AGREEMENT AND PLAN OF MERGER BY AND AMONG K-SEA ACQUISITION1, LLC, K-SEA TRANSPORTATION PARTNERS L.P., SMITH MARITIME, LTD., GO BIG CHARTERING, LLC, GORDON L.K. SMITH, THE GORDON L.K. SMITH TRUST, BARBARA SMITH SML TRUST, 235LX, LLC AND THE OTHER...

Exhibit 10.1

Execution Version

AGREEMENT AND PLAN OF MERGER
BY AND AMONG
K-SEA ACQUISITION1, LLC,
K-SEA TRANSPORTATION PARTNERS L.P.,
XXXXX MARITIME, LTD.,
GO BIG CHARTERING, LLC,
XXXXXX X.X. XXXXX,
THE XXXXXX X.X. XXXXX TRUST,
XXXXXXX XXXXX SML TRUST,
235LX, LLC
AND
THE OTHER PARTIES SIGNATORY HERETO

DATED AS OF JUNE 25, 2007

TABLE OF CONTENTS

ARTICLE I DEFINITIONS		7

ARTICLE II THE MERGERS
Section 2.1	The Mergers	12
Section 2.2	Effective Time	12
Section 2.3	Closing	12
Section 2.4	Effects of the Mergers	13
Section 2.5	Certificate of Formation; Limited Liability Company Agreement	13
Section 2.6	Managers	13
Section 2.7	Officers	13
Section 2.8	Conversion of Equity Interests	13

ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH SELLER PARTY
Section 3.1	Corporate Status and Good Standing; Citizenship	14
Section 3.2	Authorization	14
Section 3.3	Capitalization; Title to Membership Interests	15
Section 3.4	Non-Contravention	15
Section 3.5	Validity	16
Section 3.6	Broker Involvement	16
Section 3.7	Litigation	16
Section 3.8	Disclosure	17

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF XXXXX MARITIME, GO BIG, XXXXX, THE XXXXXX TRUST AND 235LX
Section 4.1	Corporate Status and Good Standing; Citizenship	17
Section 4.2	Authorization	18
Section 4.3	Capitalization; Title to Equity Interests	18
Section 4.4	Non-Contravention	19
Section 4.5	Validity	20
Section 4.6	Broker Involvement	20
Section 4.7	Litigation	20
Section 4.8	Title to Assets	20
Section 4.9	Continuity Prior to the Closing Date	20
Section 4.10	Contracts and Commitments	22
Section 4.11	Trademarks, Trade Names and Intellectual Property	22
Section 4.12	Financial Statements; Budget	23
Section 4.13	Bank Relations; Powers of Attorney	24
Section 4.14	Condition of Assets; Eligibility for Coastwise Trade	24
Section 4.15	Absence of Undisclosed Liabilities	25
Section 4.16	Real Estate	26
Section 4.17	Accounts Receivable	26
Section 4.18	Inventory	26
Section 4.19	Employees and Related Matters	26
Section 4.20	Employee Benefits	27
Section 4.21	Compliance With Law	28

Section 4.22	Environmental	29
Section 4.23	Insurance	31
Section 4.24	Government Licenses and Permits	31
Section 4.25	Responsible Carriers Plan	31
Section 4.26	Taxes	31
Section 4.27	No Material Adverse Change	33
Section 4.28	Books and Records	33
Section 4.29	Safety Reports	34
Section 4.30	Transactions with Certain Persons	34
Section 4.31	Closing Date Balance Sheet	34
Section 4.32	Disclosure	34

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND THE PARTNERSHIP
Section 5.1	Status and Good Standing	35
Section 5.2	Authorization	35
Section 5.3	Non-Contravention	35
Section 5.4	Validity	35
Section 5.5	Broker Involvement	36
Section 5.6	Buyer’s Review	36
Section 5.7	Citizenship	36

ARTICLE VI COVENANTS
Section 6.1	Other Offers	36
Section 6.2	Conduct of Business Pending Closing	36
Section 6.3	Access	37
Section 6.4	Termination of Guarantees and Settlement of Intercompany Amounts	37
Section 6.5	Covenant Against Competition	37
Section 6.6	Further Assurances	39
Section 6.7	Governmental Filings	39
Section 6.8	Consents	39
Section 6.9	Public Announcements	39
Section 6.10	Tax Matters	39
Section 6.11	Closing Date Balance Sheet	41
Section 6.12	Employees	41
Section 6.13	Personal Property	42
Section 6.14	Financial Statements	42
Section 6.15	Notification	42
Section 6.16	Insurance	43
Section 6.17	Misdirected Payments	43
Section 6.18	Conversion of Xxxxx Subsidiaries	43
Section 6.19	Transfer of Shares	43
Section 6.20	Hawaii Dislocated Workers Act	43

ARTICLE VII INDEMNIFICATION
Section 7.1	Seller Parties’ Indemnity Obligations	43
Section 7.2	Buyer’s Indemnity Obligations	44
Section 7.3	Survival	45

Section 7.4	Indemnification Procedures	45
Section 7.5	General	47
Section 7.6	Exclusivity	47

ARTICLE VIII CONDITIONS TO CLOSING
Section 8.1	Conditions to Obligations of Buyer	47
Section 8.2	Conditions to Obligations of Xxxxx Maritime, Go Big and the Seller Parties	50

ARTICLE IX TERMINATION
Section 9.1	Grounds for Termination	51
Section 9.2	Effect of Termination	51

ARTICLE X GENERAL PROVISIONS
Section 10.1	Release	52
Section 10.2	Arbitration	52
Section 10.3	Confidentiality	54
Section 10.4	Expenses	55
Section 10.5	Entire Agreement	55
Section 10.6	No Reliance	56
Section 10.7	Waivers and Consents	56
Section 10.8	Notices	56
Section 10.9	Assignments, Successors and No Third-Party Rights	57
Section 10.10	Choice of Law	58
Section 10.11	Jurisdiction and Venue	58
Section 10.12	Construction; Section Headings; Table of Contents	58
Section 10.13	Severability	58
Section 10.14	Counterparts	58
Section 10.15	Time of Essence	58
Section 10.16	Power of Attorney	58

EXHIBITS

Exhibit A		Form of Assignment of Membership Interest/Stock Power
Exhibit B		Form of Employee Release

SCHEDULES

Schedule 1.1		Certain Permitted Liens
Schedule 2.8		Merger Consideration
Schedule 3.2		Authorization
Schedule 3.3(a)		Capitalization
Schedule 3.3(b)		Capitalization of 235LX
Schedule 3.3(c)		Subscriptions, Etc.
Schedule 3.4		Non-Contravention
Schedule 3.6		Broker Involvement
Schedule 4.1(a)(1)		Xxxxx Maritime Foreign Qualifications
Schedule 4.1(a)(2)		Xxxxx Maritime Partnerships, Etc.
Schedule 4.1(b)		Go Big Foreign Qualifications

Schedule 4.1(c)		Xxxxx Subsidiary Foreign Qualifications
Schedule 4.2		Authorization
Schedule 4.3(c)		Subscriptions, Etc.
Schedule 4.4		Non-Contravention
Schedule 4.6		Broker Involvement
Schedule 4.7		Litigation
Schedule 4.8		Title to Assets
Schedule 4.9		Continuity Prior to Closing Date
Schedule 4.10		Contracts and Commitments
Schedule 4.11		Trademarks, Trade Names and Intellectual Property
Schedule 4.12(a)		Unaudited Financial Statements
Schedule 4.12(b)		Audited Annual Financial Statements
Schedule 4.12(c)		Unaudited Interim Financial Statements
Schedule 4.12(d)		Budget
Schedule 4.12(e)		Liabilities
Schedule 4.12(f)		Intercompany Transactions
Schedule 4.13		Bank Relations
Schedule 4.14(a)		Material Assets
Schedule 4.14(b)(1)		Owned Vessels
Schedule 4.14(b)(2)		Bareboat Chartered Vessels
Schedule 4.14(b)(3)		Other Vessels
Schedule 4.14(c)		Condition of Vessels
Schedule 4.14(d)		Vessel Documentation
Schedule 4.14(e)		CG-385 Certificates; Captain of Port Orders
Schedule 4.15		Undisclosed Liabilities
Schedule 4.16		Real Estate
Schedule 4.18		Inventory
Schedule 4.19		Employees
Schedule 4.20		Employee Benefits
Schedule 4.22(a)		Compliance with Environmental Laws
Schedule 4.22(b)		Environmental Permits
Schedule 4.22(c)		Hazardous Material
Schedule 4.22(d)		Notice of Environmental Violations; Remedial Actions
Schedule 4.22(e)		Changes in Law
Schedule 4.22(f)		Releases; Disposal of Hazardous Materials
Schedule 4.22(g)		Storage of Hazardous Materials
Schedule 4.22(l)		Remedial Action
Schedule 4.22(m)		Other Environmental Matters
Schedule 4.23		Insurance
Schedule 4.24		Governmental Licenses, Permits and Related Approvals
Schedule 4.25		Responsible Carriers Plan
Schedule 4.26(b)		Notice of Deficiency or Assessment
Schedule 4.26(e)		Federal Tax Basis and Liability
Schedule 4.26(g)		Section 1374
Schedule 4.29		Safety Reports
Schedule 4.30		Transactions with Certain Persons

Schedule 6.11		GAAP Exceptions
Schedule 6.12(a)		Excepted Employees
Schedule 6.13		Personal Property

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (“Agreement”), dated as of June 25, 2007, is by and among K-Sea Acquisition1, LLC, a Delaware limited liability company (“Buyer”), K-Sea Transportation Partners L.P., a Delaware limited partnership (the “Partnership”), Xxxxx Maritime, Ltd., a Hawaii corporation (“Xxxxx Maritime”), Go Big Chartering, LLC, a Washington limited liability company (“Go Big” and, together with Xxxxx Maritime and its Subsidiaries (as defined herein), the “Subject Companies”), Xxxxxx X.X. Xxxxx (“Xxxxx”), individually and as trustee for The Xxxxxx X.X. Xxxxx Trust (the “Xxxxxx Trust”), Xxxxxxx Xxxxx, as trustee for the Xxxxxxx Xxxxx SML Trust (the “Xxxxxxx Trust” and, together with Xxxxx and the Xxxxxx Trust, the “Xxxxx Sellers”), and 235LX, LLC, a Washington limited liability company (“235LX” and, together with the Xxxxx Sellers, the “Seller Parties”).

RECITALS

WHEREAS, the Subject Companies are engaged in the maritime transportation of refined petroleum products and related businesses;

WHEREAS, the Xxxxx Sellers own 100% of the issued and outstanding shares of capital stock (the “Xxxxx Capital Stock”) of Xxxxx Maritime;

WHEREAS, 235LX owns all of the issued and outstanding membership interests of Go Big (the “Go Big Membership Interests” and, together with the Xxxxx Capital Stock, the “Equity Interests”);

WHEREAS, Buyer, Xxxxx Maritime, Go Big and the Seller Parties have determined that it is in their respective best long-term interests to effect a business combination in which each of Xxxxx Maritime and Go Big will merge with and into Buyer on the terms and subject to the conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants and agreements stated herein, the parties agree as follows:

ARTICLE I
DEFINITIONS

Capitalized terms used in this Agreement have the meanings specified in (a) the preamble, (b) the recitals, (c) this Article I or (d) elsewhere in this Agreement, as the case may be:

Accounts Receivable means all accounts receivable of the Subject Companies and all other rights of the Subject Companies to payment for goods sold or leased or for services rendered, including, without limitation, those which are not evidenced by instruments or chattel paper, whether or not they have been earned by performance or have been written off or reserved against as a bad debt or doubtful account in any financial statements, together with all instruments and all documents of title representing any of the foregoing, all rights in any merchandise or goods which any of the same represent, and all rights, title, security and guaranties in favor of the Subject Companies with respect to any of the foregoing.

Affiliate, with respect to any Person, means any Person that directly or indirectly controls, is controlled by or is under common control with such Persons.

Buyer Indemnified Party means Buyer and its Affiliates and each of their respective officers, directors, employees, agents and counsel.

Ceiling Amount means $20,000,000; provided that the Ceiling Amount with respect to the Seller Parties’ breaches of representations and warranties contained in Section 4.22 shall be $25,000,000.

Code means the Internal Revenue Code of 1986, as amended.

Environmental Laws means any federal, state, local, foreign or international Law (including common law), or other legal requirement, regulating or protecting the public and employee health and safety (including in the workplace), regulating or protecting the environment and natural resources or wildlife, prohibiting Releases into any part of the workplace or the environment, or prohibiting pollution or exposure to Hazardous Materials, including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) (42 U.S.C. Sections 9602 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Sections 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), the Clean Water Act (33 U.S.C. Sections 1251 et seq.), the Clean Air Act (42 U.S.C. Sections 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Sections 7401 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Sections 2014 et seq.), the Occupational Safety and Health Act (“OSHA”) (29 U.S.C. Sections 651 et seq.), and the Oil Pollution Act of 1990 (33 U.S.C. Sections 2701 et seq.) and the regulations promulgated pursuant thereto.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate means each entity which is or has been treated as a single employer with Seller Parties for purposes of Section 414 of the Code or Section 4001(a)(14) of ERISA.

Governmental Body means any (a) nation, state, county, city, town, village, district, or other jurisdiction of any nature, (b) federal, state, local, municipal, foreign, or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), (d) multinational governmental organization or body, or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.

HSR Act means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act.

Hazardous Material means any substance, material or waste which is regulated pursuant to any Environmental Law, including, without limitation, (a) petroleum (including crude oil or any fraction thereof) or petroleum products, polychlorinated biphenyls, asbestos or asbestos-containing materials, lead or lead-based paints or materials, toxic mold, and (b) any

material or substance which is defined or regulated as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “contaminant,” “pollutant,” “toxic waste,” “toxic substance,” “source material,” “spent nuclear material,” “byproduct material,” “high-level radioactive waste,” “low-level radioactive waste,” “spent nuclear material” or “radiofrequency” under any Environmental Law.

Indemnified Amounts means any and all claims, losses, damages, liabilities, judgments, fines, penalties, assessments and expenses (including, without limitation, reasonable attorneys’ fees); provided, however, to the extent an Indemnified Amount is compensated for by insurance for which the Indemnified Party is or was loss payee or insured, the Indemnified Amount is limited to the uninsured portion thereof as follows: (A) any amount which Indemnifying Party is obligated to pay Indemnified Party under Article VII shall be reduced by the amount of insurance proceeds actually received by Indemnified Party (net of any expenses (but excluding: (i) increases in current or future insurance premiums; (ii) in-house expenses incurred by Indemnified Party in the ordinary course of business in obtaining such insurance proceeds; and (iii) interest or other charges for use of funds advanced by Indemnified Party related to the payment of claims under “pay-to-be-paid” provisions of protection and indemnity policies, which funds Indemnified Parties shall advance in the ordinary course) incurred by the Indemnified Party in obtaining such insurance proceeds) with respect to the loss for which indemnity is sought (but the Indemnifying Party shall not be entitled to delay payment of any amounts in anticipation of receipt of insurance proceeds for more than 120 days after the Indemnified Party’s submission of a claim to an insurance carrier for payment to the extent such claim remains unpaid), and (B) if at any time after such payment is made by Indemnifying Party to Indemnified Party hereunder, the Indemnified Party should receive insurance proceeds with respect to the loss for which such Indemnified Amount was previously paid hereunder, such party shall reimburse Indemnifying Party the amount by which payment would have been reduced had such insurance been received prior to such payment by Indemnifying Party. All parties shall take such commercially reasonable actions to preserve their rights to, and obtain insurance proceeds available with respect to, any such Indemnified Amount, it being understood that the Indemnified Party shall submit claims to applicable insurances.

Laws means all statutes, treaties, codes, ordinances, decrees, rules, regulations, municipal bylaws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, policies, certificates, codes, licenses, permits, approvals, guidelines, voluntary restraints, inspection reports, or any provisions of such laws, including general principles of common law and equity and the requirements of all Governmental Bodies, binding or affecting the Person referred to in the context in which such word is used; and “Law” means any one of them.

Lien means any lien, pledge, claim, charge, security interest, mortgage, charter, option, title retention agreement, security interest of any nature, adverse claim, exception, reservation, easement, right of occupation, any matter capable of registration against title, option, right of pre-emption, privilege or other encumbrance, or any contract to create any of the foregoing or other rights of any third Person of any nature whatsoever, whether recorded, secret, state, maritime or otherwise.

Loan Obligations means, collectively:

(i) the Business Loan Agreement dated March 23, 2005 between Go Big Chartering, LLC and Bank of America, N.A., as amended by that certain Amended and Restated Business Loan Agreement dated March 31, 2005 between Go Big Chartering, LLC and Bank of America, N.A.; and

(ii) the loan evidenced by that certain Promissory Note in the principal amount of $6,000,500.00 dated February 8, 2002 by Hawaiian Interisland Towing, Inc. in favor of General Electric Capital Corporation as agent for SAGE Capital Corporation; and

(iii) that certain Preferred Ship Mortgage dated August 5, 2004 by Hawaiian Interisland Towing, Inc. on the XXX, O.N. 1136725 in favor of Bank of America, N.A., recorded at Batch BK 04-80, Document ID No. 493 on the records of the National Vessel Documentation Center, as amended by that certain Amendment to Preferred Mortgage dated August 20, 2004 by Hawaiian Interisland Towing, Inc. on the XXX, O.N. 1136725 in favor of Bank of America, N.A., recorded at Batch BK 04-93, Document ID No. 170 on the records of the National Vessel Documentation Center, as further amended by that certain Amendment to Preferred Mortgage dated June 27, 2006 by Hawaiian Interisland Towing, Inc. on the XXX, O.N. 1136725 in favor of Bank of America, N.A., amending the above-referenced Preferred Ship Mortgage dated August 5, 2004, as amended by the above referenced Amendment to Preferred Mortgage dated August 20, 2004, recorded at Batch 505943, Document ID No. 5668237 on the records of the National Vessel Documentation Center.

Permitted Lien means (a) any encumbrance or lien created by this Agreement, (b) any mechanic’s, carrier’s, workman’s, warehouseman’s, repairman’s or other like lien arising in the ordinary course of business and securing obligations not yet due and payable, (c) any encumbrance or lien for Taxes and other governmental obligations not yet due; (d) any encumbrance or lien arising under the Loan Obligations; (e) any encumbrance or lien for crew wages to the extent incurred in the ordinary course of business and payment of which is not overdue; (f) any encumbrance or lien for necessaries provided to the Vessels to the extent incurred in the ordinary course of business and payment for which is not overdue; and (g) any encumbrance or lien set forth on Schedule 1.1.

Person means any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, government or agency or subdivision thereof or any other entity.

Release means any spill, effluent, emission, leaking, pumping, pouring, emptying, escaping, dumping, injection, deposit, disposal, discharge, dispersal, leaching, abandoning, adding, or migration into the indoor or outdoor environment, or into or out of any currently or formerly owned, operated, or leased property, facility or vessel.

Remedial Action means all actions, including, without limitation, any capital expenditures required by any Governmental Body or required under or taken pursuant to any Environmental Law or voluntarily taken to (a) clean up, remove, treat, contain, assess, monitor or evaluate, or in any other way, ameliorate or address any Hazardous Material in the indoor or outdoor environment; (b) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not endanger or threaten to endanger the public or

employee health or welfare or the indoor or outdoor environment; (c) perform pre-remedial studies and investigations or post-remedial monitoring and care pertaining to or relating to a Release or threatened Release of any Hazardous Material; or (d) bring any party, property, facility or vessel into compliance with any Environmental Law.

Restricted Business means the marine transportation of petroleum products by tank vessels.

Restricted Trades means the Xxxxx Act coastwise trade of the United States (Chapter 551 of Title 46 of the United States Code), including, without limitation, the noncontiguous domestic trade of the United States.

Seller Indemnified Party means each Seller Party and its Affiliates and each of their respective officers, directors, employees, agents and counsel.

Xxxxx Items has the meaning set forth in Section 4.26(a).

Subsidiary means, with respect to any Person (the “Owner”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person, are held by the Owner or one or more of its Subsidiaries.

Taxes means any and all federal, state, local, foreign and other taxes or other assessments, including, without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, profit share, license, lease, service, service use, value added, withholding, payroll, employment, excise, estimated severance, stamp, occupation, premium, property, windfall profits, or other taxes of any kind whatsoever, together with any interests, penalties, additions to tax, fines or other additional amounts imposed thereon or related thereto, and the term “Tax” means any one of the foregoing Taxes.

Tax Returns means all returns, declarations, reports, statements and other documents filed or submitted or required to be filed or submitted in respect of any and all Taxes.

Threshold Amount means $1,000,000.

“to the knowledge of Sellers” and phrases with similar wording, when used in this Agreement to qualify a representation or warranty in Article IV, means the knowledge, after reasonable investigation, of the Seller Parties.

Vessels means Owned Vessels and Bareboat Chartered Vessels as set forth on Schedules 4.14(b)(1) and 4.14(b)(2), respectively (including, without limitation, the machinery, engines, instruments, necessaries, rigging, anchors, chains, cables, tackle, apparel, accessories, equipment, radio installation and navigational equipment, inventory, spare parts and all other appurtenances routinely carried on board the Vessels in the ordinary course of operation of such Vessels).

ARTICLE II
THE MERGERS

Section 2.1 The Mergers. At the Effective Time (as defined below) and upon the terms and subject to the conditions of this Agreement (a) Xxxxx Maritime shall be merged with and into Buyer (the “Xxxxx Merger”) in accordance with Section 18-209 of the Delaware Limited Liability Company Act (the “Delaware Act”) and Section 414-311 of the Hawaii Business Corporation Act (the “Hawaii Act”), and (b) Go Big shall be merged with and into Buyer (the “Go Big Merger” and, together with the Xxxxx Merger, the “Mergers”) in accordance with Section 18-209 of the Delaware Act and Chapter 25.15 of the Revised Code of Washington (the “Washington Code”). Following the Xxxxx Merger and the Go Big Merger, the separate existence of each of Xxxxx Maritime and Go Big, respectively, shall cease and Buyer shall continue as the surviving entity (the “Surviving Entity”).

Section 2.2 Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date (as defined in Section 2.3): (a) a Certificate of Merger with respect to the Mergers (the “Certificate of Merger”) shall be duly executed and delivered to the Secretary of State of the State of Delaware for filing pursuant to Section 18-209 of the Delaware Act; (b) Articles of Merger (the “Xxxxx Articles of Merger”) with respect to the Xxxxx Merger shall be duly executed and delivered to the Director of Commerce and Consumer Affairs of the State of Hawaii for filing pursuant to Section 414-315 of the Hawaii Act, (c) Articles of Merger with respect to the Go Big Merger (the “Go Big Articles of Merger”) shall be duly executed and delivered to the Secretary of State of the State of Washington for filing pursuant to Section 25.15.405 of the Washington Code; and (d) the parties shall make such other filings with the Secretary of State of the States of Delaware, Hawaii and Washington as shall be necessary to effect the Mergers. The Xxxxx Merger shall be become effective at such time as a properly executed copy of the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the Delaware Act and a properly executed copy of the Xxxxx Articles of Merger are filed with the Director of Commerce and Consumer Affairs of the State of Hawaii in accordance with the Hawaii Act, or such later time as Buyer and Xxxxx Maritime may agree upon and as may be set forth in the Certificate of Merger and the Xxxxx Articles of Merger (the time the Xxxxx Merger becomes effective being referred to herein as the “Xxxxx Effective Time”). The Go Big Merger shall be become effective at such time as a properly executed copy of the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the Delaware Act and a properly executed copy of the Go Big Articles of Merger are filed with the Secretary of State of the State of Washington in accordance with the Washington Code, or such later time as Buyer and Go Big may agree upon and as may be set forth in the Certificate of Merger and the Go Big Articles of Merger (the time the Go Big Merger becomes effective being referred to herein as the “Go Big Effective Time” and, together with the Xxxxx Effective Time, the “Effective Time”). The parties hereby agree that the Xxxxx Effective Time and the Go Big Effective Time shall be identical.

Section 2.3 Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Xxxxx Xxxxxxxx & Xxxxxxx LLP, 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000, at 11:00 a.m., Seattle time, on the later of (1) July 26, 2007 or (2) the date that is three business days following the first day on which all of the conditions set forth in Article VIII have been satisfied or waived (other than conditions that by

their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), or at such other time and place as the parties may agree. The date on which the Closing is held is referred to in this Agreement as the “Closing Date.”

Section 2.4 Effects of the Mergers. The Mergers shall have the effects set forth in the Delaware Act, the Hawaii Act, the Washington Code and this Agreement. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all property, rights, privileges, powers and franchises of Xxxxx Maritime, Go Big and Buyer shall vest in the Surviving Entity, and all debts, liabilities and duties of Xxxxx Maritime, Go Big and Buyer shall become the debts, liabilities and duties of the Surviving Entity.

Section 2.5 Certificate of Formation; Limited Liability Company Agreement.

(a) The Certificate of Formation of Buyer, as in effect immediately prior to the Effective Time, shall be the Certificate of Formation of the Surviving Entity until thereafter changed or amended as provided therein or by applicable law.

(b) The Limited Liability Company Agreement of Buyer as in effect immediately prior to the Effective Time shall be the Limited Liability Company Agreement of the Surviving Entity until thereafter changed or amended as provided therein or by applicable law.

Section 2.6 Managers. The managers of Buyer at the Effective Time shall be the initial managers of the Surviving Entity, each to hold office in accordance with the Certificate of Formation and the Limited Liability Company Agreement of the Surviving Entity until such director’s successor is duly elected or appointed and qualified.

Section 2.7 Officers. The officers of Buyer at the Effective Time shall be the initial officers of the Surviving Entity, each to hold office in accordance with the Certificate of Formation and the Limited Liability Company Agreement of the Surviving Entity until such officer’s successor is duly elected or appointed and qualified.

Section 2.8 Conversion of Equity Interests. At the Effective Time, by virtue of the Mergers and without any action on the part of Buyer, Xxxxx Maritime, Go Big or any of the Seller Parties:

(a) the Equity Interests shall be converted automatically into the right to receive, in the aggregate, an amount in cash equal to the following (the “Merger Consideration”):

(i) $117,698,532, less

(ii) all prepaid revenue of the Subject Companies as of the Closing Date (as certified in writing by the President of Xxxxx Maritime), less

(iii) an amount equal to the difference between $500,000 and the amount of cash that is expected to be reflected on the Closing Date Balance Sheet as finally determined pursuant to Section 6.11 (as certified in writing by the

President of Xxxxx Maritime), provided that no reduction shall be made if the amount of cash that is expected to be reflected on the Closing Date Balance Sheet is equal to or greater than $500,000; less

(iv) all bonuses or other compensation paid or promised by Xxxxx Maritime to its employees pursuant to Section 6.12(c), including all employment or other taxes payable by Xxxxx Maritime in connection with such amounts; and

At the Effective Time, the Merger Consideration shall be paid by wire transfer to the Seller Parties in the amounts set forth on Schedule 2.8 to an account or accounts designated in writing by the Seller Parties. If the Closing Date Balance Sheet, as finally determined pursuant to Section 6.11, would result in a change to the Merger Consideration as calculated on the Closing Date (due to variances in prepaid revenue or cash on hand), then, within ten business days after such final determination, the Merger Consideration shall be so adjusted and Buyer shall pay to the Seller Parties, or the Seller Parties shall refund to Buyer, the amount in cash of such adjustment, as the case may be;

(b) all such Equity Interests shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and the Seller Parties shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration; and

(c) the membership interests of Buyer issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for validly issued, fully paid and nonassessable membership interests in the Surviving Entity.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SELLER PARTY

Each Seller Party, severally and not jointly, represents and warrants to Buyer and the Partnership that, as applied solely to such Seller Party, the following are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing Date:

Section 3.1 Corporate Status and Good Standing; Citizenship.

(a) 235LX is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Washington, with full limited liability company power and authority under its governing documents to own and lease its properties and to conduct business as the same exists on the date hereof and on the Closing Date.

(b) Seller Party is a citizen of the United States within the meaning of Chapter 505 of Title 46 of the United States Code, for the purpose of operating the Vessels in the coastwise trade of the United States.

Section 3.2 Authorization.

(a) Seller Party has all requisite power and authority under its governing documents, and its members or trustees, as applicable, have taken all necessary action to authorize it, to execute and deliver this Agreement and the exhibits and schedules hereto, to consummate the transactions contemplated herein and therein and to take all actions required to be taken by it pursuant to the provisions hereof and thereof. A certified copy of resolutions or a certification, as the case may be, duly adopted by the members or trustees, as applicable, of Seller Party authorizing and approving the execution and delivery of this Agreement, including the exhibits and schedules hereto, and the consummation of the transactions contemplated herein and therein, is attached as Schedule 3.2, and such resolutions or certification have not been rescinded, revoked, modified or superseded in any respect.

(b) Each of this Agreement and the exhibits and schedules hereto constitutes the valid and binding obligation of Seller Party (to the extent a party thereto), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and to the principles of equity (whether enforcement is sought in a proceeding in equity or at law).

Section 3.3 Capitalization; Title to Membership Interests.

(a) Except as set forth on Schedule 3.3(a), Seller Party owns beneficially and of record all of the Equity Interests set forth opposite Seller’s name on Schedule 3.3(a), free and clear of all Liens. Except as set forth in Schedule 3.3(a), such Equity Interests are not subject to any agreements or understandings with respect to the voting or transfer of any of the Equity Interests (except as contemplated by this Agreement and restrictions under applicable federal and state securities laws). Except as set forth on Schedule 3.3(a), Seller Party has full legal right to sell, assign, convey and transfer its Equity Interests to Buyer and will, upon delivery of an assignment of such Equity Interests to Buyer pursuant to the terms hereof, transfer to Buyer title to such Equity Interests, free and clear of any Liens.

(b) Schedule 3.3(b) sets forth the authorized capitalization of 235LX. Xxxxx owns beneficially and of record all of the equity interests in 235LX as set forth on Schedule 3.3(b), in each case free and clear of all Liens. Except as set forth in Schedule 3.3(b), such equity interests are not subject to any agreements or understandings with respect to the voting of such equity interests.

(c) Except as set forth in Schedule 3.3(c), there are no outstanding subscriptions, options, convertible securities, warrants or calls or preemptive rights of any kind issued or granted by, or binding upon, 235LX to purchase or otherwise acquire or to sell or otherwise dispose of any security of or equity interest in 235LX.

(d) Seller Party does not own or control, directly or indirectly, any interest in any Person (other than the Subject Companies) and is not a participant in any partnership, joint venture or similar arrangement.

Section 3.4 Non-Contravention. Except as set forth in Schedule 3.4, neither the execution and delivery of this Agreement or any documents executed in connection herewith, nor the consummation of the transactions contemplated herein or therein, does or shall:

(a) violate, conflict with, result in a breach of or require notice or consent, or decrease the rights of Seller Party or increase the rights of any third party, under (i) any Law, (ii) the certificate of formation, limited liability company agreement, board or member resolutions or other governing documents or instruments of Seller Party or (iii) any provision of any agreement or instrument to which Seller Party is a party;

(b) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of such transactions or to exercise any remedy or obtain any relief under, any Law, to which Seller Party, or any of the assets owned or used by Seller Party, are bound;

(c) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any license, permit, consent, approval, authorization, qualification, certificate, registration or order of any Governmental Body that is held by Seller Party or that otherwise relates to the business of, or any of the assets owned or used by, Seller Party;

(d) otherwise require notice to or consent of any Governmental Body, except for (i) any filing under the HSR Act; (ii) the filing of articles or certificates of merger with the Secretary of State of the States of Washington, Hawaii and Delaware; and (iii) any filings required to be made with and/or approvals to be obtained from the U.S. Coast Guard with respect to the transfer of the Vessels;

(e) result in the imposition or creation of any Lien upon or with respect to the Equity Interests of Seller Party or any assets of Seller Party; or

(f) result in the acceleration or mandatory prepayment of any indebtedness, or any guaranty of Seller Party or afford any holder of any indebtedness, or any beneficiary of any guaranty the right to require Seller Party to redeem, purchase or otherwise acquire, reacquire or repay any indebtedness, or to perform any guaranty.

Section 3.5 Validity. There is no investigation, claim, proceeding or litigation of any type pending or, to the knowledge of Seller Party, threatened to which Seller Party is a party that (i) questions or involves the validity or enforceability of any of such party’s obligations under this Agreement or any of the exhibits hereto or (ii) seeks (or reasonably might be expected to seek) (A) to prevent or delay the consummation by Seller Party of the transactions contemplated by this Agreement or (B) damages in connection with any such consummation.

Section 3.6 Broker Involvemen. Seller Party has not hired, retained or dealt with any broker or finder in connection with the transactions contemplated by this Agreement, except as set forth on Schedule 3.6.

Section 3.7 Litigation. There is no judgment, order, writ, injunction or decree of any Governmental Body or arbitral tribunal against or involving Seller Party that may be reasonably expected to have an adverse effect on any of the Subject Companies, Buyer or any of their respective subsidiaries.

Section 3.8 Disclosure. No representation or warranty by Seller Party in this Agreement, and in any schedule or exhibit to this Agreement, or in any certificate or other document furnished to Buyer by Seller Party at Closing, contains or, as of the Closing Date, shall contain any untrue statement of a material fact or omits or shall omit a material fact necessary to make the statements therein not misleading.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXX MARITIME, GO BIG, XXXXX,
THE XXXXXX TRUST AND 235LX

Xxxxx Maritime, Go Big, Xxxxx, the Xxxxxx Trust and 235LX, jointly and severally, represent and warrant to Buyer and the Partnership that the following are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing Date:

Section 4.1 Corporate Status and Good Standing; Citizenship.

(a) Xxxxx Maritime is a corporation duly organized, validly existing and in good standing under the laws of the State of Hawaii, with full corporate power and authority under its governing documents to own and lease its properties and to conduct business as the same exists on the date hereof and on the Closing Date. Xxxxx Maritime is duly qualified to do business as a foreign corporation in the jurisdictions set forth on Schedule 4.1(a)(1). Xxxxx Maritime is duly qualified to do business as a foreign corporation in all jurisdictions in which the nature of its business requires such qualification and the failure to do so would have an adverse effect on any of the Subject Companies. Except as set forth on Schedule 4.1(a)(2), Xxxxx Maritime does not have any Subsidiaries and is not a participant in any partnership, joint venture or similar arrangement.

(b) Go Big is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Washington, with full limited liability company power and authority under its governing documents to own and lease its properties and to conduct business as the same exists on the date hereof and on the Closing Date. Go Big is duly qualified to do business as a foreign limited liability company in the jurisdictions set forth on Schedule 4.1(b). Go Big is duly qualified to do business as a foreign limited liability company in all jurisdictions in which the nature of its business requires such qualification and the failure to do so would have an adverse effect on any of the Subject Companies. Go Big does not have any Subsidiaries and is not a participant in any partnership, joint venture or similar arrangement.

(c) Each Subsidiary of Xxxxx Maritime set forth on Schedule 4.1(c) (each a “Xxxxx Subsidiary”) is a corporation duly organized, validly existing and in good standing under the laws of the State of Hawaii, with full corporate power and authority under its governing documents to own and lease its properties and to conduct business as the same exists on the date hereof. As of the Closing Date, each Xxxxx Subsidiary will be a limited liability company duly organized, validly existing and in good standing under the laws of the State of Hawaii, with full limited liability company power and authority under its governing documents to own and lease its properties and to conduct business as the same exists on the

Closing Date. Each Xxxxx Subsidiary is duly qualified to do business as a foreign corporation, and as of the Closing Date will be duly qualified to do business as a foreign limited liability company, in the jurisdictions set forth on Schedule 4.1(c). Each Xxxxx Subsidiary is duly qualified to do business as a foreign corporation, and as of the Closing Date each Xxxxx Subsidiary will be duly qualified to do business as a foreign limited liability company, in all jurisdictions in which the nature of its business requires such qualification and the failure to do so would have an adverse effect on any of the Subject Companies.

(d) Each of the Subject Companies is a citizen of the United States within the meaning of Chapter 505 of Title 46 of the United States Code, for the purpose of operating the Vessels in the coastwise trade of the United States.

Section 4.2 Authorization.

(a) Each of Xxxxx Maritime and Go Big has all requisite power and authority under its governing documents, and the shareholders or members, as applicable, of each of Xxxxx Maritime and Go Big has taken all necessary action to authorize it, to execute and deliver this Agreement and the exhibits and schedules hereto, to consummate the transactions contemplated herein and therein and to take all actions required to be taken by it pursuant to the provisions hereof and thereof. A certified copy of resolutions duly adopted by the shareholders or members, as applicable, of each of Xxxxx Maritime and Go Big authorizing and approving the execution and delivery of this Agreement, including the exhibits and schedules hereto, and the consummation of the transactions contemplated herein and therein, is attached as Schedule 4.2, and such resolutions have not been rescinded, revoked, modified or superseded in any respect.

(b) Each of this Agreement and the exhibits and schedules hereto constitutes the valid and binding obligation of Xxxxx Maritime and Go Big to the extent a party thereto, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and to the principles of equity (whether enforcement is sought in a proceeding in equity or at law).

Section 4.3 Capitalization; Title to Equity Interests.

(a) The authorized equity securities of Xxxxx Maritime consist of 2,000,000 shares of common stock, no par value, of which 1,000,000 shares are issued and outstanding (the “Shares”). The Xxxxx Sellers own, and at the Closing Xxxxx and the Xxxxxxx Trust will own, beneficially and of record all of the Shares, in each case free and clear of all Liens. Such Shares are not subject to any agreements or understandings with respect to the voting or transfer of any of the Shares (except as contemplated by this Agreement and restrictions under applicable federal and state securities laws). The Shares have been duly authorized and validly issued and are fully paid and nonassessable. The Xxxxx Sellers have, and at Closing Xxxxx and the Xxxxxxx Trust will have, full legal right to sell, assign, convey and transfer the Shares to Buyer and will, upon delivery of a certificate or certificates representing such Shares to Buyer pursuant to the terms hereof, transfer to Buyer title to such Shares, free and clear of any Liens.

(b) 235LX owns beneficially and of record all of the Go Big Membership Interests, in each case free and clear of all Liens. Such Go Big Membership Interests are not

subject to any agreements or understandings with respect to the voting or transfer of any of the Go Big Membership Interests (except as contemplated by this Agreement and restrictions under applicable federal and state securities laws). The Go Big Membership Interests are duly authorized and validly issued and will be fully paid and nonassessable. 235LX has full legal right to sell, assign, convey and transfer the Go Big Membership Interests, to Buyer and will, upon delivery of a certificate or certificates representing such Go Big Membership Interests to Buyer pursuant to the terms hereof, transfer to Buyer title to such Go Big Membership Interests, free and clear of any Liens.

(c) Except as set forth in Schedule 4.3(c), there are no outstanding subscriptions, options, convertible securities, warrants or calls or preemptive rights of any kind issued or granted by, or binding upon, any of the Subject Companies to purchase or otherwise acquire or to sell or otherwise dispose of any security of or equity interest in any of the Subject Companies.

Section 4.4 Non-Contravention. Except as set forth in Schedule 4.4, neither the execution and delivery of this Agreement or any documents executed in connection herewith, nor the consummation of the transactions contemplated herein or therein, does or shall:

(a) violate, conflict with, result in a breach of or require notice or consent, or decrease the rights of any of the Subject Companies or increase the rights of any third party, under (i) any Law, (ii) the certificate of formation, limited liability company agreement, board or member resolutions or other governing documents or instruments of any of the Subject Companies or (iii) any provision of any agreement or instrument to which any of the Subject Companies is a party;

(b) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of such transactions or to exercise any remedy or obtain any relief under, any Law, to which any of the Subject Companies, or any of the assets owned or used by any of the Subject Companies, are bound;

(c) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any license, permit, consent, approval, authorization, qualification, certificate, registration or order of any Governmental Body that is held by any of the Subject Companies or that otherwise relates to the business of, or any of the assets owned or used by, any of the Subject Companies;

(d) otherwise require notice to or consent of any Governmental Body, except for (i) any filing under the HSR Act; (ii) the filing of articles or certificates of merger with the Secretary of State of the States of Hawaii, Washington and Delaware; and (iii) any filings required to be made with and/or approvals to be obtained from the U.S. Coast Guard with respect to the transfer of the Vessels; or

(e) result in the imposition or creation of any Lien upon or with respect to the Equity Interests or any assets of any of the Subject Companies; or

(f) result in the acceleration or mandatory prepayment of any indebtedness, or any guaranty of any of the Subject Companies or afford any holder of any indebtedness, or any beneficiary of any guaranty the right to require any of the Subject Companies to redeem, purchase or otherwise acquire, reacquire or repay any indebtedness, or to perform any guaranty.

Section 4.5 Validity. There is no investigation, claim, proceeding or litigation of any type pending or, to the knowledge of Sellers, threatened to which any of the Subject Companies is a party that (i) questions or involves the validity or enforceability of the obligations of any of the Subject Companies under this Agreement or any of the exhibits hereto or (ii) seeks (or reasonably might be expected to seek) (A) to prevent or delay the consummation by any of the Subject Companies of the transactions contemplated by this Agreement or (B) damages in connection with any such consummation.

Section 4.6 Broker Involvement. None of the Subject Companies has hired, retained or dealt with any broker or finder in connection with the transactions contemplated by this Agreement, except as set forth on Schedule 4.6.

Section 4.7 Litigation. Except as set forth on Schedule 4.7, there is no investigation, claim, proceeding or litigation of any type pending or, to the knowledge of Sellers, threatened to which any of the Subject Companies is or may become a party or with respect to which any of their respective properties or assets could reasonably be expected to become subject. To the knowledge of Sellers, Schedule 4.7 sets forth each judgment, order, writ, injunction or decree of any Governmental Body or arbitral tribunal against or involving any of the Subject Companies that is currently in effect. Except as set forth on Schedule 4.7, there is no judgment, order, writ, injunction or decree of any Governmental Body or arbitral tribunal against or involving any of the Subject Companies that may be reasonably expected to have an adverse effect on any of the Subject Companies, Buyer or any of their respective subsidiaries.

Section 4.8 Title to Assets. Except as set forth on Schedule 4.8, each of the Subject Companies has good and marketable title to all of its owned assets that are used in its business, free and clear of any and all Liens other than Permitted Liens.

Section 4.9 Continuity Prior to the Closing Date. Except as set forth on Schedule 4.9, from January 1, 2007, to and including the Closing Date, none of the Subject Companies has conducted its business other than in the usual and customary manner and in the ordinary course of business, consistent with historical practice, and there has not been:

(a) any change in its authorized capital or in any of its outstanding capital or any grant, issuance or sale of any derivative security with respect to its capital;

(b) any sale, lease, distribution, transfer, mortgage, pledge or subjection to Lien of assets (other than Permitted Liens), except sales of inventory and obsolete or surplus equipment in the ordinary and usual course of business;

(c) any transaction by any of the Subject Companies not in the ordinary and usual course of business;

(d) any damage to or destruction, loss or equipment failure related to any assets owned or used by any of the Subject Companies, whether or not covered by insurance, requiring or that may be reasonably expected to require expenditures in excess of $10,000 in order to replace or return such asset to its condition prior to the happening of such event;

(e) a modification to the terms of any material agreement of any of the Subject Companies with its vendors, suppliers or customers, the early termination or, to the knowledge of the Sellers, threatened termination of any material contract or relationship of any of the Subject Companies with any vendor, supplier or customer or the non-renewal or, to the knowledge of Sellers, threatened non-renewal of any material contract or relationship of any of the Subject Companies with any vendor, supplier or customer;

(f) the negotiation, execution or delivery of any agreement, commitment or contract having a term exceeding one year or involving an amount in excess of $100,000;

(g) the negotiation or execution of any charter commitments with respect to articulated-tug barge units;

(h) the negotiation or execution of any vessel construction agreement;

(i) any incurrence by any of the Subject Companies of any indebtedness for borrowed money or guaranty or any commitment to incur any indebtedness or any guaranty;

(j) any change in accounting methods or principles or the application thereof or any change in the Subject Companies’ policies or practices with respect to items affecting working capital;

(k) any delay or reduction in capital expenditures or payment of vendors in contemplation of this Agreement or otherwise not in the ordinary course of business consistent with past practice, or any failure to continue to make capital expenditures or pay vendors in the ordinary course of business consistent with past practice;

(l) any acceleration of shipments, sales or orders or other similar action in contemplation of this Agreement or otherwise not in the ordinary course of business consistent with past practice;

(m) any acceleration of the collection of Accounts Receivable in contemplation of this Agreement or otherwise not in the ordinary course of business consistent with past practice;

(n) any bonus payments, salary increases, commission increases or modifications, the execution of any employment agreement, severance arrangement, or consulting arrangement or Plan (or any amendment thereto), except as contemplated in Section 6.12(c) or set forth on Schedule 4.9;

(o) any waiver of any rights that, singly or in the aggregate, are material to the business of any of the Subject Companies, its assets or the financial condition or results of operations of the Subject Companies;

(p) any labor strikes or disruptions, union organizational activities or other similar occurrence; or

(q) any contract or commitment to do or cause to be done any of the foregoing.

Section 4.10 Contracts and Commitments. Schedule 4.10 lists all agreements, commitments, contracts, undertakings or understandings (A) to which any of the Subject Companies is a party as of the date of this Agreement or (B) which relate to any of its properties or assets, including, but not limited to, trademark, trade name or patent license agreements, software license agreements (other than for off-the-shelf software), service agreements, leases, charters, contracts of affreightment, purchase or sale agreements, supply agreements, distribution or distributor agreements, purchase orders, customer orders and equipment rental agreements that, in the case of either clause (A) or (B), are either material to the Subject Companies or involve consideration with a value of $10,000 or more. Except as set forth in Schedule 4.10, none of the Subject Companies is in breach of or default under any agreement, lease, contract or commitment listed or of a type required to be listed on Schedule 4.10 (collectively, the “Contacts”). Each Contract is valid, binding and in full force and effect and is an enforceable agreement of the applicable Subject Company and, to the knowledge of Sellers, the other parties thereto. Except as set forth in Schedule 4.10, to the knowledge of Sellers, there has not occurred any breach or default under any Contract on the part of the other parties thereto, and no event has occurred which with the giving of notice or the lapse of time, or both, would constitute a default under any Contract. Except as set forth in Schedule 4.10, there is no dispute between the parties to any Contract as to the interpretation thereof or as to whether any party is in breach or default thereunder, and no party to any Contract has indicated to any of the Subject Companies its intention to terminate any Contract. None of the Subject Companies is a party to any covenant or obligation of any nature limiting the freedom of any of the Subject Companies to compete in any line of business and binding on Buyer after the Closing. Complete and correct copies of all Contracts listed or referred to in Schedule 4.10 have either been made available to Buyer or, if not provided because of pending antitrust matters or confidentiality requirements, shall be provided as soon as practicable to the extent permitted by the antitrust authorities or the counterparties to such contracts, as applicable.

Section 4.11 Trademarks, Trade Names and Intellectual Property. Schedule 4.11 contains an accurate and complete list of (a) all registered United States and foreign trademarks, servicemarks, trade names, fictitious names, brand names, business names, designs and logos owned or used by each of the Subject Companies in connection with its business, and all registrations thereof, (b) all registered copyrights owned or used by each of the Subject Companies in connection with its business, and (c) all patents (including all reissues, divisions, continuations and extensions thereof) and pending patent applications owned or used by each of the Subject Companies in connection with its business (collectively, including all rights to any of the foregoing, the “Scheduled Intellectual Property”). Each of the Subject Companies has the right to use all Scheduled Intellectual Property, as well as all other intellectual property used by such Subject Company in connection with its business, in the conduct of its business as it is currently being conducted, and the transactions contemplated by this Agreement will not have the effect of terminating any such right. Except as set forth in

Schedule 4.11, there is no pending or threatened action or claim that would impair any such right.

Section 4.12 Financial Statements; Budget.

(a) The unaudited financial statements of the Subject Companies as of and for the three years ended December 31, 2006 and as of and for the three months ended March 31, 2007 (the “Unaudited Financial Statements”) present fairly, in all material respects, the financial condition of the Subject Companies at the respective dates of the balance sheets included therein and the results of operations, cash flows and shareholders’ or members’ equity of the Subject Companies for the respective periods set forth therein and have been prepared in accordance with generally accepted accounting principles in the United States consistently applied (“GAAP”), subject to the absence of notes and normal recurring year end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse). A copy of the Unaudited Financial Statements is attached hereto as Schedule 4.12(a).

(b) At the Closing, the audited financial statements of the Subject Companies as of and for the three years ended December 31, 2006 (including the related notes) (the “Audited Annual Financial Statements”) will present fairly, in all material respects, the financial condition of the Subject Companies at the respective dates of the balance sheets included therein and the results of operations, cash flows and shareholders’ or members’ equity of the Subject Companies for the respective periods set forth therein and will have been prepared in accordance with GAAP. When available, a copy of the Audited Annual Financial Statements shall be attached hereto as Schedule 4.12(b). As of the Closing Date, the Audited Annual Financial Statements will be consistent in all material respects with the corresponding periods in the Unaudited Financial Statements and will be free of a qualified opinion. The footnotes to the Audited Annual Financial Statements will not disclose any fact or circumstance that could reasonably be expected to lead to or cause such a material adverse change; provided, however, that (a) changes resulting from conditions affecting the coastwise maritime petroleum transportation industry in general and (b) changes in the economy in general shall, in each case, be excluded from the determination to the extent that they do not have a disproportionate effect on any of the Subject Companies as compared to other entities engaged in the coastwise maritime petroleum transportation industry in Hawaii and along the West Coast.

(c) At the Closing, the unaudited financial statements of the Subject Companies as of and for the three months ended March 31, 2007 (including the related notes) (the “Unaudited Interim Financial Statements” and, together with the Audited Annual Financial Statements, the “Financial Statements”) will present fairly, in all material respects, the financial condition of the Subject Companies at the respective dates of the balance sheets included therein and the results of operations, cash flows and shareholders’ or members’ equity of the Subject Companies for the respective periods set forth therein and will have been prepared in accordance with GAAP, subject to normal recurring year end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse). When available, a copy of the Unaudited Interim Financial Statements shall be attached hereto as Schedule 4.12(c). As of the Closing Date, the Unaudited Interim Financial Statements will be consistent in all material respects with the corresponding periods in the Unaudited Financial Statements and will be free of a qualified opinion. The footnotes to the Unaudited Interim Financial Statements will not

disclose any fact or circumstance that could reasonably be expected to lead to or cause such a material adverse change; provided, however, that (a) changes resulting from conditions affecting the coastwise maritime petroleum transportation industry in general and (b) changes in the economy in general shall, in each case, be excluded from the determination to the extent that they do not have a disproportionate effect on any of the Subject Companies as compared to other entities engaged in the coastwise maritime petroleum transportation industry in Hawaii and along the West Coast.

(d) The fiscal 2007 budget and capital budget of the Subject Companies is attached hereto as Schedule 4.12(d). Such budgets (i) are true and complete copies of the most recent internal budgets for fiscal 2007 for the Subject Companies, and (ii) were prepared by management of the Subject Companies in good faith and on a reasonable basis.

(e) Schedule 4.12(e) contains a schedule of (i) any liability of any of the Subject Companies (A) for borrowed money or arising out of any extension of credit to or for the account of any of the Subject Companies, or (B) evidenced by notes, bonds, debentures or similar instruments of any of the Subject Companies and (ii) any liability secured by any Lien upon any property or other assets of any of the Subject Companies. Schedule 4.12(e) also contains a schedule of any liability, contingent or otherwise, of any of the Subject Companies guaranteeing or otherwise becoming liable for any obligation of any other Person in any manner, whether directly or indirectly.

(f) Schedule 4.12(f) reflects all intercompany transactions between any of the Subject Companies and the Seller Parties or any Affiliates thereof since December 31, 2003, excluding the transactions contemplated by Section 6.13.

Section 4.13 Bank Relations; Powers of Attorney. Schedule 4.13 sets forth: (a) the name of each financial institution in which any of the Subject Companies has borrowing or investment arrangements, deposit or checking accounts or safe deposit boxes; (b) the types of those arrangements and accounts, including, as applicable, names in which accounts or boxes are held, the account or box numbers and the name of each Person authorized to draw thereon or have access thereto; and (c) the name of each Person holding a general or special power of attorney from any of the Subject Companies and a description of the terms of each such power.

Section 4.14 Condition of Assets; Eligibility for Coastwise Trade.

(a) Schedule 4.14(a) sets forth a list of all material assets of each of the Subject Companies other than the Vessels, which are listed on Schedule 4.14(b). All tangible assets of the Subject Companies listed on Schedule 4.14(a) are in good, serviceable condition, subject only to normal maintenance requirements and normal wear and tear reasonably expected in the ordinary course of business. There are no material assets (whether or not owned by the Subject Companies) not listed on Schedule 4.14(a) or Schedule 4.14(b) that are used in or necessary for the operation of the business of any of the Subject Companies as currently conducted.

(b) Schedule 4.14(b)(1) sets forth a list of each vessel (including vessels under construction) owned by each of the Subject Companies, with an indication (as applicable)

of vessel type, year built, American Bureau of Shipping Classification (including any recommendations), flag, capacity (and/or horsepower as applicable), associated Liens (other than Permitted Liens), gross tonnage and OPA 90 phase-out dates and date of last drydocking (the “Owned Vessels”); Schedule 4.14(b)(2) sets forth a list of each vessel (including vessels under construction) bareboat chartered by the Subject Companies, with an indication (as applicable) of vessel type, year built, American Bureau of Shipping Classification (including any recommendations), flag, capacity (and/or horsepower as applicable), associated Liens (other than Permitted Liens), gross tonnage and OPA 90 phase-out dates and date of last drydocking (the “Bareboat Chartered Vessels”); Schedule 4.14(b)(3) sets forth a list of each vessel (including vessels under construction) chartered by the Subject Companies on other than a bareboat basis, with an indication (as applicable) of the type of charter, of vessel type, year built, American Bureau of Shipping Classification (including any recommendations), flag, capacity (and/or horsepower as applicable), associated Liens (other than Permitted Liens), gross tonnage and OPA 90 phase-out dates and date of last drydocking.

(c) Each of the Subject Companies has exercised due diligence to keep and maintain each of the Vessels seaworthy in all material respects. Except as set forth in Schedule 4.14(c), each of the Vessels is equipped with the machinery, engines, instruments, rigging, anchors, chains, cables, tackle, apparel, accessories, equipment, radio installation and navigational equipment, inventory, spare parts and all other appurtenances necessary for the operation of such Vessel in the ordinary course of business consistent with past practices. Except as set forth in Schedule 4.14(c), since the Vessels’ last drydocking, no Vessel has been grounded, stranded or suffered any other occurrence or casualty that could have caused or actually did cause any damage to such Vessel.

(d) Except as set forth in Schedule 4.14(d), each of the Owned Vessels is duly documented in the name of the respective Subject Company set forth on Schedule 4.14(d) under the laws and flag of the United States of America and each Vessel satisfies the requirements for coastwise documentation, has not been “sold foreign” within the meaning of Section 12132 of Title 46 of the United States Code and all coastwise licenses, permits, certificates, registrations, approvals and other authorizations necessary to operate the Vessels as currently operated are valid and current, subject to the trading restrictions set forth in Schedule 4.14(d).

(e) Each Vessel has a valid, current and unextended U.S. Coast Guard Certificate of Inspection, where applicable, and all other licenses, permits, certificates, registrations, approvals and other authorizations (including Certificates of Financial Responsibility (Water Pollution)) that are required by applicable Law. Except as set forth in Schedule 4.14(e), there are no outstanding CG-835 certificates or Captain of the Port orders with respect to the Vessels or the operation thereof.

Section 4.15 Absence of Undisclosed Liabilities. Except as set forth in Schedule 4.15, none of the Subject Companies has any liability (whether absolute, accrued, contingent, unliquidated or otherwise, whether due or to become due), other than liabilities (i) reflected in the Unaudited Financial Statements or in the Financial Statements, (ii) arising under Contracts described in Schedule 4.10 (Contracts and Commitments) or contracts entered in the ordinary course of business and consistent with past practice that are not required to be disclosed

therein due to dollar thresholds, (iii) arising out of matters reflected in Schedule 4.7 (Litigation) or (iv) trade accounts payable incurred after March 31, 2007 in the ordinary course of business consistent with past practice, and (v) Permitted Liens.

Section 4.16 Real Estate.

(a) None of the Subject Companies currently owns, and none of them has ever owned, any real property. Schedule 4.16 sets forth a list and summary description (including property location, parties and annual rental payments) of all leases, subleases and other agreements under which any of the Subject Companies is lessor or lessee of, or uses or occupies or allows the use or occupancy of, any real property. All such leases, subleases and other agreements are valid and subsisting and in full force and effect.

(b) The real property listed on Schedule 4.16 (i) has full and free access to and from public highways, streets and roads and there is no proceeding pending or, to the knowledge of Sellers, threatened that could result in the termination of or material limitations on such access and (ii) is connected to and serviced by utilities and public services, all of which are adequate for the use of the real property listed thereon as the business of the Subject Companies is currently conducted. None of the Subject Companies has experienced during the three years preceding the date hereof any material interruption in the delivery of adequate quantities of any utilities (including, without limitation, electricity, natural gas, potable water, water for cooling or similar purposes and fuel oil) or other public services (including, without limitation, sanitary and industrial sewer service) required in the operation of the business of the Subject Companies during such period and, to the knowledge of Sellers, no such material interruption is threatened.

Section 4.17 Accounts Receivable. All Accounts Receivable of the Subject Companies that are reflected in the Financial Statements and that will be reflected in the Closing Date Balance Sheet represent sales actually made in the ordinary course of business. The reserve for doubtful accounts in the Financial Statements has been, and the reserve for doubtful accounts in the Closing Date Balance Sheet will be determined based on the formula historically utilized by the Subject Companies to calculate such reserve and with the prior accounting and collection practices of the Subject Companies.

Section 4.18 Inventory. Schedule 4.18 sets forth the location of all inventory (including spare parts) related to the Vessels that is not aboard such Vessels.

Section 4.19 Employees and Related Matters. Schedule 4.19 is a complete list of all current employees of each of the Subject Companies, listing the title or position held, base salary, any commissions or other cash compensation, including bonuses, paid or payable, and the terms of any written or oral employment agreement (including a copy of any such written agreement and a description of any such oral agreement) with any of the Subject Companies or any Affiliate thereof. None of the Subject Companies has any employees covered by a collective bargaining agreement. There are no facts or circumstances that have resulted or could reasonably be expected to result in a claim for unlawful discrimination against any of the Subject Companies.

Section 4.20 Employee Benefits.

(a) Schedule 4.20 contains a complete list of each compensation or benefit plan, agreement, program or policy (whether written or oral, formal or informal) sponsored, maintained or contributed to by any of the Subject Companies for the benefit of any of its present or former directors, officers, employees, agents, consultants or other similar representatives, including, but not limited to, any “employee benefit plan” as defined in section 3(3) of ERISA, other than employment agreements or compensation practices described in Sections 4.10(e) and 4.19 above (the foregoing are hereinafter collectively referred to as “Plans”). None of the Subject Companies is subject to any legal, contractual, equitable or other obligation to enter into any new Plan or to modify or change any existing Plan.

(b) With respect to each Plan, the Subject Companies have provided to Buyer a true and correct copy of each of the following, as applicable:

(i) the current plan document (including all amendments adopted since the most recent restatement) and its most recently prepared summary plan description and all summaries of material modifications prepared since the most recent summary plan description, and all material employee communications relating to such plan;

(ii) annual reports or information returns, including financial statements, for the last three years;

(iii) all contracts relating to any plan with respect to which any Subject Company may have any liability, including, without limitation, each related trust agreement, insurance contract, service provider contract, subscription or participation agreement, or investment management agreement (including all amendments to each such document); and

(iv) the most recent IRS determination letter or other opinion letter with respect to the qualified status of such Plan under Code Section 401(a) or the exempt status of a related trust under Code Section 501(a) or 501(c)(9).

(c) Each Plan intended to be qualified under Section 401(a) of the Code is and has been so qualified in form. Each Plan is and has been maintained and operated in material compliance with its terms and the provisions of all applicable laws, rules and regulations, including, without limitation, ERISA and the Code. Other than claims for benefits in the ordinary course, there is no claim pending, or, to the knowledge of Sellers, threatened, involving any Plan by any Person against such Plan, fiduciaries or administrators of such Plan, any of the Subject Companies or the Sellers. No Plan is subject to ongoing audit, investigation or other administrative proceeding of the Internal Revenue Service, the Department of Labor or any other governmental agency, and no Plan is the subject of any pending application for administrative relief under any voluntary compliance program of the Internal Revenue Service, the Department of Labor or any other governmental entity. There has been no transaction that is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA, respectively, in relation to any Plans. Each

Plan which may be subject to Section 409A of the Code is either exempt from Section 409A of the Code under current IRS guidance or has been operated in good faith compliance with Section 409A of the Code and the IRS guidance issued thereunder. To the knowledge of Sellers, no Plan is subject to Section 409A of the Code.

(d) Neither any of the Subject Companies nor any ERISA Affiliate has ever sponsored or maintained an “employee pension benefit plan” subject to Title IV of ERISA or the minimum funding requirements of Section 412 of the Code. Neither any of the Subject Companies nor any ERISA Affiliate has maintained or incurred any liability with respect to any “multiemployer plan” (as defined in Section 3(37) of ERISA). There are no facts that have resulted or could reasonably be expected to result in a liability (whether or not asserted as of the date hereof) to the Subject Companies or any ERISA Affiliate pursuant to Title IV of ERISA.

(e) No Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Subject Companies or any Affiliate for periods extending beyond their retirement date or other termination of service other than coverage mandated by applicable law.

(f) Except as set forth in Section 6.12(c), the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not (either alone or upon the occurrence of any subsequent employment-related event) (i) result in any payment becoming due to any employee, former employee or group of employees or former employees, of any of the Subject Companies or any of its Affiliates, (ii) increase any benefits otherwise payable under any Plan, (iii) result in the acceleration of the time of payment or vesting of any such benefits, (iv) result in the incurrence or acceleration of any other obligation related to the Plans or to any employee, former employee or group of employees or former employees or (v) cause any payments to be nondeductible under Section 280G of the Code.

(g) Each of the Subject Companies has the right to, in any manner, and without the consent of any employee, beneficiary or dependent, employees’ organization or other Person, terminate, modify or amend any Plan (or their participation in any such Plan) at any time sponsored, maintained or contributed to by it, effective as of any date on or after the Closing except to the extent that any retroactive amendment would be prohibited by Section 204(g) of ERISA.

(h) All individuals who perform (or have performed within the last six years) compensatory services for the Subject Companies in any capacity have been properly classified for purposes of employment and withholding taxes and eligibility to participate in and coverage under any Plan.

Section 4.21 Compliance With Law. None of the Subject Companies is in violation, in any material respect, of any provision of any Law applicable to it, including, without limitation, those governing the registration, ownership and operation of vessels documented to engage in the coastwise trade of the United States, and none of the Subject Companies has received notice of any alleged violation of any Law. Without limiting the generality of the foregoing, (a) none of the Subject Companies has made any offer, payment, promise to pay or authorization of the payment of any money, or any offer, gift, promise to give

or authorization of the giving of anything of value, directly or indirectly, to or for the use or benefit of any official or employee of any Governmental Body or to or for the use or benefit of any political party, official or candidate unless such offer, payment, gift, promise or authorization is not prohibited by the written laws or regulations of the Governmental Body and (b) each of the Subject Companies is familiar with and has complied with the United States Foreign Corrupt Practices Act, 15 U.S.C. Sections 78dd-1 and 78dd-2.

Section 4.22 Environmental.

(a) Except as set forth in Schedule 4.22(a), each of the Subject Companies has been and is in material compliance with all Environmental Laws, and the Seller Parties are not aware of any facts, circumstances, or conditions that would require significant capital expenditures to maintain compliance in the future.

(b) Each of the Subject Companies has obtained all licenses, permits, approvals, consents, certificates, registrations and other authorizations under Environmental Laws (the “Environmental Permits”) required for the operation of its business, all of which are listed in Schedule 4.22(b). Except as set forth in Schedule 4.22(b), each Environmental Permit is valid and in good standing, and any renewal application required to keep each Environmental Permit in effect has been timely filed, and none of the Subject Companies is in default or breach of any Environmental Permit, and no proceeding is pending or, to the knowledge of Sellers, threatened to revoke, deny, condition or limit the renewal of any Environmental Permit.

(c) Except as set forth in Schedule 4.22(c), none of the Subject Companies has used or expressly permitted to be used, except in material compliance with all Environmental Laws in effect at the time, any of its currently or formerly owned or leased properties, facilities or Vessels to generate, manufacture, process, distribute, use, treat, store, dispose of, transport or handle any Hazardous Material.

(d) Except as set forth in Schedule 4.22(d), none of the Subject Companies has received any notice of or been prosecuted for an offense alleging, non-compliance with or liability under any Environmental Law or requesting information with respect to an investigation pursuant to CERCLA, or any foreign or state counterpart thereto, or any other Environmental Law. Except as set forth in Schedule 4.22(d), there are no outstanding orders requiring Remedial Actions with respect to the businesses or currently or formerly owned or leased properties of any of the Subject Companies, nor is Seller Party aware of any condition or circumstance that could reasonably be expected to require Remedial Actions.

(e) To the knowledge of Sellers and except as disclosed in Schedule 4.22(e), there are no pending or proposed changes to any Environmental Law that would render illegal or restrict any service provided by any of the Subject Companies, or require significant capital expenditures by the owner or operator of the assets of any of the Subject Companies to achieve or maintain compliance.

(f) Except as set forth in Schedule 4.22(f), and except in compliance with all Environmental Laws, there has been no Release of any Hazardous Material on, into, under, or from the currently or formerly owned or leased properties, facilities, Vessels or other assets of

any of the Subject Companies that could reasonably be expected to require Remedial Actions. All Hazardous Materials used in whole or in part by any of the Subject Companies or resulting from its business have been disposed of, treated, transported and stored in compliance with all Environmental Laws. Schedule 4.22(f) lists the names and business addresses of the facilities or enterprises used by any of the Subject Companies for the offsite disposal or treatment of Hazardous Materials during the preceding five (5) years.

(g) Except as disclosed in Schedule 4.22(g), there is not now, and to the knowledge of Sellers, there has never been, on or in any currently or formerly owned or leased properties, facilities, Vessels or other assets, any of the following: (i) any underground storage tanks; (ii) any landfills, dumps, or surface impoundments; (iii) any Remedial Action; and (iv) any asbestos-containing materials.

(h) None of the Subject Companies has received any notice that it is potentially responsible for a federal, provincial, municipal, local or other clean-up site or other corrective action under any Environmental Laws. None of the Subject Companies has received any request for information in connection with an inquiry from any Governmental Body with respect to its use of any disposal sites.

(i) No judicial or administrative proceedings are pending or, to the knowledge of Sellers, threatened against any of the Subject Companies alleging the violation of or seeking to impose liability pursuant to any Environmental Law and there are no investigations pending or, to the knowledge of Sellers, threatened against any of the Subject Companies under any Environmental Law.

(j) Seller Parties have made available to Buyer true and complete copies of all environmental and health and safety related audits, evaluations, investigations assessments, studies, sampling or similar reports, or tests in the custody or control of any of the Subject Companies relating to any of the Subject Companies or any of their respective currently or formerly owned or leased properties, facilities, Vessels or other assets.

(k) Each of the Subject Companies has timely made all filings and timely submitted all reports required under any Environmental Laws.

(l) Except as set forth in Schedule 4.22(l), no Hazardous Material is required to be removed, encapsulated or abated, and no Remedial Action is otherwise required under any Environmental Laws, with respect to any currently and to the knowledge of Sellers, formerly owned or leased property, Vessel, facility or other asset of the Subject Companies. Except as set forth in Schedule 4.22(l), none of the Subject Companies has any liability for the exposure of employees or third parties to Hazardous Materials.

(m) Except as set forth in Schedule 4.22(m), none of the Subject Companies is required under any Environmental Laws by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the effectiveness of any transactions contemplated hereby, (i) to perform a site assessment of Hazardous Materials, (ii) to remove or remediate any Hazardous Materials, (iii) to give notice to or receive approval from any Governmental Body (other than as necessary to transfer, or to allow Buyer to operate under, Environmental Permits

required under Environmental Laws), or (iv) to record or deliver to any person or entity (other than Buyer) any disclosure document or statement pertaining to environmental matters.

Section 4.23 Insurance. Schedule 4.23 sets forth a list of all insurance policies of each of the Subject Companies or relating to its assets or the conduct of its business (collectively, the “Insurance Policies”). The Insurance Policies (i) are valid, outstanding and enforceable, (ii) are issued by insurers that are financially sound and reputable, (iii) taken together, provide adequate insurance coverage for the assets and the operation of the business of the Subject Companies, (iv) are sufficient for compliance with all Laws and Contracts to which the Subject Companies are a party or by which they are bound, and (v) except as set forth in Schedule 4.23, do not provide for any retrospective premium adjustment or other experience-based liability on the part of any of the Subject Companies. Each of the Subject Companies has paid all premiums due, and has otherwise performed all of its obligations, under each of the Insurance Policies. None of the Seller Parties or any of the Subject Companies has received (i) any refusal of coverage or any notice that a defense will be afforded with a reservation of rights under any of the Insurance Policies, or (ii) any notice of cancellation or any other indication that any Insurance Policy is no longer in full force or effect or will not be renewed or that the issuer of any Insurance Policy is not willing or able to perform its obligations thereunder.

Section 4.24 Government Licenses and Permits. Schedule 4.24 sets forth a list of all licenses, permits, consents, authorizations, qualifications, plans (including vessel response plans) approved by or submitted to Governmental Bodies and orders of Governmental Bodies required for the operation or conduct of the business of any of the Subject Companies as currently conducted or the ownership of any of its assets, all of which are in full force and effect.

Section 4.25 Responsible Carriers Plan. Each of the Subject Companies has adopted an American Waterways Operators Responsible Carriers Plan, which is attached hereto as Schedule 4.25, and to the knowledge of Sellers, is in compliance with all Responsible Carrier Plan requirements.

Section 4.26 Taxes.

(a) The Seller Parties and the Subject Companies have caused to be timely filed with appropriate Governmental Bodies all Tax Returns required to be filed by or with respect to the Subject Companies, the assets and operations of the Subject Companies and the conduct of the business of the Subject Companies (together, “Xxxxx Items”), and has paid or caused to be paid or made provisions for the payment of all Taxes due with respect thereto.

(b) Except as set forth on Schedule 4.26(b), none of the Subject Companies has received notice of, and the Seller Parties do not have any knowledge of, any notice of deficiency or assessment or proposed deficiency or assessment relating to Taxes with respect to Xxxxx Items from any Governmental Body, and there are no outstanding agreements or waivers that extend any statutory period of limitations applicable to any federal, state or local income or franchise Tax Returns that include Xxxxx Items. To the knowledge of the Sellers, there are no threatened audits of, or assessments against, any of the Seller Parties or any of the Subject Companies with respect to Taxes that may be asserted against any of the Seller Parties or any of the Subject Companies. Neither any of the Seller Parties nor any of the Subject Companies is a

party to any action or proceeding by any Governmental Body for the collection or assessment of Taxes with respect to Xxxxx Items.

(c) All amounts required in the operation of the business to be withheld by or with respect to any of the Subject Companies and paid to Governmental Bodies for Taxes, including income, social security, unemployment insurance, sales, excise, use and other Taxes, have been collected or withheld and to the extent required, paid to the proper Governmental Body. All deposits applicable law requires to be made by or with respect to any of the Subject Companies with respect to employees’ withholding and other employment taxes have been made.

(d) None of the Seller Parties (or, in the case of a Seller Party that is a disregarded entity for federal income tax purposes, the person who is treated as the owner of the Seller Party’s assets for federal income tax purposes) is a “foreign person” within the meaning of Section 1445(f)(3) of the Code.

(e) Except as set forth in Schedule 4.26(e), none of the assets of any of the Subject Companies is subject to any provision of applicable law which eliminates or reduces the allowance for federal tax depreciation or amortization in respect of that asset below the allowance generally available to an asset of its type.

(f) None of the Subject Companies is a party to any Tax sharing agreement.

(g) (i) Xxxxx Maritime is, and at all times during its existence has been, an S corporation within the meaning of Section 1361(a)(1) of the Code.

(ii) Each of Hawaiian Interisland Towing, Inc., Tow Boat Services & Management, Inc., Uaukewai Diving, Salvage and Fishing, Inc. and Marine Logistics, Inc. (collectively, the “QSUBs”) is, and since the time of its contribution to Xxxxx Maritime in or prior to 2003 has been, a qualified subchapter S subsidiary of Xxxxx Maritime within the meaning of Section 1361(b)(3)(B) of the Code. Xxxxx Maritime does not own a direct or indirect interest in any entity other than the QSUBs. Schedule 4.26(g) lists the effective date of each S election and of each qualified subchapter S subsidiary election for each of the QSUBs. Prior to its contribution to Xxxxx Maritime, each QSUB was an S corporation within the meaning of Section 1361(a)(1) of the Code at all times from the date indicated for such QSUB on Schedule 4.26(g). Seller Parties have not caused or permitted Xxxxx Maritime or any of the QSUBs (x) to make any election under Treas. Reg. §301.7701-3 to treat any of the QSUBs or their successors as a corporation for federal income tax purposes or (y) to take any other action that would prevent the QSUBs or their successors from being treated as disregarded entities for federal income tax purposes at all times through the Closing Date.

(iii) Neither Xxxxx Maritime, Hawaiian Interisland Towing, Inc. nor Tow Boat Services & Management, Inc. owns any asset as to which a tax might be imposed under Section 1374 of the Code as a result of the transactions

contemplated by this Agreement. Schedule 4.26(g) identifies (x) the “net unrecognized built-in gain” of each of Uaukewai Diving, Salvage and Fishing, Inc. and Marine Logistics, Inc. (or of Xxxxx Maritime on account of its ownership of those entities) for purposes of Section 1374 of the Code and (y) each asset of Uaukewai Diving, Salvage and Fishing, Inc. or Marine Logistics, Inc. that might give rise to a “recognized built-in gain” under Section 1374 in connection with the transactions contemplated by this agreement and the amounts set forth in Sections 1374(d)(3)(B)(i) and (ii) of the Code with respect to each such asset.

(iv) Neither Xxxxx Maritime nor any QSUB is, or has been, liable for tax under Section 1375 of the Code.

(h) Each of Go Big and 235LX is, at all times from its formation has been, and through the Closing Date will be, classified as an entity whose existence apart from Xxxxx is disregarded for federal income tax purposes.

(i) There are no Taxes of any Person other than any of the Subject Companies for which any of the Subject Companies could be held liable after the Closing under Treas. Reg. § 1.1361-4(a)(6), Treas. Reg. § 1.1502-6, Treas. Reg. § 301.7701-2(c)(2)(iii) or similar principles.

(j) In all states imposing a state corporate income tax in which any of the Subject Companies do business, each of the Subject Companies is treated for state corporate income tax purposes in a manner consistent with the treatment of the entity for federal income tax purposes.

(k) None of the Subject Companies has regularly or systematically sold tangible assets, such that the transfer of all of the tangible assets held by each of the Subject Companies in connection with the Mergers will qualify for a “casual sale” exemption from Hawaii sales and use tax under Hawaii Administrative Rules Section 18-237-1.

(l) None of the assets of the Subject Companies will be located within the taxing jurisdiction of any Alaska local taxing authority at the Effective Time.

Section 4.27 No Material Adverse Change. There has been no material adverse change in the business, prospects, results of operations, assets or financial condition of any of the Subject Companies since December 31, 2006, and no event has occurred which could be reasonably expected to lead to or cause such a material adverse change; provided, however, that (a) changes resulting from conditions affecting the coastwise maritime petroleum transportation industry in general and (b) changes in the economy in general shall, in each case, be excluded from the determination to the extent that they do not have a disproportionate effect on any of the Subject Companies as compared to other entities engaged in the coastwise maritime petroleum transportation industry in Hawaii and along the West Coast.

Section 4.28 Books and Records. The books of account, minute books, stock record books, and other records of each of the Subject Companies, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices, in each case from and after January 1, 2004. Since January 1, 2004, the

books, records and accounts of the Subject Companies have accurately and fairly reflected and currently accurately and fairly reflect, in reasonable detail and in all material respects, the transactions and dispositions of the assets of the Subject Companies. The company books of each of the Subject Companies contain accurate and complete records of all meetings held of, and material company action taken by, the owners of each of the Subject Companies since January 1, 2004, and no meeting of any such members has been held since January 1, 2004 for which minutes have not been prepared and are not contained in such minute books.

Section 4.29 Safety Reports. Schedule 4.29 sets forth a complete listing of all injury reports, workers’ compensation reports and claims, safety citations and reports and OSHA reports relating to any of the foregoing since January 1, 2004.

Section 4.30 Transactions with Certain Persons. Except as set forth on Schedule 4.30 and except for transactions contemplated by Section 6.13, during the past two years, none of the Subject Companies has, directly or indirectly, purchased, leased or otherwise acquired any property or obtained any services from, or sold, leased or otherwise disposed of any property or furnished any services to, or otherwise dealt with (except with respect to remuneration for services rendered as a manager, officer or employee of any of the Subject Companies), in the ordinary course of business or otherwise, (a) any officer, manager or shareholder of any of the Subject Companies or any family member of any such person or (b) any Person which, directly or indirectly, alone or together with others, controls, is controlled by or is under common control with any of the Subject Companies or any owner thereof. Except as set forth on Schedule 4.30, none of the Subject Companies owes any amount to, or has any contract with or commitment to, any of its members, managers, officers, employees, families of employees (including relatives by marriage) or consultants (other than compensation to managers, officers, or employees for current services not yet due and payable and reimbursement of expenses of employees arising in the ordinary course of business and on an arms-length basis not in excess of $10,000 in the aggregate), and none of such Persons owe any amount to any of the Subject Companies.

Section 4.31 Closing Date Balance Sheet. The Closing Date Balance Sheet (as prepared in accordance with Section 6.11 of this Agreement) will present fairly, in all material respects, the consolidated financial condition of the Subject Companies as of the Closing Date and accurately reflects all liabilities or obligations (whether absolute, accrued, contingent, unliquidated or otherwise) of the Subject Companies as of the Closing Date other than liabilities under Contracts or contracts entered into in the ordinary course of business consistent with past practice or arising out of matters described in Schedule 4.7, in each case to the extent such liabilities are not required to be reflected in a balance sheet prepared in accordance with GAAP.

Section 4.32 Disclosure. No representation or warranty by Xxxxx Maritime, Go Big or any Seller Party in this Agreement, and in any schedule or exhibit to this Agreement, or in any certificate or other document furnished to Buyer by the Subject Companies or the Seller Parties at Closing, contains or, as of the Closing Date, shall contain any untrue statement of a material fact or omits or shall omit a material fact necessary to make the statements therein not misleading.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND THE PARTNERSHIP

Buyer and the Partnership, jointly and severally, represent and warrant to the Seller Parties as follows:

Section 5.1 Status and Good Standing. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, with full limited liability company power and authority under its certificate of formation and limited liability company agreement to own and lease its properties and to conduct business as the same exists on the date hereof and on the Closing Date. The Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of Delaware, with full partnership power and authority under its certificate and agreement of limited partnership to conduct its business as the same exists on the date hereof and on the Closing Date.

Section 5.2 Authorization. Each of Buyer and the Partnership has full limited liability company or partnership power and authority under its certificate of formation and limited liability company agreement or certificate and agreement of limited partnership, as applicable, and the managers of Buyer and the general partner of the Partnership have taken all necessary limited liability company or partnership action, as applicable, to authorize it, to execute and deliver this Agreement and the exhibits and schedules hereto, to consummate the transactions contemplated herein or therein and to take all actions required to be taken by it pursuant to the provisions hereof or thereof, and each of this Agreement and the exhibits hereto constitutes the valid and binding obligation of each of Buyer and the Partnership, enforceable against each such party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and to the principles of equity (whether enforcement is sought in a proceeding in equity or at law).

Section 5.3 Non-Contravention. Neither the execution and delivery of this Agreement and the schedules and exhibits hereto, nor the consummation of the transactions contemplated herein or therein, does or shall violate, conflict with or result in breach of or require notice or consent under any Law, the certificate of formation, certificate of limited partnership, limited liability company agreement or agreement of limited partnership of Buyer or the Partnership (as the case may be) nor or any provision of any agreement or instrument to which Buyer or the Partnership is a party.

Section 5.4 Validity. There is no investigation, claim, proceeding or litigation of any type pending or, to the knowledge of Buyer or the Partnership, threatened to which Buyer or the Partnership is a party that (i) questions or involves the validity or enforceability of any of Buyer’s or the Partnership’s obligations under this Agreement or any of the exhibits hereto or (ii) seeks (or reasonably might be expected to seek) (A) to prevent or delay the consummation by Buyer or the Partnership of the transactions contemplated by this Agreement or (B) damages in connection with any such consummation.

Section 5.5 Broker Involvement. Neither Buyer nor the Partnership has hired, retained or dealt with any broker or finder in connection with the transactions contemplated by this Agreement.

Section 5.6 Buyer’s Review. In connection with its decision to purchase the Equity Interests, each of Buyer and the Partnership acknowledges that it is a sophisticated party with such knowledge and experience in business and financial matters as to be capable of evaluating the merits and risks of the acquisition. Each of Buyer and the Partnership has had an opportunity to review the records and business of each of the Subject Companies provided to Buyer and the Partnership and to ask questions and receive answers from the Seller Parties and each of the Subject Companies regarding each of the Subject Companies.

Section 5.7 Citizenship. Each of Buyer and the Partnership is a citizen of the United States within the meaning of Chapter 505 of Title 46 of the United States Code, for the purpose of operating the Vessels in the coastwise trade of the United States.

ARTICLE VI
COVENANTS

Section 6.1 Other Offers. From and after the date hereof and until the Closing, neither the Seller Parties, Xxxxx Maritime, Go Big nor any of their respective officers, managers, members, employees, Affiliates, representatives or agents shall, directly or indirectly, (a) solicit, enter into or conduct discussions relating to, initiate or encourage any offer or proposal for, or any indication of interest in, (1) a merger, consolidation, share exchange or other business combination involving any of the Subject Companies or any Seller Party, (2) the acquisition of an equity interest in any of the Subject Companies or any Seller Party or (3) a sale, license or other transfer of all or a material part of the assets of any of the Subject Companies or any Seller Party (each, a “Transaction”), or (b) engage in negotiations with or disclose any nonpublic information relating to any of the Subject Companies, any Seller Party or their respective businesses, or afford access to the properties, books or records of any of the Subject Companies or any Seller Party, to any Person with respect to a Transaction. Xxxxx Maritime, Go Big and the Seller Parties shall notify Buyer of any such inquiry or proposal within three business days after receipt or awareness of the same.

Section 6.2 Conduct of Business Pending Closing.

(a) Between the date of this Agreement and the Closing Date, the Subject Companies and the Seller Parties will, and Seller Parties will cause the Subject Companies to:

(i) conduct the business of each of the Subject Companies in the usual and ordinary course thereof, including, without limitation, the making of proposals, quotations, bids and solicitations, and the entering into of contracts for the purchase and sale of products and services;

(ii) orally advise Buyer and, unless prohibited by confidentiality requirements or antitrust laws, keep Buyer advised of any material developments relating to the business of each of the Subject Companies;

(iii) maintain and preserve the business and assets of each of the Subject Companies in customary repair, order and condition, reasonable wear and tear excepted;

(iv) use their reasonable best efforts to preserve the business organization of each of the Subject Companies intact, to retain the services of the officers, employees and agents of each of the Subject Companies and to preserve the relationships and good will of each of the Subject Companies with their suppliers, customers, landlords, creditors, employees, agents and others having business dealings with any of the Subject Companies;

(v) confer with Buyer concerning matters of a nature described in Section 4.9;

(vi) use their reasonable efforts to cause all of the representations and warranties in Articles III and IV hereof to continue to be true and correct; and

(vii) otherwise respond to Buyer’s reasonable requests concerning the status of the business, operations and finances of any of the Subject Companies.

(b) Except as otherwise expressly permitted by this Agreement, between the date of this Agreement and the Closing Date, the Seller Parties will not, and the Seller Parties will cause the Subject Companies not to, without the prior written consent of Buyer, take any action, or fail to take any reasonable action within their or its control, as a result of which any of the changes or events listed in Section 4.9 would reasonably be expected to occur.

Section 6.3 Access. Xxxxx Maritime and Go Big will, and the Seller Parties will cause the Subject Companies to, afford Buyer’s officers, attorneys, accountants and other representatives reasonable access during normal business hours to the offices, personnel, plants, properties, equipment and records of each of the Subject Companies for the purpose of conducting an investigation thereof. Buyer shall not contact clients, charterers, customers or suppliers of any of the Subject Companies without the prior consent of Xxxxxx X.X. Xxxxx (which consent shall not be unreasonably withheld or delayed). Xxxxx Maritime, Go Big and the Seller Parties will furnish to Buyer such financial and operating data and other information as Buyer may reasonably request; provided, however, that the confidentiality of any data or information so acquired shall be maintained by Buyer and its representatives in accordance with the terms of paragraph 9 of the letter of intent dated January 25, 2007 between K-Sea Operating Partnership L.P. and the Seller Parties.

Section 6.4 Termination of Guarantees and Settlement of Intercompany Amounts. The Seller Parties shall cause any intercompany transactions described in Schedule 4.12(f) to be terminated or settled at or prior to the Closing at no cost to the Subject Companies or to Buyer.

Section 6.5 Covenant Against Competition.

(a) As an essential consideration for the obligations of Buyer and the Partnership under this Agreement, each Seller Party hereby agrees and covenants that, except on behalf of the Buyer or its Affiliates, for a period of three years following the Closing Date:

(i) neither the Seller Party nor any Affiliate thereof shall, for whatever reason and with or without cause, either individually or in partnership or jointly or in conjunction with any Person or Persons as principal, agent, employee, shareholder (other than holding common units or shares of other companies listed on a United States stock exchange or automated quotation system that do not exceed one (1%) percent of the outstanding shares so listed), owner, investor, partner or in any other manner whatsoever, directly or indirectly, engage in any manner in the Restricted Businesses in the Restricted Trades; and

(ii) neither the Seller Party nor any Affiliate thereof shall, directly or indirectly, (A) induce or attempt to induce any customer to cease doing business with Buyer or any of its Affiliates, (B) interfere with the relationship between any customer and Buyer or any of its Affiliates or (C) solicit Restricted Business from, or provide such services to, any of the customers or accounts of Buyer or any of its Affiliates.

(b) If Buyer believes that any Seller Party or any Affiliate of the Seller Party has violated the provisions of this Section 6.5, Buyer shall have the right to seek relief from any court of competent jurisdiction against such party. Each Seller Party acknowledges that money damages alone shall not adequately compensate Buyer in the event of a breach of the covenants of this Section 6.5. Therefore, each Seller Party agrees that in addition to all remedies available at law, in equity or under this Agreement, Buyer shall be entitled to injunctive relief for the enforcement of this covenant.

(c) Each Seller Party agrees that the covenants in this Section 6.5 are reasonable with respect to their duration, scope and geographical area.

(d) The covenants in this Section 6.5 are severable and separate, and the unenforceability of any specific covenant in this Section 6.5 is not intended by any party hereto to, and shall not, affect the provisions of any other covenant in this Section 6.5. If any court of competent jurisdiction determines that the scope, time or territorial restrictions Section 6.5(a) sets forth are unreasonable as applied to a Seller Party, the parties hereto, including each Seller Party, acknowledge their mutual intention and agreement that those restrictions be enforced to the fullest extent the court deems reasonable, and thereby shall be reformed to that extent.

(e) All the covenants in this Section 6.5 are intended by each party hereto to, and shall, be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of any Seller Party against Buyer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Buyer of any covenant in this Section 6.5. It is specifically agreed that the period specified in Section 6.5 shall be computed in the case of each Seller Party by excluding from that computation any time during which the Seller Party is in violation of any provision of Section 6.5. The covenants contained in this Section

6.5 shall not be affected by any breach of any other provision hereof by any party hereto.

(f) Buyer and each Seller Party hereby agree that this Section 6.5 is a material and substantial part of the transactions contemplated by this Agreement.

Section 6.6 Further Assurances. Xxxxx Maritime, Go Big and each Seller Party shall execute, acknowledge and deliver or cause to be executed, acknowledged and delivered to the Buyer or its Affiliates such assignments or other instruments of transfer, assignment and conveyance, in form and substance reasonably satisfactory to Buyer, as shall be necessary to vest in Buyer (or its permitted assignees) all of the right, title and interest in and to the Equity Interests sold to Buyer by the Seller Parties pursuant to this Agreement, free and clear of all Liens, and any other document reasonably requested by Buyer in connection with this Agreement.

Section 6.7 Governmental Filings. As promptly as practicable after the execution of this Agreement, each party shall, in cooperation with the other, file any reports or notifications that may be required to be filed by it under applicable law (including, without limitation, any filings under the HSR Act).

Section 6.8 Consents. After the Closing, each Seller Party shall use its best efforts to obtain any consents or approvals or assist in any filings required in connection with the transactions contemplated hereby that are requested by Buyer and that have not been previously obtained or made.

Section 6.9 Public Announcements. No party shall, without the prior approval of the other party, issue, or permit any of its partners, shareholders, directors, officers, managers, members, employees, agents or Affiliates to issue, any press release or other public announcement with respect to this Agreement or the transactions contemplated hereby, except as may be required by Law or applicable stock exchange regulations.

Section 6.10 Tax Matters.

(a) The Seller Parties and Buyer agree that the transactions pursuant to this Agreement shall, for federal income Tax (and related state income Tax) purposes, be reported as follows:

(i) As a taxable sale of assets by Xxxxx Maritime to the Partnership in exchange for the amount allocated to such sale pursuant to Schedule 2.8, followed by the distribution of such cash sale proceeds to the Xxxxx Sellers in liquidation of Xxxxx Maritime.

(ii) As a taxable sale of the Go Big assets by Xxxxx to the Partnership to the extent attributable to the amount allocated to such sale pursuant to Schedule 2.8.

(iii) Each party agrees not to assert, in connection with any Tax Return, tax audit or similar proceeding, any position inconsistent with the allocations and determinations described in this Section 6.10(a).

(b) The Seller Parties will indemnify and hold the Subject Companies and Buyer harmless from (i) any liability for Taxes with respect to Xxxxx Items (and any other liability of any of the Seller Parties, their Affiliates or the Subject Companies for Taxes) for events, and for Tax periods (or portions thereof) ending, on or before the Closing Date, including any taxes imposed under Section 1374 of the Code as a result of the transactions contemplated by this Agreement, and (ii) any liability of any of the Subject Companies or any other entity for which any of the Subject Companies could be held liable after the Closing under Treas. Reg. § 1.1361-4(a)(6), Treas. Reg. § 1.1502-6, Treas. Reg. § 301.7701-2(c)(2)(iii) or similar principles, excepting Taxes described in Section 6.10(c). For Tax periods ending on or before the Closing Date, the Seller Parties shall cause to be timely filed with appropriate Governmental Bodies all Tax Returns required to be filed by or with respect to the Subject Companies and Xxxxx Items, and shall pay or cause to be paid or make provisions for the payment of all Taxes due with respect thereto. Buyer and the Partnership shall cooperate with the Seller Parties and provide such information and access to records and personnel as is reasonably necessary to prepare such returns.

(c) All transfer, documentary, sales, use, registration, real estate transfer or gain or similar or related Tax (but not any income or business or occupation Tax) related to or arising from the transactions contemplated herein shall be borne by Buyer. Seller Parties and Buyer shall cooperate in timely making all Tax Returns as may be required to comply with the provisions of such Tax laws. Seller Parties shall cooperate with Buyer in meeting any filing, documentary or evidentiary requirements necessary to qualify for any available exemptions for such Taxes.

(d) Seller Parties shall cause the provisions of any Tax sharing agreement between Seller Parties and any of their Affiliates (other than the Subject Companies), on the one hand, and the Subject Companies, on the other hand, to be terminated on or before the Closing Date, and no further payments shall be made thereunder.

(e) As soon as practicable after the Closing Date, the Seller Parties and Buyer shall jointly prepare IRS Forms 8594 to report (i) the allocation of the consideration paid pursuant to this Agreement between Xxxxx Maritime and Go Big, (ii) the allocation of the consideration so paid for Xxxxx Maritime among the assets of Xxxxx Maritime and (iii) the allocation of the consideration so paid for Go Big among the assets of Go Big. All such allocations shall be made in a manner consistent with Section 6.10(a) and on the basis that (w) the fair market value of the vessels is equal to the amount determined in an appraisal of the vessels owned or leased by the Xxxxx Entities and Go Big to be prepared by Marcon International, Inc. (with Buyer to bear the cost of the appraisal), (x) the fair market value of all tangible assets other than vessels is equal to their respective tax bases, (y) the fair market value of the covenants not to compete in Section 6.5 is equal to the amount determined in an appraisal to be obtained by Buyer at Buyer’s expense and (z) the fair market value of all other intangible assets is equal to the balance of any allocable consideration; provided that the total amount

allocated to the covenants not to compete under Section 6.10(e)(y) and other intangible assets that produce ordinary income to the Seller Parties will not exceed $100,000.

(f) Following the conversion of each of the QSUBs to a limited liability company as contemplated by Section 6.18 hereof, Seller Parties will not cause or permit Xxxxx Maritime or any of the QSUBs (x) to make any election under Treas. Reg. §301.7701-3 to treat any of the QSUBs as a corporation for federal income tax purposes or (y) to take any other action that would prevent the QSUBs from being treated as disregarded entities for federal income tax purposes at all times through the Closing Date.

Section 6.11 Closing Date Balance Sheet. On the Closing Date, Seller Parties shall deliver to Buyer a balance sheet of the Subject Companies as of the Closing Date (the “Closing Date Balance Sheet”), accompanied by a certificate of the President of Xxxxx Maritime and Go Big to the effect that such statement, except as set forth on Schedule 6.11, has been prepared in accordance with GAAP. Within sixty days following the delivery of the Closing Date Balance Sheet, Buyer shall notify the Seller Parties if Buyer disagrees with the Closing Date Balance Sheet. If Buyer does not so notify the Seller Parties, Buyer shall be deemed to have accepted such determination. If Buyer does so notify the Seller Parties that Buyer disagrees with such determination, and the Seller Parties and Buyer are thereafter unable to agree within ten days upon the Closing Date Balance Sheet, then the Closing Date Balance Sheet shall be determined by an independent accounting firm selected by the Seller Parties from a list of three nationally recognized independent accounting firms provided by Buyer. The determination by such accounting firm shall be final and binding on Buyer and the Seller Parties, and the fees and expenses of such accounting firm shall be borne equally by the Seller Parties, on the one hand, and Buyer, on the other hand.

Section 6.12 Employees.

(a) For a period of three years after the Closing, none of the Seller Parties or their Affiliates shall, directly or indirectly, either for itself or any other Person, (i) induce or attempt to induce any employee of Buyer or its Affiliates to leave the employ of Buyer or its Affiliates, (ii) in any way interfere with the relationship between Buyer or its Affiliates and any of their respective employees (provided that no party shall be deemed to be interfering with such relationship if it hires a former employee of the other party who has been terminated by the other party or has resigned from the employment of such other party and the provisions of clause (i) hereof have not been violated by the Seller Parties or their Affiliates), or (iii) employ, or otherwise engage as an employee, independent contractor or otherwise, any employee of Buyer or its Affiliates, in each case except for employees set forth on Schedule 6.12(a). For purposes of this Section 6.12, employees of any of the Subject Companies immediately prior to the Closing shall be deemed to be employees of Buyer and its Affiliates and not employees of the Seller Parties and their Affiliates.

(b) Prior to the Closing Date, the Subject Companies shall terminate participation in each of the Plans and agreements set forth on Schedule 4.20 to the extent requested by Buyer (the “Terminated Plans”), and the Subject Companies and the Seller Parties shall take all actions reasonably necessary to ensure that all liabilities arising under the

Terminated Plans are either satisfied prior to the Closing or assumed by the Seller Parties or another affiliate of the Seller Parties.

(c) At or prior to Closing, any of the Subject Companies may, at its option, pay to its employees one-time bonuses or other compensation. At Closing, the aggregate amount of such bonuses or other compensation and employment and other taxes in connection therewith shall be paid by Buyer to Xxxxx Maritime as a capital contribution, and the Merger Consideration shall be reduced by such amount as provided in Section 2.8(a)(iv). Such bonuses or other compensation shall be paid only if the receiving employee executes and delivers a release in the form attached hereto as Exhibit A.

Section 6.13 Personal Property. Prior to Closing, the personal property set forth on Schedule 6.13 shall be transferred from the Subject Companies to Xxxxx or his assigns; provided, that none of the Subject Companies shall incur any liability in connection with such transfer.

Section 6.14 Financial Statements. The Subject Companies and the Seller Parties shall engage PricewaterhouseCoopers LLP to conduct a three-year audit of the financial statements of the Subject Companies and financial reviews under Statement of Auditing Standards No. 100 of the interim unaudited financial statements of the Subject Companies, which in each case are required to be filed by Buyer or its Affiliates under Rule 3-05 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Such financial statements shall be free of any qualifications and shall be substantially consistent with the Unaudited Financial Statements. The financial statements provided for in this Section 6.14 shall, when completed, be attached as Schedule 4.12(b) and Schedule 4.12(c) to this Agreement, as applicable, as provided in Section 4.12(b) and Section 4.12(c).

Section 6.15 Notification. Between the date of this Agreement and the Closing Date, Xxxxx Maritime, Go Big and the Seller Parties will promptly notify Buyer in writing if Xxxxx Maritime, Go Big or any such Seller Party becomes aware of any fact or condition that causes or constitutes a breach of any of the representations and warranties of Xxxxx Maritime, Go Big or any Seller Party as of the date of this Agreement, or if Xxxxx Maritime, Go Big or any such Seller Party becomes aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. If any such fact or condition would require any change in the Schedules referred to in Articles III or IV of this Agreement if such Schedules were dated as of the date of the occurrence or discovery of any such fact or condition, then Xxxxx Maritime, Go Big and the Seller Parties will promptly deliver to Buyer a supplement to such Schedules specifying such change. During the same period, Xxxxx Maritime, Go Big and the Seller Parties will promptly notify Buyer of the occurrence of any breach of any pre-closing covenant of Xxxxx Maritime, Go Big or the Seller Parties in this Agreement or of the occurrence of any event that may make the satisfaction of the conditions in Article VIII impossible or unlikely. If Buyer elects to proceed with the Closing after receipt of such written notification, then Buyer shall be deemed to have waived in full any breach of the representations, warranties or pre-closing covenants of Xxxxx Maritime, Go Big or the Seller Parties contained in any such notification (but only to the extent described therein).

Section 6.16 Insurance. Xxxxx Maritime, Go Big and the Seller Parties will cooperate with Buyer to arrange for new insurance coverages for the Subject Companies effective upon and after the Closing with the cost of such new insurance coverages to be at Buyer’s expense. The Seller Parties shall use their reasonable best efforts to keep the Insurance Policies in full force and effect from and after the Closing Date with respect to claims occurring prior to the Closing Date.

Section 6.17 Misdirected Payments. To the extent the Seller Parties or any of their respective Affiliates receive payments from customers of any of the Subject Companies after the Closing with respect to services rendered by any of the Subject Companies, then the receiving party shall promptly remit such payments to the Subject Companies.

Section 6.18 Conversion of Xxxxx Subsidiaries. Prior to the Closing Date, each Xxxxx Subsidiary shall convert from a corporation organized under the laws of the State of Hawaii into a limited liability company duly organized under the laws of the State of Hawaii.

Section 6.19 Transfer of Shares. Prior to the Closing Date, the Xxxxxx Trust shall distribute all of the Shares held by the Xxxxxx Trust to Xxxxx.

Section 6.20 Hawaii Dislocated Workers Act. Buyer agrees not to liquidate any Xxxxx Subsidiary for a period of 60 days following the Closing Date if such liquidation would result in a violation of the Hawaii Dislocated Workers Act by the Seller Parties.

ARTICLE VII
INDEMNIFICATION

Section 7.1 Seller Parties’ Indemnity Obligations

(a) Seller Party agrees, severally and not jointly with any other Seller Party, to indemnify each Buyer Indemnified Party against, and hold each Buyer Indemnified Party harmless from and against, any Indemnified Amounts that arise from, are based on or relate or otherwise are attributable to (1) any error, inaccuracy, breach or misrepresentation in any of the representations and warranties made by or on behalf of such Seller Party in Article III of this Agreement, (2) any violation or breach by such Seller Party of or default by such Seller Party under the terms of this Agreement, and (3) any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with such Seller Party (or any Person acting on their behalf) in connection with any of the transactions contemplated by this Agreement. Buyer shall be entitled to recover its reasonable and necessary attorneys’ fees and litigation expenses incurred in connection with successful enforcement of its rights under this Section 7.1(a).

(b) Xxxxx agrees to indemnify each Buyer Indemnified Party against, and hold each Buyer Indemnified Party harmless from and against, any Indemnified Amounts that arise from, are based on or relate or otherwise are attributable to (1) any error, inaccuracy, breach or misrepresentation in any of the representations and warranties made by or on behalf of Xxxxx Maritime, Go Big and the Seller Parties in Article IV of this Agreement (provided that the representations and warranties shall be read as if no materiality qualifiers were contained therein), (2) any violation or breach by Xxxxx Maritime, Go Big or the Seller Parties of or

default by Xxxxx Maritime, Go Big or the Seller Parties under the terms of this Agreement, (3) any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with any Seller Party or any of the Subject Companies (or any Person acting on their behalf) in connection with any of the transactions contemplated by this Agreement, (4) any claim by any Person under ERISA or other applicable law relating to an “employee pension benefit plan” sponsored, maintained or contributed to by an ERISA Affiliate and subject to Title IV of ERISA or the minimum funding requirements of Code section 412, (5) any claims related to the improper classification of employees for purposes of the Fair Labor Standards Act or other applicable law during any period prior to Closing, or (6) any examination of the Subject Companies by the Hawaii Department of Taxation relating to the reporting or payment of general excise taxes prior to the Closing Date. Buyer shall be entitled to recover its reasonable and necessary attorneys’ fees and litigation expenses incurred in connection with successful enforcement of its rights under this Section 7.1(b). Notwithstanding the foregoing, Xxxxx shall not be required to indemnify or hold harmless the Buyer Indemnified Parties on account of any Indemnified Amounts arising under Section 7.1(b)(1) (other than with respect to breaches of representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.6, 4.8, 4.14(d), 4.15, 4.26 and 4.30 as to which the Threshold Amount shall not apply) unless the aggregate liability of Xxxxx in respect of all Indemnified Amounts exceeds the Threshold Amount and then only for the amount in excess of the Threshold Amount. In no event shall Xxxxx’x liability to the Buyer Indemnified Parties under Section 7.1(b)(1) exceed the Ceiling Amount (other than with respect to breaches of representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.6, 4.8, 4.14(d), 4.15, 4.26 and 4.30 as to which the Ceiling Amount shall not apply).

Section 7.2 Buyer’s Indemnity Obligations. Buyer shall indemnify each Seller Indemnified Party against, and hold each Seller Indemnified Party harmless from and against, any and all Indemnified Amounts that arise from, are based on or relate or otherwise are attributable to (a) any error, inaccuracy, breach or misrepresentation in any of the representations and warranties made by or on behalf of Buyer or the Partnership in this Agreement, (b) any violation or breach by Buyer or the Partnership of or default by Buyer or the Partnership under the terms of this Agreement, except to the extent such Indemnified Amount relates to a matter for which indemnification would be provided under Sections 7.1(a) or (b), or (c) any claim by any Person for brokerage or finder’s fees or commissions or similar payments based on any agreement or understanding alleged to have been made by any such Person with Buyer or the Partnership (or any Person acting on its behalf) in connection with any of the transactions contemplated by this Agreement. The failure of Buyer to cure, remediate or otherwise repair any condition or circumstance existing at the Closing or caused by Seller Party shall not be deemed an “omission” for purposes hereof. Seller Party shall be entitled to recover its reasonable and necessary attorneys’ fees and litigation expenses incurred in connection with successful enforcement of their rights under this Section 7.2. Notwithstanding the foregoing, Buyer shall not be required to indemnify or hold harmless the Seller Indemnified Parties on account of any Indemnified Amounts arising under Section 7.2(a) unless the aggregate liability of Buyer in respect of all Indemnified Amounts exceeds the Threshold Amount and then only for the amount in excess of the Threshold Amount. In no event shall the Buyer’s aggregate liability to the Seller Indemnified Parties under this Section 7.2(a) exceed the Ceiling Amount (other than with respect to breaches of representations and warranties contained in Sections 5.1 and 5.7 as to which the Ceiling Amount shall not apply).

Section 7.3 Survival. All the provisions of this Agreement shall survive the Closing, notwithstanding any investigation at any time made by or on behalf of any party hereto, provided that the representations and warranties set forth in this Agreement and in any certificate delivered in connection herewith with respect to any of those representations and warranties shall terminate and expire on the third anniversary of the Closing Date, except (a) the representations and warranties of Seller Parties set forth in Section 3.1, 3.2, 3.3 and 3.6 shall survive forever, (b) the representations and warranties of the Seller Parties set forth in Sections 4.7, 4.19, 4.20, 4.21, 4.22 and 4.26 shall survive until the expiration of the applicable statutes of limitations (including all periods of extension and tolling) and (c) the representations and warranties of the Seller Parties set forth in Sections 4.1, 4.2, 4.3, 4.8, and 4.14(d) shall survive forever. After a representation and warranty has terminated and expired, no indemnification shall or may be sought pursuant to this Article VII on the basis of that representation and warranty by any Person who would have been entitled pursuant to this Article VII to indemnification on the basis of that representation and warranty prior to its termination and expiration, provided that in the case of each representation and warranty that shall terminate and expire as provided in this Section 7.3, no claim presented in writing for indemnification pursuant to this Article VII on the basis of that representation and warranty prior to its termination and expiration shall be affected in any way by that termination and expiration. The indemnification obligations under this Article VII or elsewhere in this Agreement shall apply regardless of whether any suit or action results solely or in part from the active, passive or concurrent negligence or strict liability of the Indemnified Party. The covenants and agreements entered into pursuant to this Agreement to be performed after the Closing shall survive the Closing.

Section 7.4 Indemnification Procedures. All claims for indemnification under this Agreement shall be asserted and resolved as follows:

(a) Promptly after receipt by a Person entitled to indemnity under Section 7.1 or 7.2 (an “Indemnified Party”) of notice of the assertion of a claim against an Indemnified Party by a Person that is not a party to this Agreement (a “Third-Party Claim), such Indemnified Party shall give notice to the Person obligated to indemnify under such Section (an “Indemnifying Party”) of the assertion of such Third-Party Claim, provided that the failure to notify the Indemnifying Party will not relieve the Indemnifying Party of any liability that it may have to any Indemnified Party, except to the extent that the Indemnifying Party demonstrates that the defense of such Third-Party Claim is prejudiced by the Indemnified Party’s failure to give such notice.

If an Indemnified Party gives notice to the Indemnifying Party pursuant to the preceding paragraph of the assertion of a Third-Party Claim, the Indemnifying Party shall be entitled to participate in the defense of such Third-Party Claim and, to the extent that it wishes (unless (i) the Indemnifying Party is also a Person against whom the Third-Party Claim is made and the Indemnified Party determines in good faith that joint representation would be inappropriate or (ii) the Indemnifying Party fails to provide reasonable assurance to the Indemnified Party of its financial capacity to defend such Third-Party Claim and provide indemnification with respect to such Third-Party Claim), to assume the defense of such Third-Party Claim with counsel reasonably satisfactory to the Indemnified Party. After notice from the Indemnifying Party the Indemnified Party of its election to assume the defense of such Third-Party Claim, the Indemnifying Party shall not, so long as it diligently conducts such defense, be

liable to the Indemnified Party under this Article VII for any fees of other counsel or any other expenses with respect to the defense of such Third-Party Claim, in each case subsequently incurred by the Indemnified Party in connection with the defense of such Third-Party Claim, other than reasonable costs of investigation. If the Indemnifying Party assumes the defense of a Third-Party Claim, (i) such assumption will conclusively establish for purposes of this Agreement that the claims made in that Third-Party Claim are within the scope of and subject to indemnification, and (ii) no compromise or settlement of such Third-Party Claims may be effected by the Indemnifying Party without the Indemnified Party’s consent (which shall not be unreasonably withheld) unless (A) there is no finding or admission of any violation of Law or any violation of the rights of any Person; (B) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party; and (C) the Indemnified Party shall have no liability with respect to any compromise or settlement of such Third-Party Claims effected without its consent. If notice is given to an Indemnifying Party of the assertion of any Third-Party Claim and the Indemnifying Party does not, within twenty days after the Indemnified Party’s notice is given, give notice to the Indemnified Party of its election to assume the defense of such Third-Party Claim, the Indemnifying Party will be bound by any determination made in such Third-Party Claim or any compromise or settlement effected by the Indemnified Party.

Notwithstanding the foregoing, if an Indemnified Party determines in good faith that there is a reasonable probability that a Third-Party Claim may adversely affect it or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise or settle such Third-Party Claim, but the Indemnifying Party will not be bound by any determination of any Third-Party Claim so defended for the purposes of this Agreement or any compromise or settlement effected without its consent (which may not be unreasonably withheld).

Notwithstanding the provisions of Section 10.10, Seller Party hereby consents to the nonexclusive jurisdiction of any court in which a proceeding in respect of a Third-Party Claim is brought against any Buyer Indemnified Party for purposes of any claim that a Buyer Indemnified Party may have under this Agreement with respect to such proceeding or the matters alleged therein and agree that process may be served on Seller Party with respect to such a claim anywhere in the world.

With respect to any Third-Party Claim subject to indemnification under this Article VII: (i) both the Indemnified Party and the Indemnifying Party, as the case may be, shall keep the other Person fully informed of the status of such Third-Party Claim and any related proceedings at all stages thereof where such Person is not represented by its own counsel, and (ii) the parties agree (each at its own expense) to render to each other such assistance as they may reasonably require of each other and to cooperate in good faith with each other in order to ensure the proper and adequate defense of any Third-Party Claim.

With respect to any Third-Party Claim subject to indemnification under this Article VII, the parties agree to cooperate in such a manner as to preserve in full (to the extent possible) the confidentiality of all Confidential Information (as defined below) and the attorney-client and work-product privileges. In connection therewith, each party agrees that: (i) it will use its best efforts, in respect of any Third-Party Claim in which it has assumed or participated in the

defense, to avoid production of Confidential Information (consistent with applicable law and rules of procedure), and (ii) all communications between any party hereto and counsel responsible for or participating in the defense of any Third-Party Claim shall, to the extent possible, be made so as to preserve any applicable attorney-client or work-product privilege.

(b) If any Indemnified Party should have a claim against any Indemnifying Party hereunder that does not involve a Third Party Claim, the Indemnified Party shall transmit to the Indemnifying Party a written notice (the “Indemnity Notice”) describing in reasonable detail the nature of the claim, an estimate of the amount of damages attributable to such claim to the extent feasible (which estimate shall not be conclusive of the final amount of such claim) and the basis of the Indemnified Party’s request for indemnification under this Agreement. If the Indemnifying Party does not notify the Indemnified Party within twenty days from its receipt of the Indemnity Notice that the Indemnifying Party disputes such claim, the claim specified by the Indemnified Party in the Indemnity Notice shall be deemed a liability of the Indemnifying Party hereunder.

Section 7.5 General. The indemnification provisions in this Article VII shall be enforceable regardless of whether the liability is based upon past, present or future acts, claims or Laws (including any past, present or future bulk sales law, Environmental Law, fraudulent transfer act, occupational safety and health law or product liability, securities or other Law) and regardless of whether any Person (including the Person from whom indemnification is sought) alleges or proves the sole, concurrent, contributory or comparative negligence of the Person seeking indemnification or the sole or concurrent strict liability imposed upon the Person seeking indemnification. The rights of the parties to indemnification under this Article VII shall not be limited due to any investigations heretofore or hereafter made by such parties or their representatives, regardless of negligence in the conduct of any such investigations. All representations, warranties, covenants and agreements made by the parties shall not be deemed merged into any instruments or agreements delivered in connection with the Closing or otherwise in connection with the transactions contemplated hereby.

Section 7.6 Exclusivity. The indemnification rights in Section 6.10 and this Article VII shall be the exclusive remedies of the Indemnified Parties for any Indemnified Amounts arising out of or resulting from any breach of any of the representations and warranties in this Agreement (other than any claim for Indemnified Amounts arising out of or based on fraud or willful misconduct).

ARTICLE VIII
CONDITIONS TO CLOSING

Section 8.1 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated herein are subject, at the option of Buyer, to satisfaction of the following conditions:

(a) Compliance. Xxxxx Maritime, Go Big and the Seller Parties shall have complied with their covenants and agreements contained herein, and the representations and warranties contained in Articles III and IV hereof shall be true and correct on the date hereof and true and correct in all material respects as of the Closing Date (except those representations

and warranties qualified by materiality, which shall be true and correct in all respects as so qualified).

(b) Certificate. Buyer shall have received a certificate, dated as of the Closing Date, of an executive officer or trustee, as the case may be, of each of Xxxxx Maritime and Go Big and of each Seller Party certifying as to the matters specified in Sections 8.1(a) hereof.

(c) Seller Parties’ Resolutions/Certifications. Each Seller Party shall deliver to Buyer a certification or certified copy of resolutions, as the case may be, duly adopted by the trustees or members, as applicable, of such Seller Party and authorizing and approving the execution and delivery of this Agreement, including the exhibits and schedules hereto, and the consummation of the transactions contemplated herein.

(d) Assignment of Equity Interests. The Seller Parties shall each deliver Assignments of Equity Interests assigning to Buyer all of their rights, title and interests in their respective Equity Interests in Xxxxx Maritime and Go Big in the form attached as Exhibit A duly executed by the applicable Seller Party.

(e) HSR Act. Any waiting period applicable to the consummation of the transactions contemplated by this Agreement under the HSR Act shall have expired or been terminated.

(f) Delivery of Financial Statements. Buyer shall have received the financial statements required by Section 6.14 at least thirty business days prior to the Closing Date.

(g) No Material Adverse Change. No material adverse change in the value of the Equity Interests or in the business or in the financial condition of any of the Subject Companies shall have occurred since the date hereof, and no event shall have occurred since the date hereof which could be expected to lead to or cause such a material adverse change; provided, however, that (i) changes resulting from conditions affecting the coastwise maritime petroleum transportation industry in general and (ii) changes in the economy in general shall, in each case, be excluded from the determination to the extent that they do not have a disproportionate effect on any of the Subject Companies as compared to other entities engaged in the coastwise maritime petroleum transportation industry in Hawaii and along the West Coast.

(h) Certified Abstracts. The Subject Companies and the Seller Parties shall deliver certified abstracts of title for each of the Vessels issued by the U.S. Coast Guard at the National Vessel Documentation Center dated no earlier than seven days prior to the date of the Closing (i) showing that one or more of the Subject Companies is the owner of the Owned Vessels and that such Owned Vessels are free and clear of all Liens except Permitted Liens and (ii) identifying the owner of the Bareboat Chartered Vessels and that such Bareboat Chartered Vessels are free and clear of all Liens except Permitted Liens.

(i) Confirmation of Class Certificates. The Subject Companies and the Seller Parties shall deliver confirmation of class certificates for each of the Vessels where

applicable (free from recommendations) issued by the American Bureau of Shipping issued no earlier than seven days prior to the date of the Closing.

(j) Orders, Etc. No action, suit or proceeding shall have been commenced or shall be pending or threatened, and no statute, rule, regulation or order shall have been enacted, promulgated, issued or deemed applicable to the transactions contemplated by this Agreement, by any Governmental Body or court that reasonably may be expected to (i) prohibit Buyer’s ownership or operation of all or a material portion of the assets of any of the Subject Companies, or compel Buyer to dispose of or hold separate all or a material portion of the business or assets of either Buyer or any of the Subject Companies, as a result of the transactions contemplated by this Agreement or (ii) prohibit consummation of the transactions contemplated by this Agreement.

(k) Removal of Liens. The Subject Companies and the Seller Parties shall have caused any and all Liens on the assets of any of the Subject Companies except Permitted Liens to be released and shall have provided Buyer with documentary evidence to such effect.

(l) Resignations. Each director and officer of each of the Subject Companies shall deliver a notice of resignation in the form previously approved by Buyer.

(m) Employee Releases. Each employee to whom a special bonus has been paid or promised, orally or in writing, shall deliver to the appropriate Subject Company and Buyer an executed release in substantially the form attached as Exhibit B hereto.

(n) Due Diligence. Buyer shall have received surveys of the Vessels from X.X. Xxxxxx & Associates, Inc. and the condition of such Vessels as reflected in such surveys shall be reasonably satisfactory to Buyer.

(o) Simultaneous Closing of Acquisition of Sirius Maritime, LLC. The transactions contemplated by that certain Agreement and Plan of Merger dated as of June 25, 2007, by and among Sea Transportation LLC, the Partnership, Sirius Maritime, LLC and the other parties thereto, shall close simultaneously with the closing of the transactions contemplated by this Agreement.

(p) Conversion of Xxxxx Subsidiaries. Each Xxxxx Subsidiary shall have converted from a corporation organized under the laws of the State of Hawaii into a limited liability company duly organized under the laws of the State of Hawaii.

(q) Transfer of Shares. The Xxxxxx Trust shall have distributed all of the Shares held by the Xxxxxx Trust to Xxxxx.

(r) Other Documents. The Subject Companies and the Seller Parties shall deliver to Buyer such other documents, instruments and certificates as may be reasonably requested by Buyer, including, without limitation, the original company book, minute books and seal (if any) of the appropriate Subject Company.

(s) Consents. All consents and approvals required in connection with the execution, delivery and performance of this Agreement shall have been obtained.

Section 8.2 Conditions to Obligations of Xxxxx Maritime, Go Big and the Seller Parties. The obligations of the Xxxxx Maritime, Go Big and the Seller Parties to consummate the transactions contemplated herein are subject, at the option of Xxxxx Maritime, Go Big and the Seller Parties, to satisfaction of the following conditions:

(a) Compliance. Buyer shall have complied with its covenants and agreements contained herein, and the representations and warranties contained in Article V hereof shall be true and correct on the date hereof and true and correct in all material respects as of the Closing Date (except those representations and warranties qualified by materiality, which shall be true and correct in all respects as so qualified).

(b) Officer’s Certificate. The Seller Parties shall have received a certificate, dated as of the Closing Date, of an executive officer of Buyer certifying as to the matters specified in Section 8.2(a) hereof.

(c) Buyer and Partnership Resolutions. Buyer and the Partnership shall deliver to Xxxxx Maritime, Go Big and the Seller Parties a certified copy of resolutions duly adopted by the board of directors of the general partner of each of Buyer and the Partnership authorizing and approving the execution and delivery of this Agreement, including the exhibits and schedules hereto, and the consummation of the transactions contemplated herein.

(d) HSR Act. Any waiting period applicable to the consummation of the transactions contemplated by this Agreement under the HSR Act shall have expired or been terminated.

(e) Orders, Etc. No action, suit or proceeding shall have been commenced or shall be pending or threatened, and no statute, rule, regulation or order shall have been enacted, promulgated, issued or deemed applicable to the transactions contemplated by this Agreement, by any Governmental Body or court that reasonably may be expected to prohibit consummation of the transactions contemplated by this Agreement.

(f) Simultaneous Closing of Acquisition of Sirius Maritime, LLC. The transactions contemplated by that certain Agreement and Plan of Merger dated as of June 25, 2007, by and among Sea Coast Transportation LLC, the Partnership, Sirius Maritime, LLC and the other parties thereto, shall close simultaneously with the closing of the transactions contemplated by this Agreement.

(g) Release of Guarantees. Each of the Seller Parties shall have been released from any personal guarantee which may have been entered into by a Seller Party in connection with the Loan Obligations.

(h) Other Documents. Buyer shall deliver to the Seller Parties such other documents, instruments and certificates as may be reasonably requested by the Seller Parties.

(i) Consents. All consents and approvals required in connection with the execution, delivery and performance of this Agreement shall have been obtained.

(j) Merger Consideration. Buyer shall have delivered the Merger Consideration pursuant to Section 2.8.

ARTICLE IX
TERMINATION

Section 9.1 Grounds for Termination. This Agreement may be terminated at any time prior to the Closing Date:

(a) By the mutual written agreement of Buyer and the Seller Parties;

(b) By Buyer if any of the conditions set forth in Section 8.1 hereof shall have become incapable of fulfillment and shall not have been waived by Buyer;

(c) By the Seller Parties if any of the conditions set forth in Section 8.2 hereof shall have become incapable of fulfillment and shall not have been waived by the Seller Parties;

(d) By either Buyer, on the one hand, or the Seller Parties, on the other hand, by written notice thereof to the other, if the transactions contemplated hereby shall not have been consummated on or before October 31, 2007, or such other date, if any, as Buyer and the Seller Parties shall agree upon in writing; or

(e) By Buyer, on the one hand, or the Seller Parties, on the other hand, if the consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or Governmental Body having competent jurisdiction enjoining, restraining or otherwise preventing, or awarding substantial damages in connection with, or imposing a material adverse condition upon, the consummation of this Agreement or the transactions contemplated hereby;

provided, however, that a party shall not be allowed to exercise any right of termination pursuant to this Section 9.1 if the event giving rise to such termination right shall be due to the negligent or willful failure of the party seeking to terminate this Agreement to perform or observe in any material respect any of the covenants or agreements set forth herein to be performed or observed by such party.

Section 9.2 Effect of Termination. The following provisions shall apply in the event of a termination of this Agreement:

(a) Each party’s right of termination pursuant to Section 9.1 hereof is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 9.1, all obligations of the parties under this Agreement will terminate except as set forth in Section 9.2(b) hereof; provided, however, that (i) if this Agreement is terminated by Buyer because of the breach of this Agreement by Xxxxx Maritime, Go Big or the Seller Parties or because one or more of the conditions to Buyer’s obligations under this Agreement is not satisfied as a result of the failure of Xxxxx Maritime, Go Big or any Seller Party to comply with its obligations under this Agreement, Buyer’s right to pursue all legal remedies will

survive such termination unimpaired, and (ii) if this Agreement is terminated by the Seller Parties because of the breach of this Agreement by Buyer or because one or more of the conditions to the Seller Parties’ obligations under this Agreement is not satisfied as a result of Buyer’s failure to comply with its obligations under this Agreement, the Seller Parties’ right to pursue all legal remedies will survive such termination unimpaired.

(b) The parties hereto hereby agree that the provisions of Sections 9.2, 10.3, 10.4, 10.5, 10.9 and 10.10 hereof shall survive any termination of this Agreement.

ARTICLE X
GENERAL PROVISIONS

Section 10.1 Release. Subject to the limitations set forth in the last sentence in this Section 10.1, each Seller Party, for and on behalf of itself and its controlled Affiliates (the “Releasing Parties”) hereby unconditionally and irrevocably release and forever discharge, effective as of and forever after the Closing Date, to the fullest extent permitted by applicable law, each of the Subject Companies and all past, present and future Buyer Indemnified Parties (collectively, the “Released Parties”) from any and all debts, liabilities, obligations, claims, demands, actions or causes of action, suits, judgments or controversies of any kind whatsoever (collectively, “Pre-Acquisition Claims”) against any of the Subject Companies that arise out of or are based on any agreement or understanding or act or failure to act (including any act or failure to act that constitutes ordinary or gross negligence or reckless or willful, wanton misconduct), misrepresentation, omission, transaction, fact, event or other matter occurring contemporaneously with or prior to the Closing Date or on account of or arising out of any matter, cause or event occurring contemporaneously with or prior to the Closing Date (whether based on any governmental requirement or right of action, at law or in equity or otherwise, foreseen or unforeseen, matured or unmatured, known or unknown, accrued or not accrued) (collectively, “Pre-Acquisition Matters”), including without limitation: (a) claims by a Releasing Party with respect to repayment of loans or indebtedness; (b) any rights, titles and interests in, to or under any agreements, arrangements or understandings to which a Releasing Party is a party; and (c) claims by a Releasing Party with respect to dividends or violation of preemptive rights. Each Releasing Party further agrees not to file or bring any litigation before any Governmental Authority on the basis of or respecting any Pre-Acquisition Claim concerning any Pre-Acquisition Matter against any Released Party. Each Releasing Party (a) acknowledges that such Releasing Party fully comprehends and understands all the terms of this Section 10.1 and their legal effects and (b) expressly represents and warrants that (i) such Releasing Party is competent to effect the release made in this Section 10.1 knowingly and voluntarily and without reliance on any statement or representation of any Released Party or its Representatives and (ii) such Releasing Party had the opportunity to consult with an attorney of its choice regarding this Section 10.1. This Section 10.1 shall not affect the rights of any Releasing Party under this Agreement.

Section 10.2 Arbitration.

(a) Disputes Covered. Except for matters arising under Section 6.5 and Section 10.3, any dispute, controversy, difference or claim arising out of or in connection with indemnification of an Buyer Indemnified Party or a Seller Indemnified Party pursuant to this

Agreement, or the breach, termination or validity thereof, which cannot be amicably resolved by the parties within thirty days after receipt by a party of written notice from any other party that such a dispute, controversy, difference or claim exists, shall be settled by final and binding arbitration.

(b) Forum. The forum for the arbitration shall be New York, New York.

(c) Law. The governing law for the arbitration shall be the law of the State of New York, without reference to its conflicts of laws provisions.

(d) Selection. The arbitration shall be conducted by three arbitrators, unless the parties are able to agree on a single arbitrator. In the absence of such agreement within ten days after the initiation of an arbitration proceeding, Seller Parties shall select one arbitrator and Buyer shall select one arbitrator, and those two arbitrators shall then select, within ten days, a third arbitrator. If those two arbitrators are unable to select a third arbitrator within such ten-day period, a third arbitrator shall be appointed by the commercial panel of the American Arbitration Association. The decision in writing of at least two of the three arbitrators shall be final and binding upon the parties. All arbitrators shall be residents of the United States of America.

(e) Administration. The arbitration shall be administered by the American Arbitration Association.

(f) Rules. The rules of arbitration shall be the Commercial Arbitration Rules of the American Arbitration Association (the “Commercial Arbitration Rules”), as modified by any other instructions that the parties may agree upon at the time, except that each party shall have the right to conduct discovery in any manner and to the extent authorized by the Federal Rules of Civil Procedure as interpreted by the federal courts in New York. If there is any conflict between those Rules and the provisions of this section, the provisions of this section shall prevail.

(g) Substantive Law. The arbitrators shall be bound by and shall strictly enforce the terms of this Agreement and may not limit, expand or otherwise modify its terms. The arbitrators shall make a good faith effort to apply substantive applicable law, but an arbitration decision shall not be subject to review because of errors of law. The arbitrators shall be bound to honor claims of privilege or work-product doctrine recognized at law, but the arbitrators shall have the discretion to determine whether any such claim of privilege or work product doctrine applies.

(h) Decision. The arbitrators’ decision shall provide a reasoned basis for the resolutions of each dispute and for any award. The arbitrators shall not have power to award damages in connection with any dispute in excess of actual compensatory damages and shall not multiply actual damages or award consequential or punitive damages or award any other damages that are excluded under the provisions of Article VII of this Agreement.

(i) Expenses. All costs of arbitration and enforcement of the arbitration award, including reasonable attorneys’ fees and court costs, costs of expert witnesses, transportation, lodging and meal costs of the parties and witnesses, costs of transcript

preparation and other reasonable and necessary direct and incidental costs shall be apportioned by the arbitrator(s) selected pursuant to Section 10.2(d) hereof with a view to allocating costs to the party that does not prevail in the arbitration.

(j) Payment of Arbitration Award. The arbitration award shall be made and shall be payable free of any Tax or any other deduction. The arbitration award shall include interest, at a rate determined as appropriate by the arbitrators, as of the date of any breach or other violation of this Agreement to the date when the arbitration award is paid in full.

(k) Enforcement. The parties further agree that the arbitration award and any judgment thereon, if unsatisfied, may be entered in and shall be enforceable by the courts of any nation having jurisdiction over the person or property of the party against whom the arbitration award has been rendered.

(l) Specific Performance; Enforcement of Arbitration Award. In the event of any breach by a party of the terms of this Agreement which would cause any nonbreaching party to be irreparably harmed or for which such nonbreaching party could not be made whole by monetary damages, then in such circumstances such nonbreaching party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement in any action instituted pursuant to this Section 10.2 and in any action instituted in any court of applicable jurisdiction to enforce any interim or final arbitration award rendered pursuant to this Section 10.2.

(m) Waiver of Jury Trial. EACH PARTY EXPRESSLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY SUIT OR PROCEEDING RELATING TO OR ARISING FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER THIS AGREEMENT AND EACH PARTY REPRESENTS THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS JURY TRIAL RIGHT AFTER CONSULTATION WITH LEGAL COUNSEL.

Section 10.3 Confidentiality.

(a) Each Seller Party acknowledges that it has or may have had in the past, currently has and in the future may have access to Confidential Information (as defined below) of the Subject Companies, Buyer and the Partnership. During the period prior to Closing, the parties agree to abide by the confidentiality provisions in paragraph 10 of the letter of intent dated January 25, 2007 between K-Sea Operating Partnership L.P. and the Seller Parties (and that the Seller Parties will be bound by such paragraph as if it applied to them mutatis mutandis). From and after the Closing, each Seller Party agrees that it shall keep confidential all such Confidential Information and, except with the specific prior written consent of Buyer, shall not disclose such Confidential Information to any person except (i) the directors, officers, employees, Affiliates, accountants (including independent certified public accountants), advisors, attorneys, consultants or other agents (collectively, “Representatives”) of Buyer and (ii) its own Representatives, provided that those Representatives agree to the confidentiality provisions of this Section 10.3. “Confidential Information” means, with respect to any Person, all trade secrets, know how and other confidential, nonpublic and/or proprietary information of

that Person, including any such information derived from reports, investigations, research, studies, work in progress, codes, marketing, sales or service programs, customer lists, records relating to past service provided to customers, capital expenditure projects, cost summaries, equipment or production system designs or drawings, pricing formulae, contract analyses, financial information, projections, present and future business plans, agreements with vendors, joint venture agreements, confidential filings with any Governmental Body and all other confidential, nonpublic concepts, methods, techniques or processes of doing business, ideas, materials or information prepared or performed for, by or on behalf of that Person; provided, however, that Confidential Information shall not include such information as (A) becomes known to the public generally through no fault of such Seller Party or (B) is required to be disclosed by law or the order of any Governmental Body under color of law, provided, that prior to disclosing any information pursuant to this clause (B), such Seller Party shall, if possible, give prior written notice thereof to Buyer and provide Buyer with the opportunity to contest that disclosure.

(b) Because of (i) the difficulty of measuring economic losses as a result of the breach of the covenants in Section 10.3(a) and (ii) the immediate and irreparable damage that would be caused to Buyer for which it would have no other adequate remedy, in the event of a breach or threatened breach by Seller Parties of the provisions of this Section 10.3 with respect to any Confidential Information, Buyer shall be entitled to an injunction restraining the Seller Parties from disclosing, in whole or in part, that Confidential Information. Nothing herein shall be construed as prohibiting Buyer from pursuing any other available remedy for such breach or threatened breach, including the recovery of damages.

Section 10.4 Expenses. Except as otherwise provided in this Agreement, Buyer and the Seller Parties shall pay their own respective fees and expenses incurred in connection with the negotiation, preparation and execution of this Agreement (including the exhibits and schedules hereto) and the consummation of the transactions contemplated herein and therein, including all legal, accounting, tax, brokers’ and other advisors’ fees and expenses, it being understood that such expenses shall be paid on behalf of the Seller Parties by Xxxxx Maritime at or prior to the Closing. Notwithstanding the foregoing, (1) each of Buyer, on the one-hand, and the Seller Parties, on the other hand, shall pay one-half of the filing fee under the HSR Act and (2) Buyer shall pay one-half of the cost incurred by the Subject Companies for obtaining the financial statements contemplated by Section 6.14, provided that if this Agreement is terminated and any of the Subject Companies or the Seller Parties engage in activity described in Section 6.1 within two years from the date of this Agreement, then the Seller Parties shall reimburse Buyer for any and all of such costs; provided further that the foregoing proviso shall not apply to any merger, consolidation, share exchange or other business combination among Xxxxx Maritime (including one or more of Xxxxx Maritime’s wholly owned subsidiaries as of the date of this Agreement) and Go Big.

Section 10.5 Entire Agreement. This Agreement, including all schedules and exhibits hereto, constitutes the entire agreement of the parties with respect to the subject matter hereof and constitutes (along with the schedules, exhibits, and other documents delivered pursuant to this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter and there are no terms, conditions, representations, warranties, or covenants other than those contained in this Agreement (along

with the schedules, exhibits, and other documents delivered pursuant to this Agreement). This Agreement may not be modified, amended or terminated except by a written instrument specifically referring to this Agreement signed by all the parties hereto.

Section 10.6 No Reliance. No promise or inducement for this Agreement has been made to Buyer except as set forth herein and in the schedules, exhibits and other documents delivered pursuant to this Agreement. This Agreement is executed by Buyer freely and voluntarily, and without reliance on any statement, representation, or warranty, whether written or oral, by any Seller Party, or any of their officers, directors, accountants, attorneys or other agents or representatives, except as set forth in this Agreement and the schedules, exhibits and other documents delivered pursuant to this Agreement.

Section 10.7 Waivers and Consents. All waivers and consents given hereunder shall be in writing. No waiver by any party hereto of any breach or anticipated breach of any provision hereof by any other party shall be deemed a waiver of any other contemporaneous, preceding or succeeding breach or anticipated breach, whether or not similar. Except as provided in this Agreement, no action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement.

Section 10.8 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been received only if and when (a) personally delivered, (b) on the third day after mailing, by United States mail, first class, postage prepaid or by certified mail return receipt requested, addressed in each case as follows (or to such other address as may be specified by like notice) or (c) received by facsimile at the phone number listed below:

(a) If to Buyer or the Partnership to:

K-Sea Transportation Partners L.P.
Xxx Xxxxx Xxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000

with a copy to:

Xxxxx Xxxxx L.L.P.
One Shell Plaza
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000

(b) If to any of Xxxxx Maritime or Go Big to:

Xxxxx Maritime, Ltd.
0000 Xxxxx Xxxxxx Xxx
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X.X. Xxxxx

with a copy to:

Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000

(c) If to Xxxxx or Xxxxxx Trust to:

Xxxxxx X. X. Xxxxx
0000 Xxxxx Xxxxxx Xxx
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000

with a copy to:

Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000

(d) If to Xxxxxxx Trust to:

Xxxxxxx Xxxxx SML Trust
Xxxxxxx Xxxxx, Trustee
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxxx Xxxxx

with a copy to:

Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000

Section 10.9 Assignments, Successors and No Third-Party Rights. No party may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other parties, except that Buyer may assign any of its rights and

delegate any of its obligations under this Agreement to an Affiliate of Buyer and may collaterally assign its rights hereunder to any financial institution providing financing in connection with the transactions contemplated by this Agreement; provided that such assignment shall not relieve Buyer of is obligations under this Agreement. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this Section 10.8.

Section 10.10 Choice of Law. This Agreement shall be governed by the internal laws of the State of New York (without regard to the choice of law provisions thereof).

Section 10.11 Jurisdiction and Venue. Without limiting the provisions of Section 7.5, Xxxxx Maritime, Go Big, the Seller Parties and Buyer hereby consent to personal jurisdiction in any action brought with respect to this Agreement and the transactions contemplated hereunder in any federal or state court in New York City, New York and agree that service of process may be accomplished pursuant to Section 10.7 above.

Section 10.12 Construction; Section Headings; Table of Contents. The language used in this Agreement shall be deemed to be the language the parties hereto have chosen to express their mutual intent, and no rule of strict construction will be applied against any party hereto. The section headings and any table of contents contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

Section 10.13 Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 10.14 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

Section 10.15 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

Section 10.16 Power of Attorney. Each Seller Party hereby irrevocably makes, constitutes and appoints Xxxxxx X.X. Xxxxx as its representative (the “Seller Party Representative”) and its true and lawful attorney-in-fact, with full power and authority, in the name and on behalf of each Seller Party, to act on behalf of each of them in the absolute discretion of the Seller Party Representative with respect to all matters arising out of or in connection with this Agreement and, in general, to do all things and to perform all acts, including

executing and delivering agreements (including amendments to this Agreement), certificates, receipts, instructions or other instruments contemplated by this Agreement or deemed advisable to effectuate the transactions contemplated by this Agreement. This power of attorney and all authority conferred hereby shall be coupled with an interest and irrevocable and shall not be terminated by any act of any Seller Party or by operation of law, whether by the bankruptcy, dissolution, liquidation, death, disability or incapacity of a Seller Party or by the occurrence of any other event or events. Each Seller Party hereby consents to the taking of any and all actions and the making of any decisions required or permitted to be taken or made by the Seller Party Representative pursuant to this Section 10.15. Each Seller Party agrees that the Seller Party Representative shall have no obligation or liability to any Person for any act or omission taken or omitted by the Seller Party Representative in good faith hereunder, and the Seller Parties shall indemnify and hold the Seller Party Representative harmless from and against any and all loss, damage, expense or liability (including reasonable counsel fees and expenses) which the Seller Party Representative may sustain as a result of any such action or omission by the Seller Party Representative hereunder.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

K-SEA ACQUISITION1, LLC


By:	/s/ XXXXXXX X. XXXXX
Name:	Xxxxxxx X. Xxxxx
Title:	President/CEO


K-SEA TRANSPORTATION PARTNERS L.P.


By:	K-Sea General Partner L.P.

	By:	K-Sea General Partner GP LLC


	By:	/s/ XXXXXXX X. XXXXX
	Name:	Xxxxxxx X. Xxxxx
	Title:	President/CEO


XXXXX MARITIME, LTD.


By:	/s/ XXXXXX X.X. XXXXX
		Xxxxxx X.X. Xxxxx
		President


GO BIG CHARTERING, LLC


By:	235LX, LLC


	By:	/s/ XXXXXX X.X. XXXXX
		Xxxxxx X.X. Xxxxx
		Member


/s/ XXXXXX X.X. XXXXX
XXXXXX X.X. XXXXX

THE XXXXXX X.X. XXXXX TRUST


By:	/s/ XXXXXX X.X. XXXXX
		Xxxxxx X.X. Xxxxx
		Trustee


XXXXXXX XXXXX SML TRUST


By:	/s/ XXXXXXX XXXXX
		Xxxxxxx Xxxxx
		Trustee


235LX, LLC


By:	/s/ XXXXXX X.X. XXXXX
		Xxxxxx X.X. Xxxxx
		Member

Document Metadata

Table of Contents

AGREEMENT AND PLAN OF MERGER BY AND AMONG K-SEA ACQUISITION1, LLC, K-SEA TRANSPORTATION PARTNERS L.P., SMITH MARITIME, LTD., GO BIG CHARTERING, LLC, GORDON L.K. SMITH, THE GORDON L.K. SMITH TRUST, BARBARA SMITH SML TRUST, 235LX, LLC AND THE OTHER...

Document Metadata

AGREEMENT AND PLAN OF MERGER BY AND AMONG K-SEA ACQUISITION1, LLC, K-SEA TRANSPORTATION PARTNERS L.P., SMITH MARITIME, LTD., GO BIG CHARTERING, LLC, GORDON L.K. SMITH, THE GORDON L.K. SMITH TRUST, BARBARA SMITH SML TRUST, 235LX, LLC AND THE OTHER...

ARTICLE I DEFINITIONS

ARTICLE II THE MERGERS

their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), or at such other time and place as the parties may agree. The date on which the Closing is held is referred to in this Agreement as the “Closing Date.”

Section 2.5 Certificate of Formation; Limited Liability Company Agreement.

(a) The Certificate of Formation of Buyer, as in effect immediately prior to the Effective Time, shall be the Certificate of Formation of the Surviving Entity until thereafter changed or amended as provided therein or by applicable law.

(b) The Limited Liability Company Agreement of Buyer as in effect immediately prior to the Effective Time shall be the Limited Liability Company Agreement of the Surviving Entity until thereafter changed or amended as provided therein or by applicable law.

Section 2.8 Conversion of Equity Interests. At the Effective Time, by virtue of the Mergers and without any action on the part of Buyer, Xxxxx Maritime, Go Big or any of the Seller Parties:

(a) the Equity Interests shall be converted automatically into the right to receive, in the aggregate, an amount in cash equal to the following (the “Merger Consideration”):

(i) $117,698,532, less

(ii) all prepaid revenue of the Subject Companies as of the Closing Date (as certified in writing by the President of Xxxxx Maritime), less

(iii) an amount equal to the difference between $500,000 and the amount of cash that is expected to be reflected on the Closing Date Balance Sheet as finally determined pursuant to Section 6.11 (as certified in writing by the

President of Xxxxx Maritime), provided that no reduction shall be made if the amount of cash that is expected to be reflected on the Closing Date Balance Sheet is equal to or greater than $500,000; less

(iv) all bonuses or other compensation paid or promised by Xxxxx Maritime to its employees pursuant to Section 6.12(c), including all employment or other taxes payable by Xxxxx Maritime in connection with such amounts; and

(b) all such Equity Interests shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and the Seller Parties shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration; and

(c) the membership interests of Buyer issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for validly issued, fully paid and nonassessable membership interests in the Surviving Entity.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH SELLER PARTY

Section 3.1 Corporate Status and Good Standing; Citizenship.

(b) Seller Party is a citizen of the United States within the meaning of Chapter 505 of Title 46 of the United States Code, for the purpose of operating the Vessels in the coastwise trade of the United States.

Section 3.2 Authorization.

Section 3.3 Capitalization; Title to Membership Interests.

(d) Seller Party does not own or control, directly or indirectly, any interest in any Person (other than the Subject Companies) and is not a participant in any partnership, joint venture or similar arrangement.

Section 3.4 Non-Contravention. Except as set forth in Schedule 3.4, neither the execution and delivery of this Agreement or any documents executed in connection herewith, nor the consummation of the transactions contemplated herein or therein, does or shall:

(e) result in the imposition or creation of any Lien upon or with respect to the Equity Interests of Seller Party or any assets of Seller Party; or

Section 3.6 Broker Involvemen. Seller Party has not hired, retained or dealt with any broker or finder in connection with the transactions contemplated by this Agreement, except as set forth on Schedule 3.6.

Section 3.7 Litigation. There is no judgment, order, writ, injunction or decree of any Governmental Body or arbitral tribunal against or involving Seller Party that may be reasonably expected to have an adverse effect on any of the Subject Companies, Buyer or any of their respective subsidiaries.

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF XXXXX MARITIME, GO BIG, XXXXX, THE XXXXXX TRUST AND 235LX

Section 4.1 Corporate Status and Good Standing; Citizenship.

(d) Each of the Subject Companies is a citizen of the United States within the meaning of Chapter 505 of Title 46 of the United States Code, for the purpose of operating the Vessels in the coastwise trade of the United States.

Section 4.2 Authorization.

Section 4.3 Capitalization; Title to Equity Interests.

(b) 235LX owns beneficially and of record all of the Go Big Membership Interests, in each case free and clear of all Liens. Such Go Big Membership Interests are not

Section 4.4 Non-Contravention. Except as set forth in Schedule 4.4, neither the execution and delivery of this Agreement or any documents executed in connection herewith, nor the consummation of the transactions contemplated herein or therein, does or shall:

(e) result in the imposition or creation of any Lien upon or with respect to the Equity Interests or any assets of any of the Subject Companies; or

Section 4.6 Broker Involvement. None of the Subject Companies has hired, retained or dealt with any broker or finder in connection with the transactions contemplated by this Agreement, except as set forth on Schedule 4.6.

Section 4.8 Title to Assets. Except as set forth on Schedule 4.8, each of the Subject Companies has good and marketable title to all of its owned assets that are used in its business, free and clear of any and all Liens other than Permitted Liens.

(a) any change in its authorized capital or in any of its outstanding capital or any grant, issuance or sale of any derivative security with respect to its capital;

(b) any sale, lease, distribution, transfer, mortgage, pledge or subjection to Lien of assets (other than Permitted Liens), except sales of inventory and obsolete or surplus equipment in the ordinary and usual course of business;

(c) any transaction by any of the Subject Companies not in the ordinary and usual course of business;

(f) the negotiation, execution or delivery of any agreement, commitment or contract having a term exceeding one year or involving an amount in excess of $100,000;

(g) the negotiation or execution of any charter commitments with respect to articulated-tug barge units;

(h) the negotiation or execution of any vessel construction agreement;

(i) any incurrence by any of the Subject Companies of any indebtedness for borrowed money or guaranty or any commitment to incur any indebtedness or any guaranty;

(j) any change in accounting methods or principles or the application thereof or any change in the Subject Companies’ policies or practices with respect to items affecting working capital;

(l) any acceleration of shipments, sales or orders or other similar action in contemplation of this Agreement or otherwise not in the ordinary course of business consistent with past practice;

(m) any acceleration of the collection of Accounts Receivable in contemplation of this Agreement or otherwise not in the ordinary course of business consistent with past practice;

(n) any bonus payments, salary increases, commission increases or modifications, the execution of any employment agreement, severance arrangement, or consulting arrangement or Plan (or any amendment thereto), except as contemplated in Section 6.12(c) or set forth on Schedule 4.9;

(o) any waiver of any rights that, singly or in the aggregate, are material to the business of any of the Subject Companies, its assets or the financial condition or results of operations of the Subject Companies;

(p) any labor strikes or disruptions, union organizational activities or other similar occurrence; or

(q) any contract or commitment to do or cause to be done any of the foregoing.

Schedule 4.11, there is no pending or threatened action or claim that would impair any such right.

Section 4.12 Financial Statements; Budget.

(f) Schedule 4.12(f) reflects all intercompany transactions between any of the Subject Companies and the Seller Parties or any Affiliates thereof since December 31, 2003, excluding the transactions contemplated by Section 6.13.

Section 4.14 Condition of Assets; Eligibility for Coastwise Trade.

(b) Schedule 4.14(b)(1) sets forth a list of each vessel (including vessels under construction) owned by each of the Subject Companies, with an indication (as applicable)

therein due to dollar thresholds, (iii) arising out of matters reflected in Schedule 4.7 (Litigation) or (iv) trade accounts payable incurred after March 31, 2007 in the ordinary course of business consistent with past practice, and (v) Permitted Liens.

Section 4.16 Real Estate.

Section 4.18 Inventory. Schedule 4.18 sets forth the location of all inventory (including spare parts) related to the Vessels that is not aboard such Vessels.

Section 4.20 Employee Benefits.

(b) With respect to each Plan, the Subject Companies have provided to Buyer a true and correct copy of each of the following, as applicable:

(ii) annual reports or information returns, including financial statements, for the last three years;

(iv) the most recent IRS determination letter or other opinion letter with respect to the qualified status of such Plan under Code Section 401(a) or the exempt status of a related trust under Code Section 501(a) or 501(c)(9).

(h) All individuals who perform (or have performed within the last six years) compensatory services for the Subject Companies in any capacity have been properly classified for purposes of employment and withholding taxes and eligibility to participate in and coverage under any Plan.

Section 4.22 Environmental.

(f) Except as set forth in Schedule 4.22(f), and except in compliance with all Environmental Laws, there has been no Release of any Hazardous Material on, into, under, or from the currently or formerly owned or leased properties, facilities, Vessels or other assets of

ARTICLE I
DEFINITIONS

ARTICLE II
THE MERGERS

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SELLER PARTY

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXX MARITIME, GO BIG, XXXXX,
THE XXXXXX TRUST AND 235LX