Exhibit 10.26

 

EXECUTION COPY

 

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AMENDED AND RESTATED

 

GUARANTEE and INDEMNITY AGREEMENT

 

Dated as of February 27, 2003

 

by and among

 

DELIAN HOLDINGS, L.L.C.

 

and

 

HORIZON LINES, LLC,

 

as Guarantors,

 

and

 

CSX CORPORATION,

 

CSX ALASKA VESSEL COMPANY, LLC

 

and

 

SL SERVICE, INC.,

 

as Beneficiaries

 

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W/691783v2

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TABLE OF CONTENTS

 

				Page
Preamble				1
Recitals				1
SECTION 1.		Definitions		6
1.01.		Defined Terms		6
1.02.		Terms Generally		17
SECTION 2.		Guarantee		18
SECTION 3.		Indemnity Agreement		19
SECTION 4.		Guarantors’ Obligations Unconditional		20
SECTION 5.		Waiver; Acknowledgments		22
SECTION 6.		Subrogation; Subordination		23
SECTION 7.		No Third-Party Beneficiary		24
SECTION 8.		Conditions to Effectiveness		24
SECTION 9.		Representations and Warranties		24
9.01.		Organization; Authorization		24
9.02.		No Default		25
9.03.		Taxes; Consents; Approvals, etc.		25
9.04.		No Insolvency		25
9.05.		Subsidiaries Guarantors		26
9.06.		Citizenship		26
SECTION 10.		Affirmative Covenants		26
10.01.		Information		26
10.02.		Owner Trustee Information Requests		28
10.03.		[Intentionally Omitted]		28
10.04.		Designation of Unrestricted Subsidiaries		28
10.05.		Charter Vessels		29
10.06.		United States Citizenship		29
10.07.		Power of Attorney		29
10.08.		Further Assurances		29
SECTION 11.		Certain Covenants		29
11.01.		Requirement of Joinder		29
11.02.		Other Covenants		31
11.03.		Limitation on Dividends		33
11.04.		Restriction on Amendment of Guaranteed Obligations		34
11.05.		Transactions with Affiliates and Stockholders		34
11.06.		Restrictions on Asset Sales to Unrestricted Subsidiaries		35
SECTION 12.		Amendments and Waivers; Assignments		36
12.01.		Amendments and Waivers		36
12.02.		Assignments		36
SECTION 13.		Survival		36
SECTION 14.		Events of Default; Remedies		36
14.01.		Events of Default		36
14.02.		Remedies		39

 

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SECTION 15.		Severability		42
SECTION 16.		Miscellaneous		43
16.01.		Governing Law		43
16.02.		Successors and Assigns; Complete Agreement; Headings; Counterparts		43
16.03.		Notices		43
16.04.		Waiver		45
16.05.		Enforcement		45
16.06.		Conflict		45
16.07.		Submission to Jurisdiction and Forum		45
16.08.		[Intentionally Omitted]		46
16.09.		Specific Performance		46
16.10.		U.S. Currency		46
16.11.		Notice of Claim		46
16.12.		Confidentiality		46
16.13.		Certain Covenants		46

 

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EXHIBITS AND APPENDICES

 

Exhibit A		Power of Attorney
Exhibit B		Joinder Agreement
Appendix A		Charter Documents

 

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THIS AMENDED AND RESTATED GUARANTEE AND INDEMNITY AGREEMENT, dated as of February 27, 2003 (as may be amended, modified, supplemented or restated in accordance with the terms hereof, this “Guarantee”) is by and among Delian Holdings, L.L.C., a limited liability company organized under the laws of the State of Delaware (together with its successors and permitted assigns, “New Member”), Horizon Lines, LLC (f/k/a CSX Lines, LLC), a limited liability company organized under the laws of the State of Delaware (together with its successors and permitted assigns, the “Company” or the “Subcharterer,” and together with New Member and each other person executing a Joinder Agreement from time to time, each individually a “Guarantor” and, collectively, the “Guarantors”), CSX Corporation, a corporation organized under the laws of the State of Virginia (together with its successors and permitted assigns, “CSX”), CSX Alaska Vessel Company, LLC, a limited liability company organized under the laws of the State of Delaware (together with its successors and permitted assigns, the “Charterer”), and SL Service, Inc. (formerly known as Sea-Land Service, Inc.), a corporation organized under the laws of the State of Delaware (together with its successors and permitted assigns, “SL Service”, and together with the Charterer and CSX, each individually a “Beneficiary” and collectively, the “Beneficiaries”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Sea-Land Anchorage Bareboat Charter Party, dated as of July 15, 1987 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Anchorage Bareboat Charter”), between State Street Bank and Trust Company (as successor-in-interest to The Connecticut National Bank) (“State Street”), as owner trustee (including any successor thereto or assignee thereof, the “Anchorage Owner Trustee”), and CSX Lines of Alaska, LLC (“Lines of Alaska”) (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Anchorage Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2,1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Anchorage Bareboat Charter and the Anchorage Operative Documents (the “Anchorage Sea-Land Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of November 16, 2001, the Company assigned all of its rights, title and interest under, and Lines of Alaska assumed all of the Company’s liabilities and obligations under, the Anchorage Bareboat Charter and the Anchorage Operative Documents (the “Anchorage Lines of Alaska Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement to be entered into prior to or on the Closing Date (as hereinafter defined), Lines of Alaska is assigning all of its rights, title and interest under, and the Charterer is assuming all of Lines of Alaska’s liabilities and obligations under, the Anchorage Bareboat Charter and the Anchorage Operative Documents (together with the Anchorage Sea-Land Charter Assignment and the Anchorage Lines of Alaska Charter Assignment, the “Anchorage Charter Assignments”);

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WHEREAS, pursuant to that certain Sea-Land Tacoma Bareboat Charter Party dated as of July 15, 1987 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Tacoma Bareboat Charter”), between State Street, as owner trustee (including any successor thereto or assignee thereof, the “Tacoma Owner Trustee”), and Lines of Alaska (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Tacoma Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2, 1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Tacoma Bareboat Charter and the Tacoma Operative Documents (the “Tacoma Sea-Land Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of November 16, 2001, the Company assigned all of its rights, title and interest under, and Lines of Alaska assumed all of the Company’s liabilities and obligations under, the Tacoma Bareboat Charter and the Tacoma Operative Documents (the “Tacoma Lines of Alaska Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement to be entered into prior to or on the Closing Date, Lines of Alaska is assigning all of its rights, title and interest under, and the Charterer is assuming all of Lines of Alaska’s liabilities and obligations under, the Tacoma Bareboat Charter and the Tacoma Operative Documents (together with the Tacoma Sea-Land Charter Assignment and the Tacoma Lines of Alaska Charter Assignment, the “Tacoma Charter Assignments”);

 

WHEREAS, pursuant to that certain Sea-Land Kodiak Bareboat Charter Party dated as of July 15, 1987 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Kodiak Bareboat Charter”), between State Street, as owner trustee (including any successor thereto or assignee thereof, the “Kodiak Owner Trustee”), and Lines of Alaska (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Kodiak Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2, 1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Kodiak Bareboat Charter and the Kodiak Operative Documents (the “Kodiak Sea-Land Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of November 16, 2001, the Company assigned all of its rights, title and interest under, and Lines of Alaska assumed all of the Company’s liabilities and obligations under, the Kodiak Bareboat Charter and the Kodiak Operative Documents (the “Kodiak Lines of Alaska Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement to be entered into prior to or on the Closing Date, Lines of Alaska is assigning all of its rights, title

 

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and interest under, and the Charterer is assuming all of Lines of Alaska’s liabilities and obligations under, the Kodiak Bareboat Charter and the Kodiak Operative Documents (together with the Kodiak Sea-Land Charter Assignment and the Kodiak Lines of Alaska Charter Assignment, the “Kodiak Charter Assignments”);

 

WHEREAS, pursuant to that certain Sea-Land Enterprise Bareboat Charter Party dated as of December 1, 1988 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Enterprise Bareboat Charter”), between State Street, as owner trustee (including any successor thereto or assignee thereof, the “Enterprise Owner Trustee”), and the Company (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Enterprise Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2, 1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company (as successor-in-interest to Sea-Land Domestic Shipping, LLC) assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Enterprise Bareboat Charter and the Enterprise Operative Documents (the “Enterprise Charter Assignment”);

 

WHEREAS, pursuant to that certain Sea-Land Expedition Bareboat Charter Party dated as of March 15, 1989 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Expedition Bareboat Charter”), between State Street, as owner trustee (including any successor thereto or assignee thereof, the “Expedition Owner Trustee”), and CSX Lines of Puerto Rico, Inc. (“Lines of Puerto Rico”) (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Expedition Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2, 1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Expedition Bareboat Charter and the Expedition Operative Documents (the “Expedition Sea-Land Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of May 31, 2001, the Company assigned all of its rights, title and interest under, and Lines of Puerto Rico assumed all of the Company’s liabilities and obligations under, the Expedition Bareboat Charter and the Expedition Operative Documents (the “Expedition Charter Assignment”);

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of February 14, 2003, Lines of Puerto Rico assigned all of its rights, title and interest under, and the Company assumed all of Lines of Puerto Rico’s liabilities and obligations under, the Expedition Bareboat Charter and the Expedition Operative Documents (together with the Expedition Sea-Land Charter Assignment, the Expedition Charter Assignment, the “Expedition Charter Assignments”);

 

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WHEREAS, pursuant to that certain Sea-Land Navigator Bareboat Charter Party dated as of September 1, 1989 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Navigator Bareboat Charter”), between State Street, as owner trustee (including any successor thereto or assignee thereof, the “Navigator Owner Trustee”), and the Company (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Navigator Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2,  1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company (as successor-in-interest to Sea-Land Domestic Shipping, LLC) assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Navigator Bareboat Charter and the Navigator Operative Documents (the “Navigator Charter Assignment”);

 

WHEREAS, pursuant to that certain Sea-Land Pacific Bareboat Charter Party dated as of December 1, 1988 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Pacific Bareboat Charter”), between State Street, as owner trustee (including any successor thereto or assignee thereof, the “Pacific Owner Trustee”), and the Company (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Pacific Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2, 1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company (as successor-in-interest to Sea-Land Domestic Shipping, LLC) assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Pacific Bareboat Charter and the Pacific Operative Documents (the “Pacific Charter Assignment”);

 

WHEREAS, pursuant to that certain Sea-Land Trader Bareboat Charter Party, dated as of March 15, 1989 (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Trader Bareboat Charter”), between State Street, as owner trustee (including any successor thereto or assignee thereof, the “Trader Owner Trustee”), and the Company (as successor-in-interest to Sea-Land Service, Inc.), as charterer, the Trader Owner Trustee chartered to Sea-Land Service, Inc. the vessel subject thereto;

 

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of September 2, 1999, Sea-Land Service, Inc. assigned all of its rights, title and interest under, and the Company (as successor-in-interest to Sea-Land Domestic Shipping, LLC) assumed all of Sea-Land Service, Inc.’s liabilities and obligations under, the Trader Bareboat Charter and the Trader Operative Documents (the “Trader Charter Assignment”);

 

WHEREAS, pursuant to that certain Transaction Agreement, dated as of December 16, 2002, by and among SL Service, New Member and CSX (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Transaction Agreement”), New Member will acquire membership interests of the Company;

 

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WHEREAS, pursuant to that certain Sub-Bareboat Charter Party to be entered into on the Closing Date (as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof, the “Subcharter Agreement”), the Charterer will subcharter the vessels subject thereto to the Subcharterer;

 

WHEREAS, SL Service and the Charterer are, directly or indirectly, wholly owned Subsidiaries of CSX;

 

WHEREAS, pursuant to various guarantees, indemnities and other agreements, CSX has directly or indirectly guaranteed, indemnified third parties against, agreed to pay or perform or otherwise assumed liability for, certain obligations arising under or relating to the Bareboat Charters and the Operative Documents, or the property subject thereto, which are to be paid or performed by one or more Guarantors, including the liabilities which the Subcharterer has assumed pursuant to the Subcharter Agreement;

 

WHEREAS, notwithstanding the Bareboat Charter Assignments, SL Service and/or other Beneficiaries may be liable for certain obligations under the Bareboat Charters and the Operative Documents;

 

WHEREAS, the obligations of the Beneficiaries to consummate the transactions contemplated by the Transaction Agreement are subject to the execution and delivery by the Guarantors of this Guarantee, and therefore as an inducement to the Beneficiaries to, and cause its Subsidiaries to, enter into and consummate the transactions contemplated by the Transaction Agreement and other related agreements, the Guarantors are entering into this Guarantee;

 

WHEREAS, New Member, the Company, Lines of Puerto Rico, Lines of Alaska, the Charterer, SL Service and CSX entered into that certain Guarantee and Indemnity Agreement, dated as of December 16, 2002 (the “Original Guarantee”), for the purposes stated therein;

 

WHEREAS, prior to the consummation of the Transaction Agreement and pursuant to Section 2.1(a)(i) of the Transaction Agreement, Lines of Puerto Rico, a party to the Original Guarantee, ceased to be a party with respect to any Chartered Vessel Bareboat Charters which are the subject of the Original Guarantee, and the parties have agreed to amend and restate such Original Guarantee to remove Lines of Puerto Rico as a party to this Agreement;

 

WHEREAS, the parties agree that the CSX Hawaii (Official No. 547288) and any vessel lease obligation related thereto shall no longer be subject to this Agreement as a consequence of the Assignment and Assumption Agreement, dated January 31, 2003, between CSX and the Company, whereby CSX was released from its Obligations under the Sea-Land Hawaii Guarantee Agreement (as defined in such Assignment and Assumption Agreement);

 

WHEREAS, prior to the consummation of the Transaction Agreement, the parties thereto agreed that the Company shall replace Lines of Alaska, a party to the Original Guarantee, as the “Subcharterer”, and the parties hereto agree to amend and restate such Original Guarantee to remove Lines of Alaska as a party to this Agreement;

 

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WHEREAS, the parties hereto now desire to amend and restate the Original Guarantee in its entirety to reflect the above modifications to the Original Guarantee that the parties hereto agreed to make and other matters set forth herein; and

 

NOW, THEREFORE, the Guarantors jointly and severally covenant and agree with the Beneficiaries as follows:

 

SECTION 1. Definitions.

 

1.01. Defined Terms.

 

“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such first Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. After the Closing Date, CSX and its Affiliates shall not constitute Affiliates of any Guarantor. For the avoidance of doubt, after the Closing Date, TC Group, L.L.C. and Craddock, LLC shall each be deemed Affiliates of New Member.

 

“Affiliate Transaction” shall have the meaning specified in Section 11.05.

 

“Anchorage Operative Documents” shall have the meaning specified in the definition of the term “Operative Documents” in the Anchorage Participation Agreement.

 

“Anchorage Participation Agreement” means that certain Sea-Land Anchorage Participation Agreement, dated as July 15, 1987, by and among Trident Marine Trust (as successor-in-interest to Bell Atlantic Tricon Leasing Corporation) (“Trident”), as owner participant, Sea-Land Service, Inc., as charterer, CSX, as guarantor, State Street, as bank and owner trustee, and Deutsche Bank Trust Company Americas (as successor-in-interest to Bankers Trust Company), as indenture trustee, as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof.

 

“Bankruptcy” shall have the meaning specified in Section 4.01.

 

“Bankruptcy Code” means Title 11 of the United States Code.

 

“Bareboat Charter Assignments” means, collectively, the Anchorage Charter Assignments, the Tacoma Charter Assignments, the Kodiak Charter Assignments, the Enterprise Charter Assignment, the Expedition Charter Assignments, the Navigator Charter Assignment, the Pacific Charter Assignment, and the Trader Charter Assignment.

 

“Bareboat Charters” means, collectively, the Anchorage Bareboat Charter, the Tacoma Bareboat Charter, the Kodiak Bareboat Charter, the Enterprise Bareboat Charter, the Expedition Bareboat Charter, the Navigator Bareboat Charter, the Pacific Bareboat Charter and the Trader Bareboat Charter.

 

“Beneficiaries” shall have the meaning specified in the Preamble.

 

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“Beneficiary Default” shall mean any material default (or any event which after the giving of notice and/or the lapse of time would be a material default) after the Closing Date by any Beneficiary under any Charter Document to which such Beneficiary is a party that is not attributable to an act or omission of a Guarantor. The Beneficiaries agree that a default (x) under Section 13 of any Charter Guarantee Agreement or (y) under Article 14(a) or 14(b) of any of the Anchorage, Kodiak or Tacoma Bareboat Charters caused by CSX’s failure to remit to the relevant Owner Trustee with reasonable promptness a payment of hire after having received such payment from a Guarantor is material for purposes of this definition.

 

“Beneficiary Representative” shall initially be CSX; provided, however, that the Beneficiaries may change the Beneficiary Representative by written notice to the Guarantor Representative signed by each Beneficiary.

 

“Board of Directors” means the Board of Directors (or similar governing body) of New Member or any committee of such Board of Directors duly authorized to act with respect to this Guarantee from time to time.

 

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether now outstanding or hereafter issued.

 

“Capitalized Lease Obligations” means, with respect to any Person, any rental obligation of such Person which is, or under GAAP is required to be, capitalized on the books of such Person, taken at the amount thereof accounted for as Indebtedness in accordance with such principles; provided, however, that obligations under the Charter Documents and under personal property leases of the Company or its Affiliates existing on the date hereof shall not be Capitalized Lease Obligations whether or not such obligations should be capitalized under GAAP.

 

“Carlyle Change of Control” shall mean, at any time, (a) prior to the consummation of a Public Offering (or after a Public Offering if 20% or less is publicly traded), Permitted Investors shall cease to beneficially own and control in the aggregate at least 51% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to participate in the selection of directors (the “Outstanding Company Voting Securities”) or (b) after consummation of a Public Offering, for so long as 20% or more is publicly traded (after which this clause (b) shall not be applicable) Permitted Investors collectively shall cease to beneficially own and control at least 30% of the Outstanding Company Voting Securities (or, if higher, such higher percentage that exceeds the highest percentage owned by any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Permitted Investors), in any case directly or indirectly (including though investment in any parent entity) in a single transaction or series or related transactions.

 

“CCF Program” shall mean the tax deferred program governed by § 607 of the Merchant Marine Act, 1936, as amended and the rules and regulations issued thereunder.

 

“Change of Control” shall mean any of (i) a Carlyle Change of Control until such time as a Change in Control Transaction which constitutes a Carlyle Change of Control shall

 

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have occurred, and thereafter a Successor Change in Control, (ii) approval by the unitholders or members of the Company of a complete liquidation or dissolution of the Company, or (iii) the first day on which a majority of the members of the board of directors of the Company are not Continuing Directors, in any case directly or indirectly in a single transaction or series or related transactions; provided, however, that in the event of the consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, or a sale or other disposition of all or substantially all of the assets of the Company, all references to the Company in this definition and in each definition referred to herein, shall be deemed to apply to the Continuing Person.

 

“Change of Control Transaction” means any transaction which directly or indirectly results in a Change of Control.

 

“Charter Documents” means the agreements and other instruments listed on Appendix A hereto including, without limitation, the Subcharter Agreement, the Charter Override Agreement, the Operative Documents and the Bareboat Charter Assignments, in each case as in effect as of the date hereof or as amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof and Section 11.04 or Section 16.13(a), as applicable.

 

“Charter Guarantee Agreements” means, collectively, (i) that certain Sea-Land Tacoma Guarantee Agreement, dated as of July 15, 1987, by and among CSX, as guarantor, Trident, as owner participant and State Street, as bank and owner trustee, (ii) that certain Sea-Land Kodiak Guarantee Agreement, dated as of July 15, 1987, by and among CSX, as guarantor, Trident, as owner participant, and State Street, as bank and owner trustee, (iii) that certain Sea-Land Anchorage Guarantee Agreement, dated as of July 15, 1987, by and among CSX, as guarantor, Trident, as owner participant, and State Street, as bank and owner trustee, (iv) that certain Sea-Land Enterprise Guarantee Agreement, dated as of December 1, 1988, by and among CSX, as guarantor, Chrysler Capital Company LLC (as successor-in-interest to Chrysler Capital Corporation) (“Chrysler Capital”), as owner participant, and State Street, as bank and owner trustee, (v) that certain Sea-Land Expedition Guarantee Agreement, dated as of March 15, 1989, by and among CSX, as guarantor, Sequa Capital Corporation, as owner participant, and State Street, as bank and owner trustee, (vi) that certain Sea-Land Navigator Guarantee Agreement, dated as of September 1, 1989, by and among CSX, as guarantor, GFS Third Transportation Leasing, Inc. (as successor-in-interest to Gilman Financial Services Inc.) (“GFS”), as owner participant, and State Street, as bank and owner trustee, (vii) that certain Sea-Land Pacific Guarantee Agreement, dated as of December 1, 1988, by and among CSX, as guarantor, Chrysler Capital, as owner participant, and State Street, as bank and owner trustee, and (viii) that certain Sea-Land Trader Guarantee Agreement, dated as of March 15, 1989, by and among CSX, as guarantor, National City Leasing Corporation (as successor-in-interest to Churchill Leasing Corporation) (“National City”), as owner participant, and State Street, as bank and owner trustee, in each case as each such agreement may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof and Section 11.04 or Section 16.13(a), as applicable.

 

“Chartered Vessel Bareboat Charters” means the Enterprise Bareboat Charter, the Expedition Bareboat Charter, the Navigator Bareboat Charter, the Pacific Bareboat Charter and the Trader Bareboat Charter and any other agreement, document or instrument related thereto or delivered in connection with such documents.

 

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“Chartered Vessel Default” means any Chartered Vessel Event of Default or any event or circumstance which with the giving of notice or passage of time, or both, would be a Chartered Vessel Event of Default.

 

“Chartered Vessel Event of Default” means any event of default under any of the Chartered Vessel Bareboat Charters.

 

“Charterer” shall have the meaning specified in the Preamble.

 

“Charter Override Agreement” means that certain Amended and Restated Charter Override Agreement, dated as of the date hereof, by and among New Member, the Company and CSX.

 

“Citizen of the United States” means a “citizen of the United States” within the meaning of Section 2 of the Shipping Act of 1916, as amended, 46 U.S.C. App. § 802, specifically including subsection (c) of such section, qualified to own and operate vessels in the coastwise trade of the United States so long as such law or any other law, rule or regulation to the same substantial effect remains in effect.

 

“Closing Date” shall have the meaning set forth for the term “Closing Date” in the Transaction Agreement.

 

“Company” shall have the meaning specified in the Preamble.

 

“Consolidated EBITDA” means, for any period, Consolidated Net Earnings for such period plus, each to the extent deducted in the calculation thereof and without duplication, Consolidated Interest Expense, taxes based on income or profits, depreciation, amortization (excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses for such period (excluding any such expense that constitutes an accrual of or a reserve for charges for any future period, a write-down of an asset created as a result of income recognition or amortization of a prepaid cash expense that was paid in a prior period) including, without limitation (i) non-cash compensation expense, (ii) impairment charges relating to good will or other intangible assets, (iii) write-downs of long-lived assets, and (iv) the cumulative effect of changes in accounting principles, and minus non-cash items increasing such Consolidated Net Earnings for such period other than non-cash items that constitute an accrual for revenues expected to be received in a future period; provided, however, that if at any time the Interest Coverage Ratio is to be determined on a combined (and not a consolidated) basis because the Guarantors include entities that are not consolidated with the Guarantors under GAAP or because some of the entities that are consolidated with the Guarantors under GAAP are not Guarantors, appropriate adjustments (including without limitation adjustments as to tax effects) shall be made in the computation of the Interest Coverage Ratio so as to include the items of income and expenses of Guarantors that are not consolidated with the other Guarantors and exclude the items of income and expenses of non-Guarantors. Consolidated EBITDA shall be pro forma for any acquisition or divestiture, i.e., it shall reflect the effect of the acquisition or divestiture and any related transactions including, without limitation, capital contributions and incurrence and repayment of Indebtedness as if they had occurred on the first day of the period.

 

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“Consolidated Interest Expense” means, for any period, each as determined in accordance with GAAP, (1) the net amount (if any) accrued by the Guarantors on a consolidated basis in such period on account of interest (including any interest which is capitalized in accordance with GAAP and the portion of any Capitalized Lease Obligations which is allocable to interest expense during such period in accordance with GAAP), (2) net payments made in accordance with interest rate agreements, (3) interest obligations of others guaranteed by (or secured by the assets of) any Guarantor, (4) fees in respect of letters of credit and bankers’ acceptance financing, and (5) debt discount and expense; provided, however, that if at any time the Interest Coverage Ratio is to be determined on a combined (and not a consolidated) basis because the Guarantors include entities that are not consolidated with the Guarantors under GAAP or because some of the entities that are consolidated with the Guarantors under GAAP are not Guarantors, appropriate adjustments (including without limitation adjustments as to tax effects) shall be made in the computation of the Interest Coverage Ratio so as to include the items of income and expenses of Guarantors that are not consolidated with the other Guarantors and exclude the items of income and expenses of non-Guarantors. Consolidated Interest Expense shall be pro forma for any Indebtedness incurred or paid down during such period, i.e., it shall reflect the effect of the change in debt as if it had occurred on the first day of the period.

 

“Consolidated Net Earnings” means, for any period, the consolidated net income of the Guarantors as determined in accordance with GAAP (before preferred dividends, if any) excluding extraordinary items and gains or losses from the sale of assets and the associated tax effects; provided, however, that if at any time the Interest Coverage Ratio is to be determined on a combined (and not a consolidated) basis because the Guarantors include entities that are not consolidated with the Guarantors under GAAP or because some of the entities that are consolidated with the Guarantors under GAAP are not Guarantors, appropriate adjustments (including without limitation adjustments as to tax effects) shall be made in the computation of the Interest Coverage Ratio so as to include the items of income and expenses of Guarantors that are not consolidated with the other Guarantors and exclude the items of income and expenses of non-Guarantors.

 

“Continuing Director” shall mean, as of any date of determination, any member of the board of directors of the Company who (i) was elected as a member of such board of directors as of the Closing Date by New Member or (ii) was nominated for election or elected to such board of directors with the approval of a majority of the Continuing Directors under clause (i) (or their successors under this clause (ii)).

 

“Continuing Person” shall mean, with respect to any applicable transaction, in the event of any reorganization, merger, consolidation, statutory share exchange or similar corporate transaction or any Vessel Transfer, Transfer of Capital Stock, Transfer of all or substantially all assets or Tradelane Transfer Transaction, the resulting, surviving or transferee Person of such transaction, taken together with any subsidiary of such Person that has not been designated as an Unrestricted Subsidiary in accordance with this Agreement.

 

“CSX” shall have the meaning specified in the Preamble.

 

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“CTC” shall have the meaning specified in Section 16.07(b).

 

“Default” means any event or circumstance that with the giving of notice or passage of time, or both, would be an Event of Default.

 

“Enterprise Operative Documents” shall have the meaning specified in the definition of the term “Operative Documents” in the Enterprise Participation Agreement; provided, however, that as between any Guarantor and any Beneficiary any reference to a “Charter” therein shall be construed as a reference to such Charter as modified by the Charter Override Agreement.

 

“Enterprise Participation Agreement” means that certain Sea-Land Enterprise Participation Agreement, dated as of December 1, 1988, by and among Chrysler Capital, as owner participant, the institutions listed on Schedule 1 thereto, as loan participants, the Company (as successor-in-interest to Sea-Land Service, Inc.), as charterer, CSX, as guarantor, State Street, as trustee, bank and owner trustee, and First Union Trust Company, National Association (as successor-in-interest to Meridian Bank) (“First Union”), as indenture trustee, as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof.

 

“Event of Default” means a Tier 1 Event of Default, a Tier 2 Event of Default or a Tier 3 Event of Default.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Expedition Operative Documents” shall have the meaning specified in the definition of the term “Operative Documents” in the Expedition Participation Agreement; provided, however, that as between any Guarantor and any Beneficiary any reference to a “Charter” therein shall be construed as a reference to such Charter as modified by the Charter Override Agreement.

 

“Expedition Participation Agreement” means that certain Sea-Land Expedition Participation Agreement, dated as of March 15, 1989, by and among Sequa Capital Corporation, as owner participant, the institutions listed on Schedule 1 thereto, as loan participants, Lines of Puerto Rico, as charterer, CSX, as guarantor, State Street, as trustee, bank and owner trustee, and First Union, as indenture trustee, as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof.

 

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, which are applicable to the circumstances, subject to the provisions of Section 1.02.

 

“Guarantee” shall have the meaning specified in the Preamble.

 

“Guaranteed Obligations” shall have the meaning specified in Section 2.01(b).

 

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“Guarantor Representative” shall initially be New Member; provided, however, that the Guarantors may change the Guarantor Representative by written notice to the Beneficiary Representative signed by each Guarantor.

 

“Guarantors” shall have the meaning specified in the Preamble.

 

“Indebtedness” means, as to any Person, (i) indebtedness of such Person for borrowed money (whether incurred by borrowing loans, the issuance and sale of debt securities or the sale of any property subject to an agreement to repurchase such property) or for the deferred purchase price of any property or services (other than trade accounts payable), (ii) obligations of such Person as lessee under leases that are, or under GAAP are required to be, capitalized on the books of such Person (other than leases of the Company or its Affiliates existing on the date hereof), (iii) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such indebted Person, or (iv) obligations under direct or indirect guarantees of any obligations of others of the type described in the preceding clauses (i) through (iii).

 

“Indemnity Guarantee Agreements” means, collectively, (i) that certain Sea-Land Tacoma Indemnity Guaranty Agreement, dated as of July 15, 1987, between CSX, as guarantor, and Trident, as owner participant, (ii) that certain Sea-Land Kodiak Indemnity Guaranty Agreement, dated as of July 15, 1987, between CSX, as guarantor, and Trident, as owner participant, (iii) that certain Sea-Land Anchorage Indemnity Guaranty Agreement, dated as of July 15, 1987, between CSX, as guarantor, and Trident, as owner participant, (iv) that certain Sea-Land Enterprise Indemnity Guarantee Agreement, dated as of December 1, 1988, by and among CSX, as guarantor, Chrysler Capital, as owner participant, and State Street, as bank and owner trustee, (v) that certain Sea-Land Expedition Indemnity Guarantee Agreement, dated as of March 15, 1989, by and among CSX, as guarantor, Sequa Capital Corporation, as owner participant, and State Street, as bank and owner trustee, (vi) that certain Sea-Land Navigator Indemnity Guarantee Agreement, dated as of September 1, 1989, by and among CSX, as guarantor, GFS, as owner participant, and State Street, as bank and owner trustee, (vii) that certain Sea-Land Pacific Indemnity Guarantee Agreement, dated as of December 1, 1988, by and among CSX, as guarantor, Chrysler Capital, as owner participant, and State Street, as bank and owner trustee, and (viii) that certain Sea-Land Trader Indemnity Guarantee Agreement, dated as of March 15, 1989, by and among CSX, as guarantor, National City, as owner participant, and State Street, as bank and owner trustee, in each case as such agreement may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof and Section 11.04 or Section 16.13(a), as applicable.

 

“Insolvent” means, with respect to any Person, (i) the inability of such Person to pay its debts in the ordinary course as they mature, (ii) the fair present value of such Person’s debts is greater than the fair saleable value of such Person’s assets, or (iii) such Person is engaged in a business or a transaction, or is about to engage in a business or a transaction, for which such Person has unreasonably small capital.

 

“Interest Coverage Ratio” means at the end of any fiscal quarter, the ratio of (x) Consolidated EBITDA to (y) Consolidated Interest Expense, in each case for the period of the four consecutive fiscal quarters then most recently ended; provided that in the event that less than four consecutive fiscal quarters’ information is available, then the Interest Coverage Ratio shall be calculated for such lesser number of consecutive fiscal quarters.

 

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“Joinder Agreement” shall have the meaning specified in Section 11.01(b).

 

“Joinder Transaction” shall have the meaning specified in Section 11.01(a).

 

“Knowledge” means as to any matter the actual knowledge, or such knowledge as would ordinarily be obtained as to such matter in the course of performance of his or her duties, of any of the following persons employed by the Company and the initial Guarantors, or the person or persons responsible for performing the equivalent functions for any Continuing Person: (a) the executive officers of the Company, including but not limited to each of the following persons: the President, Chief Executive Officer, Chief Financial Officer, General Counsel, and Vice-President-Operations and Labor of the Company, (b) the General Manager of each tradelane, and (c) the General Manager of Fleet Operations, Ocean Transportation Services Department. When used with reference to knowledge of the occurrence or existence of an event or circumstance that constitutes a Triggering Event, the requisite knowledge is knowledge of the occurrence or existence of such event or circumstance and not knowledge that such an event or circumstance constitutes a Triggering Event.

 

“Kodiak Operative Documents” shall have the meaning specified in the definition of the term “Operative Documents” in the Kodiak Participation Agreement.

 

“Kodiak Participation Agreement” means that certain Sea-Land Kodiak Participation Agreement, dated as July 15, 1987, by and among Trident, as owner participant, Sea-Land Service, Inc., as charterer, CSX, as guarantor, State Street, as bank and owner trustee, and Deutsche Bank Trust Company Americas (as successor-in-interest to Bankers Trust Company), as indenture trustee, as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof.

 

“Loan Facility” shall have the meaning specified in Section 10.01(d).

 

“Losses” shall have the meaning specified in Section 3(a).

 

“Material Instrument” shall have the meaning specified in Section 9.01(c)(ii).

 

“Navigator Operative Documents” shall have the meaning specified in the definition of the term “Operative Documents” in the Navigator Participation Agreement; provided, however, that as between any Guarantor and any Beneficiary any reference to a “Charter” therein shall be construed as a reference to such Charter as modified by the Charter Override Agreement.

 

“Navigator Participation Agreement” means that certain Sea-Land Navigator Participation Agreement, dated as of September 1, 1989, by and among GFS, as owner participant, the institutions listed on Schedule 1 thereto, as loan participants, the Company, as charterer, CSX, as guarantor, State Street, as bank and owner trustee, and First Union, as indenture trustee, as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof.

 

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“New Member” shall have the meaning specified in the Preamble.

 

“Officers’ Certificate” means a certificate signed in the name of any Person by any two of its Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer.

 

“Operative Documents” means, collectively, the Kodiak Operative Documents, the Anchorage Operative Documents, the Tacoma Operative Documents, the Enterprise Operative Documents, the Expedition Operative Documents, the Navigator Operative Documents, the Pacific Operative Documents, and the Trader Operative Documents.

 

“Owner Trustee” means, collectively, the Anchorage Owner Trustee, the Tacoma Owner Trustee, the Kodiak Owner Trustee, the Enterprise Owner Trustee, the Expedition Owner Trustee, the Navigator Owner Trustee, the Pacific Owner Trustee and the Trader Owner Trustee.

 

“Pacific Operative Documents” shall have the meaning specified in the definition of the term “Operative Documents” in the Pacific Participation Agreement; provided, however, that as between any Guarantor and any Beneficiary any reference to a “Charter” therein shall be construed as a reference to such Charter as modified by the Charter Override Agreement.

 

“Pacific Participation Agreement” means that certain Sea-Land Pacific Participation Agreement, dated as of December 1, 1988, by and among Chrysler Capital, as owner participant, the institutions listed on Schedule 1 thereto, as loan participants, the Company (as successor-in-interest to Sea-Land Service, Inc.), as charterer, CSX, as guarantor, State Street, as bank and owner trustee, and First Union, as indenture trustee, as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof.

 

“Permitted Indebtedness” means Indebtedness consisting of (a) Indebtedness that refinances, extends or replaces other Indebtedness without increasing the outstanding amount thereof, (b) non-cash amortization of original issue discount of other Indebtedness, (c) Indebtedness owed by one Guarantor to another Guarantor or (d) the accrual on Indebtedness of interest that is payable in kind or that is otherwise not currently payable in cash.

 

“Permitted Investor” shall mean (i) Carlyle Partners III, L.P., (ii) Theophilos Priovolos, (iii) Theophilos Priovolos’ immediate family, any trust or partnership for their benefit or, upon their death, any executor, administrator, testamentary trustee, legatee or any beneficiary of any such Person, or (iv) any Affiliate of any Person in clauses (i) or (ii); to the extent, in the case of any Person within clauses (ii), (iii) or (iv) other than an Affiliate of Carlyle Partners III, L.P., that such Person has entered into a voting agreement, or executed a proxy, granting voting power with respect to the applicable equity interests to Carlyle Partners III, L.P.

 

“Person” or “person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization, other form of business or legal entity or governmental authority.

 

“Power of Attorney” shall have the meaning specified in Section 10.07.

 

 

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“Public Offering” shall mean an underwritten public offering of equity securities of the Company or New Member or Carlyle-Horizon Holdings Corp. pursuant to an effective registration statement filed by such issuer with the U.S. Securities and Exchange Commission (other than on Form S-4 or Form S-8 or successors to such forms) under the Securities Act.

 

“Relevant Guarantor” shall have the meaning specified in Section 14.01(b)(3).

 

“Restricted Payments” shall have the meaning specified in Section 11.03.

 

“Restricted Subsidiary” means any Subsidiary of New Member or of a Continuing Person that is a Guarantor.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“SL Service” shall have the meaning specified in the Preamble.

 

“Subcharterer” shall have the meaning specified in the Preamble.

 

“Subcharter Agreement” shall have the meaning specified in the Preamble.

 

“Subcharter Default” means any Subcharter Event of Default or any event or circumstance which with the giving of notice or passage of time, or both would be a Subcharter Event of Default.

 

“Subcharter Event of Default” means a “Subcharter Event of Default” as such term is defined in the Subcharter Agreement.

 

“Subsidiary” of any Person means any corporation, partnership, limited liability company or other entity of which at least a majority of the outstanding Capital Stock (or similar interests) having voting power (or other designative ability) to elect or designate directors (or similar governing body members) shall at the time be held, directly or indirectly, by such Person.

 

“Successor Change in Control” shall mean the acquisition by any individual, entity or group (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the Outstanding Company Voting Securities, directly or indirectly (including through investment in any parent entity) in a single transaction or series or related transactions.

 

“Tacoma Operative Documents” shall have the meaning specified in the definition of the term “Operative Documents” in the Tacoma Participation Agreement.

 

“Tacoma Participation Agreement” means that certain Sea-Land Tacoma Participation Agreement, dated as July 15, 1987, by and among Trident, as owner participant, Sea-Land Service, Inc., as charterer, CSX, as guarantor, State Street, as bank and owner trustee, and Deutsche Bank Trust Company Americas (as successor-in-interest to Bankers Trust Company), as indenture trustee, as may be amended, modified, supplemented, renewed, extended or restated in accordance with the terms thereof.

 

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“Tested Transaction” shall have the meaning specified in Section 11.02(a).

 

“Tier 1 Default” means any Tier 1 Event of Default or any event or circumstance which, with the giving of notice or passage of time, or both, would be a Tier 1 Event of Default.

 

“Tier 2 Default” means any Tier 2 Event of Default or any event or circumstance which, with the giving of notice or passage of time, or both, would be a Tier 2 Event of Default.

 

“Tier 3 Default” means any Tier 3 Event of Default or any event or circumstance which, with the giving of notice or passage of time, or both, would be a Tier 3 Event of Default.

 

“Tier 1 Default Notice” shall have the meaning specified in Section 14.02(a).

 

“Tier 2 Default Notice” shall have the meaning specified in Section 14.02(b).

 

“Tier 3 Default Notice” shall have the meaning specified in Section 14.02(c).

 

“Tier 1 Event of Default” shall have the meaning specified in Section 14.01(a).

 

“Tier 2 Event of Default” shall have the meaning specified in Section 14.01(b).

 

“Tier 3 Event of Default” shall have the meaning specified in Section 14.01(c).

 

“Tradelane Transfer Transaction” means any Transfer of any portion of the assets of a Guarantor to any Person if such assets, together with other assets to be Transferred in connection therewith, comprise all or substantially all of a tradelane business in a single transaction or a group of related transactions.

 

“Trader