Exhibit 2.1
ACQUISITION AGREEMENT
FOR
MTL PETROLINK CORP.
BY AND AMONG
MARINE TRANSPORT CORPORATION, AS SELLER
AMERICAN EAGLE TANKERS INC. LIMITED, AS BUYER,
AND
XXXXXXX MARITIME CORPORATION, AS GUARANTOR
APRIL 29, 2002
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS..................................................................... 1
Section 1.1 Capitalized Terms ............................................. 1
Section 1.2 Knowledge ..................................................... 5
ARTICLE 2 PURCHASE AND SALE OF SHARES .................................................... 5
ARTICLE 3 PURCHASE PRICE AND PAYMENT ..................................................... 5
Section 3.1 Purchase Price ................................................ 5
Section 3.2 Payment ....................................................... 5
ARTICLE 4 CLOSING ........................................................................ 6
Section 4.1 Date and Place of Closing ..................................... 6
Section 4.2 Simultaneous Events ........................................... 6
Section 4.3 Seller's Deliveries ........................................... 6
Section 4.4 Buyer's Deliveries ............................................ 6
Section 4.5 Retirement of Intercompany Indebtedness and Release of Liens .. 7
Section 4.6 Mutual Release ................................................ 7
ARTICLE 5 CONDITIONS TO OBLIGATIONS OF BUYER ............................................. 7
Section 5.1 Deliveries .................................................... 7
Section 5.2 Consents ...................................................... 8
Section 5.3 No Adverse Proceedings Pending ................................ 8
Section 5.4 Mutual Release ................................................ 8
Section 5.5 Employment Agreements ......................................... 8
Section 5.6 MarAd Approval ................................................ 8
Section 5.7 Short Term Charters ........................................... 8
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF SELLER ............................................ 8
Section 6.1 Deliveries .................................................... 8
Section 6.2 Consents ...................................................... 8
Section 6.3 No Adverse Proceedings Pending ................................ 9
Section 6.4 MarAd Approval ................................................ 9
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER ....................................... 9
Section 7.1 Ownership of Petrolink ........................................ 9
Section 7.2 Due Issuance of Shares ........................................ 9
Section 7.3 Capitalization of Petrolink ................................... 9
Section 7.4 Organization of Petrolink ..................................... 9
Section 7.5 Authorization ................................................. 10
Section 7.6 Financial Statements .......................................... 11
Section 7.7 Taxes ......................................................... 11
Section 7.8 Absence of Undisclosed Liabilities ............................ 12
Section 7.9 Litigation .................................................... 12
Section 7.10 Insurance ..................................................... 13
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Section 7.11 Equipment ..................................................... 13
Section 7.12 Conduct of Business; Absence of Certain Changes ............... 13
Section 7.13 Books and Records ............................................. 14
Section 7.14 Material Contracts ............................................ 14
Section 7.15 Government Authorizations and Compliance ...................... 14
Section 7.16 Labor Matters ................................................. 15
Section 7.17 ERISA; Benefit Plans .......................................... 15
Section 7.18 Trademarks .................................................... 16
Section 7.19 Real Property ................................................. 16
Section 7.20 Environmental Matters ......................................... 16
Section 7.21 Brokers ....................................................... 17
Section 7.22 Compliance with Law ........................................... 17
Section 7.23 Insurance Coverage Regarding Litigation ....................... 17
Section 7.24 Full Disclosure ............................................... 17
Section 7.25 Reliance ...................................................... 17
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF BUYER ........................................ 18
Section 8.1 Organization of Buyer ......................................... 18
Section 8.2 Authorization ................................................. 18
Section 8.3 Brokers ....................................................... 18
Section 8.4 Investment Intent ............................................. 18
Section 8.5 Litigation .................................................... 19
ARTICLE 9 SELLER'S COVENANTS ............................................................. 19
Section 9.1 Access to Information ......................................... 19
Section 9.2 Conduct of Business ........................................... 19
Section 9.3 Ongoing Information ........................................... 20
Section 9.4 Noncompetition ................................................ 20
Section 9.5. Confidential Information ...................................... 21
Section 9.6. Relief ........................................................ 22
ARTICLE 10 BUYER'S CONFIDENTIALITY COVENANT .............................................. 22
ARTICLE 11 MUTUAL COVENANTS. ............................................................. 23
Section 11.1 Consent and Charter Cooperation ............................... 23
Section 11.2 Notice of Litigation .......................................... 23
Section 11.3 Public Announcements .......................................... 23
Section 11.4 Efforts ....................................................... 23
ARTICLE 12 POST-CLOSING MATTERS .......................................................... 23
Section 12.1 Post-Closing Amendments; Refunds .............................. 23
Section 12.2 Records and Information ....................................... 24
Section 12.3 Other Post-Closing Elections .................................. 24
Section 12.4 Continuity and Termination of Other Benefits .................. 24
Section 12.5 Closing Date Working Capital Statement ........................ 25
Section 12.6 Payment of Tax Liabilities .................................... 26
Section 12.7 Rescission Waiver ............................................. 30
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ARTICLE 13 SURVIVAL AND INDEMNIFICATION .................................................. 31
Section 13.1 Survival after Closing ........................................ 31
Section 13.2 Indemnification by Seller ..................................... 31
Section 13.3 Indemnification by Buyer ...................................... 32
Section 13.4 Additional Indemnification .................................... 32
Section 13.5 Basket and Cap ................................................ 33
Section 13.6 Procedures for Indemnification ................................ 33
ARTICLE 14 TERMINATION OF AGREEMENT PRIOR TO CLOSING ..................................... 34
Section 14.1 Grounds for Termination ....................................... 34
Section 14.2 Effect of Termination ......................................... 34
Section 14.3 Disposition of Deposit ........................................ 35
ARTICLE 15 MISCELLANEOUS.... ............................................................. 35
Section 15.1 Notices ....................................................... 35
Section 15.2 Successors and Assigns ........................................ 36
Section 15.3 Entire Agreement .............................................. 36
Section 15.4 Amendment ..................................................... 37
Section 15.5 Expenses ...................................................... 37
Section 15.6 Governing Law ................................................. 37
Section 15.7 Attorneys' Fees ............................................... 37
Section 15.8 Counterparts; Severability .................................... 37
Section 15.9 No Waivers .................................................... 37
Section 15.10 No Third Party Beneficiaries .................................. 38
Section 15.11 Further Assurances ............................................ 38
Section 15.12 Interpretation ................................................ 38
Section 15.13 Currency ...................................................... 38
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SCHEDULES
Schedule 1 Existing Liens
Schedule 2 Intercompany Indebtedness
Schedule 3 Working Capital
Schedule 4 Required Consents
Schedule 5 Litigation
Schedule 6 Insurance Policies
Schedule 7 Equipment List
Schedule 8 Conduct of Business Out of Ordinary Course
Schedule 9 Material Contracts List
Schedule 10 Authorizations
Schedule 11 Absent Authorizations
Schedule 12 Benefit Plans and Other Employee Matters
Schedule 13 Trademarks and Tradenames
Schedule 14 Real Property Owned or Leased
Schedule 15 Environmental Matters
Schedule 16 Exceptions to Insurance Coverage
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Mutual Release
Exhibit C Xxxxxx Employment Agreement
Exhibit X Xxxxxx Employment Agreement
Exhibit E Petrolink and Subsidiaries Articles and Bylaws
Exhibit F Financial Statements
Exhibit G Section 7.06(b) Letter Agreement
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THIS ACQUISITION AGREEMENT is made as of this 29th day of April 2002, by
and between Marine Transport Corporation, a Delaware corporation ("Seller"), and
American Eagle Tankers Inc. Limited, a Bermuda corporation ("Buyer").
Performance of Seller's obligations is guaranteed by Xxxxxxx Maritime
Corporation, a Delaware corporation in accordance with, and subject to, the
terms of the Guarantee set forth on the signature page of this Agreement.
R E C I T A L S
A. Seller is the owner of all of the issued and outstanding capital stock
(the "Shares") of MTL Petrolink Corp. ("Petrolink") a Delaware corporation.
B. Buyer wishes to acquire from Seller, and Seller wishes to sell to
Buyer, the Shares, on the terms and conditions contained in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
A G R E E M E N T
ARTICLE 1
DEFINITIONS
SECTION 1.1 CAPITALIZED TERMS. Certain capitalized terms are specifically
defined above and in subsequent Articles of this Agreement. In addition, the
following capitalized terms used in this Agreement mean the following:
"ACQUISITION DOCUMENTS" means, collectively, this Agreement and (except as
stated in Section 15.3) all other agreements, certificates and instruments
executed and delivered in connection with the transactions contemplated by this
Agreement, in each case as originally executed and as amended from time to time
in accordance with their terms.
"AFFILIATE" means any entity controlled by, under common control with, or
controlling the entity in question.
"AGREEMENT" means this Acquisition Agreement, together with all Schedules
and Exhibits.
"APPLICABLE LAW" means any domestic or foreign, federal, state or local,
statute, law, ordinance rule, administrative interpretation, regulation, order,
writ, injunction, directive, judgment, decree or other requirement of any
Governmental Authority applicable to the transactions contemplated by this
Agreement or to the parties hereto and their respective properties, assets,
officers, directors, employees or agents.
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"BUSINESS DAYS" means all calendar days excluding Saturdays, Sundays and
federal holidays.
"CLOSING" means the satisfaction of all conditions precedent to
consummation of the transactions contemplated by this Agreement and completion
of all deliveries pursuant to Article 4.
"CLOSING DATE" means the date on which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CROWLEY" means Seller's parent Xxxxxxx Maritime Corporation, a Delaware
corporation, the Guarantor hereunder.
"CURRENT ASSETS" means the sum of the following balance sheet accounts
stated in accordance with generally accepted accounting principles as applied in
preparation of the Interim Statements referred to in Section 7.6(b): cash, after
taking into account any pre-Closing dividend or other distribution to Seller or
its Affiliate; accounts receivable (net of allowance for bad debts), including
an estimate for voyages in process, but not including amounts due from Seller;
prepaid expenses, including advance charter hire, prepaid insurance premiums
(for purposes of the Closing Date Working Capital Statement (as defined in
Section 12.5(a) only to the extent that the respective insurance coverage
remains in place after the Closing) and other miscellaneous prepaid items;
recoverable deposits; and fuel and dock inventories. For prepaid or other assets
not reasonably fitting into established accounts on Petrolink's historical trial
balance as of the Closing Date, such items will only be included as Current
Assets to the extent they should be classified as current assets in accordance
with generally accepted accounting principles.
"CURRENT LIABILITIES" means the sum of the following balance sheet
accounts stated in accordance with generally accepted accounting principles as
applied in preparation of the Interim Statements referred to in Section 7.6(b):
accounts and accruals payable, including payroll and related Taxes and benefits
which may be represented by current amounts due to affiliated companies as well
as an estimate of the costs of voyages in progress (but excluding accrual for
transition bonuses payable to employees under the Retention Package); and Taxes
other than Taxes for which Seller is responsible under the terms of this
Agreement. For accounts payable or other accruals not reasonably fitting into
established accounts on Petrolink's historical trial balance as of the Closing
Date, such items will only be included as Current Liabilities to the extent they
should be classified as current liabilities in accordance with generally
accepted accounting principles.
"ENVIRONMENTAL LAWS" means all federal, state and local laws, rules and
regulations relating to pollution, Hazardous Material, health, safety and/or the
environment, including but not limited to the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
the Federal Water Pollution Control Act, the Oil Pollution Act of 1990 and the
Toxic Substances Control Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ESCROW AGREEMENT" means the Agreement respecting holding and disposition
of Five Hundred Thousand Dollars ($500,000) of the Purchase Price as referred to
in Article 3 in the form and substance of Exhibit A or otherwise reasonably
satisfactory to both parties to this Agreement.
"ESCROW AGENT" shall have the meaning set forth in the Escrow Agreement.
"EXHIBITS" means the exhibits referenced in, attached to, and which are a
part of this Agreement.
"EXISTING LIENS" means all Liens listed in Schedule 1.
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, court, government or self-regulatory organization, commission,
tribunal, organization or any regulatory, administrative or other agency, or any
political or other subdivision, department or branch of any of the foregoing.
"HAZARDOUS MATERIAL" means (a) any asbestos insulation or other material
composed of or containing asbestos, (b) any substance, product or waste
constituting or containing oil, petroleum or petroleum constituents, and (c) any
hazardous, toxic or dangerous waste, substance, contaminant or material or other
words of similar import defined or treated as such in any Environmental Law.
"INTERCOMPANY INDEBTEDNESS" means, without regard to whether matured or
unmatured, absolute or contingent, all indebtedness owed by Petrolink or any of
its Subsidiaries to Seller or any Affiliate of Seller (other than Petrolink and
its Subsidiaries), whether or not evidenced by notes or other similar
instruments, except that any such indebtedness on account of costs of insurance,
payroll and payroll services, payroll and social security taxes, and employee
benefits shall not be considered Intercompany Indebtedness but only to the
extent that they are Current Liabilities. The Intercompany Indebtedness as of
the date of this Agreement is set forth in Schedule 2.
"IRS" means Internal Revenue Service, Department of the Treasury of the
United States.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
other encumbrance or restriction of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest.
"LOSSES" means any and all actual losses, payments, obligations, damages,
claims, judgments, demands, liabilities, costs and expenses, including, without
limitation, reasonable attorneys' fees paid or incurred.
"MATERIAL ADVERSE EFFECT" means an adverse effect on the business, assets,
financial condition, prospects or operations of Petrolink or of any of its
Subsidiaries that a reasonable buyer of the Shares would take into account in
determining an offering price.
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"MATERIAL CONTRACTS" means all of the following contracts and agreements
of Petrolink and of any of its Subsidiaries, whether written or oral: (a) all
agreements, contracts and instruments relating to the borrowing of money, the
capital lease or purchase on an installment basis of any property or asset, or
the guaranty of any of the foregoing, (b) all charters (other than single-voyage
charters), leases, contracts and other arrangements with respect to any vessel
or property as to which the value of the vessel or property, or the annual
obligation to make payments, exceeds One Hundred Thousand Dollars ($100,000) and
all contracts, agreements, commitments, purchase orders or other understandings
or arrangements (other than bunkering contracts) with suppliers, customers or
others with respect to which payments to or from Petrolink or any of its
Subsidiaries have exceeded, or may reasonably be expected to exceed, One Hundred
Thousand Dollars ($100,000) in any 12-month period, or with respect to which
there is a term in excess of one year, (c) all franchise, license, agency, sales
representative, distributor, broker and similar agreements, (d) all contracts,
agreements and other understandings or arrangements with any stockholder,
partner, officer, director or agent of, or with any entity controlling,
controlled by or under common control with, Petrolink, (e) all contracts which
purport to restrict business activities or use of information, including any
covenants not to compete or contracts imposing exclusive dealing obligations,
(f) all management, operating, service, membership, joint venture, partnership
and teaming agreements, (g) all contracts and agreements pursuant to which there
is an agreement to indemnify or hold any person or entity harmless or to pay
liquidated damages of any kind, with a contingent liability in excess of One
Hundred Thousand Dollars ($100,000), (h) all collective bargaining agreements,
(i) all contracts and agreements providing for the acquisition or disposition of
an asset with a value of One Hundred Thousand Dollars ($100,000) or more, and
(j) all contracts and agreements entered into other than in the ordinary course
of business.
"MUTUAL RELEASE" means a mutual written release of all claims effective as
of the Closing Date between Seller and Petrolink in the form and substance of
Exhibit B or otherwise reasonably satisfactory to both parties to this
Agreement.
"PERMITTED ENCUMBRANCES" means (a) all statutory Liens for Taxes not in
excess of $100,000 in the aggregate which are not yet due and payable or which
are being contested in good faith by appropriate proceedings, (b) all
mechanics', carriers', workmen's, repairmen's, maritime or other Liens not in
excess of $100,000 in the aggregate arising or incurred in the ordinary course
of business or which are being contested in good faith by appropriate
proceedings, (c) all statutory Liens relating to deposits made in the ordinary
course of business in connection with providing workers' compensation,
unemployment insurance and other types of social security benefits, (d) all
easements and rights-of-way of record and minor charges or encumbrances incurred
in the ordinary course of business which, in all cases, do not impair in any
material respect the usefulness or the value of the affected assets, (e) all
interests or title of any lessor under any lease under which Petrolink is the
lessee, and (f) all Existing Liens.
"REQUIRED CONSENTS" means all consents, orders, approvals, authorizations,
declarations and filings (including but not limited to consents, orders, and
approvals by, and authorizations of, and filings with, any Governmental
Authority or any party to a Material Contract or to an Existing Lien) required
to consummate the transactions contemplated by this Agreement without violation
of the laws, rules or regulations of any such Governmental Authority and without
breach, default or termination of any Material Contract or foreclosure on an
Existing Lien.
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"RETENTION PACKAGE" means the document attached as Exhibit A to Schedule
12.
"SCHEDULES" means the schedules which are referenced in, attached to, and
which are a part of this Agreement.
"SUBSIDIARY" with respect to any corporation means another corporation
controlled by it.
"TAXES" means all taxes, charges, fees, levies or other assessments of
whatever kind or nature, including, without limitation, all net income, gross
income, gross receipts, premium, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise, estimated,
severance, stamp, occupancy or property taxes, custom duties, fees, assessments
or charges of any kind whatsoever, together with any interest, penalty, or
addition to tax, imposed by any Governmental Authority.
"TAX RETURNS" means, collectively, all reports, estimates, declarations of
estimated tax, claims for refund, information statements and returns required to
be prepared or filed in connection with, any Taxes, including any schedule,
attachment and amendment.
"WORKING CAPITAL" means the excess or deficiency of Current Assets (plus
any deferred charter hire for the Aldebaran and Deneb charters (Schedule 9,
Items 9 and 11) not included in Current Assets) minus Current Liabilities. A
sample computation of Working Capital, Current Assets and Current Liabilities,
derived from the financial statements of Petrolink as of December 31, 2001, is
attached as Schedule 3.
SECTION 1.2 KNOWLEDGE. As used in this Agreement with respect to either
party, the phrase "to the knowledge of" means the actual knowledge of any
officer, director or managerial personnel of such party or of any of its
Subsidiaries, and, in the case of Seller, of Crowley.
ARTICLE 2
PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, Seller shall sell,
transfer and assign to Buyer free and clear of all Liens, and Buyer shall
purchase and accept from Seller, all of the Shares.
ARTICLE 3
PURCHASE PRICE AND PAYMENT
SECTION 3.1 PURCHASE PRICE.
(a) Subject to Section 3.2, the aggregate purchase price ("Purchase
Price") for the Shares shall be Eighteen Million Dollars ($18,000,000).
SECTION 3.2 PAYMENT.
(a) Upon the execution of this Agreement, Buyer shall deliver or
shall cause to be delivered to Seller a cash deposit (the "Deposit") in
the amount of One Million Dollars ($1,000,000) to such account as Seller
shall designate, to be and remain non-
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refundable other than as provided in Section 14.3(a) of this Agreement.
Any and all interest earned with respect to the Deposit shall be solely
for the benefit of Seller and shall not apply to the Purchase Price.
(b) On the Closing Date, the Deposit shall be credited to the
Purchase Price, and (i) Buyer shall pay Five Hundred Thousand
Dollars ($500,000) in cash or by wire transfer of immediately
available funds to the Escrow Agent to be held and disbursed
pursuant to the terms and conditions of the Escrow Agreement,
and (ii) Buyer shall pay Sixteen Million Five Hundred Thousand
Dollars ($16,500,000) in cash or by wire transfer of
immediately available funds to or for the benefit of Seller as
Seller may direct, without any deduction for fees or expenses.
ARTICLE 4
CLOSING
SECTION 4.1 DATE AND PLACE OF CLOSING. The consummation of the purchase
and sale of the Shares hereunder is hereby scheduled to occur at 10:00 a.m.
(California time) on May 15, 2002, at the offices of Crowley, located at 000
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, or, if the conditions precedent set forth in
Articles 5 and 6 have not been satisfied by such date, the Closing shall occur
(subject to Article 14) on the last day of the month in which the conditions
precedent set forth in Articles 5 and 6 have been satisfied (or waived), or on
any other day that the parties shall mutually agree.
SECTION 4.2 SIMULTANEOUS EVENTS. Except as otherwise specifically provided
in this Agreement, all requirements with respect to the Closing shall, to the
extent fulfilled, be considered and deemed to have taken place simultaneously,
and no delivery or payment made on the Closing Date shall be considered or
deemed to have been made until all deliveries, payment and closing transactions
have been accomplished on such date.
SECTION 4.3 SELLER'S DELIVERIES. At the Closing, and upon satisfaction or
waiver of the conditions set forth in Article 6, Seller shall deliver or cause
to be delivered to Buyer:
(a) The original certificates representing the Shares, duly
endorsed;
(b) All closing certificates and other Acquisition Documents
required to be delivered by Seller pursuant to the terms of this
Agreement;
(c) A closing receipt for all of Buyer's deliveries.
SECTION 4.4 BUYER'S DELIVERIES. At the Closing, and upon satisfaction or
waiver of the conditions set forth in Article 5, Buyer shall deliver or cause to
be delivered:
(a) To Seller:
(i) The portion of the Purchase Price due on such date as
provided in Section 3.2(b)(ii);
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(ii) All closing certificates and other Acquisition Documents
required to be delivered by Buyer pursuant to the terms
of this Agreement;
(iii) A closing receipt for all of Seller's deliveries.
(b) To the Escrow Agent:
(i) The portion of the Purchase Price described in Section
3.2(b)(i).
SECTION 4.5 RETIREMENT OF INTERCOMPANY INDEBTEDNESS AND RELEASE OF LIENS.
Prior to Closing (a) Seller shall cause the Intercompany Indebtedness to be paid
to Seller, and Seller shall deliver evidence of satisfaction of the Intercompany
Indebtedness to Buyer and (b) Seller shall cause the mortgages and other Liens
listed in Schedule 1 to be released and Seller shall deliver evidence of such
release to Buyer.
SECTION 4.6 MUTUAL RELEASE. As part of the Closing deliveries, Seller
shall cause Petrolink to execute and deliver the Mutual Release to Seller and
Seller shall execute and deliver the Mutual Release to Petrolink, but the
failure of either such deliveries shall not be a condition to the obligations of
Seller hereunder.
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the acquisition of the Shares and
to make the deliveries set forth in Section 4.4 above are expressly subject to
the fulfillment, on or prior to the Closing Date, of all of the conditions
precedent contained in this Article, each of which may be waived in writing in
the exercise of the sole discretion of Buyer.
SECTION 5.1 DELIVERIES. Seller shall have delivered to Buyer:
(a) A certificate, executed by a duly authorized officer of Seller,
in form and substance reasonably satisfactory to Buyer, certifying to
Buyer that:
(1) the representations and warranties made by Seller in
Article 7 of this Agreement are true and correct on the Closing Date with
the same effect as though made on and as of such date, except: (i) only as
and to the extent that such representations and warranties may have been
made not true or correct by any occurrence of events or any changes in
circumstance between the date of this Agreement and the Closing Date which
have not had or which are not reasonably likely to have a Material Adverse
Effect and (ii) Petrolink and each Petrolink Subsidiary shall have zero
cash;
(2) Seller has complied with and satisfied all covenants and
agreements of Seller to be satisfied at or prior to the Closing as set
forth herein.
(3) neither Petrolink nor any of its Subsidiaries has any
obligation whatsoever under the Amended and Restated Subsidiary Guaranty
and/or under the Amended and Restated Credit Agreement both dated on or
about October 31, 2001 and referred to in item 18 of Schedule 9.
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(b) Except as otherwise requested by Buyer, the written resignations
of all of the officers and directors of Petrolink except Xxxxx Xxxxxx and
Xxxxxx Xxxxxx.
SECTION 5.2 CONSENTS. All Required Consents shall have been obtained.
SECTION 5.3 NO ADVERSE PROCEEDINGS PENDING. No action or proceeding which
seeks to restrain, prohibit or invalidate the transactions contemplated by this
Agreement shall have been instituted before any Governmental Authority.
SECTION 5.4 MUTUAL RELEASE. Seller shall have executed and delivered the
Mutual Release to Petrolink.
SECTION 5.5 EMPLOYMENT AGREEMENTS. Xxxxx Xxxxxx and Xxxxxx Xxxxxx shall
have entered into employment contracts with Petrolink in the form and substance
of Exhibits C and D.
SECTION 5.6 MARAD APPROVAL. Seller shall have delivered to Buyer from the
U.S. Maritime Administration either written advice that Section 37 of the
Shipping Act, 1916 (46 U.S.C. App. 835) is not operative as of the Closing Date
or written approval under such statute of the transactions contemplated by this
Agreement.
SECTION 5.7 SHORT TERM CHARTERS. Xxxxxxx, Petrolink and Buyer shall have
entered into short-term charters, to be effective immediately after the Closing,
for the Afrarmax vessels Aldebaran and Deneb.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the sale of the Shares, and to
make the deliveries set forth in Section 4.3 above, are expressly subject to the
fulfillment, on or prior to the Closing Date, of all of the conditions precedent
contained in this Article, each of which may be waived in writing in the
exercise of the sole discretion of Seller.
SECTION 6.1 DELIVERIES. Buyer shall have delivered to Seller a
certificate, executed by a duly authorized officer of Buyer, in form and
substance reasonably acceptable to Seller certifying to Seller that:
(a) the representations and warranties made by Buyer in this
Agreement are true and correct in all material respects on the Closing
Date with the same effect as though made on and as of such date, except
only as and to the extent that such representations and warranties may
have been made not true or correct by any occurrence of events or any
changes in circumstance between the date of this Agreement and the Closing
Date which have not had or which are not reasonably likely to have a
Material Adverse Effect on Seller; and
(b) Buyer has complied with and satisfied all covenants and
agreements of Buyer to be satisfied at or prior to the Closing as set
forth herein.
SECTION 6.2 CONSENTS. All Required Consents shall have been obtained.
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SECTION 6.3 NO ADVERSE PROCEEDINGS PENDING. No action or proceeding which
seeks to restrain, prohibit or invalidate the transactions contemplated by this
Agreement shall have been instituted before any Governmental Authority.
SECTION 6.4 MARAD APPROVAL. Seller shall have obtained from the U.S.
Maritime Administration either written advice that Section 37 of the Shipping
Act, 1916 (46 U.S.C. App. 835) is not operative as of the Closing Date or
written approval under such statute of the transactions contemplated by this
Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that, as of the date of
this Agreement, all of the following are true and correct:
SECTION 7.1 OWNERSHIP OF PETROLINK.
(a) Seller has good and marketable title to 124,500 Shares free and
clear of all Liens and has full legal right, power and authority to enter
into this Agreement and to sell, transfer, assign and deliver the Shares.
(b) The 124,500 Shares constitute all of the outstanding shares of
capital stock of Petrolink and by the purchase of the Shares hereunder,
Buyer will receive good and absolute title to 100% of the outstanding
capital stock of Petrolink free and clear of all Liens.
(c) Seller has not granted any option or right, or entered into any
agreement or commitment, which now, or upon the passage of time or the
occurrence of any event may require Seller to transfer any of the Shares
to any third party.
SECTION 7.2 DUE ISSUANCE OF SHARES. The Shares have been duly authorized,
validly issued, fully paid and are nonassessable.
SECTION 7.3 CAPITALIZATION OF PETROLINK.
(a) The authorized capital stock of Petrolink consists of 300,000
shares of common stock, of which 124,500 shares are issued and
outstanding.
(b) No third party has any right of first refusal or preemptive
right in connection with the Shares, and there are no outstanding options,
warrants, convertible or exchangeable securities, nor any agreement or
commitment, that could obligate Petrolink to issue or purchase shares of
its capital stock.
SECTION 7.4 ORGANIZATION OF PETROLINK.
(a) Petrolink and each of its Subsidiaries is a corporation, duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, and
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has full corporate authority to own, lease and operate its properties and
to carry on its business as now conducted.
(b) Petrolink and each of its Subsidiaries is duly qualified and
authorized to do business and is in good standing in each jurisdiction in
which such qualification or authorization is required.
(c) True, correct and complete copies of the articles of
incorporation and bylaws of Petrolink and each of its Subsidiaries are
attached hereto as Exhibit E.
(d) Petrolink has four wholly owned Subsidiaries named: (1) Offshore
Marine Services, Inc. ("OMS"), a Delaware corporation which operates
certain vessels; (2) Nuelink, Inc., a Delaware corporation which holds
title to a workboat; (3) Harlink, Inc., a Delaware corporation, which
holds title to a workboat; and (4) OMIP, Inc. a Texas corporation which
holds title to certain real property utilized by OMS. Reference in this
Agreement to "Petrolink" shall, as the context requires, include reference
to OMS, Nuelink, Inc., Harlink, Inc. and OMIP, Inc. Other than the
foregoing, Petrolink does not own, directly or indirectly, any capital
stock or other equity securities of, or otherwise control, any
corporation, partnership, joint venture, limited liability company or
other business entity.
(e) Petrolink owns 100% of the issued and outstanding stock of each
of its Subsidiaries. Petrolink has not granted any option or right which
now or upon the passage of time or the occurrence of any event, may
require Petrolink to transfer any of the shares of any Subsidiary to any
third party.
(f) No Person has any right of first refusal or preemptive right in
connection with the shares of any Petrolink Subsidiary and there are no
outstanding options, warrants, convertible or exchangeable securities or
agreements or commitments that could obligate any Subsidiary to issue or
purchase shares of its common stock.
SECTION 7.5 AUTHORIZATION.
(a) Seller has full corporate power and authority and has taken all
required action necessary to permit it to execute and deliver this
Agreement and the other Acquisition Documents to which it is or may become
a party and to perform its obligations thereunder.
(b) This Agreement and each other Acquisition Document to be
executed and delivered by Seller in accordance with the terms of this
Agreement, constitutes or will constitute upon its execution and delivery,
the valid and legally binding obligation of Seller enforceable against
Seller in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws which affect the enforcement of
creditors' rights generally and by equitable limitations on specific
remedies.
(c) All Required Consents are listed in Schedule 4. Subject to the
granting of the Required Consents, the execution, delivery and performance
by Seller of this
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Agreement and the other Acquisition Documents, will not result in any
violation of, be in conflict with or constitute a default under, any
Applicable Law, Material Contract, judgment, decree or order to which
Seller is a party or is bound, or any articles of incorporation, bylaws or
agreement of Seller, Petrolink, or any Petrolink Subsidiary.
SECTION 7.6 FINANCIAL STATEMENTS. The following financial statements
(collectively, the "Financial Statements") are attached hereto as Exhibit F:
(a) The audited balance sheet of Petrolink and its Subsidiaries as
of December 31, 2000, and the related statements of income and cash flows
for the fiscal year then ended;
(b) The unaudited balance sheets of Petrolink and its Subsidiaries
as of December 31, 2001 and the related unaudited statements of income for
the twelve-month period then ended (the "Interim Statements"). All Interim
Statements have been reviewed by the accounting firm of Deloitte & Touche,
LLP ("D&T") on behalf of Seller and D&T has reported to Seller that based
on such review D&T is not aware of any material modifications that should
be made to the Interim Statements in order for them to be in conformity
with accounting principles generally accepted in the United States of
America.
The Financial Statements were prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied, subject, in the
case of the Interim Statements, to normal period-end adjustments. The Financial
Statements are complete and accurate and fairly present in all material respects
the financial condition of Petrolink and its Subsidiaries as of the respective
dates thereof and the results of operations, subject, in the case of Interim
Statements, to normal period-end adjustments.
SECTION 7.7 TAXES.
(a) All Tax Returns required to be filed through and including the
date hereof in connection with the operations of Petrolink and its
Subsidiaries are true, complete and correct in all material respects and
have been properly and timely filed. Except with respect to the Tax Return
for the year ending December 31, 2001, neither Petrolink nor any entity
filing a Tax Return on behalf of Petrolink or any of its Subsidiaries has
requested any extension of time within which to file any such Tax Return,
which Tax Return has not since been filed.
(b) All material Taxes required to be paid or withheld and deposited
through and including the date hereof in connection with the operations of
Petrolink and its Subsidiaries have been duly and timely paid or withheld
and deposited by or on behalf of Petrolink or its Subsidiaries. Petrolink
and its Subsidiaries have properly withheld or collected all amounts
required by law for income Taxes and employment Taxes relating to its
employees, creditors, independent contractors and other third parties, and
for sales Taxes on sales, and such withheld or collected amounts have been
properly and timely remitted to the appropriate Governmental Authority.
(c) The Financial Statements reflect that Petrolink and its
Subsidiaries have adequately provided for any Taxes of Petrolink and its
Subsidiaries through
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December 31, 2001, and Petrolink and its Subsidiaries maintain adequate
reserves for all Taxes.
(d) Neither Petrolink nor any entity filing a Tax Return on behalf
of Petrolink or any of its Subsidiaries has (i) had a Tax deficiency
proposed, asserted or assessed against it with respect to any Tax, (ii)
except with respect to the audit for fiscal years 1993 and 1994 of OMI
Corp. (now Seller) (the "Audit"), executed any waiver of any statute of
limitations on the assessment or collection of any Tax, or (iii) been
delinquent in the payment of any Tax.
(e) Except with respect to the Audit, no Tax Return filed by or on
behalf of Petrolink or any of its Subsidiaries is the subject of any
current audit or the subject of any other current action by any
Governmental Authority. Except with respect to the Audit, no Tax Return
filed by or on behalf Petrolink or any of its Subsidiaries has been the
subject of an audit during the five (5) year period ending on the date
hereof. Except with respect to the Audit, neither Petrolink nor any
Affiliate thereof has received any notice from any Governmental Authority
of any pending examination or any proposed deficiency, addition,
assessment, demand for payment or adjustment relating to or affecting
Petrolink, its Subsidiaries or any assets or properties of Petrolink and
its Subsidiaries.
(f) Petrolink and each of its Subsidiaries shall, as of the Closing
Date, have terminated all Tax allocation agreements or Tax sharing
agreements to which any of them are a party and shall ensure that such
agreements are of no further force or effect as to any of them on and
after the Closing Date, and there shall be no liability of any of them
under any such agreement.
(g) No claim has been made or, to the knowledge of Seller or
Petrolink, threatened, by a Governmental Authority in a jurisdiction where
Petrolink or any of its Subsidiaries does not file Tax Returns that they
are subject to Taxes by that jurisdiction.
(h) Seller shall not make an election under Treasury Regulation
Section 1.1502-20(g) with respect to the transaction contemplated by this
Agreement.
(i) Petrolink and each of its Subsidiaries has taken no position
that requires disclosure under Section 6662 of the Code or under any
similar provision relating to state and local Taxes.
SECTION 7.8 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Petrolink nor any
of its Subsidiaries has any material liability or obligation, except (a) as and
to the extent reflected and reserved against in the Financial Statements, (b)
for current liabilities, incurred in the ordinary course of business consistent
with past practice, (c) for obligations of future performance under Material
Contracts, (d) for Permitted Encumbrances, (e) as and to the extent disclosed in
Schedules 2 and 5, and (f) as otherwise permitted under Section 9.2 of this
Agreement.
SECTION 7.9 LITIGATION. Except as disclosed in Schedule 5 there is no
litigation, action, suit, proceeding, or investigation pending or, to the
knowledge of Seller, threatened in or before any Governmental Authority against
Petrolink or any of its Subsidiaries, and there is no
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unsatisfied judgment, order, writ, injunction or decree against Petrolink or any
of its Subsidiaries or which could materially adversely affect the ability of
Seller to perform hereunder.
SECTION 7.10 INSURANCE. A complete list of all material insurance policies
(the "Insurance Policies") held by Petrolink or Seller covering Petrolink, its
Subsidiaries or any of their respective properties or assets, is contained in
Schedule 6. All such Insurance Policies are, and they or other policies have
been, in full force and effect so that substantially the same coverages as those
provided by the Insurance Policies have been in effect for the past three (3)
years. True, correct and complete copies of all material Insurance Policies have
been delivered to and/or made available to Buyer for copying and inspection.
Buyer acknowledges that certain of the foregoing policies and benefits
thereunder are, as indicated on Schedule 6, provided through Xxxxxxx'x insurance
program. All such Xxxxxxx-provided insurance and benefits shall be terminated
effective as of the Closing, and thereafter any replacement of such insurance
policies and benefits desired by Buyer and/or Petrolink will be the sole
responsibility and for the account of Buyer and/or Petrolink.
SECTION 7.11 EQUIPMENT. Except for Permitted Encumbrances, Petrolink and
each of its Subsidiaries has good and marketable title to or a valid charter,
leasehold or license interest in all vessels and equipment used by it in
connection with its business, free and clear of all Liens. A list of vessels and
equipment owned, chartered or leased by Petrolink and its Subsidiaries (the
"Equipment"), each item of which has an original cost or an annual rent
obligation in excess of Twenty Five Thousand Dollars ($25,000), is set forth in
Schedule 7. All such vessels and Equipment are "as is, where is." Except as
provided on Schedule 7, each Petrolink-owned vessel has a current United States
Coast Guard inspection certificate with no outstanding citations or
requirements. For purposes of this Section 7.11, "Petrolink-owned vessels"
includes vessels owned by any Petrolink Subsidiary.
SECTION 7.12 CONDUCT OF BUSINESS; ABSENCE OF CERTAIN CHANGES. Except as
set forth in Schedule 8, and except as otherwise permitted under Section 9.2 of
this Agreement, since December 31, 2000, Petrolink and each of its Subsidiaries
has conducted its business only in the usual and ordinary course and:
(a) There has been no damage to or destruction or loss of physical
property which individually exceeded One Hundred Thousand Dollars
($100,000) or in the aggregate exceeded Two Hundred Fifty Thousand Dollars
($250,000);
(b) Neither Petrolink nor any of its Subsidiaries has declared or
paid any dividend or made any distribution on its capital stock, or
redeemed, purchased or otherwise acquired any capital stock;
(c) There has been no sale, transfer or other disposition of assets
or commitment therefor other than sales in the ordinary course of business
consistent with past practice;
(d) There have not been any loans made by Petrolink or any of its
Subsidiaries to any of their respective employees, officers or directors,
other than travel advances and other advances made in the ordinary course
of business;
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(e) Except for Permitted Encumbrances, no Lien has been placed on
any of the assets of Petrolink or any of its Subsidiaries; and
(f) the charges, accruals and reserves for unpaid Taxes, including
intercompany Tax accruals, have been accrued and reserved by Petrolink and
its Subsidiaries in accordance with generally accepted accounting
principles and in a manner consistent with past practice;
(g) Neither Petrolink nor any of its Subsidiaries has amended,
terminated or entered into any Material Contract;
(h) Neither Petrolink nor any of its Subsidiaries has granted any
material increase in salary, bonus, or benefits to any of their respective
officers or employees.
SECTION 7.13 BOOKS AND RECORDS. The general ledgers and books of account,
and all other books and records of Petrolink (the "Books and Records") fairly
reflect the information presented therein and have been maintained in accordance
with good business practice. True, correct and complete copies of all Books and
Records have been or will prior to Closing be delivered to and/or made available
for copying and inspection by Buyer. Seller makes no representation or warranty
regarding the validity or collectability of any or all accounts or other
receivables of Petrolink or any Petrolink Subsidiary except that such accounts
included in the Financial Statements are stated therein in accordance with GAAP.
SECTION 7.14 MATERIAL CONTRACTS. Schedule 9 contains a complete and
accurate list of all Material Contracts. True, correct and complete copies of
all Material Contracts have been delivered to and/or made available to Buyer for
copying and inspection. Each Material Contract is a legal, valid, binding, and
enforceable obligation of Petrolink or of a Petrolink Subsidiary, and to the
knowledge of Seller (i) is a legal, valid, binding, and enforceable obligation
on every other party thereto, and (ii) is in full force and effect in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
which affect the enforcement of creditors' rights generally and by equitable
limitations on specific remedies. To the knowledge of Seller, and subject to
receipt of the Required Consents, there is no event which has occurred or an
existing condition which constitutes, or which, with notice and the passage of
time, would constitute a default or breach under any Material Contract by
Petrolink or any of its Subsidiaries.
SECTION 7.15 GOVERNMENT AUTHORIZATIONS AND COMPLIANCE.
(a) All material licenses, franchises, permits, consents, approvals,
authorizations and orders of Governmental Authorities held by Petrolink or
any of its Subsidiaries which are in effect and which are used to operate
its business and/or own its assets (collectively, the "Authorizations")
are set forth in Schedule 10.
(b) Except as set forth in Schedule 11, the Authorizations
constitute all material licenses, franchises, permits, registrations,
consents, approvals, authorizations and orders required for the conduct by
Petrolink and its Subsidiaries of their respective businesses as currently
conducted and for Petrolink and its Subsidiaries to own, lease, use
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and operate their respective properties at the places and in the manner in
which such properties are currently owned, leased, used and operated.
SECTION 7.16 LABOR MATTERS. To the knowledge of Seller, Petrolink is in
material compliance with all Applicable Laws with respect to employment
practices. No present or former director, officer or employee of Petrolink or
any of its Subsidiaries is or will be eligible to receive any bonus, commission,
severance pay, lump sum or other payment, compensation or other remuneration
from Petrolink or any of its Subsidiaries as a result of any of the transactions
contemplated by this Agreement except for the Retention Package. There are no
employment or consulting contracts or arrangements by which Petrolink or any of
its Subsidiaries is bound (other than those terminable at will with no penalty
or other payment required) with any directors, officers, or employees of or
associated with Petrolink or any of its Subsidiaries, except as set forth in the
first six (6) items on Schedule 9. There is no organized labor strike, dispute,
slowdown or stoppage, or collective bargaining or unfair labor practice claim
pending or, to the knowledge of Seller, threatened against or affecting
Petrolink or any of its Subsidiaries that would constitute a Material Adverse
Effect. To the knowledge of Seller, there is no factual basis for any unfair
labor practice claim against Petrolink or any of its Subsidiaries that would
constitute a Material Adverse Effect. Neither Petrolink nor any of its
Subsidiaries is a party to a collective bargaining agreement.
SECTION 7.17 ERISA; BENEFIT PLANS.
(a) Except as set forth in Schedule 12: Neither Petrolink nor any of
its Subsidiaries offers, maintains or sponsors, and is not required to
make contributions to any pension, profit sharing, thrift or other
retirement plan, employee stock ownership plan, deferred compensation,
stock ownership, stock purchase, bonus or other incentive plan, severance
plan, health or group insurance plan, welfare plan, or other compensation
or benefit plan, (each a "Benefit Plan"), including, without limitation,
any employee benefit plan within the meaning of Section 3(3) of ERISA.
(b) With respect to each Benefit Plan described in Schedule 12: (1)
if intended to qualify under Section 401(a) of the Code, such plan has
been determined by the IRS to be qualified and its trust to be exempt from
taxation under Section 501(a) of the Code, (2) such plan has been
administered and enforced in material compliance with its terms and all
Applicable Laws, regulations and rulings, (3) no breach of fiduciary duty
has occurred with respect to which Petrolink, any of its Subsidiaries, or
any such Benefit Plan may be liable or otherwise damaged in any material
respect, (4) no material disputes with, nor any audits or investigations
by, any Governmental Authority are pending or, to the knowledge of Seller,
threatened, (5) no "prohibited transaction" within the meaning of either
Section 4975(c) of the Code or Section 406 of ERISA has occurred with
respect to which Petrolink, any of its Subsidiaries, or any such Benefit
Plan may be liable or otherwise damaged in any material respect, (6) all
contributions, premiums, and other payment obligations have been accrued
on the Financial Statements in accordance with generally accepted
accounting principles, and, to the extent due, have been made on a timely
basis, in all material respects, (7) all contributions or benefit payments
made or required to be made under such plan meet the requirements for
deductibility under the Code, (8) Petrolink and each Subsidiary has
expressly reserved in itself the right to
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amend, modify or terminate such plan, or any portion of it, at any time
without liability to itself, and (9) no such plan requires Petrolink to
continue to employ any employee or director.
(c) None of the Benefit Plans described in Schedule 12 is a
"multiemployer plan," as that term is defined in Section 3(37) of ERISA.
SECTION 7.18 TRADEMARKS. All registered trademarks, trade names, and
protected rights to use any trademark or tradename, which are owned by Petrolink
or any of its Subsidiaries, are set forth in Schedule 13. To the knowledge of
Seller, the use by Petrolink or any of its Subsidiaries of the foregoing in the
operation of Petrolink's or such Subsidiaries business as presently conducted
does not infringe on the rights of any other person or entity.
SECTION 7.19 REAL PROPERTY. Subject to Permitted Encumbrances, Petrolink
and each of its Subsidiaries has good and marketable title or valid leasehold
interests in and to the real property (the "Real Property") described in
Schedule 14. There is not pending, or to the knowledge of Seller, threatened any
condemnation, eminent domain or similar proceeding with respect to any of the
Real Property.
SECTION 7.20 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 15:
(a) Petrolink and its Subsidiaries have obtained all environmental
permits required to carry on their businesses as now conducted, are in
compliance with the terms and conditions of all such environmental permits
and are in compliance with all applicable Environmental Laws, except for
any of the foregoing that would not reasonably be expected to constitute a
Material Adverse Effect.
(b) No Hazardous Material (i) is presently maintained, used,
generated, or permitted to remain in place by Petrolink of any of its
Subsidiaries in violation of any Environmental Law, (ii) is required by
any Environmental Law to be eliminated, removed, treated or mitigated by
Petrolink or any of its Subsidiaries, given the nature of its present
condition, location, nature, material or maintenance, or (iii) is of a
type, location, material, nature or condition which requires special
notification to third parties by Petrolink or any of its Subsidiaries
under any Environmental Law or under common law.
(c) No complaint has been filed since October 1, 1987 and no
investigation or review is pending or, to the knowledge of Seller,
threatened by any Governmental Authority, with respect to (i) any alleged
violation by Petrolink or any of its Subsidiaries of any Environmental Law
or (ii) any alleged failure by Petrolink or any of its Subsidiaries to
have any environmental permit, certificate, license, approval,
registration or authorization required in connection with their respective
businesses or properties, or (iii) any use, possession, generation,
treatment, storage, recycling, transportation, release or disposal by or
on behalf of Petrolink or any of its Subsidiaries of any Hazardous
Material. Since October 1, 1987, no notice, citation, summons or order has
been received by Petrolink or any of its Subsidiaries, and no notice has
been given by Petrolink or any of its Subsidiaries, with respect to any of
the items in clause (i)-(iii) of the immediately
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preceding sentence, that either (i) requires any action to be taken by
Petrolink or any of its Subsidiaries or any Governmental Authority, which
action has not been taken prior to the date hereof, or (ii) that in any
way limits the actions that could otherwise be taken by Petrolink or any
of its Subsidiaries after the date hereof, and no fine or other sanction
has been assessed or imposed with respect to any of the items in clause
(i)-(iii) of the immediately preceding sentence, which has not been paid,
has not expired, or has not otherwise been satisfied.
(d) Since October 1, 1987, neither Petrolink nor any of its
Subsidiaries has received any request for information, notice of claim,
demand or notification that it is or that indicates that it may be a
"potentially responsible party" with respect to any investigation or
remediation of any threatened or actual release of any Hazardous
Materials.
(e) Since October 1, 1987, no notice has been received by Petrolink
or any of its Subsidiaries with respect to the listing or proposed listing
of any property currently or previously owned, operated or leased by
Petrolink or any of its Subsidiaries on the National Priorities List
promulgated pursuant to CERCLA, CERCLIS or any similar state list of sites
requiring investigation or cleanup.
SECTION 7.21 BROKERS. Other than Xxxxxxx Xxxxx Xxxxxx, neither Petrolink
(nor any of its Subsidiaries) nor Seller has dealt with any broker, finder,
investment banker or similar agent with respect to the transactions contemplated
by this Agreement. All fees and costs of Xxxxxxx Xxxxx Barney shall be for the
account of Seller.
SECTION 7.22 COMPLIANCE WITH LAW. To the knowledge of Seller, Petrolink
and its Subsidiaries are operating in compliance with all applicable Laws,
except for violations which would not, singly or in the aggregate, constitute a
Material Adverse Effect.
SECTION 7.23 INSURANCE COVERAGE REGARDING LITIGATION. Except as set forth
in Schedule 16, all Losses of Petrolink arising out of, resulting from or
relating to any litigation described on Schedule 5 are covered by the Insurance
Policies (or the predecessor policies referred to in Section 7.10), subject to
the terms and conditions of the Insurance Policies (and predecessor policies).
SECTION 7.24 FULL DISCLOSURE. This Agreement and the Acquisition Documents
delivered by Seller to Buyer, its attorneys or agents in connection with the
transactions contemplated by this Agreement, when taken as a whole, do not
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
SECTION 7.25 RELIANCE. The foregoing representations and warranties are
made by Seller with the knowledge and expectation that Buyer is placing complete
reliance thereon in entering into, and performing its obligations under, this
Agreement, and the same shall not be affected in any respect whatsoever by any
investigation heretofore conducted by or on behalf of Buyer, whether in
contemplation of or pursuant to this Agreement or otherwise.
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ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that, as of the date of
this Agreement, all of the following are true and correct:
SECTION 8.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Bermuda and has full
corporate authority to own, lease and operate its properties and to carry on its
business as now conducted. True, correct and complete copies of the articles of
incorporation and bylaws of Buyer have been delivered to and/or made available
for copying and inspection by Seller.
SECTION 8.2 AUTHORIZATION.
(a) Buyer has full corporate power and authority and has taken all
required action necessary to permit it to execute and deliver this
Agreement and the other Acquisition Documents to which it is or may become
a party and to perform its obligations thereunder.
(b) This Agreement, and each other Acquisition Document to be
executed and delivered by Buyer in accordance with the terms of this
Agreement constitutes or will constitute upon its execution and delivery
the valid and legally binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws which affect the enforcement of
creditors' rights generally and by equitable limitations on specific
remedies.
(c) Subject to the granting of the Required Consents, the execution,
delivery and performance by Buyer of this Agreement and the other
Acquisition Documents will not result in any violation of, be in conflict
with or constitute, a default under any Applicable Law, contract,
agreement, instrument, judgment, decree or order to which Buyer is a party
or is bound or the articles of incorporation and bylaws or other agreement
of Buyer.
SECTION 8.3 BROKERS. Buyer has not dealt with any broker, finder,
investment banker or similar agent with respect to the transactions contemplated
by this Agreement.
SECTION 8.4 INVESTMENT INTENT. Buyer represents and acknowledges the
following with regard to the Shares:
(a) Buyer is acquiring the shares for its own account and for
investment only, and not with a view toward, or for sale in connection
with, any distribution of any of the Shares in violation of the Securities
Act of 1933, as amended ("Securities Act") or any rule or regulation
promulgated by the Securities and Exchange Commission or any state
securities law or regulation. Buyer has sufficient experience in business,
financial and investment matters to be able to evaluate the merits and
risks involved in the purchase of the Shares and to make an informed
investment decision with respect to such purchase.
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(b) Buyer understands that the Shares have not been registered under
the Securities Act and are, therefore, "restricted securities" within the
meaning of Rule 144 under the Securities Act, and the Shares cannot be
sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption is then available.
SECTION 8.5 LITIGATION. There is no litigation, action, suit, proceeding,
or investigation pending or, to the knowledge of Buyer, threatened, in or before
any Governmental Authority, and there is no unsatisfied judgment, order, writ,
injunction, or decree, which relates to the transactions contemplated by this
Agreement or could materially adversely affect the ability of Buyer to perform
hereunder.
ARTICLE 9
SELLER'S COVENANTS
SECTION 9.1 ACCESS TO INFORMATION. Seller shall permit, and shall cause
Petrolink and its Subsidiaries to permit, Buyer, its counsel and its other
representatives to have access, upon reasonable notice and during normal
business hours, throughout the period prior to the Closing, to the Equipment,
the Real Property, the Material Contracts, and the Books and Records, and to any
key officers of Petrolink and its Subsidiaries, and shall furnish, and shall
cause Petrolink and its Subsidiaries to furnish, Buyer during such period with
all of such other information concerning the business affairs of Petrolink and
its Subsidiaries as Buyer or its counsel or such other representatives may
reasonably request.
SECTION 9.2 CONDUCT OF BUSINESS. During the period between the date of
execution of this Agreement and the Closing Date:
(a) Seller shall cause Petrolink and each of its Subsidiaries to:
(1) maintain its corporate existence and conduct its business in the usual
and ordinary course, (2) use reasonable efforts to preserve its business
intact and retain its Authorizations in the usual and ordinary course of
its business, (3) maintain all Insurance Policies, and (4) maintain the
Books and Records in its usual, regular and ordinary manner.
(b) Seller shall not, and shall not permit Petrolink or any of its
Subsidiaries to do any of the following, directly or indirectly: (1)
terminate the services of any present employee except in the ordinary
course of business or for cause shown, (2) amend its articles of
incorporation or by-laws, (3) acquire or dispose of any material
properties or assets other than in the ordinary course of business
consistent with past practice, (4) subject any of its properties or assets
to any Lien other than pursuant to existing credit facilities in the
ordinary course of business consistent with past practice, (5) redeem,
purchase or otherwise acquire any of its outstanding capital stock, (6)
modify, amend, cancel or terminate any Material Contract except for any
modification, amendment, cancellation or termination which would not
result in a Material Adverse Effect, (7) make any change in its accounting
methods or practices, (8) without Buyer's prior consent, not to be
unreasonably withheld, enter into new Material Contracts (other than
single-voyage charters and bunkering contracts) with respect to which
Petrolink or any of its Subsidiaries has liabilities and obligations for
more than One Hundred Thousand Dollars
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($100,000) in respect of each such new Material Contract, (9) increase the
compensation or benefits payable or to become payable to any officer,
director, or employee of Petrolink or any of its Subsidiaries or make or
enter into any bonus payment or arrangement with any officer, director, or
employee other than (i) bonus payments to which Petrolink or any of its
Subsidiaries is committed as of the date of this Agreement and which are
listed on Schedule 9 and (ii) raises paid to non-officer employees in the
ordinary course of business consistent with past practice, (10) issue or
authorize any securities or grant options, warrants or other rights to
acquire its securities, (11) declare or pay any dividend or make any
distribution on any capital stock (except as noted in the last sentence of
this Section 9.2(b)), or (12) commit or agree to do any of the foregoing.
Notwithstanding the foregoing, the cash of Petrolink and each Petrolink
Subsidiary shall be zero on the Closing Date, having been either used to
pay expenses or distributed to Seller.
(c) Seller will not, and will cause Petrolink and each of its
Subsidiaries not to, take any of the following actions without the written
consent of Buyer, which consent shall not be unreasonably withheld: (i)
make, revoke, or amend any Tax election relating to Petrolink or any of
its Subsidiaries, other than an election made in the ordinary course of
business; (ii) execute any waiver of restrictions on assessment or
collection of any Taxes from Petrolink or any of its Subsidiaries, or
(iii) enter into or amend any agreement, understanding, or settlement with
any Tax authority with respect to Taxes of Petrolink or any of its
Subsidiaries or with respect to any past or present Affiliate of Petrolink
if such agreement, understanding, or settlement would affect the Tax
liability of Petrolink or any of its Subsidiaries.
SECTION 9.3 ONGOING INFORMATION. From time to time prior to the Closing,
Seller will deliver or cause to be delivered to and/or make available for
copying and inspection by Buyer supplemental information concerning events
subsequent to the date hereof which would render any statement, representation
or warranty in this Agreement or any information contained in any Schedule
inaccurate or incomplete at any time after the date hereof until the Closing
Date.
SECTION 9.4 NONCOMPETITION. In order to induce Buyer to enter into this
Agreement, to ensure Buyer of the full benefit of the sale and transfer of the
Shares hereunder, and to enhance the earnings of Buyer in future years, Seller
undertakes and agrees that, during the three-year period beginning on the
Closing Date, without the prior written consent of Buyer:
(a) Neither Seller nor any Affiliate of Seller shall, directly or
indirectly, own, manage, operate, market, finance, join, control, or
participate in the ownership, management, operation, marketing, financing,
or control of any person or entity which engages in the transshipment (not
currently reserved for U.S.- flag vessels under the U.S. Xxxxx Act) of
crude oil from large bulk vessels unable to enter shallow-water ports
fully laden in the United States Gulf or Atlantic utilizing smaller bulk
vessels in sizes between 40,000 deadweight tons and 150,000 deadweight
tons which will then carry the crude oil to destination ports (hereinafter
"Lightering Services"); provided, however, that the foregoing shall not
prohibit Seller, combined with its Affiliates, from owning, in the
aggregate, securities not in excess of 5% of any class of securities of a
company if such class of securities is registered with the Securities and
Exchange Commission under the
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Securities Exchange Act of 1934 as amended; and further provided that the
foregoing shall not prohibit the Seller or any of its Affiliates from
engaging in salvage or other emergency response work.
(b) Neither Seller nor any Affiliate of Seller shall, directly or
indirectly, persuade or attempt to persuade any customer or prospective
customer of Petrolink or any Subsidiary of Petrolink (i) not to contract
with or continue to contract with Petrolink or any such Subsidiary for the
provision of Lightering Services or (ii) to acquire Lightering Services
from a person or entity other than Petrolink or any such Subsidiary;
(c) Neither Seller nor any Affiliate of Seller shall, directly or
indirectly, without the prior consent of Buyer, persuade or attempt to
persuade any employee or independent contractor of Petrolink or any of its
Subsidiaries, to leave Petrolink's or any such Subsidiaries' employ or
otherwise terminate such person's contractual relationship with Petrolink
or any such Subsidiary, or, with respect to employees, to become employed
by any entity or person other than Petrolink or any such Subsidiary.
Nothing in this Section 9.4 shall be interpreted to prevent, preclude or
in any way limit Seller pursuing and performing Lightering Services, or any
other business, currently reserved for U.S.-flag vessels under the U.S. Xxxxx
Act and activities directly related to and in support of such current Xxxxx Act
work even if the limits or extent of such Xxxxx Act reservation may hereafter
change.
SECTION 9.5. CONFIDENTIAL INFORMATION.
(a) Seller acknowledges and agrees that:
(1) it has had access to commercial information, data and
material regarding the condition, assets, liabilities, business,
operations, affairs and/or prospects of Petrolink and its Subsidiaries
(the "Confidential Information") as a result of its ownership interests
and/or involvement in the operations of Petrolink and its Subsidiaries;
(2) The Confidential Information is confidential and
proprietary, and the development of the Confidential Information
represents a substantial investment having great economic and commercial
value to Petrolink and its Subsidiaries and hence to Buyer as the buyer of
the Shares; and
(3) Buyer, Petrolink, and its Subsidiaries would be
irreparably damaged if any of the Confidential Information was disclosed
to, or used or exploited on behalf of, any entity or person other than
Buyer as the owner of the Shares.
(b) To induce Buyer to enter into and perform this Agreement, Seller
covenants and agrees that neither it nor any of its Affiliates shall at
any time, directly or indirectly, use, exploit or disclose to any third
person, without the prior written consent of Buyer, any Confidential
Information. Notwithstanding the foregoing, Seller and any Affiliate of
Seller may use or exploit Confidential Information to the extent, but only
to the extent, that such Confidential Information: (i) is or becomes
publicly known through no wrongful act of Seller, of any Affiliate of
Seller, or of any third party under any obligation to Buyer, Petrolink or
any Affiliate of Buyer or Petrolink not to disclose such
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Information; or (ii) is disclosed pursuant to the requirement of a
governmental agency or a court of law or otherwise as required by
operation of law.
SECTION 9.6. RELIEF. Seller acknowledges and agrees that (i) the covenants
set forth in Section 9.4 or Section 9.5 are of the essence of this Agreement and
that their existence is a material inducement to Buyer to enter into and perform
this Agreement; (ii) that money damages will be difficult to calculate and may
not adequately compensate Buyer in connection with an actual or threatened
breach by Seller or its Affiliates of any provisions of such Sections; and (iii)
that such covenants contain reasonable limitations as to time, geographical area
and scope of activity to be restrained necessary to protect the Buyer's business
interests. Accordingly, Seller hereby expressly agrees that Buyer shall be
entitled to enforce by injunction or other equitable relief the due and proper
performance and observance of the provisions of Section 9.4 and Section 9.5 and
in addition shall be entitled to pursue any other available remedies at law or
equity, including without limitation the recovery of money damages. If any
provision of Section 9.4 or Section 9.5 shall for any reason be held to be
excessively broad as to time, duration, geographical scope, activity or subject,
it shall be enforceable to the maximum extent compatible with then-applicable
laws.
ARTICLE 10
BUYER'S CONFIDENTIALITY COVENANT
Buyer shall not disclose to any third party, or use for any purpose other
than as contemplated by this Agreement, any confidential information regarding
Xxxxxxx, Seller, Petrolink or any Petrolink Subsidiary other than to: Buyer's
directors, officers, employees, attorneys, accountants, representatives, and
prospective investors and lenders and governmental and quasi-governmental
agencies having a need to know such information in connection with the
transaction contemplated hereby. The preceding sentence shall not apply to
information which (i) was or becomes generally available to the public other
than as a result of a prohibited disclosure by Buyer or any of said parties,
(ii) was or becomes available to Buyer on a non-confidential basis from a source
other than Seller or its representatives, provided that such source is not to
Buyer's knowledge bound by a confidentiality agreement with Seller or otherwise
prohibited from transmitting the information to Buyer, or (iii) was within
Buyer's possession prior to its being furnished to Buyer by Seller, provided
that the source of such information was not known by Buyer to be bound by a
confidentiality agreement with Seller or to be otherwise prohibited from
transmitting the information to Buyer. Buyer shall advise Seller of any request,
including a subpoena or similar legal inquiry, to disclose any such confidential
information, so that Seller can seek appropriate legal relief. This Article 10
shall terminate with respect to information regarding Petrolink and its
Subsidiaries upon Closing but shall survive the Closing with respect to
information regarding Seller and Xxxxxxx. If this Agreement is terminated prior
to Closing, Buyer will return to Seller all of the materials, data and
information relating to Petrolink, all Petrolink Subsidiaries, Seller or Xxxxxxx
made available to Buyer in connection with this Agreement and the obligations of
this Article 10 shall survive such termination. The availability of equitable
and legal remedies referred to in Section 9.6 in favor of Buyer are incorporated
into this Article 10 to be available in favor of Seller to enforce the due and
proper performance and observance of the provisions of this Article 10, and in
addition Seller shall be entitled to pursue any other available remedies at law
or equity, including, without limitation, the recovery of money damages.
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ARTICLE 11
MUTUAL COVENANTS
SECTION 11.1 CONSENT AND CHARTER COOPERATION. During the period between
the date of execution of this Agreement and the Closing Date, each party will
use its best efforts, and Seller will cause Petrolink and its Subsidiaries to
use their respective best efforts, to cooperate in obtaining the Required
Consents and will in good faith negotiate and seek to enter the short-term
charters referred to in Section 5.7. Should the parties elect to Close in the
absence of one or more Required Consents, during the six (6) month period
following the Closing Date, Seller shall, upon Buyer's request, use reasonable
efforts to assist Buyer in its efforts to obtain the same.
SECTION 11.2 NOTICE OF LITIGATION. Each party agrees to notify the other
party promptly if, to the knowledge of such party, any third party shall
institute or shall threaten to institute any litigation relating to this
Agreement, or which would adversely affect any party's rights or ability to
perform this Agreement.
SECTION 11.3 PUBLIC ANNOUNCEMENTS. The parties agree that prior to the
Closing Date neither party shall issue any press release or other public
announcement concerning this Agreement and the acquisition of Petrolink as set
forth herein without obtaining the prior written approval of the other party.
This Section shall not limit the ability of either Seller or Buyer, subject to
any and all confidentiality obligations, to make such disclosures as either
deems necessary in connection with its efforts to secure financing and any
Required Consents or otherwise to satisfy any condition to the Closing.
Notwithstanding the foregoing, if any such release or announcement by a party is
required by Applicable Law or the rules of a stock exchange, such a party may
proceed without the approval of the other party but shall endeavor to give the
other party as much advance notice of the pending release or announcement as
practicable. Upon any announcement or release by either party, the other party
shall be released from the restrictions of this Section 11.3.
SECTION 11.4 EFFORTS. Each party hereto covenants and agrees to cooperate
and to use all commercially reasonable efforts to obtain the satisfaction of the
conditions to the Closing specified in Articles 5 and 6 of this Agreement.
Without limitation to the foregoing: (a) Seller shall use commercially
reasonable efforts to enable Buyer to obtain the satisfaction of the conditions
to Closing specified in Article 5, and (b) Buyer shall use commercially
reasonable efforts to enable Seller to obtain the satisfaction of the conditions
to Closing specified in Article 6.
ARTICLE 12
POST-CLOSING MATTERS
SECTION 12.1 POST-CLOSING AMENDMENTS; REFUNDS. From and after the Closing
Date, Seller shall have the right, subject to Buyer's prior written consent,
which shall not be unreasonably withheld, to (a) file or cause to be filed any
amended Tax Return with respect to Petrolink that relates to periods ending
prior to the Closing and that does not have a Material Adverse Effect, or (b)
file a claim for refund of Taxes paid by or on behalf of Petrolink that relates
to periods ending prior to the Closing and that does not have a Material Adverse
Effect.
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SECTION 12.2 RECORDS AND INFORMATION. After the Closing Date, Seller and
Buyer will make available to the other, as reasonably requested, all
information, records or documents relating to liabilities for Taxes for all
periods prior to or including the Closing Date, and will preserve such
information, records or documents until the expiration of any applicable statute
of limitations or extensions thereof. After the Closing Date, Seller and Buyer
will cooperate fully, as and to the extent reasonably requested by each other,
in connection with any audit, litigation, or other proceeding with respect to
Taxes.
SECTION 12.3 OTHER POST-CLOSING ELECTIONS. At Seller's request, Buyer will
cause Petrolink to make and/or join with Seller in making any Tax elections
after Closing, except that neither Buyer nor Seller shall make an election under
Section 338(h)(10) of the Code, and any corresponding elections under state,
local, or foreign tax law with respect to the purchase and sale of the Shares
without the prior written consent of the other, which consent may be withheld in
the absolute and sole discretion of the other party for any reason whatsoever.
After the Closing Date, Buyer or its agent shall not make any material election
with respect to Petrolink which could have a material adverse impact on Seller,
without the prior written consent of Seller, which shall not be unreasonably
withheld.
SECTION 12.4 CONTINUITY AND TERMINATION OF OTHER BENEFITS.
(a) Each person who was an employee of Petrolink immediately prior
to Closing and is in Petrolink's employ immediately after Closing
("Continuing Employee") shall:
(1) receive credit from Petrolink for vacation benefits
accrued but unpaid while in the employ of Petrolink prior to Closing; and
(2) for purposes of satisfying vesting and eligibility
requirements of any Benefit Plan of Buyer or of Petrolink after the
Closing or successor plan following Closing, be given credit for years of
service earned as of the Closing Date under the retirement plan sponsored
by the Xxxxxxx affiliated group which covers such Continuing Employee
prior to the Closing.
(b) On the Closing Date or as soon thereafter as is reasonably
practicable, Seller shall effect a transfer into each Continuing
Employee's participant account in the Benefit Plan specified by Buyer
("Buyer's Benefit Plan"), cash funds equal to all vested and non-vested
amounts credited to such Continuing Employee in the Marine Transport
Lines, Inc. Salaried Employees Retirement Income Plan and the Crowley
Retirement Income System Plan (but specifically excluding the Xxxxxxx
Maritime Corporation Stock Savings Plan and the Xxxxxxx Maritime
Corporation Retirement Stock Plan) at the time of such transfer. In the
event that, at any time following Closing, Buyer's or Petrolink's required
contributions to Buyer's Benefit Plan or any successor plan are reduced
because of forfeitures of non-vested amounts in the participant account of
any Continuing Employee, Buyer shall, within a reasonable time following
conclusion of the fiscal year in which such reduction occurs, pay to
Seller an amount equal to the portion of such reduction attributable to
non-vested amounts transferred to Buyer's Benefit Plan with
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respect to such Continuing Employee under this Section. Appropriate
records and files will be made available by Buyer to Seller for audit of
this payment.
(c) Nothing in this Section shall be construed to require Buyer to
cause Petrolink to continue to employ any person after the Closing, to
offer to any Continuing Employee any vacation, retirement or other benefit
program not generally made available to other employees of Buyer, or to
institute or continue any employee benefit program for any period of time
following the Closing, except that Buyer agrees that, with respect to any
Continuing Employee whose employment is terminated by Petrolink within six
(6) months of the Closing, Buyer will provide an employee severance
program similar to the severance program referred to in the Xxxxxxx
Employee Handbook in the "Total Compensation" section under the heading
"Termination" beginning at page y-6 (7/1/01). Buyer further agrees it will
promptly upon submission of evidence of payment reimburse Seller or
Xxxxxxx for all payments made by either of them after the Closing pursuant
to the Retention Package, up to a maximum reimbursement of Three Hundred
Eighty Thousand One Hundred Thirty Dollars ($380,130).
(d) Other than as specifically provided in Section 12.4(b) and (c),
all employee compensation and benefit packages and fringe benefits
provided through Xxxxxxx, including, but not limited to, medical, dental,
disability and life insurance, retirement savings plans, 401(k) plans,
matching plans, defined contribution plans, bonus plans and any other
Benefit Plans whatsoever will be terminated with respect to Petrolink and
its employees as of the Closing.
SECTION 12.5 CLOSING DATE WORKING CAPITAL STATEMENT.
(a) As promptly as practicable, but no later than ninety (90) days
after the Closing Date, Buyer shall prepare a statement of the
consolidated Working Capital of Petrolink and its Subsidiaries as of the
time of the Closing on the Closing Date in the form of Schedule 3 and
shall (at Buyer's sole cost and expense) designate and cause an
independent certified public accounting firm in the United States of
international recognition ("Auditor") to prepare and issue a report on the
statement of the consolidated Working Capital of Petrolink and its
Subsidiaries as of the time of Closing on the Closing Date. Such report
from the Auditor shall contain a statement to the effect that the
statement of the consolidated Working Capital has been prepared in
accordance with U.S. generally accepted accounting principles and in a
manner consistent with the definition of Working Capital set forth in this
Agreement, an example of which is set forth in Schedule 3 ("Closing Date
Working Capital Statement").
(b) During the forty-five (45) days immediately following receipt of
the Closing Date Working Capital Statement by Seller, Deloitte & Touche,
LLP, (or another independent certified public accounting firm in the
United States of international recognition) on behalf of Seller, will be
permitted during normal business hours upon reasonable advance notice to
review (at Seller's sole cost and expense) Buyer's working papers relating
to the Closing Date Working Capital Statement, as well as all of the books
and records relating to the operations and finances of Petrolink and its
Subsidiaries with respect to the period up to and including the Closing
Date, and Buyer shall make reasonably available the individuals
responsible for the preparation of the Closing Date Working Capital
Statement (including, without limitation, accountants, lawyers and other
advisors) in order to respond to inquiries related thereto. Seller shall
notify Buyer in writing (the "Notice of Disagreement") within such
forty-five (45) day period if it
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disagrees with Buyer's calculation of the Working Capital of Petrolink and
its Subsidiaries on a consolidated basis as shown on the Closing Date
Working Capital Statement, which Notice of Disagreement shall set forth in
reasonable detail the basis for such dispute and the amounts involved and
Seller's good faith estimate of the Working Capital of Petrolink and its
Subsidiaries as of the close of business on the Closing Date. If Seller
does not deliver a Notice of Disagreement to Buyer within such forty-five
(45) day period, then the initial Working Capital shall be deemed to have
been accepted, shall become final and binding upon the parties, and shall
be the "Final Working Capital."
(c) During the thirty (30) days immediately following the delivery
of a Notice of Disagreement, Seller and Buyer shall seek in good faith to
resolve any differences that they may have with respect to any matter
specified in the Notice of Disagreement. If at the end of such thirty
(30)-day period Seller and Buyer have been unable to agree upon a Final
Working Capital, Seller and Buyer shall submit to an independent
accounting firm mutually agreeable to the parties ("Independent Accounting
Firm") for review and resolution of any and all matters that remain in
dispute with respect to the Notice of Disagreement. Buyer and Seller shall
cause the Independent Accounting Firm to use commercially practicable
efforts to make a final determination (which determination shall be
consistent with the definition of Working Capital set forth in this
Agreement and shall be binding on the parties hereto) of the Working
Capital of Petrolink and its Subsidiaries as of the Closing Date within
thirty (30) days from such submission, and such final determination shall
be the Final Working Capital. The cost of the Independent Accounting
Firm's review and determination shall be shared by Buyer and Seller such
that each shall pay the amount of such cost multiplied by a fraction, the
numerator of which is the total dollar value of the issues decided against
Buyer or Seller, respectively, by the Independent Accounting Firm and the
denominator of which is the total dollar value of the proposed adjustments
included in the Notice of Disagreement. During the thirty (30)-day review
by the Independent Accounting Firm, Buyer and Seller will make available
to the Independent Accounting Firm interviews with such individuals and
such information, books and records as may be reasonably required by the
Independent Accounting Firm to make its final determination.
(d) In the event that the Final Working Capital is greater than Two
Million Dollars ($2,000,000), then Buyer shall pay such difference to
Seller, and in the event that the Final Working Capital is less than Two
Million Dollars ($2,000,000), then Seller shall pay such difference to
Buyer. Amounts due under this Section 12.5(d) shall be paid within ten
(10) days after determination of the Final Working Capital.
SECTION 12.6 PAYMENT OF TAX LIABILITIES.
(a) Seller will pay all Taxes of Petrolink and any of its
Subsidiaries that may be due after the Closing Date that are allocable to
taxable periods ending prior to or on the Closing Date ("Pre-Closing Tax
Periods"). If, with respect to any Tax, the taxable period of Petrolink or
any of its Subsidiaries begins before and ends after the Closing Date (a
"Split-Tax Period"), the Tax (whether based on income, capital, ownership
of property or otherwise) for such Split-Tax Period will be allocated to
(i) Seller for the portion of such period up to and including the Closing
Date, and (ii) Buyer for the portion of such period subsequent to the
Closing Date. Taxes for a Split-Tax Period will be allocated between the
portion of the period up to and including the Closing Date and the portion
of the period following the Closing Date on the basis of a deemed closing
of the books of Petrolink and its Subsidiaries on the Closing Date (A)
treating any transactions outside the ordinary course of business that
occur on the Closing Date but after the Closing as occurring after the
Closing Date and (B) treating any transactions outside the ordinary course
of business that occur on the Closing Date but before the Closing (and all
transactions related to this Agreement, including any other transactions
undertaken in
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connection or in contemplation of such Agreement) as occurring prior to
the Closing, except that any such Tax imposed periodically based on
ownership of assets or similar Tax will be prorated based on the
assessment period for the Tax for the portion of the period prior to and
including the Closing Date and the portion of the period thereafter. Any
credits relating to a Split-Tax Period will be taken into account based on
a deemed closing of the books of Petrolink and its Subsidiaries on the
Closing Date, except that any credit provided on a periodic basis without
regard to activities during the period will be prorated based on the
number of days in the period prior to and including the Closing Date and
the number of days in the period following the Closing Date. All
determinations necessary to give effect to the foregoing allocations will
be made in a manner consistent with applicable United States and
state/local tax laws and with general principles of tax law. Seller shall
be entitled to all refunds of or credits with regard to Taxes of Petrolink
or any of its Subsidiaries for Pre-Closing Tax Periods and for the portion
of refunds of or credits with respect to Taxes of Petrolink or any of its
Subsidiaries for a Split-Tax Period allocable to the portion of such
period that runs through the Closing Date. Buyer shall pay to Seller the
amounts described in the preceding sentence promptly following receipt of
such refund or the determination of the amount of the credit. Buyer shall
be entitled to all refunds of or credits with regard to Taxes of Petrolink
or any of its Subsidiaries for the Split-Tax Period allocable to the
portion of the period following the Closing Date and for the portion of
all refunds of or credits with respect to Taxes of Petrolink or any of its
Subsidiaries attributable to any loss reported in a Tax year beginning
after the Closing Date ("Post-Closing Tax Period") but which is carried
back to a Pre-Closing Tax Period or Split-Tax Period. The Tax attributes
carried back by Petrolink or any of its Subsidiaries will be considered to
produce a refund only after all tax attributes of Seller and other members
of Seller's group have been used or deemed used. Seller shall pay to Buyer
the amounts described in the preceding sentence promptly following receipt
by Seller of any such refund or the determination of the amount of the
credit granted to Seller. Buyer agrees to indemnify Seller for any Taxes
resulting from the disallowance of Post-Closing Tax Period Tax attributes
on a subsequent audit or otherwise.
(b) Seller will pay all Taxes arising from or relating to the
transactions contemplated by this Agreement, except those that are for the
account of Buyer pursuant to Section 15.5.
(c) Seller will file or cause to be filed when due all Tax Returns
of Petrolink and its Subsidiaries for Pre-Closing Tax Periods. Such Tax
Returns will be prepared in a manner consistent with past practice and, on
such Tax Returns, no material positions will be taken, material elections
made, or material methods adopted, that are inconsistent with positions
taken, elections made, or methods used in preparing similar Tax Returns
for prior periods, without the consent of Buyer, which consent will not be
unreasonably withheld. Seller will furnish to Buyer copies of such Tax
Returns on a separate company basis, within thirty (30) days following the
filing date.
(d) With respect to Tax Returns for Split-Tax Periods and
Post-Closing Periods:
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(i) Buyer will prepare and file all Tax Returns of Petrolink and its
Subsidiaries for all Post-Closing Tax Periods.
(ii) With respect to any Tax Return for a Split-Tax Period,
at least thirty (30) days before the due date (including
extensions) of such Tax Return, Buyer will deliver to
Seller a copy of such Tax Return and a statement setting
forth the amount of Taxes for which Seller is
responsible pursuant to this Agreement (the
"Statement"). Seller will have the right to review and
approve or disapprove such Tax Return and the Statement
prior to the filing of such Tax Return. Such a Tax
Return will not be filed prior to the due date thereof
unless Seller has previously indicated its approval or
disapproval of such Tax Return. If Seller disapproves of
any information in such Tax Return or Statement, it will
describe such dispute in reasonable detail in a written
notice delivered to Buyer within twenty (20) days after
its receipt of the Statement and Tax Return, and failure
to deliver such notice will be deemed approval of the
Tax Return and Statement by Seller. Seller and Buyer
will negotiate and attempt to resolve in good faith any
issue described in such notice from Seller with respect
to its review of such Tax Returns and Statement.
(iii) In the event the parties are unable to resolve any
dispute within five (5) days following the delivery of
Seller's notice of disapproval of a Tax Return and
Statement pursuant to Section 12.6(d)(ii), the matters
in dispute will be resolved pursuant to Section
12.6(d)(viii) (the "Tax Arbitrator Procedure"). If the
dispute is not resolved before five (5) days prior to
the due date (including extensions) for the filing of
the Tax Return in question, then Buyer may file such Tax
Return in the manner it deems reasonable and without
Seller's consent. However, notwithstanding the filing of
such Tax Return, the amount of Taxes for which Seller is
responsible under this Agreement with respect to the
matter(s) in dispute will be as determined by agreement
of the parties or by the Tax Arbitrator Procedure.
(iv) Not later than (A) five (5) Business Days before the due
date for the payment of Taxes with respect to such Tax
Return, and (B) if later than the date specified in (A),
in the event of a dispute, five (5) Business Days after
notice to Seller of resolution thereof pursuant to
agreement of the parties or determination under the Tax
Arbitrator Procedure, Seller will pay to Buyer an amount
equal to the Taxes shown on the Statement (or otherwise
determined by agreement of the parties or the Tax
Arbitrator Procedure) as being the responsibility of
Seller under this Agreement.
(v) Whenever any Taxing Authority or other governmental body
sends a notice of an audit, initiates an examination of
Petrolink or any of its Subsidiaries, or otherwise
asserts a claim, makes an assessment or disputes the
amount of Taxes for any Pre-Closing Tax Period,
regardless of whether such claim also involves or
disputes the amount of Taxes for a Taxable period ending
after the Closing Date, Buyer will promptly inform
Seller, and Seller will have the right to control
(including control over whether and in what manner to
settle, compromise or abandon (in each case, to
"Voluntarily Discharge," and each such action a
"Voluntary Discharge")), at its own cost, any resulting
proceedings and to determine whether and when to settle
any such claim, assessment or dispute, in each case only
to the extent that they involve a Pre-Closing Tax
Period. If requested by Seller, Buyer will execute or
cause to be executed powers of attorney or other
documents necessary to enable Seller to control such
proceeding.
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(vi) In the event that Buyer settles, compromises or abandons
a Tax claim, assessment, or dispute involving a
Split-Tax Period or Post-Closing Tax Period for
Petrolink or any of its Subsidiaries and Seller
believes, in good faith, that such settlement
compromises or abandonment will result in an additional
material Tax liability for Seller with respect to a
Taxable period the Taxes for which Seller is liable or
responsible under this Agreement, then Seller may
request that the amount of such additional material Tax
liability of Seller and the portion of it, if any, that
should be borne by Buyer be determined by the Tax
Arbitrator Procedure, and Buyer will pay Seller the
amount of such additional material Tax liability, if
any, that the Tax Arbitrator Procedure determines should
be borne by Buyer. For purposes of this Section 12.6(d),
material amount means an additional material Tax
liability in excess of $50,000.
(vii) In the event that Seller settles, compromises or
abandons a Tax claim, assessment, or dispute involving a
Pre-Closing Tax Period for Petrolink or any of its
Subsidiaries and Buyer believes, in good faith, that
such settlement compromises or abandonment will result
in an additional material Tax liability for Buyer with
respect to a Taxable period the Taxes for which Buyer is
liable or responsible under this Agreement, then Buyer
may request that the amount of such additional material
Tax liability of Buyer and the portion of it, if any,
that should be borne by Seller be determined by the Tax
Arbitrator Procedure, and Seller will pay Buyer the
amount of such additional material Tax liability, if
any, that the Tax Arbitrator Procedure determines should
be borne by Seller.
(viii) The Tax Arbitrator Procedure will be as described in
this Section 12.6 (d) (viii). If a matter is to be
determined by the Tax Arbitrator Procedure, Seller and
Buyer will attempt to jointly select a public accounting
firm or law firm with recognized Tax expertise to
resolve the dispute. If they cannot agree on the
selection of a single firm for this purpose within ten
Business Days after a party initiates the Tax Arbitrator
Procedure, then Seller and Buyer will each select an
arbitrator and those two arbitrators will select a third
arbitrator. The arbitrators will make written
determinations, and the determination of the arbitrator
who finds an amount which is neither the highest nor the
lowest (including zero) amount found by any of the three
arbitrators will be final and will be binding upon all
parties. If two of the three, or all three arbitrators
agree on an amount (including zero), then that amount
will be final and binding upon the parties. The fees and
disbursements of the Tax arbitrator(s) shall be
allocated between Buyer and Seller in the same
proportion that the aggregate amount of any disputed
items submitted to the Tax Arbitrator Procedure that are
unsuccessfully disputed by each (as finally determined
by the Tax Arbitrator Procedure) bears to the total
amount of any disputed items so submitted. Buyer and
Seller shall make readily available to the Tax
arbitrator(s) all relevant books and records and any
work papers relating to the disputed Taxes and all other
items reasonably requested by the Tax arbitrator.
(ix) Seller and Buyer will cooperate fully, as and to the
extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to
this Agreement and with any audit, litigation or other
proceeding with respect to Taxes. Such cooperation will
include the retention and (upon the other party's
reasonable request) the provision of records and
information which are reasonably relevant to any such
audit, litigation or other proceeding, and making
employees available on a mutually convenient basis to
provide additional information and explanation of any
material provided hereunder. Seller agrees (A) to retain
all books and records that it has with respect to Tax
matters pertinent to Petrolink or any of its
Subsidiaries relating to any Tax period beginning before
the Closing Date until the expiration of the statute of
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limitations (and, to the extent notified by Buyer, any
extensions thereof) applicable to such Tax period, and
to abide by all record retention agreements entered into
with any Taxing Authority or other governmental body,
and (B) to give Buyer reasonable written notice prior to
transferring, destroying or discarding any such books
and records and, if Buyer so requests, Seller will allow
the Buyer to take possession of such books and records.
(x) Buyer and Seller each further agree, upon the other's
request, to use commercially reasonable efforts to
obtain any certificate, waiver, or other document from
any governmental body or any other person as may be
necessary to mitigate, reduce, or eliminate any Tax that
could be imposed upon Buyer, Petrolink, any of its
Subsidiaries, Seller, or any of their respective
Affiliates, in connection with the transactions
contemplated by this Agreement or the operations of
Petrolink or any of its Subsidiaries.
(e) In the event that (i) either Seller or Buyer settles,
compromises or abandons a Tax claim, assessment, or dispute involving a
Pre-Closing Tax Period or a Split-Tax Period for Petrolink or any of its
Subsidiaries and Seller believes, in good faith, that such settlement,
compromise or abandonment will result in an additional material Tax
liability for Seller with respect to a Taxable period the Taxes for which
Seller is liable or responsible under this Agreement and such settlement,
compromise or abandonment results in an increase in the depreciable basis
of any asset or assets owned by Petrolink or any of its Subsidiaries, or
(ii) an audit adjustment is made decreasing expense or increasing income
in the Pre-Closing Tax Period or Split-Tax Period which results in an
increase in deduction or reduction in income in any Post-Closing Tax
Period for Petrolink or any of its Subsidiaries then Seller may notify
Buyer that the amount of such additional material Tax liability of Seller
be borne by Buyer as determined by agreement of the parties. In
determining the amount of such additional material Tax Liability of
Seller, if any, to be borne by Buyer, Buyer and Seller shall seek in good
faith to agree as to the future period in which the resulting income
adjustment will occur, a tax will be computed on the income adjustment
using the highest marginal tax rate in effect in the Pre-Closing Tax
Period or Split Tax Period, and the resultant Tax will be discounted to
the date of Seller's payment of the Tax for which Seller is liable or
responsible under this Agreement using a discount rate equal to the 5 year
Treasury Xxxx Rate in effect at the time of Seller's payment. If the
parties are unable to reach agreement with respect to any of the foregoing
within thirty (30) days of Seller's notice, the matter shall be resolved
by the Tax Arbitrator Procedure. Buyer will pay Seller the amount of such
additional material Tax liability, if any, agreed upon by the parties or,
failing such agreement, that the Tax Arbitrator Procedure determines
should be borne by Buyer. For purposes of this Section 12.6(e), material
amount means an additional material Tax liability in excess of $50,000.
SECTION 12.7 RESCISSION WAIVER. Despite any breach or default by either of
the parties under any of their respective representations, warranties, covenants
or agreements under this Agreement, if the purchase and sale contemplated by
this Agreement is consummated at the Closing, each of the parties waives any
rights that it may have to rescind this Agreement or the transactions
consummated by it.
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ARTICLE 13
SURVIVAL AND INDEMNIFICATION
SECTION 13.1 SURVIVAL AFTER CLOSING.
(a) All warranties, representations and covenants set forth in this
Agreement shall survive the Closing for eighteen (18) months, except that
the warranties, representations and covenants contained in Sections 7.1,
7.2, 7.3, 7.4, 7.7, 7.17, 7.20, 8.1, 8.4, 9.4, 9.5, 9.6, and Articles 10,
12, 13 and 15 shall survive the Closing without any expiration period
concerning the enforceability thereof, other than any applicable statutes
of limitations. No action on or concerning such warranties,
representations or covenants shall be enforceable if brought after the
expiration of such period or limitations.
(b) Without limiting the pre-Closing rights of the parties set forth
in Article 14 and disposition of the Deposit, and without modification to
the limitations on post-Closing claims set forth in paragraph (a) of this
Section:
(1) Each of the parties hereby agrees that any and all claims
by one against the other arising out of or related to the breach of any
surviving covenant, or the inaccuracy or breach of any surviving
representation or warranty, shall be limited exclusively to claims subject
to Sections 13.2, 13.3, 13.4 and 13.6;
(2) Each of the parties hereby waives any and all claims one
against the other and related remedies of every kind and character,
including, but not limited to, any and all claims for breach of contract
or tort, and any and all legal and equitable remedies, arising out of or
related to the breach of any surviving covenant, or the inaccuracy or
breach of any surviving representation or warranty, except as and to the
extent expressly provided in Sections 13.2 , 13.3, 13.4 and 13.6; and
(3) Each of the parties acknowledges that, following the
Closing, Buyer's liability to Seller, and Seller's liability to Buyer in
connection with this Agreement, shall be limited to satisfaction of claims
arising out of or related to the breach of any surviving covenant, or the
inaccuracy or breach of any surviving representation or warranty, and that
each party's sole remedy (other than as provided in Section 9.6 or Article
10) shall be money damages, both as limited by and subject to the express
terms of Sections 13.2 , 13.3, 13.4 and 13.6. As used in Sections 13.2 ,
13.3, 13.4 and 13.6, the word "indemnify" shall cover third party claims
as well as first party reimbursement claims by Buyer or Seller against
each other.
SECTION 13.2 INDEMNIFICATION BY SELLER. Subject to Section 13.1 and
effective as of the Closing Date, Seller agrees to indemnify, defend and hold
Buyer harmless from and against any and all Losses arising out of, resulting
from or relating to (a) any breach of any covenant or promise contained in this
Agreement, (b) any breach or inaccuracy of the representations or warranties of
Seller set forth in Article 7 or in any other Acquisition Document, or (c) any
inaccuracy in the officer's certificate delivered to Buyer pursuant to Section
5.1(a); provided, that (1) Seller shall not be liable under this Section 13.2
for any breach of a representation or warranty in Article 7 of this Agreement
unless and until the aggregate of all Losses exceeds the
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"Basket" as defined in Section 13.5 below at which time Buyer shall be entitled
to claim damages for all Losses under this Section subject to the Cap (as
defined in Section 13.5 below) if applicable, and (2) in no event shall the
maximum aggregate liability of Seller to Buyer for Losses under this Section
exceed the Cap, if applicable.
SECTION 13.3 INDEMNIFICATION BY BUYER. Subject to Section 13.1 and
effective as of the Closing Date, Buyer agrees to indemnify, defend and hold
Seller harmless from and against any and all Losses arising out of, resulting
from or relating to (a) any breach of any covenant or promise contained in this
Agreement, (b) any breach or inaccuracy of the representations or warranties of
Buyer contained in Article 8 or in any other Acquisition Document, or (c) any
inaccuracy in the officer's statement delivered to Seller pursuant to Section
6.1(a); provided, that (1) Buyer shall not be liable under this Section 13.3 for
any breach of a representation or warranty contained in Article 8 of this
Agreement unless and until the aggregate Losses exceeds the Basket and (2) in no
event shall the aggregate liability of Buyer to Seller for Losses under this
Section exceed the Cap.
SECTION 13.4 ADDITIONAL INDEMNIFICATION.
(a) Seller agrees to indemnify, defend and hold Buyer harmless from
and against any and all uninsured Losses arising out of, resulting from or
relating to: (i) the Starargus, SFS or Sea River litigation matters listed
on Schedule 5 as items 4, 9 and 13 respectively, (ii) the MTL Petrolink
ICP/Bonus Plan, as amended, dated on or about September 14, 1998 and
terminated by Petrolink on April 5, 2002, listed as item 1 on Schedule 12,
(iii) the Bonus Plan applicable to Messrs. Carson, Barton, Xxxxxxxx and
Xxx in the event MTL Petrolink Corp. is sold, attached as Exhibit B to
Schedule 12; (iv) any of the matters listed on Schedule 15; or (v) the
commitment by Petrolink in the Engagement Letter among Xxxxxxx, Petrolink
and D&T dated January 27, 2002, to indemnify and hold harmless D&T and its
personnel from all claims, liabilities, and expenses relating to the
engagement described in the Engagement Letter, except to the extent
finally judicially determined to have resulted primarily from the bad
faith or intentional misconduct of D&T.
(b) Notwithstanding any limitations on liability elsewhere in this
Agreement, from and after the Closing Date, Seller (or any successor in
interest) will protect, defend, indemnify, and hold harmless Buyer,
Petrolink and any of its Subsidiaries from any and all Taxes which are
imposed on Petrolink or any of its Subsidiaries in respect of its income,
business, property or operations or for which Petrolink or any of its
Subsidiaries may otherwise be liable (A) with regard to any Pre-Closing
Tax Period, (B) in respect of any Split-Tax Period to the extent of all
Taxes allocated to the Seller pursuant to Section 12.6(a)(i), (C) by
reason of the several liability of Petrolink or any of its Subsidiaries
pursuant to Treasury Regulations section 1.1502-6 or any analogous State,
local or foreign law or regulation or by reason of Petrolink or any of its
Subsidiaries having been a member of any consolidated, combined or unitary
group on or prior to the Closing Date, (D) as a result of Petrolink or any
of its Subsidiaries ceasing to be a member of an affiliated group (within
the meaning of Section 1504(a) of the Code) that includes the Seller, (E)
in respect of any Post-Closing Tax Period, attributable to events,
transactions, sales, deposits, services or rentals occurring, received or
performed in a Pre-Closing Tax
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Period, (F) in respect of any Post-Closing Tax Period, attributable to any
change in accounting method employed by Petrolink or any of its
Subsidiaries during any of its four previous taxable years, (G) in respect
of any Post-Closing Tax Period, attributable to any items of income or
gain of a partnership reporting Petrolink or any of its Subsidiaries as a
partner, to the extent such items are properly attributable to periods of
the partnership ending on or before the Closing Date with such items
calculated as if a closing of the partnership books occurred on the
Closing Date, and (H) as a result of any discharge of indebtedness or
deemed discharge of indebtedness resulting from any capital contributions
by Seller (or any Affiliate of Seller) to Petrolink or any of its
Subsidiaries of any intercompany indebtedness owed by Petrolink or any of
its Subsidiaries to Seller (or any Affiliate of Seller).
SECTION 13.5 BASKET AND CAP. For purposes of each of Section 13.2 and
Section 13.3 the Basket shall be Five Hundred Thousand Dollars ($500,000) and
the Cap shall be Ten Million Dollars ($10,000,000) except that, in case of fraud
or willful misconduct, the Cap shall be Eighteen Million Dollars ($18,000,000).
In the case of a Claim based on an inaccuracy or breach of Section 7.20, there
shall be no Cap.
SECTION 13.6 PROCEDURES FOR INDEMNIFICATION. Effective as of the Closing
Date, the following procedures shall apply to claims under this Agreement by one
party against the other for indemnification:
(a) A party entitled to indemnification hereunder (the "Indemnified
Party") will give the party required to provide such indemnification (the
"Indemnifier") prompt written notice of any legal proceeding, claim or
demand (in each case, a "Claim") for which the Indemnified Party is
entitled to indemnification hereunder, provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifier will
relieve the Indemnifier from any obligation hereunder unless (and then
solely to the extent) the Indemnifier is materially prejudiced as a result
thereof.
(b) Within ten (10) Business Days after receipt of such notice from
the Indemnified Party, which notice shall include a statement setting
forth the basis for the Indemnified Party's belief that the Indemnifier is
responsible for such Claim, the Indemnifier shall have the right, by
giving written notice to the Indemnified Party, but without acknowledgment
of any liability for indemnity of the Claim and without prejudice to the
right to defend against any such liability, to defend, at the expense of
the Indemnifier, the Indemnified Party against any such Claim or to
negotiate, settle or otherwise deal with any such Claim and to provide
counsel for the Indemnified Party, selected by the Indemnifier, which is
reasonably satisfactory to the Indemnified Party; provided, that the
Indemnified Party may participate in any proceeding with counsel of its
choice and at its own expense and may join in such proceeding its claim
for indemnity hereunder. Neither the Indemnifier nor the Indemnified Party
may enter into a settlement of any such Claim without the consent of the
other if the other reasonably believes such settlement would be materially
detrimental to its business, reputation or future prospects.
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ARTICLE 14
TERMINATION OF AGREEMENT PRIOR TO CLOSING
SECTION 14.1 GROUNDS FOR TERMINATION. Without limitation and subject to
Sections 14.2 and 14.3 below, this Agreement and the transactions contemplated
hereunder may be terminated at any time prior to the Closing only in the
following circumstances:
(a) By the written consent of Seller and Buyer;
(b) At the option of Buyer by written notice to Seller, if Seller
shall have materially breached or failed to perform in any material
respect any of Seller's obligations or covenants under this Agreement, or
if any of the representations and warranties of Seller set forth in
Article 7 is not true in any material respect, and such breach, failure or
misrepresentation is not cured to Buyer's reasonable satisfaction within
ten (10) Business Days after Buyer first gives Seller written notice
identifying such breach, failure or misrepresentation with reasonable
specificity;
(c) At the option of Seller by written notice to Buyer, if Buyer
shall have materially breached or failed to perform in any material
respect any of its obligations or covenants under this Agreement, or any
of the representations and warranties of Buyer set forth in Article 8 is
not true in any material respect, and such breach, failure or
misrepresentation is not cured to Seller's reasonable satisfaction within
ten (10) Business Days after Seller first gives Buyer written notice
identifying such breach, failure or misrepresentation with reasonable
specificity; or
(d) At the option of Buyer by written notice to Seller, if any of
the conditions set forth in Article 5 has not been satisfied within
twenty-eight (28) days after the date first written above and is not
waived by Buyer in accordance therewith;
(e) At the option of Seller by written notice to Buyer, if any of
the conditions set forth in Article 6 has not been satisfied within
twenty-eight (28) days after the date first written above and is not
waived by Seller in accordance therewith; or
(f) At the option of Seller by written notice to Buyer, if all of
the conditions set forth in Article 5 have been fulfilled, or at the
option of Buyer by written notice to Seller, if all of the conditions set
forth in Article 6 have been fulfilled, in either case if the Closing
shall not have occurred on or before that date which is twenty-eight (28)
days after the date first written above, or such later date, if any, as
Seller and Buyer may hereafter agree in writing;
PROVIDED, that nothing set forth above shall entitle either party to
terminate this Agreement under this Section 14.1 if such party is in material
breach of or has failed to perform in any material respect any obligation or
covenant under this Agreement or if any of the representations or warranties of
such party set forth in Article 7 or Article 8, as applicable, is not true in
any material respect.
SECTION 14.2 EFFECT OF TERMINATION. Termination of this Agreement pursuant
to this Article shall be deemed to have one of the following effects:
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(a) If this Agreement is terminated other than as described in
subsection (b) below, all further obligations of each party will terminate
without further liability of any party hereto; or
(b) If this Agreement is terminated under Section 14.1(b), (c), (d),
(e) or (f) at a time when either Seller or Buyer is in breach of a
representation or warranty or in violation of a covenant contained in this
Agreement: (i) the liabilities and obligations of the party not in breach
or violation of this Agreement shall terminate; and (ii) the party in
breach or violation of this Agreement shall remain liable for such
breaches and violations. Termination of this Agreement shall not be deemed
to restrict the rights and remedies available against such breaching party
other than as expressly set forth in Section 14.3(b);
SECTION 14.3 DISPOSITION OF DEPOSIT. Except as otherwise mutually agreed
by and between Buyer and Seller in writing, if the Closing does not occur and if
this Agreement is terminated in accordance with Section 14.1, then:
(a) The Deposit shall be refunded to Buyer only:
(1) In the event this Agreement has been terminated in
accordance with Section 14.1(a), (b) or (d) of this Agreement or by Buyer
in accordance with Section 14.1(f) of this Agreement; or
(2) In the event this Agreement has been terminated in
accordance with Section 14.1(e) and the condition which has not been
satisfied and which gave rise to grounds for termination was, through no
fault of Buyer, the condition precedent to Seller's performance set forth
in Section 6.2 , 6.3, or 6.4 of this Agreement.
(b) In all other events, the parties have determined and agreed and
hereby acknowledge that the actual amount of damages that would be
sustained by Seller as a result of the failure to close is difficult or
impossible to ascertain and the parties agree that, in such event, the
Deposit shall be retained by Seller as liquidated damages for the failure
to close. By placing their initials below, Buyer and Seller acknowledge
their agreement to this liquidated damages provision. It is agreed that
Seller shall not have any cause of action or claim whatsoever against
Buyer because of the failure to close, and Seller's sole and exclusive
remedy shall be the retention of the Deposit as liquidated damages.
/s/ XXXXX XXXXX /s/ XXXXXXX X. XxXXXXX
______________________ ________________________
FOR SELLER FOR BUYER
ARTICLE 15
MISCELLANEOUS
SECTION 15.1 NOTICES. All notices and other communications provided for
under this Agreement shall be in writing and shall be personally delivered or
sent by nationally recognized overnight courier such as Federal Express or
D.H.L., or by telecopy or by other means of telecommunication, to the following
addresses:
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If to Seller: Marine Transport Corporation
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Vice President & General Counsel
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx Peabody LLP
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
If to Buyer: American Eagle Tankers Inc. Limited
NOL Center
00 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
Attention: Vice President, Finance and Administration
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxx X. Xxxxx, Esq.
Xxxx & Xxxxxxx
0000 Xxxxxxxxxxxxx Xxxxxx, X.X.; Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and communications shall be deemed received
(a) if personally delivered, upon delivery, (b) if sent by courier service with
next day delivery charges prepaid, upon receipt, and (c) if sent by telex,
telecopy or similar form of telecommunications, upon receipt.
SECTION 15.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors and assigns, provided that no party may assign its rights or
obligations hereunder without the prior written consent of the other party which
may be granted in the exercise of such party's sole discretion. Notwithstanding
the foregoing, Buyer may assign its rights and obligations hereunder to any
Affiliate without the consent of Seller, provided that prior to the effective
date of such assignment, Buyer guarantees the full and faithful payment and
performance of such Affiliate pursuant to a guaranty in form and substance
reasonably acceptable to Seller. Any assignment in contravention of this
provision shall be void and of no force or effect.
SECTION 15.3 ENTIRE AGREEMENT. Seller, Buyer and Crowley have entered into
the Letter Agreement regarding the report referred to in Section 7.6(b), which
Letter Agreement is attached hereto as Exhibit G. This Agreement, including all
Schedules and Exhibits hereto, together with all other Acquisition Documents to
be delivered by the parties in connection herewith, represent the entire
understanding and agreement between the parties with respect to the subject
matter hereof and supersede all prior oral and written agreements and all
contemporaneous oral negotiations, commitments and understandings between such
parties.
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Without limiting the generality of the foregoing, this Agreement supersedes that
certain letter dated November 23, 2001 from Buyer to Crowley regarding a
"Proposal in Relation to the Acquisition of MTL Petrolink" (the "Letter") as
well as that certain "Confidential Information Memorandum" (the "Prospectus")
dated August 2001 prepared by Xxxxxxx Xxxxx Barney with respect to Petrolink and
sale of the Shares. No information or data contained in the Prospectus or the
Letter shall be taken as any representation or warranty by any party hereto. All
representations and warranties of Seller to Buyer are to be found only in this
Agreement, its Schedules, Exhibits or other Acquisitions Documents. Neither the
Letter nor the Prospectus is an Acquisition Document.
SECTION 15.4 AMENDMENT. This Agreement may only be amended or modified by
a written agreement signed by Seller and Buyer.
SECTION 15.5 EXPENSES. Buyer will pay (a) all transfer Taxes imposed by
reason of the transactions contemplated by this Agreement, and (b) all stamp and
recording Taxes, fees and expenses, settlement fees, escrow and other
miscellaneous closing fees or costs associated therewith. Except as otherwise
expressly provided in this Agreement, all other costs and expenses, including
all legal costs and expenses, incurred in connection with the preparation,
negotiation, and documentation of this Agreement and the transactions
contemplated hereby and in connection with the Closing shall be paid by the
party incurring such costs and expenses. Notwithstanding the foregoing, any such
costs or expenses which are for Seller's or Petrolink's account may at Seller's
option be paid by Petrolink or any Subsidiary prior to Closing and such payment
shall not be deemed to be a breach by Seller of any representation or warranty
of Seller under this Agreement.
SECTION 15.6 GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the internal laws of the State of New Jersey.
SECTION 15.7 ATTORNEYS' FEES. In any litigation, arbitration, mediation or
other proceeding by which one party either seeks to enforce its rights under
this Agreement or seeks a declaration of any rights or obligation under this
Agreement, the prevailing party shall be awarded reasonable attorneys' fees,
together with any costs and expenses, to resolve the dispute and to enforce the
final judgment.
SECTION 15.8 COUNTERPARTS; SEVERABILITY. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which when taken together shall constitute one and the same agreement. If
any provision of this Agreement is unenforceable or illegal, such provision
shall be enforced to the fullest extent permitted by law and the remainder of
this Agreement shall remain in full force and effect.
SECTION 15.9 NO WAIVERS. No delay or failure to act on the part of either
party shall constitute a waiver of any provision of or rights under this
Agreement, and no waiver in any instance shall be effective in any other
instance. No waiver shall be effective unless such waiver shall be in writing
and signed by the party making such waiver. The rights provided under this
Agreement are cumulative and not exclusive of any rights provided by law.
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SECTION 15.10 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied (including, but not limited to, the references to employees
in Section 12.4), is intended or shall be construed to confer upon or give to
any person or entity other than the parties hereto any benefits, remedies or
claims under, or by reason of this Agreement, all of which shall be for the sole
and exclusive benefit of the parties hereto.
SECTION 15.11 FURTHER ASSURANCES. Following the Closing, the parties will
execute and deliver to each other such documents and take such other reasonable
actions as the parties may reasonably request in order to consummate the
transactions contemplated hereby.
SECTION 15.12 INTERPRETATION. The headings preceding the text of Articles
and Sections included in this Agreement and the headings to Exhibits and
Schedules are for convenience only and shall not be given any effect in
interpreting this Agreement. The use of the terms "including" and "include"
shall in all cases herein mean "including, without limitation" and "include,
without limitation," respectively. No specific representation, warranty or
covenant contained herein shall limit the generality or applicability of a more
general representation, warranty or covenant contained herein. A breach of or
inaccuracy in any representation, warranty or covenant shall not be affected by
the fact that any more general or less general representation, warranty or
covenant was not also breached or inaccurate.
SECTION 15.13 CURRENCY. All monetary obligations which are payable under
or in connection with this Agreement shall be subject to satisfaction and shall
be payable only in lawful money of the United States of America.
IN WITNESS WHEREOF, this Agreement was executed and delivered as of the
date first written above.
SELLER BUYER
MARINE TRANSPORT CORPORATION AMERICAN EAGLE TANKERS INC.
LIMITED
/s/ XXXXX XXXXX /s/ XXXXXXX X. XxXXXXX
By_______________________________ By______________________________________
Name: XXXXX X. XXXXX Name: XXXXXXX X. XxXXXXX
Title: VICE PRESIDENT Title: VICE PRESIDENT FINANCE
& ADMINISTRATION
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GUARANTY
Xxxxxxx Maritime Corporation ("Crowley") hereby unconditionally guarantees
full performance by Seller of each and every obligation of Seller under the
Acquisition Agreement to which this Guaranty is attached. Xxxxxxx'x obligations
and liabilities under this Guaranty shall at all times be subject to all
defenses, offsets and cross or counterclaims which may exist in favor of the
Seller against the Buyer named in such Acquisition Agreement.
XXXXXXX MARITIME CORPORATION
/s/ XXXXX LOVE
By _____________________________________
Name: XXXXX LOVE
Title: CORPORATE SECRETARY
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