VESSEL PURCHASE AGREEMENT
among
WISCONSIN & MICHIGAN STEAMSHIP COMPANY
and
GRAND RIVER NAVIGATION COMPANY, INC.
and
RAND LL HOLDINGS CORP.
Dated February 14, 2008
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................. 1
ARTICLE II PURCHASE AND SALE OF ASSETS.................................. 8
2.1 Sale and Transfer of Assets..................................... 8
2.2 Retained Assets................................................. 9
2.3 Assignability and Consents...................................... 9
2.4 Short-Term License.............................................. 9
ARTICLE III LIABILITIES.................................................. 10
3.1 Assumption of Liabilities....................................... 10
3.2 Retained Liabilities............................................ 10
ARTICLE IV PURCHASE PRICE............................................... 10
4.1 Payment......................................................... 10
4.2 Purchase Price Allocation....................................... 11
ARTICLE V CLOSING AND DELIVERIES....................................... 11
5.1 Closing......................................................... 11
5.2 Delivery of Vessels............................................. 11
5.3 Documents to be Delivered by the Company........................ 11
5.4 Documents to be Delivered by Buyer.............................. 13
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 14
6.1 Organization and Standing; Citizenship.......................... 14
6.2 Authorization, Validity and Effect.............................. 14
6.3 No Conflict; Required Filings and Consents...................... 14
6.4 Financial Statements............................................ 15
6.5 Title; Sufficiency of Assets; Condition......................... 16
6.6 [Intentionally Omitted]......................................... 17
6.7 Compliance with Laws............................................ 17
6.8 Permits......................................................... 17
6.9 Employee Plans.................................................. 18
6.10 Contracts and Loans............................................. 19
6.11 Legal Proceedings............................................... 19
6.12 Insurance....................................................... 19
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TABLE OF CONTENTS
(continued)
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6.13 Labor Relations and Employment Issues........................... 19
6.14 Environmental Matters........................................... 20
6.15 Conduct of Business in Ordinary Course.......................... 21
6.16 Taxes........................................................... 21
6.17 No Brokers...................................................... 22
6.18 Pooling Arrangement............................................. 22
6.19 No Other Representations or Warranties.......................... 22
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER AND RAND............. 22
7.1 Organization and Standing....................................... 22
7.2 Authorization, Validity and Effect.............................. 22
7.3 No Conflict; Required Filings and Consents...................... 23
7.4 Citizenship..................................................... 23
7.5 No Brokers...................................................... 23
ARTICLE VIII COVENANTS AND AGREEMENTS..................................... 23
8.1 Confidentiality................................................. 23
8.2 Transfer Taxes.................................................. 23
8.3 Records; Reasonable Access...................................... 24
8.4 Commercially Reasonable Efforts; Cooperation.................... 25
8.5 Employee Matters................................................ 25
8.6 Hazardous Substance-Containing Materials........................ 29
ARTICLE IX REMEDIES..................................................... 29
9.1 Survival........................................................ 29
9.2 Indemnification by Buyer........................................ 30
9.3 Indemnification by the Company.................................. 30
9.4 Exclusive Remedy................................................ 31
9.5 Limitations on Indemnification Payments......................... 31
9.6 Procedures...................................................... 32
9.7 Specific Performance............................................ 34
9.8 Subrogation..................................................... 34
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TABLE OF CONTENTS
(continued)
Page
9.9 Adjustment to Purchase Price.................................... 35
ARTICLE X TAX MATTERS.................................................. 35
10.1 Cooperation; Audits............................................. 35
ARTICLE XI MISCELLANEOUS AND GENERAL.................................... 35
11.1 Expenses........................................................ 35
11.2 Successors and Assigns.......................................... 35
11.3 Third Party Beneficiaries....................................... 35
11.4 Notices......................................................... 36
11.5 Complete Agreement.............................................. 37
11.6 Captions........................................................ 37
11.7 Amendment....................................................... 37
11.8 Governing Law................................................... 37
11.9 Severability.................................................... 37
11.10 Construction.................................................... 37
11.11 Counterparts.................................................... 38
SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 2.1(b) Vessels
Schedule 2.1(e) Acquired Contracts
Schedule 4.2 Purchase Price Allocation
Schedule 6.3(a) Conflicts
Schedule 6.3(b) Required Consents of the Company
Schedule 6.4(c) Undisclosed Liabilities
Schedule 6.4(d) Current Assets
Schedule 6.5(a) Title Exceptions
Schedule 6.5(b) List of Personal Property and Fixtures
Schedule 6.5(d) Condition of Vessels
Schedule 6.5(f) Vessel Permits
Schedule 6.5(g) Vessel Information
Schedule 6.5(h) Class
Schedule 6.7 Compliance with Laws
Schedule 6.8 Permits
Schedule 6.9(a) Employee Plans
Schedule 6.10(a) Contracts and Purchase Orders
Schedule 6.10(b) Indebtedness
Schedule 6.11 Legal Proceedings
Schedule 6.12 Insurance
Schedule 6.13(b) Labor Relations
Schedule 6.13(d) Employees
Schedule 6.14 Environmental Matters
Schedule 6.15 Conduct of Business
Schedule 6.16 Taxes
Schedule 7.3(b) Required Consents of Buyer
Exhibits
--------
Exhibit A Form of ▇▇▇▇ of Sale
Exhibit B Form of Coast Guard ▇▇▇▇ of Sale for Vessels
Exhibit C Form(s) of Assignment and Assumption Agreement(s)
Exhibit D Form of Protocol of Delivery and Acceptance
Exhibit E Form of Escrow Agreement
VESSEL PURCHASE AGREEMENT
This VESSEL PURCHASE AGREEMENT (this "Agreement"), dated February ___,
2008, is entered into among Wisconsin & Michigan Steamship Company, a Michigan
corporation (the "Company"), Grand River Navigation Company, Inc., a Delaware
corporation ("Buyer"), and, solely for purposes of Article VII and Article IX
hereof, Rand LL Holdings Corp., a Delaware corporation ("Rand").
RECITALS
A. The Company is engaged in the business (the "Business") of owning and
operating the Vessels (as hereinafter defined).
B. The Company and Lower Lakes Transportation Company ("LLTC") are party
to that certain Time Charter Agreement, dated on or about August 1, 2006 (the
"Time Charter Agreement"), pursuant to which LLTC has exercised its option to
purchase, or cause its designee to purchase, the Vessels and Equipment (as
herein defined) by delivery of a Notice of Exercise dated February ___, 2008.
C. The Company and Buyer desire to effectuate the sale of the Vessels and
Equipment in accordance with the terms of this Agreement. Rand desires to assist
its Affiliate, Buyer, in completing the purchase of the Vessels and Equipment.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
subject to the terms and conditions set forth herein, the Company and Buyer
hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
"Acquired Assets" has the meaning set forth in Section 2.1.
"Actions" means any suit, claim, charge, complaint, legal proceeding,
administrative proceeding or arbitration proceeding before any Governmental
Authority and any suit, claim, charge, complaint, arbitration proceeding or
legal proceeding by any other Person.
"Acquired Contracts" has the meaning set forth in Section 2.1(e).
"Acquired Purchase Orders" means all purchase orders issued by the Company
prior to the Closing Date that are attributable to goods and services to be
delivered to or for the Vessels or performed on the Vessels after the Closing
Date.
"Acquired Sales Orders" means all orders received by the Company for which
services have not been provided as of the Closing Date.
"Affiliate" means with respect to any Person, any Person that directly or
indirectly controls, is controlled by or is under common control with such
Person.
"Agreement" has the meaning set forth in the preamble.
"AMO" means the American Maritime Officers Union.
"AMO CBA" means the Collective Bargaining Agreement dated August 1, 2003,
between ONCO and the AMO, as assumed by the Company in connection with the ONCO
Purchase Agreement.
"Assumed Liabilities" has the meaning set forth in Section 3.1.
"Assignment and Assumption Agreements" has the meaning set forth in
Section 5.3(d).
"Balance Sheet" has the meaning set forth in Section 6.4(a).
"Balance Sheet Date" has the meaning set forth in Section 6.4(a).
"Business" has the meaning set forth in the recitals.
"Buyer" has the meaning set forth in the preamble.
"Buyer Indemnitees" has the meaning set forth in Section 9.3.
"Claims Notice" has the meaning set forth in Section 9.6(a)(i).
"Closing" has the meaning set forth in Section 5.1.
"Closing Date" has the meaning set forth in Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Company" has the meaning set forth in the preamble.
"Company Employees" means Union Employees and Non-Union Employees.
"Company Proposed Settlement Offer" has the meaning set forth in Section
9.6(a)(ii).
"Company's Knowledge" means the actual knowledge of senior management of
the Company as of the Closing Date, and such knowledge that any of those persons
should have acquired in the reasonable discharge of his or her employment
responsibilities.
"Confidentiality Agreement" has the meaning set forth in Section 8.1.
"Consent" means any consent, approval, authorization, qualification,
waiver, registration or notification required to be obtained from, filed with or
delivered to a Governmental Authority or any other Person in connection with the
consummation of the transactions provided for herein.
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"Contracts" means all executory contracts, leases, licenses and other
agreements (including any amendments and other modifications thereto), whether
oral or written, to which the Company is a party or third party beneficiary
excluding the Purchase and Sale Orders.
"Delivery Protocol" has the meaning set forth in Section 5.3(p).
"Direct Claim" has the meaning set forth in Section 9.6(b).
"Employee Plans" has the meaning set forth in Section 6.9(a).
"Environment" means surface or subsurface soil or strata, surface waters
(including lakes, streams, creeks, marshes and wetlands), sediments, navigable
waters, groundwater, land, and indoor or ambient air.
"Environmental Claim" means any Action or any written notice, demand,
allegation or charge by any Person relating to or arising out of the Business or
the Acquired Assets alleging a violation of, noncompliance with or liability
under any Environmental Law, or common law with respect to Hazardous Substances.
The term includes such Actions and claims seeking damages for damage to real or
personal property, personal injury, bodily injury or disease (including death)
and damage to natural resources including, without limitation, any cleanup,
removal, containment or other remediation required by any Environmental Law
(whether or not such cleanup has been required or requested by any Governmental
Authority), as well as Actions and claims for equitable or injunctive relief.
"Environmental Law" means any Law, including common law, or Order
concerning the liability for, or protection of, human health (with respect to
handling of or exposure to Hazardous Substances), pollution, natural resources
and the Environment, including, without limitation any such Law or binding
obligation: (i) related to the presence, Releases or threatened Releases of any
Hazardous Substance on, at, or to the Environment; and (ii) governing the
manufacture, processing, use, treatment, storage, management, disposal, loading,
off-loading, shipping, transport or handling of or exposure to Hazardous
Substances. Such Environmental Laws shall include, but are not limited to, the
federal Resource Conservation and Recovery Act; the Solid Waste Disposal Act;
the Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right to Know Act; the Federal Water Pollution
Control Act; the Clean Water Act; the Oil Pollution Act; the Clean Air Act; the
Safe Drinking Water Act, the Toxic Substances Control Act; the Hazardous
Materials Transportation Act; the environmental provisions of the Occupational
Safety and Health Act to the extent that they apply to the Vessels; and any
other similar foreign, federal, state or local Laws, in each case as are or may
be amended or superseded.
"Environmental Liabilities" means any actual, alleged or contingent
liability or obligation (i) arising from the violation, or alleged violation on
or prior to the Closing Date of any Environmental Law or Environmental Permit;
(ii) arising from the Release on or prior to the Closing Date or threatened
Release on or prior to the Closing Date of Hazardous Substances at, on, in,
under or from the Vessels; (iii) arising from exposure of any Person to
Hazardous Substances on or prior to the Closing Date; or (iv) arising from the
Release or threatened Release of Hazardous Substances at, on, in, under or from
the Real Property.
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"Environmental Permits" means licenses, permits, authorizations, consents,
certificates of authority, qualifications or similar document or authority
required by or issued by any Governmental Authority under Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to the Company, (i) any corporation
which at, or at any time within six (6) years prior to, the Closing Date is or
was a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company; (ii) any partnership, trade or
business (whether or not incorporated) which at, or any time within six (6)
years prior to, the Closing Date is or was under common control (within the
meaning of Section 414(c) of the Code) with the Company; (iii) any entity, which
at, or at any time within six (6) years prior to, the Closing Date is or was a
member of the same affiliated service group (within the meaning of Section
414(m) of the Code) as the Company, any corporation described in clause (i) or
any partnership, trade or business described in clause (ii); and (iv) any entity
which at, or at any time within six (6) years prior to, the Closing Date is or
was required to be aggregated with the Company under Section 414(o) of the Code.
"Financial Statements" has the meaning set forth in Section 6.4(a).
"Fit Out Expenses" means all costs and expenses actually incurred by the
Company to stock and supply any of the Vessels in preparation for the sailing
season pending as of the date of this Agreement, if a sailing season is then
pending, and all direct labor, material and other direct costs actually incurred
by the Company relating to the startup and preparation of any of the Vessels for
such sailing season if then pending.
"GAAP" means United States generally accepted accounting principles
applied on a consistent basis.
"General Enforceability Exceptions" means (i) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar Laws affecting the
enforcement of creditors' rights generally from time to time in effect and (ii)
the availability of equitable remedies (regardless of whether enforceability is
considered in a proceeding at law or in equity).
"Governmental Authority" means any government or political subdivision,
whether federal, state, local or foreign, or any agency or instrumentality of
any such government or political subdivision, any quasi-governmental authority,
or any federal, state, local or foreign court or official of any of the
foregoing. Without limiting the foregoing, the term specifically includes the
U.S. Coast Guard, the U.S. Environmental Protection Agency, the Ohio
Environmental Protection Agency, the U.S. Department of Labor, the IRS and the
U.S. Department of Transportation.
"Hazardous Substance" means any pollutant, substance, contaminant,
chemical, toxic, hazardous or noxious substance, material, gas, compound or
waste for which liability, standards of conduct, standards for presence in the
Environment or standards of exposure are imposed pursuant to any Law concerning
liability for, or protection of, human health, natural resources or the
Environment, including, without limitation, any oil, petroleum and petroleum
products and constituents thereof, explosives, asbestos-containing materials,
mercury, radioactive materials and polychlorinated biphenyls.
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"Indemnifying Party" has the meaning set forth in Section 9.6(a)(i).
"Indemnitee" has the meaning set forth in Section 9.6(a)(i).
"Indemnity Notice" has the meaning set forth in Section 9.6(b).
"Indemnity Response" has the meaning set forth in Section 9.6(b).
"Indemnity Response Period" has the meaning set forth in Section 9.6(b).
"IRS" means the Internal Revenue Service.
"▇▇▇▇▇ Act" has the meaning set forth in Section 8.5(f).
"Labor Contracts" means the USW CBA and the AMO CBA to which the Company
is or was, from and after August 1, 2006, a party.
"Laws" means any law, statute, code, ordinance, regulation, and any
binding Order or rule of any foreign, federal, state or local Governmental
Authority. The term specifically includes Environmental Laws.
"Liens" means any lien, pledge, claim, charge, security interest,
mortgage, charter, right to possession by a third person, option, title
retention agreement, lease, adverse claim against title, title exception, title
reservation, easement, right of occupation, condemnation, right of preemption,
right of first refusal, restriction on use, privilege or other encumbrance, or
any contract to create any of the foregoing.
"LLTC" has the meaning set forth in the recitals.
"Losses" has the meaning set forth in Section 9.2.
"Material Adverse Effect" means, with respect to the Company, Buyer, or
Rand, as applicable, a material adverse effect on the business, results of
operations, financial condition, assets or properties thereof, and any event,
change effect or development which would reasonably be expected, individually or
in the aggregate, with the passage of time, to constitute such a material
adverse effect, but excludes (a) any effect resulting from general economic
conditions in the United States, and (b) any effect affecting companies in the
industry in which the Company, Buyer, or Rand, as applicable, conducts its
business generally.
"National City Financing Documentation" means the Credit and Security
Agreement, dated on or about August 1, 2006, between the Company and National
City Commercial Capital Company, LLC, and the other "Loan Documents" (as defined
in the Credit and Security Agreement), as such Credit and Security Agreement and
Loan Documents exist on the date of the Time Charter Agreement and without
giving effect to any amendment, modification or waiver thereto or thereunder
after such date unless such amendment, modification or waiver has been consented
to in writing by the "Charterer" under the Time Charter Agreement.
5
"NatCity Payoff Amount" means the payoff amount specified in the NatCity
Payoff Letter.
"NatCity Payoff Letter" means a letter from the lender or agent under the
National City Financing Documentation, in form and substance reasonably
satisfactory to the Company and Buyer, setting forth the total amount of
Indebtedness outstanding as of the Closing Date under the National City
Financing Documentation, and providing instructions for the payment thereof.
"Non-Union Employees" means employees of the Company who provide services
to the Business and who are not covered by the Labor Contracts.
"ONCO" means Oglebay Norton Marine Services Company, L.L.C., a Delaware
limited liability company.
"ONCO Purchase Agreement" means the Asset Purchase Agreement, dated on or
about August 1, 2006, among ONCO, Oglebay Norton Company, and the Company.
"Order" means any order, judgment, ruling, injunction, assessment, award,
decree or writ of any Governmental Authority and the results of any arbitration
proceeding with respect to a collective bargaining agreement.
"Permits" means any license, permit, registration, franchise, variance,
exemption, Order approval, authorization, consent, certificate, certificate of
authority, American Bureau of Shipping certificate, Coast Guard certificate,
qualification, order or similar document or authority required, issued or
granted by any Governmental Authority. The term includes Environmental Permits.
"Permitted Liens" means (a) Liens for Taxes, assessments and other charges
of Governmental Authorities to the extent not yet due and payable or being
contested in good faith by appropriate proceedings for which collection or
enforcement against the property is stayed and (b) Liens imposed by Law and
incurred in the ordinary course of business for obligations to landlords,
carriers, warehousemen, laborers, materialmen and the like to the extent not yet
due and payable or being contested in good faith by appropriate proceedings for
which collection or enforcement against the property is stayed; provided that
the term "Permitted Liens" shall not include any Liens imposed on any of the
Vessels.
"Person" means any individual, sole proprietorship, partnership,
corporation, limited liability company, joint venture, unincorporated society or
association, trust or other legal entity or Governmental Authority.
"Purchase and Sale Orders" means all executory purchase and sale orders
entered into by the Company in the ordinary course of the Business.
"Purchase Price" has the meaning set forth in Section 4.1.
6
"Rand" has the meaning set forth in the preamble.
"Release" or "Releases" means any releasing, spilling, discharging,
emitting, leaking, pumping, injecting, pouring, dumping, disposing, discharging,
dispersing, emptying, leaching or migrating into the Environment.
"Replacement Financing Documentation" means such credit, loan, security
and other agreements entered into by the Company with the consent of the
"Charterer" under the Time Charter Agreement with respect to indebtedness
obtained by the Company to refinance or replace the indebtedness under the
National City Financing Documentation, as such agreements exist as of the date
of such refinancing or replacement and without giving effect to any amendment,
modification or waiver thereto or thereunder after the date of such refinancing
or replacement unless such amendment, modification or waiver has been consented
to in writing by the "Charterer" under the Time Charter Agreement.
"Replacement Subordinated Debt Financing Documentation" means such credit,
loan, security and other agreements entered into by the Company with the consent
of the "Charterer" under the Time Charter Agreement with respect to indebtedness
obtained by the Company to refinance or replace the indebtedness under the
Subordinated Debt Financing Documentation, as such agreements exist as of the
date of such refinancing or replacement and without giving effect to any
amendment, modification or waiver thereto or thereunder after the date of such
refinancing or replacement unless such amendment, modification or waiver has
been consented to in writing by the "Charterer" under the Time Charter
Agreement.
"Responsible Party" has the meaning set forth in Section 9.6(a)(i).
"Retained Assets" has the meaning set forth in Section 2.2.
"Retained Liabilities" has the meaning set forth in Section 3.2.
"Sale Notice" has the meaning set forth in Section 8.7(a).
"Seller Indemnitees" has the meaning set forth in Section 9.2.
"Subordinated Debt Financing Documentation" means the Senior Subordinated
Note Purchase Agreement, dated on or about August 1, 2006, by and among the
Company, Rand Finance Inc. and Oglebay Norton Company, and the other "Purchase
Documents" (as defined in the Senior Subordinated Note Purchase Agreement), as
such Senior Subordinated Note Purchase Agreement and Purchase Documents exist on
the date of the Time Charter Agreement and without giving effect to any
amendment, modification or waiver thereto or thereunder after such date unless
such amendment, modification or waiver has been consented to in writing by the
"Charterer" under the Time Charter Agreement.
"Sub Debt Payoff Amount" means the payoff amount specified in each Sub
Debt Payoff Letter.
"Sub Debt Payoff Letter" means a letter from each lender under the
Subordinated Debt Financing Documentation, in form and substance reasonably
7
satisfactory to the Company and Buyer, setting forth the total amount of
Indebtedness owed to such lender as of the Closing Date under the Subordinated
Debt Financing Documentation, and providing instructions for the payment
thereof.
"Tax" or "Taxes" means any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, capital stock, premium, property (real or
personal), environmental or windfall profit tax, custom, vehicle, boat, vessel
or other title or registration, duty or other tax, governmental fee, levy,
tariff or other like assessment or charge of any kind whatsoever, together with
any interest, penalties, additions to tax or additional amounts imposed by any
Taxing Authority.
"Tax Returns" means all Tax returns, statements, reports, elections,
schedules, claims for refund and forms.
"Taxing Authority" means any Governmental Authority responsible for the
administration or imposition of any Tax.
"Third Party Claim" has the meaning set forth in Section 9.6(a)(i).
"Time Charter Agreement" has the meaning set forth in the recitals.
"Transfer Taxes" has the meaning set forth in Section 8.2.
"Union Employees" means employees of the Company performing services for
the Business who are covered by the Labor Contracts.
"USW" means the United Steelworkers of America.
"USW CBA" means the Labor Agreement dated October 10, 2007, between the
USW and the Company.
"USW MOU" means the Memorandum of Understanding dated October 10, 2007,
between the USW and the Company.
"Vessels" has the meaning set forth in Section 2.1(b).
"Winter Work" means any and all maintenance or other work performed with
respect to any of the Vessels after the Vessels have been laid up at the
conclusion of the last completed navigation season (but excluding any
maintenance or other work associated with the lay-up of the Vessels).
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Sale and Transfer of Assets. Subject to Section 2.2 and Section 2.3,
at the Closing, Buyer shall purchase and acquire from the Company, and the
Company shall sell, transfer, convey, assign and deliver to Buyer, all of the
8
Company's right, title and interest in, under and to all of the following
assets, properties and rights owned by the Company and used primarily in the
operation of the Business, free and clear of all Liens other than Permitted
Liens (collectively, the "Acquired Assets"):
(a) Prepaids. All prepaid expenses, advance payments, deposits and
other current assets (excluding cash, cash equivalents and accounts
receivable associated with any of the Vessels);
(b) Vessels. The three (3) Great Lakes shipping vessels owned by the
Company, as described on Schedule 2.1(b), together with all machinery,
engines, instruments, rigging, anchors, chains, cables, tackle, apparel,
accessories, equipment, radio installation and navigational equipment,
inventory, stores, bunkers, spare parts and all other appurtenances used
in or relating to the Vessels, whether or not on board (collectively, the
"Vessels");
(c) Equipment. All machinery and equipment, spare parts, supplies,
tangible personal property and fixtures that are held for use in
connection with operation of the Vessels;
(d) Business Records. Except for the minute books and other
corporate record books, accounting records, and personnel records, all
books and records, including all files, forms, accounts, correspondence,
production records, customer lists, customer records and information,
customer prospects, sales plans, business plans, referral sources,
accounting and operations manuals and procedures, studies, reports or
summaries, ship designs, surveys, engineering drawings and data, all
equipment manuals, written warranties, maintenance records and other
similar documents and other books and records (including all environmental
documents, studies, asbestos surveys, audits and reports and Phase I and
Phase II environmental assessment or investigation reports relating to the
Vessels commissioned by the Company) relating primarily to the Vessels;
(e) Contracts. All rights, benefits and interests of the Company in
and to all Contracts identified on Schedule 2.1(e) (the "Acquired
Contracts");
(f) Software and Licenses. All rights, benefits and interests of the
Company, to the extent transferable, in and to the Maptech software
associated with each Vessel, the EASYLOAD software associated with each
Vessel, and software on personal computers that are included in the
Acquired Assets, together with all rights, benefits and interests of the
Company in and to the licenses associated therewith to the extent
transferable, which licenses shall be included in the Acquired Contracts;
(g) Purchase and Sale Orders. All rights, benefits and interests of
the Company in and to the Acquired Purchase Orders and the Acquired Sale
Orders;
(h) Permits. All Permits relating to the Vessels owned or held by
the Company to the extent transferable to Buyer; and
(i) Claims Against Third Parties. All claims of the Company against
any third party relating to the Acquired Assets, whether ▇▇▇▇▇▇ or
inchoate, known or unknown, contingent or noncontingent, but not including
claims that would constitute Retained Assets.
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2.2 Retained Assets. Notwithstanding the provisions of Section 2.1 to the
contrary, the Company shall retain and Buyer shall not purchase or acquire from
the Company any of the assets, properties, rights or interests of the Company
not specifically listed in Section 2.1 above (collectively, the "Retained
Assets"), including all rights, claims and benefits of the Company in, to, or
under all insurance policies maintained by or for the benefit of the Company.
2.3 Assignability and Consents. Notwithstanding anything herein to the
contrary, this Agreement shall not constitute an agreement to sell, convey,
assign, sublease or transfer any Acquired Asset if any attempted sale,
conveyance, assignment, sublease or transfer of such asset, without the Consent
of the other Person to such transfer, would constitute a breach by the Company
with respect to such Acquired Asset. If such Consent is not obtained, or if an
attempted assignment thereof would be ineffective or would materially affect the
rights of Buyer or the Company, the Company shall cooperate with Buyer in any
arrangement designed to provide for Buyer's enjoyment of the benefits under any
such Acquired Assets, including, without limitation, enforcement for the benefit
of Buyer of any and all rights of the Company under or relating to such Acquired
Assets.
ARTICLE III
LIABILITIES
3.1 Assumption of Liabilities. Buyer shall assume, effective as of the
Closing, and shall thereafter pay, perform and discharge as and when due the
following liabilities and obligations of the Company (collectively, the "Assumed
Liabilities"):
(a) Contracts. All liabilities and obligations of the Company
arising under the terms of the Acquired Contracts, in each case solely to
the extent that (i) such liabilities and obligations are attributed to
periods after the Closing and (ii) payment in respect of such liabilities
and obligations has not been made by LLTC pursuant to the terms of the
Time Charter Agreement;
(b) Purchase and Sale Orders. All liabilities and obligations of the
Company outstanding under the Acquired Purchase Orders and the Acquired
Sale Orders solely to the extent that (i) such liabilities and obligations
are attributed to periods after the Closing and (ii) payment in respect of
such liabilities and obligations has not been made by LLTC pursuant to the
terms of the Time Charter Agreement; and
(c) Expenses of the Business. All accounts payable associated with
the Business and other liabilities and obligations of the Company arising
out of or relating to the Company's ownership or operation of the Acquired
Assets or the Business on or prior to the Closing Date which were the
obligation of LLTC to pay under the Time Charter Agreement but which, as
of the Closing Date, have not been paid by LLTC in accordance with the
Time Charter Agreement.
3.2 Retained Liabilities. Other than the Assumed Liabilities, the Company
shall retain, and Buyer shall not assume, or be responsible or liable with
10
respect to, any other liabilities or obligations of the Company (collectively
the "Retained Liabilities"). The Buyer will acquire the Acquired Assets free and
clear of all such liabilities and obligations and the Company shall remain
responsible for and will duly and timely pay, perform and discharge in full all
Retained Liabilities.
ARTICLE IV
PURCHASE PRICE
4.1 Payment. In full consideration for the sale and transfer of the
Acquired Assets to Buyer, at the Closing, the following shall occur: Buyer shall
(a) assume the Assumed Liabilities, (b) pay to the Company, by bank wire
transfer of immediately available funds to an account or accounts designated in
writing by the Company, an amount equal to (i) the total amount of principal,
interest and other amounts outstanding under the National City Financing
Documentation or Replacement Financing Documentation, as applicable, plus (ii)
the total amount of principal, interest and other amounts outstanding under the
Subordinated Debt Financing Documentation or Replacement Subordinated Debt
Financing Documentation, as applicable, plus (iii) $400,000, plus (iv) an amount
equal to sixteen percent (16%) simple interest per year (based on a 365-day
year) on the amount set forth under clause (iii) of this Section 4.1 for the
period from the date of the "Closing" under the ONCO Purchase Agreement through
the Closing Date (such assumption together with the amount of the foregoing
payment is referred to as the "Purchase Price"). The Company directs Buyer to
pay, for the Company's account, from the Purchase Price (x) an amount equal to
the NatCity Payoff Amount in accordance with the NatCity Payoff Letter, and (y)
an amount equal to the Sub Debt Payoff Amount in accordance with the Sub Debt
Payoff Letters.
4.2 Purchase Price Allocation. The Purchase Price shall be allocated in
accordance with Schedule 4.2. Buyer and the Company covenant to prepare and file
their respective Tax Returns in a manner consistent with such allocation and not
to take any position in any Tax Return, or examination or other administrative
or judicial proceeding relating to any Tax Return, or for financial purposes
that is inconsistent with such allocation unless required by Law. Buyer and the
Company each shall file with it federal income tax return an appropriate IRS
Form 8594 reflecting such allocation.
ARTICLE V
CLOSING AND DELIVERIES
5.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") will take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Rosenman LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, concurrently with the execution of
this Agreement (the "Closing Date"). All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing will be
deemed to have been taken and executed simultaneously and no proceedings will be
deemed to have been taken nor documents executed or delivered until all have
been taken, executed and delivered.
5.2 Delivery of Vessels. The Vessels are presently at the locations where
they have been laid up for the winter season, and Buyer will take delivery of
the Vessels in those locations.
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5.3 Documents to be Delivered by the Company. As indicated below, on the
Closing Date, the Company shall deliver or cause to be delivered to Buyer:
(a) copies of the resolutions of the board of directors of the
Company and its shareholders, authorizing and approving this Agreement,
the other agreements contemplated hereby to which the Company is a party
and the transactions contemplated hereby or thereby;
(b) a ▇▇▇▇ of sale transferring the Acquired Assets (other than the
Vessels) to Buyer, duly executed by the Company, in the form attached
hereto as Exhibit A;
(c) a ▇▇▇▇ of sale transferring each Vessel to be transferred to
Buyer, duly executed by the Company and recordable by the National Vessel
Documentation Center, in the form of Coast Guard Form CG-1340 attached
hereto as Exhibit B;
(d) a duly executed counterpart of an instrument or instruments of
assignment and assumption assigning the entire right, title and interest
of the Company in, to and under the Acquired Contracts, the Acquired
Purchase Orders, and the Assumed Liabilities to Buyer, in the form or
forms attached hereto as Exhibit C (the "Assignment and Assumption
Agreements");
(e) the Consents listed on Schedule 6.3(b);
(f) satisfactions of all mortgages on Vessels to be transferred on
such dates in a form recordable with the National Vessel Documentation
Center, and otherwise acceptable to Buyer;
(g) a Certificate of Ownership of Vessel for each Vessel issued by
the National Vessel Documentation Center on Coast Guard Form CG-1330;
(h) releases, including termination statements under the Uniform
Commercial Code of any financing statements filed against any Acquired
Assets to be transferred to Buyer on such dates, evidencing discharge,
removal and termination of all Liens (other than Permitted Liens) to which
the Acquired Assets being transferred to Buyer are subject;
(i) good standing certificates of the Company from the Company's
jurisdiction of incorporation dated no earlier than seven (7) days prior
to the Closing Date;
(j) an Abstract of Title for each Vessel issued by the National
Vessel Documentation Center on Coast Guard Form CG-1332;
(k) all classification and operating certificates (for hull,
engines, anchors, chains, etc.), as well as plans and specifications which
are on board or in the Company's possession for each Vessel being
transferred on such dates;
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(l) any such additional documents, including but not limited to the
Certificate of Documentation issued by the National Vessel Documentation
Center on Coast Guard Form CG-1270 for each Vessel, as may reasonably be
required by the competent authorities for the purpose of documenting the
Vessels under ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Section 12101 et seq. in the name of
the Buyer, endorsed for the United States coastwise and registry trades;
(m) confirmation of class certificates for each of the Vessels (free
and clear of any recommendations affecting class) issued by the American
Bureau of Shipping Classification issued no earlier than three (3) days
prior to the Closing Date;
(n) two (2) originals of the Protocol of Delivery and Acceptance
confirming the date and time of delivery of the Vessels from the Company
to Buyer, duly executed by the Company, in the form attached here as
Exhibit D ("Delivery Protocol");
(o) complete and accurate originals (or if no original exists, a
copy) of all Acquired Contracts, Acquired Purchase Orders, Acquired Sale
Orders, and all books and records described in Section 2.1(d);
(p) sufficient copies of a letter on the Company's letterhead and
signed by an officer of the Company addressed to warehousemen and bailees
of the Company holding, storing or warehousing any of the Acquired Assets
to the effect that Buyer has purchased, or otherwise has legal power and
authority over, such assets and the warehouseman or bailee may do with the
assets as the Buyer may thereafter direct, such letter to otherwise be in
form and substance mutually agreeable to Buyer and the Company; and
5.4 Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver or cause to be delivered to the Company:
(a) as contemplated in Section 4.1, the Purchase Price;
(b) copies of the resolutions of the Board of Directors or other
governing body of Buyer, authorizing and approving this Agreement, the
other agreements contemplated hereby to which Buyer is a party and the
transactions contemplated hereby or thereby;
(c) a counterpart of the Assignment and Assumption Agreements, duly
executed by Buyer;
(d) an Escrow Agreement, duly executed by Buyer and the Company,
substantially in the form attached hereto as Exhibit E;
(e) a counterpart of the Delivery Protocol for each Vessel to be
delivered to Buyer on such date, duly executed by Buyer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as follows:
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6.1 Organization and Standing; Citizenship. The Company is duly organized,
validly existing and in good standing under the laws of Michigan. The Company is
duly qualified to do business, and is in good standing, in each jurisdiction in
which the character of the properties owned or leased by it or in which the
conduct of the Business requires it to be so qualified, except where the failure
to be so qualified or to be in good standing would not have a Material Adverse
Effect on the Company. The Company is a "citizen of the United States" within
the meaning of Section 2 of the Shipping Act, 1916, as amended, for the purpose
of owning and operating the Vessels in the coastwise trade of the United States.
6.2 Authorization, Validity and Effect. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby to be executed and delivered by it,
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and such other agreements and documents
and the consummation of the transactions contemplated herein and therein, have
been duly and validly authorized by all necessary corporate action on the part
of the Company. This Agreement has been duly and validly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company. This Agreement is enforceable against the Company in accordance with
its terms, except as limited by the General Enforceability Exceptions.
6.3 No Conflict; Required Filings and Consents.
(a) Neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the transactions
contemplated herein, nor compliance by the Company with any of the
provisions hereof, will (i) conflict with or result in a breach of any
provisions of the articles of incorporation, by-laws or other governing
documents of the Company, (ii) except as set forth on Schedule 6.3(a),
constitute or result in the breach or violation of any term, condition or
provision of, or constitute a default under (without regard to
requirements of notice, passage of time or elections of any Person), or
give rise to any right of termination, cancellation or acceleration with
respect to, or result in the creation or imposition of a Lien upon any of
the Acquired Assets, pursuant to any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which it is
a party or by which the Company or the Acquired Assets may be subject, or
(iii) subject to receipt of the requisite approvals referred to on
Schedule 6.3(a), violate any Order, Permit or Law applicable to the
Company the Business or the Acquired Assets or give any third party or
Governmental Authority the right to revoke, withdraw, suspend, cancel,
terminate or modify any Permit held by the Company, or (iv) give any
Person the right to challenge any of the transactions contemplated by this
Agreement or to exercise any remedies or obtain any relief under any Laws
or Orders to which the Company or any of the Acquired Assets may be
subject.
(b) Other than as set forth on Schedule 6.3(b), no Consent is
necessary for the consummation by the Company of the transactions
contemplated in this Agreement.
6.4 Financial Statements.
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(a) Copies of the following financial statements have been delivered
to Buyer or have been made available to Buyer for its review: (i) annual
unaudited balance sheet of the Company as of December 31, 2007 (the
"Balance Sheet" and such date of the Balance Sheet, the "Balance Sheet
Date") and the related statements of income, stockholders' equity and cash
flows for the year then ended (collectively, the "Financial Statements").
(b) The Financial Statements have been prepared in accordance with
the Company's books and records and GAAP applied on a consistent basis
throughout the period covered thereby (except, in the case of the
unaudited financial statements, for the absence of footnote disclosure and
any customary year end adjustments) and fairly present, in all material
respects, the financial position and results of operations of the Company
as of the date and for the period indicated.
(c) The Company has no material liability or obligation of any
nature, whether absolute, contingent or otherwise, other than (a)
liabilities or obligations accrued or reserved for on the Balance Sheet,
(b) liabilities incurred after the Balance Sheet Date in the ordinary
course of business or (c) the liabilities set forth on Schedule 6.4(c).
(d) Schedule 6.4(d) sets forth, as of December 31, 2007, all prepaid
expenses, advance payments, deposits and other current assets (excluding
cash, cash equivalents and accounts receivable) of the Company.
(e) The financial books and records of the Company (i) are in all
material respects true and complete, and (ii) have been maintained in
accordance with reasonable business practices on a basis consistent with
prior years.
6.5 Title; Sufficiency of Assets; Condition.
(a) The Acquired Assets and the Retained Assets constitute all of
the assets, properties, rights and interests necessary to conduct the
Business in substantially the same manner as conducted by the Company
prior to the date of this Agreement and in compliance in all material
respects with all applicable Laws, Orders, Contracts and Permits. Except
as set forth on Schedule 6.5(a), the Company has, and at the Closing,
15
Buyer will acquire, title to all of the Vessels as received by the Company
pursuant to the ONCO Purchase Agreement. Except with respect to the
Vessels or as set forth on Schedule 6.5(a), the Company has, and at the
Closing, Buyer will acquire, good, valid and marketable title to all of
the Acquired Assets, as applicable, free and clear of all Liens except for
Permitted Liens.
(b) Schedule 6.5(b) contains a true and accurate list, including the
location thereof, of all tangible personal property (including, without
limitation, all machinery, engines, instruments, rigging, anchors, chains,
cables, tackle, apparel, accessories, equipment, radio installation and
navigational equipment, inventory and spare parts) and fixtures included
within the Acquired Assets which are not located on the Vessels. Except as
set forth on Schedule 6.5(b), to the Company's Knowledge all such personal
property and fixtures are in good condition and repair, except for
ordinary wear and tear and routine repairs.
(c) Each Vessel is equipped with machinery, engines, instruments,
bunker fuel, stores, rigging, anchors, chains, cables, tackle, apparel,
accessories, equipment, radio installation and navigational equipment,
inventory, spare parts and all other appurtenances necessary for the
operation of such Vessel in the ordinary course of business consistent
with past practices. To the Company's Knowledge, all such property is in
good condition and repair, except for ordinary wear and tear and routine
repairs.
(d) To the Company's Knowledge, each of the Vessels is reasonably
fit for its intended purpose. Except as set forth on Schedule 6.5(d), to
the Company's Knowledge, since the date of acquisition of the Vessels by
the Company, no Vessel has been grounded, stranded or has suffered any
other occurrence or casualty that could have or did cause any damage to
the Vessel in excess of $25,000 that has not been reported to the American
Bureau of Shipping. Each Vessel shall be delivered at Closing safely
afloat, anchored, moored or underway in its present condition, normal wear
and tear excepted.
(e) The Vessels are duly documented under the Laws and flag of the
United States and satisfy all requirements for coastwise documentation
under ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇. No Vessel has been "sold
foreign" within the meaning of 46 U.S.C. App. 883. All Permits (including
without limitation coastwise licenses, permits, certificates,
registrations, approvals or other authorizations) necessary to operate the
Vessels as currently operated are valid and current.
(f) Except as set forth on Schedule 6.5(f), each Vessel has a valid,
current and unextended U.S. Coast Guard Certificate of Inspection, and all
other Permits (including a Certificate of Financial Responsibility (Water
Pollution)) that are required by applicable Law, true, complete and
correct copies of all of which have been provided to Buyer, and, except as
set forth on Schedule 6.5(f), there are no outstanding CG-835 Notice of
Merchant Marine Inspection Requirements or Captain of Port Orders with
respect to the Vessels or the operation thereof. Schedule 6.5(f) sets
forth a list of such Permits and CG-835 Notice of Merchant Marine
Inspection Requirements or Captain of Port Orders.
(g) Schedule 6.5(g) sets forth a list of the Vessels, with an
indication, as applicable, of the vessel type, year built, American Bureau
of Shipping Classification (including any recommendations affecting
class), flag, horsepower, associated Liens (to the Company's Knowledge),
gross tonnage and date of last drydocking.
(h) Except as set forth on Schedule 6.5(h), all Vessels are in class
free of outstanding recommendations affecting class, with all valid class
certificates.
(i) All Winter Work and Fit Out Expenses for the winter season
2007-2008 have been established in consultation with LLTC, which is aware
of their status.
6.6 [Intentionally Omitted]
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6.7 Compliance with Laws.
(a) Except as set forth on Schedule 6.7, the Company is, and has
been, in material compliance with all Laws and Orders applicable to the
Company, the Business or employees conducting the Business.
(b) Except as set forth on Schedule 6.7, the Company has received no
written notification or, to the Company's Knowledge, other notification or
communication from any Governmental Authority or other Person asserting
that the Company is not in compliance with any Law or Order applicable to
the Company or relating to the Acquired Assets and, to the Company's
Knowledge, no facts relating to the Company, and/or the Acquired Assets
exist which could reasonably give rise to any claim that a violation
exists.
(c) Except as may be disclosed on Schedule 6.7, (i) there is no
pending or, to the Company's Knowledge, threatened investigation, audit,
review or other examination of the Company by any Governmental Authority
having supervisory or regulatory authority with respect to the Company or
the Acquired Assets, and (ii) the Company is not subject to, nor has the
Company received any written notice that it may become subject to, any
Order, agreement, memorandum of understanding or other regulatory
enforcement action or Action with or by or any such Governmental
Authority.
6.8 Permits. Schedule 6.8 contains a complete list of all material Permits
(including Environmental Permits) and their expiration dates issued to the
Company that are currently required for the use and operation of the Acquired
Assets. The Company is in compliance in all material respects with all such
Permits, including all requirements for notification, filing, reporting, posting
and maintenance of logs and records. Except as set forth on Schedule 6.8, all
Permits are in full force and effect, are not in default, and are valid and
unextended under all applicable Laws according to their terms. There is no
Action or investigation pending of which the Company has received written notice
or, to the Company's Knowledge, threatened, to terminate, suspend, refuse to
renew, or modify any Permit.
6.9 Employee Plans.
(a) Schedule 6.9(a) sets forth a complete list, as of the date of
this Agreement, of (i) all "employee benefit plans," as defined in Section
3(3) of ERISA, (ii) all other severance pay, salary continuation, bonus,
incentive, stock option, retirement, pension, profit sharing or deferred
compensation plans, contracts, programs, funds or arrangements of any
kind, and (iii) all other employee benefit plans, contracts, programs,
funds, or arrangements in respect of any employees of the Business that
are sponsored by the Company or in which the Company is or was, since its
inception, a participating employer, in each of the foregoing clauses (i),
(ii) and (iii) relating to the Business (all of the above being
hereinafter individually or collectively referred to as "Employee Plan" or
"Employee Plans," respectively). Notwithstanding the foregoing, Schedule
6.9(a) shall not be required to list any Employee Plan that is not
material.
17
(b) True and complete copies of all current summary plan
descriptions with respect to the Employee Plans have been made available
to Buyer.
(c) Each Employee Plan has been maintained, operated, and
administered in compliance with its terms and any related documents or
agreements and in compliance with all applicable Laws (including, without
limitation, ERISA and the Code), in each case in all material respects.
(d) Each Employee Plan (other than a multiemployer plan) intended to
be qualified under Section 401(a) of the Code has been determined by the
IRS to be so qualified, and each trust created thereunder has been
determined by the IRS to be exempt from Tax under the provisions of
Section 501(a) of the Code. To the Company's Knowledge, nothing has
occurred since the date of such determinations that could reasonably be
expected to adversely affect the status of any such Employee Plan or
trust.
(e) There exists no Action (other than routine claims for benefits)
with respect to any Employee Plan pending or, to the Company's Knowledge,
threatened against any such plan, and to the Company's Knowledge no facts
exist which could give rise to any such action, suit or claim.
(f) No condition or event exists or is expected to occur with
respect to the Employee Plans or the employee benefit plans (as defined in
ERISA Section 3(3)) of any ERISA Affiliate that could be expected to
subject, directly or indirectly, the Buyer to any material liability,
contingent or otherwise, as a result of the transactions contemplated by
this Agreement.
6.10 Contracts and Loans.
(a) Set forth on Schedule 6.10(a), as of the date of this Agreement,
is a list of all Contracts and outstanding Purchase and Sales Orders
relating to the Acquired Assets. The Company has given to Buyer, or
provided Buyer with access to, complete and accurate copies of all written
Contracts and Purchase and Sales Orders, or with respect to any oral
Contract or Purchase and Sales Order, complete and accurate summaries of
such Contracts and Purchase and Sales Orders. Each of the Contracts and
Purchase and Sales Orders set forth on Schedule 6.10(a) is in full force
and effect and is a legal, valid and binding agreement of the Company,
subject only to the General Enforceability Exceptions, and there is no
default or breach by the Company, or, to the Company's Knowledge, any
other party, in the timely performance of any obligation to be performed
or paid thereunder or any other material provision thereof. None of the
Contracts are subject to termination or modification by reason of the sale
of the Acquired Assets to Buyer, and the Company has not received notice
of any potential termination or modification of any Contract. Except as
set forth on Schedule 6.3(b), each of the Contracts and Acquired Purchase
Orders and Acquired Sale Orders is assignable by the Company to Buyer
without the required Consent of any other Person.
(b) Schedule 6.10(b) sets forth a complete and accurate list or
description of all instruments or other documents relating to any direct
18
or indirect indebtedness for borrowed money of the Company as well as
indebtedness by way of capital leases, lease-purchase arrangements,
guarantees, undertakings on which others rely in extending credit and all
chattel mortgages and other security arrangements with respect to property
included in the Acquired Assets.
6.11 Legal Proceedings. As of the date of this Agreement, except as set
forth on Schedule 6.11, there are no Actions pending, or, to the Company's
Knowledge, threatened, against the Company in connection with the Acquired
Assets or that questions the validity of this Agreement or any action taken or
to be taken by the Company in connection with the consummation of the
transactions contemplated hereby or which seeks to prohibit, enjoin or other
wise challenge any of the transactions contemplated hereby. Except as set forth
on Schedule 6.11, as of the date of this Agreement, the Company is not subject
to any Order.
6.12 Insurance. Schedule 6.12 sets forth, as of the date of this
Agreement, all policies of insurance covering the Acquired Assets. All such
policies are valid and enforceable and in full force and effect and all premiums
due and payable thereunder have been paid. The Company has not received written
notice of cancellation or of premium increase of any such insurance policies.
6.13 Labor Relations and Employment Issues.
(a)
(i) At the time of the Company's purchase of the vessels under
the ONCO Purchase Agreement, the Company recognized the AMO as the
exclusive collective bargaining representative of its Licensed Officers
and Stewards involved in the Business and assumed the AMO CBA. The AMO CBA
provided for a contract "re-opener" for "wages and other economic terms"
for the period July 31, 2006, through August 1, 2007. The Company engaged
in good faith negotiations with the AMO pursuant to the re-opener. On or
about May 9, 2007, the AMO licensed Officers and Stewards involved in the
business commenced a work stoppage/strike.
By letter dated May 31, 2007, the Company provided the AMO
with notice, pursuant to Article XXII, Term of Agreement, that the CBA
would terminate as of August 1, 2007. By letter dated August 2, 2007, the
Company advised the AMO that the Company would no longer recognize the AMO
as the bargaining representative of its Licensed Engineers, Licensed Deck
Officers and Stewards. Thereafter, the Company commenced hiring Licensed
Officers to operate the Vessels. The Company continues to operate the
Business in the ordinary course with these new employees. Following the
expiration of the AMO CBA and withdrawal of recognition by the Company,
the AMO has continued its picketing/strike related activity. The AMO has
indirectly threatened a legal challenge to the AMO CBA termination, the
Company's withdrawal of recognition, and any Vessel transfer transaction.
(ii) The Company recognized the USW and assumed the Collective
Bargaining Agreement dated August 1, 1999 between the USW and ONCO (the
"1999 CBA"), as modified by a Memorandum of Understanding between ONCO and
the USW dated April 24, 2004 (the "2004 MOU"). The Company and USW entered
19
into the USW CBA, the USW MOU, and a Letter of Agreement dated August 30,
2007 (the "2007 LOA"). The Company has not recognized any other labor
organization as the representative of its unlicensed employees, nor is any
other labor organization the representative of its unlicensed employees,
nor is any other labor organization claiming or seeking to represent such
employees, nor has any other labor organization claimed or sought to do so
during the Company's ownership of the Vessels.
(iii) To the Company's Knowledge, and except as identified
above in Section 6.13(a)(i), there is not now, nor has there been during
the Company's ownership of the Vessels, any actual or threatened strike or
other job action, demand for arbitration, unfair labor practice charge
filed against the Company or other material claim or dispute arising out
of or relating to the Company's dealing with the AMO, the USW, or any
other labor organization and the Company is in material compliance with
the USW Agreement and all Laws governing the USW Agreement and
relationship. To the Company's Knowledge, the AMO CBA has been terminated
and the Company is in material compliance with all Laws governing the AMO
Agreement and relationship.
(b) To the Company's Knowledge, and except as set forth on Schedule
6.13(b), there is not now, nor has there been, since its inception, any
actual or threatened material complaint, allegation, investigation or
claim of any alleged violation by the Company of any Law regulating the
workplace and the Company is in material compliance with all such laws.
(c) Except with respect to ongoing disputes of a routine nature or
involving immaterial amounts, the Company has paid in full to all
employees of the Company providing services to the Business all wages,
salaries, commissions, bonuses, benefits and other compensation due and
payable to such employees, and the Company is and has been in material
compliance with all applicable Laws with respect to employment and
employment practices.
(d) Schedule 6.13(d) includes a complete list of all employees of
the Company during its ownership of the Vessels, along with their
respective union affiliation, if any, along with a list of all independent
contractors performing services for the Business as of the date of this
Agreement.
6.14 Environmental Matters. Except as set forth on Schedule 6.14:
(a) The Company's use and operation of the Vessels currently
complies with all applicable Environmental Laws and Environmental Permits
in all material respects.
(b) To the Company's Knowledge, no present or previous owner,
tenant, occupant or user of the Vessels has Released Hazardous Substances,
abandoned or disposed of any containers or equipment containing Hazardous
Substances, or violated applicable Environmental Laws or Environmental
Permits in a manner materially adversely affecting the condition or value
of the Vessels.
20
(c) There is no currently pending Environmental Claim (written or,
to the Company's Knowledge, otherwise) against the Company or, to the
Company's Knowledge, formal or informal investigation of the Vessels (or
the Company's operations thereon) by any Person, including any
Governmental Authority, based upon Environmental Laws or Environmental
Permits.
(d) There are no Liens on any Vessel based on or arising out of
Environmental Laws.
(e) The Company has obtained, and is in compliance in all material
respects, with all Environmental Permits required for the lawful operation
of the Vessels and all such Environmental Permits are listed on Schedule
6.8.
(f) The Company has delivered to Buyer complete copies of all
Environmental Permits, asbestos survey reports, records concerning the
removal, abatement or encapsulation of asbestos or mercury, and records
concerning employee asbestos training, exposure, and medical monitoring,
if any, in each case, in its possession relating to the Vessels.
(g) The Company has delivered or made available to Buyer all
material environmental studies, assessments, audits, reports (including
without limitation, environmental compliance audits reports and Phase I
and Phase II environmental assessment or investigation reports
commissioned by the Company) in its possession relating to the Vessels.
(h) Since the date of acquisition of the Vessels by the Company, the
Company has not been subject to or the subject of any Environmental Claims
and has not incurred losses with respect to any Environmental Liabilities
relating to the Vessels.
(i) The representations and warranties in this Section 6.14 are the
sole representations and warranties of the Company relating to compliance
with, and liabilities arising under, Environmental Laws and Environmental
Permits. Notwithstanding the foregoing, nothing in this subsection alters
the Company's Retained Liabilities under Section 3.2 of this Agreement.
6.15 Conduct of Business in Ordinary Course. Except as set forth on
Schedule 6.15, since the Balance Sheet Date (a) the Company has conducted the
Business in the ordinary course of business consistent with past practices and
(b) there has not been any event having a Material Adverse Effect on the
Acquired Assets or the Company.
6.16 Taxes. Except as set forth on Schedule 6.16, the Company has filed
all Tax Returns due prior to the Closing Date, all of which were prepared in
accordance with applicable Laws and accurately reflect the information required
to be presented therein, required to be filed with respect to the Business or
the Acquired Assets with the appropriate Taxing Authority. All Taxes, fees and
assessments due and payable on account of the Business have been paid, except
such amounts as are being contested diligently and in good faith and are not
material, and the Company has set up an adequate reserve for the payment of such
Taxes. No deficiencies for any Taxes have been proposed, asserted or assessed
against the Company on account of the Business, or the Acquired Assets that have
21
not been finally settled or paid in full, and no requests for waivers of the
time to assess any such Tax are pending. There are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any federal,
state, local or foreign income Tax Return for any period in connection with the
Business or the Acquired Assets, and there are no Tax audits pending in
connection with the Business or the Acquired Assets. The Company has not
received any notice of nor, to the Company's Knowledge, is there any deficiency,
assessment or audit or proposed deficiency assessment or audit from any Taxing
Authority which could affect, or result in the imposition of any Lien upon, the
Business or the Acquired Assets. Buyer is not required to withhold any amounts
for Taxes imposed on the Company from the Purchase Price. The Company is not,
and, to the Company's Knowledge, does not expect to be, involved in a dispute in
relation to any Tax matters.
6.17 No Brokers. No broker, finder or similar agent has been employed by
or on behalf of the Company, and no Person with which the Company has had any
dealings or communications of any kind is entitled to any brokerage commission,
finder's fee or any similar compensation in connection with this Agreement or
the transactions contemplated hereby.
6.18 No Other Representations or Warranties. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS ARTICLE VI, ANY CERTIFICATE REFERRED TO IN THIS ARTICLE VI OR
ANY DOCUMENT OTHERWISE DELIVERED PURSUANT TO SECTION 5.2, THE COMPANY MAKES NO
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WARRANTIES WITH RESPECT TO
THE CONDITION, MERCHANTABILITY, SUITABILITY AND/OR FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO ANY OF THE ACQUIRED ASSETS.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER AND RAND
Each of Buyer and Rand represents and warrants to the Company, jointly and
severally, as follows:
7.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Buyer is duly
qualified to do business, and in good standing, in each jurisdiction in which
the character of the properties owned or leased by it or in which the conduct of
its business requires it to be so qualified, except where the failure to be so
qualified or to be in good standing would not have a Material Adverse Effect on
Buyer. Rand is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Rand is duly qualified to do business, and
in good standing, in each jurisdiction in which the character of the properties
owned or leased by it or in which the conduct of its business requires it to be
so qualified, except where the failure to be so qualified or to be in good
standing would not have a Material Adverse Effect on Rand.
7.2 Authorization, Validity and Effect.
(a) Buyer has the requisite power and authority to execute and
deliver this Agreement and all agreements and documents contemplated
hereby to be executed and delivered by it, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery
22
of this Agreement and such other agreements and documents and the
consummation of the transactions contemplated herein and therein, have
been duly and validly authorized by all necessary corporate action on the
part of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except
as limited by the General Enforceability Exceptions.
(b) Rand has the requisite power and authority to execute and
deliver this Agreement and all agreements and documents contemplated
hereby to be executed and delivered by it, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and such other agreements and documents and the
consummation of the transactions contemplated herein and therein, have
been duly and validly authorized by all necessary corporate action on the
part of Rand. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation
of Rand, enforceable against Rand in accordance with its terms, except as
limited by the General Enforceability Exceptions.
7.3 No Conflict; Required Filings and Consents.
(a) Neither the execution and delivery of this Agreement by Buyer,
nor the consummation by Buyer of the transactions contemplated herein, nor
compliance by Buyer with any of the provisions hereof, will (i) conflict
with or result in a breach of any provisions of the articles or
certificate of incorporation or by-laws or equivalent organizational
documents of Buyer, (ii) constitute or result in the breach of any term,
condition or provision of, or constitute a default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation or imposition of any Lien upon, any property or
assets of Buyer or, pursuant to any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which it is
a party or by which it or any of its properties or assets may be subject,
and that would, in any such event, have a Material Adverse Effect on Buyer
or (iii) subject to receiving the requisite approvals referred to on
Schedule 7.3(b), violate any Order, Permit or Law applicable to Buyer or
any of its properties or assets, or (iv) give any Person the right to
challenge any of the transactions contemplated by this Agreement or to
exercise any remedies or obtain any relief under any Laws or Orders to
which Buyer may be subject.
(b) Other than as set forth on Schedule 7.3(b), no Consent is
necessary for the consummation by Buyer or Rand of the transactions
contemplated in this Agreement.
(c) Neither the execution and delivery of this Agreement by Rand,
nor the consummation by Rand of the transactions contemplated herein, nor
compliance by Rand with any of the provisions hereof, will (i) conflict
with or result in a breach of any provisions of the articles or
certificate of incorporation or by-laws or equivalent organizational
documents of Rand, (ii) constitute or result in the breach of any term,
condition or provision of, or constitute a default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation or imposition of any Lien upon, any property or
assets of Rand or, pursuant to any note, bond, mortgage, indenture,
23
license, agreement, lease or other instrument or obligation to which it is
a party or by which it or any of its properties or assets may be subject,
and that would, in any such event, have a Material Adverse Effect on Rand
or (iii) subject to receiving the requisite approvals referred to on
Schedule 7.3(b), violate any Order, Permit or Law applicable to Rand or
any of its properties or assets, or (iv) give any Person the right to
challenge any of the transactions contemplated by this Agreement or to
exercise any remedies or obtain any relief under any Laws or Orders to
which Rand may be subject.
7.4 Citizenship. Buyer is a "citizen of the United States" within the
meaning of Section 2(a) and (c) of the Shipping Act, 1916, as amended.
7.5 No Brokers. No broker, finder or similar agent has been employed by or
on behalf of Buyer or Rand, and no Person with which Buyer or Rand has had any
dealings or communications of any kind is entitled to any brokerage commission,
finder's fee or any similar compensation in connection with this Agreement or
the transactions contemplated hereby.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 Intentionally Omitted
8.2 Transfer Taxes. All sales, use, stamp, transfer, recordation and
documentary Taxes and all conveyance fees, recording charges and other fees and
charges (collectively, "Transfer Taxes") which may be payable in connection with
the transactions contemplated by this Agreement shall be borne by Buyer. The
party responsible under applicable Law for filing any Tax Return or other
documentation relating to Transfer Taxes shall file such Tax Return or other
documentation at its own expense, and the non-filing party shall use
commercially reasonable efforts to cooperate with the filing party and join in
the execution of any such Tax Returns and other documentation, if required.
8.3 Records; Reasonable Access.
(a) From and after the Closing Date, with respect to the books and
records of the Company relating to the Business on or prior to the Closing
Date and acquired by Buyer hereunder: (i) Buyer shall not cause or permit
their destruction or disposal without first offering to surrender them to
the Company and (ii) where the books and records relate to the Retained
Liabilities or there is another legitimate purpose, including a claim for
indemnification against the Company under Article IX, Buyer shall allow
the Company and its representatives, upon reasonable advance notice to
Buyer: (A) access, during regular business hours, to such books and
records, and (B) to make copies of such books and records, at the
Company's sole expense.
(b) From and after the Closing Date, with respect to the books and
records of the Company relating to the Acquired Assets on or prior to the
Closing Date that are retained by the Company after the Closing Date
(including, without limitation, personnel records for employees of the
Business prior to the Closing): (i) the Company shall not cause or permit
their destruction or disposal without first offering to surrender them to
24
Buyer (if permitted by law) and (ii) where the books and records relate to
the Acquired Assets or there is another legitimate purpose, including a
claim for indemnification against Buyer under Article IX, the Company
shall allow Buyer and its representatives, upon reasonable advance notice
to the Company: (A) access, during regular business hours, to such books
and records, and (B) to make copies of such books and records, at Buyer's
sole expense.
(c) From and after the Closing Date, Buyer shall permit the Company
and its representatives to have reasonable access, during regular business
hours and upon reasonable advance notice, to the Vessels, drawings and
other records relating to the Vessels during the Company's ownership of
such Vessels, any of the other Acquired Assets so that the Company may
address any matter relating to any Retained Liability or a claim for
indemnification against the Company under Article IX.
(d) Access by the Company pursuant to Section 8.4(a) and (c), or
access by the Buyer pursuant to Section 8.4(b), shall in each case be
conducted in a manner that is not disruptive to the business of the party
providing such access in any material respect, shall be at the sole risk
and expense of the party provided access and will be subject to any other
reasonable limitations, including confidentiality restrictions imposed by
the party providing such access and execution of an indemnity and waiver
in favor of the party providing such access prior to embarkment on the
Vessels or entry onto the premises.
8.4 Commercially Reasonable Efforts; Cooperation. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use commercially reasonable efforts to take, or cause to be taken, all
commercially reasonable actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all commercially reasonable
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement, including (a) obtaining all of the necessary actions or nonactions,
waivers, Permits, consents and approvals from Governmental Authorities and the
making of all filings and the taking of all steps as may be necessary to obtain
an approval or waiver from, or to avoid an Action or proceeding by, any
Governmental Authority, (b) obtaining the necessary Consents from third parties
including those listed on Schedule 6.3(b), (c) the execution and delivery of any
additional agreements, documents or instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement; and (d) the determination of the delivery location of each Vessel.
8.5 Employee Matters.
(a) Non-Union Employees. The Company has provided Buyer with a list
of Non-Union Employees as of Closing on Schedule 6.13(d). Effective as of
Closing, the Company has terminated the employment of each person on this
list. Within three days after the Closing Date, Buyer shall provide the
Company with a list of those Non-Union Employees who accept offers of
employment and became new employees of Buyer upon Closing. Nothing in this
Agreement shall confer any additional rights upon any Non-Union Employee,
including but not limited to any right to employment with Buyer.
25
(b) Union Employees. The Company asked Buyer to assume the USW CBA
or to otherwise enter into an agreement with the USW establishing the
terms and conditions of employment to be effective as of the Closing Date,
as set forth in Paragraph 12, Successorship, of the USW MOU under the USW
CBA. Buyer has refused to assume the USW CBA and refused to establish
terms and conditions of employment to be effective as of the Closing Date.
The Company and the other Seller Indemnitees have been indemnified by
Buyer from any Losses incurred by the Company arising from this refusal by
Buyer under Section 9.2 below.
(c) Employment-Related Liabilities.
(i) Except as set forth in Section 3.1(c) and Section 8.5(e),
the Company will be solely responsible for any and all employment-related
claims and obligations, if any, arising with respect to the Company
Employees under the Employee Plans, the USW CBA, other terms of
employment, any Laws, or otherwise prior to the Closing, including claims
for wages, vacation, bonuses, commissions, salary, insurance, wage
continuation, compliance with the extension of coverage under COBRA, and
other benefits. The Company will pay all withholding tax and similar
obligations in respect of compensation earned by any Company Employee
prior to the Closing.
(ii) Buyer will be responsible for employment related
liabilities related to the Company Employees employed by Buyer which arise
at or after the Closing, and any liabilities arising as a result of any of
Buyer's activities in connection with the evaluation and hiring process
with respect to all Company Employees, whether before or after the
Closing.
(iii) Buyer shall be solely responsible for any and all
liabilities relating to any termination and severance benefits, costs,
charges and liabilities of any nature incurred under the USW CBA, the
Employee Plans, or other terms of employment with respect to termination
of Company Employees as of or after the Closing.
(iv) For purposes of this Section 8.5(c) and Section 9.2, a
claim is deemed to "arise" at the time the event or condition that gives
rise to the claim occurs (for all purposes other than medical insurance)
or the date treatment, services, products or supplies are provided (for
purposes of medical insurance); provided, however, that Buyer shall be
liable for its own actions in regard to the decision to offer employment
to a particular employee, whether or not those actions took place, in
whole or in part, prior to the Closing.
(d) Pension Benefits. Active participation of employees who are
employed in the Business under the Company's Employee Plans that are
employee pension benefit plans within the meaning of section 3(2) of ERISA
will cease as of the Closing. Buyer shall be liable for any withdrawal
liability under any existing multiemployer plan (as defined in Section
3(37) of ERISA), arising as a direct result of the purchase and sale of
the Acquired Assets or arising as a result of any actions taken by Buyer
after the Closing.
26
(e) Worker's Compensation. Buyer will bear the entire cost and
expense of all workers' compensation claims (including, but not limited
to, claims brought pursuant to the ▇▇▇▇▇▇▇▇▇ and Harbor Workers'
Compensation Statute or any applicable State Workers' Compensation
Statute) as well as claims brought pursuant to the ▇▇▇▇▇ Act, 46 U.S.C.
ss. 688 (the "▇▇▇▇▇ Act"), the General Maritime Law of the United States,
and similar claims, arising out of (i) injuries or illnesses sustained by
Company Employees prior to Closing; (ii) injuries or illnesses sustained
by Company Employees after the Closing to the extent they relate to
injuries or illnesses sustained prior to the Closing (including (x)
injuries sustained by Company Employees after the Closing that are
aggravations or reinjuries of injuries or illnesses that were sustained
before the Closing, or (y) treatment after the Closing required by Company
Employees which relates to injuries sustained before the Closing); and
(iii) illnesses or injuries arising from or in any way related to exposure
to Hazardous Substances or hazardous conditions prior to the Closing
regardless of whether such claim is made prior to or after the Closing.
Buyer will bear the entire cost and expense of all workers' compensation,
▇▇▇▇▇ Act or similar claims to the extent arising from exposure to
Hazardous Substances or hazardous conditions after the Closing on any
vessel owned, leased or operated by Buyer.
(f) Cooperation. The parties agree to furnish each other with such
information concerning employees, employee payroll and employee benefit
plans, subject to confidentiality and privacy considerations, and to take
all such other action, as is necessary and appropriate to effect the
transactions contemplated hereby.
8.6 Hazardous Substance-Containing Materials. From and after the Closing
Date and notwithstanding any other provision of this Agreement to the contrary,
Buyer agrees that the Company will not be responsible for or liable for
maintaining, repairing, encapsulating, investigating, removing or remediating
any asbestos-containing materials or any Hazardous Substance-containing
equipment located in the Vessels as of the Closing Date nor shall the Company be
responsible or liable for any Release or threatened Release of any Hazardous
Substance from such materials or equipment to the extent occurring at, on, in or
from the Vessels after the Closing Date
8.7 Disposition of Vessels.
(a) If, within the two year period immediately following the Closing
Date, Buyer shall determine to pursue the sale of any one or more of the
Vessels to, directly or indirectly, a third party not an Affiliate of
Buyer, Buyer shall notify the Company of this determination (the "Sale
Notice"). The Sale Notice shall propose a price and material payment terms
under which the Company or any Affiliate of the Company may acquire the
Vessels specified in the Sale Notice. The Company shall have thirty (30)
days after receiving the Sale Notice to irrevocably notify Buyer as to
whether or not it wants to purchase all, but not less than all, of the
Vessels specified in the Sale Notice at the proposed price and under the
proposed terms specified in the Sale Notice. If the Company notifies the
Buyer within such thirty day period that it has determined to purchase, or
cause its Affiliate to purchase, the Vessels specified in the Sale Notice,
the parties shall be obligated to close the transaction within sixty (60)
days after Buyer has been so notified. This Section 8.7 shall not apply to
a sale of the Vessels as part of the direct or indirect sale of the
Company or all or substantially all of its assets in one transaction or
series of related transactions with the same purchaser or group of
purchasers.
27
(b) If the Company elects not to purchase, or cause its Affiliate to
purchase, the Vessels pursuant to the Sale Notice (either by affirmative
notice to such effect delivered to the Buyer or by failure to notify the
Buyer of its election within the requisite thirty day time period), Buyer
may, for a period of one year from the date of such election, sell the
Vessels specified in the Sale Notice to a third party provided that the
value received by the Buyer in such sale is at least eighty five percent
(85%) of the price proposed in the Sale Notice. This Section 8.7 shall
continue to apply to any Vessel previously specified in a Sale Notice if
such Vessel remains unsold upon expiration of the one-year period referred
to in the preceding sentence.
ARTICLE IX
REMEDIES
9.1 Survival. The representations, warranties, covenants and agreements of
the Company, on the one hand, and Buyer and Rand, on the other hand, contained
in this Agreement will survive the Closing Date but only to the extent specified
below:
(a) All covenants and agreements contained in this Agreement that
contemplate performance thereof following the Closing Date will survive
the Closing Date in accordance with their terms.
(b) Except as set forth in Section 9.1(c) and (d), the
representations and warranties contained in this Agreement will survive
the Closing Date for a period of two (2) years following the Closing Date,
at which point such representations and warranties and any claim for
indemnification for breach thereof will terminate, except for pending
Claims as of such date of termination.
(c) The representations and warranties of the Company contained in
this Agreement (except that contained in Sections 6.1 (Organization and
Standing; Citizenship), 6.2 (Authorization, Validity and Effect), 6.3 (No
Conflict; Required Filings and Consents), 6.5(a) (Title), and 6.5(e)
(Documented Coastwise)) shall expire on the Closing Date, at which point
such representations and warranties and any claim for indemnification for
breach thereof will terminate.
(d) The representations and warranties of the Company contained in
the last sentence of Section 6.1 (Organization and Standing; Citizenship),
and the first two sentences of Section 6.5(e) (Documented Coastwise) will
survive the Closing Date indefinitely.
9.2 Indemnification by Buyer and Rand. Buyer and Rand, jointly and
severally, will indemnify, defend and hold harmless the Company, its Affiliates
and their respective successors and permitted assigns, and the officers,
employees, directors, managers, members, partners and stockholders of such
Persons (collectively, the "Seller Indemnitees") from and against, and will pay
to the Seller Indemnitees the amount of, any and all out-of-pocket losses,
28
liabilities, claims, damages, penalties, fines, judgments, awards, settlements,
Taxes, costs, fees, expenses (including, but not limited to, reasonable attorney
and investigation fees) and disbursements (collectively, "Losses") actually
incurred by any of the Seller Indemnitees following the Closing Date based upon,
arising out of or relating to (a) any breach of or inaccuracy in the
representations and warranties of Buyer or Rand contained in this Agreement; (b)
any breach of the covenants or agreements of Buyer or Rand contained in this
Agreement; (c) the Buyer's (and Buyer's subsidiaries' or Affiliates') ownership,
operation or lease of the Acquired Assets or the Business after the Closing
(other than as a result of facts or circumstances giving rise to a claim by
Buyer for indemnification described in Section 9.3); (d) the failure of Buyer to
pay, perform or discharge when due the Assumed Liabilities; (e) third party
actions challenging, or alleging claims arising out of, consummation of the
transactions contemplated by this Agreement, including any actions brought under
or in connection with the Labor Contracts; (f) any alleged violation arising
after the Closing of any successorship, bargaining, or other obligations under
the National Labor Relations Act or any other federal, state, or local labor or
employment law; and (g) any liabilities and obligations of the Company incurred
in winding down its business and operations after the Closing Date (using its
commercially reasonable efforts to minimize the operating and related costs
incurred by it during the wind down period) but not previously paid by LLTC
under the Time Charter Agreement.
9.3 Indemnification by the Company. The Company will indemnify, defend and
hold harmless Buyer, its Affiliates and their respective successors and
permitted assigns, and the officers, employees, directors, managers, members,
partners and stockholders of such Persons (collectively, the "Buyer
Indemnitees") from and against, and will pay to the Buyer Indemnitees the amount
of, any and all Losses actually incurred by any of the Buyer Indemnitees
following the Closing Date based upon, arising out of or relating to (a) any
breach of or inaccuracy in the representations and warranties of the Company
contained in this Agreement; (b) any breach of the covenants or agreements of
the Company contained in this Agreement; (c) the Retained Liabilities, including
the failure of the Company to pay, perform and discharge the Retained
Liabilities when due; and (d) the Company's gross negligence or willful
misconduct in owning or operating the Acquired Assets or the Business prior to
the Closing Date, including any Actions arising out of or relating thereto but
not including any Actions arising out of or relating to the Company's
negotiations with any labor organization. The indemnification obligations of
Company with respect to Sections 9.3(b), (c), and (d) are independent of
Company's indemnification obligations with respect to a breach of
representations or warranties under clause (a) above and are effective
irrespective of any limitations in Section 9.5 on applicable representations and
warranties.
9.4 Exclusive Remedy. The parties agree that, with the exception of fraud
or claims by a party for indemnification that are assumed by the other party
pursuant to Section 9.2 or Section 9.3, from and after the Closing, the
exclusive remedies of the parties against each other for any Losses based upon,
arising out of or otherwise in respect of the matters set forth in this
Agreement are the remedies of the parties set forth in this Article IX. The
parties expressly waive any and all rights they may have to assert a direct,
first-party action against each other seeking damages or equitable relief under
any Environmental Laws for such Losses. The provisions of this Section 9.4 shall
not, however, (i) prevent or limit a cause of action under Section 9.8 to obtain
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, (ii) prevent or limit any
party's right to assert any available legal defenses, claims or cross-claims or
29
implead a party in any Action by any Person which has not been fully assumed by
the other party pursuant to this Article IX or (iii) prevent or limit any party
from seeking contribution from any other party through an Action or otherwise
with respect to any Order that holds any two or more of the parties hereto
jointly and severally liable.
9.5 Limitations on Indemnification Payments. Notwithstanding anything in
this Agreement to the contrary, the right of an Indemnitee to indemnification is
limited as follows:
(a) The Buyer Indemnitees shall not be entitled to indemnification
pursuant to Section 9.3(a) unless and until the aggregate amount of all
Losses suffered by the Buyer Indemnitees pursuant to Section 9.3(a)
exceeds $100,000, at which time the Buyer Indemnitees shall be entitled to
indemnification pursuant to Section 9.3(a) for all such Losses up to a
maximum amount equal to the sum of clauses (b)(iii) and (iv) in the
definition of "Purchase Price" in Section 4.1 hereof. Notwithstanding the
foregoing, (i) there shall be no limitation for indemnification that Buyer
Indemnitees shall be entitled to receive for any claim arising as a result
of a breach of the representations and warranties set forth in the last
sentence of Section 6.1 (Organization and Standing; Citizenship), and the
first two sentences of Section 6.5(e) (Documented Coastwise).
(b) The Buyer Indemnitees' right to indemnification pursuant to
Section 9.3 on account of any Losses will be reduced by all insurance or
other third party indemnification proceeds actually received by the Buyer
Indemnitees with respect to such Loss. Buyer shall use reasonable efforts
to claim and recover any Losses suffered by the Buyer Indemnitees under
any such insurance policies or other third party indemnities. The Buyer
Indemnitees shall remit to the Company any such insurance or other third
party proceeds which are paid to the Buyer Indemnitees with respect to
Losses for which the Buyer Indemnitees have been previously compensated
pursuant to Section 9.3.
(c) The Buyer Indemnitees' right to indemnification pursuant to
Section 9.3 on account of any Losses will be reduced by the net amount of
the Tax benefits actually realized by the Buyer Indemnitees by reason of
such Loss. Buyer shall use reasonable efforts to claim and realize all
such Tax benefits.
(d) No party will be entitled to indemnification pursuant to Section
9.2 or Section 9.3 for punitive, consequential (including lost profits and
diminution in value), exemplary or special damages with respect to any
claim for indemnity under this Article IX which does not involve a Third
Party Claim.
(e) The Buyer Indemnitees will not be entitled to assert any claims
for Losses under Section 9.3(a) with respect to any individual item or
matter, or items or matters arising out of substantially similar facts and
circumstances, unless the amount of Losses with respect to such item(s) or
matter(s) exceeds $5,000.
9.6 Procedures. All claims for indemnification under this Agreement shall
be asserted and resolved as follows:
(a) Third Party Claim.
30
(i) Opportunity to Defend Third Party Claims. In the event of any claim by
a third party against a Buyer Indemnitee or Seller Indemnitee for which
indemnification is available hereunder (a "Third Party Claim"), the Buyer
Indemnitee or the Seller Indemnitee, as applicable ("Indemnitee"), shall
give written notice thereof (a "Claims Notice") to the Company, if
indemnification is sought against the Company, or to the Buyer, if
indemnification is sought against the Buyer or Rand (each an "Indemnifying
Party"). A Claims Notice must describe the Third Party Claim in reasonable
detail, and indicate the amount of the Loss claimed by the third party. No
delay in or failure to give notice of a Third Party Claim will adversely
affect any of the other rights or remedies of an Indemnitee under this
Agreement, or alter or relieve the Indemnifying Party of its obligation to
indemnify the applicable Indemnitee except to the extent that the
Indemnifying Party is materially prejudiced thereby. The Indemnifying
Party has the right, exercisable by written notice to the Indemnitee,
within sixty (60) days of receipt of a Claims Notice from the Indemnitee,
to assume and conduct the defense of such claim with counsel selected by
the Indemnifying Party. If the Indemnifying Party has assumed such defense
as provided in this Section 9.6(a)(i), the Indemnifying Party will not be
liable for any legal expenses subsequently incurred by any Indemnitee in
connection with the defense of such Claim. If the Indemnifying Party does
not assume the defense of any third party claim in accordance with this
Section 9.6(a)(i), the Indemnitee may continue to defend such claim at the
sole cost of the Indemnifying Party (subject to the limitations set forth
in this Article IX) and the Indemnifying Party may still participate in,
but not control, the defense of such third party claim at the Indemnifying
Party's sole cost and expense. The Indemnitee will not consent to a
settlement of, or the entry of any judgment arising from, any such claim,
without the prior written consent of the Indemnifying Party (such consent
not to be unreasonably withheld or delayed). Except with the prior written
consent of the Indemnitee (such consent not to be unreasonably withheld or
delayed), no Indemnifying Party, in the defense of any such claim, will
consent to the entry of any judgment or enter into any settlement that (i)
provides for injunctive or other non-monetary relief affecting the
Indemnitee or (ii) does not include as an unconditional term thereof the
giving by each claimant or plaintiff to such Indemnitee of a release from
all liability with respect to such claim or litigation. In any such third
party claim, the party responsible for the defense of such claim (the
"Responsible Party") shall, to the extent reasonably requested by the
other party, keep such other party informed as to the status of such
claim, including all settlement negotiations and offers. Each Party shall
use all reasonable efforts to make available to the Responsible Party and
its representatives all books and records of such Party and the Business
relating to such third party claim and shall cooperate with the
Responsible Party in the defense of the third party claim.
(ii) Settlement. The Responsible Party shall promptly notify the other
party of each settlement offer with respect to a third party claim. Such
other party shall promptly notify the Responsible Party whether or not
such party is willing to accept the proposed settlement offer. If the
Company is willing to accept the proposed settlement offer but Buyer or
Rand refuses to accept such settlement offer, then if (i) such settlement
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offer requires only the payment of money damages, requires no other
actions by any Indemnitee, does not impose any restriction on Buyer with
respect to the operation of the Business or use of the Acquired Assets and
provides a complete release of all Indemnitees that are a party to such
third party claim with respect to the subject matter thereof, and (ii) the
Company agrees in writing that the entire amount of such proposed
settlement constitutes Losses that are indemnifiable (subject to the
limitations set forth in this Article IX), then the amount payable to the
Indemnitees with respect to such third party claim will be limited to the
amount of such settlement offer subject to the limitations contained in
this Article IX. The Company may nevertheless propose in writing a good
faith, reasonable settlement offer (a "Company Proposed Settlement Offer")
that requires only the payment of money damages, requires no other actions
by any Indemnitee, does not impose any restriction on Buyer with respect
to the operation of the Business or use of the Acquired Assets and
provides a complete release of all Indemnitees who are parties to such
third party claim with respect to the subject matter thereof; provided,
however, that the Company agrees in writing that the entire amount of such
proposed settlement constitutes Losses that are indemnifiable (subject to
the limitations set forth in this Article IX). If Buyer or Rand refuses to
agree to or make a Company Proposed Settlement Offer to the claimant in
the third party claim, any amount payable to a Buyer Indemnitee with
respect to such third party claim will be limited to the amount of such
proposed settlement offer. If any such settlement offer is made to any
claimant and rejected by such claimant, the amount payable to an
Indemnitee with respect to such claim will not be limited to the amount of
such settlement offer but will remain subject to all other limitations set
forth in this Agreement.
(b) Direct Claim. As soon as reasonably practicable after an
Indemnitee has actual knowledge of any claim to which Indemnitee is
entitled to indemnity under Section 9.2 or Section 9.3 that does not
involve a Third Party Claim (a "Direct Claim"), the Indemnitee shall give
written notice thereof (an "Indemnity Notice") to the Indemnifying Party.
An Indemnity Notice must describe the Direct Claim in reasonable detail,
and indicate the amount (estimated, as necessary and to the extent
feasible) of the Loss that has been or may be suffered by the Indemnitee.
No delay in or failure to give notice of a Direct Claim will adversely
affect any of the other rights or remedies of an Indemnitee under this
Agreement, or alter or relieve the Indemnifying Party of its obligation to
indemnify the applicable Indemnitee except to the extent that the
Indemnifying Party is materially prejudiced thereby. The Indemnifying
Party shall respond to any Indemnity Notice within thirty (30) days (the
"Indemnity Response Period") after the date that the Indemnity Notice is
sent by the Indemnitee. Any response to the Indemnity Notice (an
"Indemnity Response") must specify whether or not the Indemnifying Party
disputes its obligations to indemnify the Indemnitee with respect to the
Direct Claim asserted in the Indemnity Notice. If the Indemnifying Party
fails to give an Indemnity Response within the Indemnity Response Period,
it will be deemed not to dispute the asserted Direct Claim. If the
Indemnifying Party elects not to dispute the asserted Direct Claim,
whether by failing to give a timely Indemnity Response or otherwise, then
the amount of Losses alleged in such Indemnity Notice will be conclusively
32
deemed to be an obligation of the Indemnifying Party, and the Indemnifying
Party shall pay, in cash, to the Indemnitee within fifteen (15) days after
the last day of the applicable Indemnity Response Period the amount
specified in the Indemnity Notice. If Indemnifying Party delivers to
Indemnitee an Indemnity Response within the Indemnity Response Period
indicating that it disputes one or more of the matters identified in the
Indemnity Notice, the Indemnifying Party and Indemnitee shall promptly
meet and use their reasonable efforts to settle the dispute. If the
Indemnifying Party and the Indemnitee are unable to reach agreement within
thirty (30) days after the conclusion of the Indemnity Response Period,
then either the Indemnifying Party or the Indemnitee may resort to other
legal remedies subject to the limitations set forth in this Article IX.
(c) Certain Matters. Notwithstanding anything in this Section 9.6 to
the contrary, Buyer shall not have the right to assume the defense of,
settle or otherwise participate in any of the matters set forth on
Schedule 6.11, and the Company shall have the sole right to defend and
settle any such matters.
9.7 Specific Performance. Each party's obligation under this Agreement is
unique. If any party should breach its covenants under this Agreement, the
parties each acknowledge that it would be extremely impracticable to measure the
resulting damages; accordingly, the nonbreaching party or parties, in addition
to any other available rights or remedies they may have under the terms of this
Agreement, may ▇▇▇ in equity for specific performance, and each party expressly
waives the defense that a remedy in damages will be adequate.
9.8 Subrogation. Upon making any indemnity payment pursuant to Section 9.2
or Section 9.3, as applicable, the Indemnifying Party shall be subrogated to all
rights of the indemnified party against any third party in respect of the Losses
to which the payment related. The parties hereto will execute upon request all
instruments reasonably necessary to evidence and perfect the above described
subrogation rights.
9.9 Adjustment to Purchase Price. All indemnification payments made
pursuant to this Article IX will be treated as an adjustment to the Purchase
Price unless otherwise required by Law.
ARTICLE X
TAX MATTERS
10.1 Cooperation; Audits.
(a) Buyer and its Affiliates, on the one hand, and the Company and
its Affiliates, on the other hand, shall (at the expense of the requesting
party) use commercially reasonable efforts to provide to each other such
information and assistance as may reasonably be requested in connection
with (i) the preparation of any Tax Return relating to the Business, (ii)
the conduct of any audit or other examination by any Taxing Authority
relating to any liability for Taxes relating to the Business and (iii) the
prosecution or defense of any claim, suit or proceeding relating to any
Tax Return relating to the Business.
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(b) Buyer and the Company shall, upon request, use their
commercially reasonable efforts to obtain any certificate or other
document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby).
ARTICLE XI
MISCELLANEOUS AND GENERAL
11.1 Expenses. Except as set forth in this Agreement, all costs and
expenses (including all legal, accounting, broker, finder or investment banker
fees) incurred in connection with this Agreement and the transactions
contemplated hereby are to be paid in the case of the Company, by the Company,
and in the case of Buyer and Rand, by Buyer.
11.2 Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective successors and assigns,
but is not assignable by any party without the prior written consent of the
other party hereto; provided, that, the parties acknowledge and agree that Buyer
may assign its rights under this Agreement to or for the benefit of any lender
providing financing of the Purchase Price to Buyer.
11.3 Third Party Beneficiaries. This Agreement does not benefit or create
any right or cause of action in or on behalf of any Person other than the
parties hereto.
11.4 Notices. Any notice or other communication provided for herein or
given hereunder to a party hereto must be in writing, and sent by facsimile
transmission (electronically confirmed), delivered in person, mailed by first
class registered or certified mail, postage prepaid, or sent by Federal Express
or other overnight courier of national reputation, addressed as follows:
If to Buyer or Rand:
Grand River Navigation Company, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ #▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Rosenman LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
34
If to the Company:
Wisconsin & Michigan Steamship Company
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. High
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address with respect to a party as such party notifies the
other in writing as above provided. Notice shall be deemed given on the earlier
of (i) actual receipt by the receiving party, (ii) the date shown on a facsimile
transmission, (iii) the date reflected on a signed delivery receipt, (iv) three
(3) days after tender of delivery by first class registered or certified mail,
postage prepaid, or (v) one (1) day after sent by Federal Express or other
overnight courier of national reputation.
11.5 Complete Agreement. This Agreement and the schedules and exhibits
hereto and the other documents delivered by the parties in connection herewith,
together with the Confidentiality Agreement, contain the complete agreement
between the parties hereto with respect to the transactions contemplated hereby
and thereby and supersede all prior agreements and understandings between the
parties hereto with respect thereto. The Buyer acknowledges and agrees that the
Company has not made any representation or warranty, express or implied, as to
the Company or the Acquired Assets or as to the accuracy or completeness of any
information regarding the Company or the Acquired Assets furnished or made
available to the Buyer and its representatives, except for the representations
and warranties specifically set forth in this Agreement (including the schedules
and exhibits hereto) and in any certificates required to be delivered to Buyer
by the Company hereunder and thereunder.
11.6 Captions. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
11.7 Amendment. This Agreement may be amended or modified only by an
instrument in writing duly executed by the parties hereto.
11.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Michigan, without regard to its rules of
conflict of laws.
11.9 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision will be interpreted
to be only so broad as is enforceable.
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11.10 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or Law will be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means including without limitation. Any reference to the singular in
this Agreement also includes the plural and vice versa.
11.11 Counterparts. This Agreement may be executed in separate
counterparts (including by facsimile), each of which will be deemed an original
but all of which will constitute but one instrument.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
WISCONSIN & MICHIGAN STEAMSHIP COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: President
GRAND RIVER NAVIGATION COMPANY, INC.
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Vice President
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RAND LL HOLDINGS CORP.
For the purposes of Article VII and Article IX.
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: President
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37