Exhibit 10.1

Execution Version

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

DATED AS OF JUNE 25, 2007

 

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TABLE OF CONTENTS

ARTICLE I DEFINITIONS

 

7

 

 

 

ARTICLE II THE MERGERS

 

 

Section 2.1

 

The Mergers

 

12

Section 2.2

 

Effective Time

 

12

Section 2.3

 

Closing

 

12

Section 2.4

 

Effects of the Mergers

 

13

Section 2.5

 

Certificate of Formation; Limited Liability Company Agreement

 

13

Section 2.6

 

Managers

 

13

Section 2.7

 

Officers

 

13

Section 2.8

 

Conversion of Equity Interests

 

13

 

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH SELLER PARTY

 

 

Section 3.1

 

Corporate Status and Good Standing; Citizenship

 

14

Section 3.2

 

Authorization

 

14

Section 3.3

 

Capitalization; Title to Membership Interests

 

15

Section 3.4

 

Non-Contravention

 

15

Section 3.5

 

Validity

 

16

Section 3.6

 

Broker Involvement

 

16

Section 3.7

 

Litigation

 

16

Section 3.8

 

Disclosure

 

17

 

 

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SMITH MARITIME, GO BIG, SMITH, THE
GORDON TRUST AND 235LX

 

 

Section 4.1

 

Corporate Status and Good Standing; Citizenship

 

17

Section 4.2

 

Authorization

 

18

Section 4.3

 

Capitalization; Title to Equity Interests

 

18

Section 4.4

 

Non-Contravention

 

19

Section 4.5

 

Validity

 

20

Section 4.6

 

Broker Involvement

 

20

Section 4.7

 

Litigation

 

20

Section 4.8

 

Title to Assets

 

20

Section 4.9

 

Continuity Prior to the Closing Date

 

20

Section 4.10

 

Contracts and Commitments

 

22

Section 4.11

 

Trademarks, Trade Names and Intellectual Property

 

22

Section 4.12

 

Financial Statements; Budget

 

23

Section 4.13

 

Bank Relations; Powers of Attorney

 

24

Section 4.14

 

Condition of Assets; Eligibility for Coastwise Trade

 

24

Section 4.15

 

Absence of Undisclosed Liabilities

 

25

Section 4.16

 

Real Estate

 

26

Section 4.17

 

Accounts Receivable

 

26

Section 4.18

 

Inventory

 

26

Section 4.19

 

Employees and Related Matters

 

26

Section 4.20

 

Employee Benefits

 

27

Section 4.21

 

Compliance With Law

 

28

 

2

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Section 4.22

 

Environmental

 

29

Section 4.23

 

Insurance

 

31

Section 4.24

 

Government Licenses and Permits

 

31

Section 4.25

 

Responsible Carriers Plan

 

31

Section 4.26

 

Taxes

 

31

Section 4.27

 

No Material Adverse Change

 

33

Section 4.28

 

Books and Records

 

33

Section 4.29

 

Safety Reports

 

34

Section 4.30

 

Transactions with Certain Persons

 

34

Section 4.31

 

Closing Date Balance Sheet

 

34

Section 4.32

 

Disclosure

 

34

 

 

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND THE PARTNERSHIP

 

 

Section 5.1

 

Status and Good Standing

 

35

Section 5.2

 

Authorization

 

35

Section 5.3

 

Non-Contravention

 

35

Section 5.4

 

Validity

 

35

Section 5.5

 

Broker Involvement

 

36

Section 5.6

 

Buyer’s Review

 

36

Section 5.7

 

Citizenship

 

36

 

 

 

 

 

ARTICLE VI COVENANTS

 

 

Section 6.1

 

Other Offers

 

36

Section 6.2

 

Conduct of Business Pending Closing

 

36

Section 6.3

 

Access

 

37

Section 6.4

 

Termination of Guarantees and Settlement of Intercompany Amounts

 

37

Section 6.5

 

Covenant Against Competition

 

37

Section 6.6

 

Further Assurances

 

39

Section 6.7

 

Governmental Filings

 

39

Section 6.8

 

Consents

 

39

Section 6.9

 

Public Announcements

 

39

Section 6.10

 

Tax Matters

 

39

Section 6.11

 

Closing Date Balance Sheet

 

41

Section 6.12

 

Employees

 

41

Section 6.13

 

Personal Property

 

42

Section 6.14

 

Financial Statements

 

42

Section 6.15

 

Notification

 

42

Section 6.16

 

Insurance

 

43

Section 6.17

 

Misdirected Payments

 

43

Section 6.18

 

Conversion of Smith Subsidiaries

 

43

Section 6.19

 

Transfer of Shares

 

43

Section 6.20

 

Hawaii Dislocated Workers Act

 

43

 

 

 

 

 

ARTICLE VII INDEMNIFICATION

 

 

Section 7.1

 

Seller Parties’ Indemnity Obligations

 

43

Section 7.2

 

Buyer’s Indemnity Obligations

 

44

Section 7.3

 

Survival

 

45

 

3

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Section 7.4

 

Indemnification Procedures

 

45

Section 7.5

 

General

 

47

Section 7.6

 

Exclusivity

 

47

 

 

 

 

 

ARTICLE VIII CONDITIONS TO CLOSING

 

 

Section 8.1

 

Conditions to Obligations of Buyer

 

47

Section 8.2

 

Conditions to Obligations of Smith Maritime, Go Big and the Seller Parties

 

50

 

 

 

 

 

ARTICLE IX TERMINATION

 

 

Section 9.1

 

Grounds for Termination

 

51

Section 9.2

 

Effect of Termination

 

51

 

 

 

 

 

ARTICLE X GENERAL PROVISIONS

 

 

Section 10.1

 

Release

 

52

Section 10.2

 

Arbitration

 

52

Section 10.3

 

Confidentiality

 

54

Section 10.4

 

Expenses

 

55

Section 10.5

 

Entire Agreement

 

55

Section 10.6

 

No Reliance

 

56

Section 10.7

 

Waivers and Consents

 

56

Section 10.8

 

Notices

 

56

Section 10.9

 

Assignments, Successors and No Third-Party Rights

 

57

Section 10.10

 

Choice of Law

 

58

Section 10.11

 

Jurisdiction and Venue

 

58

Section 10.12

 

Construction; Section Headings; Table of Contents

 

58

Section 10.13

 

Severability

 

58

Section 10.14

 

Counterparts

 

58

Section 10.15

 

Time of Essence

 

58

Section 10.16

 

Power of Attorney

 

58

 

EXHIBITS

 

 

 

 

 

Exhibit A

 

Form of Assignment of Membership Interest/Stock Power

Exhibit B

 

Form of Employee Release

 

 

 

SCHEDULES

 

 

 

 

 

Schedule 1.1

 

Certain Permitted Liens

Schedule 2.8

 

Merger Consideration

Schedule 3.2

 

Authorization

Schedule 3.3(a)

 

Capitalization

Schedule 3.3(b)

 

Capitalization of 235LX

Schedule 3.3(c)

 

Subscriptions, Etc.

Schedule 3.4

 

Non-Contravention

Schedule 3.6

 

Broker Involvement

Schedule 4.1(a)(1)

 

Smith Maritime Foreign Qualifications

Schedule 4.1(a)(2)

 

Smith Maritime Partnerships, Etc.

Schedule 4.1(b)

 

Go Big Foreign Qualifications

 

4

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Schedule 4.1(c)

 

Smith Subsidiary Foreign Qualifications

Schedule 4.2

 

Authorization

Schedule 4.3(c)

 

Subscriptions, Etc.

Schedule 4.4

 

Non-Contravention

Schedule 4.6

 

Broker Involvement

Schedule 4.7

 

Litigation

Schedule 4.8

 

Title to Assets

Schedule 4.9

 

Continuity Prior to Closing Date

Schedule 4.10

 

Contracts and Commitments

Schedule 4.11

 

Trademarks, Trade Names and Intellectual Property

Schedule 4.12(a)

 

Unaudited Financial Statements

Schedule 4.12(b)

 

Audited Annual Financial Statements

Schedule 4.12(c)

 

Unaudited Interim Financial Statements

Schedule 4.12(d)

 

Budget

Schedule 4.12(e)

 

Liabilities

Schedule 4.12(f)

 

Intercompany Transactions

Schedule 4.13

 

Bank Relations

Schedule 4.14(a)

 

Material Assets

Schedule 4.14(b)(1)

 

Owned Vessels

Schedule 4.14(b)(2)

 

Bareboat Chartered Vessels

Schedule 4.14(b)(3)

 

Other Vessels

Schedule 4.14(c)

 

Condition of Vessels

Schedule 4.14(d)

 

Vessel Documentation

Schedule 4.14(e)

 

CG-385 Certificates; Captain of Port Orders

Schedule 4.15

 

Undisclosed Liabilities

Schedule 4.16

 

Real Estate

Schedule 4.18

 

Inventory

Schedule 4.19

 

Employees

Schedule 4.20

 

Employee Benefits

Schedule 4.22(a)

 

Compliance with Environmental Laws

Schedule 4.22(b)

 

Environmental Permits

Schedule 4.22(c)

 

Hazardous Material

Schedule 4.22(d)

 

Notice of Environmental Violations; Remedial Actions

Schedule 4.22(e)

 

Changes in Law

Schedule 4.22(f)

 

Releases; Disposal of Hazardous Materials

Schedule 4.22(g)

 

Storage of Hazardous Materials

Schedule 4.22(l)

 

Remedial Action

Schedule 4.22(m)

 

Other Environmental Matters

Schedule 4.23

 

Insurance

Schedule 4.24

 

Governmental Licenses, Permits and Related Approvals

Schedule 4.25

 

Responsible Carriers Plan

Schedule 4.26(b)

 

Notice of Deficiency or Assessment

Schedule 4.26(e)

 

Federal Tax Basis and Liability

Schedule 4.26(g)

 

Section 1374

Schedule 4.29

 

Safety Reports

Schedule 4.30

 

Transactions with Certain Persons

 

5

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Schedule 6.11

 

GAAP Exceptions

Schedule 6.12(a)

 

Excepted Employees

Schedule 6.13

 

Personal Property

 

6

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AGREEMENT AND PLAN OF MERGER

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

RECITALS

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

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

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

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

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

ARTICLE I
DEFINITIONS

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

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

 

7

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

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

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

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

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

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

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

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

HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act.

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

 

8

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

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

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

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

Loan Obligations means, collectively:

 

9

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

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

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

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

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

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

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

 

10

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

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

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

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

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

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

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

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

Threshold Amount means $1,000,000.

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

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

 

11

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ARTICLE II
THE MERGERS

SECTION 2.1  THE MERGERS.  AT THE EFFECTIVE TIME (AS DEFINED BELOW) AND UPON THE
TERMS AND SUBJECT TO THE CONDITIONS OF THIS AGREEMENT (A) SMITH MARITIME SHALL
BE MERGED WITH AND INTO BUYER (THE “SMITH MERGER”) IN ACCORDANCE WITH SECTION
18-209 OF THE DELAWARE LIMITED LIABILITY COMPANY ACT (THE “DELAWARE ACT”) AND
SECTION 414-311 OF THE HAWAII BUSINESS CORPORATION ACT (THE “HAWAII ACT”), AND
(B) GO BIG SHALL BE MERGED WITH AND INTO BUYER (THE “GO BIG MERGER” AND,
TOGETHER WITH THE SMITH MERGER, THE “MERGERS”) IN ACCORDANCE WITH SECTION 18-209
OF THE DELAWARE ACT AND CHAPTER 25.15 OF THE REVISED CODE OF WASHINGTON (THE
“WASHINGTON CODE”).  FOLLOWING THE SMITH MERGER AND THE GO BIG MERGER, THE
SEPARATE EXISTENCE OF EACH OF SMITH MARITIME AND GO BIG, RESPECTIVELY, SHALL
CEASE AND BUYER SHALL CONTINUE AS THE SURVIVING ENTITY (THE “SURVIVING ENTITY”).

SECTION 2.2  EFFECTIVE TIME.  UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET
FORTH IN THIS AGREEMENT, ON THE CLOSING DATE (AS DEFINED IN SECTION 2.3): (A) A
CERTIFICATE OF MERGER WITH RESPECT TO THE MERGERS (THE “CERTIFICATE OF MERGER”)
SHALL BE DULY EXECUTED AND DELIVERED TO THE SECRETARY OF STATE OF THE STATE OF
DELAWARE FOR FILING PURSUANT TO SECTION 18-209 OF THE DELAWARE ACT; (B) ARTICLES
OF MERGER (THE “SMITH ARTICLES OF MERGER”) WITH RESPECT TO THE SMITH MERGER
SHALL BE DULY EXECUTED AND DELIVERED TO THE DIRECTOR OF COMMERCE AND CONSUMER
AFFAIRS OF THE STATE OF HAWAII FOR FILING PURSUANT TO SECTION 414-315 OF THE
HAWAII ACT, (C) ARTICLES OF MERGER WITH RESPECT TO THE GO BIG MERGER (THE “GO
BIG ARTICLES OF MERGER”) SHALL BE DULY EXECUTED AND DELIVERED TO THE SECRETARY
OF STATE OF THE STATE OF WASHINGTON FOR FILING PURSUANT TO SECTION 25.15.405 OF
THE WASHINGTON CODE; AND (D) THE PARTIES SHALL MAKE SUCH OTHER FILINGS WITH THE
SECRETARY OF STATE OF THE STATES OF DELAWARE, HAWAII AND WASHINGTON AS SHALL BE
NECESSARY TO EFFECT THE MERGERS.  THE SMITH MERGER SHALL BE BECOME EFFECTIVE AT
SUCH TIME AS A PROPERLY EXECUTED COPY OF THE CERTIFICATE OF MERGER IS DULY FILED
WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE IN ACCORDANCE WITH THE
DELAWARE ACT AND A PROPERLY EXECUTED COPY OF THE SMITH ARTICLES OF MERGER ARE
FILED WITH THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS OF THE STATE OF HAWAII
IN ACCORDANCE WITH THE HAWAII ACT, OR SUCH LATER TIME AS BUYER AND SMITH
MARITIME MAY AGREE UPON AND AS MAY BE SET FORTH IN THE CERTIFICATE OF MERGER AND
THE SMITH ARTICLES OF MERGER (THE TIME THE SMITH MERGER BECOMES EFFECTIVE BEING
REFERRED TO HEREIN AS THE “SMITH EFFECTIVE TIME”).  THE GO BIG MERGER SHALL BE
BECOME EFFECTIVE AT SUCH TIME AS A PROPERLY EXECUTED COPY OF THE CERTIFICATE OF
MERGER IS DULY FILED WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE IN
ACCORDANCE WITH THE DELAWARE ACT AND A PROPERLY EXECUTED COPY OF THE GO BIG
ARTICLES OF MERGER ARE FILED WITH THE SECRETARY OF STATE OF THE STATE OF
WASHINGTON IN ACCORDANCE WITH THE WASHINGTON CODE, OR SUCH LATER TIME AS BUYER
AND GO BIG MAY AGREE UPON AND AS MAY BE SET FORTH IN THE CERTIFICATE OF MERGER
AND THE GO BIG ARTICLES OF MERGER (THE TIME THE GO BIG MERGER BECOMES EFFECTIVE
BEING REFERRED TO HEREIN AS THE “GO BIG EFFECTIVE TIME” AND, TOGETHER WITH THE
SMITH EFFECTIVE TIME, THE “EFFECTIVE TIME”).  THE PARTIES HEREBY AGREE THAT THE
SMITH EFFECTIVE TIME AND THE GO BIG EFFECTIVE TIME SHALL BE IDENTICAL.

SECTION 2.3  CLOSING.  THE CLOSING OF THE TRANSACTIONS CONTEMPLATED HEREBY (THE
“CLOSING”) SHALL TAKE PLACE AT THE OFFICES OF BAUER MOYNIHAN & JOHNSON LLP, 2101
FOURTH AVENUE, SUITE 2400, SEATTLE, WASHINGTON 98121, AT 11:00 A.M., SEATTLE
TIME, ON THE LATER OF (1) JULY 26, 2007 OR (2) THE DATE THAT IS THREE BUSINESS
DAYS FOLLOWING THE FIRST DAY ON WHICH ALL OF THE CONDITIONS SET FORTH IN ARTICLE
VIII HAVE BEEN SATISFIED OR WAIVED (OTHER THAN CONDITIONS THAT BY

 

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THEIR NATURE ARE TO BE SATISFIED AT THE CLOSING, BUT SUBJECT TO THE FULFILLMENT
OR WAIVER OF THOSE CONDITIONS), OR AT SUCH OTHER TIME AND PLACE AS THE PARTIES
MAY AGREE.  THE DATE ON WHICH THE CLOSING IS HELD IS REFERRED TO IN THIS
AGREEMENT AS THE “CLOSING DATE.”

SECTION 2.4  EFFECTS OF THE MERGERS.  THE MERGERS SHALL HAVE THE EFFECTS SET
FORTH IN THE DELAWARE ACT, THE HAWAII ACT, THE WASHINGTON CODE AND THIS
AGREEMENT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND SUBJECT
THERETO, AT THE EFFECTIVE TIME, ALL PROPERTY, RIGHTS, PRIVILEGES, POWERS AND
FRANCHISES OF SMITH MARITIME, GO BIG AND BUYER SHALL VEST IN THE SURVIVING
ENTITY, AND ALL DEBTS, LIABILITIES AND DUTIES OF SMITH MARITIME, GO BIG AND
BUYER SHALL BECOME THE DEBTS, LIABILITIES AND DUTIES OF THE SURVIVING ENTITY.

SECTION 2.5  CERTIFICATE OF FORMATION; LIMITED LIABILITY COMPANY AGREEMENT.

(A)           THE CERTIFICATE OF FORMATION OF BUYER, AS IN EFFECT IMMEDIATELY
PRIOR TO THE EFFECTIVE TIME, SHALL BE THE CERTIFICATE OF FORMATION OF THE
SURVIVING ENTITY UNTIL THEREAFTER CHANGED OR AMENDED AS PROVIDED THEREIN OR BY
APPLICABLE LAW.

(B)           THE LIMITED LIABILITY COMPANY AGREEMENT OF BUYER AS IN EFFECT
IMMEDIATELY PRIOR TO THE EFFECTIVE TIME SHALL BE THE LIMITED LIABILITY COMPANY
AGREEMENT OF THE SURVIVING ENTITY UNTIL THEREAFTER CHANGED OR AMENDED AS
PROVIDED THEREIN OR BY APPLICABLE LAW.

SECTION 2.6  MANAGERS.  THE MANAGERS OF BUYER AT THE EFFECTIVE TIME SHALL BE THE
INITIAL MANAGERS OF THE SURVIVING ENTITY, EACH TO HOLD OFFICE IN ACCORDANCE WITH
THE CERTIFICATE OF FORMATION AND THE LIMITED LIABILITY COMPANY AGREEMENT OF THE
SURVIVING ENTITY UNTIL SUCH DIRECTOR’S SUCCESSOR IS DULY ELECTED OR APPOINTED
AND QUALIFIED.

SECTION 2.7  OFFICERS.  THE OFFICERS OF BUYER AT THE EFFECTIVE TIME SHALL BE THE
INITIAL OFFICERS OF THE SURVIVING ENTITY, EACH TO HOLD OFFICE IN ACCORDANCE WITH
THE CERTIFICATE OF FORMATION AND THE LIMITED LIABILITY COMPANY AGREEMENT OF THE
SURVIVING ENTITY UNTIL SUCH OFFICER’S SUCCESSOR IS DULY ELECTED OR APPOINTED AND
QUALIFIED.

SECTION 2.8  CONVERSION OF EQUITY INTERESTS.  AT THE EFFECTIVE TIME, BY VIRTUE
OF THE MERGERS AND WITHOUT ANY ACTION ON THE PART OF BUYER, SMITH MARITIME, GO
BIG OR ANY OF THE SELLER PARTIES:

(A)           THE EQUITY INTERESTS SHALL BE CONVERTED AUTOMATICALLY INTO THE
RIGHT TO RECEIVE, IN THE AGGREGATE, AN AMOUNT IN CASH EQUAL TO THE FOLLOWING
(THE “MERGER CONSIDERATION”):

(I)            $117,698,532, LESS

(II)           ALL PREPAID REVENUE OF THE SUBJECT COMPANIES AS OF THE CLOSING
DATE (AS CERTIFIED IN WRITING BY THE PRESIDENT OF SMITH MARITIME), LESS

(III)          AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN $500,000 AND THE AMOUNT
OF CASH THAT IS EXPECTED TO BE REFLECTED ON THE CLOSING DATE BALANCE SHEET AS
FINALLY DETERMINED PURSUANT TO SECTION 6.11 (AS CERTIFIED IN WRITING BY THE

 

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PRESIDENT OF SMITH MARITIME), PROVIDED THAT NO REDUCTION SHALL BE MADE IF THE
AMOUNT OF CASH THAT IS EXPECTED TO BE REFLECTED ON THE CLOSING DATE BALANCE
SHEET IS EQUAL TO OR GREATER THAN $500,000; LESS

(IV)          ALL BONUSES OR OTHER COMPENSATION PAID OR PROMISED BY SMITH
MARITIME TO ITS EMPLOYEES PURSUANT TO SECTION 6.12(C), INCLUDING ALL EMPLOYMENT
OR OTHER TAXES PAYABLE BY SMITH MARITIME IN CONNECTION WITH SUCH AMOUNTS; AND

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

(B)           ALL SUCH EQUITY INTERESTS SHALL NO LONGER BE OUTSTANDING AND SHALL
AUTOMATICALLY BE CANCELLED AND SHALL CEASE TO EXIST, AND THE SELLER PARTIES
SHALL CEASE TO HAVE ANY RIGHTS WITH RESPECT THERETO, EXCEPT THE RIGHT TO RECEIVE
THE MERGER CONSIDERATION; AND

(C)           THE MEMBERSHIP INTERESTS OF BUYER ISSUED AND OUTSTANDING
IMMEDIATELY PRIOR TO THE EFFECTIVE TIME SHALL BE CONVERTED INTO AND EXCHANGED
FOR VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE MEMBERSHIP INTERESTS IN THE
SURVIVING ENTITY.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SELLER PARTY

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

SECTION 3.1  CORPORATE STATUS AND GOOD STANDING; CITIZENSHIP.

(A)           235LX IS A LIMITED LIABILITY COMPANY DULY ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF WASHINGTON, WITH
FULL LIMITED LIABILITY COMPANY POWER AND AUTHORITY UNDER ITS GOVERNING DOCUMENTS
TO OWN AND LEASE ITS PROPERTIES AND TO CONDUCT BUSINESS AS THE SAME EXISTS ON
THE DATE HEREOF AND ON THE CLOSING DATE.

(B)           SELLER PARTY IS A CITIZEN OF THE UNITED STATES WITHIN THE MEANING
OF CHAPTER 505 OF TITLE 46 OF THE UNITED STATES CODE, FOR THE PURPOSE OF
OPERATING THE VESSELS IN THE COASTWISE TRADE OF THE UNITED STATES.

SECTION 3.2  AUTHORIZATION.

 

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(A)           SELLER PARTY HAS ALL REQUISITE POWER AND AUTHORITY UNDER ITS
GOVERNING DOCUMENTS, AND ITS MEMBERS OR TRUSTEES, AS APPLICABLE, HAVE TAKEN ALL
NECESSARY ACTION TO AUTHORIZE IT, TO EXECUTE AND DELIVER THIS AGREEMENT AND THE
EXHIBITS AND SCHEDULES HERETO, TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
HEREIN AND THEREIN AND TO TAKE ALL ACTIONS REQUIRED TO BE TAKEN BY IT PURSUANT
TO THE PROVISIONS HEREOF AND THEREOF.  A CERTIFIED COPY OF RESOLUTIONS OR A
CERTIFICATION, AS THE CASE MAY BE, DULY ADOPTED BY THE MEMBERS OR TRUSTEES, AS
APPLICABLE, OF SELLER PARTY AUTHORIZING AND APPROVING THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, INCLUDING THE EXHIBITS AND SCHEDULES HERETO, AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN, IS ATTACHED AS
SCHEDULE 3.2, AND SUCH RESOLUTIONS OR CERTIFICATION HAVE NOT BEEN RESCINDED,
REVOKED, MODIFIED OR SUPERSEDED IN ANY RESPECT.

(B)           EACH OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO
CONSTITUTES THE VALID AND BINDING OBLIGATION OF SELLER PARTY (TO THE EXTENT A
PARTY THERETO), ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, SUBJECT TO APPLICABLE
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER SIMILAR LAWS
AFFECTING CREDITORS’ RIGHTS GENERALLY AND TO THE PRINCIPLES OF EQUITY (WHETHER
ENFORCEMENT IS SOUGHT IN A PROCEEDING IN EQUITY OR AT LAW).

SECTION 3.3  CAPITALIZATION; TITLE TO MEMBERSHIP INTERESTS.

(A)           EXCEPT AS SET FORTH ON SCHEDULE 3.3(A), SELLER PARTY OWNS
BENEFICIALLY AND OF RECORD ALL OF THE EQUITY INTERESTS SET FORTH OPPOSITE
SELLER’S NAME ON SCHEDULE 3.3(A), FREE AND CLEAR OF ALL LIENS.  EXCEPT AS SET
FORTH IN SCHEDULE 3.3(A), SUCH EQUITY INTERESTS ARE NOT SUBJECT TO ANY
AGREEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE VOTING OR TRANSFER OF ANY OF
THE EQUITY INTERESTS (EXCEPT AS CONTEMPLATED BY THIS AGREEMENT AND RESTRICTIONS
UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS).  EXCEPT AS SET FORTH ON
SCHEDULE 3.3(A), SELLER PARTY HAS FULL LEGAL RIGHT TO SELL, ASSIGN, CONVEY AND
TRANSFER ITS EQUITY INTERESTS TO BUYER AND WILL, UPON DELIVERY OF AN ASSIGNMENT
OF SUCH EQUITY INTERESTS TO BUYER PURSUANT TO THE TERMS HEREOF, TRANSFER TO
BUYER TITLE TO SUCH EQUITY INTERESTS, FREE AND CLEAR OF ANY LIENS.

(B)           SCHEDULE 3.3(B) SETS FORTH THE AUTHORIZED CAPITALIZATION OF
235LX.  SMITH OWNS BENEFICIALLY AND OF RECORD ALL OF THE EQUITY INTERESTS IN
235LX AS SET FORTH ON SCHEDULE 3.3(B), IN EACH CASE FREE AND CLEAR OF ALL
LIENS.  EXCEPT AS SET FORTH IN SCHEDULE 3.3(B), SUCH EQUITY INTERESTS ARE NOT
SUBJECT TO ANY AGREEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE VOTING OF SUCH
EQUITY INTERESTS.

(C)           EXCEPT AS SET FORTH IN SCHEDULE 3.3(C), THERE ARE NO OUTSTANDING
SUBSCRIPTIONS, OPTIONS, CONVERTIBLE SECURITIES, WARRANTS OR CALLS OR PREEMPTIVE
RIGHTS OF ANY KIND ISSUED OR GRANTED BY, OR BINDING UPON, 235LX TO PURCHASE OR
OTHERWISE ACQUIRE OR TO SELL OR OTHERWISE DISPOSE OF ANY SECURITY OF OR EQUITY
INTEREST IN 235LX.

(D)           SELLER PARTY DOES NOT OWN OR CONTROL, DIRECTLY OR INDIRECTLY, ANY
INTEREST IN ANY PERSON (OTHER THAN THE SUBJECT COMPANIES) AND IS NOT A
PARTICIPANT IN ANY PARTNERSHIP, JOINT VENTURE OR SIMILAR ARRANGEMENT.

SECTION 3.4  NON-CONTRAVENTION.  EXCEPT AS SET FORTH IN SCHEDULE 3.4, NEITHER
THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THEREIN, DOES OR SHALL:

 

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(A)           VIOLATE, CONFLICT WITH, RESULT IN A BREACH OF OR REQUIRE NOTICE OR
CONSENT, OR DECREASE THE RIGHTS OF SELLER PARTY OR INCREASE THE RIGHTS OF ANY
THIRD PARTY, UNDER (I) ANY LAW, (II) THE CERTIFICATE OF FORMATION, LIMITED
LIABILITY COMPANY AGREEMENT, BOARD OR MEMBER RESOLUTIONS OR OTHER GOVERNING
DOCUMENTS OR INSTRUMENTS OF SELLER PARTY OR (III) ANY PROVISION OF ANY AGREEMENT
OR INSTRUMENT TO WHICH SELLER PARTY IS A PARTY;

(B)           CONTRAVENE, CONFLICT WITH, OR RESULT IN A VIOLATION OF, OR GIVE
ANY GOVERNMENTAL BODY OR OTHER PERSON THE RIGHT TO CHALLENGE ANY OF SUCH
TRANSACTIONS OR TO EXERCISE ANY REMEDY OR OBTAIN ANY RELIEF UNDER, ANY LAW, TO
WHICH SELLER PARTY, OR ANY OF THE ASSETS OWNED OR USED BY SELLER PARTY, ARE
BOUND;

(C)           CONTRAVENE, CONFLICT WITH, OR RESULT IN A VIOLATION OF ANY OF THE
TERMS OR REQUIREMENTS OF, OR GIVE ANY GOVERNMENTAL BODY THE RIGHT TO REVOKE,
WITHDRAW, SUSPEND, CANCEL, TERMINATE, OR MODIFY, ANY LICENSE, PERMIT, CONSENT,
APPROVAL, AUTHORIZATION, QUALIFICATION, CERTIFICATE, REGISTRATION OR ORDER OF
ANY GOVERNMENTAL BODY THAT IS HELD BY SELLER PARTY OR THAT OTHERWISE RELATES TO
THE BUSINESS OF, OR ANY OF THE ASSETS OWNED OR USED BY, SELLER PARTY;

(D)           OTHERWISE REQUIRE NOTICE TO OR CONSENT OF ANY GOVERNMENTAL BODY,
EXCEPT FOR (I) ANY FILING UNDER THE HSR ACT; (II) THE FILING OF ARTICLES OR
CERTIFICATES OF MERGER WITH THE SECRETARY OF STATE OF THE STATES OF WASHINGTON,
HAWAII AND DELAWARE; AND (III) ANY FILINGS REQUIRED TO BE MADE WITH AND/OR
APPROVALS TO BE OBTAINED FROM THE U.S. COAST GUARD WITH RESPECT TO THE TRANSFER
OF THE VESSELS;

(E)           RESULT IN THE IMPOSITION OR CREATION OF ANY LIEN UPON OR WITH
RESPECT TO THE EQUITY INTERESTS OF SELLER PARTY OR ANY ASSETS OF SELLER PARTY;
OR

(F)            RESULT IN THE ACCELERATION OR MANDATORY PREPAYMENT OF ANY
INDEBTEDNESS, OR ANY GUARANTY OF SELLER PARTY OR AFFORD ANY HOLDER OF ANY
INDEBTEDNESS, OR ANY BENEFICIARY OF ANY GUARANTY THE RIGHT TO REQUIRE SELLER
PARTY TO REDEEM, PURCHASE OR OTHERWISE ACQUIRE, REACQUIRE OR REPAY ANY
INDEBTEDNESS, OR TO PERFORM ANY GUARANTY.

SECTION 3.5  VALIDITY.  THERE IS NO INVESTIGATION, CLAIM, PROCEEDING OR
LITIGATION OF ANY TYPE PENDING OR, TO THE KNOWLEDGE OF SELLER PARTY, THREATENED
TO WHICH SELLER PARTY IS A PARTY THAT (I) QUESTIONS OR INVOLVES THE VALIDITY OR
ENFORCEABILITY OF ANY OF SUCH PARTY’S OBLIGATIONS UNDER THIS AGREEMENT OR ANY OF
THE EXHIBITS HERETO OR (II) SEEKS (OR REASONABLY MIGHT BE EXPECTED TO SEEK) (A)
TO PREVENT OR DELAY THE CONSUMMATION BY SELLER PARTY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR (B) DAMAGES IN CONNECTION WITH ANY SUCH
CONSUMMATION.

SECTION 3.6  BROKER INVOLVEMEN.  SELLER PARTY HAS NOT HIRED, RETAINED OR DEALT
WITH ANY BROKER OR FINDER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, EXCEPT AS SET FORTH ON SCHEDULE 3.6.

SECTION 3.7  LITIGATION.  THERE IS NO JUDGMENT, ORDER, WRIT, INJUNCTION OR
DECREE OF ANY GOVERNMENTAL BODY OR ARBITRAL TRIBUNAL AGAINST OR INVOLVING SELLER
PARTY THAT MAY BE REASONABLY EXPECTED TO HAVE AN ADVERSE EFFECT ON ANY OF THE
SUBJECT COMPANIES, BUYER OR ANY OF THEIR RESPECTIVE SUBSIDIARIES.

 

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

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SMITH MARITIME, GO BIG, SMITH,
THE GORDON TRUST AND 235LX

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

SECTION 4.1  CORPORATE STATUS AND GOOD STANDING; CITIZENSHIP.

(A)           SMITH MARITIME IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING
AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF HAWAII, WITH FULL CORPORATE
POWER AND AUTHORITY UNDER ITS GOVERNING DOCUMENTS TO OWN AND LEASE ITS
PROPERTIES AND TO CONDUCT BUSINESS AS THE SAME EXISTS ON THE DATE HEREOF AND ON
THE CLOSING DATE.  SMITH MARITIME IS DULY QUALIFIED TO DO BUSINESS AS A FOREIGN
CORPORATION IN THE JURISDICTIONS SET FORTH ON SCHEDULE 4.1(A)(1).  SMITH
MARITIME IS DULY QUALIFIED TO DO BUSINESS AS A FOREIGN CORPORATION IN ALL
JURISDICTIONS IN WHICH THE NATURE OF ITS BUSINESS REQUIRES SUCH QUALIFICATION
AND THE FAILURE TO DO SO WOULD HAVE AN ADVERSE EFFECT ON ANY OF THE SUBJECT
COMPANIES.  EXCEPT AS SET FORTH ON SCHEDULE 4.1(A)(2), SMITH MARITIME DOES NOT
HAVE ANY SUBSIDIARIES AND IS NOT A PARTICIPANT IN ANY PARTNERSHIP, JOINT VENTURE
OR SIMILAR ARRANGEMENT.

(B)           GO BIG IS A LIMITED LIABILITY COMPANY DULY ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF WASHINGTON, WITH
FULL LIMITED LIABILITY COMPANY POWER AND AUTHORITY UNDER ITS GOVERNING DOCUMENTS
TO OWN AND LEASE ITS PROPERTIES AND TO CONDUCT BUSINESS AS THE SAME EXISTS ON
THE DATE HEREOF AND ON THE CLOSING DATE.  GO BIG IS DULY QUALIFIED TO DO
BUSINESS AS A FOREIGN LIMITED LIABILITY COMPANY IN THE JURISDICTIONS SET FORTH
ON SCHEDULE 4.1(B).  GO BIG IS DULY QUALIFIED TO DO BUSINESS AS A FOREIGN
LIMITED LIABILITY COMPANY IN ALL JURISDICTIONS IN WHICH THE NATURE OF ITS
BUSINESS REQUIRES SUCH QUALIFICATION AND THE FAILURE TO DO SO WOULD HAVE AN
ADVERSE EFFECT ON ANY OF THE SUBJECT COMPANIES.  GO BIG DOES NOT HAVE ANY
SUBSIDIARIES AND IS NOT A PARTICIPANT IN ANY PARTNERSHIP, JOINT VENTURE OR
SIMILAR ARRANGEMENT.

(C)           EACH SUBSIDIARY OF SMITH MARITIME SET FORTH ON SCHEDULE 4.1(C)
(EACH A “SMITH SUBSIDIARY”) IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING
AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF HAWAII, WITH FULL CORPORATE
POWER AND AUTHORITY UNDER ITS GOVERNING DOCUMENTS TO OWN AND LEASE ITS
PROPERTIES AND TO CONDUCT BUSINESS AS THE SAME EXISTS ON THE DATE HEREOF.   AS
OF THE CLOSING DATE, EACH SMITH SUBSIDIARY WILL BE A LIMITED LIABILITY COMPANY
DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
STATE OF HAWAII, WITH FULL LIMITED LIABILITY COMPANY POWER AND AUTHORITY UNDER
ITS GOVERNING DOCUMENTS TO OWN AND LEASE ITS PROPERTIES AND TO CONDUCT BUSINESS
AS THE SAME EXISTS ON THE

 

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CLOSING DATE.  EACH SMITH SUBSIDIARY IS DULY QUALIFIED TO DO BUSINESS AS A
FOREIGN CORPORATION, AND AS OF THE CLOSING DATE WILL BE DULY QUALIFIED TO DO
BUSINESS AS A FOREIGN LIMITED LIABILITY COMPANY, IN THE JURISDICTIONS SET FORTH
ON SCHEDULE 4.1(C).  EACH SMITH SUBSIDIARY IS DULY QUALIFIED TO DO BUSINESS AS A
FOREIGN CORPORATION, AND AS OF THE CLOSING DATE EACH SMITH SUBSIDIARY WILL BE
DULY QUALIFIED TO DO BUSINESS AS A FOREIGN LIMITED LIABILITY COMPANY, IN ALL
JURISDICTIONS IN WHICH THE NATURE OF ITS BUSINESS REQUIRES SUCH QUALIFICATION
AND THE FAILURE TO DO SO WOULD HAVE AN ADVERSE EFFECT ON ANY OF THE SUBJECT
COMPANIES.

(D)           EACH OF THE SUBJECT COMPANIES IS A CITIZEN OF THE UNITED STATES
WITHIN THE MEANING OF CHAPTER 505 OF TITLE 46 OF THE UNITED STATES CODE, FOR THE
PURPOSE OF OPERATING THE VESSELS IN THE COASTWISE TRADE OF THE UNITED STATES.

SECTION 4.2  AUTHORIZATION.

(A)           EACH OF SMITH MARITIME AND GO BIG HAS ALL REQUISITE POWER AND
AUTHORITY UNDER ITS GOVERNING DOCUMENTS, AND THE SHAREHOLDERS OR MEMBERS, AS
APPLICABLE, OF EACH OF SMITH MARITIME AND GO BIG HAS TAKEN ALL NECESSARY ACTION
TO AUTHORIZE IT, TO EXECUTE AND DELIVER THIS AGREEMENT AND THE EXHIBITS AND
SCHEDULES HERETO, TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN
AND TO TAKE ALL ACTIONS REQUIRED TO BE TAKEN BY IT PURSUANT TO THE PROVISIONS
HEREOF AND THEREOF.  A CERTIFIED COPY OF RESOLUTIONS DULY ADOPTED BY THE
SHAREHOLDERS OR MEMBERS, AS APPLICABLE, OF EACH OF SMITH MARITIME AND GO BIG
AUTHORIZING AND APPROVING THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
INCLUDING THE EXHIBITS AND SCHEDULES HERETO, AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN, IS ATTACHED AS SCHEDULE 4.2, AND
SUCH RESOLUTIONS HAVE NOT BEEN RESCINDED, REVOKED, MODIFIED OR SUPERSEDED IN ANY
RESPECT.

(B)           EACH OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO
CONSTITUTES THE VALID AND BINDING OBLIGATION OF SMITH MARITIME AND GO BIG TO THE
EXTENT A PARTY THERETO, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, SUBJECT TO
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER SIMILAR
LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY AND TO THE PRINCIPLES OF EQUITY
(WHETHER ENFORCEMENT IS SOUGHT IN A PROCEEDING IN EQUITY OR AT LAW).

SECTION 4.3  CAPITALIZATION; TITLE TO EQUITY INTERESTS.

(A)           THE AUTHORIZED EQUITY SECURITIES OF SMITH MARITIME CONSIST OF
2,000,000 SHARES OF COMMON STOCK, NO PAR VALUE, OF WHICH 1,000,000 SHARES ARE
ISSUED AND OUTSTANDING (THE “SHARES”).  THE SMITH SELLERS OWN, AND AT THE
CLOSING SMITH AND THE BARBARA TRUST WILL OWN, BENEFICIALLY AND OF RECORD ALL OF
THE SHARES, IN EACH CASE FREE AND CLEAR OF ALL LIENS.  SUCH SHARES ARE NOT
SUBJECT TO ANY AGREEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE VOTING OR
TRANSFER OF ANY OF THE SHARES (EXCEPT AS CONTEMPLATED BY THIS AGREEMENT AND
RESTRICTIONS UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS).  THE SHARES
HAVE BEEN DULY AUTHORIZED AND VALIDLY ISSUED AND ARE FULLY PAID AND
NONASSESSABLE.  THE SMITH SELLERS HAVE, AND AT CLOSING SMITH AND THE BARBARA
TRUST WILL HAVE, FULL LEGAL RIGHT TO SELL, ASSIGN, CONVEY AND TRANSFER THE
SHARES TO BUYER AND WILL, UPON DELIVERY OF A CERTIFICATE OR CERTIFICATES
REPRESENTING SUCH SHARES TO BUYER PURSUANT TO THE TERMS HEREOF, TRANSFER TO
BUYER TITLE TO SUCH SHARES, FREE AND CLEAR OF ANY LIENS.

(B)           235LX OWNS BENEFICIALLY AND OF RECORD ALL OF THE GO BIG MEMBERSHIP
INTERESTS, IN EACH CASE FREE AND CLEAR OF ALL LIENS.  SUCH GO BIG MEMBERSHIP
INTERESTS ARE NOT

 

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SUBJECT TO ANY AGREEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE VOTING OR
TRANSFER OF ANY OF THE GO BIG MEMBERSHIP INTERESTS (EXCEPT AS CONTEMPLATED BY
THIS AGREEMENT AND RESTRICTIONS UNDER APPLICABLE FEDERAL AND STATE SECURITIES
LAWS).  THE GO BIG MEMBERSHIP INTERESTS ARE DULY AUTHORIZED AND VALIDLY ISSUED
AND WILL BE FULLY PAID AND NONASSESSABLE.  235LX HAS FULL LEGAL RIGHT TO SELL,
ASSIGN, CONVEY AND TRANSFER THE GO BIG MEMBERSHIP INTERESTS, TO BUYER AND WILL,
UPON DELIVERY OF A CERTIFICATE OR CERTIFICATES REPRESENTING SUCH GO BIG
MEMBERSHIP INTERESTS TO BUYER PURSUANT TO THE TERMS HEREOF, TRANSFER TO BUYER
TITLE TO SUCH GO BIG MEMBERSHIP INTERESTS, FREE AND CLEAR OF ANY LIENS.

(C)           EXCEPT AS SET FORTH IN SCHEDULE 4.3(C), THERE ARE NO OUTSTANDING
SUBSCRIPTIONS, OPTIONS, CONVERTIBLE SECURITIES, WARRANTS OR CALLS OR PREEMPTIVE
RIGHTS OF ANY KIND ISSUED OR GRANTED BY, OR BINDING UPON, ANY OF THE SUBJECT
COMPANIES TO PURCHASE OR OTHERWISE ACQUIRE OR TO SELL OR OTHERWISE DISPOSE OF
ANY SECURITY OF OR EQUITY INTEREST IN ANY OF THE SUBJECT COMPANIES.

SECTION 4.4  NON-CONTRAVENTION.  EXCEPT AS SET FORTH IN SCHEDULE 4.4, NEITHER
THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THEREIN, DOES OR SHALL:

(A)           VIOLATE, CONFLICT WITH, RESULT IN A BREACH OF OR REQUIRE NOTICE OR
CONSENT, OR DECREASE THE RIGHTS OF ANY OF THE SUBJECT COMPANIES OR INCREASE THE
RIGHTS OF ANY THIRD PARTY, UNDER (I) ANY LAW, (II) THE CERTIFICATE OF FORMATION,
LIMITED LIABILITY COMPANY AGREEMENT, BOARD OR MEMBER RESOLUTIONS OR OTHER
GOVERNING DOCUMENTS OR INSTRUMENTS OF ANY OF THE SUBJECT COMPANIES OR (III) ANY
PROVISION OF ANY AGREEMENT OR INSTRUMENT TO WHICH ANY OF THE SUBJECT COMPANIES
IS A PARTY;

(B)           CONTRAVENE, CONFLICT WITH, OR RESULT IN A VIOLATION OF, OR GIVE
ANY GOVERNMENTAL BODY OR OTHER PERSON THE RIGHT TO CHALLENGE ANY OF SUCH
TRANSACTIONS OR TO EXERCISE ANY REMEDY OR OBTAIN ANY RELIEF UNDER, ANY LAW, TO
WHICH ANY OF THE SUBJECT COMPANIES, OR ANY OF THE ASSETS OWNED OR USED BY ANY OF
THE SUBJECT COMPANIES, ARE BOUND;

(C)           CONTRAVENE, CONFLICT WITH, OR RESULT IN A VIOLATION OF ANY OF THE
TERMS OR REQUIREMENTS OF, OR GIVE ANY GOVERNMENTAL BODY THE RIGHT TO REVOKE,
WITHDRAW, SUSPEND, CANCEL, TERMINATE, OR MODIFY, ANY LICENSE, PERMIT, CONSENT,
APPROVAL, AUTHORIZATION, QUALIFICATION, CERTIFICATE, REGISTRATION OR ORDER OF
ANY GOVERNMENTAL BODY THAT IS HELD BY ANY OF THE SUBJECT COMPANIES OR THAT
OTHERWISE RELATES TO THE BUSINESS OF, OR ANY OF THE ASSETS OWNED OR USED BY, ANY
OF THE SUBJECT COMPANIES;

(D)           OTHERWISE REQUIRE NOTICE TO OR CONSENT OF ANY GOVERNMENTAL BODY,
EXCEPT FOR (I) ANY FILING UNDER THE HSR ACT; (II) THE FILING OF ARTICLES OR
CERTIFICATES OF MERGER WITH THE SECRETARY OF STATE OF THE STATES OF HAWAII,
WASHINGTON AND DELAWARE; AND (III) ANY FILINGS REQUIRED TO BE MADE WITH AND/OR
APPROVALS TO BE OBTAINED FROM THE U.S. COAST GUARD WITH RESPECT TO THE TRANSFER
OF THE VESSELS; OR

(E)           RESULT IN THE IMPOSITION OR CREATION OF ANY LIEN UPON OR WITH
RESPECT TO THE EQUITY INTERESTS OR ANY ASSETS OF ANY OF THE SUBJECT COMPANIES;
OR

 

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(F)            RESULT IN THE ACCELERATION OR MANDATORY PREPAYMENT OF ANY
INDEBTEDNESS, OR ANY GUARANTY OF ANY OF THE SUBJECT COMPANIES OR AFFORD ANY
HOLDER OF ANY INDEBTEDNESS, OR ANY BENEFICIARY OF ANY GUARANTY THE RIGHT TO
REQUIRE ANY OF THE SUBJECT COMPANIES TO REDEEM, PURCHASE OR OTHERWISE ACQUIRE,
REACQUIRE OR REPAY ANY INDEBTEDNESS, OR TO PERFORM ANY GUARANTY.

SECTION 4.5  VALIDITY.  THERE IS NO INVESTIGATION, CLAIM, PROCEEDING OR
LITIGATION OF ANY TYPE PENDING OR, TO THE KNOWLEDGE OF SELLERS, THREATENED TO
WHICH ANY OF THE SUBJECT COMPANIES IS A PARTY THAT (I) QUESTIONS OR INVOLVES THE
VALIDITY OR ENFORCEABILITY OF THE OBLIGATIONS OF ANY OF THE SUBJECT COMPANIES
UNDER THIS AGREEMENT OR ANY OF THE EXHIBITS HERETO OR (II) SEEKS (OR REASONABLY
MIGHT BE EXPECTED TO SEEK) (A) TO PREVENT OR DELAY THE CONSUMMATION BY ANY OF
THE SUBJECT COMPANIES OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
(B) DAMAGES IN CONNECTION WITH ANY SUCH CONSUMMATION.

SECTION 4.6  BROKER INVOLVEMENT.  NONE OF THE SUBJECT COMPANIES HAS HIRED,
RETAINED OR DEALT WITH ANY BROKER OR FINDER IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, EXCEPT AS SET FORTH ON SCHEDULE 4.6.

SECTION 4.7  LITIGATION.  EXCEPT AS SET FORTH ON SCHEDULE 4.7, THERE IS NO
INVESTIGATION, CLAIM, PROCEEDING OR LITIGATION OF ANY TYPE PENDING OR, TO THE
KNOWLEDGE OF SELLERS, THREATENED TO WHICH ANY OF THE SUBJECT COMPANIES IS OR MAY
BECOME A PARTY OR WITH RESPECT TO WHICH ANY OF THEIR RESPECTIVE PROPERTIES OR
ASSETS COULD REASONABLY BE EXPECTED TO BECOME SUBJECT.  TO THE KNOWLEDGE OF
SELLERS, SCHEDULE 4.7 SETS FORTH EACH JUDGMENT, ORDER, WRIT, INJUNCTION OR
DECREE OF ANY GOVERNMENTAL BODY OR ARBITRAL TRIBUNAL AGAINST OR INVOLVING ANY OF
THE SUBJECT COMPANIES THAT IS CURRENTLY IN EFFECT.  EXCEPT AS SET FORTH ON
SCHEDULE 4.7, THERE IS NO JUDGMENT, ORDER, WRIT, INJUNCTION OR DECREE OF ANY
GOVERNMENTAL BODY OR ARBITRAL TRIBUNAL AGAINST OR INVOLVING ANY OF THE SUBJECT
COMPANIES THAT MAY BE REASONABLY EXPECTED TO HAVE AN ADVERSE EFFECT ON ANY OF
THE SUBJECT COMPANIES, BUYER OR ANY OF THEIR RESPECTIVE SUBSIDIARIES.

SECTION 4.8  TITLE TO ASSETS.  EXCEPT AS SET FORTH ON SCHEDULE 4.8, EACH OF THE
SUBJECT COMPANIES HAS GOOD AND MARKETABLE TITLE TO ALL OF ITS OWNED ASSETS THAT
ARE USED IN ITS BUSINESS, FREE AND CLEAR OF ANY AND ALL LIENS OTHER THAN
PERMITTED LIENS.

SECTION 4.9  CONTINUITY PRIOR TO THE CLOSING DATE.  EXCEPT AS SET FORTH ON
SCHEDULE 4.9, FROM JANUARY 1, 2007, TO AND INCLUDING THE CLOSING DATE, NONE OF
THE SUBJECT COMPANIES HAS CONDUCTED ITS BUSINESS OTHER THAN IN THE USUAL AND
CUSTOMARY MANNER AND IN THE ORDINARY COURSE OF BUSINESS, CONSISTENT WITH
HISTORICAL PRACTICE, AND THERE HAS NOT BEEN:

(A)           ANY CHANGE IN ITS AUTHORIZED CAPITAL OR IN ANY OF ITS OUTSTANDING
CAPITAL OR ANY GRANT, ISSUANCE OR SALE OF ANY DERIVATIVE SECURITY WITH RESPECT
TO ITS CAPITAL;

(B)           ANY SALE, LEASE, DISTRIBUTION, TRANSFER, MORTGAGE, PLEDGE OR
SUBJECTION TO LIEN OF ASSETS (OTHER THAN PERMITTED LIENS), EXCEPT SALES OF
INVENTORY AND OBSOLETE OR SURPLUS EQUIPMENT IN THE ORDINARY AND USUAL COURSE OF
BUSINESS;

(C)           ANY TRANSACTION BY ANY OF THE SUBJECT COMPANIES NOT IN THE
ORDINARY AND USUAL COURSE OF BUSINESS;

 

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(D)           ANY DAMAGE TO OR DESTRUCTION, LOSS OR EQUIPMENT FAILURE RELATED TO
ANY ASSETS OWNED OR USED BY ANY OF THE SUBJECT COMPANIES, WHETHER OR NOT COVERED
BY INSURANCE, REQUIRING OR THAT MAY BE REASONABLY EXPECTED TO REQUIRE
EXPENDITURES IN EXCESS OF $10,000 IN ORDER TO REPLACE OR RETURN SUCH ASSET TO
ITS CONDITION PRIOR TO THE HAPPENING OF SUCH EVENT;

(E)           A MODIFICATION TO THE TERMS OF ANY MATERIAL AGREEMENT OF ANY OF
THE SUBJECT COMPANIES WITH ITS VENDORS, SUPPLIERS OR CUSTOMERS, THE EARLY
TERMINATION OR, TO THE KNOWLEDGE OF THE SELLERS, THREATENED TERMINATION OF ANY
MATERIAL CONTRACT OR RELATIONSHIP OF ANY OF THE SUBJECT COMPANIES WITH ANY
VENDOR, SUPPLIER OR CUSTOMER OR THE NON-RENEWAL OR, TO THE KNOWLEDGE OF SELLERS,
THREATENED NON-RENEWAL OF ANY MATERIAL CONTRACT OR RELATIONSHIP OF ANY OF THE
SUBJECT COMPANIES WITH ANY VENDOR, SUPPLIER OR CUSTOMER;

(F)            THE NEGOTIATION, EXECUTION OR DELIVERY OF ANY AGREEMENT,
COMMITMENT OR CONTRACT HAVING A TERM EXCEEDING ONE YEAR OR INVOLVING AN AMOUNT
IN EXCESS OF $100,000;

(G)           THE NEGOTIATION OR EXECUTION OF ANY CHARTER COMMITMENTS WITH
RESPECT TO ARTICULATED-TUG BARGE UNITS;

(H)           THE NEGOTIATION OR EXECUTION OF ANY VESSEL CONSTRUCTION AGREEMENT;

(I)            ANY INCURRENCE BY ANY OF THE SUBJECT COMPANIES OF ANY
INDEBTEDNESS FOR BORROWED MONEY OR GUARANTY OR ANY COMMITMENT TO INCUR ANY
INDEBTEDNESS OR ANY GUARANTY;

(J)            ANY CHANGE IN ACCOUNTING METHODS OR PRINCIPLES OR THE APPLICATION
THEREOF OR ANY CHANGE IN THE SUBJECT COMPANIES’ POLICIES OR PRACTICES WITH
RESPECT TO ITEMS AFFECTING WORKING CAPITAL;

(K)           ANY DELAY OR REDUCTION IN CAPITAL EXPENDITURES OR PAYMENT OF
VENDORS IN CONTEMPLATION OF THIS AGREEMENT OR OTHERWISE NOT IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE, OR ANY FAILURE TO CONTINUE TO
MAKE CAPITAL EXPENDITURES OR PAY VENDORS IN THE ORDINARY COURSE OF BUSINESS
CONSISTENT WITH PAST PRACTICE;

(L)            ANY ACCELERATION OF SHIPMENTS, SALES OR ORDERS OR OTHER SIMILAR
ACTION IN CONTEMPLATION OF THIS AGREEMENT OR OTHERWISE NOT IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;

(M)          ANY ACCELERATION OF THE COLLECTION OF ACCOUNTS RECEIVABLE IN
CONTEMPLATION OF THIS AGREEMENT OR OTHERWISE NOT IN THE ORDINARY COURSE OF
BUSINESS CONSISTENT WITH PAST PRACTICE;

(N)           ANY BONUS PAYMENTS, SALARY INCREASES, COMMISSION INCREASES OR
MODIFICATIONS, THE EXECUTION OF ANY EMPLOYMENT AGREEMENT, SEVERANCE ARRANGEMENT,
OR CONSULTING ARRANGEMENT OR PLAN (OR ANY AMENDMENT THERETO), EXCEPT AS
CONTEMPLATED IN SECTION 6.12(C) OR SET FORTH ON SCHEDULE 4.9;

(O)           ANY WAIVER OF ANY RIGHTS THAT, SINGLY OR IN THE AGGREGATE, ARE
MATERIAL TO THE BUSINESS OF ANY OF THE SUBJECT COMPANIES, ITS ASSETS OR THE
FINANCIAL CONDITION OR RESULTS OF OPERATIONS OF THE SUBJECT COMPANIES;

 

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(P)           ANY LABOR STRIKES OR DISRUPTIONS, UNION ORGANIZATIONAL ACTIVITIES
OR OTHER SIMILAR OCCURRENCE; OR

(Q)           ANY CONTRACT OR COMMITMENT TO DO OR CAUSE TO BE DONE ANY OF THE
FOREGOING.

SECTION 4.10  CONTRACTS AND COMMITMENTS.  SCHEDULE 4.10 LISTS ALL AGREEMENTS,
COMMITMENTS, CONTRACTS, UNDERTAKINGS OR UNDERSTANDINGS (A) TO WHICH ANY OF THE
SUBJECT COMPANIES IS A PARTY AS OF THE DATE OF THIS AGREEMENT OR (B) WHICH
RELATE TO ANY OF ITS PROPERTIES OR ASSETS, INCLUDING, BUT NOT LIMITED TO,
TRADEMARK, TRADE NAME OR PATENT LICENSE AGREEMENTS, SOFTWARE LICENSE AGREEMENTS
(OTHER THAN FOR OFF-THE-SHELF SOFTWARE), SERVICE AGREEMENTS, LEASES, CHARTERS,
CONTRACTS OF AFFREIGHTMENT, PURCHASE OR SALE AGREEMENTS, SUPPLY AGREEMENTS,
DISTRIBUTION OR DISTRIBUTOR AGREEMENTS, PURCHASE ORDERS, CUSTOMER ORDERS AND
EQUIPMENT RENTAL AGREEMENTS THAT, IN THE CASE OF EITHER CLAUSE (A) OR (B), ARE
EITHER MATERIAL TO THE SUBJECT COMPANIES OR INVOLVE CONSIDERATION WITH A VALUE
OF $10,000 OR MORE.  EXCEPT AS SET FORTH IN SCHEDULE 4.10, NONE OF THE SUBJECT
COMPANIES IS IN BREACH OF OR DEFAULT UNDER ANY AGREEMENT, LEASE, CONTRACT OR
COMMITMENT LISTED OR OF A TYPE REQUIRED TO BE LISTED ON SCHEDULE 4.10
(COLLECTIVELY, THE “CONTACTS”).  EACH CONTRACT IS VALID, BINDING AND IN FULL
FORCE AND EFFECT AND IS AN ENFORCEABLE AGREEMENT OF THE APPLICABLE SUBJECT
COMPANY AND, TO THE KNOWLEDGE OF SELLERS, THE OTHER PARTIES THERETO.  EXCEPT AS
SET FORTH IN SCHEDULE 4.10, TO THE KNOWLEDGE OF SELLERS, THERE HAS NOT OCCURRED
ANY BREACH OR DEFAULT UNDER ANY CONTRACT ON THE PART OF THE OTHER PARTIES
THERETO, AND NO EVENT HAS OCCURRED WHICH WITH THE GIVING OF NOTICE OR THE LAPSE
OF TIME, OR BOTH, WOULD CONSTITUTE A DEFAULT UNDER ANY CONTRACT.  EXCEPT AS SET
FORTH IN SCHEDULE 4.10, THERE IS NO DISPUTE BETWEEN THE PARTIES TO ANY CONTRACT
AS TO THE INTERPRETATION THEREOF OR AS TO WHETHER ANY PARTY IS IN BREACH OR
DEFAULT THEREUNDER, AND NO PARTY TO ANY CONTRACT HAS INDICATED TO ANY OF THE
SUBJECT COMPANIES ITS INTENTION TO TERMINATE ANY CONTRACT.  NONE OF THE SUBJECT
COMPANIES IS A PARTY TO ANY COVENANT OR OBLIGATION OF ANY NATURE LIMITING THE
FREEDOM OF ANY OF THE SUBJECT COMPANIES TO COMPETE IN ANY LINE OF BUSINESS AND
BINDING ON BUYER AFTER THE CLOSING.  COMPLETE AND CORRECT COPIES OF ALL
CONTRACTS LISTED OR REFERRED TO IN SCHEDULE 4.10 HAVE EITHER BEEN MADE AVAILABLE
TO BUYER OR, IF NOT PROVIDED BECAUSE OF PENDING ANTITRUST MATTERS OR
CONFIDENTIALITY REQUIREMENTS, SHALL BE PROVIDED AS SOON AS PRACTICABLE TO THE
EXTENT PERMITTED BY THE ANTITRUST AUTHORITIES OR THE COUNTERPARTIES TO SUCH
CONTRACTS, AS APPLICABLE.

SECTION 4.11  TRADEMARKS, TRADE NAMES AND INTELLECTUAL PROPERTY.  SCHEDULE 4.11
CONTAINS AN ACCURATE AND COMPLETE LIST OF (A) ALL REGISTERED UNITED STATES AND
FOREIGN TRADEMARKS, SERVICEMARKS, TRADE NAMES, FICTITIOUS NAMES, BRAND NAMES,
BUSINESS NAMES, DESIGNS AND LOGOS OWNED OR USED BY EACH OF THE SUBJECT COMPANIES
IN CONNECTION WITH ITS BUSINESS, AND ALL REGISTRATIONS THEREOF, (B) ALL
REGISTERED COPYRIGHTS OWNED OR USED BY EACH OF THE SUBJECT COMPANIES IN
CONNECTION WITH ITS BUSINESS, AND (C) ALL PATENTS (INCLUDING ALL REISSUES,
DIVISIONS, CONTINUATIONS AND EXTENSIONS THEREOF) AND PENDING PATENT APPLICATIONS
OWNED OR USED BY EACH OF THE SUBJECT COMPANIES IN CONNECTION WITH ITS BUSINESS
(COLLECTIVELY, INCLUDING ALL RIGHTS TO ANY OF THE FOREGOING, THE “SCHEDULED
INTELLECTUAL PROPERTY”).  EACH OF THE SUBJECT COMPANIES HAS THE RIGHT TO USE ALL
SCHEDULED INTELLECTUAL PROPERTY, AS WELL AS ALL OTHER INTELLECTUAL PROPERTY USED
BY SUCH SUBJECT COMPANY IN CONNECTION WITH ITS BUSINESS, IN THE CONDUCT OF ITS
BUSINESS AS IT IS CURRENTLY BEING CONDUCTED, AND THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT WILL NOT HAVE THE EFFECT OF TERMINATING ANY SUCH RIGHT. 
EXCEPT AS SET FORTH IN

 

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SCHEDULE 4.11, THERE IS NO PENDING OR THREATENED ACTION OR CLAIM THAT WOULD
IMPAIR ANY SUCH RIGHT.

SECTION 4.12  FINANCIAL STATEMENTS; BUDGET.

(A)           THE UNAUDITED FINANCIAL STATEMENTS OF THE SUBJECT COMPANIES AS OF
AND FOR THE THREE YEARS ENDED DECEMBER 31, 2006 AND AS OF AND FOR THE THREE
MONTHS ENDED MARCH 31, 2007 (THE “UNAUDITED FINANCIAL STATEMENTS”) PRESENT
FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL CONDITION OF THE SUBJECT
COMPANIES AT THE RESPECTIVE DATES OF THE BALANCE SHEETS INCLUDED THEREIN AND THE
RESULTS OF OPERATIONS, CASH FLOWS AND SHAREHOLDERS’ OR MEMBERS’ EQUITY OF THE
SUBJECT COMPANIES FOR THE RESPECTIVE PERIODS SET FORTH THEREIN AND HAVE BEEN
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE
UNITED STATES CONSISTENTLY APPLIED (“GAAP”), SUBJECT TO THE ABSENCE OF NOTES AND
NORMAL RECURRING YEAR END ADJUSTMENTS (THE EFFECT OF WHICH WILL NOT,
INDIVIDUALLY OR IN THE AGGREGATE, BE MATERIALLY ADVERSE).  A COPY OF THE
UNAUDITED FINANCIAL STATEMENTS IS ATTACHED HERETO AS SCHEDULE 4.12(A).

(B)           AT THE CLOSING, THE AUDITED FINANCIAL STATEMENTS OF THE SUBJECT
COMPANIES AS OF AND FOR THE THREE YEARS ENDED DECEMBER 31, 2006 (INCLUDING THE
RELATED NOTES) (THE “AUDITED ANNUAL FINANCIAL STATEMENTS”) WILL PRESENT FAIRLY,
IN ALL MATERIAL RESPECTS, THE FINANCIAL CONDITION OF THE SUBJECT COMPANIES AT
THE RESPECTIVE DATES OF THE BALANCE SHEETS INCLUDED THEREIN AND THE RESULTS OF
OPERATIONS, CASH FLOWS AND SHAREHOLDERS’ OR MEMBERS’ EQUITY OF THE SUBJECT
COMPANIES FOR THE RESPECTIVE PERIODS SET FORTH THEREIN AND WILL HAVE BEEN
PREPARED IN ACCORDANCE WITH GAAP.  WHEN AVAILABLE, A COPY OF THE AUDITED ANNUAL
FINANCIAL STATEMENTS SHALL BE ATTACHED HERETO AS SCHEDULE 4.12(B).  AS OF THE
CLOSING DATE, THE AUDITED ANNUAL FINANCIAL STATEMENTS WILL BE CONSISTENT IN ALL
MATERIAL RESPECTS WITH THE CORRESPONDING PERIODS IN THE UNAUDITED FINANCIAL
STATEMENTS AND WILL BE FREE OF A QUALIFIED OPINION.  THE FOOTNOTES TO THE
AUDITED ANNUAL FINANCIAL STATEMENTS WILL NOT DISCLOSE ANY FACT OR CIRCUMSTANCE
THAT COULD REASONABLY BE EXPECTED TO LEAD TO OR CAUSE SUCH A MATERIAL ADVERSE
CHANGE; PROVIDED, HOWEVER, THAT (A) CHANGES RESULTING FROM CONDITIONS AFFECTING
THE COASTWISE MARITIME PETROLEUM TRANSPORTATION INDUSTRY IN GENERAL AND
(B) CHANGES IN THE ECONOMY IN GENERAL SHALL, IN EACH CASE, BE EXCLUDED FROM THE
DETERMINATION TO THE EXTENT THAT THEY DO NOT HAVE A DISPROPORTIONATE EFFECT ON
ANY OF THE SUBJECT COMPANIES AS COMPARED TO OTHER ENTITIES ENGAGED IN THE
COASTWISE MARITIME PETROLEUM TRANSPORTATION INDUSTRY IN HAWAII AND ALONG THE
WEST COAST.

(C)           AT THE CLOSING, THE UNAUDITED FINANCIAL STATEMENTS OF THE SUBJECT
COMPANIES AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2007 (INCLUDING THE
RELATED NOTES) (THE “UNAUDITED INTERIM FINANCIAL STATEMENTS” AND, TOGETHER WITH
THE AUDITED ANNUAL FINANCIAL STATEMENTS, THE “FINANCIAL STATEMENTS”) WILL
PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL CONDITION OF THE SUBJECT
COMPANIES AT THE RESPECTIVE DATES OF THE BALANCE SHEETS INCLUDED THEREIN AND THE
RESULTS OF OPERATIONS, CASH FLOWS AND SHAREHOLDERS’ OR MEMBERS’ EQUITY OF THE
SUBJECT COMPANIES FOR THE RESPECTIVE PERIODS SET FORTH THEREIN AND WILL HAVE
BEEN PREPARED IN ACCORDANCE WITH GAAP, SUBJECT TO NORMAL RECURRING YEAR END
ADJUSTMENTS (THE EFFECT OF WHICH WILL NOT, INDIVIDUALLY OR IN THE AGGREGATE, BE
MATERIALLY ADVERSE).  WHEN AVAILABLE, A COPY OF THE UNAUDITED INTERIM FINANCIAL
STATEMENTS SHALL BE ATTACHED HERETO AS SCHEDULE 4.12(C).  AS OF THE CLOSING
DATE, THE UNAUDITED INTERIM FINANCIAL STATEMENTS WILL BE CONSISTENT IN ALL
MATERIAL RESPECTS WITH THE CORRESPONDING PERIODS IN THE UNAUDITED FINANCIAL
STATEMENTS AND WILL BE FREE OF A QUALIFIED OPINION.  THE FOOTNOTES TO THE
UNAUDITED INTERIM FINANCIAL STATEMENTS WILL NOT

 

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DISCLOSE ANY FACT OR CIRCUMSTANCE THAT COULD REASONABLY BE EXPECTED TO LEAD TO
OR CAUSE SUCH A MATERIAL ADVERSE CHANGE; PROVIDED, HOWEVER, THAT (A) CHANGES
RESULTING FROM CONDITIONS AFFECTING THE COASTWISE MARITIME PETROLEUM
TRANSPORTATION INDUSTRY IN GENERAL AND (B) CHANGES IN THE ECONOMY IN GENERAL
SHALL, IN EACH CASE, BE EXCLUDED FROM THE DETERMINATION TO THE EXTENT THAT THEY
DO NOT HAVE A DISPROPORTIONATE EFFECT ON ANY OF THE SUBJECT COMPANIES AS
COMPARED TO OTHER ENTITIES ENGAGED IN THE COASTWISE MARITIME PETROLEUM
TRANSPORTATION INDUSTRY IN HAWAII AND ALONG THE WEST COAST.

(D)           THE FISCAL 2007 BUDGET AND CAPITAL BUDGET OF THE SUBJECT COMPANIES
IS ATTACHED HERETO AS SCHEDULE 4.12(D).  SUCH BUDGETS (I) ARE TRUE AND COMPLETE
COPIES OF THE MOST RECENT INTERNAL BUDGETS FOR FISCAL 2007 FOR THE SUBJECT
COMPANIES, AND (II) WERE PREPARED BY MANAGEMENT OF THE SUBJECT COMPANIES IN GOOD
FAITH AND ON A REASONABLE BASIS.

(E)           SCHEDULE 4.12(E) CONTAINS A SCHEDULE OF (I) ANY LIABILITY OF ANY
OF THE SUBJECT COMPANIES (A) FOR BORROWED MONEY OR ARISING OUT OF ANY EXTENSION
OF CREDIT TO OR FOR THE ACCOUNT OF ANY OF THE SUBJECT COMPANIES, OR (B)
EVIDENCED BY NOTES, BONDS, DEBENTURES OR SIMILAR INSTRUMENTS OF ANY OF THE
SUBJECT COMPANIES AND (II) ANY LIABILITY SECURED BY ANY LIEN UPON ANY PROPERTY
OR OTHER ASSETS OF ANY OF THE SUBJECT COMPANIES.  SCHEDULE 4.12(E) ALSO CONTAINS
A SCHEDULE OF ANY LIABILITY, CONTINGENT OR OTHERWISE, OF ANY OF THE SUBJECT
COMPANIES GUARANTEEING OR OTHERWISE BECOMING LIABLE FOR ANY OBLIGATION OF ANY
OTHER PERSON IN ANY MANNER, WHETHER DIRECTLY OR INDIRECTLY.

(F)            SCHEDULE 4.12(F) REFLECTS ALL INTERCOMPANY TRANSACTIONS BETWEEN
ANY OF THE SUBJECT COMPANIES AND THE SELLER PARTIES OR ANY AFFILIATES THEREOF
SINCE DECEMBER 31, 2003, EXCLUDING THE TRANSACTIONS CONTEMPLATED BY SECTION
6.13.

SECTION 4.13  BANK RELATIONS; POWERS OF ATTORNEY.  SCHEDULE 4.13 SETS FORTH: (A)
THE NAME OF EACH FINANCIAL INSTITUTION IN WHICH ANY OF THE SUBJECT COMPANIES HAS
BORROWING OR INVESTMENT ARRANGEMENTS, DEPOSIT OR CHECKING ACCOUNTS OR SAFE
DEPOSIT BOXES; (B) THE TYPES OF THOSE ARRANGEMENTS AND ACCOUNTS, INCLUDING, AS
APPLICABLE, NAMES IN WHICH ACCOUNTS OR BOXES ARE HELD, THE ACCOUNT OR BOX
NUMBERS AND THE NAME OF EACH PERSON AUTHORIZED TO DRAW THEREON OR HAVE ACCESS
THERETO; AND (C) THE NAME OF EACH PERSON HOLDING A GENERAL OR SPECIAL POWER OF
ATTORNEY FROM ANY OF THE SUBJECT COMPANIES AND A DESCRIPTION OF THE TERMS OF
EACH SUCH POWER.

SECTION 4.14  CONDITION OF ASSETS; ELIGIBILITY FOR COASTWISE TRADE.

(A)           SCHEDULE 4.14(A) SETS FORTH A LIST OF ALL MATERIAL ASSETS OF EACH
OF THE SUBJECT COMPANIES OTHER THAN THE VESSELS, WHICH ARE LISTED ON SCHEDULE
4.14(B).  ALL TANGIBLE ASSETS OF THE SUBJECT COMPANIES LISTED ON SCHEDULE
4.14(A) ARE IN GOOD, SERVICEABLE CONDITION, SUBJECT ONLY TO NORMAL MAINTENANCE
REQUIREMENTS AND NORMAL WEAR AND TEAR REASONABLY EXPECTED IN THE ORDINARY COURSE
OF BUSINESS. THERE ARE NO MATERIAL ASSETS (WHETHER OR NOT OWNED BY THE SUBJECT
COMPANIES) NOT LISTED ON SCHEDULE 4.14(A) OR SCHEDULE 4.14(B) THAT ARE USED IN
OR NECESSARY FOR THE OPERATION OF THE BUSINESS OF ANY OF THE SUBJECT COMPANIES
AS CURRENTLY CONDUCTED.

(B)           SCHEDULE 4.14(B)(1) SETS FORTH A LIST OF EACH VESSEL (INCLUDING
VESSELS UNDER CONSTRUCTION) OWNED BY EACH OF THE SUBJECT COMPANIES, WITH AN
INDICATION (AS APPLICABLE)

 

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OF VESSEL TYPE, YEAR BUILT, AMERICAN BUREAU OF SHIPPING CLASSIFICATION
(INCLUDING ANY RECOMMENDATIONS), FLAG, CAPACITY (AND/OR HORSEPOWER AS
APPLICABLE), ASSOCIATED LIENS (OTHER THAN PERMITTED LIENS), GROSS TONNAGE AND
OPA 90 PHASE-OUT DATES AND DATE OF LAST DRYDOCKING (THE “OWNED VESSELS”);
SCHEDULE 4.14(B)(2) SETS FORTH A LIST OF EACH VESSEL (INCLUDING VESSELS UNDER
CONSTRUCTION) BAREBOAT CHARTERED BY THE SUBJECT COMPANIES, WITH AN INDICATION
(AS APPLICABLE) OF VESSEL TYPE, YEAR BUILT, AMERICAN BUREAU OF SHIPPING
CLASSIFICATION (INCLUDING ANY RECOMMENDATIONS), FLAG, CAPACITY (AND/OR
HORSEPOWER AS APPLICABLE), ASSOCIATED LIENS (OTHER THAN PERMITTED LIENS), GROSS
TONNAGE AND OPA 90 PHASE-OUT DATES AND DATE OF LAST DRYDOCKING (THE “BAREBOAT
CHARTERED VESSELS”); SCHEDULE 4.14(B)(3) SETS FORTH A LIST OF EACH VESSEL
(INCLUDING VESSELS UNDER CONSTRUCTION) CHARTERED BY THE SUBJECT COMPANIES ON
OTHER THAN A BAREBOAT BASIS, WITH AN INDICATION (AS APPLICABLE) OF THE TYPE OF
CHARTER, OF VESSEL TYPE, YEAR BUILT, AMERICAN BUREAU OF SHIPPING CLASSIFICATION
(INCLUDING ANY RECOMMENDATIONS), FLAG, CAPACITY (AND/OR HORSEPOWER AS
APPLICABLE), ASSOCIATED LIENS (OTHER THAN PERMITTED LIENS), GROSS TONNAGE AND
OPA 90 PHASE-OUT DATES AND DATE OF LAST DRYDOCKING.

(C)           EACH OF THE SUBJECT COMPANIES HAS EXERCISED DUE DILIGENCE TO KEEP
AND MAINTAIN EACH OF THE VESSELS SEAWORTHY IN ALL MATERIAL RESPECTS.  EXCEPT AS
SET FORTH IN SCHEDULE 4.14(C), EACH OF THE VESSELS IS EQUIPPED WITH THE
MACHINERY, ENGINES, INSTRUMENTS, RIGGING, ANCHORS, CHAINS, CABLES, TACKLE,
APPAREL, ACCESSORIES, EQUIPMENT, RADIO INSTALLATION AND NAVIGATIONAL EQUIPMENT,
INVENTORY, SPARE PARTS AND ALL OTHER APPURTENANCES NECESSARY FOR THE OPERATION
OF SUCH VESSEL IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICES.  EXCEPT AS SET FORTH IN SCHEDULE 4.14(C), SINCE THE VESSELS’ LAST
DRYDOCKING, NO VESSEL HAS BEEN GROUNDED, STRANDED OR SUFFERED ANY OTHER
OCCURRENCE OR CASUALTY THAT COULD HAVE CAUSED OR ACTUALLY DID CAUSE ANY DAMAGE
TO SUCH VESSEL.

(D)           EXCEPT AS SET FORTH IN SCHEDULE 4.14(D), EACH OF THE OWNED VESSELS
IS DULY DOCUMENTED IN THE NAME OF THE RESPECTIVE SUBJECT COMPANY SET FORTH ON
SCHEDULE 4.14(D) UNDER THE LAWS AND FLAG OF THE UNITED STATES OF AMERICA AND
EACH VESSEL SATISFIES THE REQUIREMENTS FOR COASTWISE DOCUMENTATION, HAS NOT BEEN
“SOLD FOREIGN” WITHIN THE MEANING OF SECTION 12132 OF TITLE 46 OF THE UNITED
STATES CODE AND ALL COASTWISE LICENSES, PERMITS, CERTIFICATES, REGISTRATIONS,
APPROVALS AND OTHER AUTHORIZATIONS NECESSARY TO OPERATE THE VESSELS AS CURRENTLY
OPERATED ARE VALID AND CURRENT, SUBJECT TO THE TRADING RESTRICTIONS SET FORTH IN
SCHEDULE 4.14(D).

(E)           EACH VESSEL HAS A VALID, CURRENT AND UNEXTENDED U.S. COAST GUARD
CERTIFICATE OF INSPECTION, WHERE APPLICABLE, AND ALL OTHER LICENSES, PERMITS,
CERTIFICATES, REGISTRATIONS, APPROVALS AND OTHER AUTHORIZATIONS (INCLUDING
CERTIFICATES OF FINANCIAL RESPONSIBILITY (WATER POLLUTION)) THAT ARE REQUIRED BY
APPLICABLE LAW.  EXCEPT AS SET FORTH IN SCHEDULE 4.14(E), THERE ARE NO
OUTSTANDING CG-835 CERTIFICATES OR CAPTAIN OF THE PORT ORDERS WITH RESPECT TO
THE VESSELS OR THE OPERATION THEREOF.

SECTION 4.15  ABSENCE OF UNDISCLOSED LIABILITIES.  EXCEPT AS SET FORTH IN
SCHEDULE 4.15, NONE OF THE SUBJECT COMPANIES HAS ANY LIABILITY (WHETHER
ABSOLUTE, ACCRUED, CONTINGENT, UNLIQUIDATED OR OTHERWISE, WHETHER DUE OR TO
BECOME DUE), OTHER THAN LIABILITIES (I) REFLECTED IN THE UNAUDITED FINANCIAL
STATEMENTS OR IN THE FINANCIAL STATEMENTS, (II) ARISING UNDER CONTRACTS
DESCRIBED IN SCHEDULE 4.10 (CONTRACTS AND COMMITMENTS) OR CONTRACTS ENTERED IN
THE ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH PAST PRACTICE THAT ARE NOT
REQUIRED TO BE DISCLOSED

 

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THEREIN DUE TO DOLLAR THRESHOLDS, (III) ARISING OUT OF MATTERS REFLECTED IN
SCHEDULE 4.7 (LITIGATION) OR (IV) TRADE ACCOUNTS PAYABLE INCURRED AFTER
MARCH 31, 2007 IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE,
AND (V) PERMITTED LIENS.

SECTION 4.16  REAL ESTATE.

(A)           NONE OF THE SUBJECT COMPANIES CURRENTLY OWNS, AND NONE OF THEM HAS
EVER OWNED, ANY REAL PROPERTY.  SCHEDULE 4.16 SETS FORTH A LIST AND SUMMARY
DESCRIPTION (INCLUDING PROPERTY LOCATION, PARTIES AND ANNUAL RENTAL PAYMENTS) OF
ALL LEASES, SUBLEASES AND OTHER AGREEMENTS UNDER WHICH ANY OF THE SUBJECT
COMPANIES IS LESSOR OR LESSEE OF, OR USES OR OCCUPIES OR ALLOWS THE USE OR
OCCUPANCY OF, ANY REAL PROPERTY.  ALL SUCH LEASES, SUBLEASES AND OTHER
AGREEMENTS ARE VALID AND SUBSISTING AND IN FULL FORCE AND EFFECT.

(B)           THE REAL PROPERTY LISTED ON SCHEDULE 4.16 (I) HAS FULL AND FREE
ACCESS TO AND FROM PUBLIC HIGHWAYS, STREETS AND ROADS AND THERE IS NO PROCEEDING
PENDING OR, TO THE KNOWLEDGE OF SELLERS, THREATENED THAT COULD RESULT IN THE
TERMINATION OF OR MATERIAL LIMITATIONS ON SUCH ACCESS AND (II) IS CONNECTED TO
AND SERVICED BY UTILITIES AND PUBLIC SERVICES, ALL OF WHICH ARE ADEQUATE FOR THE
USE OF THE REAL PROPERTY LISTED THEREON AS THE BUSINESS OF THE SUBJECT COMPANIES
IS CURRENTLY CONDUCTED.  NONE OF THE SUBJECT COMPANIES HAS EXPERIENCED DURING
THE THREE YEARS PRECEDING THE DATE HEREOF ANY MATERIAL INTERRUPTION IN THE
DELIVERY OF ADEQUATE QUANTITIES OF ANY UTILITIES (INCLUDING, WITHOUT LIMITATION,
ELECTRICITY, NATURAL GAS, POTABLE WATER, WATER FOR COOLING OR SIMILAR PURPOSES
AND FUEL OIL) OR OTHER PUBLIC SERVICES (INCLUDING, WITHOUT LIMITATION, SANITARY
AND INDUSTRIAL SEWER SERVICE) REQUIRED IN THE OPERATION OF THE BUSINESS OF THE
SUBJECT COMPANIES DURING SUCH PERIOD AND, TO THE KNOWLEDGE OF SELLERS, NO SUCH
MATERIAL INTERRUPTION IS THREATENED.

SECTION 4.17  ACCOUNTS RECEIVABLE.  ALL ACCOUNTS RECEIVABLE OF THE SUBJECT
COMPANIES THAT ARE REFLECTED IN THE FINANCIAL STATEMENTS AND THAT WILL BE
REFLECTED IN THE CLOSING DATE BALANCE SHEET REPRESENT SALES ACTUALLY MADE IN THE
ORDINARY COURSE OF BUSINESS.  THE RESERVE FOR DOUBTFUL ACCOUNTS IN THE FINANCIAL
STATEMENTS HAS BEEN, AND THE RESERVE FOR DOUBTFUL ACCOUNTS IN THE CLOSING DATE
BALANCE SHEET WILL BE DETERMINED BASED ON THE FORMULA HISTORICALLY UTILIZED BY
THE SUBJECT COMPANIES TO CALCULATE SUCH RESERVE AND WITH THE PRIOR ACCOUNTING
AND COLLECTION PRACTICES OF THE SUBJECT COMPANIES.

SECTION 4.18  INVENTORY.  SCHEDULE 4.18 SETS FORTH THE LOCATION OF ALL INVENTORY
(INCLUDING SPARE PARTS) RELATED TO THE VESSELS THAT IS NOT ABOARD SUCH VESSELS.

SECTION 4.19  EMPLOYEES AND RELATED MATTERS.  SCHEDULE 4.19 IS A COMPLETE LIST
OF ALL CURRENT EMPLOYEES OF EACH OF THE SUBJECT COMPANIES, LISTING THE TITLE OR
POSITION HELD, BASE SALARY, ANY COMMISSIONS OR OTHER CASH COMPENSATION,
INCLUDING BONUSES, PAID OR PAYABLE, AND THE TERMS OF ANY WRITTEN OR ORAL
EMPLOYMENT AGREEMENT (INCLUDING A COPY OF ANY SUCH WRITTEN AGREEMENT AND A
DESCRIPTION OF ANY SUCH ORAL AGREEMENT) WITH ANY OF THE SUBJECT COMPANIES OR ANY
AFFILIATE THEREOF.  NONE OF THE SUBJECT COMPANIES HAS ANY EMPLOYEES COVERED BY A
COLLECTIVE BARGAINING AGREEMENT.  THERE ARE NO FACTS OR CIRCUMSTANCES THAT HAVE
RESULTED OR COULD REASONABLY BE EXPECTED TO RESULT IN A CLAIM FOR UNLAWFUL
DISCRIMINATION AGAINST ANY OF THE SUBJECT COMPANIES.

 

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SECTION 4.20  EMPLOYEE BENEFITS.

(A)           SCHEDULE 4.20 CONTAINS A COMPLETE LIST OF EACH COMPENSATION OR
BENEFIT PLAN, AGREEMENT, PROGRAM OR POLICY (WHETHER WRITTEN OR ORAL, FORMAL OR
INFORMAL) SPONSORED, MAINTAINED OR CONTRIBUTED TO BY ANY OF THE SUBJECT
COMPANIES FOR THE BENEFIT OF ANY OF ITS PRESENT OR FORMER DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, CONSULTANTS OR OTHER SIMILAR REPRESENTATIVES, INCLUDING, BUT
NOT LIMITED TO, ANY “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF ERISA,
OTHER THAN EMPLOYMENT AGREEMENTS OR COMPENSATION PRACTICES DESCRIBED IN SECTIONS
4.10(E) AND 4.19 ABOVE (THE FOREGOING ARE HEREINAFTER COLLECTIVELY REFERRED TO
AS “PLANS”).  NONE OF THE SUBJECT COMPANIES IS SUBJECT TO ANY LEGAL,
CONTRACTUAL, EQUITABLE OR OTHER OBLIGATION TO ENTER INTO ANY NEW PLAN OR TO
MODIFY OR CHANGE ANY EXISTING PLAN.

(B)           WITH RESPECT TO EACH PLAN, THE SUBJECT COMPANIES HAVE PROVIDED TO
BUYER A TRUE AND CORRECT COPY OF EACH OF THE FOLLOWING, AS APPLICABLE:

(I)            THE CURRENT PLAN DOCUMENT (INCLUDING ALL AMENDMENTS ADOPTED SINCE
THE MOST RECENT RESTATEMENT) AND ITS MOST RECENTLY PREPARED SUMMARY PLAN
DESCRIPTION AND ALL SUMMARIES OF MATERIAL MODIFICATIONS PREPARED SINCE THE MOST
RECENT SUMMARY PLAN DESCRIPTION, AND ALL MATERIAL EMPLOYEE COMMUNICATIONS
RELATING TO SUCH PLAN;

(II)           ANNUAL REPORTS OR INFORMATION RETURNS, INCLUDING FINANCIAL
STATEMENTS, FOR THE LAST THREE YEARS;

(III)          ALL CONTRACTS RELATING TO ANY PLAN WITH RESPECT TO WHICH ANY
SUBJECT COMPANY MAY HAVE ANY LIABILITY, INCLUDING, WITHOUT LIMITATION, EACH
RELATED TRUST AGREEMENT, INSURANCE CONTRACT, SERVICE PROVIDER CONTRACT,
SUBSCRIPTION OR PARTICIPATION AGREEMENT, OR INVESTMENT MANAGEMENT AGREEMENT
(INCLUDING ALL AMENDMENTS TO EACH SUCH DOCUMENT); AND

(IV)          THE MOST RECENT IRS DETERMINATION LETTER OR OTHER OPINION LETTER
WITH RESPECT TO THE QUALIFIED STATUS OF SUCH PLAN UNDER CODE SECTION 401(A) OR
THE EXEMPT STATUS OF A RELATED TRUST UNDER CODE SECTION 501(A) OR 501(C)(9).

(C)           EACH PLAN INTENDED TO BE QUALIFIED UNDER SECTION 401(A) OF THE
CODE IS AND HAS BEEN SO QUALIFIED IN FORM.  EACH PLAN IS AND HAS BEEN MAINTAINED
AND OPERATED IN MATERIAL COMPLIANCE WITH ITS TERMS AND THE PROVISIONS OF ALL
APPLICABLE LAWS, RULES AND REGULATIONS, INCLUDING, WITHOUT LIMITATION, ERISA AND
THE CODE.  OTHER THAN CLAIMS FOR BENEFITS IN THE ORDINARY COURSE, THERE IS NO
CLAIM PENDING, OR, TO THE KNOWLEDGE OF SELLERS, THREATENED, INVOLVING ANY PLAN
BY ANY PERSON AGAINST SUCH PLAN, FIDUCIARIES OR ADMINISTRATORS OF SUCH PLAN, ANY
OF THE SUBJECT COMPANIES OR THE SELLERS.  NO PLAN IS SUBJECT TO ONGOING AUDIT,
INVESTIGATION OR OTHER ADMINISTRATIVE PROCEEDING OF THE INTERNAL REVENUE
SERVICE, THE DEPARTMENT OF LABOR OR ANY OTHER GOVERNMENTAL AGENCY, AND NO PLAN
IS THE SUBJECT OF ANY PENDING APPLICATION FOR ADMINISTRATIVE RELIEF UNDER ANY
VOLUNTARY COMPLIANCE PROGRAM OF THE INTERNAL REVENUE SERVICE, THE DEPARTMENT OF
LABOR OR ANY OTHER GOVERNMENTAL ENTITY.  THERE HAS BEEN NO TRANSACTION THAT IS
PROHIBITED UNDER SECTION 4975 OF THE CODE OR SECTION 406 OF ERISA AND NOT EXEMPT
UNDER SECTION 4975 OF THE CODE OR SECTION 408 OF ERISA, RESPECTIVELY, IN
RELATION TO ANY PLANS.  EACH

 

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PLAN WHICH MAY BE SUBJECT TO SECTION 409A OF THE CODE IS EITHER EXEMPT FROM
SECTION 409A OF THE CODE UNDER CURRENT IRS GUIDANCE OR HAS BEEN OPERATED IN GOOD
FAITH COMPLIANCE WITH SECTION 409A OF THE CODE AND THE IRS GUIDANCE ISSUED
THEREUNDER.  TO THE KNOWLEDGE OF SELLERS, NO PLAN IS SUBJECT TO SECTION 409A OF
THE CODE.

(D)           NEITHER ANY OF THE SUBJECT COMPANIES NOR ANY ERISA AFFILIATE HAS
EVER SPONSORED OR MAINTAINED AN “EMPLOYEE PENSION BENEFIT PLAN” SUBJECT TO
TITLE IV OF ERISA OR THE MINIMUM FUNDING REQUIREMENTS OF SECTION 412 OF THE
CODE.  NEITHER ANY OF THE SUBJECT COMPANIES NOR ANY ERISA AFFILIATE HAS
MAINTAINED OR INCURRED ANY LIABILITY WITH RESPECT TO ANY “MULTIEMPLOYER PLAN”
(AS DEFINED IN SECTION 3(37) OF ERISA).  THERE ARE NO FACTS THAT HAVE RESULTED
OR COULD REASONABLY BE EXPECTED TO RESULT IN A LIABILITY (WHETHER OR NOT
ASSERTED AS OF THE DATE HEREOF) TO THE SUBJECT COMPANIES OR ANY ERISA AFFILIATE
PURSUANT TO TITLE IV OF ERISA.

(E)           NO PLAN PROVIDES MEDICAL, SURGICAL, HOSPITALIZATION, DEATH OR
SIMILAR BENEFITS (WHETHER OR NOT INSURED) FOR EMPLOYEES OR FORMER EMPLOYEES OF
THE SUBJECT COMPANIES OR ANY AFFILIATE FOR PERIODS EXTENDING BEYOND THEIR
RETIREMENT DATE OR OTHER TERMINATION OF SERVICE OTHER THAN COVERAGE MANDATED BY
APPLICABLE LAW.

(F)            EXCEPT AS SET FORTH IN SECTION 6.12(C), THE EXECUTION AND
DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT WILL NOT (EITHER ALONE OR UPON THE OCCURRENCE OF ANY
SUBSEQUENT EMPLOYMENT-RELATED EVENT) (I) RESULT IN ANY PAYMENT BECOMING DUE TO
ANY EMPLOYEE, FORMER EMPLOYEE OR GROUP OF EMPLOYEES OR FORMER EMPLOYEES, OF ANY
OF THE SUBJECT COMPANIES OR ANY OF ITS AFFILIATES, (II) INCREASE ANY BENEFITS
OTHERWISE PAYABLE UNDER ANY PLAN, (III) RESULT IN THE ACCELERATION OF THE TIME
OF PAYMENT OR VESTING OF ANY SUCH BENEFITS, (IV) RESULT IN THE INCURRENCE OR
ACCELERATION OF ANY OTHER OBLIGATION RELATED TO THE PLANS OR TO ANY EMPLOYEE,
FORMER EMPLOYEE OR GROUP OF EMPLOYEES OR FORMER EMPLOYEES OR (V) CAUSE ANY
PAYMENTS TO BE NONDEDUCTIBLE UNDER SECTION 280G OF THE CODE.

(G)           EACH OF THE SUBJECT COMPANIES HAS THE RIGHT TO, IN ANY MANNER, AND
WITHOUT THE CONSENT OF ANY EMPLOYEE, BENEFICIARY OR DEPENDENT, EMPLOYEES’
ORGANIZATION OR OTHER PERSON, TERMINATE, MODIFY OR AMEND ANY PLAN (OR THEIR
PARTICIPATION IN ANY SUCH PLAN) AT ANY TIME SPONSORED, MAINTAINED OR CONTRIBUTED
TO BY IT, EFFECTIVE AS OF ANY DATE ON OR AFTER THE CLOSING EXCEPT TO THE EXTENT
THAT ANY RETROACTIVE AMENDMENT WOULD BE PROHIBITED BY SECTION 204(G) OF ERISA.

(H)           ALL INDIVIDUALS WHO PERFORM (OR HAVE PERFORMED WITHIN THE LAST SIX
YEARS) COMPENSATORY SERVICES FOR THE SUBJECT COMPANIES IN ANY CAPACITY HAVE BEEN
PROPERLY CLASSIFIED FOR PURPOSES OF EMPLOYMENT AND WITHHOLDING TAXES AND
ELIGIBILITY TO PARTICIPATE IN AND COVERAGE UNDER ANY PLAN.

SECTION 4.21  COMPLIANCE WITH LAW.  NONE OF THE SUBJECT COMPANIES IS IN
VIOLATION, IN ANY MATERIAL RESPECT, OF ANY PROVISION OF ANY LAW APPLICABLE TO
IT, INCLUDING, WITHOUT LIMITATION, THOSE GOVERNING THE REGISTRATION, OWNERSHIP
AND OPERATION OF VESSELS DOCUMENTED TO ENGAGE IN THE COASTWISE TRADE OF THE
UNITED STATES, AND NONE OF THE SUBJECT COMPANIES HAS RECEIVED NOTICE OF ANY
ALLEGED VIOLATION OF ANY LAW.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
(A) NONE OF THE SUBJECT COMPANIES HAS MADE ANY OFFER, PAYMENT, PROMISE TO PAY OR
AUTHORIZATION OF THE PAYMENT OF ANY MONEY, OR ANY OFFER, GIFT, PROMISE TO GIVE

 

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OR AUTHORIZATION OF THE GIVING OF ANYTHING OF VALUE, DIRECTLY OR INDIRECTLY, TO
OR FOR THE USE OR BENEFIT OF ANY OFFICIAL OR EMPLOYEE OF ANY GOVERNMENTAL BODY
OR TO OR FOR THE USE OR BENEFIT OF ANY POLITICAL PARTY, OFFICIAL OR CANDIDATE
UNLESS SUCH OFFER, PAYMENT, GIFT, PROMISE OR AUTHORIZATION IS NOT PROHIBITED BY
THE WRITTEN LAWS OR REGULATIONS OF THE GOVERNMENTAL BODY AND (B) EACH OF THE
SUBJECT COMPANIES IS FAMILIAR WITH AND HAS COMPLIED WITH THE UNITED STATES
FOREIGN CORRUPT PRACTICES ACT, 15 U.S.C. SECTIONS 78DD-1 AND 78DD-2.

SECTION 4.22  ENVIRONMENTAL.

(A)           EXCEPT AS SET FORTH IN SCHEDULE 4.22(A), EACH OF THE SUBJECT
COMPANIES HAS BEEN AND IS IN MATERIAL COMPLIANCE WITH ALL ENVIRONMENTAL LAWS,
AND THE SELLER PARTIES ARE NOT AWARE OF ANY FACTS, CIRCUMSTANCES, OR CONDITIONS
THAT WOULD REQUIRE SIGNIFICANT CAPITAL EXPENDITURES TO MAINTAIN COMPLIANCE IN
THE FUTURE.

(B)           EACH OF THE SUBJECT COMPANIES HAS OBTAINED ALL LICENSES, PERMITS,
APPROVALS, CONSENTS, CERTIFICATES, REGISTRATIONS AND OTHER AUTHORIZATIONS UNDER
ENVIRONMENTAL LAWS (THE “ENVIRONMENTAL PERMITS”) REQUIRED FOR THE OPERATION OF
ITS BUSINESS, ALL OF WHICH ARE LISTED IN SCHEDULE 4.22(B).  EXCEPT AS SET FORTH
IN SCHEDULE 4.22(B), EACH ENVIRONMENTAL PERMIT IS VALID AND IN GOOD STANDING,
AND ANY RENEWAL APPLICATION REQUIRED TO KEEP EACH ENVIRONMENTAL PERMIT IN EFFECT
HAS BEEN TIMELY FILED, AND NONE OF THE SUBJECT COMPANIES IS IN DEFAULT OR BREACH
OF ANY ENVIRONMENTAL PERMIT, AND NO PROCEEDING IS PENDING OR, TO THE KNOWLEDGE
OF SELLERS, THREATENED TO REVOKE, DENY, CONDITION OR LIMIT THE RENEWAL OF ANY
ENVIRONMENTAL PERMIT.

(C)           EXCEPT AS SET FORTH IN SCHEDULE 4.22(C), NONE OF THE SUBJECT
COMPANIES HAS USED OR EXPRESSLY PERMITTED TO BE USED, EXCEPT IN MATERIAL
COMPLIANCE WITH ALL ENVIRONMENTAL LAWS IN EFFECT AT THE TIME, ANY OF ITS
CURRENTLY OR FORMERLY OWNED OR LEASED PROPERTIES, FACILITIES OR VESSELS TO
GENERATE, MANUFACTURE, PROCESS, DISTRIBUTE, USE, TREAT, STORE, DISPOSE OF,
TRANSPORT OR HANDLE ANY HAZARDOUS MATERIAL.

(D)           EXCEPT AS SET FORTH IN SCHEDULE 4.22(D), NONE OF THE SUBJECT
COMPANIES HAS RECEIVED ANY NOTICE OF OR BEEN PROSECUTED FOR AN OFFENSE ALLEGING,
NON-COMPLIANCE WITH OR LIABILITY UNDER ANY ENVIRONMENTAL LAW OR REQUESTING
INFORMATION WITH RESPECT TO AN INVESTIGATION PURSUANT TO CERCLA, OR ANY FOREIGN
OR STATE COUNTERPART THERETO, OR ANY OTHER ENVIRONMENTAL LAW.   EXCEPT AS SET
FORTH IN SCHEDULE 4.22(D), THERE ARE NO OUTSTANDING ORDERS REQUIRING REMEDIAL
ACTIONS WITH RESPECT TO THE BUSINESSES OR CURRENTLY OR FORMERLY OWNED OR LEASED
PROPERTIES OF ANY OF THE SUBJECT COMPANIES, NOR IS SELLER PARTY AWARE OF ANY
CONDITION OR CIRCUMSTANCE THAT COULD REASONABLY BE EXPECTED TO REQUIRE REMEDIAL
ACTIONS.

(E)           TO THE KNOWLEDGE OF SELLERS AND EXCEPT AS DISCLOSED IN SCHEDULE
4.22(E), THERE ARE NO PENDING OR PROPOSED CHANGES TO ANY ENVIRONMENTAL LAW THAT
WOULD RENDER ILLEGAL OR RESTRICT ANY SERVICE PROVIDED BY ANY OF THE SUBJECT
COMPANIES, OR REQUIRE SIGNIFICANT CAPITAL EXPENDITURES BY THE OWNER OR OPERATOR
OF THE ASSETS OF ANY OF THE SUBJECT COMPANIES TO ACHIEVE OR MAINTAIN COMPLIANCE.

(F)            EXCEPT AS SET FORTH IN SCHEDULE 4.22(F), AND EXCEPT IN COMPLIANCE
WITH ALL ENVIRONMENTAL LAWS, THERE HAS BEEN NO RELEASE OF ANY HAZARDOUS MATERIAL
ON, INTO, UNDER, OR FROM THE CURRENTLY OR FORMERLY OWNED OR LEASED PROPERTIES,
FACILITIES, VESSELS OR OTHER ASSETS OF

 

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ANY OF THE SUBJECT COMPANIES THAT COULD REASONABLY BE EXPECTED TO REQUIRE
REMEDIAL ACTIONS. ALL HAZARDOUS MATERIALS USED IN WHOLE OR IN PART BY ANY OF THE
SUBJECT COMPANIES OR RESULTING FROM ITS BUSINESS HAVE BEEN DISPOSED OF, TREATED,
TRANSPORTED AND STORED IN COMPLIANCE WITH ALL ENVIRONMENTAL LAWS.  SCHEDULE
4.22(F) LISTS THE NAMES AND BUSINESS ADDRESSES OF THE FACILITIES OR ENTERPRISES
USED BY ANY OF THE SUBJECT COMPANIES FOR THE OFFSITE DISPOSAL OR TREATMENT OF
HAZARDOUS MATERIALS DURING THE PRECEDING FIVE (5) YEARS.

(G)           EXCEPT AS DISCLOSED IN SCHEDULE 4.22(G), THERE IS NOT NOW, AND TO
THE KNOWLEDGE OF SELLERS,  THERE HAS NEVER BEEN, ON OR IN ANY CURRENTLY OR
FORMERLY OWNED OR LEASED PROPERTIES, FACILITIES, VESSELS OR OTHER ASSETS, ANY OF
THE FOLLOWING: (I) ANY UNDERGROUND STORAGE TANKS; (II) ANY LANDFILLS, DUMPS, OR
SURFACE IMPOUNDMENTS; (III) ANY REMEDIAL ACTION; AND (IV) ANY
ASBESTOS-CONTAINING MATERIALS.

(H)           NONE OF THE SUBJECT COMPANIES HAS RECEIVED ANY NOTICE THAT IT IS
POTENTIALLY RESPONSIBLE FOR A FEDERAL, PROVINCIAL, MUNICIPAL, LOCAL OR OTHER
CLEAN-UP SITE OR OTHER CORRECTIVE ACTION UNDER ANY ENVIRONMENTAL LAWS. NONE OF
THE SUBJECT COMPANIES HAS RECEIVED ANY REQUEST FOR INFORMATION IN CONNECTION
WITH AN INQUIRY FROM ANY GOVERNMENTAL BODY WITH RESPECT TO ITS USE OF ANY
DISPOSAL SITES.

(I)            NO JUDICIAL OR ADMINISTRATIVE PROCEEDINGS ARE PENDING OR, TO THE
KNOWLEDGE OF SELLERS, THREATENED AGAINST ANY OF THE SUBJECT COMPANIES ALLEGING
THE VIOLATION OF OR SEEKING TO IMPOSE LIABILITY PURSUANT TO ANY ENVIRONMENTAL
LAW AND THERE ARE NO INVESTIGATIONS PENDING OR, TO THE KNOWLEDGE OF SELLERS,
THREATENED AGAINST ANY OF THE SUBJECT COMPANIES UNDER ANY ENVIRONMENTAL LAW.

(J)            SELLER PARTIES HAVE MADE AVAILABLE TO BUYER TRUE AND COMPLETE
COPIES OF ALL ENVIRONMENTAL AND HEALTH AND SAFETY RELATED AUDITS, EVALUATIONS,
INVESTIGATIONS ASSESSMENTS, STUDIES, SAMPLING OR SIMILAR REPORTS, OR TESTS IN
THE CUSTODY OR CONTROL OF ANY OF THE SUBJECT COMPANIES RELATING TO ANY OF THE
SUBJECT COMPANIES OR ANY OF THEIR RESPECTIVE CURRENTLY OR FORMERLY OWNED OR
LEASED PROPERTIES, FACILITIES, VESSELS OR OTHER ASSETS.

(K)           EACH OF THE SUBJECT COMPANIES HAS TIMELY MADE ALL FILINGS AND
TIMELY SUBMITTED ALL REPORTS REQUIRED UNDER ANY ENVIRONMENTAL LAWS.

(L)            EXCEPT AS SET FORTH IN SCHEDULE 4.22(L), NO HAZARDOUS MATERIAL IS
REQUIRED TO BE REMOVED, ENCAPSULATED OR ABATED, AND NO REMEDIAL ACTION IS
OTHERWISE REQUIRED UNDER ANY ENVIRONMENTAL LAWS, WITH RESPECT TO ANY CURRENTLY
AND TO THE KNOWLEDGE OF SELLERS, FORMERLY OWNED OR LEASED PROPERTY, VESSEL,
FACILITY OR OTHER ASSET OF THE SUBJECT COMPANIES. EXCEPT AS SET FORTH IN
SCHEDULE 4.22(L), NONE OF THE SUBJECT COMPANIES HAS ANY LIABILITY FOR THE
EXPOSURE OF EMPLOYEES OR THIRD PARTIES TO HAZARDOUS MATERIALS.

(M)          EXCEPT AS SET FORTH IN SCHEDULE 4.22(M), NONE OF THE SUBJECT
COMPANIES IS REQUIRED UNDER ANY ENVIRONMENTAL LAWS BY VIRTUE OF THE TRANSACTIONS
SET FORTH HEREIN AND CONTEMPLATED HEREBY, OR AS A CONDITION TO THE EFFECTIVENESS
OF ANY TRANSACTIONS CONTEMPLATED HEREBY, (I) TO PERFORM A SITE ASSESSMENT OF
HAZARDOUS MATERIALS, (II) TO REMOVE OR REMEDIATE ANY HAZARDOUS MATERIALS, (III)
TO GIVE NOTICE TO OR RECEIVE APPROVAL FROM ANY GOVERNMENTAL BODY (OTHER THAN AS
NECESSARY TO TRANSFER, OR TO ALLOW BUYER TO OPERATE UNDER, ENVIRONMENTAL PERMITS

 

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REQUIRED UNDER ENVIRONMENTAL LAWS), OR (IV) TO RECORD OR DELIVER TO ANY PERSON
OR ENTITY (OTHER THAN BUYER) ANY DISCLOSURE DOCUMENT OR STATEMENT PERTAINING TO
ENVIRONMENTAL MATTERS.

SECTION 4.23  INSURANCE.  SCHEDULE 4.23 SETS FORTH A LIST OF ALL INSURANCE
POLICIES OF EACH OF THE SUBJECT COMPANIES OR RELATING TO ITS ASSETS OR THE
CONDUCT OF ITS BUSINESS (COLLECTIVELY, THE “INSURANCE POLICIES”).  THE INSURANCE
POLICIES (I) ARE VALID, OUTSTANDING AND ENFORCEABLE, (II) ARE ISSUED BY INSURERS
THAT ARE FINANCIALLY SOUND AND REPUTABLE, (III) TAKEN TOGETHER, PROVIDE ADEQUATE
INSURANCE COVERAGE FOR THE ASSETS AND THE OPERATION OF THE BUSINESS OF THE
SUBJECT COMPANIES, (IV) ARE SUFFICIENT FOR COMPLIANCE WITH ALL LAWS AND
CONTRACTS TO WHICH THE SUBJECT COMPANIES ARE A PARTY OR BY WHICH THEY ARE BOUND,
AND (V) EXCEPT AS SET FORTH IN SCHEDULE 4.23, DO NOT PROVIDE FOR ANY
RETROSPECTIVE PREMIUM ADJUSTMENT OR OTHER EXPERIENCE-BASED LIABILITY ON THE PART
OF ANY OF THE SUBJECT COMPANIES.  EACH OF THE SUBJECT COMPANIES HAS PAID ALL
PREMIUMS DUE, AND HAS OTHERWISE PERFORMED ALL OF ITS OBLIGATIONS, UNDER EACH OF
THE INSURANCE POLICIES.  NONE OF THE SELLER PARTIES OR ANY OF THE SUBJECT
COMPANIES HAS RECEIVED (I) ANY REFUSAL OF COVERAGE OR ANY NOTICE THAT A DEFENSE
WILL BE AFFORDED WITH A RESERVATION OF RIGHTS UNDER ANY OF THE INSURANCE
POLICIES, OR (II) ANY NOTICE OF CANCELLATION OR ANY OTHER INDICATION THAT ANY
INSURANCE POLICY IS NO LONGER IN FULL FORCE OR EFFECT OR WILL NOT BE RENEWED OR
THAT THE ISSUER OF ANY INSURANCE POLICY IS NOT WILLING OR ABLE TO PERFORM ITS
OBLIGATIONS THEREUNDER.

SECTION 4.24  GOVERNMENT LICENSES AND PERMITS.  SCHEDULE 4.24 SETS FORTH A LIST
OF ALL LICENSES, PERMITS, CONSENTS, AUTHORIZATIONS, QUALIFICATIONS, PLANS
(INCLUDING VESSEL RESPONSE PLANS) APPROVED BY OR SUBMITTED TO GOVERNMENTAL
BODIES AND ORDERS OF GOVERNMENTAL BODIES REQUIRED FOR THE OPERATION OR CONDUCT
OF THE BUSINESS OF ANY OF THE SUBJECT COMPANIES AS CURRENTLY CONDUCTED OR THE
OWNERSHIP OF ANY OF ITS ASSETS, ALL OF WHICH ARE IN FULL FORCE AND EFFECT.

SECTION 4.25  RESPONSIBLE CARRIERS PLAN.  EACH OF THE SUBJECT COMPANIES HAS
ADOPTED AN AMERICAN WATERWAYS OPERATORS RESPONSIBLE CARRIERS PLAN, WHICH IS
ATTACHED HERETO AS SCHEDULE 4.25, AND TO THE KNOWLEDGE OF SELLERS, IS IN
COMPLIANCE WITH ALL RESPONSIBLE CARRIER PLAN REQUIREMENTS.

SECTION 4.26  TAXES.

(A)           THE SELLER PARTIES AND THE SUBJECT COMPANIES HAVE CAUSED TO BE
TIMELY FILED WITH APPROPRIATE GOVERNMENTAL BODIES ALL TAX RETURNS REQUIRED TO BE
FILED BY OR WITH RESPECT TO THE SUBJECT COMPANIES, THE ASSETS AND OPERATIONS OF
THE SUBJECT COMPANIES AND THE CONDUCT OF THE BUSINESS OF THE SUBJECT COMPANIES
(TOGETHER, “SMITH ITEMS”), AND HAS PAID OR CAUSED TO BE PAID OR MADE PROVISIONS
FOR THE PAYMENT OF ALL TAXES DUE WITH RESPECT THERETO.

(B)           EXCEPT AS SET FORTH ON SCHEDULE 4.26(B), NONE OF THE SUBJECT
COMPANIES HAS RECEIVED NOTICE OF, AND THE SELLER PARTIES DO NOT HAVE ANY
KNOWLEDGE OF, ANY NOTICE OF DEFICIENCY OR ASSESSMENT OR PROPOSED DEFICIENCY OR
ASSESSMENT RELATING TO TAXES WITH RESPECT TO SMITH ITEMS FROM ANY GOVERNMENTAL
BODY, AND THERE ARE NO OUTSTANDING AGREEMENTS OR WAIVERS THAT EXTEND ANY
STATUTORY PERIOD OF LIMITATIONS APPLICABLE TO ANY FEDERAL, STATE OR LOCAL INCOME
OR FRANCHISE TAX RETURNS THAT INCLUDE SMITH ITEMS.  TO THE KNOWLEDGE OF THE
SELLERS, THERE ARE NO THREATENED AUDITS OF, OR ASSESSMENTS AGAINST, ANY OF THE
SELLER PARTIES OR ANY OF THE SUBJECT COMPANIES WITH RESPECT TO TAXES THAT MAY BE
ASSERTED AGAINST ANY OF THE SELLER PARTIES OR ANY OF THE SUBJECT COMPANIES.
NEITHER ANY OF THE SELLER PARTIES NOR ANY OF THE SUBJECT COMPANIES IS A

 

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PARTY TO ANY ACTION OR PROCEEDING BY ANY GOVERNMENTAL BODY FOR THE COLLECTION OR
ASSESSMENT OF TAXES WITH RESPECT TO SMITH ITEMS.

(C)           ALL AMOUNTS REQUIRED IN THE OPERATION OF THE BUSINESS TO BE
WITHHELD BY OR WITH RESPECT TO ANY OF THE SUBJECT COMPANIES AND PAID TO
GOVERNMENTAL BODIES FOR TAXES, INCLUDING INCOME, SOCIAL SECURITY, UNEMPLOYMENT
INSURANCE, SALES, EXCISE, USE AND OTHER TAXES, HAVE BEEN COLLECTED OR WITHHELD
AND TO THE EXTENT REQUIRED, PAID TO THE PROPER GOVERNMENTAL BODY.  ALL DEPOSITS
APPLICABLE LAW REQUIRES TO BE MADE BY OR WITH RESPECT TO ANY OF THE SUBJECT
COMPANIES WITH RESPECT TO EMPLOYEES’ WITHHOLDING AND OTHER EMPLOYMENT TAXES HAVE
BEEN MADE.

(D)           NONE OF THE SELLER PARTIES (OR, IN THE CASE OF A SELLER PARTY THAT
IS A DISREGARDED ENTITY FOR FEDERAL INCOME TAX PURPOSES, THE PERSON WHO IS
TREATED AS THE OWNER OF THE SELLER PARTY’S ASSETS FOR FEDERAL INCOME TAX
PURPOSES) IS A “FOREIGN PERSON” WITHIN THE MEANING OF SECTION 1445(F)(3) OF THE
CODE.

(E)           EXCEPT AS SET FORTH IN SCHEDULE 4.26(E), NONE OF THE ASSETS OF ANY
OF THE SUBJECT COMPANIES IS SUBJECT TO ANY PROVISION OF APPLICABLE LAW WHICH
ELIMINATES OR REDUCES THE ALLOWANCE FOR FEDERAL TAX DEPRECIATION OR AMORTIZATION
IN RESPECT OF THAT ASSET BELOW THE ALLOWANCE GENERALLY AVAILABLE TO AN ASSET OF
ITS TYPE.

(F)            NONE OF THE SUBJECT COMPANIES IS A PARTY TO ANY TAX SHARING
AGREEMENT.

(G)           (I)          SMITH MARITIME IS, AND AT ALL TIMES DURING ITS
EXISTENCE HAS BEEN, AN S CORPORATION WITHIN THE MEANING OF SECTION 1361(A)(1) OF
THE CODE.

(II)           EACH OF HAWAIIAN INTERISLAND TOWING, INC., TOW BOAT SERVICES &
MANAGEMENT, INC., UAUKEWAI DIVING, SALVAGE AND FISHING, INC. AND MARINE
LOGISTICS, INC. (COLLECTIVELY, THE “QSUBS”) IS, AND SINCE THE TIME OF ITS
CONTRIBUTION TO SMITH MARITIME IN OR PRIOR TO 2003 HAS BEEN, A QUALIFIED
SUBCHAPTER S SUBSIDIARY OF SMITH MARITIME WITHIN THE MEANING OF SECTION
1361(B)(3)(B) OF THE CODE.  SMITH MARITIME DOES NOT OWN A DIRECT OR INDIRECT
INTEREST IN ANY ENTITY OTHER THAN THE QSUBS.   SCHEDULE 4.26(G) LISTS THE
EFFECTIVE DATE OF EACH S ELECTION AND OF EACH QUALIFIED SUBCHAPTER S SUBSIDIARY
ELECTION FOR EACH OF THE QSUBS.  PRIOR TO ITS CONTRIBUTION TO SMITH MARITIME,
EACH QSUB WAS AN S CORPORATION WITHIN THE MEANING OF SECTION 1361(A)(1) OF THE
CODE AT ALL TIMES FROM THE DATE INDICATED FOR SUCH QSUB ON SCHEDULE 4.26(G). 
SELLER PARTIES HAVE NOT CAUSED OR PERMITTED SMITH MARITIME OR ANY OF THE QSUBS
(X) TO MAKE ANY ELECTION UNDER TREAS. REG. §301.7701-3 TO TREAT ANY OF THE QSUBS
OR THEIR SUCCESSORS AS A CORPORATION FOR FEDERAL INCOME TAX PURPOSES OR (Y) TO
TAKE ANY OTHER ACTION THAT WOULD PREVENT THE QSUBS OR THEIR SUCCESSORS FROM
BEING TREATED AS DISREGARDED ENTITIES FOR FEDERAL INCOME TAX PURPOSES AT ALL
TIMES THROUGH THE CLOSING DATE.

(III)          NEITHER SMITH MARITIME, HAWAIIAN INTERISLAND TOWING, INC. NOR TOW
BOAT SERVICES & MANAGEMENT, INC. OWNS ANY ASSET AS TO WHICH A TAX MIGHT BE
IMPOSED UNDER SECTION 1374 OF THE CODE AS A RESULT OF THE TRANSACTIONS

 

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CONTEMPLATED BY THIS AGREEMENT.  SCHEDULE 4.26(G) IDENTIFIES (X) THE “NET
UNRECOGNIZED BUILT-IN GAIN” OF EACH OF UAUKEWAI DIVING, SALVAGE AND FISHING,
INC. AND MARINE LOGISTICS, INC. (OR OF SMITH MARITIME ON ACCOUNT OF ITS
OWNERSHIP OF THOSE ENTITIES) FOR PURPOSES OF SECTION 1374 OF THE CODE AND (Y)
EACH ASSET OF UAUKEWAI DIVING, SALVAGE AND FISHING, INC. OR MARINE LOGISTICS,
INC. THAT MIGHT GIVE RISE TO A “RECOGNIZED BUILT-IN GAIN” UNDER SECTION 1374 IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE AMOUNTS
SET FORTH IN SECTIONS 1374(D)(3)(B)(I) AND (II) OF THE CODE WITH RESPECT TO EACH
SUCH ASSET.

(IV)          NEITHER SMITH MARITIME NOR ANY QSUB IS, OR HAS BEEN, LIABLE FOR
TAX UNDER SECTION 1375 OF THE CODE.

(H)           EACH OF GO BIG AND 235LX IS, AT ALL TIMES FROM ITS FORMATION HAS
BEEN, AND THROUGH THE CLOSING DATE WILL BE, CLASSIFIED AS AN ENTITY WHOSE
EXISTENCE APART FROM SMITH IS DISREGARDED FOR FEDERAL INCOME TAX PURPOSES.

(I)            THERE ARE NO TAXES OF ANY PERSON OTHER THAN ANY OF THE SUBJECT
COMPANIES FOR WHICH ANY OF THE SUBJECT COMPANIES COULD BE HELD LIABLE AFTER THE
CLOSING UNDER TREAS. REG. § 1.1361-4(A)(6), TREAS. REG. § 1.1502-6, TREAS. REG.
§ 301.7701-2(C)(2)(III) OR SIMILAR PRINCIPLES.

(J)            IN ALL STATES IMPOSING A STATE CORPORATE INCOME TAX IN WHICH ANY
OF THE SUBJECT COMPANIES DO BUSINESS, EACH OF THE SUBJECT COMPANIES IS TREATED
FOR STATE CORPORATE INCOME TAX PURPOSES IN A MANNER CONSISTENT WITH THE
TREATMENT OF THE ENTITY FOR FEDERAL INCOME TAX PURPOSES.

(K)           NONE OF THE SUBJECT COMPANIES HAS REGULARLY OR SYSTEMATICALLY SOLD
TANGIBLE ASSETS, SUCH THAT THE TRANSFER OF ALL OF THE TANGIBLE ASSETS HELD BY
EACH OF THE SUBJECT COMPANIES IN CONNECTION WITH THE MERGERS WILL QUALIFY FOR A
“CASUAL SALE” EXEMPTION FROM HAWAII SALES AND USE TAX UNDER HAWAII
ADMINISTRATIVE RULES SECTION 18-237-1.

(L)            NONE OF THE ASSETS OF THE SUBJECT COMPANIES WILL BE LOCATED
WITHIN THE TAXING JURISDICTION OF ANY ALASKA LOCAL TAXING AUTHORITY AT THE
EFFECTIVE TIME.

SECTION 4.27  NO MATERIAL ADVERSE CHANGE.  THERE HAS BEEN NO MATERIAL ADVERSE
CHANGE IN THE BUSINESS, PROSPECTS, RESULTS OF OPERATIONS, ASSETS OR FINANCIAL
CONDITION OF ANY OF THE SUBJECT COMPANIES SINCE DECEMBER 31, 2006, AND NO EVENT
HAS OCCURRED WHICH COULD BE REASONABLY EXPECTED TO LEAD TO OR CAUSE SUCH A
MATERIAL ADVERSE CHANGE; PROVIDED, HOWEVER, THAT (A) CHANGES RESULTING FROM
CONDITIONS AFFECTING THE COASTWISE MARITIME PETROLEUM TRANSPORTATION INDUSTRY IN
GENERAL AND (B) CHANGES IN THE ECONOMY IN GENERAL SHALL, IN EACH CASE, BE
EXCLUDED FROM THE DETERMINATION TO THE EXTENT THAT THEY DO NOT HAVE A
DISPROPORTIONATE EFFECT ON ANY OF THE SUBJECT COMPANIES AS COMPARED TO OTHER
ENTITIES ENGAGED IN THE COASTWISE MARITIME PETROLEUM TRANSPORTATION INDUSTRY IN
HAWAII AND ALONG THE WEST COAST.

SECTION 4.28  BOOKS AND RECORDS.  THE BOOKS OF ACCOUNT, MINUTE BOOKS, STOCK
RECORD BOOKS, AND OTHER RECORDS OF EACH OF THE SUBJECT COMPANIES, ALL OF WHICH
HAVE BEEN MADE AVAILABLE TO BUYER, ARE COMPLETE AND CORRECT AND HAVE BEEN
MAINTAINED IN ACCORDANCE WITH SOUND BUSINESS PRACTICES, IN EACH CASE FROM AND
AFTER JANUARY 1, 2004.  SINCE JANUARY 1, 2004, THE

 

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BOOKS, RECORDS AND ACCOUNTS OF THE SUBJECT COMPANIES HAVE ACCURATELY AND FAIRLY
REFLECTED AND CURRENTLY ACCURATELY AND FAIRLY REFLECT, IN REASONABLE DETAIL AND
IN ALL MATERIAL RESPECTS, THE TRANSACTIONS AND DISPOSITIONS OF THE ASSETS OF THE
SUBJECT COMPANIES.  THE COMPANY BOOKS OF EACH OF THE SUBJECT COMPANIES CONTAIN
ACCURATE AND COMPLETE RECORDS OF ALL MEETINGS HELD OF, AND MATERIAL COMPANY
ACTION TAKEN BY, THE OWNERS OF EACH OF THE SUBJECT COMPANIES SINCE JANUARY 1,
2004, AND NO MEETING OF ANY SUCH MEMBERS HAS BEEN HELD SINCE JANUARY 1, 2004 FOR
WHICH MINUTES HAVE NOT BEEN PREPARED AND ARE NOT CONTAINED IN SUCH MINUTE BOOKS.

SECTION 4.29  SAFETY REPORTS.  SCHEDULE 4.29 SETS FORTH A COMPLETE LISTING OF
ALL INJURY REPORTS, WORKERS’ COMPENSATION REPORTS AND CLAIMS, SAFETY CITATIONS
AND REPORTS AND OSHA REPORTS RELATING TO ANY OF THE FOREGOING SINCE JANUARY 1,
2004.

SECTION 4.30  TRANSACTIONS WITH CERTAIN PERSONS.  EXCEPT AS SET FORTH ON
SCHEDULE 4.30 AND EXCEPT FOR TRANSACTIONS CONTEMPLATED BY SECTION 6.13, DURING
THE PAST TWO YEARS, NONE OF THE SUBJECT COMPANIES HAS, DIRECTLY OR INDIRECTLY,
PURCHASED, LEASED OR OTHERWISE ACQUIRED ANY PROPERTY OR OBTAINED ANY SERVICES
FROM, OR SOLD, LEASED OR OTHERWISE DISPOSED OF ANY PROPERTY OR FURNISHED ANY
SERVICES TO, OR OTHERWISE DEALT WITH (EXCEPT WITH RESPECT TO REMUNERATION FOR
SERVICES RENDERED AS A MANAGER, OFFICER OR EMPLOYEE OF ANY OF THE SUBJECT
COMPANIES), IN THE ORDINARY COURSE OF BUSINESS OR OTHERWISE, (A) ANY OFFICER,
MANAGER OR SHAREHOLDER OF ANY OF THE SUBJECT COMPANIES OR ANY FAMILY MEMBER OF
ANY SUCH PERSON OR (B) ANY PERSON WHICH, DIRECTLY OR INDIRECTLY, ALONE OR
TOGETHER WITH OTHERS, CONTROLS, IS CONTROLLED BY OR IS UNDER COMMON CONTROL WITH
ANY OF THE SUBJECT COMPANIES OR ANY OWNER THEREOF.  EXCEPT AS SET FORTH ON
SCHEDULE 4.30, NONE OF THE SUBJECT COMPANIES OWES ANY AMOUNT TO, OR HAS ANY
CONTRACT WITH OR COMMITMENT TO, ANY OF ITS MEMBERS, MANAGERS, OFFICERS,
EMPLOYEES, FAMILIES OF EMPLOYEES (INCLUDING RELATIVES BY MARRIAGE) OR
CONSULTANTS (OTHER THAN COMPENSATION TO MANAGERS, OFFICERS, OR EMPLOYEES FOR
CURRENT SERVICES NOT YET DUE AND PAYABLE AND REIMBURSEMENT OF EXPENSES OF
EMPLOYEES ARISING IN THE ORDINARY COURSE OF BUSINESS AND ON AN ARMS-LENGTH BASIS
NOT IN EXCESS OF $10,000 IN THE AGGREGATE), AND NONE OF SUCH PERSONS OWE ANY
AMOUNT TO ANY OF THE SUBJECT COMPANIES.

SECTION 4.31  CLOSING DATE BALANCE SHEET.  THE CLOSING DATE BALANCE SHEET (AS
PREPARED IN ACCORDANCE WITH SECTION 6.11 OF THIS AGREEMENT) WILL PRESENT FAIRLY,
IN ALL MATERIAL RESPECTS, THE CONSOLIDATED FINANCIAL CONDITION OF THE SUBJECT
COMPANIES AS OF THE CLOSING DATE AND ACCURATELY REFLECTS ALL LIABILITIES OR
OBLIGATIONS (WHETHER ABSOLUTE, ACCRUED, CONTINGENT, UNLIQUIDATED OR OTHERWISE)
OF THE SUBJECT COMPANIES AS OF THE CLOSING DATE OTHER THAN LIABILITIES UNDER
CONTRACTS OR CONTRACTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS
CONSISTENT WITH PAST PRACTICE OR ARISING OUT OF MATTERS DESCRIBED IN SCHEDULE
4.7, IN EACH CASE TO THE EXTENT SUCH LIABILITIES ARE NOT REQUIRED TO BE
REFLECTED IN A BALANCE SHEET PREPARED IN ACCORDANCE WITH GAAP.

SECTION 4.32  DISCLOSURE.  NO REPRESENTATION OR WARRANTY BY SMITH MARITIME, GO
BIG OR ANY SELLER PARTY IN THIS AGREEMENT, AND IN ANY SCHEDULE OR EXHIBIT TO
THIS AGREEMENT, OR IN ANY CERTIFICATE OR OTHER DOCUMENT FURNISHED TO BUYER BY
THE SUBJECT COMPANIES OR THE SELLER PARTIES AT CLOSING, CONTAINS OR, AS OF THE
CLOSING DATE, SHALL CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS OR
SHALL OMIT A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS THEREIN NOT
MISLEADING.

 

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND THE PARTNERSHIP

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

SECTION 5.1  STATUS AND GOOD STANDING.  BUYER IS A LIMITED LIABILITY COMPANY
DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
STATE OF DELAWARE, WITH FULL LIMITED LIABILITY COMPANY POWER AND AUTHORITY UNDER
ITS CERTIFICATE OF FORMATION AND LIMITED LIABILITY COMPANY AGREEMENT TO OWN AND
LEASE ITS PROPERTIES AND TO CONDUCT BUSINESS AS THE SAME EXISTS ON THE DATE
HEREOF AND ON THE CLOSING DATE.  THE PARTNERSHIP IS A LIMITED PARTNERSHIP DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF DELAWARE,
WITH FULL PARTNERSHIP POWER AND AUTHORITY UNDER ITS CERTIFICATE AND AGREEMENT OF
LIMITED PARTNERSHIP TO CONDUCT ITS BUSINESS AS THE SAME EXISTS ON THE DATE
HEREOF AND ON THE CLOSING DATE.

SECTION 5.2  AUTHORIZATION.  EACH OF BUYER AND THE PARTNERSHIP HAS FULL LIMITED
LIABILITY COMPANY OR PARTNERSHIP POWER AND AUTHORITY UNDER ITS CERTIFICATE OF
FORMATION AND LIMITED LIABILITY COMPANY AGREEMENT OR CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP, AS APPLICABLE, AND THE MANAGERS OF BUYER AND THE GENERAL
PARTNER OF THE PARTNERSHIP HAVE TAKEN ALL NECESSARY LIMITED LIABILITY COMPANY OR
PARTNERSHIP ACTION, AS APPLICABLE, TO AUTHORIZE IT, TO EXECUTE AND DELIVER THIS
AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO, TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN AND TO TAKE ALL ACTIONS REQUIRED TO BE TAKEN BY
IT PURSUANT TO THE PROVISIONS HEREOF OR THEREOF, AND EACH OF THIS AGREEMENT AND
THE EXHIBITS HERETO CONSTITUTES THE VALID AND BINDING OBLIGATION OF EACH OF
BUYER AND THE PARTNERSHIP, ENFORCEABLE AGAINST EACH SUCH PARTY IN ACCORDANCE
WITH ITS TERMS, SUBJECT TO APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION,
MORATORIUM AND OTHER SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY AND TO
THE PRINCIPLES OF EQUITY (WHETHER ENFORCEMENT IS SOUGHT IN A PROCEEDING IN
EQUITY OR AT LAW).

SECTION 5.3  NON-CONTRAVENTION.  NEITHER THE EXECUTION AND DELIVERY OF THIS
AGREEMENT AND THE SCHEDULES AND EXHIBITS HERETO, NOR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, DOES OR SHALL VIOLATE, CONFLICT
WITH OR RESULT IN BREACH OF OR REQUIRE NOTICE OR CONSENT UNDER ANY LAW, THE
CERTIFICATE OF FORMATION, CERTIFICATE OF LIMITED PARTNERSHIP, LIMITED LIABILITY
COMPANY AGREEMENT OR AGREEMENT OF LIMITED PARTNERSHIP OF BUYER OR THE
PARTNERSHIP (AS THE CASE MAY BE) NOR OR ANY PROVISION OF ANY AGREEMENT OR
INSTRUMENT TO WHICH BUYER OR THE PARTNERSHIP IS A PARTY.

SECTION 5.4  VALIDITY.  THERE IS NO INVESTIGATION, CLAIM, PROCEEDING OR
LITIGATION OF ANY TYPE PENDING OR, TO THE KNOWLEDGE OF BUYER OR THE PARTNERSHIP,
THREATENED TO WHICH BUYER OR THE PARTNERSHIP IS A PARTY THAT (I) QUESTIONS OR
INVOLVES THE VALIDITY OR ENFORCEABILITY OF ANY OF BUYER’S OR THE PARTNERSHIP’S
OBLIGATIONS UNDER THIS AGREEMENT OR ANY OF THE EXHIBITS HERETO OR (II) SEEKS (OR
REASONABLY MIGHT BE EXPECTED TO SEEK) (A) TO PREVENT OR DELAY THE CONSUMMATION
BY BUYER OR THE PARTNERSHIP OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
OR (B) DAMAGES IN CONNECTION WITH ANY SUCH CONSUMMATION.

 

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SECTION 5.5  BROKER INVOLVEMENT.  NEITHER BUYER NOR THE PARTNERSHIP HAS HIRED,
RETAINED OR DEALT WITH ANY BROKER OR FINDER IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

SECTION 5.6  BUYER’S REVIEW.  IN CONNECTION WITH ITS DECISION TO PURCHASE THE
EQUITY INTERESTS, EACH OF BUYER AND THE PARTNERSHIP ACKNOWLEDGES THAT IT IS A
SOPHISTICATED PARTY WITH SUCH KNOWLEDGE AND EXPERIENCE IN BUSINESS AND FINANCIAL
MATTERS AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE ACQUISITION. 
EACH OF BUYER AND THE PARTNERSHIP HAS HAD AN OPPORTUNITY TO REVIEW THE RECORDS
AND BUSINESS OF EACH OF THE SUBJECT COMPANIES PROVIDED TO BUYER AND THE
PARTNERSHIP AND TO ASK QUESTIONS AND RECEIVE ANSWERS FROM THE SELLER PARTIES AND
EACH OF THE SUBJECT COMPANIES REGARDING EACH OF THE SUBJECT COMPANIES.

SECTION 5.7  CITIZENSHIP.  EACH OF BUYER AND THE PARTNERSHIP IS A CITIZEN OF THE
UNITED STATES WITHIN THE MEANING OF CHAPTER 505 OF TITLE 46 OF THE UNITED STATES
CODE, FOR THE PURPOSE OF OPERATING THE VESSELS IN THE COASTWISE TRADE OF THE
UNITED STATES.

ARTICLE VI
COVENANTS

SECTION 6.1  OTHER OFFERS.  FROM AND AFTER THE DATE HEREOF AND UNTIL THE
CLOSING, NEITHER THE SELLER PARTIES, SMITH MARITIME, GO BIG NOR ANY OF THEIR
RESPECTIVE OFFICERS, MANAGERS, MEMBERS, EMPLOYEES, AFFILIATES, REPRESENTATIVES
OR AGENTS SHALL, DIRECTLY OR INDIRECTLY, (A) SOLICIT, ENTER INTO OR CONDUCT
DISCUSSIONS RELATING TO, INITIATE OR ENCOURAGE ANY OFFER OR PROPOSAL FOR, OR ANY
INDICATION OF INTEREST IN, (1) A MERGER, CONSOLIDATION, SHARE EXCHANGE OR OTHER
BUSINESS COMBINATION INVOLVING ANY OF THE SUBJECT COMPANIES OR ANY SELLER PARTY,
(2) THE ACQUISITION OF AN EQUITY INTEREST IN ANY OF THE SUBJECT COMPANIES OR ANY
SELLER PARTY OR (3) A SALE, LICENSE OR OTHER TRANSFER OF ALL OR A MATERIAL PART
OF THE ASSETS OF ANY OF THE SUBJECT COMPANIES OR ANY SELLER PARTY (EACH, A
“TRANSACTION”), OR (B) ENGAGE IN NEGOTIATIONS WITH OR DISCLOSE ANY NONPUBLIC
INFORMATION RELATING TO ANY OF THE SUBJECT COMPANIES, ANY SELLER PARTY OR THEIR
RESPECTIVE BUSINESSES, OR AFFORD ACCESS TO THE PROPERTIES, BOOKS OR RECORDS OF
ANY OF THE SUBJECT COMPANIES OR ANY SELLER PARTY, TO ANY PERSON WITH RESPECT TO
A TRANSACTION.  SMITH MARITIME, GO BIG AND THE SELLER PARTIES SHALL NOTIFY BUYER
OF ANY SUCH INQUIRY OR PROPOSAL WITHIN THREE BUSINESS DAYS AFTER RECEIPT OR
AWARENESS OF THE SAME.

SECTION 6.2  CONDUCT OF BUSINESS PENDING CLOSING.

(A)           BETWEEN THE DATE OF THIS AGREEMENT AND THE CLOSING DATE, THE
SUBJECT COMPANIES AND THE SELLER PARTIES WILL, AND SELLER PARTIES WILL CAUSE THE
SUBJECT COMPANIES TO:

(I)            CONDUCT THE BUSINESS OF EACH OF THE SUBJECT COMPANIES IN THE
USUAL AND ORDINARY COURSE THEREOF, INCLUDING, WITHOUT LIMITATION, THE MAKING OF
PROPOSALS, QUOTATIONS, BIDS AND SOLICITATIONS, AND THE ENTERING INTO OF
CONTRACTS FOR THE PURCHASE AND SALE OF PRODUCTS AND SERVICES;

(II)           ORALLY ADVISE BUYER AND, UNLESS PROHIBITED BY CONFIDENTIALITY
REQUIREMENTS OR ANTITRUST LAWS, KEEP BUYER ADVISED OF ANY MATERIAL DEVELOPMENTS
RELATING TO THE BUSINESS OF EACH OF THE SUBJECT COMPANIES;

 

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(III)          MAINTAIN AND PRESERVE THE BUSINESS AND ASSETS OF EACH OF THE
SUBJECT COMPANIES IN CUSTOMARY REPAIR, ORDER AND CONDITION, REASONABLE WEAR AND
TEAR EXCEPTED;

(IV)          USE THEIR REASONABLE BEST EFFORTS TO PRESERVE THE BUSINESS
ORGANIZATION OF EACH OF THE SUBJECT COMPANIES INTACT, TO RETAIN THE SERVICES OF
THE OFFICERS, EMPLOYEES AND AGENTS OF EACH OF THE SUBJECT COMPANIES AND TO
PRESERVE THE RELATIONSHIPS AND GOOD WILL OF EACH OF THE SUBJECT COMPANIES WITH
THEIR SUPPLIERS, CUSTOMERS, LANDLORDS, CREDITORS, EMPLOYEES, AGENTS AND OTHERS
HAVING BUSINESS DEALINGS WITH ANY OF THE SUBJECT COMPANIES;

(V)           CONFER WITH BUYER CONCERNING MATTERS OF A NATURE DESCRIBED IN
SECTION 4.9;

(VI)          USE THEIR REASONABLE EFFORTS TO CAUSE ALL OF THE REPRESENTATIONS
AND WARRANTIES IN ARTICLES III AND IV HEREOF TO CONTINUE TO BE TRUE AND CORRECT;
AND

(VII)         OTHERWISE RESPOND TO BUYER’S REASONABLE REQUESTS CONCERNING THE
STATUS OF THE BUSINESS, OPERATIONS AND FINANCES OF ANY OF THE SUBJECT COMPANIES.

(B)           EXCEPT AS OTHERWISE EXPRESSLY PERMITTED BY THIS AGREEMENT, BETWEEN
THE DATE OF THIS AGREEMENT AND THE CLOSING DATE, THE SELLER PARTIES WILL NOT,
AND THE SELLER PARTIES WILL CAUSE THE SUBJECT COMPANIES NOT TO, WITHOUT THE
PRIOR WRITTEN CONSENT OF BUYER, TAKE ANY ACTION, OR FAIL TO TAKE ANY REASONABLE
ACTION WITHIN THEIR OR ITS CONTROL, AS A RESULT OF WHICH ANY OF THE CHANGES OR
EVENTS LISTED IN SECTION 4.9 WOULD REASONABLY BE EXPECTED TO OCCUR.

SECTION 6.3  ACCESS.  SMITH MARITIME AND GO BIG WILL, AND THE SELLER PARTIES
WILL CAUSE THE SUBJECT COMPANIES TO, AFFORD BUYER’S OFFICERS, ATTORNEYS,
ACCOUNTANTS AND OTHER REPRESENTATIVES REASONABLE ACCESS DURING NORMAL BUSINESS
HOURS TO THE OFFICES, PERSONNEL, PLANTS, PROPERTIES, EQUIPMENT AND RECORDS OF
EACH OF THE SUBJECT COMPANIES FOR THE PURPOSE OF CONDUCTING AN INVESTIGATION
THEREOF.  BUYER SHALL NOT CONTACT CLIENTS, CHARTERERS, CUSTOMERS OR SUPPLIERS OF
ANY OF THE SUBJECT COMPANIES WITHOUT THE PRIOR CONSENT OF GORDON L.K. SMITH
(WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED).  SMITH MARITIME,
GO BIG AND THE SELLER PARTIES WILL FURNISH TO BUYER SUCH FINANCIAL AND OPERATING
DATA AND OTHER INFORMATION AS BUYER MAY REASONABLY REQUEST; PROVIDED, HOWEVER,
THAT THE CONFIDENTIALITY OF ANY DATA OR INFORMATION SO ACQUIRED SHALL BE
MAINTAINED BY BUYER AND ITS REPRESENTATIVES IN ACCORDANCE WITH THE TERMS OF
PARAGRAPH 9 OF THE LETTER OF INTENT DATED JANUARY 25, 2007 BETWEEN K-SEA
OPERATING PARTNERSHIP L.P. AND THE SELLER PARTIES.

SECTION 6.4  TERMINATION OF GUARANTEES AND SETTLEMENT OF INTERCOMPANY
AMOUNTS.  THE SELLER PARTIES SHALL CAUSE ANY INTERCOMPANY TRANSACTIONS DESCRIBED
IN SCHEDULE 4.12(F) TO BE TERMINATED OR SETTLED AT OR PRIOR TO THE CLOSING AT NO
COST TO THE SUBJECT COMPANIES OR TO BUYER.

SECTION 6.5  COVENANT AGAINST COMPETITION.

 

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(A)           AS AN ESSENTIAL CONSIDERATION FOR THE OBLIGATIONS OF BUYER AND THE
PARTNERSHIP UNDER THIS AGREEMENT, EACH SELLER PARTY HEREBY AGREES AND COVENANTS
THAT, EXCEPT ON BEHALF OF THE BUYER OR ITS AFFILIATES, FOR A PERIOD OF THREE
YEARS FOLLOWING THE CLOSING DATE:

(I)            NEITHER THE SELLER PARTY NOR ANY AFFILIATE THEREOF SHALL, FOR
WHATEVER REASON AND WITH OR WITHOUT CAUSE, EITHER INDIVIDUALLY OR IN PARTNERSHIP
OR JOINTLY OR IN CONJUNCTION WITH ANY PERSON OR PERSONS AS PRINCIPAL, AGENT,
EMPLOYEE, SHAREHOLDER (OTHER THAN HOLDING COMMON UNITS OR SHARES OF OTHER
COMPANIES LISTED ON A UNITED STATES STOCK EXCHANGE OR AUTOMATED QUOTATION SYSTEM
THAT DO NOT EXCEED ONE (1%) PERCENT OF THE OUTSTANDING SHARES SO LISTED), OWNER,
INVESTOR, PARTNER OR IN ANY OTHER MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY MANNER IN THE RESTRICTED BUSINESSES IN THE RESTRICTED TRADES; AND

(II)           NEITHER THE SELLER PARTY NOR ANY AFFILIATE THEREOF SHALL,
DIRECTLY OR INDIRECTLY, (A) INDUCE OR ATTEMPT TO INDUCE ANY CUSTOMER TO CEASE
DOING BUSINESS WITH BUYER OR ANY OF ITS AFFILIATES, (B) INTERFERE WITH THE
RELATIONSHIP BETWEEN ANY CUSTOMER AND BUYER OR ANY OF ITS AFFILIATES OR (C)
SOLICIT RESTRICTED BUSINESS FROM, OR PROVIDE SUCH SERVICES TO, ANY OF THE
CUSTOMERS OR ACCOUNTS OF BUYER OR ANY OF ITS AFFILIATES.

(B)           IF BUYER BELIEVES THAT ANY SELLER PARTY OR ANY AFFILIATE OF THE
SELLER PARTY HAS VIOLATED THE PROVISIONS OF THIS SECTION 6.5, BUYER SHALL HAVE
THE RIGHT TO SEEK RELIEF FROM ANY COURT OF COMPETENT JURISDICTION AGAINST SUCH
PARTY.  EACH SELLER PARTY ACKNOWLEDGES THAT MONEY DAMAGES ALONE SHALL NOT
ADEQUATELY COMPENSATE BUYER IN THE EVENT OF A BREACH OF THE COVENANTS OF THIS
SECTION 6.5.  THEREFORE, EACH SELLER PARTY AGREES THAT IN ADDITION TO ALL
REMEDIES AVAILABLE AT LAW, IN EQUITY OR UNDER THIS AGREEMENT, BUYER SHALL BE
ENTITLED TO INJUNCTIVE RELIEF FOR THE ENFORCEMENT OF THIS COVENANT.

(C)           EACH SELLER PARTY AGREES THAT THE COVENANTS IN THIS SECTION 6.5
ARE REASONABLE WITH RESPECT TO THEIR DURATION, SCOPE AND GEOGRAPHICAL AREA.

(D)           THE COVENANTS IN THIS SECTION 6.5 ARE SEVERABLE AND SEPARATE, AND
THE UNENFORCEABILITY OF ANY SPECIFIC COVENANT IN THIS SECTION 6.5 IS NOT
INTENDED BY ANY PARTY HERETO TO, AND SHALL NOT, AFFECT THE PROVISIONS OF ANY
OTHER COVENANT IN THIS SECTION 6.5.  IF ANY COURT OF COMPETENT JURISDICTION
DETERMINES THAT THE SCOPE, TIME OR TERRITORIAL RESTRICTIONS SECTION 6.5(A) SETS
FORTH ARE UNREASONABLE AS APPLIED TO A SELLER PARTY, THE PARTIES HERETO,
INCLUDING EACH SELLER PARTY, ACKNOWLEDGE THEIR MUTUAL INTENTION AND AGREEMENT
THAT THOSE RESTRICTIONS BE ENFORCED TO THE FULLEST EXTENT THE COURT DEEMS
REASONABLE, AND THEREBY SHALL BE REFORMED TO THAT EXTENT.

(E)           ALL THE COVENANTS IN THIS SECTION 6.5 ARE INTENDED BY EACH PARTY
HERETO TO, AND SHALL, BE CONSTRUED AS AN AGREEMENT INDEPENDENT OF ANY OTHER
PROVISION IN THIS AGREEMENT, AND THE EXISTENCE OF ANY CLAIM OR CAUSE OF ACTION
OF ANY SELLER PARTY AGAINST BUYER, WHETHER PREDICATED ON THIS AGREEMENT OR
OTHERWISE, SHALL NOT CONSTITUTE A DEFENSE TO THE ENFORCEMENT BY BUYER OF ANY
COVENANT IN THIS SECTION 6.5.  IT IS SPECIFICALLY AGREED THAT THE PERIOD
SPECIFIED IN SECTION 6.5 SHALL BE COMPUTED IN THE CASE OF EACH SELLER PARTY BY
EXCLUDING FROM THAT COMPUTATION ANY TIME DURING WHICH THE SELLER PARTY IS IN
VIOLATION OF ANY PROVISION OF SECTION 6.5.  THE COVENANTS CONTAINED IN THIS
SECTION

 

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6.5 SHALL NOT BE AFFECTED BY ANY BREACH OF ANY OTHER PROVISION HEREOF BY ANY
PARTY HERETO.

(F)            BUYER AND EACH SELLER PARTY HEREBY AGREE THAT THIS SECTION 6.5 IS
A MATERIAL AND SUBSTANTIAL PART OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

SECTION 6.6  FURTHER ASSURANCES.  SMITH MARITIME, GO BIG AND EACH SELLER PARTY
SHALL EXECUTE, ACKNOWLEDGE AND DELIVER OR CAUSE TO BE EXECUTED, ACKNOWLEDGED AND
DELIVERED TO THE BUYER OR ITS AFFILIATES SUCH ASSIGNMENTS OR OTHER INSTRUMENTS
OF TRANSFER, ASSIGNMENT AND CONVEYANCE, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO BUYER, AS SHALL BE NECESSARY TO VEST IN BUYER (OR ITS PERMITTED
ASSIGNEES) ALL OF THE RIGHT, TITLE AND INTEREST IN AND TO THE EQUITY INTERESTS
SOLD TO BUYER BY THE SELLER PARTIES PURSUANT TO THIS AGREEMENT, FREE AND CLEAR
OF ALL LIENS, AND ANY OTHER DOCUMENT REASONABLY REQUESTED BY BUYER IN CONNECTION
WITH THIS AGREEMENT.

SECTION 6.7  GOVERNMENTAL FILINGS.  AS PROMPTLY AS PRACTICABLE AFTER THE
EXECUTION OF THIS AGREEMENT, EACH PARTY SHALL, IN COOPERATION WITH THE OTHER,
FILE ANY REPORTS OR NOTIFICATIONS THAT MAY BE REQUIRED TO BE FILED BY IT UNDER
APPLICABLE LAW (INCLUDING, WITHOUT LIMITATION, ANY FILINGS UNDER THE HSR ACT).

SECTION 6.8  CONSENTS.  AFTER THE CLOSING, EACH SELLER PARTY SHALL USE ITS BEST
EFFORTS TO OBTAIN ANY CONSENTS OR APPROVALS OR ASSIST IN ANY FILINGS REQUIRED IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY THAT ARE REQUESTED BY BUYER
AND THAT HAVE NOT BEEN PREVIOUSLY OBTAINED OR MADE.

SECTION 6.9  PUBLIC ANNOUNCEMENTS.  NO PARTY SHALL, WITHOUT THE PRIOR APPROVAL
OF THE OTHER PARTY, ISSUE, OR PERMIT ANY OF ITS PARTNERS, SHAREHOLDERS,
DIRECTORS, OFFICERS, MANAGERS, MEMBERS, EMPLOYEES, AGENTS OR AFFILIATES TO
ISSUE, ANY PRESS RELEASE OR OTHER PUBLIC ANNOUNCEMENT WITH RESPECT TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT AS MAY BE REQUIRED BY
LAW OR APPLICABLE STOCK EXCHANGE REGULATIONS.

SECTION 6.10  TAX MATTERS.

(A)           THE SELLER PARTIES AND BUYER AGREE THAT THE TRANSACTIONS PURSUANT
TO THIS AGREEMENT SHALL, FOR FEDERAL INCOME TAX (AND RELATED STATE INCOME TAX)
PURPOSES, BE REPORTED AS FOLLOWS:

(I)            AS A TAXABLE SALE OF ASSETS BY SMITH MARITIME TO THE PARTNERSHIP
IN EXCHANGE FOR THE AMOUNT ALLOCATED TO SUCH SALE PURSUANT TO SCHEDULE 2.8,
FOLLOWED BY THE DISTRIBUTION OF SUCH CASH SALE PROCEEDS TO THE SMITH SELLERS IN
LIQUIDATION OF SMITH MARITIME.

(II)           AS A TAXABLE SALE OF THE GO BIG ASSETS BY SMITH TO THE
PARTNERSHIP TO THE EXTENT ATTRIBUTABLE TO THE AMOUNT ALLOCATED TO SUCH SALE
PURSUANT TO SCHEDULE 2.8.

 

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(III)          EACH PARTY AGREES NOT TO ASSERT, IN CONNECTION WITH ANY TAX
RETURN, TAX AUDIT OR SIMILAR PROCEEDING, ANY POSITION INCONSISTENT WITH THE
ALLOCATIONS AND DETERMINATIONS DESCRIBED IN THIS SECTION 6.10(A).

(B)           THE SELLER PARTIES WILL INDEMNIFY AND HOLD THE SUBJECT COMPANIES
AND BUYER HARMLESS FROM (I) ANY LIABILITY FOR TAXES WITH RESPECT TO SMITH ITEMS
(AND ANY OTHER LIABILITY OF ANY OF THE SELLER PARTIES, THEIR AFFILIATES OR THE
SUBJECT COMPANIES FOR TAXES) FOR EVENTS, AND FOR TAX PERIODS (OR PORTIONS
THEREOF) ENDING, ON OR BEFORE THE CLOSING DATE, INCLUDING ANY TAXES IMPOSED
UNDER SECTION 1374 OF THE CODE AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, AND (II) ANY LIABILITY OF ANY OF THE SUBJECT COMPANIES OR ANY
OTHER ENTITY FOR WHICH ANY OF THE SUBJECT COMPANIES COULD BE HELD LIABLE AFTER
THE CLOSING UNDER TREAS. REG. § 1.1361-4(A)(6), TREAS. REG. § 1.1502-6, TREAS.
REG. § 301.7701-2(C)(2)(III) OR SIMILAR PRINCIPLES, EXCEPTING TAXES DESCRIBED IN
SECTION 6.10(C).  FOR TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE, THE
SELLER PARTIES SHALL CAUSE TO BE TIMELY FILED WITH APPROPRIATE GOVERNMENTAL
BODIES ALL TAX RETURNS REQUIRED TO BE FILED BY OR WITH RESPECT TO THE SUBJECT
COMPANIES AND SMITH ITEMS, AND SHALL PAY OR CAUSE TO BE PAID OR MAKE PROVISIONS
FOR THE PAYMENT OF ALL TAXES DUE WITH RESPECT THERETO.  BUYER AND THE
PARTNERSHIP SHALL COOPERATE WITH THE SELLER PARTIES AND PROVIDE SUCH INFORMATION
AND ACCESS TO RECORDS AND PERSONNEL AS IS REASONABLY NECESSARY TO PREPARE SUCH
RETURNS.

(C)           ALL TRANSFER, DOCUMENTARY, SALES, USE, REGISTRATION, REAL ESTATE
TRANSFER OR GAIN OR SIMILAR OR RELATED TAX (BUT NOT ANY INCOME OR BUSINESS OR
OCCUPATION TAX) RELATED TO OR ARISING FROM THE TRANSACTIONS CONTEMPLATED HEREIN
SHALL BE BORNE BY BUYER.  SELLER PARTIES AND BUYER SHALL COOPERATE IN TIMELY
MAKING ALL TAX RETURNS AS MAY BE REQUIRED TO COMPLY WITH THE PROVISIONS OF SUCH
TAX LAWS.  SELLER PARTIES SHALL COOPERATE WITH BUYER IN MEETING ANY FILING,
DOCUMENTARY OR EVIDENTIARY REQUIREMENTS NECESSARY TO QUALIFY FOR ANY AVAILABLE
EXEMPTIONS FOR SUCH TAXES.

(D)           SELLER PARTIES SHALL CAUSE THE PROVISIONS OF ANY TAX SHARING
AGREEMENT BETWEEN SELLER PARTIES AND ANY OF THEIR AFFILIATES (OTHER THAN THE
SUBJECT COMPANIES), ON THE ONE HAND, AND THE SUBJECT COMPANIES, ON THE OTHER
HAND, TO BE TERMINATED ON OR BEFORE THE CLOSING DATE, AND NO FURTHER PAYMENTS
SHALL BE MADE THEREUNDER.

(E)           AS SOON AS PRACTICABLE AFTER THE CLOSING DATE, THE SELLER PARTIES
AND BUYER SHALL JOINTLY PREPARE IRS FORMS 8594 TO REPORT (I) THE ALLOCATION OF
THE CONSIDERATION PAID PURSUANT TO THIS AGREEMENT BETWEEN SMITH MARITIME AND GO
BIG, (II) THE ALLOCATION OF THE CONSIDERATION SO PAID FOR SMITH MARITIME AMONG
THE ASSETS OF SMITH MARITIME AND (III) THE ALLOCATION OF THE CONSIDERATION SO
PAID FOR GO BIG AMONG THE ASSETS OF GO BIG. ALL SUCH ALLOCATIONS SHALL BE MADE
IN A MANNER CONSISTENT WITH SECTION 6.10(A) AND ON THE BASIS THAT (W) THE FAIR
MARKET VALUE OF THE VESSELS IS EQUAL TO THE AMOUNT DETERMINED IN AN APPRAISAL OF
THE VESSELS OWNED OR LEASED BY THE SMITH ENTITIES AND GO BIG TO BE PREPARED BY
MARCON INTERNATIONAL, INC. (WITH BUYER TO BEAR THE COST OF THE APPRAISAL), (X)
THE FAIR MARKET VALUE OF ALL TANGIBLE ASSETS OTHER THAN VESSELS IS EQUAL TO
THEIR RESPECTIVE TAX BASES, (Y) THE FAIR MARKET VALUE OF THE COVENANTS NOT TO
COMPETE IN SECTION 6.5 IS EQUAL TO THE AMOUNT DETERMINED IN AN APPRAISAL TO BE
OBTAINED BY BUYER AT BUYER’S EXPENSE AND (Z) THE FAIR MARKET VALUE OF ALL OTHER
INTANGIBLE ASSETS IS EQUAL TO THE BALANCE OF ANY ALLOCABLE CONSIDERATION;
PROVIDED THAT THE TOTAL AMOUNT

 

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ALLOCATED TO THE COVENANTS NOT TO COMPETE UNDER SECTION 6.10(E)(Y) AND OTHER
INTANGIBLE ASSETS THAT PRODUCE ORDINARY INCOME TO THE SELLER PARTIES WILL NOT
EXCEED $100,000.

(F)            FOLLOWING THE CONVERSION OF EACH OF THE QSUBS TO A LIMITED
LIABILITY COMPANY AS CONTEMPLATED BY SECTION 6.18 HEREOF, SELLER PARTIES WILL
NOT CAUSE OR PERMIT SMITH MARITIME OR ANY OF THE QSUBS (X) TO MAKE ANY ELECTION
UNDER TREAS. REG. §301.7701-3 TO TREAT ANY OF THE QSUBS AS A CORPORATION FOR
FEDERAL INCOME TAX PURPOSES OR (Y) TO TAKE ANY OTHER ACTION THAT WOULD PREVENT
THE QSUBS FROM BEING TREATED AS DISREGARDED ENTITIES FOR FEDERAL INCOME TAX
PURPOSES AT ALL TIMES THROUGH THE CLOSING DATE.

SECTION 6.11  CLOSING DATE BALANCE SHEET.  ON THE CLOSING DATE, SELLER PARTIES
SHALL DELIVER TO BUYER A BALANCE SHEET OF THE SUBJECT COMPANIES AS OF THE
CLOSING DATE (THE “CLOSING DATE BALANCE SHEET”), ACCOMPANIED BY A CERTIFICATE OF
THE PRESIDENT OF SMITH MARITIME AND GO BIG TO THE EFFECT THAT SUCH STATEMENT,
EXCEPT AS SET FORTH ON SCHEDULE 6.11, HAS BEEN PREPARED IN ACCORDANCE WITH
GAAP.  WITHIN SIXTY DAYS FOLLOWING THE DELIVERY OF THE CLOSING DATE BALANCE
SHEET, BUYER SHALL NOTIFY THE SELLER PARTIES IF BUYER DISAGREES WITH THE CLOSING
DATE BALANCE SHEET.  IF BUYER DOES NOT SO NOTIFY THE SELLER PARTIES, BUYER SHALL
BE DEEMED TO HAVE ACCEPTED SUCH DETERMINATION.  IF BUYER DOES SO NOTIFY THE
SELLER PARTIES THAT BUYER DISAGREES WITH SUCH DETERMINATION, AND THE SELLER
PARTIES AND BUYER ARE THEREAFTER UNABLE TO AGREE WITHIN TEN DAYS UPON THE
CLOSING DATE BALANCE SHEET, THEN THE CLOSING DATE BALANCE SHEET SHALL BE
DETERMINED BY AN INDEPENDENT ACCOUNTING FIRM SELECTED BY THE SELLER PARTIES FROM
A LIST OF THREE NATIONALLY RECOGNIZED INDEPENDENT ACCOUNTING FIRMS PROVIDED BY
BUYER.  THE DETERMINATION BY SUCH ACCOUNTING FIRM SHALL BE FINAL AND BINDING ON
BUYER AND THE SELLER PARTIES, AND THE FEES AND EXPENSES OF SUCH ACCOUNTING FIRM
SHALL BE BORNE EQUALLY BY THE SELLER PARTIES, ON THE ONE HAND, AND BUYER, ON THE
OTHER HAND.

SECTION 6.12  EMPLOYEES.

(A)           FOR A PERIOD OF THREE YEARS AFTER THE CLOSING, NONE OF THE SELLER
PARTIES OR THEIR AFFILIATES SHALL, DIRECTLY OR INDIRECTLY, EITHER FOR ITSELF OR
ANY OTHER PERSON, (I) INDUCE OR ATTEMPT TO INDUCE ANY EMPLOYEE OF BUYER OR ITS
AFFILIATES TO LEAVE THE EMPLOY OF BUYER OR ITS AFFILIATES, (II) IN ANY WAY
INTERFERE WITH THE RELATIONSHIP BETWEEN BUYER OR ITS AFFILIATES AND ANY OF THEIR
RESPECTIVE EMPLOYEES (PROVIDED THAT NO PARTY SHALL BE DEEMED TO BE INTERFERING
WITH SUCH RELATIONSHIP IF IT HIRES A FORMER EMPLOYEE OF THE OTHER PARTY WHO HAS
BEEN TERMINATED BY THE OTHER PARTY OR HAS RESIGNED FROM THE EMPLOYMENT OF SUCH
OTHER PARTY AND THE PROVISIONS OF CLAUSE (I) HEREOF HAVE NOT BEEN VIOLATED BY
THE SELLER PARTIES OR THEIR AFFILIATES), OR (III) EMPLOY, OR OTHERWISE ENGAGE AS
AN EMPLOYEE, INDEPENDENT CONTRACTOR OR OTHERWISE, ANY EMPLOYEE OF BUYER OR ITS
AFFILIATES, IN EACH CASE EXCEPT FOR EMPLOYEES SET FORTH ON SCHEDULE 6.12(A). 
FOR PURPOSES OF THIS SECTION 6.12, EMPLOYEES OF ANY OF THE SUBJECT COMPANIES
IMMEDIATELY PRIOR TO THE CLOSING SHALL BE DEEMED TO BE EMPLOYEES OF BUYER AND
ITS AFFILIATES AND NOT EMPLOYEES OF THE SELLER PARTIES AND THEIR AFFILIATES.

(B)           PRIOR TO THE CLOSING DATE, THE SUBJECT COMPANIES SHALL TERMINATE
PARTICIPATION IN EACH OF THE PLANS AND AGREEMENTS SET FORTH ON SCHEDULE 4.20 TO
THE EXTENT REQUESTED BY BUYER (THE “TERMINATED PLANS”), AND THE SUBJECT
COMPANIES AND THE SELLER PARTIES SHALL TAKE ALL ACTIONS REASONABLY NECESSARY TO
ENSURE THAT ALL LIABILITIES ARISING UNDER THE

 

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TERMINATED PLANS ARE EITHER SATISFIED PRIOR TO THE CLOSING OR ASSUMED BY THE
SELLER PARTIES OR ANOTHER AFFILIATE OF THE SELLER PARTIES.

(C)           AT OR PRIOR TO CLOSING, ANY OF THE SUBJECT COMPANIES MAY, AT ITS
OPTION, PAY TO ITS EMPLOYEES ONE-TIME BONUSES OR OTHER COMPENSATION.  AT
CLOSING, THE AGGREGATE AMOUNT OF SUCH BONUSES OR OTHER COMPENSATION AND
EMPLOYMENT AND OTHER TAXES IN CONNECTION THEREWITH SHALL BE PAID BY BUYER TO
SMITH MARITIME AS A CAPITAL CONTRIBUTION, AND THE MERGER CONSIDERATION SHALL BE
REDUCED BY SUCH AMOUNT AS PROVIDED IN SECTION 2.8(A)(IV).  SUCH BONUSES OR OTHER
COMPENSATION SHALL BE PAID ONLY IF THE RECEIVING EMPLOYEE EXECUTES AND DELIVERS
A RELEASE IN THE FORM ATTACHED HERETO AS EXHIBIT A.

SECTION 6.13  PERSONAL PROPERTY.  PRIOR TO CLOSING, THE PERSONAL PROPERTY SET
FORTH ON SCHEDULE 6.13 SHALL BE TRANSFERRED FROM THE SUBJECT COMPANIES TO SMITH
OR HIS ASSIGNS; PROVIDED, THAT NONE OF THE SUBJECT COMPANIES SHALL INCUR ANY
LIABILITY IN CONNECTION WITH SUCH TRANSFER.

SECTION 6.14  FINANCIAL STATEMENTS.  THE SUBJECT COMPANIES AND THE SELLER
PARTIES SHALL ENGAGE PRICEWATERHOUSECOOPERS LLP TO CONDUCT A THREE-YEAR AUDIT OF
THE FINANCIAL STATEMENTS OF THE SUBJECT COMPANIES AND FINANCIAL REVIEWS UNDER
STATEMENT OF AUDITING STANDARDS NO. 100 OF THE INTERIM UNAUDITED FINANCIAL
STATEMENTS OF THE SUBJECT COMPANIES, WHICH IN EACH CASE ARE REQUIRED TO BE FILED
BY BUYER OR ITS AFFILIATES UNDER RULE 3-05 OF REGULATION S-X OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.  SUCH FINANCIAL STATEMENTS SHALL BE FREE OF
ANY QUALIFICATIONS AND SHALL BE SUBSTANTIALLY CONSISTENT WITH THE UNAUDITED
FINANCIAL STATEMENTS.  THE FINANCIAL STATEMENTS PROVIDED FOR IN THIS SECTION
6.14 SHALL, WHEN COMPLETED, BE ATTACHED AS SCHEDULE 4.12(B) AND SCHEDULE 4.12(C)
TO THIS AGREEMENT, AS APPLICABLE, AS PROVIDED IN SECTION 4.12(B) AND SECTION
4.12(C).

SECTION 6.15  NOTIFICATION.  BETWEEN THE DATE OF THIS AGREEMENT AND THE CLOSING
DATE, SMITH MARITIME, GO BIG AND THE SELLER PARTIES WILL PROMPTLY NOTIFY BUYER
IN WRITING IF SMITH MARITIME, GO BIG OR ANY SUCH SELLER PARTY BECOMES AWARE OF
ANY FACT OR CONDITION THAT CAUSES OR CONSTITUTES A BREACH OF ANY OF THE
REPRESENTATIONS AND WARRANTIES OF SMITH MARITIME, GO BIG OR ANY SELLER PARTY AS
OF THE DATE OF THIS AGREEMENT, OR IF SMITH MARITIME, GO BIG OR ANY SUCH SELLER
PARTY BECOMES AWARE OF THE OCCURRENCE AFTER THE DATE OF THIS AGREEMENT OF ANY
FACT OR CONDITION THAT WOULD (EXCEPT AS EXPRESSLY CONTEMPLATED BY THIS
AGREEMENT) CAUSE OR CONSTITUTE A BREACH OF ANY SUCH REPRESENTATION OR WARRANTY
HAD SUCH REPRESENTATION OR WARRANTY BEEN MADE AS OF THE TIME OF OCCURRENCE OR
DISCOVERY OF SUCH FACT OR CONDITION.  IF ANY SUCH FACT OR CONDITION WOULD
REQUIRE ANY CHANGE IN THE SCHEDULES REFERRED TO IN ARTICLES III OR IV OF THIS
AGREEMENT IF SUCH SCHEDULES WERE DATED AS OF THE DATE OF THE OCCURRENCE OR
DISCOVERY OF ANY SUCH FACT OR CONDITION, THEN SMITH MARITIME, GO BIG AND THE
SELLER PARTIES WILL PROMPTLY DELIVER TO BUYER A SUPPLEMENT TO SUCH SCHEDULES
SPECIFYING SUCH CHANGE.  DURING THE SAME PERIOD, SMITH MARITIME, GO BIG AND THE
SELLER PARTIES WILL PROMPTLY NOTIFY BUYER OF THE OCCURRENCE OF ANY BREACH OF ANY
PRE-CLOSING COVENANT OF SMITH MARITIME, GO BIG OR THE SELLER PARTIES IN THIS
AGREEMENT OR OF THE OCCURRENCE OF ANY EVENT THAT MAY MAKE THE SATISFACTION OF
THE CONDITIONS IN ARTICLE VIII IMPOSSIBLE OR UNLIKELY.  IF BUYER ELECTS TO
PROCEED WITH THE CLOSING AFTER RECEIPT OF SUCH WRITTEN NOTIFICATION, THEN BUYER
SHALL BE DEEMED TO HAVE WAIVED IN FULL ANY BREACH OF THE REPRESENTATIONS,
WARRANTIES OR PRE-CLOSING COVENANTS OF SMITH MARITIME, GO BIG OR THE SELLER
PARTIES CONTAINED IN ANY SUCH NOTIFICATION (BUT ONLY TO THE EXTENT DESCRIBED
THEREIN).

 

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SECTION 6.16  INSURANCE.  SMITH MARITIME, GO BIG AND THE SELLER PARTIES WILL
COOPERATE WITH BUYER TO ARRANGE FOR NEW INSURANCE COVERAGES FOR THE SUBJECT
COMPANIES EFFECTIVE UPON AND AFTER THE CLOSING WITH THE COST OF SUCH NEW
INSURANCE COVERAGES TO BE AT BUYER’S EXPENSE.  THE SELLER PARTIES SHALL USE
THEIR REASONABLE BEST EFFORTS TO KEEP THE INSURANCE POLICIES IN FULL FORCE AND
EFFECT FROM AND AFTER THE CLOSING DATE WITH RESPECT TO CLAIMS OCCURRING PRIOR TO
THE CLOSING DATE.

SECTION 6.17  MISDIRECTED PAYMENTS.  TO THE EXTENT THE SELLER PARTIES OR ANY OF
THEIR RESPECTIVE AFFILIATES RECEIVE PAYMENTS FROM CUSTOMERS OF ANY OF THE
SUBJECT COMPANIES AFTER THE CLOSING WITH RESPECT TO SERVICES RENDERED BY ANY OF
THE SUBJECT COMPANIES, THEN THE RECEIVING PARTY SHALL PROMPTLY REMIT SUCH
PAYMENTS TO THE SUBJECT COMPANIES.

SECTION 6.18  CONVERSION OF SMITH SUBSIDIARIES.  PRIOR TO THE CLOSING DATE, EACH
SMITH SUBSIDIARY SHALL CONVERT FROM A CORPORATION ORGANIZED UNDER THE LAWS OF
THE STATE OF HAWAII INTO A LIMITED LIABILITY COMPANY DULY ORGANIZED UNDER THE
LAWS OF THE STATE OF HAWAII.

SECTION 6.19  TRANSFER OF SHARES.  PRIOR TO THE CLOSING DATE, THE GORDON TRUST
SHALL DISTRIBUTE ALL OF THE SHARES HELD BY THE GORDON TRUST TO SMITH.

SECTION 6.20  HAWAII DISLOCATED WORKERS ACT.  BUYER AGREES NOT TO LIQUIDATE ANY
SMITH SUBSIDIARY FOR A PERIOD OF 60 DAYS FOLLOWING THE CLOSING DATE IF SUCH
LIQUIDATION WOULD RESULT IN A VIOLATION OF THE HAWAII DISLOCATED WORKERS ACT BY
THE SELLER PARTIES.

ARTICLE VII
INDEMNIFICATION

SECTION 7.1  SELLER PARTIES’ INDEMNITY OBLIGATIONS

(A)           SELLER PARTY AGREES, SEVERALLY AND NOT JOINTLY WITH ANY OTHER
SELLER PARTY, TO INDEMNIFY EACH BUYER INDEMNIFIED PARTY AGAINST, AND HOLD EACH
BUYER INDEMNIFIED PARTY HARMLESS FROM AND AGAINST, ANY INDEMNIFIED AMOUNTS THAT
ARISE FROM, ARE BASED ON OR RELATE OR OTHERWISE ARE ATTRIBUTABLE TO (1) ANY
ERROR, INACCURACY, BREACH OR MISREPRESENTATION IN ANY OF THE REPRESENTATIONS AND
WARRANTIES MADE BY OR ON BEHALF OF SUCH SELLER PARTY IN ARTICLE III OF THIS
AGREEMENT, (2) ANY VIOLATION OR BREACH BY SUCH SELLER PARTY OF OR DEFAULT BY
SUCH SELLER PARTY UNDER THE TERMS OF THIS AGREEMENT, AND (3) ANY CLAIM BY ANY
PERSON FOR BROKERAGE OR FINDER’S FEES OR COMMISSIONS OR SIMILAR PAYMENTS BASED
UPON ANY AGREEMENT OR UNDERSTANDING ALLEGED TO HAVE BEEN MADE BY ANY SUCH PERSON
WITH SUCH SELLER PARTY (OR ANY PERSON ACTING ON THEIR BEHALF) IN CONNECTION WITH
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  BUYER SHALL BE ENTITLED
TO RECOVER ITS REASONABLE AND NECESSARY ATTORNEYS’ FEES AND LITIGATION EXPENSES
INCURRED IN CONNECTION WITH SUCCESSFUL ENFORCEMENT OF ITS RIGHTS UNDER THIS
SECTION 7.1(A).

(B)           SMITH AGREES TO INDEMNIFY EACH BUYER INDEMNIFIED PARTY AGAINST,
AND HOLD EACH BUYER INDEMNIFIED PARTY HARMLESS FROM AND AGAINST, ANY INDEMNIFIED
AMOUNTS THAT ARISE FROM, ARE BASED ON OR RELATE OR OTHERWISE ARE ATTRIBUTABLE TO
(1) ANY ERROR, INACCURACY, BREACH OR MISREPRESENTATION IN ANY OF THE
REPRESENTATIONS AND WARRANTIES MADE BY OR ON BEHALF OF SMITH MARITIME, GO BIG
AND THE SELLER PARTIES IN ARTICLE IV OF THIS AGREEMENT (PROVIDED THAT THE
REPRESENTATIONS AND WARRANTIES SHALL BE READ AS IF NO MATERIALITY QUALIFIERS
WERE CONTAINED THEREIN), (2) ANY VIOLATION OR BREACH BY SMITH MARITIME, GO BIG
OR THE SELLER PARTIES OF OR

 

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DEFAULT BY SMITH MARITIME, GO BIG OR THE SELLER PARTIES UNDER THE TERMS OF THIS
AGREEMENT, (3) ANY CLAIM BY ANY PERSON FOR BROKERAGE OR FINDER’S FEES OR
COMMISSIONS OR SIMILAR PAYMENTS BASED UPON ANY AGREEMENT OR UNDERSTANDING
ALLEGED TO HAVE BEEN MADE BY ANY SUCH PERSON WITH ANY SELLER PARTY OR ANY OF THE
SUBJECT COMPANIES (OR ANY PERSON ACTING ON THEIR BEHALF) IN CONNECTION WITH ANY
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (4) ANY CLAIM BY ANY PERSON
UNDER ERISA OR OTHER APPLICABLE LAW RELATING TO AN “EMPLOYEE PENSION BENEFIT
PLAN” SPONSORED, MAINTAINED OR CONTRIBUTED TO BY AN ERISA AFFILIATE AND SUBJECT
TO TITLE IV OF ERISA OR THE MINIMUM FUNDING REQUIREMENTS OF CODE SECTION 412,
(5) ANY CLAIMS RELATED TO THE IMPROPER CLASSIFICATION OF EMPLOYEES FOR PURPOSES
OF THE FAIR LABOR STANDARDS ACT OR OTHER APPLICABLE LAW DURING ANY PERIOD PRIOR
TO CLOSING, OR (6) ANY EXAMINATION OF THE SUBJECT COMPANIES BY THE HAWAII
DEPARTMENT OF TAXATION RELATING TO THE REPORTING OR PAYMENT OF GENERAL EXCISE
TAXES PRIOR TO THE CLOSING DATE.  BUYER SHALL BE ENTITLED TO RECOVER ITS
REASONABLE AND NECESSARY ATTORNEYS’ FEES AND LITIGATION EXPENSES INCURRED IN
CONNECTION WITH SUCCESSFUL ENFORCEMENT OF ITS RIGHTS UNDER THIS SECTION 7.1(B). 
NOTWITHSTANDING THE FOREGOING, SMITH SHALL NOT BE REQUIRED TO INDEMNIFY OR HOLD
HARMLESS THE BUYER INDEMNIFIED PARTIES ON ACCOUNT OF ANY INDEMNIFIED AMOUNTS
ARISING UNDER SECTION 7.1(B)(1) (OTHER THAN WITH RESPECT TO BREACHES OF
REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTIONS 4.1, 4.2, 4.3, 4.6, 4.8,
4.14(D), 4.15, 4.26 AND 4.30 AS TO WHICH THE THRESHOLD AMOUNT SHALL NOT APPLY)
UNLESS THE AGGREGATE LIABILITY OF SMITH IN RESPECT OF ALL INDEMNIFIED AMOUNTS
EXCEEDS THE THRESHOLD AMOUNT AND THEN ONLY FOR THE AMOUNT IN EXCESS OF THE
THRESHOLD AMOUNT.  IN NO EVENT SHALL SMITH’S LIABILITY TO THE BUYER INDEMNIFIED
PARTIES UNDER SECTION 7.1(B)(1) EXCEED THE CEILING AMOUNT (OTHER THAN WITH
RESPECT TO BREACHES OF REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTIONS 4.1,
4.2, 4.3, 4.6, 4.8, 4.14(D), 4.15, 4.26 AND 4.30 AS TO WHICH THE CEILING AMOUNT
SHALL NOT APPLY).

SECTION 7.2  BUYER’S INDEMNITY OBLIGATIONS.  BUYER SHALL INDEMNIFY EACH SELLER
INDEMNIFIED PARTY AGAINST, AND HOLD EACH SELLER INDEMNIFIED PARTY HARMLESS FROM
AND AGAINST, ANY AND ALL INDEMNIFIED AMOUNTS THAT ARISE FROM, ARE BASED ON OR
RELATE OR OTHERWISE ARE ATTRIBUTABLE TO (A) ANY ERROR, INACCURACY, BREACH OR
MISREPRESENTATION IN ANY OF THE REPRESENTATIONS AND WARRANTIES MADE BY OR ON
BEHALF OF BUYER OR THE PARTNERSHIP IN THIS AGREEMENT, (B) ANY VIOLATION OR
BREACH BY BUYER OR THE PARTNERSHIP OF OR DEFAULT BY BUYER OR THE PARTNERSHIP
UNDER THE TERMS OF THIS AGREEMENT, EXCEPT TO THE EXTENT SUCH INDEMNIFIED AMOUNT
RELATES TO A MATTER FOR WHICH INDEMNIFICATION WOULD BE PROVIDED UNDER SECTIONS
7.1(A) OR (B), OR (C) ANY CLAIM BY ANY PERSON FOR BROKERAGE OR FINDER’S FEES OR
COMMISSIONS OR SIMILAR PAYMENTS BASED ON ANY AGREEMENT OR UNDERSTANDING ALLEGED
TO HAVE BEEN MADE BY ANY SUCH PERSON WITH BUYER OR THE PARTNERSHIP (OR ANY
PERSON ACTING ON ITS BEHALF) IN CONNECTION WITH ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.  THE FAILURE OF BUYER TO CURE, REMEDIATE OR
OTHERWISE REPAIR ANY CONDITION OR CIRCUMSTANCE EXISTING AT THE CLOSING OR CAUSED
BY SELLER PARTY SHALL NOT BE DEEMED AN “OMISSION” FOR PURPOSES HEREOF.  SELLER
PARTY SHALL BE ENTITLED TO RECOVER ITS REASONABLE AND NECESSARY ATTORNEYS’ FEES
AND LITIGATION EXPENSES INCURRED IN CONNECTION WITH SUCCESSFUL ENFORCEMENT OF
THEIR RIGHTS UNDER THIS SECTION 7.2.  NOTWITHSTANDING THE FOREGOING, BUYER SHALL
NOT BE REQUIRED TO INDEMNIFY OR HOLD HARMLESS THE SELLER INDEMNIFIED PARTIES ON
ACCOUNT OF ANY INDEMNIFIED AMOUNTS ARISING UNDER SECTION 7.2(A) UNLESS THE
AGGREGATE LIABILITY OF BUYER IN RESPECT OF ALL INDEMNIFIED AMOUNTS EXCEEDS THE
THRESHOLD AMOUNT AND THEN ONLY FOR THE AMOUNT IN EXCESS OF THE THRESHOLD
AMOUNT.  IN NO EVENT SHALL THE BUYER’S AGGREGATE LIABILITY TO THE SELLER
INDEMNIFIED PARTIES UNDER THIS SECTION 7.2(A) EXCEED THE CEILING AMOUNT (OTHER
THAN WITH RESPECT TO BREACHES OF REPRESENTATIONS AND WARRANTIES CONTAINED IN
SECTIONS 5.1 AND 5.7 AS TO WHICH THE CEILING AMOUNT SHALL NOT APPLY).

 

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SECTION 7.3  SURVIVAL.  ALL THE PROVISIONS OF THIS AGREEMENT SHALL SURVIVE THE
CLOSING, NOTWITHSTANDING ANY INVESTIGATION AT ANY TIME MADE BY OR ON BEHALF OF
ANY PARTY HERETO, PROVIDED THAT THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS AGREEMENT AND IN ANY CERTIFICATE DELIVERED IN CONNECTION HEREWITH WITH
RESPECT TO ANY OF THOSE REPRESENTATIONS AND WARRANTIES SHALL TERMINATE AND
EXPIRE ON THE THIRD ANNIVERSARY OF THE CLOSING DATE, EXCEPT (A) THE
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES SET FORTH IN SECTION 3.1, 3.2,
3.3 AND 3.6 SHALL SURVIVE FOREVER, (B) THE REPRESENTATIONS AND WARRANTIES OF THE
SELLER PARTIES SET FORTH IN SECTIONS 4.7, 4.19, 4.20, 4.21, 4.22 AND 4.26 SHALL
SURVIVE UNTIL THE EXPIRATION OF THE APPLICABLE STATUTES OF LIMITATIONS
(INCLUDING ALL PERIODS OF EXTENSION AND TOLLING) AND (C) THE REPRESENTATIONS AND
WARRANTIES OF THE SELLER PARTIES SET FORTH IN SECTIONS 4.1, 4.2, 4.3, 4.8, AND
4.14(D) SHALL SURVIVE FOREVER.  AFTER A REPRESENTATION AND WARRANTY HAS
TERMINATED AND EXPIRED, NO INDEMNIFICATION SHALL OR MAY BE SOUGHT PURSUANT TO
THIS ARTICLE VII ON THE BASIS OF THAT REPRESENTATION AND WARRANTY BY ANY PERSON
WHO WOULD HAVE BEEN ENTITLED PURSUANT TO THIS ARTICLE VII TO INDEMNIFICATION ON
THE BASIS OF THAT REPRESENTATION AND WARRANTY PRIOR TO ITS TERMINATION AND
EXPIRATION, PROVIDED THAT IN THE CASE OF EACH REPRESENTATION AND WARRANTY THAT
SHALL TERMINATE AND EXPIRE AS PROVIDED IN THIS SECTION 7.3, NO CLAIM PRESENTED
IN WRITING FOR INDEMNIFICATION PURSUANT TO THIS ARTICLE VII ON THE BASIS OF THAT
REPRESENTATION AND WARRANTY PRIOR TO ITS TERMINATION AND EXPIRATION SHALL BE
AFFECTED IN ANY WAY BY THAT TERMINATION AND EXPIRATION.  THE INDEMNIFICATION
OBLIGATIONS UNDER THIS ARTICLE VII OR ELSEWHERE IN THIS AGREEMENT SHALL APPLY
REGARDLESS OF WHETHER ANY SUIT OR ACTION RESULTS SOLELY OR IN PART FROM THE
ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNIFIED
PARTY.  THE COVENANTS AND AGREEMENTS ENTERED INTO PURSUANT TO THIS AGREEMENT TO
BE PERFORMED AFTER THE CLOSING SHALL SURVIVE THE CLOSING.

SECTION 7.4  INDEMNIFICATION PROCEDURES.  ALL CLAIMS FOR INDEMNIFICATION UNDER
THIS AGREEMENT SHALL BE ASSERTED AND RESOLVED AS FOLLOWS:

(A)           PROMPTLY AFTER RECEIPT BY A PERSON ENTITLED TO INDEMNITY UNDER
SECTION 7.1 OR 7.2 (AN “INDEMNIFIED PARTY”) OF NOTICE OF THE ASSERTION OF A
CLAIM AGAINST AN INDEMNIFIED PARTY BY A PERSON THAT IS NOT A PARTY TO THIS
AGREEMENT (A “THIRD-PARTY CLAIM), SUCH INDEMNIFIED PARTY SHALL GIVE NOTICE TO
THE PERSON OBLIGATED TO INDEMNIFY UNDER SUCH SECTION (AN “INDEMNIFYING PARTY”)
OF THE ASSERTION OF SUCH THIRD-PARTY CLAIM, PROVIDED THAT THE FAILURE TO NOTIFY
THE INDEMNIFYING PARTY WILL NOT RELIEVE THE INDEMNIFYING PARTY OF ANY LIABILITY
THAT IT MAY HAVE TO ANY INDEMNIFIED PARTY, EXCEPT TO THE EXTENT THAT THE
INDEMNIFYING PARTY DEMONSTRATES THAT THE DEFENSE OF SUCH THIRD-PARTY CLAIM IS
PREJUDICED BY THE INDEMNIFIED PARTY’S FAILURE TO GIVE SUCH NOTICE.

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

 

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

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

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

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

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

 

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

(B)           IF ANY INDEMNIFIED PARTY SHOULD HAVE A CLAIM AGAINST ANY
INDEMNIFYING PARTY HEREUNDER THAT DOES NOT INVOLVE A THIRD PARTY CLAIM, THE
INDEMNIFIED PARTY SHALL TRANSMIT TO THE INDEMNIFYING PARTY A WRITTEN NOTICE (THE
“INDEMNITY NOTICE”) DESCRIBING IN REASONABLE DETAIL THE NATURE OF THE CLAIM, AN
ESTIMATE OF THE AMOUNT OF DAMAGES ATTRIBUTABLE TO SUCH CLAIM TO THE EXTENT
FEASIBLE (WHICH ESTIMATE SHALL NOT BE CONCLUSIVE OF THE FINAL AMOUNT OF SUCH
CLAIM) AND THE BASIS OF THE INDEMNIFIED PARTY’S REQUEST FOR INDEMNIFICATION
UNDER THIS AGREEMENT.  IF THE INDEMNIFYING PARTY DOES NOT NOTIFY THE INDEMNIFIED
PARTY WITHIN TWENTY DAYS FROM ITS RECEIPT OF THE INDEMNITY NOTICE THAT THE
INDEMNIFYING PARTY DISPUTES SUCH CLAIM, THE CLAIM SPECIFIED BY THE INDEMNIFIED
PARTY IN THE INDEMNITY NOTICE SHALL BE DEEMED A LIABILITY OF THE INDEMNIFYING
PARTY HEREUNDER.

SECTION 7.5  GENERAL.  THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE VII SHALL
BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT
OR FUTURE ACTS, CLAIMS OR LAWS (INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES
LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH
LAW OR PRODUCT LIABILITY, SECURITIES OR OTHER LAW) AND REGARDLESS OF WHETHER ANY
PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR
PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE
PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.  THE RIGHTS OF THE PARTIES TO
INDEMNIFICATION UNDER THIS ARTICLE VII SHALL NOT BE LIMITED DUE TO ANY
INVESTIGATIONS HERETOFORE OR HEREAFTER MADE BY SUCH PARTIES OR THEIR
REPRESENTATIVES, REGARDLESS OF NEGLIGENCE IN THE CONDUCT OF ANY SUCH
INVESTIGATIONS.  ALL REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS MADE
BY THE PARTIES SHALL NOT BE DEEMED MERGED INTO ANY INSTRUMENTS OR AGREEMENTS
DELIVERED IN CONNECTION WITH THE CLOSING OR OTHERWISE IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 7.6  EXCLUSIVITY.  THE INDEMNIFICATION RIGHTS IN SECTION 6.10 AND THIS
ARTICLE VII SHALL BE THE EXCLUSIVE REMEDIES OF THE INDEMNIFIED PARTIES FOR ANY
INDEMNIFIED AMOUNTS ARISING OUT OF OR RESULTING FROM ANY BREACH OF ANY OF THE
REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT (OTHER THAN ANY CLAIM FOR
INDEMNIFIED AMOUNTS ARISING OUT OF OR BASED ON FRAUD OR WILLFUL MISCONDUCT).

ARTICLE VIII
CONDITIONS TO CLOSING

SECTION 8.1  CONDITIONS TO OBLIGATIONS OF BUYER.   THE OBLIGATIONS OF BUYER TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN ARE SUBJECT, AT THE OPTION OF
BUYER, TO SATISFACTION OF THE FOLLOWING CONDITIONS:

(A)           COMPLIANCE.  SMITH MARITIME, GO BIG AND THE SELLER PARTIES SHALL
HAVE COMPLIED WITH THEIR COVENANTS AND AGREEMENTS CONTAINED HEREIN, AND THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLES III AND IV HEREOF SHALL BE
TRUE AND CORRECT ON THE DATE HEREOF AND TRUE AND CORRECT IN ALL MATERIAL
RESPECTS AS OF THE CLOSING DATE (EXCEPT THOSE REPRESENTATIONS

 

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AND WARRANTIES QUALIFIED BY MATERIALITY, WHICH SHALL BE TRUE AND CORRECT IN ALL
RESPECTS AS SO QUALIFIED).

(B)           CERTIFICATE.  BUYER SHALL HAVE RECEIVED A CERTIFICATE, DATED AS OF
THE CLOSING DATE, OF AN EXECUTIVE OFFICER OR TRUSTEE, AS THE CASE MAY BE, OF
EACH OF SMITH MARITIME AND GO BIG AND OF EACH SELLER PARTY CERTIFYING AS TO THE
MATTERS SPECIFIED IN SECTIONS 8.1(A) HEREOF.

(C)           SELLER PARTIES’ RESOLUTIONS/CERTIFICATIONS.  EACH SELLER PARTY
SHALL DELIVER TO BUYER A CERTIFICATION OR CERTIFIED COPY OF RESOLUTIONS, AS THE
CASE MAY BE, DULY ADOPTED BY THE TRUSTEES OR MEMBERS, AS APPLICABLE, OF SUCH
SELLER PARTY AND AUTHORIZING AND APPROVING THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, INCLUDING THE EXHIBITS AND SCHEDULES HERETO, AND THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREIN.

(D)           ASSIGNMENT OF EQUITY INTERESTS.  THE SELLER PARTIES SHALL EACH
DELIVER ASSIGNMENTS OF EQUITY INTERESTS ASSIGNING TO BUYER ALL OF THEIR RIGHTS,
TITLE AND INTERESTS IN THEIR RESPECTIVE EQUITY INTERESTS IN SMITH MARITIME AND
GO BIG IN THE FORM ATTACHED AS EXHIBIT A DULY EXECUTED BY THE APPLICABLE SELLER
PARTY.

(E)           HSR ACT.  ANY WAITING PERIOD APPLICABLE TO THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT UNDER THE HSR ACT SHALL HAVE EXPIRED
OR BEEN TERMINATED.

(F)            DELIVERY OF FINANCIAL STATEMENTS.  BUYER SHALL HAVE RECEIVED THE
FINANCIAL STATEMENTS REQUIRED BY SECTION 6.14 AT LEAST THIRTY BUSINESS DAYS
PRIOR TO THE CLOSING DATE.

(G)           NO MATERIAL ADVERSE CHANGE.  NO MATERIAL ADVERSE CHANGE IN THE
VALUE OF THE EQUITY INTERESTS OR IN THE BUSINESS OR IN THE FINANCIAL CONDITION
OF ANY OF THE SUBJECT COMPANIES SHALL HAVE OCCURRED SINCE THE DATE HEREOF, AND
NO EVENT SHALL HAVE OCCURRED SINCE THE DATE HEREOF WHICH COULD BE EXPECTED TO
LEAD TO OR CAUSE SUCH A MATERIAL ADVERSE CHANGE; PROVIDED, HOWEVER, THAT (I)
CHANGES RESULTING FROM CONDITIONS AFFECTING THE COASTWISE MARITIME PETROLEUM
TRANSPORTATION INDUSTRY IN GENERAL AND (II) CHANGES IN THE ECONOMY IN GENERAL
SHALL, IN EACH CASE, BE EXCLUDED FROM THE DETERMINATION TO THE EXTENT THAT THEY
DO NOT HAVE A DISPROPORTIONATE EFFECT ON ANY OF THE SUBJECT COMPANIES AS
COMPARED TO OTHER ENTITIES ENGAGED IN THE COASTWISE MARITIME PETROLEUM
TRANSPORTATION INDUSTRY IN HAWAII AND ALONG THE WEST COAST.

(H)           CERTIFIED ABSTRACTS.  THE SUBJECT COMPANIES AND THE SELLER PARTIES
SHALL DELIVER CERTIFIED ABSTRACTS OF TITLE FOR EACH OF THE VESSELS ISSUED BY THE
U.S. COAST GUARD AT THE NATIONAL VESSEL DOCUMENTATION CENTER DATED NO EARLIER
THAN SEVEN DAYS PRIOR TO THE DATE OF THE CLOSING (I) SHOWING THAT ONE OR MORE OF
THE SUBJECT COMPANIES IS THE OWNER OF THE OWNED VESSELS AND THAT SUCH OWNED
VESSELS ARE FREE AND CLEAR OF ALL LIENS EXCEPT PERMITTED LIENS AND (II)
IDENTIFYING THE OWNER OF THE BAREBOAT CHARTERED VESSELS AND THAT SUCH BAREBOAT
CHARTERED VESSELS ARE FREE AND CLEAR OF ALL LIENS EXCEPT PERMITTED LIENS.

(I)            CONFIRMATION OF CLASS CERTIFICATES.  THE SUBJECT COMPANIES AND
THE SELLER PARTIES SHALL DELIVER CONFIRMATION OF CLASS CERTIFICATES FOR EACH OF
THE VESSELS WHERE

 

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APPLICABLE (FREE FROM RECOMMENDATIONS) ISSUED BY THE AMERICAN BUREAU OF SHIPPING
ISSUED NO EARLIER THAN SEVEN DAYS PRIOR TO THE DATE OF THE CLOSING.

(J)            ORDERS, ETC.  NO ACTION, SUIT OR PROCEEDING SHALL HAVE BEEN
COMMENCED OR SHALL BE PENDING OR THREATENED, AND NO STATUTE, RULE, REGULATION OR
ORDER SHALL HAVE BEEN ENACTED, PROMULGATED, ISSUED OR DEEMED APPLICABLE TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, BY ANY GOVERNMENTAL BODY OR COURT
THAT REASONABLY MAY BE EXPECTED TO (I) PROHIBIT BUYER’S OWNERSHIP OR OPERATION
OF ALL OR A MATERIAL PORTION OF THE ASSETS OF ANY OF THE SUBJECT COMPANIES, OR
COMPEL BUYER TO DISPOSE OF OR HOLD SEPARATE ALL OR A MATERIAL PORTION OF THE
BUSINESS OR ASSETS OF EITHER BUYER OR ANY OF THE SUBJECT COMPANIES, AS A RESULT
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR (II) PROHIBIT CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(K)           REMOVAL OF LIENS.  THE SUBJECT COMPANIES AND THE SELLER PARTIES
SHALL HAVE CAUSED ANY AND ALL LIENS ON THE ASSETS OF ANY OF THE SUBJECT
COMPANIES EXCEPT PERMITTED LIENS TO BE RELEASED AND SHALL HAVE PROVIDED BUYER
WITH DOCUMENTARY EVIDENCE TO SUCH EFFECT.

(L)            RESIGNATIONS.  EACH DIRECTOR AND OFFICER OF EACH OF THE SUBJECT
COMPANIES SHALL DELIVER A NOTICE OF RESIGNATION IN THE FORM PREVIOUSLY APPROVED
BY BUYER.

(M)          EMPLOYEE RELEASES.  EACH EMPLOYEE TO WHOM A SPECIAL BONUS HAS BEEN
PAID OR PROMISED, ORALLY OR IN WRITING, SHALL DELIVER TO THE APPROPRIATE SUBJECT
COMPANY AND BUYER AN EXECUTED RELEASE IN SUBSTANTIALLY THE FORM ATTACHED AS
EXHIBIT B HERETO.

(N)           DUE DILIGENCE.  BUYER SHALL HAVE RECEIVED SURVEYS OF THE VESSELS
FROM W.H. PADDIE & ASSOCIATES, INC. AND THE CONDITION OF SUCH VESSELS AS
REFLECTED IN SUCH SURVEYS SHALL BE REASONABLY SATISFACTORY TO BUYER.

(O)           SIMULTANEOUS CLOSING OF ACQUISITION OF SIRIUS MARITIME, LLC.  THE
TRANSACTIONS CONTEMPLATED BY THAT CERTAIN AGREEMENT AND PLAN OF MERGER DATED AS
OF JUNE 25, 2007, BY AND AMONG SEA TRANSPORTATION LLC, THE PARTNERSHIP, SIRIUS
MARITIME, LLC AND THE OTHER PARTIES THERETO, SHALL CLOSE SIMULTANEOUSLY WITH THE
CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(P)           CONVERSION OF SMITH SUBSIDIARIES.  EACH SMITH SUBSIDIARY SHALL
HAVE CONVERTED FROM A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF
HAWAII INTO A LIMITED LIABILITY COMPANY DULY ORGANIZED UNDER THE LAWS OF THE
STATE OF HAWAII.

(Q)           TRANSFER OF SHARES.  THE GORDON TRUST SHALL HAVE DISTRIBUTED ALL
OF THE SHARES HELD BY THE GORDON TRUST TO SMITH.

(R)            OTHER DOCUMENTS.  THE SUBJECT COMPANIES AND THE SELLER PARTIES
SHALL DELIVER TO BUYER SUCH OTHER DOCUMENTS, INSTRUMENTS AND CERTIFICATES AS MAY
BE REASONABLY REQUESTED BY BUYER, INCLUDING, WITHOUT LIMITATION, THE ORIGINAL
COMPANY BOOK, MINUTE BOOKS AND SEAL (IF ANY) OF THE APPROPRIATE SUBJECT COMPANY.

(S)           CONSENTS.  ALL CONSENTS AND APPROVALS REQUIRED IN CONNECTION WITH
THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT SHALL HAVE BEEN
OBTAINED.

 

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SECTION 8.2  CONDITIONS TO OBLIGATIONS OF SMITH MARITIME, GO BIG AND THE SELLER
PARTIES.  THE OBLIGATIONS OF THE SMITH MARITIME, GO BIG AND THE SELLER PARTIES
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN ARE SUBJECT, AT THE OPTION OF
SMITH MARITIME, GO BIG AND THE SELLER PARTIES, TO SATISFACTION OF THE FOLLOWING
CONDITIONS:

(A)           COMPLIANCE.  BUYER SHALL HAVE COMPLIED WITH ITS COVENANTS AND
AGREEMENTS CONTAINED HEREIN, AND THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
ARTICLE V HEREOF SHALL BE TRUE AND CORRECT ON THE DATE HEREOF AND TRUE AND
CORRECT IN ALL MATERIAL RESPECTS AS OF THE CLOSING DATE (EXCEPT THOSE
REPRESENTATIONS AND WARRANTIES QUALIFIED BY MATERIALITY, WHICH SHALL BE TRUE AND
CORRECT IN ALL RESPECTS AS SO QUALIFIED).

(B)           OFFICER’S CERTIFICATE.  THE SELLER PARTIES SHALL HAVE RECEIVED A
CERTIFICATE, DATED AS OF THE CLOSING DATE, OF AN EXECUTIVE OFFICER OF BUYER
CERTIFYING AS TO THE MATTERS SPECIFIED IN SECTION 8.2(A) HEREOF.

(C)           BUYER AND PARTNERSHIP RESOLUTIONS.  BUYER AND THE PARTNERSHIP
SHALL DELIVER TO SMITH MARITIME, GO BIG AND THE SELLER PARTIES A CERTIFIED COPY
OF RESOLUTIONS DULY ADOPTED BY THE BOARD OF DIRECTORS OF THE GENERAL PARTNER OF
EACH OF BUYER AND THE PARTNERSHIP AUTHORIZING AND APPROVING THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, INCLUDING THE EXHIBITS AND SCHEDULES HERETO, AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREIN.

(D)           HSR ACT.  ANY WAITING PERIOD APPLICABLE TO THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT UNDER THE HSR ACT SHALL HAVE EXPIRED
OR BEEN TERMINATED.

(E)           ORDERS, ETC.  NO ACTION, SUIT OR PROCEEDING SHALL HAVE BEEN
COMMENCED OR SHALL BE PENDING OR THREATENED, AND NO STATUTE, RULE, REGULATION OR
ORDER SHALL HAVE BEEN ENACTED, PROMULGATED, ISSUED OR DEEMED APPLICABLE TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, BY ANY GOVERNMENTAL BODY OR COURT
THAT REASONABLY MAY BE EXPECTED TO PROHIBIT CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

(F)            SIMULTANEOUS CLOSING OF ACQUISITION OF SIRIUS MARITIME, LLC.  THE
TRANSACTIONS CONTEMPLATED BY THAT CERTAIN AGREEMENT AND PLAN OF MERGER DATED AS
OF JUNE 25, 2007, BY AND AMONG SEA COAST TRANSPORTATION LLC, THE PARTNERSHIP,
SIRIUS MARITIME, LLC AND THE OTHER PARTIES THERETO, SHALL CLOSE SIMULTANEOUSLY
WITH THE CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(G)           RELEASE OF GUARANTEES.  EACH OF THE SELLER PARTIES SHALL HAVE BEEN
RELEASED FROM ANY PERSONAL GUARANTEE WHICH MAY HAVE BEEN ENTERED INTO BY A
SELLER PARTY IN CONNECTION WITH THE LOAN OBLIGATIONS.

(H)           OTHER DOCUMENTS.  BUYER SHALL DELIVER TO THE SELLER PARTIES SUCH
OTHER DOCUMENTS, INSTRUMENTS AND CERTIFICATES AS MAY BE REASONABLY REQUESTED BY
THE SELLER PARTIES.

(I)            CONSENTS.  ALL CONSENTS AND APPROVALS REQUIRED IN CONNECTION WITH
THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT SHALL HAVE BEEN
OBTAINED.

 

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(J)            MERGER CONSIDERATION.  BUYER SHALL HAVE DELIVERED THE MERGER
CONSIDERATION PURSUANT TO SECTION 2.8.

ARTICLE IX
TERMINATION

SECTION 9.1  GROUNDS FOR TERMINATION.  THIS AGREEMENT MAY BE TERMINATED AT ANY
TIME PRIOR TO THE CLOSING DATE:

(A)           BY THE MUTUAL WRITTEN AGREEMENT OF BUYER AND THE SELLER PARTIES;

(B)           BY BUYER IF ANY OF THE CONDITIONS SET FORTH IN SECTION 8.1 HEREOF
SHALL HAVE BECOME INCAPABLE OF FULFILLMENT AND SHALL NOT HAVE BEEN WAIVED BY
BUYER;

(C)           BY THE SELLER PARTIES IF ANY OF THE CONDITIONS SET FORTH IN
SECTION 8.2 HEREOF SHALL HAVE BECOME INCAPABLE OF FULFILLMENT AND SHALL NOT HAVE
BEEN WAIVED BY THE SELLER PARTIES;

(D)           BY EITHER BUYER, ON THE ONE HAND, OR THE SELLER PARTIES, ON THE
OTHER HAND, BY WRITTEN NOTICE THEREOF TO THE OTHER, IF THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL NOT HAVE BEEN CONSUMMATED ON OR BEFORE OCTOBER 31,
2007, OR SUCH OTHER DATE, IF ANY, AS BUYER AND THE SELLER PARTIES SHALL AGREE
UPON IN WRITING; OR

(E)           BY BUYER, ON THE ONE HAND, OR THE SELLER PARTIES, ON THE OTHER
HAND, IF THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WOULD VIOLATE
ANY NONAPPEALABLE FINAL ORDER, DECREE OR JUDGMENT OF ANY COURT OR GOVERNMENTAL
BODY HAVING COMPETENT JURISDICTION ENJOINING, RESTRAINING OR OTHERWISE
PREVENTING, OR AWARDING SUBSTANTIAL DAMAGES IN CONNECTION WITH, OR IMPOSING A
MATERIAL ADVERSE CONDITION UPON, THE CONSUMMATION OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY;

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

SECTION 9.2  EFFECT OF TERMINATION.  THE FOLLOWING PROVISIONS SHALL APPLY IN THE
EVENT OF A TERMINATION OF THIS AGREEMENT:

(A)           EACH PARTY’S RIGHT OF TERMINATION PURSUANT TO SECTION 9.1 HEREOF
IS IN ADDITION TO ANY OTHER RIGHTS IT MAY HAVE UNDER THIS AGREEMENT OR
OTHERWISE, AND THE EXERCISE OF SUCH RIGHT OF TERMINATION WILL NOT BE AN ELECTION
OF REMEDIES.  IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 9.1, ALL
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT WILL TERMINATE EXCEPT AS SET
FORTH IN SECTION 9.2(B) HEREOF; PROVIDED, HOWEVER, THAT (I) IF THIS AGREEMENT IS
TERMINATED BY BUYER BECAUSE OF THE BREACH OF THIS AGREEMENT BY SMITH MARITIME,
GO BIG OR THE SELLER PARTIES OR BECAUSE ONE OR MORE OF THE CONDITIONS TO BUYER’S
OBLIGATIONS UNDER THIS AGREEMENT IS NOT SATISFIED AS A RESULT OF THE FAILURE OF
SMITH MARITIME, GO BIG OR ANY SELLER PARTY TO COMPLY WITH ITS OBLIGATIONS UNDER
THIS AGREEMENT, BUYER’S RIGHT TO PURSUE ALL LEGAL REMEDIES WILL

 

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SURVIVE SUCH TERMINATION UNIMPAIRED, AND (II) IF THIS AGREEMENT IS TERMINATED BY
THE SELLER PARTIES BECAUSE OF THE BREACH OF THIS AGREEMENT BY BUYER OR BECAUSE
ONE OR MORE OF THE CONDITIONS TO THE SELLER PARTIES’ OBLIGATIONS UNDER THIS
AGREEMENT IS NOT SATISFIED AS A RESULT OF BUYER’S FAILURE TO COMPLY WITH ITS
OBLIGATIONS UNDER THIS AGREEMENT, THE SELLER PARTIES’ RIGHT TO PURSUE ALL LEGAL
REMEDIES WILL SURVIVE SUCH TERMINATION UNIMPAIRED.

(B)           THE PARTIES HERETO HEREBY AGREE THAT THE PROVISIONS OF SECTIONS
9.2, 10.3, 10.4, 10.5, 10.9 AND 10.10 HEREOF SHALL SURVIVE ANY TERMINATION OF
THIS AGREEMENT.

ARTICLE X
GENERAL PROVISIONS

SECTION 10.1  RELEASE.  SUBJECT TO THE LIMITATIONS SET FORTH IN THE LAST
SENTENCE IN THIS SECTION 10.1, EACH SELLER PARTY, FOR AND ON BEHALF OF ITSELF
AND ITS CONTROLLED AFFILIATES (THE “RELEASING PARTIES”) HEREBY UNCONDITIONALLY
AND IRREVOCABLY RELEASE AND FOREVER DISCHARGE, EFFECTIVE AS OF AND FOREVER AFTER
THE CLOSING DATE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
SUBJECT COMPANIES AND ALL PAST, PRESENT AND FUTURE BUYER INDEMNIFIED PARTIES
(COLLECTIVELY, THE “RELEASED PARTIES”) FROM ANY AND ALL DEBTS, LIABILITIES,
OBLIGATIONS, CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION, SUITS, JUDGMENTS OR
CONTROVERSIES OF ANY KIND WHATSOEVER (COLLECTIVELY, “PRE-ACQUISITION CLAIMS”)
AGAINST ANY OF THE SUBJECT COMPANIES THAT ARISE OUT OF OR ARE BASED ON ANY
AGREEMENT OR UNDERSTANDING OR ACT OR FAILURE TO ACT (INCLUDING ANY ACT OR
FAILURE TO ACT THAT CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR RECKLESS OR
WILLFUL, WANTON MISCONDUCT), MISREPRESENTATION, OMISSION, TRANSACTION, FACT,
EVENT OR OTHER MATTER OCCURRING CONTEMPORANEOUSLY WITH OR PRIOR TO THE CLOSING
DATE OR ON ACCOUNT OF OR ARISING OUT OF ANY MATTER, CAUSE OR EVENT OCCURRING
CONTEMPORANEOUSLY WITH OR PRIOR TO THE CLOSING DATE (WHETHER BASED ON ANY
GOVERNMENTAL REQUIREMENT OR RIGHT OF ACTION, AT LAW OR IN EQUITY OR OTHERWISE,
FORESEEN OR UNFORESEEN, MATURED OR UNMATURED, KNOWN OR UNKNOWN, ACCRUED OR NOT
ACCRUED) (COLLECTIVELY, “PRE-ACQUISITION MATTERS”), INCLUDING WITHOUT
LIMITATION: (A) CLAIMS BY A RELEASING PARTY WITH RESPECT TO REPAYMENT OF LOANS
OR INDEBTEDNESS; (B) ANY RIGHTS, TITLES AND INTERESTS IN, TO OR UNDER ANY
AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS TO WHICH A RELEASING PARTY IS A
PARTY; AND (C) CLAIMS BY A RELEASING PARTY WITH RESPECT TO DIVIDENDS OR
VIOLATION OF PREEMPTIVE RIGHTS.  EACH RELEASING PARTY FURTHER AGREES NOT TO FILE
OR BRING ANY LITIGATION BEFORE ANY GOVERNMENTAL AUTHORITY ON THE BASIS OF OR
RESPECTING ANY PRE-ACQUISITION CLAIM CONCERNING ANY PRE-ACQUISITION MATTER
AGAINST ANY RELEASED PARTY.  EACH RELEASING PARTY (A) ACKNOWLEDGES THAT SUCH
RELEASING PARTY FULLY COMPREHENDS AND UNDERSTANDS ALL THE TERMS OF THIS SECTION
10.1 AND THEIR LEGAL EFFECTS AND (B) EXPRESSLY REPRESENTS AND WARRANTS THAT (I)
SUCH RELEASING PARTY IS COMPETENT TO EFFECT THE RELEASE MADE IN THIS SECTION
10.1 KNOWINGLY AND VOLUNTARILY AND WITHOUT RELIANCE ON ANY STATEMENT OR
REPRESENTATION OF ANY RELEASED PARTY OR ITS REPRESENTATIVES AND (II) SUCH
RELEASING PARTY HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF ITS CHOICE
REGARDING THIS SECTION 10.1.  THIS SECTION 10.1 SHALL NOT AFFECT THE RIGHTS OF
ANY RELEASING PARTY UNDER THIS AGREEMENT.

SECTION 10.2  ARBITRATION.

(A)           DISPUTES COVERED.  EXCEPT FOR MATTERS ARISING UNDER SECTION 6.5
AND SECTION 10.3, ANY DISPUTE, CONTROVERSY, DIFFERENCE OR CLAIM ARISING OUT OF
OR IN CONNECTION WITH INDEMNIFICATION OF AN BUYER INDEMNIFIED PARTY OR A SELLER
INDEMNIFIED PARTY PURSUANT TO THIS

 

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AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY THEREOF, WHICH CANNOT BE
AMICABLY RESOLVED BY THE PARTIES WITHIN THIRTY DAYS AFTER RECEIPT BY A PARTY OF
WRITTEN NOTICE FROM ANY OTHER PARTY THAT SUCH A DISPUTE, CONTROVERSY, DIFFERENCE
OR CLAIM EXISTS, SHALL BE SETTLED BY FINAL AND BINDING ARBITRATION.

(B)           FORUM.  THE FORUM FOR THE ARBITRATION SHALL BE NEW YORK, NEW YORK.

(C)           LAW.  THE GOVERNING LAW FOR THE ARBITRATION SHALL BE THE LAW OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS PROVISIONS.

(D)           SELECTION.  THE ARBITRATION SHALL BE CONDUCTED BY THREE
ARBITRATORS, UNLESS THE PARTIES ARE ABLE TO AGREE ON A SINGLE ARBITRATOR.  IN
THE ABSENCE OF SUCH AGREEMENT WITHIN TEN DAYS AFTER THE INITIATION OF AN
ARBITRATION PROCEEDING, SELLER PARTIES SHALL SELECT ONE ARBITRATOR AND BUYER
SHALL SELECT ONE ARBITRATOR, AND THOSE TWO ARBITRATORS SHALL THEN SELECT, WITHIN
TEN DAYS, A THIRD ARBITRATOR.  IF THOSE TWO ARBITRATORS ARE UNABLE TO SELECT A
THIRD ARBITRATOR WITHIN SUCH TEN-DAY PERIOD, A THIRD ARBITRATOR SHALL BE
APPOINTED BY THE COMMERCIAL PANEL OF THE AMERICAN ARBITRATION ASSOCIATION.  THE
DECISION IN WRITING OF AT LEAST TWO OF THE THREE ARBITRATORS SHALL BE FINAL AND
BINDING UPON THE PARTIES.  ALL ARBITRATORS SHALL BE RESIDENTS OF THE UNITED
STATES OF AMERICA.

(E)           ADMINISTRATION.  THE ARBITRATION SHALL BE ADMINISTERED BY THE
AMERICAN ARBITRATION ASSOCIATION.

(F)            RULES.  THE RULES OF ARBITRATION SHALL BE THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION (THE “COMMERCIAL
ARBITRATION RULES”), AS MODIFIED BY ANY OTHER INSTRUCTIONS THAT THE PARTIES MAY
AGREE UPON AT THE TIME, EXCEPT THAT EACH PARTY SHALL HAVE THE RIGHT TO CONDUCT
DISCOVERY IN ANY MANNER AND TO THE EXTENT AUTHORIZED BY THE FEDERAL RULES OF
CIVIL PROCEDURE AS INTERPRETED BY THE FEDERAL COURTS IN NEW YORK.  IF THERE IS
ANY CONFLICT BETWEEN THOSE RULES AND THE PROVISIONS OF THIS SECTION, THE
PROVISIONS OF THIS SECTION SHALL PREVAIL.

(G)           SUBSTANTIVE LAW.  THE ARBITRATORS SHALL BE BOUND BY AND SHALL
STRICTLY ENFORCE THE TERMS OF THIS AGREEMENT AND MAY NOT LIMIT, EXPAND OR
OTHERWISE MODIFY ITS TERMS.  THE ARBITRATORS SHALL MAKE A GOOD FAITH EFFORT TO
APPLY SUBSTANTIVE APPLICABLE LAW, BUT AN ARBITRATION DECISION SHALL NOT BE
SUBJECT TO REVIEW BECAUSE OF ERRORS OF LAW.  THE ARBITRATORS SHALL BE BOUND TO
HONOR CLAIMS OF PRIVILEGE OR WORK-PRODUCT DOCTRINE RECOGNIZED AT LAW, BUT THE
ARBITRATORS SHALL HAVE THE DISCRETION TO DETERMINE WHETHER ANY SUCH CLAIM OF
PRIVILEGE OR WORK PRODUCT DOCTRINE APPLIES.

(H)           DECISION.  THE ARBITRATORS’ DECISION SHALL PROVIDE A REASONED
BASIS FOR THE RESOLUTIONS OF EACH DISPUTE AND FOR ANY AWARD.  THE ARBITRATORS
SHALL NOT HAVE POWER TO AWARD DAMAGES IN CONNECTION WITH ANY DISPUTE IN EXCESS
OF ACTUAL COMPENSATORY DAMAGES AND SHALL NOT MULTIPLY ACTUAL DAMAGES OR AWARD
CONSEQUENTIAL OR PUNITIVE DAMAGES OR AWARD ANY OTHER DAMAGES THAT ARE EXCLUDED
UNDER THE PROVISIONS OF ARTICLE VII OF THIS AGREEMENT.

(I)            EXPENSES.  ALL COSTS OF ARBITRATION AND ENFORCEMENT OF THE
ARBITRATION AWARD, INCLUDING REASONABLE ATTORNEYS’ FEES AND COURT COSTS, COSTS
OF EXPERT WITNESSES, TRANSPORTATION, LODGING AND MEAL COSTS OF THE PARTIES AND
WITNESSES, COSTS OF TRANSCRIPT

 

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PREPARATION AND OTHER REASONABLE AND NECESSARY DIRECT AND INCIDENTAL COSTS SHALL
BE APPORTIONED BY THE ARBITRATOR(S) SELECTED PURSUANT TO SECTION 10.2(D) HEREOF
WITH A VIEW TO ALLOCATING COSTS TO THE PARTY THAT DOES NOT PREVAIL IN THE
ARBITRATION.

(J)            PAYMENT OF ARBITRATION AWARD.  THE ARBITRATION AWARD SHALL BE
MADE AND SHALL BE PAYABLE FREE OF ANY TAX OR ANY OTHER DEDUCTION. THE
ARBITRATION AWARD SHALL INCLUDE INTEREST, AT A RATE DETERMINED AS APPROPRIATE BY
THE ARBITRATORS, AS OF THE DATE OF ANY BREACH OR OTHER VIOLATION OF THIS
AGREEMENT TO THE DATE WHEN THE ARBITRATION AWARD IS PAID IN FULL.

(K)           ENFORCEMENT.  THE PARTIES FURTHER AGREE THAT THE ARBITRATION AWARD
AND ANY JUDGMENT THEREON, IF UNSATISFIED, MAY BE ENTERED IN AND SHALL BE
ENFORCEABLE BY THE COURTS OF ANY NATION HAVING JURISDICTION OVER THE PERSON OR
PROPERTY OF THE PARTY AGAINST WHOM THE ARBITRATION AWARD HAS BEEN RENDERED.

(L)            SPECIFIC PERFORMANCE; ENFORCEMENT OF ARBITRATION AWARD.  IN THE
EVENT OF ANY BREACH BY A PARTY OF THE TERMS OF THIS AGREEMENT WHICH WOULD CAUSE
ANY NONBREACHING PARTY TO BE IRREPARABLY HARMED OR FOR WHICH SUCH NONBREACHING
PARTY COULD NOT BE MADE WHOLE BY MONETARY DAMAGES, THEN IN SUCH CIRCUMSTANCES
SUCH NONBREACHING PARTY, IN ADDITION TO ANY OTHER REMEDY TO WHICH IT MAY BE
ENTITLED AT LAW OR IN EQUITY, SHALL BE ENTITLED TO COMPEL SPECIFIC PERFORMANCE
OF THIS AGREEMENT IN ANY ACTION INSTITUTED PURSUANT TO THIS SECTION 10.2 AND IN
ANY ACTION INSTITUTED IN ANY COURT OF APPLICABLE JURISDICTION TO ENFORCE ANY
INTERIM OR FINAL ARBITRATION AWARD RENDERED PURSUANT TO THIS SECTION 10.2.

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

SECTION 10.3  CONFIDENTIALITY.

(A)           EACH SELLER PARTY ACKNOWLEDGES THAT IT HAS OR MAY HAVE HAD IN THE
PAST, CURRENTLY HAS AND IN THE FUTURE MAY HAVE ACCESS TO CONFIDENTIAL
INFORMATION (AS DEFINED BELOW) OF THE SUBJECT COMPANIES, BUYER AND THE
PARTNERSHIP.  DURING THE PERIOD PRIOR TO CLOSING, THE PARTIES AGREE TO ABIDE BY
THE CONFIDENTIALITY PROVISIONS IN PARAGRAPH 10 OF THE LETTER OF INTENT DATED
JANUARY 25, 2007 BETWEEN K-SEA OPERATING PARTNERSHIP L.P. AND THE SELLER PARTIES
(AND THAT THE SELLER PARTIES WILL BE BOUND BY SUCH PARAGRAPH AS IF IT APPLIED TO
THEM MUTATIS MUTANDIS).  FROM AND AFTER THE CLOSING, EACH SELLER PARTY AGREES
THAT IT SHALL KEEP CONFIDENTIAL ALL SUCH CONFIDENTIAL INFORMATION AND, EXCEPT
WITH THE SPECIFIC PRIOR WRITTEN CONSENT OF BUYER, SHALL NOT DISCLOSE SUCH
CONFIDENTIAL INFORMATION TO ANY PERSON EXCEPT (I) THE DIRECTORS, OFFICERS,
EMPLOYEES, AFFILIATES, ACCOUNTANTS (INCLUDING INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS), ADVISORS, ATTORNEYS, CONSULTANTS OR OTHER AGENTS (COLLECTIVELY,
“REPRESENTATIVES”) OF BUYER AND (II) ITS OWN REPRESENTATIVES, PROVIDED THAT
THOSE REPRESENTATIVES AGREE TO THE CONFIDENTIALITY PROVISIONS OF THIS SECTION
10.3.  “CONFIDENTIAL INFORMATION” MEANS, WITH RESPECT TO ANY PERSON, ALL TRADE
SECRETS, KNOW HOW AND OTHER CONFIDENTIAL, NONPUBLIC AND/OR PROPRIETARY
INFORMATION OF

 

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THAT PERSON, INCLUDING ANY SUCH INFORMATION DERIVED FROM REPORTS,
INVESTIGATIONS, RESEARCH, STUDIES, WORK IN PROGRESS, CODES, MARKETING, SALES OR
SERVICE PROGRAMS, CUSTOMER LISTS, RECORDS RELATING TO PAST SERVICE PROVIDED TO
CUSTOMERS, CAPITAL EXPENDITURE PROJECTS, COST SUMMARIES, EQUIPMENT OR PRODUCTION
SYSTEM DESIGNS OR DRAWINGS, PRICING FORMULAE, CONTRACT ANALYSES, FINANCIAL
INFORMATION, PROJECTIONS, PRESENT AND FUTURE BUSINESS PLANS, AGREEMENTS WITH
VENDORS, JOINT VENTURE AGREEMENTS, CONFIDENTIAL FILINGS WITH ANY GOVERNMENTAL
BODY AND ALL OTHER CONFIDENTIAL, NONPUBLIC CONCEPTS, METHODS, TECHNIQUES OR
PROCESSES OF DOING BUSINESS, IDEAS, MATERIALS OR INFORMATION PREPARED OR
PERFORMED FOR, BY OR ON BEHALF OF THAT PERSON; PROVIDED, HOWEVER, THAT
CONFIDENTIAL INFORMATION SHALL NOT INCLUDE SUCH INFORMATION AS (A) BECOMES KNOWN
TO THE PUBLIC GENERALLY THROUGH NO FAULT OF SUCH SELLER PARTY OR (B) IS REQUIRED
TO BE DISCLOSED BY LAW OR THE ORDER OF ANY GOVERNMENTAL BODY UNDER COLOR OF LAW,
PROVIDED, THAT PRIOR TO DISCLOSING ANY INFORMATION PURSUANT TO THIS CLAUSE (B),
SUCH SELLER PARTY SHALL, IF POSSIBLE, GIVE PRIOR WRITTEN NOTICE THEREOF TO BUYER
AND PROVIDE BUYER WITH THE OPPORTUNITY TO CONTEST THAT DISCLOSURE.

(B)           BECAUSE OF (I) THE DIFFICULTY OF MEASURING ECONOMIC LOSSES AS A
RESULT OF THE BREACH OF THE COVENANTS IN SECTION 10.3(A) AND (II) THE IMMEDIATE
AND IRREPARABLE DAMAGE THAT WOULD BE CAUSED TO BUYER FOR WHICH IT WOULD HAVE NO
OTHER ADEQUATE REMEDY, IN THE EVENT OF A BREACH OR THREATENED BREACH BY SELLER
PARTIES OF THE PROVISIONS OF THIS SECTION 10.3 WITH RESPECT TO ANY CONFIDENTIAL
INFORMATION, BUYER SHALL BE ENTITLED TO AN INJUNCTION RESTRAINING THE SELLER
PARTIES FROM DISCLOSING, IN WHOLE OR IN PART, THAT CONFIDENTIAL INFORMATION. 
NOTHING HEREIN SHALL BE CONSTRUED AS PROHIBITING BUYER FROM PURSUING ANY OTHER
AVAILABLE REMEDY FOR SUCH BREACH OR THREATENED BREACH, INCLUDING THE RECOVERY OF
DAMAGES.

SECTION 10.4  EXPENSES.  EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, BUYER
AND THE SELLER PARTIES SHALL PAY THEIR OWN RESPECTIVE FEES AND EXPENSES INCURRED
IN CONNECTION WITH THE NEGOTIATION, PREPARATION AND EXECUTION OF THIS AGREEMENT
(INCLUDING THE EXHIBITS AND SCHEDULES HERETO) AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN, INCLUDING ALL LEGAL, ACCOUNTING,
TAX, BROKERS’ AND OTHER ADVISORS’ FEES AND EXPENSES, IT BEING UNDERSTOOD THAT
SUCH EXPENSES SHALL BE PAID ON BEHALF OF THE SELLER PARTIES BY SMITH MARITIME AT
OR PRIOR TO THE CLOSING.  NOTWITHSTANDING THE FOREGOING, (1) EACH OF BUYER, ON
THE ONE-HAND, AND THE SELLER PARTIES, ON THE OTHER HAND, SHALL PAY ONE-HALF OF
THE FILING FEE UNDER THE HSR ACT AND (2) BUYER SHALL PAY ONE-HALF OF THE COST
INCURRED BY THE SUBJECT COMPANIES FOR OBTAINING THE FINANCIAL STATEMENTS
CONTEMPLATED BY SECTION 6.14, PROVIDED THAT IF THIS AGREEMENT IS TERMINATED AND
ANY OF THE SUBJECT COMPANIES OR THE SELLER PARTIES ENGAGE IN ACTIVITY DESCRIBED
IN SECTION 6.1 WITHIN TWO YEARS FROM THE DATE OF THIS AGREEMENT, THEN THE SELLER
PARTIES SHALL REIMBURSE BUYER FOR ANY AND ALL OF SUCH COSTS; PROVIDED FURTHER
THAT THE FOREGOING PROVISO SHALL NOT APPLY TO ANY MERGER, CONSOLIDATION, SHARE
EXCHANGE OR OTHER BUSINESS COMBINATION AMONG SMITH MARITIME (INCLUDING ONE OR
MORE OF SMITH MARITIME’S WHOLLY OWNED SUBSIDIARIES AS OF THE DATE OF THIS
AGREEMENT) AND GO BIG.

SECTION 10.5  ENTIRE AGREEMENT.  THIS AGREEMENT, INCLUDING ALL SCHEDULES AND
EXHIBITS HERETO, CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND CONSTITUTES (ALONG WITH THE SCHEDULES, EXHIBITS,
AND OTHER DOCUMENTS DELIVERED PURSUANT TO THIS AGREEMENT) A COMPLETE AND
EXCLUSIVE STATEMENT OF THE TERMS OF THE AGREEMENT BETWEEN THE PARTIES WITH
RESPECT TO ITS SUBJECT MATTER AND THERE ARE NO TERMS, CONDITIONS,
REPRESENTATIONS, WARRANTIES, OR COVENANTS OTHER THAN THOSE CONTAINED IN THIS
AGREEMENT (ALONG

 

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WITH THE SCHEDULES, EXHIBITS, AND OTHER DOCUMENTS DELIVERED PURSUANT TO THIS
AGREEMENT).  THIS AGREEMENT MAY NOT BE MODIFIED, AMENDED OR TERMINATED EXCEPT BY
A WRITTEN INSTRUMENT SPECIFICALLY REFERRING TO THIS AGREEMENT SIGNED BY ALL THE
PARTIES HERETO.

SECTION 10.6  NO RELIANCE.  NO PROMISE OR INDUCEMENT FOR THIS AGREEMENT HAS BEEN
MADE TO BUYER EXCEPT AS SET FORTH HEREIN AND IN THE SCHEDULES, EXHIBITS AND
OTHER DOCUMENTS DELIVERED PURSUANT TO THIS AGREEMENT.  THIS AGREEMENT IS
EXECUTED BY BUYER FREELY AND VOLUNTARILY, AND WITHOUT RELIANCE ON ANY STATEMENT,
REPRESENTATION, OR WARRANTY, WHETHER WRITTEN OR ORAL, BY ANY SELLER PARTY, OR
ANY OF THEIR OFFICERS, DIRECTORS, ACCOUNTANTS, ATTORNEYS OR OTHER AGENTS OR
REPRESENTATIVES, EXCEPT AS SET FORTH IN THIS AGREEMENT AND THE SCHEDULES,
EXHIBITS AND OTHER DOCUMENTS DELIVERED PURSUANT TO THIS AGREEMENT.

SECTION 10.7  WAIVERS AND CONSENTS.  ALL WAIVERS AND CONSENTS GIVEN HEREUNDER
SHALL BE IN WRITING.  NO WAIVER BY ANY PARTY HERETO OF ANY BREACH OR ANTICIPATED
BREACH OF ANY PROVISION HEREOF BY ANY OTHER PARTY SHALL BE DEEMED A WAIVER OF
ANY OTHER CONTEMPORANEOUS, PRECEDING OR SUCCEEDING BREACH OR ANTICIPATED BREACH,
WHETHER OR NOT SIMILAR.  EXCEPT AS PROVIDED IN THIS AGREEMENT, NO ACTION TAKEN
PURSUANT TO THIS AGREEMENT, INCLUDING ANY INVESTIGATION BY OR ON BEHALF OF ANY
PARTY, SHALL BE DEEMED TO CONSTITUTE A WAIVER BY THE PARTY TAKING SUCH ACTION OF
COMPLIANCE WITH ANY REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS
CONTAINED IN THIS AGREEMENT.

SECTION 10.8  NOTICES.  ALL NOTICES AND OTHER COMMUNICATIONS HEREUNDER SHALL BE
IN WRITING AND SHALL BE DEEMED TO HAVE BEEN RECEIVED ONLY IF AND WHEN (A)
PERSONALLY DELIVERED, (B) ON THE THIRD DAY AFTER MAILING, BY UNITED STATES MAIL,
FIRST CLASS, POSTAGE PREPAID OR BY CERTIFIED MAIL RETURN RECEIPT REQUESTED,
ADDRESSED IN EACH CASE AS FOLLOWS (OR TO SUCH OTHER ADDRESS AS MAY BE SPECIFIED
BY LIKE NOTICE) OR (C) RECEIVED BY FACSIMILE AT THE PHONE NUMBER LISTED BELOW:

(A)           IF TO BUYER OR THE PARTNERSHIP TO:

K-Sea Transportation Partners L.P.
One Tower Center Boulevard, 17th Floor
East Brunswick, New Jersey 08816
Attn:  Timothy J. Casey
Fax:  (732) 565-3696

with a copy to:

Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002
Attn:  Sean T. Wheeler
Fax:  (713) 229-7868

(B)           IF TO ANY OF SMITH MARITIME OR GO BIG TO:

 

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Smith Maritime, Ltd.
8440 North Mercer Way
Mercer Island, Washington 98404
Attn:  Gordon L.K. Smith

with a copy to:

Bauer Moynihan & Johnson LLP
2101 Fourth Avenue, Suite 2400
Seattle, Washington 98121
Attn:       Gary M. Haugen
Fax:         (206) 905-3326

(C)           IF TO SMITH OR GORDON TRUST TO:

Gordon L. K. Smith
8440 North Mercer Way
Mercer Island, Washington 98404

with a copy to:

Bauer Moynihan & Johnson LLP
2101 Fourth Avenue, Suite 2400
Seattle, Washington 98121
Attn:       Gary M. Haugen
Fax:         (206) 905-3326

(D)           IF TO BARBARA TRUST TO:

Barbara Smith SML Trust
Barbara Smith, Trustee
1021 Koloa Street
Honolulu, Hawaii 96816
Attn:  Barbara Smith

with a copy to:

Bauer Moynihan & Johnson LLP
2101 Fourth Avenue, Suite 2400
Seattle, Washington 98121
Attn:       Gary M. Haugen
Fax:         (206) 905-3326

SECTION 10.9  ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS.  NO PARTY MAY
ASSIGN ANY OF ITS RIGHTS OR DELEGATE ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT
WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTIES, EXCEPT THAT BUYER MAY
ASSIGN ANY OF ITS RIGHTS AND

 

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

SECTION 10.10  CHOICE OF LAW.  THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS
THEREOF).

SECTION 10.11  JURISDICTION AND VENUE.  WITHOUT LIMITING THE PROVISIONS OF
SECTION 7.5, SMITH MARITIME, GO BIG, THE SELLER PARTIES AND BUYER HEREBY CONSENT
TO PERSONAL JURISDICTION IN ANY ACTION BROUGHT WITH RESPECT TO THIS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED HEREUNDER IN ANY FEDERAL OR STATE COURT IN NEW
YORK CITY, NEW YORK AND AGREE THAT SERVICE OF PROCESS MAY BE ACCOMPLISHED
PURSUANT TO SECTION 10.7 ABOVE.

SECTION 10.12  CONSTRUCTION; SECTION HEADINGS; TABLE OF CONTENTS.  THE LANGUAGE
USED IN THIS AGREEMENT SHALL BE DEEMED TO BE THE LANGUAGE THE PARTIES HERETO
HAVE CHOSEN TO EXPRESS THEIR MUTUAL INTENT, AND NO RULE OF STRICT CONSTRUCTION
WILL BE APPLIED AGAINST ANY PARTY HERETO.  THE SECTION HEADINGS AND ANY TABLE OF
CONTENTS CONTAINED IN THIS AGREEMENT ARE FOR REFERENCE PURPOSES ONLY AND SHALL
NOT AFFECT THE MEANING OR INTERPRETATION OF THIS AGREEMENT.

SECTION 10.13  SEVERABILITY.  ANY TERM OR PROVISION OF THIS AGREEMENT WHICH IS
INVALID OR UNENFORCEABLE IN ANY JURISDICTION SHALL, AS TO THAT JURISDICTION, BE
INEFFECTIVE TO THE EXTENT OF SUCH INVALIDITY OR UNENFORCEABILITY WITHOUT
RENDERING INVALID OR UNENFORCEABLE THE REMAINING TERMS AND PROVISIONS OF THIS
AGREEMENT OR AFFECTING THE VALIDITY OR ENFORCEABILITY OF ANY OF THE TERMS OR
PROVISIONS OF THIS AGREEMENT IN ANY OTHER JURISDICTION.  IF ANY PROVISION OF
THIS AGREEMENT IS SO BROAD AS TO BE UNENFORCEABLE, THE PROVISION SHALL BE
INTERPRETED TO BE ONLY SO BROAD AS IS ENFORCEABLE.

SECTION 10.14  COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH
TOGETHER SHALL BE DEEMED TO BE ONE AND THE SAME INSTRUMENT.

SECTION 10.15  TIME OF ESSENCE.  WITH REGARD TO ALL DATES AND TIME PERIODS SET
FORTH OR REFERRED TO IN THIS AGREEMENT, TIME IS OF THE ESSENCE.

SECTION 10.16  POWER OF ATTORNEY.  EACH SELLER PARTY HEREBY IRREVOCABLY MAKES,
CONSTITUTES AND APPOINTS GORDON L.K. SMITH AS ITS REPRESENTATIVE (THE “SELLER
PARTY REPRESENTATIVE”) AND ITS TRUE AND LAWFUL ATTORNEY-IN-FACT, WITH FULL POWER
AND AUTHORITY, IN THE NAME AND ON BEHALF OF EACH SELLER PARTY, TO ACT ON BEHALF
OF EACH OF THEM IN THE ABSOLUTE DISCRETION OF THE SELLER PARTY REPRESENTATIVE
WITH RESPECT TO ALL MATTERS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
AND, IN GENERAL, TO DO ALL THINGS AND TO PERFORM ALL ACTS, INCLUDING

 

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EXECUTING AND DELIVERING AGREEMENTS (INCLUDING AMENDMENTS TO THIS AGREEMENT),
CERTIFICATES, RECEIPTS, INSTRUCTIONS OR OTHER INSTRUMENTS CONTEMPLATED BY THIS
AGREEMENT OR DEEMED ADVISABLE TO EFFECTUATE THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.  THIS POWER OF ATTORNEY AND ALL AUTHORITY CONFERRED HEREBY SHALL
BE COUPLED WITH AN INTEREST AND IRREVOCABLE AND SHALL NOT BE TERMINATED BY ANY
ACT OF ANY SELLER PARTY OR BY OPERATION OF LAW, WHETHER BY THE BANKRUPTCY,
DISSOLUTION, LIQUIDATION, DEATH, DISABILITY OR INCAPACITY OF A SELLER PARTY OR
BY THE OCCURRENCE OF ANY OTHER EVENT OR EVENTS.  EACH SELLER PARTY HEREBY
CONSENTS TO THE TAKING OF ANY AND ALL ACTIONS AND THE MAKING OF ANY DECISIONS
REQUIRED OR PERMITTED TO BE TAKEN OR MADE BY THE SELLER PARTY REPRESENTATIVE
PURSUANT TO THIS SECTION 10.15.  EACH SELLER PARTY AGREES THAT THE SELLER PARTY
REPRESENTATIVE SHALL HAVE NO OBLIGATION OR LIABILITY TO ANY PERSON FOR ANY ACT
OR OMISSION TAKEN OR OMITTED BY THE SELLER PARTY REPRESENTATIVE IN GOOD FAITH
HEREUNDER, AND THE SELLER PARTIES SHALL INDEMNIFY AND HOLD THE SELLER PARTY
REPRESENTATIVE HARMLESS FROM AND AGAINST ANY AND ALL LOSS, DAMAGE, EXPENSE OR
LIABILITY (INCLUDING REASONABLE COUNSEL FEES AND EXPENSES) WHICH THE SELLER
PARTY REPRESENTATIVE MAY SUSTAIN AS A RESULT OF ANY SUCH ACTION OR OMISSION BY
THE SELLER PARTY REPRESENTATIVE HEREUNDER.

 

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IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT ON THE DATE
FIRST ABOVE WRITTEN.

 

 

K-SEA ACQUISITION1, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ TIMOTHY J. CASEY

 

 

 

Name:

Timothy J. Casey

 

 

 

Title:

President/CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

K-SEA TRANSPORTATION PARTNERS L.P.

 

 

 

 

 

 

 

 

 

 

 

By:

K-Sea General Partner L.P.

 

 

 

 

 

 

 

 

 

By:

K-Sea General Partner GP LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ TIMOTHY J. CASEY

 

 

 

 

Name:

Timothy J. Casey

 

 

 

 

Title:

President/CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SMITH MARITIME, LTD.

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ GORDON L.K. SMITH

 

 

 

 

 

Gordon L.K. Smith

 

 

 

 

 

President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GO BIG CHARTERING, LLC

 

 

 

 

 

 

 

 

 

 

 

By:

235LX, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ GORDON L.K. SMITH

 

 

 

 

 

        Gordon L.K. Smith

 

 

 

 

 

        Member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ GORDON L.K. SMITH

 

 

 

GORDON L.K. SMITH

 

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THE GORDON L.K. SMITH TRUST

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ GORDON L.K. SMITH

 

 

 

 

 

Gordon L.K. Smith

 

 

 

 

 

Trustee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BARBARA SMITH SML TRUST

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ BARBARA SMITH

 

 

 

 

 

Barbara Smith

 

 

 

 

 

Trustee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

235LX, LLC

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ GORDON L.K. SMITH

 

 

 

 

 

Gordon L.K. Smith

 

 

 

 

 

Member

 

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