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DISTRIBUTION AND RECAPITALIZATION AGREEMENT
DISTRIBUTION AND RECAPITALIZATION AGREEMENT, dated as of October 26,
1999 (this "Agreement"), between The ST. XXX COMPANY, a Florida company ("St.
Xxx"), and FLORIDA EAST COAST INDUSTRIES, INC., a Florida corporation ("FEC")
(each a "Party" and collectively, "Parties").
WHEREAS, St. Xxx owns, indirectly through St. Xxx Capital II, Inc.
Corporation, a Delaware corporation and a wholly owned subsidiary of St. Xxx
(the "Delaware Sub"), as of the close of business on the date hereof, 19,609,216
shares of common stock, no par value per share, of FEC ("FEC Common Stock");
WHEREAS, prior to the Declaration Date (as defined herein), Delaware
Sub will merge with and into St. Xxx with St. Xxx as the surviving corporation
(the "Delaware Sub Merger");
WHEREAS, prior to the Declaration Date, St. Xxx will contribute all of
its shares of FEC Common Stock to which it will have direct title to and
ownership of as a result of the Delaware Sub Merger, to a Florida corporation
which will be incorporated prior to the Declaration Date and will be a direct
wholly owned Subsidiary of St. Xxx ("Merger Sub");
WHEREAS, FEC and Merger Sub, expect to enter into Articles of Merger
substantially in the form attached hereto as Exhibit A (the "Articles of
Merger"), pursuant to which, among other things, Merger Sub will merge with and
into FEC with the consequent capital stock changes resulting in (i) all of the
outstanding share capital in Merger Sub being exchanged for 19,609,216 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, (ii) all of the shares of FEC
Common Stock held by Merger Sub being canceled and (iii) all other stockholders
of FEC retaining all their shares of FEC Common Stock, which class of stock will
be re-designated as Class A Common Stock and shall be entitled to elect 20% of
the members of the board of directors of FEC (such merger and the transactions
(including, without limitation, the amended and restated Articles of
Incorporation and Bylaws of FEC specified therein) contemplated by the Articles
of Merger, the "Recapitalization");
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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 on the Distribution Date (as defined herein) 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 this Agreement, to the holders
of record of the common stock, no par value per share, of St. Xxx ("St. Xxx
Common Stock"), as of the Distribution Record Date (as defined herein), on a pro
rata basis (the "Distribution");
WHEREAS, the Board of Directors of FEC has determined that it is
appropriate, desirable and in the best interests of FEC and its stockholders
that the Distribution be consummated, and the Recapitalization is a necessary
and desirable means to enable the Distribution to occur;
WHEREAS, St. Xxx is in the process of applying for a ruling from the
Internal Revenue Service to the effect that the Distribution will be a tax-free
distribution within the meaning of Section 355 of the Code (as defined herein);
WHEREAS, each of St. Xxx and FEC has determined that it is necessary
and desirable to set forth the principal corporate transactions required to
effect the Distribution and the Recapitalization; and
WHEREAS, each of St. Xxx and FEC has determined that it is necessary
and desirable to set forth certain additional agreements that will govern
certain matters following the Distribution, including relating to (i) the
restructuring of the asset, property and development management relationship
between the Parties and (ii) certain agreements between FEC and certain of its
shareholders after the Distribution.
NOW, THEREFORE, in consideration of the mutual representations and
warranties, covenants, agreements, and conditions contained in this Agreement,
the Parties hereby agree as follows,
ARTICLE I.
DEFINITIONS
SECTION I.1 General. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Action" shall mean any action, suit, arbitration,
inquiry, proceeding or investigation by or before any court, any
Governmental Authority or any arbitration tribunal.
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(b) "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, whether through the ownership of voting securities or other
interests, by contract or otherwise.
(c) "Agreement Disputes" shall have the meaning set forth in
Section 5.1.
(d) "Articles of Merger" shall have the meaning set forth in
the recitals hereto.
(e) "Assets" shall mean assets, properties and rights
(including goodwill) , wherever located (including in the possession of
vendors or other third parties or elsewhere), whether real, personal or
mixed, tangible, intangible or contingent, in each case whether or not
recorded or reflected or required to be recorded or reflected on the
books and records or financial statements of any Person.
(f) "Business Entity" shall mean any corporation, partnership,
limited liability company or other entity which may legally hold title
to Assets.
(g) "Class B Common Stock" shall have the meaning set forth in
the recitals hereto.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder, including
any successor legislation.
(i) "Declaration Date" shall mean the date, mutually agreed
between St. Xxx and FEC, on which (i) the St. Xxx Board of Directors
shall declare the Distribution, and (ii) the Articles of Merger
effecting the Recapitalization shall be filed with the Department of
State of the State of Florida.
(j) "Distribution" shall have the meaning set forth in the
recitals hereto.
(k) "Distribution Agent" shall mean the distribution agent
selected by St. Xxx to effect the Distribution, which may be FEC's
stock transfer agent.
(l) "Distribution Date" shall mean the date following the
consummation of the Recapitalization determined by the Board of
Directors of St. Xxx for the
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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.
(m) "Distribution Record Date" shall mean the date determined
by the Board of Directors of St. Xxx as the record date for the
determination of the holders of record of St. Xxx Common Stock entitled
to receive shares of Class B Common Stock in the Distribution.
(n) "Effective Time" shall mean immediately prior to the
midnight, New York time, that ends the 24-hour period comprising the
Distribution Date.
(o) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
(p) "FBCA" shall mean the Florida Business Corporation Act, as
amended.
(q) "FEC Common Stock" shall have the meaning set forth in the
recitals hereto.
(r) "FEC" shall have the meaning set forth in the heading of
this Agreement.
(s) "FEC Business" shall mean each and every business
conducted at any time prior to, on or after the Effective Time by FEC
or any current, former, or future Subsidiary of FEC or other Business
Entity controlled by FEC, whether or not such Subsidiary is a
Subsidiary of FEC or such Business Entity is controlled by FEC on the
date hereof.
(t) "FEC Business Entity" shall mean any Business Entity a
majority of the equity interests of which are owned, directly or
indirectly, by FEC.
(u) "FEC Group" shall mean FEC and each Person that is a
Subsidiary of FEC immediately prior to the Effective Time.
(v) "FEC Indemnitees" shall mean, each member of the FEC
Group, each of their respective present and former directors, officers,
employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing.
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(w) "FEC Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise from, relate to or are in the nature
of the operation of the FEC Business or the ownership of the Assets of
the FEC Business by FEC, any current, former or future Subsidiary of
FEC or any Business Entity controlled by FEC, whether such Liabilities
arise before, on or after the Effective Time and whether known or
unknown, fixed or contingent, and, without limiting the generality of
the foregoing, shall include and be deemed to include:
(i) any and all Liabilities to which St. Xxx or its
predecessors and successors may become subject arising from or
based upon its status or alleged status as a "controlling
person" (as defined under Section 15 of the Securities Act and
Section 20 of the Exchange Act) of FEC relating to (a) the
Proxy Statement (or any amendment thereto) (except for
liabilities which FEC incurs solely as a result of written
information relating to St. Xxx supplied by St. Xxx expressly
for inclusion in the Proxy Statement) or (b) any other report
or document filed by FEC with the SEC at any time before, on
or after the Effective Time (except for liabilities which FEC
incurs solely as a result of written information relating to
St. Xxx or the St. Xxx Business supplied by St. Xxx expressly
for inclusion in such report or document); and
(ii) any Liabilities arising from, relating to or in
the nature of a breach or failure to perform by FEC of any
representation, warranty, covenant or agreement of FEC herein
or in the Articles of Merger;
(x) "FEC Required Consents" shall have the meaning set forth
in Section 2.2(a)(iv) hereto.
(y) "Form 8-A" shall mean an FEC registration statement on
Form 8-A pursuant to which the Class B Common Stock shall be registered
under the Exchange Act, including all amendments thereto.
(z) "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.
(aa) "HSR Act" shall have the meaning set forth in
Section 2.2(a)(iii).
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(bb) "Indemnifying Party" shall have the meaning set forth
in Section 3.3.
(cc) "Indemnitee" shall have the meaning set forth in
Section 3.3.
(dd) "IRS" shall mean the United States Internal Revenue
Service.
(ee) "IRS Ruling" shall have the meaning set forth in
Section 2.1(c) (i).
(ff) "IRS Supplemental Ruling" shall have the meaning set
forth in Section 4.4.
(gg) "Liabilities" shall mean any and all losses, claims,
charges, debts, demands, actions, causes of action, suits, damages,
obligations, payments, costs and expenses, sums of money, accounts,
reckonings, bonds, specialties, indemnities and similar obligations,
exonerations, covenants, contracts, controversies, agreements,
promises, doings, omissions, variances, guarantees, make-whole
agreements and similar obligations, and other liabilities, including
all 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 Agreement or the Articles of Merger, in each
case, whether or not recorded or reflected or required to be recorded
or reflected on the books and records or financial statements of any
Person.
(hh) "Master Agreement" shall mean the Master Agreement
between Gran Central Corporation ("GCC") and St. Xxx, dated October 26,
1999.
(ii) "NYSE" shall mean the New York Stock Exchange, Inc.
(jj) "NYSE Listing Application" shall mean the application to
be submitted by FEC to the NYSE for the listing of the Class B Common
Stock.
(kk) "Person" shall mean any natural person, Business Entity,
corporation, business trust, joint venture, association, company,
partnership, other entity or government, or any agency or political
subdivision thereof.
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(ll) "Proxy Statement" shall have the meaning set forth in
Section 4.3(d) hereof.
(mm) "Real Estate Agreements" shall mean each of the
agreements attached as exhibits to the Master Agreement.
(nn) "Recapitalization" shall have the meaning set forth in
the recitals hereto.
(oo) "Rights Plan" shall have the meaning set forth in Section
2.1(d)(xvi) hereof.
(pp) "St. Xxx Business" shall mean each and every business
conducted at any time prior to, on or after the Effective Time by St.
Xxx or any current, former or future Subsidiary of St. Xxx (other than
FEC and its Subsidiaries), including Merger Sub, or other Business
Entity controlled by St. Xxx (other than FEC and its Subsidiaries),
whether or not such Subsidiary is a Subsidiary of St. Xxx or such
Business Entity is controlled by St. Xxx on the date hereof.
(qq) "St. Xxx Business Entity" shall mean any Business Entity
a majority of the equity interests of which are owned, directly or
indirectly, by St. Xxx.
(rr) "St. Xxx Common Stock" shall mean the common stock, no
par value per share, of St. Xxx.
(ss) "St. Xxx Group" shall mean St. Xxx and each Person (other
than any member of the FEC Group) that is a Subsidiary of St. Xxx
immediately prior to the Effective Time.
(tt) "St. Xxx Indemnitees" shall mean each member of the St.
Xxx Group, each of their respective stockholders, present and former
directors, officers, employees and agents and each of the heirs,
executors, successors and assigns of any of the foregoing.
(uu) "St. Xxx Liabilities" shall mean, collectively, any and
all Liabilities whatsoever that arise out of, result from or are
related to the operation of the St. Xxx Business or the ownership of
the Assets of the St. Xxx Business by St. Xxx, any predecessor entity
of St. Xxx (and all predecessors thereto) or any Subsidiary of or
Business Entity controlled by any such predecessor, any current,
former, or future Subsidiary of St. Xxx or any Business Entity
controlled by St. Xxx (other than, in each case, FEC and its
Subsidiaries) whether such Liabilities arise before, on or
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after the Effective Time and whether known or unknown, fixed or
contingent, and, without limiting the generality of the foregoing,
shall include and be deemed to include:
(i) any Liabilities arising from, relating to or in the
nature of a breach or failure to perform by St. Xxx or Merger
Sub of any representation, warranty, covenant or agreement of
St. Xxx herein or in the Articles of Merger;
(ii) any and all Liabilities which FEC incurs solely as
a result of written information relating to St. Xxx or the St.
Xxx Business supplied by St. Xxx for the express purpose of
inclusion in the Proxy Statement or any report or document
filed by FEC with the SEC;
(iii)any and all Liabilities arising from or relating
to any breach by St. Xxx of any fiduciary duty under
applicable law as a controlling shareholder of FEC.
(vv) "St. Xxx Required Consents" shall have the meaning set
forth in Section 2.2(b)(iv) hereto.
(ww) "SEC" shall mean the United States Securities and
Exchange Commission.
(xx) "Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
(yy) "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).
(zz) "Tax Authority" shall have the meaning set forth in
Section 2.2(a)(ix).
(aaa) "Third-Party Claim" shall have the meaning set forth
Section 3.3.
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(bbb) "Trust" shall mean the Xxxxxx X. xxXxxx Testamentary
Trust.
SECTION I.2 References; Interpretation. References in this 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 Agreement shall be deemed to be followed by
the phrase "without limitation". Unless the context otherwise requires,
references in this Agreement 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 otherwise requires, the words "hereof",
"hereby" and "herein" and words of similar meaning when used in this Agreement
refer to this Agreement in its entirety and not to any particular Article,
Section or provision of this Agreement.
ARTICLE II.
RECAPITALIZATION, DISTRIBUTION, AND OTHER TRANSACTIONS;
CERTAIN COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION II.1 The Recapitalization, Distribution and Other Transactions.
(a) The Recapitalization. Subject to the conditions set forth in
Section 2.1(d) of this Agreement, FEC shall effect the Recapitalization on the
Declaration Date in accordance with the terms of the Articles of Merger,
including duly executing and filing the Articles of Merger with the Department
of State of the State of Florida and filing or recording all other documents or
material required by the FBCA in connection with the Recapitalization; provided
that FEC shall not, and shall not be obligated to, file the Articles of Merger
until (i) Merger Sub shall have duly executed the Articles of Merger and (ii)
St. Xxx shall have consented to the filing of the Articles of Merger with the
Department of State of the State of Florida.
(b) The Distribution. Subject to the conditions set forth in Sections
2.1(c) of this Agreement, on the Declaration Date the Board of Directors of St.
Xxx shall (i) declare the Distribution upon the terms set forth in this
Agreement, (ii) cause Merger Sub to duly execute the Articles of Merger and
(iii) consent to the filing by FEC of the Articles of Merger with the Department
of State of the State of Florida. To effect the Distribution, St. Xxx shall
cause the Distribution Agent to distribute, on or as soon as practicable
following the Distribution Date, on a pro rata basis to the holders of record of
St. Xxx Common Stock on the Distribution Record Date, all shares of Class B
Common Stock received by St. Xxx in the Recapitalization. During the period
commencing on the date the certificates representing shares of Class B Common
Stock are delivered to the Distribution
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Agent and ending upon the date(s) on which certificates evidencing such shares
are mailed to holders of record of St. Xxx Common Stock on the Distribution
Record Date or on which fractional shares of Class B Common Stock are sold on
behalf of such holders, St. Xxx shall cause the Distribution Agent to hold the
certificates representing shares of Class B Common Stock on behalf of such
holders. St. Xxx shall deliver to the Agent the share certificates representing
the shares of Class B Common Stock held by St. Xxx which are to be distributed
to the holders of St. Xxx Common Stock in the Distribution. St. Xxx agrees to
reimburse the Distribution Agent for its reasonable costs, expenses and fees in
connection with the Distribution. FEC agrees, if required by St. Xxx, to provide
all certificates evidencing shares of Class B Common Stock that St. Xxx shall
require in order to effect the Distribution.
(c) Conditions to the Distribution. The obligation of St. Xxx to (1)
declare the Distribution on the Declaration Date, (2) cause Merger Sub to duly
execute the Articles of Merger and (3) consent to the filing of the Articles of
Merger with the Department of State of the State of Florida, is, in each case,
subject to the satisfaction or waiver by St. Xxx as determined by St. Xxx in its
sole discretion, of the conditions set forth below:
(i) (a) A private letter ruling, the request for which shall
have been prepared by counsel for St. Xxx in consultation with counsel
for FEC, shall have been received from the IRS in form and substance
reasonably satisfactory to St. Xxx providing that, among other things,
the Recapitalization and the Distribution will qualify as tax-free
transactions for federal income tax purposes under Sections 354 and 355
of the Code, respectively (the "IRS Ruling") and the IRS Ruling shall
continue in effect; and (b) St. Xxx and FEC shall have complied with
all provisions, statements or representations set forth in the IRS
Ruling, the request for an IRS Supplemental Ruling, if St. Xxx has
determined to seek an IRS Supplemental Ruling in accordance with
Section 4.4, and which request shall have been prepared by counsel for
St. Xxx in consultation with counsel for FEC and, if granted prior to
such time, the IRS Supplemental Ruling, in each case, that are required
to be complied with prior to the Declaration Date;
(ii) Any approvals and consents of any Governmental Authority
necessary to consummate the Distribution, Recapitalization and the
other transactions contemplated hereby and by the Articles of Merger
shall have been obtained and shall be in full force and effect, and any
waiting periods or extensions thereof required by any Governmental
Authority or with respect to any such approvals or consents shall have
expired or been terminated;
(iii) No actions or suits by any Governmental Authority or
third party against either of the Parties shall be pending with respect
to, and the Parties shall
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not be subject to any injunctions, judgments, decrees or orders which
enjoin or rescind, the transactions contemplated by this Agreement or
the Articles of Merger or otherwise prevent either of the Parties from
complying with the terms and provisions of this Agreement or the
Articles of Merger (and which, in the case of any pending action or
suit, raise substantial issues of law or fact and have, in the judgment
of St. Xxx, a reasonable probability of success), and no other event
outside the control of St. Xxx shall have occurred or failed to occur
that prevents the lawful consummation of the Distribution, the
Recapitalization and the other transactions contemplated hereby;
(iv) The Recapitalization and the Distribution shall be in
compliance with applicable federal and state securities and other
applicable laws;
(v) All conditions to the Recapitalization set forth in
Section 2.1(d) (other than the condition contained in Section
2.1(d)(iv)) shall have been satisfied or waived and no circumstances
shall exist that may prevent the consummation of the Recapitalization
concurrently with the declaration of the Distribution pursuant to the
terms hereunder;
(vi) The Indemnity Agreement attached hereto as Exhibit B,
shall have been duly executed and delivered by each of Trust and the
Nemours Foundation, a Florida foundation (the "Foundation"), to St.
Xxx;
(vii) The Class B Common Stock shall have been approved for
listing on the NYSE, subject to official notice of issuance;
(viii) The Recapitalization and related transactions shall
have been approved by the holders of a majority of outstanding shares
of FEC Common Stock not beneficially owned by St. Xxx or any Affiliate
of St. Xxx;
(ix) The Master Agreement and each of the Real Estate
Agreements shall be in full force and effect as of the Distribution
Date in accordance with their terms and there shall be existing no
default by the parties thereto of any material terms thereof;
(x) Each of the Senior FEC Employee Consents shall have
been duly executed and delivered to St. Xxx;
(xi) FEC shall have obtained the FEC Required Consents;
(xii) Each of the representations and warranties of FEC set
forth in this
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Agreement shall have been true and correct in all material respects
when made and shall be true and correct in all material respects as of
the Declaration Date; and FEC shall have performed or complied in all
material respects with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Declaration
Date; and St. Xxx shall have received a certificate of the chief
executive officer of FEC as to the foregoing;
(xiii) St. Xxx shall have received a secretary's certificate
certifying and attaching the articles and bylaws of FEC as amended as
of the Distribution Date and all resolutions of FEC and evidence of FEC
shareholder votes with respect to the transactions contemplated hereby,
as of the Distribution Date;
(xiv) The Form 8-A shall have been filed with the Commission
and there shall be no impediment to the certification by the NYSE to
the Commission of the listing of the Class B Common Stock; and
(xv) All actions and other documents and instruments
reasonably necessary from or by Persons other than St. Xxx in
connection with the transactions contemplated hereby shall have been
taken or executed, as the case may be, in form and substance reasonably
satisfactory to St. Xxx.
The foregoing conditions are for the sole benefit of St. Xxx and shall not give
rise to or create any duty on the part of St. Xxx to waive or not waive any such
condition.
(d) Conditions to the Recapitalization. The obligation of FEC to effect
the Recapitalization on the Declaration Date is subject to the satisfaction or
waiver by FEC, as determined by FEC in its sole discretion, of the conditions
set forth below:
(i) Any approvals and consents of any Governmental Authority
necessary to consummate the Distribution, the Recapitalization and the
other transactions contemplated hereby and by the Articles of Merger
shall have been obtained and shall be in full force and effect, and any
waiting periods or extensions thereof required by any Governmental
Authority or with respect to any such approvals or consents shall have
expired or been terminated;
(ii) No actions or suits by any Governmental Authority or
third party against either of the Parties shall be pending with respect
to, and the Parties shall not be subject to any injunctions, judgments,
decrees or orders which enjoin or rescind, the transactions
contemplated by this Agreement or the Articles of Merger or otherwise
prevent either of the Parties from complying with the terms and
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provisions of this Agreement or the Articles of Merger (and which, in
the case of any pending action or suit, raise substantial questions of
law or fact and have, in the judgment of FEC, a reasonable probability
of success), and no other event outside the control of FEC shall have
occurred or failed to occur that prevents the lawful consummation of
the Distribution, the Recapitalization or the other transactions
contemplated hereby;
(iii) The Recapitalization and the Distribution shall be in
compliance with applicable federal and state securities and other
applicable laws;
(iv) All conditions to the Distribution set forth in Section
2.1(c) (other than the condition contained in Section 2.1(c)(v)) shall
have been satisfied or waived and no circumstances shall exist that may
prevent the declaration of the Distribution concurrently with the
consummation of the Recapitalization pursuant to the terms hereunder;
(v) The Recapitalization shall have been approved by a
majority of the outstanding shares of FEC Common Stock not beneficially
owned by St. Xxx or any Affiliate of St. Xxx;
(vi) The Recapitalization shall have been approved by the
outstanding shares of FEC Common Stock as required under applicable
Florida law;
(vii) The Shareholders Agreement, substantially in the form
attached hereto as Exhibit C, shall have been duly executed and
delivered to FEC by Trust and the Nemours Foundation and shall be in
full force and effect;
(viii) St. Xxx shall have obtained the St. Xxx Required
Consents;
(ix) Each of the representations and warranties of St. Xxx set
forth in this Agreement shall have been true and correct in all
material respects when made and shall be true and correct in all
material respects as of the Declaration Date; and St. Xxx shall have
performed or complied in all material respects with all agreements and
covenants required to be performed by it under this Agreement at or
prior to the Declaration Date; and FEC shall have received a
certificate of the chief executive officer of St. Xxx as to the
foregoing;
(x) FEC shall have received a secretary's certificate
certifying and attaching the articles and bylaws of St. Xxx and all
resolutions of St. Xxx with respect to the transactions contemplated
hereby, as of the Declaration Date;
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(xi) The Class B Common Stock shall have been approved for
listing on the NYSE, subject to official notice of issuance;
(xii) (A) The IRS Ruling shall have been received by St. Xxx,
shall not have imposed material restrictions on FEC that would not have
been reasonably anticipated by FEC at the time the request for the IRS
Ruling was made, and such IRS Ruling shall not have been revoked and
(B) the IRS shall not have conditioned the delivery of the IRS Ruling
on a material modification of any of this Agreement, the Shareholders
Agreement, the Articles of Incorporation of FEC attached to the
Articles of Merger or the Rights Plan, which adversely affects the
substantive benefits to FEC and FEC's shareholders under such
instruments taken as a whole;
(xiii) The Master Agreement and each of the Real Estate
Agreements shall be in full force and effect as of the Declaration Date
in accordance with their terms and there shall be existing no default
by the parties thereto of any material terms thereof;
(xiv) Merger Sub shall own, beneficially and of record, all
right, title and interest, free and clear of any claims, liens or
encumbrances, to all shares of FEC Common Stock owned, directly or
indirectly, by St. Xxx as of the date of the Recapitalization;
(xv) prior to the execution of this Agreement, Xxxxxxxxx,
Lufkin & Xxxxxxxx shall have delivered to FEC its opinion, in form and
substance satisfactory to the Board of Directors of FEC, as to the
effect from a financial point of view of the Recapitalization and
related transactions on the shareholders of FEC, other than St. Xxx and
its affiliates; and
(xvi) The FEC Rights Plan, having substantially the terms set
forth on Exhibit D hereto (the "Rights Plan"), shall have been duly
approved by all necessary corporate action and shall be in effect;
provided that the Board of Directors of FEC has complied with the
provisions contained in Section 4.3(r) hereof; and
(xvii) All actions and other documents and instruments
reasonably necessary from or by Persons other than FEC in connection
with the transactions contemplated hereby shall have been taken or
executed, as the case may be, in form and substance reasonably
satisfactory to FEC.
The foregoing conditions are for the sole benefit of FEC and shall not give rise
to or create any duty on the part of FEC to waive or not waive any such
condition.
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SECTION II.2 Representations and Warranties. (a) FEC hereby represents
and warrants, as of the date hereof and as of the Distribution Date (except as
otherwise specified below), to St. Xxx as follows:
(i) Organization; Good Standing; Capitalization. FEC is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Florida and has all corporate power
required to consummate the transactions contemplated hereby and by the
Articles of Merger. Subject to the changes in capitalization of FEC
contemplated by the Articles of Merger, the authorized and outstanding
shares of capital stock of FEC is set forth on Schedule 2.2(a)(i)
hereto.
(ii) Authorization. The execution, delivery and performance by
each of FEC (or in the case of certain of the Real Estate Agreements,
an Affiliate of FEC) and GCC, as the case may be, of this Agreement,
the Articles of Merger, the Master Agreement and the Real Estate
Agreements and the consummation by FEC (including by such Affiliates)
and GCC, as applicable, of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
the part of FEC (including by such Affiliates) and GCC, as applicable,
other than the approval of the Recapitalization and related
transactions by the stockholders of FEC and the approval of the Rights
Plan by the Board of Directors of FEC. This Agreement and the Master
Agreement constitute, and the Articles of Merger, the Real Estate
Agreements and each other agreement or instrument executed and
delivered or to be executed and delivered by FEC or an Affiliate of
FEC, as applicable, pursuant to this Agreement, the Articles of Merger
or the Master Agreement will, upon such execution and delivery,
constitute, a legal, valid and binding obligation of FEC and each
Affiliate of FEC, as applicable, enforceable against FEC and each
Affiliate of FEC, as applicable, in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting 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.
(iii) Consents and Filings. Except (t) for the NYSE Listing
Application, (u) the IRS Ruling, (v) as required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (x) for the filing of a registration statement on Form 8-A
with respect to the Class B Common Stock and (y) for the filing of the
Proxy Statement and any other reports or documents required to be filed
under the Exchange Act and (z) the filing of the Articles of Merger
with the Department of State of the State of Florida in accordance with
the
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FBCA, no material consent of, or filing with, any Governmental
Authority which has not been obtained or made is required for or in
connection with the execution and delivery of this Agreement or the
Articles of Merger by FEC, and the consummation by FEC of the
transactions contemplated hereby or thereby.
(iv) Noncontravention. The execution, delivery and performance
of this Agreement and the Articles of Merger by FEC does not, and the
consummation by FEC of the transactions contemplated hereby and thereby
will not, (x) violate any applicable federal, state or local statute,
law, rule, order, arbitration award, judgment, decree or regulation or
permit (y) violate any provision of the Articles of Incorporation or
By-Laws of FEC, or (z), except as set forth on Schedule 2.2(a)(iv) (any
waivers or consents needed by virtue of such matters, the "FEC Required
Consents"), conflict with, result in the breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument,
mortgage, lien, franchise, instrument, or other arrangement to which
any of FEC or its Subsidiaries is a party or by which it is bound or to
which any of its Assets is subject (or result in the imposition of any
encumbrance of any nature upon any of FEC's Assets or operations),
other than as expressly contemplated hereby (including under Section
2.2(a)(iii)).
(v) Litigation. As of the date of this Agreement, there are no
actions or suits against FEC pending with respect to, and FEC is not
subject to any injunctions, judgments, decrees or orders which enjoin
or rescind, the transactions contemplated by this Agreement or the
Articles of Merger or otherwise prevent FEC from complying with the
terms and provisions of this Agreement or the Articles of Merger.
(vi) Change of Control Adjustments. Except as set forth on
Schedule 2.2(a)(vi), neither of the Recapitalization or Distribution or
any of the other transactions contemplated hereby or by the Articles of
Merger will constitute a "change of control" or otherwise result in the
increase or acceleration of any benefits, including to employees of
FEC, under any agreement to which FEC or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries is bound.
(vii) Certain Transactions. Except for transactions or other
actions that occurred prior to March 1, 1999 or that are described in
Schedule 2.2(a)(vii) , neither FEC nor any other member of the FEC
Group has engaged in any transaction or taken any other action through
the date hereof involving or relating to issuance or disposition of the
stock of FEC or options, warrants or other rights
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to acquire stock of FEC. None of the transactions and other actions
described in Schedule 2.2(a)(vii) were undertaken by FEC in
contemplation of the Distribution or are related to the Distribution
(the Parties agree that the concept of the Distribution was solely
conceived by St. Xxx and first communicated to FEC on or about March 1,
1999), and all transactions and actions by FEC described in Schedule
2.2(a)(vii) were undertaken in the ordinary course of business.
(viii) Issuance of Class B Common Stock. Upon issuance, the
Class B Common Stock will have been duly authorized and validly issued
by all necessary corporate action and will be fully paid and
non-assessable, free and clear of all pledges, liens, encumbrances and
preemptive rights of any nature.
(ix) Information in Ruling Documents. As each becomes
available, FEC will have examined the application for the IRS Ruling
and the appendices and exhibits thereto, and any supplemental filings
or other materials subsequently submitted to the Service in connection
with the Distribution (and any related transactions) or any similar
filings submitted to 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 or imposition of any tax (collectively "any Tax Authority")
in connection with the Distribution and any related transactions
(collectively the "Ruling Documents"), and the facts presented and the
representations made therein, when made, to the extent descriptive of
FEC and its affiliates and the businesses of FEC and its affiliates
(including, without limitation, the business purposes for the
Distribution and the representations in the IRS Ruling Documents to the
extent that they relate to the businesses of FEC and its affiliates,
but not including any representation made by an affiliate of FEC to the
extent descriptive of such affiliate) will be true, correct and
complete in all material respects, as of the date such documents or
material are submitted to the applicable Tax Authority.
(x) Approval. FEC's Board of Directors has resolved to
recommend that the stockholders of FEC vote in favor of the approval of
the Recapitalization and related transactions.
(xi) Proxy Statement. FEC's Proxy Statement, the form of proxy
and any other solicitation material used in connection therewith and
any oral solicitations of proxies made by FEC shall not contain any
statement which, at the time and in the light of the circumstances
under which it is made, is false or misleading with respect to any
material fact, or which omits to state any material fact necessary in
order to make the statements therein not false or misleading or
necessary to
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correct any statement in any earlier communication with respect to any
solicitation of a proxy for any of the matters to be voted upon at the
FEC stockholders meeting with respect to the transactions contemplated
hereby, which has become false or misleading, except that no
representation or warranty is made by FEC with respect to written
information relating to St. Xxx or St. Joe's Business for inclusion in
the Proxy Statement or any such proxy material or oral solicitation.
(xii) Certificates. All Certificates to be furnished by FEC to
St. Xxx hereunder pursuant to a covenant, condition or otherwise are
and will be true and correct as of the dates so furnished.
(b) St. Xxx hereby represents and warrants to FEC, as of the
date hereof and as of the Distribution Date (except with respect to Merger Sub,
the representations and warranties with respect to which are made only as of the
Distribution Date and except as otherwise specified below), as follows:
(i) Organization; Good Standing. Each of St. Xxx, Delaware Sub
is, and Merger Sub will be upon incorporation, a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Florida, or Delaware in the case of Delaware Sub, and has
or will have all corporate power required to consummate the
transactions contemplated hereby and by the Articles of Merger.
(ii) Authorization. The execution, delivery and performance by
each of St. Xxx (or, in the case of certain of the Real Estate
Agreements, an Affiliate of St. Xxx), Delaware Sub, and Merger Sub of
this Agreement, the Articles of Merger, the Master Agreement and the
Real Estate Agreements, as the case may be, and the consummation by
each of St. Xxx (including by such Affiliates), Delaware Sub and Merger
Sub, as applicable, of the transactions contemplated hereby and thereby
have been, or in the case of Merger Sub will have been prior to the
Declaration Date, duly authorized by all necessary corporate action on
the part of each of St. Xxx (including by such Affiliates), Delaware
Sub and Merger Sub, other than the formal declaration of the
Distribution. This Agreement and the Master Agreement constitutes and,
when executed and delivered, the Articles of Merger, the Real Estate
Agreements and each other agreement or instrument executed and
delivered or to be executed and delivered by each of St. Xxx, an
Affiliate of St. Xxx, Delaware Sub and Merger Sub pursuant to this
Agreement will, upon such execution and delivery, constitute, a legal,
valid and binding obligation of each of St. Xxx, each Affiliate of St.
Xxx, Delaware Sub and Merger Sub, enforceable against each of St. Xxx,
each Affiliate of St. Xxx, Delaware Sub
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and Merger Sub in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting 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.
(iii) Consents and Filings. Except (x) for the IRS Ruling, and
(y) as required under the HSR Act and any other reports or documents
required to be filed under the Exchange Act, no material consent of, or
filing with, any Governmental Authority which has not been obtained or
made is required to be obtained or made by each of St. Xxx, Delaware
Sub and Merger Sub for or in connection with the execution and delivery
of this Agreement or the Articles of Merger by each of St. Xxx and
Merger Sub, and the consummation by each of St. Xxx, Delaware Sub and
Merger Sub of the transactions contemplated hereby or thereby.
(iv) Noncontravention. The execution and delivery of this
Agreement by St. Xxx and the performance of this Agreement by St. Xxx,
Delaware Sub and Merger Sub does not, and the consummation by St. Xxx,
Delaware Sub and Merger Sub of the transactions contemplated hereby and
thereby will not, (x) violate any applicable federal, state or local
statute, law, rule, order, arbitration award, judgment, decree or
regulation or permit (y) violate any provision of the Articles of
Incorporation or By-Laws of St. Xxx, Delaware Sub and Merger Sub, or
(z) except as set forth on Schedule 2.2(b)(iv) (any waivers or consents
needed by virtue of such matters, the "St. Xxx Required Consents"),
conflict with, result in the breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, mortgage, lien,
franchise, instrument, or other arrangement to which any of St. Xxx,
Delaware Sub and Merger Sub is a party or by which it is bound or to
which any of its Assets is subject (or result in the imposition of any
encumbrance of any nature upon any of St. Joe's, Delaware Sub's and
Merger Sub's Assets or operations), other than as expressly
contemplated hereby.
(v) Litigation. As of the date of this Agreement, there are no
actions or suits against St. Xxx or Delaware Sub pending with respect
to, and St. Xxx or Delaware Sub is not subject to any injunctions,
judgments, decrees or orders which enjoin or rescind, the transactions
contemplated by this Agreement or the Articles of Merger or otherwise
prevent each of St. Xxx, Delaware Sub and Merger Sub from complying
with the terms and provisions of this Agreement or the Articles of
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Merger.
(vi) Ownership of Delaware Sub and Merger Sub. St. Xxx owns,
and in the case of Merger Sub will own upon Merger Sub's incorporation,
all outstanding equity interests of Delaware Sub and Merger Sub free
and clear of any claims, liens or encumbrances and no other person
holds any equity interests of Delaware Sub or Merger Sub nor has any
right to acquire any equity interests in Delaware Sub or Merger Sub.
(vii) Merger Sub's Title to FEC Common Stock. As of the date
hereof, St. Xxx owns beneficially and of record, directly or indirectly
(including through Delaware Sub), all right, title and interest, free
and clear of any claims, liens or encumbrances, 19,609,216 shares of
FEC Common Stock. All right and title to all shares of FEC Common Stock
owned directly or indirectly by St. Xxx or Delaware Sub as of the date
hereof will have been contributed to Merger Sub prior to the
Declaration Date, and Merger Sub will then own beneficially and of
record, free and clear of any claims, liens or encumbrances, such
stock.
(viii) Purpose of Merger Sub. Merger Sub was formed by St. Xxx
solely for the purposes of effecting the Recapitalization upon the
terms and conditions of this Agreement and the Articles of Merger and
will have no Assets as of the Effective Time other than the shares of
FEC Common Stock owned by St. Xxx through a wholly owned Subsidiary as
of the date hereof.
(ix) Certificates. All certificates to be furnished by St.
Xxx, Delaware Sub and Merger Sub to FEC hereunder pursuant to a
covenant, condition or otherwise are and will be true and correct as of
the dates so furnished.
(x) Information Furnished by St. Xxx for Proxy Statement. The
information in FEC's Proxy Statement which has been furnished by St.
Xxx to FEC for the purpose of inclusion therein shall not contain any
statement which, at the time and in the light of the circumstances
under which it is made, is false or misleading with respect to any
material fact, or which omits to state any material fact necessary in
order to make the statements therein not false or misleading or has
become false or misleading, provided that FEC has complied with its
obligations set forth in the third, fourth and fifth sentences of
Section 4.3(d).
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ARTICLE III.
INDEMNIFICATION
SECTION III.1 Indemnification by FEC. (a) FEC shall indemnify, defend
and hold harmless the St. Xxx Indemnitees from and against any and all FEC
Liabilities or third-party allegations of FEC Liabilities to which, in any case,
the St. Xxx Indemnitees become subject.
(b) FEC shall indemnify, defend and hold harmless the St. Xxx
Indemnitees from and against any Liability to which, in any case, the St. Xxx
Indemnitees become subject arising from, relating to or in the nature of any
inaccuracy in, or failure by FEC to comply with, any representation or statement
made by FEC to St. Xxx or the IRS in connection with the requests by St. Xxx for
the IRS Ruling and the IRS Supplemental Ruling; provided, however, that,
notwithstanding the foregoing, FEC shall not indemnify St. Xxx, any St. Xxx
Indemnitee or any shareholder of St. Xxx for any liability that results from any
inaccuracy or incompleteness in any representation or statement made by St. Xxx
to the IRS in connection with requests for the IRS Ruling or the IRS
Supplemental Ruling or failure by St. Xxx to comply with any representation or
statement made by St. Xxx to the IRS in connection with the requests for the IRS
Ruling or the IRS Supplemental Ruling.
(c) FEC shall indemnify, defend and hold harmless the St. Xxx
Indemnitees from and against one hundred percent (100%) of 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 the highest statutory marginal tax
corporate tax rates for the relevant taxable period (the "Distribution
Restructuring Taxes"), in any case arising from, relating to or in the nature
of, any actions or inactions of FEC or FEC's Affiliates or FEC's shareholders
relating directly to FEC, FEC's Subsidiaries or FEC stock without regard to
whether such action or inaction would constitute a breach of any covenant under
Section 4.4 hereof, including, without limitation, the following actions:
i Any action or inaction on the part of FEC or any FEC affiliate
after the Distribution (including, without any limitation, any
amendment to FEC's Articles of Incorporation (or other
organizational documents)), whether through a stockholder vote
or otherwise, affecting the relative voting rights of the
separate classes of FEC stock (including without limitation,
through the conversion of one class of FEC stock into another
class of FEC stock.)
ii Any acquisition of stock of FEC or of stock of any FEC
affiliate by any Person or Persons (including, without
limitation, as a result of an issuance of FEC stock or a
merger of another entity with and into FEC or any FEC
affiliate) or any acquisition of Assets of FEC or any FEC
affiliate
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(including, without limitation, as a result of a merger) by any
Person or Persons.
(d) If any Tax Authority withdraws all or any portion of the IRS Ruling
or any IRS Supplemental Ruling issued to St. Xxx in connection with the
Distribution arising from, relating to or in the nature of a breach or failure
to comply by FEC or any FEC affiliate of any representation, warranty, covenant
or agreement made in this Agreement relating directly to FEC, FEC's Subsidiaries
or FEC stock, FEC shall indemnify, defend and hold harmless the St. Xxx
Indemnitees from and against one hundred percent (100%) of any Distribution
Restructuring Taxes arising from, relating to or in the nature of such breach or
failure to comply.
SECTION III.2 Indemnification by St. Xxx. (a) St. Xxx shall
indemnify, defend and hold harmless the FEC Indemnitees from and against any and
all St. Xxx Liabilities or third-party allegations of St. Xxx Liabilities to
which, in any case, the FEC Indemnitees become subject.
(b) St. Xxx shall indemnify, defend and hold harmless the FEC
Indemnitees from and against (i) any and all federal, state and local taxes,
including any interest, penalties or additions to tax, that result solely from
the Recapitalization and (ii) any liability of any member of the FEC Group,
arising from, relating to or in the nature of any inaccuracy in, or failure by
St. Xxx to comply with, any representation made by St. Xxx to the IRS in
connection with the requests by St. Xxx for the IRS Ruling and the IRS
Supplemental Ruling; provided, however, that, notwithstanding the foregoing, St.
Xxx shall not indemnify FEC or any FEC Indemnitee for any liability that results
from any inaccuracy or incompleteness in any representation made by FEC to the
IRS in connection with requests for the IRS Ruling or the IRS Supplemental
Ruling or failure by FEC to comply with any representation made by FEC to the
IRS in connection with the requests for the IRS Ruling or the IRS Supplemental
Ruling or for any liability of the FEC Indemnitees arising under Sections
3.1(b), (c) or (d).
SECTION III.3 Procedures for Indemnification in Third-Party Claims.
(a) Third-Party Claims. If a claim or demand is made against a FEC
Indemnitee or an St. Xxx Indemnitee (each, an "Indemnitee") by any Person who is
not a party to this Agreement, including, without limitation, any Governmental
Authority with respect to taxes (a "Third-Party Claim"), as to which such
Indemnitee may be entitled to indemnification pursuant to this Agreement, such
Indemnitee shall notify the party which is or may be required pursuant to the
terms hereof to make such indemnification (the "Indemnifying Party") in writing,
and in reasonable detail, of the Third-Party Claim promptly (and in any event
within 30 business days) after receipt by such Indemnitee of
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written notice of the Third-Party Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure. Thereafter, the Indemnitee shall deliver to the
Indemnifying Party, promptly (and in any event within 15 business days) after
the Indemnitee's receipt thereof, copies of all notices and documents (including
court papers) received by the Indemnitee relating to the Third-Party Claim.
If a Third-Party Claim is made against an Indemnitee with respect to
which a claim for indemnification is made pursuant to Section 3.1 or Section 3.2
hereof, the Indemnifying Party shall be entitled to participate in the defense
thereof and, if it so chooses and acknowledges in writing its obligation to
indemnify the Indemnitee therefor, to assume the defense thereof with counsel
selected by the Indemnifying Party; provided that such counsel is not reasonably
objected to by the Indemnitee. Should the Indemnifying Party so elect to assume
the defense of a Third-Party Claim, the Indemnifying Party shall, within 30 days
(or sooner if the nature of the Third-Party Claim so requires), notify the
Indemnitee of its intent to do so, and if counsel to the Indemnifying Party has
not been properly rejected by the Indemnitee, the Indemnifying Party shall after
a reasonable transition period not be liable to the Indemnitee for legal or
other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided that such Indemnitee shall have the right to employ
counsel to represent such Indemnitee if, in such Indemnitee's reasonable
judgment, a conflict of interest between such Indemnitee and such Indemnifying
Party exists in respect of such claim which would make representation of both
such parties by one counsel inappropriate, or the Third-Party Claim seeks
injunctive relief for other than money damages, and in such event the fees and
expenses of such separate counsel shall be paid by such Indemnifying Party.
Subject to the preceding sentence, if the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall control such defense. The Indemnifying Party shall be liable for the
fees and expenses of counsel employed by the Indemnitee for any period during
which the Indemnifying Party has failed to assume the defense thereof. If the
Indemnifying Party so elects to assume the defense of any Third-Party Claim, all
of the Indemnitees shall reasonably cooperate with the Indemnifying Party in the
defense or prosecution thereof, including by providing or causing to be
provided, records and witnesses as soon as reasonably practicable after
receiving any request therefor from or on behalf of the Indemnifying Party.
In no event will the Indemnitee admit any liability with respect to, or
settle, compromise or discharge, any Third-Party Claim without the Indemnifying
Party's prior written consent (which will not be unreasonably withheld);
provided, however, that the
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Indemnitee shall have the right to settle, compromise or discharge such
Third-Party Claim without the consent of the Indemnifying Party if the
Indemnitee releases the Indemnifying Party from its indemnification obligation
hereunder with respect to such Third-Party Claim and such settlement, compromise
or discharge would not otherwise adversely affect the Indemnifying Party. If the
Indemnifying Party acknowledges in writing liability for a Third-Party Claim (as
between the Indemnifying Party and the Indemnitee), the Indemnitee will agree to
any settlement, compromise or discharge of a Third-Party Claim that the
Indemnifying Party may recommend and that by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third-Party Claim and releases the Indemnitee effective immediately,
completely and unconditionally (with no prospective limitations or changes in
status of the Indemnitee of any nature) with respect to such Third-Party Claim
and that would not otherwise adversely affect the Indemnitee; provided, however,
that the Indemnitee may refuse to agree to any such settlement, compromise or
discharge if the Indemnitee agrees that the Indemnifying Party's indemnification
obligation with respect to such Third-Party Claim shall not otherwise exceed the
amount that would have been required to have been paid by or on behalf of the
Indemnifying Party pursuant to such proposed settlement, compromise or
discharge. If an Indemnifying Party elects not to assume the defense of a
Third-Party Claim, or fails to notify an Indemnitee of its election to do so as
provided herein, such Indemnitee may compromise, settle or defend such
Third-Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third-Party Claim (and shall be liable for
the fees and expenses of counsel incurred by the Indemnitee in defending such
Third-Party Claim) if the Third-Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the Indemnitee
which the Indemnitee reasonably determines, after conferring with its counsel,
cannot be separated from any related claim for money damages. If such equitable
relief or other relief portion of the Third-Party Claim can be so separated from
that for money damages, the Indemnifying Party shall be entitled to assume the
defense of the portion relating to money damages.
(b) Subrogation. Subject in all respects to the terms of Section 3.3(a)
above, in the event of payment by an Indemnifying Party to any Indemnitee in
connection which any Third-Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third-Party Claim against any claimant or plaintiff asserting
such Third-Party Claim. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
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(c) Remedies Not Exclusive. The remedies provided in this Article III
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party; provided that no Person may recover more than once for a
Liability it has incurred.
SECTION III.4 Indemnification Payments Timing; Quantification.
Indemnification required by this Article III 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 Agreement
shall be quantified on an after-tax basis, taking into account, without
limitation, any withholding taxes deducted from the indemnity payment and any
taxes incurred by the Indemnified Party on the indemnity payment.
SECTION III.5 Limitation of Indemnity. The indemnification provisions
contained in this Article III shall not be applicable with respect to any FEC
Liability or St. Xxx Liability with respect to which there exists or may exist
any separate indemnity arrangement set forth in any of the Real Estate
Agreements, the Management Agreement between GCC and St. Xxx, dated as of
January 1, 1998, any agreement contemplated by the Real Estate Agreements or the
Management Agreement or any agreements between St. Xxx or any of its
Subsidiaries and FEC or any of its Subsidiaries relating to property management,
real estate development or real estate brokerage.
ARTICLE IV.
COVENANTS
SECTION IV.1 Access to Information. (a) Other than in circumstances in
which indemnification is sought pursuant to Article III (in which event the
provisions of such Article will govern to the extent in direct conflict with the
provisions of this Section 4.1), from and after the Distribution Date, each of
FEC and St. Xxx shall afford to the other and its authorized accountants,
counsel and other designated representatives reasonable access during normal
business hours, subject to appropriate restrictions for classified, privileged
or confidential information, to the personnel, properties, books and records of
such party and its Subsidiaries insofar as such access is reasonably required by
the other party and relates to such other party's performance of its obligations
under this Agreement or the Articles of Merger or such party's financial, tax
and other reporting obligations.
(b) A party providing information or access to information to the other
party under this Article IV shall be entitled to receive from the recipient,
upon the presentation of invoices therefor, payments for such amounts, relating
to supplies, disbursements and other out-of-pocket expenses, as may be
reasonably incurred in providing such
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information or access to information.
SECTION IV.2 Confidentiality. Each of FEC, its Subsidiaries and
their Affiliates and St. Xxx, its Subsidiaries and their Affiliates shall keep,
and shall cause their respective employees, consultants, advisors and agents to
keep, confidential all information concerning the other Party in its possession,
its custody or under its control (except to the extent that (A) such information
is then in the public domain through no fault of such party or (B) such
information has been lawfully acquired from other sources by such party or (C)
this Agreement or the Articles of Merger or any other agreement entered into
pursuant hereto or thereto permits the use or disclosure of such information) to
the extent such information (i) relates to or was acquired during the period up
to the Effective Time or pursuant to Section 4.1, or (ii) is based upon or is
derived from information described in the preceding clause (i), and each party
shall not (without the prior written consent of the other) otherwise release or
disclose such information to any other Person, except such party's auditors and
attorneys, unless compelled to disclose such information by judicial or
administrative process or unless such disclosure is required by law and such
party has used all reasonable efforts to consult with the other affected Party
or Parties prior to such disclosure.
SECTION IV.3 Standstill; Additional Covenants.
(a) Standstill. Each of St. Xxx and FEC, including on behalf of their
respective Affiliates and agents, agrees not to solicit, initiate or encourage
the commencement of negotiations or continue any current negotiations regarding
any proposal for the acquisition by any third party of any outstanding shares of
capital stock of FEC (other than issuances of FEC Common Stock by FEC pursuant
to employee stock plans in the ordinary course of business) or the acquisition
of FEC through any other means including a merger or purchase of Assets (an
"Acquisition Proposal") until the earlier to occur of the termination of this
Agreement or the time at which the Distribution is consummated; provided,
however, that (i) either Party may respond to any unsolicited inquiries or
proposals solely to indicate that it is bound by this Section 4.3(a) and (ii)
either St. Xxx or FEC may, after its receipt of a bona fide written Acquisition
Proposal, commence discussions or negotiations with the Person making such
Acquisition Proposal, if the Board of Directors of St. Xxx or FEC, as
applicable, in good faith determines, based upon the advice of its outside
counsel, that the respective Board of Directors must do so in order to comply
with its fiduciary duties under applicable law and, in the case of St. Xxx, such
Acquisition Proposal contemplates a transaction in which all shares of FEC
Common Stock are to receive equivalent consideration.
(b) Sale of Fractional Shares. St. Xxx shall appoint the Distribution
Agent as
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agent for each holder of record of St. Xxx Common Stock who would receive in the
Distribution any fractional share of Class B Common Stock. The Distribution
Agent shall aggregate all such fractional shares and sell them in an orderly
manner after the Distribution Date in the open market and, after completion of
such sales, distribute a pro rata portion of the net proceeds from such sales,
based upon the gross selling price of all such fractional shares net of all
selling expenses, to each stockholder of St. Xxx who would otherwise have
received a fractional share. St. Xxx shall reimburse the Distribution Agent for
its reasonable costs, expenses and fees (other than selling expenses) in
connection with the sale of fractional shares of Class B Common Stock and the
distribution of the proceeds thereof in accordance with this Section 4.3(b).
(c) Shareholder Meeting. FEC shall, as soon as reasonably practicable
following the date of this Agreement, duly call, give notice of, convene and
hold, a meeting of its stockholders (the "Stockholders Meeting") for the purpose
of considering the approval of the Recapitalization and related transactions.
FEC, through its Board of Directors, shall resolve to recommend, shall recommend
and shall continue to recommend to its stockholders approval of the
Recapitalization and related transactions and shall not withdraw such
recommendation; provided, however, that, FEC's Board of Directors may withdraw
or modify such recommendation if it determines in good faith, based upon the
advice of outside counsel, that it must do so to comply with its fiduciary
duties under applicable law.
(d) Proxy Statement. Subject to the provisions of this Agreement and
the Articles of Merger, FEC shall, as soon as reasonably practicable following
the date of this Agreement, prepare and file with the SEC a proxy statement for
the solicitation of proxies in favor of the transactions and agreements referred
to in Section 4.3(c) (the "Proxy Statement"). FEC shall use all reasonable
efforts to have the Proxy Statement cleared by the SEC for mailing in definitive
form as promptly as practicable after such filing. FEC and St. Xxx shall
cooperate with each other in the preparation of the Proxy Statement and any
amendment or supplement thereto. FEC shall notify St. Xxx of the receipt of any
comments of the SEC with respect to the Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information,
and shall provide to St. Xxx promptly copies of all correspondence between the
SEC and FEC or any of its advisors with respect to the Proxy Statement. FEC
shall give St. Xxx and its counsel reasonably appropriate advance opportunity to
review the Proxy Statement and all responses to requests for additional
information by and replies to comments of the SEC, and incorporate therein any
reasonable comments St. Xxx xxx timely deliver to FEC with respect thereto,
before such Proxy Statement, response or reply is filed with or sent to the SEC.
FEC agrees to use all reasonable efforts, after consultation with St. Xxx and
its advisors, to respond promptly to all such comments of, and requests by, the
SEC and to cause the Proxy Statement to be mailed to the holders of FEC Common
Stock entitled to
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vote at the Stockholders Meeting as soon as reasonably practicable following the
execution hereof. St. Xxx shall provide FEC such information concerning the
business and affairs of St. Xxx and Merger Sub as is reasonably required for
inclusion in the Proxy Statement.
(e) St. Xxx Mailings. It is understood that St. Xxx xxx, but shall not
be required hereunder, prepare and mail, at such time as determined by St. Xxx,
to the holders of St. Xxx Common Stock, such information concerning FEC, its
business, operations and management, the Distribution and the tax consequences
thereof and such other matters as St. Xxx shall reasonably determine is
advisable or as may be required by law. In such event, St. Xxx shall give FEC
and its counsel reasonably appropriate advance opportunity to review such
documents and shall consider in good faith any comments FEC timely delivers to
St. Xxx with respect to such information. FEC agrees to cooperate with St. Xxx
in the preparation of, and provide any information reasonably requested by St.
Xxx for inclusion in, such mailing. St. Xxx and FEC will prepare, and FEC will,
to the extent required under applicable law, file with the SEC any such
documentation, including any no-action letters or other requests for
interpretive or regulatory assistance, if any, which St. Xxx reasonably
determines are necessary or desirable to effectuate the Distribution and the
other transactions contemplated hereby and by the Articles of Merger and St. Xxx
and FEC shall each use all reasonable efforts to cooperate with each other with
respect thereto and to obtain all necessary approvals from the SEC with respect
thereto as soon as practicable.
(f) Actions Regarding Securities Laws. St. Xxx and FEC shall take all
such action as may be necessary or appropriate under the securities or blue sky
laws of the United States (and any comparable laws under any foreign
jurisdiction) in connection with the Distribution, the Recapitalization and the
other transactions contemplated hereby and by the Articles of Merger.
(g) Listing of Class B Common Stock. FEC shall prepare and file, and
shall use all reasonable efforts to have approved, an application for the
listing on the NYSE of the Class B Common Stock to be distributed in the
Distribution, subject to official notice of issuance. St. Xxx shall provide,
upon request by FEC, information reasonably necessary to FEC for its preparation
and filing of such application.
(h) Opportunity for St. Xxx to Review Filings. Until the Distribution
Date, FEC agrees that prior to filing with the SEC any report or other document
that contains any disclosure relating to the Distribution, this Agreement, the
Articles of Merger or any of the transactions contemplated hereby or thereby, it
shall give St. Xxx and its counsel reasonably appropriate advance opportunity to
review such report or other document and shall consider in good faith any
comments St. Xxx xxx deliver to FEC with respect to or
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for inclusion in such report or document.
(i) No Amendment to Articles or By-Laws of FEC. Prior to the
Distribution Date, FEC shall not amend, and the FEC Board of Directors shall not
approve any amendment to, FEC's Articles of Incorporation or By-Laws, other than
the Amended and Restated Articles of Incorporation and By-Laws of FEC that will
become effective upon the filing of the Articles of Merger with the Department
of State of the State of Florida in connection with the Recapitalization.
(j) St. Xxx Vote in Favor of Transactions. St. Xxx hereby agrees to be
present in person or by proxy at each and every stockholders meeting of FEC at
which any aspect of the transactions contemplated by this Agreement are
submitted to the stockholders of FEC for consideration at such meeting, and to
vote, or cause to be voted, all shares of FEC Common Stock owned directly or
indirectly by it and its Subsidiaries in accordance with the recommendation of
the Board of Directors of FEC referred to in Section 4.3(c) in favor of the
Recapitalization and related transactions; provided that the Recapitalization
and such related transactions are to become effective solely upon the
Declaration of the Distribution; and similarly to execute any written consent
submitted to stockholders by FEC in favor of the Recapitalization and related
transactions.
(k) Creation of Merger Sub; Contribution of Shares. St. Xxx shall (i)
incorporate Merger Sub and (ii) contribute the shares of FEC Common Stock held
by Delaware Sub as of the date hereof to Merger Sub, subsequent to the Delaware
Sub Merger and prior to the Declaration Date.
(l) Opportunity to Review Releases. In addition to the limitations in
Section 4.3(h) above, each of St. Xxx and FEC agrees that no public release or
announcement concerning the Distribution, the Recapitalization or the
transactions contemplated by this Agreement or the Articles of Merger shall be
issued by either party without the prior written consent of the other (which
shall not be unreasonably withheld), except as such release or announcement may
be required by law, in which case the party required to make the release or
announcement shall use all reasonable efforts to allow each other party
reasonable time to comment on each release or announcement in advance of such
issuance.
(m) Senior FEC Employee Consents. FEC shall use all reasonable efforts
to obtain from each of Xxxxxx X. Xxxxxxx (Chairman, President and Chief
Executive Officer of FEC), Xxxxxx X. XxxXxxxx (Executive Vice President Special
Projects of FEC), Xxxx X. XxXxxxxxx (Chief Operating Officer of FEC), Xxxxx X.
Xxxxxx (Senior Vice President, General Counsel and Secretary of FEC) and Xxxxxx
Xxxxxxxx (Executive Vice President and Chief Financial Officer of FEC) a letter
agreement in favor of St. Xxx in the form
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attached as Exhibit E hereto (the "Senior FEC Employee Consents").
(n) Efforts to Obtain Consents. Each of St. Xxx and FEC shall use all
reasonable efforts to obtain all of the consents, waivers or authorizations
required in connection with the completion of the Recapitalization and the
Distribution from any third party or Governmental Authorities;
(o) Efforts to Oppose Contrary Orders, Injunctions and Decrees. Each of
St. Xxx and FEC shall use all reasonable efforts to procure that no order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Distribution, the Recapitalization and the other transactions contemplated
hereby and by the Articles of Merger shall be in effect;
(p) Filing of Press Release. St. Xxx and FEC will issue jointly, prior
to 8:30 a.m. New York City time, on October 27, 1999, the press release attached
as Exhibit F to this Agreement.
(q) Preparation and Filing of Form 8-A. FEC shall prepare and file the
Form 8-A (which may include or incorporate by reference information contained in
the Proxy Statement) with the Commission as promptly as practicable following
the date hereof, and shall use all reasonable efforts to cause the Form 8-A to
become effective under the Exchange Act immediately following the consummation
of the Recapitalization or as soon thereafter as practicable. St. Xxx shall
provide, upon request by FEC, information reasonably necessary to FEC for its
preparation and filing of such Form 8-A. FEC shall give St. Xxx and its counsel
reasonably appropriate advance opportunity to review the Form 8-A and all
responses to requests for additional information by and replies to comments of
the SEC with respect thereto, and shall incorporate therein any reasonable
comments St. Xxx xxx timely deliver to FEC with respect thereto, before such
Form 8-A, response or reply is filed with or sent to the SEC.
(r) Approval of Rights Plan. FEC shall use its best efforts to effect
the adoption of the Rights Plan; provided, however, that, FEC's Board of
Directors shall not be required to effect the adoption of the Rights Plan if it
determines in good faith, based upon the advice of outside counsel, that the
adoption of such Rights Plan would not be in compliance with its fiduciary
duties under applicable law.
(s) Reasonable Efforts. Without limiting any other obligations
hereunder, each of St. Xxx and FEC will cooperate with each other and use (and
shall cause their respective Affiliates directors, officers, employees and
agents to use) all their respective reasonable efforts to take or cause to be
taken all actions, including executing any further documents and making other
filings with Governmental Authorities, and to do or cause to be done all
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things, necessary or advisable in order to consummate and make effective, as
promptly as practicable after the date hereof, the transactions contemplated
hereby and by the Articles of Merger, including the satisfaction, but not
waiver, of all applicable conditions.
SECTION IV.4 Taxes: Cooperation; Right to Supplemental Ruling;
Preservation of Rulings. (a) St. Xxx and FEC will cooperate and take any and all
actions reasonably requested of each other in the preparation and filing of an
application for the IRS Ruling. In addition, St. Xxx will have the right to
obtain, and FEC will have the right, after the original IRS Ruling has been
issued by the IRS, to require St. Xxx to seek to obtain, a supplemental private
letter ruling 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") as St.
Xxx or FEC determines, is necessary to effect the tax treatment of the
Distribution contemplated by this Agreement. If either party determines that an
IRS Supplemental Ruling shall be requested pursuant to this Section 4.4(a), that
other party will cooperate with the requesting party and take any and all
actions reasonably requested by the requesting party in connection with
obtaining the IRS Supplemental Ruling (including, without limitation, by making
any representation or covenant or providing any materials or information
requested by any Tax Authority). On or prior to the Distribution Date, each of
St. Xxx and FEC shall take those actions and consummate those other transactions
in connection with the Distribution that are contemplated by the IRS Ruling, the
ruling request therefor or any related submissions by St. Xxx to the IRS (which
shall have been reviewed by FEC), including, to the extent applicable, the IRS
Supplemental Ruling and the request therefor.
(b) FEC will not take or fail to take, or permit, to the extent it is
in FEC's power to prevent such actions, any FEC affiliate to take or fail to
take, any action, where such action or inaction would be inconsistent with any
material, information, covenant or representation in the IRS Ruling, any Ruling
Documents, any IRS Supplemental Ruling or any IRS materials, appendices and
exhibits submitted or filed therewith (the "Supplemental Ruling Documents").
(c) FEC will not take or fail to take, or permit, to the extent it is
in FEC's power to prevent such actions, any of its affiliates to take or fail to
take, any action or inaction after the Distribution that could reasonably be
expected to prevent the Distribution from qualifying as a tax-free distribution
under Section 355 of the Code. In addition, FEC will not take or fail to take,
or permit any of its affiliates to take or fail to take, any action or inaction
after the Distribution that could reasonably be expected to have a material
adverse impact on the known tax consequences of the Distribution to St. Xxx.
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(d) Other than as contemplated by this Agreement or the Articles of
Merger (including the exhibits thereto), FEC will make no amendment or changes
to its Articles of Incorporation or Bylaws that would affect the composition or
size of its Board of Directors, the manner in which its Board of Directors is
elected, and the duties and responsibilities of its Board of Directors unless
FEC obtains an IRS Supplemental Ruling in conjunction with St. Xxx pursuant to
(a) above that such amendment will not affect the treatment of the Distribution
under Section 355 of the Code or FEC obtains an opinion (reasonably acceptable
to St. Xxx) of nationally recognized tax counsel that such amendment will not
affect the treatment of the Distribution under Section 355 of the Code.
(e) Other than as contemplated by this Agreement or the Articles of
Merger (including the exhibits thereto), FEC will not propose a plan of
recapitalization or amendment to its Articles of Incorporation, or any other
action providing for any of the following, unless (i) the IRS Ruling provides or
(ii) FEC obtains an IRS Supplemental Ruling in conjunction with St. Xxx pursuant
to (a) above that provides that such recapitalization or amendment will not
affect the treatment of the Distribution under Section 355 of the Code or FEC
obtains an opinion (reasonably acceptable to St. Xxx) of nationally recognized
tax counsel that such recapitalization or amendment will not affect the
treatment of the Distribution under Section 355 of the Code:
i The conversion of shares of any class of FEC stock
into a different class of FEC stock.
ii A change in the absolute or relative voting rights of
any class of FEC stock from the rights existing at
the time of the Distribution.
iii Any other action having an effect similar to that
described in (i) or (ii).
(f) Until the first day after the two-year anniversary of the
Distribution:
i FEC will continue to conduct the active trade or
business relied upon in the IRS Ruling (the "Active
Trade or Business") in a manner that satisfies the
requirement of Section 355(b) of the Code.
ii Unless FEC obtains an IRS Supplemental Ruling in
conjunction with St. Xxx pursuant to (a) above that
the following action or actions will not affect the
treatment of the Distribution under Section 355 of
the Code or FEC obtains an opinion (reasonably
acceptable to St. Xxx) of nationally recognized tax
counsel that such
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action or actions will not affect the treatment of
the Distribution under Section 355 of the Code, FEC
will not do either of the following:
(A) Liquidate, dispose of, or otherwise
discontinue the conduct of any portion of
the Active Trade or Business.
(B) Dispose of any business or Assets that would
cause FEC to be operated in a manner
inconsistent in any material respect with
the business purposes for the Distribution
as set forth in the Ruling Documents.
(g) During the two-year period following the Distribution, FEC will
conduct the Active Trade or Business primarily through officers and employees of
FEC or its subsidiaries (and not primarily through independent contractors) who
are not also officers or employees of St. Xxx or its Affiliates.
(h) During the two-year period following the Distribution, FEC will
not, and will not undertake to, voluntarily dissolve or liquidate, or liquidate,
dispose of, or otherwise discontinue the conduct of any portion of the Active
Trade or Business if such liquidation, disposition or discontinuation of the
Active Trade or Business would cause a dissolution or liquidation of FEC, and
except in the ordinary course of business, neither FEC nor any Subsidiaries of
FEC will sell, transfer, or otherwise dispose of, or agree to dispose of, Assets
(including, for such purpose, any capital stock of such subsidiaries) that, in
the aggregate, constitute more than (x) sixty percent (60%) of the gross Assets
of FEC or (y) sixty percent (60%) of the consolidated gross Assets of FEC and
such subsidiaries, unless prior to the consummation of such transaction FEC
obtains an IRS Supplemental Ruling in conjunction with St. Xxx pursuant to (a)
above that such transaction will not affect the treatment of the Distribution
under Section 355 of the Code or FEC obtains an opinion (reasonably acceptable
to St. Xxx) of nationally recognized tax counsel that such transaction will not
affect the treatment of the Distribution under Section 355 of the Code.
(i) FEC will not reacquire its shares during the two-year period
following the distribution unless FEC obtains an IRS Supplemental Ruling in
conjunction with St. Xxx pursuant to (a) above that such reacquisition will not
affect the treatment of the Distribution under Section 355 of the Code or FEC
obtains an opinion (reasonably acceptable to St. Xxx) of nationally recognized
tax counsel that such reacquisition will not affect the treatment of the
Distribution under Section 355 of the Code, except if the reacquisition meets
all of the following conditions:
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i The reacquisition is for a corporate business purpose;
ii The stock acquired is widely held;
iii The acquisition is made on the open market;
iv There is no plan or intention to reacquire more than
twenty percent (20%) of FEC stock by vote or value.
(j) Until the first day after the two-year anniversary of the
Distribution FEC will not enter into any proposed stock issuance transaction
(other than in employee related issuances in the ordinary course of business)
if, as a result of such proposed stock issuance transaction, FEC would issue a
number of shares of FEC stock that, when aggregated with all other shares of FEC
stock issued pursuant to any stock issuance transaction or transactions
occurring prior to or simultaneously with such proposed stock issuance
transaction, would cause either: (a) the number of shares of Class B Common
Stock distributed to the shareholders of St. Xxx in the Distribution to
constitute less than eighty percent (80%) of the total combined voting power of
all outstanding FEC voting stock with respect to the election of directors of
FEC or (b) the issuance of outstanding shares of any class or series of FEC
stock other than stock of FEC entitling the holders thereof to vote, unless FEC
obtains an IRS Supplemental Ruling that such transaction will not affect the
treatment of the Distribution under Section 355 of the Code or FEC obtains an
opinion (reasonably acceptable to St. Xxx) of nationally recognized tax counsel
that such transaction will not affect the treatment of the Distribution under
Section 355 of the Code.
(k) Until the first day after the two-year anniversary of the
Distribution, FEC will not enter into any proposed stock buyback transaction if,
as a result of such proposed stock buyback transaction the then outstanding
shares of Class B Common Stock would constitute less than eighty percent (80%)
of the total combined voting power of all outstanding voting stock of FEC with
respect to the election of directors, unless FEC obtains an IRS Supplemental
Ruling that such transaction will not affect the treatment of the Distribution
under Section 355 of the Code or FEC obtains an opinion (reasonably acceptable
to St. Xxx) of nationally recognized tax counsel that such transaction will not
affect the treatment of the Distribution under Section 355 of the Code. For
purposes of the preceding sentence, any option (including an option issued to
employees or in connection with the performance of services), warrant or other
security that would permit or require a Person to acquire shares of voting stock
of FEC or any other FEC capital stock (including the option, right or obligation
of FEC or a FEC affiliate to acquire shares of FEC capital stock), or any
security convertible into or exchangeable for shares of voting stock of FEC or
other FEC capital stock, shall be treated as if it had been fully exercised,
converted or exchanged at the time of issuance, whether or not such security is
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by its terms exercisable at such time.
(l) Until the first day after the two-year anniversary of the
Distribution, FEC shall not enter into (x) any proposed acquisition transaction
which, together with all proposed acquisition transactions agreed to or entered
into during the two-year period following the Distribution, is of more than 5%
of the stock of FEC (in vote or in value) or, (y) to the extent FEC has the
right to prohibit any proposed acquisition transaction, permit any proposed
acquisition transaction which, together with all proposed acquisition
transactions agreed to or entered into during the two-year period following the
Distribution, is of more than 5% of the Stock of FEC (in vote or in value), in
each case occurring pursuant to any of the following actions:
i The redemption of rights under a stockholders' rights
plan;
ii The determination that a tender offer for the stock
of FEC is a "permitted offer" or similar permitted
acquisition under any such plan or otherwise causing
any such plan to be inapplicable or neutralized with
respect to any proposed acquisition transaction;
iii The approval of any proposed transaction or
transactions involving the acquisition by FEC of
another corporation or business or the acquisition by
another Person of FEC.
unless prior to the consummation of such proposed acquisition transaction or
transactions FEC obtains an IRS Supplemental Ruling that such transaction or
transactions will not affect the treatment of the Distribution under Section 355
of the Code or FEC obtains an opinion (reasonably acceptable to St. Xxx) of
nationally recognized tax counsel that such transaction or transactions will not
affect the treatment of the Distribution under Section 355 of the Code.
ARTICLE V.
DISPUTE RESOLUTION
SECTION V.1 Negotiation. In the event of a controversy, dispute or
claim arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Agreement (but not any
controversy, dispute or claim in any way relating to or arising from any of the
contracts referred to in, or attached as Schedules or Exhibits to, this
Agreement), including any claim based on contract, tort, statute or constitution
(but excluding any controversy, dispute or claim between a party hereto and a
third-party beneficiary hereof) (collectively, "Agreement Disputes"), the
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general counsels of the Parties shall negotiate in good faith for a reasonable
period of time to settle such Agreement Dispute; provided such reasonable period
shall not, unless otherwise agreed by the Parties in writing, exceed 30 days
from the time the Parties begin such negotiations; provided further that in the
event of any arbitration pursuant to Section 5.2 below, the Parties shall not
assert the defenses of statute of limitations and laches arising for the period
beginning after the date the Parties began negotiations hereunder, and any
contractual time period or deadline under this Agreement or the Articles of
Merger to which such Agreement Dispute relates shall not be deemed to have
passed until such Agreement Dispute has been resolved.
SECTION V.2 Arbitration. If after such reasonable period such general
counsels are unable to settle such Agreement Dispute (and in any event, unless
otherwise agreed in writing by the Parties, after 30 days have elapsed from the
time the Parties began such negotiations), such Agreement Dispute shall be
determined, at the request of any party, by arbitration conducted in New York
City, before and in accordance with the then-existing International Arbitration
Rules of the American Arbitration Association (the "Rules"). In any dispute
between the parties, the number of arbitrators shall be one. Any judgment or
award rendered by the arbitrator shall be final, binding and nonappealable
(except upon grounds specified in 9 U.S.C. Sec.10(a) as in effect on the date
hereof). If the Parties are unable to agree on the arbitrator, the arbitrator
shall be selected in accordance with the Rules; provided that the arbitrator
shall be a U.S. national. Any controversy concerning whether an Agreement
Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived,
whether an assignee of this Agreement is bound to arbitrate, or as to the
interpretation of enforceability of this Article V shall be determined by the
arbitrator. In resolving any dispute, the Parties intend that the arbitrator
apply the substantive laws of the State of Florida, without regard to the choice
of law principles thereof. The Parties intend that the provisions to arbitrate
set forth herein be valid, enforceable and irrevocable. The Parties agree to
comply with any award made in any such arbitration proceeding that has become
final in accordance with the Rules and agree to enforcement of or entry of
judgment upon such award, by any court of competent jurisdiction, including (a)
the Circuit Court of the State of Florida, Xxxxx County, or (b) the United
States District Court for the Middle District of Florida, in accordance with
Section 6.16 hereof. The arbitrator shall be entitled, if appropriate, to award
any remedy in such proceedings, including monetary damages, specific performance
and all other forms of legal and equitable relief; provided, however, the
arbitrator shall not be entitled to award punitive damages. Without limiting the
provisions of the Rules, unless otherwise agreed in writing by or among the
Parties or permitted by this Agreement, the Parties shall keep confidential all
matters relating to the arbitration or the award, provided such matters may be
disclosed (i) to the extent reasonably necessary in any proceeding brought to
enforce the award or for entry of a judgment upon the award and (ii) to the
extent otherwise required by law. Notwithstanding Article 32 of the Rules, the
party other than
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the prevailing party in the arbitration shall be responsible for all of the
costs of the arbitration, including legal fees and other costs specified by such
Article 32. Nothing contained herein is intended to or shall be construed to
prevent any party, in accordance with Article 22(3) of the Rules or otherwise,
from applying to any court of competent jurisdiction for interim measures or
other provisional relief in connection with the subject matter of any Agreement
Disputes.
SECTION V.3 Continuity of Performance. Unless otherwise agreed in
writing, the Parties will continue to honor all other commitments under this
Agreement and the Articles of Merger during the course of arbitration or other
dispute resolution pursuant to the provisions of this Article V with respect to
all matters not subject to such dispute, controversy or claim.
ARTICLE VI.
MISCELLANEOUS
SECTION VI.1 Complete Agreement; Construction. This Agreement and the
Articles of Merger, including the Exhibits and Schedules hereto and thereto,
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.
SECTION VI.2 Counterparts. This 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 VI.3 Survival of Agreements. Except as otherwise expressly
contemplated by this Agreement, all covenants, representations, warranties and
agreements of the Parties contained in this Agreement shall survive the
Distribution Date.
SECTION VI.4 Expenses. All costs and expenses incurred in connection
with the preparation, execution, delivery and implementation of this Agreement
and the Articles of Merger, and the Distribution and the other transactions
contemplated hereby and thereby shall be charged to and paid by the party
incurring such costs and expenses.
SECTION VI.5 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
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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: Xxxxxx Xxxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 212 558-3588
Attn: Xxxxxx Xxxxxxxx
To FEC:
Florida East Coast Industries, Inc.
Xxx Xxxxxx Xxxxxx
Xx. Xxxxxxxxx, XX 00000
Telecopy: 000 000-0000
Attn: Xxxxx Xxxxxx
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 000 000-0000
Attn: Xxxxxxxx Xxxxxx, Xx.
SECTION VI.6 Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that
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party's right to demand strict performance thereafter of that or any other
provision hereof.
SECTION VI.7 Amendments. Subject to the terms of Section 6.10 hereof,
this Agreement may not be modified or amended except by an agreement in writing
signed by each of the parties, and in the case of FEC, approved by a majority of
the directors of FEC independent of St. Xxx and its Affiliates.
SECTION VI.8 Assignment. This Agreement shall not be assignable, in
whole or in part, directly or indirectly, by any party hereto without the prior
written consent of the other party hereto, and any attempt to assign any rights
or obligations arising under this Agreement without such consent shall be void.
SECTION VI.9 Successors and Assigns. The provisions to this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and permitted assigns.
SECTION VI.10 Termination. (a) Prior to the filing of the Articles
of Merger, this Agreement may be terminated
(i) by St. Xxx and FEC by mutual consent;
(ii) upon 15 days' written notice to the other Party, by St.
Xxx or FEC if the other Party is materially in breach of, or has
materially failed to comply with, any of its representations,
warranties, covenants or agreements hereunder or in the Articles of
Merger and such breach or failure to comply would materially impair the
benefits to be derived from the Recapitalization or the Distribution,
unless, with respect to any breach or failure to comply which is
reasonably susceptible to cure, the Party whose failure or breach it is
has effected a cure prior to the end of such 15 day notice period;
(iii) by FEC if, following receipt of an Acquisition Proposal,
the Board of Directors of FEC in good faith determines, based upon the
advice of its outside counsel that it must terminate this Agreement in
order to comply with its fiduciary duties under applicable law;
(iv) by St. Xxx if, following receipt of an Acquisition
Proposal which contemplates a transaction in which all shares of FEC
Common Stock are to receive equivalent consideration, the Board of
Directors of St. Xxx in good faith determines, based upon advice of its
outside counsel, that it must terminate this Agreement in order to
comply with its fiduciary duties under applicable law;
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(v) by St. Xxx if the Board of Directors of FEC shall or shall
resolve to (i) not recommend, or withdraw its approval or
recommendation of, the Recapitalization, the Articles of Merger, this
Agreement or any of the transactions contemplated thereby or hereby,
(ii) modify any such approval or recommendation in a manner adverse to
St. Xxx or (iii) approve, recommend or enter into an agreement for any
Acquisition Proposal;
(vi) by FEC if St. Xxx shall or shall resolve to (i) not
vote in favor of this Agreement and related transactions as
contemplated by Section 4.3(j) hereof or (ii) approve, recommend or
enter into an agreement for any Acquisition Proposal;
(vii) by St. Xxx if St. Xxx in good faith believes that the
IRS Ruling in form and content substantially identical to the rulings
requested in the request for the IRS Ruling submitted to the IRS will
not be forthcoming prior to the Declaration Date or, in the case of an
IRS Supplemental Ruling that is requested prior to the Declaration Date
and that is necessary to clarify that material adverse consequences
would not attach to St. Xxx or its affiliates as a result of the
Distribution, that the IRS Supplemental Ruling in form and content
substantially identical to the rulings requested in the request for the
IRS Supplemental Ruling submitted to the IRS will not be forthcoming
prior to the Declaration Date; or
(viii) by St. Xxx or FEC if the Recapitalization is not
consummated by August 1, 2000.
(b) No party shall have any further liability, except for liabilities
then accrued but not discharged, of any kind to any other party or any other
Person as a result of the termination of this Agreement under paragraphs (a)
(vii) and (a)(viii) above. After the filing of the Articles of Merger relating
to the Recapitalization, this Agreement may not be terminated except by an
agreement in writing signed by both Parties.
SECTION VI.11 Subsidiaries. Each of the parties shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary, including the
merger of Delaware Sub with and into St. Xxx pursuant to the Delaware Sub
Merger, of such party or by any entity that is contemplated to be a Subsidiary
of such party on or after the Distribution Date, except that, for purposes of
this Section 6.11, FEC shall not be considered a Subsidiary of St. Xxx.
SECTION VI.12 Third-Party Beneficiaries. Except as provided in Article
III relating to Indemnitees, this Agreement is solely for the benefit of the
parties and their
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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 Agreement.
SECTION VI.13 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 Agreement.
SECTION VI.14 Exhibits and Schedules. The Exhibits and Schedules shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
SECTION VI.15 GOVERNING LAW. THIS 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 VI.16 Consent to Jurisdiction. Without limiting the provisions
of Article VI hereof, 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 Agreement
or any transaction contemplated hereby. 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
6.16. 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
Agreement or the transactions contemplated hereby 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 VI.17 Severability; Representations and Warranties Cumulative.
In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of
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the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby; provided, however, that the consummation of the
Recapitalization is conditioned upon and is not severable from the Distribution,
and that the Distribution is not severable from the Recapitalization. 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. Each representation , warranty, covenant and agreement
hereunder shall apply in accordance with its terms, whether or not it may relate
to or cover information and matters which are the subject of other
representations, warranties, covenants or agreements herein.
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IN WITNESS WHEREOF, the Parties have caused this 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
FLORIDA EAST COAST INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman
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SCHEDULES AND EXHIBITS
SCHEDULE 2.2(A)(I):
None.
SCHEDULE 2.2(A)(IV):
In 1998 FEC adopted a stock incentive plan (the "Plan") which
authorizes the grant of non-qualified stock options and restricted stock to
certain management employees and outside Directors. The Plan is administered by
the Board's Compensation Committee. The number of shares authorized for the Plan
is 1.6 million. Grants of restricted stock total 75,800 shares and options to
acquire 1,134,172 shares have been issued and 30,000 shares have been issued
upon exercise of such options. Options vest ratably from 1 to 5 years. Annual
issuances are determined by the Compensation Committee subject to the
requirements of employment agreements with FEC senior executives. Pursuant to
the Plan, options granted under the Plan are subject to accelerated vesting upon
a change in control. Options for 44,000 shares will be subject to accelerated
vesting, the balance of outstanding options are either subject to the Senior FEC
Employee Consents or have already vested. Prior to the Distribution Date, FEC
will not have granted additional restricted stock or options or issued
additional shares in connection with the options described above, other than in
the ordinary course of business.
SCHEDULE 2.2(A)(VI):
None.
SCHEDULE 2.2(A)(VII):
FEC is contemplating the acquisition of a transportation services
company. If such acquisition in consummated, the consideration paid to the
seller may include stock of FEC issued for such transaction or options to
acquire stock of FEC in an aggregate amount not to exceed 2% of the stock of FEC
(in vote or in value). In addition, the information set forth in Schedule
2.2(a)(iv) above is incorporated herein by reference.
SCHEDULE 2.2(B)(IV):
None.
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EXHIBIT A - ARTICLES OF MERGER
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EXHIBIT B - INDEMNITY AGREEMENT
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EXHIBIT C - SHAREHOLDERS AGREEMENT
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EXHIBIT D - FEC RIGHTS PLAN TERM SHEETS
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EXHIBIT E - SENIOR FEC EMPLOYEE CONSENT
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EXHIBIT F - PRESS RELEASE
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