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INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated October 26, 1999 (this
"Indemnification Agreement"), among The ST. XXX COMPANY, a Florida company
("St. Xxx"), THE NEMOURS FOUNDATION, a Florida foundation ("Nemours") and the
XXXXXX X. XXXXXX TESTAMENTARY TRUST ("Trust", and together with Nemours the,
"Majority Shareholders") (each a "Party" and collectively, "Parties").
WHEREAS, Trust owns as of the close of business on the date hereof,
49,643,292 shares of common stock, no par value per share, of St. Xxx ("St. Xxx
Common Stock") and Nemours owns as of the close of business on the date hereof,
2,232,408 shares of common stock, no par value per share, of St. Xxx
("St. Xxx Common Stock");
WHEREAS, St. Xxx and FLORIDA EAST COAST INDUSTRIES, INC. ("FEC") are
entering simultaneously herewith into a Distribution and Recapitalization
Agreement, dated as of October 26, 1999 (the "Distribution and Recapitalization
Agreement"), pursuant to which, among other things, (i) St. Xxx Capital II,
Inc., a Delaware corporation and a direct wholly owned subsidiary of St. Xxx,
which holds as the date hereof 19,609,216 shares of common stock, no par value
per share, of FEC ("FEC Common Stock"), will be merged with and into St. Xxx
with St. Xxx as the surviving corporation, (ii) St. Xxx will incorporate a
Florida corporation as a direct wholly owned subsidiary of St. Xxx ("Merger
Sub") and will contribute the 19,609,216 shares of FEC Common Stock then held by
St. Xxx to Merger Sub, (iii) Merger Sub will be merged with and into FEC with
the effect that St. Xxx will be issued, in exchange for the cancellation of the
shares of FEC Common Stock that Merger Sub will hold as of the date of its
merger with and into FEC, an equal number of shares of a new Class B Common
Stock, no par value per share, of FEC ("Class B Common Stock"), which new class
of stock shall be entitled to elect 80% of the members of the board of directors
of FEC and in all other respects shall be substantially identical to the FEC
Common Stock (the "Recapitalization") and (iv) St. Xxx will effect the
Distribution (as defined below);
WHEREAS, the Board of Directors of St. Xxx has determined that it is
appropriate, desirable and in the best interests of St. Xxx and its stockholders
to distribute pursuant to the Distribution and Recapitalization Agreement,
following consummation of the Recapitalization, all the shares of Class B Common
Stock that St. Xxx will receive in the Recapitalization, on the terms and
subject to the conditions set forth in the Distribution and Recapitalization
Agreement, to the holders of record of St. Xxx Common Stock, including the
Majority Shareholders, as of a date determined by the Board of Directors of St.
Xxx, on a pro rata basis (the "Distribution");
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WHEREAS, St. Xxx is in the process of applying for a ruling from the
United States Internal Revenue Service (the "IRS") to the effect that the
Distribution will be a tax-free distribution within the meaning of Xxxxxxx 000
xx xxx Xxxxxx Xxxxxx Internal Revenue Code (the "Code");
WHEREAS, one of the conditions to St. Joe's obligation to effect the
consummation of the Distribution under the Distribution and Recapitalization
Agreement is that each of the Majority Shareholders enter into this
Indemnification Agreement on or prior to the date the Distribution is declared;
and
WHEREAS, each of the Majority Shareholders has determined that it is
appropriate, desirable and in the best interests of the beneficiaries of each of
the Majority Shareholders that the Distribution be effected in accordance with
the terms of the Distribution and Recapitalization Agreement and that this
Indemnification Agreement be entered into in connection therewith and each of
the Majority Shareholders has effected all necessary action and obtained any
consents required by it to authorize, enter into and perform this
Indemnification Agreement in accordance with its terms.
NOW, THEREFORE, in connection with the Distribution and in
consideration of the mutual covenants and agreements contained in this
Indemnification Agreement, the Parties hereby agree as follows:
ARTICLE I
RESTRICTIONS ON TRANSFER
SECTION 1. Restrictions on Transfers.
a. Neither of the Majority Shareholders may transfer, agree to transfer
or negotiate regarding a transfer or agreement to transfer any shares of St. Xxx
Common Stock during the time period beginning on the Effective Date and ending
on the date which is six months after the Distribution Date (the "Six-month
Anniversary"); provided, however, that the Majority Shareholders may, after the
Distribution Date and prior to the Six-month Anniversary, transfer to St. Xxx,
in all one transaction or in a series of transactions, up to an aggregate for
all such transfers of an amount of shares of St. Xxx Common Stock equal to 15%
of the number of shares of outstanding stock of St. Xxx immediately after the
Distribution, taking into account all transfers of both Majority Shareholders
during such period on a cumulative basis.
b. Any time after the Six-month Anniversary until the date which is two
years after the Distribution Date (the "Two-year Anniversary"), the Majority
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Shareholders may (i) transfer to St. Xxx, in all one transaction or in a series
of transactions, up to an aggregate for all such transfers and any transfers of
St. Xxx Common Stock to St. Xxx after the Distribution Date and prior to the
Six-month Anniversary of an amount of shares of St. Xxx Common Stock equal to
15% of the number of shares of outstanding stock of St. Xxx immediately after
the Distribution, taking into account all transfers of both Majority
Shareholders during period on and after the Effective Date until the Two-year
Anniversary on a cumulative basis, and (ii) transfer to any other Person or
Persons, in all one transaction or in a series of transactions, up to an
aggregate for all such transfers of an amount of shares of St. Xxx Common Stock
equal to 20% of the number of shares of outstanding stock of St. Xxx immediately
after the Distribution, taking into account all transfers of both Majority
Shareholders during such period on a cumulative basis. At any time after the
Two-year Anniversary, either of the Majority Shareholders may transfer, agree to
transfer or negotiate regarding a transfer or agreement to transfer any of their
shares of St. Xxx Common Stock.
c. Other than the transfers permitted by Section 1(b) of this Article
I, neither of the Majority Shareholders may transfer, agree to transfer or
negotiate regarding a transfer or agreement to transfer any shares of St. Xxx
Common Stock during the time period beginning after the Six-month Anniversary
and ending on the Two-year Anniversary unless the Majority Shareholder seeking
any such transfer or agreement receives a ruling from the Internal Revenue
Service or an opinion of nationally recognized tax counsel, reasonably
satisfactory to St. Xxx, to the effect that the transfer of such St. Xxx Common
Stock will not be treated as part of a "plan" or "series of related
transactions" involving the Distribution within the meaning of Section 355(e) of
the Code.
SECTION 2. Indemnification.
a. Each of the Majority Shareholders shall indemnify, defend
and hold harmless St. Xxx, its Affiliates (other than the Majority
Shareholders), each of their respective stockholders (other than the Majority
Shareholders), present and former directors, officers, employees and agents and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "St. Xxx Indemnitees") from and against any Liability to
which, in any case, the St. Xxx Indemnitees become subject arising from any
inaccuracy in or failure to comply with any written representation or statement
made by it to St. Xxx or the IRS in connection with the requests by St. Xxx for
the IRS Ruling (as defined below) and the IRS Supplemental Ruling (as defined
below); provided, however, that, notwithstanding the foregoing, the Majority
Shareholders shall not be required to indemnify, defend or hold harmless any St.
Xxx Indemnitee for any liability to the extent resulting from any inaccuracy or
incompleteness in any representation or statement made by St. Xxx or any St. Xxx
Indemnitee to the IRS in connection with
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requests for the IRS Ruling or the IRS Supplemental Ruling or failure by St. Xxx
or any St. Xxx Indemnitee to comply with any written representation or statement
made by St. Xxx or any St. Xxx Indemnitee to the IRS in connection with the
requests for the IRS Ruling or the IRS Supplemental Ruling.
b. Each of the Majority Shareholders shall indemnify, defend
and hold harmless the St. Xxx Indemnitees from and against all Liabilities
(including, without limitation, (i) any Distribution Restructuring Taxes and
(ii) any lost financing or other corporate opportunities of St. Xxx related to
St. Joe's inability to issue stock or engage in a transaction without giving
rise to Distribution Restructuring Taxes to the extent St. Xxx could have issued
such stock or engaged in such transaction without giving rise to such
Distribution Restructuring Taxes had there not been a violation of Article I,
Section 1 of this Indemnification Agreement) to which the St. Xxx Indemnitees
may become subject, arising from any failure by it to comply with its
obligations under Article 1, Section 1(a) and (b) of this Indemnification
Agreement.
c. Contractual Indemnification. Other than with respect to
Liabilities with respect to which indemnity payments are made pursuant to (a)
and (b) above, each of the Majority Shareholders shall indemnify, defend and
hold harmless the St. Xxx Indemnitees from and against all Liabilities to which
the St. Xxx Indemnitees may become subject, arising from, relating to, or in the
nature of any failure by it to comply with its representations, warranties,
covenants or agreements in this Agreement.
d. Remedies Not Exclusive. Any and all of the remedies
provided in this Article I shall be cumulative with respect to each other and,
in addition, shall not preclude assertion by any St. Xxx Indemnitee of any other
rights or the seeking of any and all other remedies against either of the
Majority Shareholders.
SECTION 3. Indemnification Payments Timing; Quantification.
Indemnification required by this Indemnification Agreement shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or loss, liability, claim, damage or
expense is incurred. All indemnification payments made or to be made under this
Indemnification Agreement shall be quantified on an after-tax basis, grossed-up
for any withholding taxes deducted from the indemnity payment and for any taxes
incurred by the St. Xxx Indemnitees on the indemnity payment and reduced by any
deduction or other actual reduction in tax realized by the St. Xxx Indemnitee as
a result of such loss, liability, claim, damage or expense, including, without
limitation, any credit allowable under U.S. or foreign tax law, any dividends
received deduction or any adjustment to the basis of the FEC Common Stock or
Class B Common Stock.
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SECTION 4. Taxes: Cooperation. Each of the Majority Shareholders will
cooperate and take any and all actions reasonably requested by St. Xxx in the
preparation and filing of an application for the IRS Ruling and any supplemental
private letter ruling sought by St. Xxx from the IRS in connection with the
Distribution and any related transactions, or any similar ruling issued by any
Tax Authority other than the IRS in connection with the Distribution (an "IRS
Supplemental Ruling") (including, without limitation, by making any
representation or covenant or providing any materials or information reasonably
requested by any Tax Authority). Notwithstanding the foregoing, neither of the
Majority Shareholders shall be required to make any representation or covenant
if such representation or covenant would impose a material burden on such
Majority Shareholder that would not have been reasonably anticipated by such
Majority Shareholder on the date hereof.
ARTICLE II
MISCELLANEOUS
SECTION 1. References; Interpretation; Certain Definitions. References
in this Indemnification Agreement to any gender include references to all
genders, and references to the singular include references to the plural and
vice versa. The words "include", "includes" and "including" when used in this
Indemnification Agreement shall be deemed to be followed by the phrase "without
limitation". The words "either of" when used in this Indemnification Agreement
shall be deemed to be followed by the phrase "or both." Unless the context
otherwise requires, references in this Indemnification Agreement to Articles and
Sections shall be deemed references to Articles and Sections of this
Indemnification Agreement. Unless the context otherwise requires, the words
"hereof", "hereby" and "herein" and words of similar meaning when used in this
Indemnification Agreement refer to this Indemnification Agreement in its
entirety and not to any particular Article, Section or provision of this
Indemnification Agreement.
For purposes of this Indemnification Agreement:
"Action" shall mean any action, suit, arbitration, inquiry, proceeding
or investigation by or before any court , any Governmental Authority or any
arbitration tribunal.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that controls, is controlled by, or is under common control with
the Person specified. As used herein, "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person,
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whether through the ownership of voting securities or other interests, by
contract or otherwise.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the Treasury regulations promulgated thereunder, including any successor
legislation.
"Distribution Date" shall mean the date following the consummation of
the Recapitalization determined by the Board of Directors of St. Xxx for the
mailing of certificates of Class B Common Stock to stockholders of St. Xxx in
the Distribution. The Distribution Date shall be a date as soon as practicable,
but in any event not more than thirty days after the filing of the Articles of
Merger relating to the Recapitalization.
"Distribution Restructuring Taxes" shall mean any taxes imposed upon
the St. Xxx Indemnitees arising from, relating to or in the nature of the
failure of the Distribution to qualify under Section 355 of the Code (including
without limitation, any tax attributable to the application of Section 355(d) or
Section 355(e) of the Code to the Distribution) or corresponding provisions of
the laws of other jurisdictions, using, in the case of St. Xxx, the highest
statutory marginal tax corporate tax rates for the relevant taxable period.
"Effective Date" shall have the meaning set forth in Article II,
Section 4 hereof.
"Governmental Authority" shall mean any federal, state, local, foreign
or international court, government, department, commission, board, bureau,
agency, official, body or other regulatory, administrative or governmental
authority or, with respect to any Person, any securities exchange or association
on which shares of such Person are listed or registered or any self regulating
organization of which such Person is a member.
"Liabilities" shall mean any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments, costs
and expenses, and other liabilities, including, with respect to the withdrawal
by any Tax Authority of all or any portion of the IRS Ruling or any IRS
Supplemental Ruling issued to St. Xxx in connection with the Distribution,
contractual obligations, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever
arising, and including those arising under any law, rule, regulation, Action,
threatened or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses, whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened or contemplated Actions), order or consent decree of any Governmental
Authority or any award of any arbitrator or mediator of any kind, and those
arising under any contract, commitment or undertaking, including those arising
under this Indemnification Agreement, in each case, whether or
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not recorded or reflected or required to be recorded or reflected on the books
and records or financial statements of any Person.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, other entity or government, or
any agency or political subdivision thereof.
"Subsidiary" shall mean any corporation, partnership or other entity
of which another entity (i) owns, directly or indirectly, ownership interests
sufficient to elect a majority of the Board of Directors (or persons performing
similar functions) (irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g., a
trustee).
"Tax Authority" shall mean any Governmental Authority or any
subdivision agency, commission or authority thereof, or any quasi-governmental
or private body having jurisdiction over the assessment, determination,
collection, imposition of any tax.
SECTION 2. Complete Agreement; Construction. This Indemnification
Agreement, shall constitute the entire agreement between the Parties with
respect to the subject matter hereof and thereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter. Except for the rights and obligations of the Majority Shareholders and
St. Xxx set forth in Article I hereof, this Indemnification Agreement shall not
affect the rights and obligations of the Trust and St. Xxx under that certain
Registration Rights Agreement between the Trust and St. Xxx dated December 16,
1997, as amended.
SECTION 3. Counterparts. This Indemnification Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the Parties and delivered to the other Parties.
SECTION 4. Effective Date of the Indemnification Agreement. The
provisions of Article I of this Indemnification Agreement shall become effective
as of the date (the "Effective Date") the Distribution and Recapitalization
Agreement is executed, and thereafter, all covenants, representations,
warranties and agreements of the Parties contained in this Indemnification
Agreement, including, without limitation, those contained in Article I hereof,
shall survive the Distribution Date.
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SECTION 5. Expenses. Except with respect to the obligation of the
Majority Shareholders to indemnify the St. Xxx Indemnitees as set forth in
Article I hereof, all costs and expenses incurred in connection with the
preparation, execution, delivery and implementation of this Indemnification
Agreement shall be charged to and paid by the Party incurring such costs and
expenses.
SECTION 6. Notices. All notices and other communications hereunder
shall be in writing, shall be effective when received, and shall in any event be
deemed to have been received (i) upon hand delivery, (ii) three (3) days after
deposit in U.S. mail, postage prepaid, for first class delivery, (iii) one (1)
business day following the business day of timely deposit with Federal Express
or similar carrier, freight prepaid, for next business day delivery, and (iv)
one (1) business day after the date of the transmission if sent by facsimile;
provided that confirmation of transmission and receipt is confirmed and copy is
promptly sent by first class mail, postage prepaid, and shall be sent to each
Party at the following respective address (or at such other address for a Party
as shall be specified by like notice):
To St. Xxx:
The St. Xxx Company
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: 000 000-0000
Attn: General Counsel
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 212 558-3588
Attn: Xxxxxx Xxxxxxxx
To Trust:
Xxxxxx X xxXxxx Testamentary Trust.
Suite 400
0000 Xxxxxxxxxx Xxxxx
Xx. Xxxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attn: Chairman
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with a copy to:
XxXxxxx Xxxxx Battle & Xxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx, Esquire
To Nemours:
The Nemours Foundation.
Xxxxx 000
0000 Xxxxxxxxxx Xxxxx
Xx. Xxxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attn: Chairman
with a copy to:
XxXxxxx Xxxxx Battle & Xxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx, Esquire
SECTION 7. Waivers. The failure of any Party to require strict
performance by any other Party of any provision in this Indemnification
Agreement will not waive or diminish that Party's right to demand strict
performance thereafter of that or any other provision hereof; no waiver of any
provision of this Agreement will be effective unless it is in writing and
executed by the waiving party.
SECTION 8. Amendments. This Indemnification Agreement may not be
modified or amended except by an agreement in writing signed by each of the
Parties.
SECTION 9. Assignment. This Indemnification Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any Party without
the prior written consent of the other Party, and any attempt to assign any
rights or obligations arising under this Indemnification Agreement without such
consent shall be void.
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SECTION 10. Successors and Assigns. The provisions to this
Indemnification Agreement shall be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and permitted
assigns.
SECTION 11. Third-Party Beneficiaries. Except as provided in Article
III relating to St. Xxx Indemnitees, this Indemnification Agreement is solely
for the benefit of the Parties and their respective Subsidiaries and Affiliates
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Indemnification Agreement.
SECTION 12. Title and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Indemnification
Agreement.
SECTION 13. GOVERNING LAW. THIS INDEMNIFICATION AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF FLORIDA.
SECTION 14. Consent to Jurisdiction. Each of the Parties irrevocably
submits to the exclusive jurisdiction of (a) the Circuit Court of the State of
Florida, Xxxxx County, and (b) the United States District Court for the Middle
District of Florida, for the purposes of any suit, action or other proceeding
arising out of this Indemnification Agreement. Each of the Parties agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Middle District of Florida or if such suit, action
or other proceeding may not be brought in such court for jurisdictional reasons,
in the Circuit Court of the State of Florida, Xxxxx County. Each of the Parties
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such Party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in Florida with
respect to any matters to which it has submitted to jurisdiction in this Section
14. Each of the Parties irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Indemnification Agreement in (i) the Circuit Court of the State of Florida,
Xxxxx County, or (ii) the United States District Court for the Middle District
of Florida, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 16. Severability. In the event any one or more of the
provisions contained in this Indemnification Agreement should be held invalid,
illegal or
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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. Each representation, warranty, covenant and
agreement (including with respect to indemnification) hereunder shall apply in
accordance with its terms, whether or not it may relate to or cover matters
which are the subject of other representations, warranties, covenants or
agreements (including with respect to indemnification) in this Indemnification
Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Indemnification
Agreement to be duly executed as of the day and year first above written.
THE ST. XXX COMPANY
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman
NEMOURS FOUNDATION
By: /s/ X. X. Xxxxxxxx
----------------------------------------
Name: X. X. Xxxxxxxx
Title: Vice Chairman
XXXXXX X. XXXXXX TESTAMENTARY TRUST
By: /s/ X. X. Xxxxxxxx
----------------------------------------
Name: X. X. Xxxxxxxx
Title: Chairman
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