AMENDED AND RESTATED SHARE PURCHASE AGREEMENT dated as of February 6, 2008 by and among VANSHIP HOLDINGS LIMITED, a Liberian corporation, ENERGY INFRASTRUCTURE MERGER CORPORATION a Marshall Islands corporation and ENERGY INFRASTRUCTURE ACQUISITION...
Exhibit
10.1
AMENDED
AND RESTATED
dated
as
of February 6, 2008
by
and
among
VANSHIP
HOLDINGS LIMITED,
a
Liberian corporation,
ENERGY
INFRASTRUCTURE MERGER CORPORATION
a
Xxxxxxxx Islands corporation
and
a
Delaware corporation
relating
to the purchase of shares of companies owning
9
ocean-going vessels
Table
of
Contents
Page
|
||
SECTION
1.
|
DEFINITIONS.
|
1
|
SECTION
2.
|
INTENTIONALLY
OMITTED.
|
13
|
SECTION
3.
|
SALE
AND PURCHASE.
|
13
|
SECTION
4.
|
COVENANTS
OF THE SELLER.
|
17
|
SECTION
5.
|
COVENANTS
OF EIAC AND THE BUYER.
|
18
|
SECTION
6.
|
REGISTRATION
RIGHTS; LOCK UP.
|
20
|
SECTION
7.
|
DIVIDENDS.
|
27
|
SECTION
8.
|
NO
SOLICITATION OF OTHER ACQUISITIONS.
|
28
|
SECTION
9.
|
DIRECTOR
NOMINEES AND OFFICERS; MANAGEMENT STRUCTURE.
|
29
|
SECTION
10.
|
BINDING
AGREEMENTS; NON-COMPETITION.
|
30
|
SECTION
11.
|
REPRESENTATIONS
AND WARRANTIES OF THE SELLER.
|
32
|
SECTION
12.
|
REPRESENTATIONS
AND WARRANTIES OF THE BUYER.
|
41
|
SECTION
13.
|
REPRESENTATIONS
AND WARRANTIES OF EIAC.
|
43
|
SECTION
14.
|
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF THE SELLER.
|
45
|
SECTION
15.
|
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF THE BUYER AND EIAC.
|
48
|
SECTION
16.
|
FURTHER
ASSURANCES AND OTHER MATTERS.
|
50
|
SECTION
17.
|
INDEMNITIES.
|
51
|
SECTION
18.
|
TAX
RETURNS AND PRE-CLOSING TAXES AND STRADDLE PERIOD TAXES.
|
53
|
SECTION
19.
|
CONFIDENTIALITY
AND ANNOUNCEMENTS.
|
57
|
SECTION
20.
|
TERM
AND TERMINATION.
|
58
|
SECTION
21.
|
MISCELLANEOUS.
|
58
|
i
Schedules
Schedule 1 - |
Carry-Over
Financing
|
Schedule 2 - |
Legal
Proceedings
|
Schedule 11(c) - |
Required
Consents
|
Schedule 11(d) - |
Ownership
of SPV Shares
|
Schedule 11(f) - |
Vessels
|
Schedule 11(g) - |
Governmental
Actions
|
Schedule 11(j) - |
Tax
sharing or allocation agreements
|
Schedule 11(p) - |
Material
Contracts
|
Schedule 11(q) - |
Defaults;
Breaches of Material Contracts
|
Schedule 11(r) - |
Business
Conduct
|
Schedule 11(z) - |
Bank
Accounts
|
Schedule 12(g) - |
Buyer’s
Corporate Documents
|
Schedule 12(h) - |
Buyer’s
outstanding shares of common stock, rights and
warrants
|
Schedule 12(j) - |
Buyer’s
Contractual Liabilities
|
Schedule 13(g) - |
EIAC’s
Contractual Liabilities
|
Schedule 13(h) - |
EIAC’s
insider loans
|
Schedule 13(i) - |
EIAC’s
outstanding shares of common stock, rights and warrants and shares
outstanding on a fully diluted
basis
|
ii
AMENDED
AND RESTATED SHARE PURCHASE AGREEMENT
THIS
AMENDED AND RESTATED SHARE PURCHASE AGREEMENT, dated as of February 6, 2008
(this “Agreement”),
is made by and among VANSHIP HOLDINGS LIMITED, a Liberian corporation (the
“Seller”),
ENERGY INFRASTRUCTURE MERGER CORPORATION, a Xxxxxxxx Islands corporation (the
“Buyer”),
and ENERGY INFRASTRUCTURE ACQUISITION CORP., a Delaware corporation
(“EIAC”).
WITNESSETH:
WHEREAS,
to effect the Sale and Purchase the Seller, the Buyer and EIAC entered into
that
certain Share Purchase Agreement dated December 3, 2007 (the “Original
Agreement”),
and wish to amend and restate the same as set forth below.
NOW,
THEREFORE, in consideration of the foregoing premises, and the mutual covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION
1.
|
DEFINITIONS.
|
(a) Definitions.
For
purposes of this Agreement, the following terms shall have the following
meanings:
“Accounts”
means together the Audited Financial Statements and the Interim Financial
Statements and any other financial statements as may be provided by Seller
with
respect to each of the SPVs.
“Acknowledgment
and Agreement”
means the acknowledgment and agreement in respect of Section 6(h)(ii) of this
Agreement, and also as provided by (i) Xxxxxx Ventures Limited pursuant to
which
it agrees not to transfer any shares of EIAC common stock issuable to it upon
conversion of the convertible promissory notes in the aggregate principal amount
of $2,685,000 until the earlier of the termination of this Agreement pursuant
to
Section 20 hereof or the consummation of the business combination and (ii)
the
holders of the units purchased in the Initial Private Placement pursuant to
which they agree not to transfer any of the common stock contained therein
until
the earlier of the termination of this Agreement pursuant to Section 20 hereof
or the consummation of the business combination, as required to be executed
pursuant to the terms of Section 14(p) hereof, such acknowledgment and agreement
to be in form and substance satisfactory to the parties hereto and
thereto.
“Acquisition
Proposal”
means any proposal of EIAC, the Buyer or an Affiliate of either to effect a
business combination with a target business (other than with the
Seller).
“Acquisition
Registration Statement”
means the Registration Statement on Form F-4 or S-4 to be filed by the Buyer
with the SEC in connection with the Sale and Purchase.
“Action”
means any claim, action, suit, arbitration, inquiry, proceeding or investigation
by or before any Governmental Authority.
1
“Affiliate” means a
Person who, directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, such Person. For purposes
of this definition, “control”, when used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have correlative meanings.
“Ancillary
Agreements” means,
collectively, the Acknowledgment and Agreements, the Dividend Waiver Agreements,
the Management Agreement, the Dividend Escrow Agreement, SOC Escrow Agreement,
the Option Agreement and all other agreements identified herein and required
to
be delivered in connection herewith or therewith.
“Aggregate
Purchase Price”
means, collectively, the Cash Consideration, the Stock Consideration and the
Warrant Consideration.
“Arab
Boycott Clause”
means any clause in a Charter or other contract of employment for a Vessel
that
warrants, confirms or implies that the Vessel (or the SPV owning such Vessel)
performing thereunder complies with the Arab League boycott of Israel or
indicates that such Vessel is not blacklisted by the Arab League.
“Audited
Financial Statements” means,
collectively, the audited individual balance sheet of each SPV for each of
the
three fiscal years ended as of December 31, 2004, 2005, and 2006 or from the
date of their incorporation, if later, and the related audited individual
statements of income, retained earnings, stockholders’ equity and cash flows of
such SPV, together with all related or required notes and schedules thereto,
accompanied by the reports thereon of the Seller’s Accountants, all prepared in
accordance with GAAP.
“Business”
means the principal business of each SPV, which is ownership and chartering
of
VLCCs.
“business
combination”
shall have the meaning assigned such term in the prospectus summary of the
Prospectus.
“Business
Day”
means a day (other than a Saturday, Sunday or public holiday) when banks in
Hong
Kong and New York are open for business.
“Buyer
Common Stock”
means the common stock, par value $.0001 per share, of the Buyer.
“Buyer
Indemnitees” means,
collectively, the Buyer, EIAC and their respective officers, directors,
successors and permitted assigns, and each other person, if any, who controls
the Buyer Indemnitees.
“Buyer’s
Portion”
shall have the meaning set forth in Section 18(f).
“Carry-Over
Financing”
means those financing arrangements described on Schedule
1
existing as of the Original Agreement Date in respect of the Vessels;
provided that (a) the parties hereto shall amend and restate Schedule
1
on the Closing Date so that the financing arrangements described therein are
those which the parties hereto mutually agree in
writing will
exist on and after the Closing Date (such mutual agreement not to be
unreasonably withheld by any party; and (b) notwithstanding anything herein
to
the contrary, the Seller and/or the SPVs may amend, restate, pay or prepay
any
of the financing arrangements listed on Schedule
1
between the date hereof and the Closing Date with the consent of EIAC and the
Buyer, such consent not to be unreasonably withheld or delayed.
2
“Cash
Consideration”
means $643,000,000 minus the principal amount of any Carry-Over Financing as
of
the Closing Date plus the sum of the Closing Date Net Current Assets of each
SPV
“Charter”
means the time charter of each Vessel by the relevant SPV to the Charterer
named
therein, as set forth in Schedule
11(q).
“Charterer”
means the time charterer of any Vessel pursuant to a Charter.
“Claims”
means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of non-compliance or violation,
investigations, audits, proceedings, consent orders or consent
agreements.
“Closing”
means completion of the Merger and the Sale and Purchase in accordance with
Section 3(c).
“Closing
Date”
has the meaning set forth in Section 3(c).
“Closing
Date Balance Sheet”
for an SPV shall mean a balance sheet of the SPV prepared by Seller in
accordance with GAAP reflecting the assets and liabilities of the SPV on the
Closing Date.
“Closing
Date Net Current Assets”
of an SPV shall mean the excess of the assets of such SPV shown on the Closing
Date Balance Sheet of such SPV, other than such SPV’s Vessel, over the
liabilities of such SPV shown on the Closing Date Balance Sheet, other than
any
liability for any Carry-Over Financing.
“Code”
means, except as the context may otherwise state expressly, the U.S. Internal
Revenue Code of 1986, as amended.
“Competitive
Business”
means a business which can reasonably be regarded as being in direct competition
with the Business during the Non-Compete Period.
“Disclosed
Legal Proceedings”
shall mean those litigations, arbitrations and other legal proceedings
identified in Schedule
2.
“Disclosure
Letter”
means the disclosure letter dated as of the Closing Date from the Seller to
the
Buyer and EIAC, and any other disclosure letter dated and delivered from the
Seller to the Buyer and EIAC prior to the Closing Date pursuant to Section
4(b)(x), in each case, in connection with the Seller’s representations and
warranties under Section 11 hereof.
3
“Dividend
Escrow Agreement”
means the escrow agreement among the Buyer, the Escrow Agent and the parties
named in Section 7(b) and (c) upon the terms and conditions of which the
Dividend Waiver Securities held by the parties identified in Section 7(b) and
(c) shall be held in escrow, such escrow agreement to be in form and substance
reasonably acceptable to the Buyer, the Escrow Agent and the parties identified
in Section 7(b) and (c).
“Dividend
Waiver Agreement” means
an agreement between the Buyer and the parties named in Section 7(b) and (c)
pursuant to which the parties named in Section 7(b) and (c) agree to waive
all
rights to receive the First Year Dividend (whenever paid) in respect of the
Dividend Waiver Securities, such Dividend Waiver Agreement to be in form and
substance reasonably acceptable to the parties hereto and thereto.
“Dividend
Waiver Securities” means
all shares of Buyer Common Stock and any warrant, right, option or other form
of
security exercisable or convertible for Buyer Common Stock, except for an
aggregate of 5,268,849 shares of EIAC common stock held by the Initial
Stockholders, which are already held in escrow pursuant to the Stock Escrow
Agreement (and the corresponding Shares of Buyer Common Stock to be issued
upon
the Merger).
“EBITDA”
means,
for any period, the sum of: revenue less operating expenses excluding gains
or
losses on disposal of property and equipment. For the avoidance of doubt, (i)
depreciation and amortization, impairment of assets, non-recurring costs or
expenses, extraordinary items, unusual items, and any other non operating income
or expenses shall not be included in the calculation of EBITDA and (ii) all
items referred to in this definition of EBITDA shall be determined in accordance
with U.S. generally accepted accounting principles in effect as of the date
of
this Agreement.
“Effective
Time”
has the meaning set forth in Section 3(c)(i).
“Employee”
means any person employed by any SPV under a contract of employment but does
not
include any crew member xxxxxxx any Vessel under the applicable technical
management contract.
“Employment
Legislation”
means legislation applying in Hong Kong affecting contractual or other relations
between employers and their employees or workers, including but not limited
to
any legislation and any amendment, extension or re-enactment of such
legislation.
“Environmental
Claims”
means Claims relating in any way to any Environmental Law or any Environmental
Permit, including, without limitation, (a) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (b) any
and
all Claims by any person seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
“Environmental
Laws”
means any federal, state, regional or foreign law, statute, treaty, regulation,
policy, guidance, order, injunction, judgment or decision of any Governmental
Authority relating to the protection of natural resources, the environment
and
public and employee health and safety and shall include, without limitation,
the
International Convention for the Prevention of Pollution from Ships, and, in
each case, the regulations promulgated pursuant thereto, and any applicable
analogous state statutes, and the regulations promulgated pursuant thereto,
as
such laws have been amended or supplemented.
4
“Environmental
Permits”
means all permits, approvals, identification numbers, licenses and other
authorizations required under any applicable Environmental Law.
“Escrow
Agent”
means Fortis Capital Corp. acting through its office located at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
“Escrow
Shares”
shall have the meaning assigned such term in the Stock Escrow
Agreement.
“Estimated
Tax Returns”
means any Tax Returns filed or to be filed in connection with estimated Tax
payments which estimated Tax payments are to be made on or before the Closing
Date.
“Exchange
Act”
means the U.S. Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder, as the same shall be in effect from time
to
time.
“Financing”
shall mean a written commitment from a lending institution to make available
to
the Buyer a credit facility in such amount and on such terms as shall be agreed
to by and among Buyer, Seller and EIAC (and without requiring any continuing
guarantees or security from Seller or any Seller’s Affiliates).
“Financing
Private Placement” means
the private placement of up to 5 million Financing Private Placement Units
at a
purchase price of $10.00 per unit for an aggregate purchase price of up to
$50
million.
“Financing
Private Placement Unit”
means a unit consisting of one share of Buyer Common Stock and one warrant
to
purchase one share of Buyer Common Stock, exercisable at $8.00 per warrant,
substantially in the form of the IPO Warrants.
“First
Anniversary”
means the date corresponding to the first anniversary of the Closing
Date.
“First
Fiscal Year”
means a fiscal year of the Buyer commencing on the Closing Date and ending
on
the First Anniversary.
“First
Year Dividend”
means a cash dividend in the amount of $1.54 per share of Buyer Common Stock
to
be paid for the First Fiscal Year.
“GAAP”
means generally accepted accounting principles in the United States of America
in effect from time to time.
“Governmental
Approvals” means all
governmental filings, authorizations and approvals that are required (if any)
for the Merger and the Sale and Purchase.
5
“Governmental
Authority”
means any federal, national, supranational, international, state, regional,
local or provincial government, governmental, regulatory or administrative
authority, agency, instrumentality or commission or any court, tribunal, or
judicial or arbitral body.
“Hazardous
Materials”
means (a) any compound or chemical that is defined, listed or otherwise
classified as a toxic pollutant, toxic or hazardous substance, extremely
hazardous substance or chemical or hazardous waste, medical waste, bio-hazardous
or infectious waste under or regulated by Environmental Laws; (b) petroleum,
petroleum-based or petroleum-derived products; and (c) polychlorinated
biphenyls.
“IACS”
means
the International Association of Classification Societies.
“Indebtedness” means
with respect to any Person to the extent required to be reflected as a liability
on a balance sheet for such Person prepared in accordance with GAAP, (a) any
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (b) any indebtedness evidenced by any note,
bond, debenture or other debt security, (c) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business),
(d)
any obligations under capitalized leases with respect to which a Person is
liable as obligor, (e) any indebtedness secured by a Lien on a Person’s assets,
(f) any distributions payable or loans/advances payable to any Affiliates,
shareholders or partners as of the Closing, which are not paid at Closing,
(g)
any other liabilities recorded in accordance with GAAP on the balance sheet
of
such Person which are not due within one year of the Closing, and (h) any
accrued interest, prepayment penalties and premiums on any of the
foregoing.
“Initial
Private Placement” means
the private placement of EIAC units made in accordance with Regulation S under
the Securities Act as described in the Prospectus.
“Initial
Stockholders”
shall have the meaning assigned such term in the Stock Escrow
Agreement.
“Initial
Stockholders’ Undertaking”
shall have the meaning assigned such term in Section 5(a)(vi).
“Interim
Financial Statements” means
the unaudited balance sheets of the SPVs as of September 30, 2006 and September
30, 2007 and the related statements of income, retained earnings, stockholders’
equity and cash flows of such SPVs, together with all related or required notes
and schedules thereto applicable for financial statements of such nature, all
prepared in accordance with GAAP.
“IPO”
means
EIAC’s initial public offering made pursuant to the Prospectus.
“IPO
Warrants” means
the warrants contained in the units sold to the public in connection with the
IPO.
“JVCo”
means
the Bahamas corporation in which Seller is a shareholder.
6
“Key
Person”
means each of Captain Xxxxxxx Xxxxxx Xxxxxx Vanderperre (“Captain
Vanderperre”)
and Mr. Xxxx Xxxxx.
“Knowledge
of the Seller”
or any similar phrase means the actual knowledge of each of Captain Vanderperre
and Mr. Xxxx Xxxxx.
“Laws”
in respect of any Person means any applicable national, international, federal,
state, local or foreign statute, law, ordinance, regulation, rule, code,
executive order, injunction, judgment, decree or other order of any Governmental
Authority to which that Person is subject.
“Liabilities”
means any and all debts, liabilities and obligations, whether accrued or fixed,
absolute or contingent, matured or unmatured or determined or determinable,
arising under any Law or Action and those arising under any contract, agreement,
arrangement, commitment or undertaking.
“Lien”
means any lien, mortgage, security interest, tax lien, pledge, encumbrance,
conditional sale or title retention arrangement, or any other interest or equity
of any Person (including any right to acquire, option or right of pre-emption)
in property designated to secure the repayment of indebtedness, or other adverse
claim or restriction whether arising by agreement or under any statute or law,
or otherwise.
“Losses”
means all direct losses, damages, judgments, awards, orders, settlements, costs
and expenses (including, without limitation, interest, penalties, court costs
and reasonable legal fees and expenses, but excluding any incidental damages,
consequential damages, special damages, damages arising out of business
interruption or lost profits, damages arising through the application of any
statutory multiplier to any Losses, punitive damages or loss of
reputation).
“Management
Agreement” means
the agreement to be executed between the Buyer and the Management Company for
the provision of the Management Services, such agreement to be in form and
substance acceptable in the sole discretion of each of the Buyer and
Seller.
“Management
Company”
means Vanship
Group Limited, a company incorporated under the laws of Bermuda (to be renamed
prior to Closing as “Van Asia Capital Management Limited”).
“Management
Services”
means
the commercial and technical management of the Vessels and related crewing
services, and the provision of appropriate premises and equipment, staffing
and
administrative and accounting services and related activities in connection
with
the operation of the business of EIMC following Closing, including the provision
of the services of the Key Persons.
“Maritime
Guideline” means any
rule, code of practice, convention, protocol, guideline or similar requirement
or restriction to which a Vessel is subject that is imposed or published by
any
Governmental Authority, the International Maritime Organization, such Vessel’s
classification society or the insurer(s) of such Vessel.
7
“Material
Adverse Effect”
means any circumstance, change in, or effect on the Vessels or the SPVs that,
individually or in the aggregate with any other circumstances, changes in,
or
effects on, the SPVs or the Vessels is, or might reasonably be expected to
be,
materially adverse to the business, operations, assets or liabilities, employee
relationships, customer or supplier relationships, prospects, results of
operations or the condition (financial or otherwise) of the SPVs or the Vessels
on an individual or aggregate basis; provided,
however,
that “Material Adverse Effect” shall not include the impact on such business,
operations, assets or liabilities, employee relationships, customer or supplier
relationships, prospects, results of operations or the condition (financial
or
otherwise) of the SPVs or the Vessels solely arising out of or solely
attributable to: (i) conditions or effects that generally affect the industries
in which the SPVs or the Vessels operate (including legal and regulatory
changes), (ii) effects resulting from changes in general economic or political
conditions, (iii) effects resulting from changes affecting capital market
conditions (including in the case of each of clauses (i) and (ii) above, any
effects or conditions resulting from an outbreak or escalation of hostilities,
war, acts of terrorism, political instability or other national or international
calamity, crisis, emergency, epidemic or natural disaster, or any governmental
or other response to any of the foregoing, in each case whether or not involving
the United States), (iii) effects resulting from changes in laws or GAAP, (iv)
effects relating to the announcement of the execution of this Agreement or
the
transactions contemplated hereby, assuming compliance with Section 19 hereof,
(v) effects resulting from compliance with the terms and conditions of this
Agreement or the transactions contemplated hereby by the Seller or any SPV
or
consented to in writing by the Buyer or (vi) effects resulting from any action
or omission of the Buyer or any of its Affiliates other than as permitted or
contemplated pursuant to the terms of this Agreement. For the avoidance of
doubt, a Material Adverse Effect shall be measured only against past performance
of the SPVs and the Vessels, and not against any forward-looking statements,
financial projections or forecasts of the Seller or any SPV.
“Material
Contract”
has the meaning set forth in Section 11(p).
“Merger”
means the business combination of EIAC with the Buyer to be effected by way
of a
merger in which the Buyer is the surviving corporation.
“Merger
Proxy”
means the Proxy Statement to be filed with the SEC by EIAC pursuant to Section
14(a) of the Exchange Act in connection with the Merger.
“NASD”
shall mean the National Association of Securities Dealers, Inc., or any
successor self regulatory organization.
“Non-Compete
Period” means
the period commencing on the Closing Date and ending on the third anniversary
thereof.
“Option
Vessels”
means each of the newbuilding vessels described in the Option
Agreement.
“Option
Agreement”
means the agreement to be executed between the Buyer and the Option Vessel
Seller(s) pursuant to which the Buyer shall have the option to acquire the
ownership interest in the Option Vessels held by such Option Vessel Seller(s)
until 90 days before the delivery date of each Option Vessel at the higher
of
fair market value of or the price offered by a Third Party for such Option
Vessel on the date of the Buyer’s proposed exercise of such option, such Option
Agreement to be in form and substance reasonably acceptable to Seller, EIAC
and
Buyer.
8
“Option
Vessel Seller(s)”
means, in respect of the Option Vessels, the Seller and/or one or more
subsidiaries of the Seller that in each case has an ownership interest in one
or
more of such vessels.
“Order” means
any judgment, order, decree, writ, ruling, charge or injunction issued by any
court or Governmental Authority or administrative body or agency or arbitral
authority.
“Original
Agreement Date” means
the date of the Original Agreement.
“Out-of-Pocket
Expenses”
shall include, but not be limited to, reasonable attorney’s fees, accountant
fees and other related professional fees and disbursements.
“Permits”
means all the health and safety and other permits (including, without
limitation, Environmental Permits) licenses, authorizations, certificates,
exemptions and approvals of Governmental Authorities necessary for the current
use and operation of the relevant Vessel and the conduct of the
Business.
“Permitted
Liens”
means (a) Liens disclosed in the Accounts or any Schedules to this Agreement,
(b) Liens created or permitted by the Carry-Over Financing, (c) Liens for Taxes
not yet due and payable or which are being contested diligently and in good
faith by appropriate proceedings, as set forth in Schedule
2,
(d) mechanics’, workmens’, repairmens’, warehousemens’, carriers’ or other like
Liens arising in the ordinary course of business of the SPVs, any of which
do
not exceed $500,000 on an individual basis or $1,000,000 in the aggregate,
(e)
Liens securing rental payments under capitalized leases, (f) Liens that do
not
otherwise materially detract from the value or current use of the applicable
asset, (g) Liens to be removed, and which are actually removed, prior to or
at
Closing, (h) Liens for which title insurance coverage, bonding or an
indemnification has been obtained, (i) Liens for current crew wages not
exceeding three (3) months, (j) Liens for salvage or general average, (k) Liens
arising from the supply of goods and/or services to any Vessel in the ordinary
course of business, (l) Liens arising under charters (including the Charters)
entered into in the ordinary course of business and (m) Liens securing claims
which are completely covered by insurance.
“Person” means
any individual, partnership, firm, corporation, joint venture, association,
trust, unincorporated organization, limited liability company, limited liability
partnership or other legal entity.
“Pre-Closing
Taxes”
means all Taxes (other than those arising as a result of a Section 338 Election)
incurred by, imposed on or asserted against any SPV for a Pre-Closing Tax
Period.
“Pre-Closing
Tax Period”
means any tax period of an SPV ended or ending on or before the Closing
Date.
“Pre-Closing
Tax Returns” means
any and all Tax Returns of an SPV for each Pre-Closing Tax Period.
9
“Prepaid
Taxes”
means all payments of Taxes made in respect of the Tax liability of any SPV
(whether by reason of an estimated Tax payment or otherwise) on or prior to
the
Closing Date, including any refunds or credits attributable to a Pre-Closing
Tax
Period, applied to a Straddle Period.
“Prospectus”
means the Final Prospectus dated July 18, 2006 with respect to the
IPO.
“Registrable
Securities”
shall mean (a) the Buyer Common Stock issued to and owned by the Seller or
any
Seller’s Affiliates as the Stock Consideration, (b) the shares of Buyer Common
Stock underlying the warrants transferred to the Seller as Warrant Consideration
and owned by the Seller or any Seller’s Affiliates, (c) the Buyer Common Stock
issued to and owned by the Seller or any Seller’s Affiliates pursuant to the
terms of Section 3(d) of this Agreement and (d) the Buyer Common Stock contained
in the Financing Private Placement Units and the Buyer Common Stock issuable
upon exercise of the warrants contained therein issued to and owned by the
Seller or any Seller’s Affiliates.
“Registrable
Securities Holder”
shall mean any of the Seller or a Seller’s Affiliate holding the Registrable
Securities.
“Registration
Buyer Indemnitees”
means, collectively, the Buyer, the Buyer Indemnitees and any other person
(including each underwriter) who participated in the offering of such
Registrable Securities.
“Requested
Stock”
shall have the meaning set forth in Section 6(b)(ii).
“Resale
Registration Statement”
means a registration statement filed by the Buyer with the SEC on Form F-1
or
S-1 (or Form F-3 or S-3 (or other comparable short form) if eligible) under
the
Securities Act for the purpose of registering the resale of Registrable
Securities.
“Reserved
Tax Liability”
means that part of Seller’s Portion of any Straddle Period Taxes of an SPV which
is shown as a current liability on the Closing Date Balance Sheet of such
SPV.
“Sale
and Purchase”
means the sale by the Seller and the purchase by the Buyer of the SPV Shares
in
accordance with the terms of this Agreement.
“SEC”
means the United States Securities and Exchange Commission.
“Section
338 Election”
means an election that may be made by the Buyer or any of its nominated
subsidiaries under Section 338(g) of the Code in respect to the acquisition
of
the SPV Shares hereunder.
“Securities
Act”
shall mean the U.S. Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder, as the same shall be in effect from time
to
time.
“Seller’s
Affiliates”
mean any entity which is an Affiliate of the Seller.
10
“Seller’s
Indemnitees”
means, collectively, the Registrable Securities Holders, their respective
directors and officers and each other person, if any, who controls the
Registrable Securities Holders.
“Seller’s
Portion” shall
have the meaning set forth in Section 18(f).
“SK
Shipping”
means SK Shipping Co. Limited, a Korean corporation.
“SK
Shipping Venture”
means the agreement between JVCo and SK Shipping in respect of a profit and
loss
share for a VLCC that is chartered to SK Shipping.
“SOC
Escrow Agreement”
means the escrow agreement among the Buyer, the Seller and the Escrow Agent
upon
the terms and conditions of which the SOC Escrow Amount shall be held in escrow,
in form and substance reasonably acceptable to the Buyer, the Seller and the
Escrow Agent.
“SOC
Escrow Amount”
means $17,250,000.
“SPV”
means each corporation indicated on Schedule
11(f),
which wholly owns a Vessel.
“SPV
Shares”
means all the outstanding ordinary shares of an SPV on the Closing
Date.
“Stock
Consideration”
means 13,500,000 shares of the Buyer Common Stock.
“Stock
Escrow Agreement”
means that certain Stock Escrow Agreement dated as of July 21, 2006 among EIAC,
the Initial Stockholders and Continental Stock Transfer & Trust
Company.
“Straddle
Period”
means any tax period of an SPV that begins on or before the Closing Date and
ends after the Closing Date.
“Straddle
Period Tax Return”
means any Tax Return of an SPV that relates to a Straddle Period.
“Straddle
Period Taxes”
means all Taxes (other than those arising as a result of a Section 338 Election)
incurred by, imposed on, or asserted against any SPV for a Straddle
Period.
“Surviving
Corporation”
has the meaning set forth in Section 14(f).
“target
business”
shall have the meaning assigned such term in the prospectus summary of the
Prospectus.
“Tax”
or “Taxes”
means (i) any and all taxes, fees, levies, duties, tariffs, imposts, and other
charges of any kind (together with any and all interest, penalties, additions
to
tax and additional amounts imposed with respect thereto) imposed by any
Governmental Authority, including any income, franchise, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers’ compensation, unemployment compensation,
net worth, excise, withholding, ad valorem, stamp, transfer, value added, gains,
license, registration, documentation, recording, occupancy, occupation,
estimated, minimum, customs, duties, tariffs or other similar taxes and charges,
whether disputed or not, (ii) any liability for or in respect of the payment
of
any amount of a type described in clause (i) of this definition as a result
of
being a member of an affiliated, combined, consolidated, unitary or other group
for Tax purposes, and (iii) any liability for or in respect of the payment
of
any amount described in clauses (i) or (ii) of this definition of another Person
as a transferee or successor, as a responsible person, as a result of a tax
sharing or allocation agreements, or otherwise.
11
“Tax
Matter”
means any inquiry, claim, assessment, audit, proceeding or similar event with
respect to Taxes.
“Tax
Returns”
means any and all returns, reports, forms, claims for refund or credit, and
information returns filed or required to be filed with any Governmental
Authority (including any Schedule or attachment thereto) in connection with
the
reporting, determination, assessment, collection or payment of any
Tax.
“Third
Parties”
means all Persons and Governmental Authorities other than parties to this
Agreement or their Affiliates.
“Third
Party Approvals” means all
approvals, consents, licenses and waivers from Third Parties that are required
to effect the Merger and the Sale and Purchase.
“Third
Party Claim”
means a claim for money damages brought by a Third Party.
“Trust
Fund”
has the meaning set forth in Section 16(d).
“Trust
Fund Claim”
has the meaning set forth in Section 16(d).
“Univan”
means Univan Ship Management Limited.
“$”
means an amount expressed in United States dollars, the currency of the United
States of America.
“Vessel”
or “Vessels”
means each of the vessels listed on Schedule
11(f).
“VLCC”
means a crude oil carrier vessel with a deadweight tonnage between 200,000
and
320,000 deadweight tons.
“Warrant
Consideration”
means an aggregate of 425,000 warrants to purchase Buyer Common
Stock.
“Worker”
means any person who personally performs services for any SPV but who is not
in
business on their own account or in a client/customer relationship, but does
not
include any crew member xxxxxxx any Vessel under the applicable technical
management contract.
(b) Section
and appendix or schedule or exhibit headings do not affect the interpretation
of
this Agreement.
12
(c) Words
in the singular include the plural and in the plural include the
singular.
(d) A
reference to one gender includes a reference to the other gender, and a
reference to “including” means “including without limitation.”
(e) A
reference to a statute or statutory provision is a reference to it as it is
in
force taking account of any amendment, extension or re-enactment and includes
any subordinate legislation in force made under it.
(f) Writing
or written
includes faxes but not e-mail.
(g) Documents
in agreed
form
are documents in the form agreed by the parties or on their behalf and initialed
by them or on their behalf for identification.
(h) References
to Sections, Schedules and Exhibits are to the Sections and Schedules of this
Agreement; references to paragraphs are to paragraphs of the relevant Section
or
Schedule or Exhibit.
(i) Reference
to this Agreement include this Agreement, the Schedules and the Exhibits (which
are an integral part of this Agreement) as each may be amended or varied in
accordance with the terms hereof.
SECTION
2.
|
INTENTIONALLY
OMITTED.
|
SECTION
3.
|
SALE
AND PURCHASE.
|
(a) On
the terms of this Agreement, and immediately after the Merger, the Seller shall
sell and transfer or cause to be sold and transferred to the Buyer or its
nominated subsidiaries all of the SPV Shares and the Buyer shall buy and pay
for
all of the SPV Shares for the Aggregate Purchase Price. Such SPV Shares shall
be
free of all Liens (other than such Liens imposed by the Carry-Over Financing)
and with all rights that attach (or may in the future attach) to such SPV Shares
including, in particular, the right to receive all dividends and distributions
declared in respect of any period commencing on or after the Closing Date and
for the avoidance of doubt the Seller shall retain and be entitled to receive
and retain for its own benefit all dividends and distributions declared in
respect of any period up to the Closing Date.
(b) The
Seller on behalf of itself, JVCo and Golden Asia Limited waives any right of
pre-emption or other restriction on transfer in respect of the SPV Shares or
any
of them conferred on the Seller or JVCo under the organizational documents
of
any SPV, any shareholders’ agreement or otherwise.
(c) Subject
to Section 20, the Closing shall take place as soon as practicable after the
satisfaction or waiver of each of the conditions set forth in Sections 14 and
15
hereof or at such other time as the parties hereto agree (the “Closing
Date”)
as soon as practicable following the receipt of the shareholder approval
required under Section 14(g). The Closing shall take place at the offices of
Loeb & Loeb LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
location as the parties hereto agree.
13
In
connection with the Closing:
(i) the
Buyer and EIAC shall cause the Merger to be consummated immediately prior to
the
Closing (the time of such consummation of the Merger being the “Effective
Time”).
Upon the consummation of the Merger, Buyer’s name shall be changed to
Van
Asia
Tankers Corporation
(or such other name which is acceptable to and as may be directed by
Seller).
(ii) the
Ancillary Agreements shall be executed by each party thereto (provided
that
in the event that the Seller obtains deletion of the “mutual sales option”
clause from the Charter of the SHINYO OCEAN, then notwithstanding the foregoing,
execution of the SOC Escrow Agreement shall not be required).
(iii) from
the Cash Consideration otherwise due pursuant to Section 3(a) above the Buyer
shall:
(A) deposit
the SOC Escrow Amount into the account designated in the SOC Escrow Agreement
(provided
that
in the
event that the Seller obtains deletion of the “mutual sales option” clause from
the Charter of the SHINYO OCEAN, then notwithstanding the foregoing, the SOC
Escrow Amount shall not be payable to the account designated in the SOC Escrow
Agreement but shall instead be payable under the immediately following clause
(B) of this clause (iii)); and
(B) pay
the
balance of the Cash Consideration to the Seller to such account(s) as the Seller
shall direct, in each case, in immediately available funds (provided
that
the
Buyer shall deduct from such Cash Consideration and retain an amount equal
to
the consideration payable by the Seller for the Financing Private Placement
Units purchased by the Seller).
(iv) the
Buyer shall deliver (or shall arrange to be delivered) to the Seller one or
more
share certificates representing the Stock Consideration and effect the transfer
from one or more of the Initial Stockholders (free of cost to the Seller) of
one
or more warrants representing the Warrant Consideration, in each case registered
in the name of the Seller or such Seller’s Affiliates as the Seller may
designate in writing.
(v) the
Seller shall deliver to the Buyer (or its nominated subsidiaries) appropriate
stock transfer documents in respect of all of the SPV Shares duly executed
by
the registered owner thereof together with share certificates representing
such
SPV Shares, as required in order to fully effect the transfer thereof to Buyer
(or its nominated subsidiaries) subject only to execution of appropriate stock
transfer documents by the Buyer or its nominated subsidiaries and payment of
applicable stamp duty, except for such share certificates as may be retained
by
the financing institutions in connection with the Carry-Over
Financing.
(vi) the
Seller shall deliver to the Buyer the written resignation of the directors
and
officers of each SPV if required to do so by the Buyer.
14
(vii) each
SPV will assign to Seller all of its rights to any litigation (including
arbitration or mediation proceedings) commenced in any part of the world prior
to the Closing Date (“Assignment
of Rights”)
and Seller will assume and agree to indemnify each SPV in connection with all
costs, expenses and other liabilities in connection with such assigned rights
(“Assumption
of Liabilities”),
provided
that
where it is or may be contrary to the applicable law to assign such rights
or to
maintain or participate in such an action, the relevant SPV shall permit Seller
at Seller’s sole cost and expense to undertake such proceedings in its name and
on its behalf and shall hold all proceeds of such proceedings which it may
actually receive in trust for Seller absolutely.
(viii) Xx.
Xxxxxx Xxxxxxxx shall receive an aggregate of 1 million units of the Buyer,
each
unit consisting of one share of Buyer Common Stock and a warrant to purchase
one
share of Buyer Common Stock at an exercise price of $8.00 per share
substantially in the form of the IPO Warrants. Xx. Xxxxxxxx shall in his sole
discretion have the right to direct the issuance of 500,000 of such units to
Xx.
Xxxxxx Xxxxxxxxxxxxx. The shares of Buyer Common Stock, warrants and the shares
of Buyer Common Stock issuable upon exercise thereof shall have
the same
registration
and other
rights
contained in Section 6 of this Agreement
and,
solely for the purposes of such Section 6 rights, shall be deemed to be
Registrable Securities, and Xx. Xxxxxxxx and Xx. Xxxxxxxxxxxxx (or any
transferees of such securities) shall be deemed to be a holder of Registrable
Securities.
(ix) all
Dividend Waiver
Securities
shall be deposited with (in the case of certificated shares), or registered
in
the name of (in the case of uncertificated shares), the Escrow Agent pursuant
to
the terms of the Dividend Escrow Agreement.
(d) In
addition to the Aggregate Purchase Price, the following shall constitute
additional consideration to be paid by the Buyer to the Seller for the
acquisition by the Buyer of the SPV Shares:
(i) With
respect to the first full twelve month period following the Closing Date, in
the
event that the Vessels achieve EBITDA for such period equal to or in excess
of
$75,000,000, then the Seller shall be entitled to receive, within 30 days
following the end of such period, an additional 3,000,000 shares of Buyer Common
Stock at no cost. Any expense or other charge to earnings incurred in
conjunction with the award of these additional shares or other shares awarded
to
EIAC or management will be added back to EBITDA for purposes of calculating
the
share award. In the event that the Buyer sells any of the Vessels during the
first full twelve month period after the Merger, the consolidated EBITDA hurdle
for the first twelve month period will be reduced by an amount calculated as
follows:
15
First
Twelve Month Reduction =A * (365/C - 1)
-
(D*E*(1-y%)).
where
A
= actual EBITDA contribution for the first twelve month period from the Vessel
in question up to and including the closing of the sale of such
Vessel,
C
= the number of days during the first twelve month period up to and including
the closing date of the sale of such Vessel,
D
= the
number of days of the scheduled offhire after the sale of such Vessel (i.e.,
drydock or special survey) during the first twelve-month period,
E
= the
gross time charter rate of such Vessel for the first twelve-month period, as
presented in Schedule 11(p)(vi), and
y%
= the
brokerage commission on the gross time charter rate of such Vessel, as presented
in Schedule 11(p)(vi).
The
consolidated EBITDA hurdle for the second twelve month period shall be reduced
by an amount calculated as follows:
Second
Twelve Month Reduction = A *(365/C)
- (D*E *
(1-y%)).
where
D
= the
number of days of the scheduled offhire after the sale of such Vessel (i.e.,
drydock or special survey) during the first twelve-month period,
E
= the
gross time charter rate of such Vessel for the second twelve-month period,
as
presented in Schedule 11(p)(vi),
and
y%
= the
brokerage commission on the gross time charter rate of such Vessel, as presented
in Schedule 11(p)(vi).
To
illustrate, assume Buyer sells Vessel X on the 90th day of the first twelve
month period after the Closing Date, and that during the period from the Closing
Date up to and including the close of the 90th day Vessel X has earned EBITDA
of
US$2,000,000. Assume also that Vessel X is due for drydock during the first
twelve month period with projected 20 offhire days and Vessel X is earning
a
gross charter rate of $28,000 per day less 1.25% brokerage commission. Then
the
EBITDA hurdle rate for purposes of calculating the earnout consideration for
the
first twelve months would
be reduced by US$5,558,111, calculated as follows:
US$2,000,000
* (365/90 - 1) - (US$28,000 * (1-1.25%) * 20) = US$5,558,111
and
the EBITDA hurdle for the second twelve month period would be reduced
by
US$2,000,000
* (365/90) - (US$28,000 * (1-1.25%) * 0) = US$8,111,111
16
plus
(ii) With
respect to the second twelve month period following the Closing Date, in the
event that the Vessels achieve EBITDA for such period equal to or in excess
of
$75,000,000, then the Seller shall be entitled to receive within 30 days
following the end of such period, an additional 3,000,000 shares of Buyer Common
Stock at no cost. Any expense or
other charge to earnings incurred
in conjunction with the award of these additional shares or other shares awarded
to EIAC or management will be added back to EBITDA for purposes of calculating
the share award. In the event that the Buyer sells any of the Vessels during
the
second twelve month period after the Merger, the consolidated EBITDA hurdle
for
the second twelve month period will be reduced by an amount calculated as
follows:
Second
Twelve Month Reduction =A * (365/C - 1)
-
(D*E*(1-y%)).
where
A
= actual EBITDA contribution for the Vessel for the second twelve month period
up to and including the closing of the sale of such Vessel,
C
= the number of days during the second twelve month period up to and including
the closing date of the sale of such Vessel,
D
=
the
number of days of the scheduled offhire after the sale of such Vessel (i.e.,
drydock or special survey) during the second twelve-month period,
E
= the
gross time charter rate of such Vessel for the second twelve-month period,
as
presented in Schedule 11(p)(vi), and
y%
= the
brokerage commission on the gross time charter rate of such Vessel, as presented
in Schedule 11(p)(vi).
For
the avoidance of doubt, the additional 6,000,000 shares of Buyer Common Stock,
if issued in accordance with subclauses (i) and (ii) above, shall not be subject
to any lock-up from the date of any such issuance.
SECTION
4.
|
COVENANTS
OF THE SELLER.
|
(a) The
Seller will use its best efforts to deliver to EIAC no later than December
14,
2007 (or such later date as shall be agreed to in writing between EIAC and
Seller) true and complete copies of the Audited Financial Statements and the
Interim Financial Statements, accompanied by a related Management’s Discussion
and Analysis of Financial Condition in form and substance in accordance with
the
requirements of the Securities Act for purposes of the Merger Proxy and the
Acquisition Registration Statement.
17
(b) From
the Original Agreement Date, through and including the Closing Date, the Seller
shall:
(i) use
its best efforts to prevent the SPVs from becoming insolvent (within the meaning
of the U.S. Bankruptcy Code);
(ii) use
its best efforts to ensure that each SPV shall continue to operate its
respective Business as it is currently conducted;
(iii) use
its best efforts to ensure that each SPV shall retain ownership of the Vessel
owned by such SPV, provided that an SPV may sell its Vessel if EIAC and the
Buyer have consented in advance to such sale;
(iv) use
reasonable commercial efforts to ensure that each SPV shall perform its
respective obligations under each Charter;
(v) use
its best efforts to continue to keep each SPV, each Vessel and the SPV Shares
free and clear of any Liens, other than Permitted Liens, and use its best
efforts to ensure that each SPV shall forbear from creating any Liens, claims
or
encumbrances of any kind upon the Vessels, the SPV Shares or any other material
assets of the SPVs, in each case other than in the ordinary course of
business;
(vi) [intentionally
omitted];
(vii) [intentionally
omitted];
(viii) use
its best efforts to ensure that the Closing Date Net Current Assets of each
SPV
shall be not less than zero;
(ix) use
reasonable commercial efforts to obtain the consent or waiver of any party
to a
Carry-Over Financing, to the extent such consent or waiver is necessary to
continue such financing arrangements upon the consummation of the Sale and
Purchase; and
(x) to
the extent that the terms of any representation and warranty contained in
Section 11 are no longer accurate and complete, Seller shall promptly provide
EIAC and Buyer with a Disclosure Letter with the corrected complete and accurate
information.
(c) Subsequent
to the Closing Date, to the extent not waived or paid pursuant to the SOC Escrow
Agreement, promptly pay any obligation due pursuant to the “mutual sales option”
clause in the relevant Charter.
(d) Seller
shall use its best reasonable efforts to cause the Financing to be committed
on
or before December
17, 2007.
SECTION
5.
|
COVENANTS
OF EIAC AND THE BUYER.
|
(a) Each
of EIAC and the Buyer covenants with the Seller that it shall:
(i) use
its best efforts to assist the Seller in procuring the Financing;
18
(ii) as
soon as is reasonably practicable following the date hereof, and after receipt
of the required financial statements of the SPVs, file the Merger Proxy and
Acquisition Registration Statement with the SEC;
(iii) use
its best efforts to materially comply with all applicable rules and regulations
of the SEC in connection with the Merger and the Sale and Purchase;
(iv) obtain
all Governmental Approvals and take all other actions, as may be necessary
or
reasonably appropriate in order to effect the Merger and the Sale and
Purchase;
(v) have
received prior to the Closing Date a market stand-off agreement signed by each
of the Initial Stockholders, such market stand-off agreement to be in form
and
substance satisfactory to the Seller;
(vi) have
received prior to the Closing Date an undertaking (“Initial
Stockholders’ Undertaking”)
executed by each of the Initial Stockholders that they shall not without the
prior written consent of the Seller exercise any rights they may have under
the
Stock Escrow Agreement to cause the release of any of the Escrow Shares prior
to
the First Anniversary, other than as permitted pursuant to Sections 3.2 and
4.3
of the Stock Escrow Agreement, such undertaking to be in form and substance
reasonably satisfactory to the Seller and provided that in the case of any
transfer of the Escrow Shares pursuant to Section 4.3 of the Stock Escrow
Agreement the transferee of such shares shall first enter into an undertaking
with the Seller in terms equivalent to the Initial Stockholders’ Undertaking and
acceptable to the Seller; and
(vii) from
the date hereof until the Closing Date (unless this Agreement is otherwise
terminated earlier), not enter into any obligations, commitments or liabilities
except as (1) necessary to effect the Merger and the Sale and Purchase or (2)
subject to the terms of Section 8 hereof, in connection with the business of
either of Buyer or EIAC as currently conducted or as disclosed in the
Prospectus.
(b) Each
of EIAC and the Buyer shall not without the prior written consent of the Seller
permit any change to be made in its Certificate or Articles of Incorporation
(as
the case may be) or Bylaws or issue any shares or rights to acquire shares
until
Closing except
as
mutually agreed in writing between Buyer and Seller to effect the Merger and
the
Sale and Purchase.
(c) At
least ten (10) days
prior to the
initial
filing of the Merger Proxy or Acquisition Registration Statement or Resale
Registration Statement, and
at least
five (5) days prior to the filing
of any amendment of or supplements to the Merger Proxy or Acquisition
Registration Statement or Resale Registration Statement, or of any document
that
is to be incorporated by reference therein after initial filing thereof with
the
SEC, and of any responses to the comments of the SEC, Buyer and EIAC shall
in
each case provide copies of such documents (including revised drafts) to the
Seller, its counsel and auditors and other advisors as specifically advised
by
Seller and make such of the representatives of EIAC and the Buyer as shall
be
reasonably requested by the Seller, and their respective counsel, auditors
and
advisors, available for discussion of such document, including comments of
and
responses to the SEC; EIAC and Buyer shall consult and cooperate with and take
account of the comments and suggestions of Seller and its counsel, auditors
and
advisors with regard to the foregoing; and neither EIAC nor the Buyer shall
file
with the SEC or distribute to shareholders or otherwise make publicly available
any Merger Proxy, the Acquisition Registration Statement, the Resale
Registration Statement, any amendment of or supplement to any of the foregoing,
or any document that is to be incorporated by reference therein after initial
filing thereof with the SEC, nor any SEC response letter or related
correspondence, except (i) if pursuant to this paragraph the Seller and its
counsel shall have previously been furnished
with a copy thereof,
and (ii) if the Seller (or
any
representative of Seller) shall
have provided its written
consent (such consent not to be unreasonably withheld or delayed) to such
filing, distribution or other public release. In addition, EIAC and Buyer shall
not request acceleration of the effectiveness of the Acquisition Registration
Statement or Resale Registration Statement without the written
consent of Seller
or its
representative
(such consent not to be unreasonably withheld or delayed).
19
SECTION
6.
|
REGISTRATION
RIGHTS; LOCK UP.
|
(a) Registration
on Form F-4 / S-4.
Buyer shall include the Registrable Securities in the Acquisition Registration
Statement to the extent that such inclusion would not, in Buyer’s reasonable
judgment, after receiving written comments from the SEC that address the
registration of the Registrable Securities, materially hinder or delay the
SEC’s
declaration of effectiveness thereof or approval of the Merger
Proxy.
(b) Registration
of Registrable Securities.
(i) “Demand
Registration.” Upon
request by the Seller or any other holder of Registrable Securities, from time
to time the Buyer shall prepare and file and use its best efforts to have
declared effective as soon as is reasonably practical but in any event within
120 days from the date of such request the Resale Registration Statement with
the SEC and shall include all of the Registrable Securities in such Resale
Registration Statement (or such lesser number of shares of Registrable
Securities as is permitted under SEC rules, regulations and interpretations)
and
shall keep such Resale Registration Statement effective until all Registrable
Securities are sold thereunder.
(ii) “Piggyback
Registration Rights.” If
the Buyer shall determine to proceed with the preparation and filing of a new
registration statement under the Securities Act in connection with the proposed
offer and sale of any of its securities (other than a registration statement
on
Form F-4 / X-0, X-0 or other limited purpose form), the Buyer will give written
notice of its determination to any holder of Registrable Securities. Upon the
written request from any such holder of Registrable Securities, within 15 days
after receipt of any such notice from the Buyer, the Buyer will cause all of
the
Registrable Securities covered by such request (the “Requested Stock”) held by
any such holder of Registrable Securities to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by the prospective seller or sellers of the Requested Stock; provided that
nothing herein shall prevent the Buyer from, at any time, abandoning or delaying
any such registration.
20
(c) Registration
Procedures.
Pursuant to the Buyer’s obligations as set forth in Section 6(a) and 6(b), the
Buyer will:
(i) prepare
and file with the SEC the Acquisition Registration Statement and, if requested
in accordance with the provisions of subparagraph (b) above, the Resale
Registration Statement, and use its best efforts to cause each such registration
statement to become and remain effective for such period of time as may be
required for the disposition of such securities covered by such registration
statement by the holders thereof (which period of time shall not expire earlier
than the first date on which the Registrable Securities Holders could sell
or
dispose the Registrable Securities without restrictions pursuant to Rule 144(k)
promulgated under the Securities Act);
(ii) prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to
keep such registration statement effective and to comply with the provisions
of
the Securities Act with respect to the sale or other disposition of all
securities covered by such registration statement until such time as all of
such
securities have been fully disposed of;
(iii) furnish
to all selling security holders (including the Registrable Securities Holders)
such number of copies of the relevant prospectus, including the relevant
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents, as such selling security holders may reasonably
request;
(iv) use
its best efforts to register or qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as each holder of such
securities shall request (provided,
however, that
the Buyer shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified
or
to file any general consent to service or process), and do such other reasonable
acts and things as may be required of it to enable such holder to consummate
the
disposition in such jurisdiction of the securities covered by such registration
statement;
(v) furnish,
at the request of the selling Registrable Securities Holder(s), on the date
that
such shares of Registrable Securities are delivered to the underwriters for
sale
pursuant to a registration that is underwritten or, if such Registrable
Securities are not being sold through underwriters, on the date that the
registration statement with respect to such shares of Registrable Securities
becomes effective, (A) an opinion, dated such date, of the counsel representing
the Buyer for the purposes of such registration, addressed to the underwriters,
if any, and if such Registrable Securities are not being sold through
underwriters, then to the selling Registrable Securities Holder(s), in customary
form and covering matters of the type customarily covered in such legal
opinions; and (B) a comfort letter dated such date, from the independent
certified public accountants of the Buyer, addressed to the underwriters, if
any, and the selling Registrable Securities Holder(s), in a customary form
and
covering matters of the type customarily covered by such comfort letters and
as
they shall reasonably request;
21
(vi) enter
into customary agreements (including an underwriting agreement in customary
form, it being understood that any underwriting agreement entered into by the
selling Registrable Securities Holder(s) with respect to an underwritten
offering of Registrable Securities will impose customary indemnification
obligations on the underwriter(s)) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
(vii) cooperate
reasonably with any managing underwriter to effect the sale of Registrable
Securities, including but not limited to attendance of the Buyer’s executive
officers at any planned “road show” presentations to the extent that such
attendance does not unduly or unreasonably impact the performance of such
officer’s duties;
(viii) notify
the selling Registrable Securities Holder(s) and the underwriter(s), if any,
in
writing at any time when the Buyer is aware that offering documents include
an
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein not misleading
in
light of the circumstances then existing, and at the request of any selling
Registrable Securities Holder or underwriter, prepare and furnish to such
person(s) such reasonable number of copies of any amendment or supplement to
the
offering documents as may be necessary so that, as thereafter delivered to
the
purchasers of such shares, such offering documents would not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and to deliver to purchasers of any
other securities of the Buyer included in the offering copies of such offering
documents as so amended or supplemented;
(ix) promptly
notify the selling Registrable Securities Holder(s) of (A) the effectiveness
of
such offering documents, (B) the issuance by the SEC of an order suspending
the
effectiveness of the offering documents, or of the threat of any proceeding
for
that purpose, and (C) the suspension of the qualification of any securities
to
be included in the offering documents for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose; and
(x) cause
all Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Buyer are then listed.
22
It
shall be a condition precedent to the obligation of the Buyer to take any action
pursuant to this Section 6 in respect of the securities which are to be
registered that the Registrable Securities Holder(s) shall furnish to the Buyer
such information regarding the securities held by the Registrable Securities
Holder(s) and the intended method of disposition thereof as the Buyer shall
reasonably request and as shall be required in connection with the action taken
by the Buyer.
(d) Expenses.
All expenses incurred in complying with this Section 6 shall be paid by the
Buyer, including, without limitation, (i) all registration and filing fees
(including all expenses incident to filing with the NASD), (ii) all “road show”
expenses incurred by the Buyer or the Registrable Securities Holder(s) and
all
applicable selling security holders, (iii) printing expenses, (iv) fees and
expenses of counsel for the Buyer, (v) the reasonable fees and expenses of
one
counsel for the Registrable Securities Holders, (vi) expenses of any special
audits incident to or required by any such registration, (vii) expenses of
complying with the securities or blue sky laws of any jurisdiction pursuant
to
Section 6(c)(iv) and (viii) any fees or disbursements of counsel for any
underwriter in respect of the securities sold by any applicable selling security
holders, including the Registrable Securities Holders, if applicable, except
that the Buyer shall not be liable for any fees, discounts or commissions to
any
underwriter.
(e) Indemnification
and Contribution.
(i) In
the event of any registration of any Registrable Securities under the Securities
Act pursuant to this Agreement, the Buyer shall indemnify and hold harmless
the
Seller’s Indemnitees from and against any losses, claims, damages or
liabilities, joint or several, to which a Seller’s Indemnitee may become subject
under the Securities Act or any other statute or at common law, insofar as
such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out
of or are based upon: (A) any untrue statement or any alleged untrue statement
of any material fact contained or incorporated by reference, on the effective
date thereof, in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, any free writing prospectus or any amendment
or
supplement thereto, (B) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (C) any other violation of any applicable securities
laws, and in each of the foregoing circumstances shall pay for or reimburse
the
Seller’s Indemnitees for any legal or any other expenses reasonably incurred by
all or any one of the Seller’s Indemnitees in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however,
that, with respect to any Seller’s Indemnitee, the Buyer shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
has
been found by a court of competent jurisdiction to have been based upon any
actual untrue statement or actual omission made or incorporated by reference
in
such registration statement, preliminary prospectus, prospectus, free writing
prospectus or any amendment or supplement thereto solely in reliance upon and
in
conformity with written information furnished to the Buyer by such Seller’s
Indemnitee specifically for use therein. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of a
Seller’s Indemnitee, and shall survive the transfer of such securities by a
Seller’s Indemnitee.
23
(ii) In
the event of any registration of any Registrable Securities under the Securities
Act pursuant to this Agreement, the Registrable Securities Holders, by
acceptance hereof, agree to indemnify and hold harmless the Registration Buyer
Indemnitees against any losses, claims, damages or liabilities, joint or
several, to which the Registration Buyer Indemnitees may become subject under
the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out
of or are based upon: (A) any untrue statement or any alleged untrue statement
of any material fact contained or incorporated by reference, effective date
thereof, in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, any free writing prospectus, or any amendment
or
supplement thereto, or (B) any omission or alleged omission to state therein
a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in either case only to the extent that such untrue
statement or omission is (1) made in reliance on and in conformity with any
information furnished in writing by the Seller to the Buyer concerning the
Seller specifically for inclusion in the registration statement, preliminary
prospectus, prospectus, free writing prospectus or any amendment or supplement
thereto relating to such offering, and (2) is not corrected by the Seller and
distributed to the purchasers of shares within a reasonable period of
time.
(iii) If
the indemnification provided for in this Section 6 from an indemnifying party
is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to
the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to
reflect the relative fault of the indemnifying party and indemnified parties
in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall
be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates
to
information supplied by, such indemnifying party or indemnifying parties, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by a party as
a
result of the losses, claims, damages, liabilities and expenses referred to
above shall include any legal or other fees or expenses reasonably incurred
by
such party in connection with any investigation or proceeding.
(iv) The
parties hereto agree that it would not be just and equitable if contribution
pursuant to Section 6(e)(iii) were determined by pro rata allocation or by
any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11 (f)
of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
24
(f) “Market
Stand-Off” Agreement.
The Seller (on behalf of itself and each Registrable Securities Holder) hereby
agrees, in connection with any firm commitment, underwritten primary public
offering by the Buyer of its securities, that it shall not, to the extent
requested by the Buyer or a managing underwriter of such securities, sell or
otherwise transfer or dispose of or engage in any other transaction regarding
any Registrable Securities or other shares of the Buyer then owned by the Seller
or any Registrable Securities Holder for a period not to exceed one hundred
and
eighty (180) days following the effective date of a registration statement
of
the Buyer filed under the Securities Act in connection with such firm
commitment, underwritten public offering by the Buyer.
(g) Resale
Exemptions; Reports Under Exchange Act. In
order to permit a Registrable Securities Holder to sell Registrable Securities,
if it so desires, pursuant to any applicable resale exemption under applicable
securities laws and regulations, the Buyer shall:
(i) comply
with all requirements under the Securities Act and all rules and regulations
of
the SEC thereunder in connection with use of any such resale
exemption;
(ii) make
and keep available adequate and current public information regarding the
Buyer;
(iii) file
with the SEC in a timely manner, all reports and other documents required to
be
filed under the Securities Act, the Exchange Act, or other applicable securities
laws and regulations;
(iv) furnish
to the Registrable Securities Holders, upon written request, copies of annual
reports required to be filed under the Exchange Act and other applicable
securities laws and regulations; and
(v) furnish
to the Registrable Securities Holders, upon written request (A) a copy of the
most recent quarterly report of the Buyer and such other reports and documents
filed by the Buyer with the SEC and (B) such other information as may be
reasonably required to permit the Registrable Securities Holders to sell
pursuant to any applicable resale exemption under the Securities Act or other
applicable securities law and regulations, if any.
25
(h) Lock-up.
(i) The
Seller hereby agrees that, without the prior written consent of the Buyer,
it
(A) will not, directly or indirectly, offer, sell, agree to offer or sell,
solicit offers to purchase, grant any call option or purchase any put option
with respect to, or pledge, borrow or otherwise dispose of, any of the
Registrable Securities, and (B) will not establish or increase any “put
equivalent position” or liquidate or decrease any “call equivalent position”
with respect to such Registrable Securities (in each case within the meaning
of
Section 16 of the Exchange Act), or otherwise enter into any swap, derivative
or
other transaction or arrangement that transfers to another, in whole or in
part,
any economic consequence of ownership of such Registrable Securities, whether
or
not such transaction is to be settled by delivery of Registrable Securities,
other securities, cash or other consideration, in either case for a period
of
(x) one hundred and eighty (180) days with respect to one-half of such
Registrable Securities, and (y) three hundred and sixty five (365) days with
respect to the remaining Registrable Securities, in each case commencing on
the
Closing Date; provided
that,
notwithstanding the foregoing, the Seller shall be permitted to transfer all
or
any portion of the Registrable Securities to any Seller’s Affiliate;
provided,
further, that prior
to any such transfer the transferor at its expense shall provide to the Buyer
an
opinion of counsel reasonably acceptable to the Buyer to the effect that such
transfer would not require registration under the Securities Act. The Seller
hereby further agrees to cause each Registrable Securities Holder to enter
into
a lock-up agreement giving effect to the provisions of this Section 6(h)
immediately upon such Registrable Securities Holder’s acquisition of an
aggregate of any
Registrable Securities. The registration of the Registrable Securities as
contemplated by Sections 6(a) and (b) shall not be prohibited by this Section
6(h).
(ii) The
Buyer and EIAC shall cause each of Xxxxxx Xxxxxxxx
and
Xxxxxx Xxxxxxxxxxxxx to
enter into an acknowledgment and agreement (as required by Section 14(p))
providing
that,
without the prior written consent of the Buyer, he
(A) will not, directly or indirectly, offer, sell, agree to offer or sell,
solicit offers to purchase, grant any call option or purchase any put option
with respect to, or pledge, borrow or otherwise dispose of the
1
million units of Buyer to be issued pursuant to Section 3(c)(viii) of this
Agreement, or any of the Buyer
Common Stock or warrants included therein,
and (B) will not establish or increase any “put equivalent position” or
liquidate or decrease any “call equivalent position” with respect to
1
million units of Buyer to be issued pursuant to Section 3(c)(viii) of this
Agreement, or any of the Buyer Common Stock or warrants included therein
(in
each case within the meaning of Section 16 of the Exchange Act), or otherwise
enter into any swap, derivative or other transaction or arrangement that
transfers to another, in whole or in part, any economic consequence of ownership
of the 1 million units of Buyer to be issued pursuant to Section 3(c)(viii)
of
this Agreement, or any of the Buyer Common Stock or warrants included therein,
whether or not such transaction is to be settled by delivery of shares of Buyer
Common Stock or warrants, other securities, cash or other consideration, in
either case for a period of one hundred and eighty (180) days commencing on
the
Closing Date. The registration rights contemplated by Sections 6(a) and (b)
shall not be prohibited by this Section 6(h)(ii).
(i) Termination.
The rights granted under this Section 6 shall expire at the earlier of such
time
as the Registrable Securities Holders collectively (i) hold less than five
(5%)
percent of the outstanding Buyer Common Stock, or (ii) are eligible to sell
their Registrable Securities without restriction under Rule 144(k) promulgated
under the Securities Act (it being agreed, for purposes of this Section 6(i),
that the Buyer, upon the request of a Registrable Securities Holder and at
Buyer’s expense, shall provide to Buyer’s transfer agent a legal opinion of its
counsel regarding the ability of such holder to sell its Registrable Securities
under Rule 144(k) and any appropriate legend removal instructions).
26
(j) Legends.
The Seller hereby acknowledges and agrees that the Buyer shall legend the share
certificates representing the Registrable Securities to reflect the restrictions
on transfer contained in this Agreement and may issue to its transfer agent
a
stop transfer instruction in relation thereto. Such legend shall
state:
THE
SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY HAS RECEIVED AN OPINION
OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO AN AGREEMENT BY THE REGISTERED HOLDER WITH THE
COMPANY NOT TO SELL SUCH SHARES FOR A PERIOD OF 180 (OR 365 DAYS, AS THE CASE
MAY BE) DAYS FOLLOWING THE DATE OF ISSUANCE OF THE SHARES.
SECTION
7.
|
DIVIDENDS.
|
(a) Subject
to its ability to do so under applicable law, the Buyer agrees to pay the First
Year Dividend to its shareholders on the First Anniversary.
(b) The
Seller shall, and shall cause each other Registrable Securities Holder holding
Dividend Waiver Securities to, enter into a Dividend Waiver Agreement as
required under Section 3(c)(ii) hereof.
(c) EIAC
and the Buyer shall cause the Initial Stockholders, the directors and officers
of EIAC and their respective Affiliates holding Dividend Waiver Securities
to
enter into a Dividend Waiver Agreement
as required under Section 3(c)(ii) hereof.
(d) Subject
to the restrictions contained in Section 6(h), a Person described in Section
7(b) or (c) may:
(i) sell
any Dividend Waiver Securities to an unrelated third party free of any
restrictions imposed by a Dividend Waiver Agreement, and upon such sale, and
pursuant to the terms of the Dividend Escrow Agreement, if
applicable, the
Escrow Agent shall release such Dividend Waiver Securities from escrow upon
receipt by it of the agreed consideration therefor and shall pay to the seller
the amount of the consideration received less such amount as would be necessary
to pay the First Year Dividend on such Dividend Waiver Securities, which amount
shall be retained by the Escrow Agent and held in escrow pursuant to the terms
of the Dividend Escrow Agreement. Any
amounts deposited
in escrow pursuant
to this paragraph and
not used to pay the First Year Dividend shall be refunded, together with any
interest accrued thereon,
to such seller upon the payment of the First Year Dividend; and
27
(ii) exercise
any warrants, rights or other options in respect of any Dividend Waiver
Securities, and upon notifying the Escrow Agent of such exercise the Escrow
Agent shall promptly take all such steps as are necessary to exercise such
warrants, rights or other options in respect of any Dividend Waiver
Securities,
provided
that
any shares of Buyer Common Stock issuable upon any such exercise shall remain
subject to the applicable Dividend Waiver Agreement and shall be held in escrow
by the Escrow Agent and pursuant to the terms of the Dividend Escrow
Agreement.
(e) The
Buyer
shall be obligated and agrees to pay any and all expenses of the Escrow Agent
in
connection with the Dividend Escrow Agreement.
SECTION
8.
|
NO
SOLICITATION OF OTHER ACQUISITIONS.
|
(a) Only
in
the event that the Seller obtains the Financing, and commencing on such date,
until the termination of this Agreement pursuant to Section 20 hereof,
EIAC,
the Buyer, their Affiliates and their respective representatives, agents and
officers will
cease
all activities, discussions or negotiations with any Person or Persons other
than the Seller with respect to any Acquisition Proposal and in particular,
EIAC
and the Buyer and their respective representatives, agents and officers shall
not take, and shall use commercially reasonable efforts to cause their
respective Affiliates and their respective representatives, agents and officers
not to take, any action to:
(i) knowingly
solicit the making or submission of any Acquisition Proposal; or
(ii) knowingly
initiate or participate in any discussions or negotiations with any Person
(other than the Seller) in furtherance of any proposal that constitutes or
could
reasonably be expected to lead to any Acquisition Proposal.
(b) Only
in
the event that the Seller obtains the Financing, and commencing on such date,
until the termination of this Agreement pursuant to Section 20 hereof,
the
Board of Directors of each of EIAC and the Buyer (or any committee thereof)
shall not (i) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal (other than with the Seller) nor (ii) cause EIAC, the
Buyer
or any of their respective Affiliates to enter into and approve any letter
of
intent, agreement in principle or similar agreement relating to any Acquisition
Proposal.
(c) Only
in
the event that the Seller obtains the Financing, and commencing on such date,
until the termination of this Agreement pursuant to Section 20 hereof,
in
addition to the obligations set forth the preceding clauses of this Section
8,
EIAC and the Buyer shall as promptly as practicable (and in any event within
two
(2) Business Days) advise the Seller of any request for information with respect
to any Acquisition Proposal or of any Acquisition Proposal, or any inquiry
with
respect to any Acquisition Proposal, including the terms and conditions of
such
Acquisition Proposal.
28
SECTION
9.
|
DIRECTOR
NOMINEES AND OFFICERS; MANAGEMENT STRUCTURE.
|
(a) The
Merger Proxy will provide that following the Merger and the Sale and Purchase
the Buyer’s board of directors shall consist of nine (9) persons, eight (8) of
whom (consisting of two (2) Class A directors, three (3) Class B directors
and
three (3) Class C directors) shall be nominated by the Seller and one (1) of
whom (consisting of one (1) Class A director) shall be nominated by the holders
of Buyer
Common Stock
immediately prior to the Effective Time. Five (5) of the directors so nominated
by Seller shall qualify as independent directors under the Securities Act and
the rules of any applicable securities exchange. In accordance with Article
Sixth of the Buyer’s Articles of Incorporation, following the consummation of
the Merger and the Sale and Purchase, subject to subparagraph (i) below, Captain
Vanderperre and Mr. Xxxx Xxxxx shall be appointed as Class C directors and
Xx.
Xxxxxx Xxxxxxxxxxxxx shall be appointed as a Class A director. Subject to the
placement of director and officer liability insurance in form and substance
satisfactory to each of the following individuals in his sole discretion,
following the Effective Time the following individuals shall be appointed to
the
offices of Buyer indicated:
(i) Captain
Vanderperre shall serve as non-executive Chairman of the Board of Directors
or
if he is unable or unwilling to accept such appointment, the Seller may nominate
another individual to serve as non-executive Chairman of the Board of Directors;
and
(ii) Mr.
Xxxx Xxxxx shall serve as Chief Executive Officer.
(b) After
the Effective Time, Buyer shall have its principal office located in Hong Kong
subject to confirmation by the Closing Date that the location of such office
will not result in any adverse tax consequences.
(c) Upon
the
consummation of the Closing the Buyer shall procure that under the Management
Agreement the management of the Vessels is contracted for a period of three
(3)
years to the Management Company or such other entity as may be nominated by
Seller, which shall in turn subcontract the technical management and crewing
services activities to Univan.
(d) After
the
initial appointments referred to in sub-clause (a) above and in consideration
of
Closing, the Buyer hereby irrevocably grants to the Seller, for so long as
the
Seller shall hold not less than 25% of the outstanding Buyer Common Stock for
the time being (calculated assuming conversion of any outstanding shares of
convertible preferred stock of the Buyer held by the Seller at such time),
the
continuing right to appoint by written notice to the Buyer one (1) Class A
director, one (1) Class B director and one (1) Class C director at any time
in
place of any of the Class A, Class B or Class C directors nominated by the
Seller under sub-clause (a) above, or their successors, whether upon the
retirement, removal, incapacity or death of any such Class A, Class B or Class
C
directors (as the case may be). None of such appointed directors shall be
required to be independent directors, provided that following any such
appointment the board of the directors of the Buyer shall include such number
of
independent directors as are then required under applicable U.S. securities
laws
and the rules and regulations of the American Stock Exchange. The parties hereto
agree that, at or prior to the Closing, the Buyer shall effect such amendments
to its Articles of Incorporation, issue to the Seller such shares of convertible
preferred stock or other convertible voting securities (in each case for no
consideration) in lieu of shares of Buyer Common Stock that would otherwise
be
issued to the Seller as Stock Consideration or in the Financing Private
Placement, and enter into such agreements with the Seller, in each case as
are
in the reasonable opinion of the Seller necessary to give effect to the
provisions of this Section 9(d).
29
SECTION
10.
|
BINDING
AGREEMENTS; NON-COMPETITION.
|
(a) Subject
to Section 20 hereof, the Buyer, EIAC and Seller agree to be bound by the terms
of this Agreement and shall not enter into any agreements, negotiations or
transactions that would adversely affect their respective obligations
hereunder.
(b) During
the Non-Compete Period, the Seller hereby agrees and undertakes not to do any
of
the things set out in Section 10(c) below, except with the Buyer’s prior written
consent (which consent shall not be unreasonably withheld or delayed),
regardless of whether the Seller is acting:
(i) for
itself or on behalf of any Person (including as director, manager, partner,
shareholder, employee, consultant or agent of such Person);
(ii) alone
or in conjunction with any other Person;
(iii) directly
or indirectly through agents, intermediaries, Affiliates or any other Person;
or
(iv) in
any other capacity and in any other manner whatsoever.
(c) Pursuant
to Section 10(b) above, the Seller shall refrain from:
(i) participating
in any capacity (other than as a customer) in any Competitive Business,
provided
that:
(A) the
Seller shall be permitted to participate as a minority shareholder in any
Competitive Business; and
(B) the
Seller shall not be prevented or restrained in any way from acquiring or
participating in any Competitive Business in any manner the Seller deems fit
in
its sole discretion if Seller shall have offered to the Buyer the first
opportunity to acquire or participate in such Competitive Business on the terms
available to the Seller and, within not more than three (3) business days of
the
date the Seller offered such opportunity to the Buyer, the Buyer has either
declined to proceed with such opportunity or failed to respond to such
offer;
30
(ii) inducing
or attempting to induce any person who is or was within one year prior to the
Closing Date a customer, supplier or other business relation of any SPV to
cease
doing business with or materially reduce its business with such SPV or to do
business with such SPV on less favorable terms than such business had previously
been conducted or in any way interfering in a materially detrimental manner
with
the relationship between any SPV or the Buyer and any of its customers,
suppliers or other business relations;
(iii) inducing
or attempting to induce any prospective customer of any SPV not to do business
with such SPV;
(iv) inducing
or attempting to induce any employee of the Buyer to leave such employment
or in
any way interfering with the relationship between any SPV or the Buyer and
any
of its employees, provided
that
nothing herein shall extend to the crew for the respective Vessels provided
by
Univan under the management agreements or to any employee who responds to a
general employment advertisement;
(v) employing
(or otherwise engaging as an independent contractor or in any other capacity)
any employee of the Buyer or any person who was an employee of the Buyer at
any
time during the Non-Compete Period except (A) after such person has left his
employment with the Buyer, but then only if the circumstances set out in
paragraph (iv) above do not apply or (B) any employee who responds to a general
employment advertisement; and
(vi) inducing
or attempting to induce any director of any SPV or the Buyer or any person
having a consultancy or similar agreement with any SPV or the Buyer to leave
his
position with any SPV or the Buyer or to terminate his agreement with any SPV
or
the Buyer or in any way interfering in a materially detrimental manner with
the
relationship between any SPV or the Buyer and any of its directors or any of
the
persons referred to in this paragraph, provided
that
nothing herein shall extend to any director or consultant who responds to a
general advertisement.
(d) If
the Buyer becomes aware of any infringement of the provisions set out in Section
10(c) by the Seller, the Buyer shall give a notice to the Seller requesting
them
to cease any such infringement within fifteen days. In case of failure by the
Seller to comply with this notice, the Seller shall compensate the Buyer for
all
Losses (as defined herein) caused by such infringement.
(e) The
Seller acknowledges that the provisions of Section 10(c) above are reasonable
and necessary to protect the legitimate interests of the Buyer. However, if
any
of such provisions shall ever be held to exceed the limitations imposed by
applicable law, they shall not be nullified but the parties hereto shall be
deemed to have agreed to such provisions that conform with the maximum permitted
by applicable law, and any such provision exceeding such limitations shall
be
automatically reformed accordingly.
31
(f) The
Buyer and EIAC acknowledge that the Seller (either directly or through
subsidiaries other than the SPVs), Captain Vanderperre, Mr. Xxxx Xxxxx and/or
JVCo are now engaged in (i) the SK Shipping Venture, and (ii) activities or
lines of business that are similar to the Business but which are not Competitive
Businesses, and that in the event that the option available pursuant to the
Option Agreement has not been exercised by the Buyer in respect of any or all
of
the respective Option Vessels, such Option Vessels may carry on Competitive
Business. Notwithstanding anything in this Section 10 to the contrary, the
Buyer
and EIAC acknowledge that the Seller (either directly or through subsidiaries
other than the SPVs), Captain Vanderperre, Mr. Xxxx Xxxxx and/or JVCo shall
have
the right to continue to engage in (x) the SK Shipping Venture, (y) such
activities or lines of business that are similar to the Business in which they
are now engaged or may in the future elect to engage in so long as such
activities or lines of business are not Competitive Businesses, and (z) any
Business in respect of any Option Vessels in respect of which the option
available pursuant to the Option Agreement has not been exercised by the Buyer,
whether or not it is Competitive Business.
SECTION
11.
|
REPRESENTATIONS
AND WARRANTIES OF THE SELLER.
|
The
Seller hereby makes the following representations and warranties to the Buyer
and EIAC as of the Original Agreement Date and as of the Closing Date (unless
otherwise indicated), provided
that
the Seller shall have no liability whatsoever in respect of any Claims or Losses
if and to the extent that any fact, matter or circumstance which causes any
of
the following representations and warranties to be breached or which might
result in any Claims or Losses has been disclosed in this Agreement or in the
Disclosure Letter, assuming compliance with Section (4)(b)(x):
(a) it
is duly organized and existing under the laws of the jurisdiction of its
organization with full power and authority to execute and deliver this Agreement
and to perform all of the duties and obligations to be performed by it under
this Agreement;
(b) as
of the date of this Agreement and as of the Closing Date, this Agreement has
been duly authorized, executed and delivered by it, and constitutes its valid,
legal and binding obligation enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application relating to or affecting the
enforcement of creditors’ rights in general or by general principles of equity
whether considered in a proceeding at law or equity;
(c) its
execution and delivery of, the performance and incurrence by it of its
obligations and liabilities under, and the consummation by it of the other
transactions contemplated by, this Agreement do not and will not as of the
date
of this Agreement and as of the Closing Date:
(i) violate
any provision of its organizational documents;
(ii) violate
any applicable law, rule or regulation of any Governmental Authority having
jurisdiction over the Seller, except as would not reasonably be expected, based
on customary practice in the maritime shipping industry, individually or in
the
aggregate, to materially impair the Seller’s ability to consummate the
transactions contemplated hereby or otherwise result in a Material Adverse
Effect;
32
(iii) violate
any order, writ, injunction or decree of any Governmental Authority having
jurisdiction over the Seller, except as would not reasonably be expected, based
on customary practice in the maritime shipping industry, individually or in
the
aggregate, to materially impair the Seller’s ability to consummate the
transactions contemplated hereby or otherwise result in a Material Adverse
Effect; or
(iv) other
than as set forth in Schedule
11(c)(iv)
result in a breach of, constitute a default under, require any consent under,
or
result in the acceleration or required prepayment of any indebtedness pursuant
to the terms of, any agreement or instrument to which it or any SPV is a party
or by which it or any SPV is bound or to which it or any SPV is subject, or
result in the creation or imposition of any Lien upon any property of it or
any
SPV (other than the Financing or Carry-Over Financing) pursuant to the terms
of
any such agreement or instrument, except as would not reasonably be expected,
based on customary practice in the maritime shipping industry, individually
or
in the aggregate, to materially impair the Seller’s ability to consummate the
transactions contemplated hereby or otherwise result in a Material Adverse
Effect;
(d) Schedule
11(d)
sets forth the Seller’s and JVCo’s record and beneficial ownership of the SPV
Shares. The Seller and JVCo have good and valid title to the SPV Shares and,
upon the transfer of the SPV Shares in accordance with this Agreement, the
Buyer
will receive good and valid title to all of the issued and outstanding SPV
Shares, free and clear of all Liens except for any Liens in respect of the
Carry-Over Financing;
(e) the
SPV Shares constitute the whole of the authorized and issued share capital
of
each SPV, and as of the date hereof are, and as of the Closing Date will be,
duly authorized, validly issued, fully paid and nonassessable. There are no
options, warrants, rights, calls, commitments, conversion rights, rights of
exchange or other agreements of any character, contingent or otherwise,
providing for the purchase or sale of any of the SPV Shares by any person other
than the Buyer pursuant hereto, nor any arrangements that require or permit
the
SPV Shares to be voted by or at the discretion of anyone other than the Seller
except following an event of default in respect of the Carry-Over
Financing;
(f) each
SPV wholly owns the Vessel indicated on Schedule
11(f),
free and clear of any Liens, other than Permitted Liens;
(g) except
as set forth in Schedule
11(g) (which,
with respect to each Action disclosed therein, sets forth the parties, nature
of
the proceeding, date and method commenced, amount of damages or other relief
sought and, if applicable, paid or granted), to the Knowledge of the Seller
after due inquiry, there are no Actions as of the date hereof by or against
any
SPV (or by or against the Seller or any Affiliate thereof and relating to the
Business, an SPV or any Vessel), pending before any Governmental Authority
(or,
to the Knowledge of the Seller after due inquiry, threatened to be brought
by or
before any Governmental Authority);
33
(h) none
of the SPVs are conducting their Business in violation of any Laws, except
such
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect;
(i) in
connection with Taxes of the SPVs:
(i) all
Tax Returns required to be filed with respect to each SPV have been duly and
timely filed and, to the Knowledge of the Seller, are true, correct and complete
in all material respects;
(ii) all
Taxes required to be shown on such Tax Returns or otherwise due and payable
on
or prior to the Closing Date have been duly and timely paid, and all Taxes
required to be deducted and/or withheld by an SPV have been so deducted and/or
withheld and timely paid and reported to the appropriate Governmental
Authority;
(iii) no
adjustment relating to any such Tax Return has been proposed formally or
informally by any Governmental Authority and, to the Knowledge of the Seller,
no
basis exists for any such adjustment;
(iv) there
are no pending or, to the Knowledge of the Seller, threatened Tax Matters for
the assessment or collection of Taxes against any SPV or any company that was
included in the filing of a return with an SPV on a consolidated, combined
or
unitary basis; and
(v) neither
the Seller nor any SPV has received any notice of the existence of any Tax
liens
other than Permitted Liens on any assets of any SPV;
(j) the
Seller has delivered to EIAC correct and complete copies of all Tax Returns
filed with respect to each SPV for any taxable period ending after 2001, and
copies of all correspondence to or from any Governmental Authority with respect
thereto or any Tax Matter relating thereto, including any examination reports
and statements of deficiencies assessed against or agreed to by any SPV. Any
tax
sharing or allocation agreement involving any SPV shall be terminated as of
the
Closing on terms that require no further payments by any party. Seller has
delivered to EIAC a true and complete copy of each such agreement as listed
on
Schedule
11(j);
(k) as
of the Original Agreement Date and as of the Closing Date, each of the SPVs
was
and is currently duly organized, validly existing and in good standing under
the
laws of its jurisdiction of formation.
(l) the
Accounts:
(i) have
been prepared in accordance with the books of account and other financial
records of the relevant SPV;
(ii) present
fairly the consolidated financial condition and results of operations of the
relevant SPV as of the dates thereof or for the periods covered
thereby;
34
(iii) were
prepared on a basis consistent with past practices and have been (or will be
as
required by this Agreement) converted to GAAP; and
(iv) include
all adjustments (consisting only of normal recurring accruals) that are
necessary for a fair presentation of the consolidated financial condition of
the
relevant SPV and the results of the operations of the relevant SPV as of the
dates thereof or for the periods covered thereby;
(m) the
books of account and other financial records of each SPV provided in accordance
with the terms of this Agreement reflect all items of income and expense and
all
assets and liabilities required to be reflected therein in accordance with
past
practices, (ii) are in all material respects complete and correct, and do not
contain or reflect any material inaccuracies or discrepancies and (iii) have
been maintained in accordance with good business and accounting
practices;
(n) to
the Knowledge of the Seller, there are no Liabilities of any SPV, other than
Liabilities reflected or reserved against in the Accounts;
(o) to
the Knowledge of the Seller, there are no oral or informal arrangements or
agreements that would be binding on any SPV or otherwise relate to any
Vessel;
(p) Schedule
11(p)
sets forth the following contracts and agreements of each SPV currently in
effect (such contracts and agreements being “Material
Contracts”):
(i) each
contract and agreement involving the purchase of spare parts, other materials,
or for the furnishing of services to a SPV or a Vessel (including repair
services) or otherwise related to the Business under the terms of which such
SPV: (A) is likely to pay or otherwise give consideration of more than $500,000
in the aggregate during the calendar year ended December 31, 2007, (B) is likely
to pay or otherwise give consideration of more than $1,000,000 in the aggregate
over the remaining term of such contract or (C) cannot be cancelled by such
SPV
without penalty or further payment and without more than 180 days’
notice;
(ii) all
ship broker, market research, marketing consulting and advertising contracts
and
agreements to which any SPV is a party under the terms of which such SPV: (A)
is
likely to pay or otherwise give consideration of more than $500,000 in the
aggregate during the calendar year ended December 31, 2007 or (B) is likely
to
pay or otherwise give consideration of more than $1,000,000 in the aggregate
over the remaining term of such contract;
(iii) all
technical and commercial management contracts (or other contracts with
independent contractors or consultants), to which any SPV is a party and which
are not cancelable without penalty or further payment and without more than
180
days’ notice;
(iv) all
contracts and agreements pursuant to which any SPV has incurred
Indebtedness;
35
(v) all
contracts and agreements with any Governmental Authority to which any SPV is
a
party;
(vi) all
contracts and agreements for the employment of a Vessel with a duration in
excess of 12 months;
(vii) all
contracts and agreements, whether or not made in the ordinary course of
business, which are material to the business as conducted prior to the Closing
Date; and
(viii) all
contracts pertaining to insurance for the Vessels;
(q) except
as set forth on Schedule
11(q),
with respect to all Material Contracts:
(i) none
of the SPVs or, to the Knowledge of the Seller, any other party to any such
Material Contract is in material breach thereof or default
thereunder;
(ii) to
the Knowledge of the Seller, there does not exist under any Material Contract
any event which, with the giving of notice or the lapse of time, would
constitute such a material breach or default by an SPV or, to the Knowledge
of
the Seller, any other party thereto;
(iii) each
Material Contract is a valid and enforceable obligation of the SPV party thereto
and with respect to such SPV party is in full force and effect and to the
Knowledge of the Seller, with respect to any other party thereto is in full
force and effect (except to the extent that the enforceability thereof may
be
limited by (A) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time in effect affecting
generally the enforcement of creditors’ rights and remedies, and (B) general
principles of equity), in each case except for such breaches, defaults, events
and other circumstances as to which requisite waivers or consents have been
obtained, or which would not, individually or in the aggregate, be material
to
the SPVs, individually, and taken as a whole; and
(iv) no
consent is required by any Person that is a party to a Material Contract to
consummate the Sale and Purchase, except with respect to the Carry-Over
Financing;
(r) since
the date of the most recent balance sheet included in the Audited Financial
Statements, except as disclosed in Schedule
11(r),
the business of the SPVs has been conducted in the ordinary course and
consistent with past practice. As amplification and not limitation of the
foregoing, except as so disclosed, since such date, no SPV has:
(i) permitted
or allowed any of the assets or properties (whether tangible or intangible)
of
such SPV to be subjected to any Lien, other than Permitted Liens;
(ii) except
in the ordinary course of business consistent with past practice, discharged
or
otherwise obtained the release of any Lien or paid or otherwise discharged
any
liability, other than current liabilities reflected in the Accounts and current
liabilities incurred in the ordinary course of business consistent with past
practice;
36
(iii) made
any loan to, guaranteed any Indebtedness of or otherwise incurred any
Indebtedness on behalf of any Person;
(iv) failed
to pay any creditor any amount owed to such creditor;
(v) except
for the Charters and insurance policies relating to the Vessels, entered into
any contract or agreement that limits or purports to limit the ability of any
SPV to compete in any line of business or with any Person in any geographic
area
or during any period of time;
(vi) made
any material changes in the operating practices of such SPV that would be
inconsistent with past practice, including, without limitation, practices and
policies relating to marketing, selling and pricing;
(vii) merged
with, entered into a consolidation with or acquired an interest of 30% or more
in any Person or acquired 50% or more of the assets or business of any Person
or
any division or line of business thereof, or otherwise acquired any material
assets other than in the ordinary course of business consistent with past
practice;
(viii) made
any capital expenditure or commitment for any capital expenditure in excess
of
$1,000,000 individually or $3,000,000 in the aggregate other than in the
ordinary course of business;
(ix) issued
any sales orders or otherwise agreed to make any purchases involving exchanges
in value in excess of $1,000,000 individually or $3,000,000 in the aggregate
other than in the ordinary course of business;
(x) sold,
transferred, leased, subleased, licensed or otherwise disposed of any properties
or assets, real, personal or mixed (including, without limitation, leasehold
interests and intangible assets) in value in excess of $1,000,000 individually
or $3,000,000 in the aggregate, other than in the ordinary course of business
consistent with past practice;
(xi) issued
or sold any capital stock, notes, bonds or other securities, or any option,
warrant or other right to acquire the same, of, or any other interest in, SPVs
other than to the Seller;
(xii) entered
into any agreement, arrangement or transaction with any of its directors,
officers, employees or shareholders (or with any relative, beneficiary, spouse
or Affiliate of such person), other than shareholder loans reflected in (jj)
below;
37
(xiii) granted
any increase, or announced any increase, in the wages, salaries, compensation,
bonuses, incentives, pension or other benefits payable by such SPV to any of
its
Employees;
(xiv) amended,
terminated, cancelled, waived or compromised any material claims or rights
of
such SPV, except such claims or rights as would not, individually or in the
aggregate, be expected to have a Material Adverse Effect;
(xv) failed
to maintain the Vessels in accordance with class requirements and past
practices;
(xvi) allowed
any Permit that was issued or relates to such SPV or its Vessel to lapse or
terminate except such Permits as would not, individually or in the aggregate,
be
reasonably expected to have a Material Adverse Effect, or failed to renew any
such Permit or any insurance policy that is scheduled to terminate or expire
within 45 calendar days prior to or after the Closing Date;
(xvii) incurred
any Indebtedness, in excess of $1,000,000 individually or $3,000,000 in the
aggregate, other than in the ordinary course of business and except for
shareholder loans reflected in (jj) below;
(xviii) amended,
modified or consented to the termination of any Material Contract or such SPV’s
rights thereunder except (A) in the ordinary course of business consistent
with
past practice or (B) for such amendments and terminations as would not be
expected to have a Material Adverse Effect;
(xix) amended
or restated the charter or the by-laws (or other organizational documents)
of
such SPV except for such amendments that would not be expected to have a
Material Adverse Effect;
(xx) suffered
any Material Adverse Effect; or
(xxi) agreed,
whether in writing or otherwise, to take any of the actions specified in this
Section 11(r) or granted any options to purchase, rights of first refusal,
rights of first offer or any other similar rights or commitments with respect
to
any of the actions specified in this Section 11(r), except as expressly
contemplated by this Agreement;
(s) on
the date hereof, Captain Vanderperre and Mr. Xxxx Xxxxx are the sole directors
of each SPV except Shinyo Jubilee Ltd., Shinyo Mariner Ltd., and Shinyo Sawako
Ltd. in respect of which on the date hereof Captain Vanderperre and Mr. Xxxx
Xxxxx are both directors, and provided it is within their ability on the Closing
Date, Captain Vanderperre and Mr. Xxxx Xxxxx will be directors of each SPV.
None
of the SPVs have any officers, Employees or Workers. To the Knowledge of the
Seller, no dispute in excess of $100,000 exists under any Employment Legislation
or otherwise is outstanding between any SPV and any crew on such SPV’s Vessel.
No SPV is a party to or bound by any redundancy payment scheme in addition
to
statutory redundancy pay requirements. No SPV is a party to or bound by any
share option, profit sharing, bonus, commission or any other scheme relating
to
the profit or sales of the SPVs or the Vessel other than profit sharing
arrangements under the respective Charters in respect of the Vessels SHINYO
XXXXXXX and SHINYO OCEAN which have been disclosed on Schedule
11(p);
38
(t) since
the date of the most recent balance sheet included in the Audited Financial
Statements, no SPV has incurred any actual, or to the Knowledge of Seller,
contingent liability in connection with any termination of employment of its
Employees (including redundancy payments) or Workers or to the Knowledge of
Seller for failure to comply with any order for the reinstatement or
re-engagement of any Employees or Workers;
(u) [intentionally
omitted];
(v) true
and correct copies of the insurance policies maintained by or on behalf of
each
SPV as listed in Schedule
11(p)
have been provided to the Buyer. Other than as set forth in Schedule
2 of
this Agreement, there are no material outstanding claims under, or in respect
of
the validity of, any of those insurance policies and, to the Knowledge of the
Seller, there are no circumstances likely to give rise to any claim under any
of
those insurance policies, other than in the normal conduct of the Business
by
the SPVs. To the Knowledge of the Seller, (i) all the insurance policies are
in
full force and effect, (ii) are not void and (iii) nothing has been done or
not
done which could make any of them void or voidable;
(w) each
SPV currently holds all Permits (except where the failure to have such permits
would not reasonably be likely to have a Material Adverse Effect), and to the
Knowledge of the Seller all such Permits are in full force and effect. To the
Knowledge of the Seller, except for the Arab Boycott Clauses found in certain
of
the charters, there is no existing practice, action or activity of the Seller,
any SPV or their businesses as presently conducted, and no existing condition
of
the Vessels, which will give rise to any civil or criminal liability under,
or
violate or prevent compliance with, any health or occupational safety or other
applicable Law. Since the date of the most recent balance sheet included in
the
Audited Financial Statements, none of the Seller nor any SPV has received any
notice in writing from any Governmental Authority revoking, canceling,
rescinding, materially modifying or refusing to renew any Permit or providing
written notice of violations under any Law. To the Knowledge of the Seller,
each
SPV is in all respects in compliance with the requirements of the Permits and
no
Permit will require the consent of any Governmental Authority upon the
consummation of the Sale and Purchase;
(x) there
are no pending, and to the Knowledge of the Seller, during the one-year period
prior to the Original Agreement Date, there have been no threatened,
Environmental Claims against any SPV or any Vessel and, to the Knowledge of
the
Seller, there are no circumstances with respect to any Vessel or the operation
of the Business which could reasonably be anticipated (i) to form the basis
of
an Environmental Claim against any SPV or any Vessel or (ii) to cause such
Vessel to be subject to any restrictions on ownership, occupancy, use or
transferability under any applicable Environmental Law;
39
(y) the
name, official number, registered owner, and jurisdiction of registration of
each Vessel owned by any SPV is listed in Schedule
11(f)
hereto. To the Knowledge of the Seller, each Vessel is operated in material
compliance with each Maritime Guideline and all Laws to which it is subject.
Each SPV is qualified to own and operate the Vessel owned by it under all
applicable Laws (including the Laws of each Vessel’s flag state). Each Vessel is
classed by a classification society which is a member of the IACS and is in
class and free of overdue recommendations affecting class with all class and
trading certificates valid. The Vessels are insured in accordance with customary
market practice for vessels of similar age and type and as required by the
Carry-Over Financing. To the Knowledge of the Seller, since the date of the
most
recent balance sheet included in the Audited Financial Statements, the Vessels
have not been employed in any trade or business which is unlawful under the
laws
of any jurisdiction in which such Vessel is registered or trades, or in any
manner whatsoever which may render any such Vessel liable to condemnation in
a
prize court or to destruction, seizure or confiscation;
(z) all
of the bank accounts, safe deposit boxes and lock boxes used by each SPV
(designating each authorized signatory) are listed in Schedule
11(y).
Excepting the authorized signatories, no SPV has granted a power of attorney
with respect to such bank accounts to any Person which has not been
terminated;
(aa) it
is an “accredited investor” within the meaning of Rule 501 of Regulation D under
the Securities Act;
(bb) it
has received or has had full access to all the information it considers
necessary or appropriate to make an informed decision with respect to the
acquisition of the Registrable Securities;
(cc) the
Registrable Securities being acquired by it are being acquired for its own
account for the purpose of investment and not with a view to, or for resale
in
connection with, any distribution thereof within the meaning of the Securities
Act, and it has no current specific plan or intention to sell or otherwise
dispose of such Registrable Securities;
(dd) it
understands that (i) the Registrable Securities have not been registered under
the Securities Act by reason of their issuance in a transaction exempt from
the
registration requirements of the Securities Act, (ii) the Registrable Securities
must be held indefinitely (subject, however, to the Buyer’s obligation to effect
the registration of Registrable Securities in accordance with Section 6 hereof)
unless a subsequent disposition thereof is registered under the Securities
Act
or is exempt from such registration, and (iii) shares of Buyer Common Stock
will
bear a legend to such effect set forth in Section 6(j) hereof;
(ee) the
representations and warranties made by the Seller in this Section 11 are the
exclusive representations and warranties made by the Seller and the Seller
hereby disclaims any other express or implied representations or
warranties;
(ff) the
Seller is not aware of any existing facts pertaining to any SPV or the business
which could have a Material Adverse Effect and which have not been disclosed
to
EIAC and the Buyer by the Seller other than normal business or market risks
prevailing from time to time;
(gg) no
representation or warranty of the Seller in this Agreement, nor any statement
or
certificate furnished or to be furnished to EIAC or the Buyer pursuant to this
Agreement, or in connection with the transactions contemplated by this
Agreement, contains or will contain any untrue statement of a material fact,
or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading;
40
(hh) during
the period the Vessels have been owned by the SPVs, the Vessels have not
violated any United Nations or United States of America sanctions applicable
to
the Vessels at any time;
(ii) Seller
has the full power and authority to waive any and all rights of preemption
or
other restrictions on transfer in respect of the SPV Shares, as provided in
Section 3(b) of this Agreement; and
(jj) The
aggregate net amount of shareholder loans to the SPVs and inter-company
indebtedness between the respective SPVs at the Original Agreement Date and
the
date of this Agreement is approximately $87,330,000, which shall be satisfied
prior to or at Closing.
SECTION
12.
|
REPRESENTATIONS
AND WARRANTIES OF THE BUYER.
|
The
Buyer hereby makes the following representations and warranties to the Seller
and EIAC as of the Original Agreement Date and as of the Closing Date (unless
otherwise indicated):
(a) it
is duly organized and existing under the laws of the jurisdiction of its
organization with full power and authority to execute and deliver this Agreement
and to perform all of the duties and obligations to be performed by it under
this Agreement;
(b) as
of the date of this Agreement and as of the Closing Date, this Agreement has
been duly authorized, executed and delivered by it, and constitutes its valid,
legal and binding obligation enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application relating to or affecting the
enforcement of creditors’ rights in general or by general principles of equity
whether considered in a proceeding at law or equity;
(c) its
execution and delivery of, the performance and incurrence by it of its
obligations and liabilities under, and the consummation by it of the other
transactions contemplated by this Agreement do not and will not as of the date
of this Agreement and as of the Closing Date (i) violate any provision of its
organizational documents, (ii) violate any applicable law, rule or regulation,
(iii) violate any order, writ, injunction or decree of any court or governmental
or regulatory authority or agency or any arbitral award applicable to it or
its
affiliates or (iv) result in a breach of, constitute a default under, require
any consent under, or result in the acceleration or required prepayment of
any
indebtedness pursuant to the terms of, any agreement or instrument of which
it
is a party or by which it is bound or to which it is subject, or result in
the
creation or imposition of any lien upon any property of it pursuant to the
terms
of any such agreement or instrument, in the case of (i), (ii), (iii) or (iv)
which could have a material adverse effect on the transactions contemplated
hereby;
(d) there
are no legal or governmental actions, suits or proceedings pending or, to its
actual knowledge, threatened against it before any court, administrative agency
or tribunal which, if determined adversely to it, could reasonably be expected
to adversely affect the ability of it to perform its obligations under this
Agreement;
41
(e) as
of the Closing Date, the Buyer will (i) have sufficient cash in immediately
available funds to pay the Cash Consideration required to be paid by the Buyer
and all of its fees and expenses in order to consummate the Sale and Purchase
and (ii) be duly authorized without the consent of any other Person to issue
the
Stock
Consideration,
such that upon issuance, such Stock
Consideration
will be duly and validly issued, fully paid and non-assessable;
(f) the
affirmative vote of the holders of a majority of the outstanding shares of
Buyer
Common Stock is the only vote of the holders of any class or series of equity
securities of the Buyer necessary to approve the Merger and the Sale and
Purchase;
(g) attached
as Schedule
12(g)
are a true, correct and complete copy of the Buyer’s Articles of Incorporation
and Bylaws;
(h) as
of the date hereof and as of the Closing Date immediately prior to the Merger,
the Buyer has no shares of common stock or rights or warrants or any other
instrument to acquire shares of common stock currently outstanding except as
disclosed in Schedule
12(h),
which shares of common stock, rights, warrants and instruments are necessary
to
fulfill its obligations in connection with Merger and the Sale and
Purchase;
(i) the
Buyer acknowledges that it and its representatives have been permitted full
and
complete access to the books and records, facilities, equipment, Tax Returns,
contracts, insurance policies (or summaries thereof) and other properties and
assets of the SPVs that it and its representatives have desired or requested
to
see or review, and that it and its representatives have had a full opportunity
to meet with such Employees and other representatives of the SPVs to discuss
the
business of the SPVs; the Buyer acknowledges that none of the SPVs, the Seller
or any other Person has made any representation or warranty, expressed or
implied, as to the SPV Shares, the Vessels or the SPVs furnished or made
available to the Buyer and its representatives, except as expressly set forth
in
Section 11, and neither the Seller nor any other Person (including any officer,
director, member or partner of the Seller) shall have or be subject to any
liability to the Buyer, or any other Person, resulting from the Buyer’s use of
any information, documents or material made available to the Buyer in any
confidential information memoranda, “data rooms” (whether electronic or
otherwise), management presentations, due diligence or in any other form in
expectation of the transactions contemplated hereby; the Buyer acknowledges
that, should the Closing occur, the Buyer shall acquire the SPVs and their
respective Vessels in class pursuant to the rules of the applicable
classification society with no overdue recommendations affecting class, except
as otherwise expressly represented or warranted in Section 11 or in the
Disclosure Letter; provided,
however,
that nothing in this Section 12(i) is intended to limit or modify the
representations and warranties contained in Section 11 or in the Disclosure
Letter; and the Buyer acknowledges that, except for the representations and
warranties contained in Section 11 or in the Disclosure Letter, none of the
SPVs, the Seller or any other Person has made, and the Buyer has not relied
on
any other express or implied representation or warranty by or on behalf of
the
SPVs or the Seller;
(j) save
as set out in Schedule
12(j)
there are not now in existence any contracts, agreements, or understandings
of
any nature to which the Buyer is a party or by which it is or may become bound
which give rise to any Liabilities which will survive the Merger (except
as mutually agreed in writing between Buyer and Seller to effect the Merger
and
the Sale and Purchase)
and become the Liabilities of the Buyer, in whole or in part;
Buyer agrees that its Liabilities with respect to the contractual obligations
set forth in Schedule
12(j)
(other than legal, accounting and auditing fees and expenses) will not exceed
$7.15 million in the aggregate and expects legal, accounting and auditing fees
and expenses not to exceed $1.25 million in the aggregate; but in the event
that
Buyer has reason to believe that legal, accounting and auditing fees and
expenses will exceed $1.25 million, then Buyer shall notify Seller promptly
of
the amount by which it expects such Liabilities to exceed $1.25 million;
and
42
(k) no
representation or warranty of the Buyer in this Agreement, nor any statement
or
certificate furnished or to be furnished to Seller pursuant to this Agreement
or
in connection with the transactions contemplated by this Agreement, or in
respect of any filings made or to be made by the Buyer or EIAC with the
SEC
prior to
the Closing,
contains or will contain any untrue statement of a material fact, or omits
or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading; provided
that
nothing in the foregoing representation shall be construed to include any actual
untrue statement or actual omission made or incorporated by reference in any
filings made or to be made by the Buyer or EIAC with the SEC (i)
solely in reliance upon and in conformity with written information furnished
to
the Buyer or EIAC by the Seller (or
any
of its representatives) specifically
for use therein
or (ii)
which otherwise relates to Seller, the SPVs, or their businesses (individually
and combined), that the Seller has had the opportunity to review and has
provided its written consent thereto as provided in Section 5(c) of this
Agreement.
SECTION
13.
|
REPRESENTATIONS
AND WARRANTIES OF EIAC.
|
EIAC
hereby makes the following representations and warranties to the Seller and
the
Buyer as of the Original Agreement Date and as of the Closing Date (unless
otherwise indicated):
(a) it
is duly organized and existing under the laws of the jurisdiction of its
organization with full power and authority to execute and deliver this Agreement
and to perform all of the duties and obligations to be performed by it under
this Agreement;
(b) as
of the date of this Agreement and as of the Closing Date, this Agreement has
been duly authorized, executed and delivered by it, and constitutes its valid,
legal and binding obligation enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application relating to or affecting the
enforcement of creditors’ rights in general or by general principles of equity
whether considered in a proceeding at law or equity;
(c) its
execution and delivery of, the performance and incurrence by it of its
obligations and liabilities under, and the consummation by it of the other
transactions contemplated by, this Agreement do not and will not as of the
date
of this Agreement and as of the Closing Date (i) violate any provision of its
organizational documents, (ii) violate any applicable law, rule or regulation,
(iii) violate any order, writ, injunction or decree of any court or governmental
or regulatory authority or agency or any arbitral award applicable to it or
its
affiliates or (iv) result in a breach of, constitute a default under, require
any consent under, or result in the acceleration or required prepayment of
any
indebtedness pursuant to the terms of, any agreement or instrument of which
it
is a party or by which it is bound or to which it is subject, or result in
the
creation or imposition of any lien upon any property of it pursuant to the
terms
of any such agreement or instrument, in the case of (i), (ii), (iii) or (iv)
which could have a material adverse effect on the transactions contemplated
hereby;
43
(d) there
are no legal or governmental actions, suits or proceedings pending or, to its
actual knowledge, threatened against it before any court, administrative agency
or tribunal which, if determined adversely to it, could reasonably be expected
to adversely affect the ability of it to perform its obligations under this
Agreement;
(e) other
than the affirmative vote of the holders of a majority of the shares of common
stock voted by the holders of shares issued in the IPO and Initial Private
Placement, subject to public stockholders owning less than 30.0% of the total
number of shares sold in the IPO and Initial Private Placement exercising their
redemption rights (as described in the Prospectus), there is no other
shareholder vote of the holders of any class or series of equity securities
of
EIAC necessary to approve the transactions contemplated hereby to be undertaken
by EIAC hereunder;
(f) EIAC
acknowledges that it and its representatives have been permitted full and
complete access to the books and records, facilities, equipment, Tax Returns,
contracts, insurance policies (or summaries thereof) and other properties and
assets of the SPVs that it and its representatives have desired or requested
to
see or review, and that it and its representatives have had a full opportunity
to meet with such Employees and other representatives of the SPVs to discuss
the
business of the SPVs; EIAC acknowledges that none of the SPVs, the Seller or
any
other Person has made any representation or warranty, expressed or implied,
as
to the SPV Shares, the Vessels or the SPVs furnished or made available to EIAC
and its representatives, except as expressly set forth in Section 11, and
neither the Seller nor any other Person (including any officer, director, member
or partner of the Seller) shall have or be subject to any liability to EIAC,
or
any other Person, resulting from EIAC’s use of any information, documents or
material made available to EIAC in any confidential information memoranda,
“data
rooms” (whether electronic or otherwise), management presentations, due
diligence or in any other form in expectation of the transactions contemplated
hereby; EIAC acknowledges that, should the Closing occur, the Buyer shall
acquire the SPVs and their respective Vessels in class pursuant to the rules
of
the applicable classification society with no overdue recommendations affecting
class, except as otherwise expressly represented or warranted in Section 11
or
in the Disclosure Letter; provided,
however,
that nothing in this Section 13(f) is intended to limit or modify the
representations and warranties contained in Section 11 or in the Disclosure
Letter; and EIAC acknowledges that, except for the representations and
warranties contained in Section 11 or in the Disclosure Letter, none of the
SPVs, the Seller or any other Person has made, and EIAC has not relied on any
other express or implied representation or warranty by or on behalf of the
SPVs
or the Seller;
(g) save
as set out in Schedule
13(g)
there are no contracts, agreements, or understandings of any nature to which
EIAC is a party or by which it is or may become bound which give rise to any
Liabilities which will survive the Merger (except
as mutually agreed in writing between Buyer and Seller to effect the Merger
and
the Sale and Purchase)
and become the Liabilities of the Buyer, in whole or in part;
Buyer agrees that its Liabilities with respect to the contractual obligations
set forth in Schedule
13(g)
(other than legal, accounting and auditing fees and expenses) will not exceed
$7.15 million in the aggregate and expects legal, accounting and auditing fees
and expenses not to exceed $1.25 million in the aggregate; but in the event
that
Buyer has reason to believe that legal, accounting and auditing fees and
expenses will exceed $1.25 million, then Buyer shall notify Seller promptly
of
the amount by which it expects such Liabilities to exceed $1.25
million;
44
(h) set
out in Schedule
13(h)
are all currently outstanding loans made by officers, directors or principal
stockholders to EIAC.
(i) as
of the date hereof and as of the Closing Date immediately prior to the Merger,
EIAC has no shares of common stock or rights or warrants or any other instrument
to acquire shares of common stock currently outstanding except as disclosed
in
Schedule
13(i),
which shares of common stock, rights, warrants and instruments represent the
fully diluted capitalization of EIAC as of such dates and are necessary to
fulfill its obligations in connection with Merger and the Sale and Purchase;
and
(j) no
representation or warranty of EIAC in this Agreement, nor any statement or
certificate furnished or to be furnished to the Seller pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement,
or in respect of any filings made or to be made by EIAC or the Buyer with the
SEC
prior to
the Closing,
contains or will contain any untrue statement of a material fact, or omits
or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading; provided
that
nothing in the foregoing representation shall be construed to include any actual
untrue statement or actual omission made or incorporated by reference in any
filings made or to be made by the Buyer or EIAC with the SEC (i)
solely in reliance upon and in conformity with written information furnished
to
the Buyer or EIAC by the Seller (or
any
of its representatives) specifically
for use therein
or (ii)
which otherwise relates to Seller, the SPVs, or their businesses (individually
and combined), that the Seller has had the opportunity to review and has
provided its written consent thereto as provided in Section 5(c) of this
Agreement.
SECTION
14.
|
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF THE SELLER.
|
The
obligation of the Seller to sell and deliver the SPV Shares to the Buyer is
subject to the satisfaction or waiver of the following conditions, which
conditions are intended wholly for the benefit of the Seller:
(a) Due
Authorization, Execution and Delivery.
This Agreement shall have been duly authorized, executed and delivered by the
Buyer and EIAC, shall be in full force and effect and executed counterparts
thereof shall have been delivered to the Seller.
(b) Representations
and Warranties.
The representations and warranties of the Buyer and EIAC contained in this
Agreement shall be true and correct on and as of the date hereof and the Closing
Date.
(c) Illegality.
The performance of the transactions contemplated hereby upon the terms and
subject to the conditions set forth in this Agreement shall not, in the
reasonable judgment of the Seller, violate, and shall not subject the Seller
or
any Seller’s Affiliate or any SPV or Vessel to any material penalty or liability
under, any law, rule or regulation binding upon any of them.
45
(d) No
Proceedings.
No legal or governmental action, suit or proceeding shall have been instituted
or threatened before any court, administrative agency or tribunal, nor shall
any
order, judgment or decree have been issued or proposed to be issued by any
court, administrative agency or tribunal, to set aside, restrain, enjoin or
prevent the consummation of this Agreement or the transactions contemplated
hereby.
(e) Performance
of Obligations.
EIAC and the Buyer shall have performed all obligations required of them under
this Agreement in all material respects.
(f) Merger.
(i) EIAC
shall have been merged with and into the Buyer on the terms disclosed in the
Merger Proxy, the separate corporate existence of EIAC shall have ceased and
the
Buyer shall continue as the surviving corporation (the “Surviving
Corporation”);
(ii) the
Certificate of Incorporation and By-laws of EIAC, as in effect immediately
prior
to the Effective Time, shall cease and the Articles of Incorporation and Bylaws
of the Buyer shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation; and
(iii) the
board of directors of the Surviving Corporation shall consist of those persons
elected to serve as directors in accordance with Section 9.
(g) Shareholder
Approval.
Each of EIAC and the Buyer shall have received the required affirmative votes
from its stockholders in favor of the Merger and the purchase of the SPV Shares
as contemplated hereby.
(h) Admission
to Listing. The
consent to the listing of the securities of the Buyer on the American Stock
Exchange at and from the Effective Time shall have been obtained and a copy
supplied to Seller.
(i) Opinions
of Counsel to Buyer.
The Seller shall have received from counsel to Buyer opinions, customary for
transactions of the type contemplated by the Merger and the Sale and Purchase,
which opinions shall be in form and substance reasonably satisfactory to
Seller.
(j) Financing.
The Financing shall have been made available to Buyer on the Closing
Date.
(k) Market
Stand-off Agreement.
Prior to the Closing Date, each of the Initial Stockholders, each of the
executive officers and directors of the Buyer shall have executed and delivered
to the Seller and the Buyer a market stand-off agreement in form and substance
reasonably satisfactory to the Seller.
46
(l) Initial
Stockholders.
The Seller shall have received the Initial Stockholders’ Undertaking duly
executed by the Initial Stockholders, and the Seller and the Initial
Stockholders shall have entered into an agreement, in form and substance
reasonably satisfactory to the Seller, providing the Seller with a right of
first refusal to purchase the Escrow Shares.
(m) Management
Agreement.
(i) The
terms of the Management Agreement shall have been mutually agreed in writing
by
the Seller, the Buyer and EIAC on or before the date of the filing of the final
Merger Proxy with the SEC, (ii) each of Buyer and the Management Company shall
have executed the Management Agreement, and the Management Agreement shall
be in
full force and effect and all conditions to its performance shall have been
satisfied on or before the Closing Date, and (iii) any pre-existing contracts
of
employment between EIAC and any officer, director, or other employee of EIAC
and
any pre-existing consulting agreement with any consultant to EIAC shall have
been terminated without any liability thereunder being transferred to the Buyer
in consequence of the Merger, the Sale and Purchase or otherwise.
(n) Assigned
Rights.
The Seller shall have received documentation evidencing each SPVs assignment
of
the Assigned Rights.
(o) Termination
of Options.
Outstanding options to purchase an aggregate of 2,688,750 shares of EIAC common
stock granted to Xx. Xxxxxx Xxxxxxxx, and outstanding options to purchase an
aggregate of 896,250 shares of EIAC common stock granted to Mr. Andreas
Theotokis, shall be terminated and cancelled, and upon such termination and
cancellation, neither EIAC nor the Buyer will have any further obligation under
the corresponding option agreements covering the grants of such
options.
(p) Acknowledgment
and Agreement.
Each of Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxxxxxx, each holder of EIAC units
received in the Initial Private Placement and Xxxxxx Ventures Limited shall
have
executed an Acknowledgment and Agreement.
(q) Officer’s
Certificates.
Each of the Buyer and EIAC had have delivered to the Seller a certificate,
signed by its President, dated as of the Closing Date, certifying the matters
set forth in Sections 14(a), (b), (d), (e), (f), (g), (m)(iii), (o)
and (s).
(r) Minute
Books.
The Seller shall have received (i)
a
copy of the minute books of
EIAC
and Buyer and
stock register of the
Buyer,
certified by their respective Secretaries or Assistant Secretaries
as of
the Closing Date and (ii) a copy of the stock register of EIAC, certified by
its
stock transfer agent
as of the Closing Date.
(s) Third
Party Approvals.
Each
of
EIAC and Buyer shall have obtained all Third Party Approvals, other than those
Third Party Approvals that Seller is obligated to obtain pursuant to Section
15(s) of this Agreement.
47
SECTION
15.
|
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF THE BUYER AND EIAC.
|
The
obligation of each of the Buyer and EIAC to effectuate the Merger and to
purchase the SPV Shares from the Seller is subject to the satisfaction or waiver
of the following conditions, which conditions are intended wholly for the
benefit of the Buyer and EIAC:
(a) Due
Authorization. Execution and Delivery.
This Agreement shall have been duly authorized, executed and delivered by the
Seller, shall be in full force and effect and executed counterparts thereof
shall have been delivered to the Buyer.
(b) Representations
and Warranties.
The representations and warranties of the Seller contained in this Agreement,
as
supplemented by the Disclosure Letter(s), shall be true and correct on and
as of
the date hereof and the Closing Date.
(c) Illegality.
The performance of the transactions contemplated hereby upon the terms and
subject to the conditions set forth in this Agreement shall not, in the
reasonable judgment of the Buyer and EIAC, violate, and shall not subject the
Buyer or EIAC to any material penalty or liability under, any law, rule or
regulation binding upon the Buyer or EIAC.
(d) No
Proceedings.
No legal or governmental action, suit or proceeding shall have been instituted
or threatened before any court, administrative agency or tribunal, nor shall
any
order, judgment or decree have been issued or proposed to be issued by any
court, administrative agency or tribunal, to set aside, restrain, enjoin or
prevent the consummation of this Agreement or the transactions contemplated
hereby.
(e) Performance
of Obligations.
The Seller shall have performed all obligations required of it under this
Agreement in all material respects.
(f) Shareholder
Approval.
Each of the Buyer and EIAC shall have received the required affirmative votes
from its stockholders in favor of the Merger and the Sale and Purchase and
the
SEC shall have declared the Acquisition Registration Statement
effective.
(g) Opinion
of Counsel to Seller.
Buyer and EIAC shall have received from counsel to Seller an opinion, customary
for transactions of the type contemplated by the Merger and the Sale and
Purchase, which opinion shall be in form and substance reasonably satisfactory
to Buyer and EIAC.
(h) Resignations
of Directors.
Buyer and EIAC shall have received the resignations, effective as of the
Closing, of all the directors and officers of each SPV, except for such persons
as shall have been designated in writing prior to the Closing by the Buyer
to
the Seller.
(i) Organizational
Documents.
Buyer and EIAC shall have received a copy of (i) the Certificates of
Incorporation, as amended (or similar organizational documents), of each SPV,
certified by the appropriate government official in the jurisdiction in which
each such entity is incorporated or organized, as of a date not earlier than
five days prior to the Closing Date accompanied, if available, by a
certification by the appropriate government official that each such entity
is
validly existing and in good standing under the laws of the jurisdiction of
its
incorporation and accompanied by a certificate of the Secretary or Assistant
Secretary of each such entity, dated as of the Closing Date, stating that no
amendments have been made to such Certificate of Incorporation (or similar
organizational documents) since such date, and (ii) the By-laws (or similar
organizational documents) of each SPV, certified by a Director of each such
entity.
48
(j) Minute
Books.
Buyer and EIAC shall have received a copy of the minute books and stock register
of each SPV, certified by their respective Secretaries or Assistant Secretaries
as of the Closing Date.
(k) Vessel
Management Agreements.
All management agreements and submanagement agreements that any SPV is party
to
or relating to any Vessel will be terminated on or prior to the Closing Date
and
new management agreements will be entered into as required by Section 9(c)
of
this Agreement.
(l) No
Material Adverse Effect.
No event or events shall have occurred, or be reasonably likely to occur, which
individually or in the aggregate have, or might reasonably be expected to have,
a Material Adverse Effect.
(m) SOC
Escrow Agreement.
The Seller, the Buyer and the Escrow Agent shall have executed the SOC Escrow
Agreement (unless such execution is not required pursuant to Section
3(c)(ii)).
(n) Management
Agreement.
The
terms of the Management Agreement shall have been mutually agreed in writing
by
the Seller, the Buyer and EIAC and on or before the date of the filing of the
final Merger Proxy with the SEC and each of Buyer and the Management Company
shall have executed the Management Agreement on or before the Closing
Date.
(o) Transcripts
of Register.
The Buyer and EIAC shall have received a Transcript of Register dated as of
the
Closing Date issued by the Hong Kong Shipping Registry evidencing each Vessel
duly registered in the ownership of the relevant SPV free from any and all
registered Liens except Permitted Liens;
(p) Classification
Status. The
Buyer and EIAC shall have received a certificate issued by the Classification
Society of each Vessel dated as of the Closing Date stating that such Vessel
maintains its class free of overdue recommendations affecting
class.
(q) Insurances.
The Buyer and EIAC shall have received evidence that each Vessel is properly
insured in accordance with customary market practice for vessels of similar
age
and type and as required by the Carry-Over Financing.
(r) SPV
Share Ownership.
The Seller and/or JVCo shall own all of the issued and outstanding ordinary
shares of each SPV, free and clear of all Liens other than Liens created by
the
Carry-Over Financing.
(s) Third
Party Approvals.
The Seller shall have obtained all Third Party Approvals and the consent or
waiver of any party to a Carry-Over Financing, to the extent such consent or
waiver is necessary to continue the financing arrangements thereby upon the
consummation of the transactions contemplated hereby.
(t) Officer’s
Certificates.
Seller shall have delivered to each of EIAC and Buyer a certificate, signed
by a
Director, dated as of the Closing Date, certifying the matters set forth in
Sections 15(a), (b), (d), (e), (k), (l) (to the Knowledge of Seller), (s) and
(u).
49
(u) Seller
Closing Conditions.
All of the conditions set forth in Section 14 (other than Section 14(f)(ii))
shall have been met.
(v) Assumption
of Liabilities.
The Buyer shall have received documentation evidencing the Seller’s Assumption
of Liabilities.
(w) Financing.
The Financing shall have been made available to Buyer on the Closing
Date.
(x) Financing
Private Placement.
Seller shall have purchased or agreed to purchase at and subject to Closing
the
Financing Private Placement Units issued in the Financing Private Placement.
Notwithstanding the foregoing, the number of Financing Private Placement Units
actually purchased shall not exceed $50 million, and shall be the actual amount
as is necessary to meet any capital threshold requirements of the Financing
referred to in (x) immediately above.
SECTION
16.
|
FURTHER
ASSURANCES AND OTHER MATTERS.
|
(a) Each
of the Seller, the Buyer and EIAC agrees, upon the request of the other party,
at any time and from time to time, promptly to execute and deliver all such
further documents, promptly to take and forbear from all such action, and to
obtain all approvals, consents, exemptions or authorizations from such
governmental agencies or authorities as may be necessary or reasonably
appropriate in order to effect the Merger and the Sale and Purchase and to
more
effectively confirm or carry out the provisions of this Agreement and the other
documents entered into in connection herewith.
(b) Seller
shall cooperate with and assist EIAC and Buyer in the preparation of the Merger
Proxy and other documents required in connection therewith, which cooperation
and assistance shall include, but not be limited to, providing appropriate
representation letters, preparing and reviewing explanations and descriptions
of
Seller’s business and making available Seller’s financial and business
information required to be included in the Merger Proxy pursuant to the rules
and regulations under the Securities Act (including such additional audited
and
unaudited financial statements for each SPV and other related information with
respect to any required periods (including the related Management’s Discussion
and Analysis of Financial Conditions), provided that any financial statements
and other related information shall be prepared at the sole cost of EIAC and
the
Buyer).
(c) Seller
will review the Merger Proxy and other documents required in connection
therewith to assist EIAC and Buyer in their confirmation processes with respect
to information that Seller has provided, and will further permit EIAC and Buyer
to have access to such information as, in Buyer’s discretion, Buyer deems
necessary to ensure that the Merger Proxy, Acquisition Registration Statement
and Resale Registration Statement, as the case may be, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements contained therein not misleading.
50
(d) Seller
on behalf of itself and the SPVs hereby agrees that, except for any expenses
which EIAC and/or the Buyer has agreed to pay under the terms of this
Agreement
on the
earlier of the termination of this Agreement under Section 20 and the Closing
Date,
neither it nor any of the SPVs shall have any right, title, interest or claim
of
any kind (each, a “Trust
Fund Claim”)
in or to any monies that were at any time retained in the trust fund (the
“Trust
Fund”)
established by EIAC for the benefit of the public stockholders and the
underwriters of the IPO and hereby waive any Trust Fund Claim against any such
monies which it may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with EIAC and will not for any reason
whatsoever seek recourse against the monies that are retained in the Trust
Fund
for such purposes. The obligations arising under this Section 16(d) shall
survive the termination of this Agreement.
SECTION
17.
|
INDEMNITIES.
|
(a) Subject
to the terms and conditions of this Section 17 and the Closing having occurred,
and notwithstanding anything to the contrary contained in this Agreement, the
Seller hereby agrees to indemnify, defend and hold harmless the Buyer
Indemnitees from and against all Losses asserted against, resulting to, imposed
upon, or incurred by any Buyer Indemnitee by reason of, arising out of or
resulting from:
(i) the
inaccuracy or breach of any representation or warranty of the Seller contained
in or made pursuant to this Agreement, any Exhibits, Schedules or any
certificate delivered by the Seller to the Buyer pursuant to this Agreement
with
respect hereto or thereto in connection with the Closing;
(ii) the
non-fulfillment or breach of any agreement, covenant or undertaking of the
Seller or any SPV contained in this Agreement or any Ancillary
Agreement;
(iii) any
Liability (other than the Carry-Over Financing) of an SPV attributable to the
operations or actions of any SPV or the Seller occurring on or prior to the
Closing Date; or
(iv) Disclosed
Legal Proceedings.
(b) The
Buyer shall notify the Seller of any Claim for which the Seller may have an
indemnification liability under this Agreement as soon as reasonably possible,
giving reasonable details, provided, however, that the failure to give such
timely notice shall not affect the Buyer’s rights to indemnification hereunder,
except to the extent the Seller is actually prejudiced by such failure. In
the
event of a Third Party Claim, the Seller shall have 30 days after the receipt
of
such notice to elect to undertake, conduct and control, through counsel of
its
own choosing and at its expense, the settlement or defense thereof, and the
Buyer shall cooperate with the Seller in connection therewith; provided
that:
(i) the
Seller acknowledges and agrees in writing that the indemnification provisions
of
this Section 17 apply to such Third Party Claim;
(ii) the
Seller shall permit the Buyer to participate in such settlement or defense
through counsel chosen by the Buyer, provided that the fees and expenses of
such
counsel shall be borne by the Buyer;
51
(iii) the
Seller shall keep the Buyer advised as to the current status and progress of
such settlement or defense;
(iv) the
Seller shall not, without the prior written consent of the Buyer (which consent
shall not be unreasonably withheld or delayed), settle or compromise any such
Third Party Claim or consent to the entry of any order, judgment, injunction,
or
consent decree in respect to such Third Party Claim; and
(v) nothing
herein shall require the Buyer to consent to any such settlement or compromise
or to the entry of any order, judgment, injunction or consent decree which
does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to the Buyer a release from all liability in respect to such Third
Party Claim or which affects the ability of the Buyer or any SPV to conduct
its
business operations after the date thereof.
So
long as the Seller is diligently contesting any such Third Party Claim in good
faith (and is otherwise complying with the conditions in the preceding
sentence), the Buyer shall not pay or settle any such Third Party Claim.
Notwithstanding the foregoing, the Buyer shall have the right to pay or settle
any Third Party Claim, provided that in such event it shall waive any right
to
indemnity therefor by the Seller. If the Seller does not notify the Buyer within
30 days after the receipt of the Buyer’s written notice of a Third Party Claim
that it elects to undertake the defense thereof (or does not otherwise comply
with the conditions set forth in this Section 17(b)), the Buyer shall have
the
right to contest, settle or compromise the Third Party Claim in the exercise
of
its reasonable judgment at the expense of the Seller.
(c) Seller’s
indemnity shall include all Losses arising from any demands, claims, suits,
actions, costs of investigation, notices of violation or noncompliance, causes
of action, proceedings and assessments made by Third Parties whether or not
ultimately determined to be valid. Solely for the purpose of determining the
amount of any Losses (and not for determining any breach) for which any Buyer
Indemnitee may be entitled to indemnification pursuant to this Section 17,
any
Losses recoverable in respect of a breach of representation or warranty
contained in this Agreement that is qualified by a term or terms such as
“material” or “materially,” or any equivalent qualification shall include all
Losses that are recoverable in respect of such breach, and not only the
“material” Losses or the Losses that relate to the part which is “material.” Any
Buyer Indemnitee seeking indemnification under this Agreement shall take and
shall cause its Affiliates and their respective directors and officers to take
all commercially reasonable steps to mitigate the amount of any Losses upon
becoming aware of any event which would reasonably be expected to, or does,
give
rise thereto, including incurring costs only to the minimum extent necessary
to
remedy the breach or inaccuracy which gives rise to such Losses.
(d) The
parties hereto acknowledge and agree that the remedies provided for in this
Section 17 shall be their sole and exclusive remedy with respect to any Claims
under this Agreement, except in respect of Taxes. The Buyer’s rights and
remedies under this Section 17 or any other provision of this Agreement shall
not exclude or limit any other remedies that may be available to it under any
applicable law, such as (without limitation) the right to apply to a court
of
competent authority in any jurisdiction for relief by way of injunction or
restraining order or the right to seek specific performance of this
Agreement.
52
(e) To
the extent that a Claim indemnified by Seller under this Agreement is in effect
paid in full (or if payment of such Claim is otherwise provided for to the
reasonable satisfaction of the Buyer Indemnitee) by the Seller, the Seller
(as
the case may be) shall, to the extent permitted by law, be subrogated to the
rights and remedies of the Buyer Indemnitee on whose behalf such Claim was
paid
or provided for (including the rights of such Buyer Indemnitee under its
insurance) with respect to the transaction or event giving rise to such Claim.
Should the Buyer Indemnitee receive any refund, reimbursement or other payment,
in whole or in part, with respect to any Claim paid by or on behalf of Seller,
such Buyer Indemnitee shall promptly pay the amount so received (but not an
amount in excess of the amount Seller has paid or caused to be paid in respect
of such Claim) plus interest thereon to the extent that such amount reimbursed
included such interest less any Taxes (net after adjustment) as may be required
to be paid with respect to such reimbursed amount.
(f) [Intentionally
omitted].
(g) Seller
shall have no liability (for indemnification or otherwise) with respect to
any
Claim under this Agreement (except in respect to Taxes):
(i) until
the total of all Losses with respect to such matters exceeds $5,000,000, after
which Seller must indemnify the Buyer Indemnitees for the full amount of such
Losses from the first dollar of such Losses; or
(ii) made
after the First Anniversary.
(h) Seller’s
aggregate liability (for indemnification or otherwise, except in respect of
Taxes) with respect to Claims under this Agreement shall not exceed $25,000,000;
provided
that
the limitation provided under this subclause (h) shall not apply to Claims
made
after the Closing arising under Section 11(a), (b), (d), (e), (f) and (i) of
this Agreement or related thereto or Claims resulting from or due to
fraud.
SECTION
18.
|
TAX
RETURNS AND PRE-CLOSING TAXES AND STRADDLE PERIOD
TAXES
|
(a) Notwithstanding
any provision of this Agreement to the contrary, all rights and remedies of
the
parties relating to Pre-Closing Taxes and Straddle Period Taxes, Losses arising
from such Taxes and any other matter relating to such Taxes are set forth
exclusively in this Section 18. The sole remedies, rights of payments and
damages available with respect to such Taxes, Losses arising from such Taxes
and
any other matter relating to such Taxes are those set forth in this Section
18.
(b) The
Seller shall be liable for, and, subject to the provisions of this Section
18,
shall pay, indemnify and hold harmless the Buyer Indemnitees, on an after-tax
basis, against any and all Pre-Closing Taxes and any Losses arising from
Pre-Closing Taxes. Seller shall be liable for, and subject to the provisions
of
this Section 18, shall pay, indemnify and hold harmless the Buyer Indemnitees,
on an after-tax basis, against Seller’s Portion of any Straddle Period Taxes
(including any amounts paid to Seller under Section 18(j)) in excess of the
Reserved Tax Liability and any Losses arising therefrom.
53
(c) The
Seller shall have exclusive authority subject to the provisions of this Section
18 to prepare and file or cause to be prepared and filed all Pre-Closing Tax
Returns for each SPV, including any Estimated Tax Returns due on or prior to
the
Closing Date.
(d) The
Seller shall prepare and duly and timely file or cause to be prepared and duly
and timely filed all Pre-Closing Tax Returns for all SPVs. Each such Tax Return
shall be true, correct and complete, shall be prepared in the same manner as
the
Tax Returns of the SPVs for the immediately preceding taxable year or period,
and shall not make, amend or terminate any election without the prior written
consent of the Buyer (which consent shall not be unreasonably withheld or
delayed). The Seller shall duly and timely pay the Tax shown to be due on each
such Tax Return. Promptly after the filing of each such Tax Return, Seller
shall
provide Buyer with a copy of the Tax Return, together with proof of the payment
of the Tax shown thereon to be due.
(e) The
Buyer shall prepare (in accordance with the past practices of the relevant
SPV,
except to the extent required by law) the initial draft of all Straddle Period
Tax Returns (other than Estimated Tax Returns due on or prior to the Closing
Date) of each of the SPVs and shall submit such Tax Returns, along with a
calculation of the Seller’s Portion of any Straddle Period Taxes relating to
such Tax Returns (net of the Reserved Tax Liability for the relevant SPV and
net
of any Prepaid Taxes related to such Straddle Period Taxes), to the Seller
for
its approval no later than thirty (30) days prior to the due date thereof.
No
later than ten (10) days after the receipt of such Tax Return from the Buyer,
the Seller shall notify the Buyer of any reasonable objections the Seller may
have to items set forth in such draft Tax Returns and/or the calculation of
the
Sellers Portion of Straddle Period Taxes for which the Seller is responsible.
The Buyer and Seller agree to consult and resolve in good faith any such
objections, it being understood and agreed that in the absence of any such
resolution, any and all such objections shall be in a manner consistent with
the
past practices with respect to such items unless otherwise required by
law.
If
the Seller and the Buyer cannot resolve any and all objections by the fifteenth
(15th)
day prior to the due date of the Straddle Period Tax Returns that are the
subject of the dispute, the issue involved shall be submitted to an independent
public accounting firm acceptable to both the Seller and the Buyer; provided,
however, that if the dispute or disagreement involves a matter of legal
interpretation, then upon the written consent of both parties (which shall
not
be unreasonably withheld or delayed by either of them), such dispute shall
be
resolved by such independent public accounting firm, provided that in the
absence of such written consent, such independent accounting firm shall select
an outside attorney (1) experienced in the relevant tax law and (2) mutually
acceptable to the Seller and the Buyer (which acceptance shall be in writing
and
shall not be unreasonably withheld or delayed by either of them) to resolve
such
dispute or disagreement. If the Seller and the Buyer cannot agree on an
independent public accounting firm, the first Big Four Public Accounting Firm
(on an alphabetical basis) that is not currently serving as the auditor of
the
Seller or the Buyer shall be selected to resolve the dispute. The Seller and
the
Buyer shall provide all necessary information to the independent accounting
firm
(or any outside attorney selected by such accounting firm), and shall instruct
the independent accounting firm (or outside attorney selected by such accounting
firm) to resolve the dispute, to the extent reasonably possible, no later than
five 5 days prior to the due date of such Tax Returns. The decision of the
independent public accounting firm (and any outside attorney selected by such
accounting firm) in resolving the dispute shall be final and binding. The fees
and expenses incurred with respect to the independent public accounting firm
resolving the dispute shall be allocated fifty percent (50%) to the Seller
and
fifty percent (50%) to the Buyer. All other fees and expenses incurred in
resolving the dispute shall be borne by the party hereto that incurs such fees
and expenses.
54
Not
later than three (3) days prior to the due date of the Straddle Period Tax
Returns, the Seller shall pay to the Buyer the Seller’s Portion of Straddle
Period Taxes in respect to such Tax Returns if such calculation shall not then
be in dispute, provided that if any amount involved in such calculation shall
then be in dispute under the provisions of the preceding paragraph, Seller
shall
pay to Buyer the amount in dispute, upon receipt of a written acknowledgement
by
the Buyer that it will repay to Seller any such amount promptly after a
determination pursuant to the provisions of the preceding paragraph that Seller
does not owe such amount.
(f) For
purposes of this Agreement, Taxes related to a Straddle Period shall be
apportioned to the Seller (“Seller’s
Portion”)
for the period up to and including the close of the Closing Date and to the
Buyer (“Buyer’s
Portion”)
for the period subsequent to the Closing Date, determined as
follows:
(i) in
the case of real property and personal property Taxes on a per-diem basis;
and
(ii) otherwise,
as determined from the books and records of the relevant SPV as though the
taxable year of the SPV had terminated as of the close on the Closing Date
but
apportioning any annual exemption amount based on the relative number of days
in
the portion of the Straddle Period through and including the Closing Date and
in
the balance of the Straddle Period.
For
avoidance of doubt, Seller’s Portion of any Straddle Period Taxes shall be
determined without regard to any Prepaid Taxes or Reserved Tax
Liability.
(g) The
Buyer shall have exclusive authority to prepare and file or cause to be prepared
and filed all Tax Returns for all SPVs for all tax reporting periods that begin
on or after the Closing Date. Notwithstanding any provision of this Agreement
to
the contrary, Buyer or any of its nominated subsidiaries also shall have
exclusive authority to make a Section 338 Election in respect to the acquisition
of the SPV Shares hereunder and to prepare and file or cause to be prepared
and
filed all Tax Returns in connection therewith.
(h) The
Seller and the Buyer agree that Tax Returns that would otherwise be filed for
tax periods that begin on or prior to the Closing Date and which would otherwise
end after the Closing Date will reflect a short taxable year for any SPV ending
on the Closing Date in any federal, state, local or foreign taxing jurisdiction
in which such tax year is allowed by administrative practice, whether or not
required by law.
(i) Each
of the Buyer and Seller shall bear all costs incurred in preparing and filing
the Tax Returns that such party is responsible to prepare and file under this
Agreement.
55
(j) To
the extent that the Reserved Tax Liability shall exceed the Seller’s Portion of
the Straddle Period Taxes (as determined under this Section 18), the Buyer
shall
pay the Seller such excess at the same time as the related Straddle Period
Tax
Return is filed.
(k) The
Buyer shall promptly notify the Seller in writing upon receipt by the Buyer
or
any Affiliate of the Buyer (including any SPV) of any communication with respect
to any Tax Matter (or pending or threatened Tax Matter) relating to any Tax
period beginning before the Closing Date. The Buyer shall include with such
notification a complete copy of any written communication received by the Buyer
or any affiliate of the Buyer in respect of such Tax Matter.
(l) The
Seller shall have the sole right to represent the interests of the any SPA,
and
the right to employ counsel of its choice at its expense and to make decisions
with respect to negotiation, contest or settlements in any Tax Matter relating
to any Pre-Closing Tax Returns for any SPV, provided that (i) the Seller
acknowledges and agrees in writing that the indemnification provisions of this
Section 18 apply to the Pre-Closing Taxes in dispute, (ii) the Seller shall
permit the Buyer to participate in such settlement or defense through counsel
chosen by the Buyer and at the Buyer’s expense, (iii) Seller shall keep the
Buyer advised as to the current status and progress of such settlement or
defense, and (iv) the Seller shall not, without the prior written consent of
the
Buyer (which shall not be unreasonably withheld or delayed) settle or compromise
any such Tax Matter if any such settlement or compromise could affect any tax
period other than a Pre-Closing Tax Period.
(m) The
Buyer and Seller shall jointly represent the interests of any SPV, and shall
jointly employ counsel mutually agreed in
writing (with
expenses divided in the proportions that the Seller’s Portion and the Buyer’s
Portion are of the relevant Straddle Period Tax) and shall jointly make
decisions with respect to negotiation, contest or settlements in any Tax Matter
related to any Straddle Period Tax Return.
(n) Beginning
on the Closing Date, each of the Seller and the Buyer, on behalf of itself
and
each Affiliate, respectively, agrees to use good faith efforts to provide the
other party hereto with such cooperation or information as such other party
hereto reasonably shall request in connection with the determination of any
payment or any calculations described in this Agreement and the preparation
or
filing of any Pre-Closing Tax Return or Straddle Period Tax Return. Such
cooperation and information shall include preparing and submitting to the Seller
(in a time frame consistent with past practice), at Buyer’s expense (other than
Out-of-Pocket Expenses, which shall be paid by the Seller) all information
within the control or possession of Buyer, any SPV or any Affiliate of any
of
them that the Seller shall reasonably request, in such form as the Seller shall
reasonably request, to enable the Seller to prepare any Tax Returns required
to
be filed by the Seller pursuant to this Section 18.
(o) Any
request for information or documents pursuant to this Section 18 shall be made
by the requesting party in writing. The other party hereto shall use reasonable
efforts to promptly provide the requested information. Except as otherwise
provided in this Agreement, the requesting party shall reimburse the other
party
for any Out-of-Pocket Expenses incurred by such party in connection with
providing any information or documentation pursuant to this clause (o). Upon
reasonable notice, each of the Seller and the Buyer (at its own expense other
than Out-of-Pocket Expenses, which will be paid by the Seller) shall make its,
or shall cause its Affiliates, as applicable, to make their, employees and
facilities available on a mutually convenient basis to provide explanation
of
any documents or information provided hereunder. Any information obtained under
this provision shall be kept confidential, except as otherwise reasonably may
be
necessary in connection with the filing of Tax Returns or in conducting any
Tax
Matter.
56
(p) For
at least three (3) years following the Closing Date, each party hereto will
retain such records, documents, accounting data and other information (including
computer data) in its possession in the ordinary course of business reasonably
necessary for (i) the preparation and filing of all Pre-Closing Tax Returns
and
Straddle Period Tax Returns required to be filed by, on behalf of, or with
respect to another party hereto, and (ii) any Tax Matters relating to such
Pre-Closing Tax Returns, Straddle Period Tax Returns, or to any Pre-Closing
Taxes payable by, on behalf of, or with respect to, another party
hereto.
SECTION
19.
|
CONFIDENTIALITY
AND ANNOUNCEMENTS.
|
(a) The
parties to this Agreement agree that the existence and terms of this Agreement
are strictly confidential and further agree that they and their respective
representatives shall not disclose to the public or to any third party the
existence or terms of this Agreement or any other Confidential Information
(as
defined below) other than with the express prior written consent of the other
party, except as may be required by applicable law, rule or regulation, or
at
the request of any Governmental Authority having jurisdiction over such party
or
any of its representatives, control persons or affiliates, including, without
limitation, the rules and regulations of the SEC, the American Stock Exchange,
or the NASD, or as may be required to defend any action brought against such
person in connection with the transactions contemplated by this
Agreement.
(b) Notwithstanding
the above, the Seller hereby consents to the filing by EIAC of a current report
on Form 8-K with the SEC announcing the transaction contemplated by this
Agreement upon the execution of this Agreement in such form as shall be agreed
between EIAC and the Seller before the execution of this Agreement.
(c) Any
other press release or other public announcement by the Seller or EIAC or their
respective representatives relating to the transactions contemplated by the
Agreement shall be agreed between EIAC and the Seller prior to the public
release or dissemination of same (such agreement not to be unreasonably withheld
or delayed).
(d) For
the purposes of this Section 19, “Confidential Information” means any
information relating to EIAC, the Buyer, the Seller, the SPVs, their directors,
officers, representatives, employees, agents or advisers obtained whether before
or after the date of this Agreement in any form from or pursuant to discussions
with EIAC, the Buyer, the Seller, the SPVs, or any of their directors, officers,
representatives, employees, agents or advisers unless it is publicly known
either at the date of the disclosure or at any time thereafter (other than
by
breach of this Agreement).
57
SECTION
20.
|
TERM
AND TERMINATION.
|
(a) This
Agreement shall terminate and be of no further force and effect upon the earlier
to occur of:
(i) satisfaction
of all obligations of all parties to this Agreement;
(ii) from
and after May 14, 2008 (or such later date as determined by clause (b) below),
mutual agreement in writing of the Seller and EIAC acting in good faith that
the
market has not reacted favorably to the transactions contemplated hereby (which
may be determined by, among other things, average stock and warrant prices
of
EIAC over a 20 day period), such mutual agreement not be unreasonably
withheld;
(iii) in
the event that the SEC has not cleared the Merger Proxy by July 21, 2008, notice
by Seller to EIAC and Buyer that it has elected unilaterally to terminate this
Agreement;
(iv) in
the event Captain Vanderperre and Mr. Xxxx Xxxxx are not appointed to the
respective offices of Buyer set forth in Section 9(a) hereof, notice by Seller
to EIAC and Buyer that it has elected unilaterally to terminate this Agreement;
and
(v) in
the event that the Seller fails to obtain the Financing on or before
December
17, 2007,
by notice of Seller to EIAC and Buyer, or notice of Buyer and EIAC to
Seller.
(b) In
the event the Audited Financial Statements and the Interim Financial Statements
have not been prepared and delivered to EIAC by December 14, 2007, then the
May
14, 2008 date referred to in Section 20(a) above shall be extended for the
greater of (i) such period of time as shall equal the difference between
December 14, 2007 and the date on which such financial statements (or the
financial statements for a subsequent reporting period, in the event that the
Interim Financial Statements are stale and cannot be used in the Merger Proxy)
have been delivered to EIAC for inclusion in the Merger Proxy, and (ii) 15
calendar days.
(c) Notwithstanding
anything to the contrary set forth in this Agreement, Sections 17 and 19 hereof
shall survive the termination of this Agreement and remain in full force and
effect.
SECTION
21.
|
MISCELLANEOUS.
|
(a) Notices.
All notices provided hereunder shall be given in writing and either delivered
personally or by courier service or by facsimile transmission,
if
to the Buyer, to:
ENERGY
INFRASTRUCTURE MERGER CORPORATION
c/o
V&P Law Firm
15,
Filikis Xxxxxxx Xx.,
000
00 Xxxxxx,
Xxxxxx
Attention:
Xxxx Xxxxxxxxxx, Esq.
Fax
No: 00 000 000 0000
58
if
to EIAC, to:
0000
Xxxxx Xxxx Xxxxxx
Xxxxx
0000,
Xxxxxxxxxx,
Xxxxxxxx 00000
Attention:
Ms. Xxxxx Dub
Fax
No: (000) 000-0000
or
Athens
Office
1
Zissimopoulou + Xxxxxxxxxx Xxx.
XX-00000
Xxxxxxx
Athens
Attention:
Xx. Xxxxxx Xxxxxxxxxxxxx
Fax
No: x00 000 00 00 000
with
a copy (which shall not constitute notice) to:
Loeb
& Loeb LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxxx Xxxxxxxx, Esq.
Fax
No: (000) 000-0000
if
to the Seller to:
VANSHIP
HOLDINGS LIMITED
C/o
Univan Ship Management Limited
Xxxxx
000 Xxxxx Xxxxx
0
Xxxxxxxx Xxxx, Xxxxxxx
Xxxx
Xxxx
Attention:
Captain C.A.J. Vanderperre
Fax
No: (x000) 0000 0000
with
a copy (which shall not constitute notice) to:
Xxxxxx,
Xxxxxx & Xxxxxxxx (New York) LLP
000
Xxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxx X. Xxxxxxx, Esq.
Fax
No: (000) 000-0000
or
to such other address as the parties shall from time to time designate in
writing. Any notice delivered personally or by fax shall be deemed given upon
receipt (with confirmation of receipt required in the case of fax
transmissions); any notice given by overnight courier shall be deemed given
on
the third Business Day after delivery to the overnight courier.
59
(b) Governing
Law.
This Agreement shall be governed by and construed under the laws of the State
of
New York without
regard to conflicts of laws principles.
(c) Arbitration.
Any controversy or claim arising out of or in conjunction with this Agreement
shall be settled by arbitration in accordance with the Commercial Rules of
the
American Arbitration Association then in effect in the State of New York and
judgment upon such award rendered by the arbitrator shall be final and binding
upon the parties and may be entered and enforced in any court having
jurisdiction thereof. The arbitration shall be held in the State of New York,
New York County or such other location as is mutually agreed in
writing before
a panel of three (3) arbitrators, one selected by Seller, one selected jointly
by Buyer and EIAC, and the third by the two (2) so chosen. The arbitration
award
shall include attorneys’ fees and costs to the prevailing party.
(d) Survival.
(i) All representations and warranties contained herein, as made, when made,
shall survive the Closing (unless the damaged party knew of any
misrepresentation or breach of warranty at the time of Closing, other than
in
the case of fraud); and (ii) Sections 6 and 9(d) hereof shall survive the
Closing.
(e) Headings.
Headings used herein are for convenience only and shall not in any way affect
the construction of, or be taken into consideration in interpreting, this
Agreement.
(f) Severability.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(g) No
Trading.
From the date of this Agreement, neither the Seller nor any Seller’s Affiliate,
their respective officers, directors, employees, agents or representatives
shall
use any material non-public information of EIAC (including the existence and
terms of this Agreement) to purchase, sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise transfer or dispose of any
securities of EIAC.
(h) Amendments
in Writing.
No amendment, modification, waiver, termination or discharge of any provision
of
this Agreement, or any consent to any departure by any of the Seller, the Buyer
or EIAC from any provision hereof, shall in any event be effective unless the
same shall be in writing and signed by the parties hereto, and each such
amendment, modification, waiver, termination or discharge shall be effective
only in the specific instance and for the specific purpose for which given.
No
provision of this Agreement shall be varied, contradicted or explained by any
oral agreement, course of dealing or performance or any other matter not set
forth in an agreement in writing and signed by the parties hereto.
60
(i) Expenses. Each
party shall be responsible for its own expenses in connection with the
preparation, negotiation, execution and delivery of this Agreement, provided
that the costs of preparing the Audited Financial Statements and the Interim
Financial Statements and
the
costs of Seller's counsel shall
be borne by Seller and, together with any costs of counsel to EIAC, Buyer or
the
lending parties in respect of the Financing advanced by Seller, shall be
reimbursed by Buyer and/or EIAC to Seller, upon the earlier of termination
of
this Agreement pursuant to Section 20 and the Closing, and the cost of any
other
audited or interim financial statements requested by SEC shall be borne by
EIAC.
Any stamp duties or other transfer or similar Taxes payable to any Governmental
Authority in relation to the transfer of the SPV Shares to the Buyer shall
be
borne by the Buyer. No broker, agent, finder, consultant or other person or
entity is entitled to be paid based upon any agreement made by any party in
connection with any transaction contemplated hereby other than (i) Fortis
Securities LLC, which Seller shall have the obligation to compensate
(provided
that
on the Closing Date the Buyer shall issue to Fortis Securities LLC 200,000
shares of Buyer Common Stock (such shares forming part of the Stock
Consideration) in partial satisfaction of the fees of Fortis Securities LLC)),
and (ii) Maxim Group LLC and Investment Bank of Greece, which EIAC shall have
the sole obligation to compensate. Each party shall indemnify the other for
any
claim by any third party to such payment.
(j) Execution
in Counterparts.
This Agreement and any amendment, waiver or consent hereto may be executed
by
the parties hereto in separate counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which, when so executed
and delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument. All such counterparts may be delivered
among the parties hereto by facsimile or other electronic transmission, which
shall not affect the validity thereof.
(k) Entire
Agreement.
This Agreement and the other documents referred to herein or therein, on and
as
of the date hereof, constitute the entire agreement of the parties hereto with
respect to the subject matter hereof or thereof, and all prior understandings
or
agreements, whether written or oral between the parties hereto with respect
to
such subject matter (including, without limitation, the Memorandum of
Understanding) are hereby superseded in their entirety.
(l) Exhibits
and Schedules.
The exhibits attached hereto or any schedules referenced in this Agreement
are
incorporated by reference herein and shall have the same force and effect with
respect to the provisions set forth therein as though fully set forth in this
Agreement.
(m) Successors
and Assigns.
This Agreement shall be binding upon, shall inure to the benefit of and shall
be
enforceable by the parties hereto and their respective successors and assigns;
provided, that, except for permitted transferees of Registrable Securities,
who
shall be entitled to the benefits of Section 6 hereof, none of the Buyer, the
Seller or EIAC may assign any of its obligations hereunder without the prior
written consent of the other party or parties (as the case may be).
(n) Non
Waiver.
Any failure at any time of either party to enforce any provision of this
Agreement shall neither constitute a waiver of such provision nor prejudice
the
right of any party hereto to enforce such provision at any subsequent
time.
(o) Rights
Against JVCo Shareholders.
Each of EIAC and the Buyer hereby waive any right or cause of action it may
have
against any shareholder in JVCo other than Seller in respect of or arising
from
the Merger, the Sale and Purchase and/or any other transaction contemplated
in
connection therewith by this Agreement.
61
(p) Acknowledgement
of Prior Agreements. Buyer
hereby acknowledges (i) that certain Registration Rights Agreement between
EIAC
and the Initial Stockholders dated as of July 17, 2006 ("Registration
Rights Agreement")
and
(ii) that certain Subscription Agreement dated as of January 2, 2006, by and
between the Company and Xxxxxx Xxxxxxxx, as amended, as subsequently assigned
to
Energy Corp. ("Initial
Private Placement Subscription Agreement"),
and
hereby confirms such agreements and that upon the Merger agrees to honor and
be
bound by the obligations of EIAC under each such agreement, in accordance with
the terms thereof, as if it were originally a party thereto.
(q) Filing
of Merger Proxy.
Each of
Seller, EIAC and Buyer agree to perform their respective best reasonable efforts
in order that the preliminary filing of the Merger Proxy is made with the SEC
no
later than December 21, 2007.
[Signature
Page Follows]
62
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers thereunto duly authorized as of the day and date
first
above written.
By:
|
/s/
Xxxxxx X. Xxxxxxxx
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
||
Title:
President & Chief Operating
Officer
|
ENERGY
INFRASTRUCTURE MERGER CORPORATION
By:
|
/s/
Xxxxxx X. Xxxxxxxx
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
||
Title:
President
|
VANSHIP
HOLDINGS LIMITED
By:
|
/s/
Captain C.A.J. Vanderperre
|
|
Name:
Captain C.A.J. Vanderperre
|
||
Title:
Director
|
63
The
following schedules to the Share Purchase Agreement have been omitted
in
accordance with the Item 601(b)(2) of Regulation S-K. The Company agrees
to
furnish supplementally a copy of any omitted schedule to the Securities
and
Exchange Commission upon request.
Schedule 1 - |
Carry-Over
Financing
|
Schedule 2 - |
Legal
Proceedings
|
Schedule 11(c) - |
Required
Consents
|
Schedule 11(d) - |
Ownership
of SPV Shares
|
Schedule 11(f) - |
Vessels
|
Schedule 11(g) - |
Governmental
Actions
|
Schedule 11(j) - |
Tax
sharing or allocation
agreements
|
Schedule 11(p) - |
Material
Contracts
|
Schedule 11(q) - |
Defaults;
Breaches of Material Contracts
|
Schedule 11(r) - |
Business
Conduct
|
Schedule 11(z) - |
Bank
Accounts
|
Schedule 12(g) - |
Buyer’s
Corporate Documents
|
Schedule 12(h) - |
Buyer’s
outstanding shares of common stock, rights and
warrants
|
Schedule 12(j) - |
Buyer’s
Contractual Liabilities
|
Schedule 13(g) - |
EIAC’s
Contractual Liabilities
|
Schedule 13(h) - |
EIAC’s
insider loans
|
Schedule 13(i) - |
EIAC’s
outstanding shares of common stock, rights and warrants and shares
outstanding on a fully diluted
basis
|
64