------
EARNINGS (LOSS) BEFORE INCOME
TAXES............................ 44,231 14,690 (56,898) 2,023 (1,536) (3,290)
INCOME TAXES...................... 18,287 (16,160)(a) 2,127 (3,953) 3,953(f)
-------- -------- -------- -------- -------- --------
NET EARNINGS (LOSS)............... $25,944 $30,850 $(56,898) $(104) $2,417 $(7,243)
======== ======== ======== ======== ======== ========
<CAPTION>
ACQUISITION
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
<S> <C> <C>
OPERATING REVENUE................. $742,677
OPERATING EXPENSE
Materials, Supplies and Other.... $(1,500)(i) 327,351
(3,000)(k)
Labor and Fringe Benefits........ (4,100)(k) 178,440
Fuel............................. (100)(i) 73,104
Depreciation and Amortization.... (999)(j) 49,533
Taxes, Other Than Income Taxes... 26,710
-------- --------
(9,699) 655,138
-------- --------
OPERATING INCOME.................. 9,699 87,539
OTHER EXPENSE (INCOME)
Interest Expense................. (7,964)(l) 71,008
Interest Expense, Affiliate...... --
Other, Net....................... (168)(m) 1,503
-------- --------
(8,132) 72,511
-------- --------
EARNINGS (LOSS) BEFORE INCOME
TAXES............................ 17,831 15,028
INCOME TAXES...................... 2,127
-------- --------
NET EARNINGS (LOSS)............... $17,831 $12,901
======== ========
</TABLE>
31
<PAGE> 37
AMERICAN COMMERCIAL LINES LLC
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 26, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EXCLUDED RECAPITALIZATION HISTORICAL EXCLUDED ACQUISITION
HISTORICAL OPERATIONS PRO FORMA PRO FORMA VECTURA OPERATIONS PRO FORMA
ACL AND OTHER ADJUSTMENTS ACL GROUP, INC. AND OTHER ADJUSTMENTS
---------- ---------- ---------------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE............... $266,858 $(1,660)(a) $265,198 $63,484 $(3,626)(f)
OPERATING EXPENSE
Materials, Supplies and
Other........................ 122,152 (814)(a) $(7,134)(b) 114,917 64,306 (3,019)(f) (750)(i)
713(e) (32,254)(g) (1,500)(k)
(11)(h)
Labor and Fringe Benefits...... 73,259 21(a) 182(b) 73,462 -- 16,963(g) (2,050)(k)
Fuel........................... 22,659 (14)(a) 22,645 -- 6,712(g) (50)(i)
Depreciation and
Amortization................. 20,569 (103)(a) 20,326 -- 4,906(g) (500)(j)
(140)(d) 1,457(h)
Taxes, Other Than Income
Taxes........................ 11,027 (200)(a) 10,827 -- (770)(f)
3,673(g)
-------- ------- -------- -------- ------- -------- -------
249,666 (537) (6,952) 242,177 64,306 (2,343) (4,850)
-------- ------- -------- -------- ------- -------- -------
OPERATING INCOME................ 17,192 (1,123) 6,952 23,021 (822) (1,283) 4,850
OTHER EXPENSE (INCOME)..........
Interest Expense............... 2,097 (2,097)(a) 35,504(c) 35,504 3,248 (185)(f) (3,858)(l)
795(h)
Interest Expense, Affiliate.... 3,971 (3,971)(a) -- --
Other, Net..................... 687 (150)(a) 537 372 (362)(f) (66)(m)
(118)(h)
-------- ------- -------- -------- ------- -------- -------
6,755 (6,218) 35,504 36,041 3,620 130 (3,924)
-------- ------- -------- -------- ------- -------- -------
EARNINGS (LOSS) BEFORE INCOME
TAXES.......................... 10,437 5,095 (28,552) (13,020) (4,442) (1,413) 8,774
INCOME TAXES.................... (62,225) 62,362(a) 137 (1,424) 1,424(f)
-------- ------- -------- -------- ------- -------- -------
NET EARNINGS (LOSS)............. $72,662 $(57,267) $(28,552) $(13,157) $(3,018) $(2,837) $8,774
======== ======= ======== ======== ======= ======== =======
<CAPTION>
PRO FORMA
---------
<S> <C>
OPERATING REVENUE............... $325,056
OPERATING EXPENSE
Materials, Supplies and
Other........................ 141,689
Labor and Fringe Benefits...... 88,375
Fuel........................... 29,307
Depreciation and
Amortization................. 26,189
Taxes, Other Than Income
Taxes........................ 13,730
--------
299,290
--------
OPERATING INCOME................ 25,766
OTHER EXPENSE (INCOME)..........
Interest Expense............... 35,504
Interest Expense, Affiliate....
Other, Net..................... 363
--------
35,867
--------
EARNINGS (LOSS) BEFORE INCOME
TAXES.......................... (10,101)
INCOME TAXES.................... 137
--------
NET EARNINGS (LOSS)............. $(10,238)
========
</TABLE>
32
<PAGE> 38
AMERICAN COMMERCIAL LINES LLC
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JUNE 26, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EXCLUDED RECAPITALIZATION HISTORICAL EXCLUDED
HISTORICAL AND OTHER PRO FORMA PRO FORMA VECTURA OPERATIONS
ACL OPERATIONS ADJUSTMENTS ACL GROUP, INC. AND OTHER
---------- ---------- ---------------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE................. $609,668 $(3,879)(a) $605,789 132,102 $(5,572)(f)
OPERATING EXPENSE
Materials, Supplies and Other.... 283,085 (2,171)(a) (14,373)(b) 267,967 130,574 (5,209)(f)
1,426(e) (63,835)(g)
(3,083)(h)
Labor and Fringe Benefits........ 152,201 (3,329)(a) 365(b) 149,237 -- 35,182(g)
Fuel............................. 49,302 (14)(a) 49,288 -- 14,565(g)
Depreciation and Amortization.... 41,589 (203)(a) 41,087 -- 7,663(g)
(299)(d) 2,873(h)
Taxes, Other Than Income Taxes... 21,217 (364)(a) 20,853 -- (946)(f)
6,425(g)
-------- -------- -------- -------- -------- --------
547,394 (4,954) (14,008) 528,432 130,574 (6,365)
-------- -------- -------- -------- -------- --------
OPERATING INCOME.................. 62,274 1,075 14,008 77,357 1,528 793
OTHER EXPENSE (INCOME)
Interest Expense................. 3,917 (3,917)(a) 71,008(c) 71,008 6,674 (492)(f)
1,638(h)
Interest Expense, Affiliate...... 8,457 (8,457)(a) -- --
Other, Net....................... 3,028 (309)(a) 2,719 (3,759) 3,697(f)
(253)(h)
-------- -------- -------- -------- -------- --------
15,402 (12,683) 71,008 73,727 2,915 4,590
-------- -------- -------- -------- -------- --------
EARNINGS (LOSS) BEFORE INCOME
TAXES............................ 46,872 13,758 (57,000) 3,630 (1,387) (3,797)
INCOME TAXES...................... (47,626) 49,494(a) 0 1,868 (3,799) 3,799(f)
-------- -------- -------- -------- -------- --------
NET EARNINGS (LOSS)............... $94,498 $(35,736) $(57,000) $1,762 $2,412 $(7,596)
======== ======== ======== ======== ======== ========
<CAPTION>
ACQUISITION
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
<S> <C> <C>
OPERATING REVENUE................. $732,319
OPERATING EXPENSE
Materials, Supplies and Other.... $ (1,500)(i) 321,914
(3,000)(k)
Labor and Fringe Benefits........ (4,100)(k) 180,319
Fuel............................. (100)(i) 63,753
Depreciation and Amortization.... (999)(j) 50,624
Taxes, Other Than Income Taxes... 26,332
-------- --------
(9,699) 642,942
-------- --------
OPERATING INCOME.................. 9,699 89,377
OTHER EXPENSE (INCOME)
Interest Expense................. (7,820)(l) 71,008
Interest Expense, Affiliate...... --
Other, Net....................... (122)(m) 2,282
-------- --------
(7,942) 73,290
-------- --------
EARNINGS (LOSS) BEFORE INCOME
TAXES............................ 17,641 16,087
INCOME TAXES...................... 1,868
-------- --------
NET EARNINGS (LOSS)............... $17,641 $14,219
======== ========
</TABLE>
33
<PAGE> 39
AMERICAN COMMERCIAL LINES LLC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) Represents the elimination of the results of operations of ACL's wholly
owned subsidiary, Curtis Bay Company, certain terminal operations which will
be retained by CSX or an affiliate, certain stock incentive plans maintained
by CSX, interest expense related to the debt excluded in the
Recapitalization and historical U.S. Federal and state income taxes due to
ACL's status as a limited liability company, which passes through its U.S.
(but not foreign) taxable income to its members who are responsible for
income taxes on such taxable income.
(b) Elimination of management fee charged by CSX, less estimated incremental
stand-alone operating costs as follows:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE
YEAR ENDED ENDED MONTHS ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
------------ ---------- ------------
<S> <C> <C> <C>
Elimination of management fee charged by CSX
for certain administrative services......... $(15,024) $(7,410) $(14,922)
Estimated additional administrative expense
increases................................... 914 458 914
-------- ------- --------
$(14,110) $(6,952) $(14,008)
======== ======= ========
</TABLE>
(c) Pro forma interest expense is reflected as follows:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE
YEAR ENDED ENDED MONTHS ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
------------ ---------- ------------
<S> <C> <C> <C>
$200 million Tranche B Term Loan at
LIBOR(5.69%) + 2.50% (8.19%)................ $16,380 $8,190 $16,380
$235 million Tranche C Term Loan at
LIBOR(5.69%) + 2.75% (8.44%)................ 19,834 9,917 19,834
$300 million Senior Notes at an assumed rate
of 10.25%................................... 30,750 15,375 30,750
$10 million draw on the Revolving Credit
Facility at LIBOR (5.69%) + 2.25% (7.94%)... 794 397 794
Commitment fee of 0.5% on undrawn portion of
Revolving Credit Facility................... 450 225 450
------- ------- -------
68,208 34,104 68,208
Amortization of debt issuance costs of
$24,500..................................... 2,800 1,400 2,800
------- ------- -------
$71,008 $35,504 $71,008
======= ======= =======
</TABLE>
(d) Elimination of amortization expense associated with debt costs which have
been written off:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE
YEAR ENDED ENDED MONTHS ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
------------ ---------- ------------
<S> <C> <C> <C>
$326 $140 $299
==== ==== ====
</TABLE>
34
<PAGE> 40
AMERICAN COMMERCIAL LINES LLC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(e) Cost associated with rental of barges from CSX under operating lease:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
$1,426 $713 $1,426
====== ==== ======
</TABLE>
(f) Represents the elimination of the operating results of certain subsidiaries
excluded from NMI Contribution under the Recapitalization Agreement. The
adjustments include the elimination of all intercompany transactions between
the subsidiaries and historical U.S. Federal and state income taxes due to
NMI's status as a limited liability company which passes through its U.S.
Federal and state (but not foreign) taxable income to its members who are
responsible for income taxes on such taxable income.
(g) Reclassification in order to conform to ACL presentation.
(h) Reflects consolidation of individual operations of NBL, Inc. and the
elimination of the historical carrying value of non-consolidated operations.
(i) Reflects the following recurring operational cost savings:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Purchase discounts from ACL lube oil vendor
extended to NMI........................... $200 $100 $200
Elimination of duplicate fleet locations and
operations................................ 1,400 700 1,400
------ ---- ------
$1,600 $800 $1,600
====== ==== ======
</TABLE>
(j) Reflects the adjustment to depreciation expense resulting from decrease of
$6,361 in property, plant and equipment, primarily barges and boats, from
historical carrying values and amortization expense of NBL, Inc. goodwill.
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
----------------- -------------- -------------
<S> <C> <C> <C>
Reduction of depreciation resulting
from purchase accounting............. $795 $398 $795
Reduction of historical amortization of
goodwill............................. 204 102 204
---- ---- ----
$999 $500 $999
==== ==== ====
</TABLE>
35
<PAGE> 41
AMERICAN COMMERCIAL LINES LLC
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(k) Reflects the following estimated recurring administrative cost savings:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Elimination of duplicate NMI general and
administrative costs, including workforce
reductions of approximately 70 employees,
reduced occupancy expenses and
professional fees and the management fee
paid by NMI to Vectura.................... $7,900 $3,950 $7,900
NMI headquarters building rent during
transition period prior to facility
closing................................... (300) (150) (300)
Personnel costs of certain NMI employees
covered under employment agreements....... (500) (250) (500)
------ ------ ------
$7,100 $3,550 $7,100
====== ====== ======
</TABLE>
(l) Elimination of interest expense on repayment of NMI Debt.
(m) Elimination of amortization expense associated with the debt costs that have
been written off:
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 26, JUNE 26, JUNE 26,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
$168 $66 $122
==== === ====
</TABLE>
36
<PAGE> 42
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data of the Company for the five years ended December 31, 1993, December 30,
1994, December 29, 1995, December 27, 1996 and December 26, 1997. The selected
historical consolidated financial data as of and for the five years ended
December 31, 1993, December 30, 1994, December 29, 1995, December 27, 1996 and
December 26, 1997 were derived from the audited consolidated financial
statements of the Company which for the three years ended December 29, 1995,
December 27, 1996 and December 26, 1997 are included elsewhere in this
Registration Statement, together with the report thereon of Ernst & Young LLP,
independent auditors. The selected historical interim financial data of ACL as
of and for the six months ended June 27, 1997 and June 26, 1998 were derived
from the unaudited consolidated financial statements of ACL for such periods,
which, in the opinion of management of ACL, reflect all adjustments necessary to
present fairly the financial position and results of operations for the periods
presented, such adjustments being of a normal recurring nature. Other operating
data is derived from non-financial information maintained by the Company. The
following table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the historical
consolidated financial statements and the notes thereto of ACL included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
---------------------------------------------------- -------------------
DEC. 31, DEC. 30, DEC. 29, DEC. 27, DEC. 26, JUNE 27, JUNE 26,
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Operating revenue...................... $417,234 $448,653 $553,582 $622,140 $618,233 $275,423 $266,858
Operating expense...................... 380,790 393,273 458,126 521,476 559,600 261,872 249,666
Operating income....................... 36,444 55,380 95,456 100,664 58,633 13,551 17,192
Other expense.......................... 2,369 1,446 1,808 2,726 1,930 (411) 687
Interest expense....................... 15,654 13,712 11,385 11,780 12,472 6,166 6,068
Earnings before income taxes........... 18,421 40,222 82,263 86,158 44,231 7,796 10,437
Income tax expense (benefit)........... 8,384 15,006 30,861 28,733 18,287 3,688 (62,225)
Net earnings........................... 10,037 25,216 51,402 57,425 25,944 4,108 72,662
OTHER OPERATING DATA:
Towboats (at period end)............... 134 128 127 148 145 147 145
Barges (at period end)................. 3,353 3,295 3,228 3,718 3,818 3,778 3,833
Ton-miles (millions, for period
ended)............................... 45,472 51,274 52,235 55,842 56,026 27,219 26,811
Tonnage (thousands, for period
ended)............................... 54,205 59,204 61,055 64,929 65,998 31,989 31,725
OTHER FINANCIAL DATA:
EBITDA(1).............................. $63,914 $86,208 $126,208 $135,419 $97,852 34,091 37,074
Depreciation and amortization.......... 29,839 32,274 32,560 37,481 41,149 20,129 20,569
Property additions..................... 10,448 11,950 33,425 90,551 51,500 38,212 25,034
Net cash provided (used) by:
Operating activities................. 47,890 42,820 99,080 113,620 52,069 (4,337) 12,673
Investing activities................. (15,940) (12,271) (36,504) (93,655) (49,300) (42,050) (51,022)
Financing activities................. (22,411) (26,278) (36,226) (52,484) (28,134) 38,262 43,826
Ratio of earnings to fixed charges(2).... 2.0x 3.4x 6.9x 5.8x 3.3x 1.8x 2.1x
STATEMENT OF FINANCIAL POSITION DATA (AT
PERIOD END):
Cash and cash equivalents.............. $26,182 $30,453 $56,803 $24,284 $(1,081) (679) 4,396
Working capital........................ 38,750 57,471 71,291 21,005 7,445 (19,298) (36,210)
Properties -- net...................... 422,692 394,115 394,717 449,221 460,295 467,835 457,341
Total assets........................... 612,397 607,699 658,499 667,095 632,132 656,763 671,583
Long-term debt, including current
portion.............................. 69,802 61,724 57,198 52,714 48,230 50,472 45,988
Shareholder's equity/member's equity... 236,814 255,030 285,932 292,557 299,501 287,166 329,816
</TABLE>
- ---------------
(1) EBITDA represents earnings before interest, income taxes, depreciation and
amortization. EBITDA is presented because management believes it is a widely
accepted financial indicator used by certain investors and securities
analysts to analyze and compare companies on the basis of operating
performance. EBITDA is not intended to represent cash flows for the period,
nor has it been presented as an alternative to operating income as an
indicator of operating performance and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
generally accepted accounting principles. The Company understands that while
EBITDA is frequently used by securities analysts in the evaluation of
companies, EBITDA, as used herein, is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the method of calculation. See the historical financial
statements of ACL and the related notes thereto included elsewhere herein.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings before income taxes plus interest expense on
indebtedness, amortization of debt discount, the interest portion of fixed
rent expense, and undistributed earnings of affiliates accounted for using
the equity method. Fixed charges include interest on indebtedness (whether
expensed or capitalized), amortization of debt discount, and the interest
portion of fixed rent expense.
37
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations covers periods before the completion of the Transactions. In
connection with the Transactions, the Company entered into financing
arrangements and altered its capital structure. The results of operations and
financial condition for the periods subsequent to the consummation of the
Transactions will not necessarily be comparable to prior periods. See "The
Transactions," "Unaudited Pro Forma Combined Financial Data," "Selected
Historical Consolidated Financial Data", "Description of the Senior Credit
Facilities" and the audited financial statements and notes thereto included
elsewhere in this Prospectus.
OVERVIEW
ACL is an integrated marine transportation and service company, providing
barge transportation services. The Company supports its barging operations by
providing towboat and barge design and construction, terminal services and
ship-to-shore voice and data telecommunications services to the Company and
third parties. The Company is the leading provider of river barge transportation
throughout the Inland Waterways. In addition, since expanding its barge
transportation operations to South America in 1993, the Company has become the
leading provider of barge transportation services on the Orinoco River in
Venezuela and the Parana/Paraguay River system serving Argentina, Brazil,
Paraguay, Uruguay and Bolivia.
ACL derives its revenues primarily from the transportation of grain, coal,
steel and other bulk cargo and liquids in the United States and South America.
While the Company's customer base has remained relatively stable and certain of
its operations provide relatively steady rate levels and profit margins, its
results of operations can be impacted by a variety of external factors. ACL
seeks to enter into multi-year contracts at fixed prices (with inflation-indexed
escalation and fuel adjustment clauses) with its customers. Approximately 49% of
contracts, in tonnage terms, that will be in effect as of July 1, 1998 will be
for periods of greater than 18 months. As of July 1, 1998, ACL had contracted to
transport 69 million tons domestically in 1998, of which 64 million tons are
fixed as to price. The factors that can impact results include fluctuations in
rates for shipping grain, which in turn affect rates for shipping other dry
cargoes, weather and river conditions and fluctuations in fuel prices. Although
revenues from the Company's international operations are denominated in U.S.
dollars, the Company's results could be impacted by currency fluctuations.
The Company historically has pursued a strategy of growth through strategic
acquisitions and its results of operations have been significantly enhanced
thereby. The Company intends to continue to pursue a strategy of growth,
domestically through acquisitions and internationally by establishing operations
to serve customers along river systems outside the United States. ACL's
acquisitions have included SCNO Barge Lines in 1988, Hines, Inc. in 1991, The
Valley Line Company in 1992 and Continental Grain's barging operations in 1996.
As part of the Transactions, the Company will be integrating the operations of
NMI with its own operations. The size of ACL's fleet over the past three years,
and on a pro forma basis to reflect the NMI operations, is as follows:
DOMESTIC AND INTERNATIONAL FLEET
<TABLE>
<CAPTION>
PRO FORMA
DEC. 29, 1995 DEC. 27, 1996 DEC. 26, 1997 DEC. 26, 1997(1)
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Barges
Covered hoppers........ 2,068 2,615 2,758 3,218
Open hoppers........... 924 865 811 857
Tankers................ 236 238 249 465
----- ----- ----- -----
Total............... 3,228 3,718 3,818 4,540
===== ===== ===== =====
Towboats................. 127 148 145 201
</TABLE>
- ---------------
(1) Reflects the addition of NMI fleet.
38
<PAGE> 44
The average age of the Company's domestic barge fleet is 18.5 years,
compared with an industry average of 15.8 years. These barges have an expected
life of approximately 25 to 30 years. In addition, ACL operates 189 towboats
domestically, with an average age of approximately 23 years. The Company expects
to incur significant capital expenditures in the future to maintain or grow the
size of its fleet. See "-- Liquidity and Capital Resources."
The Company intends to rapidly integrate the operations of NMI with those
of the Company. Vectura reported operating revenue (including in respect of NMI)
of $185.6 million, $141.6 million and $134.8 million during 1995, 1996 and 1997,
respectively, a loss from continuing operations before income taxes of $1.0
million and $1.5 million in 1995 and 1997, respectively, and income from
continuing operations before income taxes of $1.1 million in 1996. See
"Unaudited Pro Forma Combined Financial Data" for figures representing excluded
operations of Vectura not being combined as part of the NMI Contribution.
The Company's operations are conducted through a limited liability company,
as a result of which ACL will not itself generally be subject to U.S. Federal or
state income tax. Taxable income will be allocated to the equity holders of the
Parent and such holders will be responsible for income taxes on such taxable
income. The Company intends to make distributions to the Parent which, in turn,
will make distributions to its equity holders to enable them to meet all or a
portion of their tax obligations with respect to taxable income allocated to
them by the Company. The Limited Liability Company Agreement of the Parent (the
"LLC Agreement") reduces the amount of tax distributions to CSX (or its
affiliate) during the first nine years, which may make additional funds
available for use by the Company, subject to the discretion of the Parent.
Notwithstanding the foregoing, in certain circumstances the tax distribution
provisions of the LLC Agreement permit distributions which could exceed the
combined Federal, state, local and foreign income taxes that would be payable
with respect to taxable income of the Company for any given period if the
Company were a Delaware corporation filing separate tax returns. Such
distributions are permitted under the Indenture. See "Certain Relationships and
Related Transactions".
Prior to the Recapitalization, ACL participated in CSX's cash management
plan through which the Company's excess cash was advanced to CSX for investment
and its cash needs were funded by CSX. In addition, the Company obtained
insurance coverage through an insurance company owned by CSX and paid management
service fees to CSX of $14.5 million, $15.2 million and $15.0 million in 1995,
1996 and 1997, respectively. The Company anticipates that costs for
administrative services in the future will be approximately $1 million per year.
In connection with the Transactions all intercompany indebtedness was repaid,
and the Company incurred substantial third-party indebtedness. See "-- Liquidity
and Capital Resources -- Post-Transactions."
One of the Company's electric utility customers is in Chapter 11
proceedings. The contract with such customer for the transportation of coal is
at attractive margins. The Company expects that the contract will be
restructured during 1999 as a long-term contract having a term of at least 5
years as part of such proceedings, and that as a result the revenue from such
contract could be reduced by up to $12 to $16 million annually.
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<PAGE> 45
RESULTS OF OPERATIONS
The following table sets forth certain condensed historical financial data
for the Company expressed as a percentage of operating revenue for each of the
three most recent fiscal years and for each of the two most recent first fiscal
quarters:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
------------------------------ -------------------
DEC. 29, DEC. 27, DEC. 26, JUNE 27, JUNE 26,
1995 1996 1997 1997 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Operating revenue................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expense................................... 82.8 83.8 90.5 95.1 93.6
----- ----- ----- ----- -----
Operating income.................................... 17.2 16.2 9.5 4.9 6.4
Other expense (income).............................. 0.2 0.5 0.3 (0.1) 0.3
Interest expense.................................... 2.1 1.9 2.0 2.2 2.3
----- ----- ----- ----- -----
Earnings before income taxes........................ 14.9 13.8 7.2 2.8 3.9
Income taxes........................................ 5.6 4.6 3.0 1.3 (23.3)
----- ----- ----- ----- -----
Net earnings........................................ 9.3% 9.2% 4.2% 1.5% 27.2%
===== ===== ===== ===== =====
</TABLE>
SIX MONTHS ENDED JUNE 26, 1998 COMPARED TO SIX MONTHS ENDED JUNE 27, 1997
Operating Revenue. Operating revenue for the six months ended June 26,
1998 decreased $8.6 million or 3.1% to $266.9 million from $275.4 million for
the same period in 1997. This decrease was primarily due to a reduction in
domestic rates and ton-miles, partially offset by increased sales to third-party
customers at Jeffboat and an increase in international volume. The reduction in
rates was primarily due to decreased demand for U.S. grain exports resulting
from increased production by foreign producers which negatively impacted rate
per ton for dry cargo generally. The decrease in domestic ton-miles was due in
part to adverse river conditions in early 1998, including extended periods of
high water on the Mississippi River, and in part to reduced grain exports.
Operating Expense. Operating expense for the six months ended June 26,
1998 decreased $12.2 million, or 4.7%, to $249.7 million from $261.9 million.
This decrease was primarily due to lower domestic barging expenses, partially
offset by increased volume-related expenses for Jeffboat and international
barging. The decrease in domestic barging expenses was due to reduced levels of
barge repair, improved barge to towboat rations, and reduced use of third party
towing services. The Company also benefited from decreases in fuel prices and a
reduction in variable costs related to reduced ton-miles during the first half
of 1998.
Operating Income. Operating income for the six months ended June 26, 1998
increased $3.6 million to $17.2 million from $13.6 million for the same period
in 1997 due to the foregoing factors.
Other Expense (Income). Other expense for the six months ended June 26,
1998 increased $1.1 million to $0.7 million compared to income of $.4 million
for the same period in 1997. The increase is primarily due to an increase in
minority interest earnings in South America.
Earnings Before Income Taxes. Earnings before income taxes for the six
months ended June 26, 1998 increased $2.6 million to $10.4 million compared to
$7.8 million for the same period in 1997.
Income Taxes (Benefit). Income taxes for the six months ended June 26,
1998 decreased $65.9 million to a benefit of $62.2 million from an expense of
$3.7 million for the same period in 1997. The Company was reorganized as a
limited liability company in the second quarter of 1998. Due to the change in
the tax status, previously recognized deferred income taxes were reversed
resulting in a benefit of approximately $65 million.
Net Earnings. Net earnings for the six months ended June 26, 1998
increased $68.6 million to $72.7 million from $4.1 million for the same period
in 1997 due to the foregoing factors.
YEAR ENDED DECEMBER 26, 1997 COMPARED TO YEAR ENDED DECEMBER 27, 1996
Operating Revenue. Operating revenue for the year ended December 26, 1997
decreased $3.9 million, or 0.6%, to $618.2 million from $622.1 million for 1996.
This decrease was primarily due to a reduction in
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<PAGE> 46
domestic ton-miles and rate per ton, partially offset by an increase in
international ton-miles. The decrease in domestic ton-miles was due, in part, to
adverse river conditions, including severe flooding on the Ohio River and the
Upper Mississippi River during the first half of 1997 and, in part, to lower
volume driven by reduced U.S. grain exports primarily resulting from increased
grain production by foreign producers. During 1997, rates were also negatively
impacted by industry-wide vessel overcapacity. The reduction in grain exports
also negatively impacted rate per ton for dry cargo generally. Results in 1997
were positively impacted by increased revenues from sales to third-party
customers at Jeffboat.
Operating Expense. Operating expense for the year ended December 26, 1997
increased $38.1 million, or 7.3%, to $559.6 million from $521.5 million for
1996. This increase was primarily due to increased operating costs as a result
of ice and extreme flooding on the Ohio and Mississippi Rivers, including barge
repair and higher operating expenses associated with increased production levels
at Jeffboat and start-up costs in Argentina, partially offset by improved
productivity resulting from the Company's on-going cost control program and
lower fuel prices.
Operating Income. Operating income for the year ended December 26, 1997
decreased $42.1 million, or 42.0% to $58.6 million from $100.7 million for 1996
due to the foregoing factors.
Earnings Before Income Taxes. Earnings before income taxes for the year
ended December 26, 1997 decreased $42.0 million, or 48.7% to $44.2 million from
$86.2 million for 1996.
Income Taxes. Income taxes for the year ended December 26, 1997 decreased
$10.4 million, or 36.4%, to $18.3 million from $28.7 million for 1996. This
decrease was due to lower domestic earnings before income taxes.
Net Earnings. Net earnings for the year ended December 26, 1997 decreased
$31.5 million, or 54.9% to $25.9 million from $57.4 million for 1996.
YEAR ENDED DECEMBER 27, 1996 COMPARED TO YEAR ENDED DECEMBER 29, 1995
Operating Revenue. Operating revenue for the year ended December 27, 1996
increased $68.5 million, or 12.4%, to $622.1 million from $553.6 million for
1995. This increase was primarily due to increased tonnage hauled as a result of
the January 1996 acquisition of the barging operations of Continental Grain,
higher grain freight rates and revenues from operations in Argentina, which
commenced in 1996. Grain freight rates were positively impacted by greater U.S.
grain exports.
Operating Expense. Operating expense for the year ended December 27, 1996
increased $63.4 million, or 13.8%, to $521.5 million from $458.1 million for
1995. This increase was primarily due to increased expenses associated with the
Continental Grain barging operations and higher fuel prices and, to a lesser
extent, start-up costs in Argentina.
Operating Income. Operating income for the year ended December 27, 1996
increased $5.2 million, or 5.4%, to $100.7 million from $95.5 million for 1995,
due to the foregoing.
Earnings Before Income Taxes. Earnings before income taxes for the year
ended December 27, 1996 increased $3.9 million, or 4.7% to $86.2 million from
$82.3 million for 1995.
Income Taxes. Income taxes for the year ended December 27, 1996 decreased
$2.2 million, or 7.1%, to $28.7 million from $30.9 million for 1995. This
decrease was due to the effect of international tax planning initiatives.
Net Earnings. Net earnings for the year ended December 27, 1996 increased
$6.0 million, or 11.7% ,to $57.4 million from $51.4 million for 1995.
LIQUIDITY AND CAPITAL RESOURCES
Historical
Historically, the Company has used cash generated from operations to fund
capital expenditures and acquisitions, repay third-party and intercompany debt
and pay dividends.
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<PAGE> 47
Net cash provided by operating activities totaled $99.1 million, $113.6
million and $52.1 million for fiscal 1995, 1996 and 1997, respectively. The
decrease in net cash from operating activities in fiscal 1997 compared to fiscal
1996 was primarily attributable to a decrease in net earnings. The increase in
net cash from operating activities in fiscal 1996 compared to fiscal 1995 was
primarily attributable to an increase in net earnings.
Net cash from operating activities was used primarily for capital
expenditures. Expenditures were $33.4 million, $90.6 million and $51.5 million
in fiscal 1995, 1996 and 1997, respectively. Expenditures in 1997 included $24.0
million for domestic marine equipment and $18.5 million for expansion into
Argentina. Expenditures in 1996 included $31.0 million for domestic marine
equipment, $26.0 million for expansion into Argentina and $17.7 million for the
purchase of the barge assets of Continental Grain. In each of fiscal 1995, 1996
and 1997 net cash from operating activities was also used to pay cash dividends
to CSX ($20.5 million in 1995, $36.8 million in 1996 and $19.0 million in 1997),
and to repay affiliate and long-term debt.
Post-Transactions
The Company's principal sources of liquidity are cash flow generated from
combined operations and borrowings under the $100.0 million Revolving Credit
Facility. The Company's principal uses of capital are to meet debt service
requirements, finance the Company's capital expenditures and strategic
acquisitions and provide working capital. The Company expects that capital
expenditures in 1998 will be approximately $66 million, $25 million of which had
been spent as of June 30, 1998. Approximately half of the 1998 capital
expenditures has been allocated to international expansion. Similar expenditures
are expected in future years to fund international expansion. The Company
expects over the next five years to spend significant capital to replace an
average of 140 barges per year to maintain current fleet size and to spend
additional amounts as part of its growth strategy. If unable to fund such
replacement, the Company may be required to delay or forgo capital expenditures.
The Company expects that ongoing requirements for debt service, capital
expenditures and working capital will be funded by internally generated cash
flow from the combined operations after the Recapitalization and borrowings
under the Senior Credit Facilities.
The Company incurred substantial indebtedness in connection with the
Transactions. The Company has approximately $745.0 million of indebtedness as
compared to $21.6 million of third-party indebtedness and $67.2 million of
indebtedness owed to CSX at June 26, 1998. The Company's debt service
obligations could have important consequences to holders of the Exchange Notes.
See "Risk Factors." Indebtedness is net of $24.4 million of Terminal Revenue
Refunding Bonds which were defeased with funds invested in U.S. government
obligations deposited in an irrevocable trust.
In connection with the Transactions, the Company and the Parent entered
into the Senior Credit Facilities with the Lenders and Chase, as administrative
agent. The Senior Credit Facilities are comprised of the $100.0 million
Revolving Credit Facility maturing in 2005, and a term loan facility aggregating
$435.0 million, consisting of the Tranche B Term Loan of $200.0 million which
matures in 2006 and the Tranche C Term Loan of $235.0 million which matures in
2007. The Tranche B Term Loan will amortize at the rate of $1.0 million per year
for years one through five, $20.0 million for year six, $75.0 million for year
seven and $100.0 million for year eight, and the Tranche C Term Loan will
amortize at the rate of $1.0 million per year for years one through eight and
$227.0 million for year nine. The borrowings under the Term Loans, together with
the aggregate gross proceeds from the issuance of the Notes, borrowings under
the Revolving Credit Facility and proceeds from the Vectura Cash Contribution,
were used to consummate the Recapitalization and pay fees and expenses in
connection with the Transactions. The Revolving Credit Facility will provide
financing for future working capital and other general corporate purposes. See
"Description of the Senior Credit Facilities."
Based upon the current level of operations and anticipated growth,
including the NMI operations and cash flow that management expects to be derived
from those operations, management believes that future cash flow from
operations, together with available borrowings under the Senior Credit
Facilities, will be adequate to meet the Company's anticipated requirements for
capital expenditures (for fleet replacement and international expansion),
working capital, interest payments and scheduled principal payments. There can
be no assurance, however, that the Company's business, including the NMI
operations, will continue to generate sufficient cash flow from operations in
the future to service its debt and make necessary capital expenditures after
satisfying
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<PAGE> 48
liabilities arising in the ordinary course of business. If unable to do so, the
Company may be required to refinance all or a portion of its existing debt,
including the Exchange Notes, to sell assets, to obtain additional financing
(including, possibly, a capitalized lease program) or to lease, in lieu of
purchasing, additional marine equipment. There can be no assurance that any such
refinancing would be possible or that any such sales of assets or additional
financing could be achieved. See "Risk Factors."
BACKLOG
The Company's backlog represents firm orders for barge transportation and
marine equipment. The backlog at December 27, 1996 was $1,226.9 million and at
December 28, 1997 was $1,120.7 million. The backlog ranges from one to eleven
years, with approximately 34% expected to be filled within one year.
SEASONALITY
The Company's business is seasonal, and its quarterly revenues and profits
historically have been lower during the first and second fiscal quarters of the
year (January through June) and higher during the third and fourth fiscal
quarters (July through December) due to the fall grain harvest. In addition,
working capital requirements fluctuate throughout the year. Adverse market or
operating conditions during the last four months of the year could have a
greater effect on the Company's business, financial condition and results of
operations than during other periods.
ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive Federal, state and local
environmental laws and regulations which, among other things, specify
requirements for the management of oil, hazardous wastes, and hazardous
substances and impose liability for releases of these materials into the
environment. As is the case with others in the maritime industry, a release of
oil, hazardous waste, hazardous substances or other pollutants into the
environment at or by the Company's properties or vessels, as a result of the
Company's current or past operations, or at a facility to which the Company has
shipped wastes, or the existence of historical contamination at any of the
Company's properties, could result in material liability to the Company. The
Company endeavors to conduct its operations in a manner that it believes reduces
such risks. The Company is in discussions with the EPA, the DOJ and local law
enforcement authorities regarding alleged violations of various environmental
laws and has also been identified as a PRP with respect to the cleanup of
certain waste disposal sites. See "Risk Factors -- Company-Specific
Risks -- Environmental, Health and Safety Requirements."
Federal, state and local governments could in the future enact laws or
regulations concerning environmental matters that affect the Company's
operations or facilities, increase the Company's costs of operation, or
adversely affect the demand for the Company's services. The Company cannot
predict the effect that such future laws or regulations could have on the
Company. Nor can the Company predict what environmental conditions may be found
to exist at the Company's current or past facilities or at other properties
where the Company or its predecessors have arranged for the disposal of wastes
and the extent of liability that may result from the discovery of such
conditions. It is possible that such future laws or undiscovered conditions
could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company does not anticipate material
capital expenditures for environmental controls in the current or succeeding
fiscal year. See "Business -- Environmental Matters."
YEAR 2000 ISSUE
In mid-1997, the Company formed a Year 2000 project team to identify
information technology and non-technology systems that require modification for
the Year 2000. A project plan has been developed with goals and target dates.
The Company's business areas are in various stages of this project plan. Certain
changes to the project plan were made to accommodate the integration of the
operations of National Marine, Inc. The Company currently expects to have
substantially completed programming changes and internal testing of internal
mission critical computer systems by July 1999, and to have begun significant
enterprise
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<PAGE> 49
testing of mission critical systems in April 1999, with such enterprise testing
continuing through 1999. The Company currently expects to have substantially
completed remediation and testing of both information technology and non-
technology systems that the Company deems are of high business value and
priority by July 1999.
The Company incurred expenses of $0.9 million throughout 1997 and in the
first two quarters of 1998 related to this project, which represents
approximately 14% of its total information technology operating expense for the
related periods. The remaining cost of the Year 2000 project is presently
estimated at $2.6 million which will be expensed as incurred through 2000. A
portion of the total Year 2000 project expense is represented by existing staff
that has been or will be redeployed to this project. The Company does not
believe that the redeployment of existing staff will have a material adverse
effect on its business, results of operations or financial position. However,
the remaining cost and the date on which the Company believes it will complete
the Year 2000 project are based on management's current estimates, which are
derived utilizing numerous assumptions of future events including the continued
availability of certain staff resources, and are inherently uncertain.
As a part of its Year 2000 project, the Company is in communication with
its mission critical suppliers, large customers and financial institutions and
other significant third parties to assess their Year 2000 readiness. Risks
associated with any such third parties located outside the United States may be
higher insofar as it is generally believed that non-U.S. business may not be
addressing their Year 2000 issues on as timely a basis as U.S. businesses.
The Company believes its planning efforts are adequate to address its Year
2000 concerns. There can be no assurance, however, that the Company's efforts
will be successful in a task of this size and complexity. The Company is
currently assessing the consequences of its Year 2000 initiative not being
completed on schedule or its remediation efforts not being successful. Upon
completion of such assessment, the Company will begin contingency planning,
including efforts to address potential disruptions in third-party services, such
as telecommunications and electricity, on which the Company's systems and
operations rely. There can be no assurance that the Company's contingency plans
or its efforts with respect to third parties will prevent a material adverse
effect on the Company's business, results of operations or financial condition.
CHANGES IN ACCOUNTING STANDARDS
In 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information." This Statement requires that public business enterprises disclose
information about their products and services, operating segments, the
geographic areas in which they operate, and their major customers. Management
adopted the provisions of this Statement in 1997.
In 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained For Internal Use." This Statement requires
capitalization of (i) external direct costs of materials and services incurred
in developing or obtaining internal-use computer software; (ii) payroll and
payroll-related costs for employees who are directly associated with and who
devote time to the internal-use computer software project and (iii) interest
costs incurred in developing computer software for internal use. Costs that are
considered to be related to research and development activities would be
expensed as incurred. Similarly, training and maintenance costs would be
expensed, and allocations to amounts capitalized of general and administrative
or overhead costs would not be permitted. Management adopted this Statement with
early application in 1997 with no significant effect on the financial
statements.
In February 1998, the FASB issued Statement No. 132, "Employer's
Disclosures about Pensions and Other Postretirement Benefits." The Statement
supersedes the disclosure requirements in Statements No. 87, "Employer's
Accounting for Pensions", No. 88, "Accounting for Settlements and Curtailments
of Defined Benefit Plans and for Termination Benefits", and No. 106, "Employer's
Accounting for Postretirement Benefits Other Than Pensions." Statement No. 132
eliminates certain existing disclosure requirements, but at the same time adds
new disclosures. The Company will adopt the provisions of this Statement in
1998.
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In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income", which establishes new rules for the reporting of comprehensive income.
The purpose of reporting comprehensive income is to report all changes in equity
of an enterprise that result from recognized transactions and other economic
events of a period other than transactions with owners in their capacity as
owners. Statement No. 130 does not specify a format for the financial statement
that portrays the components of comprehensive income but requires that a Company
display an amount representing total comprehensive income for the periods
reported in the financial statement. The Company adopted Statement No. 130 in
the first quarter of 1998 but the adoption had no impact on the Company's
shareholder's equity or net earnings.
In April 1998, the AICPA issued Statement of Position No. 98-5, "Reporting
on the Costs of Start-Up Activities" (SOP 98-5) which requires costs of start-up
activities and organizational costs to be expensed as incurred. The Company has
historically expensed start-up costs. It will adopt SOP 98-5 in fiscal 1999, and
does not anticipate that it will have any significant impact on the Company's
financial statements.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. If
certain conditions are met, a derivative may be specifically designated as (a) a
hedge of the exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the exposure to
variable cash flows of a forecasted transaction, or (c) a hedge of the foreign
currency exposure of a net investment in a foreign operation, an unrecognized
firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. The accounting for changes
in the fair value of a derivative (that is, gains and losses) depends on the
intended use of the derivative and resulting designation. This statement is
effective for fiscal years beginning after June 15, 1999, but earlier
application is encouraged. The Company has not determined when it will adopt
Statement No. 133, but expects adoption will not have a significant effect on
its financial statements.
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<PAGE> 51
BUSINESS
GENERAL
ACL is an integrated marine transportation and service company, providing
barge transportation services. The principal cargoes carried are grain, coal,
steel and other bulk commodities and liquids. The Company supports its barging
operations by providing towboat and barge design and construction, terminal
services and ship-to-shore voice and data telecommunications services to the
Company and third parties. The Company is the leading provider of river barge
transportation throughout the inland United States and Gulf Intracoastal
Waterway Systems, which include the Mississippi, Illinois, Ohio, Tennessee and
the Missouri Rivers and their tributaries and the Intracoastal canals that
parallel the Gulf Coast (collectively, the "Inland Waterways"). In addition,
since expanding its barge transportation operations to South America in 1993,
the Company has become the leading provider of barge transportation services on
the Orinoco River in Venezuela and the Parana/Paraguay River system serving
Argentina, Brazil, Paraguay, Uruguay and Bolivia. The Company believes that its
leadership position provides it with significant competitive advantages in terms
of its ability to generate revenue, manage costs and expand its operations. For
the twelve months ended June 26, 1998, pro forma for the Transactions, the
Company generated operating revenue, EBITDA and adjusted EBITDA of $732.3
million, $137.7 million and $146.7 million, respectively.
The Company's barge fleet is the largest in the United States and comprises
approximately 19% of the total dry cargo and 16% of the liquid cargo barge
capacity in the United States. The Company's domestic barge fleet consists of
3,068 covered and 776 open barges which are used for the transportation of dry
cargo including grain, steel, coal and other bulk cargoes and 446 tankers which
are used for the transportation of a variety of chemicals, petroleum and edible
oils. The Company's barge fleet is supported by the largest towboat fleet in the
United States, consisting of 189 towboats. The Company believes that the size of
its towboat fleet allows it to minimize the amount of idle barge time, thereby
increasing revenue per barge. The international fleet consists of 114 covered
and 113 open hopper barges, 13 tankers, 7 deck barges and 12 towboats.
The Company, through its Jeffboat LLC ("Jeffboat") subsidiary, designs and
manufactures towboats and barges for the Company and third-party customers.
Through its American Commercial Terminals LLC ("ACT") subsidiary, which operates
16 river terminal sites along the Inland Waterways, the Company supports its
barging operations with transfer and warehousing capabilities for steel, bulk,
liquid and other general commodity products moving between barge, truck and
rail. Through its Louisiana Dock Company LLC ("LDC") subsidiary, the Company
operates 22 facilities throughout the Inland Waterways that provide fleeting,
shifting, cleaning and repair services for both towboats and barges, primarily
to the Company as well as to third-party customers. The Company, through its
Waterway Communications System LLC ("Watercom") subsidiary, is the premier
provider of automated ship-to-shore voice and data telecommunications services
throughout the Inland Waterways.
COMPANY STRENGTHS
The Company believes that it benefits from the following competitive
strengths:
Market Leadership. ACL is the premier provider of river barge
transportation in North America. The Company leads the industry in terms of
revenues, gross tons hauled and fleet size. ACL is the largest provider of dry
cargo transportation on the Inland Waterways, with leading positions in grain
and bulk cargo shipments. In addition, the Company is the second largest
provider of coal and liquid cargo river transportation. In recent years, ACL
also has become the leading provider of river barge transportation in South
America. The Company believes that its leadership position provides it with
significant competitive advantages in terms of its ability to generate revenues,
manage costs and expand its operations.
Full Service Fleet. ACL has the largest fleet on the Inland Waterways,
consisting of the largest number of hopper barges and towboats and the second
largest number of tankers in the industry. The Company's barge fleet is nearly
double the size of that of its largest competitor. The barge fleet meets all
current regulatory requirements and has already met the Federal requirement that
all tank barges be double-skinned by 2015. The size and diversity of ACL's fleet
allow it to service the most ports with the greatest frequency, thereby
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<PAGE> 52
providing superior customer service and maximizing profitable backhaul
opportunities. These advantages allow ACL to maximize the tonnage that a barge
can transport over a given time period, significantly enhancing the Company's
ability to generate revenues.
Long-standing Customer Relationships. ACL has a strong and diverse
customer base consisting of several of the leading industrial and agricultural
companies in the United States. The Company has a number of long-standing
customer relationships, with 20 of ACL's top 25 customers having been customers
of the Company for over 20 years. In many cases, these relationships have
resulted in multi-year contracts with these customers. Long-term contracts
generally provide for minimum tonnage or requirements guarantees, which allow
the Company to plan its logistics more effectively. A majority of the Company's
contracts for non-grain cargoes are also at a fixed price, increasing the
stability and predictability of operating revenue. As of July 1, 1998, ACL had
contracted to transport 69 million tons domestically in 1998, of which 64
million tons are fixed as to price.
Fully Integrated Operator. As a fully integrated inland river
transportation company, ACL believes it has a substantial cost advantage over
some of its competitors. Through effective coordination of its barging,
shipbuilding, terminals, fleeting, repair and communications services, ACL
reduces costs while maintaining each business unit's ability to generate
third-party revenues. In addition, the Company believes it is a technology
leader in the barging industry. ACL has made significant investments that allow
it to maximize operating efficiency through technologies such as real-time cargo
tracking. This investment in technology strengthens the Company's ability to
compete by lowering its cost structure and enhancing the quality of the services
and products provided.
Low Cost Operator. As a fully integrated operator, ACL believes it is able
to minimize costs through economies of scale and savings generated across its
vertically integrated business lines. In addition, the Company closely manages
operating expenses and continuously undertakes cost-cutting initiatives such as
a two-year staff review and restructuring effort, the adoption of best practices
and the utilization of process improvement teams. These initiatives have
resulted in aggregate first-year savings of at least $70 million since 1992.
Management believes that many of these savings are recurring in nature.
Successful Track Record of Integrating Acquisitions. Over the past several
years, ACL has been able to successfully complete and integrate multiple large
acquisitions, including SCNO Barge Lines, Inc., Hines, Inc., The Valley Line
Company and Continental Grain's barging operations. ACL believes that it will be
able to use this expertise to rapidly integrate the barge operations of NMI,
which are being combined with those of the Company as part of the
Recapitalization, permitting it to realize substantial synergies quickly. In
addition to the $17.7 million of synergies reflected in adjusted pro forma
EBITDA, ACL believes that the integration of NMI's operations into its fleet
will improve logistics and thus increase overall fleet capacity, resulting in
additional annual operating income of approximately $4 million by fiscal 1999.
The Company believes that its previous successes, combined with its size and
extensive organizational infrastructure, make it well-positioned to acquire
additional barging operators, thereby continuing to improve its cost structure
and service capability.
Management Experience. ACL's senior management team, which has an average
of 20 years with ACL and its affiliates and an average of more than 27 years of
transportation industry experience, is among the most qualified in the industry.
The management team has a detailed knowledge of each of the Company's businesses
and markets. Their knowledge and depth of experience will help ACL to continue
to improve its competitive position. In addition, the Management Investors will
own membership interests in the Parent.
BUSINESS STRATEGY
The Company's objective is to achieve stable earnings growth in its core
barging business as well as its shipbuilding, terminals and communications
operations. ACL will continue to build upon its reputation as a leader in the
inland river transportation industry. The key elements of the Company's strategy
are as follows:
Improve Operating Efficiency. ACL has focused its efforts on continuously
improving its cost structure and operating efficiency. As the largest and only
fully integrated barging company, ACL maintains a low cost structure through
economies of scale, investment in technology and savings generated from vertical
integration. In addition, ACL uses process improvement teams to target specific
areas for cost reduction and control. The Company establishes an annual cost
reduction target and assigns cross-functional process
47
<PAGE> 53
improvement teams to recommend and implement actions to reduce costs and/or
increase efficiency in the targeted areas.
Grow Through Strategic Acquisitions. The Company intends to pursue
synergistic acquisitions in its core business lines. ACL believes that there
will continue to be opportunities to make such acquisitions that create value
through a combination of enhanced revenue opportunities and cost reductions. In
particular, some major companies have recently sold or are considering the sale
of their barging operations in an effort to focus on their core business lines.
In conjunction with these divestitures, companies often establish long-term
shipping contracts with the purchasers of their fleets in order to secure
reliable transportation for their cargoes. In 1996, ACL acquired Continental
Grain's barge fleet in such a transaction. Based upon the success of this
acquisition and other similar transactions, combined with the Company's ability
to provide long-term, reliable service to its customers, ACL believes that it is
particularly well-positioned to continue to grow through strategic acquisitions.
Expand Internationally. Over the past several years, the Company has
developed a targeted international expansion strategy. ACL initially implemented
this strategy by establishing operations to serve a new customer's shipping
needs along the Orinoco River in Venezuela. Since then, the focus of ACL's
international strategy has been to serve customers that require reliable,
low-cost transportation abroad. The Company works closely with current and
potential customers to establish mutually beneficial long-term contracts to
serve these needs. By following this strategy, ACL has become the leading
provider of barge transportation on the Orinoco River in Venezuela and the
Parana/Paraguay River system serving Argentina, Brazil, Paraguay, Uruguay and
Bolivia. Because the demand for transportation in South America is expected to
enjoy rapid and substantial growth, ACL has the opportunity to significantly
broaden the scope of its operations. Expansion possibilities include servicing
more multinational and local customers, broadening the array of cargoes
transported and servicing additional river systems.
ACL believes that its significant investment in the infrastructure,
training and customer service required to operate profitably in South America
will not be quickly or easily replicated by competitors. In addition, the
Company believes that its expansion strategy can be effectively applied to other
foreign markets.
Continue to Improve Quality. ACL has developed a reputation for having one
of the highest quality operations in the inland river transportation industry.
The Company has implemented a quality improvement process to ensure that
customer requirements are identified and that processes are in place to ensure
that those requirements are met. The Company seeks to involve the entire
workforce to continually improve these processes on an ongoing basis. The
Company's emphasis on quality allows it to provide a superior level of customer
service at a competitive price. This reputation as a quality leader enhances
ACL's ability to successfully secure valuable contracts and has allowed it to
build strong, profitable relationships with its customers.
Maintain Emphasis on Safety. Through continuous improvements, ACL has
greatly improved safety conditions since 1990. During this time, while headcount
increased 37% through acquisitions, international expansion and increased
Jeffboat production, the safety incident rate improved 69%. The key to ACL's
success in reducing workplace injuries has been broad-based work force
participation in all safety programs and processes.
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<PAGE> 54
INDUSTRY
Overview
The U.S. barge industry has experienced modest cargo tonnage growth over
the past ten years. Tonnage carried on the Inland Waterways has grown from 570
million tons in 1987 to 622 million tons in 1996 (the latest year for which data
are available). During this same time period, the overall barge fleet has grown
from 19,967 barges to 21,731 barges.
<TABLE>
<CAPTION>
TOTAL INLAND WATERWAYS
-----------------------------------------
TONNAGE BARGE FLEET
--------------------- -----------------
(IN MILLIONS)
<S> <C> <C>
1987 570 19,967
1988 588 20,197
1989 606 21,131
1990 623 21,352
1991 600 21,249
1992 621 20,799
1993 607 21,232
1994 618 21,156
1995 620 21,280
1996 622 21,731
</TABLE>
Since 1980, the industry has been consolidating as acquiring companies have
moved towards attaining the widespread geographic reach necessary to support
major national customers. The Company's management believes that the
consolidation process will continue. There are currently five major domestic
barging companies that operate more than 1,000 barges. There also are 17
mid-sized operators that operate over 200 barges, and approximately 13% of
barging capacity remains in the hands of small carriers that operate fewer than
200 barges. As the industry continues to consolidate, the Company believes that
it will be well-positioned to realize cost savings and synergies by merging
smaller operators into its existing network.
Primary Domestic Cargoes
Domestic barging focuses on five core commodity groups: grain, coal, steel,
bulk commodities and liquids.
Grain
The United States dominates the world production and export of coarse grain
(corn, barley, oats, sorghum and milo), and 70% of historical U.S. coarse grain
exports were exported through the Port of New Orleans via the Mississippi River,
the center of the Company's North American service area. Corn is the major
commodity, accounting for 93% of historical U.S. coarse grain exports through
the Port of New Orleans. During the 1990s, U.S. coarse grain exports averaged
57% of total world coarse grain exports, a figure that is projected to increase
to 65% by 2003. Most of this increase can be traced to three distinct trends:
increased consumption of coarse grain by China (forecasted by the U.S.
Department of Agriculture ("USDA") to be a net importer by 2003), increased
demand spurred by the overall world population annual growth rate (1.8%) and
improving living standards in developing economies.
While grain is not the largest category of barge transport in terms of
tonnage, it is a material driver for the industry's overall freight rate
structure for dry cargo movements. Because U.S. grain production and export
demand fluctuates, grain cargoes become the swing factor for the industry's
utilization rates. In years of high export demand and high domestic production,
grain transportation rates tend to increase as shippers compete for barge
availability. Rate pressure is exerted as shippers of other commodities using
covered barges compete for available capacity, causing the rates for all dry
commodities to increase. In years of lower domestic grain production or slack
export demand, grain transportation rates tend to decline, easing the rates on
alternative cargoes.
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<PAGE> 55
Coal
From a tonnage standpoint, coal is the barging industry's largest transport
commodity. Approximately 170 million tons of domestic coal were moved by water
in 1996 (the latest year for which industry data are available). There are three
primary sources of demand for coal: utilities (which generally represent over
80% of total demand), industrial and coke producers and exports. Demand,
particularly from utilities, remains fairly constant on a year-to-year basis and
transportation contracts with utilities are customarily multi-year, fixed price
contracts with escalation clauses. The Company believes that utility
deregulation should lead to increased demand for coal at river-served utility
plants.
Steel
Steel is a mature industry that in the recent past has experienced steady,
but modest overall growth. Total demand for finished steel products remains in
the 100-105 million ton range and riverborne tonnage has been approximately 9-10
million tons per year. However, new mini-mills and their feedstock plants are
being located with river access to provide for low-cost transportation,
providing an excellent growth opportunity for the barging industry. Industry
sources estimate that an additional 14 million tons of mini-mill steel-making
capacity will have come on line during the 1990s. The Company believes that
continued growth in mini-mills should spur demand for scrap and iron ore,
providing additional opportunities for domestic barge operators.
Bulk Commodities
Because barging provides a low-cost transportation alternative for high
mass/high volume cargoes, many bulk commodity shippers choose barging as their
preferred mode of transportation. The primary bulk commodities shipped by
domestic barges include alumina, salt, scrubber sorbents, cement, fertilizer and
forest products. Criton Corporation ("Criton") estimates that, over the next
three years, river-served alumina shipments will remain constant in the 3.0-3.5
million ton range, while fertilizer and salt shipments will remain stable at
11.5 and 6.0 million tons, respectively. In addition, Criton estimates that,
over the next three years, overall demand for cement should remain constant,
while forest products shipments should experience some growth due to strong
export demand as well as increased production by domestic chip mills along the
Mississippi River system.
Liquids
Liquid cargo transportation provides attractive margins, while exhibiting
relatively steady rate levels and profit margin opportunities. Chemicals are the
primary liquid cargo handled by liquid barge carriers. These chemicals include:
caustic soda, styrene, methanol, ethylene glycol and propylene oxide. Annual
growth for these chemicals is expected to be at least 2-3% over the next three
years. Approximately 84% of the production capacity of the above-mentioned
chemicals is located on the Inland Waterways. The other primary liquid
commodities shipped by domestic barges include petroleum products, edible oils,
including soybean oil, molasses and ethanol. Annual growth for petroleum
products, edible oil and ethanol is expected to be from 1-3%, 1% and 1%,
respectively, over the next three years. Safety and quality control are
essential factors in serving this market.
Pricing
There are essentially three forms of pricing in the barging industry: spot
pricing, annual pricing and long-term contract pricing. Spot pricing is
determined by a competitive marketplace where barge operators provide their
services at the then current rate. The St. Louis Merchants Exchange serves as an
indicator of barge transportation spot rates.
Pricing for annual and long-term contracts involves forecasts of demand
conditions. On a customer specific level, there are several important factors in
determining barge contract rates. In particular, contracts for larger volumes
and longer distances will normally generate lower costs per ton-mile due to the
efficiencies gained from carrying full barge loads and the savings associated
with keeping towboats fully utilized. In
50
<PAGE> 56
addition, longer term contracts generally provide for fixed pricing with
escalation formulas and help to stabilize earnings and produce predictable
minimum cash flows.
Marine Equipment Description
The barging industry uses two types of equipment to move freight: towboats
and barges. The combination of a towboat, which provides power and navigation,
and barges, which carry the freight, is referred to as a tow. A tow usually
consists of one towboat and from five to 40 barges depending upon the horsepower
of the towboat, the river conditions, the load and empty mix of the tow, the
direction of travel and the commodity carried.
Open Hopper Barges
The open hopper barge is a double-skinned open hopper box without covers.
Its inner shell forms the cargo hold. Open hoppers are multi-purpose vessels
that carry a wide range of commodities that require no protection from the
elements. The most common usage is the transportation of coal. A typical new
open hopper barge costs approximately $250,000 and has an expected life of
approximately 25 years if it remains uncovered.
Covered Hopper Barges
The covered hopper barge is an open hopper barge with a set of eight or
nine covers mounted upon it. There are two types of covers: rolling covers and
lift covers. Both types of covered hopper barges are used for cargo that needs
to be protected from the elements, with lift covers used primarily for grain and
rolling covers used for other bulk commodities such as steel, paper, alumina,
salt and cement. A typical new covered hopper barge costs approximately $300,000
and has an expected life of approximately 25 years as a covered hopper barge and
up to an additional five years as an open hopper barge once the cover is
removed.
Tank Barges
There are three basic types of tank barges ("tankers") that are currently
in use by the domestic barge industry. In the past the most common tanker was
the single-skinned type which had a bow and stern void. While these tankers were
less costly to manufacture than a double skinned tank barge, any puncture of
that single skin would result in a cargo spill and possible environmental
damage. Due to these concerns, new environmental legislation requires that these
tankers be phased-out by 2015. The single-skinned tanker is being replaced by
the double-skinned tanker, which consists of an inner cargo compartment or group
of compartments surrounded by a void space on the bow, stern, sides, and bottom.
A third type of tanker has independent cylindrical tanks which are similar to a
hopper type barge. These tankers most often carry cargoes either under pressure
or at high or low temperatures. Tanker costs range from approximately $700,000
for a typical new 10,000 barrel capacity tanker up to approximately $1,500,000
for a typical new 30,000 barrel capacity tanker, and has an expected life of
approximately 30 years.
Deck Barges
Deck barges are a box type hull with a well-supported deck. Some will have
a coaming around the deck area to contain the cargoes they move without
spillage. Deck barges are used to transport machinery, containers, vehicles,
heavy equipment, sand, stone and gravel. In addition, deck barges are used by
dredging companies to move dredge material and by the logging industry to
transport logs. A typical new deck barge costs approximately $250,000 and has an
expected life of approximately 30 years.
Towboats
Towboats are the most expensive floating equipment in a barging operation.
A typical new towboat can range in price from $1 million to $8 million depending
upon the horsepower that it generates. Horsepower is the key statistic used to
compare different towboats since the value of a towboat lies in the number of
barges that it can effectively push and maneuver. Much of barging logistics is
dedicated to generating optimal barge/
51
<PAGE> 57
horsepower matches while minimizing the time that towboats remain in port. The
average towboat has an expected life of approximately 40 years.
COMPANY OPERATIONS
Domestic Barging
ACL is the leading provider of barge transportation in the United States,
operating over nearly 11,000 miles of the Inland Waterways and transporting a
wide variety of commodities, including coal, corn, soybeans, liquids, steel and
bulk commodities. ACL is ranked first in the United States in terms of revenues,
barges operated and gross tons hauled. With 3,844 dry cargo hopper barges and
446 tankers, all of which are double-skinned tankers, ACL's barge fleet accounts
for 19% of the domestic industry's dry cargo fleet and 16% of the tanker fleet.
Of ACL's 3,844 dry cargo hopper barges and 446 tankers, 765 and 40 are operated
by ACL pursuant to charter agreements, respectively. The charter agreements have
expiration dates ranging from one to four years. The Company expects generally
to be able to renew such charter agreements as they expire.
DOMESTIC FLEET PROFILE BY BARGE TYPE(1)
<TABLE>
<CAPTION>
AVERAGE AGE
-------------------
% OF TOTAL TOTAL
BARGE BARGE
NUMBER FLEET COMPANY FLEET
------ ------------- ------- --------
<S> <C> <C> <C> <C>
BARGES
Covered hoppers.................................. 3,068 24.7% 17.2 15.9
Open hoppers..................................... 776 12.2% 22.7 13.5
Tankers.......................................... 446 15.9% 19.7 20.5
----- ---- ---- ----
Total.................................... 4,290 18.9% 18.5 15.9
===== ==== ==== ====
</TABLE>
- ---------------
(1) Excludes marine equipment used in international operations. See
"-- International Barging."
In addition, ACL operates 189 towboats with an average age of approximately
23 years. No comparative industry data is available with respect to towboats. Of
ACL's 189 towboats, 45 are operated by ACL pursuant to charter agreements. The
charter agreements have expiration dates ranging from one to five years. The
Company expects to be able to renew such charter agreements as they expire.
The size and diversity of ACL's towboat fleet allows it to deploy the
towboats to the portions of the Inland Waterways where they can most effectively
operate. For example, ACL's towboats that have in excess of 8,000 horsepower
operate with tow sizes of 30 to 35 barges along the lower Mississippi River
where the river channels are wider and there are no restricting locks and dams.
ACL's 5,600 horsepower towboats operate along the Ohio, upper Mississippi and
Illinois Rivers where the river channels are narrower and restricting locks and
dams are more prevalent. ACL deploys its smaller horsepower towboats for shuttle
and harbor services.
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<PAGE> 58
DOMESTIC TOWBOATS BY HORSEPOWER(1)
<TABLE>
<CAPTION>
NUMBER OF AVERAGE
HORSEPOWER TOWBOATS AGE
---------- --------- -------
<S> <C> <C>
6,700 - 10,500.............................................. 16 20.5
5,000 - 6,500............................................... 53 23.5
1,950 - 4,900............................................... 35 25.2
1,800 and below............................................. 85 22.1
--- ----
Total.................................................. 189 22.9
=== ====
</TABLE>
- ---------------
(1) Towboats owned and chartered.
ACL's barging operations focus on five core commodity groups: grain, coal,
steel, bulk cargo and liquids. In terms of annual riverborne tonnage, ACL is the
leading grain transporter in the industry and is the second largest liquids
transporter in the United States. In terms of tonnage, bulk/steel is ACL's
largest transport commodity with coal and grain second and third, respectively.
Bulk/steel is also the Company's largest source of revenue, with grain and
liquids transport second and third, respectively.
ACL DOMESTIC BARGING OPERATIONS BY COMMODITY
<TABLE>
<CAPTION>
1995 1996 1997
-------------------------------- -------------------------------- --------------------------------
REVENUE % TONNAGE % REVENUE % TONNAGE % REVENUE % TONNAGE %
------- ----- ------- ----- ------- ----- ------- ----- ------- ----- ------- -----
(DOLLARS AND TONNAGE IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Grain................ $146 26.0 14 19.7 $162 26.3 18 24.7 $134 23.1 17 23.0
Coal................. 94 16.8 25 35.2 89 14.5 22 30.1 88 15.1 22 29.7
Bulk/Steel........... 136 24.2 21 29.6 169 27.5 23 31.5 158 27.2 24 32.4
Liquids.............. 108 19.3 11 15.5 110 17.9 10 13.7 116 20.0 11 14.9
Other(1)............. 77 13.7 -- 0.0 85 13.8 -- 0.0 85 14.6 -- 0.0
---- ----- -- ----- ---- ----- -- ----- ---- ----- -- -----
Total........ $561 100.0 71 100.0 $615 100.0 73 100.0 $581 100.0 74 100.0
==== ===== == ===== ==== ===== == ===== ==== ===== == =====
</TABLE>
- ---------------
(1) Includes towing and demurrage.
To support the Company's domestic barging operations, ACL operates 22
shore-based facilities throughout the Inland Waterways that provide fleeting,
shifting, cleaning and repair services for both towboats and barges, including
five towboat dry-docks and nine barge dry-docks.
International Barging
ACL launched its international barging operations in South America in 1993.
The Company currently operates on the Orinoco River, with headquarters in Puerto
Ordaz, Venezuela, and on the Parana/Paraguay River system, with headquarters in
Rosario, Argentina. A significant portion of the Company's planned capital
expenditures for the next few years will be dedicated to international growth.
While South American operations generated only 5% of ACL's 1997 operating
revenue, management expects revenues from South American operations to increase
significantly in the coming years. The Company's expansion in South America has
been effected by introducing new equipment and technology to the South American
river systems, transplanting systems used in the United States and developing
new processes to meet local requirements. ACL expects to use its expertise to
expand its barging operations into new regions. For fiscal years 1996 and 1997,
the Company's international operations generated revenue of $27.4 million and
$36.0 million, generated operating profit of $10.6 million and $3.0 million, and
had assets of $72.5 million and $89.5 million, respectively.
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<PAGE> 59
INTERNATIONAL FLEET PROFILE BY BARGE TYPE
<TABLE>
<CAPTION>
NUMBER AVERAGE AGE
------ -----------
<S> <C> <C>
BARGES
Covered hoppers........................................... 114 5.0
Open hoppers.............................................. 113 15.2
Tankers................................................... 13 4.6
Deck...................................................... 7 2.9
--- ----
Total............................................. 247 9.6
=== ====
</TABLE>
Of ACL's international barge fleet, 19 dry cargo barges are operated by ACL
pursuant to charter agreements with expiration dates of one year. The Company
expects generally to be able to renew such charter agreements as they expire. In
addition, ACL operates 12 towboats in South America.
Barge and Towboat Design and Manufacturing
Jeffboat manufactures both towboats and barges for the Company and
third-party customers primarily for inland river service, but also produces
equipment for coastal and offshore markets. Jeffboat has long been recognized as
a leader in inland marine technology, incorporating designs and propulsion
systems derived from ongoing model basin studies. Jeffboat also provides
around-the-clock vessel repair services, including complete dry-docking
capabilities, back-up support for emergency cargo salvage and equipment
recovery, and full machine shop facilities for repair and storage of towboat
propellers, rudders and shafts.
The Company is Jeffboat's largest customer. Approximately 28% of Jeffboat's
1998 shipbuilding capacity is committed to ACL. The Company believes that the
partnership between its barging operations and Jeffboat is a competitive
advantage for ACL, permitting optimization of construction schedules and asset
utilization between ACL's internal requirements and sales to third-party
customers and giving Jeffboat's engineers an opportunity to collaborate with
ACL's barge operations on innovations that optimize towboat performance and
barge life.
Terminals
The Company's ACT subsidiary operates 16 river terminal sites along the
Inland Waterways. Most terminals offer transfer and warehousing capabilities for
steel, bulk, liquid and other general commodity products moving between barge,
truck and rail. Seven of the facilities in the Memphis and Arkansas areas are
jointly owned with an unaffiliated third-party. The focus of the Company's
terminal operations is to support ACL's core barging operations. As a result,
the terminal group primarily pursues opportunities that fit well with ACL's
barging patterns and the majority of the terminals' tonnage is transported by
ACL barges. ACT operates terminal facilities in Jeffersonville, Indiana,
Louisville, Kentucky, Cincinnati, Ohio, Evansville, Indiana, Guntersville,
Alabama, Omaha and Nebraska City, Nebraska, St. Louis, Missouri, Memphis,
Tennessee, West Memphis, Arkansas, Helena, Arkansas, Osceola, Arkansas, Pine
Bluff, Arkansas and Fort Smith, Arkansas.
Ship-to-Shore Telecommunications Services
Watercom is the premier provider of automated ship-to-shore voice and data
telecommunications services throughout the Inland Waterways. Watercom is
comprised of 55 shore stations with approximately 1,000 installed units on
towboats and other vessels throughout the Inland Waterways. Through the Watercom
connection, customers can send and receive both phone calls and faxes, receive
data to on-board computers and maintain radio communications for all areas where
there is no phone connection. The Company is able to utilize this technology to
integrate towboat locations with ACL's barge tracking software to obtain
relative tracking of its towboat locations and thereby provide its barging
customers with real-time updates of cargo arrivals.
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<PAGE> 60
CUSTOMERS
The Company's main domestic barging customers include many of the nation's
major industrial and agricultural companies. The Company enters into a wide
variety of short and long-term contracts with these customers ranging from
annual one-year contracts to multi-year extended contracts with inflation
adjustments. Approximately 50% of ACL's annual capacity is currently under
multi-year contracts. ACL's top 25 domestic barging customers accounted for 43%
of ACL's fiscal 1997 pro forma consolidated operating revenue. No customer, or
group of customers under common control, accounted for more than 10% of the
Company's fiscal 1997 pro forma consolidated operating revenue.
SALES AND MARKETING
The Company's sales and marketing department manages its sales efforts by
commodity, with specialized market knowledge in each area. In addition to
negotiating annual and multi-year contracts, the sales and support staff
maintains contact with customers to fulfill day-to-day contractual requirements.
The primary efforts of the sales staff are oriented toward building and
maintaining long-term relationships with the major shippers in each commodity
area. The distribution services group matches daily customer shipping
requirements to the barge fleet locations for maximum logistical efficiency.
Where possible, the sales force also works closely with customers to package
complete transportation arrangements through Company terminal locations.
The Company is implementing a 24-hour planning center, scheduled to be
operational by the fall of 1998, to provide around-the-clock customer contact
and planning capability. In addition to superior customer service, another
anticipated benefit of the Planning Center is improved communication between
vessels and office staff for improved logistics and asset utilization.
COMPETITION
The Company's barging operations compete on the basis of price, service and
equipment availability. Primary competitors of the Company's barging operations
include other barge lines, railroads, trucks and pipelines. Barge transportation
provides the lowest unit cost of delivery of any major form of transportation
for high volume, bulk products, delivering 12% of the volume of U.S. freight for
2% of the total U.S. freight cost, according to data available from the USDT.
One standard hopper barge has the equivalent carrying capacity of 15 railcars or
58 trucks. In areas where shippers have access to water transportation, the rate
per ton-mile is significantly less than rail rates and approximately 10% to 20%
of truck rates. While it is generally less expensive to move large volumes of
certain liquids by pipeline when both the origin and destination have a direct
connection to the pipeline, barge transportation of liquids has greater
flexibility with respect to the origins and destinations that can be served.
The Company considers Jeffboat's major competitor to be Trinity Industries
Inc. which operates seven inland shipyards and which the Company estimates
manufactures approximately 63% of the new supply of barges. The Company believes
that in addition to Trinity, Jeffboat's other competitors include Bollinger
Machine Shop and Shipyard, Inc. and Galveston Shipbuilding Company for barges
and Halter Marine, Inc. and Quality Shipyards, Inc. for towboats, all of which
are located primarily on the Gulf of Mexico.
Competition within the barging industry for major commodity contracts is
intense. There are a number of companies offering transportation services on the
Inland Waterways. Carriers compete not only on the basis of commodity shipping
rates, but also with respect to value-added services, including more convenient
and flexible scheduling, more timely information and better equipment. The
Company believes its vertical integration provides it with a competitive
advantage. ACL utilizes its tow and barge repair and vessel fleeting facilities,
Jeffboat's shipbuilding capabilities, ACT's geographically broad-based terminals
and Watercom's ship-to-shore voice and data telecommunications services to offer
a combination of competitive pricing and high quality service.
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<PAGE> 61
The following table sets forth the leading domestic barge operators in the
United States:
<TABLE>
<CAPTION>
DRY CARGO
- -------------------------------------------
% OF TOTAL
BARGES BARGE FLEET
------ -----------
<S> <C> <C>
ACL(1)............... 3,844 19.3%
Midland.............. 2,298 11.6%
ARTCO................ 1,890 9.5%
Ingram............... 1,586 8.0%
Peavey............... 1,523 7.7%
------ ----
Top 5................ 11,141 56.1%
Total................ 19,875
======
</TABLE>
<TABLE>
<CAPTION>
LIQUID
- -------------------------------------------
% OF TOTAL
BARGES BARGE FLEET
------ -----------
<S> <C> <C>
Kirby................ 513 18.3%
ACL(1)............... 446 15.9%
Hollywood............ 255 9.1%
Marathon............. 169 6.0%
Ingram............... 129 4.6%
----- ----
Top 5................ 1,512 53.8%
Total................ 2,809
=====
</TABLE>
<TABLE>
<CAPTION>
ALL BARGES
- -------------------------------------------
% OF TOTAL
BARGES BARGE FLEET
------ -----------
<S> <C> <C>
ACL(1)............... 4,290 18.9%
Midland.............. 2,298 10.1%
ARTCO................ 1,960 8.6%
Ingram............... 1,715 7.6%
Peavey............... 1,523 6.7%
------ ----
Top 5................ 11,786 51.9%
Total................ 22,684
======
</TABLE>
- ---------------
(1) Pro forma for the NMI Contribution.
PROPERTIES
The Company operates numerous land-based facilities that support its
overall marine operations. These facilities include a major new construction
shipyard, two repair shipyards, 16 terminal facilities for cargo transfer and
handling throughout the river system, 22 facilities for the staging, interchange
and repair of barges and towboats and a corporate office complex in
Jeffersonville, Indiana.
The significant facilities among these properties include:
- The Jeffboat shipbuilding facility in Jeffersonville, Indiana is the
largest single shipyard facility on the Inland Waterways. It is situated
on 86 acres with 5,600 feet of frontage on the Ohio River across from
Louisville, Kentucky. There are 38 buildings on the property comprising a
total of 305,000 square feet under roof.
- The LDC repair shipyard and office facility in Harahan, Louisiana is
located on 94 acres of property along the Mississippi River immediately
upstream from New Orleans. The facility includes several drydocks,
machine shop, warehouse and office facility.
- The Company's main office complex is located on 22 acres in
Jeffersonville, Indiana. The main building has approximately 140,000
square feet and five outlying buildings have a total of 25,000 square
feet.
GOVERNMENT REGULATION
General
The Company's business is materially affected by government regulation in
the form of international treaties, conventions, national, state and local laws
and regulations, and laws and regulations of the flag nations of the Company's
vessels, including laws relating to the discharge of materials into the
environment. Because such conventions, laws and regulations are regularly
reviewed and revised by the issuing governmental bodies, the Company is unable
to predict the ultimate costs or impacts of compliance. In addition, the Company
is required by various governmental and quasi-governmental agencies to obtain
certain permits, licenses and certificates with respect to its business
operations. The kinds of permits, licenses and certificates required depend upon
such factors as the country of registry, the commodity transported, the waters
in which the vessel operates, the nationality of the vessel's crew, the age of
the vessel and the status of the Company as owner, operator or charterer. The
Company believes that it currently has or can readily attain all permits,
licenses and certificates necessary to permit its vessels to operate in their
current trades. See "-- Environmental Matters."
The Company's domestic transportation operations are subject to regulation
by the United States Coast Guard, Federal laws, state laws and certain
international conventions.
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<PAGE> 62
The Company's inland tank barges are inspected by the United States Coast
Guard and carry certificates of inspection. The Company's towing vessels and dry
cargo barges are not subject to United States Coast Guard inspection
requirements.
Jones Act
The Jones Act is a Federal cabotage law that restricts domestic marine
transportation in the United States to vessels built and registered in the
United States. Furthermore, the Jones Act requires that the vessels be manned by
United States citizens and owned by United States citizens. For corporations to
qualify as U.S. citizens for the purpose of domestic trade, 75% of the
corporations' beneficial stockholders must be United States citizens. The
Company presently meets all of the requirements of the Jones Act for its owned
vessels.
Compliance with United States ownership requirements of the Jones Act is
very important to the operations of the Company and the loss of Jones Act status
could have a significant negative effect for the Company. The Company monitors
the citizenship requirements under the Jones Act of its employees and beneficial
equity holders and will take action as necessary to ensure compliance with the
Jones Act requirements.
During the past several years, the Jones Act cabotage laws have been
challenged by interests seeking to facilitate foreign flag competition for trade
reserved for U.S. flag vessels under the Jones Act. These efforts have been
consistently defeated by large margins in the United States Congress. The
Company believes that continued efforts may be made to modify or eliminate the
cabotage provisions of the Jones Act. If such efforts are successful so as to
permit foreign competition, it could have an adverse effect on the Company.
User Fees and Fuel Tax
Federal legislation requires that inland marine transportation companies
pay a user fee in the form of a tax based on propulsion fuel used by vessels
engaged in trade along inland waterways that are maintained by the Army Corps of
Engineers. Such user fees are designed to help defray the costs associated with
replacing major components of the waterway system, including dams and locks, and
to build new projects. A significant portion of the inland waterways on which
the Company's vessels operate are maintained by the Corps of Engineers.
The Company presently pays a Federal fuel tax of 24.4 cents per gallon. In
the future, existing user fees may be increased, and additional user fees
imposed, to defray the costs of inland waterways infrastructure and navigation.
ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive Federal, state and local
environmental laws and regulations which, among other things, specify
requirements for the management of oil, hazardous wastes, and hazardous
substances and impose liability for releases of these materials into the
environment. The Company devotes resources toward achieving and maintaining
compliance with environmental requirements. The Company believes, except as
otherwise set forth herein, that it is in material compliance with environmental
requirements and that noncompliance is not likely to have a material adverse
effect on the Company. However, there can be no assurance that the Company will
be at all times in material compliance with all environmental requirements. The
Company does not anticipate material capital expenditures for environmental
controls in the current or succeeding fiscal year.
As is the case with others in the maritime industry, a release of oil,
hazardous waste, hazardous substances or other pollutants into the environment
at or by the Company's properties or vessels, as a result of the Company's
current or past operations, or at a facility to which the Company has shipped
wastes, or the existence of historical contamination at any of the Company's
properties, could result in material liability to the Company. The Company
conducts loading and unloading of dry commodities, liquids and scrap materials
in and near waterways. Such operations present a potential that some such
materials might be spilled into a
57
<PAGE> 63
waterway thereby exposing the Company to potential liability. While the amount
of such liability could be material, the Company endeavors to conduct its
operations in a manner that it believes reduces such risks.
Federal, state and local governments could in the future enact laws or
regulations concerning environmental matters that affect the Company's
operations or facilities, increase the Company's costs of operation, or
adversely affect the demand for the Company's services. The Company cannot
predict the effect that such future laws or regulations could have on the
Company. Nor can the Company predict what environmental conditions may be found
to exist at the Company's current or past facilities or at other properties
where the Company or its predecessors have arranged for the disposal of wastes
and the extent of liability that may result from the discovery of such
conditions. It is possible that such future laws or undiscovered conditions
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The EPA and the DOJ have alleged that the Mid-South Terminal Company
("MSTC") violated provisions of the Federal Clean Water Act by spilling scrap
metal into the McKellar Lake during barge loading operations at an MSTC terminal
located near Memphis, Tennessee. The Company holds a 50% interest in MSTC, which
is a joint venture between American Commercial Terminal-Memphis, Inc. and Mid-
South Terminal Company L.P. DOJ indicated it may bring criminal charges against
MSTC with regard to the alleged violations. MSTC has been engaged in discussions
with the DOJ to resolve this matter. Based on these discussions, the Company
anticipates that a fine is likely to be assessed by DOJ. The Company anticipates
that any fine assessed by DOJ is not likely to be material. As part of the
resolution, MSTC may be required to remove spilled scrap metal from the lake.
The Parish of West Baton Rouge, Louisiana has indicted Tiger Shipyard
("Tiger") and seven current employees alleging illegal discharges into the
Mississippi River and improper handling of used oil and rust scale. The Parish
is seeking to impose criminal fines and penalties against Tiger. The Company
believes that no criminal activity was conducted by Tiger Shipyard or by any of
its employees; however, the outcome of this matter is currently uncertain. The
Company cannot at this time estimate the fines, if any, that may ultimately be
imposed, but such fines could be material. At the request of EPA, Tiger removed
drums from the Mississippi River near the Tiger Shipyard facility. Tiger has
filed a reimbursement petition seeking to recover from the Federal Superfund
approximately $1.5 million dollars it previously spent in this matter.
Vectura has received an order from the EPA under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Federal Superfund clean-up statute, regarding contamination at the former Dravo
Mechling property in Seneca, Illinois. The Order required that Vectura perform
site sampling and possible future remediation at the site. Based on the
investigation of the site to date, the Company and its consultants believe that
extensive further remediation will be unnecessary but are awaiting the EPA's
review and proposed clean-up standards. The Company believes that its liability
at the Seneca site is not likely to be material.
The Company is involved as a potentially responsible party ("PRP") with
respect to the clean-up of hazardous waste disposal sites (Superfund Sites)
identified under CERCLA and similar state laws. While CERCLA authorizes joint
and several liability for remediation costs at clean-up or remediation sites, as
a practical matter, such costs are typically allocated among the waste
generators and other involved parties.
Jeffboat was named a PRP at the Third Site in Zionsville, Indiana. Jeffboat
estimates that its share of costs for the remaining phases of clean-up at the
Third Site will not be material. Jeffboat has also received notice of potential
liability with regard to waste allegedly transhipped from the Third Site to the
Four County Landfill in Rochester, Indiana. At this time, there is no estimate
of Jeffboat's potential liability with respect to the Four County Landfill, but
the Company does not believe such liability is likely to be material.
American Commercial Barge Line was named as a PRP at the Southern
Shipbuilding facility in Slidell, Louisiana. At this time, there is no estimate
of potential liability with regard to the Southern Shipbuilding site, but the
Company does not believe such liability is likely to be material.
The Company has also received notice that certain barges formerly owned by
SCNO Barge Line, Inc. and The Valley Line Company (companies from which ACL
purchased assets) also allegedly sent waste to the Southern Shipbuilding
Superfund site prior to ACL's purchase of such assets from these companies. ACL
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<PAGE> 64
believes that it is not responsible for such waste and also believes it is
indemnified for such claims under the respective Asset Purchase Agreements. The
Company has provided notice of claims for indemnification pursuant to such Asset
Purchase Agreements.
NMI has been named as a PRP at the SBA Shipyard site in Houma, Louisiana.
The Company believes that its share of costs at the SBA Shipyard site is not
likely to be material.
Because CERCLA liability is retroactive, it is possible in the future that
the Company may be identified as a PRP with respect to other waste disposal
sites, where wastes generated by the Company have been transported and disposed.
The Company maintains certain accounting reserves for environmental
matters. Given the uncertainties associated with such matters, there can be no
assurance that liabilities will not exceed reserves.
OCCUPATIONAL HEALTH AND SAFETY MATTERS
The Company's domestic vessel operations are primarily regulated by the
United States Coast Guard for occupational health and safety standards. The
Company's domestic shore operations are subject to the United States
Occupational Safety and Health Administration regulations. While there can be no
assurance that the Company is at all times in complete compliance with all such
regulations, the Company believes that it is in material compliance with such
regulations, and that any noncompliance is not likely to have a material adverse
effect on the Company. There can be no assurance, however, that claims will not
be made against the Company for work related illness or injury, or that the
further adoption of occupational health and safety regulations in the United
States or in foreign jurisdictions in which the Company operates will not
adversely affect the Company's business, financial condition and results of
operations.
The Company endeavors to reduce employee exposure to hazards incident to
its business through safety programs, training and preventive maintenance
efforts. The Company emphasizes safety performance in all of its operating
divisions. The Company believes that its safety performance consistently places
it among the industry leaders as evidenced by what it believes are lower injury
frequency levels than many of its competitors. The Company participates in the
American Waterway Operators Responsible Carrier Program which is oriented to
enhancing safety in vessel operations.
INTELLECTUAL PROPERTY
The Company registers some of its material trademarks, tradenames and
copyrights and has acquired patent protection for some of its proprietary
processes. The Company has current trademark rights to conduct its business.
INSURANCE
The Company maintains protection and indemnity insurance ("P&I") to cover
liabilities arising out of the ownership and operation of marine vessels. The
Company maintains hull and machinery insurance policies on each of its vessels
in amounts related to the value of each vessel. The Company maintains coverage
for shore-side properties, shipboard consumables and inventory, spare parts,
worker's compensation, and general liability risks. The Company maintains
primary insurance and third party guaranty agreements as to its statutory
liabilities for discharges of oil or hazardous substances under the Oil
Pollution Act of 1990. In the future, the Company may elect to self-insure such
primary statutory liability amounts; however, the Company currently maintains
and expects to continue to maintain excess coverage for pollution liability. All
insurance policies have been obtained and arranged through the Aon Insurance
Brokerage Syndicate, other brokers or direct placement with commercial insurers,
and maintained with underwriters in the U.S., British and other markets.
Insurance premiums for the coverages described above will vary from year to year
depending upon the Company's loss record and market conditions. In order to
reduce premiums, the Company maintains certain deductible and self-insured
retention levels that it believes are prudent and generally consistent with
those maintained by other shipping companies.
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<PAGE> 65
LEGAL PROCEEDINGS
The Company is named as a defendant in various lawsuits that have arisen in
the ordinary course of its business. Claimants seek damages of various amounts
for personal injuries, property damage and other matters. All material claims
asserted under lawsuits of this description and nature are covered by insurance
policies. The Company is not aware of any litigation that would be deemed
material to the financial condition, results of operations or liquidity of the
Company that is not covered by insurance coverages and policies. For a
discussion of environmental legal proceedings, see "-- Environmental Matters."
EMPLOYEES
As of June 30, 1998, on a consolidated basis, the Company employed
approximately 4,140 individuals. Of this total, 745 individuals were engaged in
shore-side management and administrative functions, 2,110 individuals were
employed as boat officers and crew members on the Company's marine vessels,
1,140 individuals were engaged in production and repair activities at the
Company's shipyard facilities, 70 individuals were employed by the Company's
Watercom communication unit, and 75 individuals were employed in production and
hourly work activities at the Company's terminals. Approximately 1,025 of the
Company's U.S. shore-side employees are represented by unions. Most of these
unionized employees (approximately 985) are represented by the International
Brotherhood of Teamsters at the Company's Jeffboat shipyard facility.
The Company's combined barging operations employ 540 boat officers as
pilots and captains. On April 4, 1998, a labor organization, Pilots Agree,
called for an industry-wide work stoppage. Twenty-eight of the Company's boat
officers joined the work stoppage. The National Labor Relations Board, in a
previous ruling, held that the Company's pilots and captains are supervisors
and, therefore, are not covered by the National Labor Relations Act. The Company
has refused to recognize or bargain with Pilots Agree. The work stoppage has
terminated and had no effect on the Company's marine operations.
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<PAGE> 66
MANAGEMENT
EXECUTIVE OFFICERS OF THE PARENT AND ACL; BOARD OF MANAGERS OF THE PARENT
The Executive Officers of the Parent and ACL are:
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael C. Hagan.......................... 51 President and Chief Executive Officer
Robert W. Greene III...................... 58 President -- Jeffboat and American
Commercial Terminals
Michael A. Khouri......................... 48 Sr. Vice President -- Corporate Services
Daniel J. Marquitz........................ 55 Sr. Vice President -- Marketing &
Distribution Services
Martin K. Pepper.......................... 44 Sr. Vice President -- International
Larry J. Weas............................. 62 Vice President -- Human Resources
William N. Whitlock....................... 56 Sr. Vice President -- Transportation
Services
James J. Wolff............................ 40 Sr. Vice
President -- Finance/Administration and
Chief Financial Officer
</TABLE>
The members of the Board of Managers of the Parent (the "Board of
Managers") are as follows.
BOARD OF MANAGERS OF THE PARENT
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David Wagstaff III........................ 60 Chairman
Stuart Agranoff........................... [ ] Member
Steven Anderson........................... 50 Member
Mark G. Aron.............................. 55 Member
David H. Baggs............................ 39 Member
Ellen M. Fitzsimmons...................... 38 Member
Paul R. Goodwin........................... 55 Member
Michael C. Hagan.......................... 51 Member
Richard E. Mayberry, Jr................... 45 Member
David F. Thomas........................... 48 Member
</TABLE>
MICHAEL C. HAGAN President & Chief Executive Officer, graduated from
Brescia College with a B.S. in Business Administration and joined the Company in
1970. He has served as President and Chief Executive Officer of American
Commercial Lines since 1991. Prior to that, he held a series of positions of
increasing responsibility with ACL and CSX.
ROBERT W. GREENE III is a graduate of Georgia Tech with a B.S. in Chemical
Engineering. He received his MBA from Harvard Business School in 1963. He began
his career with ACL in 1968. In 1980 he was named President of Jeffboat and was
appointed President-Chief Operating Officer of American Commercial Marine
Service Company (now named American Commercial Terminals) in 1986.
MICHAEL A. KHOURI is a 1971 graduate of Tulane University with a B.A. in
Economics. He received his J.D. from the University of Louisville -- Brandeis
Law School in 1980 and completed the Advanced Management Program at Harvard
Business School in 1996. He was named chief legal officer in 1988. Prior to
joining ACL in 1979, he worked at the Crounse Corporation.
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<PAGE> 67
DANIEL J. MARQUITZ received a B.S. degree in Business from Washington
University as well as an A.D. in Transportation/Traffic Management. He joined
ACL as chief sales and marketing officer in 1992 after serving with several
commodity and transportation companies. From 1987 until he came to ACL, he was
the President of The Valley Line Company -- Sequa Corporation.
MARTIN K. PEPPER is a 1976 graduate of Tulane University with a B.S. in
Mechanical Engineering. He received his MBA from Harvard Business School in
1980. Prior to joining ACL in 1997 as VP for fleet maintenance, he served for
sixteen years as an operations officer with Canal Barge Line and served in sales
and marketing for Tidewater Barge Line from 1990 to 1997. He was appointed chief
of international business development in August 1998.
LARRY J. WEAS graduated from the University of Louisville with a B.S.
degree in Commerce and earned his Masters Degree in Counseling from the
University of North Florida. He joined a CSX predecessor railroad in 1953 and
has served in a number of staff and human resource positions with CSX before
joining ACL as its chief human resource officer in 1992.
WILLIAM N. WHITLOCK is a 1964 graduate of the University of
Louisville -- Speed Scientific School with a B.S. in Engineering. He devoted
fifteen years of his career to the U.S. Army Corps of Engineers in positions of
increasing authority prior to joining ACL in 1979. He has served as the chief
transportation officer since 1982.
JAMES J. WOLFF graduated from the University of Texas in 1979 with a B.A.
degree. From 1979 to 1986, he was with Texas Gas Exploration, a CSX subsidiary.
In 1986, he joined CSX and transferred to ACL in 1992 as Senior Vice
President -- Finance. He was appointed chief of international business
development in 1996 and returned to the CFO position in August 1998.
DAVID WAGSTAFF III has served as President and Chief Executive Officer of
Vectura Group, Inc. since 1993. He was previously the Principal in a private
consulting business and has worked in various executive capacities at the
Equitable Life Assurance Company and Citicorp.
STUART AGRANOFF graduated from Fordham University with a B.S. degree in
1973. He was Vice President and Chief Financial Officer of Citicorp Corporate
Finance from 1981 until 1988, when he became Vice President and Chief Financial
Officer of Citicorp Venture Capital, Ltd., Court Square Capital Limited, 399
Venture Partners, Inc. and Citicorp Capital Investors, Ltd. He has served on the
Board of Directors of Beverage Canners and Farm Fresh. He is currently also a
director for Express Messenger and is a general partner of Murphy & Partners.
STEVEN A. ANDERSON currently serves as President and Chief Executive
Officer of Hancor, Inc. and serves as a turnaround consultant to Citicorp
Venture Capital, Ltd. Prior to that, he has served as a Director, Credit Officer
in the Capital Markets and Treasury Group for Swiss Bank Corporation from 1992
to 1993. He has also served as Vice President for the North America Business
Risk Review and as Vice President for the Investment Banking Group of Citibank,
N.A. from 1990 to 1992 and from 1974 to 1986, respectively. From 1986 to 1990,
Mr. Anderson served as Corporate Vice President responsible for the Fixed Income
Credit Department in Drexel, Burnham and Lambert's London office.
MARK G. ARON is Executive Vice President -- Law and Public Affairs for CSX.
He has served in various executive positions with CSX since 1981.
DAVID H. BAGGS has served as Assistant Vice President -- Corporate Strategy
since August 1994. He has held various finance and planning positions with CSX
since 1985.
ELLEN M. FITZSIMMONS has been General Counsel -- Corporate of CSX since
September 1997. She has served in various legal positions with CSX since 1991.
PAUL R. GOODWIN has been Executive Vice President -- Finance and Chief
Financial Officer of CSX since April 1995. Prior thereto, he was Executive Vice
President, Finance & Administration of CSX's principal subsidiary, CSX
Transportation, Inc., which provides rail transportation services.
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<PAGE> 68
RICHARD E. MAYBERRY, JR. has been a Managing Director of Citicorp Capital
Investors, Ltd. for over five years. Mr. Mayberry is currently a director of a
number of private companies.
DAVID F. THOMAS has been President of 399 Venture Partners, Inc. since
December 1994. In addition, Mr. Thomas has been a Managing Director of Citicorp
Venture Capital, Ltd., an affiliate of 399 Venture Partners, Inc., for over five
years. Mr. Thomas is currently a director of Lifestyles Furnishings
International Ltd., Galey & Lord, Inc., Anvil Knitwear, Inc., Stage Stores,
Inc., Neenah Foundry Company, Plainwell, Inc. and a number of private companies.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company or its
predecessor for 1997 of those persons who served as (i) the chief executive
officer during 1997 and (ii) the other four most highly compensated executive
officers of the Company or its predecessor for 1997 (collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------- -----------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING TOTAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION(1) AWARD(S)(2) OPTIONS(3) COMPENSATION
- --------------------------- ---- -------- -------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael C. Hagan............ 1997 $300,000 $225,000 $7,190 $304,854 20,000 $837,044
Daniel J. Marquitz.......... 1997 187,000 130,000 5,935 130,487 11,000 453,422
William N. Whitlock......... 1997 152,000 90,000 5,097 110,856 9,000 357,953
James J. Wolff.............. 1997 132,000 70,000 9,816 86,916 8,000 298,732
Michael A. Khouri........... 1997 132,000 70,000 8,340 76,214 7,700 286,554
</TABLE>
- ---------------
(1) Consists of automobile payments and medical examinations.
(2) Consists of bonus paid in the form of shares of CSX's common stock ("CSX
Shares") (valued as of date of grant).
(3) Represents options to acquire CSX Shares granted during 1997.
The following table sets forth option grants to the Named Executive
Officers for fiscal 1997:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERWRITING EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME OPTIONS GRANTED(1) FISCAL YEAR(2) PRICE DATE(3) VALUE(4)
---- ------------------ -------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Michael C. Hagan........... 20,000 0.5% $46.5625 4/17/07 $339,800
Daniel J. Marquitz......... 11,000 0.3% 46.5625 4/17/07 186,890
William N. Whitlock........ 9,000 0.2% 46.5625 4/17/07 152,910
James J. Wolff............. 8,000 0.2% 46.5625 4/17/07 135,920
Michael A. Khouri.......... 7,700 0.2% 46.5625 4/17/07 130,823
</TABLE>
- ---------------
(1) Represents options to acquire CSX Shares.
(2) Represents percent of total options granted by CSX to its and its
subsidiaries' employees.
(3) The expiration date of each option listed above held by Messrs. Hagan, Wolff
and Khouri will be amended to July 31, 2001 upon the consummation of the
Transactions.
(4) Grant date value has been determined using the Black-Scholes pricing model.
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<PAGE> 69
No options were exercised by any of the Named Executive Officers during
fiscal 1997. The following table sets forth the number of securities underlying
unexercised options held by each of the Named Executive Officers and the value
of such options at the end of fiscal 1997:
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBERS OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END AT FISCAL YEAR-END(1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE(2)
---- ----------------- ---------------------
<S> <C> <C>
Michael C. Hagan........................................... 123,608/40,002 $594,864/$192,510
Daniel J. Marquitz......................................... 44,534/21,866 214,320/105,230
William N. Whitlock........................................ 45,400/18,000 218,488/86,625
James J. Wolff............................................. 28,600/16,432 137,638/79,079
Michael A. Khouri.......................................... 43,714/15,866 210,374/76,355
</TABLE>
- ---------------
(1) Represents options to purchase CSX Shares.
(2) Value of unexercised options at fiscal year-end represents the difference
between the exercise price of any outstanding in-the-money options and
$51.375, the mean value of CSX Shares on December 26, 1997.
The following table sets forth Long-Term Incentive Plan awards to each of
the Named Executive Officers in fiscal 1997:
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF OTHER PERIOD UNTIL
SHARES, UNITS OR MATURATION OR
NAME OTHER RIGHTS(1) PAYOUT(2)
- ---- ---------------- -------------------
<S> <C> <C>
Michael C. Hagan............................................ 6,600 3 years
Daniel J. Marquitz.......................................... 2,825 3 years
William N. Whitlock......................................... 2,400 3 years
James J. Wolff.............................................. 1,925 3 years
Michael A. Khouri........................................... 1,650 3 years
</TABLE>
- ---------------
(1) Represents the number of performance shares granted on December 9, 1997,
pursuant to CSX's 1987 Long-Term Performance Stock Plan for the 1998-2000
cycle. The final payouts in CSX Shares will be based on the Company's Return
on Invested Capital as a percentage of CSX's Cost of Capital over the
three-year period. The estimated threshold payout was calculated at 13% of
the performance shares granted on December 9, 1997, and assumes a specified
minimum level of financial performance by the Company. The estimated target
payout was calculated at 67% of the performance shares granted and
represents the number of shares that would be awarded if a specified
intermediate level of financial performance is achieved by the Company. The
maximum equals 100% of the performance shares granted on December 9, 1997.
(2) Such period was reduced to 90 days following the consummation of the
Transactions.
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<PAGE> 70
In addition, certain of the Named Executive Officers received a one-time
bonus in connection with the Transactions from CSX determined by CSX.
Each of the Named Executive Officers and certain other management employees
of ACL are beneficiaries of a severance pay plan of the Company pursuant to
which those employees under certain circumstances will receive either one year
or two years' of base salary, bonus and benefits upon their termination of
employment with the Company. This plan by its terms will remain in effect until
April 17, 2000.
Mr. Hagan has entered into an employment agreement with CSX (the "Hagan
Employment Agreement") which by its terms will remain in effect for three years
after the closing of the Recapitalization. Pursuant to the Hagan Employment
Agreement, in the event that at any time during the term of the agreement, Mr.
Hagan's employment is terminated by the Company (other than for cause) or Mr.
Hagan resigns with good reason (which includes resignation by Mr. Hagan for any
reason during the 30-day period after the first anniversary of the closing of
the Recapitalization), CSX will pay Mr. Hagan severance benefits that include
three years of base salary, bonus and benefits.
BENEFIT PLANS
The Company maintains various qualified and non-qualified benefit plans for
its employees. All salaried, full time employees are covered or will be covered
by an ERISA qualified defined benefit retirement plan and are eligible to
participate in a 401(k) savings plan that includes a partial Company match
feature. Hourly employees with certain of the Company's subsidiaries have
separate ERISA qualified defined benefit plans and are eligible to participate
in separate 401(k) savings plans.
The Company maintains a self-insured general welfare health plan for
employees. The plan has appropriate levels of employee deductible, and maximum
benefit levels. Employees may elect to participate in certain approved HMO plans
in lieu of the Company sponsored plan.
The Company has provided to certain members of management various
non-qualified benefit and deferred compensation plans. These plans include
deferred salary plans, deferred bonus plans, salary continuation with whole life
plans, stock bonus plans, stock option plans and stock purchase/loan plans.
The Company reserves the right to add, amend, change, tie off and/or
terminate any or all qualified or non-qualified benefit plans at any time and to
alter, amend, add to and/or restrict employee participation to the extent
permitted by applicable Federal or state law or regulation.
COMPENSATION OF BOARD OF MANAGERS
The Company will reimburse members of the Board of Managers for any
out-of-pocket expenses incurred by them in connection with services provided in
such capacity. In addition, the Company may compensate members of the Board of
Managers for services provided in such capacity.
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SECURITY OWNERSHIP
The Parent owns all of the outstanding equity interests of the Company. The
following table sets forth certain information regarding the approximate
beneficial ownership of the Parent's equity interests held by (i) each person
(other than members of the Board of Managers and executive officers of the
Company) known to the Company to own more than 5% of the outstanding membership
interests of the Parent and (ii) members of the Board of Managers of the Company
(without giving effect to membership interests to be beneficially owned by
Management Investors).
<TABLE>
<CAPTION>
FULLY DILUTED VOTING
SENIOR PREFERRED JUNIOR PREFERRED SENIOR COMMON JUNIOR COMMON JUNIOR COMMON
NAME AND ADDRESS OF BENEFICIAL MEMBERSHIP MEMBERSHIP MEMBERSHIP MEMBERSHIP MEMBERSHIP
OWNER INTERESTS INTERESTS INTERESTS(1) INTERESTS(2) INTERESTS
- ------------------------------ ---------------- ---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Vectura Group, Inc. ........ -- 59.7% -- 52.1% 15.8%
National Marine, Inc. ...... -- .4% 100.0% 10.6% 3.2%
CSX Corporation............. 100.0% 39.9% -- 32.8% 34.0%
Management Investors(3)..... -- -- -- 1.6% 17.0%
Independent Investors....... -- -- -- 2.9% 30.0%
</TABLE>
- ---------------
(1) Represents residual future profits interests in the Parent of up to $32.5
million.
(2) Represents both voting and non-voting junior common membership interests of
the Parent.
(3) The amount of non-voting Junior Common Membership Interests to be issued to
the Management Investors will be determined, which issuance will dilute the
other investors on a pro rata basis.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AFFILIATE AGREEMENTS
The Company has entered into agreements or arrangements with CSX,
subsidiaries of CSX and Vectura. These agreements and business arrangements are
for the purpose of either providing or obtaining rail services for multi-modal
transportation packages, real estate and office lease arrangements, charter and
lease arrangements for certain river barges and provision of certain
transitional administrative services, as described herein. Also, the Company
leases certain barges from JEM Transportation, Inc. on a year-to-year basis.
Daniel J. Marquitz, an executive officer of the Company, is a principal in JEM
Transportation, Inc.
The JEM Transportation lease, as well as the Company's multi-modal
arrangements with CSX and its subsidiaries and the Company's transition services
agreement with CSX, are each on terms and conditions that the Company believes
are in the aggregate not materially more burdensome to the Company than would be
obtained on an arm's-length basis among unaffiliated parties.
PARENT LIMITED LIABILITY COMPANY AGREEMENT
Upon the consummation of the Recapitalization, CSX and the Investors
(collectively, the "Members") entered into the LLC Agreement. The LLC Agreement
governs the relative rights and duties of the Members. The following description
summarizes certain terms of the LLC Agreement. The following description does
not purport to be complete and is qualified in its entirety by reference to the
LLC Agreement.
The business and affairs of the Parent are managed by a Board of Managers
having duties comparable to a corporate board of directors. The Board of
Managers is composed of ten individuals as follows: four shall be designated by
CSX, two shall be designated by Vectura and NMI collectively (the "Vectura
Parties"), one shall be the current CEO of ACL Holdings, one shall be the
current CEO of Vectura and two shall be independent of CSX and Vectura (and
their affiliates) designated by holders of a majority of the voting Junior
Common Membership Interests. CSX's and the Vectura Parties' rights to designate
individuals to the Board of Managers is dependent in part on such party's
continuing to hold membership interests of the Parent in specified amounts.
As long as CSX holds specified amounts of Parent membership interests, CSX
will be entitled to veto rights with respect to the following transactions,
howsoever directly or indirectly structured, subject to certain exceptions:
(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 the
Parent, the Company or its subsidiary would become a Subchapter C corporation
(other than certain specified transactions); (iii) any amendment to the limited
liability company agreement of the Parent, the Company or its subsidiary which
would adversely affect CSX; (iv) 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
(v) transactions with affiliates.
As long as the Vectura Parties hold specified amounts of Parent membership
interests and subject to CSX's veto rights described above, the Vectura Parties
will be entitled to veto rights with respect to the following transactions,
howsoever directly or indirectly structured, subject to certain exceptions: (i)
certain material financings, acquisitions, divestitures, public equity offerings
or capital expenditures; (ii) equity investment programs for management of the
Parent and its subsidiaries; and (iii) transactions with affiliates. In
addition, the Vectura Parties will have the right, subject to CSX's veto rights,
to cause an Initial Public Offering or Sale of ACL (each as defined in the LLC
Agreement).
Membership Interests. The Parent was 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. The Senior Preferred Membership
Interests and the Junior Preferred Membership Interests are collectively
referred to as the "Preferred Membership Interests" and the Senior Common
Membership Interests and the Junior Common Membership Interests are collectively
referred to as the "Common Membership Interests." The Junior Common Membership
Interests are divided into voting membership interests and non-voting membership
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interests of the Parent, and collectively represent the residual future profits
interests in the Parent. The holders of non-voting Junior Common Membership
Interests may at any time, by a majority vote of such holders, convert all such
interests into voting Junior Common Membership Interests. Holders of the
Preferred Membership Interests are entitled to return of capital contributions
prior to any distributions made to holders of the Common Membership Interests.
Each Preferred Membership Interest has an initial Redemption Value of $100,
which compounds annually at the rate per year of the lesser of (i) 12% and (ii)
the sum of the "applicable Federal rate" in effect at the time of issuance of
the membership interest plus five percentage points (the "Preferred Rate"). The
Senior Common Membership Interests represent an aggregate capital interest of
$3,389,091 and an aggregate future profits interest in the Parent of $32,500,000
(subject to certain adjustments) and accrue a compounded annual yield at the
Preferred Rate on a notional principal amount of $35,889,091. As to dividends,
distributions and liquidations, except as otherwise provided and except with
respect to redemptions of Membership Interests held by Management Investors upon
their termination, Senior Preferred Membership Interests rank senior to Junior
Preferred Membership Interests, Junior Preferred Membership Interests rank
senior to Senior Common Membership Interests and Senior Common Membership
Interests rank senior to Junior Common Membership Interests. At the Parent's
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 the Parent's conversion to a
Subchapter C corporation.
Senior Preferred Membership Interests have the benefit of covenants
respecting restricted payments (providing that the Parent may 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 Investors upon their termination or tax distributions
pursuant to the LLC Agreement), affiliate transactions, no issuance of
membership interests senior in priority to the Senior Preferred Membership
Interests and delivery of financial statements.
Junior Common Membership Interests are allocated into voting and non-voting
interests. All other classes of membership interests will be non-voting, except
as otherwise explicitly provided or as provided by law. The Parent will
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 the Parent's option at any time,
subject to the priority of such membership interests (other than in certain
cases), without premium or penalty, provided that CSX's consent will be required
to redeem its Senior Preferred Membership Interests in certain cases. Holders of
Preferred Membership Interests 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.
In addition, the LLC Agreement: (i) restricts the transfer of the equity
interests of the Parent; (ii) grants tag-along rights on certain transfers of
equity interests of the Parent (as described below); (iii) requires CSX and the
Investors to consent to a sale of the Parent to an independent third party if
such sale is approved by the Board of Managers of the Parent (as described
below); and (iv) grants preemptive rights on certain issuances of equity
interests of the Parent. Certain of the foregoing provisions of the Members
Agreement will terminate upon the consummation of a Qualified Public Offering or
a Sale of ACL (each as defined in the LLC Agreement).
The Vectura Parties and CSX may participate pro rata (based on ownership of
Junior Common Membership Interests) in any sale or transfer of Parent equity
securities by the other (other than certain specified transactions) and in any
control transaction howsoever structured, subject to certain limitations. 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, subject to certain limitations. In the event
of a sale of all of the Parent approved by its Board of Managers (whether by
sale of membership interests, all or substantially all assets or businesses,
merger or otherwise), each holder of membership interests shall consent to,
approve and participate in such transaction on the same terms and
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conditions. Any such transaction shall also be a change of control, and any such
transaction which would not also otherwise trigger tag-along rights shall
trigger a liquidation of the Parent.
Distributions. The holders of Senior Preferred Membership Interests are
entitled to receive distributions from the Parent in an amount equal to the
Redemption Value (plus accrued and unpaid yield thereon) of such interests prior
to distributions (other than Tax Distributions described below) in respect of
any other membership interests of the Parent. The holders of Junior Preferred
Membership Interests are entitled to receive distributions from the Parent in an
amount equal to the Redemption Value (plus accrued and unpaid yield thereon) of
such interests prior to distributions (other than Tax Distributions described
below) in respect of any other membership interests of the Parent, except Senior
Preferred Membership Interests.
Subject to certain restrictions contained in the LLC Agreement and any
restrictions contained in any financing agreements to which the Parent is a
party, and subject to the requirement of quarterly Tax Distributions described
below, the Board of Managers may make distributions, whether in cash, property
or securities of the Parent, at any time or from time to time, in the following
order of priority: first, to the holders of Senior Preferred Membership
Interests, an amount determined by the Redemption Value (plus accrued and unpaid
yield thereon) of such interests (as defined and described in the LLC
Agreement); second, to the holders of Junior Preferred Membership Interests, an
amount determined by the Redemption Value (plus accrued and unpaid yield
thereon) of such interests (as defined and described in the LLC Agreement);
third, pro rata to the holders of the Senior Common Membership Interests 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 fourth, thereafter, pro rata in accordance with capital accounts
(as defined in the LLC Agreement) or a cash waterfall producing identical
results.
The Company's operations are conducted in the form of a limited liability
company. As a result, in general, neither the Company nor the Parent is subject
to U.S. Federal or state income taxes. Instead, taxable income from the
operations of the Company and its noncorporate subsidiaries are allocated to the
equity holders of the Parent, and such holders are directly liable for income
taxes on such income. The LLC Agreement requires the Parent to make quarterly
distributions ("Tax Distributions") to its members to enable each member to
satisfy some or all of its tax liability resulting from its equity interest in
the Parent. Tax Distributions to each member generally will be computed by
multiplying the taxable income allocated to the member from the Parent by the
assumed tax rate applicable to that member. The assumed tax rate (i) for a
corporate member will be the highest marginal Federal income tax rate applicable
to a corporation plus 2.3%, and (ii) for each other member will be an assumed
highest marginal blended Federal, state and local income tax rate applicable to
an individual. Such distributions are permitted under the Indenture. See
"Description of the Exchange Notes -- Certain Covenants -- Restricted Payments."
Tax Distributions otherwise payable to CSX under the above formula may be
reduced (to not below zero) in three ways. First, CSX's tax distributions will
be reduced by $4.0 million in each of the Company's first five years of
operation and by $6 million in each of the Company's following four years of
operation (the "Annual Exclusion"). Second, any income allocated by the Parent
to CSX in respect of the accruing yield on the Senior Preferred Membership
Interests held by CSX will be excluded from the computation of CSX's tax
distributions. Third, taxes incurred by CSX attributable to the recognition of
Built-In Gain (through asset sales or otherwise) will in some circumstances be
excluded from the computation of CSX's tax distributions. For this purpose,
"Built-In Gain" means the excess of the fair market value of the assets
originally contributed by CSX to the Company as of the date of the
Recapitalization over the tax basis of those assets measured as of the date of
contribution. In general, subject to certain exceptions and limitations, upon
the recognition of any Built-In Gain by CSX, the Parent may elect to either (i)
accelerate the Annual Exclusion to the extent of any resulting tax in inverse
chronological order beginning with year nine, (ii) distribute to CSX in the year
in which the Built-In Gain is recognized an additional Tax Distribution equal to
one-half of the resulting tax to CSX, or (iii) make additional distributions to
CSX on its Senior Preferred Membership Interests (in the amount of the resulting
Built-In Gain tax) by accelerating prior to year nine the time at which such
distributions would otherwise be required to commence under the LLC Agreement.
CSX is also entitled to Tax Distributions in such amount as is required so
that CSX's "unreimbursed tax amount" does not exceed $85.0 million. CSX's
unreimbursed tax amount is the excess of its taxes at the
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assumed corporate tax rate on taxable income allocated to CSX by the Parent
(excluding allocations in respect of the accruing yield on the Senior Preferred
Membership Interests and allocations of Built-In Gain arising by reason of
certain extraordinary transactions) over Tax Distributions. In addition, CSX is
entitled to Tax Distributions equal to the tax at the assumed corporate tax rate
on any Built-In Gain arising from a sale-leaseback transaction.
Further, as part of the tax distribution provisions of the LLC Agreement,
the Senior Preferred Membership Interests are entitled to distributions
beginning at the end of year nine in an amount equal to the product of the
assumed corporate tax rate and the Senior Preferred Membership Interest annual
accrual, including the full annual accrual for year nine.
In certain circumstances, it is possible that the distributions referred to
in the foregoing paragraphs could exceed the combined Federal, state, local and
foreign income taxes that would be payable with respect to taxable income of the
Company for any given period if the Company were a Delaware corporation filing
separate tax returns. Such distributions are permitted under the Indenture. See
"Description of the Exchange Notes -- Certain Covenants -- Restricted Payments."
The Senior Preferred Membership Interests are entitled to distributions
beginning in year six equal to the lesser of excess cash flow and an annual
limit. The annual limit is $7.5 million in each of years six through ten 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 as described in this paragraph.
Liquidating distributions will be made among the members pro rata in
accordance with capital accounts or a cash waterfall producing identical
results.
PARENT REGISTRATION RIGHTS AGREEMENTS
The Parent, CSX Brown and the Investors, entered into a registration rights
agreement (the "Parent Registration Rights Agreement"). Under the Parent
Registration Rights Agreement, CSX Brown and the Vectura Parties have the right,
subject to certain conditions, to require the Parent to register any or all of
their common equity interests of the Parent under the Securities Act at the
Parent's expense. In addition, all holders of registrable securities are
entitled to request the inclusion of any Common Membership Interests of the
Parent subject to the Parent Registration Rights Agreement in any registration
statement (excluding certain registration statements, including any registration
statement in connection with an Initial Public Offering (as defined in the
Parent Registration Rights Agreement)) at the Parent's expense whenever the
Parent proposes to register any of its Common Membership Interests under the
Securities Act. In connection with all such registrations, the Parent has agreed
to indemnify all holders of registrable securities against certain liabilities,
including liabilities under the Securities Act.
TRANSITION SERVICES AGREEMENT
The Company and CSX entered into a transition services agreement (the
"Transition Services Agreement"), pursuant to which CSX will provide to the
Company certain services that it had previously provided to the Company's
predecessor. Such transitional services will be provided for at least six months
and may include such services as general accounting, legal and computer systems
support, tax planning and benefits administration, as well as various other
transitional services.
OTHER ARRANGEMENTS
In connection with the Recapitalization, the Company has agreed to
indemnify CSX and Vectura and their respective affiliates with respect to
liabilities related to the business of the Company.
The Company and CSX were parties to a lease agreement, pursuant to which
the Company agreed to lease from CSX newly constructed and existing marine
equipment with a fair market value of approximately $12 million for a term of
ten years and with a rental of approximately $119,000 per month. In addition,
ACBL de Venezuela, C.A. ("ACBL Venezuela"), a subsidiary of the Company, entered
into charter agreements with Shell Venezuela, S.A. ("Shell") for ACBL Venezuela
to charter to Shell eight barges for Shell's use in connection with oil drilling
operations. In July 1998, CSX terminated its interest in the lease and its
rights to an assignment of ACBL Venezuela's interest in the charter in exchange
for a payment of $3.4 million from the Company.
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DESCRIPTION OF THE SENIOR CREDIT FACILITIES
The following is a summary of the material terms of the Senior Credit
Facilities that are entered into by the Company, the Parent, the Lenders and
Chase Bank, as administrative agent. The following summary is qualified in its
entirety by reference to the Senior Credit Facilities, copies of which will be
made available to prospective holders of the Exchange Notes upon request.
THE FACILITIES
Structure. The Senior Credit Facilities provide for (i) the Revolving
Credit Facility providing for revolving loans to the Company and the issuance of
letters of credit for the account of the Company in an aggregate principal
amount (including the aggregate stated amount of letters of credit) of up to
$100.0 million due 2005 and (ii) the Term Loans in an aggregate principal amount
of $435.0 million, consisting of a $200.0 million Tranche B Term Loan due 2006
and a $235.0 million Tranche C Term Loan due 2007.
Availability. Availability under the Senior Credit Facilities is subject
to various conditions precedent typical of bank loans, and the commitment of the
Lenders to provide financing under the Senior Credit Facilities is also subject
to, among other things, the absence of any event, condition or circumstance that
has had or is reasonably likely to have a material adverse effect on the
business assets, operations, condition (financial or otherwise), contingent
liabilities, prospects or material agreements of the Parent, the Company and its
subsidiaries, taken as a whole. The full amount of the Term Loans was required
to be drawn at the closing of the Transactions and amounts repaid or prepaid
will not be able to be reborrowed. Amounts under the Revolving Credit Facility
are available on a revolving basis.
INTEREST
Borrowings under the Senior Credit Facilities will bear interest at a rate
per annum equal (at the Company's option) to: (a) an adjusted London inter-bank
offered rate ("LIBOR") plus a percentage based on the Company's financial
performance or (b) a rate equal to the highest of Chase's published prime rate,
a certificate of deposit rate plus 1% and the Federal Funds effective rate plus
0.50% ("ABR") plus, in each case, a percentage based on the Company's financial
performance. The borrowing margins applicable to the Senior Credit Facilities
initially are (i) with respect to loans under the Revolving Credit Facility,
2.25% for LIBOR loans and 1.25% for ABR loans, (ii) with respect to loans under
the Tranche B Term Loan, 2.50% for LIBOR loans and 1.50% for ABR Loans and (iii)
with respect to loans under the Tranche C Term Loan, 2.75% for LIBOR loans and
1.75% for ABR loans. Amounts outstanding under the Senior Credit Facilities not
paid when due bear interest at a default rate equal to 2.00% above the rates
otherwise applicable to the loans under the Senior Credit Facilities.
FEES
The Company has agreed to pay certain fees with respect to the Senior
Credit Facilities, including (i) fees on the unused commitments of the lenders
equal to 0.50% on the undrawn portion of the commitments in respect of the
Senior Credit Facilities (subject to a reduction based on the Company's
financial performance); (ii) letter of credit fees on the aggregate face amount
of outstanding letters of credit equal to the then applicable borrowing margin
for LIBOR loans under the Revolving Credit Facility and the standard fronting,
issuance and drawing fees for the letter of credit issuing bank; (iii) annual
administration fees; and (iv) agent, arrangement and other similar fees.
SECURITY; GUARANTEES
The obligations of the Company under the Senior Credit Facilities are
irrevocably guaranteed, jointly and severally, by the Parent and by each
existing and subsequently acquired or organized domestic subsidiary of the
Company. In addition, the Senior Credit Facilities and the guarantees thereunder
are secured by substantially all of the assets of the Parent, the Company (other
than the Company's interest in the capital stock of any foreign subsidiaries)
and its domestic subsidiaries (collectively, the "Collateral"), including but
not limited to (i) a first priority pledge of all the membership interests of
the Company and of each existing
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and subsequently acquired or organized domestic subsidiary of the Company and
(ii) a perfected first priority security interest in, and mortgage on,
substantially all tangible and intangible assets of the Parent, the Company
(other than the Company's interest in greater than 65% of the capital stock of
each of the Company's foreign subsidiaries) and the guarantors (including, but
not limited to, accounts receivable, documents, inventory, equipment, investment
property, general intangibles, real property, cash and cash accounts and
proceeds of the foregoing), in each case subject to certain exceptions.
COMMITMENT REDUCTIONS AND REPAYMENTS
The Tranche B Term Loan will mature on the date that is eight years after
the closing of the Transactions. The Tranche B Term Loan will amortize quarterly
in annual amounts equal to (i) $1.0 million in each of the first five years of
the Tranche B Term Loan, (ii) $20.0 million in the sixth year thereof, (iii)
$75.0 million in the seventh year thereof and (iv) $100.0 million in the eighth
year thereof. The Tranche C Term Loan will mature on the date that is nine years
after the closing of the Transactions. The Tranche C Term Loan will amortize
quarterly in annual amounts equal to (i) $1.0 million in each of the first eight
years of the Tranche C Term Loan and (ii) $227.0 million in the ninth year
thereof. In addition, the Term Loans are subject to mandatory prepayment and
reductions in an amount equal to (i) 100% of the net cash proceeds of certain
equity issuances by the Parent, the Company or any of its subsidiaries, (ii)
100% of the net cash proceeds of certain debt issuances of the Parent, the
Company or any of its subsidiaries, (iii) 50% of the Company's excess cash flow
and (iv) 100% of the net cash proceeds of certain asset sales or other
dispositions of property by the Parent, the Company or any of its subsidiaries,
in each case subject to certain exceptions.
AFFIRMATIVE, NEGATIVE AND FINANCIAL COVENANTS
The Senior Credit Facilities contain a number of covenants that, among
other things, restrict the ability of the Parent, the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, incur or
guarantee obligations, prepay other indebtedness or amend other debt
instruments, pay dividends, create liens on assets, make investments, loans or
advances, make acquisitions, engage in mergers or consolidations, change the
business conducted by the Parent, the Company and its subsidiaries, make capital
expenditures, or engage in certain transactions with affiliates and otherwise
restrict certain corporate activities. In addition, the Senior Credit Facilities
require the Company to comply with specified financial ratios and tests,
including maximum leverage ratios, minimum interest coverage ratios, minimum
fixed charge coverage ratios and a minimum net worth test. The Senior Credit
Facilities also contain provisions that prohibit any modifications of the
Indenture in any manner adverse to the lenders under the Senior Credit
Facilities and that limit the Company's ability to refinance or otherwise prepay
the Notes without the consent of such lenders.
EVENTS OF DEFAULT
The Senior Credit Facilities contain customary events of default, including
non-payment of principal, interest or fees, violation of covenants, inaccuracy
of representations or warranties in any material respect, cross default to
certain other indebtedness, bankruptcy, ERISA events, material judgments and
liabilities, actual or asserted invalidity of security interests and change of
control.
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DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued pursuant to an Indenture (the
"Indenture") between the Issuers and United States Trust Company of New York, as
trustee (the "Trustee"). The terms of the Exchange Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "Trust Indenture Act"). The Exchange Notes are
subject to all such terms, and prospective holders of Exchange Notes are
referred to the Indenture and the Trust Indenture Act for a statement thereof.
The following summary of the material provisions of the Indenture does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, including the definitions therein of certain terms used below. The
definitions of certain terms used in the following summary are set forth below
under "-- Certain Definitions." For purposes of this summary, the term "Company"
refers only to American Commercial Lines LLC and not to any of its Subsidiaries.
The Exchange Notes will be general unsecured senior obligations of the
Issuers, will rank pari passu in right of payment with all existing and future
senior indebtedness of the Issuers and will rank senior in right of payment to
all subordinated indebtedness of the Issuers. The Issuers' obligations under the
Exchange Notes will be jointly and severally guaranteed on a senior basis (the
"Subsidiary Guarantees") by the Company's domestic Subsidiaries (other than ACL
Capital, any Accounts Receivable Subsidiary and certain Subsidiaries of the
Company without substantial assets or operations). See "-- Subsidiary
Guarantees."
The Exchange Notes will be effectively subordinated in right of payment to
any secured debt of the Issuers or the Subsidiary Guarantors to the extent of
the value of the assets serving as security for such secured debt. As of June
30, 1998, the Issuers and the Subsidiary Guarantors had approximately $445
million in outstanding secured indebtedness under the Senior Credit Facilities
to which the Exchange Notes are effectively subordinated. Approximately $90.0
million is available for additional borrowings under the Senior Credit
Facilities. The Exchange Notes will be effectively subordinated to all
liabilities of subsidiaries of the Issuers which are not Subsidiary Guarantors,
initially the Foreign Subsidiaries (as defined). As of June 30, 1998, the
Foreign Subsidiaries had no outstanding indebtedness other than inter-company
indebtedness. The Indenture permits the Issuers and their Subsidiaries to incur
additional indebtedness (including senior indebtedness), subject to certain
limitations. See "Description of the Senior Credit Facilities."
The operations of the Company are conducted in part through its
Subsidiaries and, therefore, the Company will be dependent in part upon the cash
flow of such Subsidiaries to meet its obligations, including its obligations
under the Exchange Notes. All of the existing domestic Restricted Subsidiaries
of the Company (other than ACL Capital and certain Subsidiaries of the Company
without substantial assets or operations) are, and all future domestic
Restricted Subsidiaries of the Company other than any Accounts Receivable
Subsidiary are expected to be, Subsidiary Guarantors. As of the date of the
Indenture, all of the Company's Subsidiaries other than River Terminal
Properties, L.P. will be Restricted Subsidiaries. However, under certain
circumstances, the Company will be able to designate current or future
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants set forth in the Indenture.
ACL Capital is a wholly owned subsidiary of the Company that was
incorporated in Delaware solely for the purpose of serving as a co-issuer of the
Senior Notes in order to accommodate the issuance of the Senior Notes by the
Company. The Company believes that certain prospective holders of the Exchange
Notes may be restricted in their ability to purchase debt securities of limited
liability companies, such as the Company, unless such debt securities are
jointly issued by a corporation. ACL Capital does not have any operations or any
assets (other than the $100.00 contributed to it in connection with its
formation) and does not have any revenues. As a result, prospective holders of
the Exchange Notes should not expect ACL Capital to participate in servicing the
interest and principal obligations on the Exchange Notes. See "-- Certain
Covenants -- Restrictions on Activities of ACL Capital."
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PRINCIPAL, MATURITY AND INTEREST
The Senior Notes are limited in aggregate principal amount to $300.0
million and will mature on June 30, 2008. Interest on the Exchange Notes is
payable in cash at a rate of 10 1/4% per annum semiannually in arrears on June
30 and December 31 of each year, commencing December 31, 1998, to Holders of
record on the immediately preceding June 15 and December 15.
Additional Senior Notes may be issued from time to time, subject to the
provisions of the Indenture described below under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Equity."
Interest on the Exchange Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Principal, premium and Liquidated Damages, if
any, and interest on the Exchange Notes will be payable at the office or agency
of the Issuers maintained for such purpose within the City and State of New York
or, at the option of the Issuers, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders of the Exchange Notes at their
respective addresses set forth in the register of Holders of Exchange Notes;
provided, that all payments of principal, premium and Liquidated Damages, if
any, and interest with respect to Exchange Notes the Holders of which have given
wire transfer instructions to the Issuers will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Issuers, the Issuers' office or
agency in New York under the Indenture will be the office of the Trustee
maintained for such purpose. The Exchange Notes will be issued in denominations
of $1,000 and integral multiples thereof.
SUBSIDIARY GUARANTEES
The Issuers' payment obligations under the Exchange Notes will be jointly
and severally guaranteed by the Subsidiary Guarantors. The Subsidiary Guarantee
of each Subsidiary Guarantor will rank pari passu with other Senior Debt of such
Subsidiary Guarantor and the amounts for which a Subsidiary Guarantor will be
liable under other guarantees, if any, issued by such Subsidiary Guarantor from
time to time with respect to Senior Debt. The obligations of each Subsidiary
Guarantor under its Subsidiary Guarantee will be limited so as not to constitute
a fraudulent conveyance under applicable law. See, however, "Risk
Factors -- Risks Relating to the Exchange Notes -- Fraudulent Transfer."
The Indenture provides that no Subsidiary Guarantor may consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person) another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless (i) subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all the obligations of such
Subsidiary Guarantor pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Senior Notes, the Indenture,
and the Registration Rights Agreement; (ii) immediately after giving effect to
such transaction, no Default or Event of Default exists; and (iii) the Issuers
would be permitted by virtue of the Company's pro forma Fixed Charge Coverage
Ratio, immediately after giving effect to such transaction, to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Equity";
provided, that the merger of any Subsidiary Guarantor with or into the Company
or another Subsidiary Guarantor under circumstances where the Company or such
Subsidiary Guarantor, as applicable, is the surviving Person shall not be
subject to the foregoing provisions.
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Subsidiary Guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all of the Capital Stock of any
Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the Capital Stock of such Subsidiary Guarantor) or the Person acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Subsidiary Guarantor) will be released and relieved of any obligations
under its Subsidiary Guarantee;
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provided, that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. See "-- Certain
Covenants -- Asset Sales."
OPTIONAL REDEMPTION
The Exchange Notes are redeemable at any time at the option of the Issuers,
in whole or in part, upon not less than 30 nor more than 60 days' notice, in
cash at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on June 30 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.............................................. 105.125%
2004.............................................. 103.417%
2005.............................................. 101.708%
2006 and thereafter............................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to June 30, 2001, the
Issuers may on any one or more occasions redeem up to 35% of the aggregate
principal amount of the Senior Notes originally issued at a redemption price of
110.25% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date with the net cash
proceeds of one or more Equity Offerings; provided, that at least 65% of the
aggregate principal amount of the Senior Notes originally issued remains
outstanding immediately after the occurrence of such redemption (excluding
Senior Notes held by the Company and its Subsidiaries); and provided further,
that such redemption shall occur within 60 days of the date of the closing of
such Equity Offerings.
At any time prior to June 30, 2003, the Exchange Notes may be redeemed, in
whole or in part, at the option of the Issuers at any time within 180 days after
a Change of Control, upon not less than 30 nor more than 60 days prior notice
mailed by first-class mail to the registered address of each Holder of such
Exchange Notes, at a redemption price equal to 100% of the principal amount
thereof, together with accrued and unpaid interest thereon to the redemption
date plus the Applicable Premium, together with Liquidated Damages, if any,
thereon to the redemption date. Holders of the Exchange Notes will also have
certain rights to require the Issuers to make an offer to repurchase their
Exchange Notes upon a Change of Control or an Asset Sale. See "-- Repurchase at
the Option of Holders -- Change of Control" and "-- Certain Covenants -- Asset
Sales."
"Applicable Premium" means, with respect to any Exchange Note at any
redemption date, the greater of (i) 1.0% of the principal amount of such
Exchange Note and (ii) the excess of (A) the present value at such time of (1)
the redemption price of such Exchange Note at June 30, 2003, such redemption
price being set forth in the table above) plus (2) all required interest
payments due on such Exchange Note through June 30, 2003, computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (B) the
principal amount of such Exchange Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H. 15(519)
which has become publicly available at least two Business Days prior to the
redemption date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the redemption date to June 30, 2003; provided, however, that if the
period from the redemption date to June 30, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the redemption date to June 30, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
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SELECTION AND NOTICE
If less than all of the Senior Notes are to be redeemed at any time,
selection of Senior Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Senior Notes are listed, or, if such Senior Notes are not
so listed, on a pro rata basis, by lot or by such method as the Trustee shall
deem fair and appropriate; provided, that no Senior Notes of $1,000 or less
shall be redeemed in part. Notices of redemption shall be mailed by first class
mail at least 30 but not more than 60 days before the redemption date to each
Holder of Senior Notes to be redeemed at its registered address. Notices of
redemption may not be conditional. If any Senior Note is to be redeemed in part
only, the notice of redemption that relates to such Senior Note shall state the
portion of the principal amount thereof to be redeemed. A new Senior Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Senior Note. Senior
Notes called for redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on Senior Notes or portions
of them called for redemption.
MANDATORY REDEMPTION
The Issuers are not required to make mandatory redemption or sinking fund
payments with respect to the Exchange Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, if the Issuers do not redeem
all of the Senior Notes as described under "-- Optional Redemption" or if a
Change of Control occurs on or after June 30, 2003, each Holder of Notes will
have the right to require the Issuers to make an offer to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Senior
Notes pursuant to the offer described below (the "Change of Control Offer") at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of repurchase (in either case, the "Change of Control Payment"). Within 60 days
following any Change of Control, the Issuers will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Senior Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by the Indenture and described in such notice. The
Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Senior
Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful, (1) accept for payment all Senior Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Senior
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the Senior Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Senior Notes or portions
thereof being purchased by the Issuers. The Paying Agent will promptly mail to
each Holder of Senior Notes so tendered the Change of Control Payment for such
Senior Notes, and the Trustee will promptly authenticate and mail (or cause to
be transferred by book entry) to each Holder a new Senior Note equal in
principal amount to any unpurchased portion of the Senior Notes surrendered, if
any; provided, that each such new Senior Note will be in a principal amount of
$1,000 or an integral multiple thereof. The Issuers will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the Senior
Notes to require that the Issuers repurchase or redeem the Senior Notes in the
event of a takeover, recapitalization or similar transaction. The Senior Credit
Facilities prohibit the Issuers from purchasing any Senior Notes prior to final
maturity of the Term Loans, and may also provide that
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certain change of control events with respect to the Issuers would constitute a
default thereunder. Any New Credit Facility or other future credit or financing
agreement or other agreements to which the Issuers may become party may contain
similar restrictions and provisions. In the event a Change of Control occurs at
a time when the Issuers are prohibited from purchasing Senior Notes, the Issuers
could seek the consent of necessary parties to the purchase of Senior Notes or
could attempt to renegotiate, refinance or extinguish the agreements that
contain any such prohibition. If the Issuers do not obtain such a consent or
repay such borrowings, the Company will remain prohibited from purchasing Senior
Notes. Any failure by the Issuers to repurchase tendered Senior Notes, as a
result of any such conflict with other agreements or otherwise, would constitute
an Event of Default under the Indenture which would, in turn, constitute a
default under the Senior Credit Facilities.
The Issuers are not required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Issuers and
purchases all Senior Notes validly tendered and not withdrawn under such Change
of Control Offer.
The following are definitions applicable to the foregoing covenant:
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Parent or a wholly owned subsidiary of the
Parent or any Principal (as defined below) or Principals, (ii) the adoption of a
plan relating to the liquidation or dissolution of the Parent (except any
recapitalization of the Parent in contemplation of an initial public offering of
Capital Stock of the Parent or its successor) or ACL Capital, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principals, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Issuers (measured by voting power rather than number of shares), (iv) the first
day on which a majority of the members of the Board of Managers are not
Continuing Directors or (v) the first day on which the Parent or the Company
fails to own 100% of the issued and outstanding Equity Interests of ACL Capital.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Issuers to repurchase such Senior Notes as a result of a sale, lease,
transfer, conveyance or other disposition of less than all of the assets of the
Company and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
"Citicorp" means Citicorp, a Delaware corporation, or any successor thereto
by merger or consolidation.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Managers who (i) was a member of such Board of Managers on the
date of the Indenture or (ii) was nominated for election or elected to such
Board of Managers with the approval of (A) a majority of the Continuing
Directors who were members of such Board of Managers at the time of such
nomination or election or (B) one or more of the Principals pursuant to the LLC
Agreement.
"CSX" means CSX Corporation, a Virginia corporation, or any successor
thereto by merger or consolidation.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation, or any
successor thereto by merger or consolidation.
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"Management Investors" means the officers and employees of the Parent, the
Company or a Subsidiary of the Company who acquire Voting Stock of the Parent or
the Company on or after the date of the Indenture.
"Principals" means (i) CSX, Vectura, CVC and the Management Investors; (ii)
any Related Party of a Person referred to in clause (i); and (iii) any Person or
group of Persons which holds, directly or indirectly, Equity Interests in the
Parent so long as a majority of the Voting Stock in the Parent is beneficially
owned by the Persons referred to in clauses (i) and (ii).
"Related Party" means (a) with respect to CSX (i) CSX, any direct or
indirect wholly owned subsidiary of CSX, and any officer, director or employee
of CSX or any wholly owned subsidiary of CSX, (ii) any spouse or lineal
descendant (including by adoption and stepchildren) of the officers, directors
and employees referred to in clause (a)(i) above or (iii) any trust, corporation
or partnership 100%-in-interest of the beneficiaries, stockholders or partners
of which consists of one or more of the persons described in clause (a)(i) or
(ii) above; (b) with respect to CVC (i) Citicorp, any direct or indirect wholly
owned subsidiary of Citicorp, and any officer, director or employee of CVC,
Citicorp or any wholly owned subsidiary of Citicorp, (ii) any spouse or lineal
descendant (including by adoption and stepchildren) of the officers, directors
and employees referred to in clause (b)(i) above or (iii) any trust, corporation
or partnership 100%-in-interest of the beneficiaries, stockholders or partners
of which consists of one or more of the persons described in clause (b)(i) or
(ii) above; (c) with respect to Vectura (i) Vectura, any direct or indirect
wholly owned subsidiary of Vectura, and any officer, director or employee of
Vectura or any wholly owned subsidiary of Vectura, (ii) any spouse or lineal
descendant (including by adoption and stepchildren) of the officers, directors
and employees referred to in clause (c)(i) above or (iii) any trust, corporation
or partnership 100%-in-interest of the beneficiaries, stockholders or partners
of which consists of one or more of the persons described in clause (c)(i) or
(ii) above; and (d) with respect to any officer or employee of the Parent, the
Company or a Subsidiary of the Company (i) any spouse or lineal descendant
(including by adoption and stepchildren) of such officer or employee and (ii)
any trust, corporation or partnership 100%-in-interest of the beneficiaries,
stockholders or partners of which consists of such officer or employee, any of
the persons described in clause (d)(i) above or any combination thereof.
"Vectura" means Vectura Group, Inc., a Delaware corporation, or any
successor thereto by merger or consolidation.
CERTAIN COVENANTS
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Managers set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash; provided, that the amount of (x) any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet), of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes) that are assumed
by the transferee of any such assets pursuant to a customary novation agreement
that releases the Company or such Restricted Subsidiary from further liability
and (y) any securities, notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are contemporaneously
(subject to ordinary settlement periods) converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may, at its option, (a) apply such Net Proceeds to repay Senior
Debt, or (b) apply such Net Proceeds to the acquisition of a majority of the
assets of, or a majority of the Voting Stock of, another Permitted Business, the
making of a capital expenditure or the acquisition of other long-term assets
that are used or useful in a Permitted Business. Pending the final application
of any such Net Proceeds, the Company may temporarily reduce revolving credit
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borrowings or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Indenture provides that the Issuers will be
required to make an offer to all Holders of Senior Notes (an "Asset Sale Offer")
to purchase the maximum principal amount of Senior Notes that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of repurchase, in accordance with the
procedures set forth in the Indenture. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If
the aggregate principal amount of Senior Notes tendered into such Asset Sale
Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Senior
Notes to be purchased on a pro rata basis among the Holders of Senior Notes,
based upon the aggregate outstanding principal amount of the Senior Notes. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero. The Issuers will be entitled to reduce any obligation to make an
Asset Sale Offer under the Indenture by an amount equal to the aggregate
principal amount of Senior Notes purchased by the Issuers in transactions other
than those in which Senior Notes were redeemed or required to be purchased by
the Issuers pursuant to the terms of the Indenture) within the previous 365 days
immediately preceding the date on which the aggregate amount of Excess Proceeds
exceeds $10.0 million.
Notwithstanding the first paragraph of this section, the Company and its
Restricted Subsidiaries will be permitted to consummate an Asset Sale without
complying with such first paragraph if (i) the Company or the applicable
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets or other
property sold, issued or otherwise disposed of (as evidenced by a resolution of
the Board of Managers and in the case of consideration with a fair market value
in excess of $5 million, accompanied by a valuation opinion issued by an
accounting, appraisal or investment banking firm of national standing) and (ii)
at least 75% of the consideration for such Asset Sale constitutes a controlling
interest in a business of the type described in the "Business Activities"
covenant, long-term assets used or useful in such business and/or cash or Cash
Equivalents; provided that any cash or Cash Equivalents received by the Company
or any of its Restricted Subsidiaries in connection with any Asset Sale
permitted to be consummated under this paragraph shall be added to the Excess
Proceeds.
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) or to the direct or
indirect holders of the Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or to
the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value (including, without limitation, in
connection with any merger or consolidation involving the Issuers) any Equity
Interests of the Company or any direct or indirect parent of the Company; (iii)
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Senior Notes, except a payment of interest or principal at Stated Maturity;
or (iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable fourquarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed
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Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Equity"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (including Restricted Payments
permitted by clauses (i), (iv), (vi) and (viii) of the next succeeding
paragraph and excluding Restricted Payments permitted by clauses (ii),
(iii), (v), (vii), (ix) and (x) of the next succeeding paragraph), is less
than the sum, without duplication, of (i) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from
the beginning of the first fiscal quarter commencing after the date of the
Indenture to the end of the Company's most recently ended fiscal quarter
for which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
proceeds (including the fair market value of non-cash proceeds determined
in good faith by the Board of Managers) received by the Company since the
date of the Indenture as a contribution to its equity capital or from the
issue or sale of Equity Interests of the Company (other than Disqualified
Stock of the Company) or from the issue or sale of Disqualified Stock or
debt securities of the Company that have been converted into such Equity
Interests (other than Equity Interests or Disqualified Stock or convertible
debt securities sold to a Subsidiary of the Company), plus (iii) to the
extent that any Restricted Investment that was made after the date of the
Indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment, plus (iv) 50% of any dividends
received by the Company or a Wholly Owned Restricted Subsidiary after the
date of the Indenture from an Unrestricted Subsidiary of the Company, to
the extent that such dividends were not otherwise included in Consolidated
Net Income of the Company for such period, plus (v) to the extent that any
Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after
the date of the Indenture, the lesser of (A) the fair market value of the
Company's Investment in such Subsidiary as of the date of such
redesignation or (B) such fair market value as of the date on which such
Subsidiary was originally designated as an Unrestricted Subsidiary. Any
non-cash contribution or series of related non-cash contributions to equity
capital in excess of $5.0 million in fair market value shall be included in
the foregoing sum only if accompanied by a supporting valuation opinion
issued by an accounting, appraisal or investment banking firm of national
standing.
The foregoing provisions will not prohibit: (i) the payment of any dividend
otherwise prohibited hereunder within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of the Indenture; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of (A) any Indebtedness that is subordinated to
the Senior Notes or (B) any Equity Interests of the Company, in each case in
exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, Permitted Refinancing
Indebtedness of the Company that is subordinated to the Senior Notes, or Equity
Interests of the Company (other than any Disqualified Stock of the Company), or
from the net cash proceeds of a common equity capital contribution to the
Company; provided, that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(iii) the defeasance, retirement, redemption, repurchase or other acquisition of
Indebtedness that is subordinated to the Senior Notes with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness; (iv) the redemption,
repurchase, retirement, defeasance or other acquisition of any indebtedness
following a Change of Control pursuant to provisions of such Indebtedness
substantially similar to those described under the "-- Repurchase at the Option
of Holders -- Change of Control" covenant above after the Company shall have
complied with the provisions under such covenant, including the payment of the
applicable Change of Control Payment; (v) the payment of any dividend by a
Subsidiary of the Company other than any Restricted Subsidiary or by a Foreign
Subsidiary, in each case to the holders of such Subsidiary's Equity Interests on
a pro rata basis; (vi) so long as any Senior Notes are outstanding and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction, (A) the repurchase, redemption or other acquisition or
retirement for value by the Company, or the distribution by the Company to the
Parent of funding to permit the repurchase, redemption
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or other acquisition or retirement for value by the Parent, of any Equity
Interests of the Parent, the Company or any Subsidiary of the Company held by
any member of the Company's (or any of its Subsidiaries') management or by any
former employee of the Company or any of its Subsidiaries pursuant to any equity
subscription agreement or stock option agreement; provided, that the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed the sum of $5.0 million in any twelve-month period or
$10.0 million in the aggregate, plus the cash proceeds of any "key man" life
insurance policy received by the Company with respect to the owner of, and any
cash proceeds paid to the Company in connection with the issuance or exercise
of, any management or employee Equity Interests so acquired, and excluding
repurchases of Equity Interests deemed to occur upon exercise of stock options
if such Equity Interests represent a portion of the exercise price of such
options, and (B) the making of loans or advances to employees of the Company or
the Parent, in the ordinary course of business, but in any event not to exceed
$2.0 million in the aggregate outstanding at any one time; (vii) so long as the
Company is a limited liability company (or a corporation filing consolidated,
combined or unitary tax returns with the Parent), distributions to the Parent as
sole member (or shareholder) of the Company in an aggregate amount, with respect
to any period after March 31, 1998, not to exceed the amount payable with
respect to such period by the Parent to the holders of its Equity Interests
pursuant to the tax distribution provisions of the LLC Agreement as in effect on
the date of the Indenture; provided, that at any time upon irrevocable election
of the Parent on written notice to the Company, such distributions shall
thereafter be permitted in an amount not to exceed the Tax Amount (calculated
without regard to any net operating loss or other carryforward from periods
prior to the effective date of such election to the extent such carryforwards
are not actually usable under applicable law) for the Company with respect to
any such period; (viii) distributions with respect to any period after December
31, 1997, to the Parent in an amount not to exceed the operating expenses of the
Parent for such period, but only to the extent such costs (A) are directly
related to the general and administrative expenses of the Parent, the Company or
its Restricted Subsidiaries and not to any other business, subsidiary or
investment of the Parent, (B) are not otherwise paid for by the Company or its
Restricted Subsidiaries and (C) are not payments in respect of any Equity
Interests or Indebtedness of the Parent or of any Affiliate of the Parent;
provided, that the aggregate amount of any such distributions in any
twelve-month period shall not exceed $3.0 million; (ix) any Permitted
Investment; and (x) cash payments by the Company or its subsidiaries in
connection with the consummation of the Transactions.
The Board of Managers may designate any Restricted Subsidiary, other than
ACL Capital, to be an Unrestricted Subsidiary if such designation would not
cause a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the fair market value of such Investments at the time of such
designation. Such designation will only be permitted if such Restricted Payment
would be permitted at such time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Board of Managers whose
resolution with respect thereto shall be delivered to the Trustee, such
determination to be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing if such fair market
value exceeds $10.0 million. Not later than the date of making any Restricted
Payment, the Issuers shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by the covenant entitled "-- Restricted
Payments" were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
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Incurrence of Indebtedness and Issuance of Preferred Equity
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, that the Issuers may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock and the Company's Subsidiaries may incur
Indebtedness if the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have been at least 2.00
to 1, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period.
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company or any
Subsidiary thereof unless such Indebtedness is also contractually subordinated
in right of payment to the Senior Notes on substantially identical terms;
provided, that no Indebtedness of the Company or any Subsidiary thereof shall be
deemed to be contractually subordinated in right of payment to any other
Indebtedness of the Company or any Subsidiary thereof solely by virtue of being
unsecured. In addition, the Indenture provides that the Company will not, and
will not permit any of its Subsidiaries to, incur any Indebtedness secured by a
Lien other than pursuant to a New Credit Facility and other than a Permitted
Lien unless contemporaneously therewith effective provision is made to secure
the Senior Notes equally and ratably with, or in the case of Indebtedness
subordinated in right of payment to the Senior Notes, on a senior basis to, such
Indebtedness for so long as such Indebtedness is so secured by a Lien.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Issuers or any Restricted Subsidiary of term
Indebtedness under the Senior Credit Facilities or another New Credit
Facility; provided, that the aggregate principal amount of all term
Indebtedness (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Company and its
Subsidiaries thereunder) outstanding under all New Credit Facilities after
giving effect to such incurrence does not exceed an amount equal to $435
million less the aggregate amount of all scheduled repayments of the
principal of any term Indebtedness under a New Credit Facility (other than
repayments that are immediately reborrowed) that have been made since the
date of the Indenture;
(ii) the incurrence by the Issuers or any Restricted Subsidiary of
revolving credit Indebtedness and letters of credit under the Senior Credit
Facilities or a New Credit Facility; provided, that the aggregate principal
amount of all revolving credit Indebtedness (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Company and its Subsidiaries thereunder) outstanding after giving
effect to such incurrence does not exceed an amount equal to $100 million
less the aggregate amount of all Net Proceeds of Asset Sales applied
permanently to repay revolving credit Indebtedness (which is accompanied by
a corresponding permanent commitment reduction and is not available to be
reborrowed) pursuant to the covenant described above under the caption
"--Asset Sales";
(iii) the incurrence by the Company and its Subsidiaries of Existing
Indebtedness;
(iv) the incurrence by the Issuers of Indebtedness represented by the
Senior Notes and the incurrence by the Subsidiary Guarantors of
Indebtedness represented by the Subsidiary Guarantees;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations or
Purchase Money Indebtedness, at any time outstanding in an aggregate
principal amount not to exceed 10% of Total Assets;
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(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by the Indenture
to be incurred under the first paragraph hereof or clauses (i), (ii),
(iii), (iv), (v), (vi) or (ix) of this paragraph;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness owing to and held by any Wholly Owned
Restricted Subsidiary or owing to and held by the Company; provided, that
(i) if one of the Issuers is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in cash
of all Obligations with respect to the Senior Notes and (ii) (A) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a Wholly
Owned Restricted Subsidiary thereof shall be deemed to constitute an
incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause (vii)
and (B) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Wholly Owned Restricted Subsidiary
thereof shall be deemed to constitute an incurrence of such Indebtedness by
the Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (vii);
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations incurred with respect to any
Indebtedness or Obligation that is permitted by the terms of the Indenture
to be outstanding;
(ix) the incurrence by the Company or any Subsidiary Guarantor of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (ix), not to exceed $25
million;
(x) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary of
the Company that was not permitted by this clause (x);
(xi) the incurrence of Indebtedness of the Company and its Restricted
Subsidiaries (including letters of credit) in respect of performance bonds,
bankers' acceptances, letters of credit, performance, bid, surety or appeal
bonds or similar bonds and completion guarantees provided by the Company
and its Restricted Subsidiaries in the ordinary course of their business
and consistent with past practices and which do not secure other
Indebtedness;
(xii) Indebtedness of the Company and its Restricted Subsidiaries
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, in any case incurred in connection
with the disposition of any business, assets or Subsidiary of the Company
(other than Guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or Subsidiary for the purpose of
financing such acquisition), in an aggregate principal amount not to exceed
the gross proceeds actually received by the Company or any Restricted
Subsidiary of the Company in connection with such disposition;
(xiii) Indebtedness of the Company or a Restricted Subsidiary owed to
(including obligations in respect of letters of credit for the benefit of)
any Person in connection with worker's compensation, health, disability or
other employee benefits or property, casualty or liability insurance
provided by such Person to the Company or such Restricted Subsidiary,
pursuant to reimbursement or indemnification obligations to such Person, in
each case incurred in the ordinary course of business and consistent with
past practices;
(xiv) the Guarantee by the Issuers or any Restricted Subsidiary of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this covenant;
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(xv) the incurrence by Foreign Subsidiaries of additional Indebtedness
in an aggregate principal amount (or accreted value, as applicable) at any
time outstanding, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any Indebtedness incurred pursuant to this
clause (xv), not to exceed $20.0 million; and
(xvi) Indebtedness incurred in connection with a transaction pursuant
to and in compliance with the caption entitled "-- Sales of Accounts
Receivable."
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xvi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Issuers shall, in their sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this covenant;
provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
The Indenture provides that the Company will not permit any of its
Restricted Subsidiaries other than Subsidiary Guarantors to incur any
Indebtedness (including Acquired Debt) other than (i) intercompany Indebtedness
owing to the Company or a Wholly Owned Restricted Subsidiary of the Company
permitted under clause (vii) above or (ii) Indebtedness permitted under clause
(xv) above; provided, that Restricted Subsidiaries other than Subsidiary
Guarantors may incur Indebtedness (including Acquired Debt) other than
Indebtedness permitted under clause (vii) above in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace any
such Indebtedness so incurred and any Indebtedness permitted under clause (xv)
above, in an amount not to exceed 30% of the total consolidated assets of such
Restricted Subsidiaries in the aggregate, calculated in accordance with GAAP, if
the Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
would have been at least 2.00 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if such additional
Indebtedness had been incurred at the beginning of such four-quarter period.
Liens
The Indenture provides that the Issuers will not, and will not permit any
of their Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries. However, the
foregoing restrictions will not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of the
Indenture, (b) the Senior Credit Facilities as in effect as of the date of the
Indenture, any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, and any other New
Credit Facility permitted under the Indenture; provided, that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements, refinancings or New Credit Facilities are no more restric-
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tive, taken as a whole, with respect to such dividend and other payment
restrictions than those contained in the Senior Credit Facilities as in effect
on the date of the Indenture, (c) Indebtedness incurred by Restricted
Subsidiaries other than Subsidiary Guarantors, incurred in compliance with the
covenant described in the last paragraph under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Equity," (d) the Indenture and the Notes,
(e) applicable law, (f) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided, that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the Indenture to be incurred, (g)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (h) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (f) above on the property so
acquired, (i) any agreement for the sale of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending its sale, (j)
Permitted Refinancing Indebtedness, provided, that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced, (k) secured Indebtedness otherwise permitted
to be incurred pursuant to the provisions of the covenant described above under
the caption "-- Liens" that limits the right of the debtor to dispose of the
assets securing such Indebtedness, (l) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements entered into in the ordinary course of business,
(m) protective liens filed in connection with sale-leaseback transactions
permitted under the caption "-- Sale and Leaseback Transactions," (n) Permitted
Debt incurred pursuant to clauses (v), (viii), (xi), (xiii) or (xv) of the
covenant described under the caption "Incurrence of Indebtedness and Issuance of
Preferred Equity," (o) purchase money obligations or other Indebtedness or
contractual requirements incurred in connection with or permitted by the
covenant described under the caption "-- Sales of Accounts Receivable" and (p)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Issuers may not consolidate or merge with
or into (whether or not such Issuer is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) such Issuer is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than one of the Issuers) or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made is a corporation or limited liability company organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than one of the Issuers) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Issuers
under the Registration Rights Agreement, the Senior Notes and the Indenture
pursuant to supplemental indentures in a form reasonably satisfactory to the
Trustee; (iii) immediately after such transaction no Default or Event of Default
exists; (iv) except in the case of a merger or consolidation of one of the
Issuers with or into a Wholly Owned Restricted Subsidiary of the Company, the
Issuer or the entity or Person formed by or surviving any such merger or
consolidation (if other than one of the Issuers), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, (A) be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "-- Incurrence
of Indebtedness and Issuance of Preferred Equity" and (B) have Consolidated Net
Worth in an amount not less than the Consolidated Net Worth of the Company
immediately prior to such transaction; and (v) the Company will have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or
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transfer and such supplemental indenture (if any) comply with the Indenture.
Notwithstanding the foregoing, the Company is permitted to reorganize as a
corporation; provided, that the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States confirming that the holders of the
Senior Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such reorganization and will be subject to Federal
income tax in the same manner and at the same times as would have been the case
if such reorganization had not occurred, and certain other conditions are
satisfied.
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Issuers deliver to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Managers set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Managers and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Company of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such Restricted
Subsidiary, (ii) transactions between or among the Company and/or its Restricted
Subsidiaries, (iii) payment of reasonable directors fees and payments in respect
of indemnification obligations owing to directors, officers or other individuals
under the charter or by-laws of the Company or the Parent or pursuant to written
agreements with any such Person, (iv) Restricted Payments and Permitted
Investments that are permitted by the provisions of the Indenture described
above under the caption "-- Restricted Payments," (v) transactions pursuant to
agreements in effect as of the date of the Indenture disclosed in or
contemplated by "Certain Relationships and Related Transactions" or disclosed
elsewhere in this Prospectus, (vi) transactions effected in compliance with the
terms of sales permitted as described under the caption "-- Sales of Accounts
Receivable" and (vii) Permitted Affiliate Transactions.
Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; provided, that the Issuers may enter into a sale and leaseback
transaction if (i) the Company could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described above under the caption "-- Incurrence of
Additional Indebtedness and Issuance of Preferred Equity" and (b) incurred a
Lien to secure such Indebtedness pursuant to the covenant described above under
the caption "-- Liens," (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Managers and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Issuers apply the proceeds of
such transaction in compliance with, the covenant described above under the
caption "-- Asset Sales."
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Restrictions on Preferred Stock of Subsidiaries
The Indenture provides that the Company will not permit any of its
Restricted Subsidiaries to issue any preferred stock, or permit any Person to
own or hold an interest in any preferred stock of any such Subsidiary, except
for preferred stock issued to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
Business Activities
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than (i) Permitted
Businesses and (ii) the making of Permitted Investments and engaging in a
business in connection with any such Permitted Investment, except to such extent
as would not be material to the Company and its Restricted Subsidiaries taken as
a whole.
Restrictions on Activities of ACL Capital
The Indenture provides that ACL Capital may not hold any assets (other than
the $100.00 contributed to it in connection with its formation), become liable
for any obligations other than its obligations under the Senior Notes or engage
in any business activities; provided, that ACL Capital may be a co-obligor with
respect to Indebtedness if the Company is primary obligor of such Indebtedness
and the net proceeds of such Indebtedness are received by the Company or one or
more of the Company's Subsidiaries other than ACL Capital.
Payments for Consent
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Senior Notes for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of the Indenture or the Senior Notes unless such
consideration is offered to be paid or is paid to all Holders of the Senior
Notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
Additional Subsidiary Guarantees
The Indenture provides that if the Issuers or any of their Restricted
Subsidiaries shall acquire or create another domestic Subsidiary after the date
of the Indenture, then such newly acquired or created Subsidiary shall become a
Subsidiary Guarantor and execute supplemental indentures and deliver an Opinion
of Counsel, in accordance with the terms of the Indenture.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Senior Notes are outstanding, the
Issuers will furnish to the Holders of Senior Notes and prospective purchasers
upon request (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Issuers were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Issuers and
their consolidated Subsidiaries and, with respect to the annual information
only, a report thereon by the Issuers' certified independent accountants and
(ii) all current reports that would be required to be filed with the Commission
on Form 8-K if the Issuers were required to file such reports, in each case
within the time periods specified in the Commission's rules and regulations. In
addition, following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Issuers will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, (x) at
all times that the Commission does not accept the filings provided for in the
preceding sentence or (y) such filings provided for in the preceding sentence do
not
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contain all of the information required to be delivered pursuant to Rule
144A(d)(4), the Issuers have agreed to make available to any holder of Senior
Notes, to securities analysts and to prospective holders of such Senior Notes,
the information required by Rule 144A(d)(4) under the Securities Act.
SALES OF ACCOUNTS RECEIVABLE
The Company may, and any of its Restricted Subsidiaries may, sell at any
time and from time to time, accounts receivable and notes receivable and related
assets to an Accounts Receivable Subsidiary; provided that (i) the aggregate
consideration received in each such sale is at least equal to the aggregate fair
market value of the receivables sold, as determined by the Board of Managers in
good faith, (ii) no less than 80% of the consideration received in each such
sale consists of either cash or a promissory note (a "Promissory Note") which is
subordinated to no Indebtedness or obligation (except that it may be
subordinated to the financial institutions or other entities providing the
financing to the Accounts Receivable Subsidiary with respect to such accounts
receivable (the "Financier")) or an Equity Interest in such Accounts Receivable
Subsidiary; provided further that the initial sale will include all accounts
receivable of the Company and/or its Restricted Subsidiaries that are party to
such arrangements that constitute eligible receivables under such arrangements,
(iii) the cash proceeds received from the initial sale less reasonable and
customary transaction costs will be deemed to be Net Proceeds and will be
applied in accordance with the second paragraph of the covenant described above
under the caption entitled "-- Certain Covenants -- Asset Sales," and (iv) the
Company and its Restricted Subsidiaries will sell all accounts receivable that
constitute eligible receivables under such arrangements to the Accounts
Receivable Subsidiary no less frequently than on a weekly basis.
The Company (i) will not permit any Accounts Receivable Subsidiary to sell
any accounts receivable purchased from the Company or any of its Restricted
Subsidiaries to any other person except on an arm's-length basis and solely for
consideration in the form of cash or Cash Equivalents, (ii) will not permit the
Accounts Receivable Subsidiary to engage in any business or transaction other
than the purchase, financing and sale of accounts receivable of the Company and
its Restricted Subsidiaries and activities incidental thereto, (iii) will not
permit any Accounts Receivable Subsidiary to incur Indebtedness in an amount in
excess of the book value of such Accounts Receivable Subsidiary's total assets,
as determined in accordance with GAAP, (iv) will, at least as frequently as
monthly, cause the Accounts Receivable Subsidiary to remit to the Company as
payment on the outstanding balance of the Promissory Notes, all available cash
or Cash Equivalents not held in a collection account pledged to a Financier, to
the extent not applied to pay or maintain reserves for reasonable operating
expenses of the Accounts Receivable Subsidiary or to satisfy reasonable minimum
operating capital requirements and (v) will not, and will not permit any of its
Subsidiaries to, sell accounts receivable to any Accounts Receivable Subsidiary
upon the occurrence of certain events of bankruptcy or insolvency with respect
to such Accounts Receivable Subsidiary.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Senior Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Senior Notes; (iii)
failure by the Company or any of its Subsidiaries to comply with the provisions
described under the caption "-- Repurchase at the Option of Holders -- Change of
Control"; (iv) failure by the Company or any of its Subsidiaries for 30 days
after notice to comply with any of its other agreements in the Indenture or the
Senior Notes; (v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $7.5 million or more;
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(vi) failure by the Company or any of its Subsidiaries to pay final judgments
aggregating in excess of $7.5 million, which judgments are not paid, discharged
or stayed for a period of 30 days; (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Subsidiaries; and (viii)
except as permitted by the Indenture, any Subsidiary Guarantee shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Subsidiary Guarantor, or any Person
acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Senior Notes
may declare all such Senior Notes to be due and payable immediately. Upon such
declaration, the principal of such Senior Notes, premium, if any, and accrued
and unpaid interest on such Senior Notes shall be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Issuers, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Senior Notes will become
due and payable without further action or notice. Holders of the Senior Notes
may not enforce the Indenture or the Senior Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Senior Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Senior Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
such Senior Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, such Senior Notes.
The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuers are required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, MEMBERS AND STOCKHOLDERS
No director, officer, employee, incorporator, member or stockholder of the
Issuers, as such, shall have any liability for any obligations of the Issuers
under the Senior Notes, the Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder of Senior Notes
by accepting a Senior Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Senior Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers may, at their option and at any time, elect to have all of
their obligations discharged with respect to the outstanding Senior Notes
("Legal Defeasance") except for (i) the rights of Holders of outstanding Senior
Notes to receive payments in respect of the principal of, premium and Liquidated
Damages, if any, and interest on such Senior Notes when such payments are due
from the trust referred to below, (ii) the Issuers' obligations with respect to
the Senior Notes concerning issuing temporary Senior Notes, registration of
Senior Notes, mutilated, destroyed, lost or stolen Senior Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Issuers obligations in connection therewith and (iv) the Legal
Defeasance provisions of the Indenture. In addition, the Issuers may, at their
option and at any time, elect to have the obligations of the Issuers released
with respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the Senior Notes.
In the event Covenant Defeasance occurs, certain events (not including
non-payment, bankruptcy, receivership, rehabilitation and insolvency
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events) described under "-- Events of Default and Remedies" will no longer
constitute an Event of Default with respect to the Senior Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Senior Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages on the outstanding Senior Notes on the stated maturity or on
the applicable redemption date, as the case may be, and the Issuers must specify
whether the Senior Notes are being defeased to maturity or to a particular
redemption date; (ii) in the case of Legal Defeasance, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States confirming
that (A) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Senior Notes will not recognize income, gain or
loss for Federal income tax purposes as a result of such Legal Defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance had
not occurred; (iii) in the case of Covenant Defeasance, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States confirming
that the Holders of the outstanding Senior Notes will not recognize income, gain
or loss for Federal income tax purposes as a result of such Covenant Defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit); (v) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Issuers must have delivered to the Trustee an Opinion of Counsel
to the effect that as of the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii) the
Issuers must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by the Issuers with the intent of preferring the Holders of
Senior Notes over the other creditors of the Issuers with the intent of
defeating, hindering, delaying or defrauding creditors of the Issuers or others;
and (viii) the Issuers must deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Senior Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuers may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuers are not required to transfer or exchange
any Senior Note selected for redemption. Also, the Issuers are not required to
transfer or exchange any Senior Note for a period of 15 days before a selection
of Senior Notes to be redeemed.
The registered Holder of a Senior Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Senior Notes may be amended or supplemented with the consent of the Holders
of at least a majority in principal amount of such Senior Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, such Senior Notes), and any existing
default or compliance with any provision of the Indenture or the Senior Notes
may be waived with the consent of the Holders of a majority in principal amount
of such then outstanding Senior Notes (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, such Senior Notes).
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Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Senior Notes held by a non-consenting Holder): (i) reduce
the principal amount of Senior Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Senior Note or alter the provisions with respect to the redemption of the
Senior Notes (other than the provisions relating to the covenants described
above and entitled "-- Repurchase at the Option of Holders -- Change of Control"
and "-- Certain Covenants -- Asset Sales"),(iii) reduce the rate of or change
the time for payment of interest on any Senior Note, (iv) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the Senior Notes (except a rescission of acceleration of the Senior Notes by
the Holders of at least a majority in aggregate principal amount of such Senior
Notes and a waiver of the payment default that resulted from such acceleration),
(v) make any Senior Note payable in money other than that stated in the Senior
Notes, (vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of Senior Notes to receive
payments of principal of or premium, if any, or interest on the Senior Notes,
(vii) waive a redemption payment with respect to any Senior Note (other than the
provisions relating to the covenants described above and entitled "-- Repurchase
at the Option of Holders -- Change of Control" and "-- Certain
Covenants -- Asset Sales") or (viii) make any change in the foregoing amendment
and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Senior
Notes, the Issuers and the Trustee may amend or supplement the Indenture or the
Senior Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Senior Notes in addition to or in place of certificated Senior
Notes, to provide for the assumption of the Issuers' obligations to Holders of
Senior Notes in the case of the merger, consolidation or sale of all or
substantially all of the Issuers' assets, to make any change that would provide
any additional rights or benefits to the Holders of Senior Notes or that does
not adversely affect the legal rights under the Indenture of any such Holder, or
to comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should the Trustee become a creditor of the Issuers, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if the Trustee acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Senior Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Senior Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
GOVERNING LAW
The Indenture provides that it and the Senior Notes will be governed by,
and construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain copies of the Indenture and
Registration Rights Agreement without charge by writing to the Issuers at 1701
East Market St., Jeffersonville, IN 47130, Attention: Secretary.
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Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Accounts Receivable Subsidiary" means a Wholly Owned Subsidiary of the
Company (i) which is formed solely for the purpose of, and which engages in no
activities other than activities in connection with, financing accounts
receivable and/or notes receivable and related assets of the Company and/or its
Restricted Subsidiaries, (ii) which is designated by the Board of Managers as an
Accounts Receivables Subsidiary pursuant to a resolution set forth in an
Officers' Certificate and delivered to the Trustee, (iii) that has total assets
at the time of such designation with a book value not exceeding $100,000 plus
the reasonable fees and expenses required to establish such Accounts Receivable
Subsidiary and any accounts receivable financing, (iv) no portion of
Indebtedness or any other obligation (contingent or otherwise) of which (a) is
at any time recourse to or obligates the Company or any Restricted Subsidiary of
the Company in any way, other than pursuant to (I) representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with the sale of accounts receivable and/or notes receivable to such
Accounts Receivable Subsidiary or (II) any guarantee of any such accounts
receivable financing by the Company that is permitted to be incurred pursuant to
the covenant described under the caption entitled "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Equity," or
(b) subjects any property or asset of the Company or any Restricted Subsidiary
of the Company, directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to (I) representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with sales of accounts receivable and/or notes receivable or (II) any
guarantee of any such accounts receivable financing by the Company that is
permitted to be incurred pursuant to the covenant described under the caption
entitled "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Equity," (v) with which neither the Company nor any Restricted
Subsidiary of the Company has any contract, agreement, arrangement or
understanding other than contracts, agreements, arrangements or understandings
entered into in the ordinary course of business in connection with sales of
accounts receivable and/or notes receivable in accordance with the description
under the caption "-- Sales of Accounts Receivable" and fees payable in the
ordinary course of business in connection with servicing accounts receivable
and/or notes receivable and (vi) with respect to which neither the Company nor
any Restricted Subsidiary of the Company has any obligation (a) to subscribe for
additional shares of Capital Stock or other Equity Interests therein or make any
additional capital contribution or similar payment or transfer thereto other
than in connection with the sale of accounts receivable and/or notes receivable
to such Accounts Receivable Subsidiary in accordance with the description under
the caption "-- Sales of Accounts Receivable" or (b) to maintain or preserve
solvency or any balance sheet item, financial condition, level of income or
results of operations thereof.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than (A) in the ordinary course of business consistent with
past practices or (B) sales or other dispositions of accounts receivable and/or
notes
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receivable and related assets to the Accounts Receivable Subsidiary in
accordance with the description under the caption "-- Sales of Accounts
Receivable" (provided, that the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company and its Subsidiaries taken
as a whole will be governed by the provisions of the Indenture described above
under the caption "-- Repurchase at the Option of Holders -- Change of Control"
and/or the provisions described above under the caption "-- Certain Covenants --
Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset
Sale covenant), and (ii) the issue or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $1.0
million or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing, the following items shall not be deemed to be Asset Sales: (i) a
transfer of assets by the Issuers to a Wholly Owned Restricted Subsidiary or by
a Wholly Owned Restricted Subsidiary to the Issuers or to another Wholly Owned
Restricted Subsidiary; (ii) an issuance of Equity Interests by a Wholly Owned
Restricted Subsidiary to the Issuers or to another Wholly Owned Restricted
Subsidiary; (iii) a Restricted Payment that is permitted by the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments";
(iv) any disposition of damaged, worn out or otherwise obsolete property in the
ordinary course of business, so long as such property is no longer necessary for
the proper conduct of a Permitted Business; (v) any sale or discount without
recourse (other than recourse for a breach of a representation or warranty) of
accounts receivable arising in the ordinary course of business, but only in
connection with the collection or compromise thereof; and (vi) sales or
transfers (a) among Foreign Subsidiaries or (b) from the Issuers or a Wholly
Owned Restricted Subsidiary to a Foreign Subsidiary to the extent, in the case
of this clause (b), the consideration received by the Company or any Wholly
Owned Restricted Subsidiary of the Company in any such transaction consists
solely of cash or Cash Equivalents.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Board of Managers" means (i) for so long as the Company is a limited
liability company, the board of managers or management committee of the Company,
if it has such a board or committee, and if it does not, the board of managers
or management committee of the manager of the Company, (ii) if the Company is
not a limited liability company at the relevant time, the board of directors or
other analogous body of the Company, and (iii) any committee or subcommittee
thereof duly authorized to act on behalf of such board of managers, such board
of directors or such other analogous body.
"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The amount of Indebtedness represented by a
Capital Lease Obligation shall be the capitalized amount of the liability in
respect of such obligation determined in accordance with GAAP, and the Stated
Maturity thereof shall be the date of the last scheduled payment of rent or any
other amount due under the relevant lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having
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capital and surplus in excess of $500.0 million and a Thompson Bank Watch Rating
of "B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition and
(vi) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (i) through (v) of this
definition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits or the Tax Amount of such Person and its Subsidiaries for such period,
to the extent that such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) consolidated interest expense of such Person
and its Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing such
Consolidated Net Income for such period, plus (vi) one-time cash payments made
in connection with the Transactions in an amount not to exceed $3.0 million, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that the
Net Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Subsidiary or
its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person (ii) the Net Income of any Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.
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"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (a) the consolidated equity of the common equityholders of such
Person and its consolidated Restricted Subsidiaries as of such date, plus (b)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (i) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the date of the Indenture
in the book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (ii) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries
and (iii) all unamortized debt discount and expense and unamortized deferred
charges as of such date, in each case, determined in accordance with GAAP.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, that any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to require
the issuers thereof to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that such issuers may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with the covenant described above under the caption
"-- Certain Covenants -- Restricted Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means a primary offering of Capital Stock (other than
Disqualified Stock) of (i) the Company; or (ii) the Parent to the extent the net
proceeds thereof are contributed to the Company as a common equity capital
contribution (other than Disqualified Stock).
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness (other than Indebtedness under the Senior Credit Facilities) of the
Company and its Subsidiaries in existence on the date of the Indenture, until
such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest of such Person and
its Restricted Subsidiaries that was capitalized during such period, and (iii)
any interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on assets
of such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon) and (iv) the product of (a) all cash dividend
payments or other distributions (and non-cash dividend payments in the case of a
Person that is a Restricted Subsidiary) on any series of preferred equity of
such Person times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person (or in the case of a person that is a
partnership or limited liability company, the combined federal, state, local and
foreign income tax rate that was or would have been utilized to calculate the
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Tax Amount of such Person), expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
referent Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred equity subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred equity, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Foreign Subsidiary" means each of ACBL de Venezuela, C.A. (a Venezuelan
compania anonima), ACBL Hidrovias, S.A. (an Argentine sociedad anonima), ACBL
Hidrovias, Ltd. (a Bermuda corporation), ACBL Argentina, Ltd. (a Bermuda
corporation), ACBL Venezuela, Ltd. (a Bermuda corporation), ACBL Castle Harbour,
Ltd. (a Bermuda corporation), ACL Venezuela, Ltd. (a Bermuda corporation),
Venco, Ltd. (a Bermuda corporation) and any future Restricted Subsidiary of the
Company that is organized under the laws of any jurisdiction other than the
United States or any State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements or other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates and (ii) foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect such Person against
fluctuations in currency exchange rates, in each case provided that such
obligations are entered into solely to protect such Person against fluctuations
in interest rates or currency exchange rates and not for purposes of
speculation.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations, the balance deferred and unpaid of the
purchase price of any property, Attributable Debt or any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade
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payable, if and to the extent any of the foregoing (other than letters of
credit, Attributable Debt and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, as well as
all Indebtedness of others secured by a Lien on any asset of such Person
(whether or not such Indebtedness is assumed by such Person) and, to the extent
not otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "-- Certain Covenants -- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person for any period, (i) the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of dividends on preferred interests, excluding, however,
(a) any gain (but not loss), together with any related provision for taxes or
distributions in respect of taxes made under clause (vii) of the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments,"
on such gain (but not loss), realized in connection with (1) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (2) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries and (b) any extraordinary or
nonrecurring gain (but not loss), together with any related provision for taxes
or distributions in respect of taxes made under clause (vii) of the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments,"
on such extraordinary or nonrecurring gain (but not loss) less (ii) in the case
of any Person that is a partnership or limited liability company, distributions
in respect of taxes made under clause (vii) of the covenant described above
under the caption "-- Certain Covenants -- Restricted Payments," of such person
for such period.
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, any taxes (or distributions in respect of taxes
permitted under clause (vii) of the covenant described above under the caption
"-- Certain Covenants -- Restricted Payments"), and any reserve for adjustment
in respect of the sale price of such asset or assets established in accordance
with GAAP.
"New Credit Facility" means, with respect to the Company and its
Subsidiaries, one or more debt facilities (including, without limitation,
facilities available under the Senior Credit Facilities) or commercial
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paper facilities with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Notes and any New Credit Facility) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity;
and (iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities and obligations
payable under the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed by any two of the Chief
Executive Officer, the Chief Financial Officer, the President, any Vice
President, the Treasurer or the Secretary, of the Company.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee and who may be an employee of or counsel to the
Parent, the Company or the Trustee.
"Permitted Affiliate Transactions" means (i) management, support, service
and consulting arrangements with CSX pursuant to the Transition Services
Agreement and any payments for fees and expenses thereunder made; provided, that
such payments shall not exceed $3.0 million in the aggregate, (ii) railroad
transportation and related services provided to the Company and its Subsidiaries
in the ordinary course of business and consistent with past practices; provided,
that any such transactions are on terms that are not materially less favorable
to the Company or its Subsidiaries than those that would have been obtained in a
comparable transaction with an unrelated Person and (iii) transactions pursuant
to any contract or agreement in effect on the date of the Indenture as the same
may be amended, modified or replaced from time to time so long as such
amendment, modification or replacement is not materially less favorable to the
Company and its Restricted Subsidiaries than the contract or agreement as in
effect on the date of the Indenture.
"Permitted Business" means any of the businesses and any other businesses
ancillary or complementary to the businesses engaged in by the Company and its
respective Restricted Subsidiaries on the date of the Indenture.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary that is a Subsidiary Guarantor and is engaged in a
Permitted Business; (b) any Investment in Cash Equivalents; (c) any Investment
by the Company or any Restricted Subsidiary of the Company in a Person, if as a
result of or in connection with such Investment (i) such Person becomes a
Restricted Subsidiary of the Company that is a Subsidiary Guarantor of the
Company and is engaged in a Permitted Business or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company that is a Subsidiary Guarantor of the Company and is
engaged in a Permitted Business; (d) any Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the covenant described above under the caption
"-- Certain Covenants -- Asset Sales" or from a sale that was made pursuant to
and in compliance with the requirements described under the caption "-- Sales of
Accounts Receivable."; (e) any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company; (f)
any Investment by the Company or any Wholly Owned Restricted Subsidiary of the
Company involving the contribution of assets to a Restricted Subsidiary of the
Company that is a not Subsidiary Guarantor in exchange for the incurrence by
such Restricted Subsidiary of Indebtedness owed to the Company or any Wholly
Owned Restricted Subsidiary of the Company that is a
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Subsidiary Guarantor; (g) Investments in an Accounts Receivable Subsidiary made
in connection with the formation of an Accounts Receivable Subsidiary; and (h)
other Investments in any Person having an aggregate fair market value (measured
on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (h) that are at the time outstanding, not to exceed
5% of Total Assets.
"Permitted Liens" means (i) Liens on assets of the Company or Restricted
Subsidiaries of the Company to secure Senior Debt of the Company or such
Subsidiaries in an amount not to exceed $535.0 million minus the aggregate
amount of principal payments at Stated Maturity made on Indebtedness under a New
Credit Facility since the date of the Indenture that was otherwise permitted by
the terms of the Indenture to be incurred; (ii) Liens in favor of the Issuers;
(iii) Liens on property of a Person existing at the time such Person is merged
into or consolidated with one of the Company or any Subsidiary of the Company;
provided, that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company or any Subsidiary of the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided, that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens existing on the date of the Indenture; (vii) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided, that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (viii) Liens on assets of Unrestricted Subsidiaries that
secure Non-Recourse Debt of Unrestricted Subsidiaries; and (ix) Liens incurred
in the ordinary course of business of the Issuers or any Subsidiary of the
Issuers with respect to obligations that do not exceed $5.0 million at any one
time outstanding and that (a) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Issuers or such Subsidiary; (x) Liens with respect
to current wages of the master and crew and for wages of a stevedore when
employed directly by the Company or any Subsidiary of the Company, or by the
charterer, operator, master or agent of any of the vessels owned or operated by
the Company or any Subsidiary of the Company, and for salvage (including
contract salvage) and general average and (xi) Liens with respect to Permitted
Debt incurred pursuant to clauses (v), (viii), (ix), (xi), (xiii) and (xv) of
the covenant described under the caption "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Equity."
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided, that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Senior Notes on terms at least as favorable to the Holders of Senior
Notes as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Restricted Subsidiary
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
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"Purchase Money Indebtedness" means Indebtedness (i) consisting of the
deferred purchase price of an asset or assets (including Capital Stock), any
conditional sale obligation, any obligation under any title retention agreement
or any other purchase money obligation or (ii) incurred to finance the
acquisition by the Company or a Restricted Subsidiary of such asset or assets,
including additions and improvements; provided, that the average life of such
Indebtedness is less than the anticipated useful life of assets having an
aggregate fair market value representing more than 50% of the aggregate fair
market value of all assets so acquired and that such Indebtedness is incurred
within 180 days after the acquisition by the Company or Restricted Subsidiary of
such asset, or is in existence with respect to any asset or other property at
the time such asset or property is acquired.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Credit Facilities" means that certain Credit Agreement, by and
among the Company, certain Subsidiaries of the Company and The Chase Manhattan
Bank, as Agent, providing for revolving credit borrowings and term loans,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"Senior Debt" means (i) all Indebtedness outstanding under a New Credit
Facility and all Hedging Obligations with respect thereto, (ii) any other
Indebtedness permitted to be incurred under the terms of the Indenture, unless
the instrument under which such Indebtedness is incurred expressly provides that
it is subordinated in right of payment to the Senior Notes and (iii) all
Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (v) any Indebtedness or
Obligation which is subordinate or junior in any respect (other than as a result
of the Indebtedness being unsecured) to any other Indebtedness or obligation of
the Company, (w) any liability for federal, state, local or other taxes owed or
owing, (x) any Indebtedness of the Issuers to any of their Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means each of American Commercial Barge Line LLC (a
Delaware limited liability company), American Commercial Marine Service LLC (a
Delaware limited liability company), Louisiana Dock Company LLC (a Delaware
limited liability company), Waterway Communication System LLC (a Delaware
limited liability company), American Commercial Terminals LLC (a Delaware
limited liability company), American Commercial Terminals-Memphis LLC (a
Delaware limited liability company), Jeffboat LLC (a Delaware limited liability
company), American Commercial Lines International LLC (a Delaware limited
liability company), Orinoco TASA LLC (a Delaware limited liability company),
Orinoco TASV LLC (a Delaware limited liability company), Breen TAS LLC (a
Delaware limited liability
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company), Bullard TAS LLC (a Delaware limited liability company), Shelton TAS
LLC (a Delaware limited liability company), Lemont Harbor & Fleeting Services
LLC (a Delaware limited liability company), Tiger Shipyard LLC (a Delaware
limited liability company), Wilkinson Point LLC (a Delaware limited liability
company), Houston Fleet LLC (a Delaware limited liability company) and any other
Subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of the Indenture, and their respective successors and assigns.
"Tax Amount" means, with respect to any Person for any period, the combined
federal, state, local and foreign income taxes that would be paid by such Person
if it were a Delaware corporation filing separate tax returns with respect to
such Person's actual taxable income for such period; provided, that in
determining the Tax Amount for a period, the effect thereon of any net operating
loss carryforwards or other carryforwards, such as alternative minimum tax
carryforwards, that would have arisen if such Person were a Delaware corporation
shall be taken into account to the extent they would be taken into account under
applicable law. Notwithstanding anything to the contrary, Tax Amount shall not
include taxes resulting from such Person's reorganization as or change in status
to a corporation. In no event shall the Tax Amount for any year or other period
be less than zero.
"Total Assets" means, at any date of determination, the total consolidated
assets of the Company and its Restricted Subsidiaries, as set forth on the
Company's then most recent consolidated balance sheet.
"Unrestricted Subsidiary" means River Terminal Properties, L.P. and any
Subsidiary (other than ACL Capital ) or any successor to any of them that is
designated by the Board of Managers as an Unrestricted Subsidiary pursuant to a
resolution of the Board of Managers; but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of managers or board of directors that is
not a director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries. Any such
designation by the Board of Managers shall be evidenced to the Trustee by filing
with the Trustee a certified copy of the resolution of the Board of Managers
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "-- Certain Covenants -- Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption "Incurrence of Indebtedness and Issuance of Preferred Equity," the
Issuers shall be in default of such covenant). The Board of Managers of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the covenant described
under the caption "-- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Equity," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the board of
managers or management committee of a limited liability company, the board of
directors of a corporation or other analogous body of such Person.
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"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were originally sold by the Company on June 23, 1998 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Notes to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and to certain persons outside the United
States pursuant to Regulation S under the Securities Act that agreed to comply
with certain transfer restrictions and other conditions. As a condition to the
Purchase Agreement, the Issuers entered into the Registration Rights Agreement
with the Initial Purchaser pursuant to which the Issuers have agreed to: (i)
file a registration statement (the "Exchange Offer Registration Statement") with
the Commission on or prior to 60 days after the closing of the Offering (the
"Closing"), (ii) use their best efforts to have the Exchange Offer Registration
Statement declared effective by the Commission on or prior to 150 days after the
Closing of the Offering, (iii) unless the Exchange Offer would not be permitted
by applicable law or Commission policy, the Issuers will commence the Exchange
Offer and use their best efforts to issue on or prior to 30 business days after
the date on which the Exchange Offer Registration Statement was declared
effective by the Commission (the "Effective Date"), Exchange Notes in exchange
for all Notes tendered prior thereto in the Exchange Offer and (iv) if obligated
to file the Shelf Registration Statement, the Issuers will use their best
efforts to file the Shelf Registration Statement with the Commission on or prior
to 60 days after such filing obligation arises and to cause the Shelf
Registration to be declared effective by the Commission on or prior to 150 days
after such obligation arises. If (a) the Issuers fail to file any of the
Registration Statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) the
Issuers fail to consummate the Exchange Offer within 30 business days of the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement, or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then the Issuers will pay Liquidated Damages to each Holder of Notes with
respect to which any such Registration Default shall be applicable, with respect
to the first 90-day period immediately following the occurrence of the first
such Registration Default in an amount equal to $.05 per week per $1,000
principal amount of Notes held by such Holder. The amount of the Liquidated
Damages will increase by an additional $.05 per week per $1,000 principal amount
of Notes with respect to each subsequent 90-day period until all such
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages for all such Registration Defaults of $0.25 per week per $1,000
principal amount of Notes. All accrued Liquidated Damages will be paid by the
Issuers on each damages payment date to the Global Note Holder by wire transfer
of immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to the
Issuers (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver certain
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreement in order to have their Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Liquidated Damages set forth above. Upon the effectiveness of the
Exchange Offer Registration Statement, the Issuers will offer to the Holders of
Transfer Restricted Securities pursuant to the Exchange Offer who are able to
make certain representations the opportunity to exchange their Transfer
Restricted Securities for New Notes. The Company will keep the Exchange Offer
open for not less than 20 business days (or longer, if required by applicable
law) after the Effective Date. For each Note surrendered to the Company pursuant
to the Exchange Offer, the holder of such Note will receive an Exchange Note
having a principal amount equal to that of the surrendered Note. Interest on
each Exchange Note will accrue from the date of its original issue.
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Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the Issuers believe that the
Exchange Notes would in general be freely tradeable after the Exchange Offer
without further registration under the Securities Act. However, any purchaser of
Notes who is an "affiliate" of the Company or who intends to participate in the
Exchange Offer for the purpose of distributing the Exchange Notes: (i) will not
be able to rely on the interpretation of the staff of the Commission; (ii) will
not be able to tender its Notes in the Exchange Offer; and (iii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or transfer of the Notes, unless such sale or
transfer is made pursuant to an exemption from such requirements.
If (i) the Issuers are not required to file the Exchange Offer Registration
Statement or permitted to consummate the Exchange Offer because the Exchange
Offer is not permitted by applicable law or Commission policy or (ii) any Holder
of Transfer Restricted Securities notifies the Issuers prior to the 20th day
following consummation of the Exchange Offer that (A) it is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) that it may
not resell the New Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales or
(C) that it is a broker-dealer and owns Notes acquired directly from the Issuers
or an affiliate of the Issuers, the Issuers will file with the Commission a
Shelf Registration Statement to cover resales of the Notes by the Holders
thereof who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement. The Issuers will use their
best efforts to cause the applicable registration statement to be declared
effective as promptly as possible by the Commission. For purposes of the
foregoing, "Transfer Restricted Securities" means each Note until (i) the date
on which such Note has been exchanged by a person other than a broker-dealer for
an Exchange Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of a Note for an Exchange Note, the date on
which such Exchange Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement or (iv) the date on which
such Note is distributed to the public pursuant to Rule 144 under the Securities
Act.
Upon the effectiveness of the Exchange Offer Registration Statement, unless
it would not be permitted by applicable law or Commission policy, the Company
will promptly commence the Exchange Offer to enable each Holder of the Notes
(other than Holders who are affiliates (within the meaning of the Securities
Act) of the Company or underwriters (as defined in the Securities Act) with
respect to the Exchange Notes) to exchange the Notes for Exchange Notes. If
applicable, the Company shall keep the Shelf Registration Statement continuously
effective for, under certain circumstances, at least two years after the Closing
of the Offering.
The Issuers (i) shall make available for a period of up to one year from
the consummation of the Exchange Offer a prospectus meeting the requirements of
the Securities Act to any broker-dealer for use in connection with any resale of
any such Exchange Notes and (ii) shall pay all expenses incident to the Exchange
Offer (including the expense of one counsel to the Holders covered thereby) and
will indemnify certain holders of the Notes (including any broker-dealer)
against certain liabilities, including liabilities under the Securities Act. A
broker-dealer which delivers such a prospectus to purchasers in connection with
such resales will be subject to certain of the civil liability provisions under
the Securities Act and will be bound by the provisions of the Exchange and
Registration Rights Agreement (including certain indemnification rights and
obligations).
Each holder of Notes who wishes to exchange such Notes for Exchange Notes
in the Exchange Offer will be required to make representations in the Letter of
Transmittal that (a) it is not an "affiliate" of the Issuers (within the meaning
of Rule 405 of the Securities Act); (b) it is not engaged in and does not intend
to engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes to be issued in the
Exchange Offer; (c) it is acquiring the Exchange Notes in its ordinary course of
business; and (d) if it is a Participating Broker-Dealer holding Notes acquired
for its own account as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus meeting
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the requirements of the Securities Act in connection with any resale of Exchange
Notes received in respect of such Exchange Notes pursuant to the Exchange Offer.
The Commission has taken the position and the Issuers believe that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Notes (other than a resale of an unsold allotment from the
original sale of the Notes) with the prospectus contained in the Exchange Offer
Registration Statement. Under the Exchange and Registration Rights Agreement,
the Company is required to allow Participating Broker-Dealers and other persons,
if any, subject to similar prospectus delivery requirements to use the
prospectus contained in the Exchange Offer Registration Statement in connection
with the resale of such Exchange Notes.
If the holder is a Participating Broker-Dealer, it will be required to
include a representation in such Participating Broker-Dealer's letter of
transmittal with respect to the Exchange Offer that such Participating
Broker-Dealer has not entered into any arrangement or understanding with the
Company or any affiliate of the Issuers to distribute the Exchange Notes.
For so long as the Notes are outstanding, the Issuers will continue to
provide to holders of the Notes and to prospective purchasers of the Notes the
information required by Rule 144A(d)(4) under the Securities Act.
The foregoing description of the Registration Rights Agreement contains a
discussion of all material elements thereof, but does not purport to be complete
and is qualified in its entirety by reference to all provisions of the
Registration Rights Agreement.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuers will accept any and all Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Issuers will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Notes accepted
in the Exchange Offer. Holders may tender some or all of their Notes pursuant to
the Exchange Offer. However, Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes except that: (i) the Exchange Notes bear a Series B designation and
a different CUSIP Number from the Notes; (ii) the Exchange Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof; and (iii) the holders of the Exchange Notes will not be
entitled to certain rights under the Registration Rights Agreement, including
the provisions providing for an increase in the interest rate on the Notes in
certain circumstances relating to the timing of the Exchange Offer, all of which
rights will terminate when the Exchange Offer is terminated. The Exchange Notes
will evidence the same debt as the Notes and will be entitled to the benefits of
the Indenture.
As of the date of this Prospectus, $300,000,000 aggregate principal amount
of Notes were outstanding. The Issuers have fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
The Issuers intend to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission thereunder.
The Issuers shall be deemed to have accepted validly tendered Notes when,
as and if the Issuers have given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the Exchange Notes from the Issuers.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of
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Notes pursuant to the Exchange Offer. The Issuers will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Issuers, in their sole discretion, extend the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. Notwithstanding the
foregoing, the Issuers will not extend the Expiration Date beyond ,
1998.
In order to extend the Exchange Offer, the Issuers will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Issuers reserve the right, in their sole discretion, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from their date of issuance. Holders
of Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the Exchange Notes. Such
interest will be paid with the first interest payment on the Exchange Notes on
December 31, 1998. Interest on the Notes accepted for exchange will cease to
accrue upon issuance of the Exchange Notes.
Interest on the Exchange Notes is payable semi-annually in arrears on June
30 and December 31, of each year, commencing on December 31, 1998, to Holders of
record on the immediately preceding June 15 and December 15.
PROCEDURES FOR TENDERING
Only a holder of Notes may tender such Notes in the Exchange Offer. To
tender in the Exchange Offer, a holder must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed
if required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Notes and any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. To be tendered effectively, the Notes, Letter of
Transmittal and other required documents must be completed and received by the
Exchange Agent at the address set forth below under "Exchange Agent" prior to
5:00 p.m., New York City time, on the Expiration Date. Delivery of the Notes may
be made by book-entry transfer in accordance with the procedures described
below. Confirmation of such book-entry transfer must be received by the Exchange
Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the
Issuers the representations set forth above in the eighth paragraph under the
heading "--Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Issuers will
constitute agreement between such holder and the Issuers in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE
HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
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CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE
SENT TO THE ISSUERS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See "Instruction to
Registered Holder and/or Book-Entry Transfer Facility Participant from Owner"
included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Issuers of their authority to so act must be submitted with the Letter of
Transmittal.
The Issuers understand that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Notes at the book-entry transfer facility, The Depository Trust Company (the
"Book-Entry Transfer Facility"), for the purpose of facilitating the Exchange
Offer, and subject to the establishment thereof, any financial institution that
is a participant in the Book-Entry Transfer Facility's system may make
book-entry delivery of Notes by causing such Book-Entry Transfer Facility to
transfer such Notes into the Exchange Agent's account with respect to the Notes
in accordance with the Book-Entry Transfer Facility's procedures for such
transfer. Although delivery of the Notes may be effected through book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility,
an appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent.
The Depositary and DTC have confirmed that the Exchange Offer is eligible
for the DTC Automated Tender Offer Program ("ATOP"). Accordingly, DTC
participants may electronically transmit their acceptance of the Exchange Offer
by causing DTC to transfer Notes to the Depositary in accordance with DTC's ATOP
procedures for transfer. DTC will then send an Agent's Message to the
Depositary.
The term "Agent's Message" means a message transmitted by DTC, received by
the Depositary and forming part of the confirmation of a book-entry transfer,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering Notes which are the subject of such book-entry
confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Issuers may enforce such
agreement against such participant. In the case of an Agent's Message relating
to guaranteed delivery, the term means a message transmitted by DTC and received
by the Depositary, which states that DTC has received an express acknowledgment
from the participant in
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DTC tendering Notes that such participant has received and agrees to be bound by
the Notice of Guaranteed Delivery.
Notwithstanding the foregoing, in order to validly tender in the Exchange
Offer with respect to Securities transferred pursuant to ATOP, a DTC participant
using ATOP must also properly complete and duly execute the applicable Letter of
Transmittal and deliver it to the Depositary. Pursuant to authority granted by
DTC, any DTC participant which has Notes credited to its DTC account at any time
(and thereby held of record by DTC's nominee) may directly provide a tender as
though it were the registered holder by so completing, executing and delivering
the applicable Letter of Transmittal to the Depositary. DELIVERY OF DOCUMENTS TO
DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Issuers in their sole discretion, which determination will be
final and binding. The Issuers reserve the absolute right to reject any and all
Notes not properly tendered or any Notes the Issuer's acceptance of which would,
in the opinion of counsel for the Issuers, be unlawful. The Issuers also reserve
the right in their sole discretion to waive any defects, irregularities or
conditions of tender as to particular Notes. The Issuer's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Notes must be cured
within such time as the Issuers shall determine. Although the Issuers intend, to
notify holders of defects or irregularities with respect to tenders of Notes,
neither the Issuers, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of Notes will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any Notes received by the Exchange Agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Notes and the principal amount of Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s)
representing the Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and all other documents required by the Letter of Transmittal
are received by the Exchange Agent upon five New York Stock Exchange
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. To
withdraw a tender of Notes in the Exchange Offer, a telegram, telex, letter or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of Notes transferred by
book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility to be credited), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Notes register the transfer of such Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Notes are to
be registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Issuers, whose determination shall be final and binding on
all parties. Any Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the Notes so withdrawn are validly retendered. Any
Notes which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuers shall not
be required to accept for exchange, or exchange Exchange Notes for, any Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Issuers, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Issuers or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Issuers, might materially impair the ability of the Issuers
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Issuers; or
(c) any governmental approval has not been obtained, which approval
the Issuers shall, in their sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Issuers determine in their sole discretion that any of the
conditions are not satisfied, the Issuers may (i) refuse to accept any Notes and
return all tendered Notes to the tendering holders, (ii) extend the Exchange
Offer and retain all Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of holders to withdraw such Notes (see
"-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn.
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EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Delivery to an address other than as set forth above will not constitute a
valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Issuers and their affiliates.
The Issuers have not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Issuers, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuers. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Notes, which is face value, as reflected in the Issuers accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by the Issuers. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Notes may be
resold only: (i) to the Issuers (upon redemption thereof or otherwise); (ii) so
long as the Notes are eligible for resale pursuant to Rule 144A, to a person
inside the United States whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, in accordance with Rule 144
under the Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to the Issuers); (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act; or (iv) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
RESALES OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Issuers believe that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of the Issuers within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Notes in the ordinary course of
business and who is not participating, does not intend to participate, and has
no arrangement or understanding with person to participate, in the distribution
of the Exchange Notes, will be allowed to resell the Exchange Notes to the
public without further registration under the Securities Act
110
<PAGE> 116
and without delivering to the purchasers of the Exchange Notes a prospectus that
satisfies the requirements of Section 10 of the Securities Act. However, if any
holder acquires Exchange Notes in the Exchange Offer for the purpose of
distributing or participating in a distribution of the Exchange Notes, such
holder cannot rely on the position of the staff of the Commission enunciated in
such no-action letters or any similar interpretive letters, and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Notes, where such Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Issuers in the Letter of Transmittal that (a) it is not an "affiliate" of
the Issuers (within the meaning of Rule 405 of the Securities Act); (b) it is
not engaged in and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the Exchange
Notes to be issued in the Exchange Offer; (c) it is acquiring the Exchange Notes
in its ordinary course of business; and (d) if it is a Participating
Broker-Dealer holding Notes acquired for its own account as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of Exchange Notes received in respect of such
Exchange Notes pursuant to the Exchange Offer. As indicated above, each
Participating Broker-Dealer that receives an Exchange Note for its own account
in exchange for Notes must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes. For a description of the procedures for such resales by
Participating Broker-Dealers, see "Plan of Distribution."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion (including the opinion of special counsel
described below) is based upon current provisions of the Internal Revenue Code
of 1986, as amended, applicable Treasury regulations, judicial authority and
administrative rulings and practice. There can be no assurance that the Internal
Revenue Service (the "Service") will not take a contrary view, and no ruling
from the Service has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. The Issuers recommend that
each holder consult such holder's own tax advisor as to the particular tax
consequences of exchanging such holder's Notes for Exchange Notes, including the
applicability and effect of any state, local or foreign tax laws.
Kirkland & Ellis, special counsel to the Issuers, has advised the Issuers
that in its opinion, the exchange of the Notes for Exchange Notes pursuant to
the Exchange Offer will not be treated as an "exchange" for federal income tax
purposes because the Exchange Notes will not be considered to differ materially
in kind or extent from the Notes. Rather, the Exchange Notes received by a
holder will be treated as a continuation of the Notes in the hands of such
holder. As a result, there will be no federal income tax consequences to holders
exchanging Notes for Exchange Notes pursuant to the Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of Exchange Notes received in respect of such Notes pursuant to the
Exchange Offer. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of Exchange Notes received in exchange for Notes
111
<PAGE> 117
where such Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that for a period of up to one year
from the consummation of the Exchange Offer, it will make this Prospectus, as
amended or supplemented, available to any Participating Broker-Dealer for use in
connection with any such resale. In addition, until , 1998, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Issuers will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchaser or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of the Issuers within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Notes in the ordinary course of
business and who is not participating, does not intend to participate, and has
no arrangement or understanding with person to participate, in the distribution
of the Exchange Notes, will be allowed to resell the Exchange Notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction and such a secondary resale transaction
should be covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K under the Securities Act, unless an exemption from registration
is otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Notes, where such Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes. The Issuers have agreed that, for a period of up
to one year from the consummation of the Exchange Offer, they will make this
Prospectus available to any Participating Broker-Dealer for use in connection
with any such resale.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Exchange Notes
offered hereby will be passed upon for the Company by Kirkland & Ellis, New
York, New York.
112
<PAGE> 118
EXPERTS
The consolidated financial statements of American Commercial Lines, Inc. as
of December 27, 1996 and December 26, 1997 and for each of the three fiscal
years in the period ended December 26, 1997, included in this Prospectus and in
the Registration Statement, have been audited by Ernst & Young LLP, independent
auditors, as stated in their report thereon appearing herein and are included in
reliance upon such report given the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Vectura Group, Inc. and
subsidiaries as of and for the year ended December 31, 1997, included in this
Prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
113
<PAGE> 119
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
AMERICAN COMMERCIAL LINES, INC.
Report of Independent Auditors.............................. F-2
Audited Consolidated Financial Statements
Consolidated Statement of Earnings and Retained Earnings for
the fiscal years ended December 29, 1995, December 27,
1996 and December 26, 1997................................ F-3
Consolidated Statement of Cash Flows for the fiscal years
ended December 29, 1995, December 27, 1996 and December
26, 1997.................................................. F-4
Consolidated Statement of Financial Position at December 27,
1996 and December 26, 1997................................ F-5
Notes to Consolidated Financial Statements.................. F-6
AMERICAN COMMERCIAL LINES LLC
Condensed Unaudited Consolidated Interim Financial
Statements
Condensed Consolidated Statement of Earnings and Retained
Earnings for the six months ended June 27, 1997 and June
26, 1998.................................................. F-24
Condensed Consolidated Statement of Cash Flows for the six
months ended June 27, 1997 and June 26, 1998.............. F-25
Condensed Consolidated Statement of Financial Position at
December 26, 1997 and June 26, 1998....................... F-26
Notes to Condensed Consolidated Financial Statements........ F-27
VECTURA GROUP, INC. AND SUBSIDIARIES
Report of Independent Auditors.............................. F-38
Audited Consolidated Financial Statements
Consolidated Balance Sheet at December 31, 1997............. F-39
Consolidated Statement of Income for the year ended December
31, 1997.................................................. F-41
Consolidated Statement of Stockholders' Equity for the year
ended December 31, 1997................................... F-42
Consolidated Statement of Cash Flows for the year ended
December 31, 1997......................................... F-43
Notes to Consolidated Financial Statements.................. F-44
Unaudited Consolidated Balance Sheet at June 30, 1998....... F-61
Unaudited Consolidated Statements of Income (Loss) for the
six months ended June 30, 1997 and 1998................... F-63
Unaudited Statements of Cash Flows for the six months ended
June 30, 1997 and 1998.................................... F-64
Notes to Consolidated Interim Financial Statements.......... F-65
</TABLE>
F-1
<PAGE> 120
REPORT OF INDEPENDENT AUDITORS
To the Shareholder
of American Commercial Lines, Inc.
We have audited the accompanying consolidated statements of financial
position of American Commercial Lines, Inc. (a wholly-owned subsidiary of CSX
Corporation) and subsidiaries as of December 27, 1996 and December 26, 1997, and
the related consolidated statements of earnings and retained earnings and cash
flows for each of the three fiscal years in the period ended December 26, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
American Commercial Lines, Inc. and subsidiaries at December 27, 1996 and
December 26, 1997, and the consolidated results of their operations and their
cash flows for each of the three fiscal years in the period ended December 26,
1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Louisville, Kentucky
January 30, 1998, except
for Note 11, as to which
the date is June 5, 1998
F-2
<PAGE> 121
AMERICAN COMMERCIAL LINES, INC.
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
DEC. 29, DEC. 27, DEC. 26,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING REVENUE.......................................... $553,582 $622,140 $618,233
OPERATING EXPENSE
Materials, Supplies and Other............................ 240,627 267,300 289,394
Labor and Fringe Benefits................................ 122,306 138,341 150,960
Fuel..................................................... 41,955 58,747 56,982
Depreciation and Amortization............................ 32,560 37,481 41,149
Taxes, Other Than Income Taxes........................... 20,678 19,607 21,115
-------- -------- --------
458,126 521,476 559,600
-------- -------- --------
OPERATING INCOME........................................... 95,456 100,664 58,633
OTHER EXPENSE
Interest Expense......................................... 4,343 4,034 3,720
Interest Expense, Affiliate -- Net....................... 7,042 7,746 8,752
Other, Net............................................... 1,808 2,726 1,930
-------- -------- --------
13,193 14,506 14,402
-------- -------- --------
EARNINGS BEFORE INCOME TAXES............................... 82,263 86,158 44,231
INCOME TAXES............................................... 30,861 28,733 18,287
-------- -------- --------
NET EARNINGS............................................... 51,402 57,425 25,944
RETAINED EARNINGS, BEGINNING OF YEAR....................... 83,860 114,762 121,387
-------- -------- --------
135,262 172,187 147,331
CASH DIVIDENDS PAID........................................ 20,500 36,800 19,000
DIVIDEND OF NET PENSION ASSETS............................. -- 14,000 --
-------- -------- --------
RETAINED EARNINGS, END OF YEAR............................. $114,762 $121,387 $128,331
======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE> 122
AMERICAN COMMERCIAL LINES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
DEC. 29, DEC. 27, DEC. 26,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings............................................. $51,402 $57,425 $25,944
Adjustments to Reconcile Net Earnings to Net Cash
Provided:
Depreciation and Amortization......................... 32,560 37,481 41,149
Deferred Income Taxes................................. 3,738 (794) 90
Other Operating Activities............................ (2,014) 1,526 3,216
Changes in Operating Assets and Liabilities:
Accounts Receivable................................. (7,840) (13,048) 10,818
Materials and Supplies.............................. (11,357) 6,301 14,062
Other Current Assets................................ 1,481 (273) (5,157)
Due to Affiliates................................... 377 (903) (844)
Other Current Liabilities........................... 30,733 25,905 (37,209)
-------- -------- --------
Net Cash Provided by Operating Activities........... 99,080 113,620 52,069
INVESTING ACTIVITIES
Property Additions....................................... (33,425) (90,551) (51,500)
Proceeds from Property Dispositions...................... 2,968 1,054 3,411
Other Investing Activities............................... (6,047) (4,158) (1,211)
-------- -------- --------
Net Cash Used by Investing Activities............... (36,504) (93,655) (49,300)
FINANCING ACTIVITIES
Short-Term Borrowing from Affiliate...................... -- -- 6,550
Long-Term Debt Repaid.................................... (4,526) (4,484) (4,484)
Affiliate Debt Repaid.................................... (11,200) (11,200) (11,200)
Cash Dividends Paid...................................... (20,500) (36,800) (19,000)
-------- -------- --------
Net Cash Used by Financing Activities............... (36,226) (52,484) (28,134)
Net Increase (Decrease) in Cash and Cash Equivalents....... 26,350 (32,519) (25,365)
Cash and Cash Equivalents at Beginning of Year............. 30,453 56,803 24,284
-------- -------- --------
Cash and Cash Equivalents at End of Year............ $56,803 $24,284 $(1,081)
======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE> 123
AMERICAN COMMERCIAL LINES, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DEC. 27, DEC. 26,
1996 1997
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents................................. $24,284 $(1,081)
Accounts Receivable -- Net................................ 89,599 77,449
Materials and Supplies.................................... 47,588 33,526
Deferred Income Taxes..................................... 1,619 1,378
Other Current Assets...................................... 3,678 10,167
-------- --------
Total Current Assets................................... 166,768 121,439
PROPERTIES -- NET........................................... 449,221 460,295
NET PENSION ASSET........................................... 16,455 19,091
OTHER ASSETS................................................ 34,651 31,307
-------- --------
Total Assets........................................... $667,095 $632,132
======== ========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable.......................................... $33,775 $13,714
Accrued Payroll and Fringe Benefits....................... 17,990 16,131
Due to Affiliates......................................... 26,168 27,599
Short Term Borrowings from Affiliate...................... -- 6,550
Accrued Claims and Insurance Premiums..................... 5,197 6,620
Deferred Revenue.......................................... 11,614 7,894
Other Current Liabilities................................. 51,019 35,486
-------- --------
Total Current Liabilities.............................. 145,763 113,994
LONG-TERM NOTE PAYABLE TO AFFILIATE......................... 78,400 67,200
DEFERRED INCOME TAXES....................................... 71,453 71,302
LONG-TERM DEBT.............................................. 48,230 43,746
OTHER LONG-TERM LIABILITIES................................. 30,692 36,389
-------- --------
374,538 332,631
-------- --------
SHAREHOLDER'S EQUITY
Common Stock, No Par Value, Authorized 2,000 Shares;
Issued and Outstanding 1,001 Shares.................... 6,006 6,006
Other Capital............................................. 165,164 165,164
Retained Earnings......................................... 121,387 128,331
-------- --------
Total Shareholder's Equity............................. 292,557 299,501
-------- --------
Total Liabilities and Shareholder's Equity............. $667,095 $632,132
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE> 124
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The operations of American Commercial Lines, Inc. ("ACL") include barge
transportation together with related terminal, marine construction and repair,
and communications services along inland waterways. Barge transportation
services include the movement of grain, coal, liquids, and other bulk products
in the United States and South America and account for the majority of the
Company's revenues. ACL's operations in South America are concentrated in
Venezuela and along the Parana/Paraguay River system. Terminal, marine
construction and repair, and communications services are provided to customers
in marine transportation and other related industries in the United States. ACL
has long term contracts with some customers. A long term coal contract may be
restructured in 1998.
ACL is a wholly-owned subsidiary of CSX Corporation ("CSX").
Principles of Consolidation
The Consolidated Financial Statements reflect the results of operations,
cash flows and financial position of ACL and its majority-owned subsidiaries as
a single entity. All significant intercompany accounts and transactions have
been eliminated.
Investments in companies that are not majority-owned are carried at either
cost or equity, depending on the extent of control.
Fiscal Year
ACL follows an annual fiscal reporting period which ends on the last Friday
in December. The financial statements presented are for the fiscal years ended
December 29, 1995, December 27, 1996 and December 26, 1997.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates in
reporting the amounts of certain revenues and expenses for each fiscal year and
certain assets and liabilities at the end of each fiscal year. Actual results
may differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include short-term investments with a maturity of
less than three months when purchased.
Accounts Receivable
ACL maintains an allowance for doubtful accounts based upon the expected
collectibility of accounts receivable. Allowances for doubtful accounts of
$1,496 and $1,254 have been applied as a reduction of accounts receivable at
December 27, 1996 and December 26, 1997, respectively.
F-6
<PAGE> 125
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Materials and Supplies
Materials and Supplies are carried at average cost and consist of the
following:
<TABLE>
<CAPTION>
DEC. 27, DEC. 26,
1996 1997
-------- --------
<S> <C> <C>
Raw Materials $14,070 $5,917
Work in Process 13,679 7,243
Parts and Supplies 19,839 20,366
------- -------
$47,588 $33,526
======= =======
</TABLE>
Revenue Recognition
Barge transportation revenue is recognized proportionately as shipments
move from origin to destination. Terminal, repair and communication revenue is
recognized as services are provided. Marine construction revenue, and related
expense, is primarily recognized on the completed-contract method.
Properties
Properties, at cost, consist of the following:
<TABLE>
<CAPTION>
DEC. 27, DEC. 26,
1996 1997
-------- --------
<S> <C> <C>
Land $17,786 $17,097
Buildings and Improvements 39,378 40,305
Equipment 596,961 639,116
-------- --------
654,125 696,518
Less Accumulated Depreciation 204,904 236,223
-------- --------
$449,221 $460,295
======== ========
</TABLE>
Provisions for depreciation of properties are based on the estimated useful
service lives computed on the straight-line method.
Accounting Pronouncement
ACL elected early adoption of Statement of Financial Accounting Standards
No. 131 "Disclosures about Segments of an Enterprise and Related Information"
("Statement No. 131"). Statement No. 131 establishes standards for the way
certain enterprises report information about operating segments in interim and
annual financial statements. The statement also establishes standards for
related disclosures with respect to services or products, geographic areas of
operation and major customers.
Other
Certain prior year data have been reclassified to conform to the 1997
presentation.
NOTE 2. ACQUISITION
Effective January 12, 1996, ACL acquired certain marine vessels and other
assets from ContiCarriers and Terminals, Inc., a wholly-owned barge
transportation subsidiary of Continental Grain Company, for a cash purchase
price of $21 million. The acquisition was accounted for by the purchase method
of accounting.
F-7
<PAGE> 126
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3. RELATED PARTIES
Cash and cash equivalents at December 27, 1996 includes $16,838,
representing the amount due from CSX for ACL's participation in the CSX cash
management plan. Short term borrowings from affiliate of $6,550 at December 26,
1997 reflects the amount due to CSX for participation in the plan. Under this
plan, excess cash is advanced to CSX for investment and CSX makes cash funds
available to its subsidiaries as needed for use in their operations. CSX is
committed to repay (or require payment of) all amounts on demand should
circumstances require. The subsidiaries are charged for borrowings or
compensated for investments based on returns earned by the plan portfolio.
Interest income (expense) related to the Company's investment in/borrowings from
the plan was $1,781, $97 and $(1,889) in 1995, 1996 and 1997, respectively.
As of December 26, 1997, ACL has an outstanding loan with a CSX affiliate
with a principal balance of $78,400. The loan agreement calls for twelve annual
principal payments of $11,200 on January 2 of each year. Interest accrues at the
rate of 8.75% per annum, and interest expense for 1995, 1996 and 1997, was
$8,823, $7,843 and $6,863, respectively. Interest payments during 1995, 1996 and
1997 were $9,317, $8,337, and $7,357, respectively, and the interest payable at
December 27, 1996 and December 26, 1997 was $3,952 and $3,458, respectively, and
is included in due to affiliates in the statement of financial position.
ACL maintains insurance coverage which transfers substantially all risk of
loss, subject to coverage limits, related to various personal injury and
property damage claims, to an insurance company owned by CSX. Accordingly, loss
reserve accruals for such claims are not required, except for minimal per claim
deductible amounts. ACL paid premiums of approximately $6,788, $7,215, and
$6,350 to a CSX affiliate during 1995, 1996, and 1997, respectively.
Included in Materials, Supplies and Other operating expenses are amounts
related to a management service fee charged by CSX of $14,472 in 1995, $15,228
in 1996, and $15,024 in 1997.
NOTE 4. INCOME TAXES
ACL is included in the consolidated federal income tax return of CSX. The
consolidated federal income tax liability is allocated to ACL as though ACL had
filed a separate consolidated return subject to certain consolidated elections
determined by CSX. As of December 27, 1996 and December 26, 1997, federal income
taxes payable to CSX were $8,475 and $10,750, respectively, and are included in
due to affiliates in the statement of financial position. ACL made federal
income tax payments to CSX of $11,232, $28,919 and $12,765 during 1995, 1996 and
1997, respectively.
Earnings from domestic and foreign operations and related income tax
expense are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Earnings (Loss) Before Income Taxes:
-- Domestic.................................... $77,320 $79,183 $46,643
-- Foreign..................................... 4,943 6,975 (2,412)
------- ------- -------
Total............................................ $82,263 $86,158 $44,231
======= ======= =======
Income Tax Expense (Benefit):
Current -- Federal.................................. $22,175 $26,200 $15,040
-- State.................................... 2,548 2,597 1,030
-- Foreign.................................. 2,400 730 2,127
------- ------- -------
Total Current.................................... $27,123 $29,527 $18,197
======= ======= =======
</TABLE>
F-8
<PAGE> 127
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Deferred -- Federal................................. $3,763 $(410) $3
-- State................................... (25) (384) 87
-- Foreign................................. -- -- --
------- ------- -------
Total Deferred................................... 3,738 (794) 90
------- ------- -------
Total Expense.................................... $30,861 $28,733 $18,287
======= ======= =======
</TABLE>
Income tax computed at federal statutory rates reconciled to income tax
expense is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Tax at Federal Statutory Rate......................... $28,792 $30,155 $15,481
State Income Taxes, Net............................... 1,640 1,438 726
Foreign Operations, Net............................... 570 (1,790) 3,183
Other Items........................................... (141) (1,070) (1,103)
------- ------- -------
Total Income Tax Expense......................... $30,861 $28,733 $18,287
======= ======= =======
</TABLE>
The significant components of deferred tax assets and liabilities include:
<TABLE>
<CAPTION>
DEC. 27, DEC. 26,
1996 1997
-------- --------
<S> <C> <C>
Deferred Tax Assets:
Other Post-retirement Benefits............................ $6,417 $6,910
Other Items............................................... 7,293 8,702
-------- --------
Total.................................................. $13,710 $15,612
======== ========
Deferred Tax Liabilities:
Accelerated Depreciation.................................. $(75,501) $(76,363)
Pension Obligation........................................ (6,895) (7,648)
Other Items............................................... (1,148) (1,525)
-------- --------
Total.................................................. (83,544) (85,536)
-------- --------
Net deferred tax liability.................................. $(69,834) $(69,924)
======== ========
</TABLE>
ACL has not recorded domestic deferred or additional foreign income taxes
applicable to undistributed earnings of foreign subsidiaries that are considered
to be indefinitely reinvested. Such earnings as of December 27, 1996 and
December 26, 1997 amounted to $8,157 and $11,620, respectively. These amounts
may become taxable upon their remittance as dividends or upon the sale or
liquidation of the foreign subsidiaries. It is not practicable to determine the
amount of net additional income tax that may be payable if such earnings were
repatriated.
Examinations of CSX consolidated federal income tax returns, which include
ACL, have been completed through 1990. Returns for 1991 through 1993 are
currently under examination. Management believes adequate provision has been
made for any adjustments that might be assessed.
F-9
<PAGE> 128
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5. LONG-TERM DEBT
Long-term debt, excluding note payable to affiliate, consists of the
following:
<TABLE>
<CAPTION>
DEC. 27, DEC. 26,
1996 1997
-------- --------
<S> <C> <C>
U.S. Government Guaranteed Ship Financing Bonds:
1976 Issue-due serially through 2001, 5.90% to 6.263%..... $5,771 $4,197
1977 Issue-due serially through 2002, 7.555% to 7.565%.... 8,710 7,248
1980 Issue-due serially through 2004, 6.85%............... 7,939 6,939
1991 Issue-due serially through 2016, 8.125%.............. 5,894 5,446
Terminal Facilities Revenue Refunding Bonds, due in 2010,
7.75%..................................................... 24,400 24,400
------- -------
Total.................................................. 52,714 48,230
Less current maturities..................................... 4,484 4,484
------- -------
Total Long-Term Debt................................... $48,230 $43,746
======= =======
</TABLE>
Maturities on long-term debt outstanding as of December 26, 1997 for the
years 1998 through 2002 are $4,484, $4,242, $3,845, $3,266 and $2,848,
respectively.
Interest payments on long-term debt amounted to $4,486 in 1995, $4,169 in
1996 and $3,855 in 1997.
Towboats and barges of ACL with a net book value of $42,571 are subject to
liens under the U.S. Government Guaranteed Ship Financing Bonds agreements. A
terminal with a net book value of $16,572 is also subject to lien.
NOTE 6. FAIR VALUE OF FINANCIAL INSTRUMENTS
ACL's long-term debt and long-term note payable to affiliate are the only
financial instruments of ACL's with a fair value significantly different than
their carrying amounts.
<TABLE>
<CAPTION>
1996 1997
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Long-Term Debt.............................. $52,714 $55,518 $48,230 $52,127
Long-Term Note Payable to Affiliate......... $89,600 $97,572 $78,400 $85,630
</TABLE>
The above fair values have been estimated using discounted cash flow
analyses based upon ACL's current incremental borrowing rates for similar types
of borrowing arrangements.
The carrying amounts of cash and cash equivalents and current assets and
current liabilities qualifying as financial instruments approximate fair value
due to the short-term maturities of these instruments.
NOTE 7. EMPLOYEE BENEFIT PLANS
Pension and Related Plans
ACL sponsors or participates in defined benefit pension plans covering both
salaried and hourly employees, including participation for certain employees in
the combined CSX Pension Plan for which ACL is allocated a portion of the net
pension expense. The plans provide for eligible employees to receive benefits
based on years of service and either compensation rates near retirement or a
predetermined multiplier factor. Contributions to the plans are sufficient to
meet the minimum funding standards set forth in the Employee Retirement Income
Security Act of 1974, as amended. Plan assets consist primarily of common
stocks, corporate bonds and cash and cash equivalents. Substantially all assets
of the various plans are invested in the CSX Corporation Master Pension Trust, a
master trust.
F-10
<PAGE> 129
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the components of net periodic pension expense (income) for
ACL's defined benefit pension plans, including the allocation from the CSX
Pension Plan, is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------ -------
<S> <C> <C> <C>
Service Cost........................................... $505 $626 $661
Interest Cost on Projected Benefit Obligation.......... 1,199 1,251 1,297
Actual Return on Plan Assets........................... (6,033) (2,811) (8,762)
Net Amortization and Deferral.......................... 2,997 (192) 5,405
ACL share of CSX Pension Plan.......................... (668) 694 1,600
------- ------ -------
Net Pension Expense (Income)........................... $(2,000) $(432) $201
======= ====== =======
</TABLE>
The following actuarial assumptions were used in determining net pension
income and the net pension asset:
<TABLE>
<CAPTION>
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Discount Rate.............................................. 7.50% 7.50% 7.50%
Estimated Long-Term Rate of Salary Increases............... 5.00% 5.00% 5.00%
Expected Long-Term Rate of Return on Assets................ 9.75% 9.50% 9.50%
</TABLE>
The funded status of the plans and the amounts reflected in the
accompanying statement of financial position at year end are as follows:
<TABLE>
<CAPTION>
SEPT. 30, SEPT. 30,
1996 1997
--------- ---------
(AT VALUATION DATE)
<S> <C> <C>
Plan Assets at Fair Value................................... $34,583 $42,694
------- -------
Actuarial Present Value of Projected Benefit Obligations:
Accumulated Benefit Obligations:
Vested................................................. (17,036) (18,428)
Nonvested.............................................. (440) (663)
------- -------
(17,476) (19,091)
------- -------
Excess of Plan Assets Over Projected Benefit Obligations.... 17,107 23,603
Unrecognized Prior Service Cost............................. 1,169 1,025
Unrecognized Net Loss (Gain)................................ 1,561 (3,784)
Unrecognized Initial Net Asset.............................. (1,900) (1,424)
ACL share of CSX Pension Plan............................... (1,466) (266)
Recognition of Minimum Liability............................ (16) (63)
------- -------
Net Pension Asset at Year-End............................... $16,455 $19,091
======= =======
</TABLE>
During 1996, ACL transferred approximately $23 million in pension assets,
$14 million after-tax, to CSX through a dividend.
ACL also sponsors certain contributory defined contribution plans covering
eligible employee groups. ACL contributions to such plans are based upon a
percentage of employee contributions and were $1,376, $1,530 and $1,649 in 1995,
1996 and 1997, respectively.
Certain ACL employees are covered by union-sponsored,
collectively-bargained, multiemployer defined benefit pension plans.
Contributions to such plans, which are based upon union contracts, were
approximately $136, $161 and $87 in 1995, 1996 and 1997, respectively.
F-11
<PAGE> 130
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Other Post-retirement Benefit Plans
In addition to the defined benefit pension and related plans, ACL has a
defined benefit post-retirement plan covering most full-time salaried employees.
The plan provides medical benefits and is contributory, with retiree
contributions adjusted annually, and contains other cost-sharing features such
as deductibles and coinsurance. The accounting for the health care plan
anticipates future cost-sharing changes to the written plan that are consistent
with ACL's expressed intent to increase the retiree contribution rate annually.
Net periodic post-retirement benefit expense included the following
components:
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Service Cost............................................. $802 $782 $839
Interest Cost............................................ 1,078 1,296 1,373
Amortization of Prior Service Cost....................... (568) (319) (501)
------ ------ ------
Net Periodic Post-retirement Benefit Expense............. $1,312 $1,759 $1,711
====== ====== ======
</TABLE>
ACL's current policy is to fund the cost of the post-retirement health care
benefits on a pay-as-you-go basis, as in prior years. The amounts recognized in
ACL's statement of financial position at December 27, 1996 and December 26, 1997
are as follows:
<TABLE>
<CAPTION>
SEPT. 30, SEPT. 30,
1996 1997
--------- ---------
(AT VALUATION DATE)
<S> <C> <C>
Accumulated Post-retirement Benefit Obligation:
Retirees.................................................. $12,194 $11,813
Fully Eligible Active Plan Participants................... 2,959 3,165
Other Active Plan Participants............................ 3,329 3,332
------- -------
Total.................................................. 18,482 18,310
Unrecognized Prior Service Cost............................. 907 339
Unrecognized Net Loss....................................... (2,515) (405)
Claim Payments, October 1 through Year-End.................. (90) (125)
------- -------
Net Post-retirement Benefit Obligation at Year-End........ $16,784 $18,119
======= =======
</TABLE>
The net post-retirement benefit obligation was determined using the
assumption that the health care cost trend rate for retirees was 9.50% for
1997-1998, decreasing gradually to a 5.50% trend rate by 2005 and remaining at
that level thereafter. A 1% increase in the assumed health care cost trend rate
would have increased the accumulated post-retirement benefit obligation as of
December 26, 1997 by $1,394 and the aggregate of the service and interest cost
components of net periodic post-retirement benefit expense for 1997 by $207.
The discount rate used in determining the accumulated post-retirement
benefit obligation was 7.50% for 1995, 1996 and 1997.
NOTE 8. LEASE OBLIGATIONS
ACL leases buildings, data processing hardware and operating equipment
under various operating leases and charter agreements which expire from 1998 to
2015 and which generally have renewal options at similar terms. Certain vessel
leases also contain purchase options at prices approximating fair value of the
leased vessels. Rental expense in 1995, 1996 and 1997 under continuing
obligations was approximately $19,893, $35,201 and $40,585, respectively.
F-12
<PAGE> 131
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 26, 1997, minimum lease payments under non-cancelable operating
leases total $16,228 for 1998, $13,144 for 1999, $8,578 for 2000, $3,784 for
2001, $2,029 for 2002 and $4,570 thereafter.
NOTE 9. CONTINGENCIES
A number of legal actions are pending against ACL in which claims are made
in substantial amounts. While the ultimate results of pending litigation cannot
be predicted with certainty, management does not currently expect that
resolution of these matters will have a material adverse effect on the
consolidated results of operations, financial position and cash flows of ACL.
NOTE 10. BUSINESS SEGMENTS
ACL has two reportable business segments -- barging and construction. The
Company's barging segment includes barge transportation operations in North and
South America and ACL's domestic fleeting facilities that provide fleeting,
shifting, cleaning and repair services at various locations along the inland
waterways. The construction segment constructs marine equipment for ACL's
domestic and international fleets as well as external customers.
ACL evaluates performance based on segment earnings, which is defined as
operating income, before income taxes and excluding the management services fee
paid to CSX. The accounting policies of the reportable segments are consistent
with those described in the summary of significant accounting policies.
Intercompany sales are transferred at cost.
ACL's reportable segments are business units that offer different products
or services. The reportable segments are managed separately because they provide
distinct products and services to internal and external customers.
<TABLE>
<CAPTION>
REPORTABLE SEGMENTS
------------------------ ALL OTHER
BARGING CONSTRUCTION SEGMENTS(1) TOTAL
-------- ------------ ----------- --------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 29, 1995
Revenues from external customers............. 439,107 86,302 28,173 553,582
Intersegment revenues........................ -- 6,211 2,717 8,928
Depreciation expense......................... 26,898 739 4,035 31,672
Segment earnings (loss)...................... 104,165 (599) 6,362 109,928
Property additions........................... 20,599 3,207 9,619 33,425
YEAR ENDED DECEMBER 27, 1996
Revenues from external customers............. 508,435 84,729 28,976 622,140
Intersegment revenues........................ -- 33,172 3,397 36,569
Depreciation expense......................... 30,913 929 4,181 36,023
Segment earnings............................. 104,298 4,327 7,267 115,892
Segment assets............................... 548,982 64,692 53,421 667,095
Property additions........................... 82,667 6,663 1,221 90,551
</TABLE>
F-13
<PAGE> 132
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
REPORTABLE SEGMENTS
------------------------ ALL OTHER
BARGING CONSTRUCTION SEGMENTS(1) TOTAL
-------- ------------ ----------- --------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 26, 1997
Revenues from external customers............. $487,106 $100,711 $30,416 $618,233
Intersegment revenues........................ -- 33,263 4,204 37,467
Depreciation expense......................... 32,982 1,569 4,124 38,675
Segment earnings............................. 56,832 8,507 8,318 73,657
Segment assets............................... 529,301 50,907 51,924 632,132
Property additions........................... 47,827 2,635 1,038 51,500
</TABLE>
- ---------------
(1) Financial data for segments below the reporting thresholds is attributable
to two operating segments -- a segment operating terminals along the U.S.
inland waterways and a segment providing voice and data communications to
marine companies operating on the U.S. inland waterways.
The following is a reconciliation of ACL's segments' revenues and profits
to ACL's consolidated totals.
<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Total revenues from external customers..................... $553,582 $622,140 $618,233
Intersegment revenues...................................... 8,928 36,569 37,467
Elimination of intersegment revenues....................... (8,928) (36,569) (37,467)
-------- -------- --------
Operating revenue.......................................... $553,582 $622,140 $618,233
======== ======== ========
PROFITS
Total segment earnings..................................... $109,928 $115,892 $73,657
Unallocated amounts:
Management services fee charged by CSX................... (14,472) (15,228) (15,024)
Interest expense......................................... (4,343) (4,034) (3,720)
Interest expense, affiliate -- net....................... (7,042) (7,746) (8,752)
Other, net............................................... (1,808) (2,726) (1,930)
-------- -------- --------
Earnings before income taxes............................... $82,263 $86,158 $44,231
======== ======== ========
</TABLE>
Geographic Information
<TABLE>
<CAPTION>
REVENUES PROPERTIES -- NET
-------------------------------- --------------------
1995 1996 1997 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
United States....................... $536,000 $594,783 $582,185 $417,724 $406,709
South America....................... 17,582 27,357 36,048 31,497 53,586
-------- -------- -------- -------- --------
Total............................... $553,582 $622,140 $618,233 $449,221 $460,295
======== ======== ======== ======== ========
</TABLE>
Revenues are attributed to countries based on the location of the service
provided. Properties represent the only long lived assets of the company.
Major Customer
Revenues from one customer of the barging segment represented approximately
12% and 11% of ACL's consolidated revenues in 1996 and 1997, respectively.
F-14
<PAGE> 133
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 11. SUBSEQUENT EVENT
On April 20, 1998, CSX announced that it will convey ACL to a venture
formed with Vectura Group, Inc. ("Vectura") for approximately $850 million in
cash and securities. As part of the transaction, National Marine, Inc. ("NMI"),
a wholly-owned subsidiary of Vectura, will be combined with ACL. The transaction
is subject to customary conditions, including the arrangement of financing.
Closing of the transaction is anticipated in the second quarter of 1998.
Vectura, CSX and NMI will hold approximately 55%, 34% and 11%, respectively, of
the junior common membership interests in the venture which shall be allocated
between voting and non-voting interests (before giving effect to any issuance to
certain management investors and independent investors).
In connection with the formation of the new venture, ACL will become part
of a new entity, American Commercial Lines LLC. American Commercial Lines LLC
plans to issue certain debt in connection with the recapitalization of the
parent company, American Commercial Lines Holdings LLC. American Commercial
Lines LLC's payment obligations under the proposed debt offering are to be
guaranteed by ACL's domestic subsidiaries, other than ACL Capital Corp. (which
will be formed in connection with the transaction), any Accounts Receivable
Subsidiary (as defined in the indentures with respect to such debt) and certain
subsidiaries of the company without substantial assets or operations (the
"Subsidiary Guarantors"). Such guarantees are full, unconditional and joint and
several. Separate financial statements of the Subsidiary Guarantors are not
presented because ACL's management has determined that they would not be
material to investors. The following supplemental financial information sets
forth on a combined basis, condensed consolidated statements of financial
position, statements of earnings and statements of cash flows for the Subsidiary
Guarantors, ACL's non-guarantor subsidiaries and for ACL.
F-15
<PAGE> 134
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 29, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING REVENUE............................ $536,000 $17,582 $ -- $553,582
OPERATING EXPENSE
Materials, Supplies and Other.............. 233,924 6,703 -- 240,627
Labor and Fringe Benefits.................. 119,604 2,702 -- 122,306
Fuel....................................... 41,439 516 -- 41,955
Depreciation and Amortization.............. 32,195 365 -- 32,560
Taxes, Other Than Income Taxes............. 20,677 1 -- 20,678
-------- ------- ------- --------
447,839 10,287 -- 458,126
-------- ------- ------- --------
OPERATING INCOME............................. 88,161 7,295 -- 95,456
OTHER EXPENSE (INCOME)
Interest Expense........................... 4,343 -- -- 4,343
Interest Expense, Affiliate -- Net......... 7,042 1,117 (1,117) 7,042
Other, Net................................. (544) 1,235 1,117 1,808
-------- ------- ------- --------
10,841 2,352 -- 13,193
-------- ------- ------- --------
EARNINGS BEFORE INCOME TAXES................. 77,320 4,943 -- 82,263
INCOME TAXES................................. 28,852 2,009 -- 30,861
-------- ------- ------- --------
NET EARNINGS................................. $48,468 $2,934 $ -- $51,402
======== ======= ======= ========
</TABLE>
F-16
<PAGE> 135
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 27, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING REVENUE.............................. $594,783 $27,357 $ -- $622,140
OPERATING EXPENSE
Materials, Supplies and Other................ 257,934 9,366 -- 267,300
Labor and Fringe Benefits.................... 134,366 3,975 -- 138,341
Fuel......................................... 56,550 2,197 -- 58,747
Depreciation and Amortization................ 36,241 1,240 -- 37,481
Taxes, Other Than Income Taxes............... 19,607 -- -- 19,607
-------- ------- ------- --------
504,698 16,778 -- 521,476
-------- ------- ------- --------
OPERATING INCOME............................... 90,085 10,579 -- 100,664
OTHER EXPENSE (INCOME)
Interest Expense............................. 4,034 -- -- 4,034
Interest Expense, Affiliate -- Net........... 7,746 1,333 (1,333) 7,746
Other, Net................................... (878) 2,271 1,333 2,726
-------- ------- ------- --------
10,902 3,604 -- 14,506
-------- ------- ------- --------
EARNINGS BEFORE INCOME TAXES................... 79,183 6,975 -- 86,158
INCOME TAXES................................... 28,095 638 -- 28,733
-------- ------- ------- --------
NET EARNINGS................................... $51,088 $6,337 $ -- $57,425
======== ======= ======= ========
</TABLE>
F-17
<PAGE> 136
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 26, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING REVENUE............................ $582,185 $36,048 $ -- $618,233
OPERATING EXPENSE
Materials, Supplies and Other.............. 270,050 19,344 -- 289,394
Labor and Fringe Benefits.................. 143,844 7,116 -- 150,960
Fuel....................................... 53,698 3,284 -- 56,982
Depreciation and Amortization.............. 37,809 3,340 -- 41,149
Taxes, Other Than Income Taxes............. 21,114 1 -- 21,115
-------- ------- ------- --------
526,515 33,085 -- 559,600
-------- ------- ------- --------
OPERATING INCOME............................. 55,670 2,963 -- 58,633
OTHER EXPENSE (INCOME)
Interest Expense........................... 3,720 -- -- 3,720
Interest Expense, Affiliate -- Net......... 8,752 2,026 (2,026) 8,752
Other, Net................................. (3,445) 3,349 2,026 1,930
-------- ------- ------- --------
9,027 5,375 -- 14,402
-------- ------- ------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES.......... 46,643 (2,412) -- 44,231
INCOME TAXES................................. 16,209 2,078 -- 18,287
-------- ------- ------- --------
NET EARNINGS (LOSS).......................... $30,434 $(4,490) $ -- $35,944
======== ======= ======= ========
</TABLE>
F-18
<PAGE> 137
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 29, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings............................... $48,468 $2,934 $ -- $51,402
Adjustments to Reconcile Net Earnings to
Net Cash Provided:
Depreciation and Amortization........... 32,195 365 -- 32,560
Deferred Income Taxes................... 3,738 -- -- 3,738
Other Operating Activities.............. (2,183) 169 -- (2,014)
Changes in Operating Assets and
Liabilities:
Accounts Receivable................... (6,895) (945) -- (7,840)
Materials and Supplies................ (11,094) (263) -- (11,357)
Other Current Assets.................. 1,719 (840) 602 1,481
Due to Affiliates..................... 377 -- -- 377
Other Current Liabilities............. 26,554 4,179 -- 30,733
-------- ------- ------- --------
Net Cash Provided by Operating
Activities....................... 92,879 5,599 602 99,080
INVESTING ACTIVITIES
Property Additions......................... (32,414) (1,011) -- (33,425)
Proceeds from Property Dispositions........ 2,968 -- -- 2,968
Other Investing Activities................. 1,909 62 (8,018) (6,047)
-------- ------- ------- --------
Net Cash Used by Investing
Activities....................... (27,537) (949) (8,018) (36,504)
FINANCING ACTIVITIES
Borrowings from Affiliate.................. -- -- -- --
Long-Term Debt Repaid...................... (4,526) -- -- (4,526)
Affiliate Debt Repaid...................... (11,200) (4,280) 4,280 (11,200)
Cash Dividends Paid........................ (20,500) (3,160) 3,160 (20,500)
Other Financing Activities................. -- 24 (24) --
-------- ------- ------- --------
Net Cash Used by Financing
Activities....................... (36,226) (7,416) 7,416 (36,226)
Net Increase (Decrease) in Cash and Cash
Equivalents................................ 29,116 (2,766) -- 26,350
Cash and Cash Equivalents at Beginning of
Year....................................... 26,810 3,643 -- 30,453
-------- ------- ------- --------
Cash and Cash Equivalents at End of
Year............................. $55,926 $877 $ -- $56,803
======== ======= ======= ========
</TABLE>
F-19
<PAGE> 138
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 27, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings............................... $51,088 $6,337 $ -- $57,425
Adjustments to Reconcile Net Earnings to
Net Cash Provided:
Depreciation and Amortization........... 36,241 1,240 -- 37,481
Deferred Income Taxes................... (800) 6 -- (794)
Other Operating Activities.............. (10) 1,536 -- 1,526
Changes in Operating Assets and
Liabilities:
Accounts Receivable................... (6,127) (6,921) -- (13,048)
Materials and Supplies................ 8,206 (1,905) -- 6,301
Other Current Assets.................. 180 (453) -- (273)
Due to Affiliates..................... (903) -- -- (903)
Other Current Liabilities............. 22,945 2,960 -- 25,905
--------- -------- -------- --------
Net Cash Provided by Operating
Activities......................... 110,820 2,800 -- 113,620
INVESTING ACTIVITIES
Property Additions......................... (59,472) (31,079) -- (90,551)
Proceeds from Property Dispositions........ 1,054 -- -- 1,054
Other Investing Activities................. (36,626) 913 31,555 (4,158)
--------- -------- -------- --------
Net Cash Used by Investing
Activities......................... (95,044) (30,166) 31,555 (93,655)
FINANCING ACTIVITIES
Borrowings from Affiliate.................. -- 20,627 (20,627) --
Long-Term Debt Repaid...................... (4,484) -- -- (4,484)
Affiliate Debt Repaid...................... (11,200) (3,945) 3,945 (11,200)
Cash Dividends Paid........................ (36,800) (2,765) 2,765 (36,800)
Other Financing Activities................. -- 17,638 (17,638) --
--------- -------- -------- --------
Net Cash (Used in) Provided by
Financing Activities............... (52,484) 31,555 (31,555) (52,484)
Net Increase (Decrease) in Cash and Cash
Equivalents................................ (36,708) 4,189 -- (32,519)
Cash and Cash Equivalents at Beginning of
Year....................................... 55,926 877 -- 56,803
--------- -------- -------- --------
Cash and Cash Equivalents at
End of Year........................ $19,218 $5,066 $ -- $24,284
========= ======== ======== ========
</TABLE>
F-20
<PAGE> 139
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 26, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings (Loss)......................... $30,434 $(4,490) $ -- $25,944
Adjustments to Reconcile Net Earnings (Loss)
to Net Cash Provided:
Depreciation and Amortization............ 37,809 3,340 -- 41,149
Deferred Income Taxes.................... 103 (13) -- 90
Other Operating Activities............... 1,918 1,298 -- 3,216
Changes in Operating Assets and
Liabilities:
Accounts Receivable.................... 5,952 4,866 -- 10,818
Materials and Supplies................. 14,248 (186) -- 14,062
Other Current Assets................... (5,820) 663 -- (5,157)
Due to Affiliates...................... (844) -- -- (844)
Other Current Liabilities.............. (35,925) (1,284) -- (37,209)
-------- -------- -------- --------
Net Cash Provided by Operating
Activities.......................... 47,875 4,194 -- 52,069
INVESTING ACTIVITIES
Property Additions.......................... (26,114) (25,386) -- (51,500)
Proceeds from Property Dispositions......... 3,452 (41) -- 3,411
Other Investing Activities.................. (21,435) (1,228) 21,452 (1,211)
-------- -------- -------- --------
Net Cash Used by Investing
Activities.......................... (44,097) (26,655) 21,452 (49,300)
FINANCING ACTIVITIES
Short-Term Borrowing from Affiliate......... 6,550 23,984 (23,984) 6,550
Long-Term Debt Repaid....................... (4,484) -- -- (4,484)
Affiliate Debt Repaid....................... (11,200) (4,000) 4,000 (11,200)
Cash Dividends Paid......................... (19,000) (2,370) 2,370 (19,000)
Other Financing Activities.................. -- 3,838 (3,838) --
-------- -------- -------- --------
Net Cash (Used in) Provided by
Financing Activities................ (28,134) 21,452 (21,452) (28,134)
Net (Decrease) Increase in Cash and Cash
Equivalents................................. (24,356) (1,009) -- (25,365)
Cash and Cash Equivalents at Beginning of
Year........................................ 19,218 5,066 -- 24,284
-------- -------- -------- --------
Cash and Cash Equivalents at End of
Year................................ $(5,138) $4,057 $ -- $(1,081)
======== ======== ======== ========
</TABLE>
F-21
<PAGE> 140
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF FINANCIAL POSITION AT DECEMBER 27, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents.................. $19,218 $5,066 $ -- $24,284
Accounts Receivable -- Net................. 76,518 13,081 -- 89,599
Materials and Supplies..................... 45,166 2,422 -- 47,588
Deferred Income Taxes...................... 1,624 (5) -- 1,619
Other Current Assets....................... 2,211 1,467 -- 3,678
-------- ------- -------- --------
Total Current Assets.................... 144,737 22,031 -- 166,768
PROPERTIES -- NET............................ 417,723 31,498 -- 449,221
NET PENSION ASSET............................ 16,455 -- -- 16,455
OTHER ASSETS................................. 72,241 18,955 (56,545) 34,651
-------- ------- -------- --------
Total Assets............................... $651,156 $72,484 $(56,545) $667,095
======== ======= ======== ========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable........................... $25,390 $8,385 $ -- $33,775
Accrued Payroll and Fringe Benefits........ 17,874 116 -- 17,990
Due to Affiliates.......................... 26,200 (32) -- 26,168
Accrued Claims and Insurance Premiums...... 5,197 -- -- 5,197
Deferred Revenue........................... 11,614 -- -- 11,614
Other Current Liabilities.................. 48,458 2,561 -- 51,019
-------- ------- -------- --------
Total Current Liabilities............... 134,733 11,030 -- 145,763
LONG-TERM NOTE PAYABLE TO AFFILIATE.......... 78,400 24,813 (24,813) 78,400
DEFERRED INCOME TAXES........................ 71,469 (16) -- 71,453
LONG-TERM DEBT............................... 48,230 -- -- 48,230
OTHER LONG-TERM LIABILITIES.................. 25,767 4,925 -- 30,692
-------- ------- -------- --------
358,599 40,752 (24,813) 374,538
-------- ------- -------- --------
SHAREHOLDER'S EQUITY
Common Stock................................. 6,006 36 (36) 6,006
Other Capital................................ 165,164 25,560 (25,560) 165,164
Retained Earnings............................ 121,387 6,136 (6,136) 121,387
-------- ------- -------- --------
Total Shareholder's Equity.............. 292,557 31,732 (31,732) 292,557
-------- ------- -------- --------
Total Liabilities and Shareholder's
Equity................................ $651,156 $72,484 $(56,545) $667,095
======== ======= ======== ========
</TABLE>
F-22
<PAGE> 141
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF FINANCIAL POSITION AT DECEMBER 26, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents........................ $(5,138) $4,057 $ -- $(1,081)
Accounts Receivable -- Net....................... 69,234 8,215 -- 77,449
Materials and Supplies........................... 30,918 2,608 -- 33,526
Deferred Income Taxes............................ 1,371 7 -- 1,378
Other Current Assets............................. 13,383 804 (4,020) 10,167
-------- ------- -------- --------
Total Current Assets.......................... 109,768 15,691 (4,020) 121,439
PROPERTIES -- NET.................................. 406,709 53,586 -- 460,295
NET PENSION ASSET.................................. 19,091 -- -- 19,091
OTHER ASSETS....................................... 80,611 20,183 (69,487) 31,307
-------- ------- -------- --------
TOTAL ASSETS.................................. $616,179 $89,460 $(73,507) $632,132
======== ======= ======== ========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable................................. $10,351 $3,363 $ -- $13,714
Accrued Payroll and Fringe Benefits.............. 16,016 115 -- 16,131
Due to Affiliates................................ 27,562 4,057 (4,020) 27,599
Short Term Borrowings from Affiliate............. 6,550 -- -- 6,550
Accrued Claims and Insurance Premiums............ 6,620 -- -- 6,620
Deferred Revenue................................. 7,894 -- -- 7,894
Other Current Liabilities........................ 29,256 6,230 -- 35,486
-------- ------- -------- --------
Total Current Liabilities..................... 104,249 13,765 (4,020) 113,994
LONG-TERM NOTE PAYABLE TO AFFILIATE................ 67,200 29,722 (29,722) 67,200
DEFERRED INCOME TAXES.............................. 71,318 (16) -- 71,302
LONG-TERM DEBT..................................... 43,746 -- -- 43,746
OTHER LONG-TERM LIABILITIES........................ 30,165 6,224 -- 36,389
-------- ------- -------- --------
316,678 49,695 (33,742) 332,631
-------- ------- -------- --------
SHAREHOLDER'S EQUITY
Common Stock....................................... 6,006 36 (36) 6,006
Other Capital...................................... 165,164 40,453 (40,453) 165,164
Retained Earnings.................................. 128,331 (724) 724 128,331
-------- ------- -------- --------
Total Shareholder's Equity.................... 299,501 39,765 (39,765) 299,501
-------- ------- -------- --------
Total Liabilities and Shareholder's Equity.... $616,179 $89,460 $(73,507) $632,132
======== ======= ======== ========
</TABLE>
F-23
<PAGE> 142
AMERICAN COMMERCIAL LINES, INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JUNE 27, JUNE 26,
1997 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
OPERATING REVENUE........................................... $275,423 $266,858
OPERATING EXPENSE
Materials, Supplies and Other............................. 128,461 122,152
Labor and Fringe Benefits................................. 72,018 73,259
Fuel...................................................... 30,339 22,659
Depreciation and Amortization............................. 20,129 20,569
Taxes, Other Than Income Taxes............................ 10,925 11,027
-------- --------
261,872 249,666
-------- --------
OPERATING INCOME............................................ 13,551 17,192
OTHER EXPENSE (INCOME)
Interest Expense.......................................... 1,900 2,097
Interest Expense, Affiliate -- Net........................ 4,266 3,971
Other, Net................................................ (411) 687
-------- --------
5,755 6,755
-------- --------
EARNINGS BEFORE INCOME TAXES................................ 7,796 10,437
INCOME TAXES (BENEFIT)...................................... 3,688 (62,225)
-------- --------
NET EARNINGS................................................ 4,108 72,662
RETAINED EARNINGS, BEGINNING OF PERIOD...................... 121,387 128,331
-------- --------
125,495 200,993
DIVIDENDS/DISTRIBUTIONS..................................... 9,500 18,454
-------- --------
RETAINED EARNINGS, END OF PERIOD............................ $115,995 $182,539
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
F-24
<PAGE> 143
AMERICAN COMMERCIAL LINES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JUNE 27, JUNE 26,
1997 1998
-------- --------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings.............................................. $4,108 $72,662
Adjustments to Reconcile Net Earnings to Net Cash Provided
(Used):
Depreciation and Amortization.......................... 20,129 20,569
Deferred Income Taxes.................................. 836 (63,601)
Other Operating Activities............................. (219) 5,377
Changes in Operating Assets and Liabilities:
Accounts Receivable.................................. 14,951 10,403
Materials and Supplies............................... (5,056) (17,211)
Other Current Assets................................. (1,421) (2,013)
Due to Affiliates.................................... (852) (306)
Other Current Liabilities............................ (36,813) (13,207)
-------- --------
Net Cash Provided by (Used in) Operating
Activities.......................................... (4,337) 12,673
INVESTING ACTIVITIES
Property Additions........................................ (38,212) (25,034)
Proceeds from Property Dispositions....................... 903 3,150
Restricted Investments.................................... (26,128)
Other Investing Activities................................ (4,741) (3,010)
-------- --------
Net Cash Used by Investing Activities................ (42,050) (51,022)
FINANCING ACTIVITIES
Short Term Borrowing from Affiliates...................... 61,204 68,106
Long-Term Debt Repaid..................................... (2,242) (2,242)
Affiliate Debt Repaid..................................... (11,200) (11,200)
Cash Dividends Paid....................................... (9,500) (9,500)
Other Financing........................................... -- (1,338)
-------- --------
Net Cash Provided by Financing Activities............ 38,262 43,826
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents........ (8,125) 5,477
Cash and Cash Equivalents at Beginning of Period............ 7,446 (1,081)
-------- --------
Cash and Cash Equivalents at End of Period........... $(679) $4,396
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
F-25
<PAGE> 144
AMERICAN COMMERCIAL LINES, INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DEC. 26, JUNE 26,
1997* 1998
-------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents................................. $(1,081) $4,396
Accounts Receivable, Net.................................. 77,449 68,266
Materials and Supplies.................................... 33,526 50,466
Deferred Income Taxes..................................... 1,378 1,288
Other Current Assets...................................... 10,167 10,847
-------- --------
Total Current Assets................................... 121,439 135,263
PROPERTIES -- NET........................................... 460,295 457,341
RESTRICTED INVESTMENTS...................................... 26,128
PENSION ASSET............................................... 19,091 20,265
OTHER ASSETS................................................ 31,307 32,586
-------- --------
Total Assets........................................... $632,132 $671,583
======== ========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable.......................................... $13,714 $13,465
Accrued Payroll and Fringe Benefits....................... 16,131 15,516
Due to Affiliates......................................... 27,599 18,329
Short Term Borrowings from Affiliate...................... 6,550 74,656
Accrued Claims and Insurance Premiums..................... 6,620 4,858
Deferred Revenue.......................................... 7,894 11,581
Other Current Liabilities................................. 35,486 33,068
-------- --------
Total Current Liabilities.............................. 113,994 171,473
LONG-TERM NOTE PAYABLE TO AFFILIATE......................... 67,200 56,000
DEFERRED INCOME TAXES....................................... 71,302 7,778
LONG-TERM DEBT.............................................. 43,746 41,504
PENSION LIABILITY........................................... -- 24,158
OTHER LONG-TERM LIABILITIES................................. 36,389 40,854
-------- --------
332,631 341,767
-------- --------
SHAREHOLDER'S EQUITY/MEMBER'S EQUITY
Common Stock/Member's Interest.............................. 6,006 6,006
Other Capital............................................... 165,164 141,271
Retained Earnings........................................... 128,331 182,539
-------- --------
Total Shareholder's Equity/Member's Equity............. 299,501 329,816
-------- --------
Total Liabilities and Shareholder's Equity/Member's
Equity................................................ $632,132 $671,583
======== ========
</TABLE>
- ---------------
* Derived from the audited December 26, 1997 consolidated statement of financial
position.
See accompanying Notes to Condensed Consolidated Financial Statements.
F-26
<PAGE> 145
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1. BASIS OF PRESENTATION
American Commercial Lines LLC ("ACL" or the "Company") is a wholly-owned
subsidiary of CSX Corporation at June 26, 1998. During the second quarter of
1998, CSX contributed all assets and liabilities of American Commercial Lines,
Inc. to form ACL. The accompanying financial statements as of and for the six
months ended June 26, 1998 include the operations of both entities on a
continuing basis. See also Note 10 regarding subsequent event.
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the Company's
financial position at December 26, 1997 and June 26, 1998, the results of its
operations and its cash flows for the six months ended June 27, 1997 and June
26, 1998, such adjustments being of a normal recurring nature. Operating results
for the six months ended June 26, 1998 are not necessarily indicative of the
results that may be expected for the fiscal year ended December 25, 1998.
While the Company believes that the disclosures presented are adequate to
make the information not misleading, it is suggested that these financial
statements be read in conjunction with the 1997 audited consolidated financial
statements and the notes related thereto.
The Company's fiscal year is composed of 52 weeks ending on the last Friday
in December. The financial statements presented are for the 26 weeks ended June
27, 1997 and June 26, 1998, and the fiscal year ended December 26, 1997.
NOTE 2. MATERIAL AND SUPPLIES
Materials and Supplies are carried at average cost and consist of the
following:
<TABLE>
<CAPTION>
DEC. 26, JUNE 26,
1997 1998
-------- --------
<S> <C> <C>
Raw Materials............................................... $ 5,917 $ 8,052
Work in Process............................................. 7,243 23,161
Parts and Supplies.......................................... 20,366 19,253
------- -------
$33,526 $50,466
======= =======
</TABLE>
NOTE 3. RESTRICTED INVESTMENTS
In June 1998, the Company deposited approximately $26 million into an
escrow fund which, together with future income earned on such amount, is to be
used to repay $24.4 million principal of Terminal Revenue Refunding Bonds plus
redemption premium and interest thereon. The escrow funds are invested in U.S.
Government obligations, which are stated at cost which approximates fair value,
are classified as held-to-maturity, and are irrevocably pledged and assigned
solely for the payment of principal, redemption premium and interest on the
Terminal Facilities Revenue Refunding Bonds.
NOTE 4. INCOME TAXES
ACL was reorganized as a limited liability company in the second quarter of
1998. As such, ACL passes through its U.S. Federal and state (but not foreign)
taxable income to its member who is responsible for income taxes on such taxable
income. All of ACL's corporate subsidiaries were converted to limited liability
companies (except for the foreign subsidiaries) on June 30, 1998 prior to the
recapitalization (see Note 10). Due to the change in the tax status, the Company
reversed previously recognized deferred income taxes resulting in a benefit of
approximately $65 million. The Company reversed an additional $6 million of
deferred income taxes as a tax benefit on June 30, 1998 resulting from the
change in tax status of the subsidiaries.
F-27
<PAGE> 146
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
The components of income tax expense (benefit) computed at federal
statutory rate follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JUNE 27, JUNE 26,
1997 1998
-------- --------
<S> <C> <C>
Tax at Federal Statutory Rate............................... $2,729 $ 3,653
State Income Taxes, Net..................................... 190 239
Foreign Operations, net..................................... 1,155 2,542
Tax effect of income taxable to member resulting from change
of tax status and other items............................. (386) (3,168)
Reversal of previously established deferred income taxes
resulting from change of tax status....................... (65,491)
------ --------
Total Income Tax Expense (Benefit).......................... $3,688 $(62,225)
====== ========
</TABLE>
NOTE 5. DIVIDENDS/DISTRIBUTIONS
Dividends/Distributions to CSX consist of $9,500 paid in cash in both 1997
and 1998. In addition, 1998 includes $1,650 accrued distribution related to
income taxes and $7,304 in net assets of certain terminal operations which were
distributed pursuant to the recapitalization (see Note 10). Revenues and
operating income of the terminal operations are not material.
NOTE 6. EMPLOYEE BENEFIT PLAN
Prior to January 1, 1998, certain employees of ACL participated in the
combined CSX Pension Plan for which ACL was allocated a portion of the annual
net pension expense. CSX determined that it would spin-off the assets and
liabilities in the CSX Pension Plan attributable to ACL employees to a
newly-created plan sponsored by ACL. The plan spin-off was completed in June
1998. This transfer of assets and benefit liabilities resulted in the Company
recording a pension liability of approximately $24 million and a corresponding
reduction to other capital. The assets transferred to the new plan of
approximately $52 million were determined based on regulations established under
the Employee Retirement Income Security Act of 1974 ("ERISA"). The benefits to
be received by ACL participants will not change as a result of the spin-off.
The Company also continues to sponsor other defined benefit pension plans,
in connection with which the Company has a pension asset of approximately $20
million at June 26, 1998.
NOTE 7. CONTINGENCIES
A number of legal actions are pending against ACL in which claims are made
in substantial amounts. While the ultimate results of pending litigation cannot
be predicted with certainty, management does not currently expect that
resolution of these matters will have a material adverse effect on the
consolidated results of operations, financial position and cash flows of ACL.
F-28
<PAGE> 147
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 8. BUSINESS SEGMENTS (IN $000's)
<TABLE>
<CAPTION>
REPORTABLE SEGMENTS
----------------------- ALL OTHER
BARGING CONSTRUCTION SEGMENTS(1) TOTAL
-------- ------------ ----------- --------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 27, 1997
Revenues from external customers................... $232,339 $28,090 $14,994 $275,423
Intersegment revenues.............................. -- 30,344 2,136 32,480
Segment earnings................................... 16,050 1,223 3,790 21,063
SIX MONTHS ENDED JUNE 26, 1998
Revenues from external customers................... $216,338 $37,318 $13,202 $266,858
Intersegment revenues.............................. -- 11,065 1,994 13,059
Segment earnings................................... 16,830 4,150 3,622 24,602
</TABLE>
- ---------------
(1) Financial data for segments below the reporting thresholds is attributable
to two operating segments -- a segment operating terminals along the U.S.
inland waterways and a segment providing voice and data communications to
marine companies operating on the U.S. inland waterways.
The following is a reconciliation of ACL's revenues from external customers
and segment earnings to ACL's consolidated totals.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JUNE 27, JUNE 26,
1997 1998
-------- --------
<S> <C> <C>
REVENUES
Revenues from external customers............................ $275,423 $266,858
Intersegment revenues....................................... 32,480 13,059
Elimination of intersegment revenues........................ (32,480) (13,059)
-------- --------
Operating revenue........................................... $275,423 $266,858
======== ========
PROFIT
Total segment earnings...................................... $ 21,063 $ 24,602
Unallocated amounts:
Management service fee charged by CSX..................... (7,512) (7,410)
Interest expense.......................................... (1,900) (2,097)
Interest expense, affiliate -- net........................ (4,266) (3,971)
Other, net................................................ 411 (687)
-------- --------
Earnings before income taxes................................ $ 7,796 $ 10,437
======== ========
</TABLE>
F-29
<PAGE> 148
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 9. CHANGES IN ACCOUNTING STANDARDS
In 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information." This Statement requires that public business enterprises disclose
information about their products and services, operating segments, the
geographic areas in which they operate, and their major customers. Management
adopted the provisions of this Statement in 1997.
In 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained For Internal Use." This Statement requires
capitalization of (i) external direct costs of materials and services incurred
in developing or obtaining internal-use computer software; (ii) payroll and
payroll-related costs for employees who are directly associated with and who
devote time to the internal-use computer software project and (iii) interest
costs incurred in developing computer software for internal use. Costs that are
considered to be related to research and development activities would be
expensed as incurred. Similarly, training and maintenance costs would be
expensed, and allocations to amounts capitalized of general and administrative
or overhead costs would not be permitted. Management adopted this Statement with
early application in 1997 with no significant effect on the financial
statements.
In February 1998, the FASB issued Statement No. 132, "Employer's
Disclosures about Pensions and Other Postretirement Benefits." The Statement
supersedes the disclosure requirements in Statements No. 87, "Employer's
Accounting for Pensions", No. 88, "Accounting for Settlements and Curtailments
of Defined Benefit Plans and for Termination Benefits", and No. 106, "Employer's
Accounting for Postretirement Benefits Other Than Pensions." Statement No. 132
eliminates certain existing disclosure requirements, but at the same time adds
new disclosures. The Company will adopt the provisions of this Statement in
1998.
In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income", which establishes new rules for the reporting of comprehensive income.
The purpose of reporting comprehensive income is to report all changes in equity
of an enterprise that result from recognized transactions and other economic
events of a period other than transactions with owners in their capacity as
owners. Statement No. 130 does not specify a format for the financial statement
that portrays the components of comprehensive income but requires that a Company
display an amount representing total comprehensive income for the periods
reported in the financial statement. The Company adopted Statement No. 130 in
the first quarter of 1998 but the adoption had no impact on the Company's
shareholder's equity or net earnings.
In April 1998, the AICPA issued Statement of Position No. 98-5, "Reporting
on the Costs of Start-Up Activities" (SOP 98-5) which requires costs of start-up
activities and organizational costs to be expensed as incurred. The Company has
historically expensed start-up costs. It will adopt SOP 98-5 in fiscal 1999, and
does not anticipate that it will have any significant impact on the Company's
financial statements.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. If
certain conditions are met, a derivative may be specifically designated as (a) a
hedge of the exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the exposure to
variable cash flows of a forecasted transaction, or (c) a hedge of the foreign
currency exposure of a net investment in a foreign operation, an unrecognized
firm commitment, an available-for-sale security, or a foreign-currency-dominated
forecasted transaction. The accounting for changes in the fair value of a
derivative (that is, gains and losses) depends on the intended use of the
derivative and the resulting designation. This statement is effective for
F-30
<PAGE> 149
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
fiscal years beginning after June 15, 1999, but earlier application is
encouraged. The Company has not determined when it will adopt Statement No. 133,
but expects adoption will not have a significant effect on its financial
statements.
NOTE 10. SUBSEQUENT EVENT
On June 30, 1998, the Company's parent, American Commercial Lines Holdings
LLC ("Holdings"), completed a recapitalization in a series of transactions in
which the barge business of Vectura Group, Inc. ("Vectura") and its subsidiaries
were combined with that of the Company. The Company issued $735 million in new
debt ($435 million in Senior Credit Facilities and $300 million in 10 1/4%
Senior Notes), Vectura contributed certain of its assets and liabilities
(referred to as the NMI contribution) plus $60 million in cash and the Company
paid a $696 million distribution, including a working capital adjustment, to CSX
and $75 million of existing liabilities of Vectura. In addition, CSX contributed
to the capital of the Company approximately $166 million of existing debt owed
to CSX.
The transactions described above will be accounted for as a
recapitalization of the Company with the NMI contribution accounted for by the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16. The purchase price of $3.9 million is less than the fair value
of the net assets being acquired, resulting in a reduction of long-term assets
of approximately $6.4 million.
The $735 million of debt issued by the Company is guaranteed by the
Company's domestic subsidiaries, other than ACL Capital Corp. (which was formed
in connection with the transaction), any Accounts Receivable Subsidiary (as
defined in the indentures with respect to such debt) and certain subsidiaries of
the Company without substantial assets or operations (the "Subsidiary
Guarantors"). Such guarantees are full, unconditional and joint and several.
Separate financial statements of the Subsidiary Guarantors are not presented
because management has determined that they would not be material to investors.
The following supplemental financial information sets forth on a combined basis,
condensed consolidated statements of financial position, statements of earnings
and statements of cash flows for the Subsidiary Guarantors, non-guarantor
subsidiaries and for the Company.
F-31
<PAGE> 150
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 27,
1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings (Loss)........................ $ 6,792 $ (2,684) $ -- $ 4,108
Adjustments to Reconcile Net Earnings
(Loss) to Net Cash (Used in) Provided:
Depreciation and Amortization........... 18,663 1,466 -- 20,129
Deferred Income Taxes................... 836 -- -- 836
Other Operating Activities.............. 558 (777) -- (219)
Changes in Operating Assets and
Liabilities:
Accounts Receivable................... 9,418 5,533 -- 14,951
Materials and Supplies................ (4,476) (580) -- (5,056)
Other Current Assets.................. (1,224) (197) -- (1,421)
Due to Affiliates..................... (852) -- -- (852)
Other Current Liabilities............. (34,229) (2,584) -- (36,813)
-------- -------- -------- --------
Net Cash (Used in) Provided by
Operating Activities............. (4,514) 177 -- (4,337)
INVESTING ACTIVITIES
Property Additions......................... (13,541) (24,671) -- (38,212)
Proceeds from Property Dispositions........ 903 -- -- 903
Other Investing Activities................. (26,281) (1,224) 22,764 (4,741)
-------- -------- -------- --------
Net Cash Used by Investing
Activities....................... (38,919) (25,895) 22,764 (42,050)
FINANCING ACTIVITIES
Short-Term Borrowing from Affiliate........ 61,204 13,984 (13,984) 61,204
Long-Term Debt Repaid...................... (2,242) -- -- (2,242)
Affiliate Debt Repaid...................... (11,200) -- -- (11,200)
Cash Dividends Paid........................ (9,500) (2,370) 2,370 (9,500)
Other Financing Activities................. -- 11,150 (11,150) --
-------- -------- -------- --------
Net Cash Provided by Financing
Activities....................... 38,262 22,764 (22,764) 38,262
Net (Decrease) Increase in Cash and Cash
Equivalents................................ (5,171) (2,954) -- (8,125)
Cash and Cash Equivalents at Beginning of
Period..................................... 2,380 5,066 -- 7,446
-------- -------- -------- --------
Cash and Cash Equivalents at End of
Period........................... $ (2,791) $ 2,112 $ -- (679)
======== ======== ======== ========
</TABLE>
F-32
<PAGE> 151
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF FINANCIAL POSITION AT JUNE 26, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents...................... $ 2,265 $ 2,131 $ -- $ 4,396
Accounts Receivable -- Net..................... 55,657 12,609 -- 68,266
Materials and Supplies......................... 47,439 3,027 -- 50,466
Deferred Income Taxes.......................... 1,281 7 -- 1,288
Other Current Assets........................... 18,603 (4,842) (2,914) 10,847
-------- -------- -------- --------
Total Current Assets........................ 125,245 12,932 (2,914) 135,263
PROPERTIES -- NET................................ 388,838 68,503 -- 457,341
RESTRICTED INVESTMENTS........................... 26,128 -- -- 26,128
NET PENSION ASSET................................ 20,265 -- -- 20,265
OTHER ASSETS..................................... 91,280 22,130 (80,824) 32,586
-------- -------- -------- --------
TOTAL ASSETS................................ $651,756 $103,565 $(83,738) $671,583
======== ======== ======== ========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable............................... $ 9,461 $ 4,004 $ -- $ 13,465
Accrued Payroll and Fringe Benefits............ 15,459 57 -- 15,516
Due to Affiliates.............................. 18,353 2,890 (2,914) 18,329
Short Term Borrowings from Affiliate........... 74,656 -- -- 74,656
Accrued Claims and Insurance Premiums.......... 4,858 -- -- 4,858
Deferred Revenue............................... 11,581 -- -- 11,581
Other Current Liabilities...................... 28,000 5,068 -- 33,068
-------- -------- -------- --------
Total Current Liabilities................... 162,368 12,019 (2,914) 171,473
LONG-TERM NOTE PAYABLE TO AFFILIATE.............. 56,000 45,883 (45,883) 56,000
DEFERRED INCOME TAXES............................ 7,794 (16) -- 7,778
LONG-TERM DEBT................................... 41,504 -- -- 41,504
PENSION LIABILITY................................ 24,158 -- -- 24,158
OTHER LONG-TERM LIABILITIES...................... 30,116 10,738 -- 40,854
-------- -------- -------- --------
321,940 68,624 (48,797) 341,767
-------- -------- -------- --------
SHAREHOLDER'S EQUITY/MEMBER'S EQUITY
Common Stock/Member's Interest................... 6,006 40 (40) 6,006
Other Capital.................................... 141,271 44,737 (44,737) 141,271
Retained Earnings (Deficit)...................... 182,539 (9,836) 9,836 182,539
-------- -------- -------- --------
Total Shareholder's Equity/Member's
Equity.................................... 329,816 34,941 (34,941) 329,816
-------- -------- -------- --------
Total Liabilities and Shareholder's Equity/
Member's Equity........................... $651,756 $103,565 $(83,738) $671,583
======== ======== ======== ========
</TABLE>
F-33
<PAGE> 152
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED JUNE 27, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING REVENUE............................ $264,590 $10,833 $ -- $275,423
OPERATING EXPENSE
Materials, Supplies and Other.............. 121,533 6,928 -- 128,461
Labor and Fringe Benefits.................. 69,239 2,779 72,018
Fuel....................................... 29,195 1,144 30,339
Depreciation and Amortization.............. 18,663 1,466 20,129
Taxes, Other Than Income Taxes............. 10,925 -- 10,925
-------- ------- ---- --------
249,555 12,317 -- 261,872
-------- ------- ---- --------
OPERATING INCOME (LOSS)...................... 15,035 (1,484) -- 13,551
OTHER EXPENSE (INCOME)
Interest Expense........................... 1,900 -- -- 1,900
Interest Expense, Affiliate -- Net......... 4,266 983 (983) 4,266
Other, Net................................. (1,278) (116) 983 (411)
-------- ------- ---- --------
4,888 867 -- 5,755
-------- ------- ---- --------
EARNINGS (LOSS) BEFORE INCOME TAXES.......... 10,147 (2,351) -- 7,796
INCOME TAXES................................. 3,355 333 -- 3,688
-------- ------- ---- --------
NET EARNINGS (LOSS).......................... $ 6,792 $(2,684) $ -- $ 4,108
======== ======= ==== ========
</TABLE>
F-34
<PAGE> 153
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED JUNE 26, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUE................................. $249,464 $17,394 $ -- $266,858
OPERATING EXPENSE
Materials, Supplies and Other................... 110,194 11,958 -- 122,152
Labor and Fringe Benefits....................... 68,790 4,469 -- 73,259
Fuel............................................ 21,355 1,304 -- 22,659
Depreciation and Amortization................... 18,240 2,329 -- 20,569
Taxes, Other Than Income Taxes.................. 10,973 54 -- 11,027
-------- ------- ------- --------
229,552 20,114 -- 249,666
-------- ------- ------- --------
OPERATING INCOME (LOSS)........................... 19,912 (2,720) -- 17,192
OTHER EXPENSE (INCOME)
Interest Expense................................ 2,097 -- -- 2,097
Interest Expense, Affiliate -- Net.............. 3,971 1,531 (1,531) 3,971
Other, Net...................................... (1,265) 421 1,531 687
-------- ------- ------- --------
4,803 1,952 -- 6,755
-------- ------- ------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES............... 15,109 (4,672) -- 10,437
INCOME TAXES (BENEFIT)............................ (62,320) 95 -- (62,225)
-------- ------- ------- --------
NET EARNINGS (LOSS)............................... $ 77,429 $(4,767) $ -- $ 72,662
======== ======= ======= ========
</TABLE>
F-35
<PAGE> 154
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 26,
1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings (Loss).............................. $ 77,429 $ (4,767) $ -- $ 72,662
Adjustments to Reconcile Net Earnings (Loss) to
Net Cash Provided:
Depreciation and Amortization............... 18,240 2,329 -- 20,569
Deferred Income Taxes....................... (63,601) -- -- (63,601)
Other Operating Activities.................. 863 4,514 -- 5,377
Changes in Operating Assets and Liabilities:
Accounts Receivable...................... 14,797 (4,394) -- 10,403
Materials and Supplies................... (16,792) (419) -- (17,211)
Other Current Assets..................... (7,659) 5,646 -- (2,013)
Due to Affiliates........................ (306) -- -- (306)
Other Current Liabilities................ (12,567) (640) -- (13,207)
-------- -------- -------- --------
Net Cash (Used in) Provided by Operating
Activities............................. 10,404 2,269 -- 12,673
INVESTING ACTIVITIES
Property Additions............................... (7,535) (17,499) -- (25,034)
Proceeds from Property Dispositions.............. 2,897 253 -- 3,150
Restricted Investments........................... (26,128) (26,128)
Other Investing Activities....................... (16,061) (1,947) 14,998 (3,010)
-------- -------- -------- --------
Net Cash Used by Investing Activities.... (46,827) (19,193) 14,998 (51,022)
FINANCING ACTIVITIES
Borrowings from Affiliate........................ 68,106 4,000 (4,000) 68,106
Long-Term Debt Repaid............................ (2,242) -- -- (2,242)
Affiliate Debt Repaid............................ (11,200) -- -- (11,200)
Cash Dividends Paid.............................. (9,500) (4,345) 4,345 (9,500)
Other Financing Activities....................... (1,338) 15,343 (15,343) (1,338)
-------- -------- -------- --------
Net Cash Used by Financing Activities.... 43,826 14,998 (14,998) 43,826
Net (Decrease) Increase in Cash and Cash
Equivalents...................................... 7,403 (1,926) -- 5,477
Cash and Cash Equivalents at Beginning of Year..... (5,138) 4,057 -- (1,081)
-------- -------- -------- --------
Cash and Cash Equivalents at End of
Period................................. $ 2,265 $ 2,131 $ -- $ 4,396
======== ======== ======== ========
</TABLE>
F-36
<PAGE> 155
AMERICAN COMMERCIAL LINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
CONDENSED COMBINING STATEMENT OF FINANCIAL POSITION AT DECEMBER 26, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTOR OTHER COMBINED
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTALS
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents........................ $ (5,138) $ 4,057 $ -- $ (1,081)
Accounts Receivable -- Net....................... 69,234 8,215 -- 77,449
Materials and Supplies........................... 30,918 2,608 -- 33,526
Deferred Income Taxes............................ 1,371 7 -- 1,378
Other Current Assets............................. 13,383 804 (4,020) 10,167
-------- ------- -------- --------
Total Current Assets..................... 109,768 15,691 (4,020) 121,439
PROPERTIES -- NET.................................. 406,709 53,586 -- 460,295
NET PENSION ASSET.................................. 19,091 -- -- 19,091
OTHER ASSETS....................................... 80,611 20,183 (69,487) 31,307
-------- ------- -------- --------
TOTAL ASSETS............................. $616,179 $89,460 $(73,507) $632,132
======== ======= ======== ========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable................................. $ 10,351 $ 3,363 $ -- $ 13,714
Accrued Payroll and Fringe Benefits.............. 16,016 115 -- 16,131
Due to Affiliates................................ 27,562 4,057 (4,020) 27,599
Short Term Borrowings from Affiliate............. 6,550 -- -- 6,550
Accrued Claims and Insurance Premiums............ 6,620 -- -- 6,620
Deferred Revenue................................. 7,894 -- -- 7,894
Other Current Liabilities........................ 29,256 6,230 -- 35,486
-------- ------- -------- --------
Total Current Liabilities................ 104,249 13,765 (4,020) 113,994
LONG-TERM NOTE PAYABLE TO AFFILIATE................ 67,200 29,722 (29,722) 67,200
DEFERRED INCOME TAXES.............................. 71,318 (16) -- 71,302
LONG-TERM DEBT..................................... 43,746 -- -- 43,746
PENSION LIABILITY.................................. -- -- -- --
OTHER LONG-TERM LIABILITIES........................ 30,165 6,224 -- 38,389
-------- ------- -------- --------
316,678 49,695 (33,742) 332,631
-------- ------- -------- --------
SHAREHOLDER'S EQUITY
Common Stock....................................... 6,006 36 (36) 6,006
Other Capital...................................... 165,164 40,453 (40,453) 165,164
Retained Earnings (Deficit)........................ 128,331 (724) 724 128,331
-------- ------- -------- --------
Total Shareholder's Equity............... 299,501 39,765 (39,765) 299,501
-------- ------- -------- --------
Total Liabilities and Shareholder's
Equity................................. $616,179 $89,460 $(73,507) $632,132
======== ======= ======== ========
</TABLE>
F-37
<PAGE> 156
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Vectura Group, Inc.:
We have audited the accompanying consolidated balance sheet of Vectura
Group, Inc. (a Delaware corporation) and Subsidiaries as of December 31, 1997,
and the related consolidated statements of income, stockholders' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Vectura Group, Inc. and
Subsidiaries as of December 31, 1997, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
New Orleans, Louisiana
June 5, 1998
F-38
<PAGE> 157
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $178
Accounts and notes receivable, net (Note 4)............... 19,964
Prepaid expenses.......................................... 2,205
Inventories (Note 5)...................................... 2,806
Current portion of deferred income taxes (Note 14)........ 2,242
Proceeds due from sale of investment (Note 3)............. 5,772
Other current assets...................................... 47
--------
Total current assets................................... 33,214
--------
Notes receivable............................................ 29
Note receivable -- unconsolidated affiliate................. 1,312
Vessels, property and equipment:
Land and buildings........................................ 3,720
Floating equipment........................................ 105,711
Other equipment........................................... 10,147
--------
119,578
Less -- Accumulated depreciation.......................... (38,934)
--------
Net vessels, property and equipment.................... 80,644
Other assets................................................ 2,864
--------
Total assets...................................... $118,063
========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-39
<PAGE> 158
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt (Note 7)................ $18,532
Accounts payable.......................................... 17,754
Accrued compensation and employee benefits................ 467
Accrued workers' compensation and other insurance......... 596
Accrued expenses.......................................... 3,091
Other current liabilities................................. 2,690
--------
Total current liabilities.............................. 43,130
Long-term Debt (Note 7)..................................... 43,423
Investments (Note 6)........................................ 1,761
Reserve for workers' compensation and other insurance....... 756
Deferred income taxes payable (Note 14)..................... 4,753
Other liabilities........................................... 8,596
--------
Total liabilities...................................... 102,419
--------
Commitments and contingencies (Notes 11, 17 and 18)
Mandatorily redeemable preferred stock (Note 12)............ 4,037
Stockholders' equity (Note 12):
Common stock, par value $.01 per share -- Authorized,
28,000 shares Issued and outstanding, 390 shares....... 1
Additional paid-in capital................................ 45
Retained earnings......................................... 11,561
--------
Total stockholders' equity............................. 11,607
--------
Total liabilities and stockholders' equity........... $118,063
========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-40
<PAGE> 159
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS EXCEPT EARNINGS PER SHARE AND WEIGHTED AVERAGE SHARES
OUTSTANDING)
<TABLE>
<S> <C>
OPERATING REVENUE........................................... $134,839
OPERATING EXPENSES.......................................... 126,233
----------
Gross profit........................................... 8,606
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ 7,411
----------
Income from operations................................. 1,195
----------
OTHER INCOME (EXPENSE):
Interest and dividend income.............................. 56
Interest expense.......................................... (6,884)
Equity in loss of unconsolidated affiliates............... (162)
Gain on sale of investments (Note 3)...................... 3,912
Gain on disposition of capital assets and other items,
net.................................................... 347
----------
(2,731)
----------
Loss from operations before income taxes............... (1,536)
BENEFIT FROM INCOME TAXES (Note 14)......................... (3,953)
----------
NET INCOME.................................................. 2,417
PREFERRED DIVIDENDS AND ACCRETION........................... (1,323)
----------
NET INCOME TO COMMON SHAREHOLDERS........................... $1,094
==========
EARNINGS PER SHARE:
Basic..................................................... $2,805.13
==========
Diluted................................................... $149.25
==========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic..................................................... 390
==========
Diluted................................................... 7,330
==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-41
<PAGE> 160
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- -------- -------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 (Note 12)............... $1 $43 $10,467 $10,511
1997 net income.................................. -- -- 2,417 2,417
Warrants issued.................................. -- 3 -- 3
Issuance costs of capital stock.................. -- (1) -- (1)
Dividends accrued -- Class E..................... -- -- (1,027) (1,027)
Preferred stock accretion........................ -- -- (296) (296)
-- --- ------- -------
Balance, December 31, 1997 (Note 12)............... $1 $45 $11,561 $11,607
== === ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-42
<PAGE> 161
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net income................................................ $2,417
Adjustments to reconcile net income to net cash generated
by operating activities --
Depreciation and amortization.......................... 7,524
Loss of unconsolidated affiliates...................... 162
Deferred income taxes.................................. (2,379)
Gain on disposition of capital assets.................. (439)
Increase in accounts receivable........................ (2,238)
Decrease in inventories................................ 331
Increase in accounts payable........................... 4,252
Decrease in workers' compensation and other
insurance............................................. (554)
Decrease in accrued expenses........................... (2,248)
Gain on sale of subsidiary............................. (3,912)
Other items............................................ 2,001
-------
Cash generated by operating activities............... 4,917
-------
INVESTING ACTIVITIES:
Purchase of vessels, property and equipment............... (169)
Proceeds from sale of vessels, property and equipment..... 816
Collections of notes receivable........................... 73
Decrease in investments and other assets.................. 123
-------
Cash generated by investing activities............... 843
-------
FINANCING ACTIVITIES:
Payments of long-term debt................................ (9,549)
Net borrowings under revolving loan facilities............ 501
Increase in long-term debt................................ 1,139
Borrowings to pay off existing debt....................... 1,465
Issuance of securities (Note 12).......................... 122
-------
Cash utilized by financing activities................ (6,322)
-------
DECREASE IN CASH AND CASH EQUIVALENTS....................... (562)
CASH AND CASH EQUIVALENTS, beginning of year................ 740
-------
CASH AND CASH EQUIVALENTS, end of year...................... $178
=======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-43
<PAGE> 162
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
1. ORGANIZATION:
Vectura Group, Inc. (the Company or Vectura), a Delaware corporation
headquartered in New Orleans, Louisiana, is a holding company with interests in
companies which provide marine transportation and cargo handling services.
Vectura's operations are principally those of three wholly-owned subsidiaries:
National Marine, Inc. (National Marine); MariTrend, Inc. (MariTrend) and Vectura
Cargo Services, Inc. (VCSI). Vectura also has a minority interest in Viking
Maritec, Inc. (Viking), a marine vessel design, engineering and project
management organization; and an interest in NBL, Inc. (NBL), a holding company
(see Note 18). NBL's wholly-owned subsidiary, NMS, Inc. (NMS), leases a fleet of
tank barges to National Marine.
National Marine, headquartered in New Orleans, Louisiana, is a provider of
barge transportation services and operates a fleet of approximately 700 barges
and 50 towboats on the Mississippi, Illinois and Ohio rivers and on the
Intracoastal Waterway along the Gulf of Mexico. Major commodities transported
include a wide array of petrochemical products, grain, coal, steel and
limestone. MariTrend, headquartered in New Orleans, Louisiana, is engaged in the
supply of stevedoring and terminal services in the Port of New Orleans. VCSI,
formed in 1993, owned Ryan-Walsh, Inc. (Ryan-Walsh), a provider of cargo
handling and marine terminal services, which operated in approximately 25 port
locations, principally along the Atlantic and Gulf Coasts. On April 18, 1995,
VCSI sold the stock of Ryan-Walsh (see Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all of its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated. Investments in companies in which
ownership interests range from 20% to 50% are accounted for under the equity
method. Ownership interests of less than 20% are accounted for under the cost
method. See Note 18 for a discussion regarding the ownership of NBL.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid debt instruments purchased
with an original maturity of three months or less.
Inventories
Inventories are stated at the lower of cost or market. Cost of the
Company's inventories, including fuel, repair parts and consumable inventories,
is determined principally by the first-in, first-out (FIFO) method.
Vessels, Property and Equipment
Vessels, property and equipment are stated at cost. Depreciation for
financial reporting purposes is computed using the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings............................................ 20 years
Barges............................................... 25-35 years
Towboats............................................. 35 years
Leasehold Improvements............................... Remaining term of lease
</TABLE>
For income tax purposes, depreciation is calculated using accelerated
methods. Depreciation expense charged to operations for the year ended December
31, 1997 was $7.3 million.
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<PAGE> 163
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Expenditures for maintenance and repairs which do not materially extend the
lives of the assets are expensed currently. With respect to its river
transportation operations, the Company accrues expense for engine overhauls
based on towboat utilization. Upon retirement or other disposition of property,
applicable cost and accumulated depreciation or amortization are removed from
the accounts. Any gains or losses are included in earnings.
During 1995, the Company adopted Statement of Financial Accounting
Standards (SFAS) 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." The adoption of this statement did not
materially impact the financial position of the Company.
Outstanding Checks
Outstanding checks, representing checks written and released but not
presented to the bank for payment, are included in accounts payable. The Company
uses current deposits and credit borrowings to cover checks presented for
payment. The amount of outstanding checks at December 31, 1997 was $1.4 million.
Revenue Recognition
The Company recognizes revenue from its river transportation operations
ratably over the duration of each trip. Revenue from stevedoring and other
services is recognized upon completion of each assignment.
Income Taxes
Vectura files a consolidated federal income tax return which includes all
consolidated subsidiaries and NBL. The Company has determined that requisite
ownership criteria have been met for tax purposes, which require NBL to be
consolidated.
Deferred income taxes are provided for temporary differences between
financial and taxable income. These differences result principally from the use
of accelerated depreciation methods for tax purposes, workers' compensation
reserves and other provisions made for financial statement purposes.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported revenues and expenses during the reporting period. Actual results
may differ from those estimates.
Self-Insurance
The Company is liable for insurance claims cost under $25,000 per
occurrence and up to an aggregate cost of $500,000 per year under its hull,
machinery and tower's liability insurance program. The Company is a member of
the West of England Ship Owners Mutual Insurance Association, which provides
protection and indemnification insurance to the Company. Personal injury and
cargo claims are covered by this policy with a $50,000 per occurrence
deductible. Loss reserves are recorded as short-term or long-term liabilities
based on the Company's estimates of the timing of the eventual settlement. The
Company is liable for supplemental calls (premiums) for the policy years
February 20, 1996 to February 20, 1997 and February 20, 1997 to February 20,
1998 based on the club's claims experience for those years. Based on the club's
current financial position, any supplemental calls appear unlikely. For the
policy year February 20, 1998 to February 20, 1999, the Company has secured
insurance to cover any supplemental calls after a $117,000 buffer or
"deductible."
The Company is self-insured for certain health care benefits up to $60,000
per individual for those employees who participate in the Company's group health
insurance plan.
F-45
<PAGE> 164
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 130, "Reporting Comprehensive
Income" and SFAS 131, "Disclosures About Segments of an Enterprise and Related
Information." SFAS 130 establishes standards for reporting and display of
comprehensive income in the financial statements. Comprehensive income is the
total of net income and all other nonowner changes in equity. SFAS 131 requires
that companies disclose segment data based on how management makes decisions
about allocating resources to segments and measuring their performance. In
February 1998, the FASB issued SFAS 132, "Employer's Disclosures About Pensions
and Other Postretirement Benefits." SFAS 130, 131 and 132 are effective for
fiscal years beginning after December 15, 1997. Adoption of SFAS 130 and 131 is
not expected to have a significant effect on the Company's financial position or
results of operations. SFAS 132 is not expected to have any impact on the
Company's financial statements.
Earnings per Share
Effective December 15, 1997, the Company adopted SFAS 128, "Earnings per
Share." Accordingly, the Company reports two measures of earnings per share
(EPS), basic and diluted. Basic EPS is calculated by dividing income available
to common shareholders by the weighted-average number of common shares
outstanding for the applicable period, without adjustment for potential common
shares outstanding in the form of options, warrants, convertible securities or
contingent stock agreements. For the calculation of diluted EPS, the number of
common shares outstanding are increased by the number of additional common
shares that would have been outstanding if the dilutive potential common shares
had been issued, determined using the treasury stock method where appropriate.
Under the Company's present capital structure, the calculation of diluted EPS
includes the dilutive impact of outstanding stock warrants.
Basic and diluted earnings per share for the year ended December 31, 1997
was calculated as follows (Net Income in thousands):
<TABLE>
<CAPTION>
PER SHARE
NET INCOME SHARES AMOUNT
---------- ------ ---------
<S> <C> <C> <C>
Basic Earnings per Share:
Income available to common shareholders................... $1,094 390 $2,805.13
=========
Impact of stock warrants (Note 12)........................ -- 6,940
------ -----
Diluted Earnings per Share:
Income available to common shareholders plus assumed
exercise of stock warrants............................. $1,094 7,330 $149.25
====== ===== =========
</TABLE>
3. NET BOOK VALUE OF SUBSIDIARY SOLD:
In 1994, management made the strategic decision to exit the cargo handling
and marine terminal service business operated by Ryan-Walsh. On April 18, 1995,
VCSI sold the stock of Ryan-Walsh to a third party for future contingent
consideration based on Ryan-Walsh's performance in certain areas. A $1.6 million
loss on sale was recognized in 1995. This loss was attributable to VCSI
establishing a $1.7 million reserve primarily associated with legal
indemnifications provided to the buyer by VCSI and Vectura, the transfer of $1.1
million of investment tax credits and alternative minimum tax credits related to
Ryan-Walsh, and the elimination of the negative investment in Ryan-Walsh by VCSI
at April 18, 1995. As part of the agreement, MariTrend entered into a bareboat
charterparty with Ryan-Walsh to lease a crane barge for up to twelve months with
an option to purchase the barge at any time during the twelve months. In
February 1996, MariTrend exercised its option. Finally, VCS Realty was required
to purchase certain equipment used at the ROBAS II facility that was previously
leased to Ryan-Walsh by a third party. During 1996, a review of the legal
indemnifications
F-46
<PAGE> 165
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
provided to the buyer by VCSI and Vectura resulted in VCSI increasing this
reserve by $950,000. Prior to year end 1997, an agreement was reached with the
purchaser of Ryan-Walsh regarding a contingent consideration payment that was
due under the terms of the stock purchase agreement. As a result, $5.8 million
of income was accrued at year end 1997. A reserve of $1.9 million, net of $1.1
million of anticipated additional future contingent consideration, was accrued
to cover certain indemnifications provided to the purchaser. The net gain of
$3.9 million was recognized in the 1997 consolidated statement of income and is
presented as a component of "Gain on sale of investments." In February 1998, the
cash payment was received. In management's opinion, the resolution of any
liabilities under the indemnifications mentioned above will not have a material
effect on the Company.
4. ACCOUNTS AND NOTES RECEIVABLE:
Receivables at December 31, 1997 include (in thousands):
<TABLE>
<S> <C>
Trade receivables, net of allowance for doubtful accounts of
$688,000.................................................. $19,962
Notes receivable and other, net of allowance for doubtful
accounts of $281,000...................................... 2
-------
$19,964
=======
</TABLE>
The Company has pledged essentially all receivables to financial
institutions under its revolving loan facilities (see Note 7).
5. INVENTORIES:
Inventories at December 31, 1997 consist of the following (in thousands):
<TABLE>
<S> <C>
Fuel........................................................ $1,021
Repair parts and supplies................................... 1,785
------
$2,806
======
</TABLE>
The Company has pledged all inventories to financial institutions under its
revolving loan facilities (see Note 7).
6. INVESTMENTS:
Investments in an unconsolidated affiliate, NBL (see Note 18), totaled
$(1,771,000) at December 31, 1997.
F-47
<PAGE> 166
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. LONG-TERM DEBT:
Long-term debt at December 31, 1997 consists of the following (in
thousands):
<TABLE>
<S> <C>
Floating rate loan and security agreement (10.0% at December
31, 1997) expiring January 2000........................... $17,770
13.0% first-preferred ship mortgage payable August 1999..... 750
10.48% first-preferred ship mortgage payable monthly through
July 2001................................................. 3,408
10.96% first-preferred ship mortgage payable monthly through
July 2001................................................. 4,283
10.134% first-preferred ship mortgage payable monthly
through May 2003.......................................... 4,169
9.71% first-preferred ship mortgage payable monthly through
April 2003................................................ 3,287
9.8% first-preferred ship mortgage payable quarterly through
October 1999.............................................. 4,322
11.0% first-preferred ship mortgage payable monthly through
August 2004............................................... 6,037
11.48% first-preferred ship mortgage payable quarterly
through April 2002........................................ 4,783
12.4% first-preferred fleet mortgage payable monthly through
February 1999............................................. 1,676
10.375% first-preferred ship mortgage payable quarterly
through September 1999.................................... 1,692
13.0% first-preferred ship mortgage payable monthly through
February 1999............................................. 819
11.0% first-preferred ship mortgage payable monthly through
October 2000.............................................. 2,000
13.0% mortgage payable November 1999........................ 1,250
6.10% insurance finance note payable monthly through
September 1998............................................ 1,463
Other notes with varying interest rates..................... 4,246
-------
61,955
Less -- Current portion..................................... 18,532
-------
$43,423
=======
</TABLE>
Following is a description of the terms and conditions of the Company's
revolving loan and credit facility, as well as its other major debt instruments:
Loan and Security Agreement
National Marine had a loan and security agreement with a bank that provided
a line of credit totaling $25.0 million. The agreement, which was amended in
March 1996, provided for a $12.0 million revolving loan facility and a $13.0
million credit line, which was available for supplemental loans or letter of
credit accommodations. Interest was charged on borrowings under the revolver at
a bank's prime rate plus 1.75% and under the supplemental loan facility at the
same prime rate plus 2.0%. In March 1997, the agreement was again amended. The
amended agreement consists of a $12.0 million revolving loan facility and a
$11.6 million credit line, which is available for supplemental loans or letter
of credit accommodations. The term was extended to January 1, 2000 with interest
rates reduced to 1.5% and 1.75% over the bank's prime rate for the revolver and
credit line, respectively. The credit line is reduced by $235,000 each month.
National Marine has pledged as collateral essentially all of its current assets
and certain equipment with a book value as of December 31, 1997 of $10.5
million. In addition, certain affiliates of National Marine guarantee this
obligation. As of December 31, 1997, the amount outstanding under the revolving
loan portion of the agreement was $8.1 million.
The facility contains certain restrictive covenants related to net worth,
incurrence of debt, sale of assets, working capital and certain related party
transactions (see Note 8).
F-48
<PAGE> 167
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Preferred Ship Mortgages
The 13.0% first-preferred ship mortgage is payable in monthly installments
of interest of $8,000. The principal becomes due August 1999. The loan is
collateralized by floating equipment with a book value of $697,000 as of
December 31, 1997.
The 10.48% first-preferred ship mortgage is payable in monthly installments
of principal and interest of $67,000 through June 2001, with the remaining
balance due July 2001. The loan is collateralized by floating equipment with a
book value of $2.3 million as of December 31, 1997.
The 10.96% first-preferred ship mortgage is payable in monthly installments
of principal and interest of $86,000 through June 2001, with the remaining
balance due July 2001. The loan is collateralized by floating equipment with a
book value of $6.7 million as of December 31, 1997.
The 10.134% first-preferred ship mortgage is payable in monthly
installments of principal and interest of $83,000 through April 2003, with the
remaining balance due May 2003. The loan is collateralized by floating equipment
with a book value of $6.2 million as of December 31, 1997.
The 9.71% first-preferred ship mortgage is payable in monthly installments
of principal and interest of $66,000 through April 2003. The loan is
collateralized by floating equipment with a book value of $5.0 million as of
December 31, 1997.
The 9.8% first-preferred ship mortgage is payable in quarterly installments
of principal and interest of $181,000 through July 1999, with the remaining
balance due in October 1999. The loan is collateralized by floating equipment
with a book value of $4.6 million as of December 31, 1997.
The 11.0% first-preferred ship mortgage is payable in monthly installments
of principal and interest of $107,000 through July 2000 and thereafter monthly
installments of principal and interest of $109,000 through August 2004. The loan
is collateralized by floating equipment with a book value of $6.4 million as of
December 31, 1997.
The 11.48% first-preferred ship mortgage is payable in quarterly
installments of principal and interest of $183,000 through January 2002, with
the remaining principal plus interest due April 2002. The loan is collateralized
by floating equipment with a book value of $6.4 million as of December 31, 1997.
The 13.0% first-preferred fleet mortgage was issued for the purchase of
used hopper barges and tank barges that were previously leased from a third
party. In March 1997 the Company amended the mortgage and borrowed an additional
$1.0 million at 12%. The amended mortgage is payable in monthly installments of
principal and interest of $62,332 through January 1999 with the remaining
principal plus interest due February 1999. The loan is collateralized by
floating equipment with a book value of $980,569 as of December 31, 1997.
The 10.375% first-preferred ship mortgage is payable in equal quarterly
installments of principal and interest of $268,000 through September 1999. The
loan is collateralized by floating equipment with a book value of $1.7 million
as of December 31, 1997.
The 13.0% first-preferred ship mortgage was issued for the purchase of a
crane barge that was previously accounted for as a capital lease. The mortgage
requires monthly installments of principal and interest of $25,000 through
January 1999 with the remaining balance due February 1999. The loan is
collateralized by floating equipment with a book value of $1.2 million as of
December 31, 1997.
The 11.0% first-preferred ship mortgage is payable in monthly installments
of interest of $18,000 through April 1998 and thereafter monthly installments of
principal of $11,000 plus interest through September 2000 with the remaining
balance due October 2000. The loan is collateralized by floating equipment with
a book value of $3.2 million as of December 31, 1997.
F-49
<PAGE> 168
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Other Debt Agreements
The 13.0% mortgage is payable in monthly installments of interest of
$14,000. The principal becomes due November 1999. The loan is collateralized by
land, building, improvements and equipment with a book value of $2.2 million as
of December 31, 1997.
The 6.10% rate is for financing of insurance premiums and is payable in
monthly installments of principal and interest of $179,967 through September
1998. The note is collateralized by the value of unexpired premiums, which have
been assigned to the lender.
The Company's other notes as of December 31, 1997, include a mortgage
totaling $872,000, a $2.3 million demand promissory note to a related party,
$434,000 outstanding under a revolving loan facility, capital lease obligations
of $111,000 and other 9.0% fixed rate notes totaling $478,000.
Scheduled payments on long-term debt are as follows (in thousands):
1998 -- $10,001; 1999 -- $14,914; 2000 -- $9,652; 2001 - $7,258; 2002 -- $6,541;
thereafter -- $5,062. At December 31, 1997, payments not included in the above
schedule that are applicable to revolving loan facilities expected to be renewed
or replaced upon expiration (primarily in the year 2000) totaled $8.5 million.
The agreements described above contain restrictive covenants relative to
certain related party transactions, dividends, investments, incurrence of debt,
sale of assets and financial ratios. The most restrictive covenant requires that
the Company maintain minimum working capital of $1 (excluding its revolving
credit facility) and net worth of $20.0 million (see Note 8).
8. COVENANTS UNDER CREDITOR AGREEMENTS:
At December 31, 1997, the Company and NMS were not in compliance with
certain covenants under agreements with their creditors. Subsequently, the
Company and NMS obtained waivers from all applicable parties regarding all
events of noncompliance through that date, and forbearance was received with
respect to financial measurement-related covenants under their respective
agreements through January 1, 1999.
National Marine guarantees the debt obligations of its affiliate, NMS. As
of December 31, 1997, NMS owed approximately $16.2 million under loan
obligations guaranteed by National Marine.
9. RETIREMENT PLAN:
The Company has a noncontributory defined benefit plan covering
substantially all of its employees. Benefits are based on years of credited
service and employee compensation near retirement. The Company's funding policy
is to make contributions in accordance with the requirements of the Employee
Retirement Income Security Act of 1974. Assets of the plan are currently
invested in a short-term investment fund. Effective June 30, 1996, the Company
adopted a resolution ceasing future benefit accruals under its defined benefit
plan. As a result, the plan incurred a curtailment in 1996 as defined in
accordance with SFAS 88, "Employers Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits." Due to the
ceasing of any future benefit accruals, a pretax gain of $1.3 million was
recognized in 1996.
Pension credit for the year ended December 31, 1997 is as follows (in
thousands):
<TABLE>
<S> <C>
Interest cost............................................... $452
Return on plan assets....................................... (446)
Net amortization and deferrals.............................. (192)
-----
$(186)
=====
</TABLE>
F-50
<PAGE> 169
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funded status of the plan at December 31, 1997 is as follows (in
thousands):
<TABLE>
<S> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligations........................... $6,604
Effect of future salary increases......................... --
------
Total projected benefit obligations......................... $6,604
Plan assets at fair value................................... 7,986
------
Projected benefit obligations less than plan assets......... (1,382)
Unrecognized net gain....................................... 1,302
------
Noncurrent pension asset.................................... $(80)
======
</TABLE>
The assumptions used in determining pension expense and funded status
information shown above were as follows at December 31, 1997:
<TABLE>
<S> <C>
Discount rate............................................... 7.25%
Long-term rate of return on assets.......................... 8.00%
Rate of increase in compensation............................ N/A
</TABLE>
The Company also has a defined contribution plan covering substantially all
of its employees who have completed one year of service. Participants may
contribute a percentage of their compensation to their individual accounts, up
to the Internal Revenue Service maximum, which is partially matched by the
Company. The defined contribution plan expense was $411,273 in 1997.
10. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS:
The Company provides certain health care and life insurance benefits to its
employees who retired prior to January 1, 1993. Most of the employees who
retired from the Company were eligible for those benefits. Effective January 1,
1993, the Company instituted a fixed percentage contribution into a qualified
tax deferred 401(k) plan in lieu of providing postretirement health care and
life insurance benefits for employees who retired after December 31, 1992.
However, the Company provides a special subsidy to help defer the cost of
postretirement health care coverage to those employees who were age 56 or older
on January 1, 1993 and that will have ten or more years of continuous service at
retirement. In addition, with the sale of Connex Pipe Systems, Inc. in 1991, the
Company maintained responsibility for postretirement health care and life
insurance benefits for certain Connex employees, primarily those already
retired. At that time, the Company established a reserve for the cost of
providing these postretirement health care and life insurance benefits.
Effective January 1, 1995, the Company adopted SFAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This statement
requires the Company to recognize the estimated cost of providing these benefits
during the working careers of those employees who could become eligible for such
benefits when they retire. The cost of providing these benefits was previously
recognized in the period in which the benefits were paid, except for those costs
relating to Connex employees discussed above that were charged against the
reserve. Below are the results of adopting this standard.
No funds are segregated for future postretirement obligations. The Company
is amortizing its accumulated postretirement benefit obligation (APBO) over a
20-year period. The APBO in 1997 was calculated using a discount rate of 7.25%
and health care cost trend rate of 8.5% in 1997, gradually declining to 6.0% in
2003. If the health care cost trend rates were increased 1%, the accumulated
postretirement benefit obligation as of December 31, 1997 would have increased
$6,007. The effect of this change would not result in a material impact to
service and interest cost for 1997.
F-51
<PAGE> 170
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement benefit cost for 1997 includes the following components:
<TABLE>
<S> <C>
Service cost................................................ $6,000
Interest cost............................................... 86,839
Amortization of transition amount........................... 36,432
--------
Postretirement benefit cost................................. $129,271
========
</TABLE>
The postretirement benefit plan's funded status reconciled with the amount
included in the Company's consolidated balance sheet at December 31, 1997 is as
follows:
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees and related beneficiaries.......................... $1,035,831
Other fully eligible participants........................... 163,442
Other active participants not fully eligible................ 36,964
----------
Accumulated postretirement benefit obligation............... 1,236,237
Unrecognized transition obligation.......................... (295,778)
Unrecognized net losses..................................... (20,582)
----------
Accrued postretirement benefit liability.................... $919,877
==========
</TABLE>
11. COMMITMENTS AND CONTINGENT LIABILITIES:
The Company has various lease agreements for floating equipment, which
include certain restrictive covenants related to dividends, net worth,
incurrence of debt, sale of assets, guarantees and certain related party
transactions. Additionally, the Company has pledged to one lessor certain
floating equipment which had a book value of $3.8 million as of December 31,
1997 as collateral for the rental payments.
In November 1997, the Company extended a charter with NMS for an eight-year
period (see Note 16). As discussed in Note 8, the Company's primary operating
subsidiary, National Marine, guarantees the debt obligations of its affiliate,
NMS, which as of December 31, 1997 represented a contingent liability of
approximately $16.2 million.
Future minimum rental payments required under operating leases with
noncancelable lease terms in excess of one year as of December 31, 1997 are as
follows (in thousands):
<TABLE>
<S> <C>
1998........................................................ $12,351
1999........................................................ 12,058
2000........................................................ 11,721
2001........................................................ 10,447
2002........................................................ 14,854
Thereafter.................................................. 21,395
-------
$82,826
=======
</TABLE>
Rental expense under noncancelable operating leases for the year ended
December 31, 1997 was $13.1 million. Additionally, the Company enters into
charter agreements for barges and towboats for terms of less than one year. The
Company's short-term charter expense for the year ended December 31, 1997 was
$15.8 million.
As of December 31, 1997 the Company was not in compliance with certain
covenants pursuant to an operating lease related to two marine vessels, and the
lessor has not waived its rights with respect to the covenant violations through
1998. The Company is current with regard to all required lease payments, and
F-52
<PAGE> 171
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
based on the terms of the lease agreement including remedies available to the
lessor with respect to the lease covenant violations, management believes that
this matter will result in no significant impact to the Company's financial
condition or results of operations.
12. STOCKHOLDERS' EQUITY:
PLAN OF RECAPITALIZATION
On December 30, 1996, a Plan of Recapitalization (the "Plan") became
effective whereby all of the issued and outstanding common stock of the Company
was converted into: (1) .05 shares of common stock of the same class as the
converted shares and (2) .475 shares of the Company's Class E, Series 1,
preferred stock. In addition, the Plan authorized the issuance to the current
shareholders of up to 3,000 shares of the Company's Class E, Series 2, preferred
stock at $1,000 per share and stock purchase warrants at $10 per warrant
exercisable for an aggregate of 6,860 shares of the Company's common stock, with
an exercise price of $100 per share of common stock received. Purchase of these
securities by any current shareholder was pro rata based on the number of shares
of common stock held by each shareholder versus the total number of shares of
common stock outstanding. The first closing, which occurred on December 30,
1996, resulted in the issuance of 2,880.77 shares of Class E, Series 2,
preferred stock and 6,587.36 warrants, generating a total of $2,952,000. These
proceeds were used to extinguish debt on December 30, 1996. The remaining
securities were sold at the second closing on January 30, 1997. Further
information regarding the preferred stock and warrants is discussed below.
MANDATORILY REDEEMABLE PREFERRED STOCK
The preferred stock is nonvoting and has a par value of $.01 per share. The
Company is authorized to issue 15,000 shares of preferred stock. Dividends on
each class are cumulative and payable, when declared by the Board of Directors
of the Company, at the following rates, except as modified below: Class B and C
at 13.5% of redemption value ($1,000 per share), Class A and D at 10% of
redemption value ($1,000 per share), and Class E, Series 1 and 2 at 10% of
redemption value ($1,000 per share) with such dividend rate increasing by 1% per
annum over the previous year's rate on each anniversary of the date of issuance.
Dividends of $1.0 million were in arrears at December 31, 1997.
Class A, C and E preferred stock are convertible into debt, under certain
circumstances, in an amount equal to redemption value plus unpaid cumulative
dividends.
The Company may, at its option, call each class of preferred stock at
redemption value plus unpaid dividends. Mandatory redemption requirements exist
for all classes of preferred stock at $1,000 per share plus unpaid dividends. On
September 30, 1996, 1,440 shares of Class A preferred stock, 222 shares of Class
C preferred stock and 610 shares of Class D preferred stock scheduled for
redemption at various times during 1997 were redeemed for liquidation value plus
accrued dividends totaling $2.3 million. Mandatorily redeemable preferred stock
outstanding at December 31, 1997 consists of the following:
<TABLE>
<S> <C>
Class E, Series 1, Shares................................... 3,705.00
Class E, Series 2, Shares................................... 3,000.00
</TABLE>
As of December 31, 1997, mandatorily redeemable preferred stock as
reflected in the accompanying balance sheet was comprised of the following
(dollars in thousands):
<TABLE>
<S> <C>
3,705 shares of Class E, Series 1, converted from Class B
and Class C common stock.................................. $741
3,000 shares of Class E, Series 2, issued at $1 per share... 3,000
Preferred stock accretion................................... 296
------
$4,037
======
</TABLE>
F-53
<PAGE> 172
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The mandatory redemption date for the Class E preferred stock listed above
is December 31, 2006. At December 31, 1997, the aggregate liquidation value of
preferred stock was $7.7 million, and the aggregate redemption value of
preferred stock was $6.7 million. The difference between the carrying value and
redemption value of the Company's preferred stock is being accreted through
earnings over the ten-year period ending December 31, 2006 (the redemption
date).
On March 31, 1993, certain shareholders of Class C and D preferred shares
agreed to extend their redemption dates from 1993 to 1994. Subsequent to
December 31, 1993, these same shareholders agreed to a further extension of
their redemption dates from 1994 to 1997. Also, certain Class D shares
originally scheduled for redemption in 1994 were extended to 1997. Redemption of
Class A preferred shares scheduled for 1994 through 1996 were extended to 1997.
Dividends on the Class C preferred shares continued to accrue at 13.5% per annum
through February 27, 1995, at which time the rate increased to 14.0% per annum
through maturity in 1997. Dividends on the Class D shares accrued at 13.5% per
annum through May 1, 1995, and 14.0% per annum thereafter through maturity in
1997, except for those Class D shares originally scheduled for redemption in
1994 which accrued dividends at 10.0% per annum until May 1, 1994. Dividends on
Class A preferred shares accrued at 10.0% per annum up to the originally
scheduled maturity date and 14.0% per annum thereafter, except for those Class A
shares whose original redemption date was 1994. The dividends on these Class A
shares accrued at 13.5% through March 30, 1995, and 14.0% thereafter.
Common Stock
The Company has three classes of common stock: Class A, Class B and Class
C. All classes have the same rights and privileges except for voting and Class
B's and Class C's rights of conversion. Class C common stock is owned by the
Company's officers and, in the aggregate, represents 50.5% of the Company's
voting rights. Class B common stock is majority-owned by an institutional
investor and represents 49.5% of the Company's voting rights. Class B and Class
C shares are convertible to Class A common at the option of the majority
stockholder of Class B or when the percentage of Class B shares outstanding
falls below 45% of the total outstanding shares of common stock. Upon the sale
or transfer of Class B shares, such shares are convertible to Class A or C
shares at the option of the majority stockholder of Class B common stock.
Conversion of Class B shares as discussed above would result in a redistribution
of stockholder voting rights.
Warrants
As noted in the Plan of Recapitalization above, the Company authorized the
issuance of up to 3,000 shares of the Company's Class E, Series 2, preferred
stock at $1,000 per share and stock purchase warrants at $10 per warrant
exercisable for an aggregate of 6,596.10 shares of the Company's Class B common
stock and 813.90 shares of the Company's Class C common stock. Such purchase was
pro rata as discussed above. These warrants are exercisable for $100 per share
at any time prior to December 31, 2006. These warrants were attached to the
preferred stock and could not be purchased separately except for 550 warrants,
which were issued in December 1996 to the Company's management.
13. PHANTOM STOCK RIGHTS PLAN:
In 1990, the Company's Board of Directors approved the Phantom Stock Rights
Plan (the 1990 Plan), a deferred compensation plan for senior management. The
1990 Plan allowed participants to share in the capital appreciation of the
Company through the issuance of rights which were valued as stock equivalents.
The 1990 Plan, as amended in 1991, permitted 1,750 rights to be issued over a
four-year period. Accumulated value under the 1990 Plan was originally scheduled
to be paid in cash on March 31, 1997. In addition, Ryan-Walsh senior management
participated in the 1990 Plan. Any payout to these former employees is
predicated upon the final outcome regarding the contingent consideration and
outstanding liabilities discussed in Note 3. In March 1997, the Company's Board
of Directors approved the 1997 Phantom Stock Plan (the 1997 Plan), a
F-54
<PAGE> 173
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
deferred compensation plan for senior management and key employees. It is
similar to the 1990 Plan in that it allows participants to share in the capital
appreciation of the Company. Current employees were provided the option of
carrying forward their existing rights from the 1990 Plan into the 1997 Plan or
cashing out. Total accumulated value of the 1997 Plan as of December 31, 1997
was $399,000 and is included in "Other liabilities" in the consolidated balance
sheet.
Compensation credit, determined under a book value formula, was $43,000 in
1997. At December 31, 1997, there were 477 rights outstanding under the 1997
Plan. The 1997 Plan matures on April 1, 2001 with accumulated value being paid
in cash at that time.
14. INCOME TAXES:
The benefit from income taxes for the year ended December 31, 1997 consists
of the following (in thousands):
<TABLE>
<S> <C>
Current --
Federal................................................... $(2,233)
State..................................................... 21
-------
(2,212)
-------
Deferred.................................................... (1,741)
-------
Total....................................................... $(3,953)
=======
</TABLE>
A reconciliation of the effective income tax rate to the federal statutory
rate on loss before income taxes for the year ended December 31, 1997 is as
follows:
<TABLE>
<S> <C>
Statutory rate.............................................. (35.0)%
Unconsolidated affiliate loss............................... 3.7
Expired investment tax credits.............................. 22.3
Nontaxable gain on sale of subsidiary....................... (89.2)
Deferred tax adjustment..................................... (167.1)
State income taxes and other items.......................... 7.9
------
(257.4)%
======
</TABLE>
F-55
<PAGE> 174
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes are provided for temporary differences in the
recognition of revenue and expenses for financial reporting and income tax
purposes. These differences consist principally of depreciation expense,
workers' compensation reserves, investment tax credit carryforwards and net
operating loss carryforwards. At December 31, 1997, the Company had investment
tax credit carryforwards of approximately $86,000, expiring in years through
1999. The Company also had net operating loss carryforwards of approximately
$24.6 million, expiring in years through 2012. The significant components of
deferred tax assets and liabilities at December 31, 1997 include:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $8,605
Alternative minimum tax credit............................ 3,061
Accounting reserves....................................... 3,539
Other..................................................... 85
--------
Total............................................. 15,290
Deferred tax liabilities:
Accelerated depreciation.................................. (14,632)
Other..................................................... (3,169)
--------
Total............................................. (17,801)
--------
Net deferred tax liability.................................. $(2,511)
========
</TABLE>
As discussed previously under Note 2, Summary of Significant Accounting
Policies: Income Taxes, NBL is included for tax purposes in the consolidated
federal income tax return filed by Vectura. Were NBL to be consolidated with
Vectura for financial reporting purposes, Vectura would report a net
consolidated deferred tax liability of $10.2 million.
SFAS 109, "Accounting for Income Taxes," requires that a valuation
allowance be provided when it is more likely than not that some portion of a
deferred tax asset will not be realized. Although there can be no assurance that
the Company will generate specific levels of taxable income in any particular
fiscal year, management believes that it is more likely than not that net
deductible temporary differences will reverse during periods in which the
Company will generate sufficient taxable income to permit the utilization of
such deductions.
Accordingly, management has determined that no valuation allowances are
required at December 31, 1997.
15. SUPPLEMENTAL CASH FLOW DISCLOSURES:
The following noncash transactions are not reflected in the Company's
consolidated statement of cash flows for the year ended December 31, 1997.
- Repair of several out-of-service barges and other capital expenditures,
which were financed by various first-preferred ship mortgages totaling
$3.3 million.
- The Company accrued dividends of $1.0 million with a corresponding
increase in noncurrent liabilities.
- The Company accreted $0.3 million of the difference between the carrying
value and redemption value of its preferred stock.
- The Company financed its insurance premiums through short-term debt
totaling $1.9 million.
- A capital lease obligation of $0.1 million.
F-56
<PAGE> 175
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Interest paid during the year ended December 31, 1997 was $6.4 million.
Payments for federal income taxes in 1997 was $0.2 million.
16. RELATED PARTY TRANSACTIONS:
The Company charters floating equipment from NMS, a wholly-owned subsidiary
of NBL. In November 1997, the charter agreement was amended to an eight-year
term with a significant reduction in rate. Charter expense for the year ended
December 31, 1997 was $4.2 million.
At December 31, 1997 the Company had receivables from NBL of $2.2 million.
In November 1997, NMS repaid $1.1 million of amounts due to the Company.
The Company provides various administrative and support services to NBL.
Administrative fees of $250,000 were charged to NBL for year ended December 31,
1997.
17. LITIGATION:
The Company's Seneca, Illinois, property is located along the Illinois
River, immediately outside the city limits of Seneca, Illinois. Prior to 1988,
the property was owned at various times by a number of companies including the
predecessor of National Marine. The various owners used it to construct barges,
process and package oil, grease, and other automobile chemicals, handle
pesticides and other chemicals, and store various chemicals. Although National
Marine has owned the property since 1988, it has never conducted any operations
on it.
In 1990, the Illinois Environmental Protection Agency (IEPA) issued a
notice pursuant to the Illinois Environmental Protection Act to the former
owners and lessees of the property, as well as to the Company, offering them the
opportunity to remediate contamination that the IEPA claimed was on the
property. Throughout the next several years, the Company contested the necessity
of doing the remediation that the state proposed and contested its own
liability. Beginning in 1995, the Company submitted proposed remediation plans
to the state. In May 1996, the IEPA asked that the U.S. Environmental Protection
Agency (U.S. EPA) become involved in the site.
In July 1996, the U.S. EPA notified the Company that it was potentially
liable under the Comprehensive Environmental Response Compensation and Liability
Act (CERCLA) for necessary remediation at the property. Also in July 1996, the
Company began its remediation of the property based on plans that it had
submitted to the state and to which the state had no objection. Remediation
activities continued through December 1996. In addition to the remediation
activities, the Company also demolished and removed the buildings that were on
the property. Based on the work that the Company has done, it appears that there
is no threat to human health or the environment at the property.
In the fall of 1996, the Company began discussion with the IEPA regarding a
resolution of any remaining concerns the state might have under the new state
"Brownfields" legislation, which allows the state to officially declare that no
further remediation is necessary at a site that has been cleaned up such that
there is no threat to health or to the environment.
In December 1996, the U.S. EPA issued a Unilateral Administrative Order
pursuant to CERCLA requiring the Company to submit plans for sampling and
possible further remediation at the property. A sampling plan was submitted to
the U.S. EPA, and it was accepted. The sampling was completed in August 1997,
and a report has been sent to the U.S. EPA. Results of the sampling and possible
solutions were reviewed by the Company, outside counsel and an environmental
consultant. The U.S. EPA also reviewed the sample report, and a meeting was held
on March 12, 1998 at which time the Company explained its view that, under
applicable standards, only minimal further remedial steps appear necessary. The
U.S. EPA said it would respond by providing its own view of the applicable
cleanup standards. The U.S. EPA planned to take
F-57
<PAGE> 176
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
additional samples at the site on April 1, 1998. The Company expects to meet
with the U.S. EPA for continued discussions concerning cleanup standards and
additional remedial measures, if any. Throughout its dealings with the IEPA and
the U.S. EPA, the Company has maintained that it has no liability for clean up
of the site.
The Company has instituted legal action against various parties, some of
whom are former employees, alleging fraud, breach of fiduciary duty and other
improper actions which the Company alleges caused the diversion of funds to
other entities. Several of the defendant parties have been convicted or have
pled guilty to federal charges based on actions related in the above suit. The
Company is reviewing options regarding restitution and damages in light of this
development.
On July 27, 1994, a search was undertaken by agents of the U.S. EPA and
other federal and state agencies at the Company's Port Allen, Louisiana, site.
The search was triggered, in part, by allegations of illegal discharges into the
Mississippi River. In conjunction with this matter, the U.S. EPA requested that
the Company negotiate and enter into an Administrative Order of Consent to
conduct an environmental assessment and possible removal action concerning the
alleged dumping into the Mississippi River. After an agreement on the terms of
an Administrative Order of Consent could not be reached, on March 15, 1995, the
U.S. EPA issued a Unilateral Administrative Order to the Company for a removal
action associated with the alleged discharges. The Company has conducted a
removal action and has sought reimbursement of its previously expensed costs
from the federal Superfund under CERCLA. The cost reimbursement proceeding is
pending. The Company has denied any liability but is cooperating with all
federal and state agencies. To date, to the Company's knowledge no evidence has
been found of illegal discharges by the Company into the Mississippi River. The
U.S. Attorney's Office had advised the Company that a grand jury investigation
would proceed, though, to the Company's knowledge, no actions have been taken to
date. Recently, the U.S. Attorney's Office has indicated that there are no
grounds for criminal action against the Company. However, the Parish of West
Baton Rouge, Louisiana has indicated that it intends to proceed with a criminal
prosecution with respect to this matter. On April 29, 1998, West Baton Rouge
Parish filed charges against Tiger Shipyard, Inc., a wholly-owned subsidiary of
National Marine, and seven employees. The Company believes that no criminal
activities were conducted by Tiger Shipyard, Inc. or any of its employees with
respect to this matter. Although the ultimate outcome of these charges is
currently uncertain, the Company believes that the matter will be resolved with
no significant adverse impact to the Company's financial condition or results of
operations.
In March 1996, the Company received a letter sent on behalf of SBA
Shipyards, Inc. (SBA) regarding the Company's interest in participating in the
voluntary funding of certain environmental remediation and closure activities at
SBA's facility. SBA has identified the Company as a potential responsible party
at SBA's facility relating to alleged cleaning services performed by SBA for or
on behalf of the Company during the period from 1977 to 1993. In the Company's
opinion, it is not possible at this time to identify either the potential scope
of any required participation in SBA's cleanup or the potential cost of any such
participation to the Company. A customer group has been formed to address the
issues. Discussions with the U.S. EPA and SBA are ongoing.
The Company is a defendant in several lawsuits resulting from the ordinary
course of business. Management believes that the outcome of such suits will not
have a material adverse effect on the Company's financial position or results of
operations.
18. NBL, INC. OWNERSHIP:
In 1993, the Company acquired an option to purchase 50% of the stock of
NBL. In February 1993, the Company exercised its rights under a stock pledge
agreement with a former officer to take ownership of the remaining 50% of the
stock of NBL. This stock was contributed to Armada Marine Corporation, a wholly-
owned subsidiary of National Marine. In 1996, Armada was merged into National
Marine. Notwithstanding
F-58
<PAGE> 177
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the above, the former officer referenced above has made a claim of ownership of
said stock in pending litigation. As a result, management has accounted for this
50% interest in NBL as a contingent asset. Therefore, the Company is accounting
for this 50% interest in NBL on the cost basis, which is recorded at a nominal
value. The remaining 50% of the stock held by the Company is being accounted for
under the equity method.
When the contingent claim no longer exists for the 50% of NBL, the entity
will be consolidated with Vectura. Below is a condensed unaudited summary of
Vectura's results and a summarized balance sheet for the year ended December 31,
1997, as if NBL were a consolidated entity (in thousands):
<TABLE>
<CAPTION>
ADJUSTMENTS/ CONSOLIDATED
VECTURA NBL ELIMINATIONS VECTURA/NBL
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues............................. $134,839 $4,156 $(4,156) $134,839
======== ======== ======= ========
Net income (loss).................... $2,417 $(324) $162 $2,255
======== ======== ======= ========
Deferred income tax
benefit -- current................. $2,242 $ -- $ -- $2,242
Other current assets................. 30,972 59 (41) 30,990
-------- -------- ------- --------
Total current assets................. 33,214 59 (41) 33,232
Net vessels, property, and
equipment.......................... 80,644 19,981 -- 100,625
Other assets......................... 4,205 4,372 (3,990) 4,587
-------- -------- ------- --------
Total assets......................... $118,063 $ 24,412 $(4,031) $138,444
======== ======== ======= ========
Current portion of long-term debt.... $18,532 $2,050 $ -- $20,582
Other current liabilities............ 24,598 133 (46) 24,685
-------- -------- ------- --------
Total current liabilities............ 43,130 2,183 (46) 45,267
Long-term debt....................... 43,423 14,179 (2,350) 55,252
Deferred income taxes................ 4,753 7,654 -- 12,407
Other liabilities.................... 11,113 3,939 (3,401) 11,651
-------- -------- ------- --------
Total liabilities.................... 102,419 27,955 (5,797) 124,577
Mandatorily redeemable preferred
stock.............................. 4,037 -- -- 4,037
Stockholders' equity................. 11,607 (3,543) 1,766 9,830
-------- -------- ------- --------
Total liabilities and stockholders
equity............................. $118,063 $ 24,412 $(4,031) $138,444
======== ======== ======= ========
</TABLE>
19. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair value of Vectura's financial instruments are as follows
at December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
-------- -------
<S> <C> <C>
Debt........................................................ $61,955 $62,806
Mandatorily redeemable preferred stock...................... $4,037 --
</TABLE>
Long-Term Debt
The fair value of the Company's revolving loan facilities and other
floating rate debt instruments is estimated to be equivalent to their carrying
value. The fair value of the Company s fixed rate debt is based on the rates at
which the Company was able to secure new financings in 1997.
F-59
<PAGE> 178
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Mandatorily Redeemable Preferred Stock
The Company determined that it was not practicable to determine the fair
value of its mandatorily redeemable preferred stock.
Accounts Receivable and Payable
The fair value of the Company's accounts receivable and payable is
estimated to be equivalent to their respective carrying values.
20. SUBSEQUENT EVENTS:
The Company and its subsidiary, National Marine, (collectively the "Vectura
Parties") have entered into a recapitalization agreement with CSX Corporation
(CSX) whereby the Vectura Parties and CSX intend to contribute their respective
companies' marine transportation assets and liabilities (marine operations) to a
limited liability company, American Commercial Lines LLC (ACL). The marine
operations of the Vectura Parties include their interest in the assets and
liabilities of NBL, Inc. In addition to its marine operations, the Company will
also contribute $60.0 million to ACL, the funding for which is expected to be
generated through equity contributions to be received by the Company from its
shareholders. In connection with the recapitalization transaction, ACL is
expected to raise approximately $735 million through certain public and private
debt financing arrangements, a portion of the proceeds of which will be used to
retire the existing debt of the contributed marine operations (including the
Vectura Parties' currently outstanding debt of approximately $75 million).
In exchange for their contributions to ACL, the Vectura Parties will
receive consideration in the form of certain common and preferred membership
interests and future profits interests.
Substantially all of the Company's key operating assets will be contributed
to ACL pursuant to the recapitalization transaction, and the primary business
operations of the Vectura Parties after the recapitalization will consist of the
Vectura Parties' interests in ACL and the Company's stevedoring and terminalling
operations conducted through its subsidiary, MariTrend.
F-60
<PAGE> 179
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30,
1998
(UNAUDITED)
-----------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $4,378
Accounts and notes receivable, net........................ 20,099
Prepaid expenses.......................................... 2,303
Inventories............................................... 2,707
Current portion of deferred income taxes.................. 2,242
Other current assets...................................... 140
--------
Total current assets................................... 31,869
--------
Notes receivable............................................ 27
Note receivable -- unconsolidated affiliate................. 1,312
Vessels, property and equipment:
Land and buildings........................................ 3,784
Floating equipment........................................ 106,848
Other equipment........................................... 10,004
--------
120,636
Less -- Accumulated depreciation.......................... (42,875)
--------
Net vessels, property and equipment.................... 77,761
Other assets................................................ 3,152
--------
Total assets...................................... $114,121
========
</TABLE>
F-61
<PAGE> 180
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30,
1998
(UNAUDITED)
-----------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $20,473
Accounts payable.......................................... 20,718
Accrued compensation and employee benefits................ 564
Accrued workers' compensation and other insurance......... 830
Income taxes payable...................................... 94
Accrued expenses.......................................... 3,390
Other current liabilities................................. 2,699
--------
Total current liabilities.............................. 48,768
Long-term debt.............................................. 38,231
Investments................................................. 2,054
Reserve for workers' compensation and other insurance....... 1,413
Deferred income taxes payable............................... 3,237
Other liabilities........................................... 8,357
--------
Total liabilities...................................... 102,060
--------
Mandatorily redeemable preferred stock...................... 4,083
Stockholders' equity:
Common stock, par value $.01 per share --
Authorized, 28,000 shares
Issued and outstanding, 390 shares..................... 1
Additional paid-in capital................................ 45
Retained earnings......................................... 7,932
--------
Total stockholders' equity............................. 7,978
--------
Total liabilities and stockholders' equity........ $114,121
========
</TABLE>
F-62
<PAGE> 181
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(DOLLARS IN THOUSANDS EXCEPT LOSS PER SHARE AND WEIGHTED AVERAGE SHARES
OUTSTANDING)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
(UNAUDITED)
------------------------
1997 1998
---------- ----------
<S> <C> <C>
OPERATING REVENUE........................................... $66,221 $63,484
OPERATING EXPENSES.......................................... 63,463 60,443
---------- ----------
Gross profit........................................... 2,758 3,041
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ 3,913 3,863
---------- ----------
Loss from operations................................... (1,155) (822)
OTHER INCOME (EXPENSE):
Interest and dividend income.............................. 43 68
Interest expense.......................................... (3,445) (3,316)
Equity in loss of unconsolidated affiliates............... (70) (292)
Gain (loss) on disposition of capital assets and other
items, net............................................. 36 (80)
---------- ----------
(3,436) (3,620)
---------- ----------
Loss from operations before income taxes............... (4,591) (4,442)
BENEFIT FROM INCOME TAXES................................... (1,578) (1,424)
---------- ----------
NET LOSS.................................................... (3,013) (3,018)
PREFERRED DIVIDENDS AND ACCRETION........................... (604) (611)
---------- ----------
NET LOSS TO COMMON SHAREHOLDERS............................. $(3,617) $(3,629)
========== ==========
LOSS PER SHARE:
Basic..................................................... $(9,274.36) $(9,305.13)
========== ==========
Diluted................................................... $(493.45) $(495.09)
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic..................................................... 390 390
========== ==========
Diluted................................................... 7,330 7,330
========== ==========
</TABLE>
F-63
<PAGE> 182
VECTURA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
(UNAUDITED)
--------------------
1997 1998
------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss.................................................. $(3,013) $(3,018)
Adjustments to reconcile net loss to net cash generated by
operating activities:
Depreciation and amortization.......................... 3,782 3,745
Losses of unconsolidated affiliates.................... 70 292
Deferred income taxes.................................. 106 (55)
Gain on disposition of capital assets.................. (154) (32)
Decrease in accounts receivable........................ 3,740 5,636
Decrease in inventories................................ 246 98
Increase in accounts payable........................... 2,844 2,963
Increase (decrease) in worker's compensation and other
insurance............................................. (35) 136
Decrease in accrued expenses........................... (2,858) (1,576)
Other items............................................ -- 1,711
------- -------
Cash generated by operating activities............ 4,728 9,900
INVESTING ACTIVITIES:
Purchase of vessels, property and equipment............... (7) (15)
Proceeds from sale of vessels, property and equipment..... 369 115
(Increase) decrease in investments and other assets....... (371) 3
------- -------
Cash (utilized) generated by investing
activities...................................... (9) 103
FINANCING ACTIVITIES:
Payments of long-term debt................................ (5,221) (7,065)
Net borrowings (repayments) under revolving loan
facilities............................................. (2,724) 1,262
Increase in long-term debt................................ 1,000 --
Borrowings to repay existing debt......................... 1,470 --
Issuance of securities.................................... 121 --
------- -------
Cash utilized by financing activities............. (5,354) (5,803)
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS....................... (635) 4,200
CASH AND CASH EQUIVALENTS, beginning of period.............. 740 178
------- -------
CASH AND CASH EQUIVALENTS, end of period.................... 105 4,378
======= =======
</TABLE>
F-64
<PAGE> 183
VECTURA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF INTERIM PERIOD PRESENTATION
The unaudited interim consolidated financial statements as of June 30, 1998
and for the six months ended June 30, 1997 and 1998 are presented immediately
before the transaction described in Note 2 below and have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission (SEC).
Certain information and note disclosure normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations. However,
all adjustments that, in the opinion of management, are necessary for fair
presentation have been included. The results for the six months ended June 30,
1998 are not necessarily indicative of the results to be expected for the fiscal
year ending December 31, 1998.
2. SUBSEQUENT EVENT
The Company and its subsidiary, National Marine, (collectively the "Vectura
Parties") consummated a recapitalization transaction with CSX Corporation (CSX)
whereby the Vectura Parties and CSX contributed their respective companies'
marine transportation assets and liabilities (marine operations) to a limited
liability company, American Commercial Lines LLC (ACL). The marine operations
contributed by the Vectura Parties included their interest in the assets and
liabilities of NBL, Inc. In addition to its marine operations, the Company
contributed $60.0 million to ACL, the funding for which was generated through
equity contributions received by the Company from its shareholders. In
connection with the recapitalization transaction, ACL raised approximately $745
million through certain public and private debt financing arrangements, a
portion of the proceeds of which were used to retire the existing debt of the
contributed marine operations.
In exchange for their contributions to ACL, the Vectura Parties received
consideration in the form of certain common and preferred membership interests
and future profits interests.
Substantially all of the Company's key operating assets were contributed to
ACL pursuant to the recapitalization transaction, and the primary business
operations of the Vectura Parties after the recapitalization consist of the
Vectura Parties' interests in ACL and the Company's stevedoring and terminalling
operations conducted through its subsidiary, MariTrend.
F-65
<PAGE> 184
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
ISSUERS OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE NOTES
OFFERED HEREBY NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY OF THE EXCHANGE NOTES TO ANY PERSON IN ANY JURISDICTION IN
WHICH IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN OR IN
THE AFFAIRS OF THE ISSUERS SINCE THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 14
The Transactions..................... 22
Use of Proceeds...................... 24
Capitalization....................... 25
Unaudited Pro Forma Combined
Financial Data..................... 26
Selected Historical Consolidated
Financial Data..................... 37
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 38
Business............................. 46
Management........................... 61
Security Ownership................... 66
Certain Relationships and Related
Transactions....................... 67
Description of the Senior Credit
Facilities......................... 71
Description of the Exchange Notes.... 73
The Exchange Offer................... 103
Certain Federal Income Tax
Consequences....................... 111
Plan of Distribution................. 111
Legal Matters........................ 112
Experts.............................. 113
Index to Financial Statements........ F-1
</TABLE>
[ACL LOGO]
AMERICAN COMMERCIAL LINES LLC
ACL CAPITAL CORP.
AMERICAN COMMERCIAL BARGE LINE LLC
AMERICAN COMMERCIAL
MARINE SERVICE LLC
LOUISIANA DOCK COMPANY LLC
WATERWAY COMMUNICATIONS SYSTEM LLC
AMERICAN COMMERCIAL TERMINALS LLC
AMERICAN COMMERCIAL
TERMINALS-MEMPHIS LLC
JEFFBOAT LLC
AMERICAN COMMERCIAL
LINES INTERNATIONAL LLC
ORINOCO TASA LLC
ORINOCO TASV LLC
BREEN TAS LLC
BULLARD TAS LLC
SHELTON TAS LLC
LEMONT HARBOR & FLEETING SERVICES LLC
TIGER SHIPYARD LLC
WILKINSON POINT LLC
HOUSTON FLEET LLC
OFFER TO EXCHANGE SERIES B
10 1/4% SENIOR NOTES DUE 2008
FOR SERIES A 10 1/4% SENIOR NOTES
DUE 2008
PROSPECTUS
, 1998
<PAGE> 185
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Each of ACL, the Parent and the Subsidiary Guarantors is a limited
liability company organized under the laws of the State of Delaware. Section
18-108 of the Delaware Limited Liability Company Act (the "DLLCA") provides
that, subject to such standards and restrictions, if any, as are set forth in
its limited liability company agreement, a limited liability company may, and
shall have the power to, indemnify and hold harmless any member or manager or
other persons from and against any and all claims and demands whatsoever.
Article XI of the Parent's Limited Liability Company Agreement (the "Parent
LLC Agreement") provides, among other things, that the Parent shall indemnify
and hold harmless any Member, Representative or any direct or indirect officer,
director, stockholder or partner of a Member (each an "Indemnitee") to the
fullest extent permitted under the DLLCA, as the same exists or as thereafter
amended, substituted or replaced (but, in the case of any such amendment,
substitution or replacement only to the extent that such amendment, substitution
or replacement permits the Parent to provide broader indemnification rights than
the Parent is providing immediately prior to such amendment), against all
expenses, costs, liabilities, damages and losses (including reasonable
attorney's fees and expenses and amounts paid in settlement) incurred by any
such Indemnitee in connection with any action, suit or proceeding to which such
Indemnitee may be made a party or otherwise involved or with which it shall be
threatened by reason of its being a Representative, or any direct or indirect
officer, director, stockholder or partner of a Member or while acting as (or on
behalf of) a Member on behalf of the Parent or in the Parent's interest;
provided that (unless the Board otherwise consents) no Indemnitee shall be
indemnified for any expenses, liabilities and losses suffered that are
attributable to such Indemnitee's gross negligence, willful misconduct or
knowing violation of law or for any present or future breaches of any
representations, warranties or covenants by such Indemnitee contained herein or
in the other agreements with the Parent. The Parent LLC Agreement further
provides that expenses, including attorneys' fees, incurred by any such
Indemnitee in defending a proceeding shall be paid by the Parent in advance of
the final disposition of such proceeding, including any appeal therefrom, upon
receipt of an undertaking by or on behalf of such Indemnitee to repay such
amount if it shall ultimately be determined that such Indemnitee is not entitled
to be indemnified by the Parent.
The Parent LLC Agreement defines "Member" as each Person who (a) is an
initial signatory to the Parent LLC Agreement, or has been admitted to the
Company as a Member in accordance with the provisions of Article II of the
Parent LLC Agreement, and (b) has not ceased to be a Member in accordance with
the provisions of the Parent LLC Agreement or for any other reason. The Parent
LLC Agreement defines "Person" as an individual, a partnership, a corporation,
an association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof. In addition, as used in the
Parent LLC Agreement, each member of the Parent's Board is referred to as a
"Representative." According to the Parent LLC Agreement, the Parent shall have
power to purchase and maintain insurance on behalf of any Indemnitee or any
Person who is or was an agent of the Parent against any liability asserted
against such Person and incurred by such Person in any such capacity, or arising
out of such Person's status as an agent, whether or not the Parent would have
the power to indemnify such Person against such liability under the provisions
of Section 11.1 of the Parent LLC Agreement or under Applicable Law (as defined
therein).
Section 16 of the Amended and Restated Limited Liability Company Agreements
of the Company and the Subsidiary Guarantors (the "LLC Agreements") provides,
among other things, that, except as limited by law any member, manager, officer
or employee of the Company or the Subsidiary Guarantors shall be indemnified and
held harmless to the fullest extent permitted under the DLLCA (including
indemnification for negligence, gross negligence and breach of fiduciary duty to
the extent so authorized) from and against any and all claims and demands
arising by reason of the fact that such person is, or was a member, manager,
officer or employee of the Company or the Subsidiary Guarantors.
II-1
<PAGE> 186
ACL Capital (the "Corporation") is a Delaware corporation. Section 145 of
the General Corporation Law of the State of Delaware provides that a Delaware
corporation may indemnify any person or persons who were, are or are threatened
to be made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, were or are threatened
to be made, a party to any threatened, pending or completed action or suit by or
in the right of the corporation by reasons of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interest, provided that no indemnification is
permitted without judicial approval if the officer, director, employee or agent
is adjudged to be liable to the corporation. Where an officer, director,
employee or agent is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
The Certificate of Incorporation of the Corporation provides that a
director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
person as a director; except for liability (i) for breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
Article VI of the Bylaws of the Corporation provides that each person who
was or is made a party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may thereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment) against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith. Article VI of the
Bylaws of the Corporation further provides that the right to indemnification
conferred in Article VI of the Bylaws of the Corporation shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that the payment of such expenses incurred by a director or
officer of the Corporation in his capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to any employee
benefit plan) in advance of the final disposition of such proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it should be
determined ultimately that such director or officer is not entitled to be
indemnified under this section or otherwise. The Corporation may, by action of
its board of directors, provide indemnification to
II-2
<PAGE> 187
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145. The
Corporation's Bylaws provide for the maintenance of insurance under the
circumstances described in Section 145.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrants pursuant to the foregoing provisions, the registrants have been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.
<TABLE>
<C> <S>
2.1 Recapitalization Agreement dated as of April 17, 1998 by and
among CSX Corporation, Vectura Group, Inc., the Parent, the
Company and National Marine, Inc.
3.1 Certificate of Formation of the Parent
3.2 Form of Certificate of Formation of the Company and the
Subsidiary Guarantors
3.3 Form of Limited Liability Company Agreement for the
Subsidiary Guarantors
3.4 Amended and Restated Limited Liability Company Agreement of
the Parent
3.5 Amended and Restated Limited Liability Company Agreement of
the Company
3.6 Certificate of Incorporation of ACL Capital
3.7 By-laws of ACL Capital
4.1 Indenture dated as of June 30, 1998 by and among the
Company, ACL Capital and the Subsidiary Guarantors and the
United States Trust Company of New York, as trustee
4.2 Purchase Agreement dated as of June 23, 1998 among the
Company, ACL Capital and the Subsidiary Guarantors,
Wasserstein Perella Securities, Inc. and Chase Securities
Inc.
4.3 Registration Rights Agreement dated as of June 23, 1998 by
and among the Company, ACL Capital and the Subsidiary
Guarantors, Wasserstein Perella Securities, Inc. and Chase
Securities Inc.
4.4 Registration Rights Agreement dated as of June 30, 1998 by
and among the Company, Vectura Group, Inc., National Marine,
Inc., CSX Brown Corp., Stuart Agranoff and Steven Anderson
and each Person whose name is set forth on Schedule I
therein
5.1 Opinion and consent of Kirkland & Ellis.
10.1 Credit Agreement dated as of June 30, 1998 among the
Company, the Parent, the Lenders (as defined therein) and
the Chase Manhattan Bank, as issuing bank, as administrative
agent, as security trustee and as collateral agent
12.1 Statement of Computation of Ratios.
21.1 Subsidiaries of the Company
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).
24.1 Powers of Attorney (included in signature page).
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instructions.
</TABLE>
- ---------------
+ To be filed by amendment.
II-3
<PAGE> 188
ITEM 22. UNDERTAKINGS.
Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering; and
(4) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by Rule 3-19 of the chapter at the start of any delayed offering or
throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished, provided, that
the registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial statements.
Notwithstanding the foregoing, with respect to registration statements on Form
F-3, a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act or Rule 3-19
of this chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Form F-3.
(1) Each undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(2) Each registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described under
Item 20 or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of
II-4
<PAGE> 189
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
Each undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Each undersigned registrant hereby undertakes to respond to requests for
information that are incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
Each undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE> 190
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
AMERICAN COMMERCIAL LINES LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-6
<PAGE> 191
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
ACL CAPITAL CORP.
By: /s/ MICHAEL C. HAGAN
-------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-7
<PAGE> 192
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
AMERICAN COMMERCIAL BARGE LINE LLC
By: /s/ MICHAEL C. HAGAN
-------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-8
<PAGE> 193
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
AMERICAN COMMERCIAL LINES
INTERNATIONAL LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael Khouri or James
J. Wolff, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ MARTIN K. PEPPER Senior Vice President -- International and
- -------------------------------------------------------- Member
Martin K. Pepper
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-9
<PAGE> 194
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
AMERICAN COMMERCIAL MARINE
SERVICE LLC
By: /s/ ROBERT W. GREENE
------------------------------------
Name: Robert W. Greene
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Robert W. Greene, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ ROBERT W. GREENE President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Robert W. Greene
/s/ MICHAEL C. HAGAN Member
- --------------------------------------------------------
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-10
<PAGE> 195
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
AMERICAN COMMERCIAL TERMINALS LLC
By: /s/ ROBERT W. GREENE
------------------------------------
Name: Robert W. Greene
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Robert W. Greene, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ ROBERT W. GREENE President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Robert W. Greene
/s/ MICHAEL C. HAGAN Member
- --------------------------------------------------------
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-11
<PAGE> 196
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
AMERICAN COMMERCIAL TERMINALS --
MEMPHIS LLC
By: /s/ ROBERT W. GREENE
------------------------------------
Name: Robert W. Greene
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Robert W. Greene, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ ROBERT W. GREENE President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Robert W. Greene
/s/ MICHAEL C. HAGAN Member
- --------------------------------------------------------
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-12
<PAGE> 197
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
BREEN TAS LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President, Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Vice President -- Corporate Services and
- -------------------------------------------------------- Member
Michael A. Khouri
/s/ MARTIN K. PEPPER Vice President -- International and Member
- --------------------------------------------------------
Martin K. Pepper
/s/ JAMES J. WOLFF Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-13
<PAGE> 198
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
BULLARD TAS LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Vice President -- Corporate Services and
- -------------------------------------------------------- Member
Michael A. Khouri
/s/ MARTIN K. PEPPER Vice President -- International and Member
- --------------------------------------------------------
Martin K. Pepper
/s/ JAMES J. WOLFF Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-14
<PAGE> 199
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
HOUSTON FLEET LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ WILLIAM N. WHITLOCK Senior Vice President -- Transportation
- -------------------------------------------------------- Services and Member
William N. Whitlock
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-15
<PAGE> 200
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
JEFFBOAT LLC
By: /s/ ROBERT W. GREENE
------------------------------------
Name: Robert W. Greene
Title: President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Robert W. Greene, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ ROBERT W. GREENE President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Robert W. Greene
/s/ MICHAEL C. HAGAN Member
- --------------------------------------------------------
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-16
<PAGE> 201
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
LEMONT HARBOR & FLEETING
SERVICES LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ WILLIAM N. WHITLOCK Senior Vice President -- Transportation
- -------------------------------------------------------- Services and Member
William N. Whitlock
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-17
<PAGE> 202
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
LOUISIANA DOCK COMPANY LLC
By:
/s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ WILLIAM N. WHITLOCK Senior Vice President -- Transportation
- -------------------------------------------------------- Services and Member
William N. Whitlock
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-18
<PAGE> 203
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
ORINOCO TASA LLC
By:
/s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Vice President -- Corporate Services and
- -------------------------------------------------------- Member
Michael A. Khouri
/s/ MARTIN K. PEPPER Vice President -- International and Member
- --------------------------------------------------------
Martin K. Pepper
/s/ JAMES J. WOLFF Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-19
<PAGE> 204
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
ORINOCO TASV LLC
By:
/s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Vice President -- Corporate Services and
- -------------------------------------------------------- Member
Michael A. Khouri
/s/ MARTIN K. PEPPER Vice President -- International and Member
- --------------------------------------------------------
Martin K. Pepper
/s/ JAMES J. WOLFF Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-20
<PAGE> 205
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
SHELTON TAS LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Vice President -- Corporate Services and
- -------------------------------------------------------- Member
Michael A. Khouri
/s/ MARTIN K. PEPPER Vice President -- International and Member
- --------------------------------------------------------
Martin K. Pepper
/s/ JAMES J. WOLFF Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-21
<PAGE> 206
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
TIGER SHIPYARD LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ WILLIAM N. WHITLOCK Senior Vice President -- Transportation
- -------------------------------------------------------- Services and Member
William N. Whitlock
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-22
<PAGE> 207
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
WATERWAY COMMUNICATIONS
SYSTEM LLC
By:
/s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-23
<PAGE> 208
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Jeffersonville, State of Indiana, on August 26, 1998.
WILKINSON POINT LLC
By: /s/ MICHAEL C. HAGAN
------------------------------------
Name: Michael C. Hagan
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints any of Michael C. Hagan, Michael A. Khouri or
James J. Wolff, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
each Registrant), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney have been signed by the following
persons in the capacities and on the dates indicated on August 26, 1998:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ MICHAEL C. HAGAN President, Chief Executive Officer
- -------------------------------------------------------- (principal executive officer) and Member
Michael C. Hagan
/s/ MICHAEL A. KHOURI Senior Vice President -- Corporate Services
- -------------------------------------------------------- and Member
Michael A. Khouri
/s/ WILLIAM N. WHITLOCK Senior Vice President -- Transportation
- -------------------------------------------------------- Services and Member
William N. Whitlock
/s/ JAMES J. WOLFF Senior Vice President -- Finance and
- -------------------------------------------------------- Administration, Chief Financial Officer
James J. Wolff (principal financial officer and
accounting officer) and Member
</TABLE>
II-24
<PAGE> 209
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
2.1 Recapitalization Agreement dated as of April 17, 1998 by and
among CSX Corporation, Vectura Group, Inc., the Parent, the
Company and National Marine, Inc. ..........................
3.1 Certificate of Formation of the Parent......................
3.2 Form of Certificate of Formation of the Company and the
Subsidiary Guarantors.......................................
3.3 Form of Limited Liability Company Agreement for the
Subsidiary Guarantors.......................................
3.4 Amended and Restated Limited Liability Company Agreement of
the Parent..................................................
3.5 Amended and Restated Limited Liability Company Agreement of
the Company.................................................
3.6 Certificate of Incorporation of ACL Capital.................
3.7 By-laws of ACL Capital......................................
4.1 Indenture dated as of June 30, 1998 by and among the
Company, ACL Capital and the Subsidiary Guarantors and the
United States Trust Company of New York, as trustee.........
4.2 Purchase Agreement dated as of June 23, 1998 among the
Company, ACL Capital and the Subsidiary Guarantors,
Wasserstein Perella Securities, Inc. and Chase Securities
Inc. .......................................................
4.3 Registration Rights Agreement dated as of June 23, 1998 by
and among the Company, ACL Capital and the Subsidiary
Guarantors, Wasserstein Perella Securities, Inc. and Chase
Securities Inc. ............................................
4.4 Registration Rights Agreement dated as of June 30, 1998 by
and among the Company, Vectura Group, Inc., National Marine,
Inc., CSX Brown Corp., Stuart Agranoff and Steven Anderson
and each Person whose name is set forth on Schedule I
therein.....................................................
5.1 Opinion and consent of Kirkland & Ellis. ...................
10.1 Credit Agreement dated as of June 30, 1998 among the
Company, the Parent, the Lenders (as defined therein) and
the Chase Manhattan Bank, as issuing bank, as administrative
agent, as security trustee and as collateral agent..........
12.1 Statement of Computation of Ratios..........................
21.1 Subsidiaries of the Company.................................
23.1 Consent of Ernst & Young LLP. ..............................
23.2 Consent of Arthur Andersen LLP. ............................
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1). .....
24.1 Powers of Attorney (included in signature page). ...........
25.1 Statement of Eligibility of Trustee on Form T-1. ...........
27.1 Financial Data Schedule. ...................................
99.1 Form of Letter of Transmittal. .............................
99.2 Form of Notice of Guaranteed Delivery. .....................
99.3 Form of Tender Instructions. ...............................
</TABLE>
- ---------------
+ To be filed by amendment.
<PAGE> 1
Exhibit 2.1
EXECUTION COPY
================================================================================
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.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
ARTICLE I
Certain Definitions
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
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
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
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
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
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
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
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
Section 3.1. Incorporation; Authorization; Etc. ............................................ 20
Section 3.2. Capitalization ................................................................ 21
Section 3.3. Financial Statements .......................................................... 22
Section 3.4. Undisclosed Liabilities ....................................................... 23
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
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
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
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
Section 4.22. Acquisition for Investment .................................................... 47
ARTICLE V
Covenants of the Parties
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
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
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
</TABLE>
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<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
ARTICLE VIII
Conditions of the Vectura Parties' Obligations to Close
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
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
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
Section 11.1. Termination.................................................................... 79
Section 11.2. Procedure and Effect of Termination............................................ 80
</TABLE>
-vii-
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<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
ARTICLE XII
Miscellaneous
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
</TABLE>
-viii-
<PAGE> 10
SCHEDULES
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
<PAGE> 11
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
<PAGE> 12
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
<PAGE> 13
EXHIBITS
Exhibit A Certain Terms of ACL Holdings LLC Agreement
Exhibit B Substance of CSX Legal Opinion
Exhibit C Substance of Vectura Legal Opinion
<PAGE> 14
This RECAPITALIZATION AGREEMENT (together with the Schedules
and Exhibits hereto, this "Agreement"), is dated as of April 17, 1998, is by and
among CSX Corporation, a Virginia corporation ("CSX"), Vectura Group, Inc., a
Delaware corporation ("Vectura"), National Marine, Inc., a Delaware corporation
and a wholly owned Subsidiary of Vectura ("NMI" and, together with Vectura, the
"Vectura Parties"), American Commercial Lines Holdings LLC, a Delaware limited
liability company and a wholly owned Subsidiary of CSX ("ACL Holdings"), and
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").
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 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
<PAGE> 15
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
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.
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<PAGE> 16
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. "ACL Former Employees" shall have the meaning set forth
in Section 3.17(a).
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<PAGE> 17
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)
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<PAGE> 18
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
5
<PAGE> 19
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 abate 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 Sherman Act,
as amended, the Clayton 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.
6
<PAGE> 20
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).
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<PAGE> 21
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.
8
<PAGE> 22
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 Hart-Scott-Rodino 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).
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<PAGE> 23
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).
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<PAGE> 24
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)
11
<PAGE> 25
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).
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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).
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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.
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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).
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(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)).
(i) 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 CSommon 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
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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
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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
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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
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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
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(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
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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
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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
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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.
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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
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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
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employment and severance and retention agreements have been made available to
the Vectura Parties.
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.
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
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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.
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.
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
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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.
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
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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
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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.
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
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from any Vectura Party, ACL Holdings or any Subsidiary of ACL Holdings in
connection with the Recapitalization Transactions.
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.
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.
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:
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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
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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
Arthur Andersen & 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
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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
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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
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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
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(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;
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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.
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(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
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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
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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.
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(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).
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(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.
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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
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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
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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.
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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
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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
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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
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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.
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(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
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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;
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(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
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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
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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.
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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
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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
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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)
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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
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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
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(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.
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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
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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
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(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
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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
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(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.
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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.
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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
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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.
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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.
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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
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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.
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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
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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
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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
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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.
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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
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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.
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(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:
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c/o Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, New York 10043
Attention: David F. Thomas
Richard E. Mayberry, Jr.
Telecopy Number: (212) 888-2940
with a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
Telecopy Number: (212) 446-4900
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 James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Mark G. Aron
Telecopy Number: (804) 783-1380
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Pamela S. Seymon, Esq.
Steven A. Cohen, Esq.
Telecopy Number: (212) 403-2000
with a copy, in the case of ACL Holdings, to:
American Commercial Lines LLC
1701 E. Market Street
Jeffersonville, Indiana 47130
Attention: General Counsel
Telecopy Number: (812) 288-0294
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.
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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 Michael C. Hagan, Michael A. Khouri, Anita P. Beier or Susan G. Lawler after
due inquiry and "to the knowledge of any Vectura Party" shall mean to the actual
knowledge of David Wagstaff, III, John W. Mulvihill, Dominic J. Verona or Robert
J. O'Neil after due inquiry or to the actual knowledge of David F. Thomas or
Richard E. Mayberry, Jr., (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.
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(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.
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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:______________________
Name:
Title:
VECTURA GROUP, INC.
by:______________________
Name:
Title:
AMERICAN COMMERCIAL LINES HOLDINGS LLC
by: CSX BROWN CORP., as
Manager
by:______________________
Name:
Title:
AMERICAN COMMERCIAL LINES LLC
by: AMERICAN COMMERCIAL
LINES HOLDINGS LLC, as
Manager
by: CSX BROWN CORP., as Manager
by:______________________
Name:
Title:
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NATIONAL MARINE, INC.
by:______________________
Name:
Title:
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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
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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
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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
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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 terminate once CSX (or its
Subsidiary) no longer holds both (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 and (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
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<PAGE> 103
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.
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<PAGE> 104
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.
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<PAGE> 105
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
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<PAGE> 106
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.
A-8
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF FORMATION
OF
ACBL LLC
This Certificate of Formation of ACBL LLC (the "LLC"), dated as of
February 3, 1998, is being duly executed and filed by Louis G. Recher, as an
authorized person, to form a limited liability company under the Delaware
Limited Liability Company Act (6 Del. C. Section 18-101 et seq.).
FIRST: The name of the limited liability company formed hereby is ACBL
LLC.
SECOND: The address of the registered office of the LLC in the State of
Delaware is c/o Corporation Trust Center (New Castle County), 1209 Orange
Street, Wilmington, Delaware, 19801.
THIRD: The name and address of the registered agent for service of
process on the LLC in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center (New Castle County), 1209 Orange Street, Wilmington,
Delaware 19801.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
--------------------------
Name: Louis G. Recher
Authorized Person
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
ACBL LLC
(filed pursuant to 6 Del. C. Section 18-202)
ACBL LLC, a limited liability company organized and existing
under and by virtue of the Limited Liability Company Act of the State of
Delaware, does hereby certify that:
FIRST: The name of the limited liability company is ACBL LLC.
SECOND: The Certificate of Formation of ACBL LLC is hereby
amended as follows: Article FIRST of the Certificate of Formation of ACBL LLC
shall be hereby replaced by the following: "The name of the limited liability
company is American Commercial Lines Holdings LLC."
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Amendment of ACBL LLC this 30th day of March, 1998.
ACBL LLC
By: CSX BROWN CORP., as Member
By: ______________________________
Name: Gregory R. Weber
Title: Vice President & Treasurer
<PAGE> 1
Exhibit 3.2
CERTIFICATE OF FORMATION
OF
___________________________
This Certificate of Formation of ________________ (the "LLC"),
dated as of June____, 1998, is being duly executed and filed by the undersigned,
as the sole member, to form a limited liability company under the Delaware
Limited Liability Company Act (6 Del. Section 18-001 et seq.).
FIRST: The name of the limited liability company formed hereby
is _____________________________.
SECOND: The registered office of the LLC in the State of
Delaware is located at Corporation Service Company, 1013 Centre Road,
Wilmington, Delaware 19805, and the registered agent of the LLC at such address
is Corporation Service Company.
THIRD: The LLC is formed for the object and purpose of, and
the nature of the business to be conducted and promoted by the LLC is, engaging
in any lawful act or activity for which limited liability companies may be
formed under the Delaware Limited Liability Company Act and engaging in any and
all activities necessary or incidental to the foregoing, including, but not
limited to, providing assurances of financial responsibility for vessels
acceptable to it and its Member as may be necessary for such vessels to meet the
Certificate of Financial Responsibility (COFR) requirements established by the
U.S. Coast Guard pursuant to the provisions of the Oil Pollution Act of 1990
(OPA '90) and the Comprehensive Environmental Response, Cooperation and
Liability Act (CERCLA).
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Formation as of the date first above written.
__________________________________
BY:_______________________________
Name:
Title:
-2-
<PAGE> 1
Exhibit 3.3
FORM OF
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is
made effective as of the __ day of ___________________, 1998, by and between
________________, a Delaware limited liability company, as the sole member (the
"Member"), and ______________, a Delaware limited liability company.
1. Formation of the Company. By execution of this Agreement,
the Member ratifies and confirms the actions of Michael A. Khouri, Senior Vice
President - Corporate and Legal Affairs, as its duly authorized agent in
connection with the filing of a certificate of formation (the "Certificate")
with the Secretary of the State of Delaware for the purpose of forming
____________________ (the "Company"), a limited liability company formed under
the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101, et seq.
("Act")
2. Name of the Company. The name of the Company stated in the
Certificate and the limited liability company governed by this Agreement is
_____________________.
3. Purpose. This Company is formed for the object and purpose
of, and the nature of the business to be conducted and promoted by the Company
is, engaging in any lawful act or activity for which limited liability companies
may be formed under the Act and engaging in any and all activities necessary or
incidental to the foregoing.
4. Registered Office; Registered Agent. The registered office
of the Company in the State of Delaware is located at The Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and
the registered agent of the Company at such address is The Corporation Trust
Company.
5. Membership Interests. The Company shall be authorized to
issue one hundred (100) membership interests ("Membership Interests"), all of
which shall be issued to the Member. Membership Interests shall for all purposes
be personal property.
6. Certificate of Membership Interest. The Company shall issue
to the Member a limited liability company certificate in the form annexed hereto
as Exhibit 1 (a "Certificate"), evidencing the Membership Interests in the
Company held by such Member. The Certificates shall be transferable only on the
books of the Company, to be kept by the Secretary of the Company, on surrender
thereof by the registered holder in person or by attorney, and until so
transferred, the Company may treat the registered holder of a Certificate as the
owner of the interest evidenced thereby for all purposes whatsoever. Nothing
contained in this Section 6 shall authorize or permit the Member to transfer its
interest except as contemplated by Section 8. For the purposes of Article 8 in
any Uniform Commercial Code, each interest in the Company as evidenced by a
Certificate shall be deemed to be a security, as such term is defined in any
Uniform Commercial Code.
7. Agreement to Pledge Memberships. Notwithstanding any
provision herein
1
<PAGE> 2
to the contrary, the Member shall pledge such Member's Membership Interests in
the Company to secure the indebtedness of the Company or its subsidiaries. The
Member hereby agrees to take any and all actions and execute such instruments,
agreements and other documents to effect the pledge of such Member's Membership.
8. Pledge of Membership Interests. To secure, among other
things, the payment and performance of the obligations of the Company to The
Chase Manhattan Bank as issuing bank and as administrative agent and collateral
agent ("Chase") for itself and certain other financial institutions (the
"Lenders") from time to time party to that certain Credit Agreement which is to
be entered into and dated as of June 30, 1998 among Chase, the Lenders, the
Company and American Commercial Lines Holdings LLC (as amended from time to
time, the "Credit Agreement"), the Member will pledge l00% of its Membership
Interests in the Company to Chase, for the benefit of itself and the Lenders.
Said pledge is hereby authorized by the Member, the Board of Managers and the
Company. The books and records of the Company shall be marked to reflect the
pledge of the Membership Interests to Chase, for the benefit of itself and the
Lenders. For so long as any Loans (as defined in the Credit Agreement) remain
outstanding, no Membership Interest or any rights relating thereto will be
transferred or further encumbered and no new Members will be admitted without
the written consent of Chase and, if the Company is advised by Chase that an
event of default has occurred under the Credit Agreement, the Company will
comply with the provisions of the Pledge Agreement which is to be entered into
and dated as of June 30, 1998. No exercise by Chase of its rights under such
Pledge Agreement shall constitute a violation of or be prohibited by this
Agreement and Chase shall become a Member upon such exercise.
9. Capital Contributions by the Member. The Member shall not
be obligated to make capital contributions to the Company, and the Membership
Interests shall be nonassessable.
10. Allocation of Profits and Losses. The Company's profits
and losses shall be allocated entirely to the Member, and the Member's
distributive share of income, gain, loss, deduction, or credit (or item thereof)
shall be determined and allocated in accordance with this Section 10 to the
fullest extent permitted by Section 704(b) and (c) of the Code and the treasury
regulations promulgated thereunder.
11. Distributions. Distributions shall be made to the Member
at the times and in the aggregate amounts determined by the Board of Managers of
the Company (the "Board of Managers").
12. Appointment and Removal of Board of Managers. The business
and affairs of the Company shall be managed by its Board of Managers. Subject to
Section 15 hereof and as provided in Section 18-402 and 18-403 of the Act, the
Managers shall have such rights and duties as are provided in the Act, and shall
have the power and authority to delegate to the officers of the Company, if any,
its rights and powers, or any portion thereof, to manage and control the
business and affairs of the Company. All actions of the Board of Managers shall
be taken by the consent or affirmative vote of a majority of the Board of
Managers, with or without a meeting.
2
<PAGE> 3
The Board of Managers shall be composed of three (3) Managers.
Managers shall be appointed by the affirmative vote of the Member. Each Manager
shall hold office until his or her successor shall be duly appointed and shall
qualify or until his or her death, until he or she shall resign, or until he or
she shall have been removed, either with or without cause, by the Member in its
sole discretion. The salaries or other compensation, if any, of the Managers
shall be fixed by the Member. Any appointment pursuant to this Section 12 may be
revoked at any time by the Member.
13. Officers. The officers of the Company, if any, shall be
appointed by the Board of Managers in its sole discretion. Unless such
appointment provides otherwise, each officer so appointed shall have such powers
and duties as are provided in the following:
(a) President. The President shall be the Chief
Executive Officer of the Company. Subject to the direction of the Board of
Managers, he shall have, and exercise, direct charge of, and general supervision
over, the business and affairs of the Company, and shall perform all duties
incident to the office of a President in a corporation organized under the
Delaware General Corporation Law. No person may hold the office of President, or
act in place of the President in the case of absence or disability, unless such
person is a citizen of the United States.
(b) Vice Presidents. The powers, duties, and
responsibilities of the Vice Presidents shall be fixed by the President, with
the approval of the Board of Managers. A Vice President may be designated as an
Executive Vice President, a Senior Vice President or a Vice President with a
functional title.
(c) General Counsel. The General Counsel shall have
general charge of the legal affairs of the Company, and shall cause to be kept
adequate records of all suits or actions, of every nature, to which the Company
may be a party, or in which it has an interest, with sufficient data to show the
nature of the case and the proceedings therein. He shall prepare, or cause to be
prepared, legal opinions on any subject necessary for the affairs of the
Company, and shall perform such other duties as the Board of Managers, or the
President, may designate.
(d) Secretary. The Secretary shall attend all
meetings of the members of the Company and record their proceedings, unless a
temporary secretary be appointed. He shall give due notice, as required, of all
meetings of the members of the Company, shall keep, or cause to be kept, at a
place or places required by law, a record of the members and managers of the
Company, giving the names and addresses of all such members and managers. He
shall be the custodian of all records, contracts, leases, and other papers and
documents of the Company, unless otherwise directed by the Board of Managers,
and shall perform such other duties as the Board of Managers, or the President,
may designate. In the case of the Secretary's absence or incapacity, the
President may designate an appropriate officer to perform the duties of
Secretary.
(e) Treasurer. The Treasurer shall receive, keep and
disburse all moneys belonging to or coming to the Company, shall keep regular,
true and full accounts of all receipts and disbursements, and make detailed
reports thereof, shall keep a true record of expenses, losses, gains, assets,
and liabilities of the Company, and shall perform such other duties in
connection
3
<PAGE> 4
with the administration of the financial affairs of the Company as the Board of
Managers, or the President, may designate. In the case of the Treasurer's
absence or incapacity, the President may designate an appropriate officer to
perform the duties of Treasurer.
(f) Subordinate Officers. Each subordinate officer
shall hold office for such period, have such authority, and perform such duties
as the Board of Managers may prescribe. The Board of Managers may, from time to
time, authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
Each such officer shall also have such additional
powers and duties as from time to time may be conferred by the Board of
Managers. Any number of offices may be held by the same person. Each officer
shall hold office until his or her successor shall be duly appointed and shall
qualify or until his or her death, until he or she shall resign, or until he or
she shall have been removed, either with or without cause, by the Board of
Managers in its sole discretion. The salaries or other compensation, if any, of
the officers and agents of the Company shall be fixed by the Board of Managers.
Any appointment pursuant to this Section 14 may be revoked at any time by the
Board of Managers.
14. Execution of Contracts, Assignments, etc. All contracts,
agreements, endorsements, assignments, transfers, stock powers, or other
instruments shall be signed by the President, or any Vice President, and
attested by the Secretary, or an Assistant Secretary, except where required or
permitted by law to be otherwise signed, and except when the signing and
execution thereof shall be expressly delegated by the Board of Managers to some
other officer or agent of the Company.
15. Limitations on Authority. The authority of the Board of
Managers over the conduct of the business and affairs of the Company shall be
subject only to such limitations as are expressly stated in this Agreement or in
the Act.
16. Indemnification. The Company shall, to the fullest extent
authorized by the Act, indemnify and hold harmless any member, manager, officer
or employee of the Company from and against any and all claims and demands
arising by reason of the fact that such person is, or was, a member, manager,
officer or employee of the Company.
17. Dissolution. The Company shall dissolve, and its affairs
shall be wound up, upon the first to occur of the following: (a) the written
consent of the Member to such effect; and (b) the entry of a decree of judicial
dissolution under Section 18-802 of the Act.
18. Consents. Any action that may be taken by the Member at a
meeting may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by the Member.
19. Amendments. Except as otherwise provided in this Agreement
or in the Act, this Agreement may be amended only by the written consent of the
Member to such effect.
20. Governing Law. This Agreement shall be construed and
enforced in
4
<PAGE> 5
accordance with, and governed by, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have made this
Agreement effective as of the date and year first above-written.
ATTEST:
By: ___________________________
As: Secretary
By: ______________________________
Name:
Title:
ATTEST:
By: _________________________ By: _______________________________
As: Secretary Name:
Title:
5
<PAGE> 1
CONFORMED COPY
Exhibit 3.4
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
AMERICAN COMMERCIAL LINES HOLDINGS LLC
THE SECURITIES ISSUED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES
LAWS AND, AS SUCH, THEY MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS THE SECURITIES HAVE BEEN QUALIFIED
AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS SUCH
QUALIFICATION AND REGISTRATION IS NOT LEGALLY REQUIRED. TRANSFER OF THE
SECURITIES REPRESENTED BY THIS AGREEMENT MAY BE FURTHER SUBJECT TO THE
RESTRICTIONS, TERMS AND CONDITIONS SET FORTH HEREIN.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
ARTICLE I
<S> <C>
DEFINITIONS...................................................................................... 1
1.1 Definitions............................................................................. 1
1.2 Terms Generally......................................................................... 17
ARTICLE II
ORGANIZATION; PURPOSE AND POWERS................................................................. 18
2.1 Formation............................................................................... 18
2.2 Certificate............................................................................. 18
2.3 Name.................................................................................... 18
2.4 Term.................................................................................... 18
2.5 Office and Agent........................................................................ 18
2.6 Qualification in Other Jurisdictions.................................................... 18
2.7 Purpose and Powers...................................................................... 18
ARTICLE III
MEMBERS.......................................................................................... 19
3.1 Members................................................................................. 19
3.2 Admission of New Members................................................................ 19
3.3 Withdrawals or Resignations............................................................. 20
3.4 Voting Rights........................................................................... 20
3.5 Conversion of Class B Common Units...................................................... 20
3.6 Conversion of Senior Preferred Units.................................................... 21
3.7 Representations and Warranties of Members............................................... 22
3.8 Successors and Substitute Members....................................................... 23
ARTICLE IV
CAPITAL CONTRIBUTIONS............................................................................ 23
4.1 Initial Capital Contributions........................................................... 23
ARTICLE V
DISTRIBUTIONS.................................................................................... 24
5.1 In General.............................................................................. 24
5.2 Discretionary Distributions............................................................. 24
5.3 Tax Advances............................................................................ 25
5.4 Mandatory Distributions on Senior Preferred
Units .................................................................................. 32
5.5 Mandatory Distributions of Junior Preferred
Units .................................................................................. 32
5.6 Application of Tax Advances; No Economic
Windfall ............................................................................... 33
ARTICLE VI
ALLOCATIONS AND CAPITAL ACCOUNTS................................................................. 33
6.1 Capital Accounts........................................................................ 33
6.2 Allocations............................................................................. 33
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
6.3 Allocations for Tax Purposes............................................................ 37
6.4 Distribution in Kind.................................................................... 37
6.5 Debt Allocations........................................................................ 37
ARTICLE VII
MANAGEMENT....................................................................................... 38
7.1 The Board; Delegation of Authority and Duties........................................... 38
7.2 Establishment of Board.................................................................. 39
7.3 Term of Office.......................................................................... 41
7.4 Meeting of the Board.................................................................... 41
7.5 Voting.................................................................................. 41
7.6 Responsibility and Authority of the Board............................................... 41
7.7 Subsidiary Boards....................................................................... 4
7.8 Company Funds........................................................................... 42
7.9 Devotion of Time........................................................................ 42
7.10 Payments to Representatives; Reimbursements............................................. 42
7.11 Officers................................................................................ 42
7.12 Negative Covenants...................................................................... 45
7.13 Affirmative Covenants................................................................... 48
7.14 Certain Tax Matters..................................................................... 48
ARTICLE VIII
TRANSFERS OF UNITS............................................................................... 49
8.1 General................................................................................. 49
8.2 Tag-Along Rights; First Offer Rights; Permitted Transfers............................... 50
8.3 Approved Sale........................................................................... 53
8.4 Legend.................................................................................. 53
8.5 Pre-emptive Rights...................................................................... 54
8.6 Initial Public Offering................................................................. 55
8.7 Transfer by Vectura Members............................................................. 55
ARTICLE IX
DISSOLUTION AND LIQUIDATION...................................................................... 55
9.1 Duration................................................................................ 55
9.2 Liquidation of Company Interests........................................................ 55
ARTICLE X
BOOKS AND RECORDS................................................................................ 57
10.1 Books................................................................................... 57
10.2 Tax Allocations and Reports............................................................. 57
10.3 Tax Proceedings......................................................................... 58
ARTICLE XI
EXCULPATION AND INDEMNIFICATION.................................................................. 58
11.1 Exculpation and Indemnification......................................................... 58
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
11.2 Insurance............................................................................... 59
11.3 Indemnification and Reimbursement for Payments on Behalf of a Unitholder................ 59
ARTICLE XII
MISCELLANEOUS.................................................................................... 60
12.1 Confidentiality......................................................................... 60
12.2 Waiver of Jury Trial.................................................................... 61
12.3 Governing Law........................................................................... 61
12.4 Descriptive Headings.................................................................... 61
12.5 Severability............................................................................ 61
12.6 Amendments.............................................................................. 61
12.7 Gender and Number....................................................................... 61
12.8 Notice.................................................................................. 62
12.9 Counterparts............................................................................ 63
12.10 Entire Agreement........................................................................ 63
12.11 No Waiver of Remedies................................................................... 63
12.12 Remedies Cumulative..................................................................... 63
12.13 Binding Effect.......................................................................... 63
12.14 Determinations of Fair Market Value..................................................... 63
</TABLE>
EXHIBIT A -- FORM OF JOINDER
SCHEDULE A -- CAPITALIZATION
SCHEDULE B -- VALUE OF CSX CONTRIBUTED ASSETS
SCHEDULE C -- METHODOLOGY OF TRANSFERS TO MANAGEMENT UNITHOLDERS
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
AMERICAN COMMERCIAL LINES HOLDINGS LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of
June 30, 1998, of American Commercial Lines Holdings LLC, a Delaware limited
liability company (the "Company"), by and among the Company, and those parties
whose names appear on Schedule A, attached hereto, such parties being members of
the Company (collectively referred to as the "Members" or individually as a
"Member"). Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in Article I below.
WHEREAS, the Company (of which CSX was the initial member) was formed
on February 3, 1998 pursuant to and in accordance with the Act; and
WHEREAS, in accordance with the Act and the Limited Liability Company
Agreement of the Company, dated as of February 3, 1998, as amended as of March
30, 1998 (the "Prior Agreement"), and to effectuate the provisions of the
Recapitalization Agreement, the Members desire to, and hereby, amend and restate
the Prior Agreement in its entirety in accordance with this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. When used in this Agreement, the following terms shall
have the meanings set forth below (all terms used in this Agreement that are not
defined in this Article I shall have the meanings set forth elsewhere in this
Agreement):
"Accountants" means a nationally recognized firm of independent
certified public accountants selected in accordance with the provisions of
Section 7.13.
"ACL" means American Commercial Lines LLC, a Delaware limited liability
company and a wholly owned Subsidiary of the Company.
"Act" means the Delaware Limited Liability Company Act, Delaware Code,
Title 6, Sections 18-101, et. seq., as in effect from time to time.
"Adjusted Capital Account Deficit" means, with respect to each
Unitholder, the deficit balance, if any, in such Unitholder's Capital Account as
of the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
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(a) Credit to such Capital Account any amount which such
Member is obligated to restore or is deemed obligated to restore pursuant to
Treasury Regulations Section 1.704-2(g)(1) and (without duplication)
1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Adjusted Taxable Income" has the meaning set forth in Section 5.3
hereof.
"Affiliate" means, as to any Person, any other Person directly or
indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with such Person; provided, the term "control," as used in
this definition, shall mean with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of the controlled entity (whether through ownership of voting
securities, by contract or otherwise).
"Aggregate Amount" has the meaning set forth in Section 5.3 hereof.
"Agreement" means this Amended and Restated Limited Liability Company
Agreement, as amended, restated or modified from time to time, including any
exhibits hereto.
"Applicable Law" means, with respect to any Person, any statute, law,
regulation, ordinance, rule, injunction, order, decree, Governmental Approval,
directive, requirement, or other governmental restriction or any similar form of
decision of, or determination by, or any interpretation or administration of any
of the foregoing by, any Governmental Authority, applicable to such Person or
its subsidiaries or their respective assets.
"Approved Sale" means a Sale of the Company approved by Majority
Approval of each class of Units then held by the Vectura Members, subject to the
provisions of Section 7.12(a)(iv).
"Bankruptcy" means, with respect to any Person: (i) the filing of a
petition by or against a Person as "debtor" under Title 11 of the United States
Code (the "Bankruptcy Code") seeking the adjudication of such Person as bankrupt
or the appointment of a trustee, receiver, or custodian of such Person's assets
and in case of a petition filed against such Person, such filing not having been
withdrawn or dismissed within 90 days after the date of such filing; (ii) the
making by such Person of a general assignment for the benefit of creditors;
(iii) the entry of an order, judgment, or decree by any court of competent
jurisdiction appointing a trustee, receiver, or custodian to take possession of
or control over the assets of such Person unless such proceedings and the person
appointed are dismissed within ninety (90) days of the date upon which the court
issued its order, judgment, or decree; or (iv) the determination by the
Bankruptcy Court or the written admission of such Person that such Person is
generally unable to pay his or her debts as they become due within the meaning
of Section 303(h)(1) of the Bankruptcy Code.
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"Base Rate" means on any date of determination, a variable rate per
annum equal to the rate of interest published, from time to time, by The Wall
Street Journal as the "prime rate" at large U.S. money center banks.
"BIG Regime" has the meaning set forth in Section 5.3.
"BIG Tax" has the meaning set forth in Section 5.3.
"Board" means the Board of Representatives as specified in Article VII
hereof.
"Built-in Gain" has the meaning set forth in Section 5.3.
"Capital Account" means, for each Unitholder, the Capital Account
established for each Unitholder pursuant to Article VI as maintained for each
Unitholder as follows:
(A) to each Unitholder's Capital Account there shall be
credited (a) such Unitholder's Capital Contributions, if any, when and as
received and (b) the Net Profit, Gross Income and other items of Company income
and gain allocated to such Unitholder pursuant to Section 6.2;
(B) to each Unitholder's Capital Account there shall be
debited (a) the aggregate amount of cash distributed to such Unitholder, (b) the
Net Loss and other items of Company loss and deduction allocated to such
Unitholder pursuant to Section 6.2, and (c) the Gross Asset Value of any Company
assets (other than cash) distributed to such Unitholder in kind (net of any
liabilities secured by such distributed property that the Unitholder is
considered to assume or take under Code Section 752);
(C) Capital Accounts shall be otherwise adjusted in accordance
with Treasury Regulations Section 1.704-1(b); and
(D) if Units are Transferred in accordance with the terms of
this Agreement, the Transferee shall succeed to the Capital Account of the
Transferor to the extent it relates to the Transferred Units.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
"Capital Contribution" means for each Unitholder the total amount of
cash and the Gross Asset Value of property contributed to the Company by such
Unitholder pursuant to Section 4.1 or otherwise, net of any liabilities
associated with such contributed property that the Company is considered to
assume or "take subject to" under Section 752 of the Code, which Capital
Contribution shall be reflected on Schedule A hereto as amended from time to
time in accordance with the terms of this Agreement.
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use)
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real or personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"C Corporation" means a corporation subject to taxation under Section
11 of the Code.
"C Corporation Tax Rate" has the meaning set forth in Section 5.3
hereof.
"Certificate" means the Certificate of Formation for the Company
originally filed with the Secretary of State of the State of Delaware and as
amended or restated from time to time.
"Change of Control" means the occurrence of (i) a "Change of Control"
as defined in the Credit Agreement as in effect on the date hereof or (ii) a
"Change of Control" as defined in the Senior Unsecured Debt Documents as in
effect on the date hereof or (iii) a Sale of the Company.
"Class A Common Unit" means a Unit having the rights and obligations
specified with respect to Class A Common Units in this Agreement. The number of
Class A Common Units initially issued to each Member is listed on Schedule A
attached hereto, subject to adjustment pursuant to this Agreement.
"Class B Common Unit" means a Unit having the rights and obligations
specified with respect to Class B Common Units in this Agreement. The number of
Class B Common Units initially issued to each Member is listed on Schedule A
attached hereto, subject to adjustment pursuant to this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" has the meaning set forth in the recitals hereto.
"Company Minimum Gain" has the same meaning as "partnership minimum
gain" in Treasury Regulations Section 1.704-2(b)(2) and 1.704-2(d). A
Unitholder's share of Company Minimum Gain shall be computed in accordance with
the provisions of Treasury Regulations Section 1.704-2(g).
"Corporation" means a corporation organized under the Delaware General
Corporation Law.
"Credit Agreement" means the Credit Agreement, dated as of the date
hereof, by and among, The Chase Manhattan Bank, N.A. as Administrative Agent,
certain other lenders party thereto, the Company and ACL, as such Credit
Agreement may be amended, supplemented, modified, restated, replaced or
refinanced from time to time, subject to the terms of this Agreement.
"CSX" means CSX Brown Corp., a Delaware corporation.
"CSX Contributed Assets" has the meaning set forth in Section 5.3
hereof.
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"CSX 50% BIG Tax Amount" has the meaning set forth in Section 5.3
hereof.
"CSX Member" means initially CSX and shall include any Affiliate of CSX
which becomes a Unitholder and any Permitted Transferee (other than a Management
Unitholder) of a CSX Member pursuant to a Transfer made in accordance with the
terms and conditions hereof.
"CSX Residual Tax Amount" has the meaning set forth in Section 5.3
hereof.
"CSX Sale-Leaseback" has the meaning set forth in Section 5.3 hereof.
"CSX Sale-Leaseback Tax Amount" has the meaning set forth in Section
5.3 hereof.
"CSX Total Tax Advances" has the meaning set forth in Section 5.3
hereof.
"CSX Total Taxes" has the meaning set forth in Section 5.3 hereof.
"CSX Unitholder" means a holder of CSX Units.
"CSX Units" means the Senior Preferred Units, Junior Preferred Units
and Junior Common Units issued to any CSX Member as of the date of this
Agreement, regardless of the ultimate holder of such Units.
"CSX Unreimbursed Taxes" has the meaning set forth in Section 5.3
hereof.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year bears to such beginning adjusted tax basis; provided, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of such
Fiscal Year is zero and the Gross Asset Value of the asset is positive,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any permitted method selected by the Board.
"Derivatives" means, with respect to any Units, derivative securities
(other than securities of Vectura existing as of the date hereof) whose value or
other economic features is based on the value or such other economic features of
such Units.
"ECF Limit" means, for any period specified in the table below, the sum
of (i) the amount shown in the table opposite the period specified plus (ii) the
amount by which the ECF Limit for the prior period (as adjusted under this
clause (ii)) exceeds the amount distributed with respect to such period under
Section 5.4(b).
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<TABLE>
<CAPTION>
Applicable Period Amount
----------------- ------
<S> <C>
Fiscal Year 2003 $7,500,000
Fiscal Year 2004 7,500,000
Fiscal Year 2005 7,500,000
Fiscal Year 2006 7,500,000
Fiscal Year 2007 7,500,000
Fiscal Year 2008 10,000,000
Fiscal Year 2009 10,000,000
Fiscal Year 2010 10,000,000
Fiscal Year 2011 10,000,000
Fiscal Year 2012 10,000,000
</TABLE>
"Encumbrance" means any lien, encumbrance, proxy, voting trust, or
similar arrangement, pledge, security interest, collateral security agreement,
limitations on voting rights, limitations on rights of ownership, financing
statement (and similar notices) filed with any Government Authority, claim,
charge, mortgage, pledge, option, restrictive covenant, restriction on transfer
or any comparable interest or right created by Applicable Law, of any nature
whatsoever, other than as contemplated pursuant to the terms of any Transaction
Document.
"Estimated Tax Amount" has the meaning set forth in Section 5.3 hereof.
"Excess Cash Flow" means the amount of "Excess Cash Flow" (as defined
in the Credit Agreement as in effect on the date hereof) plus the amounts of any
optional prepayment of the "Term Loans" (as defined in the Credit Agreement) to
the extent such amount reduces such "Excess Cash Flow"; provided, that for
purposes of Section 7.12(a) only, any prepayment or any application of such
Excess Cash Flow as required or permitted under the terms and conditions of the
Credit Agreement and appropriate reserves for reasonably anticipated or actual
repayment obligations on Indebtedness of the Company and its Subsidiaries shall
be deducted therefrom.
"Exchange Notes" has the meaning set forth in Section 3.6.
"Exempt Preemptive Offering" means a Preemptive Offering only to (i)
Qualified Sellers, (ii) financing sources of the Company or its Subsidiaries as
so-called "equity kickers," (iii) management of the Company as reasonable and
customary incentive compensation, or (iv) the public in connection with an
underwritten public offering registered under the Securities Act.
"Exempt Transaction" has the meaning set forth in Section 5.3.
"Exempt Transfers" means (i) Transfers pursuant to a Public Sale, (ii)
Piggyback Transfers, (iii) Threshold Transfers, or (iv) Transfers in accordance
with Sections 8.2(c) or 8.3 hereof.
"Fair Market Value" means, as of any date, the fair market value on
such date as determined pursuant to Section 12.14. For this purpose, securities
that are restricted by law, contract, market conditions (including trading
volume relative to the Company's holding) or
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otherwise as to saleability or transferability may be valued at an appropriate
discount, based on the nature and term of such restrictions. Notwithstanding
anything to the contrary contained herein, the Fair Market Value as of the date
of contribution for the properties identified on Schedule B attached hereto and
a part hereof shall be the value of such properties as reflected on Schedule B.
"Family Group" means, with respect to an individual Unitholder, such
Unitholder, such Unitholder's spouse, siblings, and descendants (whether
natural, by marriage or adopted) and any trust solely for the benefit of such
Unitholder and/or such Unitholder's spouse, siblings, their respective ancestors
and/or descendants (whether natural, by marriage or adopted).
"Fiscal Year" means (i) the taxable year of the Company, which shall be
the 52-53 week period ending on the last Friday of each December unless
otherwise required (or, in the Board's reasonable discretion, permitted) by
Section 706(b) of the Code, and (ii) for purposes of Article VI, the portion of
any Fiscal Year for which the Company is required to (or does) allocate Gross
Income, Net Profit, Net Loss, or other items pursuant to Article VI.
"GAAP" means United States generally accepted accounting principles as
in effect in the United States from time to time.
"Governmental Approval" means any action, order, authorization,
consent, approval, license, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority.
"Governmental Authority" means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.
"Gross Asset Value" means, with respect to any Company asset, the
adjusted basis of such asset for Federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any Company asset
contributed by a Member to the Company shall be the gross Fair Market
Value of such Company asset as of the date of such contribution;
(b) The Gross Asset Value of each Company asset shall be
adjusted to equal its respective gross Fair Market Value, as of the
following times: (i) the acquisition of an additional interest in the
Company by any new or existing Member in exchange for more than a de
minimis Capital Contribution; (ii) the distribution by the Company to a
Unitholder of more than a de minimis amount of Company assets (other
than cash) as consideration for all or part of its Units unless the
Board reasonably determines that such adjustment is not necessary to
reflect the relative economic interests of the Unitholders in the
Company; and (iii) the liquidation of the Company within the meaning of
Treasury Regulations Section Section 1.704-1(b)(2)(ii)(g);
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(c) The Gross Asset Value of a Company asset distributed to
any Unitholder shall be the Fair Market Value of such Company asset as
of the date of distribution thereof;
(d) The Gross Asset Value of each Company asset shall be
increased or decreased, as the case may be, to reflect any adjustments
to the adjusted basis of such Company asset pursuant to Section 734(b)
or Section 743(b) of the Code, but only to the extent that such
adjustments are taken into account in determining Capital Account
balances pursuant to Treasury Regulations Sections 1.704-1(b)(2)(iv)
(m); provided, that Gross Asset Values shall not be adjusted pursuant
to this subparagraph (d) to the extent that an adjustment pursuant to
subparagraph (b) above is made in conjunction with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph
(d); and
(e) If the Gross Asset Value of a Company asset has been
determined or adjusted pursuant to subparagraphs (a), (b) or (d) above,
such Gross Asset Value shall thereafter be adjusted to reflect the
Depreciation taken into account with respect to such Company asset for
purposes of computing Net Profits and Net Losses.
"Gross Income" means for each Fiscal Year, all items of income and gain
recognized by the Company.
"Guarantee" of or by any Person shall mean any obligation, contingent,
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities, or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness, or (c) to maintain working capital, equity capital, or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"hold" means direct or indirect possession and/or beneficial or record
ownership.
"Incapacity" means, as to any natural Person, the death or the
adjudication of incompetence or insanity of such Person.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property or assets purchased by such Person,
(e) all obligations of such Person issued or assumed
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as the deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property valued at the fair market value of the assets subject to
such Lien (in the case of nonrecourse Indebtedness) owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange agreements, or
other interest or exchange rate hedging arrangements, and (j) all obligations of
such person as an account party in respect of letters or credit and bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any partnership in which such Person is a general partner except to the except
that the terms of such Indebtedness provide otherwise.
"Indemnitee" has the meaning specified in Section 11.1.
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, (i) does not hold in excess of 5% of the Junior
Common Units (any Person so holding in excess of 5% of the Junior Common Units
being referred to herein as, a "5% Owner"), (ii) is not an Affiliate of any 5%
Owner, and (iii) is not a member of the Family Group of any 5% Owner.
"Initial Public Offering" means the initial underwritten public
offering of the Company's common equity securities pursuant a registration
statement filed under the Securities Act with the Securities and Exchange
Commission, which offering results in net cash proceeds to the Company of at
least $50,000,000.
"Investor Unitholder" means a Unitholder listed under the heading
"Investor Unitholder" on Schedule A attached hereto and shall include any such
Person who acquires Units pursuant to Section 8.2(c)(iii).
"Junior Common Holder" means any Person in its capacity as owner of one
or more Junior Common Units, as reflected on the Company's books and records.
"Junior Common Unit" means any Class A Common Unit or Class B Common
Unit.
"Junior Preferred Redemption Value" means, as of any time, the
aggregate dollar amount that would be necessary to be distributed to the Junior
Preferred Unitholders so that (i) the accreted value (determined as of such time
by using a rate of return of 11.02%, compounded annually from the date on which
the related distribution was made) of all distributions made by the Company with
respect to the Junior Preferred Units under Sections 5.2(a)(ii), 5.5, and 9.2 as
of such time, equals (ii) the accreted value of $99,505,909 (determined as of
such time by using a rate of return of 11.02%, compounded annually from the date
of issuance), subject to adjustment pursuant to Sections 2.1(j), 2.4(c), and
10.4 of the Recapitalization Agreement.
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"Junior Preferred Unit" means a Unit having the rights and obligations
specified with respect to Junior Preferred Units in this Agreement. The number
of Junior Preferred Units initially issued to each Member is listed on Schedule
A attached hereto, subject to adjustment pursuant to this Agreement.
"Junior Securities" means the Junior Preferred Units, the Senior Common
Units, and the Junior Common Units.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge, or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease, or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset, and (c) in the case of securities, any purchase option, call, or
similar right of a third party with respect to such securities.
"Liquidator" means the Person responsible for winding up the Company
pursuant to Section 9.2 hereof.
"Majority Approval" of a class of Units means the approval of Members
owning a majority of the outstanding Unit of such class.
"Management Unitholder" means an individual Unitholder who is a
full-time employee of the Company or any its Subsidiaries, and listed under the
heading "Management Unitholder" on Schedule A hereto and shall include such
full-time employees who acquire Units pursuant to Section 8.2(c)(ii).
"Member" means each Person who (a) is an initial signatory to this
Agreement, or has been admitted to the Company as a Member in accordance with
the provisions of Article III of this Agreement, and (b) has not ceased to be a
Member in accordance with the provisions of this Agreement or for any other
reason. No Person who is not a Member shall be deemed a "member" under the Act.
"Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Treasury Regulations Section 1.704-2(i)(3).
"Member Nonrecourse Debt" has the same meaning as the term "partner
nonrecourse debt" in Treasury Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Deductions" has the same meaning as the term
"partner nonrecourse deductions" in Treasury Regulations Section 1.704-2(i)(1)
and 1.704-2(i)(2).
"Membership Interest" means a Member's entire interest in the Company,
including such Member's economic interest, the right to vote on or participate
in the Company's management,
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and the right to receive information concerning the business and affairs of the
Company, in each case, to the extent expressly provided in this Agreement or
required by the Act.
"Net Profit and Net Loss" means, for each Fiscal Year, an amount equal
to the Company's taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (including for this purpose, all items of
income, gain, loss or deduction required to be separately stated pursuant to
Code Section 703(a)(1)), with the following adjustments:
(a) Any income of the Company that is exempt from Federal
income tax and not otherwise taken into account in computing Net Profit
or Net Loss pursuant to this definition shall be added to such taxable
income or loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i) (other than expenses in respect of which an
election is properly made under Section 709 of the Code), and not
otherwise taken into account in computing Net Profit or Net Loss
pursuant to this definition shall be subtracted from such taxable
income or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into account
as gain (if the adjustment increases the Gross Asset Value of an asset)
or loss (if the adjustment decreases the Gross Asset Value of an asset)
from the disposition of such Company asset for purposes of computing
Net Profit or Net Loss;
(d) Gain or loss resulting from any disposition of any Company
asset with respect to which gain or loss is recognized for Federal
income tax purposes shall be computed by reference to the Gross Asset
Value of the Company asset disposed of, notwithstanding that the
adjusted tax basis of such Company asset may differ from its Gross
Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such Fiscal
Year, computed in accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) is required, pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member's interest in the
Company, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) from the disposition of such asset
and shall be taken into account for purposes of computing Net Profit or
Net Loss; and
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(g) Any items of income, gain, loss or deduction specially
allocated under Section 6.2(d) shall be excluded.
"NMI" means National Marine, Inc., a Delaware corporation.
"Nonrecourse Deductions" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
"Nonrecourse Liability" shall have the meaning set forth in Treasury
Regulations Section 1.752-1(a)(2).
"Officer" means each Person who has been designated as, and who has not
ceased to be, an officer of the Company pursuant to Section 7.11 hereof, subject
to the resolution of the Board appointing such Person as an officer of the
Company.
"Other Unitholder" means, with respect to a Unitholder, all Unitholders
other than such Unitholder.
"Ownership Ratio" means, as to a Unitholder at the time of
determination, the percentage obtained by dividing the number of Units of the
applicable class of Units held by such Unitholder at such time by the aggregate
number of Units of the same class of Units held by all Unitholders at such time.
"Permitted Payment" has the meaning specified in Section 5.3.
"Permitted Transferees" means all Transferees permitted under Section
8.2(c).
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Piggyback Transfer" means a Transfer pursuant to Section 3 of the
Registration Rights Agreement.
"Preemptive Offering" means the offer, issuance or sale by the Company
or any Subsidiary of the Company of any Preemptive Securities.
"Preemptive Securities" means, collectively, (i) the Units, (ii)
Membership Interests or other economic interests in the Company, (iii) any
securities containing options or rights to acquire any Units or other economic
interests in the Company, or (iv) any other securities convertible or
exchangeable for any Units or other economic interests in the Company.
"Preferred Units" means, collectively, the Senior Preferred Units and
the Junior Preferred Units.
"Proportionate Amount" means, with respect to a Junior Common Holder,
the product of (i) all Preemptive Securities to be sold or issued by the Company
and (ii) a fraction (x) the
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numerator of which shall be the number of Junior Common Units owned by such
Junior Common Holder, and (y) the denominator of which shall be the aggregate
number of outstanding Junior Common Units.
"Public Sale" means any sale of Units, following an Initial Public
Offering, to the public pursuant to an offering registered under the Securities
Act or to the public effected through a broker, dealer or market maker pursuant
to the provisions of Rule 144 under the Securities Act.
"Qualified Public Offering" means an underwritten public offering of
the Company's common equity securities pursuant to a registration statement
filed under the Securities Act with the Securities and Exchange Commission,
which offering results in net cash proceeds to the Company of at least
$200,000,000.
"Qualified Sellers" means, in connection with an acquisition of assets
or equity securities of any Person by the Company or any Subsidiary of the
Company, such Person or Persons with whom the Company or any Subsidiary of the
Company has contracted to acquire such assets or equity securities; provided,
that any such Person is not an Affiliate of the Company or of any Member or
Representative or of any Subsidiary of the Company, in each case immediately
prior to giving effect to such acquisition.
"Quarterly Estimated Tax Amount" has the meaning set forth in Section
5.3 hereof.
"Recapitalization" means the recapitalization of the Company and all
related transactions pursuant to the terms and conditions of the
Recapitalization Agreement.
"Recapitalization Agreement" means the Recapitalization Agreement,
dated as of April 17, 1998, by and among the Company, ACL, CSX Corporation,
Vectura and NMI, as such may be amended, supplemented or restated from time to
time.
"Reclassified Securities" has the meaning set forth in Section 8.6.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, by and among the Company, the Members,
and certain other Persons signatory thereto, as may be amended, supplemented or
restated from time to time.
"Regulatory Problem" means, with respect to a Member, any set of facts
or circumstances wherein it has been asserted by any Governmental Authority (or
such Member or any of its Affiliates believes in good faith that there is a
substantial risk of such assertion) that such Member is not entitled to hold, or
exercise any significant right, with respect to, the Units held by such Member
because of such Member's regulatory status.
"Representative" means each then current CSX Representative, Vectura
Party Representative, Company Representative, Vectura Representative and
Independent Representative, each as defined in Section 7.2.
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"Sale of the Company" means the sale of the Company, in one transaction
or a group of related transactions, pursuant to which any Independent Third
Party or affiliated group of Independent Third Parties acquires (whether
structured by way of merger, consolidation or sale or transfer of the Company's
or its Subsidiaries' equity or assets or otherwise) (a) all or substantially all
of the equity of the Company or of all or substantially all of the Company's
direct and indirect Subsidiaries or (b) all or substantially all of the
Company's and its Subsidiaries' assets, properties, or business determined on a
consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to the comparable section, if any, of
any such similar Federal statute, and the rules and regulations promulgated
thereunder.
"Senior Common Capital Account" means, as of any time, (i) $3,389,091,
plus (ii) cumulative Net Profits located under Section 6.2(b)(iii), minus (iii)
cumulative Net Losses allocated under Section 6.2(c)(ii), minus (iv) cumulative
distributions made by the Company with respect to the Senior Common Units under
Sections 5.2(a)(iii) and 9.2.
"Senior Common Redemption Value" means, as of any time, the lesser of
(x) the Senior Common Capital Account as of such time, and (y) the aggregate
dollar amount that would be necessary to be distributed to the Senior Common
Unitholders so that (i) the accreted value (determined as of such time by using
a rate of return of 11.02%, compounded annually from the date on which the
related distribution was made) of all distributions made by the Company with
respect to the Senior Common Units under Sections 5.2(a)(iii) and 9.2 as of such
time, equals (ii) the accreted value of $35,889,091 (determined as of such time
by using a rate of return of 11.02%, compounded annually from June 30, 1998),
subject to adjustment pursuant to Sections 2.1(j), 2.4(c), and 10.4 of the
Recapitalization Agreement.
"Senior Common Unit" means a Unit having the rights and obligations
specified with respect to Senior Common Units in this Agreement. The number of
Senior Common Units initially issued and assigned to each Member is listed on
Schedule A attached hereto, subject to adjustment pursuant to this Agreement.
"Senior Debt" means the Senior Unsecured Notes, and Indebtedness
incurred or outstanding pursuant to the Credit Agreement (including any
Indebtedness incurred in connection with one or more successive refinancings
thereof).
"Senior Preferred Redemption Value" means, as of any time, the
aggregate dollar amount that would be necessary to be distributed to the Senior
Preferred Unitholders so that (i) the accreted value (determined as of such time
by using a rate of return of 11.02%, compounded annually from the date on which
the related distribution was made) of all distributions made by the Company with
respect to the Senior Preferred Units under Sections 5.2(a)(i), 5.3(b)(i)(B),
5.4, and 9.2 as of such time, equals (ii) the accreted value of $115,000,000
(determined as of such time by using a rate of return of 11.02%, compounded
annually from June 30, 1998), subject to adjustment pursuant to Section 10.4 of
the Recapitalization Agreement.
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"Senior Preferred Unit" means a Unit having the rights and obligations
specified with respect to Senior Preferred Units in this Agreement. The number
of Senior Preferred Units initially issued and assigned to each Member is listed
on Schedule A attached hereto, subject to adjustment pursuant to this Agreement.
"Senior Unsecured Debt Documents" means the indenture under which the
Senior Unsecured Notes are issued and all other instruments, agreements, and
other documents evidencing or governing the Senior Unsecured Notes.
"Senior Unsecured Notes" means the Senior Notes due 2008 to be issued
by ACL and a special purpose co-obligor of ACL on the date hereof in the
aggregate principal amount of $300,000,000, represented by global notes
designated R-1, R-2, and R-3, each in the principal amount of $100,000,000
issued pursuant to the related indenture dated as of the date hereof.
"Sub Board" has the meaning specified in Section 7.7.
"Subsidiary" of any Person (with respect to such Subsidiary, the
"parent") means any other Person whose (a) securities having ordinary voting
power to elect a majority of its board of directors or managing or general
partners (or other persons having similar functions) or (b) other ownership
interests (including partnership and membership interests) ordinarily
constituting a majority interest in the capital, profits or cash flow of such
Person, are at the time, directly or indirectly, owned or controlled by such
parent, or by one or more other Subsidiaries of such parent, or by such parent
and one or more of its other Subsidiaries.
"Tax Advance" has the meaning set forth in Section 5.3 hereof.
"Tax Amount" has the meaning set forth in Section 5.3 hereof.
"Tax Rate" has the meaning set forth in Section 5.3.
"399 Venture" means 399 Venture Partners, Inc., a Delaware corporation.
"Threshold Transfer" means a Transfer (other than to Permitted
Transferees) by a Unitholder of a number of Junior Common Units comprising,
cumulatively with all other Transfers (other than to Permitted Transferees) by
such Unitholder after the date hereof, 5% or less of the aggregate number of
Junior Common Units held by such Unitholder as of the date hereof.
"Transaction Documents" means, collectively, the Recapitalization
Agreement, the Credit Agreement, this Agreement, the Registration Rights
Agreement, the Senior Unsecured Debt Documents, and all other documents and
agreements executed in connection therewith.
"Transfer" means any sale, transfer, assignment, pledge, or other
disposal of a Unit, and the terms "Transferee," "Transferor," "Transferring,"
and "Transferred" shall have correlative meanings.
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"Transfer Notice" means a written notice delivered by a Unitholder
making a Transfer pursuant to the terms and conditions of Article VIII hereof,
which notice shall specify in reasonable detail the number and class of Units
proposed to be Transferred, the proposed purchase price therefor (which shall be
payable solely in cash), the proposed Transferee, and the other terms and
conditions of the Transfer.
"Transferring Unitholder" means any Unitholder making a Transfer of any
Units pursuant to the provisions of Article VIII.
"Treasury Regulations" means the final or temporary regulations that
have been issued by the U.S. Department of Treasury pursuant to its authority
under the Code, and any successor regulations.
"Unallocated Junior Preferred Yield" means the aggregate Yield on the
Junior Preferred Units from the date of issuance to the date of determination,
reduced by (i) all allocations of Net Profit previously made to the Capital
Accounts of the holders of Junior Preferred Units under Section 6.2(b)(ii) and
increased by (ii) all allocations of Net Loss previously made to the Capital
Accounts of the holders of Junior Preferred Units under Section 6.2(c)(iii).
"Unallocated Senior Common Yield" means the aggregate Yield on the
Senior Common Units from the date of issuance to the date of determination,
reduced by (i) all allocations of Net Profit previously made to the Capital
Accounts of the holders of Senior Common Units under Section 6.2(b)(iii) and
increased by (ii) all allocations of Net Loss previously made to the Capital
Accounts of the holders of Senior Common Units under Section 6.2(c)(ii).
"Unallocated Senior Preferred Yield" means the aggregate Yield on the
Senior Preferred Units from the date of issuance to the date of determination,
reduced by all allocations of Gross Income previously made to the Capital
Accounts of the holders of Senior Preferred Units under Section 6.2(a).
"Unit" means a unit of economic interest embodied in a Membership
Interest, including without limitation, an interest in certain allocations of
Gross Income, Net Profits, Net Losses, and items of income, gain, loss,
deduction, and credit of the Company, and in certain distributions under this
Agreement. Except to the extent otherwise provided herein, each class of Unit
represents the same fractional interest in such Gross Income, Net Profit, Net
Loss and distributions as each other Unit in such class. Units may be issued in
different classes and in whole and fractional numbers. The number of each class
of Units initially assigned to each Unitholder is listed on Schedule A attached
hereto, subject to adjustment pursuant to this Agreement.
"Unitholder" means any Member in its capacity as owner of one or more
Units, as reflected on the Company's books and records.
"Vectura" means Vectura Group, Inc., a Delaware corporation.
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"Vectura Junior Common Units" means the Junior Common Units issued to
and held by any Vectura Member as of any date of determination.
"Vectura Members" means, initially, any Vectura Party, and shall
include any direct or indirect stockholder of a Vectura Party which becomes a
Unitholder and any Permitted Transferee (other than a Management Unitholder) of
a Vectura Party, in any case pursuant to a Transfer made in accordance with the
terms and conditions hereof.
"Vectura Parties" means, collectively, Vectura and NMI.
"Vectura Units" means the Junior Preferred Units, Senior Common Units
and Junior Common Units issued to Vectura and NMI as of the date of this
Agreement, regardless of the ultimate holder of such Units.
"Yield" for any period means,
(a) in the case of the Senior Preferred Units, (i) the amount
of cash and the Fair Market Value (as of the date of distribution) of any
property distributed with respect to the Senior Preferred Units under Sections
5.2(a)(i), 5.3(b)(i)(B), 5.4 and 9.2 during such period, (ii) increased by any
net increase in the Senior Preferred Redemption Value during such period, and
(iii) reduced (but not below zero) by any net decrease in the Senior Preferred
Redemption Value during such period;
(b) in the case of the Junior Preferred Units (i) the amount
of cash and the Fair Market Value (as of the date of distribution) of any
property distributed with respect to the Junior Preferred Units under Sections
5.2(a)(ii), 5.5 and 9.2 during such period; (ii) increased by any net increase
in the Junior Preferred Redemption Value during such period, and (iii) reduced
(but not below zero) by any net decrease in the Junior Preferred Redemption
Value during such period; and
(c) in the case of the Senior Common Units, (i) the amount of
cash and the Fair Market Value (as of the date of distribution) of any property
distributed with respect to the Senior Common Units under Sections 5.2(a)(iii)
and 9.2 during such period, (ii) increased by any net increase in the Senior
Common Redemption Value (determined without regard to clause (x) in the
definition thereof) during such period, and (iii) reduced (but not below zero)
by any net decrease in the Senior Common Redemption Value (determined without
regard to clause (x) in the definition thereof) during such period.
1.2 Terms Generally. Throughout this Agreement:
The definitions in Article I shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." Each reference to a Person shall
include the successors thereto by merger, reorganization, or other similar
transaction.
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ARTICLE II
ORGANIZATION; PURPOSE AND POWERS
2.1 Formation. The Company was formed as a Delaware limited liability
company under the Act by the filing of the Certificate and the execution of the
Prior Agreement. The rights and liabilities of the Members shall be determined
pursuant to the Act and this Agreement. All rights and obligations of the
initial member under the Prior Agreement are hereby terminated and restated in
their entirety in accordance with, and upon the effectiveness of, this
Agreement. To the extent that the rights or obligations of any Member are
different by reason of any provision of this Agreement than they would be in the
absence of such provisions, this Agreement shall, to the extent permitted by the
Act, control.
2.2 Certificate. The Certificate has been prepared, executed and
filed in the Office of the Secretary of State for the State of Delaware.
2.3 Name. The name of the Company shall be "American Commercial
Lines Holdings LLC," and the Company may conduct business under that name or any
other name hereafter approved by the Board.
2.4 Term. The term of the Company commenced as of the date of the
filing of the Certificate. The Members shall continue the existence of the
Company until dissolution and termination of the Company in accordance with the
provisions of Article IX hereof.
2.5 Office and Agent. The principal office of the Company shall be
located at 1701 East Market Street, Jeffersonville, IN 47130 or such other
location as the Board may determine. The registered agent and office in the
State of Delaware shall be Corporation Service Company, 1013 Centre Road,
Wilmington, Delaware 19805 or as hereafter determined by the Board in accordance
with the Act.
2.6 Qualification in Other Jurisdictions. The Officers shall cause
the Company to be qualified or registered under foreign entity or assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company owns property or transacts business to the extent such qualification or
registration is necessary or advisable in order to protect the limited liability
of the Members or to permit the Company lawfully to own property or transact
business. In connection with the foregoing, any Officer, as an authorized person
within the meaning of the Act, shall execute, deliver and file any certificates
(and any amendments and/or restatements thereof) necessary for the Company to
qualify to do business in a jurisdiction in which the Company may wish to
conduct business.
2.7 Purpose and Powers.
(a) The nature or purpose of the business to be conducted
or promoted by the Company is to engage in any lawful act or activity for which
a limited liability company may be organized under the Act. The Company may
engage in any and all activities necessary, desirable or incidental to the
accomplishment of the foregoing. Notwithstanding anything herein to the
contrary, nothing set forth herein shall be construed as authorizing the Company
to possess any
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purpose or power, or to do any act or thing, forbidden by law to a limited
liability company organized under the laws of the State of Delaware.
(b) Subject to the provisions of this Agreement, the
Company shall have the power and authority to take any and all actions
necessary, appropriate, proper, advisable, convenient or incidental to, or for
the furtherance of, the purposes set forth in Section 2.7(a).
(c) Subject to the provisions of this Agreement, (i) the
Company may enter into and perform any and all documents, agreements and
instruments contemplated thereby, all without any further act, vote or approval
of any Member, (ii) the Board may authorize any Person (including, without
limitation, any other Member or Officer) to enter into and perform any document
on behalf of the Company and (iii) the Company may merge with, or consolidate
into, another Delaware limited liability company or other business entity (as
defined in the Act).
ARTICLE III
MEMBERS
3.1 Members. The Members of the Company as of the date hereof are those
Persons whose names appear on the signature pages of this Agreement. Each such
Person shall be deemed to have been admitted as a Member of the Company upon the
date that this Agreement becomes effective without the need for any further
action or consent by any Person, whereupon each such Person shall be issued its
Membership Interest (including, without limitation, the respective Units that
correspond to and are part of such Membership Interest as indicated on Exhibit A
attached hereto).
3.2 Admission of New Members.
(a) Additional Interests. Subject to the provisions of
Articles VII and VIII and the other provisions of this Agreement, the Board
shall have the right to cause the Company to issue or sell to any Person
(including Members and Affiliates of Members) any of the following (which for
purposes of this Agreement shall be referred to as "Additional Interests"): (i)
additional Membership Interests, Units or other economic interests in the
Company (including new classes or series thereof having different rights); (ii)
obligations, evidences of Indebtedness or other securities or economic interests
convertible into or exchangeable for Membership Interests, Units or other
interests in the Company; and (iii) warrants, options, or other rights to
purchase or otherwise acquire Membership Interests, Units, or other economic
interests in the Company. Subject to the provisions of this Agreement, the Board
shall determine the terms and conditions governing the issuance of such
Additional Interests, including (x) the number and designation of such
Additional Interests, (y) the preference (with respect to distributions, in
liquidation or otherwise) over any other Membership Interests, and (z) any
required contributions, and the form thereof, in connection therewith.
(b) Additional Members and Interests. In order for a
Person to be admitted as a Member of the Company with respect to an Additional
Interest or otherwise, such Person shall have delivered to the Company a written
undertaking in the form of Exhibit B attached hereto to
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<PAGE> 24
be bound by the terms and conditions of this Agreement and shall have delivered
such documents and instruments as the Board determines to be necessary or
appropriate in connection with the issuance of such Additional Interest to such
Person or to effect such Person's admission as a Member; thereafter, the
Secretary of the Company shall amend Schedule A without the further vote, act or
consent of any other Person to reflect such new Person as a Member and shall
provide a copy of such amended Schedule A to each Member. Upon the amendment of
Schedule A, such Person shall be admitted as a Member and deemed listed as such
on the books and records of the Company and thereupon shall be issued his or its
Membership Interest, including any Units that correspond to and are part of such
Membership Interest. If an Additional Interest is issued to an existing Member
in accordance with the terms hereof, the Secretary of the Company shall amend
Schedule A without the further vote, act or consent of any other Person to
reflect the issuance of such Additional Interest, shall provide a copy of such
amended Schedule A to each Member, and, upon the amendment of such Schedule A,
such Member shall be issued its Additional Interest.
3.3 Withdrawals or Resignations. Except as otherwise provided by
this Agreement, no Member may withdraw, retire, or resign from the Company.
3.4 Voting Rights. Except as specifically provided herein or
otherwise required by applicable law, the holders of the Class A Common Units
shall be entitled to one vote per Class A Common Unit held by such holders on
all matters to be voted on by the Members. Except as specifically provided
herein or otherwise required by applicable law, the holders of all Units (other
than the holders of the Class A Common Units) shall have no right to vote on any
matters to be voted on by the Members of the Company; provided, that the holders
of Class B Common Units shall have the right to vote together with the holders
of Class A Common Units on any merger or consolidation of the Company with or
into another entity or entities, or any recapitalization or reorganization on
which the holders of the Class A Common Units would otherwise have the right to
vote.
3.5 Conversion of Class B Common Units.
(a) Limited Right to Convert. The holders of Class B
Common Units (the "Class B Members") representing a majority of the outstanding
Class B Common Units held by all Class B Members shall be entitled at any time
to convert any or all of the outstanding Class B Common Units into an equal
number of Class A Common Units. Any such conversion of Class B Common Units into
Class A Common Units will be effected among all Class B Holders on a pro rata
basis according to the number of Class B Common Units held by each such holder
at the time of any such conversion (provided that if Vectura or NMI holds
directly the Vectura Junior Common Units at the time of such conversion, such
conversion may only be made if such conversion does not cause the stockholders
of Vectura a Regulatory Problem, assuming that (i) such stockholders of Vectura
hold, beneficially and of record, such Vectura Junior Common Units directly and
(ii) all such stockholders are subject to the same rules and regulations
applicable to 399 Venture).
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(b) Notice. Each conversion of Class B Common Units shall
be effected by written notice by the Class B Members representing a majority of
the outstanding Class B Units held by all Class B Members to the Company at its
principal office stating that such Class B Members desire to convert the Class B
Common Units into Class A Common Units. Each conversion of Class B Common Units
shall be deemed to have been effected as of the close of business on the date on
which such notice has been received by the Company, and at such time such Class
B Common Units shall be deemed to have been canceled and converted into Class A
Common Units, and at such time the Class A Common Units, issuable upon such
conversion shall be deemed to be issued. At such time, the Company shall
promptly provide written notice to all Common Members of such conversion.
(c) Taxes. The conversion of Class B Common Units into
Class A Common Units will be made without charge to the Class B Holders of any
stamp tax in respect thereof, which stamp tax shall be borne by the Company.
(d) No Charges or Violations. All Class A Common Units
issuable upon any conversion of Class B Common Units shall, when issued, be duly
and validly issued, fully paid and non-assessable. The Company shall take all
such actions as may be necessary to assure that all such Class A Common Units
may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
Class A Common Units may be listed (except for official notice of issuance which
shall be immediately transmitted by the Company upon issuance);
(e) Company Books. The Company shall not close its books
against the Transfer of Class B Common Units or Class A Common Units in any
manner that would interfere with the timely conversion of Class B Common Units.
The Company shall assist and cooperate in good faith with any Class B Holders
required to make any governmental filings or obtain any governmental approval
prior to or in connection with any conversion of Class B Common Units hereunder
(including, without limitation, making any filings required to be made by the
Company).
(f) Subdivision. If the Company in any manner subdivides
or combines the outstanding units of one class of Junior Common Units, the
outstanding units of the other class of Junior Common Units shall be
proportionately subdivided or combined in a similar manner.
3.6 Conversion of Senior Preferred Units.
(a) Conversion Events. Contemporaneously with or
following any Initial Public Offering or any other conversion of the Company
into a C Corporation, the Company may, at the option of the Board, cause all
(but not less than all) outstanding Senior Preferred Units (or Reclassified
Securities with respect thereto) to be converted into current-pay subordinated
promissory notes (the "Exchange Notes") with an initial aggregate principal
amount equal to the Senior Preferred Redemption Value outstanding at the time of
such conversion, which shall accrue interest at a rate of 11.02%, compounded
annually, and have terms that are customary for subordinated notes and otherwise
equivalent (including as to covenants and priority of distribution over the
Junior Securities and other equity securities of the
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Company) to the Senior Preferred Units and otherwise in form reasonably
satisfactory to the holders of such Senior Preferred Units (or Reclassified
Securities).
(b) Notice. Each conversion of Senior Preferred Units
shall be effected by written notice by the Company to the holders of the Senior
Preferred Units stating that the Company desires to convert the Senior Preferred
Units to Exchange Notes. Each conversion of Senior Preferred Units shall be
deemed to have been effected as of the close of business on the date on which
such notice has been received by the holders of the Senior Preferred Units, and
at such time such Senior Preferred Units shall be deemed to have been canceled
and converted into Exchange Notes, and at such time the Exchange Notes issuable
upon such conversion shall be deemed to be issued.
(c) Taxes. The conversion of Senior Preferred Units into
Exchange Notes will be made without charge to the Senior Preferred Units of any
stamp tax in respect thereof, which stamp tax shall be borne by the Company.
(d) No Charges or Violations. All Exchange Notes issuable
upon any conversion of Senior Preferred Units shall, when issued, be duly and
validly issued, fully paid and non-assessable. The Company shall take all such
actions as may be necessary to assure that all such Exchange Notes may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which Exchange Notes may
be listed (except for official notice of issuance which shall be immediately
transmitted by the Company upon issuance).
3.7 Representations and Warranties of Members. In connection with
the acquisition by the Members of Units pursuant to the terms and conditions of
this Agreement, each Member represents and warrants to the Company that:
(a) The Units will be acquired for the Member's own
account and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities laws, and
the Units will not be disposed of in contravention of the Securities Act or any
applicable state securities laws;
(b) No commission, fee or other remuneration is to be
paid or given directly or indirectly, to any Person for soliciting the Member to
acquire the Units;
(c) The Member is sophisticated in financial matters and
is able to evaluate the risks and benefits of making the capital contribution
contemplated hereunder with respect to the Units and has determined that such
investment is suitable for the Member, based upon the Member's financial
situation and needs, as well as the Member's other securities holdings;
(d) The Member is not subject to any state's
administrative enforcement order or judgment which prohibits, denies or revokes
the use of any exemption from registration in connection with the offer,
purchase or sale of securities;
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(e) The Member is able to bear the economic risk of its
investment in the Units for an indefinite period of time and the Member
understands that the Units have not been registered under the Securities Act and
cannot be sold unless subsequently registered under the Securities Act or unless
an exemption therefrom is available;
(f) The Member has had an opportunity to ask questions
and receive answers concerning the terms and conditions of its investment in the
Units and has had full access to such other information concerning the Company
as the Member has requested; and
(g) This Agreement constitutes the legal, valid and
binding obligation of the Member, enforceable in accordance with its terms
(subject to principles of equity, the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium, and other similar laws), and the
execution, delivery and performance of this Agreement by the Member does not and
will not, in any material respect, conflict with, violate or cause a breach of
any Applicable Law, material agreement, contract or instrument to which the
Member is a party or any judgment, order or decree to which the Member is
subject.
3.8 Successors and Substitute Members. Upon the Bankruptcy,
termination, liquidation or dissolution of a Member which is a partnership,
trust, corporation, limited liability company or other entity or the Bankruptcy,
death or Incapacity of a Member who is an individual, the estate or successor in
interest of such Member shall thereupon succeed to the rights of such Member as
a Unitholder only to receive allocations and distributions hereunder and may
become a substitute Member only upon the terms and conditions set forth in
Section 3.2(b) hereof.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. Upon consummation of the transactions
contemplated by the Recapitalization Agreement, (i) the CSX Member shall be
deemed to have made to the Company (and the Company shall be deemed to have
received) a Capital Contribution in the amount of $851,352,000, (ii) Vectura
shall be deemed to have made to the Company (and the Company shall be deemed to
have received) a Capital Contribution in the amount of $60,000,000, (iii) NMI
shall be deemed to have made to the Company (and the Company shall be deemed to
have received) a Capital Contribution in the amount of $3,895,000, (iv) the
Management Unitholders shall make a cash Capital Contribution in the amount of
$17,000 in the aggregate, and (v) the Investor Unitholders shall make a cash
Capital Contribution in the amount of $30,000 in the aggregate. Immediately
following such Capital Contributions, the CSX Member shall receive a cash
distribution from the Company in the amount of $696,352,000, of which
$200,000,000 shall represent proceeds of the Senior Unsecured Notes,
$435,000,000 shall represent proceeds of the borrowings incurred as of the date
hereof pursuant to the Credit Agreement and $61,352,000 shall reimburse the CSX
Member for a portion of its capital expenditures incurred during the two-year
period immediately prior to the date hereof with respect to property contributed
(or deemed to be contributed) to the Company as of the date hereof. In exchange
for their respective Capital Contributions, the CSX Member (in addition to
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receiving the cash distribution described in the preceding sentence), Vectura,
NMI, the Management Unitholders, and the Investor Unitholders shall receive and
shall be deemed to own the number of Senior Preferred Units, Junior Preferred
Units, Senior Common Units and Junior Common Units set forth opposite such
Member's name on Schedule A. The Company may in its discretion issue
certificates to the Members representing the Membership Interest held by each
Member. The initial Capital Account of each Member described above shall equal
the amount of such Member's initial aggregate Capital Contributions (reduced, in
the case of the CSX Member by the cash distribution described above), as shown
on Schedule A. Except for the Capital Contributions of the Members required to
be made pursuant to this Section 4.1, the Members shall not be required to make
any additional Capital Contributions. The Capital Contributions described in
this Section 4.1 and shown on Schedule A shall be adjusted to the extent
required by Sections 2.1(j) and 2.4(c) of the Recapitalization Agreement.
ARTICLE V
DISTRIBUTIONS
5.1 In General. Subject to Section 9.2, any distributions of cash or other
assets by the Company to Unitholders shall be made in accordance with this
Article V. Except to the extent otherwise provided herein, any distributions
required to be made pro rata to a class of Unitholders shall be made based on
their proportionate ownership of the outstanding Units within the class.
Notwithstanding any other provision hereof, the Company shall cause its
Subsidiaries to distribute to the Company, to the full extent possible within
the limits imposed by Applicable Law, the Credit Agreement and Senior Unsecured
Debt Documents, the cash or cash equivalents necessary for the Company to make
the distributions required hereunder.
5.2 Discretionary Distributions.
(a) Subject to Sections 5.2(b), 5.3, 5.4, 5.5 and 9.2,
available cash shall be distributed, at such times and in such amounts as the
Board determines in its discretion, in the following order and priority;
(i) first, pro rata to the Senior Preferred
Unitholders to the extent of the Senior Preferred Redemption Value;
(ii) second, pro rata to the Junior Preferred
Unitholders to the extent of the Junior Preferred Redemption Value;
(iii) third, pro rata to the Senior Common
Unitholders to the extent of the Senior Common Redemption Value; and
(iv) fourth, pro rata to the holders of Junior
Common Units.
(b) Notwithstanding the foregoing, the Company will not,
without the consent of CSX, make payments or distributions on, redeem or
purchase the Senior Preferred Units under Section 5.2(a)(i) to the extent that,
immediately following such distributions, the aggregate
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Senior Preferred Redemption Value would be less than $100 million; provided,
that (i) such consent will not be required (A) for distributions made on the
Senior Preferred Units in connection with, or after, an Initial Public Offering,
a Sale of the Company that results in taxation of the holders of Senior
Preferred Units for Federal income tax purposes, or any transaction or
transactions causing the Company not to be treated as a partnership for federal
income tax purposes or (B) after the CSX Members cease to hold any Senior
Preferred Units, and (ii) if CSX does not so consent, (A) the Company may
distribute under Section 5.2(a) (applied without regard to clause (i) thereof)
any amounts as to which a required consent was not given and which, but for this
sentence, would otherwise be distributable to the Senior Preferred Unitholders
under Section 5.2(a)(i), and (B) upon the request of the holders of a majority
of the Vectura Junior Common Units, the Vectura Members and the CSX Members will
cooperate in good faith to create a mutually satisfactory (in their respective
sole discretions) mechanism comparable to a defeasance of the Senior Preferred
Units.
5.3 Tax Advances.
(a) General. At least ten days before each date
prescribed by the Code for a calendar year corporation to pay quarterly
installments of estimated tax, the Company shall distribute to each Unitholder
cash in proportion to and to the extent of such Unitholder's Quarterly Estimated
Tax Amount for the applicable calendar quarter. If, at any time after the final
Quarterly Estimated Tax Amount has been distributed pursuant to the previous
sentence with respect to any Fiscal Year, the aggregate Tax Advances to any
Unitholder with respect to such Fiscal Year are less than such Unitholder's Tax
Amount for such Fiscal Year (a "Shortfall Amount"), the Company shall distribute
cash in proportion to and to the extent of each Unitholder's Shortfall Amount.
The Company shall use reasonable efforts to distribute Shortfall Amounts with
respect to a Fiscal Year before the 75th day of the next succeeding Fiscal Year.
If the aggregate Tax Advances to any Unitholder with respect to a Fiscal Year
exceed such Unitholder's Tax Amount for such Fiscal Year, such excess shall be
treated as an advance against and shall be deducted from the next succeeding
distribution (whether pursuant to this Section 5.3 or otherwise) made to such
Unitholder (and, if necessary, from any succeeding distributions thereafter)
until such excess has been fully deducted from such distribution(s). Any such
excess applied as an advance against one or more succeeding distributions
pursuant to the preceding sentence shall be treated for purposes of this
Agreement as having been distributed under those provisions of this Agreement
under which distributions would have been made but for the preceding sentence.
Rights to distributions under this Section 5.3 shall rank senior to any rights
to distributions under Sections 5.2, 5.4 (other than Section 5.4(c) which shall
rank on a parity with distributions under Section 5.3) and 5.5.
(b) Built-in Gain.
(i) BIG Regime. Subject to clauses (b)(ii) and
(iii) below, if CSX Unitholders recognize Built-in Gain (other than Built-in
Gain recognized as a result of a CSX Sale-Leaseback) in any Fiscal Year, the
Board shall elect (in its sole discretion) to do one of the following
(collectively, the "BIG Regime"):
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(A) reduce by the amount of the
resulting BIG Tax the unused Aggregate Amount for subsequent
Fiscal Years (or, if applicable, the current Fiscal Year) in
inverse chronological order (i.e., by applying the first
$3,000,000 of BIG Tax to reduce to zero the Aggregate Amount
for the period January 1 through June 30, 2007, the next
$6,000,000 of BIG Tax to reduce to zero the Aggregate Amount
for Fiscal Year 2006, etc.);
(B) distribute pro rata to the Senior
Preferred Unitholders, on or before June 30, 2006, cash in an
amount equal to the lesser of (x) the resulting BIG Tax and
(y) the product of (I) the C Corporation Tax Rate and (II) the
aggregate Yield on the Senior Preferred Units for the period
July 1, 2005 through June 30, 2006; provided that if such BIG
Tax exceeds the amount described in the preceding clause (y),
the Company will make additional annual distributions to the
Senior Preferred Unitholders for the immediately preceding
year (or years) in inverse chronological order, in each case
limited to an annual amount equal to the product of the C
Corporation Tax Rate for the year of payment and the aggregate
Yield on the Senior Preferred Units for the applicable
12-month period, until such excess has been applied; provided
further, that such election shall not be available to the
extent that the BIG Tax exceeds the product of the C
Corporation Tax Rate and the aggregate Yield payable (with
respect to any period) on the Senior Preferred Units from the
date of the election through and including June 30, 2006;
(C) distribute to each CSX Unitholder,
pursuant to Section 5.3(a), this clause (b)(i)(C), and clause
(ii)(B) of the definition of "Tax Amount" (without
duplication), a Tax Advance equal to 50% of the resulting BIG
Tax to such Unitholder (the "CSX 50% BIG Tax Amount"); or
(D) elect any combination of the
foregoing.
(ii) Monetary Default. If (A) Built-in Gain is
recognized during any Fiscal Year when the Company is in monetary default on any
Senior Debt either currently or on a pro forma GAAP basis (absent the asset sale
generating the Built-in Gain) with respect to a monetary payment due within 120
days following the transaction giving rise to the Built-in Gain, and (B) no
distributions (other than Permitted Payments) are made in such Fiscal Year with
respect to any Units other than CSX Units, then (x) the BIG Regime shall not
apply with respect to such Built-in Gain unless and until the Company is no
longer in monetary default, and (y) if and when the Company is no longer in
monetary default, the BIG Regime shall then apply and, to the extent at such
time an election under neither clause (i)(A) nor (i)(B) above may be made with
respect to the BIG Tax on such Built-in Gain, any remaining BIG Tax shall be
paid in part or in full pursuant to clause (C) above when and to the extent
amounts may be distributed pursuant to the terms of the Senior Debt then in
effect, provided further that any such payment shall not be treated as a Tax
Advance until the time it is paid.
(iii) Exempt Transactions. Except to the extent
provided in this clause (iii), the preceding clause (i) shall not apply to any
Built-in Gain incurred as a result of any
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Exempt Transaction. In the case of a transaction described in clause (c) of the
definition of Exempt Transaction in which the consideration received in respect
of such transaction by the Company is cash, marketable securities, a note or the
transaction is the distribution of any asset in kind, the BIG Regime shall apply
only with respect to that portion of the BIG Tax triggered by such transaction
equal to such BIG Tax multiplied by a fraction, (A) the numerator of which is
the sum (without duplication) of (i) the amount of cash received, (ii) the value
of the marketable securities received, (iii) in the case of a note (other than a
marketable security), the amount of cash payments of principal made from time to
time on the note (which payments shall not be taken into account for purposes of
this clause (iii) until the time such payments are made), and (iv) in the case
of any other asset distributed in kind, the Fair Market Value of the asset at
the time of distribution, and (B) the denominator of which is the amount of
total consideration received in the underlying disposition. If the Company
disposes of any property (other than cash, marketable securities or a note)
received in a transaction described in clause (c) of the definition of Exempt
Transaction in a transaction in which the Company receives cash, marketable
securities or a note, the later transaction shall trigger the BIG Regime as if
the cash, marketable securities or note were received in the original
transaction.
(iv) In all events, CSX Unreimbursed Taxes shall
not exceed $85 million and the Company shall make additional Tax Advances (in
the year that the gain that would otherwise cause the CSX Unreimbursed Taxes to
be in excess of $85 million is recognized) to the CSX Unitholders as necessary
(but not in duplication of amounts distributed with respect to clause (ii)(D) of
the definition of Tax Amount) to satisfy such limitation. Notwithstanding any
other provision hereunder, in the event of any CSX Sale-Leaseback, the Company
shall make additional Tax Advances (in the year that the Built-in Gain from such
CSX Sale-Leaseback is recognized) to the CSX Unitholders (but not in duplication
of amounts distributed with respect to clause (ii)(C) of the definition of Tax
Amount) equal to the product of the C Corporation Tax Rate and the amount of any
taxable Built-in Gain allocated to the CSX Unitholders with respect to such CSX
Sale-Leaseback.
(c) Certain Definitions. For purposes of this Agreement,
the following terms shall have the meanings set forth below:
"Adjusted Taxable Income" of a Unitholder for a Fiscal Year (or portion
thereof) with respect to Units held by such Unitholder means the federal taxable
income allocated by the Company to the Unitholder with respect to such Units (as
adjusted by any final determination in connection with any tax audit or other
proceeding) for such Fiscal Year (or portion thereof); provided, that such
taxable income shall be computed (i) in the case of any holder of Senior
Preferred Units, by excluding allocations of Gross Income under Section 6.2(a)
(and corresponding taxable income under Section 6.3) with respect to the Senior
Preferred Units, (ii) in the case of any CSX Unitholder, by excluding Built-in
Gain, (iii) as if all excess taxable losses and excess taxable credits
(determined, in the case of Senior Preferred Units, without regard to any
allocations of Gross Income under Section 6.2(a) (or corresponding taxable
income under Section 6.3)) allocated with respect to such Units were carried
forward (taking into account the character of any such loss carryforward as
capital or ordinary), and (iv) taking into account any special basis adjustment
with respect to such Unitholder resulting from an election by the
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Company under Code Section 754; provided further, that in the case of any
Vectura Units that are Transferred to the direct or indirect shareholders of
Vectura pursuant to Article VIII for purposes of determining the Adjusted
Taxable Income with respect to such Vectura Units for periods following the
Transfer, the preceding clause (iii) shall not apply to any excess losses and
excess credits allocable with respect to such Units for periods preceding the
Transfer ending on or before December 31, 1998.
"Aggregate Amount" means, for any period specified in the table below
(the "current period"), (i) the amount shown in the table opposite the current
period, (ii) increased by the amount by which the Aggregate Amount for the
immediately preceding period (as adjusted under this clause (ii) and the
following clause (iii)) exceeds the aggregate amount described in clause
(ii)(A)(x) of the definition of "Tax Amount" for such immediately preceding
period for all CSX Units, and (iii) reduced as provided under Section
5.3(b)(i)(A); provided, that the Aggregate Amount shall in all events be zero
for any period beginning on or after July 1, 2007.
<TABLE>
<CAPTION>
Applicable Period Amount
----------------- ------
<S> <C>
July 1 - December 31, 1998 $2,000,000
Fiscal Year 1999 4,000,000
Fiscal Year 2000 4,000,000
Fiscal Year 2001 4,000,000
Fiscal Year 2002 4,000,000
Fiscal Year 2003 5,000,000
Fiscal Year 2004 6,000,000
Fiscal Year 2005 6,000,000
Fiscal Year 2006 6,000,000
January 1 - June 30, 2007 3,000,000
-----------
TOTAL $44,000,000
</TABLE>
"BIG Tax" of a CSX Unitholder means the product of the C Corporation
Tax Rate and the Built-in Gain giving rise to such tax.
"Built-in Gain" for any period means the aggregate amount of taxable
gain recognized by all CSX Unitholders to the extent allocated to them pursuant
to Code Section 704(c) (as distinguished from "reverse section 704(c)
allocations" within the meaning of the Treasury Regulations) during such period
(taking into account the effect of any special basis adjustments resulting from
an election by the Company under Code Section 754), resulting from (i) any sale,
disposition or other transfer of CSX Contributed Assets, (ii) the conversion of
the Company to an entity taxed as a C Corporation, or (iii) a refinancing,
paydown, or payoff of debt; provided, that for purposes of this definition, the
aggregate amount of such taxable gain shall not exceed (x) $851,352,000, (y)
reduced by the aggregate tax basis of the CSX Contributed Assets as of the date
hereof (estimated by CSX to be approximately $394 million as of December 31,
1997), (z) increased by the amount of liabilities of the CSX Members assumed by
the Company as of the date hereof in connection with the contribution of the CSX
Contributed Assets (estimated by CSX to be approximately $88 million as of
December 31, 1997).
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"C Corporation Tax Rate" means the Tax Rate applicable to a Unitholder
that is a C Corporation.
"CSX Contributed Assets" means the assets contributed (or deemed to be
contributed) by CSX to the Company as of the date hereof.
"CSX 50% BIG Tax Amount" has the meaning specified in Section
5.3(b)(i)(C).
"CSX Residual Tax Amount" means the excess, if any, of (i) the
aggregate CSX Unreimbursed Taxes for all CSX Unitholders over (ii) $85,000,000.
"CSX Sale-Leaseback" means a sale-leaseback or other structured finance
transaction by the Company with respect to any CSX Contributed Assets in which
the Company or a Subsidiary of the Company retains use of such assets, but only
to the extent that such transaction is treated as a taxable disposition of such
assets for purposes of the Code.
"CSX Sale-Leaseback Tax Amount" for any CSX Unitholder for a Fiscal
Year means the product of (i) the C Corporation Tax Rate for such Fiscal Year
and (ii) the amount of Built-in Gain recognized by such Unitholder for such
Fiscal Year as a result of a CSX Sale-Leaseback.
"CSX Total Tax Advances" means the aggregate Tax Advances made with
respect to all CSX Units over the life of the Company.
"CSX Total Taxes" means the product of (x) the aggregate Adjusted
Taxable Income allocated to all CSX Units over the life of the Company and (y)
the C Corporation Tax Rate applicable to the period in respect of which the
allocation of Adjusted Taxable Income was made; provided, that for purposes of
this definition, "Adjusted Taxable Income" with respect to such Units shall be
computed by making the adjustments described in clauses (i), (iii), and (iv) of
the definition thereof, but by excluding pursuant to clause (ii) of the
definition thereof only Built-in Gain recognized as a result of any Exempt
Transaction (rather than all Built-in Gain).
"CSX Unreimbursed Taxes" means the excess, if any, of CSX Total Taxes
over CSX Total Tax Advances.
"Estimated Tax Amount" of a Unitholder for a Fiscal Year means the
Unitholder's Tax Amount for such Fiscal Year as estimated in good faith from
time to time by the Board. In making such estimate, the Board shall take into
account amounts shown on Internal Revenue Service Form 1065 filed by the Company
and similar state or local forms filed by the Company for the preceding taxable
year and such other adjustments as in the reasonable business judgment of the
Board are necessary or appropriate to reflect the estimated operations of the
Company for the Fiscal Year.
"Exempt Transaction" means any of the following transactions:
(a) an Initial Public Offering consistent with the terms
hereof;
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(b) subject to Section 7.14(b), taxation of the Company as a C
corporation except by reason of (i) a breach by the Vectura Members of the
covenant described in Section 7.12(b)(ii) or (ii) treatment of the Company as a
"publicly traded partnership" for purposes of Section 7704 of the Code as a
result of transfers of interests in the Company by the Vectura Members;
(c) a direct or indirect sale, disposition or other transfer
(other than a CSX Sale-Leaseback, an initial public offering that is not an
Initial Public Offering consistent with the terms hereof, and a transaction
giving rise to taxation of the Company as a C corporation by reason of clauses
(b)(i) or (b)(ii) above) of any assets of the Company other than (i) for cash,
(ii) for marketable securities, (iii) for a note (other than a marketable
security) to the extent provided in Section 5.3(b)(iii), or (iv) any
distribution of any CSX Contributed Asset in kind to any of the Vectura Members;
and
(d) a refinancing, paydown or payoff of debt (unless proceeds
of such refinancing are distributed, loaned or otherwise made available to the
Vectura Members (other than as Permitted Payments)) other than (i) a CSX
Sale-Leaseback and (ii) a substitution of debt that is recourse (within the
meaning of Code Section 752) for debt that is nonrecourse (within the meaning of
Code Section 752) to the extent such substitution is within the control of the
Vectura Parties or 399 Venture.
"Permitted Payment" means (i) any Tax Advance, (ii) any payment to
redeem Units held by a Management Unitholder upon such Unitholder's ceasing to
be employed full-time by the Company or any of its Subsidiaries for any reason,
(iii) any distribution with respect to the Senior Preferred Units, or (iv) any
other distribution of a nominal amount.
"Quarterly Estimated Tax Amount" of a Unitholder for any calendar
quarter of a Fiscal Year means the excess, if any of (i) the product of (A) 1/4
in the case of the first calendar quarter of the Fiscal Year, 1/2 in the case of
the second calendar quarter of the Fiscal Year, 3/4 in the case of the third
calendar quarter of the Fiscal Year, and 1 in the case of the fourth calendar
quarter of the Fiscal Year and (B) the Unitholder's Estimated Tax Amount for
such Fiscal Year over (ii) all Tax Advances previously made to such Unitholder
with respect to such Fiscal Year.
"Tax Advance" means any distribution pursuant to Section 5.3(a).
"Tax Amount" of a Unitholder for a Fiscal Year means:
(i) with respect to a holder of Units other than CSX Units,
the product of (A) the Unitholder's Tax Rate for such Fiscal Year and (B) the
Unitholder's Adjusted Taxable Income for such Fiscal Year with respect to such
Units; and
(ii) with respect to a holder of CSX Units, the sum (without
duplication) of the following amounts:
(A) the excess, if any, of (x) the product of (I) the
C Corporation Tax Rate for such Fiscal Year and (II) the Unitholder's Adjusted
Taxable Income for such Fiscal
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Year with respect to such Units, over (y) the Unitholder's pro rata share of the
Aggregate Amount for such Fiscal Year (such pro rata share to be determined by
dividing the amount of Tax Advances that would be payable to such Unitholder for
such Fiscal Year by the aggregate Tax Advances that would be payable to all
holders of CSX Units for such Fiscal Year, determining such Tax Advances in each
case without regard to this clause (y)); provided, that for purposes of
computing the Quarterly Estimated Tax Amounts for a CSX Unitholder for (1)
Fiscal Year 2003, the Aggregate Amount of $5,000,000 reflected in the chart in
the definition of "Aggregate Amount" for such year shall be allocated $2,000,000
pro rata to the first six months and $3,000,000 pro rata to the last six months
and (2) Fiscal Year 2007, the entire Aggregate Amount for the period January 1
through June 30, 2007 shall be allocated pro rata over the first six months of
such Fiscal Year rather than applied pro rata over the entire year;
(B) the Unitholder's CSX 50% BIG Tax Amount with
respect to any Built-in Gain recognized by the Unitholder in such Fiscal Year to
the extent the Board elected to apply Section 5.3(b)(i)(C) with respect to such
Built-in Gain;
(C) the Unitholder's CSX Sale-Leaseback Tax Amount;
and
(D) the Unitholder's pro rata share (based, unless
otherwise agreed by the CSX Members and the Vectura Members, on the ratio of (x)
the "CSX Unreimbursed Tax Amount" determined for purposes of this clause (x) by
taking into account CSX Total Taxes and CSX Total Tax Advances only to the
extent attributable to the CSX Units held by such Unitholder to (y) the
aggregate CSX Unreimbursed Tax Amount) of the CSX Residual Tax Amount; provided,
that the sum of the pro rata shares of all holders of CSX Units of the CSX
Residual Tax Amount equals 100% of the CSX Residual Tax Amount.
To the extent the amount distributed to a holder of CSX Units pursuant to
Section 5.3(a) with respect to a Fiscal Year is less than the amount specified
under the preceding clause (ii) with respect to such Units for the Fiscal Year,
the amount so distributed shall be treated as first distributed pursuant to
clause (A) above (to the extent of the distribution required thereunder) and
then pursuant to clauses (B) through (D).
"Tax Rate" of a Unitholder for any period means (i) for a Unitholder
that is a C Corporation, the highest marginal federal income tax rate (expressed
as a percentage) applicable for such period to a C Corporation under the Code,
plus 2.3 percentage points; (ii) for an individual Unitholder other than a
Management Unitholder, the highest marginal blended federal, state, and local
income tax rate applicable for such period to an individual residing in New York
City; and (iii) for a Management Unitholder, the highest marginal blended
federal, state, and local income tax rate applicable for such period to an
individual residing in the state and local jurisdiction of residence of such
individual, taking into account for federal income tax purposes, in the case of
the preceding clauses (ii) and (iii), the deductibility of state and local
taxes. If higher, federal Tax Advances will be based on federal alternative
minimum taxable income (taking into account solely Company items) and rates
(using the highest marginal federal alternative minimum tax rate applicable to a
corporation or an individual, as the case may be).
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<PAGE> 36
5.4 Mandatory Distributions on Senior Preferred Units.
(a) In General. In compliance with the last sentence of
Section 5.3(a), the Company shall make cash distributions to the Senior
Preferred Unitholders to the extent required by paragraphs (b), (c), (d) and (e)
below.
(b) Distributions out of Excess Cash Flow. Subject to the
terms of the Credit Agreement, the Company shall distribute pro rata to the
Senior Preferred Unitholders on or before June 30 following the close of each of
the Fiscal Years 2003 through 2012, cash in an amount equal to the lesser of (A)
Excess Cash Flow for such Fiscal Year and (B) the ECF Limit for such Fiscal
Year.
(c) Mandatory Partial Yield Distributions. The Company shall
distribute pro rata to the Senior Preferred Unitholders:
(i) on or before June 30, 2007, cash in an amount equal to the
product of (i) the C Corporation Tax Rate and (ii) the aggregate Yield
on the Senior Preferred Units for the period July 1, 2006 through June
30, 2007;
(ii) on or before the close of each six-month period
commencing on a January 1 or July 1 within the period July 1, 2007
through June 30, 2013, cash in an amount equal to the product of (i)
the C Corporation Tax Rate and (ii) the aggregate Yield on the Senior
Preferred Units for such six-month period; and
(iii) any amounts required to be distributed under Section
5.3(b)(i)(B).
(d) Mandatory Redemption. On or before June 30, 2013, the
Company shall distribute cash to the Senior Preferred Unitholders in an amount
equal to the Senior Preferred Redemption Value.
(e) Elective Redemption. Upon a Change of Control, each holder
of Senior Preferred Units shall have the right to cause the Company to redeem
all (but not less than all) of such holder's Senior Preferred Units for cash in
the amount of the Senior Preferred Redemption Value of such Units.
5.5 Redemption of Junior Preferred Units.
(a) Mandatory Redemption of Junior Preferred Units. Subject to
Sections 5.3 and 5.4, on or before June 30, 2013, the Company shall distribute
cash to the Junior Preferred Unitholders in an amount equal to the Junior
Preferred Redemption Value; provided that, without Majority Approval of the
Senior Preferred Unitholders, no distributions shall be made pursuant to this
Section 5.5 until all Senior Preferred Units have been completely redeemed.
(b) Elective Redemption. Subject to Section 5.4, upon a Change
of Control, each holder of Junior Preferred Units shall have the right to cause
the Company to redeem all
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(but not less than all) of such holder's Junior Preferred Units for cash in the
amount of the Junior Preferred Redemption Value of such Units.
5.6 Application of Tax Advances; No Economic Windfall. Tax Advances
shall be applied against a Unitholder's Junior Common Units, then against its
Senior Common Units, then against its Junior Preferred Units, and then against
its Senior Preferred Units (including in connection with a conversion of Senior
Preferred Units to Exchange Notes pursuant to Section 3.6, tag-along rights
pursuant to Section 8.2(a), an Approved Sale pursuant to Section 8.3, an Initial
Public Offering pursuant to Section 8.6 and a Liquidation pursuant to Section
9.2); provided, however, that, notwithstanding any other provision of this
Agreement, neither the holders of the CSX Units in the aggregate nor the holders
of the Vectura Units in the aggregate shall receive an economic windfall in
connection with any repayment of Senior Preferred Units, Junior Preferred Units,
Senior Common Units or Junior Common Units (including in connection with a
conversion of Senior Preferred Units to Exchange Notes pursuant to Section 3.6,
tag-along rights pursuant to Section 8.2(a), an Approved Sale pursuant to
Section 8.3, an Initial Public Offering pursuant to Section 8.6 and a
Liquidation pursuant to Section 9.2), and, to the extent necessary to prevent
such windfall:
(a) amounts otherwise distributable or payable by any Person
in connection therewith will be adjusted;
(b) conforming allocations of income, gain, deduction and loss
will be made;
(c) prior thereto, the Company will analyze (such analysis to
be without prejudice to any Unitholder's rights under this Section 5.6) whether
the holders of the CSX Units in the aggregate or the holders of the Vectura
Units in the aggregate would receive an economic windfall in the absence of such
an adjustment; and such analysis will take into account all relevant factors;
and
(d) if the Company determines that any such economic windfall
would occur, the Company shall provide its analysis to the then-holders of the
CSX Units and the then-holders of the Vectura Units, and the parties shall in
good faith seek to resolve any disputes with respect thereto.
ARTICLE VI
ALLOCATIONS AND CAPITAL ACCOUNTS
6.1 Capital Accounts. A "Capital Account" shall be established for each
Unitholder on the books of the Company and shall be maintained as provided in
the definition of Capital Account.
6.2 Allocations.
(a) Gross Income Allocation. An amount of Gross Income equal
to the Unallocated Senior Preferred Yield shall be credited quarterly (and at
such other times that such
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allocation would make a difference in connection with another allocation,
distribution or other event under this Agreement) pro rata to the holders of
Senior Preferred Units.
(b) Net Profit Allocation. Subject to subsections (d) and (e)
below, the Company's Net Profit (taking into account the amount of any Gross
Income allocated under subsection (a) above as an item of deduction) shall be
allocated annually (and at such other times that such allocation would make a
difference in connection with another allocation, distribution or other event
under this Agreement) to the Unitholders in the following order:
(i) first, pro rata to the holders of the Senior
Preferred Units until they have been
allocated Net Profit equal to the amount of
Net Loss previously allocated under
subsection (c)(iv) below not previously
offset by an allocation of Net Profit under
this subsection (b)(i);
(ii) second, pro rata to the holders of Junior
Preferred Units in an amount equal to the
Unallocated Junior Preferred Yield;
(iii) third, pro rata to the holders of Senior
Common Units in an amount equal to the
Unallocated Senior Common Yield; and
(iv) fourth, pro rata to the holders of Junior
Common Units.
(c) Net Loss Allocation. Subject to subsections (d) and (e)
below, the Company's Net Loss (taking into account the amount of Gross Income
allocated under subsection (a) above as an item of deduction) shall be allocated
annually (and at such other times that such allocation would make a difference
in connection with another allocation, distribution or other event under this
Agreement) to the Unitholders in the following order:
(i) first, pro rata to the holders of Junior
Common Units until such holders have been
allocated an amount of Net Loss equal to the
sum of (A) the amount of Net Income
previously allocated to the holders of
Junior Common Units under clause (b)(iv)
above not previously offset by an allocation
of Net Loss under this clause (c)(i) and (B)
$1,047,000;
(ii) second, pro rata to the holders of Senior
Common Units until such holders have been
allocated an amount of Net Loss equal to the
sum of (A) the amount of Net Income
previously allocated to the holders of
Senior Common Units under clause (b)(iii)
above not previously offset by an allocation
of Net Loss under this clause (c)(ii) and
(B) $3,389,091 (subject to adjustment
consistent with Sections 2.1(j), 2.4(c) and
10.4 of the Recapitalization Agreement);
(iii) third, pro rata to the holders of Junior
Preferred Units until such holders have been
allocated an amount of Net Loss equal to the
sum of (A) the amount of Net Income
previously allocated to the
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holders of Junior Preferred Units under
clause (b)(ii) above not previously offset
by an allocation of Net Loss under this
clause (c)(iii) and (B) $99,505,909 (subject
to adjustment consistent with Sections
2.1(j), 2.4(c) and 10.4 of the
Recapitalization Agreement); and
(iv) fourth, pro rata to the holders of Senior
Preferred Units until such holders have been
allocated an amount of Net Loss equal to the
sum of (A) the amount of Gross Income or Net
Income previously allocated to the holders
of Senior Preferred Units under clause (a)
or (b)(i), respectively, not previously
offset by an allocation of Net Loss under
this clause (c)(iv) and (B) $115,000,000
(subject to adjustment consistent with
Section 10.4 of the Recapitalization
Agreement).
(d) Miscellaneous and Regulatory Tax Allocations.
Notwithstanding anything to the contrary set forth in this Agreement, the
following special allocations, if applicable, shall be made in the following
order:
(i) Company Minimum Gain Chargeback. Except as
otherwise provided in Treasury Regulations Section 1.704-2(f), notwithstanding
any other provision of this Article VI, if there is a net decrease in Company
Minimum Gain during any Fiscal Year, each Unitholder shall be specially
allocated items of Company income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such Unitholder's
share of the net decrease in Company Minimum Gain, determined in accordance with
Treasury Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Unitholder pursuant thereto. The items to be so allocated
shall be determined in accordance with Treasury Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.2(d)(i) is intended to comply
with the minimum gain chargeback requirements set forth in Treasury Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Member Minimum Gain Chargeback. Except as
otherwise provided in Treasury Regulations Section 1.704-2(i)(4),
notwithstanding any other provision of this Article VI, if there is a net
decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during
any Fiscal Year, each Unitholder who has a share of the Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Treasury Regulations Section 1.704-2(i)(5), shall be specially allocated items
of Company income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to the portion of such Unitholder's share of
the net decrease in Member Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Unitholder pursuant thereto.
The items to be so allocated shall be determined in accordance with Treasury
Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.2(d)(ii) is
intended to
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comply with Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Qualified Income Offset. In the event any
Unitholder unexpectedly receives any adjustments, allocations or distributions
described in subparagraphs (4), (5) or (6) of Treasury Regulations Section
1.704-1(b)(2)(ii)(d), such Unitholder shall be allocated items of Company income
or gain in an amount and manner sufficient to eliminate such Unitholder's
Adjusted Capital Account Deficit as quickly as possible to the extent required
by the Treasury Regulations; provided, that an allocation pursuant to this
Section 6.2(d)(iii) shall be made only if and to the extent that such Unitholder
would have an Adjusted Capital Account Deficit after tentatively making all
other allocations provided in this Article VI as if this Section 6.2(d)(iii)
were not in this Agreement.
(iv) Nonrecourse Deductions. Nonrecourse Deductions
for any Fiscal Year shall be specially allocated among the Unitholders in
proportion to the allocations for such Fiscal Year of Net Profit under Section
6.2(b) or Net Loss under Section 6.2(c), as applicable. Any Member Nonrecourse
Deduction for any Fiscal Year shall be specially allocated to the Unitholder who
bears the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i)(1).
(v) Adjustments Occasioned by Code Section 754
Election. To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Code Section 734(b) or Code Section 743(b) is required
pursuant to an election under Code Section 754 to be taken into account in
determining Capital Accounts as the result of a distribution to a Unitholder in
complete liquidation of its interest, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Unitholders in accordance with
their interests in the event Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was
made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(vi) Treatment of Regulatory Allocations. The
allocations set forth in this Section 6.2(d) (the "Regulatory Allocations") are
intended to comply with and shall be interpreted consistently with certain
requirements of Treasury Regulations Sections 1.704-1 and 1.704-2.
Notwithstanding any other provisions of this Article VI (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into account
in allocating other Net Profits and Net Losses and items of income, gain, loss
and deduction among Unitholders so that, to the extent possible, the net amount
of such allocations of other Net Profits and Net Losses and other items and the
Regulatory Allocations to each Unitholder shall be equal to the net amount that
would have been allocated to such Unitholder if the Regulatory Allocations had
not occurred.
(e) Loss Limitation. Net Loss allocated pursuant to Section
6.2(c) shall not exceed the maximum amount of Net Loss that can be allocated
without causing any Unitholder
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to have an Excess Loss. For this purpose, "Excess Loss" means any Net Loss the
allocation of which to a Unitholder would cause such Unitholder to have an
Adjusted Capital Account Deficit (or increase the amount of such deficit) at the
end of any Fiscal Year. If some but not all Unitholders would be allocated an
Excess Loss as a consequence of an allocation of Net Loss pursuant to Section
6.2(c), the foregoing limitation shall be applied on a Unitholder by Unitholder
basis so as to allocate the maximum permissible Net Loss to each Unitholder
under Treasury Regulations Section 1.704-1(b)(2)(ii)(d). Any Net Loss in excess
of the limitation contained in this Section 6.2(e) shall be allocated pro rata
to the holders of Junior Common Units. Prior to any allocation of Net Profit
under Section 6.2(b), after an Excess Loss has been allocated to one or more
Unitholders, an equal amount of Net Income shall be allocated to such
Unitholders in proportion to and to the extent of the Excess Losses previously
allocated to them.
6.3 Allocations for Tax Purposes.
(a) In accordance with Section 704(c) of the Code and the
Treasury Regulations thereunder, income, gain, loss, and deduction with respect
to any property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Unitholders so as to take account of any
variation between the adjusted basis of such property to the Company for Federal
income tax purposes and its initial Gross Asset Value using the traditional
method described in Treasury Regulations Section 1.704-3(b) (without curative or
remedial allocations).
(b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (b) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for Federal income tax purposes and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the Treasury Regulations
thereunder.
(c) Subject to the preceding paragraphs (a) and (b), for
United States Federal, state and local income tax purposes, the income, gains,
losses and deductions of the Company shall, for each taxable period, be
allocated among the Unitholders in the same manner and in the same proportion
that such items have been allocated among the Unitholders' respective Capital
Accounts.
6.4 Distribution in Kind. If any property is distributed in kind to the
Unitholders, it shall first be written up or down to its Fair Market Value as of
the date of such distribution), thus creating book gain or loss for the Company,
and the Fair Market Value of the property received by each Unitholder as so
determined shall be debited against such Unitholder's Capital Account at the
time of distribution.
6.5 Debt Allocations. Solely for purposes of determining a Unitholder's
proportionate share of the "excess nonrecourse liabilities" of the Company
within the meaning of Treasury Regulations Section 1.752-3(a)(3), the
Unitholders' interests in Company profits are: (a) with respect to a
$200,000,000 tranche of the Senior Unsecured Notes and the borrowings incurred
pursuant to the Credit Agreement as in effect on the date hereof, in proportion
to the
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Gross Income allocations with respect to the Senior Preferred Units and (b) with
respect to a $100,000,000 tranche of the Senior Unsecured Notes, in proportion
to the Net Income allocations with respect to the Senior Common Units.
ARTICLE VII
MANAGEMENT
7.1 The Board; Delegation of Authority and Duties.
(a) Members and Board. The Members, acting through the Board,
shall manage and control the business and affairs of the Company, and shall
possess all rights and powers as provided in the Act and otherwise by law.
Except as otherwise expressly provided for herein, the Members hereby consent to
the exercise by the Board of all such powers and rights conferred on them by the
Act or otherwise by law with respect to the management and control of the
Company. No Member and no Representative, in its capacity as such, shall have
any power to act for, sign for, or do any act that would bind the Company. The
Members, acting through the Board, shall devote such time and effort to the
affairs of the Company as they may deem appropriate for the oversight of the
management and affairs of the Company. Each Member acknowledges and agrees that
no Member shall, in its capacity as a Member, be bound to devote all of such
Member's business time to the affairs of the Company, and that each Member and
such Member's Affiliates do and will continue to engage for such Member's own
account and for the account of others in other business ventures. To the fullest
extent permitted by Applicable Law, each Representative shall have such rights
and duties as are applicable to directors of a Corporation.
(b) Delegation by Board. The Board shall have the power and
authority to delegate to one or more other Persons the Board's rights and powers
to manage and control the business and affairs of the Company, including
delegating such rights and powers of the Board to agents and employees of the
Company (including Officers). The Board may authorize any Person (including,
without limitation, any Member, Officer or Representative) to enter into any
document on behalf of the Company and perform the obligations of the Company
thereunder. Notwithstanding the foregoing, the Board shall not have the power
and authority to delegate any rights or powers customarily requiring the
approval of the directors of a Corporation and no Officer or other Person shall
be authorized or empowered to act on behalf of the Company in any way beyond the
customary rights and powers of an officer of a Corporation.
(c) Committees. The Board may, from time to time, designate
one or more committees, and hereby establishes a compensation committee (the
"Compensation Committee"). Each committee established by the Board shall consist
of one CSX Representative, two Vectura Party Representatives, and the Company
Representative (each as defined in Section 7.2). Any such committee shall have
such powers and authority to make recommendations as provided in the enabling
resolution of the Company with respect thereto; provided, that (i) all decisions
of any such committee shall be merely recommendations to the Board with respect
to the taking of actions, the taking of which shall require the approval of the
Board, and (ii) if the Board rejects any such recommendation, such matter shall
be returned to
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such committee for its consideration (other than with respect to the
Compensation Committee's recommendations regarding the compensation of the
Company's then duly elected chief executive officer). At every meeting of any
such committee, the presence of all members thereof shall constitute a quorum
and the affirmative vote of a majority of all members shall be necessary for the
adoption of any resolution. The Board may dissolve any committee at any time,
unless otherwise provided in this Agreement. The Compensation Committee shall
have, among other things, the authority to select any Officer to the extent any
such position is vacant, and shall be responsible for making recommendations
with respect to the compensation of all Officers, which recommendation shall be
presented to the Board for its approval; provided, that the Company
Representative shall be recused from all proceedings of the Compensation
Committee relating to the compensation of the Company Representative in its
capacity as an Officer.
7.2 Establishment of Board.
(a) Number of Representatives. The authorized number of
Representatives shall initially be eleven (11). The Board shall initially be
composed of the ten (10) Representatives designated in the manner described in
this Section 7.2.
(b) CSX Representatives. Until the earlier of (i) such time as
CSX or any direct or indirect Affiliate of CSX which becomes a Unitholder ceases
to hold at least 25% of the Junior Common Units issued to the CSX Members on the
date hereof and (ii) a Qualified Public Offering, the CSX Member shall have the
right to designate (and to remove and designate successive replacements for)
four (4) Representatives (the "CSX Representatives"); provided, that following
such earlier to occur of (i) or (ii), such CSX shall have the right to designate
(and to remove and designate successive replacements for) one CSX
Representative. Each CSX Representative shall have one (1) vote with respect to
any matter to be voted on by the Board; provided, that (i) no CSX
Representatives may vote on but may be present at the meetings of the Board or
committees thereof with respect to) any matter presented for vote to the Board
or committee thereof involving transactions or contractual obligations set forth
in the Recapitalization Agreement between the Company and its Subsidiaries, on
the one hand, and CSX Corporation and its Subsidiaries, on the other hand and
(ii) each CSX Representative shall have one-half (1/2) of a vote (rounded up)
with respect to any matter presented for vote to the Board or committee thereof
relating to any transaction or series of related transactions the principal
effect of which would be to trigger Built-in Gain in excess of $5,000,000
(including Exempt Transactions, transactions including dispositions of assets,
and CSX Sale-Leasebacks). The initial CSX Representatives designated pursuant to
this Section 7.2(b) shall be Mark G. Aron, Paul R. Goodwin, David H. Baggs and
Ellen M. Fitzsimmons. The Members signatory hereto acknowledge that to the
fullest extent permitted by Applicable Law, the CSX Representatives shall act in
the best interests of the CSX Members.
(c) Vectura Party Representatives. The Vectura Members shall
have the right to designate (and to remove and designate successive replacements
for) two (2) Representatives (the "Vectura Party Representatives"). Each Vectura
Party Representative shall have one (1) vote with respect to any matter to be
voted on by the Board; provided, that no Vectura Party Representative may vote
on (but may be present at the meetings of the Board or committee
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thereof with respect to) any matter presented for vote to the Board or committee
thereof involving transactions or contractual obligations set forth in the
Recapitalization Agreement between the Company and its Affiliates, on the one
hand, and any Vectura Member and its Affiliates, on the other hand. The initial
Vectura Party Representatives designated pursuant to this Section 7.2(c) shall
be David F. Thomas and Richard E. Mayberry, Jr. The Members signatory hereto
acknowledge that to the fullest extent permitted by Applicable Law, the Vectura
Party Representatives shall act in the best interests of the Vectura Members.
(d) Company Representative. The then duly elected and acting
chief executive officer of the Company shall serve as a Representative (the
"Company Representative"). The Company Representative shall have one (1) vote
with respect to any matter to be voted on by the Board; provided, that the
Company Representative may not vote on any matter presented to the Board or
committee thereof, which relates to the capacity, authority, or powers of the
Company Representative as an Officer or Member (other than such matters relating
to the compensation of the Company Representative as an Officer). The initial
Company Representative designated pursuant to this Section 7.2(d) shall be
Michael C. Hagan.
(e) Vectura Representative. The then duly elected and acting
chief executive officer of Vectura as of the date of this Agreement shall be
designated as a Representative (the "Vectura Representative"). The Vectura
Representative shall have one (1) vote with respect to any matter to be voted on
by the Board; provided, that no Vectura Representative may vote on (but may be
present at the meetings of the Board or committee thereof with respect to) any
matter presented for vote to the Board or committee thereof involving
transactions or contractual obligations set forth in the Recapitalization
Agreement between the Company and its Affiliates, on the one hand, and any
Vectura Member and its Affiliates, on the other hand. The initial Vectura
Representative designated pursuant to this Section 7.2(e) shall be David
Wagstaff, III. The Vectura Members shall have the right to remove and designate
successive replacements for the Vectura Representative. The Members signatory
hereto acknowledge that to the fullest extent permitted by Applicable Law, the
Vectura Representative shall act in the best interests of the Vectura Members.
(f) Independent Representatives. The holders of the majority
of the Class A Common Units shall have the right to designate (and to remove and
designate successive replacements for) two (2) Representatives, which
Representatives shall be independent of CSX, the Vectura Members, and their
respective Affiliates (the "Independent Representatives"); provided, that the
Vectura Members shall have, at all times, the right to (i) approve one
Independent Representative and (ii) consent to the designation of the other
Independent Representative, which consent shall not be unreasonably withheld.
The Independent Representatives shall each have one (1) vote with respect to any
matter to be voted on by the Board. The Independent Representatives, in their
capacity as members of the Board, shall not act at the direction of the holders
of any class of Units. The initial Independent Representatives designated
pursuant to this Section 7.2(f) shall be Steven Anderson and Stuart Agranoff. In
the event that, at two consecutive meetings of the Board, the Representatives
vote on a matter presented to the Board and the Board reaches a deadlock so that
five (5) Representatives vote in favor of such matter and five (5)
Representatives vote against such matter, another Independent
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Representative (thereby increasing the number of Representatives to eleven (11))
shall be selected by the holders of a majority of the Class A Common Units then
outstanding.
7.3 Term of Office. Once designated pursuant to Section 7.2, a
Representative shall continue in office until the removal of such Representative
in accordance with the provisions of this Agreement or until the earlier death
or resignation of such Representative. Any Representative may resign at any time
by giving written notice of such Representative's resignation to the Board. Any
such resignation shall take effect at the time the Board receives such notice or
at any later effective time specified in such notice. Unless otherwise specified
in such notice, the acceptance by the Board of such Representative's resignation
shall not be necessary to make such resignation effective. Notwithstanding
anything herein or at law to the contrary, any Representative may be removed at
any time with or without cause by the party entitled to designate such
Representative.
7.4 Meeting of the Board.
(a) Meetings. The Board shall meet at least annually, at such
time and at such place as the Board may designate. Special meetings of the Board
shall be held at the request of any three (3) Representatives upon at least five
(5) days (if the meeting is to be held in person) or two (2) days (if the
meeting is to be held telephonically) oral or written notice to the
Representatives or upon such shorter notice as may be approved by the
Representatives. Any Representative may waive the requirement of such notice as
to itself.
(b) Conduct of Meetings. Any meeting of the Board may be held
in person or telephonically.
(c) Quorum. Subject to the provisions of Sections 7.2 and 7.5,
all of the votes of the Representatives which have been designated pursuant to
the provisions of this Agreement and who are then in office shall be necessary
to constitute a quorum of the Board for purposes of conducting business.
7.5 Voting. Except as otherwise provided in this Agreement, (including
a transaction effectuated pursuant to Section 7.13(a)) the effectiveness of any
vote, consent or other action of the Board or the Representatives in respect of
any matter shall require either (i) the presence of a quorum and the affirmative
vote of greater than 50% of the votes of the Representatives or (ii) the
unanimous written consent (in lieu of meeting) of the Representatives who have
been designated and who are then in office. Any Representative may vote in
person or by proxy (pursuant to a power of attorney) on any matter that is to be
voted on by the Board at a meeting thereof.
7.6 Responsibility and Authority of the Board. It shall be the
responsibility of the Board to provide advice to Officers regarding the overall
operation and direction of the Company. The function of the Board shall be
similar to the oversight typically provided to a Corporation by its board of
directors. The Officers shall, at all times, retain final responsibility for the
day-to-day management, operation, and control of the Company, subject to the
supervision and direction of the Board.
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7.7 Subsidiary Boards. The Company shall be designated as the "manager"
or "managing member" of each of its Subsidiaries which is a limited liability
company and may act through wholly owned Subsidiaries as the general partner of
any Subsidiary which is a limited partnership. Unless otherwise approved by the
Board, the Company shall cause each of its Subsidiaries (whether a limited
liability company, a corporation, a partnership or otherwise) to establish
governing boards (each, a "Sub Board"), which Sub Boards will be entrusted with
similar responsibilities and functions as typically provided to a Corporation by
its board of directors; provided, that each such Sub Board shall be subject to
the rights and powers of the Board and the Members set forth in this Agreement
or otherwise set forth in policies established by the Board consistent with the
terms hereof. The Board shall establish the membership and composition of each
Sub Board in its reasonable discretion and provided further, that the Company
shall take action to assure that none of its Subsidiaries, Sub Boards or
Officers may take any action which would require the consent of any Member or
Representative hereunder without first obtaining such consent.
7.8 Company Funds. Except as specifically provided in this Agreement or
with the approval of the Board, the Company shall not, and shall not permit any
Subsidiary to, pay to or use for, the benefit of any Unitholder (except in any
Unitholder's capacity as an employee or independent contractor of the Company or
any Subsidiary), funds, assets, credit, or other resources of any kind or
description of the Company or any Subsidiary. Funds of the Company or any
Subsidiary shall (i) be deposited only in the accounts of the Company in the
Company's name or in accounts of such Subsidiary in such Subsidiary's name, (ii)
not be commingled with funds of any Unitholder, and (iii) be withdrawn only upon
such signature or signatures as may be designated in writing from time to time
by the Board, or the Sub Board, as the case may be.
7.9 Devotion of Time. Other than any Representative who may be an
Officer, the Representatives shall not be obligated and shall not be expected to
devote all of their time or business efforts to the affairs of the Company.
7.10 Payments to Representatives; Reimbursements. Except for the
Vectura Representative (the compensation of whom shall be determined in
accordance with Section 7.1(c)) or as otherwise determined by the Board (by the
vote or written consent of a majority of the votes of the disinterested
Representatives then in office), no Representative shall be entitled to
remuneration by the Company for services rendered in its capacity as a
Representative (other than for reimbursement of reasonable out-of-pocket
expenses of such Representative). All Representatives will be entitled to
reimbursement of their reasonable out-of-pocket expenses incurred in connection
with their attendance at Board meetings.
7.11 Officers.
(a) Designation and Appointment. The Board may, from time to
time, employ and retain Persons as may be necessary or appropriate for the
conduct of the Company's business (subject to the supervision and control of the
Board), including employees, agents and other Persons (any of whom may be a
Member or Representative) who may be designated as Officers of the Company, with
titles including but not limited to "chief executive officer," "president,"
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vice president," "treasurer," "secretary," "general counsel," "director" and
"chief financial officer," as and to the extent authorized by the Board. Any
number of offices may be held by the same Person. In the Board's discretion, the
Board may choose not to fill any office for any period as it may deem advisable.
Officers need not be residents of the State of Delaware or Members. Any Officers
so designated shall have such authority and perform such duties as the Board
may, from time to time, delegate to them. The Board may assign titles to
particular Officers. Each Officer shall hold office until his successor shall be
duly designated and shall have qualified as an Officer or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided. The salaries or other compensation, if any, of the Officers of the
Company shall be fixed from time to time by the Compensation Committee (and
approved by the Board).
(b) Resignation and Removal. Any Officer may resign as such at
any time. Such resignation shall be made in writing and shall take effect at the
time specified therein, or if no time be specified, at the time of its receipt
by the Board. The acceptance by the Board of a resignation of any Officer shall
not be necessary to make such resignation effective, unless otherwise specified
in such resignation. Any Officer may be removed as such, either with or without
cause, at any time by the Board. Designation of any Person as an Officer by the
Board pursuant to the provisions of Section 7.11(a) shall not in and of itself
vest in such Person any contractual or employment rights with respect to the
Company.
(c) Duties of Officers Generally. The Officers, in the
performance of their duties as such, shall (i) owe to the Company duties of
loyalty and due care of the type owed by the officers of a Corporation to such
Corporation and its stockholders under the laws of the State of Delaware, (ii)
keep the Board reasonably apprised of material developments in the business of
the Company, and (iii) present to the Board, at least annually, a review of the
Company's performance, an operating budget for the Company, and a capital budget
for the Company.
(d) Chief Executive Officer. Subject to the powers of the
Board, the chief executive officer of the Company shall be in general and active
charge of the entire business and affairs of the Company, and shall be its chief
policy making Officer. The initial chief executive officer of the Company shall
be Michael C. Hagan.
(e) President. The president of the Company shall, subject to
the powers of the Board and the chief executive officer of the Company, have
general and active management of the business of the Company, and shall see that
all orders and resolutions of the Board are effectuated. The president of the
Company shall have such other powers and perform such other duties as may be
prescribed by the chief executive officer of the Company or by the Board.
(f) Chief Financial Officer. The chief financial officer of
the Company shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts of the properties and
business transactions of the Company, including accounts of the Company's
assets, liabilities, receipts, disbursements, gains, losses, capital and Units.
The chief financial officer of the Company shall have custody of the funds and
securities of the Company, keep full and accurate accounts of receipts and
disbursements in books belonging to the
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Company, and deposit all moneys and other valuable effects in the name and to
the credit of the Company in such depositories as may be designated by the
Board. The chief financial officer of the Company shall have such other powers
and perform such other duties as may from time to time be prescribed by the
chief executive officer of the Company or the Board.
(g) General Counsel. The general counsel of the Company shall
have general charge of the legal affairs of the Company, and shall cause to be
kept adequate records of all suits or actions, of every nature, to which the
Company may be a party, or in which it has an interest, with sufficient data to
show the nature of the case and the proceedings therein. The general counsel of
the Company shall prepare, or cause to be prepared, legal opinions on any
subject necessary for the affairs of the Company, and shall have such other
powers and perform such other duties as may from time to time be prescribed by
the chief executive officer of the Company or the Board.
(h) Vice President(s). The vice president(s) of the Company
shall perform such duties and have such other powers as the chief executive
officer of the Company or the Board may from time to time prescribe. A vice
president may be designated as an Executive Vice President, a Senior Vice
President, an Assistant Vice President, or a vice president with a functional
title.
(i) Secretary.
(i) The secretary of the Company shall attend all
meetings of the Board, record all the proceedings of the meetings and perform
similar duties for the committees of the Board when required.
(ii) The secretary of the Company shall keep all
documents as may be required under the Act. The secretary shall perform such
other duties and have such other authority as may be prescribed elsewhere in
this Agreement or from time to time by the chief executive officer of the
Company or the Board. The secretary of the Company shall have the general
duties, powers and responsibilities of a secretary of a corporation.
(iii) If the Board chooses to appoint an assistant
secretary or assistant secretaries, the assistant secretaries, in the order of
seniority, shall in the Company secretary's absence, disability or inability to
act, perform the duties and exercise the powers of the secretary of the Company,
and shall perform such other duties as the chief executive officer of the
Company or the Board may from time to time prescribe.
(j) Treasurer. The treasurer of the Company shall receive,
keep, and disburse all moneys belonging to or coming to the Company. The
treasurer of the Company shall prepare, or cause to be prepared, detailed
reports and records of all expenses, losses, gains, assets, and liabilities of
the Company as directed by the chief financial officer of the Company and shall
perform such other duties in connection with the administration of the financial
affairs of the Company as may from time to time be prescribed by the chief
financial officer or the chief executive officer of the Company or by the Board.
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7.12 Negative Covenants.
(a) Vectura Members. Notwithstanding anything to the contrary
herein, the Company and its Subsidiaries shall not take, authorize, facilitate
or permit any of the following actions without the prior approval of the holders
of a majority of the Units then held by the Vectura Parties and their Permitted
Transferees pursuant to Section 8.2(c)(i)(C).
(i) the determination of the equity investments in
the Company by the senior management of the Company and its Subsidiaries;
(ii) the making of any capital expenditures
exceeding, on an annual basis, 120% of either (x) the amount of projected
capital expenditures for each Fiscal Year set forth in the projections delivered
pursuant to Section 4.02(t)(i) of the Credit Agreement on the Closing Date or
(y) Excess Cash Flow;
(iii) any transaction by the Company or any of its
Subsidiaries (including acquisitions of third parties, divestitures of
Subsidiaries or divisions, and incurrence of, or modifications to the terms of,
any Indebtedness) that would constitute a breach of the Credit Agreement and the
Senior Unsecured Debt Documents;
(iv) the Sale of the Company or an Initial Public
Offering;
(v) the selection of the Accountants;
(vi) (A) the liquidation, dissolution, commencement
of proceedings (in bankruptcy or otherwise) for a voluntary winding up,
reorganization, adjustment, relief, or recapitalization of the Company or any of
its Subsidiaries (including, without limitation, any reorganization into a
partnership, or a corporate entity), (B) the consent to the entry of an order
for relief in an involuntary case under bankruptcy law or other similar
proceeding under Applicable Law, or (C) the application for or consent to the
appointment of a receiver, Liquidator, assignee, custodian or trustee (or
similar official) of the Company or any of its Subsidiaries; and
(vii) the approval of or entering into, directly or
indirectly, any (A) transaction or group of related transactions, (B) amendment,
supplement, waiver or modification of any agreement, or (C) commitment or
arrangement with any Person in which any of the Members or their Affiliates, any
officer or member of the Board of the Company or any Subsidiary, or any member
of the Family Group of any such Persons owns any significant beneficial
interest; provided, that the Vectura Members shall control the enforcement of
the Company's rights under the Recapitalization Agreement vis-a-vis the CSX
Members.
(b) CSX Members. Notwithstanding anything to the contrary
herein (but subject to Section 7.13), the Company and its Subsidiaries shall not
take, authorize, facilitate or permit any of the following actions without the
prior approval of the holders of a majority of the Units then held by the CSX
Members.
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(i) the merger or consolidation of the Company or any
transaction by the Company or its Subsidiaries involving the acquisition of
assets (other than the acquisition of new capital assets as part of the
Company's regular capital budgeting process) or equity securities (including,
without limitation, warrants, options, and other rights to acquire equity
securities) of any Person, in each case involving consideration of $250,000,000
or more (which, in each case, does not constitute a Sale of the Company to which
Section 8.3 applies);
(ii) any transaction that would directly or
indirectly cause the Company or ACL (or any material domestic Subsidiaries for
so long as Holdings is a partnership for Federal income tax purposes) to become
a C Corporation; provided, that such restriction shall not apply to (A) an
Initial Public Offering consistent with the terms hereof, (B) any Transfer
pursuant to which CSX is entitled to the rights set forth under Sections 8.2(a)
or pursuant to a transaction consummated under Section 8.3, and (C) any
transaction pursuant to which the Company or ACL would become a C Corporation
(x) solely as a result of actions, omissions, or elections of the CSX Members or
(y) as a result of any changes in Applicable Law that adversely and
significantly affect the tax or limited liability benefits of the Company's
status and/or operations;
(iii) any modification, supplement, amendment, or
waiver of this Agreement or the organizational documents of the Company or any
Subsidiary of the Company that would, in any respect, adversely affect, or be
prejudicial to, the CSX Members;
(iv) any modification, supplement, amendment, or
waiver of (A) clauses (iv) and (vi) of Section 6.06(a) of the Credit Agreement
as in effect on the date hereof or the correlative provisions of any successor
or replacement financing or refinancing or the definitions of "Excess Cash Flow"
and "Change of Control" (and all related definitions to the extent they affect
the treatment of the Senior Preferred Units) set forth in the Credit Agreement
as in effect on the date hereof or the correlative provisions of any successor
or replacement financing or refinancing or (B) the definitions of "Restricted
Payments" and "Change of Control" (and all related definitions to the extent
they affect the treatment of the Senior Preferred Units including the ability to
make distributions thereon) set forth in the Senior Unsecured Debt Documents as
in effect on the date hereof or the correlative provisions of any successor or
replacement financing or refinancing; and
(v) the approval of or entering into, directly or
indirectly, any (A) transaction or group of related transactions, (B) amendment,
supplement, waiver or modification of any agreement, or (C) commitment or
arrangement, in each case with any Person in which any of the Members or their
Affiliates or Permitted Transferees, any Officer or Representative of the
Company or any member of any Sub Board, or any member of the Family Group of any
such Persons owns a beneficial interest, other than such transactions,
agreements, commitments, or arrangements expressly contemplated by the
Recapitalization Agreement, the Registration Rights Agreement or this Agreement
(provided that the CSX Members shall control the enforcement of the Company's
rights under the Recapitalization Agreement vis-a-vis the Vectura Parties).
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Notwithstanding anything to the contrary contained herein, the rights accorded
to the CSX Members pursuant to clauses (i), (ii), and (iii) of this Section
7.12(b) shall immediately terminate upon the latest to occur of CSX or any
direct or indirect Affiliate of CSX which becomes a Unitholder holding (i) less
than 25% of the Junior Common Units issued to CSX on the date hereof, or (ii)
less than 5% of the Senior Preferred Units issued to CSX on the date hereof;
including as a result of any refusal by CSX or such Affiliate of CSX to consent
to an optional redemption by the Company of Senior Preferred Units, which
optional redemption would have resulted in CSX or such Affiliate of CSX holding
less than 5% of the amount of Senior Preferred Units issued to CSX or such
Affiliate of CSX on the date hereof (it being understood and agreed that any
Senior Preferred Units subject to an implemented and funded mechanism comparable
to a defeasance established pursuant to Section 5.2(b) shall not be deemed to be
held for purposes of this clause (ii)). Notwithstanding anything to the contrary
contained herein, the rights accorded to CSX or any direct or indirect Affiliate
of CSX which becomes a Unitholder pursuant to clause (iv) above of this Section
7.12(b) shall immediately terminate once CSX or such Affiliate of CSX ceases to
hold any Senior Preferred Units (or Reclassified Securities with respect
thereto) or Exchange Notes.
(c) Senior Preferred Units. Notwithstanding anything to the
contrary contained herein, so long as any Senior Preferred Units are outstanding
(it being understood and agreed that any Senior Preferred Units subject to an
implemented and funded mechanism comparable to a defeasance pursuant to Section
5.2(b) shall not be deemed to be held for purposes of this Section 7.12(c)), the
Company and its Subsidiaries shall not take, authorize, facilitate or permit any
of the following actions without the prior Majority Approval of the Senior
Preferred Units:
(i) directly or indirectly declaring or making any
distributions with respect to, paying any dividends on, or redeeming or
reacquiring or purchasing or making any other payment with respect to, any
Junior Security; provided, that such restrictions shall not apply to (i)
redemptions by the Company of Units held by Management Unitholders upon the
termination of their employment with the Company or its Subsidiaries, or (ii)
distributions pursuant to Section 5.3 or permitted under Section 5.2(b);
(ii) authorizing, creating, issuing, or entering into
any agreement providing for the sale or issuance (contingent or otherwise) of
any Units, Membership Interests or other economic interests senior, or pari
passu, in priority in any respect to the Senior Preferred Units; or
(iii) the approval of or entering into, directly or
indirectly, any (A) transaction or group of related transactions, (B) amendment,
supplement, waiver or modification of any agreement, or (C) commitment or
arrangement, in each case with any Person in which any of the Members,
Representatives or their Affiliates, any officer or member of the Board of the
Company or any Subsidiary, or any member of the Family Group of any such Persons
owns a beneficial interest, other than such transactions, agreements,
commitments, or arrangements expressly contemplated by the Recapitalization
Agreement, the Registration Rights Agreement or this Agreement.
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7.13 Affirmative Covenants.
(a) The Company shall take the following actions (and all
actions reasonably required to effect the same requested or approved by Majority
Approval of the Junior Common Units) upon the Majority Approval of the Vectura
Junior Common Units: (i) an Initial Public Offering (provided, that in
connection with an Initial Public Offering the Company shall abide by the
registration procedures set forth in Section 5 of the Registration Rights
Agreement); (ii) a Sale of the Company; or (iii) selection of the Accountants.
(b) The Company shall deliver to (i) the CSX Members and (ii)
the Vectura Members the financial statements of ACL and other notices and
reports described in, and simultaneously with the deliveries made pursuant to,
Sections 5.04(a) and (b) of the Credit Agreement, as in effect on the date
hereof, or the correlative provisions of any successor or replacement financing
or refinancing, and similar financial statements for the Company.
7.14 Certain Tax Matters.
(a) Dispositions of CSX Contributed Assets.
(i) The Board shall consult with CSX prior to any
proposed taxable disposition (either in a single disposition or series of
related dispositions) of any CSX Contributed Assets for consideration in excess
of $3,000,000.
(ii) The Company shall elect out of installment sale
treatment (to the extent installment sale treatment would otherwise apply) for
federal income tax purposes with respect to sales of CSX Contributed Assets
unless CSX otherwise consents in writing.
(b) Change in Law. In the event that a change in law could
result in taxation of the Company as a C Corporation, the Vectura Members and
CSX shall cooperate in good faith to restructure the Company to avoid such
treatment.
(c) Section 754 Election. The Company shall make an election
under Section 754 of the Code in connection with any Transfer of Units permitted
under Section 8.2(c) and, if requested by the Transferring party, in connection
with any other permitted Transfer of Units.
(d) Certain Arrangements. Without the prior approval of the
holders of a majority of the Units then held by the CSX Members, the Company and
its Subsidiaries shall not enter into any loan or other agreement or arrangement
that would restrict the Company's ability to make any distributions or payments
that are required to be made under this Agreement in a manner that would be more
restrictive than any such agreement or arrangement of the Company and its
Subsidiaries existing and in effect as of the date hereof in the Credit
Agreement and the Senior Unsecured Debt Documents.
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ARTICLE VIII
TRANSFERS OF UNITS
8.1 General.
(a) Restrictions on Transfer. No Unitholder shall Transfer any
Units other than in accordance with the terms and conditions of this Article
VIII and the other provisions of this Agreement. Notwithstanding anything to the
contrary contained herein, no Unitholder shall Transfer any Units or any
Derivatives (or create any Derivatives) if such Transfer or creation would cause
(i) the Company to be taxed as a C Corporation, (ii) a termination of the
Company for purposes of Section 708 of the Code (a "708 Termination"), unless
the Transferring Unitholder indemnifies and reimburses the Other Unitholders for
any taxes (including interest and penalties) incurred by the Other Unitholders
that would not have been incurred but for such 708 Termination, or (iii) the
Company to be treated as a publicly-traded partnership for purposes of Section
7704 of the Code, unless, in the case of each of clauses (i), (ii), and (iii),
such Transfer or creation (A) is pursuant to an Approved Sale or Initial Public
Offering, or (B) receives the approval of the holders of a majority of the Units
then held by the CSX Members and Majority Approval of the Vectura Junior Common
Units.
(b) Void Transfers. Any Transfer or attempted Transfer of any
Units or Derivatives in violation of any provision of this Agreement shall be
null and void, and the Company shall not record such Transfer on its books or
treat any purported Transferee of such Units as the owner thereof for any
purpose.
(c) Transfer Mechanics. In connection with any proposed
Transfer of Units, the holder of the Units proposed to be Transferred shall
deliver to the Company at least twenty (20) days (and no more than sixty (60)
days) prior to any such Transfer an opinion of counsel reasonably acceptable to
the Company to the effect that such proposed Transfer may be effected in
compliance with the Securities Act; provided, that any such proposed Transfer
permitted under Section 8.2(c) shall not require an opinion of counsel, but must
otherwise by consummated in compliance with the Securities Act. In addition, if
the holder of the Units proposed to be Transferred delivers to the Company an
opinion of counsel reasonably acceptable to the Company to the effect that no
subsequent Transfer of such Units shall require registration under the
Securities Act, the Company shall promptly upon consummation of such Transfer
deliver to such holder new certificates for such Units that do not bear the
legend set forth in Section 8.4. If the Company is not required to deliver new
certificates for such Units (if certificates were previously issued for such
Units) not bearing such legend, the holder thereof shall not consummate a
Transfer of the same until the prospective Transferee has confirmed to the
Company in writing its agreement to be bound by the conditions contained herein,
as provided in Section 8.1(g).
(d) Information Requests. Upon the request of a Unitholder,
the Company shall promptly supply to such Person or its prospective Transferees
all information regarding the Company required to be delivered in connection
with a Transfer pursuant to Rule 144A under the Securities Act (or any similar
rule or rules then in effect).
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(e) Special Deliveries. At least fourteen (14) days (and no
more than sixty (60) days) prior to the intended date of any proposed Transfer,
the proposed Transferor shall deliver a Transfer Notice to the Company, and the
Company shall within two business days forward such Transfer Notice to each of
the CSX Member and the Vectura Members and such other information as is
reasonably required for the CSX Members and the Vectura Members to evaluate the
consequences of the proposed Transfer under Code Sections 708 and 7704. The
Company shall also, promptly following receipt of notice of the consummation of
such transfer, give written notice to each CSX Member and Vectura Member setting
forth the number of Units so Transferred, the purchase price therefor and the
identity of such Transferees.
(f) Removal of Legend. Upon the request of any Unitholder, the
Company shall remove the legend set forth in Section 8.4 below from the
certificates for such Unitholder's Units; provided, that such Units are eligible
for sale pursuant to Rule 144(k) under the Securities Act (or any similar rule
or rules then in effect) and such Unitholder delivers to the Company an opinion
of counsel reasonably acceptable to the Company to the effect that such Units
are so eligible.
(g) Survival of Restrictions. Until the earlier of the
Transfer of Units in an Approved Sale or Public Sale, all Transferees of Units
under this Article VIII who are not parties to this Agreement shall have agreed
in writing to be bound by the provisions of this Agreement by executing a
joinder substantially in the form attached hereto as Exhibit A and, other than
Permitted Transferees, each such Transferee shall be deemed to be a Unitholder
until such Transferee has been admitted as a Member pursuant to the provisions
of Section 3.2(b).
8.2 Tag-Along Rights; First Offer Rights; Permitted Transfers.
(a) Tag-Along Rights.
(i) Subject to Section 8.2(b) and other than in
connection with an Exempt Transfer (provided that it is hereby
acknowledged and agreed that the CSX Members shall have the rights set
forth in this Section 8.2(a) in connection with a Permitted Transfer by
a Vectura Member pursuant to Section 8.2(c)(i)(E) hereof), in the event
that (x) any Unitholder (other than an Investor Unitholder or a
Management Unitholder) proposes to Transfer Junior Common Units or (y)
a Vectura Member proposes to Transfer Junior Preferred Units, or (z) in
any control transaction however structured, the Transferring Unitholder
shall deliver a Transfer Notice to the Company and the Other
Unitholders at least 30 days prior to any such Transfer. The Other
Unitholders holding the applicable class of Units to be so Transferred
may elect to participate in the contemplated Transfer by delivering
written notice to the Transferring Unitholder within 15 days after
delivery by the Transferring Unitholder of such Transfer Notice. If any
Other Unitholders have elected to participate in such Transfer (such
other Unitholders so electing, the "Electing Unitholders"), the
Transferring Unitholder and such Electing Unitholders shall be entitled
to Transfer in the contemplated Transfer, on the same contract terms,
the number of Junior Common Units at the price determined under (ii)
below and the number of Junior Preferred Units at the price determined
under
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(iii) below; provided, that if the applicable Transfer Notice includes
a Transfer of both Junior Common Units and Junior Preferred Units, and
any Other Unitholder elects to participate in such Transfer, such
Electing Unitholder must sell the number of Junior Preferred Units
calculated in accordance with paragraph (i) below. The restrictions on
Transfer contained in this Section 8.2(a) shall apply mutatis mutandis
to transfers (other than Exempt Transfers) of the equity securities of
Vectura or any other direct or indirect holding company of Vectura (but
not including 399 Venture or its direct or indirect parents and
wholly-owned Subsidiaries of such parents (but not 399 Venture or its
Subsidiaries)) holding Units by the holders of such equity securities.
This Section 8.2(a) shall survive any Initial Public Offering and
terminate upon the consummation of an Approved Sale.
(ii) In furtherance of Section 5.6, it is the intent
of the parties that, in a transaction in which tag-along rights apply,
the aggregate sale proceeds shall be divided proportionately with
respect to all Electing Unitholders and the Transferring Unitholder
based on each Electing Unitholder's and the Transferring Unitholder's
respective shares of the liquidation proceeds that all such Electing
Unitholders and the Transferring Unitholder would receive,
respectively, in the event of a hypothetical liquidation of the Company
at the enterprise value implied by the proposed sales price; and
appropriate adjustments will be made to take account of whether Junior
Preferred Units or Junior Common Units are subject to such tag-along.
(b) First Offer Rights. Other than an Exempt Transfer or a
Transfer made pursuant to Section 8.2(a), prior to any Transfer of Units by any
Unitholder, the Unitholder proposing to make such Transfer (the "Offering
Unitholder"), shall deliver a written notice to the Company and to the Other
Unitholders holding Units of the same class proposed to be Transferred by the
Offering Unitholder (such Other Unitholders, the "Unitholder Offerees"), such
written notice to specify in reasonable detail the number and class of Units to
be so Transferred, the proposed purchase price therefor and the other terms and
conditions of such proposed Transfer (a "First Offer Notice"). Subject to
Section 7.12(c)(i) hereof, the Company may elect to purchase all (but not less
than all) of the Units to be Transferred, upon the terms and conditions as those
set forth in the First Offer Notice and other reasonable and customary terms and
conditions, by delivering a written notice of such election to the Offering
Unitholder within 15 days after the First Offer Notice has been delivered to the
Company. If the Company has not elected to purchase all of the Units to be
Transferred, the Unitholder Offerees may elect to purchase all (but not less
than all) of the Units to be Transferred, on a pro rata basis (based on the
Ownership Ratio of each Unitholder Offeree calculated solely with respect to the
class of Units contemplated to be Transferred) upon the same terms and
conditions as those set forth in the First Offer Notice, by giving written
notice of such election to the Offering Unitholder within 15 days after the
First Offer Notice has been delivered to the Company; provided, that if any
Unitholder Offeree elects not to purchase its pro rata share the Units to be
Transferred, the remaining Unitholder Offerees that have so elected may purchase
their pro rata share of such unpurchased Units (based on the Ownership Ratio of
each remaining Unitholder Offeree calculated solely with respect to the class of
Units contemplated to be Transferred). If neither the Company nor the Unitholder
Offerees elect to purchase all of the Units specified in the First
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Offer Notice, then the Offering Unitholder may Transfer to any Person the Units
contemplated to be Transferred at a price and on terms and conditions in the
aggregate no more favorable to the Transferee than those specified in the First
Offer Notice during the 150-day period immediately following the date on which
the First Offer Notice has been delivered to the Company and the Unitholder
Offerees. In connection with any such Transfer, the Company shall make any
filings with Governmental Authorities necessary to consummate such Transfer. Any
Units not Transferred within such 150-day period will be subject to the
provisions of this Section 8.2(b) upon subsequent Transfer. This Section 8.2(b)
shall terminate upon the consummation of an Initial Public Offering.
(c) Permitted Transfers.
(i) Subject to Section 8.1, the restrictions on Transfer contained in
Sections 8.2(a) and (b) shall not apply with respect to any Transfer
(A) in the case of a Member which is a natural Person, of Units
pursuant to applicable laws of descent and distribution or to any
member of such Member's Family Group, (B) in the case of a CSX Member,
(x) of Senior Preferred Units or Derivatives thereof or (y) of any
Units among its Affiliates at any time after December 31, 1998, (C)(x)
in the case of a Vectura Party, among its Affiliates, (y) in the case
of each of Vectura and NMI, its stockholders as of the date hereof, so
long as such Transfer occurs prior to the second anniversary of the
date of this Agreement, (z) in the case of the majority stockholder of
Vectura (on a fully diluted, as if converted basis), (1) its
co-investment partnerships, and (2) in connection with a co-investment,
its employees, directors, and internal, full-time consultants and any
trust or partnership of which its employees, directors, and internal,
full-time consultants are the sole beneficiaries in connection with a
co-investment (any such trust or partnership, a "Co-Investment
Vehicle"), (D) in the case of a Co-Investment Vehicle, of Units in-kind
to the partners and beneficiaries of such Co-Investment Vehicle as a
distribution in-kind, and (E) in the case of a Vectura Member, to any
Person in order to resolve a Regulatory Problem if, (x) such Vectura
Member, after taking commercially reasonable actions with the
cooperation of the Company, is unable to restructure its ownership of
such Units in a manner that avoids a Regulatory Problem and in a manner
which is not adverse to such Vectura Member, and (y) giving notice to
the Company and the CSX Members, such Vectura Member has determined
that such Regulatory Problem may not be avoided.
(ii) Transfers to Management Unitholders. Subject to
Section 8.1, it is hereby acknowledged and agreed that the Company may
issue new Units to management, the proceeds of which (notwithstanding
the provisions of Article V) shall be immediately distributed to the
CSX Members and Vectura Members (in the proportions and using the
methodology and other terms and conditions set forth on Schedule C
attached hereto). Such management shall thereupon become Management
Unitholders for purposes of this Agreement.
(iii) Transfers among Investor Unitholders. Subject
to Section 8.1, each initial Investor Unitholder as of the date hereof
shall Transfer to any subsequent replacement Independent Representative
appointed in accordance with Section 7.2(f) up
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to the full amount of the Units held by such Investor Unitholder, at
$10/Unit payable to the Transferring Person.
8.3 Approved Sale.
(a) In the event of any Approved Sale, each Unitholder will
(i) consent to the Approved Sale and (ii) waive any dissenter's rights and other
similar rights available to such Unitholder. If the Approved Sale is structured
as a sale of Units that include Junior Common Units, each Unitholder will agree
to sell all of its Units on the terms and conditions of the Approved Sale;
provided that, if the Approved Sale consists of a sale of Units, the portion of
the aggregate selling price (net of expenses of the Approved Sale) (the "Selling
Price") to be delivered to each Unitholder that is selling Units in the Approved
Sale shall be equal to the amount such Unitholder would receive in respect of
their Units sold in the Approved Sale if (i) in the case of an Approved Sale of
all outstanding Units, (A) all of the Company's assets were sold for an amount
(net of all Company liabilities and expenses of the Approved Sale not described
in Section 8.3(c)) equal to the Selling Price and (B) such Selling Price were
distributed to the Unitholders in liquidation of the Company pursuant to Section
9.2(b)(iii), and (ii) in the case of an Approved Sale of less than all
outstanding Units, (A) all of the Company's assets were sold for an amount (net
of all Company liabilities and expenses of the Approved Sale not described in
Section 8.3(c)) equal to the Fair Market Value of such assets (determined
consistent with the pricing for the Approved Sale and net of all Company
liabilities and expenses of the Approved Sale not described in Section 8.3(c))
and (B) such amount were distributed to the Unitholders in liquidation of the
Company pursuant to Section 9.2(b)(iii). Each Unitholder will take all necessary
and desirable actions as reasonably requested in connection with the
consummation of any Approved Sale, but shall not be required to execute any
purchase agreement, undertake any obligation except as provided herein or grant
indemnification other than identical indemnification rights (whether directly to
the buyer of the Units or pursuant to the provisions of a contribution
agreement) pro rata based on the number of Junior Common Units to be sold by
such Unitholders pursuant to the Approved Sale capped at an amount not greater
than the proceeds thereof.
(b) If the Company or any Unitholder or group of Unitholders
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) under the Securities Act may be available with respect to
such negotiation or transaction (including a merger, consolidation, or other
reorganization), the Other Unitholders will, at the request of the Company,
appoint a purchaser representative (as such term is defined in Rule 501)
reasonably acceptable to the Company.
(c) Costs incurred by any Unitholder on its own behalf will
not be considered costs of the transaction hereunder.
8.4 Legend. The Units have not been registered under the Securities Act
and, therefore, in addition to the other restrictions on Transfer contained in
this Agreement, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is then available. To the
extent such Units have been certificated, each certificate
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evidencing Units and each certificate issued in exchange for or upon the
Transfer of any Units shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON JUNE 30, 1998 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND THE ISSUER (THE "COMPANY") HAS NOT
BEEN REGISTERED UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "INVESTMENT COMPANY ACT"). THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED (X) IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN THE ABSENCE OF
AN EXEMPTION FROM REGISTRATION THEREUNDER, OR (Y) IF SUCH SALE OR
TRANSFER CANNOT BE EFFECTED WITHOUT THE LOSS BY THE COMPANY OF ANY
APPLICABLE INVESTMENT COMPANY ACT EXEMPTION. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER SPECIFIED IN THE AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT, DATED AS OF JUNE 30, 1998, AS AMENDED AND MODIFIED
FROM TIME TO TIME. THE COMPANY RESERVES THE RIGHT TO REFUSE THE
TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED
WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE
FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE."
The Company shall imprint such legend on certificates (if any) evidencing Units.
The legend set forth above shall be removed from the certificates (if any)
evidencing any Units which cease to be Units in accordance with the definition
thereof. Notwithstanding the foregoing, to the extent the Units are not
certificated, this Agreement will contain a legend in substantially the form
stated above.
8.5 Pre-emptive Rights. The Company shall not engage in a Preemptive
Offering (other than Exempt Preemptive Offerings) unless the Company shall first
offer in writing to sell to each Junior Common Holder, on the same terms and
conditions and at the same equivalent price, a number of Preemptive Securities
equal to the Proportionate Amount; provided, that in the case a Junior Common
Holder elects not to exercise its rights pursuant to this Section 8.5, whether
in full or in part, each other Junior Common Holder shall have the right to
subscribe for such non-electing Junior Common Holder's Proportionate Amount.
Such offer of the Company shall remain outstanding for at least 30 days from the
date of such written notice and shall be exercised by a Junior Common Holder by
serving written notice to the Company within such 30 day period. The foregoing
preemptive rights shall apply mutatis mutandis to Preemptive Offerings made by
any Subsidiary of the Company. This Section 8.5 shall terminate upon the
consummation of a Qualified Public Offering.
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8.6 Initial Public Offering. Immediately prior to the consummation of
an Initial Public Offering, the Members and Board will take all necessary and
desirable actions in consummation of any such Initial Public Offering, and vote
for a recapitalization and/or exchange of the Units into securities (the
"Reclassified Securities") the Board finds acceptable; provided, that (i) the
Reclassified Securities provide each Unitholder with the same relative economic
interest, governance, priority and other rights and privileges as such
Unitholder had prior to such recapitalization and/or exchange and are consistent
with the rights and preferences attendant to such Units as set forth in the
Agreement or Applicable Law as in effect immediately prior to such Initial
Public Offering and (ii) except as otherwise provided herein, the provisions of
this Agreement apply to the Reclassified Securities and the issuer thereof as
such provisions apply to the Units and the Company, mutatis mutandis.
8.7 Transfer by Vectura Members. Notwithstanding any other provision of
this Agreement to the contrary but subject to Section 8.1(a) and the penultimate
sentence of Section 8.2(a), in any transaction that would require or permit any
Vectura Member to Transfer or exchange (including, without limitation, in
connection with an Initial Public Offering or any Transfer pursuant to Section
8.2 or 8.3) all or a portion of the Vectura Units, the Vectura Members may elect
to Transfer, in lieu of such Vectura Units, stock of Vectura corresponding to
the percentage of Vectura Units to be Transferred.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
9.1 Duration. The Company shall terminate upon (i) the sale or other
disposition by the Company of all or substantially all of the assets, properties
or businesses the Company then owns, (ii) the dissolution of the Company by
action of the Board, or (iii) any other event that would cause the dissolution
of a limited liability company under the Act (each of the foregoing events, a
"Dissolution Event").
9.2 Liquidation of Company Interests.
(a) Upon dissolution of the Company, the Board shall appoint
one Member (or any other Person) to serve as the "Liquidator" who shall act at
the direction of the Board, unless and until a successor Liquidator is appointed
as provided herein. The Liquidator shall agree not to resign at any time without
30 days' prior written notice. The Liquidator may be removed at any time, with
or without cause, by notice of removal and appointment of a successor Liquidator
approved by the Board. Within 30 days following the occurrence of any such
removal, a successor Liquidator may be elected by the Board. The successor
Liquidator shall succeed to all rights, powers and duties of the former
Liquidator. The right to appoint a successor or substitute Liquidator in the
manner provided herein shall be recurring and continuing for so long as the
functions and services of the Liquidator are authorized to continue under the
provisions hereof, and every reference herein to the Liquidator shall be deemed
to refer also to any such successor or substitute Liquidator appointed in the
manner herein provided. Except as expressly provided in this Article IX, the
Liquidator appointed in the manner provided herein shall have and may exercise,
without further authorization or consent of any of the parties hereto, all of
the powers
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conferred upon the Board under the terms of this Agreement (but subject to all
of the applicable limitations, contractual and otherwise, upon the exercise of
such powers to the extent necessary or desirable in the good faith judgment of
the Liquidator to carry out the duties and functions of the Liquidator hereunder
for and during such period of time as shall be reasonably required in the good
faith judgment of the Liquidator to complete the winding up and liquidation of
the Company as provided for herein). The Liquidator shall receive as
compensation for its services (i) no additional compensation, if the Liquidator
is an employee of the Company or any of its Subsidiaries, or (ii) if the
Liquidator is not such an employee, a reasonable fee plus out-of-pocket costs
and expenses or such other compensation as the Board may otherwise approve.
(b) The Liquidator shall liquidate the assets of the Company,
and apply and distribute the proceeds of such liquidation, in the following
order of priority, unless otherwise required by mandatory provisions of
applicable law;
(i) First, to the payment of the Company's debts and
obligations to its creditors, including sales commissions and other
expenses incident to any sale of the assets of the Company (including a
Sale of the Company).
(ii) Second, to the establishment of and additions to
such reserves as the Liquidator may deem necessary or appropriate.
(iii) Third, to the Unitholders, in accordance with
the provisions of Section 5.2(a); provided, that in the event that
distributions pursuant to this subparagraph (iii) would not otherwise
be identical to distributions in accordance with the positive balances
in the Unitholders' Capital Accounts, then in accordance with such
positive balances.
The reserves established pursuant to subparagraph (ii) of this Section 9.2(b)
shall be paid over by the Liquidator to a bank or other financial institution,
to be held in escrow for the purpose of paying any such contingent or unforeseen
liabilities or obligations and, at the expiration of such period as the
Liquidator deems advisable, such reserves shall be distributed to the
Unitholders in the priorities set forth in this Section 9.2(b). The allocations
and distributions provided for in this Agreement are intended to result in the
Capital Account of each Unitholder immediately prior to the distribution of the
Company's assets pursuant to this Section 9.2(b) being equal to the amount that
would be distributable to such Unitholder pursuant to this Section 9.2(b)
without regard to the proviso in subparagraph (iii). The Company is authorized
to make appropriate adjustments in the allocation of items of income, gain, loss
and deduction as necessary to cause the amount of each Unitholder's Capital
Account immediately prior to the distribution of the Company's assets pursuant
to this Section 9.2(b) to equal the amount that would be distributable to such
Unitholder pursuant to this Section 9.2(b) without regard to the proviso in
subparagraph (iii).
(c) Notwithstanding the provisions of Section 9.2(b) which
require the liquidation of the assets of the Company, but subject to the order
of priorities set forth in Section 9.2(b), if upon dissolution of the Company
the Board determines that an immediate sale of part or all of the Company's
assets would be impractical or could cause undue harm to the
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Unitholders, then the Board may, in its discretion, defer the liquidation of any
assets except those necessary to satisfy Company liabilities and reserves, and
may, in its discretion, distribute to the Unitholders, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 9.2(b),
undivided interests in such Company assets as the Liquidator deems reasonable
and equitable and subject to any agreements governing the operating of such
properties at such time. For purposes of any such distribution, the Board will
determine the Fair Market Value of any property to be distributed.
(d) A reasonable time will be allowed for the orderly winding
up of the business and affairs of the Company and the liquidation of its assets
pursuant to Section 9.2(b) in order to minimize any losses otherwise attendant
upon such winding up. Distributions upon liquidation of the Company (or any
Unitholder's interest in the Company) and related adjustments will be made by
the end of the Fiscal Year of the liquidation (or, if later, within 90 days
after the date of such liquidation) or as otherwise permitted by Treasury
Regulation Section 1.704-1(b)(2)(ii)(b).
ARTICLE X
BOOKS AND RECORDS
10.1 Books. The Company shall maintain complete and accurate books of
account of the Company's affairs at the Company's principal office, which books
shall be open to inspection by any Member (or its authorized representative) to
the extent required by the Act. CSX and the Vectura Parties acknowledge that
they have reviewed certain illustrations of the application of Articles V and VI
hereof (assuming that the only Members are CSX, Vectura and NMI).
10.2 Tax Allocations and Reports. Subject to the provisions of Article
VII of the Recapitalization Agreement:
(a) Not later than seven calendar months after the end of each
Fiscal Year (but subject to the review procedures described in Section 7.10 of
the Recapitalization Agreement), the Board shall cause the Company to furnish
each Unitholder an Internal Revenue Service Form K-1 and any similar form
required for the filing of state or local income tax returns for such Unitholder
for such Fiscal Year. Upon the written request of any such Unitholder and at the
expense of such Unitholder, the Company will use reasonable efforts to deliver
or cause to be delivered any additional information necessary for the
preparation of any state, local and foreign income tax return which must be
filed by such Unitholder.
(b) The Tax Matters Partner will determine whether to make or
revoke any available election pursuant to the Code. Each Unitholder will, upon
request, supply the information necessary to give proper effect to any such
election.
(c) The Company hereby designates Vectura to act as the "Tax
Matters Partner" (as defined in Section 6231(a)(7) of the Code) in accordance
with Sections 6221 through 6233 of the Code. The Tax Matters Partner is
authorized and required to represent the Company (at the Company's expense) in
connection with all examinations of the Company's
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affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Company funds for professional services and costs
associated therewith; provided, that the Tax Matters Partner may be removed and
replaced by, and shall act in such capacity at the direction of, the Board. Each
Unitholder agrees to cooperate with the Tax Matters Partner and to do or refrain
from doing any or all things reasonably requested by the Tax Matters Partner
with respect to the conduct of such proceedings. Subject to the foregoing
proviso, the Tax Matters Partner will have reasonable discretion to determine
whether the Company (either on its own behalf or on behalf of the Unitholders)
will contest or continue to contest any tax deficiencies assessed or proposed to
be assessed by any taxing authority. Any deficiency for taxes imposed on any
Unitholder (including penalties, additions to tax or interest imposed with
respect to such taxes) will be paid by such Unitholder, and if paid by the
Company, will be recoverable from such Unitholder (including by offset against
distributions otherwise payable to such Unitholder).
10.3 Tax Proceedings. Any tax audit or other proceeding with respect to
the Company or any of its Subsidiaries for a taxable period that includes but
does not end on June 30, 1998 and any taxable period that begins after June 30,
1998 that might have an adverse effect on CSX shall be treated as referred to in
Section 7.8 of the Recapitalization Agreement; provided, however, that the right
of CSX to consent to a proposed settlement, compromise or abandonment of such an
audit or proceeding pursuant to Section 7.8(b)(v) of the Recapitalization
Agreement shall apply to matters respecting the allocation of debt pursuant to
Section 6.5 of this Agreement and matters respecting any transactions that could
result in the realization of Built-in Gain of at least $1,500,000 (but such
right to consent shall otherwise not apply to such an audit or proceeding); and
provided further, however, that, in the event that CSX reasonably withholds
consent pursuant to Section 7.8(b)(v) of the Recapitalization Agreement, then
CSX shall have the right to assume control of the defense of such audit or
proceeding (at CSX's expense) and CSX shall indemnify the Company and its
Members (other than CSX) for any liability of the Company and its Members (other
than CSX) in excess of the liability that the Company and its Members (other
than CSX) would have had under the proposed settlement, compromise or
abandonment as to which CSX reasonably withheld consent.
ARTICLE XI
EXCULPATION AND INDEMNIFICATION
11.1 Exculpation and Indemnification.
(a) No Member, Representative or any direct or indirect
officer, director, stockholder or partner of a Member (each, an "Indemnitee"),
shall be liable, responsible or accountable in damages or otherwise to the
Company, any Member, or to any Unitholder, for any act or failure to act by such
Indemnitee in connection with the conduct of the business of the Company, or by
any other such Indemnitee in performing or participating in the performance of
the obligations of the Company, so long as such Indemnitee acted in the good
faith belief that such action or failure to act was in the best interests, or
not opposed to the best interests, of the Company and/or its Subsidiaries and
such action or failure to act was not in violation of this Agreement and did not
constitute gross negligence or willful misconduct. No Person who is a
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Member, Representative, an Officer, or any combination of the foregoing, shall
be personally liable under any judgment of a court, or in any other manner, for
any debt, obligation, or liability of the Company, whether that liability or
obligation arises in contract, tort, or otherwise, solely by reason of being a
Member, Representative, an Officer, or any combination of the foregoing. Nothing
contained in this Agreement shall affect the rights of the Company against any
Member pursuant to the terms and conditions of the Recapitalization Agreement.
(b) The Company shall indemnify and hold harmless each
Indemnitee to the fullest extent permitted by law against losses, damages,
liabilities, costs or expenses (including reasonable attorney's fees and
expenses and amounts paid in settlement) incurred by any such Indemnitee in
connection with any action, suit or proceeding to which such Indemnitee may be
made a party or otherwise involved or with which it shall be threatened by
reason of its being a Member, Representative or any direct or indirect officer,
director, stockholder or partner of a Member, or while acting as (or on behalf
of) a Member on behalf of the Company or in the Company's interest. Such
attorney's fees and expenses shall be paid by the Company as they are incurred
upon receipt, in each case, of an undertaking by or on behalf of the Indemnitee
to repay such amounts if it is ultimately determined that such Indemnitee is not
entitled to indemnification with respect thereto.
(c) The right of an Indemnitee to indemnification hereunder
shall not be exclusive of any other right or remedy that a Member,
Representative or Officer may have pursuant to Applicable Law or this Agreement.
11.2 Insurance. The Company shall have the power to purchase and
maintain insurance on behalf of any Indemnitee or any Person who is or was an
agent of the Company against any liability asserted against such Person and
incurred by such Person in any such capacity, or arising out of such Person's
status as an agent, whether or not the Company would have the power to indemnify
such Person against such liability under the provisions of Section 11.1 or under
Applicable Law.
11.3 Indemnification and Reimbursement for Payments on Behalf of a
Unitholder.
(a) If the Company is obligated to pay any amount to a
Governmental Authority or to any other Person (and makes such payment or will
make such a payment within 30 days of charging the Capital Account of the Member
pursuant to the following sentences and either providing notification of an
obligation to indemnify under (i) below or offsetting a distribution pursuant to
(ii) below) on behalf of (or in respect of an obligation of) a Unitholder
(including, without limitation, federal, state and local withholding taxes
imposed with respect to foreign Members, and state unincorporated business
taxes, etc.), then such Unitholder (the "Charged Member") shall indemnify the
Company in full for the entire amount paid (including, without limitation, any
interest, penalties and expenses associated with such payment). The amount to be
indemnified shall be charged against the Capital Account of the Charged Member,
and, at the option of the Board, either:
(i) promptly upon notification of an obligation to
indemnify the Company, the Charged Member shall make a cash payment to the
Company equal to the full
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amount to be indemnified (and the amount paid shall be added to the Charged
Member's Capital Account but shall not be deemed to be a Capital Contribution
hereunder); or
(ii) the Company shall reduce current or subsequent
distributions that would otherwise be made to the Charged Member until the
Company has recovered the amount to be indemnified (provided that the amount of
such reduction shall be deemed to have been distributed for all purposes of this
Agreement, but such deemed distribution shall not further reduce the Charged
Member's Capital Account).
(b) A Charged Member's obligation to make contributions to the
Company under this Section 11.3 shall survive the termination, dissolution,
liquidation and winding up of the Company, and for purposes of this Section
11.3, the Company shall be treated as continuing in existence. The Company may
pursue and enforce all rights and remedies it may have against each Charged
Member under this Section 11.3, including instituting a lawsuit to collect such
contribution with interest calculated at a rate equal to the Base Rate plus six
percentage points per annum (but not in excess of the highest rate per annum
permitted by law).
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality. By executing this Agreement, each Member expressly
agrees, at all times during the term of the Company and thereafter and whether
or not at that time it is a Member of the Company, (unless the prior written
consent of the Company is obtained, which prior consent shall not be
unreasonably withheld) to maintain the confidentiality of, and not to disclose
to any Person other than the Company, another Member or a person designated by
the Company, any information obtained from the Company or its representatives
that is not generally available or known to the public and which has not been
previously disclosed by any Member without a confidentiality agreement relating
to the identity of any Member, the business, financial structure, financial
position or financial results, clients or affairs of the Company; provided, that
each Member may deliver or disclose confidential information to (i) its
directors, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by its interest in the Company and such Persons agree to comply with
the terms of this Section), (ii) its financial advisors and other professional
advisors who agree to comply with the terms of this Section, (iii) any Person to
which it sells or offers to sell its interest in the Company or any part thereof
or any participation therein in accordance with the transfer restrictions
contained in this Agreement (if such Person has agreed in writing prior to its
receipt of such confidential information to be bound by the provisions of this
Section), (iv) any Governmental Authority or other regulatory or self regulatory
authority having jurisdiction over a Member or any nationally recognized rating
agency that requires access to information about a Member's investment
portfolio, or (v) any other Person to which such delivery or disclosure may be
necessary or advisable (a) to effect compliance with any law, rule, regulation
or order applicable to a Member, including the requirements of any stock
exchange, (b) in response to any subpoena or other legal process, or (c) in
connection with any litigation to which a Member is a party.
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12.2 Waiver of Jury Trial. Each of the parties hereto waives to the
fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart or a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
12.3 GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE APPLICATION,
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE DELAWARE LIMITED LIABILITY COMPANY ACT, DELAWARE CODE, TITLE 6,
SECTIONS 18-101, ET SEQ., AS IN EFFECT FROM TIME TO TIME, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
12.4 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
12.5 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. The Members
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 original intent of the Members
signatory hereto.
12.6 Amendments. Subject to Section 7. 12(b)(iii), the parties hereto may
at any time amend this Agreement by majority consent of the Board expressed in
writing and Majority Approval of the Junior Common Units; provided, that the
provisions of Articles V or VI may be amended without the consent of a majority
of the holders of each class of Units affected by any such proposed amendment;
provided further, that no amendment or waiver to any provision of this Agreement
which adversely affects, and is prejudicial to, any CSX Member shall be
effective against such CSX Member without the written consent of such CSX
Member.
12.7 Gender and Number. Whenever required by the context, the singular
number shall include the plural number, the plural number shall include the
singular number, the masculine gender shall include the neuter and feminine
genders and vice versa.
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12.8 Notice. Any Notice or Notices required or permitted under the
provisions of this Agreement shall be sent to the addresses set forth below, or
as otherwise notified to the other party in writing:
if to the Vectura Parties:
c/o 399 Venture Partners, Inc.
399 Park Avenue
New York, New York 10043
Attention: David F. Thomas
Richard E. Mayberry, Jr.
Telephone No.: (212) 559-1127
Telecopier No.: (212) 888-2940
with copies to (which shall not constitute constructive notice to
the Vectura Parties):
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
Telephone No.: (212) 446-4800
Telecopier No.: (212) 446-4900
if to CSX:
CSX Brown Corp.
c/o CSX Corporation
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Mark G. Aron
Telephone No.: (804) 782-1400
Telecopier No.: (804) 783-1380
with copies to (which shall not constitute constructive notice to
CSX):
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Pamela S. Seymon, Esq.
Steven A. Cohen, Esq.
Telephone No.: (212) 403-1000
Telecopier No.: (212) 403-2000
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if to any other Member, to such Member's address as set forth in the records of
the Company. Any Notice sent as set forth above shall be deemed to have been
given only upon actual delivery to the intended recipient thereof or upon the
date of rejection of such notice, as evidenced by the return receipt therefor.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed and delivered shall be an original,
and all of which when executed shall constitute one and the same instrument.
12.10 Entire Agreement. Except as otherwise expressly set forth herein,
this document and the other Transaction Documents embody the complete agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
12.11 No Waiver of Remedies. The failure of a Member to insist on the
strict performance of any covenant or duty required by the Agreement, or to
pursue any remedy under the Agreement, shall not constitute a waiver of the
breach or the remedy.
12.12 Remedies Cumulative. The remedies of the Members under the Agreement
are cumulative and shall not exclude any other remedies to which the Member may
be lawfully entitled. Each of the parties confirms that damages at law may be an
inadequate remedy for a breach or threatened breach of any provision hereof. The
respective rights and obligations hereunder shall be enforceable by specific
performance, injunction or other suitable remedy, but nothing herein contained
is intended to or shall limit or affect any rights at law or by statute or
otherwise of any party aggrieved as against the other parties for a breach or
threatened breach of any provision hereof, it being the intention by this
Section to make clear the agreement of the parties that the respective rights
and obligations of the parties hereunder shall be enforceable in equity as well
as at law or otherwise.
12.13 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of all of the Members and their permitted successors, legal
representatives, and assigns.
12.14 Determinations of Fair Market Value. Except in the case of the Fair
Market Values reflected on Schedule B, the Board shall reasonably determine Fair
Market Values hereunder; provided, that in the event the holders of 10% of any
class of Units affected by such determination (the "Requesting Holders") dispute
such determination, Fair Market Value shall be determined by an independent
appraiser mutually reasonably satisfactory to the Company and the Requesting
Holders, whose fees and expenses shall be borne by the Company if the Board's
determination differs from the appraiser's determination by at least 15% of the
appraiser's determination and shall otherwise be borne by the Requesting
Holders.
* * * * *
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IN WITNESS WHEREOF, all of the Members of American Commercial Lines
Holdings LLC, a Delaware limited liability company, have executed this
Agreement, effective as of the date first written above.
CSX BROWN CORP.
By: /s/ GREGORY R. WEBER
----------------------------------------
Name: Gregory R. Weber
Title: Vice President and Treasurer
VECTURA GROUP, INC.
By: /s/ DAVID WAGSTAFF III
----------------------------------------
Name: David Wagstaff III
Title: President
NATIONAL MARINE, INC.
By: /s/ DAVID WAGSTAFF III
----------------------------------------
Name: David Wagstaff III
Title: Vice President
AMERICAN COMMERCIAL LINES HOLDINGS LLC
By: /s/ GREGORY R. WEBER
----------------------------------------
Name: Gregory R. Weber
Title: Vice President and
Treasurer, CSX Brown Corp., as
Manager of American Commercial
Lines Holdings LLC
<PAGE> 69
INVESTOR UNITHOLDER SIGNATURE PAGE TO
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
AMERICAN COMMERCIAL LINES HOLDING LLC
/s/ STEVEN ANDERSON
- ----------------------------------------
Steven Anderson
/s/ STUART AGRANOFF
- ----------------------------------------
Stuart Agranoff
<PAGE> 70
MANAGEMENT UNITHOLDER SIGNATURE PAGE TO
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
AMERICAN COMMERCIAL LINES HOLDINGS LLC
/s/ MICHAEL C. HAGAN
- ----------------------------------------
Michael C. Hagan
<PAGE> 71
SCHEDULE A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Senior Senior
Preferred Units Junior Preferred Units Common Units
- -------------------------------------------------------------------------------------------------------------------------
Aggregate Aggregate
Aggregate Initial Initial Aggregate Number
Capital Redemption Number of Redemption Number of Initial Capital of
Member Contributions Value Units Value Units Account Units
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CSX Member* $155,000,000 $115,000,000 11,500,000 $39,656,364 3,965,636 0 0
- -------------------------------------------------------------------------------------------------------------------------
Vectura $60,000,000 0 0 $59,454,545 5,945,455 0 0
- -------------------------------------------------------------------------------------------------------------------------
NMI $3,895,000 0 0 $395,000 39,500 $3,389,091 338,909
- -------------------------------------------------------------------------------------------------------------------------
Independent
Investors
Steven A. Anderson 15,000
- -------------------------------------------------------------------------------------------------------------------------
Stuart Agranoff 15,000
- -------------------------------------------------------------------------------------------------------------------------
Management
Unitholders
Michael Hagan 17,000
=========================================================================================================================
TOTAL $218,942,000 $115,000,000 11,500,000 $99,505,909 9,950,591 $3,389,091 338,909
=========================================================================================================================
<CAPTION>
- -----------------------------------------------------------------------
Junior Common Units
- -----------------------------------------------------------------------
Aggregate Class A Class B Total
Initial Junior Junior Junior
Capital Common Common Common
Member Account Units Units Units
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CSX Member* $343,636 3,400.0 30,963.0 34,363.0
- -----------------------------------------------------------------------
Vectura $545,455 1,579.0 52,967.0 54,545.0
- -----------------------------------------------------------------------
NMI $110,909 321.0 10,770.0 11,091.0
- -----------------------------------------------------------------------
Independent
Investors
Steven A. Anderson $15,000 1,500.0 1,500.0
- -----------------------------------------------------------------------
Stuart Agranoff $15,000 1,500.0 1,500.0
- -----------------------------------------------------------------------
Management
Unitholders
Michael Hagan $17,000 1,700.0 1,700.0
=======================================================================
TOTAL $1,047,000 10,000.0 94,700.0 104,700.0
=======================================================================
</TABLE>
- ----------
* The CSX Member made a Capital Contribution of $851,352,000 and received a
distribution of $696,352,000.
<PAGE> 72
SCHEDULE B
Allocation Of Initial Value Among Gross Assets Contributed By CSX Brown
1. Domestic fleet: $450 million (estimated tax basis $140 - $150 million as
of December 31, 1997).
2. Nondepreciable, nonamortizable goodwill associated with domestic fleet:
$112.5 million, including $2 million associated with Liquids line.
3. Foreign stock: $125 million.
4. Jeffboat, Waterway Communications, Terminals, Headquarters: $112.5
million. Suballocations within this category:
<TABLE>
<S> <C>
A. Jeffboat: $ 40 million
B. Waterway Communications: $ 20 million
C. Terminals: $ 37.5 million
D. Headquarters: $ 15 million
Total: $112.5 million
</TABLE>
5. Domestic current assets and other domestic nondepreciable assets: allocate
initial value equal to tax basis (estimated at $138 million as of December
31, 1997).
<PAGE> 73
SCHEDULE C
Permitted Transfers to Management Unitholders
A. The Company shall issue to new Management Unitholders within three (3)
months following the Closing Date (provided that $1,000,000 of the Units
described below may be requested for issuance within 15 months following
the Closing Date), upon 10 days prior written notice from Vectura to CSX,
Units in amounts which results in dilution to CSX and Vectura (x) not in
excess of the amounts described below and (y) in the relative proportions
as follows (each at $10 per Unit):
(i) CSX will Transfer to the Company solely for purposes of reissuance
to Management Unitholders selected by the Compensation Committee up
to an aggregate of the following Units:
<TABLE>
<CAPTION>
NO. OF UNITS DOLLARS
------------ -------
<S> <C> <C>
Junior Preferred Units: 116,881.9 $1,168,819
Junior Common Units: 1012.8 $ 10,128
</TABLE>
(ii) Vectura or 399 Venture will Transfer to the Company solely for
purposes of reissuance to Management Unitholders selected by the
Compensation Committee up to an aggregate of the following Units.*
<TABLE>
NO. OF UNITS DOLLARS
------------ -------
<S> <C> <C>
Junior Preferred Units: 175,234.4 $1,752,344
Junior Common Units: 1,607.7 $ 16,077
</TABLE>
All such Transfers of Common Preferred Units and Junior Common Units shall
be made by CSX and Vectura/399 Venture on a pro rata basis in accordance
with the number of Junior Preferred Units and Junior Common Units to be
sold by CSX and Vectura/399 Venture.*
B. In addition, the Company may issue, as incentive compensation, up to
5,236.2 Junior Common Units (which includes any Junior Common Units based
on the Closing Date) to Management Unitholders selected by the
Compensation Committee at $10/Unit on customary terms.
C. The terms and conditions of such issuance and sale to management shall be
first consistent with the foregoing and second as reasonably specified by
the Compensation
- ----------
* While these illustrations describe Transfers, dilutive issuances by the
Company shall instead be effected.
<PAGE> 74
Committee and in accordance with customary terms and conditions for
management equity investment in leveraged acquisitions.
-2-
<PAGE> 75
Exhibit A
FORM OF JOINDER
TO
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
THIS JOINDER to the Amended and Restated Limited Liability Company
Agreement, dated as of June 30, 1998 by and among AMERICAN COMMERCIAL LINES
HOLDINGS LLC, a Delaware limited liability corporation (the "Company"), and
certain other Persons (the "Agreement"), is made and entered into as of
_________ by and between the Company and __________________ ("Holder").
Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in the Agreement.
WHEREAS, Holder has acquired certain Units and the Agreement and the
Company requires Holder, as a Unitholder, to become bound by and/or a party to
the Agreement, and Holder agrees to do so in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Joinder hereby agree as
follows:
1. Agreement to be Bound. Holder hereby agrees that upon
execution of this Joinder, it shall become bound by and/or a party to the
Agreement and shall be fully bound by, and subject to, all of the covenants,
terms and conditions of the Agreement as though an original party thereto and
shall be deemed a Unitholder for the purposes of being bound thereby. In
addition, Holder hereby agrees that each class of Units held by Holder shall be
deemed Units for the purposes of being bound thereby and shall have the rights
only as provided in the Agreement.
2. Successors and Assigns. Except as otherwise provided
herein, this Joinder shall bind and inure to the benefit of and be enforceable
by the Members, the Company and their successors and assigns and Holder (only as
provided in the Agreement) and any subsequent holders of Units and the
respective successors and assigns of each of them, so long as they hold any
Units.
3. Counterparts. This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
4. Notices. For purposes of Section 12.8 of the Agreement, all
notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
<PAGE> 76
5. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
APPLICATION, CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE AND THE DELAWARE LIMITED LIABILITY COMPANY ACT, DELAWARE CODE,
TITLE 6, SECTIONS 18-101, ET SEQ., AS IN EFFECT FROM TIME TO TIME, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER
OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
6. DESCRIPTIVE HEADINGS. The descriptive headings of this
Joinder are inserted for convenience only and do not constitute a part of this
Joinder.
* * * * *
-2-
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of
the date first above written.
AMERICAN COMMERCIAL LINES HOLDINGS LLC
By:
-----------------------------------
Name:
Title:
[HOLDER]
By:
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 3.5
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
AMERICAN COMMERCIAL LINES LLC
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT (the "Agreement") is made effective as of the 30th day of June, 1998,
by and between American Commercial Lines Holdings LLC, a Delaware limited
liability company, as the sole member (the "Member"), and American Commercial
Lines LLC, a Delaware limited liability company.
1. Formation of the Company. By execution of this Agreement, the
Member ratifies and confirms the actions of Louis G. Recher, Esquire, as its
duly authorized agent in connection with the filing of a certificate of
formation (the "Certificate") with the Secretary of the State of Delaware for
the purpose of forming American Commercial Lines LLC (the "Company"), a limited
liability company formed under the Delaware Limited Liability Company Act. 6
Del. C. Section 18-101, et seq. ("Act")
2. Name of the Company. The name of the Company stated in the
Certificate and the limited liability company governed by this Agreement is
"American Commercial Lines LLC."
3. Purpose. This Company is formed for the object and purpose of,
and the nature of the business to be conducted and promoted by the Company is,
engaging in any lawful act or activity for which limited liability companies may
be formed under the Act and engaging in any and all activities necessary or
incidental to the foregoing.
4. Registered Office; Registered Agent. The registered office of the
Company in the State of Delaware is located at The Corporation Trust Center,
1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the
registered agent of the Company at such address is The Corporation Trust
Company.
5. Membership Interests. The Company shall be authorized to issue
one hundred (100) membership interests ("Membership Interests"), all of which
shall be issued to the Member. Membership Interests shall for all purposes be
personal property.
6. Certificate of Membership Interest. The Company shall issue to
the Member a limited liability company certificate in the form annexed hereto as
Exhibit I (a "Certificate"), evidencing the Membership Interests in the Company
held by such Member. The Certificate shall be transferable only on the books of
the Company, to be kept by the Secretary of the Company, on surrender thereof by
the registered holder in person or by attorney, and until so transferred, the
Company may treat the registered holder of a Certificate as the owner of the
interest evidenced thereby for all purposes whatsoever. Nothing contained in
this Section 6 shall authorize or permit the Member to transfer its interest
except as contemplated by Section 8. For the purposes of Article
<PAGE> 2
8 in any Uniform Commercial Code, each interest in the Company as evidenced by a
Certificate shall be deemed to be a security, as such term is defined in any
Uniform Commercial Code.
7. Agreement to Pledge Membership Interests. Notwithstanding any
provision herein to the contrary, the Member shall pledge such Member's
Membership Interests in the Company to secure the indebtedness of the Company or
its subsidiaries. The Member hereby agrees to take any and all actions and
execute such instruments, agreements and other documents to effect the pledge of
such Member's Membership Interests.
8. Pledge of Membership Interests. To secure, among other things,
the payment and performance of the obligations of the Company to The Chase
Manhattan Bank as issuing bank and as administrative agent and collateral agent
("Chase") for itself and certain other financial institutions (the "Lenders")
from time to time party to that certain Credit Agreement which is to be entered
into and dated as of June 30, 1998 among Chase, the Lenders, the Company and
American Commercial Lines Holdings LLC (as amended from time to time, the
"Credit Agreement"), the Member will pledge 100% of its Membership Interests in
the Company to Chase, for the benefit of itself and the Lenders. Said pledge is
hereby authorized by the Member and the Company. The books and records of the
Company shall be marked to reflect the pledge of the Membership Interests to
Chase, for the benefit of itself and the Lenders. For so long as any Loans (as
defined in the Credit Agreement) remain outstanding, no Membership Interest or
any rights relating thereto will be transferred or further encumbered and no new
Members will be admitted without the written consent of Chase and, if the
Company is advised by Chase that an event of default has occurred under the
Credit Agreement, the Company will comply with the provisions of the Pledge
Agreement (as defined in the Credit Agreement) which is to be entered into and
dated as of June 30, 1998. No exercise by Chase of its rights under such Pledge
Agreement shall constitute a violation of or be prohibited by this Agreement and
Chase shall become a member upon such exercise.
9. Capital Contributions by the Member. The Member shall not be
obligated to make capital contributions to the Company, and the Membership
Interests shall be nonassessable.
10. Allocation of Profits and Losses. The Company's profits and
losses shall be allocated entirely to the Member, and the Member's distributive
share of income, gain, loss, deduction, or credit (or item thereof) shall be
determined and allocated in accordance with this Section 10 to the fullest
extent permitted by Sections 704(b) and (c) of the Internal Revenue Code
of 1986, as amended, and the treasury regulations promulgated thereunder.
11. Distributions. Distributions shall be made to the Member at the
times and in the aggregate amounts determined by the Manager.
12. Appointment and Removal of Manager. The Member is hereby
appointed as the sole manager of the Company (the "Manager"), as provided in
Sections 18-402 and 18-403 of the Act. The Manager shall have such rights
and duties as are provided by the Act, and shall have the power and authority to
delegate to the officers of the Company, if any, its right and powers, or any
portion thereof, to manage and control the business and affairs of the Company.
2
<PAGE> 3
13. Officers. The officers of the Company, if any, shall be
appointed by the Manager in its sole discretion. Unless such appointment
provides otherwise, each officer so appointed shall have such powers and duties
as are provided in the following:
(a) President. The President shall be the Chief Executive
Officer of the Company. Subject to the direction of the Manager, he shall have,
and exercise, direct charge of, and general supervision over, the business and
affairs of the Company, and shall perform all duties incident to the office of a
President in a corporation organized under the Delaware General Corporation Law.
No person may hold the office of President, or act in place of the President in
the case of absence or disability, unless such person is a citizen of the United
States.
(b) Vice Presidents. The powers, duties, and responsibilities
of the Vice Presidents shall be fixed by the President, with the approval of the
Manager. A Vice President may be designated as an Executive Vice President, a
Senior Vice President or a Vice President with a functional title.
(c) General Counsel. The General Counsel shall have general
charge of the legal affairs of the Company, and shall cause to be kept adequate
records of all suits or actions, of every nature, to which the Company may be a
party, or in which it has an interest, with sufficient data to show the nature
of the case and the proceedings therein. He shall prepare, or cause to be
prepared, legal opinions on any subject necessary for the affairs of the
Company, and shall perform such other duties as the Manager, or the President,
may designate.
(d) Secretary. The Secretary shall attend all meetings of the
members of the Company and record their proceedings, unless a temporary
secretary be appointed. He shall give due notice, as required, of all meetings
of the members of the Company, and he shall keep, or cause to be kept, at a
place or places required by law, a record of the members and managers of the
Company, giving the names and addresses of all such members and managers. He
shall be the custodian of all records, contracts, leases, and other papers and
documents of the Company, unless otherwise directed by the Manager, and shall
perform such other duties as the Manager, or the President, may designate. In
the case of the Secretary's absence or incapacity, the President may designate
an appropriate officer to perform the duties of Secretary.
(e) Treasurer. The Treasurer shall receive, keep and disburse
all moneys belonging to or coming to the Company, shall keep regular, true and
full accounts of all receipts and disbursements, and make detailed reports
thereof, shall keep a true record of expenses, losses, gains, assets, and
liabilities of the Company, and shall perform such other duties in connection
with the administration of the financial affairs of the Company as the Manager,
or the President, may designate. In the case of the Treasurer's absence or
incapacity, the President may designate an appropriate officer to perform the
duties of Treasurer.
(f) Subordinate Officers. Each subordinate officer shall hold
office for such period, have such authority, and perform such duties as the
Manager may prescribe. The
3
<PAGE> 4
Manager may, from time to time, authorize any officer to appoint and remove
subordinate officers and to prescribe the powers and duties thereof.
Each such officer shall also have such additional powers and duties as from time
to time may be conferred by the Manager. Any number of offices may be held by
the same person. Each officer shall hold office until his or her successor shall
be duly appointed and shall qualify or until his or her death, until he or she
shall resign, or until he or she shall have been removed, either with or without
cause, by the Manager in its sole discretion. The salaries or other
compensation, if any, of the officers and agents of the Company shall be fixed
by the Manager. Any appointment pursuant to this Section 13 may be revoked at
any time by the Manager.
14. Execution of Contracts, Assignments, etc. All contracts,
agreements, endorsements, assignments, transfers, stock powers, or other
instruments shall be signed by the President, or any Vice President, and
attested by the Secretary, or an Assistant Secretary, except where required or
permitted by law to be otherwise signed, and except when the signing and
execution thereof shall be expressly delegated by the Manager to some other
officer or agent of the Company.
15. Limitations on Authority. The authority of the Manager over the
conduct of the business and affairs of the Company shall be subject only to such
limitations as are expressly stated in this Agreement or in the Act.
16. Indemnification. The Company shall, to the fullest extent
authorized by the Act, indemnify and hold harmless any member, manager, officer
or employee of the Company from and against any and all claims and demands
arising by reason of the fact that such person is, or was, a member, manager,
officer or employee of the Company.
17. Dissolution. The Company shall dissolve, and its affairs shall
be wound up, upon the first to occur of the following: (a) the written consent
of the Member to such effect; and (b) the entry of a decree of judicial
dissolution under Section 18-802 of the Act.
l8. Consents. Any action that may be taken by the Member at a
meeting may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by the Member.
19. Amendments. Except as otherwise provided in this Agreement or in
the Act, this Agreement may be amended only by the written consent of the Member
to such effect.
20. Governing Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have made this Agreement
effective as of the date and year first above-written.
4
<PAGE> 5
AMERICAN COMMERCIAL LINES
HOLDINGS LLC
By: CSX BROWN CORP., as Manager
By: /s/ Gregory R. Weber
-----------------------------------
Gregory R. Weber
Title: Vice President and Treasurer
AMERICAN COMMERCIAL LINES LLC
By: /s/ Michael A. Khouri
-----------------------------------
Name: Michael A. Khouri
Title: Senior Vice President - Corporate
and Legal Affairs
5
<PAGE> 1
EXHIBIT 3.6
CERTIFICATE OF INCORPORATION
OF
ACL CAPITAL CORP.
* * * * * *
FIRST: The name of the Corporation is:
ACL Capital Corp.
SECOND: The address of its registered office in the State of Delaware
is the Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to accommodate the issuance
of notes by American Commercial Lines LLC by becoming a co-
obligor thereunder and engage in other activities incidental
to the Corporation's co-obligation under such notes and
otherwise not to conduct any business activities or hold any
assets.
FOURTH: The total number of shares of stock with the corporation shall
have authority to issue is One Thousand (1,000) shares of
Common Stock, each of which shall be without par value.
FIFTH: The name and mailing address of each incorporator is as
follows:
Name Mailing Address
---- ---------------
Mary Ann Brzoska 1209 Orange Street
Wilmington, Delaware 19801
Laura J. Vitalo 1209 Orange Street
Wilmington, Delaware 19801
Daniel J. Murphy 1209 Orange Street
Wilmington, Delaware 19801
SIXTH: The name and mailing address of each person who is to serve as
a director until the first annual meeting of the stockholders,
or until a successor is elected and qualified, is as follows:
Michael C. Hagan
1701 East Market Street
Jeffersonville, Indiana 47130
<PAGE> 2
Michael A Khouri
1701 East Market Street
Jeffersonville, Indiana 47130
Anita P Beier
1701 East Market Street
Jeffersonville, Indiana 47130
SEVENTH: The Board of Directors is expressly authorized and empowered
to make, alter, or repeal the Bylaws of the corporation.
EIGHTH: Election of directors need not be by written ballot.
NINTH: No person who is at any time a director of this Corporation
shall be personally liable to this Corporation or its
stockholders for monetary damages for any breach of fiduciary
duty by such person as a director, except for liability (i)
for breach of the director's duty of loyalty to this
Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit..
WE, THE UNDERSIGNED, being the incorporators hereinabove named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make this certificate, hereby declaring and certifying that the
facts herein stated are true and, accordingly, have hereunto set our hands this
29th day of May, 1998.
/s/ Mary Ann Brzoska
Mary Ann Brzoska
/s/ Laura J. Vitalo
Laura J. Vitalo
/s/ Daniel J. Murphy
Daniel J. Murphy
-2-
<PAGE> 1
EXHIBIT 3.7
BYLAWS
OF
ACL CAPITAL CORP.
May 29, 1998
--------------------
ARTICLE I.
Stockholders' Meetings.
Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held on such date in June, July, August, September or
October, as the Board of Directors may designate, either within or without the
State of Delaware.
Special Meetings. Special meetings of the stockholders shall be held
whenever called by the President, by a majority of the Directors, or by
stockholders holding at least one-fourth of the number of shares of Common Stock
entitled to vote.
Time and Place. The time and place of each meeting of the stockholders
shall be stated in the notice of the meeting.
Notice. Written or printed notice of every meeting of stockholders,
annual or special, stating the time and place thereof, and, if a special
meeting, the purpose or purposes in general terms for which the meeting is
called, shall not less than ten (10) days before such meeting be served upon or
mailed to each stockholder entitled to vote thereat, at his address as it
appears upon the books of the Corporation or, if such stockholder shall have
filed with the Secretary of the Corporation a written request that notices
intended for him be mailed to some other address, then to the address designated
in such request.
Quorum. The holders of a majority of the outstanding shares of Capital
Stock entitled to vote shall constitute a quorum at any meeting of the
stockholders. Less than a quorum may adjourn the meeting to a fixed time and
place, no further notice of any adjourned meeting being required.
Record Date. The Board of Directors may fix in advance a date to
determine shareholders entitled to notice or to vote at any meeting of
shareholders, to receive any dividend, or for any other purpose, such date to be
not more than 70 days before the meeting or action requiring a determination of
shareholders.
Votes and Proxies. At any meeting of stockholders, every stockholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such stockholder and bearing
a date not more than three (3) years prior to said meeting, unless said
instrument provides for a longer period. Each stockholder shall have one (1)
vote for each share of stock having voting power registered in his name on the
books of the Corporation. Except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record date for the
determination of its stockholders entitled to vote, no share of stock shall be
voted on at any election of directors which shall have been transferred on the
books of the Corporation within twenty (20) days next preceding such election of
directors.
<PAGE> 2
All elections of directors shall be held by ballot. If the chairman of
the meeting shall so determine, a vote may be taken upon any other matter by
ballot and shall be so taken upon the request of any stockholder entitled to
vote on such matter.
Conduct of Meeting. The President shall preside over all meetings of
the stockholders and prescribe rules of procedure therefor. If he is not
present, or if there is none in office, the Vice President shall preside, or, if
none be present, a chairman shall be elected by the meeting. The Secretary of
the Corporation shall act as Secretary of the meeting, if he is present. If he
is not present, the President shall appoint a Secretary of the meeting. The
chairman of the meeting shall appoint one or more inspectors of election who
shall determine the qualification of voters, the validity of proxies, and the
results of ballots.
ARTICLE II.
Board of Directors.
Number, Term and Election. The Board of Directors shall be elected at
the annual meeting of the stockholders or at any special meeting held in lieu
thereof. The business and property of the Corporation shall be conducted and
managed by a Board consisting of not less than three (3) nor more than five (5)
directors, none of whom needs to be a stockholder. The Board of Directors of the
corporation shall initially be composed of three (3) directors, but the Board
may at any time by resolution increase or decrease the number of directors to
not more than five (5) nor less than three (3), and the vacancies resulting from
any such increase shall be filled as provided in this Article II.
Each director shall hold office until the next annual meeting of
stockholders or until his successor is duly elected and qualified, or until his
earlier death or resignation.
Quorum. A majority of the Directors shall constitute a quorum. Less
than a quorum may adjourn the meeting to a fixed time and place, no further
notice of any adjourned meeting being required.
Removal and Vacancies. The stockholders at any meeting, by a vote of
the holders of a majority of all the shares of Capital Stock at the time
outstanding and having voting power, may remove any Director and fill any
vacancy. Vacancies arising among the directors, including a vacancy resulting
from an increase by the Board of Directors in the number of directors, so long
as the increase so created is not more than two, may be filled by the remaining
Directors, though less than a quorum of the Board, unless sooner filled by the
stockholders. Vacancies filled by the Directors may be subject to such rules,
regulations, and criteria as the Board of Directors may from time to time
prescribe.
Meetings and Notices. Meetings of the Board of Directors shall be held
at such times and places as may, from time to time, be fixed by resolution of
the Board or by the President, or the Secretary, and as may be specified in the
notice or waiver of notice of any meeting. Special Meetings of the Board of
Directors may be held at any time upon the call of the President or the
Secretary, or any two (2) of the directors in office. Notice of any meetings
shall be given by mailing or delivering such notice to each Director at his
residence or business address or by
2
<PAGE> 3
telephoning or telegraphing it to him at least twenty-four hours before the
meeting. Any such notice shall state the time and place of the meeting.
Any action required to be taken at a meeting of the Board may be taken
without a meeting if a consent in writing setting forth the action so to be
taken, shall be signed by all the Directors and filed with the Secretary. Such
consent shall have the same force and effect as a unanimous vote.
Any action required to be taken at a meeting of the Board may be taken
by means of a conference telephone or similar communications equipment whereby
all persons participating in the meeting can hear each other, and participation
by such means shall constitute presence in person at such meeting. When such
meeting is conducted, a written record shall be made of the action taken at such
meeting.
ARTICLE III.
Officers
Officers. The Board of Directors shall elect the following executive
officers of the Corporation at the first Meeting of the Board of Directors held
after the annual meeting of the stockholders:
A President
One or more Vice President
A Secretary
A Treasurer
The Board of Directors may, in their discretion, also elect such subordinate
offices as may, from time to time, be deemed desirable.
All officers elected by the Board of Directors shall, unless removed by
the Board of Directors as hereinafter set forth, hold office until the first
meeting of the Board of Directors after the next annual meeting of the
stockholders and until their successors are elected. Any two or more offices may
be held by the same person, except the offices of President and Secretary.
The President may appoint such additional subordinate officers as he
may deem necessary for the efficient conduct of the affairs of the Corporation.
The powers, duties, and responsibilities of officers and employees of
the Corporation not prescribed in these bylaws shall be established from time to
time by the Board of Directors or by the President.
President. The President shall be elected from among the Directors and
shall be the Chief Executive Officer of the Corporation. Subject to the
direction of the Board of Directors, he shall perform all duties incident to the
office of a President of a corporation, and such other duties as, from time to
time, may be assigned to him by the Board of Directors.
3
<PAGE> 4
Vice President. The powers, duties, and responsibilities of the Vice
Presidents shall be fixed by the President with the approval of the Board of
Directors.
Secretary. The Secretary shall attend all meetings of the stockholders,
the Board of Directors and record their proceedings, unless a temporary
secretary be appointed. He shall give due notice as required of all meetings of
the stockholders and Directors. He shall keep or cause to be kept at a place or
places required by law a record of the stockholders of the Corporation, giving
the names and addresses of all stockholders and the number, class, and series of
the shares held by each. He shall be the custodian of the seal of the
Corporation, and of all records, contracts, leases, and other papers and
documents of the Corporation, unless otherwise directed by the Board of
Directors, and shall perform such other duties as the Board of Directors or the
President may designate.
In the case of the Secretary's absence or incapacity, the President may
designate an appropriate officer to perform the duties of Secretary.
Treasurer. The Treasurer shall receive, keep and disburse all moneys
belonging to or coming to the Corporation, shall keep regular, true and full
accounts of all receipts and disbursements and make detailed reports thereof,
shall keep a true record of the expenses, losses, gains, assets, and liabilities
of the Corporation, and shall perform such other duties in connection with the
administration of the financial affairs of the Corporation as the Board of
Directors, or the President may designate.
In the case of the Treasurer's absence or incapacity, the President may
designate an appropriate officer to perform the duties of Treasurer.
Subordinate Officers. Each subordinate officer shall hold office for
such period, have such authority and perform such duties as the Board of
Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
Compensation. The Board of Directors shall have power to fix the
compensation of all officers of the Corporation. It may authorize any officer,
upon whom the power of appointing subordinate officers may have been conferred,
to fix the compensation of such subordinate officers.
Vacancies. Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors, at any regular or special
meeting.
Removal. Any officer of the Corporation may be removed, with or without
cause by a majority vote of the Board of Directors at a meeting called for that
purpose.
Exceptions to Officers' Powers and Duties. No person may hold the
Office of President or act in the place of the President in the case of absence
or disability unless such person so acting is a citizen of the United States.
4
<PAGE> 5
ARTICLE VI.
Officer and Director Liability
Director Liability. No person who is at any time a director of this
Corporation shall be personally liable to this Corporation or its stockholders
for monetary damages for any breach of fiduciary duty by such person as a
director, except for liability (i) for breach of the director's duty of loyalty
to this Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
Right to Indemnification. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person for whom he or
she is the legal representative is or was a director or officer, employee or
agent of this Corporation, or is or was serving at the request of this
Corporation as a director or officer, employee or agent of another corporation
in which this Corporation owns shares of Common Stock or of which it is a
creditor, or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action or inaction in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
this Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent such amendment permits this
Corporation to provide broader indemnification rights than said law permitted
this Corporation to provide prior to such amendment) against all expenses,
liability and loss (including attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith. Such right shall be
a contract right and shall include the right to be paid by this Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that the payment of such expenses incurred by a
director or officer of this Corporation in his capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service to
any employee benefit plan) in advance of the final disposition of such
proceeding, shall be made only upon delivery to this Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it should be determined ultimately that such director or officer
is not entitled to be indemnified under this section or otherwise.
Right of Claimant to Bring Suit. If a claim under the previous
paragraph is not paid in full by this Corporation within 90 days after a written
claim has been received by this Corporation, the claimant may at any time
thereafter bring suit against this Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking has been tendered to this Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for this Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on this
5
<PAGE> 6
Corporation. Neither the failure of this Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by this Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant had not met the applicable standard of conduct.
Non-Exclusivity of Rights. The rights conferred by the two preceding
paragraphs shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the certificate of
incorporation, bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
Insurance. This Corporation may maintain, at its expense, to protect
itself and any such director, officer, employee or agent of this Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not this Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
ARTICLE VII.
Checks, Notes, Contracts,
Assignments and Proxies
Execution of Checks, Notes, Etc. All checks and drafts on the
Corporation's bank accounts and all bills of exchanges and promissory notes, and
all acceptances, obligations, and other instruments for the payment of money,
shall be signed by such officer or officers, agent or agents, as shall be
thereunto authorized, from time to time, by the Board of Directors, which may in
its discretion authorize any such signatures to be facsimile.
Execution of Contracts, Assignments, Etc. All contracts, agreements,
endorsements, assignments, transfers, stock powers, or other instruments shall
be signed by the President or any Vice President and attested by the Secretary
or an Assistant Secretary, except where required or permitted by law to be
otherwise signed and except when the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Execution of Proxies. Such officer or officers as the Board of
Directors may designate, from time to time, shall be authorized to sign and
issue proxies to vote upon shares of stock of other companies standing in the
name of the Corporation. All such proxies shall be signed in the name of the
Corporation.
6
<PAGE> 7
ARTICLE VIII.
Waivers
Waivers. Whenever any notice is required to be given by law, or under
the provisions of the certificate of incorporation or of these bylaws, such
notice may be waived, in writing, signed by the person or persons entitled to
such notice, or by his attorney or attorney thereunto authorized, whether before
or after the event or action to which such notice relates.
ARTICLE IX.
Offices
Registered Office. The registered office of the Corporation shall be
located in the City of Wilmington, County of New Castle, State of Delaware, and
the name of the resident agent in charge thereof shall be The Corporation Trust
Company or any of its affiliated companies.
Other Offices. The Corporation may also have offices at such other
locations, within or without the State of Delaware, as the Board of Directors
may, from time to time, appoint or the business of the Corporation may require.
ARTICLE X.
Fiscal Year
Fiscal Year. The fiscal year of the Corporation shall begin on the
first day of January and end on the 31st day of December of each year.
ARTICLE XI.
Amendments to Bylaws
Amendments. These bylaws may be altered, amended, or repealed, and new
bylaws adopted by the stockholders or by the Board of Directors by a majority
vote at any stockholders meeting or Board of Directors meeting called for that
purpose.
# # # # # #
Jeffersonville, IN
May 29, 1998
7
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
AMERICAN COMMERCIAL LINES LLC
ACL CAPITAL CORP.
10 1/4% SENIOR NOTES DUE 2008
INDENTURE
DATED AS OF JUNE 30, 1998
UNITED STATES TRUST COMPANY OF NEW YORK
As Trustee
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.......................................... 1
Section 1.1. Definitions...................................................................... 1
Section 1.2. Other Definitions................................................................ 23
Section 1.3. Trust Indenture Act.............................................................. 23
Section 1.4. Rules of Construction............................................................ 24
ARTICLE II THE NOTES
Section 2.1. Form and Dating.................................................................. 24
Section 2.2. Execution and Authentication..................................................... 26
Section 2.3. Registrar and Paying Agent....................................................... 26
Section 2.4. Paying Agent To Hold Money in Trust.............................................. 27
Section 2.5. Holder Lists..................................................................... 27
Section 2.6. Transfer and Exchange............................................................ 27
Section 2.7 Replacement Notes................................................................ 42
Section 2.8. Outstanding Notes................................................................ 42
Section 2.9. Treasury Notes................................................................... 43
Section 2.10. Temporary Notes.................................................................. 43
Section 2.11. Cancellation..................................................................... 43
Section 2.12. Defaulted Interest............................................................... 44
Section 2.13. Record Date...................................................................... 44
Section 2.14. Computation of Interest.......................................................... 44
Section 2.15. CUSIP Number..................................................................... 44
ARTICLE III REDEMPTION AND PREPAYMENT........................................................... 44
Section 3.1. Notices to Trustee............................................................... 44
Section 3.2. Selection of Notes To Be Redeemed................................................ 45
Section 3.3. Notice of Redemption............................................................. 45
Section 3.4. Effect of Notice of Redemption................................................... 46
Section 3.5. Deposit of Redemption Price...................................................... 46
Section 3.6. Notes Redeemed in Part........................................................... 47
Section 3.7. Optional Redemption.............................................................. 47
Section 3.8. Mandatory Redemption............................................................. 48
Section 3.9. Offer To Purchase By Application of Excess Proceeds.............................. 48
ARTICLE IV COVENANTS........................................................................... 50
Section 4.1. Payment of Notes................................................................. 50
Section 4.2. Maintenance of Office or Agency.................................................. 50
Section 4.3. Reports.......................................................................... 51
Section 4.4. Compliance Certificate........................................................... 51
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Section 4.5. Taxes............................................................................ 52
Section 4.6. Stay, Extension and Usury Laws................................................... 52
Section 4.7. Restricted Payments.............................................................. 53
Section 4.8. Dividend and Other Payment Restrictions Affecting
Subsidiaries........................................................................ 56
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Equity...................... 57
Section 4.10. Asset Sales...................................................................... 61
Section 4.11. Transactions With Affiliates..................................................... 62
Section 4.12. Liens............................................................................ 63
Section 4.13. Corporate Existence.............................................................. 63
Section 4.14. Offer To Repurchase Upon Change of Control....................................... 63
Section 4.15. Senior Debt; Liens............................................................... 64
Section 4.16. Sales of Accounts Receivable..................................................... 65
Section 4.17. Sale And Leaseback Transactions.................................................. 66
Section 4.18. Restriction On Preferred Stock of Subsidiaries................................... 66
Section 4.19. Restrictions On Activities of ACL Capital........................................ 66
Section 4.20. Payments For Consent............................................................. 66
Section 4.21. Additional Subsidiary Guarantees................................................. 67
Section 4.22. Restrictions On Business Activities.............................................. 67
ARTICLE V SUCCESSORS.......................................................................... 67
Section 5.1. Merger, Consolidation or Sale of Assets.......................................... 67
Section 5.2. Successor Corporation Substituted................................................ 68
ARTICLE VI DEFAULTS AND REMEDIES............................................................... 68
Section 6.1. Events of Default................................................................ 68
Section 6.2. Acceleration..................................................................... 70
Section 6.3. Other Remedies................................................................... 70
Section 6.4. Waiver of Past Defaults.......................................................... 71
Section 6.5. Control by Majority.............................................................. 71
Section 6.6. Limitation on Suits.............................................................. 71
Section 6.7. Rights of Holders of Notes to Receive Payment.................................... 72
Section 6.8. Collection Suit by Trustee....................................................... 72
Section 6.9. Trustee May File Proofs of Claim................................................. 72
Section 6.10. Priorities...................................................................... 73
Section 6.11. Undertaking for Costs........................................................... 73
ARTICLE VII TRUSTEE............................................................................. 74
Section 7.1. Duties of Trustee................................................................ 74
Section 7.2. Rights of Trustee................................................................ 75
Section 7.3. Individual Rights of Trustee..................................................... 76
Section 7.4. Trustee's Disclaimer............................................................. 76
Section 7.5. Notice of Defaults............................................................... 76
Section 7.6. Reports by Trustee to Holders of the Notes....................................... 77
Section 7.7. Compensation and Indemnity....................................................... 77
Section 7.8. Replacement of Trustee........................................................... 78
Section 7.9. Successor Trustee by Merger, Etc................................................. 79
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Section 7.10. Eligibility; Disqualification................................................... 79
Section 7.11. Preferential Collection of Claims Against Issuers............................... 79
ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE............................................ 80
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance......................... 80
Section 8.2. Legal Defeasance and Discharge................................................... 80
Section 8.3. Covenant Defeasance.............................................................. 80
Section 8.4. Conditions to Legal or Covenant Defeasance....................................... 81
Section 8.5. Deposited Money and Government Securities to Be Held in Trust; Other
Miscellaneous Provisions....................................................................... 82
Section 8.6. Repayment to Issuers............................................................. 83
Section 8.7. Reinstatement.................................................................... 83
ARTICLE IXAMENDMENT, SUPPLEMENT AND WAIVER.............................................................. 84
Section 9.1. Without Consent of Holders of Notes.............................................. 84
Section 9.2. With Consent of Holders of Notes................................................. 85
Section 9.3. Compliance with Trust Indenture Act.............................................. 86
Section 9.4. Revocation and Effect of Consents................................................ 86
Section 9.5. Notation on or Exchange of Notes................................................. 87
Section 9.6. Trustee to Sign Amendments, Etc.................................................. 87
ARTICLE X SUBSIDIARY GUARANTEES............................................................... 87
Section 10.1. Guarantee....................................................................... 87
Section 10.2. Ranking of Subsidiary Guarantee................................................. 88
Section 10.3. Limitation on Subsidiary Guarantor Liability.................................... 89
Section 10.4. Execution and Delivery of Subsidiary Guarantee.................................. 89
Section 10.5. Subsidiary Guarantors May Consolidate, Etc. on
Certain Terms....................................................................... 90
Section 10.6. Releases Following Sale of Assets............................................... 91
ARTICLE XI MISCELLANEOUS....................................................................... 91
Section 11.1. Trust Indenture Act Controls.................................................... 91
Section 11.2. Notices......................................................................... 91
Section 11.3. Communication by Holders of Notes with Other Holders of
Notes............................................................................... 93
Section 11.4. Certificate and Opinion as to Conditions Precedent.............................. 93
Section 11.5. Statements Required in Certificate or Opinion................................... 93
Section 11.6. Rules by Trustee and Agents..................................................... 94
Section 11.7. No Personal Liability of Directors, Officers, Employees,
Members and Stockholders............................................................ 94
Section 11.8. Governing Law................................................................... 94
Section 11.9. No Adverse Interpretation of Other Agreements................................... 94
Section 11.10. Successors..................................................................... 94
Section 11.11. Severability................................................................... 94
Section 11.12. Counterpart Originals.......................................................... 95
Section 11.13. Table of Contents, Headings, Etc............................................... 95
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INDENTURE dated as of June 30, 1998 by and among American
Commercial Lines LLC, a Delaware limited liability company (the "Company"), and
ACL Capital Corp., a Delaware corporation ("ACL Capital", and together with the
Company, the "Issuers"), American Commercial Barge Line LLC, a Delaware limited
liability company, American Commercial Marine Service LLC, a Delaware limited
liability company, Louisiana Dock Company LLC, a Delaware limited liability
company, Waterway Communications System LLC, a Delaware limited liability
company, American Commercial Terminals LLC, a Delaware limited liability
company, American Commercial Terminals-Memphis LLC, a Delaware limited liability
company, Jeffboat LLC, a Delaware limited liability company, American Commercial
Lines International LLC, a Delaware limited liability company, Orinoco TASA LLC,
a Delaware limited liability company, Orinoco TASV LLC, a Delaware limited
liability company, Breen TAS LLC, a Delaware limited liability company, Bullard
TAS LLC, a Delaware limited liability company, Shelton TAS LLC, a Delaware
limited liability company, Lemont Harbor & Fleeting Services LLC, a Delaware
limited liability company, Tiger Shipyard LLC, a Delaware limited liability
company, Wilkinson Point LLC, a Delaware limited liability company, and Houston
Fleet LLC, a Delaware limited liability company, (collectively, the "Subsidiary
Guarantors") and United States Trust Company of New York, as trustee (the
"Trustee").
The Issuers, the Subsidiary Guarantors and the Trustee agree
as follows for the benefit of each other and for the equal and ratable benefit
of the Holders of $300,000,000 aggregate principal amount of 10"% Senior Notes
due 2008 (the "Senior Notes") and the 10 1/4% New Senior Notes due 2008 issued
in the Exchange Offer (the "New Senior Notes" and, together with the Senior
Notes, the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"144A Global Note" means a global note in the form of Exhibit
A-1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Accounts Receivable Subsidiary" means a Wholly Owned
Subsidiary of the Company (i) which is formed solely for the purpose of, and
which engages in no activities other than activities in connection with,
financing accounts receivable and/or notes receivable and related assets of the
Company and/or its Restricted Subsidiaries, (ii) which is designated by the
Board of Managers as an Accounts Receivables Subsidiary pursuant to a resolution
set forth in an Officers' Certificate and delivered to the Trustee, (iii) that
has total assets at the time of such designation with a book value not exceeding
$100,000
<PAGE> 6
2
plus the reasonable fees and expenses required to establish such Accounts
Receivable Subsidiary and any accounts receivable financing, (iv) no portion of
Indebtedness or any other obligation (contingent or otherwise) of which (a) is
at any time recourse to or obligates the Company or any Restricted Subsidiary of
the Company in any way, other than pursuant to (I) representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with the sale of accounts receivable and/or notes receivable to such
Accounts Receivable Subsidiary or (II) any guarantee of any such accounts
receivable financing by the Company that is permitted to be incurred pursuant to
the covenant described in Section 4.9, or (b) subjects any property or asset of
the Company or any Restricted Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
(I) representations, warranties, covenants and indemnities entered into in the
ordinary course of business in connection with sales of accounts receivable
and/or notes receivable or (II) any guarantee of any such accounts receivable
financing by the Company that is permitted to be incurred pursuant to Section
4.9, (v) with which neither the Company nor any Restricted Subsidiary of the
Company has any contract, agreement, arrangement or understanding other than
contracts, agreements, arrangements or understandings entered into in the
ordinary course of business in connection with sales of accounts receivable
and/or notes receivable in accordance with Section 4.16 and fees payable in the
ordinary course of business in connection with servicing accounts receivable
and/or notes receivable and (vi) with respect to which neither the Company nor
any Restricted Subsidiary of the Company has any obligation (a) to subscribe for
additional shares of Capital Stock or other Equity Interests therein or make any
additional capital contribution or similar payment or transfer thereto other
than in connection with the sale of accounts receivable and/or notes receivable
to such Accounts Receivable Subsidiary in accordance with Section 4.16 or (b) to
maintain or preserve solvency or any balance sheet item, financial condition,
level of income or results of operations thereof.
"ACL Capital" has the meaning assigned in the preamble of this
Indenture.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of
<PAGE> 7
3
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, that beneficial ownership of 10% or more of the Voting
Stock of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Premium" means, with respect to any Note at any
redemption date, the greater of (i) 1.0% of the principal amount of such Note
and (ii) the excess of (A) the present value at such time of (1) the redemption
price of such Note at June 30, 2003, such redemption price being set forth in
Section 3.7(a) plus (2) all required interest payments due on such Note through
June 30, 2003, computed using a discount rate equal to the Treasury Rate plus 50
basis points, over (B) the principal amount of such Note.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depositary, Euroclear or Cedel that apply to such transfer and exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than (A) in the ordinary course of business consistent
with past practices or (B) sales or other dispositions of accounts receivable
and/or notes receivable and related assets to the Accounts Receivable Subsidiary
in accordance with Section 4.16 (provided, that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of Section
4.14 and/or the provisions of Section 5.1 and not by Section 4.10, and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity Interests of
any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $1.0 million or (b) for net proceeds in
excess of $1.0 million. Notwithstanding the foregoing, the following items shall
not be deemed to be Asset Sales: (i) a transfer of assets by the Issuers to a
Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to
the Issuers or to another Wholly Owned Restricted Subsidiary; (ii) an issuance
of Equity Interests by a Wholly Owned Restricted Subsidiary to the Issuers or to
another Wholly Owned Restricted Subsidiary; (iii) a Restricted Payment that is
permitted by Section 4.7; (iv) any disposition of damaged, worn out or otherwise
obsolete property in the ordinary course of business, so long as such property
is no longer necessary for the proper conduct of a Permitted Business; (v) any
sale or discount without recourse (other than recourse for a breach of a
representation or warranty) of accounts receivable arising in the ordinary
course of business, but only in connection with the collection or compromise
thereof; and (vi) sales or transfers (a) among Foreign Subsidiaries or (b) from
the Issuers or a Wholly Owned Restricted Subsidiary to a Foreign Subsidiary to
the extent, in the case of this clause (b), the consideration received by the
Company or any Wholly Owned Restricted Subsidiary of the Company in any such
transaction consists solely of cash or Cash Equivalents.
<PAGE> 8
4
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Managers" means (i) for so long as the Company is a
limited liability company, the board of managers or management committee of the
Company, if it has such a board or committee, and if it does not, the board of
managers or management committee of the manager of the Company, (ii) if the
Company is not a limited liability company at the relevant time, the board of
directors or other analogous body of the Company, and (iii) any committee or
subcommittee thereof duly authorized to act on behalf of such board of managers,
such board of directors or such other analogous body.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP. The amount of Indebtedness
represented by a Capital Lease Obligation shall be the capitalized amount of the
liability in respect of such obligation determined in accordance with GAAP, and
the Stated Maturity thereof shall be the date of the last scheduled payment of
rent or any other amount due under the relevant lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not
<PAGE> 9
5
exceeding six months and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500.0 million and a
Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
six months after the date of acquisition and (vi) money market funds at least
95% of the assets of which constitute Cash Equivalents of the kinds described in
clauses (i) through (v) of this definition.
"Cedel" means Cedel Bank, S.A.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than the Parent or a wholly owned
subsidiary of the Parent or any Principal or Principals, (ii) the adoption of a
plan relating to the liquidation or dissolution of the Parent (except any
recapitalization of the Parent in contemplation of an initial public offering of
Capital Stock of the Parent or its successor) or ACL Capital, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principals, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Issuers (measured by voting power rather than number of shares), (iv) the first
day on which a majority of the members of the Board of Managers are not
Continuing Directors or (v) the first day on which the Parent or the Company
fails to own 100% of the issued and outstanding Equity Interests of ACL Capital.
"Citicorp" means Citicorp, a Delaware corporation, or any
successor thereto by merger or consolidation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Company" means American Commercial Lines LLC, a Delaware
limited liability company, and any and all successors thereto.
<PAGE> 10
6
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus (i)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits or the Tax Amount of such Person and its Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued and whether
or not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, plus (vi) one-time cash
payments made in connection with the Transactions in an amount not to exceed
$3.0 million, in each case, on a consolidated basis and determined in accordance
with GAAP. Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and other non-cash
charges of, a Subsidiary of a Person shall be added to Consolidated Net Income
to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be dividended to the Company
by such Subsidiary without prior approval (that has not been obtained), pursuant
to the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, that (i) the Net Income (but not loss) of any Person that
is not a Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person (ii) the Net Income of any Subsidiary shall
be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that Net Income is not at the date
of
<PAGE> 11
7
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (a) the consolidated equity of the common equityholders
of such Person and its consolidated Restricted Subsidiaries as of such date,
plus (b) the respective amounts reported on such Person's balance sheet as of
such date with respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (i) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the date of this Indenture
in the book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (ii) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries
and (iii) all unamortized debt discount and expense and unamortized deferred
charges as of such date, in each case, determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Managers who (i) was a member of such Board of
Managers on the date of this Indenture or (ii) was nominated for election or
elected to such Board of Managers with the approval of (A) a majority of the
Continuing Directors who were members of such Board of Managers at the time of
such nomination or election or (B) one or more of the Principals pursuant to the
LLC Agreement.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 11.2 hereof or such other address as
to which the Trustee may give notice to the Company.
"CSX" means CSX Corporation, a Virginia corporation, or any
successor thereto by merger or consolidation.
"CVC" means Citicorp Venture Capital, Ltd., a New York
corporation, or any successor thereto by merger or consolidation.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
<PAGE> 12
8
"Definitive Note" means Notes that are in the form of Exhibit
A-1 attached hereto (but without including the text referred to in footnotes 1
and 3 thereto).
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.3
hereof as the Depositary with respect to the Notes and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the issuers thereof to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that such issuers
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.7.
"Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S.
"Domestic Subsidiary" means any Subsidiary of a Person
organized under the laws of any State or Commonwealth of the United States of
America.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means a primary offering of Capital Stock
(other than Disqualified Stock) of (i) the Company; or (ii) the Parent to the
extent the net proceeds thereof are contributed to the Company as a common
equity capital contribution (other than Disqualified Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means the aggregate principal amount
of Indebtedness (other than Indebtedness under the Senior Credit Facilities) of
the Company
<PAGE> 13
9
and its Subsidiaries in existence on the date of this Indenture, until such
amounts are repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the referent Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred equity subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred equity, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) and (ii) the consolidated interest of
such Person and its Restricted Subsidiaries that was capitalized during such
period, and (iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments or other distributions (and non-cash dividend payments in the
case of a Person that is a Restricted Subsidiary) on any series of preferred
<PAGE> 14
10
equity of such Person times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person (or in the case of a person that is
a partnership or limited liability company, the combined federal, state, local
and foreign income tax rate that was or would have been utilized to calculate
the Tax Amount of such Person), expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Foreign Subsidiary" means each of ACBL de Venezuela, C.A. (a
Venezuelan compania anonima), ACBL Hidrovias, S.A. (an Argentine sociedad
anonima), ACBL Hidrovias, Ltd. (a Bermuda corporation), ACBL Argentina, Ltd. (a
Bermuda corporation), ACBL Venezuela, Ltd. (a Bermuda corporation), ACBL Castle
Harbour, Ltd. (a Bermuda corporation), ACL Venezuela, Ltd. (a Bermuda
corporation), Venco, Ltd. (a Bermuda corporation) and any future Restricted
Subsidiary of the Company that is organized under the laws of any jurisdiction
other than the United States or any State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Note Legend" means the legend set forth in Section
2.6(g)(ii), which is required to be placed on all Global Notes issued under this
Indenture.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A-1 and Exhibit A-2 hereto issued in accordance with Article II hereof.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements or other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates and (ii) foreign exchange contracts,
<PAGE> 15
11
currency swap agreements or other similar agreements or arrangements designed to
protect such Person against fluctuations in currency exchange rates, in each
case provided that such obligations are entered into solely to protect such
Person against fluctuations in interest rates or currency exchange rates and not
for purposes of speculation.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means a global note in the form of Exhibit
A-1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes issued to Institutional Accredited Investors
pursuant to Section 2.6 hereof.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations, the balance deferred and
unpaid of the purchase price of any property, Attributable Debt or any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing (other than letters of
credit, Attributable Debt and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, as well as
all Indebtedness of others secured by a Lien on any asset of such Person
(whether or not such Indebtedness is assumed by such Person) and, to the extent
not otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Institutional Accredited Investor" means an "accredited
investor" as defined in Rule 501 (a)(1), (2), (3) or (7) of the Securities Act.
"Investment Grade Securities" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (other than Cash Equivalents), (ii) debt
securities or debt instruments with a rating of BBB- or higher by Standard &
Poor's Corporation or Baa3 or higher by Moody's Investors Services, Inc. or the
equivalent of such rating by such rating
<PAGE> 16
12
organization, or, if no rating of Standard & Poor's Corporation or Moody's
Investors Services, Inc. then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii), which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Subsidiary not sold or
disposed of in an amount determined in Section 4.7.
"Issuers" has the meaning assigned in the preamble of this
Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Issuers and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" shall have the meaning given under the
Registration Rights Agreement.
<PAGE> 17
13
"LLC Agreement" means the limited liability company agreement
of the Parent, as amended and in effect on the date of this Indenture.
"Management Investors" means the officers and employees of the
Parent, the Company or a Subsidiary of the Company who acquire Voting Stock of
the Parent or the Company on or after the date of this Indenture.
"Net Income" means, with respect to any Person for any period,
(i) the net income (loss) of such Person, determined in accordance with GAAP and
before any reduction in respect of dividends on preferred interests, excluding,
however, (a) any gain (but not loss), together with any related provision for
taxes or distributions in respect of taxes made under clause (vii) of Section
4.7, on such gain (but not loss), realized in connection with (1) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (2) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries and (b) any extraordinary or
nonrecurring gain (but not loss), together with any related provision for taxes
or distributions in respect of taxes made under clause (vii) of Section 4.7, on
such extraordinary or nonrecurring gain (but not loss) less (ii) in the case of
any Person that is a partnership or limited liability company, distributions in
respect of taxes made under clause (vii) of Section 4.7, of such person for such
period.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, any taxes (or distributions in
respect of taxes permitted under clause (vii) of Section 4.7, and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
"New Credit Facility" means, with respect to the Company and
its Subsidiaries, one or more debt facilities (including, without limitation,
facilities available under the Senior Credit Facilities) or commercial paper
facilities with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"New Senior Notes" has the meaning assigned in the preamble of
this Indenture.
<PAGE> 18
14
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby and any New Credit Facility) of the Company or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Notes" has the meaning assigned in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities and obligations
payable under the documentation governing any Indebtedness.
"Obligor" as to the Notes means the Issuers and any successor
obligor upon the Notes.
"Offering" means the offering of the Notes by the Issuers.
"Officer" means, with respect to any Person, the Chairman of
the Board of Managers, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed by any two
of the Chief Executive Officer, the Chief Financial Officer, the President, any
Vice President, the Treasurer or the Secretary of the Company, that meets the
requirements of Section 11.5 hereof.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee, that meets the requirements of Section
11.5 hereof. The counsel may be an employee of or counsel to the Parent, the
Company or the Trustee.
<PAGE> 19
15
"Parent" means American Commercial Lines Holdings LLC, a
Delaware limited liability company.
"Participant" means, with respect to the Depositary, Euroclear
or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, the Depositary as of the date hereof,
shall include Euroclear and Cedel).
"Permitted Affiliate Transactions" means (i) management,
support, service and consulting arrangements with CSX pursuant to the Transition
Services Agreement and any payments for fees and expenses thereunder made;
provided, that such payments shall not exceed $3.0 million in the aggregate,
(ii) railroad transportation and related services provided to the Company and
its Subsidiaries in the ordinary course of business and consistent with past
practices; provided, that any such transactions are on terms that are not
materially less favorable to the Company or its Subsidiaries than those that
would have been obtained in a comparable transaction with an unrelated Person
and (iii) transactions pursuant to any contract or agreement in effect on the
date of this Indenture as the same may be amended, modified or replaced from
time to time so long as such amendment, modification or replacement is not
materially less favorable to the Company and its Restricted Subsidiaries than
the contract or agreement as in effect on the date of this Indenture.
"Permitted Business" means any of the businesses and any other
businesses ancillary or complementary to the businesses engaged in by the
Company and its respective Restricted Subsidiaries on the date of this
Indenture.
"Permitted Investments" means (a) any Investment in the
Company or in a Restricted Subsidiary that is a Subsidiary Guarantor and is
engaged in a Permitted Business; (b) any Investment in Cash Equivalents; (c) any
Investment by the Company or any Restricted Subsidiary of the Company in a
Person, if as a result of or in connection with such Investment (i) such Person
becomes a Restricted Subsidiary of the Company that is a Subsidiary Guarantor of
the Company and is engaged in a Permitted Business or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company that is a Subsidiary Guarantor of the
Company and is engaged in a Permitted Business; (d) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.10 or from a sale that was made
pursuant to and in compliance Section 4.16; (e) any acquisition of assets solely
in exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; (f) any Investment by the Company or any Wholly Owned Restricted
Subsidiary of the Company involving the contribution of assets to a Restricted
Subsidiary of the Company that is a not Subsidiary Guarantor in exchange for the
incurrence by such Restricted Subsidiary of Indebtedness owed to the Company or
any Wholly Owned Restricted Subsidiary of the Company that is a Subsidiary
Guarantor;
<PAGE> 20
16
(g) Investments in an Accounts Receivable Subsidiary made in connection with the
formation of an Accounts Receivable Subsidiary; and (h) other Investments in any
Person having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (h)
that are at the time outstanding, not to exceed 5% of Total Assets.
"Permitted Liens" means (i) Liens on assets of the Company or
Restricted Subsidiaries of the Company to secure Senior Debt of the Company or
such Subsidiaries in an amount not to exceed $535.0 million minus the aggregate
amount of principal payments at Stated Maturity made on Indebtedness under a New
Credit Facility since the date of this Indenture that was otherwise permitted by
the terms of this Indenture to be incurred; (ii) Liens in favor of the Issuers;
(iii) Liens on property of a Person existing at the time such Person is merged
into or consolidated with one of the Company or any Subsidiary of the Company;
provided, that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company or any Subsidiary of the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided, that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens existing on the date of this Indenture; (vii) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided, that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (viii) Liens on assets of Unrestricted Subsidiaries that
secure Non-Recourse Debt of Unrestricted Subsidiaries; and (ix) Liens incurred
in the ordinary course of business of the Issuers or any Subsidiary of the
Issuers with respect to obligations that do not exceed $5.0 million at any one
time outstanding and that (a) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Issuers or such Subsidiary; (x) Liens with respect
to current wages of the master and crew and for wages of a stevedore when
employed directly by the Company or any Subsidiary of the Company, or by the
charterer, operator, master or agent of any of the vessels owned or operated by
the Company or any Subsidiary of the Company, and for salvage (including
contract salvage) and general average and (xi) Liens with respect to Permitted
Debt incurred pursuant to clauses (v), (viii), (ix), (xi), (xiii) and (xv) of
Section 4.9.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other
<PAGE> 21
17
Indebtedness of the Company or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided, that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principals" means (i) CSX, Vectura, CVC and the Management
Investors; (ii) any Related Party of a Person referred to in clause (i); and
(iii) any Person or group of Persons which holds, directly or indirectly, Equity
Interests in the Parent so long as a majority of the Voting Stock in the Parent
is beneficially owned by the Persons referred to in clauses (i) and (ii).
"Private Placement Legend" means the legend set forth in
Section 2.6(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Purchase Money Indebtedness" means Indebtedness (i)
consisting of the deferred purchase price of an asset or assets (including
Capital Stock), any conditional sale obligation, any obligation under any title
retention agreement or any other purchase money obligation or (ii) incurred to
finance the acquisition by the Company or a Restricted Subsidiary of such asset
or assets, including additions and improvements; provided, that the average life
of such Indebtedness is less than the anticipated useful life of assets having
an aggregate fair market value representing more than 50% of the aggregate fair
market value of all assets so acquired and that such Indebtedness is incurred
within 180 days after the acquisition by the Company or Restricted Subsidiary of
such asset, or is in existence with respect to any asset or other property at
the time such asset or property is acquired.
<PAGE> 22
18
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Issuers and
the other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a global Note bearing the
Private Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S or a Regulation S Temporary Global
Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global
Note in the form of Exhibit A-2 hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Distribution Compliance Period.
"Regulation S Temporary Global Note" means a temporary global
Note in the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" means (a) with respect to CSX (i) CSX, any
direct or indirect wholly owned subsidiary of CSX, and any officer, director or
employee of CSX or any wholly owned subsidiary of CSX, (ii) any spouse or lineal
descendant (including by adoption and stepchildren) of the officers, directors
and employees referred to in clause (a)(i) above or (iii) any trust, corporation
or partnership 100%-in-interest of the beneficiaries, stockholders or partners
of which consists of one or more of the persons described in clause (a)(i) or
(ii) above; (b) with respect to CVC (i) Citicorp, any direct or indirect wholly
owned subsidiary of Citicorp, and any officer, director or employee of CVC,
Citicorp or any wholly owned subsidiary of Citicorp, (ii) any spouse or lineal
descendant (including by adoption and stepchildren) of the officers, directors
and employees referred to in clause (b)(i) above or (iii) any trust, corporation
or partnership 100%-in-interest of the beneficiaries, stockholders or partners
of which consists of one or more of the persons described in clause (b)(i) or
(ii) above; (c) with respect to Vectura (i) Vectura, any direct or indirect
wholly owned subsidiary of Vectura, and any officer,
<PAGE> 23
19
director or employee of Vectura or any wholly owned subsidiary
of Vectura, (ii) any spouse or lineal descendant (including by adoption and
stepchildren) of the officers, directors and employees referred to in clause
(c)(i) above or (iii) any trust, corporation or partnership 100%-in-interest of
the beneficiaries, stockholders or partners of which consists of one or more of
the persons described in clause (c)(i) or (ii) above; and (d) with respect to
any officer or employee of the Parent, the Company or a Subsidiary of the
Company (i) any spouse or lineal descendant (including by adoption and
stepchildren) of such officer or employee and (ii) any trust, corporation or
partnership 100%-in-interest of the beneficiaries, stockholders or partners of
which consists of such officer or employee, any of the persons described in
clause (d)(i) above or any combination thereof.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means one or more Definitive
Notes that bear and are required to bear the Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the
Private Placement Legend.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Rule 903" means Rule 903 promulgated under the Securities
Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means that certain Credit
Agreement, by and among the Company, certain Subsidiaries of the Company and The
Chase Manhattan Bank, as Agent, providing for revolving credit borrowings and
term loans, including any related
<PAGE> 24
20
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time.
"Senior Debt" means (i) all Indebtedness outstanding under a
New Credit Facility and all Hedging Obligations with respect thereto, (ii) any
other Indebtedness permitted to be incurred under the terms of this Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is subordinated in right of payment to the Notes and (iii) all
Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (v) any Indebtedness or
Obligation which is subordinate or junior in any respect (other than as a result
of the Indebtedness being unsecured) to any other Indebtedness or obligation of
the Company, (w) any liability for federal, state, local or other taxes owed or
owing, (x) any Indebtedness of the Issuers to any of their Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of this Indenture.
"Senior Notes" has the meaning assigned in the preamble of
this Indenture.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" has the meaning assigned in the
preamble to this Indenture.
<PAGE> 25
21
"Tax Amount" means, with respect to any Person for any period,
the combined federal, state, local and foreign income taxes that would be paid
by such Person if it were a Delaware corporation filing separate tax returns
with respect to such Person's actual taxable income for such period; provided,
that in determining the Tax Amount for a period, the effect thereon of any net
operating loss carryforwards or other carryforwards, such as alternative minimum
tax carryforwards, that would have arisen if such Person were a Delaware
corporation shall be taken into account to the extent they would be taken into
account under applicable law. Notwithstanding anything to the contrary, Tax
Amount shall not include taxes resulting from such Person's reorganization as or
change in status to a corporation. In no event shall the Tax Amount for any year
or other period be less than zero.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA; provided, however, that, in the event the Trust
Indenture Act of 1939 is amended after such date, "TIA" means, to the extent
required by any such amendments, the Trust Indenture Act of 1939, as amended.
"Total Assets" means, at any date of determination, the total
consolidated assets of the Company and its Restricted Subsidiaries, as set forth
on the Company's then most recent consolidated balance sheet.
"Transactions" shall have the meaning ascribed to such term in
the Offering Memorandum of the Issuers, dated June 23, 1998, relating to the
Notes.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the redemption date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the redemption date to June 30, 2003; provided, however, that if the
period from the redemption date to June 30, 2003 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the redemption date to June 30, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
<PAGE> 26
22
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.
"Unrestricted Global Note" means a permanent global Note in
the form of Exhibit A-1 and Exhibit A-2 attached hereto that bears the Global
Note Legend and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Notes that do
not bear the Private Placement Legend.
"Unrestricted Subsidiary" means River Terminal Properties,
L.P. and any Subsidiary (other than ACL Capital ) or any successor to any of
them that is designated by the Board of Managers as an Unrestricted Subsidiary
pursuant to a resolution of the Board of Managers; but only to the extent that
such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of managers or board of directors that is
not a director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries. Any such
designation by the Board of Managers shall be evidenced to the Trustee by filing
with the Trustee a certified copy of the resolution of the Board of Managers
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by
Section 4.7. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.9, the Issuers shall be
in default of such covenant). The Board of Managers of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided, that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.9, calculated on
a pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period, and (ii) no Default or Event of Default would be
in existence following such designation.
<PAGE> 27
23
"U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
"Vectura" means Vectura Group, Inc., a Delaware corporation,
or any successor thereto by merger or consolidation.
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
board of managers or management committee of a limited liability company, the
board of directors of a corporation or other analogous body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
Section 1.2. Other Definitions.
Defined in
Term Section
"Affiliate Transaction"........................................ 4.11
"Asset Sale"................................................... 4.10
"Asset Sale Offer"............................................. 3.9
"Authentication Order"......................................... 2.2
"Bankruptcy Law"............................................... 4.1
"Change of Control Offer"...................................... 4.14
"Change of Control Payment".................................... 4.14
"Change of Control Payment Date"............................... 4.14
"Covenant Defeasance".......................................... 8.3
"DTC".......................................................... 2.3
"Event of Default"............................................. 6.1
"Excess Proceeds".............................................. 4.10
"Exchange Offer"............................................... 2.6
"Financier".................................................... 4.16
<PAGE> 28
24
"incur"........................................................ 4.9
"Legal Defeasance"............................................. 8.2
"Offer Amount"................................................. 3.9
"Offer Period"................................................. 3.9
"Paying Agent"................................................. 2.3
"Payment Default".............................................. 6.1
"Permitted Debt"............................................... 4.9
"Promissory Note".............................................. 4.16
"Purchase Date"................................................ 3.9
"Registrar".................................................... 2.3
"Relevant Entity".............................................. 6.1
"Restricted Payments".......................................... 4.7
"Subsidiary Guarantees"........................................ 10.1
Section 1.3. Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means the
Issuers and the Subsidiary Guarantors, respectively, and any successor obligor
upon the Notes and the Subsidiary Guarantees, respectively.
All terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
<PAGE> 29
25
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in
the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement or
successor sections or rules adopted by the Commission from time to
time.
ARTICLE II
THE NOTES
Section 2.1. Form and Dating.
(a) General. The Notes and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A-1 and Exhibit
A-2 hereto. The Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Issuers, the Subsidiary Guarantors and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby. However, to the extent any provision of any Note conflicts
with the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall
be substantially in the form of Exhibits A-1 or A-2 attached hereto (including
the Global Note Legend thereon and the "Schedule of Exchanges of Interests in
the Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A-1 attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to
<PAGE> 30
26
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.6 hereof. The Global Notes,
duly executed by the Issuers and authenticated by the Trustee as hereinafter
provided, shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as Note Custodian,
and registered in the name of the Depositary or the nominee of the Depositary.
(c) Temporary Global Notes. Notes offered and sold in
reliance on Regulation S shall be issued initially in the form of the Regulation
S Temporary Global Note, which shall be deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, at its New York office, as Note
Custodian, and registered in the name of the Depositary or the nominee of the
Depositary for the accounts of designated agents holding on behalf of Euroclear
or Cedel Bank. The Distribution Compliance Period shall be terminated upon the
receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any beneficial owners thereof who acquired an
interest therein during the Distribution Compliance Period pursuant to another
exemption from registration under the Securities Act and who will take delivery
of a beneficial ownership interest in a 144A Global Note or an IAI Global Note,
all as contemplated by Section 2.6(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company. Following the termination of the Distribution
Compliance Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to
transfers of beneficial interests in the Regulation S Temporary Global Note and
the Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank.
Section 2.2. Execution and Authentication.
<PAGE> 31
27
One Officer shall sign the Notes for each of the Issuers by
manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Issuers signed
by an Officer (an "Authentication Order"), authenticate Notes for original issue
up to the aggregate principal amount stated in paragraph 4 of the Notes plus
Notes issued to pay Liquidated Damages pursuant to paragraphs 1 and 2 of the
Notes. The aggregate principal amount of Notes outstanding at any time under
this Indenture may not exceed $300,000,000 except as provided in Section 2.7
hereof.
The Trustee may appoint an authenticating agent acceptable to
the Issuers to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Issuers.
Section 2.3. Registrar and Paying Agent.
The Issuers shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange (the "Registrar") and
an office or agency where Notes may be presented for payment (the "Paying
Agent"). The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Issuers may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The Issuers may change
any Paying Agent or Registrar without notice to any Holder. The Issuers shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Issuers fail to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Issuers or any of
their Subsidiaries may act as Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Company
(the "DTC") to act as Depositary with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
Section 2.4. Paying Agent To Hold Money in Trust.
<PAGE> 32
28
The Issuers shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, and interest on the
Notes, and will notify the Trustee of any default by the Issuers in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Issuers or a Subsidiary
Guarantor) shall have no further liability for the money. If the Issuers or a
Subsidiary Guarantor acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Issuers, the Trustee shall serve as Paying Agent for the Notes.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA " 312(a). If the
Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Issuers shall otherwise comply with TIA " 312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer And Exchange. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Issuers for Definitive Notes if (i) the Issuers deliver to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Issuers within 120 days after the date of such notice from the Depositary or
(ii) the Issuers in their sole discretion determine that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Issuers for
Definitive Notes prior to (x) the expiration of the Distribution Compliance
Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence
of either of the preceding events in (i) or (ii) above, Definitive Notes shall
be issued in such names as the Depositary shall instruct the Trustee. Global
Notes also may be exchanged or replaced,
<PAGE> 33
29
in whole or in part, as provided in Sections 2.7 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.6(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.6(b),(c) or (f) hereof.
(b) Transfer And Exchange Of Beneficial Interests In
The Global Notes. The transfer and exchange of beneficial interests in the
Global Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the
Same Global Note. Beneficial interests in any Restricted Global Note may
be transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement
Legend; provided, however, that prior to the expiration of the
Distribution Compliance Period, transfers of beneficial interests in the
Temporary Regulation S Global Note may not be made to a U.S. Person or
for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.6(b)(i).
(ii) All Other Transfers and Exchanges of
Beneficial Interests in Global Notes. In connection with all transfers
and exchanges of beneficial interests that are not subject to Section
2.6(b)(i) above, the transferor of such beneficial interest must deliver
to the Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal
to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing
<PAGE> 34
30
information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in
(1) above; provided that in no event shall Definitive Notes be issued
upon the transfer or exchange of beneficial interests in the Regulation
S Temporary Global Note prior to (x) the expiration of the Distribution
Compliance Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Issuers in accordance with
Section 2.6(f) hereof, the requirements of this Section 2.6(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee
shall adjust the principal amount of the relevant Global Notes pursuant
to Section 2.6(h) hereof.
(iii) Transfer of Beneficial Interests to
Another Restricted Global Note. A beneficial interest in any Restricted
Global Note may be transferred to a Person who takes delivery thereof in
the form of a beneficial interest in another Restricted Global Note if
the transfer complies with the requirements of Section 2.6(b)(ii) above
and the Registrar receives the following:
(A) if the transferee will take delivery in
the form of a beneficial interest in the 144A Global
Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in
the form of a beneficial interest in the Regulation S
Temporary Global Note or the Regulation S Global
Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in
the form of a beneficial interest in the IAI Global
Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial
Interests in a Restricted Global Note for Beneficial Interests in the
Unrestricted Global Note. A beneficial interest in any Restricted Global
Note may be exchanged by any holder thereof for a beneficial interest in
an
<PAGE> 35
31
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
Section 2.6(b)(ii) above and:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of
an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of
Transmittal all matters required to be certified by
it under Section 6(a)(ii) of the Registration Rights
Agreement;
(B) such transfer is effected pursuant to
the Shelf Registration Statement in accordance with
the Registration Rights Agreement;
(C) such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a)
thereof, or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Issuers shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.2 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal
<PAGE> 36
32
amount equal to the aggregate principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests For
Definitive Notes.
(i) Beneficial Interests in Restricted
Global Notes to Restricted Definitive Notes. If any holder of a
beneficial interest in a Restricted Global Note proposes to exchange
such beneficial interest for a Restricted Definitive Note or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt
by the Registrar of the following documentation:
(A) if the holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Restricted
Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is
being transferred to a QIB in accordance with Rule
144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is
being transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is
being transferred pursuant to an exemption from the
registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a)
thereof;
(E) if such beneficial interest is
being transferred to an Institutional Accredited
Investor in reliance on an exemption from the
registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D)
above, a certificate to
<PAGE> 37
33
the effect set forth in Exhibit B hereto, including
the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is
being transferred to the Issuers or any of its
Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is
being transferred pursuant to an effective
registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.6(h) hereof, and the Issuers shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.6(c) shall be registered in such
name or names and in such authorized denomination or denominations as
the holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes
to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.6(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.
Notwithstanding Sections 2.6(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes delivery
thereof in the form of a Definitive Note prior to (x) the expiration of the
Distribution Compliance Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903(3)(ii)(B) under the Securities Act,
except in the case of a transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(ii) Beneficial Interests in Restricted
Global Notes to Unrestricted Definitive Notes. A holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial
interest for an Unrestricted Definitive Note or may transfer such
beneficial interest to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is
effected pursuant to the Exchange Offer in accordance
with the Registration Rights
<PAGE> 38
34
Agreement and the holder of such beneficial interest,
in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable
Letter of Transmittal all matters required to be
certified by it under Section 6(a)(ii) of the
Registration Rights Agreement;
(B) such transfer is effected
pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;
(C) such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the
following:
(1) if the holder of such
beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a
Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in
the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such
beneficial interest in a Restricted Global Note
proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of
a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted
Global Notes to Unrestricted Definitive Notes. If any holder of a
beneficial interest in an Unrestricted Global Note proposes to exchange
such beneficial interest for a Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the form
of a Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.6(b)(ii) hereof, the Trustee shall cause the
aggregate principal amount of the applicable Global Note to be reduced
accordingly
<PAGE> 39
35
pursuant to Section 2.6(h) hereof, and the Issuers shall execute and
the Trustee shall authenticate and deliver to the Person designated in
the instructions a Definitive Note in the appropriate principal amount.
Any Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.6(c)(iii) shall be registered in such name
or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.6(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for
Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial
Interests in Restricted Global Notes. If any Holder of a Restricted
Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note or to transfer such Restricted
Definitive Notes to a Person who takes delivery thereof in the form of
a beneficial interest in a Restricted Global Note, then, upon receipt
by the Registrar of the following documentation:
(A) if the Holder of such Restricted
Definitive Note proposes to exchange such Note for a
beneficial interest in a Restricted Global Note, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b)
thereof;
(B) if such Restricted Definitive
Note is being transferred to a QIB in accordance with
Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is
being transferred to a Non U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Restricted Definitive Note is
being transferred pursuant to an exemption from the
registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act,
<PAGE> 40
36
a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a)
thereof;
(E) if such Restricted Definitive Note is
being transferred to an Institutional Accredited
Investor in reliance on an exemption from the
registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such Restricted Definitive Note is
being transferred to one of an Issuer or any of their
Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such Restricted Definitive Note is
being transferred pursuant to an effective
registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c)
thereof;
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case
of clause (B) above, the 144A Global Note, in the case of clause (c)
above, the Regulation S Global Note, and in all other cases, the IAI
Global Note.
(ii) Restricted Definitive Notes to
Beneficial Interests in Unrestricted Global Notes. A Holder of a
Restricted Definitive Note may exchange such Note for a beneficial
interest in an Unrestricted Global Note or transfer such Restricted
Definitive Note to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is
effected pursuant to the Exchange Offer in accordance
with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal all matters
required to be certified by it under Section 6(a)(ii)
of the Registration Rights Agreement;
(B) such transfer is effected
pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;
<PAGE> 41
37
(C) such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the
following:
(1) if the Holder of such
Definitive Notes proposes to exchange such Notes for
a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such
Definitive Notes proposes to transfer such Notes to a
Person who shall take delivery thereof in the form of
a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.6(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to
Beneficial Interests in Unrestricted Global Notes. A Holder of an
Unrestricted Definitive Note may exchange such Note for a beneficial
interest in an Unrestricted Global Note or transfer such Definitive
Notes to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee
shall cancel the applicable Unrestricted Definitive Note and increase
or cause to be increased the aggregate principal amount of one of the
Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Issuers shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.2 hereof, the Trustee shall
<PAGE> 42
38
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for
Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.6(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.6(e).
(i) Restricted Definitive Notes to
Restricted Definitive Notes. Any Restricted Definitive Note
may be transferred to and registered in the name of Persons
who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made
pursuant to Rule 144A under the Securities Act, then
the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made
pursuant to Rule 903 or Rule 904, then the transferor
must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made
pursuant to any other exemption from the registration
requirements of the Securities Act, then the
transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item
(3) thereof, if applicable.
(ii) Restricted Definitive Notes to
Unrestricted Definitive Notes. Any Restricted Definitive Note
may be exchanged by the Holder thereof for an Unrestricted
Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive
Note if:
(A) such exchange or transfer is
effected pursuant to the Exchange Offer in accordance
with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in
the applicable Letter
<PAGE> 43
39
of Transmittal all matters required to be certified
by it under Section 6(a)(ii) of the Registration
Rights Agreement;
(B) any such transfer is effected
pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;
(C) any such transfer is effected by
a Participating Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the
following:
(1) if the Holder of such
Restricted Definitive Notes proposes to exchange such
Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such
Restricted Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof,
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Issuers to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to
Unrestricted Definitive Notes. A Holder of Unrestricted Definitive
Notes may transfer such Notes to a Person who takes delivery thereof in
the form of an Unrestricted Definitive Note. Upon receipt of a request
to register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from the
Holder thereof.
(f) Exchange Offer. Upon the occurrence of the
exchange offer referred to in the Registration Rights Agreement (as therein
defined, the "Exchange Offer"), the Issuers shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.2, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes
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40
in an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal all matters required to be
certified by them under Section 6(a)(ii) of the Registration Rights Agreement
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Issuers shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on
the face of all Global Notes and Definitive Notes issued under this Indenture
unless specifically stated otherwise in the applicable provisions of this
Indenture.
(i) Private Placement Legend.
(A) Except as permitted by
subparagraph (B) below, each Global Note and each
Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the
legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
OR REGULATION S THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) IN THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION
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MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 UNDER THE SECURITIES ACT, OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE ISSUERS SO
REQUEST), (2) TO THE ISSUERS OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing,
any Global Note or Definitive Note issued pursuant to
subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.6 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note
shall bear a legend in substantially the following
form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS
NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.7 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE ISSUERS."
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(iii) Regulation S Temporary Global Note
Legend. The Regulation S Temporary Global Note shall bear a
legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY
GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note have been
exchanged for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note shall be
returned to or retained and canceled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note or
for Definitive Notes, the principal amount of Notes represented by such Global
Note shall be reduced accordingly and an endorsement shall be made on such
Global Note by the Trustee or by the Depositary at the direction of the Trustee
to reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect such
increase.
(i) General Provisions Relating to Transfers and
Exchanges.
(i) To permit registrations of transfers and
exchanges, the Issuers shall execute and the Trustee shall authenticate
Global Notes and Definitive Notes upon the Issuers' order or at the
Registrar's request.
(ii) No service charge shall be made to a
holder of a beneficial interest in a Global Note or to a Holder of a
Definitive Note for any registration of transfer or exchange, but the
Issuers may require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.6, and
9.5 hereof).
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(iii) The Registrar shall not be required to
register the transfer of or exchange any Note selected for redemption
in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
(iv) All Global Notes and Definitive Notes
issued upon any registration of transfer or exchange of Global Notes or
Definitive Notes shall be the valid obligations of the Issuers,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes surrendered upon
such registration of transfer or exchange.
(v) The Issuers shall not be required (A) to
issue, to register the transfer of or to exchange any Notes during a
period beginning at the opening of business 15 days before the day of
any selection of Notes for redemption under Section 3.2 hereof and
ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest
payment date.
(vi) Prior to due presentment for the
registration of a transfer of any Note, the Trustee, any Agent and the
Issuers may deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and interest on such Notes and for
all other purposes, and none of the Trustee, any Agent or the Issuers
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global
Notes and Definitive Notes in accordance with the provisions of Section
2.2 hereof.
(viii) All certifications, certificates and
Opinions of Counsel required to be submitted to the Registrar pursuant
to this Section 2.6 to effect a registration of transfer or exchange
may be submitted by facsimile.
Section II.7 Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the
Issuers and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Issuers shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Issuers, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Issuers may charge for its expenses in replacing a
Note.
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Every replacement Note is an additional obligation of the
Issuers and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.9 hereof, a
Note does not cease to be outstanding because the Issuers or an Affiliate of the
Issuers holds the Note; however, Notes held by the Issuers or a Subsidiary of
the Issuers shall not be deemed to be outstanding for purposes of Section 3.7(b)
hereof.
If a Note is replaced pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Issuers, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by an Issuer, or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with an Issuer, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery,
the Issuers may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Issuers consider appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Issuers
<PAGE> 49
45
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
Section 2.11. Cancellation.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Issuers. The Issuers may not issue new Notes to replace Notes that they
have paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Issuers default in a payment of interest on the Notes,
they shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.1 hereof. The Issuers shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Issuers shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 3 days prior to the related payment date for such
defaulted interest. At least 7 days before the special record date, the Issuers
(or, upon the written request of the Issuers, the Trustee in the name and at the
expense of the Issuers) shall mail or cause to be mailed to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.
Section 2.13. Record Date.
The record date for purposes of determining the identity of
Holders of the Notes entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be determined as
provided for in TIA Section 316 (c).
Section 2.14. Computation of Interest.
Interest on the Notes shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
Section 2.15. CUSIP Number.
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The Issuers in issuing the Notes may use a "CUSIP" number, and
if they do so, the Trustee shall use the CUSIP number in notices of redemption
or exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Issuers shall
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE III
REDEMPTION AND PREPAYMENT
Section 3.1. Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, they shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.2. Selection of Notes To Be Redeemed.
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular Notes to
be redeemed shall be selected, unless otherwise provided herein, not less than
30 nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Issuers in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
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Subject to the provisions of Section 3.9 hereof, at least 30
days but not more than 60 days before a redemption date, the Issuers shall mail
or cause to be mailed, by first-class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the
portion of the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Issuers default in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' names and at their expense; provided, however, that
the Issuers shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph and the date on which the Issuers wish the Trustee to
mail such notice.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.3 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
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Section 3.5. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Issuers
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued and unpaid interest and Liquidated Damages,
if any, on all Notes to be redeemed on that date. The Trustee or the Paying
Agent shall promptly return to the Issuers any money deposited with the Trustee
or the Paying Agent by the Issuers in excess of the amounts necessary to pay the
redemption price of and accrued and unpaid interest and Liquidated Damages, if
any, on all Notes to be redeemed.
If the Issuers comply with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Issuers to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, and Liquidated Damages, if any, in respect
thereof, in each case at the rate provided in the Notes and in Section 4.1
hereof.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Issuers
shall issue and, upon the Issuers' written request, the Trustee shall
authenticate for the Holder at the expense of the Company, a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in clause (b) of this Section
3.7, the Issuers shall not have the option to redeem the Notes pursuant to this
Section 3.7 prior to June 30, 2003. Thereafter, the Notes will be redeemable at
any time at the option of the Issuers, in whole or in part upon not less than 30
nor more than 60 days' notice, in cash at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on June 30 of the
years indicated below:
YEAR PERCENTAGE
---- ----------
2003.................................................. 105.125
2004.................................................. 103.417
2005.................................................. 101.708
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2006 and thereafter................................... 100.000%
(b) Notwithstanding the foregoing, at any time prior
to June 30, 2001, the Issuers may (but will not have the obligation to), on any
one or more occasions, redeem up to 35% of the aggregate principal amount of
Notes originally issued at a redemption price equal to 110.25% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the redemption date with the net cash proceeds of one or more Equity
Offerings; provided that at least 65% of the aggregate principal amount of Notes
originally issued remain outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Issuers and its Subsidiaries); and
provided, further, that such redemption shall occur within 60 days of the date
of the closing of such Equity Offerings.
(c) At any time prior to June 30, 2003, the Notes may
be redeemed, in whole or in part, at the option of the Issuers at any time
within 180 days after a Change of Control, upon not less than 30 nor more than
60 days prior notice mailed by first-class mail to the registered address of
each Holder of such Notes, at a redemption price equal to 100% of the principal
amount thereof, together with accrued and unpaid interest thereon to the
redemption date, plus the Applicable Premium, together with Liquidated Damages,
if any, thereon to the redemption date.
(d) Any redemption pursuant to this Section 3.7 shall
be made pursuant to the provisions of Sections 3.1 through 3.6 hereof.
Section 3.8. Mandatory Redemption.
The Issuers shall not be required to make mandatory redemption
or sinking fund payments with respect to the Notes.
Section 3.9. Offer To Purchase By Application of Excess
Proceeds.
In the event that, pursuant to Section 4.10 hereof, the
Issuers shall be required to commence an offer to all Holders to purchase Notes
(an "Asset Sale Offer"), they shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Issuers shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
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If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Issuers
shall send, by first class mail, a notice to the Trustee and each of the
Holders. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset
Sale Offer shall be made to all Holders. The notice, which shall govern the
terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant
to this Section 3.9 and Section 4.10 hereof and the length of time the Asset
Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the
Purchase Date;
(c) that any Note not tendered or accepted for
payment shall continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may only elect to have Notes in denominations of
$1,000, or integral multiples thereof, purchased;
(f) that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, or transfer by book-entry transfer, to the Issuers, a
Depositary, if appointed by the Issuers, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their
election if the Issuers, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Trustee shall select the
Notes to be purchased
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on a pro rata basis (with such adjustments as may be deemed appropriate by the
Issuers so that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased) among the Holders of Notes, based upon the
aggregate outstanding principal amount of the Notes; and
(i) that Holders whose Notes were purchased only in
part shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Issuers shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Issuers in
accordance with the terms of this Section 3.9. The Issuers, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Issuers for purchase, and the Issuers shall promptly issue a new
Note, and the Trustee, upon written request from the Issuers shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Issuers to the Holder thereof. The
Issuers shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1 through 3.6 hereof. Upon the completion of an Asset Sale Offer
in accordance with this Section 3.9, the amount of Excess Proceeds (as defined
in Section 4.10) shall be reset at zero.
ARTICLE IV
COVENANTS
Section 4.1. Payment of Notes.
The Issuers shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Issuers
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date,
money deposited by the Issuers in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Issuers
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shall pay all Liquidated Damages, if any, in the same manner on the dates and in
the amounts set forth in the Registration Rights Agreement.
The Issuers shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to the then applicable interest rate on the Notes to the extent
lawful; they shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Issuers in respect of the Notes and this Indenture may be
served. The Issuers shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Issuers may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuers of their obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Issuers shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Issuers in accordance with Section
2.3.
Section 4.3. Reports.
Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Issuers shall furnish to
the Holders of Notes and prospective purchasers upon request (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Issuers were required
to file such Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Issuers and their consolidated
Subsidiaries and, with respect to the annual information only, a report thereon
by the
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Issuers' certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Issuers were required to file such reports, in each case within the time periods
specified in the Commission's rules and regulations. In addition, following the
consummation of the Exchange Offer contemplated by the Registration Rights
Agreement, whether or not required by the rules and regulations of the
Commission, the Issuers shall file a copy of all such information and reports
with the Commission for public availability within the time periods specified in
the Commission's rules and regulations (unless the Commission will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. In addition, at all times that (x) the
Commission does not accept the filings provided for in the preceding sentence or
(y) such filings provided for in the preceding sentence do not contain all of
the information required to be delivered pursuant to Rule 144A(d)(4), the
Issuers shall make available to any holder of Notes, to securities analysts and
to prospective purchasers of such Notes, the information required by Rule
144A(d)(4) under the Securities Act. The Company shall at all times comply with
TIA Section 314(a).
Section 4.4. Compliance Certificate.
(a) The Issuers and each Subsidiary Guarantor (to the
extent that such Subsidiary Guarantor is so required under the TIA) shall
deliver to the Trustee, within 90 days after the end of each fiscal year, an
Officers' Certificate stating that a review of the activities of the Issuers and
their Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Issuers have kept, observed, performed and fulfilled their obligations under
this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Issuers have kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Issuers have taken or
propose to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Issuers have taking or propose to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.3 above shall be
accompanied by a written statement of the Issuers' independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Issuers have violated any provisions of Article 4 (other than Sections 4.2, 4.3,
4.4 and 4.6,
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as to which no belief need be expressed) or Article 5 hereof or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation. In the event that such written statement of the Issuers' independent
public accountants cannot be obtained, the Issuers shall deliver an Officers'
Certificate certifying that it has used its best efforts to obtain such
statements but was unable to do so.
(c) The Issuers shall, so long as any of the Notes
are outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Issuers have taken or
propose to take with respect thereto.
Section 4.5. Taxes.
The Issuers shall pay, and shall cause each of their
Subsidiaries to pay, prior to delinquency, all material taxes, assessments and
governmental levies, except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
Section 4.6. Stay, Extension and Usury Laws.
Each of the Issuers and the Subsidiary Guarantors covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuers and each of the Subsidiary Guarantors (to the extent
that they may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
Section 4.7. Restricted Payments.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
the Company or any of its Restricted Subsidiaries) or to the direct or indirect
holders of the Company's or any of its Restricted Subsidiaries' Equity Interests
in their capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or to the
Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value
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(including, without limitation, in connection with any merger or consolidation
involving the Issuers) any Equity Interests of the Company or any direct or
indirect parent of the Company; (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except a payment of interest or
principal at Stated Maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.9
hereof; and
(c) such Restricted Payment, together with the
aggregate amount of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date hereof (including Restricted Payments
permitted by clauses (i), (iv), (vi) and (viii) of the next succeeding paragraph
and excluding Restricted Payments permitted by clauses (ii), (iii), (v), (vii),
(ix) and (x) of the next succeeding paragraph), is less than the sum, without
duplication, of (i) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net proceeds (including the fair market value of non-cash
proceeds determined in good faith by the Board of Managers) received by the
Company since the date of this Indenture as a contribution to its equity capital
or from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock of the Company) or from the issue or sale of Disqualified
Stock or debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests or Disqualified Stock or
convertible debt securities sold to a Subsidiary of the Company), plus (iii) to
the extent that any Restricted Investment that was made after the date of this
Indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial amount of
such Restricted Investment, plus (iv) 50% of any dividends received by the
Company or a Wholly Owned Restricted Subsidiary after the date of this Indenture
from an Unrestricted Subsidiary of the Company, to the extent that such
dividends were not otherwise included in Consolidated Net Income of the Company
for such period, plus (v) to the extent that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary after the date of this Indenture, the
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lesser of (A) the fair market value of the Company's Investment in such
Subsidiary as of the date of such redesignation or (B) such fair market value as
of the date on which such Subsidiary was originally designated as an
Unrestricted Subsidiary. Any non-cash contribution or series of related non-cash
contributions to equity capital in excess of $5.0 million in fair market value
shall be included in the foregoing sum only if accompanied by a supporting
valuation opinion issued by an accounting, appraisal or investment banking firm
of national standing.
The foregoing provisions will not prohibit: (i) the payment of
any dividend otherwise prohibited hereunder within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture; (ii) the redemption, repurchase,
retirement, defeasance or other acquisition of (A) any Indebtedness that is
subordinated to the Notes or (B) any Equity Interests of the Company, in each
case in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of, Permitted
Refinancing Indebtedness of the Company that is subordinated to the Notes, or
Equity Interests of the Company (other than any Disqualified Stock of the
Company), or from the net cash proceeds of a common equity capital contribution
to the Company; provided, that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(iii) the defeasance, retirement, redemption, repurchase or other acquisition of
Indebtedness that is subordinated to the Notes with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness; (iv) the redemption,
repurchase, retirement, defeasance or other acquisition of any Indebtedness
following a Change of Control pursuant to provisions of such Indebtedness
substantially similar to those described under Section 4.14 hereof after the
Company shall have complied with the provisions of Section 4.14, including the
payment of the applicable Change of Control Payment; (v) the payment of any
dividend by a Subsidiary of the Company other than any Restricted Subsidiary or
by a Foreign Subsidiary, in each case to the holders of such Subsidiary's Equity
Interests on a pro rata basis; (vi) so long as any Notes are outstanding and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction, (A) the repurchase, redemption or other acquisition or
retirement for value by the Company, or the distribution by the Company to the
Parent of funding to permit the repurchase, redemption or other acquisition or
retirement for value by the Parent, of any Equity Interests of the Parent, the
Company or any Subsidiary of the Company held by any member of the Company's (or
any of its Subsidiaries') management or by any former employee of the Company or
any of its Subsidiaries pursuant to any equity subscription agreement or stock
option agreement; provided, that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed the
sum of $5.0 million in any twelve-month period or $10.0 million in the
aggregate, plus the cash proceeds of any "key man" life insurance policy
received by the Company with respect to the owner of, and any cash proceeds paid
to the Company in connection with the issuance or exercise of, any management or
employee Equity Interests so acquired, and excluding repurchases of Equity
Interests deemed to occur upon exercise
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of stock options if such Equity Interests represent a portion of the exercise
price of such options, and (B) the making of loans or advances to employees of
the Company or of the Parent, in the ordinary course of business, but in any
event not to exceed $2.0 million in the aggregate outstanding at any one time;
(vii) so long as the Company is a limited liability company (or a corporation
filing consolidated, combined or unitary tax returns with the Parent),
distributions to the Parent as sole member (or shareholder) of the Company in an
aggregate amount, with respect to any period after March 31, 1998, not to exceed
the amount payable with respect to such period by the Parent to the holders of
its Equity Interests pursuant to Sections 5.3 and 5.4(c) of the LLC Agreement as
in effect on the date of this Indenture; provided, that at any time upon
irrevocable election of the Parent on written notice to the Company, such
distributions shall thereafter be permitted in an amount not to exceed the Tax
Amount (calculated without regard to any net operating loss or other
carryforward from periods prior to the effective date of such election to the
extent such carryforwards are not actually usable under applicable law) for the
Company with respect to any such period; (viii) distributions with respect to
any period after December 31, 1997, to the Parent in an amount not to exceed the
operating expenses of the Parent for such period, but only to the extent such
costs (A) are directly related to the general and administrative expenses of the
Parent, the Company or its Restricted Subsidiaries and not to any other
business, subsidiary or investment of the Parent, (B) are not otherwise paid for
by the Company or its Restricted Subsidiaries and (C) are not payments in
respect of any Equity Interests or Indebtedness of the Parent or of any
Affiliate of the Parent; provided, that the aggregate amount of any such
distributions in any twelve-month period shall not exceed $3.0 million; (ix) any
Permitted Investment; and (x) cash payments by the Company or its subsidiaries
in connection with the consummation of the Transactions.
The Board of Managers may designate any Restricted Subsidiary,
other than ACL Capital, to be an Unrestricted Subsidiary if such designation
would not cause a Default. For purposes of making such determination, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid in cash) in the Subsidiary so designated will be deemed to
be Restricted Payments at the time of such designation and will reduce the
amount available for Restricted Payments under the first paragraph of this
Section 4.7. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
For purposes of determining compliance with this Section 4.7,
in the event that a Restricted Payment meets the criteria of more than one of
the exceptions described above or is entitled to be made pursuant to the first
paragraph of this Section 4.7, the Issuers shall, in their sole discretion,
classify such Restricted Payment in any manner that complies with this Section
4.7. The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
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securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Managers whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, the Issuers shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.7 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
Section 4.8. Dividend and Other Payment Restrictions
Affecting Subsidiaries.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries. However, the
foregoing restrictions will not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of this
Indenture, (b) the Senior Credit Facilities as in effect as of the date of this
Indenture, any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, and any other New
Credit Facility permitted under this Indenture; provided, that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements, refinancings or New Credit Facilities are no more restrictive,
taken as a whole, with respect to such dividend and other payment restrictions
than those contained in the Senior Credit Facilities as in effect on the date of
this Indenture, (c) Indebtedness incurred by Restricted Subsidiaries other than
Subsidiary Guarantors, incurred in compliance with the last paragraph under
Section 4.9 hereof,(d) this Indenture and the Notes, (e) applicable law, (f) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired;
provided, that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of this Indenture to be incurred, (g) customary non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices, (h) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature
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described in clause (f) above on the property so acquired, (i) any agreement for
the sale of a Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending its sale, (j) Permitted Refinancing Indebtedness;
provided, that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced, (k) secured Indebtedness otherwise permitted to be incurred pursuant
to the provisions of Section 4.12 that limits the right of the debtor to dispose
of the assets securing such Indebtedness, (l) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements entered into in the ordinary course of business,
(m) protective liens filed in connection with sale-leaseback transactions
permitted under Section 4.17, (n) Permitted Debt incurred pursuant to clauses
(v), (viii), (xi), (xiii) or (xv) of Section 4.9, (o) purchase money obligations
or other Indebtedness or contractual requirements incurred in connection with or
permitted by Section 4.16 and (p) restrictions on cash or other deposits or net
worth imposed by customers under contracts entered into in the ordinary course
of business.
Section 4.9. Incurrence of Indebtedness and Issuance of
Preferred Equity.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company will not issue any Disqualified Stock and will not
permit any of its Subsidiaries to issue any shares of preferred stock; provided,
that the Issuers may incur Indebtedness (including Acquired Debt) or issue
shares of Disqualified Stock and the Company's Subsidiaries may incur
Indebtedness if the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have been at least 2.00
to 1, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period.
The provisions of the first paragraph of this Section 4.9
shall not apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Issuers or any Restricted Subsidiary
of term Indebtedness under the Senior Credit Facilities or another New
Credit Facility; provided, that the aggregate principal amount of all
term Indebtedness (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the
Company and its Subsidiaries thereunder) outstanding under all New
Credit Facilities after giving effect to such incurrence does not
exceed an amount equal to $435 million less the aggregate amount of all
scheduled repayments of the
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principal of any term Indebtedness under a New Credit Facility (other
than repayments that are immediately reborrowed) that have been made
since the date of this Indenture;
(ii) the incurrence by the Issuers or any Restricted
Subsidiary of revolving credit Indebtedness and letters of credit under
the Senior Credit Facilities or a New Credit Facility; provided, that
the aggregate principal amount of all revolving credit Indebtedness
(with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Subsidiaries
thereunder) outstanding after giving effect to such incurrence does not
exceed an amount equal to $100 million less the aggregate amount of all
Net Proceeds of Asset Sales applied permanently to repay revolving
credit Indebtedness (which is accompanied by a corresponding permanent
commitment reduction and is not available to be reborrowed) pursuant to
Section 4.10 hereof;
(iii) the incurrence by the Company and its Subsidiaries of
Existing Indebtedness;
(iv) the incurrence by the Issuers of Indebtedness represented
by the Notes and the incurrence by the Subsidiary Guarantors of
Indebtedness represented by the Subsidiary Guarantees;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations
or Purchase Money Indebtedness, at any time outstanding in an aggregate
principal amount not to exceed 10% of Total Assets;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by this Indenture to be incurred under the first paragraph of this
Section 4.9 or clauses (i), (ii), (iii), (iv), (v), (vi) or (ix) of
this paragraph;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness owing to and held by any Wholly Owned
Restricted Subsidiary or owing to and held by the Company; provided,
that (i) if one of the Issuers is the obligor on such Indebtedness,
such Indebtedness is expressly subordinated to the prior payment in
full in cash of all Obligations with respect to the Notes and (ii) (A)
any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or
a Wholly Owned Restricted Subsidiary thereof shall be deemed to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by
this clause (vii) and (B) any sale or other transfer
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of any such Indebtedness to a Person that is not either the Company or
a Wholly Owned Restricted Subsidiary thereof shall be deemed to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by
this clause (vii);
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations incurred with respect to any
Indebtedness or Obligation that is permitted by the terms of this
Indenture to be outstanding;
(ix) the incurrence by the Company or any Subsidiary Guarantor
of additional Indebtedness in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (ix), not to
exceed $25 million;
(x) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt; provided, that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (x);
(xi) the incurrence of Indebtedness of the Company and its
Restricted Subsidiaries (including letters of credit) in respect of
performance bonds, bankers' acceptances, letters of credit,
performance, bid, surety or appeal bonds or similar bonds and
completion guarantees provided by the Company and its Restricted
Subsidiaries in the ordinary course of their business and consistent
with past practices and which do not secure other Indebtedness;
(xii) Indebtedness of the Company and its Restricted
Subsidiaries arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, in any case
incurred in connection with the disposition of any business, assets or
Subsidiary of the Company (other than Guarantees of Indebtedness
incurred by any Person acquiring all or any portion of such business,
assets or Subsidiary for the purpose of financing such acquisition), in
an aggregate principal amount not to exceed the gross proceeds actually
received by the Company or any Restricted Subsidiary of the Company in
connection with such disposition;
(xiii) Indebtedness of the Company or a Restricted Subsidiary
owed to (including obligations in respect of letters of credit for the
benefit of) any Person in connection with worker's compensation,
health, disability or other employee benefits or property, casualty or
liability insurance provided by such Person to the Company or such
Restricted Subsidiary, pursuant to reimbursement or
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indemnification obligations to such Person, in each case incurred in
the ordinary course of business and consistent with past practices;
(xiv) the Guarantee by the Issuers or any Restricted
Subsidiary of Indebtedness of the Company or a Subsidiary of the
Company that was permitted to be incurred by another provision of this
Section 4.9;
(xv) the incurrence by Foreign Subsidiaries of additional
Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (xv), not to exceed $20.0
million; and
(xvi) Indebtedness incurred in connection with a transaction
pursuant to and in compliance with Section 4.16 hereof.
For purposes of determining compliance with this Section 4.9,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (xvi) above or
is entitled to be incurred pursuant to the first paragraph of this Section 4.9,
the Issuers shall, in their sole discretion, classify such item of Indebtedness
in any manner that complies with this Section 4.9. Accrual of interest,
accretion or amortization of original issue discount, the payment of interest on
any Indebtedness in the form of additional Indebtedness with the same terms, and
the payment of dividends on Disqualified Stock in the form of additional shares
of the same class of Disqualified Stock will not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Stock for purposes of this
Section 4.9; provided, in each such case, that the amount thereof is included in
Fixed Charges of the Company as accrued.
The Company shall not permit any of its Restricted
Subsidiaries other than Subsidiary Guarantors to incur any Indebtedness
(including Acquired Debt) other than (i) intercompany Indebtedness owing to the
Company or a Wholly Owned Restricted Subsidiary of the Company permitted under
clause (vii) above or (ii) Indebtedness permitted under clause (xv) above;
provided, that Restricted Subsidiaries other than Subsidiary Guarantors may
incur Indebtedness (including Acquired Debt) other than Indebtedness permitted
under clause (vii) above in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any such Indebtedness so
incurred and any Indebtedness permitted under clause (xv) above, in an amount
not to exceed 30% of the total consolidated assets of such Restricted
Subsidiaries in the aggregate, calculated in accordance with GAAP, if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred would have
been at least 2.00 to 1, determined on a pro forma basis (including a pro forma
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application of the net proceeds therefrom), as if such additional Indebtedness
had been incurred at the beginning of such four-quarter period.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or
the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Managers set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided, that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes) that are assumed by the transferee
of any such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability and (y) any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are contemporaneously (subject
to ordinary settlement periods) converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of the terms of this Section 4.10.
Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may, at its option, (a) apply such Net Proceeds to repay
Senior Debt, or (b) apply such Net Proceeds to the acquisition of a majority of
the assets of, or a majority of the Voting Stock of, another Permitted Business,
the making of a capital expenditure or the acquisition of other long-term assets
that are used or useful in a Permitted Business. Pending the final application
of any such Net Proceeds, the Company may temporarily reduce revolving credit
borrowings or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Issuers shall make an offer to all Holders
of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase, in accordance with the procedures set forth in this Section 4.10 and
Section 3.9 hereof. To the extent that any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes tendered into such Asset Sale Offer exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis among the Holders of Notes based upon the aggregate outstanding
principal amount of the Notes. Upon completion of such offer to
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purchase, the amount of Excess Proceeds shall be reset at zero. The Issuers
shall be entitled to reduce any obligation to make an Asset Sale Offer under
this Indenture by an amount equal to the aggregate principal amount of Notes
purchased by the Issuers in transactions other than those in which Notes were
redeemed or required to be purchased by the Issuers pursuant to the terms of
this Indenture within the previous 365 days immediately preceding the date on
which the aggregate amount of Excess Proceeds exceeds $10.0 million.
Notwithstanding the first paragraph of this Section 4.10, the
Company and its Restricted Subsidiaries shall be permitted to consummate an
Asset Sale without complying with such first paragraph if (i) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value of the
assets or other property sold, issued or otherwise disposed of (as evidenced by
a resolution of the Board of Managers and in the case of consideration with a
fair market value in excess of $5 million, accompanied by a valuation opinion
issued by an accounting, appraisal or investment banking firm of national
standing) and (ii) at least 75% of the consideration for such Asset Sale
constitutes a controlling interest in a business of the type described in
Section 4.22, long-term assets used or useful in such business and/or cash or
Cash Equivalents; provided that any cash or Cash Equivalents received by the
Company or any of its Restricted Subsidiaries in connection with any Asset Sale
permitted to be consummated under this paragraph shall be added to the Excess
Proceeds.
Section 4.11. Transactions With Affiliates.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Issuers deliver to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Managers set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Managers and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Company of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by
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the Company or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such Restricted
Subsidiary, (ii) transactions between or among the Company and/or its Restricted
Subsidiaries, (iii) payment of reasonable directors fees and payments in respect
of indemnification obligations owing to directors, officers or other individuals
under the charter or by-laws of the Company or the Parent or pursuant to written
agreements with any such Person, (iv) Restricted Payments and Permitted
Investments that are permitted by the provisions of Section 4.7, (v)
transactions pursuant to agreements in effect as of the date of this Indenture
disclosed in or contemplated by "Certain Relationships and Related Transactions"
in the Offering Memorandum or disclosed elsewhere in the Offering Memorandum,
(vi) transactions effected in compliance with the terms of sales permitted under
Section 4.16 and (vii) Permitted Affiliate Transactions.
Section 4.12. Liens.
The Issuers shall not, and shall not permit any of their
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
Section 4.13. Corporate Existence.
Subject to Article 5 hereof, the Issuers shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
their corporate existence, and the corporate or other existence of each of their
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Issuers or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Issuers
and their Subsidiaries; provided, however, that the Issuers shall not be
required to preserve any such right, license or franchise, or the corporate,
limited liability company or other existence of any of their Subsidiaries, if
the Board of Managers or Board of Directors, as applicable, shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Issuers and their Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.14. Offer To Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, if
the Issuers do not redeem all of the Notes as permitted under Section 3.7 or if
a Change of Control occurs on or after June 30, 2003, each Holder of Notes will
have the right to require the Issuers to make an offer to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price in cash equal to 101% of (A) the principal
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amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of repurchase (the "Change of Control Payment"). Within 60
days following any Change of Control, the Issuers will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by this Indenture and described in such notice. The
Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations directly conflict with the provisions of this
Indenture relating to such Change of Control Offer, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in this Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuers will, to
the extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Issuers. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Issuers will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(b) Notwithstanding anything to the contrary in this
Section 4.14, the Issuers shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.14 and Section 3.9 hereof and purchases
all Notes validly tendered and not withdrawn under such Change of Control Offer.
Section 4.15. Senior Debt; Liens.
The Company shall not, and shall not permit any of its
Subsidiaries to, incur any Indebtedness that is contractually subordinated in
right of payment to any other Indebtedness of the Company or any Subsidiary
thereof unless such Indebtedness is also contractually subordinated in right of
payment to the Notes on substantially identical terms; provided, that no
Indebtedness of the Company or any Subsidiary thereof shall be deemed
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to be contractually subordinated in right of payment to any other Indebtedness
of the Company or any Subsidiary thereof solely by virtue of being unsecured. In
addition, the Company shall not, and shall not permit any of its Subsidiaries
to, incur any Indebtedness secured by a Lien other than pursuant to a New Credit
Facility and other than a Permitted Lien unless contemporaneously therewith
effective provision is made to secure the Notes equally and ratably with, or in
the case of Indebtedness subordinated in right of payment to the Notes, on a
senior basis to, such Indebtedness for so long as such Indebtedness is so
secured by a Lien.
Section 4.16. Sales of Accounts Receivable.
The Company may, and any of its Restricted Subsidiaries may,
sell at any time and from time to time, accounts receivable and notes receivable
and related assets to an Accounts Receivable Subsidiary; provided that (i) the
aggregate consideration received in each such sale is at least equal to the
aggregate fair market value of the receivables sold, as determined by the Board
of Managers in good faith, (ii) no less than 80% of the consideration received
in each such sale consists of either cash or a promissory note (a "Promissory
Note") which is subordinated to no Indebtedness or obligation (except that it
may be subordinated to the financial institutions or other entities providing
the financing to the Accounts Receivable Subsidiary with respect to such
accounts receivable (the "Financier")) or an Equity Interest in such Accounts
Receivable Subsidiary; provided, further that the initial sale will include all
accounts receivable of the Company and/or its Restricted Subsidiaries that are
party to such arrangements that constitute eligible receivables under such
arrangements, (iii) the cash proceeds received from the initial sale less
reasonable and customary transaction costs will be deemed to be Net Proceeds and
will be applied in accordance with the second paragraph of Section 4.10 and (iv)
the Company and its Restricted Subsidiaries will sell all accounts receivable
that constitute eligible receivables under such arrangements to the Accounts
Receivable Subsidiary no less frequently than on a weekly basis.
The Company (i) will not permit any Accounts Receivable
Subsidiary to sell any accounts receivable purchased from the Company or any of
its Restricted Subsidiaries to any other person except on an arm's-length basis
and solely for consideration in the form of cash or Cash Equivalents, (ii) will
not permit the Accounts Receivable Subsidiary to engage in any business or
transaction other than the purchase, financing and sale of accounts receivable
of the Company and its Restricted Subsidiaries and activities incidental
thereto, (iii) will not permit any Accounts Receivable Subsidiary to incur
Indebtedness in an amount in excess of the book value of such Accounts
Receivable Subsidiary's total assets, as determined in accordance with GAAP,
(iv) will, at least as frequently as monthly, cause the Accounts Receivable
Subsidiary to remit to the Company as payment on the outstanding balance of the
Promissory Notes, all available cash or Cash Equivalents not held in a
collection account pledged to a Financier, to the extent not applied to pay or
maintain reserves for reasonable operating expenses of the Accounts Receivable
Subsidiary or to satisfy reasonable minimum operating capital requirements and
(v) will not, and will
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not permit any of its Subsidiaries to, sell accounts receivable to any Accounts
Receivable Subsidiary upon the occurrence of the events set forth in Section
6.1(h) with respect to such Accounts Receivable Subsidiary.
Section 4.17. Sale And Leaseback Transactions.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided, that the Company may enter into a sale and leaseback transaction if
(i) the Company could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.9 and (b) incurred a Lien to secure such Indebtedness pursuant to Section
4.12, (ii) the gross cash proceeds of such sale and leaseback transaction are at
least equal to the fair market value (as determined in good faith by the Board
of Managers and set forth in an Officers' Certificate delivered to the Trustee)
of the property that is the subject of such sale and leaseback transaction and
(iii) the transfer of assets in such sale and leaseback transaction is permitted
by, and the Issuers apply the proceeds of such transaction in compliance with,
Section 4.10.
Section 4.18. Restriction On Preferred Stock of Subsidiaries.
The Company shall not permit any of its Restricted
Subsidiaries to issue any preferred stock, or permit any Person to own or hold
an interest in any preferred stock of any such Subsidiary, except for preferred
stock issued to the Company or a Wholly Owned Restricted Subsidiary of the
Company.
Section 4.19. Restrictions On Activities of ACL Capital.
ACL Capital shall not hold any assets (other than the $100.00
contributed to it in connection with its formation), become liable for any
obligations other than its obligations under the Notes or engage in any business
activities; provided, that ACL Capital may be a co-obligor with respect to
Indebtedness if the Company is primary obligor of such Indebtedness and the net
proceeds of such Indebtedness are received by the Company or one or more of the
Company's Subsidiaries other than ACL Capital.
Section 4.20. Payments For Consent.
Neither the Company nor any of its Restricted Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or is paid to all Holders of the Notes that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
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Section 4.21. Additional Subsidiary Guarantees.
If the Issuers or any of their Restricted Subsidiaries shall
acquire or create another domestic Subsidiary after the date of this Indenture,
then such newly acquired or created Subsidiary shall become a Subsidiary
Guarantor and execute a supplemental indenture substantially in the form of
Exhibit F hereto and deliver an Opinion of Counsel, in accordance with the terms
of Sections 10.4 and 11.4 hereof.
Section 4.22. Restrictions On Business Activities.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than (i) Permitted Businesses and
(ii) the making of Permitted Investments and engaging in a business in
connection with any such Permitted Investment, except to such extent as would
not be material to the Company and its Restricted Subsidiaries taken as a whole.
ARTICLE V
SUCCESSORS
Section 5.1. Merger, Consolidation or Sale of Assets.
Neither of the Issuers shall consolidate or merge with or into
(whether or not such Issuer is the surviving entity), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another corporation, Person or
entity unless (i) such Issuer is the surviving entity or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
one of the Issuers) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation or limited
liability company organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the entity or Person formed by
or surviving any such consolidation or merger (if other than one of the Issuers)
or the entity or Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Issuers under the Registration Rights Agreement, the Notes and this
Indenture pursuant to supplemental indentures in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; (iv) except in the case of a merger or consolidation of one of
the Issuers with or into a Wholly Owned Restricted Subsidiary of the Company,
the Issuer or the entity or Person formed by or surviving any such merger or
consolidation (if other than one of the Issuers), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
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four-quarter period, (A) be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.9 hereof and (B) have Consolidated Net Worth in an
amount not less than the Consolidated Net Worth of the Company immediately prior
to such transaction; and (v) the Company will have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture. Notwithstanding the foregoing, the Company is
permitted to reorganize as a corporation; provided, that the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States confirming
that the holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such reorganization and will be
subject to Federal income tax in the same manner and at the same times as would
have been the case if such reorganization had not occurred, and the conditions
set forth in clauses (i), (ii), (iii) and (v) of the first sentence of this
Section 5.1 are satisfied.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of an Issuer in accordance with Section 5.1 hereof, the successor
Person formed by such consolidation or into or with which an Issuer is merged or
to which such sale, assignment, transfer, lease, conveyance or other disposition
is made shall succeed to, and be substituted for (so that from and after the
date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to such Issuer shall
refer instead to the successor Person and not to such Issuer), and may exercise
every right and power of the Issuers under this Indenture with the same effect
as if such successor Person had been named as an Issuer herein; provided,
however, that the predecessor Issuer shall not be relieved from the obligation
to pay the principal of and interest on the Notes except in the case of a sale
of all of an Issuer's assets that meets the requirements of Section 5.1 hereof.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
The following constitute an "Event of Default":
(a) default for 30 days in the payment when due of
interest on, or Liquidated Damages with respect to, the Notes;
(b) default in payment when due of the principal of
or premium, if any, on the Notes;
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(c) failure by the Company or any of its Subsidiaries
to comply with the provisions described under Section 4.14;
(d) failure by the Company or any of its Subsidiaries
for 30 days after receipt by the Issuers of notice from the Trustee or by the
Issuers and the Trustee of notice from the Holders of at least 25% in principal
amount of Notes then outstanding to comply with any of its other agreements in
this Indenture or the Notes;
(e) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, which default:
(i) is caused by a failure to pay principal
of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or
(ii) results in the acceleration of such
Indebtedness prior to its express maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$7.5 million or more;
(f) failure by the Company or any of its Subsidiaries
to pay final judgments aggregating in excess of $7.5 million, which judgments
are not paid, discharged or stayed for a period of 30 days;
(g) except as permitted by this Indenture, any
Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Subsidiary Guarantor, or any Person acting on behalf of any
Subsidiary Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and
(h) (1) the Company, (2) any Significant Subsidiary
(other than an Accounts Receivable Subsidiary) or (3) any group of Subsidiaries
(other than an Accounts Receivable Subsidiary) that, taken as a whole, would
constitute a Significant Subsidiary (each a "Relevant Entity") pursuant to or
within the meaning of Bankruptcy Law:
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(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of
it or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of
its creditors, or
(v) generally is not paying its debts as they become
due; or
(i) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against a Relevant Entity in an
involuntary case;
(ii) appoints a custodian of a Relevant Entity; or
(iii) orders the liquidation of a Relevant Entity;
and the order or decree remains unstayed and in effect for 60
consecutive days.
Section 6.2. Acceleration.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default described in Section 6.1(h), all
outstanding Notes will become due and payable without further action or notice.
In the event of a declaration of acceleration of the Notes
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (e) of Section 6.1, the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of any Indebtedness described in clause (e) of Section 6.1 have
rescinded the declaration of acceleration in respect of such indebtedness within
30 days of the date of such declaration and if (a) the annulment of the
acceleration of Notes would not conflict with any judgment or decree of a court
of competent jurisdiction and (b) all existing Events of Default, except
nonpayment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes, have been cured or waived.
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Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase);
provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 6.5. Control by Majority.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability. The Trustee may take any other action
which it deems proper which is not inconsistent with any such discretion.
Notwithstanding any provisions to the contrary in this Indenture, the Trustee
shall not be obligated to take any action with respect to the provisions of the
last paragraph of Section 6.2 hereof unless directed to do so pursuant to this
Section 6.5.
Section 6.6. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
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(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount
of the then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Note or Holders of Notes offer
and, if requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a
majority in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
Section 6.7. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agent and counsel and
all other amounts due to the Trustee pursuant to Section 7.7 hereof.
Section 6.9. Trustee May File Proofs of Claim.
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The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Issuers (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages, if
any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
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Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE VII
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
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(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or documents, but the Trustee, in its discretion may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuers, personally or by agent or attorney.
Section 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with
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counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or within
the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from an Issuer shall be
sufficient if signed by an Officer of such Issuer. A permissive right granted to
the Trustee hereunder shall not be deemed to be an obligation to act.
(f) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
(g) The Trustee shall not be charged with the
knowledge of any Default or Event of Default unless either (i) a Responsible
Officer of the Trustee shall have actual knowledge of such Default or Event of
Default, or (ii) written notice of Default or such Event of Default shall have
been given to the Trustee by the Issuers or by any Holder.
Section 7.3. Individual Rights of Trustee.
The Trustee, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Issuers or
any Affiliate of the Issuers with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.4. Trustee"s Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Issuers or upon the Issuers' direction under any provision
of this Indenture, it shall not be responsible for
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the use or application of any money received by any Paying Agent other than the
Trustee, and it shall not be responsible for any statement or recital herein or
any statement in the Notes or any other document in connection with the sale of
the Notes or pursuant to this Indenture other than its certificate of
authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
Section 7.6. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the Commission
and each stock exchange on which the Notes are listed in accordance with TIA
Section 313(d). The Issuers shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
Section 7.7. Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Issuers shall jointly and severally indemnify the Trustee
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Issuers (including this Section 7.7) and defending itself against
any claim (whether asserted by the Issuers or any Holder or any
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other Person) or liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent any such loss, liability
or expense may be attributable to its negligence or bad faith. The Trustee shall
notify the Issuers promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Issuers shall not relieve the Issuers of
their obligations hereunder. The Issuers shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Issuers shall pay the reasonable fees and expenses of such counsel. The Issuers
need not pay for any settlement made without their consent, which consent shall
not be unreasonably withheld.
The obligations of the Issuers under this Section 7.7 shall
survive the resignation and removal of the Trustee and the satisfaction and
discharge of this Indenture.
To secure the Issuers' payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the resignation and
removal of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1 (h) or (i) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Issuers. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Issuers in writing.
The Issuers may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10
hereof;
(b) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee under
any Bankruptcy Law;
(c) a custodian or public officer takes charge of the
Trustee or its property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Issuers shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuers.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuers, or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Issuers' obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
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This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against
Issuers.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII
LEGAL DEFEASANCE AND
COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Issuers may, at the option of their Board of Managers or
Board of Directors, as applicable, evidenced by a resolution set forth in an
Officers' Certificate, at any time, elect to have either Section 8.2 or 8.3
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article Eight.
Section 8.2. Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 8.1 hereof of the
option applicable to this Section 8.2, the Issuers shall, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, be deemed to
have been discharged from their obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means that the Issuers
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all their
other obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Issuers, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section 8.4
hereof, and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due, (b) the Issuers' obligations with respect to such Notes under Article 2 and
Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Issuers' obligations in connection therewith and (d)
this Article Eight. Subject to compliance with
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this Article Eight, the Issuers may exercise their option under this Section 8.2
notwithstanding the prior exercise of its option under Section 8.3 hereof.
Section 8.3. Covenant Defeasance.
Upon the Issuers' exercise under Section 8.1 hereof of the
option applicable to this Section 8.3, the Issuers shall, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, be released from
their obligations under the covenants contained in Sections 4.7, 4.8, 4.9, 4.10,
4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21 and 4.22 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.4 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Issuers may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Issuers' exercise under Section 8.1
hereof of the option applicable to this Section 8.3 hereof, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(c)
through 6.1(f) hereof shall not constitute Events of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Issuers must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium and Liquidated
Damages, if any, and interest on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.2
hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that (A) the
Issuers have received from,
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or there has been published by, the Internal Revenue Service a ruling or (B)
since the date of this Indenture, there has been a change in the applicable U.S.
federal income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes
will not recognize income, gain or loss for U.S. federal income tax purposes as
a result of such Legal Defeasance and will be subject to U.S. federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3
hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such Covenant Defeasance and
will be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the incurrence of Indebtedness all or a portion
of the proceeds of which will be used to defease the Notes pursuant to this
Article Eight concurrently with such incurrence) or insofar as Sections 6.1 (h)
or 6.1 (i) hereof is concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which the
Issuers or any of their Subsidiaries is a party or by which the Issuers or any
of their Subsidiaries is bound;
(f) the Issuers shall have delivered to the Trustee
an Opinion of Counsel (which may be subject to customary exceptions) to the
effect that as of the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Issuers shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not made by the Issuers
with the intent of preferring the Holders over any other creditors of the
Issuers or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Issuers; and
(h) the Issuers shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
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Section 8.5. Deposited Money and Government Securities to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Issuers acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Issuers shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.4 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Issuers from time to
time upon the request of the Issuers any money or non-callable Government
Securities held by it as provided in Section 8.4 hereof which, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.
Section 8.6. Repayment to Issuers.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Issuers, in trust for the payment of the principal of, premium,
if any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Issuers on their request or (if then held by the Issuers) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an
unsecured creditor, look only to the Issuers for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Issuer as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Issuers cause to be
published once, in The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Issuers.
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Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or noncallable Government Securities in accordance with Section
8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Issuers' obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if the Issuers make any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of their obligations, the Issuers shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes.
Notwithstanding Section 9.2 of this Indenture, the Issuers,
the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture, the Subsidiary Guarantees or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition
to or in place of certificated Notes or to alter the provisions of Article 2
hereof (including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Issuers' or
a Subsidiary Guarantor's obligations to the Holders of the Notes by a successor
to the Issuers or a Subsidiary Guarantor pursuant to Article 5 or Article 10
hereof;
(d) to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Note;
(e) to comply with requirements of the Commission in
order to effect or maintain the qualification of this Indenture under the TIA;
(f) to provide for the issuance of additional notes
in accordance with the limitations set forth in this Indenture as of the date
hereof; or
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(g) to allow any Subsidiary Guarantor to execute a
supplemental indenture and/or a Subsidiary Guarantee with respect to the Notes.
Upon the request of the Issuers accompanied by a
resolutions of their Board of Managers or Board of Directors, as applicable,
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.2 hereof,
the Trustee shall join with the Issuers and the Subsidiary Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders of Notes.
Except as provided below in this Section 9.2, the Issuers, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture
(including Section 3.9, 4.10 and 4.14 hereof), the Subsidiary Guarantees and the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes (including additional notes, if any)
then outstanding voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture, the Subsidiary Guarantees or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including additional notes, if any) voting as a
single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes).
Upon the request of the Issuers accompanied by a resolution of
their Board of Managers or Board of Directors, as applicable, authorizing the
execution of any such amended or supplemental indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 7.2 hereof, the Trustee shall join with the Issuers in the
execution of such amended or supplemental indenture unless such amended or
supplemental indenture directly affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.
<PAGE> 92
88
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Issuers shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Issuers to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the
Holders of a majority in aggregate principal amount of the Notes (including
additional notes, if any) then outstanding voting as a single class may waive
compliance in a particular instance by the Issuers with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver under this Section 9.2 may not (with respect to any Notes
held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed
maturity of any Note or alter or waive any of the provisions with respect to the
redemption of the Notes except as provided above with respect to Sections 3.9,
4.10 and 4.14 hereof;
(c) reduce the rate of or change the time for payment
of interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes (including additional
notes, if any and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that
stated in the Notes;
(f) make any change in the provisions of this
Indenture relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of or interest on the Notes;
(g) make any change in Section 6.4 or 6.7 hereof or
in the foregoing amendment and waiver provisions; or
(h) release any Subsidiary Guarantor from any of its
obligations under its Subsidiary Guarantee or this Indenture, except in
accordance with the terms of this Indenture.
<PAGE> 93
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Section 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental indenture that complies with the
TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Issuers in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.6. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Issuers may not sign an amendment or supplemental Indenture until the Board
of Managers or Board of Directors, as applicable, approves it. In executing any
amended or supplemental indenture, the Trustee shall be entitled to receive and
(subject to Section 7.1 hereof) shall be fully protected in relying upon, in
addition to the documents required by Section 11.4 hereof, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such amended
or supplemental indenture is authorized or permitted by this Indenture.
ARTICLE X
SUBSIDIARY GUARANTEES
<PAGE> 94
90
Section 10.1. Guarantee.
Subject to this Article 10, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees (collectively, the
"Subsidiary Guarantees") to each Holder of a Note authenticated and delivered by
the Trustee hereunder and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Issuers hereunder or thereunder, that: (a) the principal
of, premium, Liquidated Damages, if any, and interest on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of, premium, Liquidated
Damages, if any, and interest on the Notes, if any, if lawful, and all other
obligations of the Issuers to the Holders or the Trustee hereunder or thereunder
(including, without limitation, pursuant to Section 7.7 hereof) will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Subsidiary Guarantors shall be jointly and severally obligated to pay the
same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of
payment and not a guarantee of collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Issuers, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuers, any right to require a proceeding first against the Issuers,
protest, notice and all demands whatsoever and covenant that such Subsidiary
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Issuers, the Subsidiary Guarantors or any custodian,
trustee, liquidator or other similar official acting in relation to either the
Issuers or the Subsidiary Guarantors, any amount paid by either to the Trustee
or such Holder, such Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled
to any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the
<PAGE> 95
91
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of such Subsidiary Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of their Subsidiary Guarantees. The Subsidiary
Guarantors shall have the right to seek contribution from any non-paying
Subsidiary Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Subsidiary Guarantees.
Section 10.2. Ranking of Subsidiary Guarantee.
The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee pursuant to this Article 10 shall be senior and pari passu
with the Senior Debt of such Subsidiary Guarantor.
Section 10.3. Limitation on Subsidiary Guarantor Liability.
Each Subsidiary Guarantor, and by its acceptance of Notes,
each Holder, hereby confirms that it is the intention of all such parties that
the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Subsidiary Guarantee. To
effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary
Guarantors hereby irrevocably agree that the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee and this Article 10 shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Subsidiary Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under this Article 10, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
Section 10.4. Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section
10.1, each Subsidiary Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form included in Exhibit E shall be endorsed by
an Officer of such Subsidiary Guarantor on each Note authenticated and delivered
by the Trustee and that this Indenture shall be executed on behalf of such
Subsidiary Guarantor by its President or one of its Vice Presidents.
<PAGE> 96
92
Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 10.1 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary
Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.21 hereof, the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Subsidiary Guarantees in accordance with
Section 4.21 hereof and this Article 10, to the extent applicable.
Section 10.5. Subsidiary Guarantors May Consolidate, Etc. on
Certain Terms.
No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person) another
Person whether or not affiliated with such Subsidiary Guarantor unless:
(a) subject to Section 10.5 hereof, the Person formed
by or surviving any such consolidation or merger (if other than a Subsidiary
Guarantor) assumes all the obligations of such Subsidiary Guarantor, pursuant to
a supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, this Indenture and the Subsidiary Guarantee on the
terms set forth herein or therein;
(b) immediately after giving effect to such
transaction, no Default or Event of Default exists; and
(c) the Issuers would be permitted, immediately after
giving effect to such transaction, to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.9 hereof.
In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor
<PAGE> 97
93
Person shall succeed to and be substituted for the Subsidiary Guarantor with the
same effect as if it had been named herein as a Subsidiary Guarantor. Such
successor Person thereupon may cause to be signed any or all of the Subsidiary
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Subsidiary
Guarantor with or into the Company or another Subsidiary Guarantor, or shall
prevent any sale or conveyance of the property of a Subsidiary Guarantor as an
entirety or substantially as an entirety to the Company or another Subsidiary
Guarantor.
Section 10.6. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the
assets of any Subsidiary Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the membership interests or
capital stock, as applicable, of any Subsidiary Guarantor, then such Subsidiary
Guarantor (in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the membership interest or capital stock ,
as applicable, of such Subsidiary Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Subsidiary Guarantor) will be released and relieved of
any obligations under its Subsidiary Guarantee; provided that the Net Proceeds
of such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
Upon delivery by the Issuers to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Issuers in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Subsidiary
Guarantor from its obligations under its Subsidiary Guarantee.
Any Subsidiary Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any
Subsidiary Guarantor under this Indenture as provided in this Article 10.
ARTICLE XI
<PAGE> 98
94
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.
Section 11.2. Notices.
Any notice or communication by the Issuers, any Subsidiary
Guarantor or the Trustee to the others is duly given if in writing and delivered
in person or mailed by first-class mail (registered or certified, return receipt
requested), telecopier or overnight air courier guaranteeing next day delivery,
to the others' address:
If to the Issuers and/or any Subsidiary Guarantor:
American Commercial Lines LLC
1701 East Market Street
Jeffersonville, IN 47130
Telecopier No.: (812) 288-1708
Attention: General Counsel
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Telecopier No.: (212) 446-4900
Attention: Lance Balk, Esq.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036-1532
Telecopier No.: (212) 852-1626
Attention: Corporate Trust Division
The Issuers, any Subsidiary Guarantor or the Trustee, by
notice to the others may designate additional or different addresses for
subsequent notices or communications.
<PAGE> 99
95
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next-day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next-day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuers mails a notice or communication to Holders,
they shall mail a copy to the Trustee and each Agent at the same time.
Section 10.3. Communication by Holders of Notes with Other
Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Issuers, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 11.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Issuers to the Trustee
to take any action under this Indenture, the Issuers shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
Section 11.5. Statements Required in Certificate or Opinion.
<PAGE> 100
96
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Persons making such
certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person,
he or she has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been satisfied.
Section 11.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 11.7. No Personal Liability of Directors, Officers,
Employees, Members and Stockholders.
No director, officer, employee, incorporator, member or
stockholder of the Issuers, as such, shall have any liability for any
obligations of the Issuers under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
Section 11.8. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
<PAGE> 101
97
Section 11.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Issuers or their Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 11.10. Successors.
All agreements of the Issuers in this Indenture and the Notes
shall bind their successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 11.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE> 102
98
Dated as of June 30, 1998
SIGNATURES
Very truly yours,
AMERICAN COMMERCIAL LINES LLC
By:_________________________________
Name:
Title:
ACL CAPITAL CORP.
By:_________________________________
Name:
Title:
Subsidiary Guarantors:
AMERICAN COMMERCIAL BARGE LINE
LLC
By:___________________________________
Name:
Title:
AMERICAN COMMERCIAL MARINE
SERVICE LLC
By:___________________________________
Name:
Title:
<PAGE> 103
99
Name:
Title:
LOUISIANA DOCK COMPANY LLC
By:___________________________________
Name:
Title:
WATERWAY COMMUNICATIONS
SYSTEM LLC
By:___________________________________
Name:
Title:
AMERICAN COMMERCIAL TERMINALS
LLC
By:___________________________________
Name:
Title:
AMERICAN COMMERCIAL TERMINALS-
MEMPHIS LLC
By:___________________________________
Name:
Title:
<PAGE> 104
100
JEFFBOAT LLC
By:___________________________________
Name:
Title:
AMERICAN COMMERCIAL LINES
INTERNATIONAL LLC
By:___________________________________
Name:
Title:
ORINOCO TASA LLC
By:___________________________________
Name:
Title:
ORINOCO TASV LLC
By:___________________________________
Name:
Title:
BREEN TAS LLC
By:___________________________________
Name:
Title:
<PAGE> 105
101
BULLARD TAS LLC
By:___________________________________
Name:
Title:
SHELTON TAS LLC
By:___________________________________
Name:
Title:
LEMONT HARBOR & FLEETING
SERVICES LLC
By:___________________________________
Name:
Title:
TIGER SHIPYARD LLC
By:___________________________________
Name:
Title:
WILKINSON POINT LLC
By:___________________________________
Name:
Title:
<PAGE> 106
102
HOUSTON FLEET LLC
By:___________________________________
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.2
AMERICAN COMMERCIAL LINES LLC,
ACL CAPITAL CORP.
AND THE
SUBSIDIARY GUARANTORS REFERRED TO HEREIN
$300,000,000 10 1/4% Senior Notes due 2008
Purchase Agreement
June 23, 1998
WASSERSTEIN PERELLA SECURITIES, INC.
CHASE SECURITIES INC.
<PAGE> 2
AMERICAN COMMERCIAL LINES LLC,
ACL CAPITAL CORP. AND THE
SUBSIDIARY GUARANTORS REFERRED TO HEREIN
$300,000,000 10 1/4% Senior Notes due 2008
PURCHASE AGREEMENT
June 23, 1998
WASSERSTEIN PERELLA SECURITIES, INC.
CHASE SECURITIES INC.
c/o WASSERSTEIN PERELLA SECURITIES, INC.
31 West 52nd Street
New York, New York 10019
Ladies and Gentlemen:
American Commercial Lines LLC, a Delaware limited liability
company (the "Company") and ACL Capital Corp., a Delaware corporation ("ACL
Capital" and, together with the Company, the "Issuers"), propose to issue and
sell to Wasserstein Perella Securities, Inc. ("Wasserstein") and Chase
Securities Inc. ("Chase Securities" and, together with Wasserstein, the "Initial
Purchasers") an aggregate of $300,000,000 in principal amount of their 10 1/4%
Senior Notes due 2008 (the "Senior Notes" or the "Notes"), subject to the terms
and conditions set forth herein. The Senior Notes are to be issued pursuant to
the provisions of an indenture (the "Indenture"), to be dated as of the Closing
Date (as defined below), among the Issuers, the Subsidiary Guarantors (as
defined below) and United States Trust Company of New York, as trustee (the
"Trustee"). The Senior Notes and the New Senior Notes (as defined below)
issuable in exchange therefor are collectively referred to herein as the "Senior
Notes." The Senior Notes will be guaranteed (the "Subsidiary Guarantees") by
each of the entities listed on Schedule A hereto (each, a "Subsidiary Guarantor"
and collectively the "Subsidiary Guarantors"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Indenture.
Pursuant to the terms of a recapitalization agreement dated as
of April 17, 1998 (the "Recapitalization Agreement") by and among CSX
Corporation, a Virginia corporation ("CSX"), Vectura Group, Inc., a Delaware
corporation ("Vectura"), National Marine, Inc., a Delaware corporation and
wholly owned subsidiary of Vectura ("NMI"), American Commercial Lines Holdings
LLC, a Delaware limited liability company (the "Parent"), and the Company, a
wholly owned subsidiary of the Parent, concurrently with the Closing Date of the
offering of Notes contemplated hereby, the parties to the
<PAGE> 3
Recapitalization Agreement will effect the recapitalization (the
"Recapitalization") in a series of transactions in which (i) the barge business
of Vectura and its subsidiaries will be combined with that of ACL (the "NMI
Contribution"); (ii) ACL will use the net proceeds of the Offering and
borrowings under the senior secured term loan facilities from the Chase
Manhattan Bank, as Agent (together, the "Senior Credit Facility"), together with
the proceeds of a cash equity investment in the Parent by Vectura of
approximately $60.0 million (the "Vectura Cash Contribution"), to fund a cash
distribution of $695.0 million to CSX or one of its affiliates (the "CSX Cash
Distribution") and the assumption and immediate repayment of approximately $75.0
million of existing indebtedness and other obligations of Vectura and its
subsidiaries (the "Vectura Debt"); and (iii) Vectura, CSX and NMI will hold
approximately 55%, 34% and 11% of the junior common membership interests of the
Parent, which will be allocated between voting and non-voting and which
represent the residual future profits interests in the Parent, respectively
(before giving effect to the investment by certain management investors and
independent investors). In connection with the Recapitalization, the Parent will
issue $220.0 million of preferred and common membership interests, and the
Company will issue 100% of its membership interests to the Parent. The
Recapitalization, the Offering, the borrowings under the Senior Credit Facility,
the Vectura Cash Contribution, the NMI Contribution, the assumption and
immediate repayment of the Vectura Debt and the issuance of preferred and common
membership interests of the Parent are collectively referred to herein as the
"Transactions." Each of the Transactions is conditioned upon each of the others,
and consummation of all of the Transactions shall occur simultaneously. The CSX
Cash Distribution, the assumption and immediate repayment of the Vectura Debt
and the fees and expenses of the Transactions will be funded by (i) $435.0
million of term loan borrowings by the Company pursuant to the Senior Credit
Facility; (ii) the Offering; and (iii) the Vectura Cash Contribution.
1. OFFERING MEMORANDUM. The Notes will be offered and sold to
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "Act"). The
Issuers and the Subsidiary Guarantors have prepared a preliminary offering
memorandum, dated June 8, 1998 (the "Preliminary Offering Memorandum"), and a
final offering memorandum, dated June 23, 1998 (the "Offering Memorandum"),
relating to the Notes and the Subsidiary Guarantees.
Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture, the Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED
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<PAGE> 4
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 UNDER THE SECURITIES ACT, OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST),
(2) TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Issuers agree to issue
and sell to the Initial Purchasers, and the Initial Purchasers agree, severally
and not jointly, to purchase from the Issuers, the principal amounts of Notes
set forth opposite the name of such Initial Purchaser on Schedule B hereto at a
purchase price equal to 97% of the principal amount thereof (the "Purchase
Price"). The Issuers and the Subsidiary Guarantors shall not be obligated to
deliver any of the securities to be delivered hereunder except upon payment for
all of the securities to be purchased as provided herein.
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<PAGE> 5
3. TERMS OF OFFERING. Each of the Initial Purchasers has
advised the Issuers and the Subsidiary Guarantors that it will make offers (the
"Exempt Resales") of the Notes purchased hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to (i) persons whom the
Initial Purchasers reasonably believe to be "qualified institutional buyers" as
defined in Rule 144A under the Act ("QIBs") and (ii) to persons permitted to
purchase the Notes in offshore transactions in reliance upon Regulation S under
the Act (each, a "Regulation S Purchaser") (such persons specified in clauses
(i) and (ii) being referred to herein as the "Eligible Purchasers"). The Initial
Purchasers will offer the Notes to Eligible Purchasers initially at a price
equal to 100% of the principal amount thereof, plus accrued interest, if any,
from the date of issuance. Such price may be changed by either of the Initial
Purchasers at any time without notice.
Holders (including subsequent transferees) of the Notes will
have the registration rights set forth in the registration rights agreement
relating to the Senior Notes, respectively (the "Registration Rights
Agreement"), to be executed on and dated the Closing Date, in substantially the
form of Exhibit A hereto, for so long as any such Notes constitute "Transfer
Restricted Securities" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Issuers and the Subsidiary
Guarantors will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Issuers' 10 1/4% new Senior Notes due 2008 and guarantees by the
Subsidiary Guarantors in respect thereof (the "New Senior Notes"), identical in
all material respects to the Senior Notes and the Subsidiary Guarantees thereof
(except that the New Senior Notes and related guarantees shall have been
registered pursuant to such Exchange Offer Registration Statement), to be
offered in exchange for the Senior Notes and the Subsidiary Guarantees thereof
(such offer to exchange being referred to as the "Exchange Offer") and (ii) a
shelf registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, the "Registration Statements") relating to the resale by certain
holders of the Notes, and to use their best efforts to cause such Registration
Statements to be declared and remain effective and usable for the periods
specified in the Registration Rights Agreement and to consummate the Exchange
Offer. This Agreement, the Indenture, the Notes, the Subsidiary Guarantees and
the Registration Rights Agreement are hereinafter sometimes referred to
collectively as the "Operative Documents."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Notes shall be made at the offices of Kirkland & Ellis, Citicorp Center, 153
East 53rd Street, New York, New York 10022-4675, or such other location as may
be mutually acceptable. Such delivery and payment shall be made at 9:00 a.m. New
York City time,
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<PAGE> 6
on June 30, 1998 or at such other time as shall be agreed upon in writing by the
Initial Purchasers and the Issuers. The time and date of such delivery and
payment are herein called the "Closing Date."
(b) One or more of the Senior Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the aggregate
principal amount of the Senior Notes (collectively, the "Global Notes"), shall
be delivered by the Issuers to the Initial Purchasers (or as the Initial
Purchasers direct) in each case with any transfer taxes thereon duly paid by the
Issuers against payment by the Initial Purchasers of the Purchase Price thereof
by wire transfer in federal (same day) funds to an account or accounts
designated by the Issuers or such other manner of payment as may be designated
by the Issuers and agreed to by the Initial Purchasers. The Global Notes shall
be made available to the Initial Purchasers for inspection not later than 9:30
a.m., New York City time, on the business day immediately preceding the Closing
Date.
5. AGREEMENTS OF THE ISSUERS AND THE SUBSIDIARY GUARANTORS. As of the
date hereof, each of the Issuers and Subsidiary Guarantors hereby agree with the
Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly (and, if
requested by the Initial Purchasers, confirm such advice in writing) of (i) the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Notes for offering or sale
in any jurisdiction designated by the Initial Purchasers pursuant to Section
5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose
and (ii) the happening of any event during the period referred to in Section
5(c) below that makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires any
additions to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein not misleading. The Issuers
and the Subsidiary Guarantors shall use their best efforts to prevent the
issuance of any stop order or order suspending the qualification or exemption of
any Notes under any state securities or Blue Sky laws and, if at any time any
state securities commission or other federal or state regulatory authority shall
issue an order suspending the qualification or exemption of any Notes under any
state securities or Blue Sky laws, the Issuers shall use their best efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Issuers as many copies of the
Preliminary Offering Memorandum and Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified Section 5(c). Subject to the Initial Purchasers'
compliance with its representations and warranties and
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<PAGE> 7
agreements set forth in Section 7 hereof, the Issuers consent to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
and supplements thereto required pursuant hereto, by the Initial Purchasers in
connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers or market-making
activities of the Initial Purchasers with respect to Notes, not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable in
connection with such Exempt Resales or such market-making activities.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances existing when such Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if, in the opinion of
counsel to the Initial Purchasers, it is necessary to amend or supplement the
Offering Memorandum to comply with any applicable law, to prepare promptly upon
the Initial Purchasers' reasonable request an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances existing
when it is so delivered, be misleading, or so that such Offering Memorandum will
comply with applicable law, and to furnish to the Initial Purchasers and such
other persons as the Initial Purchasers may designate such number of copies
thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Notes pursuant to Exempt Resales
as contemplated hereby, to cooperate with the Initial Purchasers and counsel to
the Initial Purchasers in connection with the registration or qualification of
the Notes for offer and sale to the Initial Purchasers and pursuant to Exempt
Resales under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may reasonably request and to continue such registration or
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that neither of
the Issuers nor any Subsidiary Guarantor shall be required in connection
therewith to register or qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters and
transactions relating to the Preliminary Offering
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<PAGE> 8
Memorandum, the Offering Memorandum or Exempt Resales, in any jurisdiction in
which it is not now so subject.
(f) So long as the Senior Notes are outstanding, to furnish to
the Holders of the Senior Notes and prospective purchasers upon request (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Issuers
or any of the Subsidiary Guarantors were required to file such Forms, including
a "Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Issuers and the Subsidiary Guarantors and their consolidated subsidiaries
(showing in reasonable detail, either on the face of the financial statements or
in the footnotes thereto and in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the financial condition and
results of operations of the Company and its Restricted Subsidiaries separate
from the financial condition and results of operations of the Unrestricted
Subsidiaries of the Company) and, with respect to the annual information only, a
report thereon by the certified independent accountants of the Issuers and the
Subsidiary Guarantors and (ii) all current reports that would be required to be
filed with the Commission on Form 8-K if the Issuers or any of the Subsidiary
Guarantors were required to file such reports, in each case within the time
periods specified in the Commission's rules and regulations, and following the
consummation of the exchange offer contemplated by the Registration Rights
Agreement, whether or not required by the rules and regulations of the
Commission, to file a copy of all such information and reports with the
Commission for public availability within the time periods specified in the
Commission's rules and regulations (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. In addition, (x) at all times that the
Commission does not accept the filings provided for in the preceding sentence or
(y) such filings provided for in the preceding sentence do not contain all of
the information required to be delivered pursuant to Rule 144A(d)(4), the
Issuers shall make available to any holder of Senior Notes, to securities
analysts and to prospective purchasers of such Notes, the information ("Rule
144A Information") required by Rule 144A(d)(4) under the Act.
(g) So long as the Senior Notes are outstanding, to furnish to
the Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Issuers or any of the Subsidiary Guarantors to
their security holders or filed with the Commission or any national securities
exchange on which any class of securities of the Issuers is listed and such
other publicly available information concerning the Issuers and their
subsidiaries as the Initial Purchasers may reasonably request.
(h) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Issuers
and the Subsidiary Guarantors under this Agreement, including: (i) the fees,
disbursements and expenses of
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<PAGE> 9
counsel to the Issuers and accountants of the Issuers and the Subsidiary
Guarantors in connection with the sale and delivery of the Notes to the Initial
Purchasers and pursuant to Exempt Resales, and all other fees or expenses in
connection with the preparation, printing, filing and distribution of the
Preliminary Offering Memorandum, the Offering Memorandum and all amendments and
supplements to any of the foregoing (including financial statements) including
the mailing and delivering of copies thereof to the Initial Purchasers and
persons designated by it in the quantities specified herein, (ii) all costs and
expenses related to the sale and delivery of the Notes to the Initial Purchasers
and pursuant to Exempt Resales, including any transfer or other taxes payable
thereon, (iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in connection with the
offering, purchase, sale or delivery of the Notes, (iv) all expenses in
connection with the registration or qualification of the Notes for offer and
sale under the securities or Blue Sky laws of the several states and all costs
of printing or producing any preliminary and supplemental Blue Sky memoranda in
connection therewith (including the filing fees and the reasonable fees and
disbursements of counsel for the Initial Purchasers in connection with such
registration or qualification and memoranda relating thereto), (v) the cost of
printing certificates representing the Notes, (vi) all expenses and listing fees
in connection with the application for quotation of the Notes in the National
Association of Securities Dealers, Inc. ("NASD") Private Offerings, Resales and
Trading through Linkages market ("PORTAL"), (vii) the fees and expenses of the
Trustee and the Trustee's counsel in connection with the Indenture, the Notes
and the Subsidiary Guarantees, (viii) the costs and charges of any transfer
agent, registrar and/or depositary (including DTC), (ix) any fees charged by
rating agencies for the rating of the Notes and the Subsidiary Guarantees, (x)
all costs and expenses of the Exchange Offer and any Registration Statement, as
set forth in the Registration Rights Agreement, and (xi) and all other costs and
expenses incident to the performance of the obligations of the Issuers and the
Subsidiary Guarantors hereunder for which provision is not otherwise made in
this Section.
(i) To use its best efforts to effect the inclusion of the
Notes in PORTAL and to maintain the listing of the Notes on PORTAL for so long
as the Notes are outstanding.
(j) To obtain the approval of DTC for "book-entry" transfer of
the Notes, and to comply with all of its agreements set forth in the
representation letters of the Issuers to DTC relating to the approval of the
Notes by DTC for "book-entry" transfer.
(k) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Issuers and
any Subsidiary Guarantors or any warrants, rights or options to purchase or
otherwise acquire debt securities of the Issuers or any Subsidiary Guarantor
substantially similar to the Notes
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<PAGE> 10
(other than (i) the Notes and the Subsidiary Guarantees and (ii) commercial
paper issued in the ordinary course of business, it being understood that the
Issuers and the Subsidiary Guarantors will enter into the Senior Credit Facility
on the Closing Date), without the prior written consent of the Initial
Purchasers.
(l) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Notes under the Act.
(m) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Senior Notes and the related Subsidiary Guarantees.
(n) To cause the Exchange Offer to be made on the appropriate
form to permit New Senior Notes and guarantees thereof by the Subsidiary
Guarantors registered pursuant to the Act to be offered in exchange for the
Senior Notes and the Subsidiary Guarantees and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.
(o) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(p) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy or obtain the waiver of all conditions
precedent to the delivery of the Notes and the Subsidiary Guarantees.
(q) Not to use any form of general solicitation or general
advertising (within the meaning of Regulation D under the Act) in connection
with the offer and sale of the Notes pursuant hereto, including, but not limited
to, articles, notices or other communications published in any newspaper,
magazine or similar medium or broadcast over television or radio, or any seminar
or meeting whose attendees have been invited by any general solicitation or
general advertising.
(r) The Issuers will apply the net proceeds from the sale of
the Notes in accordance with the description set forth in the Offering
Memorandum under the caption "Use of Proceeds."
(s) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Issuers and the Subsidiary
Guarantors have not taken, nor will any of them take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or
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<PAGE> 11
manipulation of the price of the Notes to facilitate the sale or resale thereof.
Except as permitted by the Act, the Issuers and the Subsidiary Guarantors will
not distribute any offering material in connection with the Exempt Resales.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ISSUERS AND THE
SUBSIDIARY GUARANTORS. As of the date hereof, each of the Issuers and Subsidiary
Guarantors represents and warrants to, and agrees with, each of the Initial
Purchasers as set forth below.
(a) The Preliminary Offering Memorandum and Offering
Memorandum have been prepared by the Issuers for use by the Initial Purchasers
in connection with the Exempt Resales. The Preliminary Offering Memorandum and
the Offering Memorandum do not, and any supplement or amendment to them will
not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in this
paragraph (a) shall not apply to statements in or omissions from the Preliminary
Offering Memorandum or the Offering Memorandum (or any supplement or amendment
thereto) based upon information relating to the Initial Purchasers furnished to
the Issuers in writing by the Initial Purchasers expressly for use therein. Each
of the Issuers acknowledge for all purposes under this Agreement that the
statements set forth in the last paragraph on the outside cover page, the legend
on the top of inside cover page iv and in the first sentence of the third
paragraph, the fourth paragraph, the fourth sentence of the sixth paragraph, the
seventh paragraph and the eighth paragraph under the caption "Plan of
Distribution" in the Offering Memorandum constitute the only written information
furnished to the Issuers or the Subsidiary Guarantors by the Initial Purchasers
expressly for use in the Offering Documents (or any amendment or supplement
thereto). No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement thereto,
or any order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act, has been
issued.
(b) Each of the Issuers and each of their respective
subsidiaries has been duly incorporated or organized, is validly existing as a
corporation or limited liability company in good standing under the laws of its
jurisdiction of incorporation or organization and has the corporate power (in
the case of a corporation) or power (in the case of a limited liability company)
and authority to carry on its business as described in the Preliminary Offering
Memorandum and the Offering Memorandum and to own, lease and operate its
properties as described in the Offering Memorandum, and each is, duly qualified
and in good standing as a foreign corporation or limited liability company, as
the case may be, authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where
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<PAGE> 12
the failure to be so qualified would not have a Material Adverse Effect. As used
herein, "Material Adverse Effect" shall mean, with respect to any Person, any
effect or group of related or unrelated effects that (i) would be reasonably
expected, individually or in the aggregate, to result in a material adverse
effect on the assets, properties, business, results of operations, condition
(financial or otherwise) or prospects of such Person and its subsidiaries, taken
as a whole or (ii) would materially interfere with or adversely affect (A) the
issuance of the Notes or (B) the performance by such Person and each of its
subsidiaries of its respective agreements and obligations under this Agreement
or the consummation of the transactions contemplated thereby.
(c) The authorized issued and outstanding Equity Interests of
the Parent as of the Closing will be as set forth in the Preliminary Offering
Memorandum and the Offering Memorandum in the first paragraph under the caption
"The Transactions--Overview" and "Security Ownership." The Management Investors
will acquire membership interests in the Parent not to exceed 17.0% of the
voting membership interests and the Independent Investors will acquire
membership interests in the Parent not to exceed 30.0% of the voting membership
interests.
(d) All of the outstanding Equity Interests of each of the
Company's subsidiaries (including ACL Capital) have been duly authorized and
validly issued and are fully paid and non-assessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of any
nature (each, a "Lien") other than pursuant to the Senior Credit Facility.
(e) The authorized issued and outstanding Equity Interests of
the Company are as set forth in the Preliminary Offering Memorandum and the
Offering Memorandum under the caption "Capitalization." All of the outstanding
Equity Interests of the Company have been duly authorized and validly issued and
are fully paid and non-assessable, and are directly owned by the Parent, free
and clear of any Lien.
(f) This Agreement has been duly authorized, executed and
delivered by each of the Issuers and Subsidiary Guarantors and is a valid and
binding agreement of each of the Issuers and Subsidiary Guarantors, enforceable
against each of them in accordance with its terms, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing and except as rights to indemnity and
contribution thereunder may be limited by Federal or state securities laws or
principles of public policy. This Agreement conforms as to legal matters to the
description thereof contained in the Preliminary Offering Memorandum and the
Offering Memorandum.
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<PAGE> 13
(g) The Indenture has been duly authorized by the Issuers and
each of the Subsidiary Guarantors and, on the Closing Date, will have been
validly executed and delivered by the Issuers and each of the Subsidiary
Guarantors. When the Indenture has been duly executed and delivered by the
Issuers and the Subsidiary Guarantors, such Indenture will be a valid and
binding agreement of the Issuers and the Subsidiary Guarantors, enforceable
against the Issuers and the Subsidiary Guarantors in accordance with its terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and except as rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy. The Indenture conforms in all
material respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "TIA" or "Trust Indenture Act"), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.
(h) The Notes have been duly authorized by the Issuers for
issuance and sale to the Initial Purchasers pursuant to this Agreement and, on
the Closing Date, will have been validly executed and delivered by the Issuers.
When the Notes have been issued, executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Notes will be
entitled to the benefits of the Indenture and will be the valid and binding
obligation of the Issuers, enforceable in accordance with its terms except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and except as rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy. On the Closing Date, the Notes
will conform as to legal matters to the description thereof contained in the
Offering Memorandum.
(i) On the Closing Date, the New Senior Notes will have been
duly authorized by the Issuers. When the New Senior Notes are issued, executed
and authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the New Senior Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligation of the Issuers,
enforceable against the Issuers in accordance with its terms, except as the
enforcement hereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and except as rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy.
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<PAGE> 14
(j) The Subsidiary Guarantees to be endorsed on the Notes by
each Subsidiary Guarantor have been duly authorized by such Subsidiary Guarantor
and, on the Closing Date, will have been duly executed and delivered by each
such Subsidiary Guarantor. When the Notes have been issued, executed and
authenticated in accordance with the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement, the
Subsidiary Guarantee of each Subsidiary Guarantor endorsed thereon will be
entitled to the benefits of the Indenture and will be the valid and binding
obligation of such Subsidiary Guarantor, enforceable against such Subsidiary
Guarantor in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing and except as rights to indemnity and contribution thereunder may be
limited by Federal or state securities laws or principles of public policy. On
the Closing Date, the Subsidiary Guarantees to be endorsed on the Notes will
conform as to legal matters to the description thereof contained in the Offering
Memorandum.
(k) The Subsidiary Guarantees to be endorsed on the New Senior
Notes by each Subsidiary Guarantor have been duly authorized by such Subsidiary
Guarantor and, when issued, will have been duly executed and delivered by each
such Subsidiary Guarantor. When the New Senior Notes have been issued, executed
and authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Subsidiary Guarantee of each Subsidiary Guarantor endorsed
thereon will be entitled to the benefits of the Indenture and will be the valid
and binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing and except as rights to indemnity and
contribution thereunder may be limited by Federal or state securities laws or
principles of public policy. When the New Senior Notes are issued, authenticated
and delivered, the Subsidiary Guarantees to be endorsed on the New Senior Notes
will conform as to legal matters to the description thereof contained in the
Offering Memorandum.
(l) The Registration Rights Agreement has been duly authorized
by each of the Issuers and Subsidiary Guarantors and, on the Closing Date, will
have been duly executed and delivered by each of the Issuers and Subsidiary
Guarantors. When the Registration Rights Agreement has been duly executed and
delivered, the Registration Rights Agreement will be the valid and binding
agreement of each of the Issuers and Subsidiary Guarantors, enforceable against
each of them in accordance with its terms, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency,
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<PAGE> 15
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and except
as rights to indemnity and contribution thereunder may be limited by Federal or
state securities laws or principles of public policy. On the Closing Date, the
Registration Rights Agreement will conform as to legal matters to the
description thereof contained in the Offering Memorandum.
(m) The Recapitalization Agreement has been duly authorized,
executed and delivered by the Parent and the Company and is a valid and binding
agreement of the Parent and the Company, enforceable against the Parent and the
Company in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing and except as rights to indemnity and contribution thereunder may be
limited by Federal or state securities laws or principles of public policy. On
the Closing Date, the Recapitalization Agreement will conform as to legal
matters to the description thereof contained in the Offering Memorandum.
(n) The Senior Credit Facility has been duly authorized by the
Issuers and the subsidiaries of the Issuers that are obligors thereunder
(together, the "Subsidiary Obligors") and, on the Closing Date, will have been
duly executed and delivered by the Issuers and each of the Subsidiary Obligors.
When the Senior Credit Facility has been duly executed and delivered, the Senior
Credit Facility will be the valid and binding agreement of each of the Issuers
and Subsidiary Obligors, enforceable against the Issuers and each Subsidiary
Obligor in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing and except as rights to indemnity and contribution thereunder may be
limited by Federal or state securities laws or principles of public policy. On
the Closing Date, the Senior Credit Facility will conform as to legal matters to
the description thereof contained in the Offering Memorandum.
(o) Neither of the Issuers nor any of their respective
subsidiaries is in violation of its respective charter, certificate of
formation, by-laws or operating agreement or in default in the performance of
any material obligation, agreement or condition contained in any material bond,
debenture, note or any other evidence of material indebtedness or in any other
material agreement, indenture or instrument to which any of them or any of their
respective subsidiaries is a party or by which one of them or any of their
respective subsidiaries or their respective properties is bound.
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<PAGE> 16
(p) The statements set forth in the Preliminary Offering
Memorandum and the Offering Memorandum under the caption "Description of the
Notes," insofar as they purport to constitute a summary of the terms of the
Notes and under the captions "Certain Federal Income Tax Considerations" and
"Plan of Distribution," insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and fair.
(q) The execution, delivery and performance of the
Recapitalization Agreement, this Agreement and the other Operative Documents by
the each of the Issuers and Subsidiary Guarantors, compliance by each of the
Issuers and Subsidiary Guarantors with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not
require any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body (except as
such may be required under (1) the Securities Act and state securities or "blue
sky" laws and regulations, (2) the Trust Indenture Act of 1939, as amended, and
(3) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act")) and will not conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charters or by-laws of the
Issuers or the Subsidiary Guarantors or any of their respective subsidiaries or
any agreement, indenture or other instrument to which the Issuers, the
Subsidiary Guarantors or any of their respective subsidiaries is a party or by
which the Issuers, the Subsidiary Guarantors or any of their respective
subsidiaries or their respective properties are bound, or violate or conflict
with any laws, administrative regulations or rulings or court decrees applicable
to the Issuers, the Subsidiary Guarantors or any of their respective
subsidiaries or their respective properties.
(r) There are no legal or governmental proceedings pending to
which the Issuers or any of their respective subsidiaries is or could be a party
or to which any of their respective properties is or could be subject, which
might result, singly or in the aggregate, in a Material Adverse Effect.
(s) Neither of the Issuers nor any of their respective
subsidiaries has violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws") or any federal or state law relating to discrimination in
the hiring, promotion or pay of employees or any applicable federal or state
wages and hours laws, or any provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(t) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures
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<PAGE> 17
required for clean-up, closure of properties or compliance with Environmental
Laws or any Authorization (as defined), any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(u) Each of the Issuers and their respective subsidiaries has,
and after giving effect to the Transactions will have, such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business in the manner described in the
Offering Memorandum, except where the failure to have any such Authorization or
to make any such filing or notice would not, singly or in the aggregate, have a
Material Adverse Effect. Each such Authorization is valid and in full force and
effect and each of the Issuers and their respective subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Issuers or any of their respective subsidiaries; except
where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(v) In connection with the Transaction, the Company has
reviewed the effect of Environmental Laws and the disposal of hazardous or toxic
substances or wastes, pollutants or contaminants on the business, assets,
operations and properties of each of the Issuers and their respective
subsidiaries immediately following the consummation of the Transactions, and
identified and evaluated associated costs and liabilities (including, without
limitation, all material capital and operating expenditures required for
clean-up, closure of properties and compliance with Environmental Laws, all
permits, licenses and approvals, all related constraints on operating activities
and all potential liabilities to third parties). On the basis of such reviews,
the Company has reasonably concluded that such associated costs and liabilities
would not, immediately subsequent to and giving effect to the Transactions, have
a Material Adverse Effect.
(w) Each of the Issuers and each of their respective
subsidiaries has, and immediately after the consummation of the Transactions
will have, good and marketable title, free and clear of all liens, claims,
encumbrances and restrictions except
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<PAGE> 18
liens for taxes not yet due and payable, to all property and assets described in
the Offering Memorandum as being or to be owned by it, except as would not have
a Material Adverse Effect. All leases to which either of the Issuers and each of
their respective subsidiaries is, and immediately after the consummation of the
Transactions will be, a party are valid and binding and no default has occurred
or is continuing thereunder which would have a Material Adverse Effect, and each
of the Issuers and their respective subsidiaries enjoy peaceful and undisturbed
possession under all such leases to which any of them is, and immediately after
the consummation of the Transactions will be, a party as lessee with such
exceptions as do not materially interfere with the use currently made by any of
them.
(x) Each of the Issuers and their respective subsidiaries
maintain, and immediately after the consummation of the Transactions will
maintain, reasonably adequate insurance (including self-insurance).
(y) Ernst & Young LLP, Arthur Andersen LLP and Coopers &
Lybrand L.L.P. are independent public accountants with respect to American
Commercial Lines, Inc. ("ACLI"), National Marine, Inc. ("NMI"), and the Issuers,
respectively, as required by the Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The historical financial statements, together with
related schedules and notes, set forth in the Preliminary Offering Memorandum
and the Offering Memorandum comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(z) The historical financial statements of ACLI and NMI, the
predecessors to the Company and its subsidiaries, together with related
schedules and notes forming part of the Offering Memorandum (and any amendment
or supplement thereto), present fairly the financial position, results of
operations and changes in financial position of ACLI and NMI and their
respective subsidiaries on the basis stated in the Offering Memorandum at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein and, with respect to interim
financial statements, except for the absence of footnote presentation and normal
year-end adjustments; and the other financial and statistical information and
data of the Parent, the Issuers and their subsidiaries and of ACLI and NMI and
their subsidiaries set forth in the Offering Memorandum (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of such parties.
(aa) The pro forma financial statements included in the
Preliminary Offering Memorandum and the Offering Memorandum have been prepared
on a basis consistent with the historical financial statements of ACLI and NMI
and their subsidiaries and give effect to assumptions used in the preparation
thereof on a reasonable
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<PAGE> 19
basis and in good faith and present fairly the historical and proposed
transactions contemplated by the Preliminary Offering Memorandum and the
Offering Memorandum; and such pro forma financial statements comply as to form
in all material respects with the requirements applicable to pro forma financial
statements included in registration statements on Form S-1 under the Act. The
other pro forma financial and statistical information and data included in the
Offering Memorandum are, in all material respects, accurately presented and
prepared on a basis consistent with the pro forma financial statements.
(ab) In the Issuers' opinion, the assumptions used in the
preparation of the pro forma financial statements included in the Offering
Memorandum are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein. The other
pro forma financial and statistical information and data included in the
Offering Memorandum are accurately presented and prepared on a basis consistent
with the pro forma financial statements.
(ac) The Issuers are not and, immediately after giving effect
to the offering and sale of the Notes and the application of the net proceeds
thereof as described in the Offering Memorandum will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(ad) There are no holders of securities of the Issuers or the
Subsidiary Guarantors who, by reason of the execution by the Issuers or the
Subsidiary Guarantors of the Registration Rights Agreement or the consummation
of the transactions contemplated thereby, have the right to request or demand
that the Issuers or the Subsidiary Guarantors register under the Act securities
held by them.
(ae) Neither of the Issuers nor any of their respective
subsidiaries nor any agent thereof acting on behalf of any of them has taken,
and none of them will take, any action that might cause this Agreement or the
issuance or sale of the Notes or the Subsidiary Guarantees to violate Regulation
G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors
of the Federal Reserve System.
(af) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Parent, the Issuers or the Subsidiary Guarantors and their
respective subsidiaries, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the Equity Interests or in the long-term debt of the Parent, the
Issuers
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<PAGE> 20
or the Subsidiary Guarantors and their respective subsidiaries and (iii) none of
the Parent, the Issuers or the Subsidiary Guarantors nor any of their respective
subsidiaries have incurred any material liability or obligation, direct or
contingent.
(ag) The Issuers have delivered to the Initial Purchasers true
and correct executed copies of the Recapitalization Agreement, including all
schedules and exhibits thereto, and there have been no amendments, alterations,
modifications or waivers thereto or in the exhibits or schedules thereto, except
as have been delivered to the Initial Purchasers.
(ah) Other than as described in the Offering Memorandum, there
are, and immediately after the consummation of the Transactions there will be,
no outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens related to or entitling any person to
purchase or otherwise to acquire any Equity Interests of, or other ownership
interest in, any subsidiary of the Issuers and the Subsidiary Guarantors.
(ai) There is, and immediately after the consummation of the
Transactions there will be, (i) no significant unfair labor practice complaint
pending against either of the Issuers or any of their respective subsidiaries
or, to the best knowledge of the Issuers, threatened against any of them, before
the National Labor Relations Board or any state or local labor relations board,
and no significant grievance or more significant arbitration proceeding arising
out of or under any collective bargaining agreement is so pending against either
of the Issuers or any of their respective subsidiaries or, to the best knowledge
of the Issuers, threatened against any of them, and (ii) no significant strike,
labor dispute, slowdown or stoppage pending against either of the Issuers or any
of their respective subsidiaries, or, to the best knowledge of the Issuers,
threatened against any of them except for such actions specified in clause (i)
or (ii) above, which, singly or in the aggregate, would not have a Material
Adverse Effect.
(aj) Each of the Issuers and each of their respective
subsidiaries maintains, and immediately after the consummation of the
Transactions will maintain, a system of internal accounting controls sufficient
to provide reasonable assurance that: (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ak) The Company is, and immediately after the Closing will
be, Solvent. As used herein, the term "Solvent" means, with respect to the
Company on a
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<PAGE> 21
particular date, that on such date (A) the fair value of the assets of the
Company at a fair valuation will exceed the debts and liabilities, subordinated,
contingent or otherwise, of the Company, (B) the present fair salable value of
the Company's business taken as a whole is greater than the amount that will be
required to pay the probable liabilities of the Company on its debts as they
become absolute and matured, (C) the Company is able to realize upon its assets
and pay its debts and other liabilities, including contingent obligations, as
they mature, and (D) the Company does not have unreasonably small capital. For
all purposes of clauses (A) through (D) in the preceding sentence, the amount of
the contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
(al) All material tax returns required to be filed by each of
the Issuers and their respective subsidiaries in any jurisdiction have been, and
immediately after the consummation of the Transactions will have been, filed,
other than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
either of the Issuers or any of their respective subsidiaries have been, and
immediately after the consummation of the Transactions will have been, paid,
other than those being contested in good faith and for which adequate reserves
have been provided.
(am) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
(an) When the Notes and the Subsidiary Guarantees are issued
and delivered pursuant to this Agreement, neither the Notes nor the Subsidiary
Guarantees will not be of the same class (within the meaning of Rule 144A under
the Act) as any security of the Issuers that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted in a
United States automated inter-dealer quotation system.
(ao) No form of general solicitation or general advertising
(as defined in Regulation D under the Act) was used by the Parent, the Issuers,
any Subsidiary Guarantor or any of their respective representatives (other than
the Initial Purchasers, as to whom the Issuers make no representation) in
connection with the offer and sale of the Notes and the Subsidiary Guarantees
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Notes and the Subsidiary Guarantees have
been issued and sold by the Issuers or any Subsidiary Guarantor within the
six-month period immediately prior to the date hereof.
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(ap) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA.
(aq) None of the Issuers or any Subsidiary Guarantor nor their
respective affiliates or any person acting on their behalf (other than the
Initial Purchasers, as to whom the Issuers make no representation) has engaged
or will engage in any directed selling efforts within the meaning of Regulation
S under the Act ("Regulation S") with respect to the Notes and the Subsidiary
Guarantees.
(ar) The Issuers have not, and will not, offer or sell the
Notes and the Subsidiary Guarantees in reliance on Regulation S except in
offshore transactions.
(as) The Issuers have not, and will not, offer or sell the
Notes and the Subsidiary Guarantees as part of a plan or scheme to evade the
registration provisions of the Act.
(at) Each of the Issuers, each Subsidiary Guarantor and their
respective affiliates and all persons acting on their behalf (other than the
Initial Purchasers, as to whom the Issuers make no representation) have complied
with and will comply with the offering restrictions requirements of Regulation S
in connection with the offering of the Notes outside the United States and, in
connection therewith, the Offering Memorandum will contain the disclosure
required by Rule 902(h).
(au) Assuming (i) the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof and
(ii) compliance by the Initial Purchasers with the offering and transfer
procedures and restrictions described elsewhere in this Agreement and the
Offering Memorandum, no registration under the Act of the Notes and the
Subsidiary Guarantees is required for the sale of the Notes and the Subsidiary
Guarantees to the Initial Purchasers as contemplated hereby or for the Exempt
Resales.
(av) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Issuers that it is considering
imposing) any condition (financial or otherwise) on the Issuers' or any
Subsidiary Guarantor's retaining any rating assigned as of the date hereof to
them or any of their securities or (ii) has indicated to the Issuers or any
Subsidiary Guarantor that it is considering (a) the downgrading, suspension or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of either of the Issuers or any Subsidiary Guarantor.
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<PAGE> 23
(aw) Each certificate signed by any officer of the Issuers or
any Subsidiary Guarantor and delivered to the Initial Purchaser or counsel for
the Initial Purchaser shall be deemed to be a representation and warranty by the
Issuers and the Subsidiary Guarantors to the Initial Purchaser as to the matters
covered thereby.
The Issuers and the Subsidiary Guarantors acknowledge that the Initial
Purchasers and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Section 9 hereof, counsel to the Issuers and the
Subsidiary Guarantors and counsel to the Initial Purchasers, will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Issuers, and agrees that:
(a) Such Initial Purchaser is either a QIB or an institutional
"accredited investor" (as defined in rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Act) (an "Accredited Institution"), in either case, with
such knowledge and experience in financial and business matters as is necessary
in order to evaluate the merits and risks of an investment in the Notes.
(b) Such Initial Purchaser (A) is not acquiring the Notes with
a view to any distribution thereof or with any present intention of offering or
selling any of the Notes in a transaction that would violate the Act or the
securities laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Notes only to (x) QIBs
in reliance on the exemption from the registration requirements of the Act
provided by Rule 144A and (y) in offshore transactions in reliance upon
Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Notes pursuant
hereto, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Notes only
from, and will offer to sell the Notes only to, Eligible Purchasers. Each
Initial Purchaser further agrees that it will offer to sell the Notes only to,
and will solicit offers to buy the Notes only from Eligible Purchasers. As set
forth in the Preliminary Offering Memorandum and the Offering Memorandum, each
Eligible Purchaser will be deemed to have agreed that
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<PAGE> 24
(x) the Notes purchased by them may be resold, pledged or otherwise transferred
prior to the expiration of the time period referred to under Rule 144(k) (taking
into account the provisions of Rule 144(d) under the Act, if applicable) under
the Act, as in effect on the date of the transfer of such Notes, only (I) to one
of the Issuers or any of their respective subsidiaries, (II) to a person whom
the seller reasonably believes is a QIB purchasing for its own account or for
the account of a QIB in a transaction meeting the requirements of Rule 144A
under the Act, (III) in an offshore transaction (as defined in Rule 902 under
the Act) meeting the requirements of Rule 904 of the Act, (IV) in a transaction
meeting the requirements of Rule 144 under the Act, (V) in accordance with
another exemption from the registration requirements of the Act (and based upon
an opinion of counsel acceptable to the Issuers) or (VI) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (y) they will deliver to each person to whom such
Notes or an interest therein is transferred a notice substantially to the effect
of the foregoing.
(e) None of such Initial Purchasers nor any of its affiliates
or any person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Notes.
(f) The Notes offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S have been and will be offered and
sold only in offshore transactions.
(g) The sale of the Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Notes in the United States or to, or for the
benefit or account of, a U.S. Person (other than a distributor), in each case,
as defined in Rule 902 under the Act (i) as part of its distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering of the Notes pursuant hereto and the Closing Date, other than in
accordance with Regulation S of the Act or another exemption from the
registration requirements of the Act. Such Initial Purchaser agrees that, during
such 40-day distribution compliance period, it will not cause any advertisement
with respect to the Notes (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place and will
not issue any circular relating to the Notes, except such advertisements as
permitted by and include the statements required by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Notes by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
distribution compliance period referred to in
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<PAGE> 25
Rule 903(c)(3) under the Act, it will send to such distributor, dealer or person
receiving a selling concession, fee or other remuneration a confirmation or
notice to substantially the following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the
Offering and the Closing Date, except in either case in
accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are
exempt from the registration requirements of the Securities
Act), and in connection with any subsequent sale by you of the
Notes covered hereby in reliance on Regulation S during the
period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect.
Terms used above have the meanings assigned to them in
Regulation S."
(j) Such Initial Purchaser acknowledges that the Notes offered
and sold in reliance on Regulation S will be represented upon issuance by a
global security that may not be exchanged for definitive securities until the
expiration of the 40-day distribution compliance period referred to in Rule
903(c)(3) of the Act and only upon certification of beneficial ownership of such
Notes by non-U.S. persons or U.S. persons who purchased such Notes in
transactions that were exempt from the registration requirements of the Act.
(k) Such Initial Purchaser further represents and agrees that
(1) it has not offered or sold and will not offer or sell any Notes to persons
in the United Kingdom prior to the expiration of the period of six months from
the issue date of the Notes, except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their business or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995,
(ii) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the Notes in, from or otherwise involving the United Kingdom and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the Notes to a
person who is of a kind described in Article 11(3) of the Financial Services Act
of 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom the document may otherwise lawfully be issued or passed on.
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<PAGE> 26
(l) Such Initial Purchaser agrees that it will not offer, sell
or deliver any of the Notes in any jurisdiction outside the United States except
under circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is required to
permit its purchase and resale of the Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
The Initial Purchasers acknowledge that the Issuers and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Issuers and counsel to the Initial Purchasers,
will rely upon the accuracy and truth of the foregoing representations and the
Initial Purchasers hereby consent to such reliance.
8. INDEMNIFICATION.
(a) Each of the Issuers and each of the Subsidiary Guarantors
agrees, jointly and severally, to indemnify and hold harmless each Initial
Purchaser, its directors, its officers, its affiliates and each person, if any,
who controls such Initial Purchaser within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), the Preliminary Offering Memorandum or any
Rule 144A Information provided by the Issuers or any Subsidiary Guarantor to any
holder or prospective purchaser of Notes pursuant to Section 5(h) or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are (i)
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to an Initial Purchaser furnished in
writing to the Issuers by such Initial Purchaser expressly for use therein, as
described in Section 6(a) hereof; provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Offering Memorandum shall
not inure to the benefit of any Initial Purchaser who failed to deliver an
Offering Memorandum (as then amended or supplemented, provided by the Issuers to
the several Initial Purchasers in the requisite quantity and on a timely basis
to permit proper delivery on or prior to the Closing Date) to the person
asserting any losses, claims, damages and liabilities caused by any untrue
statement or omission, or any alleged untrue statement of a material fact
contained in any or omission, made in the Preliminary Offering Memorandum, or
(ii) caused by any omission or alleged omission to state therein a material fact
required to be therein or necessary to make the statements therein not
misleading, if such material misstatement or
25
<PAGE> 27
omission or alleged material misstatement or omission was cured in the Offering
Memorandum.
(b) Each of the Initial Purchasers agree, severally and not
jointly, to indemnify and hold harmless the Issuers and the Subsidiary
Guarantors, and their respective directors and officers and each person, if any,
who controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Issuers or any Subsidiary Guarantor, to the same extent as the
foregoing indemnity from the Issuers or any Subsidiary Guarantor to each Initial
Purchaser but only with reference to information relating to such Initial
Purchaser furnished in writing to the Issuers by such Initial Purchaser
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchasers). Any indemnified party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or to
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Wasserstein, in the case of the parties
indemnified pursuant to Section 8(a), and by the Issuers, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and
hold
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<PAGE> 28
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which indemnity or contribution may be or could
have been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient to hold it
harmless in respect of any losses, claims, damages, liabilities or judgments
referred to herein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Issuers and the Subsidiary Guarantors, on the one hand,
and each of the Initial Purchasers, severally and not jointly, on the other
hand, from the offering of the Notes or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Issuers and the Subsidiary
Guarantors, on the one hand, and each of the Initial Purchasers, severally and
not jointly, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuers and the Subsidiary Guarantors, on the one hand, and each
of the Initial Purchasers, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes (after
discounts and commissions, but before deducting expenses) received by the
Issuers, and the total discounts and commissions received by each of the Initial
Purchasers bear to the total price to investors of the Notes, in each case as
set forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Issuers and the Subsidiary Guarantors, on the one hand,
and each of the Initial Purchasers, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers and the Subsidiary Guarantors, on
the one hand, or any Initial Purchaser, on the other hand, and the parties'
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<PAGE> 29
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Issuers and the Subsidiary Guarantors, on the one hand,
and each of the Initial Purchasers, on the other hand, agree that it would not
be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, each of the Initial Purchasers shall not be required to contribute
any amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchaser exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity. The indemnification and
contribution obligations of the Initial Purchasers under the provisions of this
Section 8 shall be several and not joint.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of
the Initial Purchasers to purchase the Notes under this Agreement are subject to
the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers and
the Subsidiary Guarantors contained in this Agreement, and all the
representations and warranties, if any, of the Parent, the Issuers and the
Subsidiary Guarantors contained in the Recapitalization Agreement and the Senior
Credit Facility or any instrument, document or agreement related thereto shall
be true and correct on the Closing Date with the same force and effect as if
made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the
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<PAGE> 30
direction of the possible change in, any rating of the Issuers or any Subsidiary
Guarantor or any securities of the Issuers or any Subsidiary Guarantor
(including, without limitation, the placing of any of the foregoing ratings on
credit watch with negative or developing implications or under review with an
uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act, (ii) there shall not have occurred any change, nor shall notice have been
given of any potential or intended change, in the outlook for any rating of the
Issuers or any Subsidiary Guarantor by any such rating organization and (iii) no
such rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes or any Subsidiary Guarantee
than that on which the Notes and the Subsidiary Guarantees were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any material adverse
change or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Issuers and their respective subsidiaries, taken as a whole,
(ii) there shall not have been any material adverse change or any development
involving a prospective material adverse change in the capital stock or in the
long-term debt of the Issuers and their respective subsidiaries, taken as a
whole, and (iii) neither the Issuers nor any of their respective subsidiaries
shall have incurred any liability or obligation, direct or contingent, the
effect of which, in any such case described in clause 9(c)(i), 9(c)(ii) or
9(c)(iii), in the Initial Purchasers' judgment, is material and adverse and, in
the Initial Purchasers' judgment, makes it impracticable to market the Notes and
the Subsidiary Guarantees on the terms and in the manner contemplated in the
Offering Memorandum.
(d) The Initial Purchasers shall have received on the Closing
Date a certificate dated the Closing Date, signed by the Presidents and the
Chief Financial Officers of the Issuers, confirming the matters set forth in
Sections 9(a), 9(b) and 9(c) and stating that each of the Issuers and Subsidiary
Guarantors has complied with all agreements and satisfied all of the conditions
herein contained and required to be complied with or satisfied on or prior to
the Closing Date.
(e) The Initial Purchasers shall have received on the Closing
Date opinions (satisfactory to you and counsel for the Initial Purchasers),
dated the Closing Date, of Kirkland & Ellis, counsel for the Issuers and the
Subsidiary Guarantors, and Michael A. Khouri, General Counsel of the Company,
substantially in the forms set forth in Schedules C-1 and C-2 attached hereto.
The opinions of Kirkland & Ellis and Michael A. Khouri described in
Section 9(e) above shall be rendered to you at the request of the Issuers and
the Subsidiary
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<PAGE> 31
Guarantors and shall so state therein. In giving assurances with respect to
misstatements or omissions in the Offering Memorandum, Kirkland & Ellis or
Michael A. Khouri may state that their opinion and belief are based upon their
participation in the preparation of the Offering Memorandum and any amendments
or supplements thereto and review and discussion of the contents thereof, but
are without independent check or verification except as specified.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Paul, Weiss, Rifkind, Wharton &
Garrison, counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers.
(g) The Initial Purchasers shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from Ernst & Young LLP, Arthur Andersen
LLP and Coopers & Lybrand L.L.P., independent public accountants for ACLI, NMI
and the Issuers, respectively, and in each case, containing the information and
statements of the type ordinarily included in accountants' "comfort letters" to
the Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(h) The Notes shall have been approved for trading on, and
duly listed in, PORTAL.
(i) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Issuers, the Subsidiary Guarantors and the Trustee.
(j) The Issuers and the Subsidiary Guarantors shall have
executed the Registration Rights Agreement and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Issuers and the
Subsidiary Guarantors.
(k) The Issuers and the Subsidiary Guarantors shall have
executed this Agreement and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Issuers and the Subsidiary
Guarantors.
(l) The Issuers and the other subsidiaries of the Issuers that
are obligors thereunder shall have entered into the Senior Credit Facility (the
form and substance of which shall be reasonably acceptable to the Initial
Purchasers) and the Initial Purchasers shall have received counterpart,
conformed as executed, thereof and of all other documents and agreements entered
into in connection therewith.
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<PAGE> 32
(m) The Initial Purchasers shall have received a copy of the
Recapitalization Agreement, with all schedules, exhibits and amendments thereto,
certified by an executive officer of the Issuers as a true, correct and complete
copy as of the date hereof.
(n) Each condition to the closing contemplated by the Senior
Credit Facility (other than the issuance and sale of the Notes pursuant hereto)
shall have been satisfied or waived. There shall exist at and as of the Closing
Date (after giving effect to the transactions contemplated by this Agreement and
the Recapitalization Agreement) no conditions that would constitute a default
(or an event that with notice or the lapse of time, or both, would constitute a
default) under the Senior Credit Facility. On the Closing Date, the closing
under the Senior Credit Facility shall have been consummated on terms that
conform in all material respects to the description thereof in the Offering
Memorandum and the Initial Purchasers shall have received evidence satisfactory
to the Initial Purchasers of the consummation thereof.
(o) Each condition to the closing of the consummation of the
Transactions (other than the issuance and sale of the Notes and Subsidiary
Guarantees pursuant hereto and the closing under the Senior Credit Facility)
shall have been satisfied or waived. There shall exist at and as of the Closing
Date (after giving effect to the transactions contemplated by this Agreement and
the Senior Credit Facility) no conditions that would constitute a default (or an
event that with notice or the lapse of time, or both, would constitute a
default) under the Recapitalization Agreement. On the Closing Date, the
consummation of the Transactions shall have been consummated on terms that
conform in all material respects to the description thereof in the Offering
Memorandum and the Initial Purchasers shall have received evidence satisfactory
to the Initial Purchasers of the consummation thereof.
(p) Paul, Weiss, Rifkind, Wharton & Garrison shall have been
furnished with such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 9 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(q) Prior to the Closing Date, the Issuers and the Subsidiary
Guarantors shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may reasonably
request.
(r) The Issuers and the Subsidiary Guarantors shall not have
failed at or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with by the
Issuers and the Subsidiary Guarantors at or prior to the Closing Date.
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10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Notes on the terms
and in the manner contemplated in the Offering Memorandum, (ii) the suspension
or material limitation of trading in securities or other instruments on the New
York Stock Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
NASDAQ National Market or limitation on prices for securities or other
instruments on any such exchange or the NASDAQ National Market, (iii) the
suspension of trading of any securities of the Parent, the Issuers or any
Subsidiary Guarantors on any exchange or in the over-the-counter market, (iv)
the enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in the Initial Purchasers' opinion materially and adversely affects, or
will materially and adversely affect, the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, (v) the declaration of a banking moratorium by either federal or New
York State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
the Initial Purchasers' opinion has a material adverse effect on the financial
markets in the United States.
If on the Closing Date either of the Initial Purchasers shall
fail or refuse to purchase the Notes which it has or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Notes
which such defaulting Initial Purchaser or Initial Purchasers, as the case may
be, agreed but failed or refused to purchase is not more than one-tenth of the
aggregate principal amount of the Notes to be purchased on such date by all
Initial Purchasers, each non-defaulting Initial Purchaser shall be obligated
severally, in the proportion which the principal amount of the Notes set forth
opposite its name in Schedule B bears to the aggregate principal amount of the
Notes which all the non-defaulting Initial Purchasers, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase on such date; provided,
that in no event shall the aggregate principal amount of the Notes which any
Initial Purchaser has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of the Notes without the written consent of such Initial
Purchaser. If on
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<PAGE> 34
the Closing Date any Initial Purchaser or Initial Purchasers shall fail or
refuse to purchase the Notes and the aggregate principal amount of the Notes
with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Notes to be purchased by all Initial
Purchasers and arrangements satisfactory to the Initial Purchasers and the
Issuers for purchase of such Notes are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser and the Issuers. In any such case which does
not result in termination of this Agreement, either you or the Issuers shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser under
this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Issuers or any
Subsidiary Guarantor: 1701 East Market Street, Jeffersonville, Indiana 47130,
Attention: General Counsel and (ii) if to the Initial Purchasers, Wasserstein
Perella Securities, Inc., 31 West 52nd Street, New York, New York 10019,
Attention: General Counsel, or in any case to such other address as the person
to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Issuers, the Subsidiary
Guarantors and the Initial Purchasers set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchasers, the officers or directors of the Initial Purchasers, any person
controlling the Initial Purchasers, the Issuers, the officers or directors of
the Issuers, or any person controlling the Issuers, the Subsidiary Guarantors,
the officers or directors of the Subsidiary Guarantors, or any person
controlling the Subsidiary Guarantors, (ii) acceptance of the Notes and the
Subsidiary Guarantees and payment for them hereunder and (iii) termination of
this Agreement.
If this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Issuers or the
Subsidiary Guarantors to comply with the terms or to fulfill any of the
conditions of this Agreement, the Issuers and the Subsidiary Guarantors, jointly
and severally, agree to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) reasonably incurred
by them. Notwithstanding any termination of this Agreement, the Issuers shall be
liable for all expenses which they have agreed to pay pursuant to Section 5(i)
hereof. The Issuers and each Subsidiary Guarantor also agree, jointly and
severally, to reimburse each Initial Purchaser and its officers, directors and
each person, if any, who controls such Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act for any and all fees and
expenses (including without limitation the fees and expenses
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<PAGE> 35
of counsel) incurred by them in connection with enforcing their rights under
this Agreement (including without limitation its rights under this Section 12).
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Issuers, the
Subsidiary Guarantors, the Initial Purchasers, the Initial Purchasers' directors
and officers, any controlling persons referred to herein, the directors of the
Issuers and the Subsidiary Guarantors and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include a purchaser of any of the Notes
from the Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance
with the internal laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
* * * *
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<PAGE> 36
Please confirm that the foregoing correctly sets forth the
agreement among the Issuers, the Subsidiary Guarantors and the Initial
Purchasers as of the date first above written.
Very truly yours,
AMERICAN COMMERCIAL LINES LLC
By:_________________________________
Name: Michael A. Khouri
Title: Senior Vice President
ACL CAPITAL CORP.
By:_________________________________
Name: Michael A. Khouri
Title: Senior Vice President
Subsidiary Guarantors:
AMERICAN COMMERCIAL BARGE LINE
LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL MARINE
SERVICE LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
S-1
<PAGE> 37
LOUISIANA DOCK COMPANY LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
WATERWAY COMMUNICATION
SYSTEM LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL TERMINALS
LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL TERMINALS-
MEMPHIS LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
JEFFBOAT LLC
S-2
<PAGE> 38
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL LINES
INTERNATIONAL LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
ORINOCO TASA LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
ORINOCO TASV LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
BREEN TAS LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
S-3
<PAGE> 39
BULLARD TAS LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
SHELTON TAS LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
LEMONT HARBOR & FLEETING
SERVICES LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
TIGER SHIPYARD LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
WILKINSON POINT LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
S-4
<PAGE> 40
HOUSTON FLEET LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
S-5
<PAGE> 41
The foregoing Purchase Agreement is hereby
confirmed and accepted as of the date first
above written by Wasserstein Perella
Securities, Inc. on behalf of the Initial
Purchasers.
WASSERSTEIN PERELLA SECURITIES, INC.
By:_______________________________
Name:
Title:
S-6
<PAGE> 42
SCHEDULE A
SUBSIDIARY GUARANTORS
American Commercial Barge Line LLC
American Commercial Marine Service LLC
Louisiana Dock Company LLC
Waterway Communication System LLC
American Commercial Terminals LLC
American Commercial Terminals-Memphis LLC
Jeffboat LLC
American Commercial Lines International LLC
Orinoco TASA LLC
Orinoco TASV LLC
Breen TAS LLC
Bullard TAS LLC
Shelton TAS LLC
Lemont Harbor & Fleeting Services LLC
Tiger Shipyard LLC
Wilkinson Point LLC
Houston Fleet LLC
<PAGE> 43
SCHEDULE B
<TABLE>
<CAPTION>
Principal Amount of
Initial Purchaser Senior Notes
----------------- ------------
<S> <C>
Wasserstein Perella
Securities, Inc. $150,000,000
Chase Securities Inc. 150,000,000
------------
Total $300,000,000
============
</TABLE>
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of June 23,1998
by and among
American Commercial Lines LLC,
ACL Capital Corp.
and the
Subsidiary Guarantors referred to herein
and
Wasserstein Perella Securities, Inc.
and
Chase Securities Inc.,
as Initial Purchasers
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of June 23, 1998 by and among American Commercial Lines LLC, a Delaware
limited liability company (the "Company"), ACL Capital Corp., a Delaware
corporation ("ACL Capital" and, together with the Company, the "Issuers"),
American Commercial Barge Line LLC, a Delaware limited liability company,
American Commercial Marine Service LLC, a Delaware limited liability company,
Louisiana Dock Company LLC, a Delaware limited liability company, Waterway
Communication System LLC, a Delaware limited liability company, American
Commercial Terminals LLC, a Delaware limited liability company, American
Commercial Terminals-Memphis LLC, a Delaware limited liability company, Jeffboat
LLC, a Delaware limited liability company, American Commercial Lines
International LLC, a Delaware limited liability company, Orinoco TASA LLC, a
Delaware limited liability company, Orinoco TASV LLC, a Delaware limited
liability company, Breen TAS LLC, a Delaware limited liability company, Bullard
TAS LLC, a Delaware limited liability company, Shelton TAS LLC, a Delaware
limited liability company, Lemont Harbor & Fleeting Services LLC, a Delaware
limited liability company, Tiger Shipyard LLC, a Delaware limited liability
company, Wilkinson Point LLC, a Delaware limited liability company, and Houston
Fleet LLC, a Delaware limited liability company (each a "Subsidiary Guarantor"
and, collectively, the "Subsidiary Guarantors"), and Wasserstein Perella
Securities, Inc. ("Wasserstein") and Chase Securities Inc. ("Chase Securities"
and, together with Wasserstein, each an "Initial Purchaser" and, collectively,
the "Initial Purchasers"), each of whom has agreed to purchase the Issuers'
10-1/4% Senior Notes due 2008 (the "Senior Notes"or the "Notes"), subject to the
terms and conditions set forth in the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated June 23,
1998 (the "Purchase Agreement"), by and among the Issuers, the Subsidiary
Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers
to purchase the Notes, the Issuers have agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
2 of the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the indenture relating to the
Senior Notes (the "Indenture"), to be dated as of the Closing Date (as defined
below), among the Issuers, the Subsidiary Guarantors and United States Trust
Company of New York, as trustee (the "Trustee").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ACT: The Securities Act of 1933, as amended.
1
<PAGE> 3
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CLOSING DATE : The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (a) the filing and effectiveness under the
Act of the Exchange Offer Registration Statement relating to the New Senior
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Issuers to the registrar of New
Senior Notes, in the same aggregate principal amount as the aggregate principal
amount of Senior Notes, tendered by Holders thereof pursuant to the Exchange
Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Issuers of a principal
amount of New Senior Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Senior Notes that are tendered by such Holders in connection with such exchange
and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose to
sell the Senior Notes (i) to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and (ii) in offshore transactions
pursuant to Regulation S under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
2
<PAGE> 4
PROSPECTUS: The prospectus included in a Registration Statement at the time
such Registration Statement is declared effective, as amended or supplemented by
any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such
Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuers and the
Subsidiary Guarantors relating to (a) an offering of New Senior Notes pursuant
to an Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
NEW SENIOR NOTES: The Issuers' 10 1/4% new Senior Notes due 2008 to be
issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as
contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Senior Note, until the earliest to
occur of (a) the date on which such Senior Note is exchanged in the Exchange
Offer for a New Senior Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Senior Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchaser thereof has
been issued a New Senior Note), or (c) the date on which such Senior Note is
distributed to the public pursuant to Rule 144 under the Act (and purchaser
thereof has been issued a New Senior Note) and each New Senior Note until the
date on which such New Senior Note is disposed of by a Broker-Dealer pursuant to
the "Plan of Distribution" contemplated by the Exchange Offer Registration
Statement (including the delivery of the Prospectus contained therein).
3
<PAGE> 5
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each, a
"Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Issuers and the Subsidiary Guarantors shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 60 days after the
Closing Date (such 60th day being the "Filing Deadline"), (ii) use its best
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest possible time, but in no event later than 150 days after the
Closing Date (such 150th day being the "Effectiveness Deadline"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the New Senior Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the New Senior Notes to be
offered in exchange for the Senior Notes that are Transfer Restricted Securities
and (ii) resales of New Senior Notes by Broker-Dealers that tendered into the
Exchange Offer Senior Notes that such Broker-Dealer acquired for its own account
as a result of market making activities or other trading activities (other than
Senior Notes acquired directly from the Issuers or any of its Affiliates) as
contemplated by Section 3 (c) below.
(b) The Issuers and the Subsidiary Guarantors shall use their respective
best efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 Business Days. The Issuers and the Subsidiary
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the New Senior Notes shall
be included in the Exchange Offer Registration Statement. The Issuers and the
Subsidiary Guarantors shall use their respective best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 Business Days thereafter (such 30th day being the "Consummation
Deadline").
4
<PAGE> 6
(c) The Issuers shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Senior Notes acquired
directly from the Issuers or any Affiliate of the Issuers), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter (available
July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any New Senior
Notes received by such Broker-Dealer in the Exchange Offer, the Issuers and
Subsidiary Guarantors shall permit the use of the Prospectus contained in the
Exchange Offer Registration Statement by such Broker-Dealer to satisfy such
prospectus delivery requirement. To the extent necessary to ensure that the
prospectus contained in the Exchange Offer Registration Statement is available
for sales of New Senior Notes by Broker-Dealers, the Issuers and the Subsidiary
Guarantors agree to use their respective best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented, amended and current
as required by and subject to the provisions of Section 6(a) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the Consummation Deadline or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto. The Issuers and the Subsidiary
Guarantors shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than one day after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Issuers and the Subsidiary Guarantors have complied
with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Issuers within 20 Business Days
following the Consummation Deadline that (A) such Holder was prohibited by law
or Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the New Senior Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for
5
<PAGE> 7
such resales by such Holder or (C) such Holder is a Broker-Dealer and holds
Senior Notes acquired directly from the Issuers or any of its Affiliates, then
the Issuers and the Subsidiary Guarantors shall:
(x) cause to be filed, on or prior to 60 days after the earlier of
(i) the date on which the Issuers determine that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Issuers receive the notice specified in clause (a)(ii) above, (such
earlier date, the "Filing Deadline"), a shelf registration statement pursuant to
Rule 415 under the Act (which may be an amendment to the Exchange Offer
Registration Statement (the "Shelf Registration Statement")), relating to all
Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 150 days after the
Filing Deadline for the Shelf Registration Statement (such 150th day the
"Effectiveness Deadline").
If, after the Issuers have filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Issuers are required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Issuers shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Issuers and
the Subsidiary Guarantors shall use their respective best efforts to keep any
Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(b) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of at least two
years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Shelf Registration Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the Shelf
Registration Statement. No Holder of Transfer Restricted Securities may include
any of its Transfer Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes to the Issuers
in writing, within 20 days after receipt of a request therefor, the information
specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for
use in connection with any Shelf Registration
6
<PAGE> 8
Statement or Prospectus or preliminary Prospectus included therein. No Holder of
Transfer Restricted Securities shall be entitled to liquidated damages pursuant
to Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Issuers by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective immediately (each such event referred to in clauses
(i) through (iv), a "Registration Default"), then the Issuers and the Subsidiary
Guarantors hereby jointly and severally agree to pay to each Holder of Transfer
Restricted Securities affected thereby liquidated damages in an amount equal to
$.05 per week per $1,000 in principal amount of Transfer Restricted Securities
held by such Holder for each week or portion thereof that the Registration
Default continues for the first 90-day period immediately following the
occurrence of such Registration Default. The amount of the liquidated damages
shall increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.25 per week per $1,000 in principal amount of Transfer
Restricted Securities; provided, that the Issuers and the Subsidiary Guarantors
shall in no event be required to pay liquidated damages for more than one
Registration Default at any given time. Notwithstanding anything to the contrary
set forth herein, (1) upon filing of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (i)
above, (2) upon the effectiveness of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (ii)
above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above,
or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
liquidated damages payable with respect to the Transfer Restricted Securities as
a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment
7
<PAGE> 9
Date, as more fully set forth in the Indenture and the Notes. Notwithstanding
the fact that any securities for which liquidated damages are due cease to be
Transfer Restricted Securities, all obligations of the Issuers and the
Subsidiary Guarantors to pay liquidated damages with respect to securities shall
survive until such time as such obligations with respect to such securities
shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Issuers and the Subsidiary Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective best
efforts to effect such exchange and to permit the resale of New Senior Notes by
Broker-Dealers that tendered in the Exchange Offer Senior Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Senior Notes acquired
directly from the Issuers or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Issuers raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Issuers and the Subsidiary Guarantors hereby
agree to seek a no-action letter or other favorable decision from the
Commission allowing the Issuers and the Subsidiary Guarantors to Consummate
an Exchange Offer for such Transfer Restricted Securities. The Issuers and
the Subsidiary Guarantors hereby agree to pursue the issuance of such a
decision to the Commission staff. In connection with the foregoing, the
Issuers and the Subsidiary Guarantors hereby agree to take all such other
actions as may be requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation
(A) participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel to the
Issuers setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C) diligently
pursuing a resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer,
each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker-Dealer) shall furnish, upon the
request of the Issuers, prior to the Consummation of the Exchange Offer, a
written representation to the Issuers and the Subsidiary Guarantors (which
may be contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that (A) it is not an Affiliate
of the Issuers, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in, a
distribution of the
8
<PAGE> 10
New Senior Notes to be issued in the Exchange Offer and (C) it is acquiring
the New Senior Notes in its ordinary course of business. As a condition to
its participation in the Exchange Offer each Holder using the Exchange Offer
to participate in a distribution of the New Senior Notes shall acknowledge
and agree that, if the resales are of New Senior Notes obtained by such
Holder in exchange for Senior Notes acquired directly from the Issuers or an
Affiliate thereof, it (1) could not, under Commission policy as in effect on
the date of this Agreement, rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted
in the Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action letter
obtained pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act in connection
with a secondary resale transaction and that such a secondary resale
transaction must be covered by an effective registration statement
containing the selling security holder information required by Item 507 or
508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers and the Subsidiary Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Issuers and the
Subsidiary Guarantors are registering the Exchange Offer in reliance on the
position of the Commission enunciated in Exxon Capital Holdings Corporation
(available May 13, 1988), Morgan Stanley & Co. Inc. (available June 5,
1991), as interpreted in the Commission's letter to Shearman & Sterling
dated July 2, 1993, and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that neither
the Issuers nor any Subsidiary Guarantor has entered into any arrangement or
understanding with any Person to distribute the New Senior Notes to be
received in the Exchange Offer and that, to the best of the Issuers' and
each Subsidiary Guarantor's information and belief, each Holder
participating in the Exchange Offer is acquiring the New Senior Notes in its
ordinary course of business and has no arrangement or understanding with any
Person to participate in the distribution of the New Senior Notes received
in the Exchange Offer and (C) any other undertaking or representation
required by the Commission as set forth in any no action letter obtained
pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Issuers and the Subsidiary Guarantors shall
(i) comply with all the provisions of Section 6(c) below and use
their respective best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof (as indicated in the information
furnished to the Issuers pursuant to Section 4(b) hereof), and pursuant thereto
the Issuers and the Subsidiary Guarantors will
9
<PAGE> 11
prepare and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of Senior
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Notes having an aggregate principal amount equal to the
aggregate principal amount of Senior Notes, sold pursuant to the Shelf
Registration Statement and surrendered to the Issuers for cancellation; the
Issuers shall register New Senior Notes, on the Shelf Registration Statement for
this purpose and issue the New Senior Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Issuers and the
Subsidiary Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain an
untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to be
effective and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Issuers and the Subsidiary Guarantors
shall file promptly an appropriate amendment to such Registration Statement
curing such defect, and, if Commission review is required, use their
respective best efforts to cause such amendment to be declared effective as
soon as practicable.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement
or supplement to the Prospectus;
10
<PAGE> 12
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any additions to
or changes in the Registration Statement in order to make the statements
therein not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Issuers and the
Subsidiary Guarantors shall use their respective best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder in connection with such exchange or
sale, if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including all
documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Issuers will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to
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<PAGE> 13
which such Holders shall reasonably object within five Business Days after
the receipt thereof. A Holder shall be deemed to have reasonably objected to
such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains an untrue
statement of a material fact or omits to state any material fact necessary
to make the statements therein not misleading or fails to comply with the
applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Holder in connection with such
exchange or sale, if any, make the Issuers' and the Subsidiary Guarantors'
representatives available for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders may reasonably request;
(vii) make available, at reasonable times, for inspection by each
Holder and any attorney or accountant retained by such Holders, all
financial and other records, pertinent corporate documents of the Issuers
and the Subsidiary Guarantors and cause the Issuers' and the Subsidiary
Guarantors' officers, directors and employees to supply all information
reasonably requested by any such Holder, attorney or accountant in
connection with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its effectiveness;
(viii) if requested by any Holders in connection with such exchange
or sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
practicable after the Issuers are notified of the matters to be included in
such Prospectus supplement or post-effective amendment;
(ix) furnish to each Holder in connection with such exchange or
sale, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Issuers and
the Subsidiary Guarantors hereby consent to the use (in accordance with law)
of the Prospectus and any amendment or supplement thereto by each selling
Holder in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
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<PAGE> 14
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that neither the
Issuers nor any Subsidiary Guarantor shall be required to register or
qualify as a foreign corporation where it is not now so qualified or to take
any action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(xii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xiii) use their respective best efforts to cause the disposition
of the Transfer Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
(xiv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee with printed
certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with the Depository Trust Company;
(xv) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement meeting
the requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xvi) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes
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<PAGE> 15
to the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its best efforts
to cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be filed
with the Commission to enable such Indenture to be so qualified in a timely
manner; and
(xvii) provide promptly to each Holder and any affiliated market
maker thereof, upon request, each document filed with the Commission
pursuant to the requirements of Section 13 or Section 15(d) of the Exchange
Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of the notice referred to in Section
6(c)(iii)(C) or any notice from the Issuers of the existence of any fact of the
kind described in Section 6(c)(iii)(D) hereof (in each case, a "Suspension
Notice"), such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
(i) such Holder has received copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in
writing by the Issuers that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus (in each case, the "Recommencement Date"). Each
Holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Issuers with more recently
dated Prospectuses or (ii) deliver to the Issuers (at the Issuers' expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of the Suspension Notice. The time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by a number of days equal to the number of days
in the period from and including the date of delivery of the Suspension Notice
to the date of delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' and the Subsidiary Guarantors'
performance of or compliance with this Agreement will be borne by the Issuers
and the Subsidiary Guarantors, regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all registration and filing
fees and expenses; (ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the New Senior Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Issuers, the
Subsidiary Guarantors and the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the New Senior Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof, and (vi) all
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<PAGE> 16
fees and disbursements of independent certified public accountants of the
Issuers and the Subsidiary Guarantors (including the expenses of any special
audit and comfort letters required by or incident to such performance).
The Issuers will, in any event, bear their and the Subsidiary Guarantors'
internal expenses (including, without limitation, all salaries and expenses of
their officers and employees performing legal or accounting duties), the
expenses of any annual audit and the fees and expenses of any Person, including
special experts, retained by the Issuers or the Subsidiary Guarantors.
(b) In connection with any Registration Statement required by this Agreement
(including, without limitation, the Exchange Offer Registration Statement and
the Shelf Registration Statement), the Issuers and the Subsidiary Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Senior Notes in the Exchange Offer and/or selling
or reselling Senior Notes or New Senior Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Paul, Weiss, Rifkind,
Wharton & Garrison, unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) Each of the Issuers and each of the Subsidiary Guarantors agrees,
jointly and severally, to indemnify and hold harmless each Holder, its
directors, officers and each Person, if any, who controls such Holder (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from
and against any and all losses, claims, damages, liabilities, judgments,
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto) provided by the Issuers to any Holder
or any prospective purchaser of New Senior Notes or registered Senior Notes, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Issuers by any of the Holders.
(b) Each Holder of Transfer Restricted agrees, severally and not jointly, to
indemnify and hold harmless the Issuers and the Subsidiary Guarantors, and their
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<PAGE> 17
respective directors and officers, and each person, if any, who controls (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Issuers or the Subsidiary Guarantors to the same extent as the foregoing
indemnity from the Issuers and the Subsidiary Guarantors set forth in section
(a) above, but only with reference to information relating to such Holder
furnished in writing to the Issuers by such Holder expressly for use in any
Registration Statement. In no event shall any Holder, its directors, officers or
any Person who controls such Holder be liable or responsible for any amount in
excess of the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages that such Holder, its
directors, officers or any Person who controls such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
(c) In case any action shall be commenced involving any person in respect of
which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "indemnified
party"), the indemnified party shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying person") in writing and the
indemnifying party shall assume the defense of such action, including the
employment of counsel reasonably satisfactory to the indemnified party and the
payment of all fees and expenses of such counsel, as incurred (except that in
the case of any action in respect of which indemnity may be sought pursuant to
both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Issuers and Subsidiary Guarantors, in the case of parties indemnified
pursuant to Section 8(b).
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The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than 20 Business Days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Issuers and the Subsidiary
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Issuers and the Subsidiary Guarantors, on the
one hand, and of the Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Issuers and the Subsidiary Guarantors,
on the one hand, and of the Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers or such Subsidiary Guarantor, on
the one hand, or by the Holder, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and judgments referred to above shall
be deemed to include, subject to the limitations set forth in the second
paragraph of Section 8(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
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The Issuers, the Subsidiary Guarantors and each Holder agree that it would
not be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section 8, no
Holder, its directors, its officers or any Person, if any, who controls such
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total received by such Holder with respect to the
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
SECTION 9. RULE 144A AND RULE 144
The Issuers and each Subsidiary Guarantor agree with each Holder, for so
long as any Transfer Restricted Securities remain outstanding (i) whether or not
either of the Issuers or any Subsidiary Guarantor is subject to Section 13 or
15(d) of the Exchange Act, to make available, upon request of any Holder, to
such Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A, and (ii) during any period
in which either of the Issuers or such Subsidiary Guarantor is subject to
Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Issuers and the Subsidiary Guarantors acknowledge and
agree that any failure by the Issuers and/or the Subsidiary Guarantors to comply
with their respective obligations under Sections 3 and 4 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at
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<PAGE> 20
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Initial Purchasers or any Holder
may obtain such relief as may be required to specifically enforce the Issuers'
Subsidiary Guarantor's obligations under Sections 3 and 4 hereof. The Issuers
and the Subsidiary Guarantors further agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Issuers nor any Subsidiary
Guarantor will, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Issuers nor any Subsidiary Guarantor has previously entered into any
agreement granting any registration rights with respect to its securities to any
Person. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Issuers' and the Subsidiary Guarantors' securities under any agreement in effect
on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Issuers have obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Issuers have obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Issuers or their Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Issuers and the Subsidiary
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
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(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Issuers or the Subsidiary Guarantors:
1701 East Market Street
Jeffersonville, Indiana 47130
Telecopier No.: (812) 288-1708
Attention: General Counsel
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022-4675
Telecopier No.: (212) 446-4900
Attention: Lance Balk, Esq.
All such notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
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(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
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<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AMERICAN COMMERCIAL LINES LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
ACL CAPITAL CORP.
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
Subsidiary Guarantors:
AMERICAN COMMERCIAL BARGE LINE
LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL MARINE
SERVICE LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
LOUISIANA DOCK COMPANY LLC
S-1
<PAGE> 24
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
WATERWAY COMMUNICATION
SYSTEM LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL TERMINALS
LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL TERMINALS-
MEMPHIS LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
JEFFBOAT LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
S-2
<PAGE> 25
AMERICAN COMMERCIAL LINES
INTERNATIONAL LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
ORINOCO TASA LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
ORINOCO TASV LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
BREEN TAS LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
BULLARD TAS LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
SHELTON TAS LLC
S-3
<PAGE> 26
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
LEMONT HARBOR & FLEETING
SERVICES LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
TIGER SHIPYARD LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
WILKINSON POINT LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
HOUSTON FLEET LLC
By:___________________________________
Name: Michael A. Khouri
Title: Senior Vice President
S-4
<PAGE> 27
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written by Wasserstein Perella
Securities, Inc. on behalf of the
Initial Purchasers.
WASSERSTEIN PERELLA SECURITIES, INC.
By: _______________________________
Name:
Title:
S-5
<PAGE> 1
EXECUTION COPY
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of June 30, 1998, by
and among AMERICAN COMMERCIAL LINES HOLDINGS LLC, a Delaware limited liability
company (the "LLC"),VECTURA GROUP, INC., a Delaware corporation ("Vectura"),
NATIONAL MARINE, INC., a Delaware corporation ("NMI"), CSX BROWN CORP., a
Delaware corporation ("CSX"), STUART AGRANOFF and STEVEN ANDERSON (the
"Investors"), and each of those Persons whose names are set forth on Schedule I
attached hereto (collectively, "Management" and, together with Vectura, NMI, CSX
and the Investors, the "Members"). Capitalized terms used herein but not
otherwise defined have the meaning set forth in Section 1.
WHEREAS, the Members have acquired a number of the LLC's
Junior Common Units (the "Junior Common") pursuant to the terms and conditions
of that certain Amended and Restated Limited Liability Company Agreement by and
among the LLC and the Members, dated as of the date hereof, as amended,
restated, or modified from time to time (the "LLC Agreement");
WHEREAS, CSX has acquired a number of the LLC's Senior
Preferred Units (the "Senior Preferred") pursuant to the terms and conditions of
the LLC Agreement; and
WHEREAS, in order to induce the Members to enter into the LLC
Agreement, the LLC has agreed to provide to such Persons the registration rights
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Definitions. As used herein, the following terms shall have
the following meanings.
"Affiliate" means, as to any Person, any other Person directly
or indirectly, through one or more intermediaries, controlling, controlled by,
or under common control with such Person; provided, the term "control," as used
in this definition, shall mean with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled entity (whether through ownership of
voting securities, by contract or otherwise).
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
"CSX Junior Registrable Securities" means (i) any Junior
Common issued or issuable to CSX pursuant to the LLC Agreement, (ii) any Junior
Common subsequently acquired by CSX or any of its Affiliates, and (iii) any
securities of the LLC issued or issuable directly or indirectly with respect to
the securities referred to in clauses (i) or (ii) above by way of dividend
<PAGE> 2
or distribution, recapitalization, merger, consolidation, exchange or other
reorganization, including, without limitation, Reclassified Securities issued
with respect to such Junior Common. As to any particular CSX Junior Registrable
Securities, such securities shall cease to be CSX Junior Registrable Securities
when they have been distributed to the public pursuant to an offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force). For purposes of this Agreement, a Person will be
deemed to be a holder of CSX Junior Registrable Securities whenever such Person
holds such securities directly or indirectly or has the right to acquire
directly or indirectly such CSX Junior Registrable Securities (upon conversion
or exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected.
"CSX Registrable Securities" means, collectively, (i) CSX
Junior Registrable Securities and (ii) CSX Senior Registrable Securities.
"CSX Senior Registrable Securities" means (i) any Senior
Preferred issued or issuable to CSX pursuant to the LLC Agreement, (ii) any
Senior Preferred subsequently acquired by CSX or any of its Affiliates, (iii)
any securities of the LLC issued or issuable directly or indirectly with respect
to the securities referred to in clauses (i) or (ii) above by way of dividend or
distribution, recapitalization, merger, consolidation or other reorganization,
including, without limitation, the Exchange Notes and any Reclassified
Securities issued with respect to such Senior Preferred, and (iv) any derivative
securities whose value or other economic features is based on the value or other
economic features of the securities referred to in clauses (i), (ii), or (iii)
above. As to any particular CSX Senior Registrable Securities, such securities
shall cease to be CSX Senior Registrable Securities when they have been
distributed to the public pursuant to an offering registered under the
Securities Act or sold to the public through a broker, dealer or market maker in
compliance with Rule 144 under the Securities Act (or any similar rule then in
force). For purposes of this Agreement, a Person will be deemed to be a holder
of CSX Senior Registrable Securities whenever such Person holds such securities
directly or indirectly or has the right to acquire directly or indirectly such
CSX Senior Registrable Securities (upon conversion or exercise in connection
with a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" has the meaning set forth in the LLC
Agreement.
"Initial Public Offering" means the initial, exclusively
primary underwritten public offering of the LLC's common equity securities
pursuant to a registration statement filed under the Securities Act with the
SEC, which offering results in net cash proceeds to the LLC of at least
$50,000,000.
"Investor Registrable Securities" means (i) any Junior Common
issued or issuable to the Investors pursuant to the LLC Agreement, (ii) any
Junior Common subsequently acquired by the Investors or any of their respective
Affiliates, and (iii) any securities of the LLC issued or
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<PAGE> 3
issuable directly or indirectly with respect to the securities referred to in
clauses (i) or (ii) above by way of recapitalization, merger, consolidation,
exchange or other reorganization, including, without limitation, Reclassified
Securities issued with respect to such Junior Common. As to any particular
Investor Registrable Securities, such securities shall cease to be Investor
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force). For purposes of this Agreement, a
Person will be deemed to be a holder of Investor Registrable Securities whenever
such Person has the right to acquire directly or indirectly such Investor
Registrable Securities (upon conversion or exercise in connection with a
transfer of securities, or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement of the Company, dated as of the date hereof, by and
among the Company and the parties hereto.
"LLC Registrable Securities" means (i) CSX Junior Registrable
Securities, (ii) Vectura Registrable Securities, (iii) Management Registrable
Securities, and (iv) Investor Registrable Securities. As to any particular LLC
Registrable Securities, such securities shall cease to be LLC Registrable
Securities when they have been distributed to the public pursuant to an offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the Securities Act (or
any similar rule then in force). For purposes of this Agreement, a Person will
be deemed to be a holder of LLC Registrable Securities whenever such Person has
the right to acquire directly or indirectly such LLC Registrable Securities
(upon conversion or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been effected.
"Management Registrable Securities" means (i) any Junior
Common issued or issuable to Management pursuant to the LLC Agreement and vested
pursuant to the terms of the applicable agreement for such Junior Common, (ii)
any Junior Common subsequently acquired by Management or any of their respective
Affiliates and vested pursuant to the terms of the applicable agreement for such
Junior Common, and (iii) any securities of the LLC issued or issuable directly
or indirectly with respect to the securities referred to in clauses (i) or (ii)
above by way of recapitalization, merger, consolidation, exchange or other
reorganization, including without limitation, Reclassified Securities issued
with respect to such Junior Common. As to any particular Management Registrable
Securities, such securities shall cease to be Management Registrable Securities
when they have been distributed to the public pursuant to an offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force). For purposes of this Agreement, a Person will be
deemed to be a holder of Management Registrable Securities whenever such Person
has the right to acquire directly or indirectly such Management Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or
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<PAGE> 4
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been effected.
"Reclassified Securities" has the meaning set forth in the LLC
Agreement.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Registrable Securities" means, collectively, (i) CSX Junior
Registrable Securities, (ii) CSX Senior Registrable Securities, (iii) Vectura
Registrable Securities, (iv) Management Registrable Securities, and (v) Investor
Registrable Securities.
"Registration Expenses" means all expenses incident to the
LLC's performance of or compliance with this Agreement, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the LLC and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other Persons retained by the LLC.
"Rule 144" means Rule 144 under the Securities Act (or any
similar rule then in force).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Vectura Registrable Securities" means (i) any Junior Common
issued or issuable to Vectura and NMI pursuant to the LLC Agreement, (ii) any
Junior Common subsequently acquired by Vectura, NMI or any of their respective
Affiliates or stockholders, and (iii) any securities of the LLC issued or
issuable directly or indirectly with respect to the securities referred to in
clauses (i) or (ii) above by way of recapitalization, merger, consolidation,
exchange or other reorganization, including, without limitation, Reclassified
Securities issued with respect to such Junior Common. As to any particular
Vectura Registrable Securities, such securities shall cease to be Vectura
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force). For purposes of this Agreement, a
Person will be deemed to be a holder of Vectura Registrable Securities whenever
such Person has the right to acquire directly or indirectly such Vectura
Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
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<PAGE> 5
2. Demand Registrations.
(a) Requests for Registration of LLC Registrable Securities.
Subject to Section 2(b) below, (i) upon six (6) months after the consummation of
an Initial Public Offering, the holders of a majority of the CSX Junior
Registrable Securities may request registration, whether underwritten or
otherwise, under the Securities Act of all or part of the CSX Junior Registrable
Securities held by such holders, (ii) upon and after the earlier of (A) the
third anniversary of the date hereof and (B) six (6) months after the
consummation of an Initial Public Offering, the holders of a majority of the CSX
Senior Registrable Securities may request registration, whether underwritten or
otherwise, under the Securities Act of all or part of the CSX Senior Registrable
Securities held by such holders; provided, that any such registration of CSX
Senior Registrable Securities shall be subject to Section 8.1(a) of the LLC
Agreement and (iii) the holders of a majority of the Vectura Registrable
Securities may request registration, whether underwritten or otherwise, under
the Securities Act of all or part of the Vectura Registrable Securities held by
such holders, in each case on Form S-1 or any similar long-form registration
(collectively, "Long-Form Registrations") or, if available, on Form S-2 or S-3
(including pursuant to Rule 415 under the Securities Act (a "415 Registration"))
or any similar short-form registration ("Short-Form Registrations"). Each
request for a Long-Form Registration or Short-Form Registration shall specify
the approximate number of LLC Registrable Securities requested to be registered
and the anticipated price range for such offering. Within ten days after receipt
of any such request for a Long-Form Registration or Short-Form Registration
regarding LLC Registrable Securities, the LLC will give written notice of such
requested registration to all other holders of Registrable Securities and will
include (subject to the provisions of this Agreement) in such registration, all
Registrable Securities with respect to which the LLC has received written
requests for inclusion therein within 20 days after the receipt of such notice
by such holders of Registrable Securities from the LLC. All registrations
requested pursuant to in this Section 2(a) are referred to herein as "Demand
Registrations."
(b) Long-Form Registrations. The holders of a majority of the
CSX Junior Registrable Securities will be entitled to request up to two
Long-Form Registrations with respect to the CSX Junior Registrable Securities
held by such holders, of which the LLC will pay all Registration Expenses. The
holders of a majority of the CSX Senior Registrable Securities will be entitled
to request one Long-Form Registration with respect to the CSX Senior Registrable
Securities held by such holders, of which the LLC will pay all Registration
Expenses. The holders of a majority of the Vectura Registrable Securities
collectively will be entitled to request up to three Long-Form Registrations
with respect to the Vectura Registrable Securities, of which the LLC will pay
all Registration Expenses; provided, that the first such Long-Form Registration,
of Vectura Registrable Securities, if requested prior to an Initial Public
Offering, results in the registration of common equity securities resulting in
an amount of net cash proceeds sufficient to qualify as an Initial Public
Offering. A registration will not count as the permitted Long-Form Registration
hereunder until such registration has become effective and unless the holders of
the LLC Registrable Securities requested to be included in such registration are
able to register and sell at least 75% of the Registrable Securities requested
to be included in such registration.
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<PAGE> 6
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 2(b), each of the holders of the CSX
Senior Registrable Securities, CSX Junior Registrable Securities, and the
Vectura Registrable Securities will be entitled to request an unlimited number
of Short-Form Registrations with respect to the Registrable Securities held by
such holders of which the LLC will pay all Registration Expenses. Demand
Registrations (other than 415 Registrations) will be Short-Form Registrations
whenever the LLC is permitted to use any applicable short form. After the LLC
has become subject to the reporting requirements of the Exchange Act, the LLC
will use its best efforts to make Short-Form Registration available for the sale
of Registrable Securities.
(d) Priority on Demand Registrations. The LLC will not include
in any Long-Form Registration or Short-Form Registration regarding Registrable
Securities any securities that are not Registrable Securities without the prior
written consent of the holders of at least a majority of the Registrable
Securities participating in such registration. If a Long-Form Registration or a
Short-Form Registration regarding Registrable Securities is an underwritten
offering and the managing underwriters advise the LLC in writing that, in their
opinion, the number or class of Registrable Securities and, if permitted
hereunder, other securities requested to be included in such offering, exceeds
the number or class of Registrable Securities and other securities, if any,
which can be sold therein without adversely affecting the marketability of the
offering, the LLC will include in such registration (i) first, (A) to the extent
LLC Registrable Securities requested for inclusion therein need to be reduced as
a result of such advice, the number of LLC Registrable Securities requested to
be included in such registration pro rata, if necessary, among the holders of
LLC Registrable Securities based on the number of LLC Registrable Securities
owned by each such holder and (B) to the extent CSX Senior Registrable
Securities requested for inclusion therein need to be reduced as a result of
such advice, the number of CSX Senior Registrable Securities requested to be
included in such registration pro rata, if necessary, among the holders of CSX
Senior Registrable Securities based on the number of CSX Senior Registrable
Securities owned by each such holder and (ii) second, any other securities of
the LLC requested to be included in such registration pro rata, if necessary, on
the basis of the number of such other securities owned by each such holder.
(e) Restrictions on Demand Registrations. The LLC will not be
obligated to effect any Demand Registration for LLC Registrable Securities
within 90 days after the effective date of a previous Demand Registration for
LLC Registrable Securities which resulted in a sale of LLC Registrable
Securities. The LLC may postpone for no more than 90 days in each 360-day
period, the filing or the effectiveness of a registration statement for a Demand
Registration, if the LLC determines in good faith that such Demand Registration
might reasonably be expected to have an adverse effect on any proposal or plan
to engage in any acquisition or disposal of stock or assets or any merger,
consolidation, tender offer or similar transaction; provided, that, in such
event, the holders of a majority of the Registrable Securities initially
requesting such Demand Registration will be entitled to withdraw such request
and, if such request is withdrawn, such Demand Registration will not count as a
Demand Registration.
(f) Selection of Underwriters. In the case of a Demand
Registration for an underwritten offering made pursuant to the terms and
conditions of this Agreement by the hold-
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<PAGE> 7
ers of a majority of (i) a class of LLC Registrable Securities or (ii) the CSX
Senior Registrable Securities, the holders of a majority of the LLC Registrable
Securities or the CSX Senior Registrable Securities, respectively, to be
included in such Demand Registration will have the right to select the
investment banker(s) and manager(s) to administer the offering, which investment
banker(s) and manager(s) will be nationally recognized and reasonably acceptable
to the LLC.
(g) 415 Registrations.
(i) Each of the holders of a majority of the CSX Junior
Registrable Securities and the holders of a majority of the Vectura Registrable
Securities will be entitled to request one (1) 415 Registration in which the LLC
will pay all Registration Expenses. Subject to the availability of required
financial information, within 45 days after the LLC receives written notice of a
request for a 415 Registration, the LLC shall file with the SEC a registration
statement under the Securities Act for the 415 Registration. The LLC shall use
its best efforts to cause the 415 Registration to be declared effective under
the Securities Act as soon as practical after filing and, once effective, the
LLC shall (subject to the provisions of clause (ii) below) cause such 415
Registration to remain effective for such time period as is specified in such
request, but for no time period longer than the period ending on the earlier of
(i) the third anniversary of the date of filing of the 415 Registration, or (ii)
the date on which all LLC Registrable Securities have been sold pursuant to the
415 Registration.
(ii) If the holders of a majority of the CSX Junior
Registrable Securities or the holders of a majority of the Vectura Registrable
Securities notify the LLC in writing that they intend to effect the sale of all
or substantially all of the CSX Junior Registrable Securities or the Vectura
Registrable Securities, as the case may be, held by such holders pursuant to a
single integrated offering pursuant to a then effective registration statement
for a 415 Registration (a "Takedown"), the LLC and each holder of Registrable
Securities shall not effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for its equity securities, during the 90-day period beginning on the date such
notice of a Takedown is received.
(iii) If in connection with any Takedown, the managing
underwriters (selected in accordance with clause (iv) below) advise the LLC
that, in its opinion, the inclusion of any other securities other than CSX
Junior Registrable Securities or Vectura Registrable Securities, as the case may
be, in the Takedown would adversely affect the marketability of the offering,
then no such securities shall be permitted to be included. Additionally, if in
connection with such an offering, the number of CSX Junior Registrable
Securities or Vectura Registrable Securities, as the case may be, and other
securities (if any) requested to be included in such Takedown exceeds the number
of CSX Junior Registrable Securities or Vectura Registrable Securities, as the
case may be, and other securities which can be sold in such offering without
adversely affecting the marketability of the offering, the LLC shall include in
such Takedown (i) first, the CSX Junior Registrable Securities or Vectura
Registrable Securities, as the case may be, requested to be included in such
Takedown, pro rata among the holders of such Registrable Securities on the basis
of the number of CSX Junior Registrable Securities or Vectura Registrable Se-
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<PAGE> 8
curities, as the case may be, owned by each such holder, and (ii) second, other
securities requested to be included in such Takedown to the extent permitted
hereunder.
(iv) The holders of a majority of the CSX Junior
Registrable Securities or Vectura Registrable Securities, as the case may be,
shall have the right to retain and select an investment banker and manager to
administer the 415 Registration and any Takedown pursuant thereto, subject to
the LLC's approval which will not be unreasonably withheld.
(v) In addition to the provisions in Section 6 below, all
expenses incurred in connection with the management of the 415 Registration
(whether incurred by the LLC or otherwise) shall be borne by the LLC (including,
without limitation, all fees and expenses of the investment banker and manager)
(excluding discounts and commissions).
(h) Other Registration Rights. Except as provided in this
Agreement, the LLC will not grant to any Persons the right to request the LLC to
register any of its equity securities or any securities convertible or
exchangeable into or exercisable for such securities, on a "demand" basis, or on
a "piggy-back" basis which are senior to or pari passu with those rights granted
to the holders of CSX Junior Registrable Securities hereunder, for purposes of
Sections 2(d), 3(c), and 3(d) hereof without the prior written consent of a
majority of the holders of CSX Junior Registrable Securities and the LLC
Registrable Securities.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the LLC proposes to register
any of its common equity securities (or Senior Preferred) under the Securities
Act (other than pursuant to a Demand Registration, an Initial Public Offering, a
registration statement on Form S-8 or the registration solely of so-called
"equity kickers" in connection with the registration of debt securities), and
the registration form to be used may be used for the registration of Registrable
Securities (each, a "Piggyback Registration"), the LLC will give prompt written
notice to all holders of Registrable Securities of its intention to effect such
a registration. The LLC shall include in any such registration by it all
Registrable Securities with respect to which it has received written requests
for inclusion therein within 20 days after the receipt by such holders of such
written notice from the LLC.
(b) Piggyback Expenses. The Registration Expenses of the
holders of Registrable Securities will be paid by the LLC in all Piggyback
Registrations involving Registrable Securities.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the LLC, the
LLC will include in such registration all securities requested to be included in
such registration; provided, that if the managing underwriters advise the LLC in
writing that in their opinion the number or class of such securities requested
to be included in such registration exceeds the number or class which can be
sold in such offering without adversely affecting the marketability of the
offering, the LLC will include in such registration (i) first, the securities
that the LLC proposes to sell, (ii) second, (A) to the extent LLC Registrable
Securities requested for inclusion therein need to be reduced as a result of
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<PAGE> 9
such advice, the LLC Registrable Securities requested to be included in such
registration, pro rata among the holders of such LLC Registrable Securities on
the basis of the number of units of LLC Registrable Securities owned by each
such holder and (B) to the extent CSX Senior Registrable Securities requested
for inclusion therein need to be reduced as a result of such advice, the CSX
Senior Registrable Securities requested to be included in such registration pro
rata among holders of CSX Senior Registrable Securities on the basis of the
number of units of CSX Registrable Securities owned by each such holder, and
(iii) third, other securities, if any, requested to be included in such
registration, pro rata among the holders of such securities on the basis of the
number of shares owned by each such holder.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the LLC's securities (and is not a Demand Registration) and the managing
underwriters advise the LLC in writing that in their opinion the number or class
of securities of the class registered in such Piggyback Registration requested
to be included in such registration exceeds the number or class which can be
sold in such offering without adversely affecting the marketability of the
offering, the LLC will include in such registration (i) first, the securities
requested to be included therein by the holders requesting such registration,
(ii) second, (A) to the extent LLC Registrable Securities requested for
inclusion therein need to be reduced as a result of such advice, the LLC
Registrable Securities requested to be included in such registration, pro rata
among the holders of such LLC Registrable Securities on the basis of the number
of shares of LLC Registrable Securities owned by each such holder and (B) to the
extent CSX Senior Registrable Securities requested for inclusion therein need to
be reduced as a result of such advice, the CSX Senior Registrable Securities
requested to be included in such registration pro rata among holders of CSX
Senior Registrable Securities on the basis of the number of units of CSX
Registrable Securities owned by each such holder, and (iii) third, other
securities requested to be included in such registration not covered by clause
(i) above pro rata among the holders of such securities on the basis of the
number of shares owned by each such holder.
(e) Selection of Underwriters. If any Piggyback Registration
is an underwritten offering, the LLC will have the right to select the
investment banker(s) and manager(s) that will administer the offering.
(f) Other Registrations. If the LLC has previously filed a
registration statement with respect to Registrable Securities pursuant to this
Section 3, and if such previous registration has not been withdrawn or
abandoned, the LLC shall not file or cause to be effected any other registration
of any of its equity securities or securities convertible or exchangeable into
or exercisable for its equity securities under the Securities Act (except on
Forms S-4 or S-8 or any successor forms), whether on its own behalf or at the
request of any holder or holders of such securities, until a period of at least
90 days has elapsed from the effective date of such previous registration.
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<PAGE> 10
4. Holdback Agreements.
(a) To the extent not inconsistent with applicable law, each
holder of LLC Registrable Securities hereby agrees not to effect any public sale
or distribution (including sales pursuant to Rule 144) of equity securities of
the LLC or any securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and the 90-day period beginning
on the effective date of any Demand Registration (other than a 415 Registration)
or Piggyback Registration for a public offering to be underwritten on a firm
commitment basis in which the LLC Registrable Securities are included (except as
part of such underwritten registration), unless the underwriters managing the
registered public offering otherwise agree.
(b) The LLC agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 90-day period beginning on the effective date of any underwritten
Demand Registration (other than a 415 Registration) or Piggyback Registration
for LLC Registrable Securities (except as part of such underwritten registration
or pursuant to registrations on Forms S-4 or S-8 or any successor forms), unless
the underwriters managing the registered public offering otherwise agree, and
(ii) to cause each other holder of at least 5% (on a fully diluted basis) of
equity securities of the LLC or any securities convertible into or exchangeable
or exercisable for such equity securities, purchased from the LLC at any time
after the date hereof (other than in a registered public offering) to agree not
to effect any public sale or distribution (including sales pursuant to Rule 144)
of any such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
5. Registration Procedures. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the LLC will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the LLC will as expeditiously as possible:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than six months and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(c) subject to the provisions of the LLC Agreement, if
requested by the holders of a majority of the Vectura Registrable Securities,
CSX Junior Registrable Securities, or CSX Senior Registrable Securities in
connection with any Demand Registration requested by such holders, use its best
efforts to cause to be included in such registration securities (of the
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same class as the securities underlying the applicable Demand Registration)
having an aggregate value (based on the midpoint of the proposed offering price
range specified in the registration statement used to offer such securities) of
up to $20.0 million, to be offered in a primary offering of the LLC's securities
contemporaneously with such offering of Registrable Securities;
(d) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(e) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, that the LLC will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, (ii) subject itself to
taxation in any such jurisdiction, or (iii) consent to general service of
process (i.e., service of process which is not limited solely to securities law
violations) in any such jurisdiction;
(f) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the LLC will promptly
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(g) notify each seller of such Registrable Securities and, if
requested by any such seller of Registrable Securities, confirm such notice in
writing, (A) when the prospectus or any prospectus supplement or post-effective
amendment included in such registration statement has been filed, and, with
respect to any registration statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the Commission for
amendments to such registration statement or amendments or supplements to the
prospectus or for additional information relating thereto, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of the
registration statement under the Securities Act or of the suspension by any
state securities commission of the qualification of such Registrable Securities,
as applicable, for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes.
(h) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the LLC are then
listed and, if not so listed, to be listed on the Nasdaq National Market
("Nasdaq Market") (or such other national securities ex-
-11-
<PAGE> 12
change as the Board determines provides the best liquidity on which such
Registrable Securities may be listed (the "Alternative Exchange") and, if listed
on the Nasdaq Market (or the Alternative Exchange), use its best efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a Nasdaq "National Market System security" within the
meaning of Rule 11Aa2-1 of the SEC (or similar designation of the Alternative
Exchange, if applicable) or, failing that, to secure Nasdaq Market authorization
for such Registrable Securities (or similar authorization of the Alternative
Exchange, if applicable) and, without limiting the generality of the foregoing,
to arrange for at least two market makers to register as such with respect to
such Registrable Securities with the National Association of Securities Dealers
(or similar body of the Alternative Exchange, if applicable);
(i) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(j) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(k) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the LLC, and cause the managers, officers,
members, employees and independent accountants of the LLC to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(l) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months beginning with the first day of the first full
calendar quarter of the LLC after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 promulgated thereunder;
(m) permit any holder of Registrable Securities (which holder,
in the LLC's sole and exclusive judgment, might be deemed to be an underwriter
or a controlling person of the LLC) to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the LLC in writing, which in the reasonable judgment of
such holder and its counsel should be included;
(n) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the LLC will use its reasonable best efforts promptly to obtain
the withdrawal of such order;
-12-
<PAGE> 13
(o) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the sellers thereof to consummate the disposition of such Registrable
Securities;
(p) obtain a "cold comfort" letter from the independent public
accountants of the LLC in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the holders of a majority of
the Registrable Securities being sold reasonably request; and
(q) otherwise facilitate such registration and related
offering.
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the LLC and if, in its sole and
exclusive judgment, such holder is or might be deemed to be a controlling Person
of the LLC, such holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such holder and
presented to the LLC in writing, to the effect that (x) the holding by such
holder of such securities is not to be construed as a recommendation by such
holder of the investment quality of the LLC's securities covered thereby and (y)
such holding does not imply that such holder will assist in meeting any future
financial requirements of the LLC or (ii) in the event that such reference to
such holder by name or otherwise is not required by the Securities Act, the
deletion of the reference to such holder; provided, that with respect to this
clause (ii) such holder shall furnish to the LLC an opinion of counsel to such
effect, which opinion and counsel shall be reasonably satisfactory to the LLC.
6. Registration Expenses. All Registration Expenses will be
borne by the LLC, with respect to any registration, proposed or otherwise, of
its securities.
7. Indemnification.
(a) The LLC agrees to indemnify, to the extent permitted by
law, (i) each holder of Registrable Securities, (ii) such holder's managers,
members, officers and directors, and (iii) each Person who controls (within the
meaning of the Securities Act) such holder against all losses, claims, damages,
liabilities, and expenses arising out of or based upon any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus, or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse such holder, manager, member, director, officer, or controlling
Person for any legal or other expenses reasonably incurred by such holder,
manager, member, director, officer, or controlling Person in connection with the
investigation or defense of such loss, claim, damage, liability or expense,
except insofar as the same are caused by or contained in any information
furnished in writing to the LLC by such holder expressly for use therein or by
such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the LLC has furnished
such holder with a sufficient number of copies of the same. In connection with
an underwritten offering, the LLC will indemnify such underwriters, their
officers and directors, and each Person who controls such
-13-
<PAGE> 14
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder will furnish
to the LLC in writing such information and affidavits as the LLC reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the LLC in
connection with any registration of Registrable Securities, and its managers,
members, directors and officers and each Person who controls the LLC against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in such registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided, that the obligation to so indemnify will be individual to each
holder and will be limited to the net amount of proceeds received by such holder
from the sale of Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any manager, member, officer, director, or
controlling Person of such indemnified party and will survive the transfer of
securities. The LLC, to the extent so liable, also agrees to make such
provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event the indemnification provided by the LLC
pursuant to the terms and conditions of this Agreement is unavailable for any
reason.
8. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other
-14-
<PAGE> 15
documents reasonably required under the terms of such underwriting arrangements;
provided, that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the
LLC or the underwriters other than representations and warranties regarding such
holder and such holder's intended method of distribution.
9. Rule 144 Reporting. With a view to making available to the
holders of Registrable Securities the benefits of certain rules and regulations
of the SEC which may permit the sale of the Registrable Securities to the public
without registration, the LLC agrees to use its best efforts to:
(a) make and keep current public information available, within
the meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
(b) file with the SEC, in a timely manner, all reports and
other documents required under the Securities Act and the Exchange Act (after
the LLC has become subject to such reporting requirements); and
(c) so long as any party hereto owns any Registrable
Securities, furnish to such Person forthwith upon request a written statement as
to the compliance by the LLC with the reporting requirements of said Rule 144
(at any time commencing 90 days after the effective date of the first
registration filed by the LLC for an offering of its securities to the general
public), the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements); a copy of its most recent annual
or quarterly report; and such other reports and documents as such Person may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
10. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, mailed by certified or registered mail, return receipt requested and
postage prepaid, or sent via a nationally recognized overnight courier, or sent
via facsimile to the recipient. Such notices, demands and other communications
will be sent to the address listed on Exhibit A attached hereto or such other
address or to the attention of such other Person as the recipient party shall
have specified by prior written notice to the sending party.
11. Miscellaneous.
(a) Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other
-15-
<PAGE> 16
security) for specific performance and for other injunctive relief in order to
enforce or prevent violation of the provisions of this Agreement.
(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement regarding the rights of the holders of
(i) LLC Registrable Securities or (ii) CSX Senior Registrable Securities may be
amended or waived only upon the prior written consent of the LLC and the holders
of a majority of the LLC Registrable Securities or CSX Senior Registrable
Securities, respectively; provided, that any amendments which modify the rights
of any class of holders of LLC Registrable Securities in a manner that is
prejudicial to such holders (relative to the other holders of LLC Registrable
Securities) cannot be effected without the consent of the holders of such LLC
Registrable Securities so adversely affected.
(c) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(d) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(e) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
(f) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(g) GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
APPLICATION, CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC
LAWS OF THE STATE OF DELAWARE AND THE DELAWARE LIMITED LIABILITY COMPANY ACT,
DELAWARE CODE, TITLE 6, SECTIONS 18-101, ET. SEQ., AS IN EFFECT FROM TIME TO
TIME WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR
RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
DELAWARE.
* * * * *
-16-
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
AMERICAN COMMERCIAL LINES HOLDINGS
LLC
By: -------------------------------
Name:
Title:
VECTURA GROUP, INC.
By: -------------------------------
Name:
Title:
NATIONAL MARINE, INC.
By: -------------------------------
Name:
Title:
CSX BROWN CORP.
By: -------------------------------
Name:
Title:
<PAGE> 18
INVESTOR UNITHOLDER SIGNATURE PAGE TO
REGISTRATION RIGHTS AGREEMENT OF
AMERICAN COMMERCIAL LINES HOLDINGS LLC
- ----------------------------------------
Steven Anderson
- ----------------------------------------
Stuart Agranoff
<PAGE> 19
MANAGEMENT UNITHOLDER SIGNATURE PAGE TO
REGISTRATION RIGHTS AGREEMENT OF
AMERICAN COMMERCIAL LINES HOLDINGS LLC
- ----------------------------
Michael C. Hagan
<PAGE> 20
EXHIBIT A
ADDRESSES FOR NOTICES
MEMBERS
1. CSX Brown Corp.
c/o CSX Corporation
One James Center
901 East Cary Street
Richmond, VA 23219
Telecopy No.: (804) 783-1380
Attention: Mark G. Aron
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telecopy No.: (212) 403-2000
Attention: Pamela S. Seymon, Esq.
Steven A. Cohen, Esq.
2. Vectura Group, Inc.
1515 Poydras Street, Suite 1500
New Orleans, LA 70112
Telecopy No.: (504) 529-8470
Attention: David Wagstaff
with copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, NY 10043
Telecopy No.: (212) 888-2940
Attention: David F. Thomas
Richard E. Mayberry, Jr.
and
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Telecopy No.: (212) 446-4900
Attention: Kirk A. Radke, Esq.
Schedule 1 - Page 1
<PAGE> 21
3. National Marine, Inc.
1515 Poydras Street, Suite 1500
New Orleans, LA 70112
Telecopy No.: (504) 529-8470
Attention: President
with a copy to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, NY 10043
Telecopy No.: (212) 888-2940
Attention: David F. Thomas
Richard E. Mayberry, Jr.
and
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Telecopy No.: (212) 446-4900
Attention: Kirk A. Radke, Esq.
MANAGEMENT
Michael Hagen
c/o American Commercial Lines Holdings LLC
1701 East Market Street
Jeffersonville, IN 47130
Telecopy No.: (812) 288-0294
INVESTORS
Schedule 1 - Page 2
<PAGE> 1
Exhibit 5.1
[LETTERHEAD OF KIRKLAND & ELLIS]
To Call Writer Direct:
212 446-4800
August 25, 1998
AMERICAN COMMERCIAL LINES LLC
ACL CAPITAL CORP.
AMERICAN COMMERCIAL BARGE LINE LLC
AMERICAN COMMERCIAL MARINE SERVICE LLC
LOUISIANA DOCK COMPANY LLC
WATERWAY COMMUNICATIONS SYSTEM LLC
AMERICAN COMMERCIAL TERMINALS LLC
AMERICAN COMMERCIAL TERMINALS --
MEMPHIS LLC
JEFFBOAT LLC
AMERICAN COMMERCIAL LINES
INTERNATIONAL LLC
ORINOCO TASA LLC
ORINOCO TASV LLC
BREEN TAS LLC
BULLARD TAS LLC
SHELTON TAS LLC
LEMONT HARBOR & FLEETING SERVICES LLC
TIGER SHIPYARD LLC
WILKINSON POINT LLC
HOUSTON FLEET LLC (collectively the "Registrants")
1701 East Market St.
Jeffersonville, IN 47130
Re: Series B 10 1/4% Senior Notes due 2008
Ladies and Gentlemen:
We are acting as special counsel to the Registrants, in connection with
the proposed registration by the Registrants of up to $300,000,000 in aggregate
principal amount of the Registrants' Series B 10 1/4% Senior Notes due 2008 (the
"Exchange Notes"), pursuant to a Registration Statement on Form S-4 filed with
the Securities and Exchange Commission (the "Commission") on the date hereof
under the Securities Act of 1933, as amended (the "Securities Act") (such
Registration Statement, as amended or supplemented, is hereinafter referred to
as the "Registration Statement"), for the purpose of effecting an exchange offer
(the "Exchange Offer") for the Registrants' 10 1/4% Senior Notes due 2008 (the
"Old Notes"). The Exchange Notes are to be issued pursuant to the Indenture (the
"Indenture"), dated as of June 30, 1998, between the Registrants and United
States Trust Company of New York, as Trustee, in exchange for and in replacement
of the Registrants' outstanding Old Notes, of which $300,000,000 in aggregate
principal amount is outstanding.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary for the purposes of this
opinion, including (i) the corporate and organizational documents of the
Registrants, (ii) minutes and records of the corporate proceedings of the
Registrants with respect to the issuance of the Exchange Notes, (iii) the
Registration Statement and exhibits thereto and (iv) the Registration Rights
Agreement, dated as of June 30, 1998, among the Registrants, Wasserstein
Perella Securities Inc. and Chase Securities Inc.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies and the authenticity of the originals of all
documents submitted to us as copies. We have also assumed the
<PAGE> 2
August 25, 1998
Page 2
genuineness of the signatures of persons signing all documents in connection
with which this opinion is rendered, the authority of such persons signing on
behalf of the parties thereto other than the Registrants, and the due
authorization, execution and delivery of all documents by the parties thereto
other than the Registrants. As to any facts material to the opinions expressed
herein which we have not independently established or verified, we have relied
upon statements and representations of officers and other representatives of the
Registrants and others.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we are of the opinion
that:
(1) Each of American Commercial Lines LLC, American Commercial Barge
Line LLC, American Commercial Marine Service LLC, Louisiana Dock Company LLC,
Waterway Communications System LLC, American Commercial Terminals LLC, American
Commercial Terminals -- Memphis LLC, Jeffboat LLC, American Commercial Lines
International LLC, Orinoco TASA LLC, Orinoco TASV LLC, Breen TAS LLC, Bullard
TAS LLC, Shelton TAS LLC, Lemont Harbor & Fleeting Services LLC, Tiger Shipyard
LLC, Wilkinson Point LLC, Houston Fleet LLC is a limited liability company
existing and in good standing under the General Corporation Law of the State of
Delaware.
(2) ACL Capital Corp. is a corporation existing and in good standing
under the General Corporation Law of the State of Delaware.
(3) The sale and issuance of the Exchange Notes has been validly
authorized by the Registrants.
(4) When, as and if (i) the Registration Statement shall have become
effective pursuant to the provisions of the Securities Act, (ii) the Indenture
shall have been qualified pursuant to the provisions of the Trust Indenture Act
of 1939, as amended, (iii) the Old Notes shall have been validly tendered to the
Company and (iv) the Exchange Notes shall have been issued in the form and
containing the terms described in the Registration Statement, the Indenture, the
resolutions of the Registrants' Board of Directors or Board of Managers, as the
case may be, (or authorized committee thereof) authorizing the foregoing and any
legally required consents, approvals, authorizations and other order of the
Commission and any other regulatory authorities to be obtained, the Exchange
Notes when issued pursuant to the Exchange Offer will be legally issued, fully
paid and nonassessable and will constitute valid and binding obligations of the
Registrants.
Our opinions expressed above are subject to the qualifications that we
express no opinion as to the applicability of, compliance with, or effect of (i)
any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other similar law affecting the enforcement of
creditors' rights generally, (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), (iii)
public policy considerations which may limit the rights of parties to obtain
certain remedies and (iv) any laws except the laws of
<PAGE> 3
August 25, 1998
Page 3
the State of New York and the General Corporation Law of the State of Delaware.
For purposes of the opinions in paragraphs 1 and 2, we have relied exclusively
upon recent certificates issued by the Delaware Secretary of State and such
opinions are not intended to provide any conclusion or assurance beyond that
conveyed by such certificates. We have assumed without investigation that there
has been no relevant change or development between the respective dates of such
certificates and the date of this letter.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. We also consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the securities
or "Blue Sky" laws of the various states to the issuance of the Exchange Notes.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the States of Delaware or New York be changed by legislative action,
judicial decision or otherwise.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes.
Yours very truly,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE> 1
Exhibit 10.1
AMERICAN COMMERCIAL LINES LLC
AMERICAN COMMERCIAL LINES HOLDINGS LLC
$535,000,000
Credit Agreement
Dated as of June 30, 1998
Chase Securities Inc.
as Arranger
The Chase Manhattan Bank
as Administrative Agent
[CHASE GRAPHIC]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Definitions............................................................... 1
SECTION 1.02. Terms Generally........................................................... 19
ARTICLE II
The Credits
SECTION 2.01. Commitments............................................................... 20
SECTION 2.02. Loans..................................................................... 20
SECTION 2.03. Borrowing Procedure....................................................... 21
SECTION 2.04. Evidence of Debt; Repayment of Loans...................................... 22
SECTION 2.05. Fees...................................................................... 22
SECTION 2.06. Interest on Loans......................................................... 23
SECTION 2.07. Default Interest.......................................................... 23
SECTION 2.08. Alternate Rate of Interest................................................ 23
SECTION 2.09. Termination and Reduction of Commitments.................................. 24
SECTION 2.10. Conversion and Continuation of Borrowings................................. 24
SECTION 2.11. Repayment of Term Borrowings.............................................. 25
SECTION 2.12. Optional Prepayment....................................................... 27
SECTION 2.13. Mandatory Prepayments..................................................... 28
SECTION 2.14. Reserve Requirements; Change in Circumstances............................. 29
SECTION 2.15. Change in Legality........................................................ 30
SECTION 2.16. Indemnity................................................................. 31
SECTION 2.17. Pro Rata Treatment........................................................ 31
SECTION 2.18. Sharing of Setoffs........................................................ 31
SECTION 2.19. Payments.................................................................. 32
SECTION 2.20. Taxes..................................................................... 32
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate........................................................ 33
SECTION 2.22. Letters of Credit......................................................... 34
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers...................................................... 37
SECTION 3.02. Authorization............................................................. 37
SECTION 3.03. Enforceability............................................................ 38
SECTION 3.04. Governmental Approvals.................................................... 38
SECTION 3.05. Financial Statements...................................................... 38
SECTION 3.06. No Material Adverse Change................................................ 38
SECTION 3.07. Title to Properties; Possession Under Leases.............................. 38
SECTION 3.08. Subsidiaries.............................................................. 39
</TABLE>
<PAGE> 3
2
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 3.09. Litigation; Compliance with Laws.......................................... 39
SECTION 3.10. Agreements................................................................ 39
SECTION 3.11. Federal Reserve Regulations............................................... 40
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act................ 40
SECTION 3.13. Use of Proceeds........................................................... 40
SECTION 3.14. Tax Returns............................................................... 40
SECTION 3.15. No Material Misstatements................................................. 40
SECTION 3.16. ERISA..................................................................... 40
SECTION 3.17. Environmental Matters..................................................... 41
SECTION 3.18. Insurance................................................................. 41
SECTION 3.19. Security Documents........................................................ 41
SECTION 3.20. Location of Real Property, Leased Premises and Tugs and Barges............ 42
SECTION 3.21. Labor Matters............................................................. 42
SECTION 3.22. Solvency.................................................................. 43
SECTION 3.23. Year 2000................................................................. 43
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events......................................................... 43
SECTION 4.02. First Credit Event........................................................ 44
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties...................................... 47
SECTION 5.02. Insurance................................................................. 48
SECTION 5.03. Obligations and Taxes..................................................... 49
SECTION 5.04 Financial Statements, Reports, etc........................................ 49
SECTION 5.05. Litigation and Other Notices.............................................. 50
SECTION 5.06. Maintaining Records; Access to Properties and Inspections................. 50
SECTION 5.07. Use of Proceeds........................................................... 50
SECTION 5.08. Compliance with Environmental Laws........................................ 50
SECTION 5.09. Preparation of Environmental Reports...................................... 51
SECTION 5.10. Further Assurances........................................................ 51
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness.............................................................. 52
SECTION 6.02. Liens..................................................................... 53
SECTION 6.03. Sale and Lease-Back Transactions.......................................... 54
SECTION 6.04. Investments, Loans and Advances........................................... 54
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions................. 55
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends........................................... 56
SECTION 6.07. Transactions with Affiliates.............................................. 57
</TABLE>
<PAGE> 4
3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 6.08. Business of Holdings, Borrower and Subsidiaries........................... 57
SECTION 6.09. Other Indebtedness and Agreements......................................... 57
SECTION 6.10. Capital Expenditures...................................................... 57
SECTION 6.11. Consolidated Leverage Ratio............................................... 58
SECTION 6.12. Consolidated Interest Coverage Ratio...................................... 58
SECTION 6.13. Fiscal Year............................................................... 58
ARTICLE VII
Events of Default......................................................... 59
ARTICLE VIII
The Administrative Agent and the Collateral Agent......................... 61
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices................................................................... 62
SECTION 9.02. Survival of Agreement..................................................... 63
SECTION 9.03. Binding Effect............................................................ 63
SECTION 9.04. Successors and Assigns.................................................... 63
SECTION 9.05. Expenses; Indemnity....................................................... 66
SECTION 9.06. Right of Setoff........................................................... 66
SECTION 9.07. Applicable Law............................................................ 67
SECTION 9.08. Waivers; Amendment........................................................ 67
SECTION 9.09. Interest Rate Limitation.................................................. 67
SECTION 9.10. Entire Agreement.......................................................... 68
SECTION 9.11. WAIVER OF JURY TRIAL...................................................... 68
SECTION 9.12. Severability.............................................................. 68
SECTION 9.13. Counterparts.............................................................. 68
SECTION 9.14. Headings.................................................................. 68
SECTION 9.15 Jurisdiction; Consent to Service of Process............................... 68
SECTION 9.16 Confidentiality........................................................... 69
SECTION 9.17. Termination............................................................... 69
</TABLE>
SCHEDULES:
Schedule 1.01(a) -- Existing Credit Agreements
Schedule 1.01(b) -- Subsidiary Guarantors
Schedule 2.01 -- Lenders and Commitments
Schedule 3.07(a) -- Vessels Not Documented Under United States Law
Schedule 3.07(d) -- Contractual Rights Regarding Mortgaged Property
Schedule 3.08 -- Subsidiaries
Schedule 3.09 -- Litigation
Schedule 3.17 -- Environmental Matters
Schedule 3.18 -- Insurance
Schedule 3.19(d) -- Filing Offices-- Mortgages
Schedule 3.20(a) -- Mortgaged Properties
<PAGE> 5
4
Schedule 3.20(b) -- Leased Properties
Schedule 3.20(c) -- Tugs and Barges
Schedule 3.21 -- Labor Matters
Schedule 4.02(a) -- Local Counsel
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04(k) -- Existing Loans to Garvan, C.A.
Schedule 6.07 -- Transactions with Affiliates
EXHIBITS:
Exhibit A -- Form of Administrative Questionnaire
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Borrowing Request
Exhibit D -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E-1 -- Form of Fleet Mortgages
Exhibit E-2 -- Form of Mortgages
Exhibit F -- Form of Parent Guarantee Agreement
Exhibit G -- Form of Pledge Agreement
Exhibit H -- Form of Security Agreement
Exhibit I -- Form of Subsidiary Guarantee Agreement
Exhibit J-1 -- Form of Opinion of Kirkland & Ellis
Exhibit J-2 -- Form of Opinion of Local Counsel
Exhibit J-3 -- Form of Opinion of Maritime Counsel
Exhibit K -- Form of Assignments of Insurances
<PAGE> 6
CREDIT AGREEMENT dated as of June 30, 1998,
among AMERICAN COMMERCIAL LINES LLC, a Delaware
limited liability company (the "Borrower"),
AMERICAN COMMERCIAL LINES HOLDINGS LLC, a
Delaware limited liability company ("Holdings"),
the Lenders (as defined in Article I), and THE
CHASE MANHATTAN BANK, a New York banking
corporation, as issuing bank (in such capacity,
the "Issuing Bank"), as administrative agent (in
such capacity, the "Administrative Agent"), as
security trustee (in such capacity, the "Security
Trustee") and as collateral agent (in such
capacity, the "Collateral Agent") for the
Lenders.
The Borrower has requested the Lenders to extend credit in the form of
(a) Tranche B Term Loans (such term and each other capitalized term used but not
defined herein having the meaning given it in Article I) on the Closing Date, in
an aggregate principal amount not in excess of $200,000,000, (b) Tranche C Term
Loans on the Closing Date, in an aggregate principal amount not in excess of
$235,000,000, and (c) Revolving Loans at any time and from time to time prior to
the Revolving Credit Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $100,000,000. The Borrower has requested the
Issuing Bank to issue letters of credit, in an aggregate face amount at any time
outstanding not in excess of $25,000,000, to support payment obligations
incurred in the ordinary course of business by the Borrower and its
Subsidiaries. The proceeds of the Term Loans, together with the proceeds of the
Senior Unsecured Debt and the proceeds from the Equity Contribution, are to be
used solely (a) to pay the cash consideration to be paid in connection with the
Recapitalization, (b) to pay all amounts outstanding under the Existing Credit
Agreements and all other existing Indebtedness of Holdings, the Borrower and its
Subsidiaries, NMS, Inc., NBL and National Marine (other than Indebtedness
permitted under Section 6.01(a)) and (c) to pay fees and expenses in connection
with the Transactions. The proceeds of the Revolving Loans are to be used solely
for general corporate purposes.
The Lenders are willing to extend such credit to the Borrower and the
Issuing Bank is willing to issue letters of credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"399" shall mean 399 Venture Partners, Inc.
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
<PAGE> 7
2
"Account" shall mean any right to payment for goods sold or for
services rendered, whether or not it has been earned by performance.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A or such other form as may be supplied
from time to time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Agreement" shall mean this Credit Agreement as originally executed and
as hereafter amended from time to time, including any exhibits hereto.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate or both for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the preceding sentence, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Base CD Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate, the Base CD Rate or the Federal
Funds Effective Rate, respectively. The term "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change is publicly
announced as being effective. The term "Base CD Rate" shall mean the sum of (a)
the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves
and (b) the Assessment Rate. The term "Federal Funds Effective Rate" shall mean,
for any day, the weighted average (rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurodollar Loan or ABR Loan, or with respect to the Commitment Fees, as the case
may be, the applicable percentage set forth below under the caption "Eurodollar
Spread--Revolving Loans", "Eurodollar Spread-- Tranche B Term Loans",
"Eurodollar Spread--Tranche C Term Loans", "ABR Spread--Revolving Loans", "ABR
Spread--Tranche B Term Loans", "ABR Spread--Tranche C Term Loans" or "Fee
Percentage", as the case may be, based upon the Consolidated Leverage Ratio as
of the relevant date of determination; provided that, until the Administrative
Agent shall have received the Borrower's consolidated financial statements
pursuant to Section 5.04(a) with respect to its fiscal year ended
<PAGE> 8
3
December 25, 1998, the Consolidated Leverage Ratio shall be deemed to be in
Category 1 for purposes of determining the Applicable Percentage:
<TABLE>
<CAPTION>
Eurodollar
Eurodollar ABR Spread- Eurodollar ABR-
Consolidated Spread- Spread- Tranche B ABR Spread- Spread- Spread
Leverage Revolving Revolving Term Tranche B Tranche C Tranche C Fee
Ratio Loans Loans Loans Term Loans Term Loans Term Loans Percentage
----- ----- ----- ----- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Category 1 2.25% 1.25% 2.50% 1.50% 2.75% 1.75% 0.500%
- ----------
Equal to or
greater than 4.5
to 1.0
Category 2 2.00% 1.00% 2.25% 1.25% 2.50% 1.50% 0.500%
- ----------
Equal to or
greater than 4.0
to 1.0 but less
than 4.5 to 1.0
Category 3 1.75% 0.75% 2.00% 1.00% 2.25% 1.25% 0.500%
- ----------
Equal to or
greater than 3.5
to 1.0 but less
than 4.0 to 1.0
Category 4 1.50% 0.50% 2.00% 1.00% 2.25% 1.25% 0.375%
- ----------
Equal to or
greater than 3.0
to 1.0 but less
than 3.5 to 1.0
Category 5 1.25% 0.25% 2.00% 1.00% 2.25% 1.25% 0.375%
- ----------
Less than 3.0 to
1.0
</TABLE>
Each change in the Applicable Percentage resulting from a change in the
Consolidated Leverage Ratio shall be effective with respect to all Loans,
Commitments and Letters of Credit outstanding on and after the date of delivery
to the Administrative Agent of the financial statements and certificates
required by Section 5.04(a) or (b) indicating such change until the date
immediately preceding the next date of delivery of such financial statements and
certificates indicating another such change. Notwithstanding the foregoing, (a)
at any time during which the Borrower has failed to deliver the financial
statements and certificates required by Section 5.04(a) or (b), or (b) at any
time after the occurrence and during the continuance of an Event of Default, the
Consolidated Leverage Ratio shall be deemed to be in Category 1 for purposes of
determining the Applicable Percentage.
"Approved Fund" shall mean, with respect to any Lender that is a fund
that invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative
<PAGE> 9
4
Agent to the Federal Deposit Insurance Corporation (or any successor thereto)
for insurance by such Corporation (or such successor) of time deposits made in
dollars at the Administrative Agent's domestic offices.
"Asset Sale" shall mean the sale, transfer or other disposition (by way
of merger or otherwise) by the Borrower or any of the Subsidiaries to any person
other than the Borrower or any Subsidiary Guarantor of (a) any Capital Stock or
equity interests of any of the Subsidiaries (other than directors' qualifying
shares or interests) or (b) any other assets of the Borrower or any of the
Subsidiaries (other than (i) inventory, excess, damaged, obsolete or worn out
assets, scrap and Permitted Investments, in each case disposed of in the
ordinary course of business, (ii) assets transferred with an aggregate fair
market value not exceeding $25,000,000 in any fiscal year of the Borrower in
connection with the replacement or upgrade of a tangible asset of the Borrower
or any Subsidiary Guarantor which will be used in a Related Business and is
acquired, or commitments to acquire such asset have been made, within 270 days
of such transfer, (iii) dispositions resulting in Casualty Proceeds or
Condemnation Proceeds or (iv) sales or transfers (x) by or among Foreign
Subsidiaries or (y) from a Loan Party to a Foreign Subsidiary (or, unless and
until Garvan shall become a Foreign Subsidiary, to Garvan) to the extent, in the
case of this clause (y), that (A) such Loan Party would be permitted to advance
the fair market value of the asset transferred to such Foreign Subsidiary or, if
applicable, to Garvan under Section 6.04(c) or 6.04(l), respectively, and (B)
any such transfer is treated as an intercompany loan pursuant to Section 6.04(c)
or 6.04(l), respectively, and evidenced by an intercompany note pledged to the
Collateral Agent pursuant to the Pledge Agreement for the benefit of the Secured
Parties), provided that any asset sale or series of related asset sales
described in clause (b) above (including by way of condemnation or casualty)
having a value not in excess of $750,000 shall be deemed not to be an "Asset
Sale" for purposes of this Agreement.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Assignments of Insurances" shall mean each of the Assignments of
Insurances, substantially in the form of Exhibit K, between the Borrower and the
Collateral Agent and Security Trustee for the benefit of the Secured Parties.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower, executed by a
Responsible Officer of the Borrower, in accordance with the terms of Section
2.03 and substantially in the form of Exhibit C or such other form as shall be
approved by the Administrative Agent.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
<PAGE> 10
5
"Capital Stock" of any person shall mean any and all shares, interests
(including membership and economic interests in a limited liability company),
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, including any preferred
stock, but excluding any debt securities convertible into such equity prior to
such conversion.
"Casualty" shall have the meaning set forth in each of the Mortgages
and the Fleet Mortgages.
"Casualty Proceeds" shall have the meaning set forth in each of the
Mortgages and the Fleet Mortgages.
A "Change in Control" shall be deemed to have occurred if (a) prior to
the first fully distributed public offering of Voting Stock of Holdings, (i) the
Permitted Holders and the Permitted Transferees shall cease to own directly or
indirectly, beneficially or of record, shares representing at least 51% on a
fully diluted, as if converted, basis of the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings, (ii) 399 and
its Permitted Transferees shall cease to own directly or indirectly,
beneficially or of record, shares representing at least 35% on a fully diluted,
as if converted, basis of the aggregate ordinary voting power represented by the
issued and outstanding Voting Stock of Holdings, provided that if 399 at any
time shall not be permitted to hold more than 24.9% of such voting power under
any applicable law, regulation or order of any applicable Governmental
Authority, then a Change of Control shall not be deemed to have occurred so long
as 399 owns, directly or indirectly, beneficially or of record, at least 24.9%
of such voting power; (b) after the first fully distributed public offering of
Voting Stock of Holdings, the Permitted Holders and the Permitted Transferees
shall cease to own directly or indirectly, beneficially or of record, shares
representing at least 25% on a fully diluted, as if converted, basis of the
aggregate ordinary voting power represented by the issued and outstanding Voting
Stock of Holdings; (c) after the first fully distributed public offering of
Voting Stock of Holdings, any person or group (within the meaning of Rule 13d-5
of the Securities Exchange Act of 1934 as in effect on the date hereof) other
than the Permitted Holders and the Permitted Transferees shall own directly or
indirectly, beneficially or of record, a percentage of the issued and
outstanding Voting Stock of Holdings on a fully diluted, as if converted, basis
having ordinary voting power in excess of the percentage then owned, directly or
indirectly, beneficially and of record, on a fully diluted, as if converted,
basis, by the Permitted Holders and the Permitted Transferees; (d) a majority of
the seats (except in the case of any vacancy for 60 days or less resulting from
the death or resignation of any director of Holdings) on the board of managers
or analogous body of Holdings shall at any time be occupied by persons who were
not (i) nominated by the board of directors or analogous body of Holdings, (ii)
appointed by directors so nominated or (iii) appointed by one or more Permitted
Holders or Permitted Transferees; (e) any change in control (or similar event,
however denominated) with respect to Holdings or the Borrower shall occur under
and as defined in any indenture or agreement in respect of Indebtedness to which
any such person or any Subsidiary is a party; or (f) Holdings shall cease to
own, beneficially and of record, 100% of the issued and outstanding Capital
Stock of the Borrower.
"Closing Date" shall mean the date of the first Credit Event.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
<PAGE> 11
6
"Condemnation" shall have the meaning set forth in each of the
Mortgages and the Fleet Mortgages.
"Condemnation Proceeds" shall have the meaning set forth in each of the
Mortgages and the Fleet Mortgages.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated June 1998.
"Consolidated Capital Expenditures" shall mean, for any period, the sum
of (a) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability) by the Borrower or any of the
Subsidiaries during such period that, in accordance with GAAP, are or should be
included in "additions to property, plant and equipment" or similar items
reflected in the consolidated statement of cash flows of the Borrower and the
Subsidiaries for such period (including the amount of assets leased in
connection with any Capital Lease Obligation), and (b) to the extent not
included pursuant to clause (a) above, the aggregate of all expenditures
(whether paid in cash or other consideration or accrued as a liability) by the
Borrower or any Subsidiary during such period to acquire, by purchase or
otherwise, the business, property or fixed assets of, or stock or other evidence
of beneficial ownership of, any person; provided, however, that, for purposes of
Section 6.10 only, to the extent the Borrower or a Subsidiary uses, within 270
days of the receipt thereof, (i) the proceeds of the disposition of assets
described in clause (b)(i) or (ii) of the definition of the term "Asset Sale" or
(ii) Casualty Proceeds or Condemnation Proceeds to purchase, construct, repair,
lease or replace any property, plant or equipment, the amount of the related
Consolidated Capital Expenditure shall be reduced by the amount of such
proceeds.
"Consolidated Current Assets" shall mean, as of any date of
determination, the total assets that would properly be classified as current
assets (other than cash and cash equivalents) of the Borrower and the
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Current Liabilities" shall mean, as of any date of
determination, the total liabilities (other than, without duplication, (a) the
current portion of long-term Indebtedness and (b) outstanding Revolving Loans)
that would properly be classified as current liabilities of the Borrower and the
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income for such period, plus, to the extent deducted in computing such
Consolidated Net Income, (a) the sum, without duplication, of (i) all Federal,
state, local and foreign taxes, and Tax Distributions, (ii) Consolidated Net
Interest Expense and (iii) depreciation, depletion, amortization of intangibles
and other non-cash charges or non-cash losses (including non-cash transaction
expenses and the amortization of debt discounts), minus, to the extent added in
computing such Consolidated Net Income, (b) any non-cash income or non-cash
gains, all as determined on a consolidated basis with respect to the Borrower
and the Subsidiaries in accordance with GAAP.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Net
Interest Expense for such period.
"Consolidated Leverage Ratio" shall mean, as of any date of
determination, the ratio of (a) Net Debt on such date to (b) Consolidated EBITDA
for the period of four consecutive fiscal quarters ending on such date. For
purposes of determining the Consolidated Leverage Ratio as of September 25,
1998, December 25, 1998, and March 26, 1999, Consolidated EBITDA shall be deemed
to be (i) $51,265,000 for the fiscal quarter ended December 26, 1997, (ii)
$22,576,000 for the fiscal quarter ended March 27, 1998, and (iii) $28,208,000
for the fiscal quarter ended June 25, 1998, respectively.
<PAGE> 12
7
"Consolidated Net Income" shall mean, for any period, net income or
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded (a) the income of any person in which any other person (other than the
Borrower or any of the Subsidiaries or any director holding qualifying shares in
accordance with applicable law) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Borrower or
any wholly owned Subsidiary by such person during such period, (b) the income
(or loss) of any person accrued prior to the date it becomes a Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of the
Subsidiaries or the date that person's assets are acquired by the Borrower or
any of the Subsidiaries, (c) the income of any Subsidiary of the Borrower to the
extent that the declaration or payment of dividends or similar distributions by
the Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary, (d) any
gains or losses attributable to sales of assets out of the ordinary course of
business (net of taxes incurred (or in the case of a loss, any tax benefit
realized) and Tax Distributions payable with respect thereto), (e) (to the
extent not included in clauses (a) through (d) above) any non-cash extraordinary
gains or non-cash extraordinary losses (net of taxes incurred (or in the case of
a loss, any tax benefit realized) and Tax Distributions payable with respect
thereto) and (f) any Tax Distributions payable with respect to such period.
"Consolidated Net Interest Expense" shall mean, for any period, the
gross cash interest expense of the Borrower and the Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including the
portion of any payments or accruals with respect to Capital Lease Obligations
that are allocable to interest expense in accordance with GAAP, but excluding
(a) the amortization of debt discounts and (b) the amortization of all fees
(including fees with respect to Interest Rate Protection Agreements) payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense in accordance with GAAP (including fees and expenses in
connection with the Transactions and the first Credit Event) less the total
interest income of the Borrower and its Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP. For purposes of the foregoing,
gross cash interest expense shall be determined after giving effect to any net
payments made or received by the Borrower or any Subsidiary with respect to
Interest Rate Protection Agreements.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"CSX" shall mean CSX Corporation.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any
<PAGE> 13
8
Governmental Authority or any person for damages, injunctive or equitable
relief, personal injury (including sickness, disease or death), Remedial Action
costs, tangible or intangible property damage, natural resource damages,
nuisance, pollution, any adverse effect on the environment caused by any
Hazardous Material, or for fines, penalties or restrictions, resulting from or
based upon (a) the existence, or the continuation of the existence, of a Release
(including sudden or non-sudden, accidental or non-accidental Releases), (b)
exposure to any Hazardous Material, (c) the presence, use, handling,
transportation, storage, treatment or disposal of any Hazardous Material or (d)
the violation or alleged violation of any Environmental Law or Environmental
Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. Sections 6901 et seq., the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251 et seq.,
the Clean Air Act of 1970, as amended 42 U.S.C. Sections 7401 et seq., the
Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Sections
651 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Sections 11001 et seq., the Safe Drinking Water Act of 1974, as
amended, 42 U.S.C. Sections 300(f) et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 5101 et seq., and any similar or
implementing state or local law, and all amendments or regulations promulgated
under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Contribution" shall mean the contribution by VGI Investors to
Holdings of an aggregate amount of $60,000,000 in exchange for (a) Junior
Preferred Interests in an aggregate stated amount of $59,454,545 and (b) Junior
Common Interests in an aggregate stated amount of $545,455.
"Equity Issuance" shall mean the issuance by Holdings, the Borrower or
any Subsidiary of any equity securities or any other equity interests of
Holdings, the Borrower or any Subsidiary, as applicable, or the receipt by
Holdings, the Borrower or any Subsidiary of any capital contribution, in each
case, after the Closing Date, other than (a) any such issuance of equity
securities or other equity interests to, or receipt of any such capital
contribution from, Holdings, the Borrower or a Subsidiary, (b) any issuance of
directors' qualifying shares, (c) any issuance of equity securities or other
equity interests by Holdings to management or key employees of Holdings, the
Borrower or any Subsidiary to the extent that the Net Cash Proceeds therefrom
shall not exceed $1,000,000 during any fiscal year of the Borrower, (d) any
issuance of equity securities or other equity interests by any Foreign
Subsidiary to existing stockholders of such Foreign Subsidiary as a result of a
capital call by such Foreign Subsidiary, (e) any issuance or issuances by
Holdings of equity securities to the extent that the Net Cash Proceeds therefrom
shall not exceed $1,000,000 during any fiscal year (net of any such Net Cash
Proceeds used substantially concurrently to purchase equity securities of
Holdings from management or key employees of Holdings, the Borrower or any
Subsidiary upon their death, disability or termination of employment) and (f)
any Sponsor Equity Contribution.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
<PAGE> 14
9
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year of the Borrower, the
excess of (a) the sum, without duplication, of (i) Consolidated EBITDA for such
fiscal year, (ii) extraordinary cash income of the Borrower and its consolidated
Subsidiaries, if any, during such fiscal year and not included in Consolidated
EBITDA and (iii) reductions to non-cash working capital of the Borrower and its
consolidated Subsidiaries for such fiscal year (i.e., the decrease, if any, in
Consolidated Current Assets minus Consolidated Current Liabilities from the
beginning to the end of such fiscal year) over (b) the sum, without duplication,
of (i) the amount of any cash income taxes and cash foreign withholding taxes
payable by the Borrower and its consolidated Subsidiaries, and the amount of any
Tax Distributions payable, in each case with respect to such fiscal year, (ii)
cash interest paid (net of cash interest received) by the Borrower and its
consolidated Subsidiaries during such fiscal year, (iii) Consolidated Capital
Expenditures made in cash in accordance with Section 6.10 during such fiscal
year, except to the extent financed with the proceeds of Indebtedness or a
Sponsor Equity Contribution, (iv) scheduled principal repayments of Indebtedness
made by the Borrower and its consolidated Subsidiaries during such fiscal year,
(v) optional and mandatory prepayments of the principal of Loans during such
fiscal year, but only to the extent that such prepayments by their terms cannot
be reborrowed or redrawn and do not occur in connection with a refinancing of
all or any portion of the Loans, (vi) extraordinary cash expenses paid by the
Borrower and its consolidated Subsidiaries, if any, during such fiscal year and
not included in Consolidated EBITDA and (vii) additions to non-cash working
capital for such fiscal year (i.e., the increase, if any, in Consolidated
Current Assets minus Consolidated Current Liabilities from the beginning to the
end of
<PAGE> 15
10
such fiscal year), provided that to the extent otherwise included therein, the
Net Cash Proceeds of Asset Sales and dispositions resulting in Casualty Proceeds
or Condemnation Proceeds and gains or losses resulting from translation of
foreign currencies shall be excluded from the calculation of Excess Cash Flow.
"Excluded Taxes" shall mean, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.21(a)), any withholding tax that is imposed on amounts
payable to such Foreign Lender under the laws in effect at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender's failure to comply with Section 2.20(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.20(a).
"Existing Credit Agreements" shall mean the agreements listed in
Schedule 1.01(a).
"Family Group" shall mean, with respect to a natural person, such
person, such person's spouse, siblings, and descendants (whether natural, by
marriage or adopted) and any trust solely for the benefit of such person and/or
such person's spouse, siblings, their respective ancestors and/or descendants
(whether natural, by marriage or adopted).
"Fee Letter" shall mean the Fee Letter dated April 17, 1998, between
VGI and the Administrative Agent.
"Fees" shall mean the Commitment Fees, the Administrative Agent's Fees,
the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any person shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such person.
"Financing Transactions" shall mean (a) the execution, delivery and
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder, (b) the execution, delivery and performance by
each Loan Party of the Senior Unsecured Debt Documents to which it is to be a
party, the issuance of the Senior Unsecured Debt and the use of the proceeds
thereof and (c) the Equity Contribution.
"Fleet Mortgages" shall mean the first preferred fleet mortgages
delivered pursuant to clause (i) of Section 4.02(j) or pursuant to Section 5.10,
as supplemented from time to time pursuant to the terms thereof, each
substantially in the form of Exhibit E-2.
"Foreign Lender" shall mean any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
<PAGE> 16
11
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Garvan" shall mean Garvan, C.A., a Venezuelan company.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Guarantee Agreements" shall mean the Parent Guarantee Agreement and
the Subsidiary Guarantee Agreement.
"Guarantors" shall mean Holdings and the Subsidiary Guarantors.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such person,
(e) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business), (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property,
valued at the fair market value of the assets subject to such Lien (in the case
of nonrecourse Indebtedness) owned or acquired by such person, whether or not
the obligations secured thereby have been assumed, (g) all Guarantees by such
person of Indebtedness of others, (h) all Capital Lease Obligations of such
person, (i) all obligations of such person in respect of interest rate
protection agreements, foreign currency exchange agreements or other interest or
exchange rate hedging arrangements and (j) all obligations of such person as an
account party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any person shall include the Indebtedness of any partnership in
which such person is a general partner, except to the extent that the terms of
such Indebtedness provide otherwise.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Guarantors and the Collateral
Agent.
<PAGE> 17
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"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing, and, in addition, the date of any prepayment of such
Borrowing or conversion of such Borrowing to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect, and (b) as to any ABR Borrowing, the period commencing on
the date of such Borrowing and ending on the earlier of (i) the next succeeding
March 31, June 30, September 30 or December 31 and (ii) the Revolving Credit
Maturity Date, the Tranche B Maturity Date or the Tranche C Maturity Date, as
applicable; provided, however, that if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates, and not entered into for
speculation.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"Junior Preferred Interests" shall mean junior preferred limited
liability company membership interests in Holdings.
"Junior Common Interests" shall mean voting and nonvoting junior common
limited liability company membership interests in Holdings.
"L/C Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.22.
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any
time shall mean its Pro Rata Percentage of the aggregate L/C Exposure at such
time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c) .
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22.
<PAGE> 18
13
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Dow Jones Service
(or on any successor or substitute page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
so available at such time for any reason, the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits approximately equal in principal amount to the Administrative Agent's
portion of such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"LLC Agreement" shall mean the Amended and Restated Limited Liability
Company Agreement of Holdings dated as of June 30, 1998, by and among Holdings,
CSX Corporation, VGI, National Marine and certain other persons party thereto.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreements, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, condition (financial or otherwise),
liabilities, prospects or material agreements of Holdings, the Borrower and the
Subsidiaries, taken as a whole, (b) material impairment of the ability of the
Borrower and the other Loan Parties to perform any of their obligations under
the Loan Documents to which they are or will be a party or (c) material
impairment of the rights of or benefits available to the Lenders under any Loan
Document.
"Mortgaged Properties" shall mean (a) the owned real properties and
leasehold and subleasehold interests of the Loan Parties specified on Schedules
3.20(a) and 3.20(b) and (b) the Vessels specified on Schedule 3.20(c).
"Mortgages" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to clause (i) of Section 4.02(j) or pursuant to
Section 5.10, each substantially in the form of Exhibit E-1.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"National Marine" shall mean National Marine, Inc., a Delaware
corporation and wholly owned subsidiary of VGI.
<PAGE> 19
14
"National Marine Contribution" shall mean the transfer by National
Marine of all the limited liability membership interests in NMI Holdings
pursuant to, and in accordance with the terms of, the Recapitalization Documents
to Holdings in exchange for (a) Junior Preferred Interests in an aggregate
stated amount of up to $1,500,000, (b) Junior Common Interests in an aggregate
stated amount of up to $110,909 and (c) Senior Common Interests in an aggregate
stated amount of up to $3,389,091 (with a future profits interests in Holdings
of up to $32,500,000), in each case subject to adjustment as set forth in the
Recapitalization Documents.
"NBL" shall mean NBL, Inc., a Louisiana corporation and a subsidiary of
VGI.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the
cash proceeds (including cash proceeds subsequently received (as and when
received) in respect of non-cash consideration initially received and including
all insurance settlements and condemnation awards in any fiscal year of the
Borrower in excess of $250,000), net of (i) selling expenses (including
reasonable broker's fees or commissions, legal fees, transfer and similar taxes
and the Borrower's good faith estimate of income taxes and Tax Distributions
paid or payable in connection with such sale), (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations associated with such Asset Sale (provided that, to
the extent and at the time any such amounts are released from such reserve, such
amounts shall constitute Net Cash Proceeds) and (iii) the principal amount,
premium or penalty, if any, interest and other amounts on any Indebtedness for
borrowed money which is secured by the asset sold in such Asset Sale and which
is repaid with such proceeds (other than any such Indebtedness assumed by the
purchaser of such asset), (b) with respect to any issuance or disposition of
Indebtedness, the cash proceeds thereof, net of all taxes and customary fees,
commissions, costs and other expenses incurred, and Tax Distributions payable,
in connection therewith and (c) with respect to any Equity Issuance or Sponsor
Equity Contribution, the cash proceeds thereof, net of all customary fees,
commissions, costs and other expenses incurred, and Tax Distributions payable,
in connection therewith.
"Net Debt" shall mean, at any date and without duplication, (a) the
aggregate amount of all Indebtedness of the Borrower and the Subsidiaries on a
consolidated basis at such date (other than any Indebtedness described in clause
(i) or, except to the extent of any unreimbursed drawings thereunder, (j) of the
definition of the term "Indebtedness") minus (b) the aggregate amount of all
cash and Permitted Investments as shown on the Borrower's consolidated balance
sheet on such date.
"NMI Holdings" shall mean NMI Holdings LLC, a Delaware limited
liability company and wholly owned subsidiary of National Marine.
"NMI Holdings Merger" shall mean the merger of NMI Holdings and its
subsidiaries with and into Holdings, with Holdings as the surviving limited
liability company, and with certain subsidiaries of NMI Holdings surviving as
direct or indirect wholly owned Subsidiaries of the Borrower.
"Non-Pledged Foreign Subsidiaries" shall mean ACL Venezuela Ltd. and
ACBL Hidrovias Ltd., for so long as the Borrower is restricted under agreements
in effect on the Closing Date from pledging or causing to be pledged the Capital
Stock of such Foreign Subsidiaries.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreements and the Security Documents.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"Parent Guarantee Agreement" shall mean the Parent Guarantee Agreement,
substantially in the form of Exhibit F, made by Holdings in favor of the
Collateral Agent for the benefit of the Secured Parties.
<PAGE> 20
15
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Holders" shall mean 399, CSX, their respective Affiliates
and management existing at the Borrower, Holdings or any Subsidiary on the
Closing Date or within 90 days thereafter.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Service or from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $250,000,000 or any Lender;
(d) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions which have a
combined capital and surplus and undivided profits of not less than
$250,000,000; and
(e) shares of funds registered under the Investment Company
Act of 1940, as amended, that have assets of at least $100,000,000 and
invest only in obligations described in clauses (a) through (d) above,
to the extent that such shares are rated by Moody's Investors Service,
Inc. or Standard & Poor's Ratings Service in one of the two highest
rating categories assigned by such agency for shares of such nature.
"Permitted Transferees" shall mean with respect to a person, such
person's Affiliates, limited partners, stockholders, directors and employees
(and partnerships or trusts of which such directors and employees are the sole
partners or beneficiaries), and in the case of a natural person, pursuant to
applicable laws of descent and distribution or to any member of such person's
Family Group.
"person" shall mean any natural person, corporation, unincorporated
organization, business trust, joint venture, association, company, limited
liability company, partnership or government, or any agency or political
subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit G, among the Borrower, Holdings, the Subsidiaries party
thereto and the Collateral Agent for the benefit of the Secured Parties.
<PAGE> 21
16
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"Recapitalization" shall mean the recapitalization of Holdings pursuant
to, and in accordance with the terms of, the Recapitalization Documents,
including (a) the VGI Asset Transfer, (b) the National Marine Contribution, (c)
the NMI Holdings Merger and (d) the issuance of equity securities of Holdings
thereunder.
"Recapitalization Agreement" shall mean the Recapitalization Agreement
dated as of April 17, 1998, among CSX Corporation, VGI, Holdings, the Borrower
and National Marine, as the same may be amended, supplemented or otherwise
modified in accordance with the terms thereof and hereof.
"Recapitalization Documents" shall mean the Recapitalization Agreement
and all other agreements and documents relating to the transactions contemplated
thereby.
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Business" shall mean any business of the Borrower and its
Subsidiaries as conducted on the Closing Date and any business related,
ancillary or complementary thereto.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i)
cleanup, remove, treat, abate or in any other way address any Hazardous Material
in the environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or endanger
or threaten to endanger public health, welfare or the environment; or (iii)
perform studies and investigations in connection with, or as a precondition to,
(i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans, L/C
Exposure and unused Revolving Credit and Term Loan Commitments representing at
least a majority of the sum of all Loans outstanding, L/C Exposure and unused
Revolving Credit and Term Loan Commitments at such time.
"Responsible Officer" of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to
<PAGE> 22
17
Section 2.09 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Credit Maturity Date" shall mean June 30, 2005.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit H, among the Borrower, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Mortgages, the Fleet Mortgages, the
Security Agreement, the Pledge Agreement, the Assignments of Insurances and each
of the security agreements, mortgages and other instruments and documents
executed and delivered pursuant to any of the foregoing or pursuant to Section
5.10.
"Senior Common Interests" shall mean senior common limited liability
company membership interests in Holdings.
"Senior Preferred Interests" shall mean senior preferred limited
liability company membership interests in Holdings.
"Senior Unsecured Notes" shall mean the Senior Notes due 2008 to be
issued by the Borrower and a special purpose co-obligor of the Borrower on the
Closing Date in the aggregate principal amount of $300,000,000.
"Senior Unsecured Debt " shall mean the Senior Unsecured Notes, any
Guarantees thereof and the Indebtedness represented thereby.
"Senior Unsecured Debt Documents" shall mean the indenture under which
the Senior Unsecured Notes are issued and all other instruments, agreements and
other documents evidencing or governing the Senior Unsecured Notes or providing
for any Guarantee or other right in respect thereof.
"Sponsor Equity Contribution" shall mean the issuance by Holdings of
any equity securities or other equity interests of Holdings to one or more
Permitted Holders to the extent that the Net Cash Proceeds therefrom are
committed to finance a Consolidated Capital Expenditure at the time of such
issuance and are used to finance a Consolidated Capital Expenditure within 270
days after such Net Cash Proceeds are received.
"Statutory Reserves " shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting
<PAGE> 23
18
office making or holding a Loan) is subject (a) with respect to the Base CD
Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to three months, and (b) with respect to the
Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, limited liability company,
association or other business entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or more than 50% of the general partnership interests are,
at the time any determination is being made, owned, controlled or held, or (b)
that is, at the time any determination is made, otherwise Controlled, by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"Subsidiary" shall mean any direct or indirect subsidiary of the
Borrower, after giving effect to the Recapitalization.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit I, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" shall mean each Subsidiary listed on Schedule
1.01(b), and each other Subsidiary that is or becomes a party to a Subsidiary
Guarantee Agreement.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Tax Distribution" shall mean, so long as the Borrower is a limited
liability company, distributions to Holdings as sole member (or shareholder) of
the Borrower in an aggregate amount, with respect to any taxable period ending
after March 31, 1998, not to exceed the amount payable by Holdings pursuant to
the tax distribution provisions of the LLC Agreement, as in effect on the date
of this Agreement, to the holders of Holdings' Capital Stock as a direct result
of their holding membership interests in Holdings; provided that with respect to
any period during which Borrower is included in a consolidated group (other than
as the parent of such group) for Federal income tax purposes (by reason of an
initial public offering or otherwise), Borrower shall be permitted to distribute
to the parent company of such group cash in an amount equal to the combined
Federal, state and local income taxes that would be paid by the Borrower and its
domestic Subsidiaries with respect to such period if they operated as a single
Delaware corporation filing separate tax returns with respect to their combined
actual taxable income.
"Term Borrowing" shall mean a Borrowing comprised of Tranche B Term
Loans or Tranche C Term Loans.
"Term Loan Commitments" shall mean the Tranche B Commitments and the
Tranche C Commitments.
"Term Loan Repayment Dates" shall mean the Tranche B Term Loan
Repayment Dates and the Tranche C Term Loan Repayment Dates.
"Term Loans" shall mean the Tranche B Term Loans and the Tranche C Term
Loans.
<PAGE> 24
19
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Tranche B Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Tranche B Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04.
"Tranche B Maturity Date" shall mean June 30, 2006.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche
B Term Loans.
"Tranche B Term Loan Repayment Date" shall have the meaning assigned to
such term in Section 2.11(a)(i).
"Tranche B Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (a) of Section 2.01. Each Tranche B Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Tranche C Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche C Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Tranche C Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04.
"Tranche C Maturity Date" shall mean June 30, 2007.
"Tranche C Term Borrowing" shall mean a Borrowing comprised of Tranche
C Term Loans.
"Tranche C Term Loan Repayment Date" shall have the meaning assigned to
such term in Section 2.11(a)(ii).
"Tranche C Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (b) of Section 2.01. Each Tranche C Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Transactions" shall mean the Recapitalization and the Financing
Transactions.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
<PAGE> 25
20
"Vessels" shall mean the towboats and barges listed on Schedule
3.20(c).
"VGI" shall mean Vectura Group, Inc, a Delaware corporation and any
successor thereto (whether by merger, consolidation, liquidation or otherwise).
"VGI Asset Transfer" shall mean, pursuant to, and in accordance with
the terms of, the Recapitalization Documents, (a) the transfer by VGI and its
subsidiaries of all their consolidated assets (other than certain limited assets
and interests in certain subsidiaries as set forth in the Recapitalization
Documents) to NMI Holdings and subsidiaries of NMI Holdings, (b) the assumption
by NMI Holdings and subsidiaries of NMI Holdings of all liabilities of VGI,
National Marine and NBL (other than certain limited liabilities as set forth in
the Recapitalization Documents) and (c) the issuance by NMI Holdings of all its
limited liability company membership interests to National Marine.
"VGI Investors" shall mean VGI and certain investors arranged by VGI.
"Voting Stock" of a person shall mean all classes of Capital Stock of
such person then outstanding and normally entitled to vote in the election of
directors (or persons performing similar functions).
"wholly owned Subsidiary" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Article
VI or any related definition to eliminate the effect of any change in GAAP
occurring after the date of this Agreement or to reflect the application of
Accounting Principles Board Opinions 16 and 17 on the operation of such covenant
(or if the Administrative Agent notifies the Borrower that the Required Lenders
wish to amend Article VI or any related definition for either such purpose),
then the Borrower's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, or without the application of Accounting Principles Board Opinions 16
and 17, as applicable, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Borrower and the Required Lenders.
<PAGE> 26
21
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a Tranche B Term Loan to the
Borrower on the Closing Date in a principal amount not to exceed its Tranche B
Commitment, (b) to make a Tranche C Term Loan to the Borrower on the Closing
Date in a principal amount not to exceed its Tranche C Commitment, and (c) to
make Revolving Loans to the Borrower, at any time and from time to time on or
after the date hereof, and until the earlier of the Revolving Credit Maturity
Date and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in such Lender's Revolving Credit Exposure
exceeding such Lender's Revolving Credit Commitment. Within the limits set forth
in clause (c) of the preceding sentence and subject to the terms, conditions and
limitations set forth herein, the Borrower may borrow, pay or prepay and
reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may
not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; provided, however, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Except for Loans deemed made pursuant to Section
2.02(f), the Loans comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of $1,000,000 and not less than
$5,000,000 or (ii) equal to the remaining available balance of the applicable
Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan, provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that (i) the Borrower shall not be entitled to request
any Borrowing that, if made, would result in more than nine Eurodollar
Borrowings outstanding hereunder at any time and (ii) without the consent of the
Administrative Agent, the Borrower shall not be entitled to submit a request for
any Eurodollar Borrowing prior to July 1, 1998. For purposes of the foregoing,
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 11:00 a.m.,
New York City time, and the Administrative Agent shall by 12:00 (noon), New York
City time, credit the amounts so received to an account in the name of the
Borrower, maintained with the Administrative Agent and designated by the
Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur
on such date because any condition precedent herein specified shall not have
been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
<PAGE> 27
22
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing (in
lieu of interest that would otherwise become due to such Lender pursuant to
Section 2.06) and (ii) in the case of such Lender, a rate determined by the
Administrative Agent to represent its cost of overnight or short-term funds
(which determination shall be conclusive absent manifest error). If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
(excluding interest thereon) shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request a Borrowing pursuant to which the Interest
Period requested with respect thereto would end after the Revolving Credit
Maturity Date.
(f) If the Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.22(e) within the time specified in such
Section, the Issuing Bank will promptly notify the Administrative Agent of the
L/C Disbursement and the Administrative Agent will promptly notify each
Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage
thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 2:00 p.m., New York
City time, on such date (or, if such Revolving Credit Lender shall have received
such notice later than 12:00 (noon), New York City time, on any day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day),
an amount equal to such Lender's Pro Rata Percentage of such L/C Disbursement
(it being understood that such amount shall be deemed to constitute an ABR
Revolving Loan of such Lender and such payment shall be deemed to have reduced
the L/C Exposure), and the Administrative Agent will promptly pay to the Issuing
Bank amounts so received by it from the Revolving Credit Lenders. The
Administrative Agent will promptly pay to the Issuing Bank any amounts received
by it from the Borrower pursuant to Section 2.22(e) prior to the time that any
Revolving Credit Lender makes any payment pursuant to this paragraph (f); any
such amounts received by the Administrative Agent thereafter will be promptly
remitted by the Administrative Agent to the Revolving Credit Lenders that shall
have made such payments and to the Issuing Bank, as their interests may appear.
If any Revolving Credit Lender shall not have made its Pro Rata Percentage of
such L/C Disbursement available to the Administrative Agent as provided above,
such Lender and the Borrower severally agree to pay interest on such amount, for
each day from and including the date such amount is required to be paid in
accordance with this paragraph to but excluding the date such amount is paid, to
the Administrative Agent for the account of the Issuing Bank at (i) in the case
of the Borrower, a rate per annum equal to the interest rate applicable to
Revolving Loans pursuant to Section 2.06(a) (in lieu of interest that would
otherwise become due to such Lender pursuant to Section 2.06), and (ii) in the
case of such Lender, for the first such day, the Federal Funds Effective Rate,
and for each day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a deemed Borrowing pursuant to Section 2.02(f), as to which this
Section 2.03 shall not apply), the Borrower shall hand deliver or telecopy to
the Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, on the Business Day of
a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be
signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a Tranche B
Term Borrowing, a Tranche C Term Borrowing or a Revolving Credit Borrowing, and
whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii)
the date of such Borrowing (which shall be a Business Day), (iii) the number and
location of the account to which funds are to be disbursed (which shall be an
account that complies with the requirements of Section 2.02(c)); (iv) the amount
of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing,
the
<PAGE> 28
23
Interest Period with respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.02. If no election as
to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall promptly advise the applicable Lenders of any notice
given pursuant to this Section 2.03 (and the contents thereof), and of each
Lender's portion of the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the principal amount of each Term Loan of such Lender as
provided in Section 2.11 and the then unpaid principal amount of each Revolving
Loan of such Lender on the Revolving Credit Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last day of March, June, September and
December in each year (beginning September 30, 1998) and on each date on which
any Commitment of such Lender shall expire or be terminated as provided herein,
a commitment fee (a "Commitment Fee") equal to the Applicable Percentage set
forth under the heading "Fee Percentage" in the definition of the term
"Applicable Percentage" per annum in effect from time to time on the average
daily unused amount of the Commitments of such Lender during the preceding
quarter (or other period commencing with the date hereof or ending with the
Revolving Credit Maturity Date or the date on which the Commitments of such
Lender shall expire or be terminated). All Commitment Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. The
Commitment Fee due to each Lender shall commence to accrue on the date hereof
and shall cease to accrue on the date on which the Commitment of such Lender
shall expire or be terminated as provided herein. For purposes of this Section
2.05, the unused amount of any Lender's Revolving Credit Commitment on any date
shall equal such Lender's Revolving Credit Commitment on such date minus such
Lender's Revolving Credit Exposure on such date.
<PAGE> 29
24
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, the administrative fees set forth in the Fee Letter at the times and in
the amounts specified therein (the "Administrative Agent Fees").
(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on the last day of March, June, September and
December of each year (beginning September 30, 1998) and on the date on which
the Revolving Credit Commitment of such Lender shall be terminated as provided
herein, a fee (an "L/C Participation Fee") calculated on such Lender's Pro Rata
Percentage of the average daily aggregate L/C Exposure (excluding the portion
thereof attributable to unreimbursed L/C Disbursements) during the preceding
quarter (or shorter period commencing with the date hereof or ending with the
Revolving Credit Maturity Date or the date on which all Letters of Credit have
been canceled or have expired and the Revolving Credit Commitments of all
Lenders shall have been terminated) at a rate equal to the Applicable Percentage
from time to time used to determine the interest rate on Revolving Credit
Borrowings comprised of Eurodollar Loans pursuant to Section 2.06, and (ii) to
the Issuing Bank with respect to each Letter of Credit the standard fronting,
issuance and drawing fees specified from time to time by the Issuing Bank (the
"Issuing Bank Fees"). All L/C Participation Fees and Issuing Bank Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the Issuing Bank. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Percentage
in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Percentage in effect from time to time.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount from the date of such default to but
excluding the date of actual payment (after as well as before judgment) (a) in
the case of overdue principal, at the rate otherwise applicable to such Loan
pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be, when determined by reference to
the Prime Rate and over a year of 360 days at all other times) equal to the sum
of the Alternate Base Rate plus 2.00% per annum.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined in good faith that dollar deposits in the principal
<PAGE> 30
25
amounts of the Loans comprising such Borrowing are not generally available in
the London interbank market, or that the rates at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to any Lender of
making or maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, but, in any
event, prior to the commencement of any Interest Period, give written or
telecopy notice of such determination to the Borrower and the Lenders. In the
event of any such determination, until the Administrative Agent shall have
advised the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, any request by the Borrower for a Eurodollar Borrowing
pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR
Borrowing. Each determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time,
on the Closing Date. The Revolving Credit Commitments and the L/C Commitment
shall automatically terminate on the Revolving Credit Maturity Date.
Notwithstanding the foregoing, all the Commitments shall automatically terminate
at 5:00 p.m., New York City time, on July 15, 1998, if the initial Credit Event
shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce, in
each case, without premium or penalty, either of the Term Loan Commitments or
the Revolving Credit Commitments; provided, however, that (i) each partial
reduction of either of the Term Loan Commitments or the Revolving Credit
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $5,000,000 and (ii) the Total Revolving Credit Commitment shall not be
reduced to an amount that is less than the Aggregate Revolving Credit Exposure
at the time.
(c) Each reduction in either of the Term Loan Commitments or the
Revolving Credit Commitments hereunder shall be made ratably among the Lenders
in accordance with their respective applicable Commitments. The Borrower shall
pay to the Administrative Agent for the account of the applicable Lenders, on
the date of each termination or reduction, the unpaid Commitment Fees on the
amount of the Commitments so terminated or reduced accrued to but excluding the
date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 11:00 a.m., New York City time, on the
Business Day of conversion, to convert any Eurodollar Borrowing into an ABR
Borrowing, (b) not later than 10:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 10:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
<PAGE> 31
26
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued and unpaid interest on any
Eurodollar Loan (or portion thereof) being converted shall be paid by
the Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the Borrower shall
pay, upon demand, any amounts due to the Lenders pursuant to Section
2.16;
(v) any portion of a Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a
Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than the applicable Term Loan Repayment
Date occurring on or after the first day of such Interest Period if,
after giving effect to such selection, the aggregate outstanding amount
of (A) the Eurodollar Term Borrowings comprised of Tranche B Term Loans
or Tranche C Term Loans, as applicable, with Interest Periods ending on
or prior to such Term Loan Repayment Date and (B) the ABR Term
Borrowings comprised of Tranche B Term Loans or Tranche C Term Loans,
as applicable, would not be at least equal to the principal amount of
Term Borrowings to be paid on such Term Loan Repayment Date;
(viii) upon notice to the Borrower from the Administrative Agent
given at the request of the Required Lenders, after the occurrence and
during the continuance of a Default or Event of Default, no outstanding
Loan may be converted into, or continued as, a Eurodollar Loan; and
(ix) without the consent of the Administrative Agent, the Borrower
shall not be entitled to request the conversion of any ABR Borrowing to
a Eurodollar Borrowing prior to July 1, 1998.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender's portion of any converted or
continued Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.10 to continue any Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) (i) The Borrower shall
pay to the Administrative Agent, for the account of the Lenders, on the dates
set forth below, or if any such date is not a Business Day, on the next
succeeding Business Day (each such date being a "Tranche B Term Loan Repayment
Date"), a principal amount of the Tranche B Term Loans (as adjusted from time to
time pursuant to Sections 2.11(b), 2.12 and 2.13(g)) equal to the amount set
forth below for such date,
<PAGE> 32
27
together in each case with accrued and unpaid interest on the principal amount
to be paid to but excluding the date of such payment:
Date Amount
---- ------
September 30, 1998 $250,000
December 31, 1998 250,000
March 31, 1999 250,000
June 30, 1999 250,000
September 30, 1999 250,000
December 31, 1999 250,000
March 31, 2000 250,000
June 30, 2000 250,000
September 30, 2000 250,000
December 31, 2000 250,000
March 31, 2001 250,000
June 30, 2001 250,000
September 30, 2001 250,000
December 31, 2001 250,000
March 31, 2002 250,000
June 30, 2002 250,000
September 30, 2002 250,000
December 31, 2002 250,000
March 31, 2003 250,000
June 30, 2003 250,000
September 30, 2003 5,000,000
December 31, 2003 5,000,000
March 31, 2004 5,000,000
June 30, 2004 5,000,000
September 30, 2004 18,750,000
December 31, 2004 18,750,000
March 31, 2005 18,750,000
June 30, 2005 18,750,000
September 30, 2005 25,000,000
December 31, 2005 25,000,000
March 31, 2006 25,000,000
Tranche B Maturity Date 25,000,000
(ii) The Borrower shall pay to the Administrative Agent, for the
account of the Lenders, on the dates set forth below or, if any such date is not
a Business Day, on the next succeeding Business Day (each such date being a
"Tranche C Term Loan Repayment Date"), a principal amount of the Tranche C Term
Loans (as adjusted from time to time pursuant to Sections 2.11(b), 2.12 and
2.13(g)) equal to the amount set forth below for such date, together in each
case with accrued and unpaid interest on the principal amount to be paid to but
excluding the date of such payment:
Date Amount
---- ------
September 30, 1998 $250,000
December 31, 1998 250,000
March 31, 1999 250,000
June 30, 1999 250,000
September 30, 1999 250,000
December 31, 1999 250,000
March 31, 2000 250,000
June 30, 2000 250,000
<PAGE> 33
28
September 30, 2000 250,000
December 31, 2000 250,000
March 31, 2001 250,000
June 30, 2001 250,000
September 30, 2001 250,000
December 31, 2001 250,000
March 31, 2002 250,000
June 30, 2002 250,000
September 30, 2002 250,000
December 31, 2002 250,000
March 31, 2003 250,000
June 30, 2003 250,000
September 30, 2003 250,000
December 31, 2003 250,000
March 31, 2004 250,000
June 30, 2004 250,000
September 30, 2004 250,000
December 31, 2004 250,000
March 31, 2005 250,000
June 30, 2005 250,000
September 30, 2005 250,000
December 31, 2005 250,000
March 31, 2006 250,000
June 30, 2006 250,000
September 30, 2006 56,750,000
December 31, 2006 56,750,000
March 31, 2007 56,750,000
Tranche C Maturity Date 56,750,000
(b) In the event and on each occasion that any Term Loan Commitments
shall be reduced or shall expire or terminate other than as a result of the
making of a Term Loan, the installments payable on each Term Loan Repayment Date
shall be reduced pro rata by an aggregate amount equal to the amount of such
reduction, expiration or termination.
(c) To the extent not previously paid, all Tranche B Term Loans and
Tranche C Term Loans shall be due and payable on the Tranche B Maturity Date and
Tranche C Maturity Date, respectively, together with accrued and unpaid interest
on the principal amount to be paid to but excluding the date of payment.
(d) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or in
part, upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) in the case
of Eurodollar Loans, or prior written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) on or prior to the date of
prepayment in the case of ABR Loans, to the Administrative Agent before 11:00
a.m., New York City time; provided, however, that each partial prepayment shall
be in an amount that is an integral multiple of $1,000,000 and not less than
$5,000,000.
(b) Optional prepayments of Term Loans shall be allocated pro rata
between the then-outstanding Tranche B Term Loans and Tranche C Term Loans and
applied, at the option of the Borrower, first, in chronological order to the
installments of principal scheduled to be paid within 12 months after such
prepayment and second, ratably against the remaining scheduled installments of
<PAGE> 34
29
principal due in respect of the Tranche B Term Loans and Tranche C Term Loans
under Sections 2.11(a)(i) and (ii), respectively.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.12 shall be subject to Section 2.16 but otherwise without premium or penalty.
All prepayments under this Section 2.12 shall be accompanied by accrued but
unpaid interest on the principal amount being prepaid to, but excluding, the
date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall repay or
prepay all its outstanding Revolving Credit Borrowings on the date of such
termination. In the event of any partial reduction of the Revolving Credit
Commitments, then (i) at or prior to the effective date of such reduction, the
Administrative Agent shall notify the Borrower and the Revolving Credit Lenders
of the Aggregate Revolving Credit Exposure after giving effect thereto and (ii)
if the Aggregate Revolving Credit Exposure would exceed the Total Revolving
Credit Commitment after giving effect to such reduction or termination, then the
Borrower shall, on the date of such reduction or termination, first repay or
prepay Revolving Credit Borrowings in an amount sufficient to eliminate such
excess and second, to the extent of any remaining excess (after the prepayment
of Revolving Loans), to replace outstanding Letters of Credit and/or deposit an
amount in cash in a cash collateral account established with the Collateral
Agent for the benefit of the Secured Parties.
(b) Not later than the third Business Day following the completion of
any Asset Sale, the Borrower shall apply 100% of the Net Cash Proceeds received
with respect thereto to prepay outstanding Term Loans in accordance with Section
2.13(g).
(c) In the event and on each occasion that an Equity Issuance occurs,
the Borrower shall, substantially simultaneously with (and in any event not
later than the third Business Day next following) the occurrence of such Equity
Issuance, apply 100% of the Net Cash Proceeds therefrom to prepay outstanding
Term Loans in accordance with Section 2.13(g).
(d) No later than the earlier of (i) 90 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ending on December
25, 1998, and (ii) the date on which the financial statements with respect to
such period are delivered pursuant to Section 5.04(a), the Borrower shall prepay
outstanding Term Loans in accordance with Section 2.13(g) in an aggregate
principal amount equal to 50% of Excess Cash Flow for the fiscal year (or, in
the case of the fiscal year ended December 25, 1998, the portion thereof
commencing on the Closing Date and ending on December 25, 1998) then ended.
(e) In the event that any Loan Party or any subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any subsidiary of a Loan
Party (other than Indebtedness for money borrowed permitted pursuant to Section
6.01), the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the receipt of such Net
Cash Proceeds by such Loan Party or such subsidiary, apply an amount equal to
100% of such Net Cash Proceeds to prepay outstanding Term Loans in accordance
with Section 2.13(g).
(f) In the event that there shall occur any Casualty or Condemnation
and, to the extent that pursuant to the applicable Mortgage or Fleet Mortgage,
the Casualty Proceeds (less any required Tax Distributions) or Condemnation
Proceeds (less any required Tax Distributions), as the case may be, are required
to be used to prepay the Term Loans, then the Borrower shall apply an amount
equal to 100% of such Casualty Proceeds or Condemnation Proceeds, as the case
may be, to prepay outstanding Term Loans in accordance with Section 2.13(g).
<PAGE> 35
30
(g) Mandatory prepayments of outstanding Term Loans under this
Agreement shall be allocated pro rata between the then-outstanding Tranche B
Term Loans and Tranche C Term Loans, and applied, first, in chronological order
to the installments of principal scheduled to be paid within 12 months after
such prepayment and second, pro rata against the remaining scheduled
installments of principal due in respect of Tranche B Term Loans and Tranche C
Term Loans under Sections 2.11(a)(i) and (ii), respectively.
(h) The Borrower shall deliver to the Administrative Agent, (i) at the
time of each prepayment required under this Section 2.13, a certificate signed
by a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject
to Section 2.16, but shall otherwise be without premium or penalty.
(i) Amounts to be applied pursuant to this Section 2.13 to the
prepayment of Term Loans and Revolving Loans shall be applied, as applicable,
first to reduce outstanding ABR Term Loans and ABR Revolving Loans. Any amounts
remaining after each such application shall, at the option of the Borrower, be
applied to prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as the
case may be, immediately and/or shall be deposited in the Prepayment Account (as
defined below). The Administrative Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans
and (ii) allocable to Revolving Loans to prepay Eurodollar Revolving Loans, in
each case on the last day of their respective Interest Periods (or, at the
direction of the Borrower, on any earlier date) until all outstanding Term Loans
or Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of this Agreement, the term "Prepayment Account" shall mean an account
established by the Borrower with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(i). The Administrative Agent will, at the request of the Borrower, invest
amounts on deposit in the Prepayment Account in Permitted Investments that
mature prior to the last day of the applicable Interest Periods of the
Eurodollar Term Borrowings or Eurodollar Revolving Borrowings to be prepaid, as
the case may be; provided, however, that (i) the Administrative Agent shall not
be required to make any investment that, in its sole judgment, would require or
cause the Administrative Agent to be in, or would result in any, violation of
any law, statute, rule or regulation and (ii) the Administrative Agent shall
have no obligation to invest amounts on deposit in the Prepayment Account if a
Default or Event of Default shall have occurred and be continuing. The Borrower
shall indemnify the Administrative Agent for any losses relating to the
investments so that the amount available to prepay Eurodollar Borrowings on the
last day of the applicable Interest Period is not less than the amount that
would have been available had no investments been made pursuant thereto. Other
than any interest earned on such investments, the Prepayment Account shall not
bear interest. Interest or profits, if any, on such investments shall be
deposited in the Prepayment Account and reinvested and disbursed as specified
above. If the maturity of the Loans has been accelerated pursuant to Article
VII, the Administrative Agent may, in its sole discretion, apply all amounts on
deposit in the Prepayment Account to satisfy any of the Obligations. The
Borrower hereby grants to the Administrative Agent, for its benefit and the
benefit of the Issuing Bank and the Lenders, a security interest in the
Prepayment Account to secure the Obligations.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
credit extended by any Lender or the Issuing Bank (except any such reserve
requirement which is reflected in the Adjusted LIBO Rate) or shall impose on
such Lender or the Issuing Bank or the London interbank market any other
condition affecting this
<PAGE> 36
31
Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein, and the result of any of the foregoing shall be to
increase the cost to such Lender or the Issuing Bank of making or maintaining
any Eurodollar Loan or increase the cost to any Lender of issuing or maintaining
any Letter of Credit or purchasing or maintaining a participation therein or to
reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender or the Issuing Bank to be material, then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, upon
demand such additional amount or amounts as will compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender's or
the Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's or the
Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's
holding company with respect to capital adequacy) by an amount reasonably deemed
by such Lender or the Issuing Bank to be material, then from time to time the
Borrower shall pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts reasonably determined by such Lender or Issuing Bank to be
necessary to compensate such Lender or the Issuing Bank or its holding company,
as applicable, as specified in paragraph (a) or (b) above shall be delivered to
the Borrower and shall be conclusive absent manifest error. The Borrower shall
pay such Lender or the Issuing Bank the amount shown as due on any such
certificate delivered by it within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation. The
protection of this Section shall be available to each Lender and the Issuing
Bank regardless of any possible contention of the invalidity or inapplicability
of the law, rule, regulation, agreement, guideline or other change or condition
that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing
<PAGE> 37
32
to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an
additional Interest Period) shall, as to such Lender only, be deemed a
request for an ABR Loan (or a request to continue an ABR Loan as such
for an additional Interest Period or to convert a Eurodollar Loan into
an ABR Loan, as the case may be), unless such declaration shall be
subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar Loans
made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section
2.15, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Term Loan Commitments or the Revolving Credit Commitments and
each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans). Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security
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or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Loan or Loans or L/C Disbursement as a result of which the unpaid
principal portion of its Tranche B Term Loans, Tranche C Term Loans, Revolving
Loans or participations in L/C Disbursements shall be proportionately less than
the unpaid principal portion of the Tranche B Term Loans, Tranche C Term Loans,
Revolving Loans or participations in L/C Disbursements of any other Lender, it
shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a
participation in the Tranche B Term Loans, Tranche C Term Loans, Revolving Loans
and L/C Exposure, as the case may be of such other Lender, so that the aggregate
unpaid principal amount of the Tranche B Term Loans, Tranche C Term Loans,
Revolving Loans and L/C Exposure and participations in Tranche B Term Loans,
Tranche C Term Loans, Revolving Loans and L/C Exposure held by each Lender shall
be in the same proportion to the aggregate unpaid principal amount of all
Tranche B Term Loans, Tranche C Term Loans, Revolving Loans and L/C Exposure
then outstanding as the principal amount of its Tranche B Term Loans, Tranche C
Term Loans, Revolving Loans and L/C Exposure prior to such exercise of banker's
lien, setoff or counterclaim or other event was to the principal amount of all
Tranche B Term Loans, Tranche C Term Loans, Revolving Loans and L/C Exposure
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The Borrower and
Holdings expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Term Loan or Revolving Loan or L/C
Disbursement deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower and Holdings to such Lender by reason thereof as fully as if
such Lender had made a Loan directly to the Borrower in the amount of such
participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 1:00 p.m., New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than Issuing Bank Fees, which shall be paid directly to the Issuing
Bank,) shall be made to the Administrative Agent at its offices at 270 Park
Avenue, New York, New York by wire transfer.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes, provided that, if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition (but without duplication), the Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.
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(c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Each Foreign Lender shall deliver to the Borrower (with a copy to
the Administrative Agent) two copies of either United States Internal Revenue
Service Form 1001 or Form 4224, or, in the case of a Foreign Lender claiming
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Foreign Lender
delivers a Form W-8, a certificate representing that such Foreign Lender is not
a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder of the Borrower (within the meaning of Section 871(h)(3)(B) of the
Code) and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Foreign Lender claiming complete exemption from, or
reduced rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement or any other Loan Document. Such forms shall be delivered by each
Foreign Lender on or before the date it becomes a party to this Agreement or
designates a new lending office. In addition, each Foreign Lender shall deliver
such forms promptly upon the obsolescence, expiration or invalidity of any form
previously delivered by such Foreign Lender. Notwithstanding any other provision
of this Section 2.20(e), a Foreign Lender shall not be required to deliver any
form pursuant to this Section 2.20(e) that such Foreign Lender is not legally
able to deliver.
(f) If the Administrative Agent, a Lender or the Issuing Bank
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower pursuant to
this Section 2.20, it shall pay over such refund to the Borrower (but only to
the extent of indemnity payments made by the Borrower under this Section 2.20
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender or the Issuing
Bank, as applicable, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower, upon the request of the Administrative Agent or such Lender
or the Issuing Bank, as applicable, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender or the
Issuing Bank in the event the Administrative Agent or such Lender or the Issuing
Bank is required to repay such refund to such Governmental Authority. Nothing
contained in this Section 2.20 shall require the Administrative Agent or any
Lender or the Issuing Bank to make available its tax returns (or any other
information relating to its taxes which it deems confidential) to the Borrower
or any other person.
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
the Issuing Bank delivers a notice described
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35
in Section 2.15 or (iii) the Borrower is required to pay any additional amount
to any Lender or the Issuing Bank or any Governmental Authority on account of
any Lender or the Issuing Bank pursuant to Section 2.20, the Borrower may, at
its sole expense and effort (including with respect to the processing and
recordation fee referred to in Section 9.04(b)) but with the reasonable
assistance of the Administrative Agent, upon notice to such Lender or the
Issuing Bank and the Administrative Agent, require such Lender or the Issuing
Bank to transfer and assign, without recourse (in accordance with and subject to
the restrictions contained in Section 9.04), all of its interests, rights and
obligations under this Agreement to an assignee that shall assume such assigned
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that (x) such assignment shall not conflict with any law,
rule or regulation or order of any court or other Governmental Authority having
jurisdiction, (y) the Borrower shall have received the prior written consent of
the Administrative Agent (and, if a Revolving Credit Commitment is being
assigned, of the Issuing Bank), which consent shall not unreasonably be
withheld, and (z) the Borrower or such assignee shall have paid to the affected
Lender or the Issuing Bank in immediately available funds an amount equal to the
sum of the principal of and interest accrued to the date of such payment on the
outstanding Loans or L/C Disbursements of such Lender or the Issuing Bank,
respectively, plus all Fees and other amounts accrued for the account of such
Lender or the Issuing Bank hereunder (including any amounts under Section 2.14
and Section 2.16); provided further that, if prior to any such transfer and
assignment the circumstances or event that resulted in such Lender's or the
Issuing Bank's claim for compensation under Section 2.14 or notice under Section
2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to
cause such Lender or the Issuing Bank to suffer increased costs or reductions in
amounts received or receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.15, or cease to result in amounts
being payable under Section 2.20, as the case may be (including as a result of
any action taken by such Lender or the Issuing Bank pursuant to paragraph (b)
below), or if such Lender or the Issuing Bank shall waive its right to claim
further compensation under Section 2.14 in respect of such circumstances or
event or shall withdraw its notice under Section 2.15 or shall waive its right
to further payments under Section 2.20 in respect of such circumstances or
event, as the case may be, then such Lender or the Issuing Bank shall not
thereafter be required to make any such transfer and assignment hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender or the
Issuing Bank in connection with any such filing or assignment, delegation and
transfer.
SECTION 2.22. Letters of Credit. (a) General. The Borrower may request
the issuance of a Letter of Credit for its own account or for the account of any
wholly owned Subsidiary, in a form reasonably acceptable to the Administrative
Agent and the Issuing Bank, at any time and from time to time while the
Revolving Credit Commitments remain in effect. This Section shall not be
construed to impose an obligation upon the Issuing Bank to issue any Letter of
Credit that is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall hand deliver
or telecopy to the Issuing Bank and the Administrative Agent
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36
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) below), the amount of
such Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare such Letter of Credit. A
Letter of Credit shall be issued, amended, renewed or extended only if, and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that, after giving effect to such
issuance, amendment, renewal or extension (i) the L/C Exposure shall not exceed
$25,000,000 and (ii) the Aggregate Revolving Credit Exposure shall not exceed
the Total Revolving Credit Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Revolving Credit Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date.
(d) Participations. By the issuance of a Letter of Credit and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Revolving Credit Lender, and each such Lender hereby
acquires from the applicable Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Pro Rata Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of the Issuing Bank, such Lender's
Pro Rata Percentage of each L/C Disbursement made by the Issuing Bank and not
reimbursed by the Borrower (or, if applicable, another party pursuant to its
obligations under any other Loan Document) forthwith on the date due as provided
in Section 2.02(f). Each Revolving Credit Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this paragraph in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrower shall pay to the Administrative
Agent an amount equal to such L/C Disbursement by 2:00 p.m. on the same Business
Day or, if the Borrower shall have received notice of such L/C Disbursement
later than 10:00 a.m., New York City time, on any Business Day or on a day which
is not a Business Day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other Affiliate thereof
or any other person may at any time have against the beneficiary under
any Letter of Credit, the Issuing Bank, the Administrative Agent or any
Lender or any other
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person, whether in connection with this Agreement, any other Loan
Document or any other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
the Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or wilful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) the Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute wilful
misconduct or gross negligence of the Issuing Bank.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telecopy, to the Administrative Agent
and the Borrower of such demand for payment and whether the Issuing Bank has
made or will make an L/C Disbursement thereunder, provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Revolving Credit Lenders with
respect to any such L/C Disbursement. The Administrative Agent shall promptly
give each Revolving Credit Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of the Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(f), at the rate per annum that would
apply to such amount if such amount were an ABR Revolving Loan.
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(i) Resignation or Removal of the Issuing Bank. The Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder, without affecting its rights and
obligations with respect to Letters of Credit previously issued by it. At the
time such removal or resignation shall become effective, the Borrower shall pay
all accrued and unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of
any appointment as the Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form satisfactory
to the Borrower and the Administrative Agent, and, from and after the effective
date of such agreement, (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the resignation or removal of the Issuing Bank
hereunder, the retiring Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement and the other Loan Documents with respect to Letters of Credit issued
by it prior to such resignation or removal, but shall not be required to issue
additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Letters of Credit) thereof and of the amount
to be deposited, deposit in an account with the Collateral Agent, for the
benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C
Exposure as of such date. Such deposit shall be held by the Collateral Agent as
collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse the Issuing Bank for L/C
Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the L/C
Exposure at such time and (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit), be applied
to satisfy the Obligations. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.
ARTICLE III
Representations and Warranties
Each of Holdings and the Borrower represents and warrants to the
Administrative Agent, the Collateral Agent, the Issuing Bank and each of the
Lenders that:
SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and
each of the Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the
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jurisdiction of its organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted, (c) is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be expected to result in a
Material Adverse Effect, and (d) has the power and authority to execute, deliver
and perform its obligations under each of the Loan Documents and each other
agreement or instrument contemplated hereby to which it is or will be a party
and, in the case of the Borrower, to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by
each Loan Party of each of the Loan Documents, the Recapitalization Documents
and the Senior Unsecured Debt Documents, to which it is or will be a party, the
consummation of the Transactions and, in the case of the Borrower, the
borrowings hereunder (a) have been duly authorized by all requisite corporate or
limited liability company action and (b) will not (i) violate (A) any provision
of law, statute, rule or regulation, or of the articles of organization or
operating agreement or other constitutive documents or by-laws of Holdings, the
Borrower or any Subsidiary, (B) any order of any Governmental Authority or (C)
any provision of any indenture, agreement or other instrument to which Holdings,
the Borrower or any Subsidiary is a party or by which any of them or any of
their property is or may be bound, (ii) be in conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a default
under, or give rise to any right to accelerate or to require the prepayment,
repurchase or redemption of any obligation under any such indenture, agreement
or other instrument or (iii) result in the creation or imposition of any Lien
upon or with respect to any property or assets now owned or hereafter acquired
by Holdings, the Borrower or any Subsidiary (other than any Lien created
hereunder or under the Security Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by Holdings and the Borrower and constitutes, and each other Loan
Document when executed and delivered by each Loan Party party thereto will
constitute, a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms, subject to the effects of
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and equitable principles of general
applicability (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of the Mortgages and the Fleet Mortgages, as the case
may be, and (c) such as have been made or obtained and are in full force and
effect.
SECTION 3.05. Financial Statements. (a) Each of the Borrower, National
Marine and VGI has heretofore furnished to the Lenders its consolidated balance
sheets and statements of income and changes in financial condition (i) as of and
for the fiscal year ended December 26, 1997 (in the case of the Borrower) and as
of and for the fiscal year ended December 31, 1997 (in the case of National
Marine and VGI), audited by and accompanied by the opinion of (x) Ernst & Young
LLP, independent public accountants in the case of the Borrower, and (y) Arthur
Andersen LLP, independent public accountants in the case of National Marine and
VGI, and (ii) as of and for the fiscal quarter and the portion of the fiscal
year ended March 27, 1998 (in the case of the Borrower) and as of and for the
fiscal quarter and the portion of the fiscal year ended March 31, 1998 (in the
case of National Marine and VGI), certified by their respective chief financial
officers. Such financial statements present fairly the financial condition and
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries or National Marine and its consolidated subsidiaries, as the case
may be, as of such dates and for such periods. Such balance sheets and the notes
thereto disclose all material liabilities, direct or contingent, of the Borrower
and its consolidated Subsidiaries or National Marine and its consolidated
subsidiaries, as the case may be, as of the dates thereof. Such financial
statements were prepared in accordance with GAAP applied on a consistent basis.
<PAGE> 45
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(b) The Borrower has heretofore delivered to the Lenders its unaudited
pro forma consolidated balance sheet and related statements of operations and
members' equity interest as of and for the twelve month period ended March 27,
1998, prepared giving effect to the Transactions as if they had occurred on such
date (in the case of the unaudited pro forma consolidated balance sheet) and as
of the beginning of such period (in the case of the related statements of
operations and members' equity interest). Such pro forma financial statements
have been prepared in good faith by the Borrower, based on the assumptions used
to prepare the pro forma financial information contained in the Confidential
Information Memorandum (which assumptions are believed in good faith by the
Borrower on the date hereof and on the Closing Date to be reasonable), are based
on the best information available to the Borrower as of the date of delivery
thereof, accurately reflect all adjustments required to be made to give effect
to the Transactions and present fairly on a pro forma basis the estimated
consolidated financial position of the Borrower and its consolidated
Subsidiaries as of such date, assuming that the Transactions had actually
occurred at such date.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, condition (financial or
otherwise), contingent liabilities, prospects or material agreements of
Holdings, the Borrower and the Subsidiaries, taken as a whole, since December
31, 1997.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of
Holdings, the Borrower and the Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets (including
all Mortgaged Property), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02. Without limiting the generality of the foregoing,
except as set forth on Schedule 3.07(a) each of the Vessels has been duly
documented under the laws of the United States in the name of the Borrower or
the Subsidiary listed on Schedule 3.20(c) as the owner thereof, and no other
action is necessary to establish and perfect such entities' title to and
interest in such Vessels.
(b) Each of Holdings, the Borrower and the Subsidiaries is in
compliance with all obligations under all material leases to which it is a party
and all such leases are in full force and effect. Each of Holdings, the Borrower
and the Subsidiaries enjoys peaceful and undisturbed possession under all such
material leases.
(c) Except as set forth on Schedule 3.07(c), neither Holdings nor the
Borrower has received any notice of, nor has any knowledge of, any pending or
contemplated condemnation proceeding materially and adversely affecting the
Mortgaged Properties or any sale or disposition thereof in lieu of condemnation.
(d) Except as set forth on Schedule 3.07(d), none of Holdings, the
Borrower or any of the Subsidiaries is obligated under any right of first
refusal, option or other contractual right to sell, assign or otherwise dispose
of any Mortgaged Property or any interest therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of
Holdings or the Borrower therein. The shares of capital stock or other ownership
interests so indicated on Schedule 3.08 are fully paid and non-assessable and
are owned by Holdings or the Borrower, directly or indirectly, free and clear of
all Liens (other than Liens in favor of the Collateral Agent, created under the
Security Documents) or as set forth on Schedule 3.08. Holdings owns 100% of the
issued and outstanding equity membership interests of the Borrower, free and
clear of all Liens (other than Liens in favor of the Collateral Agent, created
under the Security Documents).
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth
on Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental
<PAGE> 46
41
Authority now pending or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings or the Borrower or any Subsidiary or
any business, property or rights of any such person (i) that involve any Loan
Document or the Transactions or (ii) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(b) None of Holdings, the Borrower or any of the Subsidiaries or any of
their respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting the Mortgaged Property, or is in
default with respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, in each case, where such violation or default could
reasonably be expected to result in a Material Adverse Effect.
(c) Except as set forth on Schedule 3.09, certificates of occupancy and
permits to the extent required by law are in effect for each Mortgaged Property
as currently constructed, and true and complete copies of such certificates of
occupancy have been delivered to the Collateral Agent as mortgagee with respect
to each Mortgaged Property.
SECTION 3.10. Agreements. (a) None of Holdings, the Borrower or any of
the Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) None of Holdings, the Borrower or any of the Subsidiaries is in
default in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of Holdings, the
Borrower or any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation U or
X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. None of Holdings, the Borrower or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of Holdings, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal income tax returns and
all material Federal non-income, material state, material local and material
foreign tax returns or materials required to have been filed by it and has paid
or caused to be paid all taxes shown on such returns to be due and payable by it
and all assessments received by it, except taxes that are being contested in
good faith by appropriate proceedings and for which Holdings, the Borrower or
such Subsidiary, as applicable, shall have set aside on its books adequate
reserves.
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SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of Holdings or the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were, are or
will be made, not misleading, provided that to the extent any such information,
report, financial statement, exhibit or schedule was based upon or constitutes a
forecast or projection, each of Holdings and the Borrower represents only that
it acted in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.16. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under all Plans in the aggregate (based on the assumptions
used for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $5,000,000 the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$5,000,000 the fair market value of the assets of all such underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17:
(a) The properties owned or operated by Holdings, the Borrower and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last six years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect;
(c) There have been no Releases or threatened Releases at, from, under
or proximate to the Properties or otherwise in connection with the operations of
the Borrower or the Subsidiaries, which Releases or threatened Releases, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(d) None of Holdings, the Borrower or any of the Subsidiaries has
received any written notice of an Environmental Claim in connection with the
Properties or the operations of the Borrower or the Subsidiaries or with regard
to any person whose liabilities for environmental matters Holdings, the Borrower
or the Subsidiaries has retained or assumed, in whole or in part, contractually,
by operation of law or otherwise, which, in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, nor do Holdings, the Borrower
or the Subsidiaries have reason to believe that any such notice will be received
or is being threatened; and
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of at,
on or under any of the Properties in a manner that could give rise to liability
under any Environmental Law, nor have the Borrower or the Subsidiaries retained
or assumed any liability, contractually, by operation of law or otherwise, with
<PAGE> 48
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respect to the generation, treatment, storage or disposal of Hazardous
Materials, which transportation, generation, treatment, storage or disposal, or
retained or assumed liabilities, in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the date hereof and the Closing Date. As of
each such date, such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent and for so long as the Collateral Agent
continues to hold such Collateral, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as defined in the Security Agreement), in
each case prior and superior in right to any other person, other than with
respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the registered
Intellectual Property (as defined in the Security Agreement), in each case prior
and superior in right to any other person (it being understood that subsequent
recordings in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the grantors after
the date hereof).
(d) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and to
the Mortgaged Property thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Mortgaged Property and the
proceeds thereof, in each case prior and superior in right to any other person,
other than with respect to the rights of persons pursuant to Liens expressly
permitted by Section 6.02.
(e) The Fleet Mortgages are effective to create a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and to
the Vessels specified therein, and when the Fleet Mortgages are recorded in the
National Vessel Documentation Center of the U.S. Coast Guard, the Fleet
Mortgages shall constitute a first preferred fleet mortgage and a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Vessels and the proceeds thereof, in each case prior
and superior in right to any other person, other than with respect to the rights
of persons pursuant to Liens expressly permitted by Section 6.02.
(f) The Assignments of Insurances are effective to create in favor of
the Collateral Agent for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the
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Insurances and the Requisition Compensation (each as defined in the Assignments
of Insurances) and, when notices of assignment in appropriate form are given, in
respect of Insurances, to all brokers, insurance companies and underwriters with
or through whom any policies or entries relating to the Insurances or any part
thereof are effected, and, in respect of Requisition Compensation, a notice of
assignment thereof is given to each person from whom any Requisition
Compensation may be due, the Assignments of Insurances shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the grantors thereunder in such Insurances or Requisition Compensation (as the
case may be), in each case prior and superior in right to any other person.
SECTION 3.20. Location of Real Property and Leased Premises and List of
Towboats, Drydocks and Barges. (a) Schedule 3.20(a) lists completely and
correctly as of the Closing Date all real property owned by the Loan Parties and
the addresses thereof, other than certain real property of de minimis value. The
Loan Parties own in fee all the real property set forth on Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the Closing
Date all real property leased by the Loan Parties and the addresses thereof,
other than certain real property of de minimis value. The Loan Parties have
valid leases in all the real property set forth on Schedule 3.20(b).
(c) Schedule 3.20(a) and 3.20(c) list completely and correctly as of
the Closing Date all towboats, drydocks and barges owned by the Loan Parties.
SECTION 3.21. Labor Matters. Except as set forth on Schedule 3.21, as
of the date hereof and the Closing Date, there are no strikes, lockouts or
slowdowns against Holdings, the Borrower or any Subsidiary pending or, to the
knowledge of Holdings or the Borrower, threatened. The hours worked by and
payments made to employees of Holdings, the Borrower and the Subsidiaries have
not been in material violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters. All
payments due from Holdings, the Borrower or any Subsidiary, or for which any
claim may be made against Holdings, the Borrower or any Subsidiary, on account
of wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Holdings, the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Holdings, the Borrower or any
Subsidiary is bound.
SECTION 3.22. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan made on the Closing Date and after giving effect to the application
of the proceeds of such Loans, (a) the fair value of the assets of each Loan
Party, at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
each Loan Party will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(c) each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Closing Date.
SECTION 3.23. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the Borrower's
computer systems and (b) equipment containing embedded microchips (including
systems and equipment supplied by others) and the testing of all such systems
and equipment, as so reprogrammed, is expected in good faith to be completed by
June 30, 1999. The cost to the Borrower of such reprogramming and testing and of
the reasonably foreseeable consequences of year 2000 to the Borrower (including
reprogramming errors and the failure of others' systems or equipment) could not
reasonably be expected to result in an Event of Default or a Material Adverse
Effect. Except for such of the reprogramming referred to in the preceding
sentence as may be necessary, the computer and management information systems of
the Borrower and its Subsidiaries
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are and, with ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient to permit the Borrower to conduct is
business without Material Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing,
including on the date of each issuance, amendment, extension or renewal of a
Letter of Credit (each such event being called a "Credit Event"), but excluding
any conversion or continuation of a Borrowing in accordance with Section 2.10:
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance,
amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance,
amendment, extension or renewal of such Letter of Credit as required by Section
2.22(b).
(b) The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of such
Credit Event with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an earlier
date.
(c) No Event of Default or Default shall have occurred and be
continuing.
Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower and Holdings on the date of such Credit Event as to the
matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Bank, a favorable written opinion
of (i) Kirkland & Ellis, counsel for Holdings and the Borrower,
substantially to the effect set forth in Exhibit J-1 and (ii) each
local or special counsel listed on Schedule 4.02(a), substantially to
the effect set forth in Exhibits J-2 and J-3, in each case (A) dated
the Closing Date, (B) addressed to the Issuing Bank, the Administrative
Agent and the Lenders, and (C) covering such other matters relating to
the Loan Documents and the Transactions as the Administrative Agent
shall reasonably request, and Holdings and the Borrower hereby request
such counsel to deliver such opinions.
(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be reasonably satisfactory to the Lenders, to the
Issuing Bank and to Cravath, Swaine & Moore, counsel for the
Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of
the articles of organization, including all amendments thereto, of each
Loan Party, certified as of a recent date by the Secretary of State of
the state of its organization, and a certificate as to the good
standing of each Loan Party as of a recent date, from such Secretary of
State; (ii) a certificate of the Secretary or Assistant Secretary of
each Loan Party dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the operating agreement and
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by-laws, if any, of such Loan Party as in effect on the Closing Date
and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the board of directors or
analogous body of such Loan Party authorizing the execution, delivery
and performance of the Loan Documents to which such person is a party
and, in the case of the Borrower, the borrowings hereunder, and that
such resolutions have not been modified, rescinded or amended and are
in full force and effect, (C) that the articles of organization or
operating agreement, as the case may be, of such Loan Party have not
been amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above,
and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party; (iii) a certificate
of another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to
(ii) above; and (iv) such other documents as the Lenders, the Issuing
Bank or Cravath, Swaine & Moore, counsel for the Administrative Agent,
may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of the Borrower, confirming compliance with the conditions precedent
set forth in paragraphs (b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in
full force and effect, and all the outstanding Capital Stock of the
Borrower and the Subsidiaries shall have been duly and validly pledged
thereunder to the Collateral Agent for the ratable benefit of the
Secured Parties and certificates representing such Capital Stock,
accompanied by instruments of transfer and stock powers endorsed in
blank, shall be in the actual possession of the Collateral Agent,
provided that (i) neither the Borrower nor any Domestic Subsidiary
shall be required to pledge more than 65% of the Voting Stock of any
Foreign Subsidiary (or any of the Capital Stock of either Non-Pledged
Foreign Subsidiary) and (ii) no Foreign Subsidiary shall be required to
pledge any of its assets, including, without limitation, the Capital
Stock of any of its Foreign Subsidiaries.
(g) The Security Agreement shall have been duly executed by
the Loan Parties party thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date and
each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest
in and lien on the Collateral (subject to any Lien expressly permitted
by Section 6.02) described in such agreement shall have been delivered
to the Collateral Agent.
(h) The Collateral Agent shall have received the results of a
search of the Uniform Commercial Code (or equivalent filings) filings
made with respect to the Loan Parties in the states (or other
jurisdictions) in which the chief executive office of each such person
is located, any offices of such persons in which records have been kept
relating to Accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made pursuant
to the preceding paragraph, together with copies of the financing
statements (or similar documents) disclosed by such search, and
accompanied by evidence satisfactory to the Collateral Agent that the
Liens indicated in any such financing statement (or similar document)
would be permitted under Section 6.02 or have been released.
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(i) The Collateral Agent shall have received a Perfection
Certificate with respect to the Loan Parties dated the Closing Date and
duly executed by a Responsible Officer of the Borrower.
(j)(i) Each of the Security Documents, in form and substance
satisfactory to the Lenders, relating to each of the Mortgaged
Properties shall have been duly executed by the parties thereto and
delivered to the Collateral Agent and shall be in full force and
effect, (ii) each of such Mortgaged Properties shall not be subject to
any Lien other than those permitted under Section 6.02, (iii) each of
such Security Documents shall have been filed and (other than the Fleet
Mortgages) recorded in the recording office as specified on Schedule
3.19(d) (or a lender's title insurance commitment, in form and
substance reasonably acceptable to the Collateral Agent, insuring such
Security Document as a first lien on such Mortgaged Property (subject
to any Lien permitted by Section 6.02) shall have been received by the
Collateral Agent) or in the case of the Fleet Mortgages, with the
National Vessel Documentation Center of the United States Coast Guard
and, in connection therewith, the Collateral Agent shall have received
evidence satisfactory to it of each such filing and recordation and
(iv) the Collateral Agent shall have received such other documents,
including, in the case of real property, a commitment for a policy or
policies of title insurance issued by a nationally recognized title
insurance company, together with such endorsements, coinsurance and
reinsurance as may be reasonably requested by the Collateral Agent and
the Lenders, insuring the Mortgages as valid first liens on the
Mortgaged Properties, free of Liens other than those permitted under
Section 6.02, together with such surveys, abstracts, appraisals and
legal opinions required to be furnished pursuant to the terms of the
Mortgages or as reasonably requested by the Collateral Agent or the
Lenders.
(k) Each of the Parent Guarantee Agreement and the Subsidiary
Guarantee Agreement shall have been duly executed by the parties
thereto, shall have been delivered to the Collateral Agent and shall be
in full force and effect.
(l) The Indemnity, Subrogation and Contribution Agreement
shall have been duly executed by the parties thereto, shall have been
delivered to the Collateral Agent and shall be in full force and
effect.
(m) The LLC Agreement shall have been duly executed by the
parties thereto, shall have been delivered to the Collateral Agent and
shall be in full force and effect.
(n) The Administrative Agent shall have received a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents,
each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement and to name
the Collateral Agent as additional insured, in form and substance
reasonably satisfactory to the Administrative Agent.
(o) The Administrative Agent shall have received an
environmental assessment report in form, scope and substance reasonably
satisfactory to the Lenders, from Strata Environmental, as to any
environmental hazards, liabilities or Remedial Action to which the
Borrower or any of the Subsidiaries may be subject and the Lenders
shall be reasonably satisfied with the nature and cost of any such
hazards, liabilities or Remedial Action and with the Borrower's plans
with respect thereto.
(p) None of the Recapitalization Documents and the other
applicable agreements relating to the Transactions shall have been
amended, waived or otherwise modified in any material respect adverse
to the Lenders, the Collateral Agent or the Administrative Agent
without the approval of the Required Lenders, which approval shall not
be unreasonably withheld. The Transactions shall have been consummated
or shall be consummated
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48
simultaneously with the initial Credit Event in accordance with the
terms and conditions of the Recapitalization Documents and applicable
law.
(q) The Lenders shall be reasonably satisfied with (i) the
organizational and capital structure of Holdings and its subsidiaries
and (ii) all legal, tax and accounting matters relating to the
Transactions. The aggregate amount of fees and expenses (including
underwriting discounts and commissions) payable or otherwise borne by
Holdings, the Borrower and its Subsidiaries in connection with the
Transactions shall not exceed $25,000,000.
(r) The Borrower shall have received at least $300,000,000 in
gross cash proceeds from the issuance of the Senior Unsecured Notes in
a public offering or an offering made pursuant to the terms and
conditions of Rule 144A of the Securities Act of 1933, as in effect on
the date hereof. The terms and conditions of the Senior Unsecured Debt
Documents (including, without limitation, the interest rate, maturity,
priority provisions, covenants and events of default) shall be
reasonably satisfactory in all material respects to the Lenders.
(s) Holdings shall have received at least $60,000,000 in gross
cash proceeds from the Equity Contribution and shall have applied the
same as provided in the Recapitalization Documents. The terms and
conditions of the Senior Preferred Interests (including the "change in
control put" provisions thereof) and Holdings' other equity membership
interests shall be reasonably satisfactory in all respects to the
Administrative Agent.
(t) The Lenders shall have received (i) financial projections
for a period of ten years following the Closing Date, as prepared by
management of the Borrower, reflecting the Transactions and the other
transactions contemplated hereby and including the written assumptions
on which such projections were based, in each case in form and
substance reasonably satisfactory to the Administrative Agent, (ii)
audited financial statements for the 1995, 1996 and 1997 fiscal years
of each of the Borrower, NBL and National Marine, which financial
statements shall not be materially inconsistent with the forecasts for
such years previously provided to the Lenders, and (iii) pro forma
consolidated financial statements of the Borrower as of March 27, 1998
and for the twelve month period then ended, after giving effect to the
Transactions and the consummation of the other transactions
contemplated hereby, which shall not be materially inconsistent with
the projections previously provided to the Lenders.
(u) After giving effect to the Transactions and the other
transactions contemplated hereby, Holdings and its subsidiaries shall
have outstanding no Indebtedness, preferred stock or preferred
membership interests other than (i) Indebtedness incurred under the
Loan Documents, (ii) the Senior Unsecured Notes, (iii) the Junior
Preferred Interests, (iv) the Senior Preferred Interests and (v) other
Indebtedness permitted under Section 6.01(a).
(v) The Lenders shall have received appraisals, satisfactory
in form and substance to the Administrative Agent, with respect to the
fleet of barges, towboats and other marine equipment owned by the
Borrower or its subsidiaries, as the Administrative Agent shall
reasonably request.
(w) The Lenders shall have received a solvency letter from
Houlihan Lokey Howard & Zukin, in form and substance reasonably
satisfactory to the Lenders, as to the solvency of Holdings and its
subsidiaries on a consolidated basis after giving effect to the
Transactions and the consummation of the other transactions
contemplated hereby.
(x) All requisite Governmental Authorities and third parties
shall have approved or consented to the Transactions and the other
transactions contemplated hereby to the extent required, all applicable
appeal periods shall have expired and there shall be no governmental or
judicial action, actual or threatened, that has a reasonable likelihood
of restraining,
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49
preventing or imposing materially burdensome conditions on the
Transactions or the other transactions contemplated hereby.
(y) The Assignments of Insurances shall have been duly
executed by the Loan Parties party thereto and shall have been
delivered to the Collateral Agent and shall be in full force and
effect, and each notice of assignment required by law to be given to
brokers, insurance companies and underwriters with or through whom any
policies relating to the Insurances described in such assignments or
any part thereof have been effected in order to create in favor of the
Collateral Agent for the benefit of the Secured Parties valid, legal
and perfected first-priority security interests in and liens on the
Insurances (subject to Liens, if any, expressly permitted by Section
6.02(b)), shall have been given.
ARTICLE V
Affirmative Covenants
Each of Holdings and the Borrower covenants and agrees with each Lender
that until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other expenses or amounts then due and
payable under any Loan Document (other than wholly contingent indemnification
obligations) shall have been paid in full and all Letters of Credit have been
canceled or have expired and all amounts drawn thereunder have been reimbursed
in full or cash collateralized to the satisfaction of the Administrative Agent
and the Issuing Bank, unless the Required Lenders shall otherwise consent in
writing, each of Holdings and the Borrower will, and will cause each of the
Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect in all material respects the
rights, licenses, permits, franchises, authorizations, patents, copyrights,
trademarks and trade names material to the conduct of its consolidated business;
maintain and operate such business in substantially the manner in which it is
presently conducted and operated; comply in all material respects with all
applicable laws, rules, regulations (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Mortgaged Properties) and
decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted, except where such non-compliance could not reasonably be
expected to result in a Material Adverse Effect; and, except in the case of
sales of assets permitted pursuant to Section 6.05 or a Casualty or
Condemnation, at all times maintain and preserve all property material to the
conduct of such business and keep in all material respects such property in good
repair, working order and condition, normal wear and tear excepted, and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 5.02. Insurance. In the case of the Borrower and each
Subsidiary:
(a) Keep its insurable properties adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance, to such
extent and against such risks, including fire and other risks insured against by
extended coverage, in each case as is customary with companies in the same or
similar businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or
<PAGE> 55
50
in connection with the use of any properties owned, occupied or controlled by
it; and maintain such other insurance as may be required by law.
(b) Cause all such policies to be endorsed or otherwise amended to
include a "standard" or "New York" lender's loss payable endorsement, in form
and substance satisfactory to the Administrative Agent and the Collateral Agent,
which endorsement shall provide that, from and after the Closing Date, if the
insurance carrier shall have received written notice from the Administrative
Agent or the Collateral Agent of the occurrence of an Event of Default, the
insurance carrier shall, during the continuance of such Event of Default pay all
proceeds otherwise payable to the Borrower or the Loan Parties under such
policies directly to the Collateral Agent; cause all such policies to provide
that neither the Borrower, the Administrative Agent, the Collateral Agent nor
any other party shall be a coinsurer thereunder and to contain a "Replacement
Cost Endorsement", without any deduction for depreciation, and such other
provisions as the Administrative Agent or the Collateral Agent may reasonably
require from time to time to protect their interests; deliver original or
certified copies of all such policies to the Collateral Agent; cause each such
policy to provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium upon not less than 10 days' prior written notice
thereof by the insurer to the Administrative Agent and the Collateral Agent
(giving the Administrative Agent and the Collateral Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason upon not less
than 30 days' prior written notice thereof by the insurer to the Administrative
Agent and the Collateral Agent; deliver to the Administrative Agent and the
Collateral Agent, prior to the cancelation, modification or nonrenewal of any
such policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Administrative Agent
and the Collateral Agent) together with evidence satisfactory to the
Administrative Agent and the Collateral Agent of payment of the premium
therefor.
(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time require, and otherwise comply with the National Flood Insurance Program
as set forth in the Flood Disaster Protection Act of 1973, as it may be amended
from time to time, or (ii) a "Zone 1" area, obtain earthquake insurance in such
total amount as the Administrative Agent, the Collateral Agent or the Required
Lenders may from time to time reasonably require.
(d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than $25,000,000, naming the Collateral Agent as
an additional insured, on forms satisfactory to the Collateral Agent.
(e) Notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section 5.02
is taken out by the Borrower; and promptly deliver to the Administrative Agent
and the Collateral Agent a duplicate original copy of such policy or policies.
(f) Without limiting the generality of the foregoing, keep the Vessels
insured in accordance with the insurance requirements of the Fleet Mortgages.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien (other than any Lien permitted under Section 6.02) upon such
properties or any part thereof; provided, however, that such
<PAGE> 56
51
payment and discharge shall not be required with respect to any such tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and,
in the case of a Mortgaged Property, there is no risk of forfeiture of such
property.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of operations,
members' equity interest and cash flows showing the financial condition
of the Borrower and its consolidated Subsidiaries as of the close of
such fiscal year and the results of its operations and the operations
of such Subsidiaries during such year, all audited by Coopers & Lybrand
L.L.P. or other independent public accountants of recognized national
standing reasonably acceptable to the Required Lenders and accompanied
by an opinion of such accountants (which shall not be qualified in any
material respect) to the effect that such consolidated financial
statements fairly present the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheet and
related statements of operations, members' equity interest and cash
flows showing the financial condition of the Borrower and its
consolidated Subsidiaries as of the close of such fiscal quarter and
the results of its operations and the operations of such Subsidiaries
during such fiscal quarter and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly
presenting in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements
under sub-paragraph (a) or (b) above, a letter of the accounting firm
or certificate of the Financial Officer reporting on or certifying such
statements (which letter, when furnished by an accounting firm, may be
limited to accounting matters and disclaim responsibility for legal
interpretations) (i) reporting that they are unaware that any Event of
Default has occurred, in the case of the accounting firm, or certifying
that no Event of Default or Default has occurred, in the case of the
Financial Officer or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto and (ii)
setting forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the covenants
contained in Sections 6.10, 6.11 and 6.12;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national
securities exchange, or distributed to its shareholders, as the case
may be;
(e) prior to the beginning of each fiscal year, a copy of the
budget for its consolidated balance sheet and related statements of
income and cash flows for each quarter of such fiscal year; and
(f) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
Holdings, the Borrower or any Subsidiary, or
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compliance with the terms of any Loan Document, as the Administrative
Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Issuing Bank and each Lender prompt written notice of
the following:
(a) the occurrence of any Event of Default or Default,
specifying the nature and extent thereof and the corrective action (if
any) taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any written threat or
notice of intention of any person to file or commence, any action, suit
or proceeding, whether at law or in equity or by or before any
Governmental Authority, against Holdings or any of its Subsidiaries
that could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries in
an aggregate amount exceeding $1,000,000; and
(d) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
SECTION 5.06. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the properties of Holdings, the Borrower
or any Subsidiary at reasonable times and upon reasonable notice and as often as
reasonably requested, but in no event more than four times per fiscal year
unless an Event of Default shall have occurred and be continuing, and to make
extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of Holdings, the Borrower or any Subsidiary
with the officers thereof and independent accountants therefor; provided,
however, that, unless a Default or Event of Default shall have occurred and be
continuing, in no event shall the Administrative Agent or any Lender or any of
their respective designees contact any customer or supplier of the Borrower or
any Subsidiary regarding this Agreement and the Indebtedness hereunder without
the prior consent of the Borrower.
SECTION 5.07. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.08. Compliance with Environmental Laws. Except for any
non-compliance that could not reasonably be expected to result in a Material
Adverse Effect, comply, and use reasonable efforts to cause all lessees and
other persons occupying its Properties to comply, in all material respects with
all Environmental Laws and Environmental Permits applicable to its operations
and Properties; obtain and renew all material Environmental Permits necessary
for its operations and Properties; and conduct any Remedial Action in accordance
with Environmental Laws; provided, however, that none of Holdings, the Borrower
or any of the Subsidiaries shall be required to undertake any Remedial Action to
the extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect to
such circumstances.
SECTION 5.09. Preparation of Environmental Reports. If a Default caused
by reason of a breach of Section 3.17 or 5.08 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days (or such longer period as is
reasonably required in the circumstances) after such request, at the expense of
the
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Borrower, an environmental site assessment report with respect to the subject
matter of such breach prepared by an environmental consulting firm reasonably
acceptable to the Administrative Agent indicating, where appropriate under the
circumstances, the estimated cost of any compliance or Remedial Action in
connection with such breach.
SECTION 5.10. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. The Borrower will cause any
subsequently acquired or organized Domestic Subsidiary to execute a Subsidiary
Guarantee Agreement, Indemnity Subrogation and Contribution Agreement and each
applicable Security Document in favor of the Collateral Agent, provided that no
such Domestic Subsidiary shall be required to pledge more than 65% of the Voting
Stock of any Foreign Subsidiary or any of the Capital Stock of either
Non-Pledged Foreign Subsidiary. In addition, from time to time, the Borrower
will, at its cost and expense, promptly secure the Obligations by pledging or
creating, or causing to be pledged or created, perfected security interests with
respect to such of its assets and properties as the Administrative Agent or the
Required Lenders shall designate (it being understood that it is the intent of
the parties that the Obligations shall be secured by, among other things,
substantially all the assets of the Borrower (including real and other
properties acquired subsequent to the Closing Date)), provided that the Borrower
shall not be required to pledge more than 65% of the Voting Stock of any Foreign
Subsidiary or any of the Capital Stock of either Non-Pledged Foreign Subsidiary.
Such security interests and Liens will be created under the Security Documents
and other security agreements, mortgages, deeds of trust and other instruments
and documents in form and substance satisfactory to the Collateral Agent, and
the Borrower shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, title insurance policies
and lien searches) as the Collateral Agent shall reasonably request to evidence
compliance with this Section. The Borrower agrees to provide such evidence as
the Collateral Agent shall reasonably request as to the perfection and priority
status of each such security interest and Lien.
ARTICLE VI
Negative Covenants
Each of Holdings and the Borrower covenants and agrees with each Lender
that until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other expenses or amounts then due and
payable under any Loan Document (other than wholly contingent indemnification
obligations) have been paid in full and all Letters of Credit have been canceled
or have expired and all amounts drawn thereunder have been reimbursed in full or
cash collateralized to the satisfaction of the Administrative Agent and the
Issuing Bank, unless the Required Lenders shall otherwise consent in writing,
neither Holdings nor the Borrower will, nor will they cause or permit any of the
Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date
hereof and set forth in Schedule 6.01;
(b) Indebtedness created hereunder and under the other Loan
Documents;
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(c) the Senior Unsecured Notes and the Guarantees thereof (or
the notes exchanged therefor pursuant to and in accordance with the
Senior Unsecured Debt Documents);
(d) Indebtedness consisting of purchase money Indebtedness or
Capital Lease Obligations incurred in the ordinary course of business
after the Closing Date to finance or refinance Consolidated Capital
Expenditures, provided that (A) a description of the assets financed
thereby shall have been furnished to the Administrative Agent for any
assets for which the purchase price is greater than $750,000, (B) the
aggregate principal amount of any Indebtedness or Capital Lease
Obligations incurred pursuant to this paragraph (d) outstanding at any
time shall not exceed $25,000,000 and (C) the sum of the aggregate
principal amount of all Indebtedness or Capital Lease Obligations
incurred by Foreign Subsidiaries pursuant to this paragraph (d) and
unsecured Indebtedness incurred by Foreign Subsidiaries pursuant to
paragraph (l) below and, in each case outstanding at any time, shall
not exceed $25,000,000;
(e) intercompany loans and advances permitted by Section
6.04(c) and Section 6.04(l);
(f) Indebtedness of the Borrower or any Subsidiary to
Holdings, provided that such Indebtedness (A) is subordinated to the
prior payment in full of the Obligations on terms satisfactory to the
Administrative Agent and (B) is evidenced by an intercompany note
pledged by Holdings to the Collateral Agent pursuant to the Pledge
Agreement for the benefit of the Secured Parties;
(g) ordinary course Interest Rate Protection Agreements and
ordinary course, non-speculative foreign exchange and commodity
protection agreements;
(h) Indebtedness arising out of judgments or awards (other
than any judgment that is described in clause (i) of Article VII and
constitutes a Default or Event of Default thereunder) in respect of
which the Borrower shall in good faith be prosecuting an appeal or
proceedings for review and in respect of which it shall have secured a
subsisting stay of execution pending such appeal or proceedings for
review, provided that the Borrower shall have set aside on its books
adequate reserves, in accordance with GAAP, with respect to such
judgment or award;
(i) Indebtedness under performance bonds incurred in the
ordinary course of business;
(j) in the case of the Borrower and the Subsidiary Guarantors,
Indebtedness the net proceeds of which are used substantially
concurrently with the incurrence thereof to refinance the Senior
Unsecured Notes so long as (i) such refinancing Indebtedness is in an
aggregate principal amount, or, if issued at a discount, the issue
price is, not greater than the aggregate principal amount of the
Indebtedness being refinanced plus the amount of any premiums required
to be paid thereon, the amount of accrued and unpaid interest thereon
and the fees and expenses incurred in connection with such refinancing,
(ii) such Indebtedness has a final maturity no later than and a
weighted average life no longer than than the Indebtedness being
refinanced and (iii) the covenants, events of default and other
provisions thereof (including any Guarantees thereof) shall be, in the
aggregate, no less favorable to the Lenders than those contained in the
Indebtedness being refinanced;
(k) Indebtedness issued upon the exchange of Senior Preferred
Interests in accordance with the LLC Agreement as in effect on the
Closing Date without giving effect to any subsequent amendment,
modification or supplement to the terms thereof; and
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(l) additional unsecured Indebtedness in an aggregate amount
at any time outstanding not exceeding $25,000,000, provided that the
sum of the aggregate principal amount of all Indebtedness incurred by a
Foreign Subsidiary pursuant to this paragraph (l) and Indebtedness and
Capital Lease Obligations incurred by Foreign Subsidiaries pursuant to
paragraph (d) above and, in each case, outstanding at any time shall
not exceed $25,000,000.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the date hereof and set forth in Schedule
6.02, provided that such Liens shall secure only those obligations
which they secure on the date hereof and refinancings thereof which do
not increase the outstanding principal amount thereof;
(b) any Lien created under the Loan Documents or permitted
under the Fleet Mortgages;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary, provided that
(i) such Lien is not created in contemplation of or in connection with
such acquisition, (ii) such Lien does not apply to any other property
or assets of the Borrower or any Subsidiary, (iii) such Lien does not
(A) materially interfere with the use, occupancy and operation of any
Mortgaged Property, (B) materially reduce the fair market value of such
Mortgaged Property but for such Lien or (C) result in any material
increase in the cost of operating, occupying or owning or leasing such
Mortgaged Property;
(d) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising, in the case of such other like
Liens, in the ordinary course of business and securing obligations that
are not due and payable or which are being contested in compliance with
Section 5.03;
(f) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(g) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(h) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred, in the case of such other similar encumbrances, in the
ordinary course of business which, in the aggregate, are not
substantial in amount and do not materially detract from the value of
the property subject thereto or interfere with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries;
(i) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case
of improvements, constructed) by the Borrower or any Subsidiary,
provided that (i) such security interests secure Indebtedness permitted
by Section 6.01(d), (ii) such security interests are incurred, and the
Indebtedness secured thereby is created, within 90 days after such
acquisition (or construction), (iii) the Indebtedness secured thereby
does not exceed 85% of the lesser of the cost or the fair market value
of such
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real property, improvements or equipment at the time of such
acquisition (or construction) (or if such Indebtedness exceeds such 85%
limit, such Indebtedness is non-recourse to Holdings, the Borrower and
the Subsidiaries) and (iv) such security interests do not apply to any
other property or assets of the Borrower or any Subsidiary;
(j) Liens securing appeal bonds or arising out of judgments or
awards (other than any judgment that is described in clause (i) of
Article VII and constitutes a Default or Event of Default thereunder)
in respect of which the Borrower shall in good faith be prosecuting an
appeal or proceedings for review and in respect of which it shall have
secured a subsisting stay of execution pending such appeal or
proceedings for review, provided that the Borrower shall have set aside
on its books adequate reserves, in accordance with GAAP, with respect
to such judgment or award;
(k) Liens resulting from arrangements among the stockholders
of Foreign Subsidiaries which limit or restrict the transfer of Capital
Stock of such Foreign Subsidiaries by those stockholders to third
parties; and
(l) additional Liens on property or assets securing
obligations (other than Indebtedness for borrowed money) not exceeding
$250,000 at any time, provided that, to the extent any such Lien
applies to any Collateral (as defined in any such Security Document),
such Lien does not have priority over the Liens created under the
Security Documents.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred; provided that the Borrower
and the Subsidiaries may enter into any such arrangement to the extent that the
Capital Lease Obligation and Liens associated therewith would be permitted by
Sections 6.01(d) and 6.02(i), respectively.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any Capital Stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments existing on the date hereof by Holdings in the
Capital Stock of the Borrower and by the Borrower in the Capital Stock
of the Subsidiaries, and additional investments by Holdings in the
Capital Stock of the Borrower and by the Borrower and its Subsidiaries
in the Capital Stock of the Subsidiary Guarantors;
(b) Permitted Investments;
(c) loans or advances made by any Loan Party to the Borrower
or any Subsidiary that are evidenced by an intercompany note pledged to
the Collateral Agent pursuant to the Pledge Agreement for the benefit
of the Secured Parties;
(d) investments consisting of non-cash consideration received
in connection with a sale of assets permitted by Section 6.05(b);
(e) loans and advances to employees and officers of Holdings,
the Borrower or any of the Subsidiaries for travel, entertainment and
relocation expenses in the ordinary course of business in an aggregate
principal amount outstanding at any one time not to exceed $2,500,000;
(f) loans and advances in an aggregate principal amount
outstanding at any one time not to exceed $2,000,000 to management and
other employees of the Borrower, the proceeds
<PAGE> 62
57
of which are used in their entirety to purchase Capital Stock of
Holdings and other investments pursuant to retirement savings programs;
(g) Consolidated Capital Expenditures permitted pursuant to
Section 6.10;
(h) ordinary course Interest Rate Protection Agreements and
ordinary course, non-speculative foreign exchange and commodity
protection agreements;
(i) Accounts;
(j) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(k) loans and advances to Garvan existing on the Closing Date
and set forth on Schedule 6.04(k);
(l) additional loans or advances made by any Loan Party to
Garvan that are evidenced by an intercompany note pledged to the
Collateral Agent pursuant to the Pledge Agreement for the benefit of
the Secured Parties, provided that, unless and until Garvan shall
become a Foreign Subsidiary, the aggregate principal amount outstanding
at any one time of such loans and advances made by Loan Parties to
Garvan under this paragraph (l) shall not exceed $20,000,000;
(m) investments in the Capital Stock of Holdings permitted by
Section 6.06(vii); and
(n) other investments, loans or advances in an amount at any
time outstanding not exceeding $25,000,000.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. (a) Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of the assets of the Borrower and its Subsidiaries, taken
as a whole (whether now owned or hereafter acquired), or any Capital Stock of
any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
person, except that (i) the Borrower and any Subsidiary may purchase and sell
inventory and scrap, obsolete, excess and worn out assets in the ordinary course
of business, (ii) if at the time thereof and immediately after giving effect
thereto no Event of Default or Default shall have occurred and be continuing (A)
any wholly owned Subsidiary may merge into the Borrower in a transaction in
which the Borrower is the surviving corporation, (B) any wholly owned Subsidiary
may merge into or consolidate with any other wholly owned Subsidiary in a
transaction in which the surviving entity is a wholly owned Subsidiary and no
person other than the Borrower or a wholly owned Subsidiary receives any
consideration (provided, that if any such transaction involves a Domestic
Subsidiary, the surviving entity shall be a wholly owned Domestic Subsidiary and
no person other than the Borrower or a wholly owned Domestic Subsidiary shall
receive any consideration) and (C) any Foreign Subsidiary may merge into or
consolidate with any other Foreign Subsidiary in a transaction in which the
surviving entity is a Subsidiary and the value of the Borrower's direct or
indirect interest in such surviving entity immediately after such merger or
consolidation is at least equal to the aggregate value of its direct or indirect
interest in the merging or consolidating Foreign Subsidiaries immediately prior
to such merger or consolidation, and (iii) the Borrower and any Subsidiary may
make Consolidated Capital Expenditures permitted by Section 6.10 and sale and
lease-back transactions permitted by Section 6.03.
(b) Neither the Borrower nor any Subsidiary shall engage in any Asset
Sale otherwise permitted under paragraph (a) above unless (i) such Asset Sale is
for consideration at least 85% of
<PAGE> 63
58
which is cash, (ii) such consideration is at least equal to the fair market
value (as determined in good faith by the Borrower's board of directors or
analogous body) of the assets being sold, transferred, leased or disposed of and
(iii) the fair market value (as determined in good faith by the Borrower's board
of directors or analogous body) of all assets sold, transferred, leased or
disposed of pursuant to this paragraph (b) shall not exceed (i) $20,000,000 in
any fiscal year or (ii) $100,000,000 in the aggregate.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any of its Capital Stock or directly or indirectly redeem, purchase, retire or
otherwise acquire for value (or permit any Subsidiary to purchase or acquire)
any of its Capital Stock or set aside any amount for any such purpose; provided,
however, that:
(i) any Subsidiary may declare and pay dividends or make other
distributions ratably to its shareholders;
(ii) Holdings may declare and pay dividends with respect to
the Senior Preferred Interests payable solely in additional Senior
Preferred Interests;
(iii) Holdings may declare and pay dividends with respect to
the Junior Preferred Interests payable solely in additional Junior
Preferred Interests;
(iv) the Borrower may distribute to Holdings, and Holdings may
distribute to its members, Tax Distributions;
(v) if at the time thereof and after giving effect thereto no
Default has occurred and is continuing, the Borrower may declare and
pay dividends to Holdings at such times and in such amounts, not
exceeding $3,000,000 during any fiscal year, as shall be necessary to
permit Holdings to discharge liabilities it can incur and pay pursuant
to this Agreement;
(vi) following the fifth anniversary of the Closing Date, the
Borrower may pay dividends to Holdings, and Holdings may declare and
pay dividends to its members, in cash in an aggregate amount during any
fiscal year not to exceed the lesser of (A) 50% of that portion of
Excess Cash Flow (if any) from the preceding fiscal year not required
to be used to prepay the Loans pursuant to Section 2.13(d) and (B) the
sum of (1) $7,500,000 and (2) the excess (if any) of the aggregate
amount provided in this subclause (B) for prior fiscal years ending
after such fifth anniversary over the aggregate amount actually
dividended to Holdings pursuant to this clause (vi) in such fiscal
years, provided that no payment shall be permitted under this clause
(vi) unless at the time of such payment and after giving effect thereto
(x) no Default has occurred and is continuing and (y) the Consolidated
Leverage Ratio as of the last day of the last fiscal quarter for which
financial statements are available does not exceed 3.50 to 1.00; and
(vii) the Borrower may declare and pay dividends or make other
distributions to permit Holdings to purchase, redeem, retire or
otherwise acquire (A) Capital Stock of its members, or options or
warrants to purchase Capital Stock, held by officers, directors or
employees of Holdings, the Borrower or any Subsidiary pursuant to a
compensation plan or arrangement in connection with the death,
disability or termination of employment of any such officer, director
or employee or (B) Capital Stock owned by any officer, director or
employee of Holdings, the Borrower or any Subsidiary pursuant to the
exercise of options or warrants to purchase such Capital Stock by such
officer, director or employee or to pay taxes incurred in connection
with such exercise of options or warrants in an aggregate amount for
all such transactions described in clauses (A) and (B) not exceeding
the sum of
<PAGE> 64
59
(x) $1,000,000 plus (y) the proceeds of any substantially concurrent
issuance of Capital Stock of Holdings to any officer, director or
employee of Holdings, the Borrower or any Subsidiary.
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends or
make any other distributions on its Capital Stock or any other interest or (ii)
make or repay any loans or advances to the Borrower or the parent of such
subsidiary, provided that the foregoing shall not apply to restrictions and
conditions imposed by law or by any Loan Document or the Senior Unsecured Debt
Documents.
SECTION 6.07. Transactions with Affiliates. Except as set forth on
Schedule 6.07, sell or transfer any property or assets to, or purchase or
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except that (a) the Borrower or any
Subsidiary may engage in (i) any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties, (ii) the transactions permitted pursuant to
Sections 6.04, 6.05 and 6.06 and (iii) the Transactions, including, without
limitation, the Tax Distributions and (b) this Section 6.07 shall not apply to
transactions between or among (i) the Borrower and one or more wholly owned
Domestic Subsidiaries or (ii) wholly owned Foreign Subsidiaries.
SECTION 6.08. Business of Holdings, Borrower and Subsidiaries. (a)
Other than Holdings, engage at any time in any business or business activity
other than a Related Business.
(b) In the case of Holdings, engage in any business or business
activity other than being a holding company for the Capital Stock of the
Borrower and the issuer of its securities permitted hereby and activities
reasonably incidental thereto.
SECTION 6.09. Other Indebtedness and Agreements. (a) Permit any waiver,
supplement, modification, amendment, termination or release of (i) the LLC
Agreement or the Recapitalization Documents or (ii) any indenture, instrument or
agreement pursuant to which any Indebtedness or preferred stock of Holdings, the
Borrower or any Subsidiary is outstanding in an aggregate outstanding principal
amount in excess of $5,000,000, or modify its articles of organization,
operating agreement or by-laws, in each case to the extent that any such waiver,
supplement, modification, amendment, termination or release would be adverse to
the Lenders in any material respect.
(b) (i) make any distribution, whether in cash, property, securities or
a combination thereof, other than regular scheduled (or, in the case of
Indebtedness described in Section 6.01(d), mandatory) payments of principal and
interest as and when due, in respect of, or pay, or offer or commit to pay, or
directly or indirectly redeem, repurchase, retire or otherwise acquire for
consideration, or set apart any sum for the aforesaid purposes, any Indebtedness
for borrowed money of the Borrower or any Subsidiary in an outstanding principal
amount exceeding $5,000,000 or (ii) pay in cash any amount in respect of such
Indebtedness that may at the obligor's option be paid in kind or in other
securities, except:
(A) payment of Indebtedness created under the Loan Documents;
(B) repayment of Indebtedness (including Indebtedness under
the Existing Debt Instruments and the Existing Credit Agreements) on
the Closing Date in connection with the Recapitalization; and
(C) payment of intercompany Indebtedness between or among
Holdings, the Borrower and its Subsidiaries permitted under clauses (e)
and (f) of Section 6.01 and payment of Indebtedness permitted under
clauses (h) and (i) of Section 6.01.
<PAGE> 65
60
SECTION 6.10. Capital Expenditures. Permit the aggregate amount of
Consolidated Capital Expenditures made by the Borrower and the Subsidiaries,
taken as a whole, (a) in the fiscal year ended December 25, 1998, to exceed the
excess of (i) $70,000,000 over (ii) the aggregate amount of Consolidated Capital
Expenditures made in 1998 by the Borrower and the Subsidiaries and National
Marine and its subsidiaries, taken as a whole, prior to the Closing Date, and
(b) in any fiscal year of the Borrower set forth below to exceed the sum of (x)
the amount set forth opposite such fiscal year below and (y) the Net Cash
Proceeds from Sponsor Equity Contributions made during such fiscal year;
provided, however, that the amount of Consolidated Capital Expenditures in any
fiscal year of the Borrower so permitted to be incurred shall be increased by an
amount equal to the amount of unused Consolidated Capital Expenditures so
permitted to be incurred for the immediately preceding fiscal year of the
Borrower (without giving effect to this proviso):
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C> <C>
1999 $ 90,000,000
2000 110,000,000
2001 110,000,000
2002 110,000,000
2003 150,000,000
2004 150,000,000
2005 155,000,000
2006 160,000,000
2007 160,000,000
</TABLE>
SECTION 6.11. Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as of the end of any fiscal quarter falling in any period set
forth below to be in excess of the ratio set forth below for such period.
<TABLE>
<CAPTION>
Year Ratio
---- -----
<S> <C>
June 30, 1998 through September 30, 2000 5.50 to 1.00
December 31, 2000 through September 30, 2001 5.00 to 1.00
December 31, 2001 through September 30, 2002 4.50 to 1.00
Thereafter 4.00 to 1.00
</TABLE>
SECTION 6.12. Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for (a) the (i) fiscal quarter ended
September 25, 1998, (ii) the two fiscal quarter period ended December 25, 1998,
or (iii) the three fiscal quarter period ended March 26, 1999, to be less than
1.75 to 1.00 or (b) any period of four consecutive fiscal quarters ending in any
period set forth below to be less than the ratio set forth below for such
period, tested, in each case, at the end of such quarter.
<PAGE> 66
61
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
June 25, 1999, through
September 29, 2000 1.75 to 1.00
The last Friday in
December, 2000 through
the last Friday in
September, 2001 2.00 to 1.00
The last Friday in
December, 2001 through
the last Friday in
September, 2002 2.25 to 1.00
Thereafter 2.50 to 1.00
</TABLE>
SECTION 6.13. Fiscal Year. Permit the fiscal year of Holdings or the
Borrower to end on a day other than the last Friday in December of any calendar
year.
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of Letters of
Credit hereunder, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other instrument
furnished in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made, deemed made
or furnished;
(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan or
any Fee or L/C Disbursement or any other amount (other than an amount referred
to in (b) above) due under any Loan Document, when and as the same shall become
due and payable, and such default shall continue unremedied for a period of five
Business Days;
(d) default shall be made in the due observance or performance by
Holdings, the Borrower or any Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05 or 5.06 or in Article VI;
(e) default shall be made in the due observance or performance by
Holdings, the Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan Document (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days after
notice thereof from the Administrative Agent or any Lender to the Borrower;
(f) Holdings, the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any Indebtedness
in a principal amount in excess of $5,000,000, when and as the same shall become
due and payable, or (ii) fail to observe or perform any other term, covenant,
condition or agreement contained in any agreement or instrument evidencing
<PAGE> 67
62
or governing any such Indebtedness if the effect of any failure referred to in
this clause (ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the giving of
notice, the lapse of time or both) to cause, such Indebtedness to become due
prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Holdings, the Borrower or any Subsidiary, or of a substantial part
of the property or assets of Holdings, the Borrower or a Subsidiary, under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, the Borrower or any Subsidiary or
for a substantial part of the property or assets of Holdings, the Borrower or a
Subsidiary or (iii) the winding-up or liquidation of Holdings, the Borrower or
any Subsidiary; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall
be entered;
(h) Holdings, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Holdings, the
Borrower or any Subsidiary or for a substantial part of the property or assets
of Holdings, the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000, which amount is not covered by insurance
(provided that in the event such a judgment is covered by insurance, the
Administrative Agent is provided with satisfactory evidence that the insurance
provider will provide the coverage relating thereto) shall be rendered against
Holdings, the Borrower, any Subsidiary or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to levy upon assets or properties of Holdings, the
Borrower or any Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the reasonable opinion
of the Required Lenders, when taken together with all other such ERISA Events
that have occurred, could reasonably be expected to result in liability of the
Borrower and its ERISA Affiliates in an aggregate amount exceeding (i)
$1,000,000 in any year or (ii) $5,000,000 for all periods;
(k) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any other
Loan Party not to be, a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) security
interest in the securities, assets or properties covered thereby, except to the
extent that any such loss of perfection or priority results from the failure of
the Collateral Agent to maintain possession of certificates representing
securities pledged under the Pledge Agreement or to continue previously filed
financing statements prior to the expiration thereof and except to the extent
that such loss is covered by a lender's title insurance policy and the related
insurer promptly after such loss shall have acknowledged in writing that such
loss is covered by such title insurance policy; or
(l) there shall have occurred a Change in Control;
<PAGE> 68
63
then, and in every such event (other than an event with respect to Holdings or
the Borrower described in paragraph (g) or (h) above), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate forthwith the Commitments and (ii) declare the Loans then
outstanding, if any, to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to Holdings or the
Borrower described in paragraph (g) or (h) above, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement,
The Chase Manhattan Bank is hereby appointed to act as Administrative Agent and
Collateral Agent and, for purposes of the Fleet Mortgages, Security Trustee, on
behalf of the Lenders and the Issuing Bank (for purposes of this Article VIII,
the Administrative Agent, the Collateral Agent and Security Trustee are
referred to collectively as the "Agents"). Each of the Lenders and each assignee
of any such Lender hereby irrevocably authorizes the Agents to take such actions
on behalf of such Lender or assignee or the Issuing Bank and to exercise such
powers as are specifically delegated to the Agents by the terms and provisions
hereof and of the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders and the Issuing Bank, without hereby limiting any
implied authority, (a) to receive on behalf of the Lenders and the Issuing Bank
all payments of principal of and interest on the Loans, all payments in respect
of L/C Disbursements and all other amounts due to the Lenders hereunder, and
promptly to distribute to each Lender or the Issuing Bank its proper share of
each payment so received; (b) to give notice on behalf of each of the Lenders to
the Borrower of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by the Borrower or any other Loan Party
pursuant to this Agreement or the other Loan Documents as received by the
Administrative Agent. Without limiting the generality of the foregoing, the
Agents are hereby expressly authorized to execute any and all documents
(including releases) with respect to the Collateral and the rights of the
Secured Parties with respect thereto, as contemplated by and in accordance with
the provisions of this Agreement and the Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in
<PAGE> 69
64
accordance with written instructions signed by the Required Lenders and, except
as otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. Each Agent shall,
in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. Neither the
Agents nor any of their respective directors, officers, employees or agents
shall have any responsibility in their capacity as such to the Borrower or any
other Loan Party on account of the failure of or delay in performance or breach
by any Lender or the Issuing Bank of any of its obligations hereunder or to any
Lender or the Issuing Bank on account of the failure of or delay in performance
or breach by any other Lender or the Issuing Bank or the Borrower or any other
Loan Party of any of their respective obligations hereunder or under any other
Loan Document or in connection herewith or therewith. Each of the Agents may
execute any and all duties hereunder by or through agents or employees and shall
be entitled to rely upon the advice of legal counsel selected by it with respect
to all matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor, subject to the Borrower's approval, not to be
unreasonably withheld, so long as no Default or Event of Default shall have
occurred and be continuing. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent with the consent of the
Borrower (which consent shall not be unreasonably withheld) which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings, the Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitments hereunder) of any
expenses incurred for the benefit of the Lenders by the Agents, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, that shall not have been reimbursed by the Borrower
and (b) to indemnify and hold harmless each Agent and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as Agent or any of them in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document, to
the extent the same shall not have been reimbursed by the Borrower or any other
Loan Party, provided that no Lender shall be liable to an Agent or any such
other indemnified person for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
<PAGE> 70
65
expenses or disbursements determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
wilful misconduct of such Agent or any of its directors, officers, employees or
agents. Each Revolving Credit Lender agrees to reimburse and indemnify the
Issuing Bank and its directors, employees and agents, in each case, to the same
extent and subject to the same limitations as provided above for the Agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower or Holdings, to it at American
Commercial Lines LLC, 1701 E. Market Street, Jeffersonville, Indiana
47130, Attention: General Counsel, Telecopy Number: (812) 288-0294;
with copies to Citicorp Venture Capital, Ltd., 399 Park Avenue, 14th
Floor, New York, New York 10043, Attention: David F. Thomas, Richard E.
Mayberry, Jr., Telecopy Number: (212) 888-2940, and Kirkland & Ellis,
Citicorp Center, 153 East 53rd Street, New York, New York 10022,
Attention: Kirk A. Radke, Esq., Telecopy Number (212) 446-4900;
(b) if to the Administrative Agent, to The Chase Manhattan
Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th
Floor, New York, New York 10005, Attention of Lenora Kiernan (Telecopy
No. (212) 552-5650), with a copy to The Chase Manhattan Bank, at 270
Park Avenue, New York 10017, Attention of Craig H. Fuehrer (Telecopy
No. (212) 270-9647); and
(c) if to a Lender, to it at its address (or telecopy number)
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or Holdings herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any
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Fee or any other amount then due and payable under this Agreement or any other
Loan Document is outstanding and unpaid (other than wholly-contingent
indemnification obligations) or any Letter of Credit is outstanding and so long
as the Commitments have not been terminated. The provisions of Sections 2.14,
2.16, 2.20 and 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, Holdings and the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, Holdings, the
Administrative Agent, the Issuing Bank or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective permitted
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of such Lender or to an Approved Fund, (x) the Borrower and the
Administrative Agent (and, in the case of any assignment of a Revolving Credit
Commitment, the Issuing Bank) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed) and (y)
the amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 (or, if less, the entire remaining amount of such Lender's
Commitment), (ii) unless otherwise agreed to by the Administrative Agent, the
parties to each such assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500 and (iii) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16,
2.20 and 9.05 and be subject to the provisions of Section 9.16, as well as to
any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitments and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this
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Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto, or the financial condition of
the Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements referred to in Section 3.05(a) or delivered pursuant to
Section 5.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, the Collateral Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee appoints
and authorizes the Administrative Agent and the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank, the Collateral Agent
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower, the Issuing
Bank and the Administrative Agent to such assignment, the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Lenders, the Issuing Bank and the Borrower. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the Issuing
Bank or the Administrative Agent sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same
extent as if they were Lenders and had acquired their participations by
assignment pursuant to Section 9.04(b) and (iv) the Borrower, the Administrative
Agent, the Issuing Bank and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans or L/C
Disbursements and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the rate
at which
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interest is payable on the Loans, extending any scheduled principal payment date
or date fixed for the payment of interest on the Loans, increasing or extending
the Commitments or releasing any Guarantor or all or any substantial part of the
Collateral).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower, provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(h) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto. In
order to facilitate such any such assignment, the Borrower shall, at the request
of the assigning Lender, duly execute and deliver to the assigning Lender a
promissory note or notes evidencing the Loans made to the Borrower by the
assigning Lender hereunder.
(i) Neither Holdings nor the Borrower shall assign or delegate any of
its rights or duties hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank and each Lender, and any attempted
assignment without such consent shall be null and void.
(j) In the event that Standard & Poor's Ratings Group, Moody's
Investors Service, Inc. or Thompson's BankWatch (or InsuranceWatch Ratings
Service, in the case of Lenders that are insurance companies (or Best's
Insurance Reports, if such insurance company is not rated by Insurance Watch
Ratings Service)) shall, after the date that any Lender becomes a Revolving
Credit Lender, downgrade the long-term certificate deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 or C (or BB, in the
case of a Lender that is an insurance company (or B, in the case of an insurance
company not rated by InsuranceWatch Ratings Service)), respectively, then the
Issuing Bank shall have the right, but not the obligation, at its own expense,
upon notice to such Lender and the Administrative Agent, to replace (or to
request the Borrower to use its reasonable efforts to replace) such Lender with
an assignee (in accordance with and subject to the restrictions contained in
paragraph (b) above), and such Lender hereby agrees to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in paragraph (b) above) all its interests, rights and obligations in respect of
its Revolving Credit Commitment to such assignee; provided, however, that (i) no
such assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) the Issuing Bank or such assignee, as the case
may be, shall pay to such Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower and Holdings agree,
jointly and severally, to pay all out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent and the Issuing Bank in connection
with the syndication of the credit facilities provided for herein and the
preparation and administration of this Agreement and the other Loan Documents or
in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent, the
Collateral Agent or any Lender in connection with the enforcement or protection
of its rights in connection with this Agreement and the other Loan Documents or
in connection with the Loans made or Letters of Credit issued hereunder,
including the reasonable fees,
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charges and disbursements of Cravath, Swaine & Moore, counsel for the
Administrative Agent and the Collateral Agent, and, in connection with any such
enforcement or protection, the reasonable fees, charges and disbursements of any
other counsel for the Administrative Agent, the Collateral Agent or any Lender.
(b) The Borrower and Holdings agree, jointly and severally, to
indemnify the Administrative Agent, the Collateral Agent, each Lender and the
Issuing Bank, each Affiliate of any of the foregoing persons and each of their
respective directors, trustees, officers, employees and agents (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated thereby, the performance by
the parties thereto of their respective obligations thereunder or the
consummation of the Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans or issuance of Letters of
Credit, (iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any
actual or alleged presence or Release of Hazardous Materials on any property
owned or operated by the Borrower or any of the Subsidiaries, or any
Environmental Claim related in any way to the Borrower or the Subsidiaries,
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) All amounts due under this Section 9.05 shall be payable on written
demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower or Holdings against any of and all
the obligations of the Borrower or Holdings now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank
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and the Lenders hereunder and under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrower or any other Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Borrower or
Holdings in any case shall entitle the Borrower or Holdings to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower, Holdings and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest on any Loan or any date for reimbursement of an L/C
Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan or L/C Disbursement, without the prior
written consent of each Lender affected thereby, (ii) change or extend the
Commitment or decrease or extend the date for payment of the Commitment Fees of
any Lender without the prior written consent of such Lender, (iii) amend or
modify the provisions of Section 2.17 or 9.04(i), the provisions of this
Section, the definition of the term "Required Lenders" or release any Guarantor
or all or any substantial part of the Collateral, without the prior written
consent of each Lender or (iv) change the allocation between Tranche B Term
Loans and Tranche C Term Loans of any prepayment pursuant to Section 2.12 or
2.13 without the prior written consent of (A) Lenders holding a majority of the
aggregate outstanding principal amount of the Tranche B Term Loans and (B)
Lenders holding a majority of the aggregate outstanding principal amount of the
Tranche C Term Loans; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent or the Issuing Bank hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, the Collateral
Agent or the Issuing Bank.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
9.09 shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract among the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof (including, following the Closing
Date, the Commitment Letter dated April 17, 1998, among the Administrative
Agent, Chase Securities Inc. and VGI) is superseded by this Agreement and the
other Loan Documents and shall be terminated on the Closing Date. Nothing in
this Agreement or in the other Loan Documents, expressed or implied, is intended
to confer upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
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SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each of
Holdings and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Borrower,
Holdings or their respective properties in the courts of any jurisdiction.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
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(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, the Collateral
Agent, the Issuing Bank and each of the Lenders agrees to keep confidential (and
to use its best efforts to cause its respective agents and representatives to
keep confidential) the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
shall be permitted to disclose Information (a) to such of its respective
officers, directors, employees, agents, affiliates and representatives as need
to know such Information, provided that such persons are notified of the
confidential nature of such Information, (b) to the extent requested by any
regulatory authority, including the National Association of Insurance
Commissioners, (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process (after reasonable notice
to Borrower so that Borrower may seek a protective order or other appropriate
remedy), (d) in connection with any suit, action or proceeding relating to the
enforcement of its rights hereunder or under the other Loan Documents or (e) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section 9.16 or (ii) becomes available to the
Administrative Agent, the Issuing Bank, any Lender or the Collateral Agent on a
nonconfidential basis from a source other than the Borrower or Holdings. For the
purposes of this Section, "Information" shall mean all financial statements,
certificates, reports, agreements and information (including all analyses,
compilations and studies prepared by the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender based on any of the foregoing) that are
received from the Borrower or Holdings and related to the Borrower or Holdings,
any shareholder of the Borrower or Holdings or any employee, customer or
supplier of the Borrower or Holdings, other than any of the foregoing that were
available to the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to its disclosure thereto by the
Borrower or Holdings, and which are in the case of Information provided after
the date hereof, clearly identified at the time of delivery as confidential. The
provisions of this Section 9.16 shall remain operative and in full force and
effect regardless of the expiration and term of this Agreement.
SECTION 9.17. Termination. Subject to the last sentence of Section
9.02, this Agreement and the other Loan Documents shall terminate when all the
Obligations (other than wholly contingent indemnification obligations not then
due and payable) have been indefeasibly paid in full, the Lenders have no
further commitment to lend, the L/C Exposure has been reduced to zero and the
Issuing Bank has no further commitment to issue Letters of Credit under this
Agreement, at which time the Collateral Agent shall execute and deliver to the
Borrower, Holdings and the Subsidiary Guarantors all Uniform Commercial Code
termination statements, mortgage assignments or satisfactions and similar
documents which the Borrower, Holdings and the Subsidiary Guarantors shall
reasonably request to evidence such termination.
<PAGE> 78
73
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AMERICAN COMMERCIAL LINES LLC,
by
/s/ Michael A. Khouri
--------------------------------------
Name: Michael A. Khouri
Title: Senior Vice President
AMERICAN COMMERCIAL LINES HOLDINGS
LLC,
by CSX BROWN CORP., as manager,
by
/s/ Gregory R. Weber
--------------------------------------
Name: Gregory R. Weber
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
Collateral Agent, Issuing Bank and
Security Trustee,
by
/s/ Robert W. Matthews
--------------------------------------
Name: Robert W. Matthews
Title: Vice President
ALLSTATE INSURANCE COMPANY,
by
/s/ Charles D. Mires
--------------------------------------
Name: Charles D. Mires
Title: Authorized Signatory
by
/s/ Jerry D. Zinkula
--------------------------------------
Name: Jerry D. Zinkula
Title: Authorized Signatory
<PAGE> 79
74
BHF-BANK Aktiengesellschaft
by
/s/ Anthony Heyman
--------------------------------------
Name: Anthony Heyman
Title: Assistant Vice President
by
/s/ John Sykes
--------------------------------------
Name: John Sykes
Title: Vice President
BALANCED HIGH-YIELD FUND I, LTD.,
by BHF-BANK Aktiengesellschaft,
acting through its New York branch, as
Attorney-in-Fact
by
/s/ Anthony Heyman
--------------------------------------
Name: Anthony Heyman
Title: Assistant Vice President
by
/s/ John Sykes
--------------------------------------
Name: John Sykes
Title: Vice President
BANK ONE KENTUCKY, NA,
by
/s/ Dennis P. Heishman
--------------------------------------
Name: Dennis P. Heishman
Title: Senior Vice President
CORESTATES BANK,
by
/s/ Carmel C. Albano
--------------------------------------
Name: Carmel C. Albano
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Kevin J. Kelsey
--------------------------------------
Name: Kevin J. Kelsey
Title: Assistant Vice President
<PAGE> 80
75
CRESCENT/MACH I PARTNERS, L.P.,
by TCW Asset Management Company, its
Investment Manager
by
/s/ Justin L. Driscoll
--------------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
CYPRESSTREE INVESTMENT FUND, LLC,
by CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, its
Managing Member
by
/s/ Joseph A. Germain
--------------------------------------
Name: Joseph A. Germain
Title: Principal
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.,
as Attorney-in-Fact and on behalf of First
Allmerica Financial Life Insurance
Company as Portfolio Manager
by
/s/ Joseph A. Germain
--------------------------------------
Name: Joseph A. Germain
Title: Principal
CYPRESSTREE SENIOR FLOATING RATE
FUND,
by CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC., as
Portfolio Manager
by
/s/ Joseph A. Germain
--------------------------------------
Name: Joseph A. Germain
Title: Principal
<PAGE> 81
76
FLOATING RATE PORTFOLIO
by INVESCO Senior Secured Management,
Inc., as Attorney-in-Fact
by
/s/ Kathleen A. Lenarcic
--------------------------------------
Name: Kathleen A. Lenarcic
Title: Authorized Signatory
FRANKLIN FLOATING RATE TRUST
by
/s/ Chauncey Lufkin
--------------------------------------
Name: Chauncey Lufkin
Title: Vice President
HIBERNIA BANK
by
/s/ S. John Castellano
--------------------------------------
Name: S. John Castellano
Title: Vice President
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC,
by ING Capital Advisors, Inc., as
Investment Advisor
by
/s/ Michael D. Hatley
--------------------------------------
Name: Michael D. Hatley
Title: Senior Vice President
KZH-CYPRESSTREE-1 CORPORATION,
by
/s/ Virginia Conway
--------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH-2 CORPORATION,
by
/s/ Virginia Conway
--------------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE> 82
77
KZH-SOLEIL-2 CORPORATION,
by
/s/ Virginia Conway
--------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH HOLDING CORPORATION III,
by
/s/ Virginia Conway
--------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH IV CORPORATION,
by
/s/ Virginia Conway
--------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH-PAMCO CORPORATION,
by
/s/ Virginia Conway
--------------------------------------
Name: Virginia Conway
Title: Authorized Agent
ML CLO XIX STERLING (CAYMAN) LTD.,
by STERLING ASSET MANAGER, L.L.C., as
its Investment Advisor
by
/s/ Rafael Scolari
--------------------------------------
Name: Rafael Scolari
Title: President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY,
by
/s/ Clifford M. Noreen
--------------------------------------
Name: Clifford M. Noreen
Title: Managing Director
<PAGE> 83
78
MASSMUTUAL HIGH YIELD PARTNERS II,
LLC,
by HYP Management, Inc., as Managing
Member
by
/s/ Clifford M. Noreen
--------------------------------------
Name: Clifford M. Noreen
Title: Vice President
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.,
by
/s/ Gilles Marchand
--------------------------------------
Name: Gilles Marchand
Title: Vice President
METROPOLITAN LIFE INSURANCE CO.,
by
/s/ James R. Dingler
--------------------------------------
Name: James R. Dingler
Title: Director
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST,
by
/s/ Sheila A. Finnerty
--------------------------------------
Name: Sheila A. Finnerty
Title: Vice President
NATEXIS BANQUE BECE,
by
/s/ William C. Maier
--------------------------------------
Name: William C. Maier
Title: VP-Group Manager
by
/s/ Frank H. Madden, Jr.
--------------------------------------
Name: Frank H. Madden, Jr.
Title: Vice President
<PAGE> 84
79
NATIONAL CITY BANK,
by
/s/ Lisa Mahoney
--------------------------------------
Name: Lisa Mahoney
Title: Assistant Vice President
NATIONAL WESTMINSTER BANK, PLC.
by NatWest Capital Markets Limited,
its agent
by Greenwich Capital Markets, Inc.,
its agent
by
/s/ R. Christopher MacKenzie
--------------------------------------
Name: R.Christopher MacKenzie
Title: Vice President
OCTAGON LOAN TRUST
by Octagon Credit Investors, as manager
by
/s/ Richard W. Stewart
--------------------------------------
Name: Richard W. Stewart
Title: Managing Director
ORIX USA CORPORATION
by Orix USA Corporation
by
/s/ Hiroyuki Miyauchi
--------------------------------------
Name: Hiroyuki Miyauchi
Title: Executive Vice President
PNC BANK, N.A.,
by
/s/ Ralph M. Bowman
--------------------------------------
Name: Ralph M. Bowman
Title: Vice President
PARIBAS CAPITAL FUNDING, LLC,
by
/s/ Jeffrey J. Youle
--------------------------------------
Name: Jeffrey J. Youle
Title: Director
<PAGE> 85
80
SENIOR HIGH INCOME PORTFOLIO, INC.
by
/s/ Gilles Marchand
--------------------------------------
Name: Gilles Marchand
Title: Vice President
STAR BANK, N.A.
by
/s/ Mark F. Wheeler
--------------------------------------
Name: Mark F. Wheeler
Title: Senior Vice President
STEIN ROE & FARNHAM INCORPORATED, as
agent for KEYPORT LIFE INSURANCE
COMPANY,
by
/s/ Brian W. Good
--------------------------------------
Name: Brian W. Good
Title: Vice President & Portfolio Manager
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY,
by
/s/ John M. Casparian
--------------------------------------
Name: John M. Casparian
Title: Investment Officer
THE TRAVELERS INSURANCE COMPANY
by
/s/ A. William Carnduff
--------------------------------------
Name: A. William Carnduff
Title: 2nd Vice President
VAN KAMPEN AMERICAN CAPITAL
by Senior Income Trust
by
/s/ Jeffrey W. Maillet
--------------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
<PAGE> 1
EXHIBIT 12.1
AMERICAN COMMERCIAL LINES LLC
RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Pro Forma
----------------
Fiscal Twelve
Fiscal Years Ended Six Months Ended Year Months
--------------------------------------------- ---------------- Ended Ended
Dec. 31, Dec. 31, Dec. 29, Dec. 27, Dec. 26, June 27, June 28, Dec. 26, June 26,
1993 1994 1995 1996 1997 1997 1998 1997 1998
-------- -------- -------- -------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Earnings before income taxes 18,421 40,222 82,263 86,158 44,231 7,796 10,437 15,028 16,087
Interest on indebtedness 15,654 13,712 11,385 11,780 12,472 6,166 6,068 71,008 71,008
Amortization of debt discount 541 497 429 377 326 167 140 2,800 2,800
Interest portion of fixed rent expense 2,620 2,251 2,197 5,681 6,370 2,975 3,117 9,320 9,443
Minority interest share of loss in
consolidated subsidiaries 0 0 0 0 0 (21) (447) 0 0
------ ------ ------ ------ ------ ------ ------ ------ ------
Earnings, as Adjusted 37,236 56,682 96,274 103,996 63,399 17,083 19,315 98,156 99,338
FIXED CHARGES:
Interest on indebtedness 15,654 13,712 11,385 11,780 12,472 6,166 6,068 71,008 71,008
Amortization of debt discount 541 497 429 377 326 167 140 2,800 2,800
Interest portion of fixed rent expense 2,620 2,251 2,197 5,681 6,370 2,975 3,117 9,320 9,443
------ ------ ------ ------ ------ ------ ------ ------ ------
Fixed Charges 18,815 16,460 14,011 17,838 19,168 9,308 9,325 83,128 83,251
Ratio of Earnings to Fixed Charges 2.0x 3.4x 6.9x 5.8x 3.3x 1.8x 2.1x 1.2x 1.2x
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE> 1
Exhibit 21.1
LIST OF SUBSIDIARIES
Waterway Communications System LLC
American Commercial Marine Service LLC
Bolivar Terminal Company
Jeffboat LLC
Lousiana Dock Company LLC
Houston Fleet LLC
Lemont Harbor & Fleeting Service LLC
Tiger Shipyard LLC
Wilkinson Point LLC
American CommercialTerminals LLC
American Commercial Terminals - Memphis LLC
Mid-South Terminal Company
River Terminal Properties LP
ACL Capital Corp.
American Commercial Barge Line LLC
American Commercial Lines International LLC
Orinoco TASV LLC
Breen TAS LLC
Bullard TAS LLC
Shelton TAS LLC
Orinoco TASA LLC
ACBL Venezuela, Ltd.
ACBL Castle Harbour Ltd.
ACBL de Venezuela, C.A.
Venco, Ltd.
ACL Venezuela, Ltd.
Garven, C.A.
Jeffco, Ltd.
ACBL Hidrovias, Ltd.
ACBL Argentina, Ltd.
ACBL Hidrovias S.A.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 30, 1998 except for Note 11, as to which the
date is June 5, 1998, with respect to the consolidated financial statements of
American Commercial Lines, Inc. included in the Registration Statement (Form
S-4), and related Prospectus of American Commercial Lines, LLC for the
registration of $300 million Series B 10-1/4 Senior Notes due 2008.
/s/ Ernst & Young LLP
Louisville, Kentucky
August 25, 1998
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants we hereby consent to the use of our reports
and to all references to our Firm included in or made a part of this
Registration Statement.
/S/ ARTHUR ANDERSEN LLP
New Orleans, Louisiana
August 25, 1998
<PAGE> 1
Exhibit 25.1
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
AMERICAN COMMERCIAL LINES LLC
(Subsidiary Guarantor)
Delaware 52-210660
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
ACL CAPITAL CORP.
(Subsidiary Guarantor)
Delaware N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
<PAGE> 2
- 2 -
------------------
AMERICAN COMMERCIAL BARGE LINE, LLC
(Subsidiary Guarantor)
Delaware 52-2106602
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
AMERICAN COMMERCIAL MARINE SERVICE LLC
(Subsidiary Guarantor)
Delaware N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
LOUISIANA DOCK COMPANY LLC
(Subsidiary Guarantor)
Delaware 52-2106589
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
WATERWAY COMMUNICATIONS SYSTEM LLC
(Subsidiary Guarantor)
Delaware 52-2106585
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
AMERICAN COMMERCIAL TERMINALS LLC
(Subsidiary Guarantor)
Delaware 52-2106596
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
<PAGE> 3
- 3 -
------------------
AMERICAN COMMERCIAL TERMINALS MEMPHIS LLC
(Subsidiary Guarantor)
Delaware 52-2106598
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
JEFFBOAT LLC
(Subsidiary Guarantor)
Delaware 52-2106590
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
AMERICAN COMMERCIAL LINES INTERNATIONAL LLC
(Subsidiary Guarantor)
Delaware 52-2106599
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
ORINOCO TASA LLC
(Subsidiary Guarantor)
Delaware 52-2106588
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
ORINOCO TASV LLC
(Subsidiary Guarantor)
Delaware 52-2106587
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
<PAGE> 4
- 4 -
------------------
BREEN TAS LLC
(Subsidiary Guarantor)
Delaware 52-2106595
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
BULLARD TAS LLC
(Subsidiary Guarantor)
Delaware 52-2106594
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
SHELTON TAS LLC
(Subsidiary Guarantor)
Delaware 52-2106586
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
LEMONT HARBOR & FLEETING SERVICE LLC
(Subsidiary Guarantor)
Delaware 52-2106582
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
TIGER SHIPYARD LLC
(Subsidiary Guarantor)
Delaware 52-2106593
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
<PAGE> 5
- 5 -
------------------
WILKINSON POINT LLC
(Subsidiary Guarantor)
Delaware 52-210684
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
HOUSTON FLEET LLC
(Subsidiary Guarantor)
Delaware 52-2106591
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1701 East Market Street
Jefferson, Indiana 47130
(Address of principal executive offices) (Zip Code)
------------------
Series B 10-1/4% Senior Notes due 2008
(Title of the indenture securities)
==============================================
<PAGE> 6
- 6 -
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b)Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
American Commercial Lines LLC, ACL Capital Corp. and the Subsidiary
Guarantors currently are not in default under any of their outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 7
- 7 -
16. LIST OF EXHIBITS
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of August 20, 1998 the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 20th day
of August, 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/Margaret Ciesmelewski
-------------------------
Margaret Ciesmelewski
Assistant Vice President
PC/pg
<PAGE> 8
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the
Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /S/Gerard F. Ganey
Senior Vice President
<PAGE> 9
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
JUNE 30, 1998
($ IN THOUSANDS)
<TABLE>
ASSETS
<S> <C>
Cash and Due from Banks $ 99,322
Short-Term Investments 171,315
Securities, Available for Sale 626,426
Loans 1,857,795
Less: Allowance for Credit Losses 16,708
----------
Net Loans 1,841,087
Premises and Equipment 59,304
Other Assets 122,476
----------
TOTAL ASSETS $2,919,930
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 648,072
Interest Bearing 1,646,049
----------
Total Deposits 2,294,121
Short-Term Credit Facilities 306,807
Accounts Payable and Accrued Liabilities 144,419
----------
TOTAL LIABILITIES $2,745,347
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 107,703
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,344
----------
TOTAL STOCKHOLDER'S EQUITY 174,583
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,919,930
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
July 31, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001068078
<NAME> AMERICAN COMMERCIAL LINES LLC
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-26-1997 JUN-26-1998
<PERIOD-START> DEC-28-1996 MAR-28-1998
<PERIOD-END> DEC-26-1997 JUN-26-1998
<EXCHANGE-RATE> 1 1
<CASH> (1,081) 4,396
<SECURITIES> 0 0
<RECEIVABLES> 78,703 69,653
<ALLOWANCES> (1,254) (1,387)
<INVENTORY> 33,526 50,466
<CURRENT-ASSETS> 121,439 135,263
<PP&E> 696,518 710,271
<DEPRECIATION> (236,223) (252,930)
<TOTAL-ASSETS> 632,132 671,583
<CURRENT-LIABILITIES> 113,994 171,473
<BONDS> 0 0
0 0
0 0
<COMMON> 6,006 6,006
<OTHER-SE> 293,495 323,810
<TOTAL-LIABILITY-AND-EQUITY> 632,132 671,583
<SALES> 0 0
<TOTAL-REVENUES> 618,233 150,047
<CGS> 0 0
<TOTAL-COSTS> 559,600 138,863
<OTHER-EXPENSES> 1,930 712
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 12,472 3,341
<INCOME-PRETAX> 44,231 7,131
<INCOME-TAX> 18,287 (64,849)
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 25,944 71,980
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10 1/4% SENIOR NOTES DUE 2008
OF
AMERICAN COMMERCIAL LINES LLC
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998 UNLESS EXTENDED
(THE "EXPIRATION DATE").
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal
should be completed, signed, and submitted to the Exchange Agent:
<TABLE>
<S> <C> <C>
By Overnight Courier: By Hand: By Registered or Certified Mail:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway P.O. Box 844
New York, New York 10003 Lower Level Cooper Station
Attn: Corporate Trust Services New York, New York 10006 New York, New York 10276-0844
Attn: Corporate Trust Services Attn: Corporate Trust Services
</TABLE>
By Facsimile:
212-780-0592
Attn: Corporate Trust Services
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT
800-548-6565 OR BY FACSIMILE AT 212-780-0592.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1998 (the "Prospectus") of American Commercial Lines LLC, a
Delaware limited liability company (the "Issuer"), and this Letter of
Transmittal (the "Letter of Transmittal"), that together constitute the Issuer's
offer (the "Exchange Offer") to exchange $1,000 in principal amount of its
10 1/4% Senior Notes due 2008 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement, for each $1,000 in principal amount of its outstanding
10 1/4% Senior Notes due 2008 (the "Notes"), of which $300,000,000 aggregate
principal amount is outstanding. Capitalized terms used but not defined herein
have the meanings ascribed to them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
<PAGE> 2
Subject to, and effective upon, the acceptance for exchange of the Tendered
Notes, the undersigned hereby exchanges, assigns, and transfers to, or upon the
order of, the Issuer, all right, title, and interest in, to, and under the
Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the name(s)
of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions" below (Box 3), please send or cause to be sent the
certificates for the Exchange Notes (and accompanying documents, as appropriate)
to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver the Tendered Notes to the Issuer or cause ownership of the Tendered
Notes to be transferred to, or upon the order of, the Issuer, on the books of
the registrar for the Notes and deliver all accompanying evidences of transfer
and authenticity to, or upon the order of, the Issuer upon receipt by the
Exchange Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon acceptance by the Issuer of the Tendered Notes
pursuant to the Exchange Offer, and (ii) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Tendered Notes, all in
accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Issuer upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer-Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any Beneficial Owner(s), and
every obligation of the undersigned or any Beneficial Owners hereunder shall be
binding upon the heirs, representatives, successors, and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Notes and that the Issuer will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges, encumbrances, and adverse claims
when the Tendered Notes are acquired by the Issuer as contemplated herein. The
undersigned and each Beneficial Owner will, upon request, execute and deliver
any additional documents reasonably requested by the Issuer or the Exchange
Agent as necessary or desirable to complete and give effect to the transactions
contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Issuer, and
(iv) the undersigned and each Beneficial Owner acknowledge and agree that any
person participating in the Exchange Offer with the intention or for the purpose
of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "Securities
Act"), in connection with a secondary resale of the Exchange Notes acquired by
such person and cannot rely on the position of the Staff of the Securities and
Exchange Commission (the "Commission") set forth in the no-action letters that
are discussed in the section of the Prospectus entitled "The Exchange Offer." In
addition, by accepting the Exchange Offer, the undersigned hereby (i) represents
and warrants that, if the undersigned or any Beneficial Owner of the Notes is a
Participating Broker-Dealer, such Participating Broker-Dealer acquired the Notes
for its own account as a result of market-making activities or other trading
activities and has not entered into any arrangement or understanding with the
Company or any affiliate of the Company (within the meaning of Rule 405 under
the Securities Act) to distribute the New Notes to be received in the Exchange
Offer, and (ii) acknowledges that, by receiving New Notes for its own account in
exchange for Notes, where such Notes were acquired as a result of market-making
activities or other trading activities, such Participating
2
<PAGE> 3
Broker-Dealer will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
"Use of Guaranteed Delivery" BELOW (Box 4).
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE "Use of Book-Entry Transfer" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
BOX 1
DESCRIPTION OF NOTES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
AGGREGATE
NAME(S) AND ADDRESS(ES) OF REGISTERED NOTE HOLDER(S), CERTIFICATE PRINCIPAL AMOUNT AGGREGATE
EXACTLY AS NAME(S) APPEAR(S) ON NOTE CERTIFICATE(S) NUMBER(S) OF REPRESENTED BY PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NOTES* CERTIFICATE(S) TENDERED**
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes. All
other tenders must be in integral multiples of $1,000 of principal
amount. Unless otherwise indicated in this column, the principal amount
of all Note Certificates identified in this Box 1 or delivered to the
Exchange Agent herewith shall be deemed tendered. See Instruction 4.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------
BOX 2
BENEFICIAL OWNER(S)
- -------------------------------------------------------------------------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED NOTES
ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT
AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Tax Identification or
Social Security No.:
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution which Guaranteed Delivery:
----------------------------------
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution:
--------------------------------------------------
Account Number:
-----------------------------------------------------------------
Transaction Code Number:
--------------------------------------------------------
4
<PAGE> 5
BOX 6
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
X Signature Guarantee
- ----------------------------------------------- (If required by Instruction 5)
X
- ----------------------------------------------- Authorized Signature
(SIGNATURE OF REGISTERED X
HOLDER(S) OR AUTHORIZED SIGNATORY) -----------------------------------------------
Note: The above lines must be signed by the
registered holder(s) of Notes as their name(s) Name:
appear(s) on the Notes or by persons(s) -----------------------------------------------
authorized to become registered holder(s) (PLEASE PRINT)
(evidence of which authorization must be
transmitted with this Letter of Transmittal). Title:
If signature is by a trustee, executor, -----------------------------------------------
administrator, guardian, attorney-in-fact,
officer, or other person acting in a fiduciary Name of Firm:
or representative capacity, such person must -----------------------------------------
set forth his or her full title below. See (MUST BE AN ELIGIBLE INSTITUTION AS DEFINED IN
Instruction 5. INSTRUCTION 2)
Name(s): Address:
- ---------------------------------------------- -----------------------------------------------
- ----------------------------------------------- -----------------------------------------------
-----------------------------------------------
Capacity: (INCLUDE ZIP CODE)
- -----------------------------------------------
- ----------------------------------------------- Area Code and Telephone Number:
-----------------------------------------------
Street Address:
- ---------------------------------------- Dated:
- ----------------------------------------------- -----------------------------------------------
- -----------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- -----------------------------------------------
Tax Identification or Social Security Number:
- -----------------------------------------------
</TABLE>
BOX 7
BROKER-DEALER STATUS
- --------------------------------------------------------------------------------
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities.
5
<PAGE> 6
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: AMERICAN COMMERCIAL LINES LLC
- ----------------------------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity whose
number you enter in Part 1 below. See instructions if your name has changed.)
-----------------------------------------------------------------------------------------
Address
-----------------------------------------------------------------------------------------
SUBSTITUTE City, State and ZIP Code
-----------------------------------------------------------------------------------------
FORM W-9 List account number(s) here (optional)
-----------------------------------------------------------------------------------------
DEPARTMENT OF THE PART 1 -- PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION Social Security
TREASURY NUMBER ("TIN") IN THE BOX AT RIGHT AND CERTIFY BY Number or TIN
SIGNING AND DATING BELOW
INTERNAL REVENUE SERVICE
-----------------------------------------------------------------------------------------
PART 2 -- Check the box if you are NOT subject to backup withholding under the
provisions of section 3406(a)(1)(C) of the Internal Revenue Code because (1) you have
not been notified that you are subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service has notified you
that you are no longer subject to backup withholding. [ ]
- ----------------------------------------------------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I PART 3 --
CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS
TRUE, CORRECT AND COMPLETE. Awaiting TIN [ ]
SIGNATURE ------------------------ DATE--------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
6
<PAGE> 7
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES. A properly completed
and duly executed copy of this Letter of Transmittal, including Substitute Form
W-9, and any other documents required by this Letter of Transmittal must be
received by the Exchange Agent at its address set forth herein, and either
certificates for Tendered Notes must be received by the Exchange Agent at its
address set forth herein or such Tendered Notes must be transferred pursuant to
the procedures for book-entry transfer described in the Prospectus under the
caption "Exchange Offer -- Book-Entry Transfer" (and a confirmation of such
transfer received by the Exchange Agent), in each case prior to 5:00 p.m., New
York City time, on the Expiration Date. The method of delivery of certificates
for Tendered Notes, this Letter of Transmittal and all other required documents
to the Exchange Agent is at the election and risk of the tendering holder and
the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. Instead of delivery by mail, it is recommended
that the Holder use an overnight or hand delivery service. In all cases,
sufficient time should be allowed to assure timely delivery. No Letter of
Transmittal or Notes should be sent to the Company. Neither the Issuer nor the
registrar is under any obligation to notify any tendering holder of the Issuer's
acceptance of Tendered Notes prior to the closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes
but whose Notes are not immediately available, and who cannot deliver their
Notes, this Letter of Transmittal or any other documents required hereby to the
Exchange Agent prior to the Expiration Date must tender their Notes according to
the guaranteed delivery procedures set forth below, including completion of Box
4. Pursuant to such procedures: (i) such tender must be made by or through a
firm which is a member of a recognized Medallion Program approved by the
Securities Transfer Association Inc. (an "Eligible Institution") and the Notice
of Guaranteed Delivery must be signed by the holder; (ii) prior to the
Expiration Date, the Exchange Agent must have received from the holder and the
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by mail or hand delivery) setting forth the name and address of the
holder, the certificate number(s) of the Tendered Notes and the principal amount
of Tendered Notes, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, this Letter of Transmittal together with the certificate(s)
representing the Notes and any other required documents will be deposited by the
Eligible Institution with the Exchange Agent; and (iii) such properly completed
and executed Letter of Transmittal, as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all Tendered
Notes in proper form for transfer, must be received by the Exchange Agent within
five New York Stock Exchange trading days after the Expiration Date. Any holder
who wishes to tender Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery relating to such Notes prior to 5:00 p.m., New York City
time, on the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
an Eligible Holder who attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Notes
who is not the registered holder must arrange promptly with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and delivery to the registered holder of the Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner form accompanying this Letter of Transmittal.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder should fill
in the principal amount tendered in the column labeled "Aggregate Principal
Amount Tendered" of the box entitled "Description of Notes Tendered" (Box 1)
above. The entire principal amount of Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Notes held by the holder is not tendered, then Notes for
the principal amount of Notes not tendered and Exchange Notes issued in exchange
7
<PAGE> 8
for any Notes tendered and accepted will be sent to the Holder at his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal, as soon as practicable following the
Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be issued
(and any untendered principal amount of Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should not
endorse any Tendered Notes, nor provide a separate bond power. In any other
case, such registered holder(s) must either properly endorse the Tendered Notes
or transmit a properly completed separate bond power with this Letter of
Transmittal, with the signature(s) on the endorsement or bond power guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name(s)
of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Issuer, evidence satisfactory to the Issuer of their authority to so act must be
submitted with this Letter of Transmittal.
Endorsements on Tendered Notes or signatures on bond powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the Tendered Notes are tendered (i) by a registered holder
who has not completed the box set forth herein entitled "Special Delivery
Instructions" (Box 3) or (ii) by an Eligible Institution.
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate, in
the applicable box (Box 3), the name and address to which the Exchange Notes
and/or substitute Notes for principal amounts not tendered or not accepted for
exchange are to be sent, if different from the name and address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the taxpayer identification or social security number of the person named must
also be indicated.
7. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the transfer and
exchange of Tendered Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide the
Issuer (as payor) with its correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is his or her social
security number. If the Issuer is not provided with the correct TIN, the Holder
may be subject to backup withholding and a $50 penalty imposed by the Internal
Revenue Service. (If withholding results in an over-payment of taxes, a refund
may be obtained.) Certain holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting
8
<PAGE> 9
requirements. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
failure to report all interest or dividends or (ii) the Internal Revenue Service
has notified the holder that such holder is no longer subject to backup
withholding. If the Tendered Notes are registered in more than one name or are
not in the name of the actual owner, consult the "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for information on
which TIN to report.
The Issuer reserves the right in its sole discretion to take whatever steps
are necessary to comply with the Issuer's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of Tendered
Notes will be determined by the Issuer in its sole discretion, which
determination will be final and binding. The Issuer reserves the right to reject
any and all Notes not validly tendered or any Notes the Issuer's acceptance of
which would, in the opinion of the Issuer or their counsel, be unlawful. The
Issuer also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Notes as to any ineligibility of any
holder who seeks to tender Notes in the Exchange Offer. The interpretation of
the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Issuer shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Issuer
shall determine. Neither the Issuer, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities with
respect to tenders of Notes, nor shall any of them incur any liability for
failure to give such notification. Tenders of Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify any of the conditions in the Exchange Offer in the case
of any Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes or transmittal of this Letter of Transmittal will be
accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering Holder
whose Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
indicated herein. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Issuer
will accept for exchange all validly tendered Notes as soon as practicable after
the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Issuer shall be
deemed to have accepted tendered Notes when, as and if the Issuer has given
written or oral notice (immediately followed in writing) thereof to the Exchange
Agent. If any Tendered Notes are not exchanged pursuant to the Exchange Offer
for any reason, such unexchanged Notes will be returned, without expense, to the
undersigned at the address shown in Box 1 or at a different address as may be
indicated herein under "Special Delivery Instructions" (Box 3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures
set forth in the Prospectus under the caption "The Exchange Offer."
9
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
10 1/4% SENIOR NOTES DUE 2008
OF
AMERICAN COMMERCIAL LINES LLC
PURSUANT TO THE PROSPECTUS DATED , 1998
This form must be used by a holder of 10 1/4% Senior Notes due 2008 (the
"Notes") of American Commercial Lines LLC, a Delaware limited liability company
(the "Company"), who wishes to tender Notes to the Exchange Agent pursuant to
the guaranteed delivery procedures described in "The Exchange
Offer -- Guaranteed Delivery Procedures" of the Company's Prospectus, dated
, 1998 (the "Prospectus") and in Instruction 2 to the related Letter
of Transmittal. Any holder who wishes to tender Notes pursuant to such
guaranteed delivery procedures must ensure that the Exchange Agent receives this
Notice of Guaranteed Delivery prior to the Expiration Date of the Exchange
Offer. Capitalized terms used but not defined herein have the meanings ascribed
to them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998 UNLESS EXTENDED
(THE "EXPIRATION DATE").
United States Trust Company
(the "Exchange Agent")
<TABLE>
<S> <C> <C>
By Overnight Courier: By Hand: By Registered or Certified Mail:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway P.O. Box 844
New York, New York 10003 Lower Level Cooper Station
Attn: Corporate Trust Services New York, New York 10006 New York, New York 10276-0844
Attn: Corporate Trust Services Attn: Corporate Trust Services
</TABLE>
By Facsimile:
212-780-0592
Attn: Corporate Trust Services
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
FOR ANY QUESTIONS REGARDING THIS NOTICE OF GUARANTEED DELIVERY OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT
800-548-6565, OR BY FACSIMILE AT 212-780-0592.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<S> <C> <C>
CERTIFICATE NUMBER(S) (IF KNOWN) OF NOTES OR AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PLEASE SIGN AND COMPLETE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Signatures of Registered Holder(s) or Date:
Authorized Signatory: -----------------------------------------------,
- ------------------------------------ 1998
- -------------------------------------------------
- ------------------------------------------------- Address:
Name(s) of Registered Holder(s): -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
- -------------------------------------------------
- ------------------------------------------------- Area Code and Telephone No.:
--------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Notes or on a security position
listing as the owner of Notes, or by person(s) authorized to become Holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility described in the
prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in the Letter of Transmittal) and any other required documents,
all by 5:00 p.m., New York City time, on the fifth New York Stock Exchange
trading day following the Expiration Date.
<TABLE>
<S> <C>
Name of firm:
------------------------------------------
-----------------------------------------------
(AUTHORIZED SIGNATURE)
Address: Name:
- ----------------------------------------------- -----------------------------------------------
(PLEASE PRINT)
Title:
- ----------------------------------------------- -----------------------------------------------
(INCLUDE ZIP CODE)
Area Code and
Tel. No.: Dated: , 1998
- -----------------------------------------------
</TABLE>
DO NOT SEND SECURITIES WITH THIS FORM. ACTUAL SURRENDER OF SECURITIES MUST BE
MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE> 4
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes referred
to herein, the signature must correspond with the name(s) written on the face of
the Notes without alteration, enlargement, or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a participant of the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of the Notes, the signature must correspond with the name shown on the security
position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
4
<PAGE> 1
EXHIBIT 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
AMERICAN COMMERCIAL LINES LLC
10 1/4% SENIOR NOTES DUE 2008
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
, 1998 (the "Prospectus") of American Commercial Lines LLC, a
Delaware limited liability company (the "Company"), and the accompanying Letter
of Transmittal (the "Letter of Transmittal"), that together constitute the
Company's offer (the "Exchange Offer"). Capitalized terms used but not defined
herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 10 1/4% Senior Notes due 2008 (the "Notes") held by
you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (FILL IN AMOUNT):
$ of the 10 1/4% Senior Notes due 2008
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[ ] TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY):
$
[ ] NOT TO TENDER any Notes held by you for the account of the undersigned.
If the undersigned instruct you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (FILL IN
STATE) , (ii) the undersigned is acquiring the Exchange Notes in
the ordinary course of business of the undersigned, (iii) the undersigned is not
participating, does not participate, and has no arrangement or understanding
with any person to participate in the distribution of the Exchange Notes, (iv)
the undersigned acknowledges that any person participating in the Exchange Offer
for the purpose of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Act"), in connection with a secondary resale transaction of the
Exchange Notes acquired by such person and cannot rely on the position of the
Staff of the Securities and Exchange Commission set forth in no-action letters
that are discussed in the section of the Prospectus entitled "The Exchange
Offer -- Resales of the Exchange Notes," and (v) the undersigned is not an
"affiliate," as defined in Rule 405 under the Act, of the Company; (b) to agree,
on behalf of the undersigned, as set forth in the Letter of Transmittal; and (c)
to take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of such Notes.
<PAGE> 2
SIGN HERE
Name of beneficial owner(s):
- --------------------------------------------------------------------------------
Signature(s):
- --------------------------------------------------------------------------------
Name (please print):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Telephone number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- ----------------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
2
