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Exhibit 10.1
 
EXECUTION COPY
 

 

 

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AGREEMENT AND PLAN OF MERGER
 
Dated as of July 30, 2007
 
among
 
MAST ACQUISITION LTD.,
 
MAST MERGER SUB CORP.
 
and
 
MC SHIPPING INC.
 

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TABLE OF CONTENTS
 

   
Page
     
ARTICLE I THE MERGER 
1
   
SECTION 1.1
The Merger
1
SECTION 1.2
Closing
2
SECTION 1.3
Effective Time
2
SECTION 1.4
Effects of the Merger
2
SECTION 1.5
Articles of Incorporation and Bylaws of the Surviving Corporation
2
SECTION 1.6
Directors and Officers of the Surviving Corporation
2
SECTION 1.7
Conversion of Securities
3
SECTION 1.8
Exchange of Certificates
3
SECTION 1.9
Appraisal Rights
5
 
 
 
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
6
   
 
SECTION 2.1
Organization and Standing
6
SECTION 2.2
Capitalization
7
SECTION 2.3
Authority; Noncontravention; Voting Requirements
8
SECTION 2.4
Governmental Approvals
9
SECTION 2.5
Company SEC Documents; Financial Statements; Undisclosed Liabilities
9
SECTION 2.6
Absence of Certain Changes
11
SECTION 2.7
Legal Proceedings
11
SECTION 2.8
Compliance With Laws; Permits
11
SECTION 2.9
Proxy Statement
12
SECTION 2.10
Tax Matters
12
SECTION 2.11
Employee Benefits and Labor Matters
13
SECTION 2.12
Contracts
15
SECTION 2.13
Real Estate; Environmental Matters
16
SECTION 2.14
Intellectual Property
17
SECTION 2.15
Insurance
18
SECTION 2.16
Vessels
18
SECTION 2.17
Leases of Ships and Ship Charters
19
SECTION 2.18
Certain Business Relationships with Affiliates
19
SECTION 2.19
Opinion of Financial Advisor
19
SECTION 2.20
Brokers and Other Advisors
20
SECTION 2.21
Management Consideration
20
SECTION 2.22
No Other Representations or Warranties
20

 
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 
20
 
 
 
SECTION 3.1
Organization and Standing
20
SECTION 3.2
Authority; Noncontravention
20
SECTION 3.3
Governmental Approvals
21
SECTION 3.4
Information Supplied
21
SECTION 3.5
Ownership and Operations of Merger Sub
22
SECTION 3.6
Capital Resources
22
SECTION 3.7
Legal Proceedings
22
SECTION 3.8
Brokers and Other Advisors
22
SECTION 3.9
Ownership of Company Common Stock
22
SECTION 3.10
No Reliance
22
   
 
ARTICLE IV ADDITIONAL COVENANTS AND AGREEMENTS 
23
   
 
SECTION 4.1
Conduct of Business
23
SECTION 4.2
Other Offers; Etc
26
SECTION 4.3
Reasonable Best Efforts
30
SECTION 4.4
Proxy Statement
31
SECTION 4.5
Company Shareholders Meeting
32
SECTION 4.6
Public Announcements
33
SECTION 4.7
Access to Information; Confidentiality
33
SECTION 4.8
Notification of Certain Matters
33
SECTION 4.9
Indemnification and Insurance
34
SECTION 4.10
Fees and Expenses
36
SECTION 4.11
Delisting
36
SECTION 4.12
Parent Representation on the Company Board
36
SECTION 4.13
Securityholder Litigation
39
SECTION 4.14
Tax Elections
39
SECTION 4.15
U.S. Federal Income Tax Returns
39
SECTION 4.16
Vessel Charters
39
   
 
ARTICLE V CONDITIONS TO THE MERGER
39
   
 
SECTION 5.1
Conditions to Each Party's Obligation to Effect the Merger
39
SECTION 5.2
Conditions to the Obligations of Parent and Merger Sub
40
SECTION 5.3
Conditions to the Obligations of the Company
40
SECTION 5.4
Frustration of Closing Conditions
40
   
 
ARTICLE VI TERMINATION 
41

 
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SECTION 6.1
Termination
41
SECTION 6.2
Effect of Termination
42
SECTION 6.3
Termination Fee
42
SECTION 6.4
Acknowledgment
43
 
 
 
ARTICLE VII MISCELLANEOUS 
43
   
 
SECTION 7.1
Survival of Representations, Warranties and Agreements
43
SECTION 7.2
Amendment or Supplement
43
SECTION 7.3
Extension of Time, Waiver, Etc
43
SECTION 7.4
Assignment
44
SECTION 7.5
Counterparts
44
SECTION 7.6
Entire Agreement; No Third-Party Beneficiaries
44
SECTION 7.7
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
44
SECTION 7.8
Specific Enforcement
45
SECTION 7.9
Notices
45
SECTION 7.10
Severability
46
SECTION 7.11
Definitions
47
SECTION 7.12
Interpretation
49

 
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AGREEMENT AND PLAN OF MERGER
 
This AGREEMENT AND PLAN OF MERGER, dated as of July 30, 2007 (this "Agreement"),
is among MAST ACQUISITION LTD., a Bermuda exempted limited company organized
under the laws of Bermuda ("Parent"), MAST MERGER SUB CORP., a corporation
organized under the laws of the Republic of Liberia and a wholly owned
Subsidiary of Parent ("Merger Sub"), and MC SHIPPING INC., a corporation
organized under the laws of the Republic of Liberia (the "Company").  Certain
terms used in this Agreement without definition shall have their meanings as
defined in Section 7.11.
 
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company each deems it advisable that Parent acquire the Company on the terms and
subject to the conditions provided for in this Agreement;
 
WHEREAS, in furtherance thereof it is proposed that such acquisition be
accomplished by the merger of Merger Sub with and into the Company, with the
Company as the surviving corporation, in accordance with the Business
Corporation Act of the Republic of Liberia (the "BCAL"), pursuant to which all
of the shares of voting common stock, $0.01 par value, of the Company ("Company
Common Stock") issued and outstanding (each, a "Share" and, collectively, the
"Shares"), other than certain Shares as provided in Section 1.7(b) and
Dissenting Shares, will be converted into the right to receive the Merger
Consideration on the terms and subject to the conditions provided for in this
Agreement (the "Merger");
 
WHEREAS, the respective Boards of Directors of Parent (on its own behalf and as
the sole shareholder of Merger Sub), Merger Sub and the Company have each
approved this Agreement and the Merger; and
 
WHEREAS, the Company has been advised by Navalmar Transportes Maritimos LDA and
Weco-Rederi Holding A/S (the "Principal Shareholders"), whose representatives on
the Company Board resigned their positions as directors of the Company prior to
the meeting of the Company Board held to approve this Agreement, that,
concurrent with the execution and delivery of this Agreement, they and their
respective Affiliates are entering into binding commitments to sell the
4,226,448 Shares and 849,270 Shares owned by them, respectively, representing in
the aggregate approximately 53% of the outstanding Shares, to Parent at a cash
purchase price equal to $14.25 per Share;
 
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained in this Agreement, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
 
ARTICLE I
 
The Merger
 
SECTION 1.1    The Merger.  Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the BCAL, at the Effective Time
Merger Sub shall be merged with and into the Company, and the separate corporate
existence of Merger Sub shall thereupon cease, and the Company shall be the
surviving corporation in the Merger (the "Surviving Corporation").

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SECTION 1.2    Closing.  The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. (New York time) on a date to be specified by the parties
(the "Closing Date"), which date shall be no later than the fifth (5th) business
day after satisfaction or waiver of the conditions set forth in Article V (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of those conditions at such time), at
the offices of Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New
York, New York 10005, unless another time, date or place is agreed to in writing
by the parties hereto.
 
SECTION 1.3    Effective Time.  Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the parties shall file with the
Minister of Foreign Affairs (as defined in the BCAL, the "Minister of Foreign
Affairs") articles of merger pursuant to Section 10.2.5 of the BCAL executed in
accordance with the relevant provisions of the BCAL (the "Articles of
Merger").  The Merger shall become effective upon the filing of the Articles of
Merger or at such later time as is agreed to by the parties hereto and specified
in the Articles of Merger (the time at which the Merger becomes effective is
herein referred to as the "Effective Time").
 
SECTION 1.4    Effects of the Merger.  The Merger shall have the effects set
forth in the BCAL.  Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
 
SECTION 1.5    Articles of Incorporation and Bylaws of the Surviving
Corporation.At the Effective Time, the articles of incorporation and bylaws of
the Surviving Corporation shall be amended in their entirety to read as the
articles of incorporation and bylaws of Merger Sub until thereafter amended as
provided therein or by applicable Law (and subject to Section 4.9); provided,
however, that Article I of the articles of incorporation of the Surviving
Corporation shall be amended to provide that the Surviving Corporation shall be
named "MC Shipping Inc."
 
SECTION 1.6    Directors and Officers of the Surviving Corporation
 
(a)           The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation immediately following
the Effective Time, until their respective successors are duly elected or
appointed and qualified or their earlier death, resignation or removal in
accordance with the articles of incorporation and bylaws of the Surviving
Corporation.
 
(b)           The officers of Merger Sub immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors are duly appointed and qualified or their earlier death, resignation
or removal in accordance with the articles of incorporation and bylaws of the
Surviving Corporation.
 
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SECTION 1.7    Conversion of Securities.  At the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any securities
of Merger Sub or the Company:
 
(a)           Each issued and outstanding share of capital stock of Merger Sub
shall be converted into and become one (1) validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
 
(b)           Any shares of Company Common Stock that are owned by the Company
as treasury stock and any Shares owned by Parent, Merger Sub or any other
Subsidiary of Parent shall be automatically canceled and shall cease to exist
and no consideration shall be delivered in exchange therefor.
 
(c)           Each Share (other than (i) Shares to be canceled in accordance
with Section 1.7(b) and (ii) any Dissenting Shares) shall be converted into the
right to receive $14.25 in cash, without interest (the "Merger
Consideration").  All such Shares, when so converted, shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a certificate which immediately prior to the Effective Time
represented any such Shares shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration therefor upon the surrender
of such certificate in accordance with this Agreement, without interest.
 
SECTION 1.8    Exchange of Certificates.
 
(a)           Paying Agent.  Prior to the Effective Time, Parent shall designate
a bank or trust company reasonably acceptable to the Company to act as agent for
the holders of Shares in connection with the Merger (the "Paying Agent") to
receive, on terms reasonably acceptable to the Company, for the benefit of
holders of Shares, the aggregate Merger Consideration to which holders of Shares
shall become entitled pursuant to Section 1.7(c).  Parent shall deposit such
aggregate Merger Consideration with the Paying Agent at or prior to the
Effective Time.  Such aggregate Merger Consideration deposited with the Paying
Agent shall, pending its disbursement to such holders, be invested by the Paying
Agent in (i) direct obligations of the United States of America,
(ii) obligations for which the full faith and credit of the United States of
America is pledged to provide for the payment of principal and interest,
(iii) commercial paper rated the highest quality by either Moody's Investors
Service, Inc. or Standard & Poor's Ratings Services or (iv) non-U.S. money
market funds investing solely in a combination of the foregoing.  Any interest
and other income resulting from such investments shall be the property of, and
shall be paid to, Parent.  Parent shall promptly replace any funds deposited
with the Paying Agent lost through any investment made pursuant to this
paragraph.
 
(b)           Exchange Procedures.  Promptly after the Effective Time (but in no
event more than three (3) business days thereafter), the Surviving Corporation
shall cause the Paying Agent to mail to each holder of record of a certificate
or certificates (or evidence of shares in book-entry form), which immediately
prior to the Effective Time represented outstanding Shares (the "Certificates"),
whose shares were converted pursuant to Section 1.7(c) into the right to receive
the Merger Consideration, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent, and which
shall be in such form and shall have such other customary provisions (including
customary provisions with respect to delivery of an "agent's message" with
respect to shares held in book-entry form) as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment of the Merger Consideration.  Upon surrender of a
Certificate for cancellation to the Paying Agent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions (and such other customary documents as may reasonably be required
by the Paying Agent), the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration (less any applicable
excise and withholding Taxes in accordance with Section 1.8(g)), without
interest, for each Share formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be canceled.  If payment of the
Merger Consideration is to be made to a Person other than the Person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that (x) the Certificate so surrendered shall be properly endorsed or
shall otherwise be in proper form for transfer and (y) the Person requesting
such payment shall have paid any transfer and other Taxes required by reason of
the payment of the Merger Consideration to a Person other than the registered
holder of such Certificate surrendered or shall have established to the
reasonable satisfaction of the Surviving Corporation that such Tax either has
been paid or is not applicable.  Until surrendered as contemplated by this
Section 1.8, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive the Merger Consideration as
contemplated by this Article I, without interest.
 

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(c)           Transfer Books; No Further Ownership Rights in Company Stock.  The
Merger Consideration paid in respect of Shares upon the surrender for exchange
of Certificates in accordance with the terms of this Article I shall be deemed
to have been paid in full satisfaction of all rights pertaining to the Shares
previously represented by such Certificates, and at the close of business on the
day on which the Effective Time occurs, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
that were outstanding immediately prior to the Effective Time.  From and after
the Effective Time, the holders of Certificates that evidenced ownership of
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such shares, except as otherwise provided for herein
or by applicable Law.  Subject to the last sentence of Section 1.8(e), if, at
any time after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
 
(d)           Lost, Stolen or Destroyed Certificates.  If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such Person of a
bond, in such reasonable amount as Parent may direct, as indemnity against any
claim that may be made against it with respect to such Certificate, the Paying
Agent will pay, in exchange for such lost, stolen or destroyed Certificate, the
applicable Merger Consideration to be paid in respect of the Shares formerly
represented by such Certificate, as contemplated by this Article I.
 
(e)           Termination of Fund.  At any time following the six-month
anniversary of the Closing Date, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) that had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look only to the Surviving Corporation
(subject to abandoned property, escheat, Tax or other similar Laws) as general
creditors thereof with respect to the payment of any Merger Consideration that
may be payable upon surrender of any Certificates held by such holders, as
determined pursuant to this Agreement, without any interest thereon.  Any
amounts remaining unclaimed by such holders at such time at which such amounts
would otherwise escheat to or become property of any Governmental Authority
shall become, to the extent permitted by applicable Law, the property of Parent
free and clear of all claims or interests of any Person previously entitled
thereto.
 
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(f)           No Liability.  Notwithstanding any provision of this Agreement to
the contrary, none of the parties hereto, the Surviving Corporation or the
Paying Agent shall be liable to any Person for Merger Consideration delivered to
a public official pursuant to any applicable abandoned property, escheat, Tax or
similar Law.
 
(g)           Withholding Taxes.  Parent, Merger Sub, the Surviving Corporation
and the Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable to a holder of Shares pursuant to the Merger
such amounts as may be required to be deducted and withheld with respect to the
making of such payment under any applicable Tax Law.  To the extent amounts are
so withheld and paid over to the appropriate taxing authority, the withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made.
 
SECTION 1.9    Appraisal Rights.  Notwithstanding anything in this Agreement to
the contrary, Shares that are issued and outstanding immediately prior to the
Effective Time and which are held by a shareholder who did not vote in favor of
the Merger (or consent thereto in writing) and who is entitled to demand and
properly demands appraisal of such shares pursuant to, and who complies in all
respects with, the provisions of Section 10.8 of the BCAL (each, a "Dissenting
Shareholder"), shall not be converted into or be exchangeable for the right to
receive the Merger Consideration (the "Dissenting Shares"), but instead such
Dissenting Shareholder shall be entitled to payment of the fair value of such
Dissenting Shares in accordance with the provisions of Section 10.8 of the BCAL
(and at the Effective Time, such Dissenting Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
such Dissenting Shareholder shall cease to have any rights with respect thereto,
except the right to receive the fair value of such Dissenting Shares in
accordance with the provisions of Section 10.8 of the BCAL), unless and until
such Dissenting Shareholder shall have failed to perfect or shall have
effectively withdrawn or lost rights to appraisal under the BCAL.  If any
Dissenting Shareholder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such Dissenting Shareholder's Shares shall
thereupon be treated as if they had been converted into and become exchangeable
for the right to receive, as of the Effective Time, the Merger Consideration for
each such Share, in accordance with Section 1.7(c), without any interest
thereon.  The Company shall give Parent (i) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands and any other
instruments served pursuant to the BCAL and received by the Company relating to
shareholders' rights of appraisal, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to demands for appraisal under the
BCAL.  The Company shall not make any payment or settlement offer prior to the
Effective Time with respect to any such demand, notice or instrument, or waive
any failure by a shareholder to timely comply with the requirements of the BCAL,
unless Parent shall have given its written consent to such payment or settlement
offer or unless otherwise required by an order, decree, ruling or injunction of
a court of competent jurisdiction.  Any portion of the Merger Consideration made
available to the Paying Agent pursuant to Section 1.8 to pay for Shares for
which appraisal rights have been perfected shall be returned to Parent upon
demand.
 
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ARTICLE II
 
Representations and Warranties of the Company
 
The Company represents and warrants to Parent and Merger Sub that except as set
forth in the letter delivered by the Company to Parent simultaneously with the
execution of this Agreement (the "Company Disclosure Letter") or in the Company
SEC Documents publicly filed prior to the date of this Agreement, excluding any
disclosures set forth in any risk factor section thereof, in any section
relating to forward-looking statements and any other disclosures included
therein that are cautionary, predictive or forward-looking in nature (the "Filed
Company SEC Documents") (it being understood that any matter set forth in the
Company Disclosure Letter or in such Filed Company SEC Documents shall be deemed
disclosed with respect to any section of this Article II to which the matter
relates, to the extent the relevance of such matter to such section is readily
apparent):
 
SECTION 2.1    Organization and Standing.
 
(a)           The Company is a corporation validly existing and in good standing
under the Laws of the Republic of Liberia and has all requisite corporate power
and authority necessary to own or lease all of its properties and assets and to
carry on its business as it is now being conducted.  The Company is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased or held under
license by it makes such licensing or qualification necessary, except where the
failure to be so licensed, qualified or in good standing would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect or to impair in any material respect the ability of the Company to
perform its obligations hereunder or prevent or materially delay consummation of
the Merger.  For purposes of this Agreement, the term "Company Material Adverse
Effect" shall mean any change, event or occurrence which has a material adverse
effect on the results of operations, assets, liabilities or financial condition
of the Company and its Subsidiaries taken as a whole, other than changes,
events, occurrences or effects arising out of, resulting from or attributable to
(i) changes in conditions in any geographic region in which the Company does
business or in the global economy or in capital or financial markets generally,
including changes in interest or exchange rates, provided that such changes do
not affect the Company and its Subsidiaries in a disproportionate manner,
(ii) changes in general legal, regulatory, political, economic or business
conditions or changes in generally accepted accounting principles that, in each
case, generally affect industries in which the Company and its Subsidiaries
conduct business, provided that such changes do not affect the Company and its
Subsidiaries in a disproportionate manner, (iii) the negotiation, execution,
announcement or performance of this Agreement or the consummation of the Merger,
including the impact thereof on relationships, contractual or otherwise, with
customers, suppliers, distributors, partners, collaborators or employees,
(iv) acts of war, sabotage or terrorism, or any escalation or worsening of any
such acts of war, sabotage or terrorism threatened or underway as of the date of
this Agreement, provided that such changes do not affect the Company and its
Subsidiaries in a disproportionate manner, (v) storms, earthquakes or other
natural disasters, provided that such changes do not affect the Company and its
Subsidiaries in a disproportionate manner, (vi) any action required to be taken
by the Company or any of its Subsidiaries pursuant to this Agreement, or
(vii) any decline in the market price, or change in trading volume, of the
capital stock of the Company or any failure of the Company to meet publicly
announced revenue or earnings projections, provided that the underlying cause of
any such decline, change or failure may otherwise be taken into consideration in
determining whether a Company Material Adverse Effect has occurred.
 

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(b)           Each of the Company's Subsidiaries is a corporation or
other organization duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its organization.  Each of the Company's
Subsidiaries is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased or
held under license by it makes such licensing or qualification necessary, except
where the failure to be so licensed, qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.  The Filed Company SEC Documents contain a true and
complete list of each such Subsidiary and the jurisdiction of incorporation or
organization of such Subsidiary.  All the outstanding shares of capital stock
of, or other equity interests in, each such Subsidiary (except for directors'
qualifying shares or the like) are duly authorized, have been validly issued,
are fully paid, nonassessable and free of preemptive rights, and are owned
directly or indirectly by the Company free and clear of all liens, pledges,
security interests and transfer restrictions, except for such transfer
restrictions of general applicability as may be provided under the Securities
Act of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), and other applicable securities Laws and
rules and regulations promulgated thereunder.
 
(c)           The Company has previously made available to Parent complete and
correct copies of the articles of incorporation and bylaws (or other comparable
organizational documents) of the Company and each of its Subsidiaries, in each
case as amended through the date of this Agreement (the "Company Charter
Documents").  None of the Company or its Subsidiaries, respectively, is in
material violation of the Company Charter Documents.
 
SECTION 2.2    Capitalization.
 
(a)           The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock, par value $0.01 per share. At the
close of business on July 11, 2007, (i) 9,515,471 shares of Company Common Stock
were issued and outstanding (none of which were held by the Company in its
treasury) and (ii) 47,000 shares of Company Common Stock were reserved for
issuance under the Company Stock Plan (none of which were subject to outstanding
options to purchase shares of Company Common Stock granted under the Company
Stock Plan).  All shares of Company Common Stock have been duly authorized and
are validly issued, fully paid, nonassessable and free of preemptive
rights.  Since July 11, 2007, the Company has not issued, or reserved for
issuance, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock.
 
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(b)           There are no outstanding contractual obligations of the Company or
any of its Subsidiaries (i) restricting the transfer of, (ii) affecting the
voting rights of, (iii) requiring the repurchase, redemption or disposition of,
or containing any right of first refusal with respect to, (iv) requiring the
registration for sale of, or (v) granting any preemptive or anti-dilutive right
with respect to, any shares of Company Common Stock or any capital stock of the
Company or any of its Subsidiaries.  There are no bonds, debentures, notes or
other indebtedness of the Company or any of its Subsidiaries having the right to
vote (or convertible into or exchangeable for securities having the right to
vote) on any matters on which holders of Company Common Stock or any such
Subsidiary may vote.
 
SECTION 2.3    Authority; Noncontravention; Voting Requirements.
 
(a)           The Company has all necessary corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the Company
Shareholder Approval, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.  The execution, delivery and performance by
the Company of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and approved by the Company
Board, and except for obtaining the Company Shareholder Approval, no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby.  This Agreement has
been duly executed and delivered by the Company and, assuming due authorization,
execution and delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar Laws of general application affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity, whether considered in a proceeding at Law or in equity
(the "Bankruptcy and Equity Exception").
 
(b)           The Company Board, at a meeting duly called and held and based on
the recommendation of the Transaction Committee of the Company Board (the
"Transaction Committee"), has (i) approved and declared advisable this Agreement
and the Merger and directed that this Agreement and the Merger be submitted to
the holders of Company Common Stock for their adoption and (ii) resolved,
subject to Section 4.2, to recommend that the holders of Company Common Stock
adopt this Agreement (the "Company Recommendation").
 
(c)           Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the terms or provisions
hereof, will (i) conflict with or violate any provision of the Company Charter
Documents or (ii) assuming that the authorizations, consents and approvals
referred to in Section 2.4 and the Company Shareholder Approval are obtained and
the filings referred to in Section 2.4 are made, (x) violate any Law, judgment,
writ or injunction of any Governmental Authority applicable to the Company or
any of its Subsidiaries or (y) except as set forth in Section 2.3(c) of the
Company Disclosure Letter, violate or constitute a default under any of the
terms, conditions or provisions of any loan or credit agreement, debenture,
note, bond, mortgage, indenture, deed of trust, lease, contract or other
agreement (each, a "Contract") to which the Company or any of its Subsidiaries
is a party, or by which any of their respective properties or assets is bound,
except, in the case of clause (ii), for such violations or defaults as would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or to impair in any material respect the ability of the
Company to perform its obligations hereunder or prevent or materially delay
consummation of the Merger.
 
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(d)           The affirmative vote (in person or by proxy) of the holders of
two-thirds of the shares of Company Common Stock present in person or
represented by proxy at the Company Shareholders Meeting, but in no event less
than a majority of the outstanding shares of Company Common Stock, in favor of
the adoption of this Agreement is the only vote or approval of the holders of
any class or series of capital stock of the Company which is necessary to adopt
this Agreement and approve the Merger (the "Company Shareholder Approval").
 
SECTION 2.4    Governmental Approvals.  Except for (i) the filing of the
Articles of Merger with the Minister of Foreign Affairs pursuant to the BCAL and
(ii) filings required under, and compliance with other applicable requirements
of, non-U.S. Laws intended to prohibit, restrict or regulate actions or
transactions having the purpose or effect of monopolization, restraint of trade,
harm to competition or effectuating foreign investment (collectively, "Foreign
Antitrust Laws"), no consents or approvals of, or filings, declarations or
registrations with, any Governmental Authority are necessary for the execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby, other than such consents,
approvals, filings, declarations or registrations that, if not obtained, made or
given, would not, individually or in the aggregate, reasonably be expected
(A) to have a Company Material Adverse Effect, (B) impair in any material
respect the ability of the Company to perform its obligations hereunder,
(C) prevent or materially delay consummation of the Merger or (D) impair in any
material respect the ability of the Company and its Subsidiaries to conduct
their business and operations immediately following consummation of the Merger
in the manner in which they were conducted immediately prior to consummation of
the Merger.
 
SECTION 2.5    Company SEC Documents; Financial Statements; Undisclosed
Liabilities.
 
(a)           The Company is a "foreign private issuer" (as that term is defined
in Rule 3b-4 promulgated under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act")) and voluntarily files annual reports on Form 10-K and quarterly reports
on Form 10-Q with the Securities and Exchange Commission.  The Company has filed
all required registration statements, prospectuses, forms, reports and proxy
statements with the SEC, together with all certifications required pursuant to
the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), from and after
January 1, 2004 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "Company
SEC Documents").  None of the Company's Subsidiaries is required to file
periodic reports with the U.S. Securities and Exchange Commission (the "SEC")
pursuant to the Exchange Act. As of their respective effective dates (in the
case of Company SEC Documents that are registration statements filed pursuant to
the requirements of the Securities Act) and as of their respective SEC filing
dates (in the case of all other Company SEC Documents), the Company SEC
Documents complied in all material respects with the requirements of the
Exchange Act, the Securities Act and Sarbanes-Oxley Act, as the case may be,
applicable to such Company SEC Documents, and none of the Company SEC Documents
as of such respective dates contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.  As of the date of this Agreement, there are no
outstanding or unresolved comments received from the SEC staff with respect to
the Company SEC Documents and, to the Company's Knowledge, none of the Company
SEC Documents is the subject of ongoing SEC review or investigation.
 
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(b)           The consolidated financial statements of the Company included in
the Company SEC Documents (the "Company Financial Statements") have been
prepared in accordance with GAAP (except, in the case of unaudited interim
statements, as indicated in the notes thereto) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited interim statements, to normal year-end
audit adjustments which were not and would not, individually or in the
aggregate, reasonably be expected to be material).  The books and records of the
Company and each of its Subsidiaries have been, and are being, maintained in all
material respects in accordance with applicable legal and accounting
requirements, and the Company Financial Statements are consistent in all
material respects with such books and records.
 
(c)           Neither the Company nor any of its Subsidiaries has any
liabilities which would be required to be reflected or reserved against on a
consolidated balance sheet of the Company prepared in accordance with GAAP or
the notes thereto, except liabilities (i) reflected or reserved against on the
audited balance sheet of the Company and its Subsidiaries as of December 31,
2006 (the "Balance Sheet Date") included in the Filed Company SEC Documents
(including the notes thereto), (ii) incurred after the Balance Sheet Date in the
ordinary course of business, (iii) as contemplated by this Agreement or
otherwise in connection with the transactions contemplated hereby, or (iv) as
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
 
(d)           The Company and its Subsidiaries have designed and maintain a
system of internal controls over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide
reasonable assurances regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP.  The Company (i) has designed and maintains "disclosure controls and
procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to
ensure that material information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms and is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure, and
(ii) has disclosed, based on its most recent evaluation of such disclosure
controls and procedures prior to the date hereof, to the Company's auditors and
the audit committee of the Company Board (A) any "significant deficiencies" and
"material weaknesses" in the design or operation of internal controls over
financial reporting that are reasonably likely to adversely affect in any
material respect the Company's ability to record, process, summarize and report
financial information and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting.  For purposes of this Agreement, the
terms "significant deficiency" and "material weakness" shall have the meanings
assigned to them by the Public Company Accounting Oversight Board in Auditing
Standard No. 2, as in effect on the date hereof.
 
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(e)           The Company's financial projections and the Company's business
plan, for the period from 2007 through 2011, prepared for the Company Board and
thereafter provided by the Company to Parent and Merger Sub prior to the date
hereof, were reasonably prepared on a basis reflecting management's best
estimates, assumptions and judgments, at the time provided to Parent and Merger
Sub, as to the future financial performance of the Company and the
Subsidiaries.  Except as set forth in Section 2.5(e) of the Company Disclosure
Letter, to the Knowledge of the Company, there have been no events or
circumstances which would reasonably be expected to materially adversely affect
the accuracy of such projections on the date hereof.
 
SECTION 2.6    Absence of Certain Changes.  Since the Balance Sheet Date,
(a) each of the Company and its Subsidiaries has carried on and operated its
businesses in all material respects in the ordinary course of business, (b)
there have not been any events, changes or occurrences that have had a Company
Material Adverse Effect and (c) no fact, event, circumstance or condition exists
or has occurred and continues to exist that would reasonably be expected to have
a Company Material Adverse Effect.
 
SECTION 2.7    Legal Proceedings.  As of the date hereof, except as set forth in
Section 2.7 of the Company Disclosure Letter, there is no pending or, to the
Knowledge of the Company, threatened Action or Proceeding against or relating to
the Company or any of its Subsidiaries (including any Action or Proceeding
relating to any alleged or actual breach of the ISM Code or ISPS Code or any
Environmental Law) for an amount that could reasonably be expected to be greater
than $100,000 for any individual Action or Proceeding and $400,000 for all
Actions or Proceedings in the aggregate (in either case excluding legal fees and
expenses), nor is there any injunction, order, judgment, ruling or decree
imposed upon the Company or any of its Subsidiaries, in each case, by or before
any Governmental Authority.
 
SECTION 2.8    Compliance With Laws; Permits.  The Company and its Subsidiaries
have been for the past five (5) years and are currently in compliance with all
laws, statutes, ordinances, codes, rules, regulations, decrees, treaties, orders
and other legal requirements of Governmental Authorities (collectively, "Laws")
applicable to the Company or any of its Subsidiaries, except for such
non-compliance as would not reasonably be expected to be adverse to the Company
or any of its Subsidiaries in any material respect.  The Company and each of its
Subsidiaries have held for the past five (5) years and are currently holding all
licenses, franchises, permits, certificates, approvals, clearances and
authorizations from Governmental Authorities necessary for the lawful conduct of
their respective businesses (collectively, "Permits"), and all such Permits are
valid and in full force and effect, except where the failure to hold the same or
of the same to be valid and in full force and effect would not, individually or
in the aggregate, reasonably be expected to (A) have a Company Material Adverse
Effect, (B) impair in any material respect the ability of the Company to perform
its obligations hereunder, (C) prevent or materially delay consummation of the
Merger, or (D) impair in any material respect the ability of the Company and its
Subsidiaries to conduct their business and operations immediately following
consummation of the Merger in the manner in which they were conducted
immediately prior to consummation of the Merger. 
 
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SECTION 2.9    Proxy Statement.  Subject to the accuracy of the representations
and warranties of Parent and Merger Sub set forth in Section 3.4, the Proxy
Statement, and any amendments or supplements thereto, will not, on the date it
is first mailed to the holders of Company Common Stock, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, and will not, at
the time of the Company Shareholders Meeting, omit to state any material fact
necessary to correct any statement in any earlier communication from the Company
with respect to the Company Shareholders Meeting which shall have become false
or misleading in any material respect.  Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to information supplied
by or on behalf of Parent or Merger Sub for inclusion or incorporation by
reference in the Proxy Statement.
 
SECTION 2.10   Tax Matters.
 
(a)           Except for those matters that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect: (i)
each of the Company and its Subsidiaries has timely filed, or has caused to be
timely filed on its behalf (taking into account any extension of time within
which to file), all Tax Returns required to be filed by it, and all such filed
Tax Returns are correct and complete in all material respects; (ii) all material
Taxes of the Company and each of its Subsidiaries that are duehave been timely
paid; (iii) no deficiency with respect to Taxes has been proposed, asserted or
assessed against the Company or any of its Subsidiaries which have not been
fully paid; and (iv) no audit or other Action or Proceeding is pending with any
Governmental Authority with respect to Taxes of the Company or any of its
Subsidiaries, and no written notice thereof has been received.
 
(b)           Since the Balance Sheet Date, neither the Company nor any of its
Subsidiaries has incurred any liability for Taxes outside the ordinary course of
business or otherwise inconsistent with past custom and practice.
 
(c)           Neither the Company nor any of its Subsidiaries is a party to or
bound by any Tax allocation or sharing agreement (other than any such agreement
solely between or among the Company and any of its Subsidiaries).
 
(d)           There are no liens for Taxes upon any material property or other
material assets of the Company or any of its Subsidiaries, except liens for
Taxes not yet due and payable and liens for Taxes that are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established on the Company Financial Statements in accordance with GAAP.

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(e)           All Taxes required to be withheld, collected or deposited by or
with respect to the Company and each of its Subsidiaries have been timely
withheld, collected or deposited, as the case may be, and to the extent
required, have been paid to the relevant Tax authority or other Governmental
Authority, except for such failure to do any of the foregoing as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
 
(f)           For purposes of this Agreement: (i) "Taxes" shall mean (x) all
applicable taxes, charges, fees, imposts, levies or other assessments, including
all net income, gross receipts, tonnage tax, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (y) all interest,
penalties, fines, additions to tax or additional amounts imposed by any
Governmental Authority in connection with any item described in clause (x), and
(z) any liability in respect of any items described in clauses (x) and/or
(y) payable by reason of contract, assumption, transferee liability, operation
of Law or otherwise, and (ii) "Tax Returns" shall mean any return, report, claim
for refund, estimate, information return or statement or other similar document
relating to or required to be filed with any Governmental Authority with respect
to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
 
(g)           No waivers or extensions of any statute of limitations have been
granted or requested with respect to any material Taxes of the Company or any of
its Subsidiaries, other than pursuant to extensions of time to file Tax Returns
obtained in the ordinary course.  Neither the Company nor any of its
Subsidiaries (i) has any material liability for the Taxes of any Person (other
than the Company and its Subsidiaries) under Law or as a transferee or
successor, (ii) has engaged in any "listed transaction" within the meaning of
U.S. Treasury Regulation Section 1.6011-4(b)(2), or (iii) has, since its
inception, been required to file a U.S. federal income tax return.  None of the
Company, any of its Subsidiaries or Waterloo Shipping Company Ltd. has ever been
a passive foreign investment company within the meaning of Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended (the "Code").  The Company and
each of its Subsidiaries that owns or operates a ship qualifies, and since its
inception has qualified, for the exemption provided by Section 883 of the Code.
 
(h)           Each Subsidiary of the Company and Waterloo Shipping Company Ltd.
is properly treated as a pass-through entity for U.S. federal income Tax
purposes.
 
(i)           This Section 2.10 contains the sole and exclusive representations
and warranties of the Company with respect to Tax matters.
 
SECTION 2.11          Employee Benefits and Labor Matters.
 
(a)           The Company has previously made available to Parent:
 
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(i)           details of the total number of employees as of the date of this
Agreement;
 
(ii)          the full name, age, date of start of employment, period of
continuous employment, notice period, job title, salary, bonus and commission of
all directors, officers or employees of the Company;
 
(iii)         details of any period of absence and any payments received or due
to those employees who have been absent for more than a month as of the date of
this Agreement or who are on long-term sickness leave, parental leave or other
long-term leave of absence as of the date of this Agreement and have a
contractual or statutory right to return to work; and
 
(iv)         correct and complete copies of each material employee benefit plan
or agreement maintained by the Company or any of its Subsidiaries (each, a
"Company Plan"), including, but not limited to, each (w) severance or employment
agreement with directors, officers or employees of or consultants to the Company
or any of its Subsidiaries, (x) severance program or policy of the Company or
any of its Subsidiaries with or relating to its employees, (y) plan, program,
agreement or other arrangement of the Company or any of its Subsidiaries with or
relating to its directors, officers, employees or consultants that contains
change-in-control (or comparable) provisions, and (z) arrangement providing
pension, lump sum or other payments given or in connection with (whether on or
following) termination of employment as a result of retirement, death or
disability, under which any current or former directors, officers, employees or
consultants of the Company or its Subsidiaries and their dependants have any
present or future rights to benefits or which the Company or any of its
Subsidiaries has ever operated, contributed to or participated in.  Each Company
Plan maintained by the Company or any of its Subsidiaries has been administered
in accordance with its terms other than instances of non-compliance as would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.  The Company Plans are all in compliance with all
applicable Laws, except for any instances of non-compliance that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
 
(b)           Except as set forth in Section 2.11(b) of the Company Disclosure
Letter, (i) no change has been made to the terms of employment of any person
earning more than £50,000 per annum since December 31, 2006, and (ii) no new
director, officer or employee earning more than £50,000 has been appointed or
received an offer of employment from the Company which still remains outstanding
(except that the Company is in the process of hiring a new employee in Singapore
who will earn more than £50,000 and intends to hire a new chief financial
officer who will earn more than £50,000).  The Company has not received or been
given written notice of any resignation of any director, officer or employee
earning more than £50,000, and there is no agreement with any director, officer
or employee that entitles any of them to give notice of termination of
employment, as a result of this Agreement.
 
(c)           The Company has separately provided Parent true and complete
copies of the terms of employment of all current employees and those with offers
outstanding.
 
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(d)           The Company and each of its Subsidiaries is in compliance with all
applicable Laws respecting labor, employment, fair employment practices, terms
and conditions of employment, workers' compensation, occupational safety, plant
closings, and wages and hours, and the terms of the Company Plans providing
benefits described in Section 2.11(a)(iv) above, except for such failures to be
in compliance as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.  Neither the Company nor any
of its Subsidiaries is a party to a collective bargaining agreement and no labor
union has been certified to represent any employee of the Company or any of its
Subsidiaries or, to the Knowledge of the Company, has applied to represent or is
attempting to organize so as to represent such employees.  None of the Company
or its Subsidiaries has been issued with a contribution notice or financial
support direction by the Pensions Regulator in accordance with its powers under
sections 38 to 51 (inclusive) of the UK Pensions Act 2004 ("PA04")  and no
circumstances exist which would reasonably be expected to result in the Company
or its Subsidiaries being issued with a contribution notice or a financial
support direction under sections 38 to 51 (inclusive) of PA04.  There are no
pending claims for severance or early retirement pensions.  None of the
directors, officers, employees or consultants of the Company or its Subsidiaries
who transferred to the Company or its Subsidiaries under the UK Transfer of
Undertakings (Protection of Employment) Regulations 2006 ("TUPE") has retired
early on less favorable terms than he would have had under his pre-TUPE pension
arrangement.  No director, officer, employee or consultant of the Company or its
Subsidiaries is entitled to early retirement terms which are different from
those in the Company Plans as a result of a previous TUPE transfer.
 
Section 2.12              Contracts.
 
(a)           The Company has previously made available to Parent (including
through the provision of Filed Company SEC Documents) correct and complete
copies of all of the following Contracts (including all material amendments,
modifications, extensions or renewals with respect thereto) to which the Company
or any of its Subsidiaries is a party as of the date of this Agreement
(collectively, the "Company Contracts"):
 
(i)           that contain a covenant restricting the ability of the Company or
any of its Subsidiaries to compete in any business or with any Person or in any
geographic area;
 
(ii)          with any Affiliate of the Company (other than any of its
Subsidiaries and other than employment or compensation-related Contracts);
 
(iii)         relating to any material joint venture, partnership or other
similar arrangement involving co-investment with a third party;
 
(iv)        with a Governmental Authority (other than ordinary course Contracts
with Governmental Authorities as a customer) which imposes any material
obligation or restriction on the Company or any of its Subsidiaries;
 
(v)         pursuant to which any indebtedness for borrowed money of the Company
or any of its Subsidiaries is outstanding or may be incurred or pursuant to
which the Company or any of its Subsidiaries has guaranteed any indebtedness for
borrowed money of any other Person (other than the Company or any of its
Subsidiaries and excluding trade payables arising in the ordinary course of
business);
 
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(vi)        that are ship charters (including capital leases) to which the
Company or any Subsidiary is a party (as owner, operator, charterer, lessee or
lessor, as the case may be) and related management agreements, as of the date
hereof;
 
(vii)       that is required by the rules and regulations of the SEC to be filed
as an exhibit to the Company SEC Documents; and
 
(viii)      relating to (A) the future disposition or acquisition of any
material assets or properties, other than dispositions or acquisitions in the
ordinary course of business, and (B) any merger or other business combination
transaction consummated after December 31, 2004.
 
(b)           Each Company Contract is valid and binding on the Company and each
of its Subsidiaries which is party thereto and, to the Knowledge of the Company,
each other party thereto, and is in full force and effect, and the Company and
each of its Subsidiaries has performed all obligations required to be performed
by it prior to the date hereof under each Company Contract and, to the Knowledge
of the Company, each other party to each Company Contract has performed all
obligations required to be performed by it prior to the date hereof under such
Company Contract, except for such failures to be in compliance as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
 
SECTION 2.13   Real Estate; Environmental Matters.
 
(a)           Neither the Company nor any of its Subsidiaries owns, or in the
past has owned, any real estate.
 
(b)           Except as set forth in Section 2.13(b) of the Company Disclosure
Letter:
 
(i)           The Company and each of its Subsidiaries is and has been in
compliance with (x) all applicable federal, state, local, foreign and
international Laws concerning pollution or protection of the environment or
natural resources, including without limitation all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control or cleanup of any hazardous or toxic
materials, substances or wastes or pollutants or contaminants (collectively
"Hazardous Materials"), as such requirements are enacted and in effect on the
Closing Date ("Environmental Laws"), and (y) any Permits required under
applicable Environmental Laws for the current operations of the Company and each
of its Subsidiaries, except for any such instances of non-compliance that would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
 
(ii)           Neither the Company nor any of its Subsidiaries has received any
written notice or report regarding any actual or alleged violation of any
applicable Environmental Law or any liabilities arising under applicable
Environmental Laws, in each case concerning the Company or its Subsidiaries,
except for any such violation or liability that would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
 
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(iii)         To the Knowledge of the Company, there is no Action or Proceeding
relating to or arising under Environmental Laws that is pending or threatened
against or affecting the Company or any of its Subsidiaries.
 
(iv)        Neither the Company nor any of its Subsidiaries has received any
written notice of or entered into any obligation, liability, order, settlement,
judgment, injunction or decree relating to or arising under Environmental Laws,
except for any such instances of notices or obligations that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
 
(v)         To the Knowledge of the Company, no facts, circumstances or
conditions exist with respect to the Company or any of its Subsidiaries or any
real property or assets owned or leased by or for the Company or any of its
Subsidiaries that would reasonably be expected to result in the Company and its
Subsidiaries incurring liabilities or losses under Environmental Laws,
including, but not limited to, any releases of Hazardous Materials at or from
any of the vessels or any containers under the control of the Company or any
Subsidiary except for any such facts, circumstances or conditions that would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
 
(c)           This Section 2.13 contains the sole and exclusive representations
and warranties of the Company with respect to any environmental matters,
including without limitation any arising under any Environmental Laws.
 
SECTION 2.14   Intellectual Property.
 
(a)           As used herein: (i) "Intellectual Property" means all U.S. and
foreign (A) trademarks, service marks, trade names, Internet domain names,
designs, logos and slogans, together with goodwill, registrations and
applications relating to the foregoing ("Trademarks"), (B) patents and pending
patent applications, invention disclosure statements, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations and extensions
thereof, any counterparts claiming priority therefrom and like statutory rights
("Patents"), (C) registered and unregistered copyrights (including those in
Software) and registrations and applications to register the same
("Copyrights"), (D) confidential technology, know-how, inventions, processes,
formulae, algorithms, models and methodologies ("Trade Secrets") and
(E) databases and compilations, including any and all electronic data and
electronic collections of data; (ii) "IP Licenses" means any license or
sublicense rights in or to any Intellectual Property; (iii) "Software" means all
computer programs, including any and all software implementations of algorithms,
models and methodologies whether in source code or object code form, and all
documentation, including user manuals and training materials, related to any of
the foregoing; and (iv) "Company Intellectual Property" means the Intellectual
Property, IP Licenses and Software held for use or used in the business of the
Company or any of its Subsidiaries as presently conducted.
 
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(b)           Except as would not, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect, the Company or one
of its Subsidiaries owns or possesses appropriate licenses or other legal rights
to use, sell or license all Company Intellectual Property.
 
(c)           Except as would not, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect:
 
(i)           to the Knowledge of the Company, the conduct of the businesses of
the Company and its Subsidiaries does not infringe, misappropriate, or otherwise
violate any Intellectual Property rights of any third party;
 
(ii)           to the Knowledge of the Company, no third party is infringing,
misappropriating, diluting or violating any Company Intellectual Property that
is owned by the Company or any of its Subsidiaries;
 
(iii)           no settlement agreements, consents, orders, forbearances to sue
or similar obligations to which the Company or any of its Subsidiaries is a
party limit or restrict any rights of the Company or any of its Subsidiaries in
and to any Company Intellectual Property that is owned by the Company or any of
its Subsidiaries; and
 
(iv)           the consummation of the Merger will not result in the loss or
impairment of any rights of the Company or any of its Subsidiaries to own or use
any of the Company Intellectual Property or obligate the Company or any of its
Subsidiaries to pay any royalties or other amounts to any third party in excess
of the amounts that would have been payable by them absent the consummation of
the Merger.
 
SECTION 2.15          Insurance.Section 2.15 of the Company Disclosure Letter
lists and briefly describes each insurance policy maintained by the Company and
any of its Subsidiaries.  The Company previously furnished Parent with a claims
history as of June 12, 2007 for the past five (5) years plus any insurance year
that has not been closed in accordance with the terms of the relevant insurance
policy.  All premiums due and payable to date under all such policies and
Contracts have been paid and the Company and its Subsidiaries are otherwise in
compliance in all respects with the terms of such policies and Contracts, except
for such failures to be in compliance which could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect.  Neither the Company nor any of its Subsidiaries has received notice of
cancellation or non-renewal of any marine insurance policy.
 
SECTION 2.16          Vessels.
 
(a)           Section 2.16(a) of the Company Disclosure Letter lists all vessels
owned, chartered or operated by the Company or any of its Subsidiaries (the
"Vessels"), setting forth, for each Vessel, its (i) name, (ii) owner, (iii) flag
state of registration (including any bareboat registration), (iv) charterer, (v)
IMO number and call sign, (vi) classification society, (vii) year of
construction, (viii) date of last special survey, and (ix) date of last
drydocking.  Except as set forth in Section 2.16(a) of the Company Disclosure
Letter, no Vessel is subject to any demise charter or contract of affreightment.
 
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(b)           Except as set forth on Section 2.16(b) of the Company Disclosure
Letter, each of the Vessels: (i) is free and clear of all secured liens except
as described in the Filed Company SEC Documents; (ii) is insured in accordance
with the policies listed on Section 2.15 of the Company Disclosure Letter; (iii)
is in material compliance, and each Person providing management services for
such Vessel is in material compliance, with the requirements of the ISM Code,
the ISPS Code and the MTSA, including (but not limited to) the maintenance and
renewal of valid certificates pursuant thereto; (iv) is in material compliance
with all laws as are applicable to vessels (A) registered under the law of the
flag state in which such Vessel is registered and (B) trading to any
jurisdiction to which such Vessel may trade from time to time; (v) is in the
sole and absolute ownership of the relevant owner described in Section 2.16(a)
of the Company Disclosure Letter, and duly documented in the name of such owner
under the laws of the flag state in which such Vessel is registered; (vi) except
with respect to Kew Bridge, maintains the highest classification and rating for
vessels of the same age and type with her classification society; (vii) is in a
good and safe condition and state of repair; and (viii) is seaworthy for hull
and machinery insurance warranty purposes in all material respects for its
intended service.  Except with respect to Kew Bridge, class certificates and
national and international certificates respecting the Vessels are valid and
their class is maintained.
 
SECTION 2.17          Leases of Ships and Ship Charters.  The Filed Company SEC
Documents contain a correct and complete list of all ship charters (including
capital leases) to which the Company or any Subsidiary is a party (as owner,
operator, charterer, lessee or lessor, as the case may be) as of the date hereof
(collectively, the "Charters").  Each such Charter is, with respect to the
Company and its Subsidiaries, in full force and effect; all rents, payments or
charter hire due to date on each such Charter have been paid in the ordinary
course consistent with past practice (except where disputed in good faith); in
each case, the charterer has been in possession since the commencement of the
original term of such Charter and is not in default thereunder and no waiver,
indulgence or postponement of the charterer's obligations thereunder has been
granted by the lessor, owner or operator.  Neither the Company nor any
Subsidiary has breached any material terms or conditions under any such Charter
in any material respect, and, to the Knowledge of the Company, all material
covenants to be performed by any other party under any such Charter have been
performed in all material respects.  None of the Charters will be violated,
breached or terminated by reason of the consummation of the Merger.
 
SECTION 2.18         Certain Business Relationships with Affiliates.  Except as
disclosed in the Filed Company SEC Documents, from and after January 1, 2006 and
prior to the date hereof, no event has occurred, and there has been no
transaction, or series of similar transactions, agreements, arrangements or
understandings to which the Company or any of its Subsidiaries is to be a party,
that would be required to be reported pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
 
SECTION 2.19          Opinion of Financial Advisor.  The Transaction Committee
has received the opinion of DnB NOR Markets, Inc. ("DnB"), dated the date of
this Agreement, to the effect that, as of such date, and subject to the various
assumptions and qualifications set forth therein, the Merger Consideration is
fair to the holders of Company Common Stock from a financial point of view.
 
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SECTION 2.20          Brokers and Other Advisors.  Except for DnB, the fees and
expenses of which will be paid by the Company, no broker, investment banker,
financial advisor, agent or other Person is entitled to any broker's, finder's,
financial advisor's, agent's or other similar fee or commission, or the
reimbursement of expenses, in connection with this Agreement and the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company or any of its Subsidiaries.  The Company has provided a true and
correct copy of the engagement letter, dated July 12, 2007, with DnB providing
for the payment of fees or commissions and such agreement has not been amended
or superseded (the "Engagement Letter").
 
SECTION 2.21          Management Consideration.  Except as set forth in
Section 2.21 of the Company Disclosure Letter, no employee of the Company shall
receive any amount of  consideration, bonus or other payment in excess of
$10,000 from any Person in connection with the transactions contemplated hereby.
 
SECTION 2.22          No Other Representations or Warranties.  Except for the
representations and warranties made by the Company in this Article II, neither
the Company nor any other Person makes any representation or warranty with
respect to the Company or its Subsidiaries or their respective businesses,
operations, assets, liabilities, condition (financial or otherwise) or
prospects, notwithstanding the delivery or disclosure to Parent or any of its
Affiliates or Representatives of any documentation, forecasts or other
information with respect to any one or more of the foregoing.
 
ARTICLE III

 
Representations and Warranties of Parent and Merger Sub
 
Parent and Merger Sub jointly and severally represent and warrant to the Company
that:
 
SECTION 3.1            Organization and Standing.  Parent is an exempted limited
company validly existing and in good standing under the Laws of Bermuda and
Merger Sub is a corporation validly existing and in good standing under the Laws
of the Republic of Liberia.  Parent is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned
or leased or held under license by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
impair in any material respect the ability of Parent to perform its obligations
hereunder or prevent or materially delay consummation of the Merger.
 
SECTION 3.2            Authority; Noncontravention.
 
(a)           Each of Parent and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement, to perform their respective
obligations hereunder and to consummate the transactions contemplated
hereby.  The execution, delivery and performance by Parent and Merger Sub of
this Agreement, and the consummation by Parent and Merger Sub of the
transactions contemplated hereby, have been duly authorized and approved by
their respective Boards of Directors and adopted by Parent as the sole
shareholder of Merger Sub, and no other corporate action on the part of Parent
and Merger Sub is necessary to authorize the execution, delivery and performance
by Parent and Merger Sub of this Agreement and the consummation by them of the
transactions contemplated hereby.  This Agreement has been duly executed and
delivered by Parent and Merger Sub and, assuming due authorization, execution
and delivery hereof by the Company, constitutes a legal, valid and binding
obligation of each of Parent and Merger Sub, enforceable against each of them in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
 
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(b)           Neither the execution and delivery of this Agreement by Parent and
Merger Sub, nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby, nor compliance by Parent or Merger Sub with any of the
terms or provisions hereof, will (i) conflict with or violate any provision of
the articles of incorporation or bylaws (or other comparable organizational
documents) of Parent or Merger Sub or (ii) assuming that the authorizations,
consents and approvals referred to in Section 3.3 are obtained and the filings
referred to in Section 3.3 are made, (x) violate any Law, judgment, writ or
injunction of any Governmental Authority applicable to Parent or any of its
Subsidiaries, or (y) violate or constitute a default under any of the terms,
conditions or provisions of any Contract to which Parent, Merger Sub or any of
their respective Subsidiaries is a party, or by which any of their respective
properties or assets is bound, except, in the case of clause (ii), for such
violations or defaults as would not, individually or in the aggregate,
reasonably be expected to impair the ability of Parent or Merger Sub to perform
its obligations hereunder or prevent or materially delay consummation of the
Merger.
 
(c)           No vote of the holders of any class or series of Parent's capital
stock or other securities is necessary for the consummation by Parent of the
Merger.
 
SECTION 3.3            Governmental Approvals.  Except for (i) the filing of the
Articles of Merger with the Minister of Foreign Affairs pursuant to the BCAL,
and (ii) filings required under, and compliance with other applicable
requirements of, Foreign Antitrust Laws, no consents or approvals of, or
filings, declarations or registrations with, any Governmental Authority are
necessary for the execution, delivery and performance of this Agreement by
Parent and Merger Sub or the consummation by Parent and Merger Sub of the
transactions contemplated hereby, other than such other consents, approvals,
filings, declarations or registrations that, if not obtained, made or given,
would not, individually or in the aggregate, reasonably be expected to impair in
any material respect the ability of Parent or Merger Sub to perform its
obligations hereunder or prevent or materially delay consummation of the Merger.
 
SECTION 3.4            Information Supplied.  The information supplied by Parent
for inclusion or incorporation by reference in the Proxy Statement will not, on
the date it is first mailed to the holders of Company Common Stock, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading, and
will not, at the time of the Company Shareholders Meeting, omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the Company Shareholders Meeting which shall have become false
or misleading in any material respect.

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SECTION 3.5            Ownership and Operations of Merger Sub.  Parent owns
beneficially and of record all of the outstanding capital stock of Merger
Sub.  Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
 
SECTION 3.6            Capital Resources.  Parent and Merger Sub collectively
have, and will have at the Effective Time, sufficient cash resources available
to pay the aggregate Merger Consideration and all fees and expenses payable by
them in connection with this Agreement and the transactions contemplated hereby.
 
SECTION 3.7            Legal Proceedings.  As of the date hereof, there is no
pending or, to the Knowledge of Parent, threatened Action or Proceeding, against
or relating to Parent or any of its Subsidiaries, nor is there any injunction,
order, judgment, ruling or decree imposed upon Parent or any of its
Subsidiaries, in each case, by or before any Governmental Authority, that would,
individually or in the aggregate, reasonably be expected to impair in any
material respect the ability of Parent to perform its obligations hereunder or
prevent or materially delay consummation of the Merger.
 
SECTION 3.8            Brokers and Other Advisors.  Except for HSBC Securities
(USA) Inc. and Poten Capital Services, LLC, the fees and expenses of which will
be paid by Parent, no broker, investment banker, financial advisor, agent or
other Person is entitled to any broker's, finder's, financial advisor's, agent's
or other similar fee or commission, or the reimbursement of expenses, in
connection with this Agreement and the transactions contemplated hereby based
upon arrangements made by or on behalf of Parent or any of its Subsidiaries.
 
SECTION 3.9            Ownership of Company Common Stock.  Prior to the
execution of this Agreement, neither Parent nor Merger Sub nor any of their
Affiliates owns (directly or indirectly, beneficially or of record) any Shares
and neither Parent nor Merger Sub nor any of their Affiliates holds any rights
to acquire any Shares except pursuant to this Agreement.
 
SECTION 3.10          No Reliance.  Notwithstanding anything contained in this
Agreement to the contrary, each of Parent and Merger Sub acknowledges and agrees
that (a) neither the Company nor any Person on behalf of the Company is making
any representations or warranties whatsoever, express or implied, beyond those
expressly made by the Company in Article II, and (b) none of Parent or Merger
Sub has been induced by, or relied upon, any representations, warranties or
statements (written or oral), whether express or implied, made by any Person,
that are not expressly set forth in Article II of this Agreement.  Without
limiting the generality of the foregoing, each of Parent and Merger Sub
acknowledges that no representations or warranties are made with respect to any
projections, forecasts, estimates, budgets or information as to prospects with
respect to the Company and its Subsidiaries that may have been made available to
Parent, Merger Sub or any of their respective representatives.
 
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ARTICLE IV
 
Additional Covenants and Agreements
 
SECTION 4.1            Conduct of Business.
 
(a)           Except as contemplated or permitted by this Agreement or as
required by applicable Law or as contemplated by Section 4.1(a) of the Company
Disclosure Letter, during the period from the date of this Agreement until the
Effective Time, unless Parent otherwise consents (which consent shall not be
unreasonably withheld, conditioned or delayed) in writing, the Company shall,
and shall cause each of its Subsidiaries to, (w) conduct its business in the
ordinary course and in conformity with past practice, (x) use its commercially
reasonable efforts to preserve substantially intact its capital structure and
business organization, its customer and supplier relationships and its goodwill,
and retain the services of its present officers and key employees, (y) comply in
all material respects with all applicable Laws and the requirements of all
Company Contracts, and (z) keep in full force and effect all material insurance
policies maintained by the Company and its Subsidiaries, other than changes to
such policies made in the ordinary course of business, and, without limiting the
generality of the foregoing, the Company shall not, and shall not permit any of
its Subsidiaries to, unless Parent otherwise consents (which consent shall not
be unreasonably withheld, conditioned or delayed in the case of clauses (ii),
(iii), (iv), (vi), (vii), (viii), (xiii), (xv) and (xvi) below, as well as
clause (xviii) below to the extent it relates to any of the foregoing clauses):
 
(i)           (A) issue, sell, grant, dispose of, pledge or otherwise encumber
any shares of its capital stock, or any securities or rights convertible into,
exchangeable or exercisable for, or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options calls, commitments
or any other agreements of any character to purchase any shares of its capital
stock, or any securities or rights convertible into, exchangeable or exercisable
for, or evidencing the right to subscribe for, any shares of its capital stock;
(B) redeem, purchase or otherwise acquire any of its outstanding shares of
capital stock, or any rights, warrants, options calls, commitments or any other
agreements of any character to acquire any shares of its capital stock, except
pursuant to written commitments in effect as of the date hereof; (C) declare,
set aside for payment or pay any dividend on, or make any other distribution in
respect of, any shares of its capital stock, other than a quarterly cash
dividend of no more than $0.0625 per share; (D) split, combine, subdivide or
reclassify any shares of its capital stock or (E) enter into any agreement with
respect to the voting of its capital stock;
 
(ii)          (A) incur any new indebtedness for borrowed money or guarantee any
such indebtedness (other than with respect to mechanics maritime liens which are
consistent with past practice), or issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of the Company or
any of its Subsidiaries other than borrowings in amounts not in excess of
$1,000,000 in the aggregate outstanding at any time, except for borrowings
permitted under the terms of any existing credit facility as in effect on the
date hereof, (B) make any loans, advances or capital contributions to, or
investments in, any Person other than the Company or any of its Subsidiaries in
excess of $1,000,000 in the aggregate or (C) repurchase or prepay any
indebtedness for borrowed money in excess of $1,000,000 in the aggregate, except
as required by the terms of such indebtedness or for payments of amounts
outstanding under the Company's existing credit facility in the ordinary course
of business;
 
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(iii)        sell, transfer, encumber, lease, mortgage, or otherwise dispose of
or subject to any lien any Vessel owned by the Company or any of its
Subsidiaries, or any of its properties or assets that are material to the
Company and its Subsidiaries taken as a whole, except (A) sales, leases, rentals
and licenses in the ordinary course of business, (B) pursuant to Contracts in
force at the date of this Agreement or entered into after the date of this
Agreement to the extent permitted by the terms of this Agreement,
(C) dispositions of obsolete or worthless assets, or (D) transfers among the
Company and its Subsidiaries;
 
(iv)         make any non-vessel related capital expenditures in excess of
$50,000 in the aggregate for the Company and its Subsidiaries taken as a whole;
 
(v)         directly or indirectly make any acquisition (including by merger,
consolidation or acquisition of stock or any other manner) of the capital stock
of, or division, business or equity interest of, or (except in the ordinary
course of business consistent with past practice) a material portion of the
assets of any other Person;
 
(vi)         increase in any material respect the compensation of any of its
directors, officers, consultants or employees or enter into, amend or terminate
any employment, consulting, retention, change in control, bonus or incentive
compensation arrangement with any director, officer, consultant or employee of
the Company or any of its Subsidiaries, it being understood by the parties that
the Company is currently seeking to hire a chief financial officer, other than
(A) as required pursuant to applicable Law or the terms of Contracts in effect
on the date of this Agreement or entered into after the date of this Agreement
to the extent permitted by the terms of this Agreement and (B) increases in
salaries, wages and benefits of employees (other than officers) made in the
ordinary course of business and in a manner consistent with past practice;
 
(vii)       other than in the ordinary course of business or pursuant to any
Contract or any Company Plan in existence on the date hereof or entered into
after the date of this Agreement to the extent permitted by the terms of this
Agreement, (A) pay to any current or former director, officer, employee or
consultant of the Company or any of the Company's Subsidiaries any benefit not
provided for under any Contract or Company Plan (other than the payment of cash
compensation in the ordinary course of business), (B) take any action to fund or
in any other way secure the payment of compensation or benefits under any
Contract or Company Plan, (C) exercise any discretion to accelerate the vesting
or payment of any compensation or benefit under any Contract or Company Plan
other than as required by the terms of this Agreement or (D) adopt any new
employee benefit plan or arrangement or amend, modify or terminate any existing
Company Plan to increase the benefits thereunder, in each case for the benefit
of any current or former director, officer, employee or consultant of the
Company or any Subsidiary of the Company, other than as required by applicable
Tax qualification requirements;
 
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(viii)      make, change or rescind any material election concerning Taxes;
settle or compromise any material Tax liability, claim, audit, Action or
Proceeding; file any material amended Tax Return; enter into any closing
agreement with a Governmental Authority relating to material Taxes; other than
as required by applicable Law, change any of its Tax accounting methods or
annual periods; surrender any material claim for a refund of Taxes; or waive or
extend the statute of limitations in respect of any material Tax (other than
pursuant to extensions of time to file Tax Returns in the ordinary course of
business);
 
(ix)         make any changes in financial accounting methods, principles or
practices (or change an annual accounting period), except insofar as may be
required by a change in GAAP or applicable Law;
 
(x)          (A) amend the Company Charter Documents, (B) enter into, terminate
or amend any Contract other than in the ordinary course of business, (C) enter
into or extend the term or scope of any Contract that purports to restrict the
Company, or any existing or future Subsidiary or Affiliate of the Company, from
engaging in any line of business or in any geographic area, (D) amend or modify
the Engagement Letter, (E) enter into any Contract that would be breached by, or
require the consent of any third party in order to continue in full force
following, consummation of the Merger, or (F) except to the extent permitted by
Section 4.2, release any Person from, or modify or waive any provision of, any
confidentiality, standstill or similar agreement;
 
(xi)         except to the extent permitted by Section 4.2, adopt a plan or
agreement of complete or partial liquidation or dissolution, restructuring,
recapitalization, merger, consolidation or other reorganization (other than
transactions exclusively between wholly-owned Subsidiaries of the Company);
 
(xii)        adopt or enter into any collective bargaining agreement or other
labor union Contract applicable to the employees of the Company or any
Subsidiary of the Company;
 
(xiii)       fail to use commercially reasonable efforts to maintain existing
insurance policies or comparable replacement policies to the extent available
for a reasonable cost;
 
(xiv)       enter into any new line of business that is material to the Company
and the Subsidiaries of the Company, taken as a whole;
 
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(xv)        make any investment (by contribution to capital, property transfers,
purchase of securities or otherwise) in, or loan or advance (other than travel
and similar advances to its employees in the ordinary course of business
consistent with past practice) to, any Person;
 
(xvi)      other than in the ordinary course of business, settle or compromise
any litigation, proceeding or investigation material to the Company and its
Subsidiaries taken as a whole;
 
(xvii)     acquire any real estate; or
 
(xviii)    agree to take any of the foregoing actions.
 
(b)           During the period from the date of this Agreement until the
Effective Time, Parent shall not, and shall not permit any of its Subsidiaries
to, take, or agree or commit to take, any action that could reasonably be
expected to (i) impose any material delay in the obtaining of any
authorizations, consents, orders, declarations or approvals of any Governmental
Authority necessary to consummate the Merger or the expiration or termination of
any applicable waiting period, (ii) result in any Governmental Authority
entering an order prohibiting the consummation of the Merger or (iii) otherwise
prevent or materially delay the consummation of the Merger.  Without limiting
the generality of the foregoing, Parent agrees that, during the period from the
date of this Agreement until the Effective Time, Parent shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any Person or portion thereof, or otherwise
acquire or agree to acquire any assets or rights, if the entering into of a
definitive agreement relating to or the consummation of such acquisition, merger
or consolidation would reasonably be expected to have any of the effects
described in clauses (i) through (iii) above.
 
SECTION 4.2    Other Offers; Etc.
 
(a)           On September 2, 2007, at 11:59 P.M. (the "No-Shop Period Start
Date"), the Company shall and shall cause each of its Subsidiaries, and shall
use its reasonable best efforts to cause its and its Subsidiaries' respective
directors, officers, employees, legal counsel, investment banking and financial
advisors, independent accountants and any other agents and representatives
(collectively, "Representatives") to, cease any negotiations that may be ongoing
immediately prior to the No-Shop Period Start Date with any Person with respect
to a Takeover Proposal, other than any negotiations with an Excluded Party, and
request, not later than five (5) days following the No-Shop Period Start Date,
the prompt return or written acknowledgement of destruction of all confidential
information previously furnished to such parties or their Representatives other
than an Excluded Party.  During the period from the No-Shop Period Start Date
until the Effective Time, or such earlier date as this Agreement may be
terminated in accordance with its terms, the Company and its Subsidiaries shall
not, and the Company shall use its reasonable best efforts to cause its and its
Subsidiaries' Representatives not to, (i) solicit, initiate or knowingly
encourage (including by way of providing information or access to its
properties, books, records or personnel) the submission of any inquiries,
proposals, or offers or any other efforts or attempts that constitute, or could
reasonably be expected to lead to, any Takeover Proposal, or (ii) except to
inform Persons of the existence of the provisions contained in this Section 4.2,
participate in or otherwise cooperate with or assist in any discussions or
negotiations with, or furnish any non-public information to, any Person
regarding any inquiries, proposals, or offers or any other efforts or attempts
that constitute, or may reasonably be expected to lead to a Takeover Proposal,
or (iii) grant any release or waiver under any standstill or similar agreement
relating to the Company or any of its Subsidiaries; provided that the foregoing
restrictions shall not (x) limit in any respect the ability of the Company and
its Representatives to take any of the actions described in clause (i) or (ii)
above prior to the commencement of the No-Shop Period Start Date (provided that
the Company enters into an Acceptable Confidentiality Agreement with such Person
prior to providing any non-public information and promptly provides to Parent
any non-public information concerning the Company or its Subsidiaries that is
provided to any such Person which was not previously provided to Parent) or
(y) be applicable to any Excluded Party; and provided, further, that (1) prior
to the commencement of the No-Shop Period Start Date, if requested to do so by
any Person, the Company may waive the provisions of any "standstill" agreement
between the Company and such Person to the extent necessary to permit such
Person to submit a Takeover Proposal and (2) to the extent reasonably required
to evaluate a Takeover Proposal that includes the issuance of securities by the
Person making such Takeover Proposal, the Company may enter into a customary
confidentiality agreement in order to obtain non-public information with respect
to such Person.  For purposes of this Agreement, the term "Excluded Party" means
any Person from whom the Company receives a Takeover Proposal prior to the
No-Shop Period Start Date who, as determined in good faith by, and in the
reasonable judgment of, the Company Board as of the No-Shop Period Start Date,
satisfies the requirements of sub-clauses (A) and (B) of clause (z) of
Section 4.2(b) (disregarding the fact, for this purpose, that such Takeover
Proposal may not have been an unsolicited Takeover Proposal); provided that any
Excluded Party shall cease to be an Excluded Party for all purposes under this
Agreement at such time as the Takeover Proposal made by such Person fails, in
the reasonable judgment of the Company Board, to satisfy the requirements of
sub-clauses (A) and (B) of clause (z) of Section 4.2(b).
 
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(b)           Notwithstanding Section 4.2(a), commencing on the No-Shop Period
Start Date and at any time prior to obtaining the Company Shareholder Approval,
in addition to continuing discussions with any Excluded Party regarding such
Excluded Party's Takeover Proposal, (x) the Company and its Representatives may
have discussions with any Person that has made an unsolicited Takeover Proposal
in order to clarify and understand the terms and conditions of such proposal,
(y) if requested to do so by any Person, the Company may waive the provisions of
any "standstill" agreement between the Company and such Person to the extent
necessary to permit such Person to submit an unsolicited Takeover Proposal and
(z) if the Company Board (A) receives an unsolicited Takeover Proposal that it
determines in good faith (after consultation with outside legal counsel and a
financial advisor of recognized reputation (which shall include DnB))
constitutes or would reasonably be expected to lead to a Superior Proposal and
(B) determines in good faith (after consultation with outside legal counsel)
that the taking of any of the following actions is advisable in order for the
Company Board to comply with its fiduciary duties to the holders of Company
Common Stock under applicable Law, the Company may (I) furnish information with
respect to the Company and its Subsidiaries to the Person making such Takeover
Proposal (provided that the Company first enters into an Acceptable
Confidentiality Agreement with such Person and promptly provides to Parent any
non-public information concerning the Company or its Subsidiaries that is
provided to any Person given such access which was not previously provided to
Parent), (II) participate in discussions and negotiations with such Person
regarding such Takeover Proposal and (III) to the extent reasonably required to
evaluate a Takeover Proposal that includes the issuance of securities by the
Person making such Takeover Proposal, enter into a customary confidentiality
agreement in order to obtain non-public information with respect to such
Person.  The Company shall promptly (and in any event within one (1) business
day) advise Parent of any Takeover Proposal, any inquiry or indication of
interest that could reasonably be expected to lead to a Takeover Proposal or any
request for non-public information relating to the Company or any of its
Subsidiaries with respect to any Takeover Proposal that is made or submitted by
any Person during the period commencing on the No-Shop Period Start Date
(including from an Excluded Party the Company remains in discussions with
regarding a Takeover Proposal after the No-Shop Period Start Date), and at any
time after the No-Shop Period Start Date and prior to obtaining Company
Shareholder Approval, the identity of the Person making any such Takeover
Proposal, inquiry, indication of interest or request and shall provide Parent
with a copy (if in writing) or summary of the terms and conditions (if not in
writing) of any such Takeover Proposal, inquiry, indication of interest or
request (which shall include copies of any written materials received from or on
behalf of such Person relating to such Takeover Proposal, inquiry, indication of
interest or request).  The Company shall keep Parent fully informed of the
status of any Takeover Proposal, inquiry, indication of interest or request,
including promptly advising Parent of any change to the terms of any Takeover
Proposal, after the No-Shop Period Start Date.
 
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(c)           Except as expressly permitted by this Section 4.2(c), (i) the
Company Board shall not (A) withdraw or modify, in a manner adverse to Parent,
the Company Recommendation or (B) publicly approve or recommend to the holders
of Company Common Stock a Takeover Proposal (any action described in this
clause (i) being referred to as a "Company Adverse Recommendation Change"), and
(ii) neither the Company nor any of its Subsidiaries shall enter into any letter
of intent, merger, acquisition or similar agreement with respect to any Takeover
Proposal (each, a "Company Acquisition Agreement"), other than an Acceptable
Confidentiality Agreement.  Notwithstanding the foregoing, prior to the Company
Shareholder Approval, (x) other than in connection with a Takeover Proposal, the
Company Board may withdraw or modify the Company Recommendation if it determines
in good faith (after consultation with outside legal counsel) that such action
is advisable in order for the Company Board to comply with its fiduciary duties
to the holders of Company Common Stock under applicable Law, and (y) subject to
Section 4.2(d), if the Company Board (A) determines in good faith (after
consultation with outside legal counsel and a financial advisor of recognized
reputation (which shall include DnB)) that any Takeover Proposal submitted by an
Excluded Party prior to the No-Shop Period Start Date or any unsolicited
Takeover Proposal received on or after the No-Shop Period Start Date, in either
case, constitutes a Superior Proposal, and (B) determines in good faith (after
consultation with outside legal counsel) that the taking of any of the following
actions is advisable in order for the Company Board to comply with its fiduciary
duties to the holders of Company Common Stock under applicable Law, the Company
Board may (I) make a Company Adverse Recommendation Change and/or (II) cause the
Company to enter into a Company Acquisition Agreement with respect to such
Superior Proposal, but only if the Company shall have concurrently with entering
into such Company Acquisition Agreement terminated this Agreement pursuant to
Section 6.1(c)(i).
 
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(d)           If the Company Board determines to effect a Company Adverse
Recommendation Change as provided in Section 4.2(c)(y)(I) or to authorize the
Company to enter into a Company Acquisition Agreement as provided in
Section 4.2(c)(y)(II), such Company Adverse Recommendation Change or Company
Acquisition Agreement (as applicable) may only become effective after the end of
the fifth (5th) business day (the "Notice Period") following Parent's receipt of
written notice from the Company (an "Adverse Recommendation Notice") advising
Parent that the Company Board intends to effect such Company Adverse
Recommendation Change or to authorize the Company to enter into such Company
Acquisition Agreement, which notice shall contain a copy of the Superior
Proposal to which such Company Adverse Recommendation Change or Company
Acquisition Agreement relates; provided that the Company shall negotiate in good
faith with Parent, to the extent Parent wishes to negotiate, during the Notice
Period to enable Parent to make proposed changes to the terms of this Agreement;
provided, further, that any material amendment to the terms of such Superior
Proposal after the initial Adverse Recommendation Notice shall require a new
Adverse Recommendation Notice and restart the five (5) business day period
referred to above.  Notwithstanding the foregoing, the Company Board shall not
be entitled, in response to a Superior Proposal, to effect a Company Adverse
Recommendation Change or permit the Company to enter into a Company Acquisition
Agreement if, within the Notice Period, Parent shall have made an offer that the
Company Board determines in its good faith judgment (having considered the
advice of its financial advisor and outside legal counsel) is at least as
favorable to the Company's shareholders as such Superior Proposal (it being
agreed in each case that the Company Board shall convene a meeting to consider
any such offer by Parent reasonably promptly following the receipt thereof).
 
(e)           For purposes of this Agreement:
 
"Acceptable Confidentiality Agreement" means a confidentiality agreement that
contains provisions that are no less restrictive with respect to the Company's
counterparty than those contained in the Confidentiality Agreement.  Following
the No-Shop Period Start Date, the Company shall provide Parent with a correct
and complete copy of any Acceptable Confidentiality Agreement within one (1)
business day following the execution thereof.
 
"Takeover Proposal" means a bona fide written proposal or offer from any Person
(other than Parent and its Subsidiaries) after the date, and not in breach, of
this Agreement relating to any (i) direct or indirect acquisition of all or
substantially all of the assets of the Company and its Subsidiaries, (ii) direct
or indirect acquisition of all or substantially all of the outstanding Company
Common Stock, (iii) tender offer or exchange offer that if consummated would
result in any Person beneficially owning all or substantially all of the
outstanding Company Common Stock or (iv) merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company.
 
"Superior Proposal" means a Takeover Proposal that the Company Board determines
in good faith, after consultation with its legal and financial advisors, and
consideration of all terms and conditions of such offer or proposal (including
the conditionality and the timing and likelihood of consummation), to be more
favorable to the holders of Company Common Stock than the Merger, after giving
effect to any modifications proposed to be made to this Agreement or any other
offer by Parent after Parent's receipt of an Adverse Recommendation Notice.
 
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(f)           Nothing in this Section 4.2 shall prohibit the Company Board from
(i) taking and disclosing to the Company's shareholders a position contemplated
by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under
the Exchange Act, or other applicable Law, if the Company Board determines,
after consultation with outside legal counsel, that failure to so disclose such
position could constitute a violation of applicable Law, or (ii) filing a copy
of this Agreement and any amendments hereto, together with a description of its
terms, on a Form 8-K under the Exchange Act.  In addition, it is understood and
agreed that, for purposes of this Section 4.2, a factually accurate public
statement by the Company that describes the Company's receipt of a Takeover
Proposal and the operation of this Agreement with respect thereto and contains a
"stop-look-and-listen communication" shall not be deemed a Company Adverse
Recommendation Change.
 
(g)           In the event that, in accordance with the provisions of this
Section 4.2 and Section 6.1(c)(i), the Company terminates this Agreementand
enters into a definitive Company Acquisition Agreement relating to a Superior
Proposal (or any subsequent definitive Company Acquisition Agreement relating to
a Superior Proposal entered into pursuant to procedures contained in any Company
Acquisition Agreement similar to those contained in this Section 4.2) that (x)
provides for a purchase price and/or merger consideration per Share payable
solely in cash of at least $15.00 and (y) is not subject to any financing
condition or other conditions to consummation of such Superior Proposal which
are less favorable in the aggregate to the Company's shareholders than the
conditions to Parent's obligation to effect the Merger contained in this
Agreement, Parent will, and will cause its Affiliates to, for a period of
ninety (90) days after such termination, (I) in the event that such Superior
Proposal includes a tender offer for the Shares, tender any Shares owned by them
into such tender offer prior to the expiration of such tender offer, or (II) in
the event that such Superior Proposal includes a merger or similar transaction
that is subject to approval by the Company's shareholders, vote (or cause to be
voted) any Shares owned by them in favor of such merger or similar transaction
(together with any related proposals) at any meeting of the Company's
shareholders held for such purpose and, at the request of the Company, deliver
an irrevocable proxy to the Company with respect to any such vote.
 
SECTION 4.3    Reasonable Best Efforts.
 
(a)           Subject to the terms and conditions of this Agreement, each of the
parties hereto shall cooperate with the other parties and use (and shall cause
their respective Subsidiaries to use) their respective reasonable best efforts,
to the fullest extent permitted by applicable Law, to promptly (i) take, or
cause to be taken, all actions, and do, or cause to be done, all things,
necessary, proper or advisable to cause the conditions to Closing to be
satisfied as promptly as practicable and to consummate and make effective, in
the most expeditious manner practicable, the Merger, including preparing and
filing promptly and fully all documentation to effect all necessary filings,
notices, petitions, statements, registrations, submissions of information,
applications and other documents, and (ii) obtain all approvals, consents,
registrations, permits, authorizations and other confirmations from any
Governmental Authority or third party necessary, proper or advisable to
consummate the Merger.
 
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(b)           Each of the parties hereto shall use its reasonable best efforts
to (i) cooperate in all respects with each other in connection with any filing
or submission with a Governmental Authority in connection with the Merger and in
connection with any investigation or other inquiry by or before a Governmental
Authority relating to the Merger, including any proceeding initiated by a
private party, and (ii) keep the other party informed in all material respects
and on a reasonably timely basis of any material communication received by such
party from, or given by such party to, any Governmental Authority and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding the Merger.  Subject to applicable Laws
relating to the exchange of information, each of the parties hereto shall have
the right to review in advance, and to the extent practicable each will consult
the other on, all the information relating to the other parties and their
respective Subsidiaries, as the case may be, that appears in any filing made
with, or written materials submitted to, any third party and/or any Governmental
Authority in connection with the Merger.
 
(c)           In furtherance and not in limitation of the covenants of the
parties contained in this Section 4.3, each of the parties hereto shall use its
reasonable best efforts to resolve such objections, if any, as may be asserted
by a Governmental Authority or other Person with respect to the Merger.  Without
limiting any other provision hereof, Parent and the Company shall each use its
reasonable best efforts to (i) avoid the entry of, or to have vacated or
terminated, any decree, order or judgment that would restrain, prevent or delay
the consummation of the Merger on or before the Outside Date, including by
defending through litigation on the merits any claim asserted in any court by
any Person, and (ii) avoid or eliminate each and every impediment under any
Foreign Antitrust Law that may be asserted by any Governmental Authority with
respect to the Merger so as to enable the consummation of the Merger to occur as
soon as reasonably possible (and in any event no later than the Outside Date)
including, in the case of Parent, by taking all such actions, including (x)
proposing, negotiating, committing to and effecting, by consent decree, hold
separate order, or otherwise, the sale, divestiture or disposition of such
assets or businesses of Parent or any of its Subsidiaries (which, for the
avoidance of doubt, shall not include the Company or its Subsidiaries) and (y)
otherwise taking or committing to take actions that limit Parent's or its
Subsidiaries' (which, for the avoidance of doubt, shall not include the Company
or its Subsidiaries) freedom of action with respect to, or its ability to
retain, one or more of its, or its Subsidiaries', businesses, product lines or
assets, in each case, as may be required in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order or other
order in any Action or Proceeding, which would otherwise have the effect of
preventing or materially delaying the consummation of the Merger.
 
SECTION 4.4    Proxy Statement.
 
(a)           The Company shall use all reasonable best efforts to prepare and
distribute to the shareholders of the Company a proxy statement relating to the
Company Shareholders Meeting (together with any amendments thereof or
supplements thereto, the "Proxy Statement"), it being the parties' intention
that such distribution will occur within twelve (12) days after the date
hereof.  The Company shall furnish Parent and its Representatives with drafts of
the Proxy Statement in advance of its release to the holders of Company Common
Stock as soon as reasonably practicable and shall consider in good faith
comments made by Parent and its Representatives.  Parent shall cooperate with
the Company in connection with the preparation of the Proxy Statement, and shall
furnish all information concerning Parent and Merger Sub as the Company may
reasonably request in connection with the preparation of the Proxy
Statement.  Subject to Section 4.2(c), the Proxy Statement shall include text of
this Agreement and the Company Recommendation.
 

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(b)           The Company shall ensure that none of the information included or
incorporated by reference in the Proxy Statement (other than information
relating to Parent included in the Proxy Statement that was provided by Parent)
will, at the time the Proxy Statement is mailed to the shareholders of the
Company or at the time of the Company Shareholders Meeting (or any adjournment
or postponement thereof), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. 
 
(c)           Parent shall ensure that none of the information relating to
Parent that is provided to the Company in writing by Parent or any Person
authorized to act on its behalf for inclusion in the Proxy Statement and that is
included in the Proxy Statement will, at the time the Proxy Statement is mailed
to the Company's shareholders or at the time of the Company Shareholders Meeting
(or any adjournment or postponement thereof), contain any untrue statement of a
material fact or omit to state any material fact required to be included in such
information or necessary in order to make statements therein, in the light of
the circumstances under which they are made, not misleading.
 
SECTION 4.5    Company Shareholders Meeting.  The Company shall (i) duly
establish a record date for, call, give notice of, convene and hold a special
meeting of the Company's shareholders (the "Company Shareholders Meeting") as
promptly as reasonably practicable following the date of this Agreement (but in
no event shall the Company Shareholders Meeting take place prior to the No-Shop
Period Start Date or later than the later of (x) one (1) business day after the
No-Shop Period Start Date and (y) the 15-day notice period required under the
Company's by-laws and the BCAL) for the purpose of voting upon the adoption of
this Agreement and approval of the Merger (it being the parties' intention that
the notice of the Company Shareholders Meeting will be distributed to the
holders of Company Common Stock within the time frame described in Section
4.4(a)), (ii) in connection therewith, mail the Proxy Statement to the holders
of Company Common Stock in advance of such meeting, and (iii) hold the Company
Shareholders Meeting.  Subject to Section 4.2, the Company shall use
commercially reasonable efforts to (i) solicit from the holders of Company
Common Stock proxies in favor of the adoption of this Agreement and approval of
the Merger and (ii) take all other actions necessary or advisable to secure the
vote or consent of the holders of Company Common Stock required by applicable
Law to obtain such approval; provided that the Company may extend the date of
the Company Shareholders Meeting to the extent (A) necessary in order to obtain
a quorum of its shareholders or (B) the Company reasonably determines that such
delay is required by applicable Law.  The Company shall keep Parent updated with
respect to proxy solicitation results as reasonably requested by Parent.  At the
Company Shareholders Meeting, Parent will, and will cause its Affiliates to,
vote all Shares owned by them in favor of adoption of this Agreement and
approval of the Merger.  The Company shall not be required to hold the Company
Shareholders Meeting if this Agreement is terminated before such meeting is
held.
 
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SECTION 4.6    Public Announcements.  The initial press release with respect to
the execution of this Agreement shall be a joint press release to be reasonably
agreed upon by Parent and the Company; provided that the Company shall be
entitled to include in such initial press release a description of the
provisions of Section 4.2 and to describe the Merger and the transactions
contemplated by this Agreement in, and to file a copy of this Agreement as an
exhibit to, the Company SEC Documents.  Thereafter, except as expressly
permitted by Section 4.2, neither the Company nor Parent shall issue or cause
the publication of any press release or other public announcement (to the extent
not previously issued or made in accordance with this Agreement) with respect to
this Agreement or the transactions contemplated hereby without the prior consent
of the other party (which consent shall not be unreasonably withheld,
conditioned or delayed), except as may be required by Law, applicable fiduciary
duties or by any applicable listing agreement with or other requirement of the
American Stock Exchange ("AMEX") as determined in the good faith judgment of the
party proposing to make such release (in which case such party shall not issue
or cause the publication of such press release or other public announcement
without prior consultation with the other party to the extent reasonably
practicable).
 
SECTION 4.7    Access to Information; Confidentiality.  Subject to applicable
Laws relating to the exchange of information, the Company shall afford to Parent
and Parent's Representatives reasonable access during normal business hours to
the officers, employees, accountants, properties, books, Contracts and records
of the Company and its Subsidiaries and the Company shall furnish promptly to
Parent (i) a copy of each report, schedule and other document filed by it
pursuant to the requirements of federal or state securities Laws and rules and
regulations promulgated thereunder and (ii) other information concerning the
business and properties of the Company and its Subsidiaries as Parent may
reasonably request; provided, however, that the Company shall not be obligated
to provide such access or information if the Company determines, in its
reasonable judgment, that doing so would violate applicable Law or a Contract or
obligation of confidentiality owing to a third party or jeopardize the
protection of an attorney-client privilege.  Until the Effective Time, the
information provided pursuant to this Agreement will be subject to the terms of
the Confidentiality Agreement, dated as of May 21, 2007, between Parent and the
Company (as it may be amended from time to time, the "Confidentiality
Agreement"), which shall survive the termination of this Agreement in accordance
with its terms.
 
SECTION 4.8    Notification of Certain Matters.  The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) any
notice or other communication received by such party from any Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby or from any Person alleging that the consent of such Person is or may be
required in connection with the Merger, if the subject matter of such
communication or the failure of such party to obtain such consent could
reasonably be expected to be material to the Company, the Surviving Corporation
or Parent, (ii) any actions, suits, claims, investigations or proceedings
commenced or, to such party's Knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its Subsidiaries which, in
the case of either clause (i) or (ii), would reasonably be expected to have a
Company Material Adverse Effect or prevent or materially delay consummation of
the Merger, and (iii) the discovery of any event, fact or circumstance that, or
the occurrence or non-occurrence of which, would reasonably be expected to cause
the failure of the closing conditions set forth in Section 5.2(a) or
Section 5.3(a), respectively, or any material failure of Parent or Merger Sub or
the Company, as the case may be, or of any Representative thereof, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.8 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
 
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SECTION 4.9    Indemnification and Insurance.
 
(a)           From and after the Effective Time, Parent shall, and shall cause
the Company and the Surviving Corporation to, (i) indemnify and hold harmless
each individual who at the Effective Time is, or at any time prior to the
Effective Time was, a director, officer, employee or agent of the Company or of
a Subsidiary of the Company (each, an "Indemnitee" and, collectively, the
"Indemnitees") with respect to all claims, liabilities, losses, damages,
judgments, fines, penalties, costs (including amounts paid in settlement or
compromise) and expenses (including fees and expenses of legal counsel) in
connection with any Action or Proceeding (whether civil, criminal,
administrative or investigative), whenever asserted, based on or arising out of,
in whole or in part, acts or omissions by an Indemnitee in the Indemnitee's
capacity as a director, officer, employee or agent of the Company or such
Subsidiary or taken at the request of the Company or such Subsidiary (including
in connection with serving at the request of the Company or such Subsidiary as a
director, officer, employee or agent of another Person (including any employee
benefit plan)), at, or at any time prior to, the Effective Time (including in
connection with the Merger), to the fullest extent permitted under applicable
Law, and (ii) assume all obligations of the Company and such Subsidiaries to the
Indemnitees in respect of indemnification and exculpation from liabilities for
acts or omissions occurring at or prior to the Effective Time as provided in
(x) the Company Charter Documents as currently in effect and (y) the
indemnification agreements with any of the Indemnitees provided to Parent prior
to the date hereof, which shall survive the Merger and continue in full force
and effect in accordance with their respective terms.  Without limiting the
foregoing, Parent, from and after the Effective Time, shall cause the articles
of incorporation and bylaws of the Surviving Corporation to contain provisions
no less favorable to the Indemnitees with respect to limitation of liabilities
of directors and officers and indemnification than are set forth as of the date
of this Agreement in the Company Charter Documents, which provisions shall not
be amended, repealed or otherwise modified in a manner that would adversely
affect the rights thereunder of the Indemnitees.  In addition, from and after
the Effective Time, Parent shall, and shall cause the Company and the Surviving
Corporation to, pay any expenses (including fees and expenses of legal counsel)
of any Indemnitee under this Section 4.9 (including in connection with enforcing
the indemnity and other obligations provided for in this Section 4.9) as
incurred to the fullest extent permitted under applicable Law; provided that the
individual to whom expenses are advanced provides an undertaking to repay such
advances to the extent required by applicable Law.
 
(b)           Any Indemnitee wishing to claim indemnification under this
Section 4.9, upon learning of any such Action or Proceeding, shall notify
Parent, the Company and the Surviving Corporation, but the failure to so notify
Parent, the Company and the Surviving Corporation shall not relieve such party
from any liability which it may have under this paragraph except to the extent
such failure materially prejudices Parent, the Company and/or the Surviving
Corporation.  Parent shall have the right, but not the obligation, to assume and
control the defense of any litigation, claim or proceeding relating to any acts
or omissions covered under this Section 4.9 (each, a "Claim") with counsel
selected by the Parent, which counsel shall be reasonably acceptable to the
Indemnitee; provided, however, that Indemnitee shall be permitted to participate
in the defense of such Claim at its own expense; provided, further, that such
Indemnitee shall be entitled to participate in any such defense with separate
counsel at the expense of Parent if (i) so requested by Parent to participate or
(ii) in the reasonable opinion of counsel to Indemnitee, a conflict or potential
conflict exists between Parent and Indemnitee that would make such separate
representation advisable; and provided, further, that Parent shall not be
required to pay for more than one such counsel for all Indemnitees in connection
with any such claim.  Each of Parent, the Company, the Surviving Corporation and
the Indemnitees shall cooperate in the defense of any Claim and shall provide
access to properties and individuals as reasonably requested and furnish or
cause to be furnished records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials or appeals, as may be
reasonably requested in connection therewith.
 
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(c)           For the six-year period commencing immediately after the Effective
Time (and for so long thereafter as any Claims thereunder are being
adjudicated), Parent shall maintain in effect the Company's current directors'
and officers' liability insurance covering acts or omissions occurring at or
prior to the Effective Time with respect to those individuals who are currently
(and any additional individuals who prior to the Effective Time become) covered
by the Company's directors' and officers' liability insurance policy on terms
with respect to such coverage, and in amount, not less favorable in any material
respect in the aggregate to such individuals than those of such policy in effect
on the date hereof (or Parent may substitute therefor policies, issued by
reputable insurers, of at least the same coverage with respect to matters
occurring at or prior to the Effective Time); provided, however, that, if the
aggregate annual premiums for such insurance shall exceed 300% of the current
aggregate annual premium, then Parent shall provide or cause to be provided a
policy for the applicable individuals with the best coverage as shall then be
available at an annual premium of 300% of the current aggregate annual premium
(but in no event shall such coverage be less than the directors' and officers'
liability insurance coverage then provided by Parent to its directors and
officers); and provided, further, that the Company may elect to purchase prior
to the Effective Time, and Parent may elect to cause the Company to purchase at
or after the Effective Time, in lieu of the foregoing insurance, a directors'
and officers' liability insurance "tail" or "runoff" insurance program to be in
effect until the end of such six-year period (and for so long thereafter as any
Claims thereunder are being adjudicated) with respect to acts or omissions
occurring at or prior to the Effective Time (such coverage to be on terms and
conditions no less favorable to the covered directors and officers than such
coverage existing on the date hereof).
 
(d)           The provisions of this Section 4.9 are (i) intended to be for the
benefit of, and shall be enforceable by, each Indemnitee, his or her heirs and
his or her representatives and (ii) in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such individual may
have by Contract or otherwise.  The obligations of Parent and the Surviving
Corporation under this Section 4.9 shall not be terminated or modified in such a
manner as to adversely affect the rights of any Indemnitee to whom this
Section 4.9 applies unless (x) such termination or modification is required by
applicable Law or (y) the affected Indemnitee shall have consented in writing to
such termination or modification (it being expressly agreed that the Indemnitees
to whom this Section 4.9 applies shall be third-party beneficiaries of this
Section 4.9).
 

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(e)           In the event that Parent, the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person and is not the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such case,
proper provision shall be made so that the successors and assigns of Parent and
the Surviving Corporation shall assume all of the obligations thereof set forth
in this Section 4.9.
 
SECTION 4.10          Fees and Expenses.  Except as provided in Section 6.3, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated.
 
SECTION 4.11          Delisting.  Parent shall cause the Company's securities to
be de-listed from the AMEX and de-registered under the Exchange Act as soon as
practicable following the Effective Time.
 
SECTION 4.12          Parent Representation on the Company Board.
 
(a)           Subject to Parent's compliance with its obligations under
Section 4.2(g), in the event that this Agreement is terminated for any reason
other than by the Company pursuant to Section 6.1(c)(ii), Parent shall
thereafter (but only (x) following the termination of Parent's obligations under
Section 4.2(g), to the extent applicable, and (y) until such time as Parent and
its Affiliates own less than fifty percent (50%) of the shares of Company Common
Stock then outstanding) be entitled to designate for appointment or election to
the Company Board, upon written notice to the Company (any such notice being
referred to herein as the "Parent Notice"), (i) prior to the earlier to occur of
(A) the annual meeting of shareholders of the Company to be held in 2008 (the
"2008 Shareholders Meeting") and (B) June 30, 2008, a number of directors equal
to one-half of the size of the Company Board from time to time, and (ii)
commencing with the earlier to occur of (A) the 2008 Shareholders Meeting and
(B) June 30, 2008, such number of directors, rounded to the nearest whole
number, as is equal to the product obtained by multiplying the total number of
directors on the Company Board (after giving effect to the directors designated
by Parent pursuant to this sentence) by the percentage that the number of shares
of Company Common Stock so owned by Parent and its Affiliates bears to the total
number of shares of Company Common Stock then outstanding.  In furtherance
thereof, the Company shall, upon request of Parent, use its reasonable best
efforts, subject to compliance with applicable securities Laws and applicable
rules of the AMEX, to promptly following receipt of a Parent Notice cause
Parent's designees (and any replacement designees in the event that any designee
shall no longer be on the Company Board) to be so appointed or elected to the
Company Board and, in furtherance thereof, to the extent necessary, use its
reasonable best efforts to increase the size of the Company Board or obtain the
resignation of such number of its directors as is necessary to give effect to
the foregoing provision.  Parent's right to designate members of the Company
Board pursuant to Section 4.12(a) shall not be assignable to any transferee of
shares of Company Common Stock from Parent or any of its Affiliates.  If at any
time there is a greater number of designees of Parent serving on the Company
Board than the number of designees to which Parent is then entitled pursuant to
this Section 4.12(a), Parent shall immediately cause one or more of its
designees to resign from the Company Board in order that there not be more
designees of Parent serving on the Company Board than the number to which it is
entitled.
 
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(b)           During such period as designees of Parent constitute one-half of
the Company Board pursuant to an appointment or election in accordance with
Section 4.12(a)(i), any vote by the Company Board to cause the Company to take
any action, in order to be effective, must include the affirmative vote of at
least one (1) director who has not been so designated by Parent.
 
(c)           Following the appointment or election to the Company Board of any
designees of Parent pursuant to Section 4.12(a)(ii), and until such time as
Parent and its Affiliates own all of the issued and outstanding shares of
Company Common Stock, the Company Board shall have at least three (3) directors
who are directors of the Company on the date of this Agreement (other than the
designees of the Principal Shareholders) and who are not officers of the Company
or any of its Subsidiaries ("Independent Directors"); provided, however, that if
the number of Independent Directors shall thereafter be reduced below three (3)
for any reason whatsoever, then the remaining Independent Director or Directors
shall be entitled to identify a person or persons who is not then an officer or
Affiliate of the Company, Parent or any of their respective Affiliates and who
otherwise qualifies as "independent" under the applicable rules or listing
standards of any securities exchange or market on which the shares of Company
Common Stock are then listed or approved for trading (any such person being
referred to herein as a "Qualified Person"; it being understood that, for
purposes of this definition, a person who would otherwise not be considered an
Affiliate of the Company shall not be deemed an Affiliate of the Company solely
because he or she is a director of the Company), willing to serve as an
Independent Director, in which case such remaining Independent Director or
Directors shall be entitled to designate any such Qualified Person or Persons to
fill such vacancy or vacancies, and any such designated Qualified Person or
Persons shall be deemed to be an Independent Director for purposes of this
Agreement; and providedfurther, however, that if no Independent Directors then
remain, the other directors shall be required to designate three (3) Qualified
Persons to fill such vacancies, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement.
 
(d)           Following the election or appointment of any designees of Parent
pursuant to Section 4.12(a)(ii) and for so long thereafter as the Company Board
is required to include Independent Directors in accordance with Section 4.12(c),
the approval by affirmative vote or written consent of either a majority of the
Independent Directors then in office or the holders of a majority of the
outstanding Shares not held by the Parent or its Affiliates ("Independent
Approval") shall be required to authorize (and such authorization shall
constitute the authorization of the Company Board, as applicable, and no other
action on the part of the Company, including any action by any other committee
thereof or any other director of the Company, shall, unless otherwise required
by applicable Law, be required or permitted to authorize) (w) any Related Party
Transaction (as defined below), (x) the deregistration of the shares of Company
Common Stock under the Exchange Act or the delisting of the shares of Company
Common Stock from the AMEX, (y) any amendment or modification of, or any waiver
of any right of the Company under, this Section 4.12 or (z) any amendment of the
Company Charter Documents adverse to the interests of the shareholders of the
Company (other than Parent and its Affiliates).  The Independent Directors shall
have the authority to retain such counsel and other advisors at the expense of
the Company as are reasonably appropriate to the exercise of their duties in
connection with this Section 4.12.  In addition, the Independent Directors shall
have the authority to institute any action, on behalf of the Company, to enforce
performance of this Section 4.12.
 
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(e)           During any period commencing on the furnishing of a Parent Notice
and ending on the date on which Parent's designees are elected to the Company
Board in accordance with such Parent Notice, the covenants of the Company set
forth in Section 4.1 shall be in full force and effect regardless of any
termination of this Agreement.
 
(f)           During any period in which Parent is entitled to the election or
appointment of any designees to the Company Board pursuant to Section 4.12(a),
neither Parent nor any of its Affiliates will acquire any additional shares of
Company Common Stock from any shareholder of the Company at a price less than
the Merger Consideration (as adjusted for stock dividends, stock splits and
other similar changes in the Company Common Stock), except pursuant to an offer
made to all shareholders of the Company to purchase all of their shares at the
same price or with prior Independent Approval.
 
(g)           Parent shall, and shall cause its Affiliates to, vote all shares
of Company Common Stock at any time owned by them so as to give effect to the
provisions of this Section 4.12.
 
(h)           All holders of Company Common Stock from time to time (other than
Parent and its Affiliates) may rely on the provisions of this Section 4.12 which
relate to the appointment and approval rights of the Independent Directors,
which provisions are intended to be for the benefit of such holders of Company
Common Stock and shall be enforceable by them.
 
(i)           For purposes of this Agreement, "Related Party Transaction" shall
mean:
 
(i)           Any sale of the assets or issuance of shares of capital stock of
the Company or any Subsidiary of the Company to (or any acquisition of assets
from or share subscription in) Parent or any of its Affiliates, other than a
subscription for shares of Company Common Stock by Parent or any of its
Affiliates pursuant to a rights offering made available to all holders of
Company Common Stock on a pro rata basis and for the same amount and form of
consideration and otherwise on substantially the same terms and conditions; or
 
(ii)          Any merger or consolidation between or among the Company or any
Subsidiary of the Company, on the one hand, and Parent or any of its Affiliates,
on the other; or
 
(iii)         Any merger, statutory share exchange or consolidation involving
the Company or any Subsidiary of the Company pursuant to which Parent or any of
its Affiliates is entitled to receive consideration in respect of its securities
in the Company that is different in form or amount from that offered all other
holders of the same class of such securities, other than ancillary arrangements
or rights entailing no monetary payments and other than reasonable third-party
legal fees, out-of-pocket expense reimbursement and indemnification for the
benefit of Parent or any of its Affiliates for liabilities in respect of which
other holders of the same class have no liability; or
 
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(iv)        Any other transaction or series of related transactions between or
among the Company and/or any Subsidiary of the Company, on the one hand, and
Parent or any of its Affiliates, on the other, other than payments in respect of
customary director fees in accordance with past practice or other ordinary
course transactions the value of any of which does not exceed $100,000.
 
SECTION 4.13   Securityholder Litigation.  The Company shall give Parent the
opportunity to participate in the defense and settlement of any litigation
against the Company and/or its directors relating to the transactions
contemplated hereby, and no such settlement relating to the Company shall be
agreed to without Parent's prior written consent which, prior to the Effective
Time, shall not be unreasonably withheld, conditioned or delayed.
 
SECTION 4.14          Tax Elections.  Within seventy five (75) days following
the date hereof, the Company shall cause each of its Subsidiaries that owns one
or more ships to properly file an election under U.S. Treasury Regulation
Section 301.7701-3(c) to be treated, effective as of the opening of business on
the date hereof, as a pass-through entity for U.S. federal income Tax purposes.
 
SECTION 4.15          U.S. Federal Income Tax Returns.  Prior to the Effective
Time, the Company shall file, and shall cause each of its Subsidiaries that
derives income from the international operation of a ship or ships (within the
meaning of Section 883 of the Code) to file, a properly-completed U.S. federal
income Tax return for the 2005 and 2006 taxable years of such entity (with the
appropriate owner certifications attached thereto) claiming the exemption
provided by Section 883 of the Code.
 
SECTION 4.16          Vessel Charters.  During the period prior to the Effective
Time:
 
(a)           The Company shall take the actions set forth in Section 4.16(a) of
the Company Disclosure Letter; and
 
(b)           The Company shall not enter into any arrangement or take any
action that would reasonably be expected to constitute a violation of U.S. Law
by the Company or Parent solely as a result of ownership or control of the
Company by a U.S. Person.
 
ARTICLE V
 
Conditions to the Merger
 
SECTION 5.1            Conditions to Each Party's Obligation to Effect the
Merger.  The respective obligations of each party hereto to effect the Merger
shall be subject to the satisfaction (or waiver, if permissible under applicable
Law) on or prior to the Closing Date of the following conditions:
 
(a)           The Company Shareholder Approval shall have been obtained.
 
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(b)           No Law, injunction, judgment or ruling enacted, promulgated,
issued, entered, amended or enforced by any Governmental Authority
(collectively, the "Restraints") shall be in effect enjoining, restraining,
preventing or prohibiting consummation of the Merger or making the consummation
of the Merger illegal, it being understood and agreed that, for purposes of
Sections 5.1(b), 5.2(a) and 5.3(a), the absence of shareholder litigation
challenging the transactions contemplated by this Agreement does not constitute
a condition to the obligations of any party hereto to effect the Merger.
 
SECTION 5.2            Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger shall be subject
to the satisfaction (or waiver, if permissible under applicable Law) on or prior
to the Closing Date of the following conditions:
 
(a)           Each of the representations and warranties of the Company set
forth in this Agreement shall be true and correct at and as of the Effective
Time as if made on such date (other than those representations and warranties
that address matters only as of a particular date, which shall be true and
correct as of such date), except (x) for changes permitted by this Agreement or
(y) where the failure of any such representation or warranty to be true and
correct (without giving effect to any limitation as to "materiality" or "Company
Material Adverse Effect" set forth therein) would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect; and
Parent shall have received a certificate of an executive officer of the Company
to that effect.
 
(b)           The Company shall have performed or complied with in all material
respects all agreements and covenants required by this Agreement to be performed
or complied with by it on or prior to the Effective Time; and Parent shall have
received a certificate of an executive officer of the Company to that effect.
 
SECTION 5.3            Conditions to the Obligations of the Company.  The
obligations of the Company to effect the Merger shall be subject to the
satisfaction (or waiver, if permissible under applicable Law) on or prior to the
Closing Date of the following conditions:
 
(a)           Each of the representations and warranties of Parent and Merger
Sub set forth in this Agreement shall be true and correct at and as of the
Effective Time as if made on such date, except where the failure of any such
representation or warranty to be true and correct would not, individually or in
the aggregate, reasonably be expected to impair the ability of Parent or Merger
Sub to perform its obligations hereunder or prevent or materially delay
consummation of the Merger; and the Company shall have received a certificate of
an executive officer of Parent to that effect.
 
(b)           Parent and Merger Sub shall each have performed or complied with
in all material respects all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time; and
the Company shall have received a certificate of an executive officer of Parent
to that effect.
 
SECTION 5.4            Frustration of Closing Conditions.  Neither the Company
nor Parent or Merger Sub may rely on the failure of any condition set forth in
Section 5.1, 5.2 or 5.3, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable best efforts to consummate the
Merger, to the extent required by and subject to Section 4.5 and the other
applicable provisions of Article IV.
 

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ARTICLE VI
 
Termination
 
SECTION 6.1            Termination.  This Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time, whether before or
after receipt of the Company Shareholder Approval, except as set forth below:
 
(a)           by the mutual written consent of the Company and Parent duly
authorized by the Company Board and the Board of Directors of Parent; or
 
(b)           by either the Company or Parent:
 
(i)           if any Restraint enjoining, restraining, preventing or prohibiting
consummation of the Merger or making the consummation of the Merger illegal
shall be in effect and shall have become final and non-appealable; provided that
the right to terminate this Agreement under this Section 6.l(b)(i) shall not be
available to a party if the issuance of such final, non-appealable Restraint was
primarily due to the failure of such party to perform any of its obligations
under this Agreement;
 
(ii)          if the Merger shall not have been consummated on or before the
Outside Date; provided that the right to terminate this Agreement under this
Section 6.1(b)(ii) shall not be available to any party whose failure to perform
any of its obligations under this Agreement resulted in the failure of the
Merger to be so consummated by the Outside Date; or
 
(iii)         if the Company Shareholder Approval shall not have been obtained
at a duly convened Company Shareholders Meeting (or at any adjournment or
postponement thereof) by reason of the failure to obtain the required vote upon
a vote taken thereon; provided, however, that the Company shall not be permitted
to terminate this Agreement pursuant to this Section 6.1(b)(iii) if the Company
or any of its Subsidiaries or their respective Representatives has failed to
comply in any material respect with its obligations under Section 4.2, 4.4 or
4.5; or
 
(c)           by the Company:
 
(i)           if, at any time prior to the receipt of the Company Shareholder
Approval, the Company has complied with the terms of this Agreement, including
Section 4.2(c), and concurrently it enters into a definitive Company Acquisition
Agreement providing for a Superior Proposal; provided, however, that such
termination shall not be effective unless concurrently therewith the Company
fulfills its obligations under Section 6.3; or
 
(ii)           if (A) the representations and warranties of Parent or Merger Sub
set forth in this Agreement shall not be true and correct on and as of the date
of such determination as if made on such date (other than those representations
and warranties that address matters only as of a particular date which shall be
true and correct as of such date), but only to the extent that such failure
would cause the condition contained in Section 5.3(a) not to be satisfied as of
such date; or (B) Parent or Merger Sub shall have breached or failed to perform
or comply with any obligation, agreement or covenant required by this Agreement
to be performed or complied with by them, but only to the extent that such
failure would cause the condition contained in Section 5.3(b) not to be
satisfied as of such date and such condition is, as a result of such breach or
failure (in each case under clauses (A) and (B)), incapable of being satisfied
by the Outside Date; or
 
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(d)           by Parent, if (i) the representations and warranties of the
Company set forth in this Agreement shall not be true and correct on and as of
the date of such determination as if made on such date (other than those
representations and warranties that address matters only as of a particular
date, which shall be true and correct as of such date), but only to the extent
that such failure would cause the condition contained in Section 5.2(a) not to
be satisfied as of such date; or (ii) the Company shall have breached or failed
to perform or comply with any obligation, agreement or covenant required by this
Agreement to be performed or complied with by it, but only the extent that such
breach or failure would cause the condition contained in Section 5.2(b) not to
be satisfied as of such date and such condition is, as a result of any such
breach or failure (in each case under clauses (i) and (ii)), incapable of being
satisfied by the Outside Date; or (iii) a Triggering Event shall have occurred.
 
SECTION 6.2            Effect of Termination.  In the event of the termination
of this Agreement as provided in Section 6.1, written notice thereof shall be
given to the other party or parties, specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void (other than Sections 4.2(g), 4.10, 4.12, 6.2 and 6.3, Article VII, the
last sentence of Section 4.7 and the Confidentiality Agreement, each of which
shall survive termination of this Agreement at any time in accordance with their
respective terms), and there shall be no liability as a result thereof on the
part of Parent or the Company or their respective directors, officers and
Affiliates, except (i) the Company may have liability as provided in
Section 6.3, and (ii) nothing contained in this Section 6.2 shall relieve any
party from liability for fraud or any willful breach of this Agreement occurring
prior to termination of this Agreement.
 
SECTION 6.3            Termination Fee.  In the event that:
 
(a)           (i) after the date of this Agreement a Takeover Proposal has been
publicly announced (whether or not conditional or withdrawn) or made known to
the Company, (ii) after the date of such announcement or knowledge by the
Company, this Agreement is terminated by (A) either Parent or the Company
pursuant to Section 6.1(b)(ii) or (iii) or (B) Parent pursuant to Section
6.1(d)(i) or (ii) as a result of a breach or failure by or on the part of the
Company and (iii) within twelve (12) months after such termination the Company
shall have consummated any Takeover Proposal, or a definitive agreement
contemplating a Takeover Proposal is executed, or the Company recommends or
submits to shareholders of the Company for adoption or acceptance a Takeover
Proposal or a definitive agreement contemplating a Takeover Proposal (the
Takeover Proposal so consummated, executed, recommended or submitted need not be
the same Takeover Proposal that was publicly disclosed, announced or made known
to the Company); or
 
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(b)           this Agreement is terminated by the Company pursuant to
Section 6.1(c)(i) or by Parent pursuant to Section 6.1(d)(iii);
 
then the Company shall (A) in the case of a termination described in paragraph
(a) of this Section 6.3, upon the earlier of the consummation of the transaction
contemplated by such Takeover Proposal, the execution of a definitive agreement
contemplating a Takeover Proposal or the recommendation by the Company or the
submission to its shareholders for adoption or acceptance a Takeover Proposal or
a definitive agreement contemplating a Takeover Proposal or (B) in the case of a
termination described in paragraph (b) of this Section 6.3, on the date of such
termination, pay Parent a fee equal to $7,750,000 (the "Termination Fee") by
wire transfer of immediately available funds to an account designated by Parent.
 
SECTION 6.4            Acknowledgment.  The Company acknowledges and agrees that
the agreements contained in Section 6.3 are an integral part of the Merger and
that, without these agreements, Parent would not enter into this Agreement.  If
the Company fails promptly to pay the Termination Fee and, in order to obtain
such payment, Parent commences a suit that results in a judgment against the
Company for the Termination Fee, the Company shall pay to Parent its reasonable
costs and expenses (including reasonable attorneys' fees and expenses) incurred
in connection with such suit.
 
ARTICLE VII
 
Miscellaneous
 
SECTION 7.1            Survival of Representations, Warranties and
Agreements.  The representations and warranties contained herein or in any other
writing delivered pursuant hereto, as well as any covenant or agreement of the
parties that by its terms contemplates performance exclusively prior to the
Effective Time, shall survive until (but not beyond) the Effective
Time.  Nothing in this paragraph shall limit any covenant or agreement of the
parties that by its terms contemplates performance in whole or in part after the
Effective Time.
 
SECTION 7.2            Amendment or Supplement.  At any time prior to the
Effective Time, this Agreement may be amended or supplemented in any and all
respects, whether before or after approval of the Merger by the holders of
Company Common Stock, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors; provided, however, that following
the Company Shareholder Approval, there shall be no amendment or change to the
provisions hereof which by Law or in accordance with the rules of any relevant
stock exchange would require further approval by the holders of Company Common
Stock without such approval.
 
SECTION 7.3            Extension of Time, Waiver, Etc.  At any time prior to the
Effective Time, any party may, subject to applicable Law, (a) waive any
inaccuracies in the representations and warranties of any other party hereto,
(b) extend the time for the performance of any of the obligations or acts of any
other party hereto or (c) waive compliance by any other party with any of the
agreements contained herein or, except as otherwise provided herein, waive any
of such party's conditions; provided that after the Company Shareholder Approval
is obtained, there may not be any extension or waiver of this Agreement or any
portion thereof which, by Law or in accordance with the rules of any relevant
stock exchange, requires further approval by such shareholders.  Notwithstanding
the foregoing, no failure or delay by the Company, Parent or Merger Sub in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right hereunder.  Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
 
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SECTION 7.4            Assignment.  Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of Law or otherwise, by any of the parties without the prior
written consent of the other parties; provided that Parent and Merger Sub may
assign its rights, interests and obligations under this Agreement to any of its
Affiliates.  Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and permitted assigns.  Any purported assignment not
permitted under this section shall be null and void.
 
SECTION 7.5            Counterparts.  This Agreement may be executed in
counterparts (each of which shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement) and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
 
SECTION 7.6            Entire Agreement; No Third-Party Beneficiaries.  This
Agreement, together with the Company Disclosure Letter and the Confidentiality
Agreement, (a) constitutes the entire agreement, and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof and thereof and (b) except
for the provisions of Section 4.9 and Section 4.12 to the extent provided
therein, is not intended to and shall not confer upon any Person other than the
parties hereto any rights or remedies hereunder.
 
SECTION 7.7            Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.
 
(a)           This Agreement shall be governed by, and construed in accordance
with, the Laws of the State of New York applicable to Contracts executed in and
to be performed entirely within that State.
 
(b)           The parties hereto hereby agree to bring all Actions or
Proceedings arising out of or relating to this Agreement in the federal or state
courts located in the Borough of Manhattan of the City of New York, New York and
the parties irrevocably waive, to the fullest extent permitted by applicable
Law, the defense of an inconvenient forum to the maintenance of any such Action
or Proceeding.  The parties hereto agree that a final judgment in any such
Action or Proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
applicable Law.
 
(c)           Each of the parties hereto hereby irrevocably waives any and all
rights to trial by jury in any Action or Proceeding arising out of or related to
this Agreement.
 
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SECTION 7.8            Specific Enforcement.
 
(a)             The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.  It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the federal or state courts
located in the Borough of Manhattan of the City of New York, New York without
bond or other security being required, this being in addition to any other
remedy to which they are entitled at Law or in equity.
 
(b)           In circumstances under which the Termination Fee is payable and
has been paid, Parent and Merger Sub agree that (i) to the extent they have
incurred losses or damages in connection with this Agreement, their sole and
exclusive remedy against the Company and any of its directors, officers or
Affiliates for any breach, loss or damage shall be to receive payment of the
Termination Fee to the extent provided in Section 6.3 and (ii) upon payment in
full of such amounts, (x) neither Parent nor Merger Sub shall have any other
rights or claims or seek damages against the Company or any of its directors,
officers or Affiliates under this Agreement or otherwise, whether at law or
equity, in contract, in tort or otherwise, and (y) neither the Company nor any
of its directors, officers or Affiliates shall have any further liability or
obligations relating to or arising out of this Agreement or the transactions
contemplated hereby.  Nothing herein shall relieve Parent or Merger Sub of
liability to pay the Merger Consideration in the event the Merger
occurs.  Parent and Merger Sub agree and acknowledge that none of the directors,
officers or Affiliates of the Company shall have any personal liability
hereunder, including, without limitation, for any breach of this Agreement or
inaccuracy of any representation or warranty.
 
SECTION 7.9            Notices.  All notices, requests and other communications
to any party hereunder shall be in writing and shall be deemed given if
delivered either personally, by facsimile transmission (with acknowledgement
received) by electronic mail (with receipt confirmed) or by overnight courier
(providing proof of delivery) to the parties at the following addresses:
 
If to Parent or Merger Sub, to:
 
 
c/o Bear Stearns Merchant Banking, LLC

 
383 Madison Avenue

 
New York, New York 10179

 
Attention:
Douglas R. Korn

 
Theodore B. Young

 
Facsimile:  212-881-9304

 
Email:
dkorn@bear.com

 
theodore.young@bear.com

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with a copy (which shall not constitute notice) to:

 
 
Weil, Gotshal & Manges LLP

 
767 Fifth Avenue

 
New York, New York  10153

 
Attention:
David Zeltner,

 
Jane McDonald

 
Facsimile:  (212) 310-8007

 
Email:
david.zeltner@weil.com,

 
 jane.mcdonald@weil.com

If to the Company, to:

 
Gildo Pastor Center

 
7, rue du Gabian

 
MC 98000 Monaco

 
Attention:
Antony S. Crawford

 
Chief Executive Office and President

 
Facsimile:  377-97-97-49-99

 
Email:
tony.crawford@mcshipping.com

with a copy (which shall not constitute notice) to:

 
Milbank, Tweed, Hadley & McCloy LLP

 
1 Chase Manhattan Plaza

 
New York, NY 10005

 
Attention:  Robert S. Reder

 
Facsimile:  (212) 822-5680

 
Email:
rreder@milbank.com

or such other address, facsimile number or email address as such party may
hereafter specify by notice to the other parties hereto.  All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 P.M. in the place of
receipt and such day is a business day in the place of receipt.  Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
 
SECTION 7.10         Severability.  If any term or other provision of this
Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all
other terms, provisions and conditions of this Agreement shall nevertheless
remain in full force and effect.  Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable Law in an acceptable manner to the end that the Merger
is fulfilled to the extent possible.
 
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SECTION 7.11          Definitions.
 
(a)           As used in this Agreement, the following terms have the meanings
ascribed thereto below:
 
"Action or Proceeding" shall mean any action, suit, proceeding, hearing, charge,
complaint, grievance, arbitration or Governmental Authority investigation.
 
"Affiliate" shall mean, as to any Person, any other Person that directly or
indirectly controls, or is controlled by, or is under common control with, such
Person.  For this purpose, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person, whether through the ownership of securities
or partnership or other ownership interests, by Contract or otherwise.
 
"business day" shall mean a day except a Saturday, a Sunday or other day on
which the SEC or banks in the City of New York are authorized or required by Law
to be closed.
 
"Company Board" shall mean the Board of Directors of the Company or the
Transaction Committee or any other duly constituted committee thereof which has
been given the authority to act in the name, place and stead of the Board of
Directors of the Company with respect to this Agreement and the transactions
contemplated hereby.
 
"Company Stock Plan" shall mean the Company's 2001 Stock Option Plan.
 
"GAAP" shall mean generally accepted accounting principles in the United States.
 
"Governmental Authority" shall mean any government, court, tribunal, regulatory
or administrative agency, commission or authority or other governmental
instrumentality, federal, state or local, domestic, foreign or multinational.
 
"Knowledge" shall mean, in the case of either the Company or Parent, the actual
knowledge, as of the date of this Agreement, of any of the executive officers of
such party after due inquiry of their direct reports.
 
"Outside Date" shall mean October 27, 2007.
 
"Person" shall mean an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity, including a
Governmental Authority.
 
"Subsidiary" when used with respect to any party, shall mean any corporation,
limited liability company, partnership, association, trust or other entity of
which securities or other ownership interests representing more than 50% of the
equity and more than 50% of the ordinary voting power (or, in the case of a
partnership, more than 50% of the general partnership interests) are, as of such
date, owned by such party or one or more Subsidiaries of such party or by such
party and one or more Subsidiaries of such party.
 
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"Triggering Event" shall be deemed to have occurred if: (i) the Company Board
shall have failed to recommend that the Company shareholders vote to adopt this
Agreement or shall have made a Company Adverse Recommendation Change; (ii) the
Company shall have failed to include in the Proxy Statement distributed to
shareholders the Company Recommendation or a statement to the effect that the
Company Board has determined and believes that the Merger is in the best
interests of the Company's shareholders; (iii) the Company Board shall have
formally approved or recommended to the Company's shareholders any Takeover
Proposal (other than the Merger); (iv) the Company Board shall have approved,
endorsed or recommended any Takeover Proposal (other than the Merger); (v) the
Company shall have executed any letter of intent, memorandum of understanding or
similar Contract relating to any Takeover Proposal (other than the Merger); or
(vi) a tender or exchange offer relating to securities of the Company shall have
been commenced and the Company shall not have sent to its security holders,
within ten (10) business days after the commencement of such tender or exchange
offer, a statement disclosing that the Company recommends rejection of such
tender or exchange offer.
 
(b)           The following terms are defined on the page of this Agreement set
forth opposite such term below:

2008 Shareholders Meeting
36
Acceptable Confidentiality Agreement
29
Adverse Recommendation Notice
29
Agreement
1
AMEX
33
Articles of Merger
2
Balance Sheet Date
10
Bankruptcy and Equity Exception
8
BCAL
1
Certificates
3
Charters
19
Claim
35
Closing
2
Closing Date
2
Code
13
Company
1
Company Acquisition Agreement
28
Company Adverse Recommendation Change
28
Company Charter Documents
7
Company Common Stock
1
Company Contracts
15
Company Disclosure Letter
6
Company Financial Statements
10
Company Intellectual Property
17
Company Material Adverse Effect
6
Company Plan
14
Company Recommendation
8
Company SEC Documents
9
Company Shareholder Approval
9
Company Shareholders Meeting
32
Confidentiality Agreement
33
Contract
9
Copyrights
17
Dissenting Shareholder
5
Dissenting Shares
5
DnB
19
Effective Time
2
Engagement Letter
20
Environmental Laws
16
Exchange Act
9
Excluded Party
27
Filed Company SEC Documents
6
Foreign Antitrust Laws
9
Hazardous Materials
16
Indemnitee
34
Independent Approval
37
Independent Directors
37
Intellectual Property
17
IP Licenses
17
Laws
11
Merger
1
Merger Consideration
3
Merger Sub
1
Minister of Foreign Affairs
2
No-Shop Period Start Date
26

 
 
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Notice Period
29
PA04
15
Parent
1
Parent Notice
36
Patents
17
Paying Agent
3
Permits
12
Principal Shareholders
1
Proxy Statement
31
Qualified Person
37
Related Party Transaction
38
Representatives
26
Restraints
40
Sarbanes-Oxley Act
9
SEC
9
Securities Act
7
Shares
1
Software
17
Superior Proposal
29
Surviving Corporation
2
Takeover Proposal
29
Tax Returns
13
Taxes
13
Termination Fee
43
Trade Secrets
17
Trademarks
17
Transaction Committee
8
TUPE
15
Vessels
18

 
SECTION 7.12          Interpretation.
 
(a)           The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".  The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.  All
terms defined in this Agreement shall have the defined meanings when used in any
document made or delivered pursuant hereto unless otherwise defined
therein.  The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term.  Any agreement, instrument
or statute defined or referred to herein or in any agreement or instrument that
is referred to herein means such agreement, instrument or statute as from time
to time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein.  References to a Person are also to its
permitted successors and assigns.
 
(b)           The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
 
 

   
MAST ACQUISITION LTD. 
                         
By:
          
Name:
       
Title:
                         
MAST MERGER SUB CORP. 
                         
By:
          
Name:
       
Title:
                         
MC SHIPPING INC. 
                         
By:
          
Name:  Antony S. Crawford
       
Title:  Chief Executive Officer and President
 

 
 

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