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EXHIBIT 10.8
ASSET PURCHASE AGREEMENT
dated as of
MAY 31, 2001
among
LEEVAC MARINE, INC.,
HYGRADE OPERATORS, INC.,
RED STAR TOWING AND TRANSPORTATION COMPANY, INC.,
SHERIDAN TOWING CO., INC.,
▇▇▇ ▇. ▇▇▇▇▇▇ & SONS, INC.
and
AMERADA ▇▇▇▇ CORPORATION
Relating to the purchase and sale
of the
Vessels and Other Assets named herein
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ASSET PURCHASE AGREEMENT
AGREEMENT dated as of May 31, 2001, among LEEVAC Marine, Inc.
("BUYER"), a Louisiana corporation, Hygrade Operators, Inc., a New York
corporation, Red Star Towing and Transportation Company, Inc., a New York
corporation, Sheridan Towing Co., Inc., a Delaware corporation (each, a "SELLER"
and collectively, the "SELLERS"), ▇▇▇ ▇. ▇▇▇▇▇▇ & Sons, Inc. ("PARENT"), a New
York corporation and Amerada ▇▇▇▇ Corporation, a Delaware corporation ("HESS").
WITNESSETH:
WHEREAS, each Seller desires to sell to Buyer; Parent and Hess desire
to facilitate such sale; and Buyer desires to purchase from each Seller, the
business and substantially all of the assets of each Seller for the aggregate
purchase price and upon and subject to the terms and conditions set forth in
this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
The following capitalized terms, as used in this Agreement, shall have
the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Balance Sheets" means the balance sheets of each of the Companies as
of December 31, 2000.
"Balance Sheet Date" means December 31, 2000.
"Closing Date" means the date of the Closing.
"Companies" means Hygrade, Red Star and Sheridan.
"Hygrade" means Hygrade Operators, Inc.
"Joint Exposure Claim" means a claim asserted by a person that is or
was an employee of Buyer based upon exposure during the course of employment
both before and after the Closing Date to any Contaminant.
"Knowledge" means with respect to Sellers, Parent and/or Hess the
actual knowledge after due inquiry of supervisory and management level personnel
of Sellers, Parent and Hess who by virtue of their job responsibilities would be
in a position to know the relevant facts.
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"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise) of the Vessel Business (as defined herein),
the Vessels (as defined herein) and the Other Assets (as defined herein) taken
as a whole.
"Person" means an individual, a corporation, an association, a
partnership, a limited liability company, an estate, a trust, or any other
entity or organization, governmental or otherwise.
"Red Star" means Red Star Towing and Transportation Company, Inc.
"Sheridan" means Sheridan Towing Co., Inc.
ARTICLE 2
PURCHASE AND SALE
Section 2.01 Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, each Seller agrees to sell to Buyer, and Buyer
agrees to purchase from each Seller, all of such Seller's right, title and
interest to all of such Seller's properties and assets including, but not
limited to, the vessels set forth beneath the name of such Seller on SCHEDULE
2.01(a) attached hereto (the vessels named beneath each Seller's name shall
collectively be referred to as, the "Vessels") and the Other Assets (as defined
in Section 3.09) of such Seller, free and clear of all Liens (as defined in
Section 3.04) other than with respect to the Vessels any Lien which arises by
operation of law, has not been recorded and has not been asserted by the holder
thereof. Buyer expressly agrees that the retained assets listed on SCHEDULE
2.01(b) hereof (the "RETAINED ASSETS") shall be excluded from the sale. The
aggregate purchase price for the Vessels and Other Assets is $28,030,000, which
amount includes $1,030,000 due to Hess for drydocking certain Vessels prior to
closing (the "PURCHASE PRICE"), payable in cash. The Purchase Price shall be
paid as provided in Section 2.02.
Section 2.02 Closing. The closing (the "CLOSING") of the purchase and
sale of the Vessels and Other Assets hereunder shall take place at the offices
of Hess, 1185 Avenue of the Americas, New York, New York, or at such other
location as the parties may agree, on such date and at such time as the parties
may agree, but no later than June 1, 2001. At the Closing:
(a) Buyer shall deliver to Sellers the Purchase Price in immediately
available funds by wire transfer to an account of Sellers with a bank in New
York City designated by Sellers by notice to Buyer, not later than two business
days prior to the Closing Date.
(b) The Vessels, including any and all Other Assets and documents and
certificates appurtenant to and/or required to be on board the Vessels, shall be
delivered by Sellers and taken over by Buyer safely afloat in international
waters offshore New York or in New York Harbor, and the remaining Other Assets
shall be delivered by Sellers to Buyer at the offices of Hess or such other
location as may be agreed between Buyer and Sellers.
(c) The parties shall deliver such other documents, instruments and
agreements required to be delivered under Article 8 of this Agreement.
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(d) The parties agree that, if by the time of the scheduled date for
closing, Buyer has been unable to assure itself of sufficient employee retention
or replacement hires, the Closing Date may be postponed for a reasonable time
to allow Buyer assurance of sufficient qualified employees to service the Vessel
Business as it has historically been serviced and to provide the service under
the Contract of Affreightment attached hereto as EXHIBIT A.
Section 2.03 Excluded Liabilities. Notwithstanding anything contained
herein to the contrary, except for the assumption of contracts listed on
SCHEDULE 2.03, Buyer shall not assume or agree to pay, perform or discharge any
debts, obligations or liabilities of any Seller, Parent, Hess or any Affiliate
Employer of any kind or nature, whether or not such debts, liabilities or
obligations related to or arose out of the conduct of the Vessel Business or the
use, operation or ownership of the Vessels and Other Assets, whether accrued,
absolute, contingent or otherwise, or whether due or to become due, or
otherwise, whether known or unknown, which liabilities and obligations, if ever
in existence, shall continue to be liabilities and obligations of each Seller,
Parent or Hess as the case may be (the "EXCLUDED LIABILITIES").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally with Parent, represent and warrant to
Buyer, and with respect to the representations applicable to Hess, Hess
severally but not jointly represents and warrants to Buyer, that:
Section 3.01 Corporate Existence and Power. Each Seller, Parent and
Hess is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to hold, use and lease its properties and assets and to carry
on its business as now conducted. Each Seller, Parent and Hess is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
Each Seller has heretofore delivered to Buyer true and complete copies of such
Seller's certificate of incorporation and bylaws as currently in effect.
Section 3.02 Corporate Authorization. The execution, delivery and
performance by each Seller, Parent and Hess of this Agreement and any other
documents contemplated hereby to be executed by each Seller and/or Parent or
Hess, and the consummation by each Seller, Parent and Hess of the transactions
contemplated hereby and thereby are within such Seller's, Parent's and ▇▇▇▇'▇
corporate powers and have been duly authorized by all necessary corporate
action. This Agreement constitutes, and any other documents contemplated hereby
to be executed by each Seller and/or Parent or Hess will upon execution
constitute, valid and legally binding agreements of each Seller, Parent and Hess
enforceable against each Seller, Parent and Hess in accordance with their terms.
Section 3.03 Governmental Authorization. The execution, delivery and
performance by each Seller, Parent and Hess of this Agreement requires no action
by or in respect of, or filing with, any governmental body, agency, official or
authority.
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Section 3.04 Non-contravention. The execution, delivery and performance
by each Seller, Parent and Hess of this Agreement and any other documents
contemplated hereby to be executed by each Seller and/or Parent or Hess, and the
consummation by each Seller, Parent and Hess of the transactions contemplated
hereby and thereby do not and will not (a) contravene or conflict with the
certificate of incorporation or bylaws of any Seller, Parent or Hess, (b)
assuming compliance with the matters referred to in Section 3.03, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree applicable to any Seller, Parent or Hess,
(c) constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation or to a loss of any
benefit under any provision of any agreement, contract or other instrument by
which any of the Vessels or Other Assets are subject or any license, franchise,
permit or other similar authorization applicable to any of the Vessels or Other
Assets, or (d) result in the creation or imposition of any Lien on any of the
Vessels or Other Assets. For purposes of this Agreement, "LIEN" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, recorded or unrecorded, in respect of such asset.
Section 3.05 Ownership of Sellers and Parent. Parent is the record and
beneficial holder of all of the issued and outstanding capital stock of each
Seller. There is no existing option, warrant, call, commitment or other
agreement with respect to the capital stock of any Seller. Hess is the record
and beneficial holder of all of the issued and outstanding capital stock of
Parent. There is no option, warrant, call, commitment or other agreement with
respect to the capital stock of Parent.
Section 3.06 Ownership of Vessels and Other Assets. Each Seller is the
legal, record and beneficial owner of all of its Vessels and Other Assets, free
and clear of any and all preemptive rights, claims or Liens other than, with
respect to the Vessels, Liens which arise by operation of law, which have not
been recorded and have not been asserted by the holder thereof. Seller has the
authority to sell, transfer, assign and deliver its Vessels and Other Assets to
Buyer, and such sale, transfer, assignment and delivery of such Vessels and
Other Assets to Buyer will vest in Buyer good and marketable title to such
Vessels and Other Assets, free and clear of any and all preemptive rights,
claims or Liens other than, with respect to the Vessels, Liens which arise by
operation of law, which have not been recorded and have not been asserted by the
holder thereof.
Section 3.07 Consents and Approvals. Except for the consents and
approvals set forth on SCHEDULE 3.07 hereof (which consents and approvals shall
be obtained on or before the Closing Date), the execution and delivery by each
Seller, Parent and Hess of this Agreement and any other documents contemplated
hereby to be executed by each Seller and/or Parent and Hess, compliance by each
Seller, Parent and Hess with the terms hereof and thereof and consummation by
each Seller, Parent and Hess of the transactions contemplated hereby and thereby
do not require such Seller, Parent or Hess to obtain any consent, approval or
action of any corporation, person, firm or other entity, or any public
governmental or judicial authority (including any maritime-related agency).
Section 3.08 Financial Statements. Parent has delivered to Buyer true,
complete and correct copies of the combined financial statements (including
balance sheet, statements of
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income, cash flow and Shareholders' equity) of Sellers for the years ended
December 31, 2000, 1999 and 1998, including the notes relating thereto
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements of Sellers
provided to Buyer fairly present, in conformity with generally accepted
accounting principles consistently applied the combined financial position of
Sellers as of the dates thereof and their combined results of operations and
changes in financial position for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial statements).
There are no significant assets used in the Vessel Business that are not
reflected in the Financial Statements.
Section 3.09 Title to Properties; Condition.
(a) Each Seller has good and marketable title to its Vessels and its
Other Assets (as defined below). For purposes of this Agreement, Other Assets
with respect to any Seller shall mean any and all of such Seller's properties
and assets (other than the Vessels) pertaining to, used in or necessary for the
conduct of its business (for each Seller individually and for the Sellers,
collectively, the "VESSEL BUSINESS"), other than the Retained Assets including,
without limitation, those assets specifically identified on SCHEDULE 3.09, all
equipment, pumps, gear, outfit, furniture, furnishings, fittings, fuel,
lubricants, apparel (other than with logos), appurtenances, appliances,
drawings, logs, spare and replacement parts, consumables and stores and all
other items as are on board, off board or identified to each Vessel and such
assets as appear in the inventory and pictorial condition survey for each of the
Vessels completed in February - March 2001, contract rights, assignable leases,
assignable licenses, assignable permits, customer contact lists, rights to or
associated with each Vessel's name and all rights and value associated
therewith, all machinery and equipment of each Seller not used in connection or
associated with the Vessels, inventories, supplies, manuals (or copies thereof),
specifications, equipment warranties, office furniture and equipment, other
furnishings, fittings, fixtures, accessories and appliances to the extent such
furniture, equipment, furnishings, fittings, fixtures, accessories and
appliances are now or have during the last 12 months been located in the
Brooklyn, New York marine facility, contracts, financial books and records,
vendor relationships, goodwill, operating rights, rights to telephone numbers
for the Brooklyn, New York marine facility and fuel and lubricants on board.
Notwithstanding the foregoing, except for provisions essential to the operation
of the Vessels (other than fuel and lubricants on board), properties of third
parties that are on board the Vessels, such as personal effects of crew members
and cargo, are not included in Other Assets. Each Vessel is duly documented with
the United States Coast Guard in the name of the Seller under whose name the
Vessel is listed on SCHEDULE 2.01, and is afloat. Each Seller, Parent and Hess
has at all times that any Vessel was owned by any Seller or an Affiliate of any
Seller been a citizen of the United States within the meaning of Section 2 of
the Shipping Act of 1916, as amended, (the "SHIPPING ACT") and the Vessels are
under United States flag and qualified to engage in United States coastwise
trade as set forth in the Shipping Act and the applicable regulations pertaining
thereto. At no time have the Vessels been sold, chartered or otherwise
transferred to any person in violation of any applicable laws, rules or
regulations. The Vessels will, on the Closing Date, have current Certificates of
Inspection in effect from the United States Coast Guard or the American Bureau
of Shipping and an American Bureau of Shipping Loadline Certificate and Hull and
Machinery Classification, free of reported or reportable exceptions or notations
for record.
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(b) There are no actual, pending or to the Knowledge of Sellers, Parent
or Hess after due inquiry threatened claims against the Vessels or the Other
Assets that could reasonably be expected to give rise to a Lien (other than
Liens that would be covered by valid and collectible insurance that would be
assigned to Buyer hereunder, including applicable deductibles), or acts or
incidents which could reasonably be expected to give rise to any such claims,
relating to or arising out of the Vessels or the Other Assets or the operation
of the Vessel Business. Except as set forth on SCHEDULE 3.09, all material
assets necessary or useful in or to the business of each Seller as presently
operated by such Seller are owned of record and beneficially by such Seller
which owns them and not by any affiliate of such Seller or by any other party.
SCHEDULE 3.09 includes a list of all leases, licenses and permits included in
the Other Assets. As to each license or permit the licensee's or permit holder's
interest in which constitutes part of the Other Assets, such license or permit
is in full force and effect, no notice of cancellation or termination under any
option or right reserved to the licensor or permit holder under such license or
permit or notice of default has been received by the Seller that is a party
thereto and no event or condition has occurred or exists which, with notice or
lapse of time or both would constitute a default thereunder. No Seller has
assigned its interests under any such license or permit or sublicensed or
assigned the right, license or permit granted thereby. Each Seller has the right
to transfer all of its right, title and interest in the licenses and permits
included in the Other Assets which by their terms are permitted to be
transferred or assigned without any consent, and the transfer contemplated
hereby will not affect their validity or enforceability.
(c) Each Vessel is seaworthy, properly manned, equipped and supplied
for its current or next upcoming voyage, the cargo tanks, pipelines, and valves
of each Vessel are suitable for cargo, and the pumps and heating coils, if any,
of each Vessel are in good working condition. Nothing has occurred to the
physical condition of any Vessel since the date of inspection by Buyer of such
Vessel or to the Other Assets since December 31, 2000 that would have any
material adverse effect on the value of the Vessels or the Other Assets or the
suitability of the Vessels or the Other Assets for the purposes for which they
have been and are being employed in the operation of the Vessel Business. Except
as otherwise set forth in this Section 3.09(c), as to condition the Vessels are
being sold AS IS, WHERE IS.
Section 3.10 Absence of Certain Changes. Since December 31, 2000
(except with respect to Section 3.10(a) below as to which for each Vessel it is
since the date of Buyer's inspection of such Vessel), each Seller has conducted
its business in the ordinary course consistent with past practice and there has
not been:
(a) any event, occurrence or development of a state of circumstances or
facts which has had or reasonably could be expected to have a Material Adverse
Effect;
(b) any creation or assumption by any Seller of any Lien on any of the
Vessels or Other Assets other than with respect to the Vessels, any Lien which
arises by operation of law, has not been recorded and has not been asserted by
the holder thereof;
(c) any transaction or commitment made, or any contract or agreement
entered into, by any Seller relating to the Vessel Business or binding upon the
Vessels or Other Assets (including the acquisition or disposition of any of the
Vessels or Other Assets) or any
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relinquishment by any Seller of any contract or other right, in either case,
material to such Seller, other than transactions and commitments in the ordinary
course of business consistent with past practice and those contemplated by this
Agreement;
(d) any change in any method of accounting or accounting practice by
any Seller, except for any such change required by reason of a concurrent change
in generally accepted accounting principles;
(e) any (i) grant of any severance or termination pay to any officer or
employee of any Seller except in connection with the transactions contemplated
under this Agreement, (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any officer or employee of any Seller, (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (iv) increase in compensation, bonus or other benefits
payable to officers or employees of any Seller, other than in the ordinary
course of business consistent with past practice;
(f) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of any Seller or any Affiliate Employer (as hereinafter defined),
which employees were not subject to a collective bargaining agreement at
December 31, 2000, or any lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to such employees;
(g) any material revaluation, write-down or write-off by any Seller of
any of the Vessels or Other Assets;
(h) any amendment or termination of any material contract relating to
the Vessel Business;
(i) any breach of the terms of any of the material contracts relating
to the Vessel Business;
(j) any commencement or notice of commencement or, the threat of
commencement of any litigation or any governmental proceeding against or
investigation of any Seller or any Seller's Vessel Business which would have a
Material Adverse Effect or adversely affect the ability of any Seller, Parent or
Hess to consummate the transactions contemplated hereby;
(k) any waiver or release of any material right or claim of any Seller
which constitutes a part of the Vessels or Other Assets; or
(l) to the Knowledge of Sellers, Parent and Hess, any entry into any
commitment of any kind, or the occurrence of any event giving rise to any
contingent liability not covered by the foregoing that would have a Material
Adverse Effect or adversely affect the ability of any Seller, Parent or Hess
to consummate the transaction contemplated hereby.
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Section 3.11 Material Contracts.
(a) Except as disclosed in SCHEDULE 3.11, no Seller is a party to or
bound by any written contract (i) with a term greater than one year or (ii)
which will involve annual consideration in excess of $500,000. Each Seller has
delivered to Buyer a copy of each contract listed on SCHEDULE 3.11.
(b) Each contract disclosed in SCHEDULE 3.11 to this Agreement is a
valid and legally binding agreement of the Seller that is a party thereto, and
is in full force and effect, and no Seller, or to the Knowledge of Sellers, any
other party thereto is in default or breach under the terms of any such
contract, and, to the Knowledge of Sellers, no event or circumstance has
occurred that, with notice or lapse of time or both, would constitute any event
of default thereunder.
(c) The transfer contemplated herein will not affect the validity or
enforceability of any contract disclosed on SCHEDULE 3.11.
Section 3.12 Compliance with Laws and Court Orders. No Seller is in
violation of, none has since December 31, 2000 violated, and to Sellers',
Parent's or ▇▇▇▇'▇ Knowledge no Seller is under investigation with respect to
and has not been threatened to be charged with or given notice of any violation
of, any applicable law, rule, regulation, judgment, injunction, order or decree
that could have a Material Adverse Effect or adversely affect the ability of any
Seller, Parent or Hess to consummate the transactions contemplated hereby.
Section 3.13 Absence of Defaults. None of the Sellers, Parent or Hess
is in default, and no event has occurred which with notice or lapse of time or
both would constitute a material default, in any way under any term or provision
of any agreement or instrument to which any Seller, Parent or Hess is a party or
by which any Seller, Parent or Hess is bound or by or to which the Vessel
Business or any of the Vessels or Other Assets is bound or subject that could
have a Material Adverse Effect or adversely affect the ability of any Seller,
Parent or Hess to consummate the transactions contemplated hereby.
Section 3.14 Litigation. Except as set forth on SCHEDULE 3.14, (a)
there are no actions, claims, suits, investigations, inquiries or proceedings
pending against any Seller, Parent or Hess or in rem against any of the Vessels
or Other Assets or, to Sellers', Parent's or ▇▇▇▇'▇ Knowledge, threatened
against any Seller, Parent or Hess or in rem against any of the Vessels or Other
Assets, at law or in equity, in any court, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
other instrumentality which if adversely decided could (i) affect the validity
or enforceability of this Agreement or the documents contemplated hereby to be
executed by any Seller and/or Parent or Hess; (ii) prevent or delay consummation
of the transactions contemplated hereby or (iii) establish a Lien against any of
the Vessels or Other Assets; and (b) none of the Sellers, Parent or Hess is in
violation of any order, decree, judgment, award, determination, ruling or
regulation of any court, governmental department, commission, board, bureau,
agency or other instrumentality, the result of which violation individually or
violations in the aggregate has had or could have a Material Adverse Effect or
could (i) affect the validity or enforceability of this Agreement or the
documents contemplated to be executed by any Seller and/or Parent or Hess; (ii)
prevent or delay
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consummation of the transactions contemplated hereby; or (iii) establish a Lien
against any of the Vessels or Other Assets.
Section 3.15 Environmental Matters.
(a) In this Section 3.15(a), all terms appearing in initial capitals
shall have the meaning given them in Section 3.15(b) hereof. With respect to the
Vessel Business and except as to those matters identified on SCHEDULE 3.15(a);
(i) the operations of Sellers have complied in all material
respects with all applicable Domestic Environmental Laws in all
jurisdictions in which any Seller currently conducts business;
(ii) none of the operations of any Seller are subject to any
judicial or administrative proceeding alleging the violation of any
Domestic Environmental Law;
(iii) none of the operations of any Seller are the subject of
any federal or state investigation evaluating whether any Remedial
Action is needed to respond to a Release of any Contaminant or other
substance into the environment;
(iv) no Seller has filed any notice under any Domestic
Environmental Law applicable to the jurisdiction in which operations of
any Seller are conducted indicating past or present treatment, storage
or disposal of a hazardous waste or reporting a Release of a
Contaminant or other substance into the environment;
(v) none of the operations of any Seller involve the
generation, transportation, treatment or disposal of hazardous waste,
as defined under 40 C.F.R. Parts 260-270 (in effect as of the date of
this Agreement) or any state equivalent thereof, in violation of any
Domestic Environmental Law applicable to the jurisdiction in which
operations of any Seller are conducted, including without limitation
statutes, regulations and laws pertaining to permits and manifests;
(vi) no Seller has disposed of any hazardous waste or
substance or other material by placing it in or on the ground or waters
of any premises owned, leased or used by any Seller in violation of any
Domestic Environmental Law applicable to the jurisdiction in which
operations of any Seller are conducted; and
(vii) no Lien in favor of any governmental authority for any
liability under Domestic Environmental Laws applicable to the
jurisdiction in which operations of any Seller with respect to the
Vessel Business of any Seller are conducted, or damages arising from or
costs incurred by such governmental authority in response to a release
of a Contaminant or other substance into the environment has been filed
or attached to any of the Vessels or Other Assets or any of the
locations upon which the operations of any Seller with respect to the
Vessel Business of any Seller is conducted
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which, in the case of any non-compliance, violation, disposal. Release,
liability or other condition or circumstance identified in (i) -- (vii) above,
could have a Material Adverse Effect or adversely affect the ability of any
Seller, Parent or Hess to consummate the transactions contemplated hereby.
(b) The following terms shall have the meanings set forth below:
(i) "Contaminant" shall mean those substances or materials
that are defined as hazardous or toxic or that are regulated by or form
the basis of liability under any Domestic Environmental Law, including
without limitation asbestos, polychlorinated biphenyls ("PCBs"), and
radioactive substances, or any other material or substance that
constitutes a health, safety or environmental hazard to any person or
property.
(ii) "Domestic Environmental Laws" shall mean all federal,
state or local laws relating to the environment, including without
limitation the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Clean
Water Act (33 U.S.C. Section 1251 et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601 et seq.), the National
Environmental Policy Act (42 U.S.C. Section 4321 et seq.), the Oil
Pollution Act (33 U.S.C. Section 2701 et seq.), the Marine Protection,
Research and Sanctuaries Act (33 U.S.C. Section 1401 et seq.), the
Outer Continental Shelf Lands Act (43 U.S.C. Section 1331 et seq.) and
the Act to Prevent Pollution from Ships (33 U.S.C. Sections 1902-1912,
including without limitation Annexes I, II and V of the International
Convention for the Prevention of Pollution from Ships, 1973, as
modified by the Protocol of 1978 relating thereto (MARPOL 73/78) done
at London on February 17, 1978) and other treaties or conventions into
which the United States has entered, as these laws have been amended or
supplemented, and any analogous state or local statutes, rules or
ordinances and the regulations promulgated pursuant thereto.
(iii) "Permit" shall mean any permit, approval, authorization,
license variance, or permission required from a governmental authority
under any applicable Domestic Environmental Laws.
(iv) "Release" shall mean any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching, or migration into the indoor or outdoor environment, or into
or out of any property owned or leased by any of the Companies,
including the movement of any Contaminant through or in the air, soil,
surface water, groundwater, or property and including without
limitation the meanings of such words as set forth in the laws,
applicable treaties, rules, ordinances or regulations or analogous
governmental provisions referred to under Domestic Environmental Laws.
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(v) "Remedial Action" shall mean all actions required or
voluntarily undertaken to (i) clean up, remove, treat, or in any other
way address any Contaminant in the indoor or outdoor environment; (ii)
prevent the Release or threat of Release, or minimize the further
Release of any Contaminant so it does not migrate or endanger or
threaten to endanger public health or welfare of the indoor or outdoor
environment; or (iii) perform pre-remedial studies and investigations
and post-remedial monitoring and care.
(c) This warranty in Section 3.15 shall not give rise to any remedy
relating to the structural soundness, condition, repair or adequacy for use of
the Vessels or Other Assets.
Section 3.16 ERISA and Related Matters.
(a) Set forth on SCHEDULE 3.16(a) is a list of all "employee pension
benefit plans" and all "employee welfare benefit plans" within the meaning of,
respectively, Sections 3(2) and 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") (determined without regard to any regulatory
exceptions to such statutory definitions), in which employees of any Seller or
Spentonbush/Red Star Companies, Inc. ("Spentonbush/Red Star") participate or
have participated within the six-year period ending on the Closing Date
(collectively, including any Multiemployer Plans as defined below, the "PLANS").
Except as set forth on SCHEDULE 3.16(a), there are no "multiemployer plans"
within the meaning of Section 3(37) of ERISA ("MULTIEMPLOYER PLANS") in which
any Seller or Spentonbush/Red Star participate or have been a participating
employer within the last six (6) years or in which employees of any such
entities participate or have participated within the last six (6) years.
(b) All contributions which are required under any Plan for all plan
years ending on or prior to the date hereof which have become due have been
made.
(c) Each Plan is in material compliance, in form and in operation, with
its terms and all applicable laws. Neither ▇▇▇▇, Parent nor any Seller has
received any written notice (formal or informal) that any Plan has been operated
in violation of any applicable laws.
(d) No excise tax is due (or would be due in the absence of a waiver)
under Code Section 4971 with respect to any Plan.
(e) Each Seller and all ERISA Affiliates have paid all premiums (and
interest charges and penalties for late payment, if applicable) due to the PBGC
with respect to each Pension Plan which is covered by Title IV of ERISA for each
plan year thereof for which such premiums are required.
(f) None of the Sellers nor any ERISA Affiliate have any unpaid
"withdrawal liability" (as defined by Section 4201 of ERISA) to any
Multiemployer Plan which affects the employees of the Vessel Business.
(g) Except as set forth on SCHEDULE 3.16(i), the execution of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any payment becoming due from any Seller under any employee benefit
arrangement or plan or any Plan. There is no
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agreement, plan, or arrangement covering any current or former employee,
director, or consultant of any Seller that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
the terms of Code Sections 162(m) or 280G.
(h) As used in this Section 3.16, the following terms shall have the
meanings set forth below:
(i) "ERISA Affiliate" shall mean any entity which is (or at
any relevant time was) a member of a "controlled group of corporations"
with, under common control" with, or a member of an "affiliated service
group" with Seller as such terms are defined in Section 414(b), (c),
(m) or (o) of the Code.
(ii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
(iii) "Pension Plan" shall mean any "employee pension benefit
plan" as defined in Section 3(2) of ERISA (other than a Multiemployer
Plan) which (a) is (or was within the six-year period ending on the
Closing Date) entered into, maintained, administered, contributed to or
required to be contributed to, as the case may be, by any Seller or any
ERISA Affiliate and (b) which covers (or covered within the six-year
period ending on the Closing Date) any current or former employee,
director, or consultant of any Seller, or any ERISA Affiliate (with
respect to their relationship with such entities).
Section 3.17 Customers and Suppliers. SCHEDULE 3.17 lists the names and
addresses of all of the customers and suppliers of Sellers (and including the
dollar amount of total sales to each such customer or purchases from each such
supplier to the extent separable from other ▇▇▇▇ operations not included in the
Vessel Business) from January 1, 2000 through the most recent month ending prior
to the Closing Date. To Sellers', Parent's and ▇▇▇▇'▇ Knowledge, the
relationships of each applicable Seller with the customers and suppliers listed
in SCHEDULE 3.17 are satisfactory, and Sellers are not aware of any unresolved
disputes involving amounts greater than $10,000 individually or $30,000 in the
aggregate with any of such customers or suppliers. Since January 1, 2000, no
material customer or material supplier (for this purpose, a "material customer"
means a customer that accounts for more than $10,000 in sales per any twelve
month period and a "material supplier" means a supplier from which purchases
totaled $10,000 per any twelve month period) has, in writing, cancelled, limited
or notified any Seller of its intent to cancel or limit its relationship with
Sellers.
Section 3.18 Patents, Trademarks and Copyrights. Except as set forth on
SCHEDULE 3.18, no Seller owns nor is a licensee or sublicensee of any patents,
trademarks, copyrights or other intellectual property rights used in the Vessel
Business except for (i) the corporate names that are owned by each Seller, (ii)
those rights that are incorporated by the manufacturers into the Vessels or
Other Assets, without granting any Seller any specified rights therein; and
(iii) software license agreements and related contracts, pursuant to which the
payment of all costs, fees and royalties have been duly and timely paid by each
Seller and no event of default has occurred thereunder. There have been no
claims made, and none of ▇▇▇▇, Parent nor any Seller has received any notice and
none of ▇▇▇▇, Parent or any Seller otherwise
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knows or has reason to believe that the operation of the Vessel Business or any
of the Vessels or Other Assets is in conflict with the rights of any third party
with respect to intellectual property.
Section 3.19 Insurance. SCHEDULE 3.19 sets forth a true, complete and
correct list of all insurance policies of any kind or nature covering each
Seller with respect to the Vessel Business, and the Vessels and Other Assets,
including without limitation policies of fire, theft, employee fidelity,
worker's compensation, property and other casualty and liability insurance, and
indicates the type of coverage, name of insured, the insurer, the expiration
date of each policy and the amount of coverage for statutory workers'
compensation. SCHEDULE 3.19 also sets forth a list of any currently pending
claims under such policies or similar prior policies. The premiums for the
insurance policies listed in SCHEDULE 3.19 have been fully paid. The insurance
afforded under such policies or certificates is in full force and effect and
will continue to cover each Seller with respect to the Vessel Business, and the
Vessels and Other Assets through the Closing. Copies of each such policy have
been made available to Buyer.
Section 3.20 Employees. Sellers have separately provided to Buyer a
chart listing of all employees of each Seller and each employee of each
Affiliate Employer who are now employed in Sellers' Brooklyn marine facility or
on the Vessels providing services to one or more Sellers and the rates of pay
for and all commission, bonus or other compensation or expense reimbursement or
allowance arrangements regarding such employees. Such chart lists each
management or employment contract or contract for personal services and a
description of any understanding or commitment between any Seller or any
Affiliate of Seller and any employee listed on such chart. A description of
such understandings and commitments has been delivered to Buyer. Except as
agreed to beforehand by Buyer, no Seller has through the date of this Agreement
made, and none will hereafter make, any statement or communication of any kind
regarding whether, or the terms and conditions upon which, any such employee may
continue to be employed by Buyer.
Section 3.21 Labor Agreements; Disputes. Except as set forth on
SCHEDULE 3.21, no Seller nor any Affiliate of any Seller employing employees
listed on the chart referred to in Section 3.20 to either Seller or the Vessel
Business (an "Affiliate Employer") is a party to and has an obligation under any
collective bargaining agreement or other labor union contract, white paper or
side agreement with any labor union or organization, nor any obligation to
recognize or deal with any labor union or organization. Except as set forth on
SCHEDULE 3.21, there are, and in the last three (3) years there have been, no
pending or overtly threatened representation campaigns, elections or proceedings
or questions concerning union representation involving any employees of any
Seller or any Affiliate Employer. Except as set forth on SCHEDULE 3.21, there
are, and in the last three (3) years there have been, no overt activities or
efforts of any labor union or organization (or representatives thereof) to
organize any employees engaged in the Vessel Business of any Seller, nor of any
demands for recognition or collective bargaining, nor of any strikes, slowdowns,
work stoppages or lock-outs of any kind, or overt threats thereof, by or with
respect to any employees of the Vessel Business, or any actual or claimed
representatives thereof, and no such activities, efforts, demands, strikes,
slowdowns, work stoppages or lock-outs occurred during the three-year period
preceding the date hereof. There are no pending, or to the Knowledge of Sellers,
Parent or ▇▇▇▇ threatened, charges or complaints involving any federal, state or
local civil rights enforcement agency or court; complaints or citations under
the
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Occupational Safety and Health Act or any state or local occupational safety act
or regulation; unfair labor practice charges or complaints with the National
Labor Relations Board; or other claims, charges, actions or controversies
pending, or, to Sellers', Parent's or ▇▇▇▇'▇ Knowledge, threatened or proposed,
involving any Seller or any Affiliate Employer and any employee, former employee
or any labor union or other organization representing or claiming to represent
such employees' interests, which could have a Material Adverse Affect. To the
Knowledge of Sellers, Parent and ▇▇▇▇, each Seller and each Affiliate Employer
is and has been in compliance in all respects with all laws, rules and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours, the sponsorship, maintenance, administration
and operation of (or the participation of its employees in) employee benefit
plans and arrangements and occupational safety and health programs except where
the failure to be in compliance would not result in a Material Adverse Effect,
and no Seller nor any Affiliate Employer is engaged in any violation of any law,
rule or regulation related to employment, including unfair labor practices or
acts of employment discrimination, which could have a Material Adverse Effect.
Section 3.22 Regulatory Filings. Each Seller has filed all reports,
statements, documents, registrations, filings or submissions required, in
connection with the operation of the Vessel Business or the Vessels or Other
Assets, to be filed by each Seller with any federal, state, municipal or other
governmental department, commission, board, bureau, agency or other
instrumentality, the failure to file which would have a Material Adverse Effect.
All such filings complied with applicable law when filed and no deficiencies
have been asserted by any such regulatory authority with respect to such filings
or submissions.
Section 3.23 Transactions with Affiliates. Except as set forth on
SCHEDULE 3.23, there are no contracts or arrangements (formal or informal,
written or oral) related directly or indirectly to the Vessel Business or the
Vessels or Other Assets between any Seller and any other persons controlling,
under common control with or controlled by such Seller.
Section 3.24 Finder's Fee. All negotiations with respect to this
Agreement and the transactions contemplated hereby have been carried out by
Sellers directly with Buyer without the intervention of any person on behalf of
Parent, ▇▇▇▇ and Sellers in such manner as to give rise to any valid claim by
any such person against Buyer for a finder's fee, brokerage commission or
similar payment.
Section 3.25 Customary Business Practice. None of Sellers, Parent or
▇▇▇▇ has conducted or maintained any material business practices or
relationships in connection with the Vessel Business in any manner other than is
customary or standard in the industry, and there are no special relationships
with any suppliers or customers that are inconsistent with customary and
standard practice in the industry.
Section 3.26 No MARAD Financings or Guarantees. The United States
Maritime Administration has not financed or guaranteed any obligation of any
Seller that is presently outstanding.
Section 3.27 Disclosure. Each response by ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇ ▇▇▇▇▇▇▇ to inquiries in connection with the due diligence performed by
representatives of Buyer
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(other than responses to interviews by Buyer for purposes of making employment
decisions), as revised or updated by subsequent disclosures and this Agreement,
was complete and accurate in all material respects. Copies of the most recent
versions of all documents and other written information referred to herein or in
the schedules that have been delivered or made available to Buyer are true,
correct and complete copies thereof and include all amendments, supplements or
modifications thereto or waivers thereunder. Such documents and other written
information do not omit any material facts necessary, in light of the
circumstances under which such information was furnished, to make the statements
set forth therein not misleading. Except as expressly set forth in this
Agreement and the schedules or in the certificates or other documents delivered
pursuant hereto, including written due diligence materials, there are no other
facts other than facts generally known to the public which impact on the tug and
barge industry generally which will have a material adverse effect on the value
of the Vessel Business or the Vessels or Other Assets.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
Section 4.01 Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and has, or will by
the Closing Date have, all material governmental licenses, authorization,
consents and approvals required to hold, use and lease its properties and assets
and to carry on its business as now conducted or as required to carry out its
obligations under the Contract of Affreightment attached hereto as EXHIBIT A.
Buyer is duly qualified, or by the Closing Date will be qualified, to do
business as a foreign corporation and is or will be in good standing in each
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect or as may be required to perform in all material respects under the
Contract of Affreightment. Buyer is a citizen of the United States within the
meaning of Section 2 of the Shipping Act, and qualified to operate vessels in
the coastwise trade of the United States as set forth in the Shipping Act and
the applicable regulations pertaining thereto.
Section 4.02 Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby are within the corporate powers of Buyer and
have been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of Buyer.
Section 4.03 Governmental Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated by this Agreement require no action by or in respect
of, or filing with, any governmental body, agency, official or authority.
Section 4.04 Non-contravention. Except as set forth on SCHEDULE 4.04,
for which matter a consent will be obtained prior to Closing, the execution,
delivery and performance by Buyer of this Agreement and the consummation by
Buyer of the transactions contemplated hereby do not and will not (a) contravene
or conflict with the certificate of incorporation or bylaws of Buyer, (b)
assuming compliance with the matters referred to in Section 4.03,
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contravene or conflict with any provision of law, regulation; judgment, order or
decree binding upon Buyer, or (c) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
Buyer or to a loss of any benefit to which Buyer is entitled under any
agreement, contract or other instrument binding upon Buyer.
Section 4.05 Finders' Fees. All negotiations with respect to this
Agreement and the transactions contemplated hereby have been carried out by
Buyer directly with Sellers, Parent and ▇▇▇▇ without the intervention of any
person on behalf of Buyer in such manner as to give rise to any valid claim by
any such person against Sellers, Parent or ▇▇▇▇ for a finder's fee, brokerage
commission or similar payment, other than RBC Dominion Securities Corporation,
which has been engaged by Buyer to represent it in this transaction at Buyer's
sole expense.
Section 4.06 Financing. Buyer has, or will have by the Closing Date,
sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to make payment of the Purchase Price less, the
Good Faith Deposit.
ARTICLE 5
COVENANTS OF SELLERS
Each Seller, Parent and ▇▇▇▇, jointly and severally, agree that from
the date hereof until the Closing Date:
Section 5.01 Conduct of the Companies. Sellers shall, and Parent shall
cause Sellers to, conduct its Vessel Business in the ordinary course consistent
with past practice and use its reasonable commercial efforts to maintain,
preserve and protect the Vessels and Other Assets and the Vessel Business, keep
available the services of the present officers and employees of the Vessel
Business and preserve the present relationships with persons having business
dealings with Sellers. Without limiting the generality of the foregoing, from
the date hereof until the Closing Date:
(a) No Seller will adopt or propose any change in its certificate of
incorporation or bylaws which would affect its ability to complete the
transactions contemplated in this Agreement;
(b) No Seller will, merge or consolidate with any other Person or
acquire a material amount of assets of any other Person which would affect its
ability to complete the transactions contemplated in this Agreement;
(c) No Seller will, without the prior written approval of Buyer, sell,
lease, license or otherwise dispose of any Vessels or Other Assets or property
except (i) pursuant to existing contracts or commitments or (ii) in the ordinary
course consistent with past practice;
(d) No Seller will, (i) take or agree or commit to take any action that
would make any representation and warranty of Sellers hereunder inaccurate in
any material respect at, or as of any time prior to, the Closing Date or (ii)
omit or agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at any
such time.
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(e) No Seller will increase the pay rates of existing employees except
(i) pursuant to existing contracts or commitments or (ii) in the ordinary course
of business consistent with past practice; and
(f) No Seller will allow its fuel and lubricants on board the Vessels
at the Closing to decline below a level consistent with its routine historical
performance.
(g) No Seller will agree or commit to do any of the foregoing.
Section 5.02 Access to Information. Sellers shall permit Buyer and its
counsel, accountants and other representatives reasonable access during normal
business hours to all of their properties, books, contracts, commitments and
other records relating to the Vessel Business, Vessels and Other Assets,
including without limitation tax returns, declarations of estimated tax and tax
reports, and during such period Sellers shall furnish promptly to Buyer all
other information concerning the Vessel Business, Vessels and Other Assets
and personnel as Buyer may reasonably request; provided, however, that, no
investigation pursuant to this Section 5.02 or otherwise shall limit the effect
of any representations or warranties contained in this Agreement. Without
limiting the generality of the foregoing, each Seller shall deliver to Buyer
copies of all financial statements, reports or analyses with respect to the
Vessel Business, Vessels and Other Assets which are prepared or received between
the date hereof and the Closing Date promptly after such preparation or receipt
regardless of whether such financial statements, reports or analyses are
prepared internally or by third parties.
Section 5.03 Notices of Certain Events. Each Seller shall promptly
notify Buyer of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to Sellers', Parent's or ▇▇▇▇'▇ Knowledge threatened against, relating to or
involving or otherwise affecting any Seller, the Vessels, the Other Assets or
the Vessel Business which, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 3.14 or which relate to
the consummation of the transactions contemplated by this Agreement.
Section 5.04 Continued Administration.
(a) Sellers, Parent and ▇▇▇▇ shall use their best efforts to cause to
have their Plan Administrators administer each and every Plan listed in SCHEDULE
3.16(a) hereto in accordance with its terms and the provisions of the Code and
ERISA. Sellers shall, and shall not permit their Affiliates to amend or
terminate any such Plan except as described on SCHEDULE 3.16(a).
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(b) Neither Buyer nor any of its affiliates shall adopt, become a
sponsoring employer of, nor have any obligations under or with respect to any
employee pension benefit plans or employee welfare benefits plans maintained by
the Seller, including but not limited to the Plans listed on SCHEDULE 3.16(a),
and Seller shall retain all liabilities thereunder.
(c) Seller acknowledges that Seller is responsible, and Buyer is not
responsible, for determining whether restrictions on distributions from a plan
pursuant to Section 401 (k)(10) of the Internal Revenue Code, as amended (the
"CODE"), apply for purposes of any current employees of Seller who become
employees of Buyer as a result of this Agreement.
Section 5.05 Records. Sellers shall maintain their books, accounts and
records in the usual, regular and ordinary manner.
Section 5.06 Maintenance of Insurance. Sellers shall maintain in full
force and effect all of their presently existing insurance coverage described in
SCHEDULE 3.19 hereto, or insurance comparable to such existing coverage. Sellers
shall cause Buyer to be named as an additional insured and loss payee under such
policies except for its P&I insurance effective from the signing of this
Agreement and will provide written notice to Buyer of all insured claims arising
between the date of this Agreement and the Closing Date.
Section 5.07 Additional Disclosure. Sellers and/or Parent or ▇▇▇▇
shall promptly, after the occurrence thereof is known to any Seller and/or
Parent or ▇▇▇▇, advise Buyer of each event subsequent to the date hereof which
causes any covenant of any Seller and/or Parent or ▇▇▇▇ to be breached or causes
any representation or warranty of any Seller and/or Parent or ▇▇▇▇ contained
herein to no longer be true, correct or complete.
Section 5.08 Taxes. Each Seller shall (and Parent shall cause each
Seller to) continue to timely file all Tax Returns with the appropriate
governmental agencies in all jurisdictions in which such returns or reports are
required to be filed, and ensure that all Taxes have been properly accrued and
paid when due.
Section 5.09 Approvals. Sellers, Parent and ▇▇▇▇ shall obtain, and
shall cooperate with Buyer in obtaining, as promptly as possible, all approvals,
authorizations and clearances of governmental and regulatory bodies and
officials required by such relevant person to consummate the transactions
contemplated hereby. Each Seller, Parent and ▇▇▇▇ shall provide such information
and communications to governmental and regulatory authorities, as such
governmental and regulatory authorities or Buyer may reasonably request and
shall obtain the requisite consents of third parties required to consummate the
transactions contemplated hereby. Notwithstanding any other language herein,
none of Sellers, Parent, ▇▇▇▇ or Buyer shall be required to make any payment or
other concession or to assume any obligation in connection with obtaining such
consents.
Section 5.10 Compliance with Legal Requirements. Sellers, Parent and
▇▇▇▇ shall use their reasonable commercial efforts to comply promptly with all
requirements which federal or state law may impose on any Seller, Parent or ▇▇▇▇
with respect to the transactions contemplated by this Agreement, and will
promptly cooperate with and furnish information to Buyer in connection with any
such requirements imposed upon them in connection therewith.
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Section 5.11 Certain Acts or Omissions. Sellers shall not, and Parent
shall cause Sellers not to (a) omit to take any action called for by any of its
covenants contained in this Agreement, or (b) take any action which it is
required to refrain from taking by any of such covenants. Sellers, Parent and
▇▇▇▇ shall, and Parent and ▇▇▇▇ shall cause each Seller to, before the Closing,
use reasonably commercial efforts to cure any violation or breach of any of its
representations, warranties or covenants contained in this Agreement which
becomes known, occurs or arises subsequent to the date of this Agreement and
shall obtain the satisfaction of all conditions to Closing set forth in this
Agreement.
Section 5.12 Personnel. Sellers shall not, and Parent shall cause
Sellers not to, take any action in connection with the settlement or termination
of any employment terms, plans, agreements or benefits regarding employees of
any Seller or any Affiliate Employer that could reasonably be expected to
interfere with Buyer's ability to hire any such employees after the Closing on
terms reasonably satisfactory to Buyer.
Section 5.13 Repairs. Any Vessels or Other Assets under repair on the
date hereof shall be delivered to Buyer upon completion of such repairs and all
costs therewith shall be paid by Sellers.
Section 5.14 Transition Matters. Sellers shall, and Parent shall cause
Sellers to, cooperate with Buyer to effect an orderly and timely transfer by the
Closing Date of all licenses, permits and the like that Buyer is to acquire
pursuant to this Agreement or, if any such licenses, permits and the like have
not been fully transferred as of the Closing Date, to the extent permitted by
law allow Buyer to use and operate under the same in Sellers' names until such
time as they have been completely transferred to Buyer. Immediately following
the Closing each Seller shall permanently cease to use its corporate name in the
operation of any vessel transportation business; provided that, with respect to
the operation of the Ocean Star in the Caribbean, Sellers shall be permitted to
use its corporate name for 90 days following the Closing Date.
Section 5.15 May 31 Financials. Parent shall, prior to June 12, 2001,
deliver to Buyer true, complete and correct copies of the combined unaudited
financial statements (including balance sheet, statements of income, cash flow
and shareholders' equity) of Sellers for the period ended May 31, 2001,
including the notes relating thereto. Such financial statements of Sellers
provided to Buyer shall fairly present, in conformity with generally accepted
accounting principles consistently applied the combined financial position of
Sellers as of the date thereof and their combined results of operations and
changes in financial position for the period then ended (subject to normal
period-end adjustments).
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
Section 6.01 Approvals. Buyer shall take all reasonable steps, and
shall use reasonable commercial efforts to obtain, and shall cooperate with each
Seller, Parent and Hess in obtaining, as promptly as possible, all approvals,
authorizations and clearances of governmental and
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regulatory bodies and officials required to consummate the transactions
contemplated hereby. Buyer shall provide such information and communications to
governmental and regulatory authorities as such governmental and regulatory
authorities or any Seller, Parent or Hess may reasonably request and shall use
reasonable commercial efforts to obtain any requisite consents of third parties,
to the extent required to consummate the transactions contemplated hereby but
only if no payment or other concessions are required of Buyer to obtain such
consents.
Section 6.02 Compliance with Legal Requirements. Buyer shall use
reasonable commercial efforts to comply promptly with all requirements which
federal or state law may impose on them or any of their affiliates with respect
to the transactions contemplated by this Agreement and will promptly cooperate
with and furnish information to Sellers in connection with any such requirements
imposed upon them in connection therewith.
Section 6.03 Certain Acts or Omissions. Buyer shall not (a) omit to
take any action called for by any of its covenants in this Agreement or (b) take
any action which it is required to refrain from taking by any of such covenants.
Buyer shall use all reasonable efforts to cure, before the Closing, any
violation or breach of any of its representations, warranties or covenants
contained in this Agreement which becomes known, occurs or arises subsequent to
the date of this Agreement and to obtain the satisfaction of all conditions to
Closing set forth in this Agreement.
Section 6.04 Repainting Vessels. Within 90 days of Closing, Buyer
shall, at Buyer's expense, remove or paint over the Hess logos (including any
Hess Affiliate logos) on each Vessel and the Hess colors on each Vessel above
the waterline.
Section 6.05 WARN Act. Buyer has offered all employees of Sellers or
any Affiliate Employer employed in the Vessel Business employment. Buyer agrees
that if WARN Act issues arise, the Closing may be delayed until appropriate
notices can be given under such act.
Provided that the first sentence in this Section 6.05 is true, Seller
has not violated, and will not violate, the WARN Act, or any similar state or
local law. Seller shall further indemnify and hold harmless Buyer from any WARN
Act and similar state or local law liability that may result from an "Employment
Loss," as defined by 29 U.S.C. Section 2101(a)(6), caused by Seller.
Section 6.06 Recordkeeping; Use of Sellers' Manuals.
(a) For 6 years, Buyer shall ▇▇▇▇▇ ▇▇▇▇ reasonable access to all files
pertaining to the pre-closing operation of the Vessel Business currently stored
on the premises at the Brooklyn marine facility and shall not remove, discard or
destroy any such files without first notifying Hess and providing Hess with a
reasonable opportunity to review and, at Hess' cost, to copy or remove such
files. After 6 years from the date hereof, if Buyer is planning to destroy or
discard files pertaining to the pre-closing operation of the Vessel Business,
it will use reasonable efforts to notify Hess and give Hess 5 days to remove
such files. However, with respect to Buyer's obligations after year 6, the
parties agree that Buyer will have no liability to Hess if Buyer fails to notify
Hess. Buyer also agrees to use commercially reasonable efforts to forward as
promptly as practicable all telephone calls, faxes, mail and similar items
pertaining to the pre-Closing
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operation of the Vessel Business to ▇▇▇▇▇ ▇▇▇▇▇▇, Amerada ▇▇▇▇ Corporation,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (telephone: ▇▇▇-▇▇▇-▇▇▇▇; fax:
▇▇▇-▇▇▇-▇▇▇▇).
(b) Buyer agrees as promptly as practicable after Closing to delete all
references to Seller, Hess or any of their affiliates in any Vessel Business
manuals and to indemnify Sellers, Hess and their affiliates from any claims
arising from Buyer's use of such manuals post-Closing.
(c) Seller agrees to use commercially reasonable efforts to forward as
promptly as practicable all telephone calls, faxes, mail and similar items
pertaining to the post-Closing operation of the Vessel Business to Buyer.
ARTICLE 7
COVENANTS OF BUYER, SELLERS AND PARENT
The parties hereto agree that:
Section 7.01 Confidentiality.
(a) Prior to the Closing Date and after any termination of this
Agreement, Buyer will hold, and will use its best efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning Sellers furnished to Buyer in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (a) previously known on a nonconfidential
basis by Buyer, (b) in the public domain through no fault of Buyer or (c) later
lawfully acquired by Buyer from sources other than Sellers, Parent or Hess;
provided that Buyer may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement and to its lenders in
connection with obtaining the financing for the transactions contemplated by
this Agreement so long as such Persons are informed by Buyer of the
confidential nature of such information and are directed by Buyer to treat such
information confidentially. Buyer's obligation to hold any such information in
confidence shall be satisfied if it exercises the same care with respect to such
information as it would take to preserve the confidentiality of its own similar
information. If this Agreement is terminated, Buyer will, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to Hess, upon request,
all documents and other materials, and all copies thereof, obtained by Buyer or
on its behalf from Sellers, Parent or Hess in connection with this Agreement
that are subject to such confidence.
(b) Prior to the Closing Date and after any termination of this
Agreement, each Seller, Parent and Hess will hold, and will use their best
efforts to cause their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning Buyer
furnished to any Seller, Parent or Hess in connection with the transactions
contemplated by this Agreement, except to the extent that such information can
be shown to have been (a) previously known on a nonconfidential basis by any
Seller, Parent or Hess, (b) in the public domain through no fault of
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Seller or (c) later lawfully acquired by any Seller, Parent or Hess from sources
other than Buyer; provided that any Seller, Parent or Hess may disclose such
information to their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement and to their respective lenders in connection
with obtaining the financing for the transactions contemplated by this Agreement
so long as such Persons are informed by such Seller, Parent or Hess of the
confidential nature of such information and are directed by such Seller, Parent
or Hess to treat such information confidentially. Parent's, Hess' and any
Seller's obligation to hold any such information in confidence shall be
satisfied if it exercises the same care with respect to such information as it
would take to preserve the confidentiality of its own similar information. If
this Agreement is terminated, Seller, Parent or Hess will, and will use their
best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver
to Buyer, upon request, all documents and other materials, and all copies
thereof, obtained by such Seller, Parent or Hess or on its behalf from Buyer in
connection with this Agreement that are subject to such confidence.
Section 7.02 Public Announcements. Buyer, each Seller, Parent and Hess
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with any national securities exchange, will not issue any such
press release or make any such public statement prior to such consultation.
Section 7.03 BDIS System. Hess retains a personal, nontransferable and
nonexclusive right to use BDIS solely for internal business purposes. Such right
to use includes the right to modify BDIS and to prepare derivative works based
on BDIS, provided that any such modification or derivative work that contains
any part of BDIS subject to this Agreement is treated hereunder the same as
BDIS. Buyer claims no ownership interest in any portion of such a modification
or derivative work that is not part of BDIS.
ARTICLE 8
CONDITIONS TO CLOSING
Section 8.01 Conditions to the Obligations of the Parties. The
obligations of Sellers and Buyer to consummate the Closing are subject to the
satisfaction of the following conditions:
(a) if required by applicable law, this Agreement shall have been
adopted by the stockholders of Sellers in accordance with such law;
(b) any applicable waiting period (and any extensions thereof) under
the HSR Act relating to the sale shall have expired or been terminated, and no
condition with respect to obtaining such termination shall have been imposed on
any Seller or Buyer;
(c) On the Closing Date, no action or proceeding by any public
authority or any other person shall be pending before any court or
administrative body or overtly threatened to restrain, enjoin or otherwise
prevent the consummation of this Agreement or the transactions contemplated
hereby, and no action or proceeding by any public authority or private person
shall be pending before any court or administrative body or overtly threatened
to recover any damages
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or obtain other relief as a result of this Agreement or the transactions
contemplated herein or as a result of any agreement entered into in connection
with or as a condition precedent to the consummation thereof, which action or
proceeding could result in a decision, ruling or finding which would have a
Material Adverse Effect or prevent or interfere with Buyer's ability to conduct
normal operations after the Closing with the Vessel Business, Vessels or Other
Assets or the ability of Buyer or any Seller or Parent to fulfill its
obligations under this Agreement;
(d) All orders, consents, permits, authorizations, approvals and
waivers of every governmental entity or third party required for the
consummation of the transactions contemplated hereby, and all filings,
registrations and notifications to or with all governmental entities required
with respect to the consummation of such transactions, shall have been obtained
or given.
Section 8.02 Conditions to the Obligations of Buyer. The obligations of
Buyer to consummate the Closing are subject to the satisfaction of the following
further conditions:
(a) Each Seller, Parent and Hess shall have performed all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date, the representations and warranties of each Seller, Parent and Hess
contained in this Agreement and in any certificate or other writing delivered by
any Seller, Parent or Hess pursuant hereto shall be true in all material
respects at and as of the Closing Date as if made at and as of such time and
Buyer shall have received a certificate signed by an executive officer of each
of Sellers, Parent and Hess dated as of the Closing Date to the foregoing
effect;
(b) All action necessary to authorize the execution, delivery and
performance by the each Seller, Parent and Hess of this Agreement shall have
been duly and validly taken by the each Seller and Parent, and each Sellers,
Parent and Hess shall have delivered to Buyer copies, certified as of the
Closing Date by its Secretary, of all resolutions of the Board of Directors
authorizing this Agreement and the transactions contemplated by this Agreement;
(c) Buyer shall have received an opinion, addressed to Buyer and dated
the Closing Date, of General Counsel for Sellers, Parent and Hess, in a form and
containing provisions satisfactory to Buyer;
(d) Each Seller shall deliver fully executed and duly acknowledged
instruments of conveyance and transfer, including, but not limited to, Bills of
Sale and Satisfaction of Mortgages and Abstracts of Title, and such other
instruments conveying title to the Vessels and Other Assets, free and clear of
all Liens. All such instruments of conveyance shall be in form and content
reasonably satisfactory to Buyer and its counsel;
(e) No incident or event shall have occurred resulting in the
destruction, damage to, or loss of any Vessel or Other Asset (whether or not
covered by insurance) in excess of $100,000 that has not been cured to a
commercially reasonable standard by Sellers;
(f) Sellers, Parent and Hess shall have delivered to Buyer true,
complete and correct copies of audited combined financial statements (including
balance sheet, statements of income, cash flow and shareholder's equity) of
Sellers for the years ended December 31, 2000, 1999 and
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1998, including the notes relating thereto, which shall not vary materially from
the Financial Statements, and Buyer shall have received from a certified public
accounting firm chosen by Buyer a clean opinion that the financial statements
are presented fairly in accordance with generally accepted accounting
principles, without exception with the cost of such audit to be paid by Buyer;
(g) Hess and Buyer shall have entered into a Contract of Affreightment,
substantially in the form which is attached hereto as EXHIBIT A;
(h) Each lender of Sellers shall have released any Liens on the Vessels
and Other Assets and consented to the conveyance of the Vessels and Other Assets
to Buyer, free and clear of any and all Liens other than with respect to the
Vessels any Liens which arose by operation of law, have not been recorded and
have not been asserted by the holder thereof;
(i) Effective physical possession and control of the Vessels and Other
Assets shall have been tendered by each Seller and Parent to Buyer;
(j) Specific assignments of material contracts and any proprietary
information, licenses and permits to the extent permitted by law that Buyer may
reasonably request to assure their continuity, together with any consents to
such assignments that may have been obtained;
(k) Buyer and Hess shall have entered into a lease regarding Sellers'
office space and dock space in the form attached hereto as EXHIBIT B; and
(l) The following additional documents shall have been executed and
delivered by Sellers:
(i) CONSENTS. Copies of all required consents and approvals;
(ii) RELEASES. A release in a form and containing terms
satisfactory to Buyer of any and all claims of Sellers, Parent or Hess,
if any, may have against the Vessels or Other Assets or Buyer, except
as may arise under this Agreement, under the Contract of Affreightment,
or under any other documents executed in connection herewith;
(iii) CERTIFICATE OF SECRETARY. A Certificate of Secretary of
each Seller, Parent and Hess attesting to the incumbency and the
signature specimens with respect to the officers of such entities
executing this Agreement and any other document delivered pursuant to
this Agreement by or on behalf of such entities, and attesting to such
other instruments and documents as counsel for Buyer shall reasonably
request;
(iv) OTHER REQUESTED DOCUMENTS. Further instruments and
documents, in form and content reasonably satisfactory to counsel for
Buyer, as may be necessary or reasonably appropriate more fully to
consummate the transactions contemplated hereby.
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Section 8.03 Conditions to the Obligations of Sellers and Parent. The
obligations of each Seller, Parent and Hess to consummate the Closing are
subject to the satisfaction of the following further conditions:
(a) Buyer shall have performed all of its obligations hereunder
required to be performed by it at or prior to the Closing Date, the
representations and warranties of Buyer contained in this Agreement and in any
certificate or other writing delivered by Buyer pursuant hereto shall be true in
all material respects at and as of the Closing Date as if made at and as of such
time and Seller shall have received a certificate signed by the President of
Buyer dated as of the Closing Date to the foregoing effect;
(b) Hess and Buyer shall have entered into a Contract of Affreightment,
the form of which is attached hereto as EXHIBIT A;
(c) Seller shall have received the Purchase Price;
(d) The following additional documents shall have been executed and
delivered by Buyer:
(i) Consents. Copies of all required consents and approvals;
(ii) Certificate of Secretary. A Certificate of Secretary of
Buyer attesting to the incumbency and the signature specimens with
respect to the officers of such entity executing this Agreement and any
other document delivered pursuant to this Agreement by or on behalf of
such entity, and attesting to such other instruments and documents as
counsel for Seller shall reasonably request;
(iii) Other Requested Documents. Further instruments and
documents, in form and content reasonably satisfactory to counsel for
Sellers, as may be necessary or reasonably appropriate more fully to
consummate the transactions contemplated hereby.
(e) All action necessary to authorize the execution, delivery and
performance by Buyer of this Agreement shall have been duly and validly taken by
Buyer and Buyer shall have delivered to Sellers, Parent and Hess copies,
certified as of the Closing Date by the Secretary of Buyer, of all resolutions
of the board of directors of Buyer authorizing this Agreement and the
transactions contemplated by this Agreement.
ARTICLE 9
TAX MATTERS
Section 9.01 Preparation and Filing of Tax Returns. Sellers, jointly
and severally with Parent and Hess represent and warrant to Buyer that:
(a) Insofar as the same relates to the Vessels and/or Other Assets, all
returns (including, income, franchise, sales and use, excise, severance,
property, gross receipts, payroll
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and withholding tax returns and information returns), deposits and reports (all
such returns, deposits and reports herein referred to collectively as "Tax
Returns" or singularly as a "Tax Return") of or relating to any United States
(including state or local) or foreign tax that are required to be filed (taking
into account all extensions) on or before the Closing Date by Sellers, have been
or will be timely filed with the appropriate federal, state, local and foreign
authorities;
(b) Insofar as the same relates to the Vessels and/or Other Assets, all
state, local and foreign income, excise, property, sales and use taxes,
assessments, interest, penalties, deficiencies, fees and other governmental
charges or impositions which are called for as due by the Tax Returns, or which
are claimed to be due with respect to the periods covered thereby, from Sellers
(the "Taxes"), have been properly accrued or paid. Sellers have not received
any notice of assessment or proposed assessment by any taxing authority in
connection with any Tax Returns and there are no pending tax examinations of any
Tax Returns of or tax claims in respect of the Tax Returns asserted with respect
to the Vessels and Other Assets; and
(c) There has been no disregard of any applicable statute, regulation,
rule, revenue ruling or other authority in the preparation of any Tax Return
applicable to the Vessels or Other Assets. There are no tax liens on any of the
Vessels or Other Assets except for Liens for current taxes not yet due and
payable. There is no basis for any additional assessment of any Taxes, penalties
or interest with respect to the Vessels and Other Assets. Sellers have not
waived any law or regulation fixing, or consented to the extension of, any
period of time for assessment of any Taxes which waiver or consent is currently
in effect.
Section 9.02 Access to Information. After the Closing:
(a) Sellers, Parent, Hess and each member of the affiliated group of
corporations filing consolidated United States Income Tax Returns which include
the Sellers (the "Hess Group") shall grant to Buyer (or its designees) access at
all reasonable times to all of the information, books and records relating to
the Vessels and Other Assets within the possession of Hess or any member of Hess
Group (including without limitation work papers and correspondence with taxing
authorities), and shall afford Buyer (or its designees) the right (at Buyer's
expense) to take extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Buyer (or its designees) to prepare Tax Returns,
to conduct negotiations with Tax authorities, and to implement the provisions
of, or to investigate or defend any claims between the parties arising under,
this Agreement.
(b) Buyer shall grant to Parent (or its designees) access at all
reasonable times to all of the information, books and records relating to the
Vessels and Other Assets within the possession of Buyer (including without
limitation work papers and correspondence with taxing authorities), and shall
afford Parent (or its designees) the right (at Parent's expense) to take
extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Parent (or its designees) to prepare Tax Returns, to conduct
negotiations with Tax Authorities, and to implement the provisions of, or to
investigate or defend any claims between the parties arising under, this
Agreement.
(c) Each of the parties hereto will preserve and retain all schedules,
work papers and other documents relating to any Tax Returns of or with respect
to the Vessels and Other Assets
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or to any claims, audits or other proceedings affecting the Vessels and Other
Assets until the expiration of the statute of limitations (including extensions)
applicable to the taxable period to which such documents relate or until the
final determination of any controversy with respect to such taxable period, and
until the final determination of any payments that may be required with respect
to such taxable period under this Agreement.
Section 9.03 Sales Taxes. The Purchase Price excludes, and Buyer will
be liable for, any Transfer Taxes (as defined below) required to be paid in
connection with the sale of the Vessels and Other Assets pursuant to this
Agreement. "TRANSFER TAXES" shall mean any sales, use, excise, stock, document,
filing, recording, authorization, transfer and similar taxes, fees and charges.
Section 9.04 Apportionment of Property Taxes. All ad valorem, real
property and personal property taxes attributable to the Vessels and Other
Assets for the tax period during which the Closing Date occurs shall be prorated
as of the Closing Date based upon such tax assessed against the assets for the
tax period. The owner of record of the Companies on the assessment date will
cause the Companies to file all required reports and returns incident to the
Property Taxes.
Section 9.05 Other Taxes. With the exception of income and franchise
taxes, all federal, state and local taxes (including interest and penalties
attributable thereto) on the ownership or operations of the Vessels and Other
Assets which are imposed with respect to periods or portions of periods to the
Closing Date shall be paid by Sellers and all such taxes imposed with respect to
periods or portions of periods beginning on or after the Closing Date shall be
paid by Buyer.
Section 9.06. Purchase Price Allocations.
(a) On or before the Closing Date, Sellers and Buyer mutually agree to
allocate the Purchase Price among the Vessels and Other Assets as set forth in
EXHIBIT C attached hereto. Sellers and Buyer agree that said allocation as set
forth in EXHIBIT C is the proper allocation of the Purchase Price in accordance
with the fair market value of the Vessels and Other Assets and that said
allocation of the Purchase Price of the Vessels and Other Assets as set forth in
EXHIBIT C shall apply for purposes of Section 1060 of the Internal Revenue Code
of 1986 (as amended and together with any regulations promulgated thereunder,
the "Code"). Sellers and Buyer agree (and each agrees to cause its affiliates)
to report the federal, state and local income and other tax consequences of the
transactions contemplated herein, and in particular to report the information
required under Section 1060(b) of the Code (and any regulations promulgated
thereunder), in a manner consistent with such allocation.
(b) Sellers and Buyer further agree (and each agrees to cause its
affiliates) to not take any tax position inconsistent with such allocation in
connection with the examination of any of their tax returns, refund claims or
litigation, investigations or other proceedings involving any of their tax
returns. Sellers and Buyer each further agree that they will not take any
position inconsistent with this allocation in preparing financial statements,
tax returns, reports to shareholders or government authorities or otherwise.
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(c) Sellers and Buyer each agree to furnish the other a copy of IRS
Form 8594 (Asset Acquisition Statement under Section 1060 of the Code) as filed
with the Internal Revenue Service by such party or any affiliate thereof,
pursuant to Section 1060 of the Code, as a result of the consummation of the
transactions contemplated hereby, within thirty (30) days of the filing of such
form with the Internal Revenue Service.
ARTICLE 10
INDEMNIFICATION
Section 10.01 Indemnification of Buyer Indemnitees. Each Seller,
jointly and severally with Parent hereby agrees to indemnify and hold Buyer and
its respective officers, directors, stockholders, agents, employees, and
attorneys (the "BUYER INDEMNITEES") harmless from and against any and all
liabilities, obligations, damages, deficiencies, losses and expenses:
(a) resulting from any misrepresentation or breach of warranty of the
surviving Representations and Warranties as set forth on SCHEDULE 12.03 or
nonfulfillment of any covenant or agreement on the part of any Seller, Parent or
Hess under the terms of this Agreement;
(b) comprising or resulting from any Excluded Liabilities;
(c) arising as a result of the ownership of the Vessels and/or Other
Assets and/or the use and operation of the Vessels and Other Assets and the
conduct by Sellers and the employees of any Affiliate Employer of the Vessel
Business before the Closing Date;
(d) resulting from any Liens existing on the Closing Date which arose
out of the action (or failure to act) of any Seller, Parent or Hess; and
(e) resulting from all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including reasonable attorneys'
fees, incident to the foregoing.
Section 10.02 Indemnification of Seller Indemnitees. Buyer agrees to
indemnify and hold Sellers and Parent and their respective officers, directors,
stockholders, agents, employees, and attorneys (the "SELLER INDEMNITEES")
harmless from and against any and all liabilities, obligations, damages,
deficiencies, losses and expenses:
(a) resulting from any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of Buyer under the terms
of this Agreement;
(b) arising as a result of the ownership of the Vessels and Other
Assets and/or the use and operation of any of the Vessels and Other Assets and
the conduct of the Vessel Business from and after the Closing Date provided that
this provision of this Agreement shall not be deemed to have any effect with
respect to Buyer's services to Hess or its Affiliates subsequent to the Closing
Date; and
(c) resulting from all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including reasonable attorneys'
fees, incident to the foregoing.
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Section 10.03 Method of Asserting Claims, Etc. The items listed in
Section 10.01 and Section 10.02 are sometimes collectively referred to herein as
"DAMAGES"; provided, however, that such reference shall be understood to mean
the respective damages from and against which the Buyer Indemnitees or Seller
Indemnitees, as the case may be, are indemnified as the context requires. The
person claiming indemnification hereunder, whether a Buyer Indemnitee or a
Seller Indemnitee, is sometimes referred to as the "INDEMNIFIED PARTY" and the
party against whom such claims are asserted hereunder is sometimes referred to
as the "INDEMNIFYING PARTY". All claims for indemnification by an Indemnified
Party under Section 10.01 or Section 10.02 hereof, as the case may be, shall be
asserted and resolved as follows:
(a) If any claim or demand for which an Indemnifying Party would be
liable for Damages to an Indemnified Party hereunder is overtly asserted against
or sought to be collected from such Indemnified Party by a third party (a "THIRD
PARTY CLAIM"), such Indemnified Party shall with reasonable promptness (but in
no event later than thirty (30) days after the Third Party Claim is so asserted
or sought against the Indemnified Party) notify in writing the Indemnifying
Party of such Third Party Claim enclosing a copy of all papers served, if any,
and specifying the nature of and specific basis for such Third Party Claim and
the amount or the estimated amount thereof to the extent then feasible, which
estimate shall not be conclusive of the final amount of such Third Party Claim
(the "CLAIM NOTICE"). For this purpose the commencement of any audit or other
investigation respecting Taxes shall constitute a Third Party Claim.
Notwithstanding the foregoing, failure to so provide a Claim Notice as provided
above shall not relieve the Indemnifying Party from its obligation to indemnify
the Indemnified Party with respect to any such Third Party Claim except to the
extent that a failure to so notify the Indemnifying Party in reasonably
sufficient time prejudices the Indemnifying Party's ability to defend against
the Third Party Claim. The Indemnifying Party shall have thirty (30) days from
delivery of the Claim Notice (the "NOTICE PERIOD") to notify the Indemnified
Party (i) whether or not the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such Third
Party Claim and (ii) whether or not the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified Party
against such Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party within the
Notice Period that the Indemnifying Party does not dispute its liability to the
Indemnified Party and that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
Article, then the Indemnifying Party shall have the right to defend, at its sole
cost and expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be diligently prosecuted by the Indemnifying Party to a final
conclusion or settled at the discretion of the indemnifying Party (but only if
the Indemnifying Party is liable hereunder to the Indemnified Party for the full
amount of, and all obligations under, such settlement; otherwise, no such
settlement shall be agreed to without the prior written consent of the
Indemnified Party). If the Indemnifying Party is liable hereunder to the
Indemnified Party for the full amount of such Third Party Claim, the
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file during the
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Notice Period any motion, answer or other pleadings which the Indemnified Party
shall deem necessary or appropriate to protect its interests or those of the
Indemnifying Party and not prejudicial to the Indemnifying Party (it being
understood and agreed that if an Indemnified Party takes any such action which
is prejudicial and conclusively causes a final adjudication which is adverse to
the Indemnifying Party, the Indemnifying Party shall be relieved of its
obligations hereunder with respect to such Third Party Claim); and provided
further, that if requested by the Indemnifying Party, the Indemnified Party
agrees, at the sole cost and expense of the Indemnifying Party, to cooperate
with the Indemnifying Party and its counsel in contesting any Third Party Claim
which the indemnifying Party elects to contest, or, if appropriate and related
to the Third Party Claim in question, in making any counterclaim against the
person asserting the Third Party Claim, or any cross-complaint against any
person. The Indemnified Party may participate in, but not control (except if the
Indemnifying Party is not liable hereunder to the Indemnified Party for the full
amount of such Third Party Claim, in which case whichever of the Indemnifying
Party or the indemnified Party is liable for the largest amount of Damages with
respect to the Third Party Claim shall control), any defense or settlement of
any Third Party Claim with respect to which the Indemnifying Party is
participating pursuant to this Section 10.03(b), and except as provided in the
preceding sentence, the Indemnified Party shall bear its own costs and expenses
with respect to such participation.
(c) If the Indemnifying Party fails to notify the Indemnified Party
within the Notice Period that the Indemnifying Party does not dispute its
liability to the Indemnified Party and that the Indemnifying Party desires to
defend the Indemnified Party pursuant to this Article, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings, including any compromise or settlement thereof;
provided however, that if requested by the Indemnified Party, the Indemnifying
Party agrees, at the sole cost and expense of the Indemnifying Party, to
cooperate with the Indemnified Party and its counsel in contesting any Third
Party Claim which the Indemnified Party is contesting, or, if appropriate and
related to the Third Party Claim in question, in making any counterclaim against
the person asserting the Third Party Claim, or any cross-complaint against any
person. Notwithstanding the foregoing provisions of this Section 10.03(c), if
the Indemnifying Party has timely notified the Indemnified Party that the
Indemnifying Party disputes its liability to the Indemnified Party and if such
dispute is resolved in favor of the Indemnifying Party by final, non-appealable
order of a court of competent jurisdiction, the Indemnifying Party shall not be
required to bear the costs and expenses of the Indemnified Party's defense
pursuant to this Section 10.03(c) or of the Indemnifying Party's participation
therein at the Indemnified Party's request and the Indemnified Party shall
reimburse the Indemnifying Party in full for all costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 10.03(c) (other than a dispute as to the Indemnifying Party's liability
to the Indemnified Party) and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.
(d) If any Indemnified Party should have a claim against any
Indemnifying Party hereunder which does not involve a Third Party Claim, the
Indemnified Party shall notify the
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Indemnifying Party of such claim by the Indemnified Party in writing, specifying
the nature of and specific basis for such claim and the amount or the estimated
amount of such claim (the "INDEMNITY NOTICE"). If the Indemnifying Party does
not notify the Indemnified Party in writing within thirty (30) days from
delivery of the Indemnity Notice that the Indemnifying Party disputes such
claim, the amount or estimated amount of such claim specified by the Indemnified
Party shall be conclusively deemed a liability of the Indemnifying Party
hereunder. If the Indemnifying Party has timely disputed such claim, as provided
above, such dispute shall be resolved by litigation in an appropriate court of
competent jurisdiction or as the parties otherwise at such time agree.
Section 10.04 Limitation. The maximum liability under the
indemnification provisions of this Article 10 shall be limited to an amount
equal to the Purchase Price. Notwithstanding anything contained elsewhere in
this Agreement, an Indemnifying Party shall have no liability for
indemnification hereunder until the Indemnified Party's Damages exceed $25,000,
in the aggregate (the "Threshold Amount") and then only to the extent of such
excess. With respect to the remedies available under this Agreement, the
Indemnifying Party shall not be responsible for any resulting indirect,
incidental, consequential, exemplary, punitive or special damages, whether or
not the Indemnifying Party was made aware of such damages or the possibility
thereof.
Section 10.05 Special Allocation of Damages for Joint Exposure Claims.
In the event Damages are incurred in respect of Joint Exposure Claims, such
Damages (other than punitive or special damages) shall be allocated among
Sellers and Buyer as herein set forth notwithstanding any evidence, analysis or
determination indicating a different allocation of responsibility for such
Damages amongst the Parties. With respect to Joint Exposure Claims, the portion
of such Damages allocable to a Seller shall equal that fraction the numerator of
which is the total number of days the employee making the Joint Exposure Claim
was employed by Seller and exposed to the substance or material giving rise to
the Joint Exposure Claim and the denominator of which is the total number of
days such employee has been employed by Seller and Buyer and exposed to the
substance or material giving rise to the Joint Exposure Claim. Similarly, the
portion of such Damages allocable to Buyer shall equal that fraction the
numerator of which is the total number of days the employee making the Joint
Exposure Claim was or has been employed by Buyer and exposed to the substance or
material giving rise to the Joint Exposure Claim and the denominator of which is
the total number of days such employee was or has been employed by Buyer and
Seller and exposed to the substance or material giving rise to the Joint
Exposure Claim.
ARTICLE 11
TERMINATION
Section 11.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Sellers and Parent (acting
unanimously) and Buyer;
(b) by either Sellers and Parent (acting unanimously) or Buyer by
giving written notice to the other in accordance with Section 12.01, if there
shall be any law or regulation that
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makes consummation of the transaction illegal or otherwise prohibited or if any
judgment, injunction, order or decree enjoining Buyer or any Seller or Parent
from consummating the transaction is entered and such judgment, injunction,
order or decree shall become final and nonappealable.
(c) by Buyer, upon notice of termination of its obligation to
consummate the transaction delivered to Sellers, Parent and Hess, if Buyer
reasonably has determined that there has been any breach of any material
covenant of any Seller, Parent or Hess or that any Seller, Parent or Hess has
materially breached any of its material representations or warranties, stating
in particularity the default or defaults on which the notice is based; provided,
however, that such Seller, Parent or Hess shall, after receipt of such notice,
have thirty (30) days in which to cure such breach and, if so cured, Buyer
shall, for that reason, have no right to terminate this Agreement; or
(d) by Sellers and Parent, upon notice of termination of its obligation
to consummate the transaction delivered to Buyer, if Sellers and Parent
reasonably and unanimously have determined that there has been any breach of any
covenant of Buyer or that Buyer has materially breached any of its
representations or warranties, stating in particularity the default or defaults
on which the notice is based; provided, however, that Buyer shall, after receipt
of such notice, have thirty (30) days in which to cure such breach and, if so
cured, Sellers and Parent shall, for that reason, have no right to terminate
this Agreement.
Section 11.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, and provided that the
agreements contained in Section 7.01 and Section 12.05 shall survive the
termination hereof.
ARTICLE 12
MISCELLANEOUS
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Buyer, to:
LEEVAC Marine, Inc.
c/▇ ▇▇▇▇▇▇▇▇-LEEVAC Marine Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
R. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Sellers or Parent, to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Amerada ▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Amerada ▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
Section 12.02 Risk of Loss. The risk of any loss, damage, impairment,
confiscation or condemnation of the Vessels or Other Assets or any part thereof
shall be upon Sellers at all times prior to the Closing Date. In any such event,
Sellers may either (a) repair, replace or restore any such property as soon as
possible after its loss, impairment, confiscation or condemnation, or (b) if
insurance proceeds are sufficient to repair, replace or restore the property,
pay such proceeds to Buyer; provided however, that any repair, replacement or
restoration or the determination that insurance proceeds are sufficient must be
made, or provide sufficient funds so that repairs can be made, in such a manner
as to return the Vessel to at least the same operating condition and value as
existed immediately preceding the event. During any such repair, replacement or
restoration, and during any drydocking contemplated in Section 5.13, Buyer shall
be entitled to have a representative present at the shipyard or other applicable
location.
Section 12.03 Survival of Representations and Warranties. The
respective representations and warranties made by the parties in this Agreement
or in any certificate or document executed and delivered by either party to the
other party pursuant to this Agreement,
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shall survive the Closing Date and the consummation of the transactions
contemplated hereby for the periods set forth on SCHEDULE 12.03.
Section 12.04 Amendments; No Waivers. Any provision of this Agreement
may be amended or waived prior to the Closing Date if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
Sellers, Parent, Hess and Buyer or in the case of a waiver, by the party against
whom the waiver is to be effective. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
Section 12.05 Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
Buyer shall be responsible for all fees and expenses of the escrow agent.
Section 12.06 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Buyer may
assign this Agreement to one or more of its affiliates so long as Buyer
guarantees the performance of this Agreement.
Section 12.07 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York, without regard
to conflicts of law rules of such state.
Section 12.08 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 12.09 Jurisdiction. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in the United States District Court for the Southern District of New
York or any New York State court sitting in New York City, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 12.01 shall be deemed
effective service of process on such party.
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Section 12.10 Entire Agreement. This Agreement and the documents to be
executed in connection herewith contain, and is intended as, and represents a
complete statement of all of the terms, understandings and the arrangements
between the parties hereto with respect to the matters provided for in this
Agreement, supersedes any previous or contemporaneous agreements and
understandings whether oral or written between the parties hereto with respect
to those matters, and cannot be changed or terminated except as provided in
this Agreement. None of the parties makes, and each of the parties hereby
expressly disclaims any reliance upon, any representations or warranties with
respect to the transaction which is the subject of this Agreement other than
those set forth herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
LEEVAC MARINE, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: CEO
--------------------------------
HYGRADE OPERATORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
RED STAR TOWING AND TRANSPORTATION
COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
SHERIDAN TOWING CO., INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
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▇▇▇ ▇. ▇▇▇▇▇▇ & SONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------
AMERADA ▇▇▇▇ CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Senior Vice President
--------------------------------
The undersigned hereby guarantees each and every obligation and
performance of each of the Sellers and Parent under this Agreement.
AMERADA ▇▇▇▇ CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Senior Vice President
--------------------------------
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