Document:

d1373396_ex4-4.htm

EXHIBIT 4.4

 

STAR BULK CARRIERS CORP.

2013 EQUITY INCENTIVE PLAN

 

 

ARTICLE I.

General

 

1.1.           Purpose

 

The Star Bulk Carriers Corp. 2013 Equity Incentive Plan (the "Plan") is designed to provide certain key persons, whose initiative and efforts are deemed to be important to the successful conduct of the business of Star Bulk Carriers Corp. (the "Company"), with incentives to (a) enter into and remain in the service of the Company or its Affiliates and Subsidiaries (as defined below), (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company.

 

1.2.           Administration

 

 (a)           Administration.  The Plan shall be administered by the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors (the "Board") or such other committee of the Board as may be designated by the Board to administer the Plan (the Compensation Committee or such committee, as applicable, the "Administrator"); in the event the Company is subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the "1934 Act"), the Administrator shall be composed of two or more directors, each of whom is a "Non-Employee Director" (a "Non-Employee Director") under Rule 16b-3 (as promulgated and interpreted by the Securities and Exchange Commission (the "SEC") under the 1934 Act, or any successor rule or regulation thereto as in effect from time to time, Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Administrator by the Plan, the Administrator shall have the full power and authority to: (1) designate the Persons to receive Awards (as defined below) under the Plan; (2) determine the types of Awards granted to a participant under the Plan; (3) determine the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards; (4) determine the terms and conditions of any Awards; (5) determine whether, and to what extent, and under what circumstances, Awards may be settled or exercised in cash, shares, other securities, other Awards or other property, or cancelled, forfeited or suspended, and the methods by which Awards may be settled, exercised, cancelled, forfeited or suspended; (6) determine whether, to what extent, and under what circumstances cash, shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred, either automatically or at the election of the holder thereof or the Administrator; (7) construe, interpret and implement the Plan and any Award Agreement (as defined below); (8) prescribe, amend, rescind or waive rules and regulations relating to the Plan, including rules governing its operation, and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (9) make all determinations necessary or advisable in administering the Plan; (10) correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award Agreement; and (11) make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.  Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Administrator, may be made at any time and shall be final, conclusive and binding upon all Persons.

 

  

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 (b)           General Right of Delegation.  Except to the extent prohibited by applicable law, the applicable rules of a stock exchange or any charter, by-laws or other agreement governing the Administrator, the Administrator may delegate all or any part of its responsibilities to any Person or Persons selected by it and may revoke any such allocation or delegation at any time.

 

 (c)           Indemnification.  No member of the Board, the Administrator or any employee of the Company or any of its Affiliates (each such Person, a "Covered Person") shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder.  Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys' fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company's approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company's choice.  The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person's bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company's Articles of Incorporation or Bylaws.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such Persons or hold them harmless.

 

 (d)           Delegation of Authority to Senior Officers.  The Administrator may, in accordance with the terms of Section 1.2(b), delegate, on such terms and conditions as it determines, to one or more senior officers of the Company the authority to make grants of Awards to employees (other than officers) of the Company and its Subsidiaries (including any such prospective employee) and consultants of the Company and its Subsidiaries; provided, however, that in no event shall any such officer be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (i) individuals who are subject to Section 16 of the 1934 Act, or (ii) officers of the Company (or directors of the Company) to whom authority to grant or amend Awards has been delegated hereunder.

 

  

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 (e)           Awards to Non-Employee Directors.  Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards to Non-Employee Directors or administer the Plan with respect to such Awards.  In any such case, the Board shall have all the authority and responsibility granted to the Administrator herein.

 

1.3.           Persons Eligible for Awards

 

The Persons eligible to receive Awards under the Plan are those directors, officers and employees (including any prospective officer or employee) of the Company and its Subsidiaries and Affiliates and consultants and service providers (including individuals who are employed by or provide services to any entity that is itself such a consultant or service provider) to the Company and its Subsidiaries an Affiliates (collectively, "Key Persons") as the Administrator shall select.

 

1.4.           Types of Awards

 

Awards may be made under the Plan in the form of (a) stock options, (b) stock appreciation rights, (c) restricted stock, (d) restricted stock units and (e) unrestricted stock, all as more fully set forth in the Plan.  The term "Award" means any of the foregoing that are granted under the Plan.

 

1.5.           Shares Available for Awards; Adjustments for Changes in Capitalization

 

 (a)           Maximum Number.  Subject to adjustment as provided in Section 1.5(c), the aggregate number of shares of common stock of the Company, par value $0.01 ("Common Stock"), with respect to which Awards may at any time be granted under the Plan shall be 240,000  The following shares of Common Stock shall again become available for Awards under the Plan: (i) any shares that are subject to an Award under the Plan and that remain unissued upon the cancellation or termination of such Award for any reason whatsoever; (ii) any shares of restricted stock forfeited pursuant to the Plan or the applicable Award Agreement; provided that any dividend equivalent rights with respect to such shares that have not theretofore been directly remitted to the grantee are also forfeited; and (iii) any shares in respect of which an Award is settled for cash without the delivery of shares to the grantee.  Any shares tendered or withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again become available to be delivered pursuant to Awards under the Plan.

 

 (b)           Source of Shares.  Shares issued pursuant to the Plan may be authorized but unissued Common Stock or treasury shares.  The Administrator may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares.

 

 (c)           Adjustments.  i)  In the event any dividend or other distribution (whether in the form of cash, Company shares, other securities or other property), stock split, reverse stock split, reorganization, merger, consolidation, split-up, combination, repurchase or exchange of Company shares or other securities of the Company, issuance of warrants or other rights to purchase Company shares or other securities of the Company, or other similar corporate transaction or event, other than an Equity Restructuring, affects the Company shares such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then the Administrator shall, in such manner as it may deem equitable, adjust any or all of the number of shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted under the Plan.

 

  

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(ii)           The Administrator is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including the events described in Section 1.5(c)(i) or the occurrence of a Change in Control (as defined below), other than an Equity Restructuring) affecting the Company, any of its Affiliates, or the financial statements of the Company or any of its Affiliates, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles or law, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, including providing for (A) adjustment to (1) the number of shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (2) the Exercise Price (as defined below) with respect to any Award and (B) a substitution or assumption of Awards, accelerating the exercisability or vesting of, or lapse of restrictions on, Awards, or accelerating the termination of Awards by providing for a period of time for exercise prior to the occurrence of such event, or, if deemed appropriate or desirable, providing for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award (it being understood that, in such event, any option or stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value (as defined below) of a share subject to such option or stock appreciation right may be cancelled and terminated without any payment or consideration therefor; provided, however, that with respect to options and stock appreciation rights, unless otherwise determined by the Administrator, such adjustment shall be made in accordance with the provisions of Section 424(h) of the Code.

 

(iii)           In the event of (A) a dissolution or liquidation of the Company, (B) a sale of all or substantially all the Company's assets or (C) a merger, reorganization or consolidation involving the Company or one of its Subsidiaries (as defined below), the Administrator shall have the power to:

 

(1)  provide that outstanding options, stock appreciation rights and/or restricted stock units (including any related dividend equivalent right) shall either continue in effect, be assumed or an equivalent award shall be substituted therefor by the successor corporation or a parent corporation or subsidiary corporation;

 

(2)  cancel, effective immediately prior to the occurrence of such event, options, stock appreciation rights and/or restricted stock units (including each dividend equivalent right related thereto) outstanding immediately prior to such event (whether or not then exercisable) and, in full consideration of such cancellation, pay to the holder of such Award a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Administrator) of the shares subject to such Award over the aggregate Exercise Price of such Award (it being understood that, in such event, any option or stock appreciation right having a per share Exercise Price equal to, or in excess of, the Fair Market Value of a share subject to such option or stock appreciation right may be cancelled and terminated without any payment or consideration therefor; or

 

  

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(3)  notify the holder of an option or stock appreciation right in writing or electronically that each option and stock appreciation right shall be fully vested and exercisable for a period of 30 days from the date of such notice, or such shorter period as the Administrator may determine to be reasonable, and the option or stock appreciation right shall terminate upon the expiration of such period (which period shall expire no later than immediately prior to the consummation of the corporate transaction).

 

(iv)          In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in this Section 1.5(c):

 

(A)           The number and type of securities or other property subject to each outstanding Award and the Exercise Price or grant price thereof, if applicable, shall be equitably adjusted; and

 

(B)           The Administrator shall make such equitable adjustments, if any, as the Administrator may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations set forth in Sections 1.5(a)).  The adjustments provided under this Section 1.5(c)(iv) shall be nondiscretionary and shall be final and binding on the affected participant and the Company.

 

1.6.           Definitions of Certain Terms

 

 (a)           The "Fair Market Value" of a share of Common Stock on any day shall be the closing price on the stock exchange upon which such shares are listed, as reported for such day in The Wall Street Journal, or, if no such price is reported for such day, the average of the high bid and low asked price of Common Stock as reported for such day.  If no quotation is made for the applicable day, the Fair Market Value of a share of Common Stock on such day shall be determined in the manner set forth in the preceding sentence for the next preceding trading day.  Notwithstanding the foregoing, if there is no reported closing price or high bid/low asked price that satisfies the preceding sentences, or if otherwise deemed necessary or appropriate by the Administrator, the Fair Market Value of a share of Common Stock on any day shall be determined by such methods and procedures as shall be established from time to time by the Administrator.  The "Fair Market Value" of any property other than Common Stock shall be the fair market value of such property determined by such methods and procedures as shall be established from time to time by the Administrator.

 

  

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 (b)           Unless otherwise set forth in an Award Agreement, in connection with a termination of employment or consultancy/service relationship or a dismissal from Board membership, for purposes of the Plan, the term "for Cause" shall be defined as follows:

 

 (i)      if there is an employment, severance, consulting, service, change in control or other agreement governing the relationship between the grantee, on the one hand, and the Company or any of its Affiliates, on the other hand, that contains a definition of "cause" (or similar phrase), for purposes of the Plan, the term "for Cause" shall mean those acts or omissions that would constitute "cause" under such agreement; or

 

 (ii)      if the preceding clause (i) is not applicable to the grantee, for purposes of the Plan, the term "for Cause" shall mean any of the following:

 

 (A)                     any failure by the grantee substantially to perform the grantee's employment or consultancy/service or Board membership duties;

 

 (B)                     any excessive unauthorized absenteeism by the grantee;

 

 (C)                     any refusal by the grantee to obey the lawful orders of the Board or any other Person to whom the grantee reports;

 

 (D)                     any act or omission by the grantee that is or may be injurious to the Company or any of its Affiliates, whether monetarily, reputationally or otherwise;

 

 (E)                      any act by the grantee that is inconsistent with the best interests of the Company or any of its Affiliates;

 

 (F)                      the grantee's gross negligence that is injurious to the Company or any of its Affiliates, whether monetarily, reputationally or otherwise;

 

 (G)                     the grantee's material violation of any of the policies of the Company or any of its Affiliates, as applicable, including, without limitation, those policies relating to discrimination or sexual harassment;

 

 (H)                     the grantee's material breach of his or her employment or service contract with the Company or any of its Affiliates;

 

 (I)                       the grantee's unauthorized (1) removal from the premises of the Company or any of its Affiliates of any document (in any medium or form) relating to the Company or any of its Affiliates or the customers or clients of the Company or any of its Affiliates or (2) disclosure to any Person or entity of any of the Company's, or any of its Affiliates', confidential or proprietary information;

 

 (J)                      the grantee's being convicted of, or entering a plea of guilty or nolo contendere to, any crime that constitutes a felony or involves moral turpitude; and

 

 (K)                     the grantee's commission of any act involving dishonesty or fraud.

 

  

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Any rights the Company or any of its Affiliates may have under the Plan in respect of the events giving rise to a termination or dismissal "for Cause" shall be in addition to any other rights the Company or any of its Affiliates may have under any other agreement with a grantee or at law or in equity.  Any determination of whether a grantee's employment, consultancy/service relationship or Board membership is (or is deemed to have been) terminated "for Cause" shall be made by the Administrator.  If, subsequent to a grantee's voluntary termination of employment or consultancy/service relationship or voluntarily resignation from the Board or involuntary termination of employment or consultancy/service relationship without Cause or removal from the Board other than "for Cause", it is discovered that the grantee's employment or consultancy/service relationship or Board membership could have been terminated "for Cause", the Administrator may deem such grantee's employment or consultancy/service relationship or Board membership to have been terminated "for Cause" upon such discovery and determination by the Administrator.

 

 (c)           "Affiliate" shall mean (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Administrator.

 

 (d)           "Subsidiary" shall mean any entity in which the Company, directly or indirectly, has a 50% or more equity interest.

 

 (e)           "Exercise Price" shall mean (i) in the case of options, the price specified in the applicable Award Agreement as the price-per-share at which such share can be purchased pursuant to the option or (ii) in the case of stock appreciation rights, the price specified in the applicable Award Agreement as the reference price-per-share used to calculate the amount payable to the grantee.

 

 (f)           "Equity Restructuring" shall mean a non-reciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the shares of Common Stock (or other securities of the Company) or the share price thereof and causes a change in the per share value of the shares underlying outstanding Awards.

 

 (g)           "Person" shall mean any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental body or other entity of any kind.

 

(h)           "Repricing" shall mean (i) lowering the Exercise Price of an option or a stock appreciation right after it has been granted, (ii) cancellation of an opti on or a stock appreciation right in exchange for cash or another Award when the Exercise Price exceeds the Fair Market Value of the underlying shares subject to the Award and (iii) any other action with respect to an option or a stock appreciation right that is treated as a repricing under (A) generally accepted accounting principles or (B) any applicable stock exchange rules.

 

  

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ARTICLE II.

Awards Under The Plan

 

2.1.           Agreements Evidencing Awards

 

Each Award granted under the Plan shall be evidenced by a written certificate ("Award Agreement"), which shall contain such provisions as the Administrator may deem necessary or desirable and which may, but need not, require execution or acknowledgment by a grantee.  The Award shall be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.

 

2.2.           Grant of Stock Options and Stock Appreciation Rights

 

 (a)           Stock Option Grants.  The Administrator may grant stock options ("options") to purchase shares of Common Stock from the Company to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan.  No option will be treated as an "incentive stock option" for purposes of the Code.  The Administrator shall not grant an Award in the form of stock options to an individual who is then subject to the requirements of Section 409A of the Code with respect to such Award if the Common Stock (as defined below) underlying such Award does not then qualify as "service recipient stock" for purposes of Section 409A.

 

 (b)           Option Exercise Price.  Each Award Agreement with respect to an option shall set forth the Exercise Price of such Award and, unless otherwise specifically provided in the Award Agreement, the Exercise Price of an option shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise Price be less than the greater of (i) the Fair Market Value of a share of Common Stock on the date of grant and (ii) the par value of a share of Common Stock.  Repricing of options granted under the Plan shall not be permitted (1) to the extent such action could cause adverse tax consequences to the grantee under Sections 409A or 457A of the Code or (2) without prior shareholder approval, to the extent such approval would be required to be obtained by the Company pursuant to the rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of an option shall be deemed null and void if it would cause such adverse tax consequences or if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.

 

 (c)           Stock Appreciation Right Grants; Types of Stock Appreciation Rights.  The Administrator may grant stock appreciation rights to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan.  The terms of a stock appreciation right may provide that it shall be automatically exercised for a payment upon the happening of a specified event that is outside the control of the grantee and that it shall not be otherwise exercisable.  Stock appreciation rights may be granted in connection with all or any part of, or independently of, any option granted under the Plan.  The Administrator shall not grant an Award in the form of stock appreciation rights to any Key Person (i) who is then subject to the requirements of Section 409A of the Code with respect to such Award if the Common Stock (as defined below) underlying such Award does not then qualify as "service recipient stock" for purposes of Section 409A or (ii) if such Award would create adverse tax consequences for such Key Person under Section 457A of the Code.

 

  

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 (d)           Nature of Stock Appreciation Rights.  The grantee of a stock appreciation right shall have the right, subject to the terms of the Plan and the applicable Award Agreement, to receive from the Company an amount equal to (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the stock appreciation right over the Exercise Price of the stock appreciation right, multiplied by (ii) the number of shares with respect to which the stock appreciation right is exercised.  Each Award Agreement with respect to a stock appreciation right shall set forth the Exercise Price of such Award and, unless otherwise specifically provided in the Award Agreement, the Exercise Price of a stock appreciation right shall equal the Fair Market Value of a share of Common Stock on the date of grant; provided that in no event may such Exercise Price be less than the greater of (A) the Fair Market Value of a share of Common Stock on the date of grant and (B) the par value of a share of Common Stock.  Payment upon exercise of a stock appreciation right shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of exercise of the stock appreciation right) or any combination of both, all as the Administrator shall determine.  Repricing of stock appreciation rights granted under the Plan shall not be permitted (1) to the extent such action could cause adverse tax consequences to the grantee under Sections 409A or 457A of the Code or (2) without prior shareholder approval, to the extent such approval would be required to be obtained by the Company pursuant to the rules of any applicable stock exchange on which the Common Stock is then listed, and any action that would be deemed to result in a Repricing of a stock appreciation right shall be deemed null and void if it would cause such adverse tax consequences or if any requisite shareholder approval related thereto is not obtained prior to the effective time of such action.  Upon the exercise of a stock appreciation right granted in connection with an option, the number of shares subject to the option shall be reduced by the number of shares with respect to which the stock appreciation right is exercised.  Upon the exercise of an option in connection with which a stock appreciation right has been granted, the number of shares subject to the stock appreciation right shall be reduced by the number of shares with respect to which the option is exercised.

 

2.3.           Exercise of Options and Stock Appreciation Rights

 

 Subject to the other provisions of this Article II and the Plan, each option and stock appreciation right granted under the Plan shall be exercisable as follows:

 

 (a)           Timing and Extent of Exercise.  Options and stock appreciation rights shall be exercisable at such times and under such conditions as determined by the Administrator and set forth in the corresponding Award Agreement, but in no event shall any portion of such Award be exercisable subsequent to the tenth anniversary of the date on which such Award was granted.  Unless the applicable Award Agreement otherwise provides, an option or stock appreciation right may be exercised from time to time as to all or part of the shares as to which such Award is then exercisable.

 

  

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 (b)           Notice of Exercise.  An option or stock appreciation right shall be exercised by the filing of a written notice with the Company or the Company's designated exchange agent (the "Exchange Agent"), on such form and in such manner as the Administrator shall prescribe.

 

 (c)           Payment of Exercise Price.  Any written notice of exercise of an option shall be accompanied by payment for the shares being purchased.  Such payment shall be made: (i) by certified or official bank check (or the equivalent thereof acceptable to the Company or its Exchange Agent) for the full option Exercise Price; (ii) with the consent of the Administrator, which consent shall be given or withheld in the sole discretion of the Administrator, by delivery of shares of Common Stock having a Fair Market Value (determined as of the exercise date) equal to all or part of the option Exercise Price and a certified or official bank check (or the equivalent thereof acceptable to the Company or its Exchange Agent) for any remaining portion of the full option Exercise Price; or (iii) at the sole discretion of the Administrator and to the extent permitted by law, by such other provision, consistent with the terms of the Plan, as the Administrator may from time to time prescribe (whether directly or indirectly through the Exchange Agent), or by any combination of the foregoing payment methods.

 

 (d)           Delivery of Certificates Upon Exercise.  Subject to Sections 3.2, 3.4 and 3.13, promptly after receiving payment of the full option Exercise Price, or after receiving notice of the exercise of a stock appreciation right for which the Administrator determines payment will be made partly or entirely in shares, the Company or its Exchange Agent shall (i) deliver to the grantee, or to such other Person as may then have the right to exercise the Award, a certificate or certificates for the shares of Common Stock for which the Award has been exercised or, in the case of stock appreciation rights, for which the Administrator determines will be made in shares or (ii) establish an account evidencing ownership of the stock in uncertificated form.  If the method of payment employed upon an option exercise so requires, and if applicable law permits, an optionee may direct the Company or its Exchange Agent, as the case may be, to deliver the stock certificate(s) to the optionee's stockbroker.

 

 (e)           No Stockholder Rights.  No grantee of an option or stock appreciation right (or other Person having the right to exercise such Award) shall have any of the rights of a stockholder of the Company with respect to shares subject to such Award until the issuance of a stock certificate to such Person for such shares.  Except as otherwise provided in Section 1.5(c), no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued.

 

2.4.           Termination of Employment; Death Subsequent to a Termination of Employment

 

 (a)           General Rule.  Except to the extent otherwise provided in paragraphs (b), (c), (d), (e) or (f) of this Section 2.4 or Section 3.5(b)(iii), a grantee who incurs a termination of employment or consultancy/service relationship or dismissal from the Board may exercise any outstanding option or stock appreciation right on the following terms and conditions: (i) exercise may be made only to the extent that the grantee was entitled to exercise the Award on the date of termination of employment or consultancy/service relationship or dismissal from the Board, as applicable; and (ii) exercise must occur within three months after termination of employment or consultancy/service relationship or dismissal from the Board but in no event after the original expiration date of the Award.

 

  

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 (b)           Dismissal "for Cause".  If a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board "for Cause", all options and stock appreciation rights not theretofore exercised shall immediately terminate upon the grantee's termination of employment or consultancy/service relationship or dismissal from the Board.

 

 (c)           Retirement.  If a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board as the result of his or her retirement (as defined below), then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such retirement, remain exercisable for a period of three years after such retirement; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.  For this purpose, "retirement" shall mean a grantee's resignation of employment or consultancy/service relationship or dismissal from the Board, with the Company's or its applicable Affiliate's prior consent, on or after (i) his or her 65th birthday, (ii) the date on which he or she has attained age 60 and completed at least five years of service with the Company or one or more of its Affiliates (using any method of calculation the Administrator deems appropriate) or (iii) if approved by the Administrator, on or after his or her having completed at least 20 years of service with the Company or one or more of its Affiliates (using any method of calculation the Administrator deems appropriate).

 

 (d)           Disability.  If a grantee incurs a termination of employment or consultancy/service relationship or a dismissal from the Board by reason of a disability (as defined below), then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such termination or dismissal, remain exercisable for a period of one year after such termination or dismissal of employment; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.  For this purpose, "disability" shall mean any physical or mental condition that would qualify the grantee for a disability benefit under the long-term disability plan maintained by the Company or its Affiliate, as applicable, or, if there is no such plan, a physical or mental condition that prevents the grantee from performing the essential functions of the grantee's position (with or without reasonable accommodation) for a period of six consecutive months.  The existence of a disability shall be determined by the Administrator.

 

  

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 (e)           Death.

 

  (i)      Termination of Employment as a Result of Grantee's Death.  If a grantee incurs a termination of employment or consultancy/service relationship or leaves the Board as the result of his or her death, then any outstanding option or stock appreciation right shall, to the extent exercisable at the time of such death, remain exercisable for a period of one year after such death; provided that in no event may such option or stock appreciation right be exercised following the original expiration date of the Award.

 

     (ii)      Restrictions on Exercise Following Death.  Any such exercise of an Award following a grantee's death shall be made only by the grantee's executor or administrator or other duly appointed representative reasonably acceptable to the Administrator, unless the grantee's will specifically disposes of such Award, in which case such exercise shall be made only by the recipient of such specific disposition.  If a grantee's personal representative or the recipient of a specific disposition under the grantee's will shall be entitled to exercise any Award pursuant to the preceding sentence, such representative or recipient shall be bound by all the terms and conditions of the Plan and the applicable Award Agreement which would have applied to the grantee.

 

 (f)           Administrator Discretion.  The Administrator may, in writing, may waive or modify the application of the foregoing provisions of this Section 2.4.

 

2.5.           Transferability of Options and Stock Appreciation Rights

 

 Except as otherwise provided in an applicable Award Agreement evidencing an option or stock appreciation right, during the lifetime of a grantee, each such Award granted to a grantee shall be exercisable only by the grantee, and no such Award shall be assignable or transferable other than by will or by the laws of descent and distribution.  The Administrator may, in any applicable Award Agreement evidencing an option or stock appreciation right, permit a grantee to transfer all or some of the options or stock appreciation rights to (a) the grantee's spouse, children or grandchildren ("Immediate Family Members"), (b) a trust or trusts for the exclusive benefit of such Immediate Family Members or (c) other parties approved by the Administrator.  Following any such transfer, any transferred options and stock appreciation rights shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

 

2.6.           Grant of Restricted Stock

 

 (a)           Restricted Stock Grants.  The Administrator may grant restricted shares of Common Stock to such Key Persons, in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions as the Administrator shall determine, subject to the provisions of the Plan.  A grantee of a restricted stock Award shall have no rights with respect to such Award unless such grantee accepts the Award within such period as the Administrator shall specify by accepting delivery of a restricted stock Award Agreement in such form as the Administrator shall determine and, in the event the restricted shares are newly issued by the Company, makes payment to the Company or its Exchange Agent by certified or official bank check (or the equivalent thereof acceptable to the Administrator) in an amount at least equal to the par value of the shares covered by the Award (which payment may be waived at the time of grant of the restricted stock Award to the extent the restricted shares granted hereunder are otherwise deemed to be fully paid and non-assessable).

 

  

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 (b)           Issuance of Stock Certificate.  Promptly after a grantee accepts a restricted stock Award in accordance with Section 2.6(a), subject to Sections 3.2, 3.4 and 3.13, the Company or its Exchange Agent shall issue to the grantee a stock certificate or stock certificates for the shares of Common Stock covered by the Award or shall establish an account evidencing ownership of the stock in uncertificated form.  Upon the issuance of such stock certificates, or establishment of such account, the grantee shall have the rights of a stockholder with respect to the restricted stock, subject to: (i) the nontransferability restrictions and forfeiture provision described in the Plan (including paragraphs (d), (e) and (f) of this Section 2.6); (ii) in the Administrator's sole discretion, a requirement, as set forth in the Award Agreement, that any dividends paid on such shares shall be held in escrow and, unless otherwise determined by the Administrator, shall remain forfeitable until all restrictions on such shares have lapsed; and (iii) any other restrictions and conditions contained in the applicable Award Agreement.

 

 (c)           Custody of Stock Certificate.  Unless the Administrator shall otherwise determine, any stock certificates issued evidencing shares of restricted stock shall remain in the possession of the Company until such shares are free of any restrictions specified in the applicable Award Agreement.  The Administrator may direct that such stock certificates bear a legend setting forth the applicable restrictions on transferability.

 

 (d)           Nontransferability.  Shares of restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of prior to the lapsing of all restrictions thereon, except as otherwise specifically provided in this Plan or the applicable Award Agreement.  The Administrator at the time of grant shall specify the date or dates (which may depend upon or be related to the attainment of performance goals and other conditions) on which the nontransferability of the restricted stock shall lapse.

 

 (e)           Consequence of Termination of Employment.  Unless otherwise set forth in the applicable Award Agreement, (i) a grantee's termination of employment or consultancy/service relationship or dismissal from the Board for any reason other than death or disability (as defined in Section 2.4(d)) shall cause the immediate forfeiture of all shares of restricted stock that have not yet vested as of the date of such termination of employment or consultancy/service relationship or dismissal from the Board and (ii) if a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board as the result of his or her death or disability, all shares of restricted stock that have not yet vested as of the date of such termination or departure from the Board shall immediately vest as of such date.  Unless otherwise determined by the Administrator, all dividends paid on shares forfeited under this Section 2.6(e) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.6(e).

 

  

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 (f)            Special conditions for Shares  issued during calendar year 2013 .Unless otherwise set forth in the applicable Award Agreement , the shares of restricted stock that will be issued in calendar year 2013, shall vest on the twelfth month anniversary following the Board's approval of the Plan subject to the employee remaining employed in the Company or its subsidiaries. .Therefore,  a grantee's voluntarily departure from the Company or its subsidiaries during the twelve months following the Board's approval of the Plan   shall cause the immediate forfeiture  of the Shares

 

2.7.           Grant of Restricted Stock Units

 

 (a)           Restricted Stock Unit Grants.  The Administrator may grant restricted stock units to such Key Persons, and in such amounts and subject to such vesting and forfeiture provisions and other terms and conditions, as the Administrator shall determine, subject to the provisions of the Plan.  A restricted stock unit granted under the Plan shall confer upon the grantee a right to receive from the Company, conditioned upon the occurrence of such vesting event as shall be determined by the Administrator and specified in the Award Agreement, the number of such grantee's restricted stock units that vest upon the occurrence of such vesting event multiplied by the Fair Market Value of a share of Common Stock on the date of vesting.  Payment upon vesting of a restricted stock unit shall be in cash or in shares of Common Stock (valued at their Fair Market Value on the date of vesting) or both, all as the Administrator shall determine, and such payments shall be made to the grantee at such time as provided in the Award Agreement, which shall be (i) if Section 409A of the Code is applicable to the grantee, within the period required by Section 409A such that it qualifies as a "short-term deferral" pursuant to Section 409A and the Treasury Regulations issued thereunder, unless the Administrator shall provide for deferral of the Award in compliance with Section 409A, (ii) if Section 457A of the Code is applicable to the grantee, within the period required by Section 457A(d)(3)(B) such that it qualifies for the exemption thereunder, or (iii) if Sections 409A and 457A of the Code are not applicable to the grantee, at such time as determined by the Administrator.

 

 (b)           Dividend Equivalents.  The Administrator may include in any Award Agreement with respect to a restricted stock unit a dividend equivalent right entitling the grantee to receive amounts equal to the ordinary dividends that would be paid, during the time such Award is outstanding and unvested, on the shares of Common Stock underlying such Award if such shares were then outstanding.  In the event such a provision is included in a Award Agreement, the Administrator shall determine whether such payments shall be (i) paid to the holder of the Award, as specified in the Award Agreement, either (A) at the same time as the underlying dividends are paid, regardless of the fact that the restricted stock unit has not theretofore vested, or (B) at the time at which the Award's vesting event occurs, conditioned upon the occurrence of the vesting event, (ii) made in cash, shares of Common Stock or other property and (iii) subject to such other vesting and forfeiture provisions and other terms and conditions as the Administrator shall deem appropriate and as shall set forth in the Award Agreement.

 

 (c)           Consequence of Termination of Employment.  Unless otherwise set forth in the applicable Award Agreement, (i) a grantee's termination of employment or consultancy/service relationship or dismissal from the Board for any reason other than death or disability (as defined in Section 2.4(d)) shall cause the immediate forfeiture of all restricted stock units that have not yet vested as of the date of such termination of employment or consultancy/service relationship or dismissal from the Board and (ii) if a grantee incurs a termination of employment or consultancy/service relationship or dismissal from the Board as the result of his or her death or disability, all restricted stock units that have not yet vested as of the date of such termination or departure from the Board shall immediately vest as of such date.  Unless otherwise determined by the Administrator, any dividend equivalent rights on any restricted stock units forfeited under this Section 2.7(c) that have not theretofore been directly remitted to the grantee shall also be forfeited, whether by termination of any escrow arrangement under which such dividends are held or otherwise.  The Administrator may, in writing, waive or modify the application of the foregoing provisions of this Section 2.7(c).

 

  

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 (d)           No Stockholder Rights.  No grantee of a restricted stock unit shall have any of the rights of a stockholder of the Company with respect to such Award unless and until a stock certificate is issued with respect to such Award upon the vesting of such Award (it being understood that the Administrator shall determine whether to pay any vested restricted stock unit in the form of cash or Company shares or both), which issuance shall be subject to Sections 3.2, 3.4 and 3.13.  Except as otherwise provided in Section 1.5(c), no adjustment to any restricted stock unit shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate, if any, is issued.

 

 (e)           Transferability of Restricted Stock Units.  Except as otherwise provided in an applicable Award Agreement evidencing a restricted stock unit, no restricted stock unit granted under the Plan shall be assignable or transferable.  The Administrator may, in any applicable Award Agreement evidencing a restricted stock unit, permit a grantee to transfer all or some of the restricted stock units to (i) the grantee's Immediate Family Members, (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members or (iii) other parties approved by the Administrator.  Following any such transfer, any transferred restricted stock units shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer.

 

2.8.           Grant of Unrestricted Stock

 

 The Administrator may grant (or sell at a purchase price at least equal to par value) shares of Common Stock free of restrictions under the Plan to such Key Persons and in such amounts and subject to such forfeiture provisions as the Administrator shall determine.  Shares may be thus granted or sold in respect of past services or other valid consideration.

 

 

ARTICLE III.

Miscellaneous

 

3.1.           Amendment of the Plan; Modification of Awards

 

 (a)           Amendment of the Plan.  The Board may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever, except that no such amendment shall materially impair any rights or materially increase any obligations under any Award theretofore made under the Plan without the consent of the grantee (or, upon the grantee's death, the Person having the right to exercise the Award).  For purposes of this Section 3.1, any action of the Board or the Administrator that in any way alters or affects the tax treatment of any Award shall not be considered to materially impair any rights of any grantee.

 

  

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 (b)           Stockholder Approval Requirement.  If required by applicable rules or regulations of a national securities exchange or the SEC, the Company shall obtain stockholder approval with respect to any amendment to the Plan that (i) expands the types of Awards available under the Plan, (ii) materially increases the number of shares which may be issued under the Plan, except as permitted pursuant to Section 1.5(c), (iii) materially increases the benefits to participants under the Plan, including any material change to (A) permit, or that has the effect of, a "re-pricing" of any outstanding Award, (B) reduce the price at which shares or options to purchase shares may be offered or (C) extends the duration of the Plan or (iv) materially expands the class of Persons eligible to receive Awards under the Plan.

 

 (c)           Modification of Awards.  The Administrator may cancel any Award under the Plan.  The Administrator also may amend any outstanding Award Agreement, including, without limitation, by amendment which would: (i) accelerate the time or times at which the Award becomes unrestricted, vested or may be exercised; (ii) waive or amend any goals, restrictions or conditions set forth in the Award Agreement; or (iii) waive or amend the operation of Section 2.4, 2.6(e) or 2.7(c) with respect to the termination of the Award upon termination of employment or consultancy/service relationship or dismissal from the Board; provided, however, that no such amendment shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Award.  However, any such cancellation or amendment that materially impairs the rights or materially increases the obligations of a grantee under an outstanding Award shall be made only with the consent of the grantee (or, upon the grantee's death, the Person having the right to exercise the Award).  In making any modification to an Award (e.g., an amendment resulting in a direct or indirect reduction in the Exercise Price or a waiver or modification under Section 2.4(f), 2.6(e) or 2.7(c)), the Administrator may consider the implications under Sections 409A and 457A of the Code from such modification.

 

3.2.           Consent Requirement

 

 (a)           No Plan Action Without Required Consent.  If the Administrator shall at any time determine that any Consent (as defined below) is necessary or desirable as a condition of, or in connection with, the granting of any Award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (each such action being hereinafter referred to as a "Plan Action"), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Administrator.

 

(b)           Consent Defined.  The term "Consent" as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Administrator shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies.

 

  

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3.3.           Nonassignability

 

 Except as provided in Section 2.4(e), 2.5, 2.6(d) or 2.7(e), (a) no Award or right granted to any Person under the Plan or under any Award Agreement shall be assignable or transferable other than by will or by the laws of descent and distribution and (b) all rights granted under the Plan or any Award Agreement shall be exercisable during the life of the grantee only by the grantee or the grantee's legal representative or the grantee's permissible successors or assigns (as authorized and determined by the Administrator).  All terms and conditions of the Plan and the applicable Award Agreements will be binding upon any permitted successors or assigns.

 

3.4.           Taxes

 

 (a)           Withholding.  A grantee or other Award holder under the Plan shall be required to pay, in cash, to the Company, and the Company and Affiliates shall have the right and are hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to such grantee or other Award holder, the amount of any applicable withholding taxes in respect of an Award, its grant, its exercise, its vesting, or any payment or transfer under an Award or under the Plan, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for payment of such taxes.  Whenever shares of Common Stock are to be delivered pursuant to an Award under the Plan, with the approval of the Administrator, which the Administrator shall have sole discretion whether or not to give, the grantee may satisfy the foregoing condition by electing to have the Company withhold from delivery shares having a value equal to the amount of minimum tax required to be withheld.  Such shares shall be valued at their Fair Market Value as of the date on which the amount of tax to be withheld is determined.  Fractional share amounts shall be settled in cash.  Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award as may be approved by the Administrator in its sole discretion.

 

 (b)           Liability for Taxes.  Grantees and holders of Awards are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including, without limitation, any taxes arising under Sections 409A and 457A of the Code) and the Company shall not have any obligation to indemnify or otherwise hold any such Person harmless from any or all of such taxes.  The Administrator shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or, notwithstanding anything to the contrary in the Plan or any Award Agreement, to unilaterally modify any Award in a manner that (i) conforms with the requirements of Sections 409A and 457A of the Code (to the extent applicable), (ii) voids any participant election to the extent it would violate Section 409A or 457A of the Code (to the extent applicable) and (iii) for any distribution event or election that could be expected to violate Section 409A or 457A of the Code, make the distribution only upon the earliest of the first to occur of a "permissible distribution event" within the meaning of Section 409A of the Code or a distribution event that the participant elects in accordance with Section 409A of the Code.  The Administrator shall have the sole discretion to interpret the requirements of the Code, including, without limitation, Sections 409A and 457A, for purposes of the Plan and all Awards.

 

  

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3.5.           Change in Control

 

 (a)           Change in Control Defined.  For purposes of the Plan, "Change in Control" shall mean the occurrence of any of the following:

 

 (i)      any "person" (as defined in Section 13(d)(3) of the 1934 Act), corporation or other entity (other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, or (C) any company or other entity owned, directly or indirectly, by the holders of the voting stock of the Company in substantially the same proportions as their ownership of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company) acquires "beneficial ownership" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company;

 

 (ii)     the sale of all or substantially all the Company's assets in one or more related transactions to a Person or group of Persons, other than such a sale (A) to a Subsidiary which does not involve a change in the equity holdings of the Company or (B) to an entity which has acquired all or substantially all the Company's assets (any such entity described in clause (A) or (B), the "Acquiring Entity") if, immediately following such sale, 50% or more of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Acquiring Entity (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Acquiring Entity) is beneficially owned by the holders of the voting stock of the Company, and such voting power among the persons who were holders of the voting stock of the Company immediately prior to such sale is, immediately following such sale, held in substantially the same proportions as the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such sale;

 

 (iii)    any merger, consolidation, reorganization or similar event of the Company or any Subsidiary as a result of which the holders of the voting stock of the Company immediately prior to such merger, consolidation, reorganization or similar event do not directly or indirectly hold 50% or more of the aggregate voting power of the capital stock of the surviving entity (or, if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of more than 50% of the aggregate voting power of the capital stock ordinarily entitled to elect directors of the surviving entity) and such voting power among the Persons who were holders of the voting stock of the Company immediately prior to such sale is, immediately following such sale, held in substantially the same proportions as the aggregate voting power of the capital stock ordinarily entitled to elect directors of the Company immediately prior to such sale;

 

  

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 (iv)   the approval by the Company's stockholders of a plan of complete liquidation or dissolution of the Company; or

 

 (v)    during any period of 24 consecutive calendar months, individuals:

 

	
  

	
(A)

	
who were directors of the Company on the first day of such period, or

 

	
  

	
(B)

	
whose election or nomination for election to the Board was recommended or approved by at least a majority of the directors then still in office who were directors of the Company on the first day of such period, or whose election or nomination for election were so approved,

 

  shall cease to constitute a majority of the Board.

 

Notwithstanding the foregoing, for each Award subject to Section 409A of the Code, a Change in Control shall be deemed to occur under this Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A of the Code, provided that such limitation shall apply to such Award only to the extent necessary to avoid adverse tax effects under Section 409A of the Code.

 

 (b)           Effect of a Change in Control.  Unless the Administrator provides otherwise in a Award Agreement, upon the occurrence of a Change in Control:

 

(i)       notwithstanding any other provision of this Plan, any Award then outstanding shall become fully vested and any Award in the form of an option or stock appreciation right shall be immediately exercisable;

 

(ii)      to the extent permitted by law and not otherwise limited by the terms of the Plan, the Administrator may amend any Award Agreement in such manner as it deems appropriate;

 

(iii)    a grantee who incurs a termination of employment or consultancy/service relationship or dismissal from the Board for any reason, other than a termination or dismissal "for Cause", concurrent with or within one year following the Change in Control may exercise any outstanding option or stock appreciation right, but only to the extent that the grantee was entitled to exercise the Award on the date of his or her termination of employment or consultancy/service relationship or dismissal from the Board, until the earlier of (A) the original expiration date of the Award and (B) the later of (x) the date provided for under the terms of Section 2.4 without reference to this Section 3.5(b)(iii) and (y) the first anniversary of the grantee's termination of employment or consultancy/service relationship or dismissal from the Board.

 

 (c)           Miscellaneous.  Whenever deemed appropriate by the Administrator, any action referred to in paragraph (b)(ii) of this Section 3.5 may be made conditional upon the consummation of the applicable Change in Control transaction.  For purposes of the Plan and any Award Agreement granted hereunder, the term "Company" shall include any successor to Star Bulk Carriers Corp.

 

  

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3.6.          Operation and Conduct of Business

 

 Nothing in the Plan or any Award Agreement shall be construed as limiting or preventing the Company or any of its Affiliates from taking any action with respect to the operation and conduct of their business that they deem appropriate or in their best interests, including any or all adjustments, recapitalizations, reorganizations, exchanges or other changes in the capital structure of the Company or any of its Affiliates, any merger or consolidation of the Company or any of its Affiliates, any issuance of Company shares or other securities or subscription rights, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or other securities or rights thereof, any dissolution or liquidation of the Company or any of its Affiliates, any sale or transfer of all or any part of the assets or business of the Company or any of its Affiliates, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

3.7.           No Rights to Awards

 

 No Key Person or other Person shall have any claim to be granted any Award under the Plan.

 

3.8.           Right of Discharge Reserved

 

 Nothing in the Plan or in any Award Agreement shall confer upon any grantee the right to continue his or her employment with the Company or any of its Affiliates, his or her consultancy/service relationship with the Company or any of its Affiliates, or his or her position as a director of the Company or any of its Affiliates, or affect any right that the Company or any of its Affiliates may have to terminate such employment or consultancy/service relationship or service as a director.

 

3.9.           Non-Uniform Determinations

 

 The Administrator's determinations and the treatment of Key Persons and grantees and their beneficiaries under the Plan need not be uniform and may be made and determined by the Administrator selectively among Persons who receive, or who are eligible to receive, Awards under the Plan (whether or not such Persons are similarly situated).  Without limiting the generality of the foregoing, the Administrator shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Award Agreements, as to (a) the Persons to receive Awards under the Plan, (b) the types of Awards granted under the Plan, (c) the number of shares to be covered by, or with respect to which payments, rights or other matters are to be calculated with respect to, Awards and (d) the terms and conditions of Awards.

 

3.10.        Other Payments or Awards

 

 Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company from making any award or payment to any Person under any other  plan, arrangement or understanding, whether now existing or hereafter in effect.

 

  

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3.11.        Headings

 

 Any section, subsection, paragraph or other subdivision headings contained herein are for the purpose of convenience only and are not intended to expand, limit or otherwise define the contents of such subdivisions.

 

3.12.        Effective Date and Term of Plan

 

 (a)           Adoption; Stockholder Approval.  The Plan was adopted by the Board on March 21st,2013  The Board may, but need not, make the granting of any Awards under the Plan subject to the approval of the Company's stockholders.

 

 (b)           Termination of Plan.  The Board may terminate the Plan at any time.  All Awards made under the Plan prior to its termination shall remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements.  No Awards may be granted under the Plan following the tenth anniversary of the date on which the Plan was adopted by the Board.

 

3.13.        Restriction on Issuance of Stock Pursuant to Awards

 

 The Company shall not permit any shares of Common Stock to be issued pursuant to Awards granted under the Plan unless such shares of Common Stock are fully paid and non-assessable under applicable law.  Notwithstanding anything to the contrary in the Plan or any Award Agreement, at the time of the exercise of any Award, at the time of vesting of any Award, at the time of payment of shares of Common Stock in exchange for, or in cancellation of, any Award, or at the time of grant of any unrestricted shares under the Plan, the Company and the Administrator may, if either shall deem it necessary or advisable for any reason, require the holder of an Award (a) to represent in writing to the Company that it is the Award holder's then-intention to acquire the shares with respect to which the Award is granted for investment and not with a view to the distribution thereof or (b) to postpone the date of exercise until such time as the Company has available for delivery to the Award holder a prospectus meeting the requirements of all applicable securities laws; and no shares shall be issued or transferred in connection with any Award unless and until all legal requirements applicable to the issuance or transfer of such shares have been complied with to the satisfaction of the Company and the Administrator.  The Company and the Administrator shall have the right to condition any issuance of shares to any Award holder hereunder on such Person's undertaking in writing to comply with such restrictions on the subsequent transfer of such shares as the Company or the Administrator shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and all share certificates delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Company or the Administrator may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements of the SEC, any stock exchange upon which such shares are listed, and any applicable securities or other laws, and certificates representing such shares may contain a legend to reflect any such restrictions.  The Administrator may refuse to issue or transfer any shares or other consideration under an Award if it determines that the issuance or transfer of such shares or other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the 1934 Act, and any payment tendered to the Company by a grantee or other Award holder in connection with the exercise of such Award shall be promptly refunded to the relevant grantee or other Award holder.  Without limiting the generality of the foregoing, no Award granted under the Plan shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Administrator has determined that any such offer, if made, would be in compliance with all applicable requirements of any applicable securities laws.

 

  

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3.14.        Requirement of Notification of Election Under Section 83(b) of the Code

 

 If an Award recipient, in connection with the acquisition of Company shares under the Plan, makes an election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code), the grantee shall notify the Administrator of such election within ten days of filing notice of the election with the U.S. Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code.

 

3.15.        Severability

 

 If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws or, if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

 

3.16.        Sections 409A and 457A

 

 To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Sections 409A and 457A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.  Notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, in the event that the Administrator determines that any Award may be subject to Section 409A or 457A of the Code, the Administrator may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (i) exempt the Plan and Award from Sections 409A and 457A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Sections 409A and 457A of the Code and related Department of Treasury guidance and thereby avoid the application of penalty taxes under Sections 409A and 457A of the Code.

 

3.17.        Forfeiture; Clawback

 

 The Administrator may, in its sole discretion, specify in the applicable Award Agreement that any realized gain with respect to options or stock appreciation rights and any realized value with respect to other Awards shall be subject to forfeiture or clawback, in the event of (a) a grantee's breach of any non-competition, non-solicitation, confidentiality or other restrictive covenants with respect to the Company or any of its Affiliates or (ii) a financial restatement that reduces the amount of bonus or incentive compensation previously awarded to a grantee that would have been earned had results been properly reported.

 

  

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3.18.        No Trust or Fund Created

 

 Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any of its Affiliates and an Award recipient or any other Person.  To the extent that any Person acquires a right to receive payments from the Company or any of its Affiliates pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or its Affiliates.

 

3.19.        No Fractional Shares

 

 No fractional shares shall be issued or delivered pursuant to the Plan or any Award, and the Administrator shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares or whether such fractional shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

 

3.20.        Governing Law

 

 The Plan will be construed and administered in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws.

 

  

23d1379274_ex10-1.htm

EXHIBIT 10.1

 

Execution Version

 

 

PURCHASE AGREEMENT

 

This Purchase Agreement (this "Agreement"), dated as of May 1, 2013, is entered into by and between Star Bulk Carriers Corp., a Marshall Islands corporation (including any of its successors by merger, acquisition, reorganization, conversion or otherwise, the "Company"), and the Persons set forth on Schedule I hereto (the "Purchasers" and each, a "Purchaser").

 

WHEREAS, the Company proposes to commence an offering to each of the holders (the "Eligible Holders") of its common stock, par value $0.01 per share ("Common Stock"), of record as of the close of business on May 15, 2013 (the "Record Date"), of non-transferable rights (the "Rights") to subscribe for and purchase additional shares of Common Stock (the "New Shares") at a subscription price per share of $5.35 (the "Subscription Price") for an aggregate offering amount of $75.0 million (the "Aggregate Offering Amount") (such offering, as further defined in Section 2 hereof, the "Rights Offering");

 

WHEREAS, pursuant to the Rights Offering, the Company will distribute to each of the Eligible Holders, at no charge, one Right for each share of Common Stock held by such Eligible Holder as of the Record Date, and each Right will entitle the holder thereof to purchase 2.5957 New Shares from the Company (with fractional shares rounded down to the nearest whole number of New Shares and the aggregate Subscription Price adjusted accordingly) at the Subscription Price (the "Subscription Privilege");

 

WHEREAS, in order to facilitate the Rights Offering, the Company has requested each Purchaser to agree, and each Purchaser hereby agrees, severally and not jointly, subject to the terms and conditions of this Agreement, to purchase New Shares, including New Shares that are not purchased by the Eligible Holders upon the exercise of Rights pursuant to the Subscription Privilege (the "Unsubscribed Shares"), up to the amount set forth opposite such Purchaser's name on Schedule I hereto (the "Purchase Commitment") from the Company at the Subscription Price and subject to proration of Unsubscribed Shares among all other Purchasers if the amount of Unsubscribed Shares is less than the total amount of all Purchase Commitments;

 

WHEREAS, in order to facilitate the Rights Offering, irrespective of the number of Unsubscribed Shares, the Company hereby agrees to sell to each Purchaser, subject to the terms and conditions of this Agreement, shares of Common Stock in an amount no less than the "Minimum Amount" applicable to such Purchaser as set forth next to such Purchaser's name on Schedule I hereto;

 

WHEREAS, in consideration for the agreement of certain Purchasers to make their respective capital available to the Company hereunder, the Company has agreed to issue to such Purchasers the Additional Shares pursuant to Section 12(a); and

 

  

  

  

 

WHEREAS, concurrently with the execution and delivery of this Agreement, in consideration of each Institutional Purchaser's commitment to purchase certain shares of Common Stock upon the terms and subject to the conditions set forth herein, the Company and the Institutional Purchasers are entering into the Registration Rights Agreement, dated as of the date hereof (the "Registration Rights Agreement"), pursuant to which, upon the terms and subject to the conditions set forth in the Registration Rights Agreement, the Company has committed to prepare and file a resale registration statement, registering offers and sales of the Shares (as defined below) acquired by the Institutional Purchasers pursuant to this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the Company agrees and each of the Purchasers agrees with the Company, intending to be legally bound hereby, as follows:

 

Section 1.              Definitions.

 

(a)           Certain Defined Terms.  The following terms used herein shall have the meanings set forth below:

 

	
  

	
(i)

	
"Actions" has the meaning set forth in Section 5(p).

 

	
  

	
(ii)

	
"Additional Shares" has the meaning set forth in Section 12(a).

 

	
  

	
(iii)

	
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act; provided, however, that the term "Affiliate" shall not include any portfolio company of any Institutional Purchaser or any of its Affiliates when such term is used in relation to any Institutional Purchaser.

 

	
  

	
(iv)

	
"Affiliated Purchaser" has the meaning set forth in Section 3(a)(iv).

 

	
  

	
(v)

	
"Aggregate Offering Amount" has the meaning set forth in the preamble hereto.

 

	
  

	
(vi)

	
"Agreement" has the meaning set forth in the preamble hereto.

 

	
  

	
(vii)

	
"Articles" means the Company's Third Amended and Restated Articles of Incorporation, as in effect on the date hereof.

 

	
  

	
(viii)

	
"Board" means the board of directors of the Company.

 

	
  

	
(ix)

	
"Business Day" means any day that is not a Saturday, a Sunday, or a day on which banks are required or permitted to be closed in the State of New York or Greece.

 

	
  

	
(x)

	
"Buyout Transaction" has the meaning set forth in Section 11(a).

 

	
  

	
(xi)

	
"Closing" has the meaning set forth in Section 3(b).

 

  

2

  

 

	
  

	
(xii)

	
"Closing Date" has the meaning set forth in Section 3(b).

 

	
  

	
(xiii)

	
"Commission" means the United States Securities and Exchange Commission.

 

	
  

	
(xiv)

	
"Common Stock" has the meaning set forth in the recitals hereto.

 

	
  

	
(xv)

	
"Company" has the meaning set forth in the preamble hereto.

 

	
  

	
(xvi)

	
"Company Indemnified Persons" has the meaning set forth in Section 10(b).

 

	
  

	
(xvii)

	
"Eligible Holder" has the meaning set forth in the recitals hereto.

 

	
  

	
(xviii)

	
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder.

 

	
  

	
(xix)

	
"Exercise Form" has the meaning set forth in Section 2(c).

 

	
  

	
(xx)

	
"Expiration Time" has the meaning set forth in Section 2(b).

 

	
  

	
(xxi)

	
"Form 20-F" means the Company's annual report on Form 20-F for the year ended December 31, 2012, filed with the Commission on March 20, 2013.

 

	
  

	
(xxii)

	
"Group" has the meaning set forth in Section 11(a).

 

	
  

	
(xxiii)

	
"Institutional Purchasers" means each of Monarch and Oaktree.

 

	
  

	
(xxiv)

	
"Institutional Purchaser Director" has the meaning set forth in Section 11(c).

 

	
  

	
(xxv)

	
"Letter Agreement" has the meaning set forth in Section 6(b)(viii).

 

	
  

	
(xxvi)

	
"Losses" has the meaning set forth in Section 10(a).

 

	
  

	
(xxvii)

	
"Market Adverse Effect" has the meaning set forth in Section 8(a)(v).

 

	
  

	
(xxviii)

	
"Material Adverse Effect" means (i) a material adverse effect on the legality, validity or enforceability of this Agreement or (ii) the occurrence, either individually or in the aggregate, of any change, development, event or occurrence that (A) has, or would reasonably be expected to have, a material adverse effect on the earnings, business, management, properties, assets, rights, liabilities (contingent or otherwise), capital, cash flow, income, operations, or results of operations, condition (financial or otherwise) or prospects of the Company and of the Subsidiaries, taken as a whole, or (B) impairs or materially delays the Company's ability to perform on a timely basis its

 

  

3

  

obligations under this Agreement, except that, with respect to clause (ii)(A) only, any of the following, either alone or in combination, shall not be deemed a Material Adverse Effect: (1) any change, development, event or occurrence affecting general market conditions in the U.S. or European economies or that is generally applicable to the industry in which the Company and its Subsidiaries operate (except to the extent that the Company and its Subsidiaries are adversely affected in a disproportionate manner as compared to other participants in the industry in which the Company and its Subsidiaries operate), (2) effects resulting from or relating to the announcement or disclosure of the sale of Common Stock in the Rights Offering or pursuant to the Purchase Commitment, or other transactions contemplated by this Agreement, or (3) effects caused by any event, occurrence or condition resulting from or relating to the taking of any action at the written request of the Institutional Purchasers.

 

	
  

	
(xxix)

	
"Minimum Ownership Percentage" has the meaning set forth in Section 11(c)(i).

 

	
  

	
(xxx)

	
"Minimum Shares" means, with respect to each Purchaser, the shares of Common Stock that, when aggregated with the New Shares purchased by such Purchaser hereunder, if any, are equal to such Purchaser's "Minimum Amount" as set forth next to such Purchaser's name on Schedule I hereto.

 

	
  

	
(xxxi)

	
"Monarch" means Monarch Alternative Solutions Master Fund Ltd, Monarch Capital Master Partners II A LP, Monarch Capital Master Partners II LP, Monarch Debt Recovery Master Fund Ltd, Monarch Opportunities Master Fund Ltd, and P Monarch Recovery Ltd.

 

	
  

	
(xxxii)

	
"Monarch Holders" means Monarch and any successor funds thereto, and their respective Affiliates that are direct or indirect equity investors in the Company.

 

	
  

	
(xxxiii)

	
"Monarch Holders Majority" means, as of any date, Monarch Holders holding a majority of the Purchase Commitments then held by all Monarch Holders.

 

	
  

	
(xxxiv)

	
"New Shares" has the meaning set forth in the recitals hereto.

 

	
  

	
(xxxv)

	
"Non-Affiliated Purchaser" means each Institutional Purchaser and each other Purchaser identified as a "Non-Affiliated Purchaser" on Schedule I hereto.

 

	
  

	
(xxxvi)

	
"Oaktree" means Oaktree Value Opportunities Fund, L.P.

 

	
  

	
(xxxvii)

	
"Oaktree Holders" means Oaktree and any successor funds thereto, and their respective Affiliates that are direct or indirect equity investors in the Company.

 

  

4

  

 

	
  

	
(xxxviii)

	
"Oaktree Holders Majority" means, as of any date, Oaktree Holders holding a majority of the Purchase Commitments then held by all Oaktree Holders.

 

	
  

	
(xxxix)

	
"Person" means an individual, corporation, partnership, association, joint stock company, limited liability company, joint venture, trust, governmental entity, unincorporated organization or other legal entity.

 

	
  

	
(xl)

	
"Prospectus" means the prospectus included in the Registration Statement, including the documents incorporated by reference therein.

 

	
  

	
(xli)

	
"Purchase Commitment" has the meaning set forth in the recitals hereto.

 

	
  

	
(xlii)

	
"Purchase Notice" has the meaning set forth in Section 3(a)(iii).

 

	
  

	
(xliii)

	
"Purchaser" and "Purchasers" have the meaning set forth in the preamble hereto.

 

	
  

	
(xliv)

	
"Purchaser Indemnified Persons" has the meaning set forth in Section 10(a).

 

	
  

	
(xlv)

	
"Record Date" has the meaning set forth in the recitals hereto.

 

	
  

	
(xlvi)

	
"Registration Statement" means a new Registration Statement on Form F-1 (File No. 333-             ) under the Securities Act, the form of which has been approved by the Institutional Purchasers, pursuant to which the issuance of the New Shares in the Rights Offering will be registered pursuant to the Securities Act.

 

	
  

	
(xlvii)

	
"Rights" has the meaning set forth in the recitals hereto.

 

	
  

	
(xlviii)

	
"Rights Offering" has the meaning set forth in the recitals hereto.

 

	
  

	
(xlix)

	
"Rights Offering Expiration Date" means the date on which the subscription period under the Rights Offering expires, which period shall be no longer than 20 Business Days following the commencement of the Rights Offering, unless the Institutional Purchasers consent in writing to a longer period.

 

	
  

	
(l)

	
"SEC Reports" means all reports, forms, statements and other documents (including all amendments and supplements thereto) required to be filed with, or submitted to, the Commission by the Company and its Subsidiaries pursuant to the Securities Act and the Exchange Act at any time on or after January 1, 2010 and the Registration Statement.

 

	
  

	
(li)

	
"Securities Act" means the Securities Act of 1933, as amended and the rules and regulations promulgated by the Commission thereunder.

 

  

5

  

 

	
  

	
(lii)

	
"Shares" means collectively, without duplication, the New Shares, the Minimum Shares and the Additional Shares.

 

	
  

	
(liii)

	
"Specified Amendments" has the meaning set forth in Section 6(b)(vii).

 

	
  

	
(liv)

	
"Specified Courts" has the meaning set forth in Section 12(f).

 

	
  

	
(lv)

	
"Subscription Agent" has the meaning set forth in Section 2(b).

 

	
  

	
(lvi)

	
"Subscription Price" has the meaning set forth in the recitals hereto.

 

	
  

	
(lvii)

	
"Subscription Privilege" has the meaning set forth in the recitals hereto.

 

	
  

	
(lviii)

	
"Subsidiary" means, with respect to any Person (other than a natural Person), any corporation, partnership, joint venture or other legal entity of which such Person (A) owns, directly or indirectly, more than 50% of the capital stock or other equity interests, (B) has the power to elect a majority of the board of directors or similar governing body, or (C) or has the power to direct the business and policies.

 

	
  

	
(lix)

	
"Transaction Agreements" means this Agreement and the Registration Rights Agreement.

 

	
  

	
(lx)

	
"Unsubscribed Shares" has the meaning set forth in the recitals hereto.

 

Section 2.              Rights Offering.

 

(a)           On the terms and subject to the conditions set forth in the Prospectus, the Company will distribute to each Eligible Holder, at no charge, one Right for each share of Common Stock held by such holder as of the close of business on the Record Date.  Each such Right shall be non-transferable and will entitle the holder thereof, at the election of such holder, to purchase at the Subscription Price 2.5957 New Shares, provided that no fractional New Shares will be issued.  For the avoidance of doubt, the Subscription Price multiplied by the aggregate number of New Shares offered to Eligible Holders shall not exceed the Aggregate Offering Amount.

 

(b)           Each Eligible Holder may exercise all, none, or any portion of the Rights distributed to such Eligible Holder pursuant to the Rights Offering.  The Rights may be exercised at any time prior to 5:00 p.m. Eastern Daylight Time on the Rights Offering Expiration Date (the "Expiration Time").

 

(c)           Each Eligible Holder who wishes to exercise all or any portion of its Rights shall (i) prior to the Expiration Time, return a duly executed document (the "Exercise Form") to American Stock Transfer & Trust Co., LLC (the "Subscription Agent") electing to exercise all or any portion of the Rights held by such Eligible Holder and (ii) pay an amount equal to the full Subscription Price of the number of New Shares that the Eligible Holder elects to purchase pursuant to the instructions set forth in the Registration Statement by a specified date to an escrow account established for the Rights Offering.  Upon receipt by the Subscription Agent of a

 

  

6

  

properly executed Exercise Form, the Eligible Holder's exercise of such Rights specified in the Exercise Form, and the commitment to purchase those New Shares corresponding to the Rights exercised, shall become binding and irrevocable.  On the Closing Date, the Company will issue to each Eligible Holder who validly exercised its Rights the number of New Shares to which such Eligible Holder is entitled based on such exercise.

 

(d)           The Company will pay all of its expenses associated with the Registration Statement and the Rights Offering, including, without limitation, filing and printing fees, fees and expenses of the Subscription Agent and any other agents, its counsel and accounting fees and expenses, costs associated with clearing the Shares for sale under applicable state securities laws and listing fees.

 

(e)           The Company shall notify, or cause the Subscription Agent to notify, the Purchasers on each Friday occurring prior to the Rights Offering Expiration Date and on each Business Day during the five Business Days prior to the Rights Offering Expiration Date (or more frequently if reasonably requested by the Purchasers) of the aggregate number of Rights known by the Company or the Subscription Agent to have been exercised pursuant to the Rights Offering as of the close of business on the preceding Business Day or the most recent practicable time before such request, as the case may be.

 

Section 3.              Purchase Commitment.

 

(a)           Purchase Commitment.

 

(i)           Each Purchaser, severally and not jointly, agrees to purchase from the Company, and the Company hereby agrees to sell to each Purchaser, at the Subscription Price, Unsubscribed Shares in an amount up to such Purchaser's Purchase Commitment and, if there are an insufficient number of Unsubscribed Shares available to meet the "Minimum Amount" applicable to such Purchaser as set forth next to such Purchaser's name on Schedule I hereto, Minimum Shares as necessary to meet such Minimum Amount, free and clear of all liens and encumbrances, it being agreed and acknowledged that in all events each Purchaser will be entitled to purchase no less than such Purchaser's "Minimum Amount" as set forth next to such Purchaser's name on Schedule I hereto.  The failure by one Purchaser to purchase, for any reason, the Shares specified in this Agreement with respect to such Purchaser shall create no obligation on any other Purchaser to purchase such Shares.  To the extent any Purchaser is a shareholder of the Company as of the Record Date and is distributed Rights pursuant to the Rights Offering, such Purchaser may satisfy all or any portion of its Purchase Commitment hereunder by exercising its Subscription Privilege and purchasing New Shares in the Rights Offering.

 

(ii)           Each Purchaser hereby agrees with the Company that it is the intent of such parties that such Purchaser, by virtue of acting hereunder, should not be deemed an "underwriter" within the definition of Section 2(a)(11) of the Securities Act or deemed to be engaged in broker-dealer activity requiring registration under Section 15 of the Exchange Act, and such Purchaser and the Company shall in the fulfillment of their obligations hereunder act in accordance with this mutual understanding.

 

  

7

  

 

(iii)           As soon as practicable, and in any event no later than twelve noon New York City time on the third Business Day immediately following the Rights Offering Expiration Date, the Company shall give each Purchaser a written certification from an executive officer of the Company of the number of New Shares elected to be purchased by Eligible Holders pursuant to validly exercised Rights, the number of Unsubscribed Shares and the portion of such Unsubscribed Shares and any Minimum Shares, if any, that each Purchaser is required to purchase (a "Purchase Notice").  The Purchasers will purchase, and the Company will sell, the number of Unsubscribed Shares and Minimum Shares, if any, that is listed in the Purchase Notice, without prejudice to the rights of the Purchasers or the Company to seek later an upward or downward adjustment if the number of Unsubscribed Shares in such Purchase Notice is inaccurate, it being agreed and acknowledged that in all events each Purchaser will be entitled to purchase no less than such Purchaser's "Minimum Amount" as set forth next to such Purchaser's name on Schedule I hereto.

 

(iv)           Each Purchaser shall have the right to arrange for one or more of its Affiliates (each, an "Affiliated Purchaser") to acquire Shares otherwise issuable to such Purchaser hereunder, by written notice to the Company at least two (2) Business Days prior to the Closing Date, which notice shall be signed by such Purchaser and each Affiliated Purchaser, and shall contain a confirmation by the Affiliated Purchaser of the accuracy with respect to it of the representations set forth in Section 4.  In no event will any such arrangement relieve such Purchaser from its obligations under this Agreement.

 

(b)           Closing.  On the basis of the representations and warranties and subject to the terms and conditions herein set forth, including the satisfaction of the closing conditions in Section 8 of this Agreement, the closing of the purchase and sale of the Shares (the "Closing") shall take place at the offices of Seward & Kissel LLP, at 10:00 a.m., New York City time, on the later of (i) three Business Days after the Rights Offering Expiration Date and (ii) one Business Day following the date that all of the conditions to the Closing set forth in Section 8 have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing); provided, that the Closing may take place at such other place, time or date as shall be mutually agreed upon by the Company and each Purchaser (the date of the Closing, the "Closing Date").

 

(c)           Deliveries at Closing.

 

(i)           At the Closing, the Company shall deliver to each Purchaser a certificate or certificates in book-entry form, registered in the name of such Purchaser, representing the number of Shares issued to such Purchaser hereunder.

 

(ii)           At the Closing, each Purchaser shall deliver to the Company the aggregate Subscription Price for the Unsubscribed Shares and, if applicable, Minimum Shares purchased by such Purchaser hereunder, which amount shall be paid by such Purchaser to the Company in U.S. federal (same day) funds to an account designated in writing by the Company no less than two Business Days prior to the Closing Date.

 

  

8

  

 

Section 4.              Representations and Warranties of the Purchasers.  Each Purchaser represents and warrants to the Company, severally and not jointly, as of the date hereof and as of the Closing Date, as follows:

 

(a)           Organization.  Such Purchaser is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation and has the requisite power and authority to carry on its business as it is now being conducted.

 

(b)           Due Authorization.  Such Purchaser has the requisite power and authority to enter into this Agreement and to perform and consummate the transactions contemplated hereby and the execution and delivery by such Purchaser of this Agreement, the acquisition of the Shares and the performance and consummation of the transactions contemplated hereby (a) are within the power and authority of such Purchaser and (b) have been duly authorized by all necessary action of such Purchaser.  This Agreement has been duly and validly executed and delivered by such Purchaser.  Assuming the due authorization, execution and delivery by the Company of this Agreement, this Agreement constitutes a valid and binding obligation of such Purchaser enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to enforcement of creditors' rights generally, and general equitable principles relating to the availability of remedies and the public policy underlying such laws, and except as rights to indemnity or contribution, including but not limited to, indemnification provisions set forth in Section 10 of this Agreement, may be limited by federal or state securities law or the public policy underlying such laws.

 

(c)           No Conflicts.  Assuming the accuracy of the representations and warranties of the Company contained in this Agreement, the execution, delivery and performance of this Agreement by such Purchaser, the acquisition of the Shares and the consummation by such Purchaser of the other transactions contemplated hereby and the compliance by such Purchaser with the terms of this Agreement do not and will not conflict with or do not result and will not result in any breach or violation of any of the terms or provisions of, or do not constitute or will not constitute a default under, do not cause or will not cause (or do not permit or will not permit) the maturation or acceleration of any liability or obligation or the termination of any right under, or do not result in the creation or imposition of any lien, charge or encumbrance upon, any property or assets of such Purchaser pursuant to the terms of (i) the charter or bylaws or other applicable organizational documents of such Purchaser; (ii) any indenture, mortgage, deed of trust, voting trust agreement, shareholders' agreement, note agreement or other agreement or instrument to which such Purchaser is a party or by which it is bound or to which its respective property is subject; or (iii) any statute, judgment, decree, order, rule or regulation applicable to such Purchaser of any government, arbitrator, court, regulatory body or administrative agency or other governmental agency or body, domestic or foreign, having jurisdiction over such Purchaser or its activities or properties, which in each case of subclauses (i) through (iii) would materially and adversely impair such Purchaser's ability to acquire the Shares hereunder or to perform on a timely basis its other obligations under this Agreement.

 

(d)           No Consent.  Assuming the accuracy of the representations and warranties of the Company contained in this Agreement, no authorization, approval, consent or license of any government, governmental instrumentality or court, domestic or foreign (other than under the

 

  

9

  

Securities Act) is required for the acquisition of the Shares by such Purchaser hereunder, or the consummation by such Purchaser of the transactions contemplated by this Agreement, except the absence of which will not have or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect of the type described in clause (i) of such term.

 

(e)           Information.  Based on reliance of the disclosures set forth in the SEC Reports and the representations and warranties contained herein, such Purchaser is familiar with the business in which the Company is engaged, and based upon its knowledge and experience in financial and business matters, such Purchaser is familiar with the investments of the type that it is undertaking to purchase; is fully aware of the problems and risks involved in making an investment of this type; and is capable of evaluating the merits and risks of this investment.  Such Purchaser has agreed to enter into this Agreement based solely on the SEC Reports, its own assessment, analysis and investigation and on the representations, warranties, terms and conditions contained herein.

 

(f)           Accredited Investor Status.  Such Purchaser was not created for the purpose of acquiring the Shares and is an "accredited investor," as that term is as defined in Rule 501(a) of Regulation D under the Securities Act.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the investment in the Shares, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Purchase Commitment and, at the present time, is able to afford a complete loss of such investment.  Such Purchaser understands that its investment in the Shares involves a significant degree of risk.

 

(g)           Acquisition for Investment.  Such Purchaser is acquiring the Shares hereunder as principal for its own account for investment purposes and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no arrangement or understanding with any other Persons regarding the distribution of such Shares, in each case, in violation of applicable law.

 

(h)           Purchaser Activities.  Such Purchaser is not a broker-dealer and does not need to be registered as a broker-dealer.

 

(i)           No Brokers' Fees.  Such Purchaser has not incurred any liability for any finder's or broker's fee or agent's commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

(j)           Short Sales.  Since February 1, 2012, neither such Purchaser nor any of its Affiliates has taken any action that has caused such Purchaser or such Affiliate to have, directly or indirectly, sold or agreed to sell any shares of Common Stock, effected any short sale, whether or not against the box, established any "put equivalent position" (as defined in Rule 16a-1(h) under the Exchange Act) with respect to the Common Stock, granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its value from the Common Stock.

 

  

10

  

 

(k)           Relationships.  Except as set forth on Schedule III hereto, to such Purchaser's knowledge, no officer, director or stockholder of the Company, no spouse of any such officer, director or stockholder of the Company, and no immediate family member of any such spouse or of any such officer, director or stockholder of the Company living in the same home as such officer, director or stockholder, and no Affiliate of any of the foregoing, in each case, owns, directly or indirectly, any interest in, or is an officer, director, employee or consultant of, such Purchaser.

 

Section 5.             Representations and Warranties of the Company.  The Company hereby represents and warrants to each Purchaser, as of the date hereof and as of the Closing Date, as follows:

 

(a)           Organization and Qualification.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the Republic of the Marshall Islands with corporate power and authority to own or lease its properties and conduct its business as described in the SEC Reports and as currently conducted.  The Company is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect.  Each Subsidiary of the Company is duly organized, validly existing and in good standing under the laws of its jurisdiction of its organization, with the requisite power and authority to own or lease its properties and conduct its business as currently carried out, and is qualified to do business as a foreign entity in each jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect.

 

(b)           Authorized Capital Stock.  The authorized capital stock of the Company consists of 300,000,000 shares of Common Stock and 25,000,000 shares of preferred stock of which, as of the date hereof, 5,400,810 shares of Common Stock are issued and outstanding, no shares of preferred stock are issued and outstanding and 272,093 shares of Common Stock are reserved for issuance upon exercise of warrants, options and restricted stock awards granted under the Company's stock and incentive plans.  The issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal, state and applicable foreign securities laws, and were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities.  Except as set forth in the first sentence of this Section 5(b) or set forth on Schedule II hereto, no shares of capital stock (or convertible securities or instruments) of the Company are outstanding, the Company does not have outstanding any securities (whether debt or equity) convertible into or exercisable or exchangeable for any shares of capital stock or equity interests of the Company, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating to the issuance of, any capital stock or equity interests of the Company, or any stock or securities convertible into or exercisable or exchangeable for any capital stock or equity interests of the Company.  Except as provided for pursuant to the Registration Rights Agreement, the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, or to register under the Securities Act, any shares of its capital stock or equity interests.  With respect to each Subsidiary of the Company, all of the issued and outstanding shares of such Subsidiary's capital stock or other equity interests (i) have been duly authorized, validly issued, are fully paid and

 

  

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nonassessable, and (ii) are owned by the Company free and clear of all liens, encumbrances and equities and claims, except, in the case of this clause (ii), for (A) nominal shares of Common Stock held by nominees in the case of a non-U.S. Subsidiary of the Company and (B) pledges of shares of the Company's vessel owning Subsidiaries that serve as security for the Company's credit facilities as disclosed in "Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources" of the Form 20-F.  No Subsidiary of the Company has outstanding any securities (whether debt or equity) convertible into or exercisable or exchangeable for any shares of capital stock or equity interests of such Subsidiary, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating to the issuance of, any capital stock or equity interests of such Subsidiary, or any stock or securities convertible into or exercisable or exchangeable for any capital stock or equity interests of such Subsidiary.

 

(c)           Issuance, Sale and Delivery of the Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Agreement, will be validly issued, fully paid and nonassessable.  No preemptive rights or other rights to subscribe for or purchase any shares of Common Stock exist with respect to the issuance or sale of the Shares by the Company pursuant to this Agreement.  No antidilution or similar adjustments with respect to the Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (including as set forth on Schedule II hereto) will occur or be required as a result of the issuance and sale of the Rights or the Shares by the Company.  No authorization, approval, consent or license of any kind (other than under the Securities Act) is required for the issuance of the Shares.

 

(d)           Due Authorization.  The Company has the requisite power and authority to enter into this Agreement and to perform and consummate the transactions contemplated hereby  and the execution and delivery by the Company of this Agreement and the performance and consummation of the transactions contemplated hereby (including the issuance of the Shares) (a) are within the power and authority of the Company and (b) have been duly authorized by all necessary action of the Company.  This Agreement has been duly and validly executed and delivered by the Company.  Assuming the due authorization, execution and delivery by the Purchasers of this Agreement, this Agreement constitutes a valid and binding obligation of the Company enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to enforcement of creditors' rights generally, and general equitable principles relating to the availability of remedies and the public policy underlying such laws, and except as rights to indemnity or contribution, including but not limited to, indemnification provisions set forth in Section 10 of this Agreement, may be limited by federal or state securities law or the public policy underlying such laws.  The Board, at a duly called meeting or by written consent, has unanimously adopted and approved this Agreement and the transactions contemplated hereby (including the Rights Offering and the distribution of Rights and the issuance of New Shares pursuant thereto and any Minimum Shares hereunder), and no other corporate actions on the part of the Company are necessary in connection with the authorization, execution and delivery of this Agreement by the Company and the performance by the Company of the transactions contemplated hereby and.

 

  

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(e)           No Conflicts.  The execution, delivery and performance of this Agreement by the Company and the performance by the Company, or the consummation, of the transactions contemplated by this Agreement and the compliance by the Company with the terms of this Agreement do not and will not conflict with or do not result and will not result in any breach or violation of any of the terms or provisions of, or do not constitute or will not constitute a default under, do not cause or will not cause (or do not permit or will not permit) the maturation or acceleration of any liability or obligation or the termination of any right under, or do not result in the creation or imposition of any lien, charge or encumbrance upon, any property or assets of the Company pursuant to the terms of (i) the charter or bylaws or other applicable organizational documents of the Company or any of its Subsidiaries; (ii) any indenture, mortgage, deed of trust, voting trust agreement, shareholders' agreement, note agreement or other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which it is bound or to which its respective property is subject; or (iii) any law, statute, judgment, decree, order, rule or regulation applicable to the Company or any of its Subsidiaries of any government, arbitrator, court, regulatory body or administrative agency or other governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its Subsidiaries or its activities or properties.

 

(f)           Consents and Approvals.  No consent, approval, authorization, order, registration, notice, filing, license, recording or qualification of or with any court, government or governmental agency or body, domestic or foreign, having jurisdiction (other than under the Securities Act) over the Company or any of its Subsidiaries or any of their properties, is required for the execution and delivery by the Company of this Agreement, the performance by the Company of its obligations hereunder and the consummation of the transactions contemplated hereby, the distribution of the Rights, or the sale, issuance and delivery of the Shares and the consummation of the Rights Offering and the transactions contemplated by this Agreement by the Company, except (i) the registration under the Securities Act of the issuance of the New Shares pursuant to the exercise of Rights, (ii) applicable notice requirements pursuant to the rules of the NASDAQ Global Select Market and (iii) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or "blue Sky" laws in connection with the acquisition of the Shares by a Purchaser or the distribution of the Rights and the sale of New Shares to holders of Rights.

 

(g)           Registration Statement; Prospectus. The Registration Statement and the Prospectus, at the time the Registration Statement becomes effective and as of the closing date of the Rights Offering and the Closing Date, will comply as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission thereunder. The Registration Statement, at the time it becomes effective under the Securities Act shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus, at the time the Registration Statement becomes effective and as of its date and the closing date of the Rights Offering and the Closing Date, shall not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

  

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(h)           SEC Reports.  Since January 1, 2010, the Company has filed with or submitted to the Commission all SEC Reports.  As of their respective dates, each of the SEC Reports complied in all material respects with the requirements of the Securities Act or the Exchange Act and the rules and regulations of the Commission promulgated thereunder applicable to such SEC Report.  The Company has filed with the Commission all "material contracts" (as such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange Act) that are required to be filed as exhibits to the SEC Reports and there are no contracts or other documents that are required under the Exchange Act to be described in the SEC Reports that are not so described.  No SEC Report, when filed, or, in the case of any SEC Report amended or superseded prior to the date of this Agreement, then on the date of such amending or superseding filing, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  Any SEC Report filed with the Commission prior to the Closing Date, when filed, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading.

 

(i)           Financial Statements.  The audited consolidated financial statements of the Company and the related notes and schedules thereto included in the Form 20-F fairly present the financial position, results of operations, shareholders' equity and cash flows of the Company and its consolidated Subsidiaries at the dates and for the periods specified therein.  Such financial statements and the related notes and schedules thereto comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, and have been prepared in accordance with United States generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise noted therein) and all adjustments necessary for a fair presentation of results for such periods have been made.

 

(j)           Absence of Undisclosed Liabilities.  Neither the Company nor any of its Subsidiaries has any debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, or whether due or to become due) including, without limitation, unfunded past service liabilities under any pension, profit sharing or similar plan, except liabilities disclosed in the SEC Reports, liabilities incurred in the ordinary course of business since December 31, 2012 none of which is material, and performance obligations under agreements to which the Company or any of its Subsidiaries is a party or agreements entered into by the Company or any of its Subsidiaries, in the usual and ordinary course of business (in each case, excluding liability for breach of contract, breach of warranty or infringement).

 

(k)           Listing Compliance.  The Company is in compliance with the requirements of the NASDAQ Global Select Market for continued listing of the Common Stock thereon.  The Company has taken no action designed to, or likely to have the effect of, and to the Company's knowledge no event has occurred that is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or the listing of the Common Stock on the NASDAQ Global Select Market.

 

  

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(l)           No General Solicitation.  Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising.

 

(m)           Acknowledgment Regarding Purchasers' Acquisition of Shares.  The Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Purchaser or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Purchaser's acquisition of the Shares.  The Company further represents to each of the Purchasers that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(n)           No Brokers' Fees.  Except for fees to be paid by the Company to Evercore Group LLC in connection with its provision of financial advisory services in the Rights Offering and to Seaborne Capital Advisors Ltd. in connection with its provision of financial advisory services to the Independent Committee of the Board of Directors in connection with the Rights Offering, the Company has not incurred any liability for any finder's or broker's fee or agent's commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

(o)           Absence of Certain Changes.  Since December 31, 2012, other than as disclosed in the SEC Reports filed prior to the date hereof, and except for actions to be taken pursuant to the Transaction Agreements:

 

(i)           there has not been any change in the capital stock of the Company from that set forth in the first sentence of Section 5(b) or in long-term debt of the Company or any of its Subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, except as set forth on Schedule II hereto;

 

(ii)           the Company has not incurred any material liability other than in the ordinary course of business; and

 

(iii)           no event, fact or circumstance has occurred which has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(p)           Legal Proceedings.  Except as described in the SEC Reports filed prior to the date hereof, there are no (i) actions, suits, claims or proceedings ("Actions") pending against the Company or any of its Subsidiaries, or (ii) pending or to the knowledge of the Company threatened investigations or audits by any governmental or regulatory authority that are required under the Exchange Act to be described in the SEC Reports or the Registration Statement or that if determined adversely to the Company or any of its Subsidiaries, would be material to the operations of the Company and its Subsidiaries taken together as a whole.  Except as described in the SEC Reports filed prior to the date hereof, there are no outstanding orders, writs,

 

  

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injunctions, decrees, stipulations, determinations or awards entered by or with any governmental entity or addressed to or naming as a party the Company or any of its Subsidiaries, and there are no unsatisfied judgments, penalties or awards against, relating to or affecting the Company or any of its Subsidiaries that are material to the Company and its Subsidiaries (taken together as a whole).

 

(q)           Transactions with Affiliates.  Except as described in the SEC Reports filed prior to the date hereof, (i) there are no contracts, agreements, arrangements, understandings (in each case whether written or oral), liabilities or obligations between the Company or any of its Subsidiaries, on the one hand, and any current or former officer or director of the Company or any of its Subsidiaries (or any of their respective affiliates or immediate family members), on the other hand, (ii) neither the Company nor any of its Subsidiaries provides or causes to be provided any assets, services or facilities to any person described in clause (i) of this Section 5(q), (iii) no Person described in clause (i) of this Section 5(q) provides or causes to be provided any assets, services or facilities to the Company or any of its Subsidiaries, or derives any benefit from any assets, services or facilities of the Company or any of its Subsidiaries (other than as explicitly contemplated by the terms of such person's employment by the Company or any of its Subsidiaries).

 

(r)           No Material Misstatements.  No representation or warranty made by the Company in this Agreement or any other Transaction Agreement contains an untrue statement of a material fact or omits to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein not misleading.

 

(s)           No Solicitation.  Neither the Company nor any agent acting on its behalf has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Shares to any Person or Persons so as to bring the sale or issuance of such Shares to any of the Purchasers within the registration provisions of the Securities Act or any state securities laws.

 

(t)           Absence of Agreements. There are no agreements, understandings or arrangements with any Purchaser relating to the Rights Offering other than as set forth in the Transaction Agreements.

 

(u)           No Violation or Default.  Neither the Company nor any of its Subsidiaries is in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries is subject, except for (a) any such default under, or failure to be in compliance with the terms of, the Company's credit facilities that has been cured as disclosed in "Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources" of the Form 20-F and (b) any such default that has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is, or has been at any time since January 1, 2010, in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or

 

  

16

  

regulatory authority, except for any such violation that has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(v)           Investment Company Act.  The Company is not and, after giving effect to the consummation of the transactions contemplated by this Agreement, including the offering and sale of the Shares, and the application of the proceeds thereof, will not be required to register as an "investment company" or an entity "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.

 

(w)           Licenses and Permits.  The Company and its Subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in SEC Reports except any such licenses, certificates, permits or authorization the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Except as described in the SEC Reports filed prior to the date hereof, and except as, individually and in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect, neither the Company nor any of its Subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or authorization or has any knowledge that any such license, certificate, permit or authorization will not be renewed in the ordinary course.

 

(x)           Internal Control Over Financial Reporting.  Except as set forth in the SEC Reports filed prior to the date hereof, the Company and its Subsidiaries (i) make and keep books and records that accurately and fairly represent the Company's transactions, and (ii) maintain and have maintained effective internal control over financial reporting as defined in Rule 13a-15 under the Exchange Act and a system of internal accounting controls sufficient to provide reasonable assurance that:  (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with United States generally accepted accounting principles and to maintain asset accountability; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  The Company has disclosed, based on the most recent evaluation of its chief executive officer and its chief financial officer prior to the date hereof, to the Company's auditors and the audit committee of the Board (x) any significant deficiencies in the design or operation of its internal controls over financial reporting that are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information and has identified for the Company's auditors and the audit committee of the Board any material weaknesses in internal control over financial reporting and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

 

  

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(y)           No Stabilization.  The Company has not taken and will not take, directly or indirectly, any action designed to or that would reasonably be expected to cause or result in any stabilization or manipulation of the price of the shares of Common Stock.

 

(z)           Take over Statutes; Charter. Except for Article (K) of the Articles, no other "fair price," "moratorium," "control share acquisition", "business combination" or other similar anti takeover statute or regulation is applicable to the Company, the Common Stock, the Shares, the sale and issuance of the Shares or the other transactions contemplated by the Transaction Agreements.

 

(aa)           Relationships.  Except as set forth on Schedule III hereto, to the Company's knowledge, no officer, director or stockholder of the Company, no spouse of any such officer, director or stockholder of the Company, and no family member of any such spouse or of any such officer, director or stockholder of the Company living in the same home as such spouse, officer, director or stockholder, and no Affiliate of any of the foregoing, in each case, owns, directly or indirectly, any interest in, or is an officer, director, employee or consultant of, any Purchaser.

 

Section 6.             Covenants of the Company.

 

(a)           Until the Closing Date or the earlier termination of the Purchasers' obligations in accordance with Section 9 of this Agreement, the Company covenants and agrees to operate the business of the Company and its Subsidiaries in the ordinary course of business consistent with past practice and as follows:

 

(i)           To use reasonable best efforts to effectuate the Rights Offering in accordance with the terms set forth in Section 2 as soon as practicable after the date hereof;

 

(ii)           Not to amend any of the material terms (including, without limitation, the Subscription Price and the Rights Offering Expiration Date) of the Rights Offering, or waive any material conditions to the closing of the Rights Offering, without the prior written consent of the Monarch Holders Majority and the Oaktree Holders Majority;

 

(iii)           Other than as set forth in Schedule II, not to issue any shares of capital stock of the Company, or options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, securities convertible into or exchangeable for capital stock of the Company, or other agreements or rights to purchase or otherwise acquire capital stock of the Company, except pursuant to the Rights Offering or this Agreement;

 

(iv)           Not permit or take any action that may result in any anti-dilution or similar adjustment with respect to the Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock;

 

(v)           Not to authorize any stock split, stock dividend, stock combination or similar transaction affecting the number of issued and outstanding shares of Common Stock;

 

(vi)           Not to declare or pay any dividends on its Common Stock or repurchase any shares of Common Stock;

 

  

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(vii)           Not to amend, modify or supplement any term or provision of the Articles or the by-laws of the Company or the applicable organizational documents of any Subsidiary of the Company; and

 

(viii)           Not to take any action or omit to take any action that would reasonably be expected to result in the conditions to the Closing set forth in Section 8 not being satisfied.

 

(b)           The Company further agrees and covenants as follows:

 

(i)           As promptly as practicable following the Closing Date, the Company will apply the net proceeds from the sale of the Shares, together with any other funds of the Company as may be necessary, solely to carry out new vessel acquisitions and for general corporate purposes; provided, that, without the consent of the Board after giving effect to Section 11(c) below (which consent must include the approval of at least one Institutional Purchaser Director for so long as there are any Institutional Purchaser Directors), no less than $10,000,000 of such proceeds shall be earmarked by the Company as cash on the Company's balance sheet for liquidity purposes;

 

(ii)           The Company will not take, directly or indirectly, any action designed to or that would reasonably be expected to cause or result in any stabilization or manipulation of the price of the shares of Common Stock;

 

(iii)           The Company shall use reasonable best efforts to cause the Shares acquired hereunder to be listed on the NASDAQ Global Select Market within 30 calendar days of their issuance;

 

(iv)           The Company shall use its reasonable best efforts to respond to any comments on the Registration Statement or requests for additional information from the Commission as soon as practicable after receipt of any such comments or requests and shall promptly (A) notify the Institutional Purchasers upon the receipt of any such comments or requests and (B) provide the Institutional Purchasers with copies of all correspondence between the Company and its representatives, on the one hand, and the Commission and its staff, on the other hand, to the extent such correspondence relates to the Registration Statement.  Before responding to any such comments or requests, the Company shall provide the Institutional Purchasers with a reasonable opportunity to review and comment on any drafts of the Registration Statement and related correspondence and filings and shall include in such drafts, correspondence and filings all comments reasonably proposed by the Institutional Purchasers; provided, however, that such comments shall be delivered to the Company no later than 10 a.m., New York City time, on the second Business Day after the Company shall have provided such drafts, correspondence and filings to the Institutional Purchasers and their respective counsel;

 

(v)           As promptly as practicable after becoming aware of such event, the Company shall notify each Purchaser of the issuance by the Commission of any stop order or other suspension of the effectiveness of the Registration Statement and take all lawful action to effect the withdrawal, rescission or removal of such stop order or other suspension;

 

(vi)           The Company shall use its reasonable best efforts (and shall cause its Subsidiaries to use their respective reasonable best efforts) to take or cause to be taken all

 

  

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actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its or their part under this Agreement and applicable laws to cooperate with each Purchaser and to consummate and make effective the transactions contemplated by this Agreement, including, without limitation:

 

	
  

	
(A)

	
preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party or governmental entity;

 

	
  

	
(B)

	
if deemed appropriate by the Board, defending any lawsuits or other actions or proceedings, whether judicial or administrative, challenging this Agreement or any other agreement contemplated by this Agreement or the consummation of the transactions contemplated hereby and thereby, including seeking to have any stay or temporary restraining order entered by any court or other governmental entity vacated or reversed; and

 

	
  

	
(C)

	
executing, delivering and filing, as applicable, any additional ancillary instruments or agreements necessary to consummate the transactions contemplated by this Agreement and to fully carry out the purposes of this Agreement and the transactions contemplated hereby;

 

(vii)           The Company shall use its reasonable best efforts to cause the Company's loan agreements to be amended prior to the Closing as set forth on Schedule IV hereto (such amendments, the "Specified Amendments"); and

 

(viii)           The Company shall execute and deliver the letter agreement in the form attached hereto as Schedule V (the "Letter Agreement") and shall use its reasonable best efforts to cause each other party thereto to execute and deliver the Letter Agreement.

 

Section 7.                 Post-Closing Covenants of Purchasers and Restrictions on Transfer.  In connection with the resale of the Shares, each Purchaser, severally and not jointly, shall have the following obligations:

 

(a)           Lock-Up.  Each Purchaser that is not an Institutional Purchaser agrees with the Company that, for a period of six (6) months following the Closing Date, and each Institutional Purchaser  agrees with the Company that, for a period of three (3) months following the Closing Date, other than any Common Stock disposed of as a bona fide gift approved by the Company or pursuant to a transfer without consideration (provided that the transferee of such bona fide gift or transfer agrees to be bound by the terms hereof), it will not, without the prior written consent of the Company, offer, sell, contract to sell, pledge or otherwise dispose of any of the Common Stock acquired hereunder or any securities convertible into or exercisable or exchangeable for the Common Stock acquired hereunder (or enter into any transaction that is designed to result in the disposition (whether by actual disposition or effective economic disposition due to cash

 

  

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settlement or otherwise) by such Purchaser or any Affiliate of such Purchaser), directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of Commission promulgated thereunder with respect to; or enter into any swap or any other agreement or any transaction that transfers, in whole or in part, the economic consequence of ownership of any of the Common Stock or any securities convertible into, or exercisable or exchangeable for such Common Stock, or publicly announce an intention to effect any such offer, sale, contract to sell, pledge or disposition.

 

(b)           Restrictive Legends.  Each Purchaser understands and agrees that the Shares acquired by it will bear a legend substantially similar to the legend set forth below in addition to any other legend that may be required by applicable law or by any agreement between the Company and such Purchaser:

 

"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.  THE SHARES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS."

 

(c)           No Purchaser will take, directly or indirectly, any action designed to stabilize or manipulate the price of the shares of Common Stock to facilitate the sale or resale of the Shares acquired by such Purchaser hereunder.

 

Section 8.             Conditions Precedent.

 

(a)           Conditions of the Purchasers' Obligations.  The obligations of each Purchaser to consummate the Closing are subject to the satisfaction or waiver by such Purchaser on or before the Closing Date of the following conditions:

 

(i)           No Material Adverse Effect shall have occurred since the date hereof;

 

(ii)           The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date with the same force and effect as if made on and as of the Closing Date (other than those qualified by  materiality, Material Adverse Effect or similar qualifications, which shall be

 

  

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true in all respects), except for those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date);

 

(iii)           All covenants and agreements contained in this Agreement to be performed by the Company shall have been performed and complied with in all material respects;

 

(iv)           Such Purchaser shall have received a certificate, signed by an executive officer of the Company, certifying as to the matters set forth in Section 8(a)(i), (ii) and (iii);

 

(v)           As of the Closing Date, none of the following events shall have occurred and be continuing: (A) trading in the Common Stock shall have been suspended by the Commission or The Nasdaq Global Select Market; or (B) a banking moratorium shall have been declared either by U.S. federal or New York State authorities (collectively, a "Market Adverse Effect");

 

(vi)           The Company shall have complied with the requirements of the Nasdaq Stock Market, Inc., for the listing of the Shares on The Nasdaq Global Select Market; and

 

(vii)           Each of the Purchasers shall have timely received from the Company a Purchase Notice.

 

In addition, the obligations of each Institutional Purchaser to consummate the Closing are subject to the satisfaction or waiver by the Monarch Holders Majority and the Oaktree Holder Majority on or before the Closing Date of the following conditions:

 

(i)           The Registration Rights Agreement shall be in full force and effect;

 

(ii)           Each of the Institutional Purchasers shall have received on and as of the Closing Date written evidence reasonably satisfactory to it of the good standing of the Company in the Marshall Islands, in writing or any standard form of telecommunication from the appropriate governmental authorities of such jurisdiction;

 

(iii)           The Specified Amendments shall have been executed and delivered by all parties thereto and shall be in full force and effect, and copies thereof shall have been delivered to each Institutional Purchaser; and

 

(iv)           The Letter Agreement shall have been executed and delivered by all parties thereto and shall be in full force and effect, and a copy thereof shall have been delivered to each Institutional Purchaser.

 

(b)           Conditions of the Company's Obligations.  The obligation of the Company to consummate the Closing with respect to any Purchaser is subject to the satisfaction or waiver by the Company on or before the Closing Date of the following conditions:

 

(i)           The representations and warranties of such Purchaser contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date (other than those qualified by

 

  

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materiality or similar qualifications, which shall be true in all respects) except for those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date); and

 

(ii)           All covenants and agreements contained in this Agreement to be performed by such Purchaser shall have been performed and complied with in all material respects.

 

(c)           Conditions of the Obligations of the Purchasers and the Company.  The obligations of the Purchasers and the Company to consummate the transactions contemplated by this Agreement are subject to the following additional conditions:

 

(i)           No judgment, injunction, decree or other legal restraint shall prohibit the consummation of the Rights Offering or the transactions contemplated by this Agreement;

 

(ii)           No stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and

 

(iii)           The Rights Offering shall have been completed by the Company in accordance with the terms and conditions set forth in this Agreement and the Registration Statement, and allocations of New Shares shall have been made thereunder.

 

Section 9.              Termination.

 

(a)           Termination.  This Agreement may be terminated at any time prior to the Closing Date:

 

(i)           As between the Company and any Purchaser, by mutual written agreement of the Company, on the one hand, and such Purchaser, on the other hand;

 

(ii)           by either the Company or a Purchaser, with respect to the obligations of such Purchaser, by written notice at any time after September 30, 2013 (the "Outside Date"), if the Closing has not occurred by such time; provided, that the right to terminate this Agreement pursuant to this Section 9(a)(ii) will not be available to any party whose breach of any covenant or agreement of such party or any representation or warranty of such party set forth in this Agreement has been the primary cause of the failure of the Closing to have occurred on or before the Outside Date;

 

(iii)           by a Purchaser, with respect to the obligations of such Purchaser, by written notice if there is Market Adverse Effect that is not cured at no later than 21 Business Days after the occurrence thereof;

 

(iv)           by an Institutional Purchaser, with respect to its obligations, by written notice if this Agreement is terminated by the other Institutional Purchaser, with respect to its obligations; or

 

  

23

  

 

 

(v)           by an Institutional Purchaser, with respect to the obligations of such Institutional Purchaser, by written notice:

 

	
  

	
(A)

	
if there has been a breach of any covenant or a breach of any representation or warranty of the Company, which breach would cause the failure of any condition precedent set forth in Section 8(a) or 8(c), provided, that any such breach of a covenant or representation or warranty is not capable of cure on or prior to the Outside Date; or

 

	
  

	
(B)

	
upon the occurrence of any event which results in a failure to satisfy any of the conditions set forth in Section 8(a) or 8(c), which failure is not capable of cure on or prior to the Outside Date;

 

(vi)           by the Company or a Purchaser, with respect to the obligations of such Purchaser, if the Registration Statement has not been declared effective by the Commission and the Rights Offering commencement date has not occurred by July 31, 2013; provided, that the right to terminate this Agreement pursuant to this Section 9(a)(vi) will not be available to the Company if the Company's breach of any of its covenants or agreements or any of its representations or warranties set forth in this Agreement has been the primary cause of the failure of the Registration Statement to have been declared effective by the Commission or the failure of the Rights Offering commencement date to have occurred on or before such date.

 

(b)           Effect of Termination.  If this Agreement is terminated by either the Company or a Purchaser pursuant to the provisions of this Section 9, this Agreement shall forthwith between the Company and that Purchaser become void and there shall be no further obligations on the part of the Company or that Purchaser, except for the provisions of this Section 9(b) and Sections 10 and 12, which shall survive any termination of this Agreement; provided, that nothing in this Section 9(b) shall relieve any party from liability for any willful breach of this Agreement.  In the event that this Agreement is terminated pursuant to the provisions of this Section 9 with respect to the obligations of any Purchaser, the Company shall promptly provide written notice thereof to each other Purchaser.

 

Section 10.           Indemnification.

 

(a)           Indemnification by the Company. Notwithstanding anything in this Agreement to the contrary, whether or not the Rights Offering, the issuance of the Shares to any Purchasers or the other transactions contemplated hereby are consummated or this Agreement is terminated, from and after the date hereof, the Company agrees to indemnify and hold harmless each Purchaser, its Affiliates, and each of their respective officers, directors, managers, partners, members, agents, representatives, successors, assigns and employees and each other Person, if any, who controls (within the meaning of the Securities Act) such Purchaser or its Affiliates (all such Persons being hereinafter referred to, collectively, as the "Purchaser Indemnified Persons") against any losses, claims, damages, liabilities or expenses (collectively, the "Losses") to which such Purchaser Indemnified Person may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof as contemplated below) arise out of or are based upon (1) any inaccuracy in or breach of any representation or warranty of the Company contained in this Agreement, (2) any failure by the Company to comply with the covenants and

 

  

24

  

agreements contained in this Agreement, (3) an untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the Prospectus and all other documents filed as a part thereof or incorporated by reference therein, or an omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (4) any Action by any stockholder of the Company or any other Person relating to this Agreement or the documents contemplated hereby or thereby, or the transactions contemplated hereby or thereby, or (5) by reason of the fact that such Purchaser is a party to this Agreement or in any way arising, directly or indirectly, from the Rights Offering or the consummation of the transactions contemplated by the Transaction Agreements; and the Company will promptly reimburse such Purchaser Indemnified Persons for any legal and other expenses as such expenses are reasonably incurred by such Purchaser Indemnified Persons in connection with investigating, defending or preparing to defend, settling, compromising or paying any such Losses; provided, however, that the Company will not be liable to any Purchaser Indemnified Person in any such case to the extent that any such Losses arise out of or are based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission relating to the identity of the applicable Purchaser made in the section of the Prospectus or the Registration Statement or any amendment or supplement thereto titled "Summary of the Rights Offering—Purchase Agreement" in reliance upon and in conformity with written information furnished to the Company by the applicable Purchaser or its representatives expressly for use therein, (ii) the failure of such Purchaser Indemnified Person or its Affiliate to perform any covenant and agreement contained in this Agreement with respect to the sale of the Shares, (iii) the inaccuracy of any representation or warranty made by such Purchaser Indemnified Person or its Affiliate in this Agreement or (iv) the gross negligence or willful misconduct of such Purchaser Indemnified Person or its Affiliate.

 

(b)           Indemnification by the Purchasers. Each Purchaser, severally and not jointly, agrees to indemnify and hold harmless the Company, its Affiliates, and each of their respective officers, directors, managers, partners, members, agents, representatives, successors, assigns and employees and each other Person, if any, who controls (within the meaning of the Securities Act) the Company or its Affiliates (all such Persons being hereinafter referred to, collectively, as the "Company Indemnified Persons"), against any Losses to which any Company Indemnified Person may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof as contemplated below) arise out of or are based upon (X) any breach of any representation or warranty or breach of or failure to perform any covenant or agreement on the part of such Purchaser contained in this Agreement or (Y) an untrue statement or alleged untrue statement or omission or alleged omission relating to the identity of the applicable Purchaser made in the section of the Prospectus or the Registration Statement or any amendment or supplement thereto titled "Summary of the Rights Offering—Purchase Agreement" in reliance upon and in conformity with written information furnished to the Company by that Purchaser expressly for use therein, and such Purchaser will promptly reimburse such Company Indemnified Persons for any legal and other expenses as such expenses are reasonably incurred by such Company Indemnified Persons in connection with investigating, defending or preparing to defend, settling, compromising or paying any such Losses; provided, however, that such Purchaser will not be liable in any such case to the extent that any such Losses arise out of or are based upon (i) the failure of the Company or any other Purchaser to perform any of its covenants and agreements contained in this Agreement, (ii) the inaccuracy of any representation or

 

  

25

  

warranty made by the Company or any other Purchaser in this Agreement or (iii) the gross negligence or willful misconduct of any Company Indemnified Person or any other Purchaser.

 

(c)           Indemnification Procedures.  Promptly after receipt by an indemnified party under this Section 10 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 10, promptly notify the indemnifying party in writing thereof, but the omission to notify the indemnifying party will not relieve such indemnifying party from any liability that it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained in this Section 10 to the extent such indemnifying party is not prejudiced as a result of such failure to promptly notify.  Such notice shall describe in reasonable detail such claim.  In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may elect by written notice delivered to such indemnified party within 30 days of such indemnifying party's receipt of notice of such action from such indemnified party, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, (i) if the indemnifying party has failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such indemnified party in any such proceeding or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have reasonably concluded, based on the advice of counsel, that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, in any such case, the indemnified party or parties shall have the right to select separate counsel to assume or assert, as the case may be, such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties.  Upon receipt of notice from the indemnifying party to such indemnified party of its election to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 10 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption or assertion, as the case may be, of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel in any jurisdiction (and as required, local counsels), reasonably satisfactory to such indemnifying party, representing the indemnified party), (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent such indemnified party within a reasonable time after notice of commencement of action or (iii) the indemnifying party shall have authorized in writing the employment of counsel for such indemnified person, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.  The indemnifying party shall not be liable for any settlement of any action without its written consent.  In no event shall any indemnifying party be liable in respect of any amounts paid in settlement of any action unless the indemnifying party shall have approved in writing the terms of such settlement.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnification

 

  

26

  

could have been sought hereunder by such indemnified party from all liability on claims that are the subject matter of such proceeding unless such settlement or compromise includes an unconditional release of such indemnified party from all liability arising out of such Action.

 

(d)           Contribution.  If the indemnification provided for in this Section 10 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (a), (b) or (c) of this Section 10 in respect to any Losses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of any Losses referred to herein (i) in such proportion as is appropriate to reflect the relative fault of the Company and the applicable Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement and/or the Registration Statement, including the Prospectus, that resulted in such Losses, as well as any other relevant equitable considerations.  The relative fault of the Company on the one hand and the applicable Purchaser on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact, or the omission or alleged omission to state a material fact, or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or by the applicable Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid or payable by a party as a result of the Losses shall be deemed to include, subject to the limitations set forth in paragraph (c) of this Section 10, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.  The provisions set forth in paragraph (c) of this Section 10 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (d); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (c) for purposes of indemnification.  The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined solely by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph.  No person guilty of fraudulent misrepresentation (within the meaning of Section 12(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

(e)           The obligations of the Company under this Section 10 shall be in addition to any liability which the Company may otherwise have to any Purchaser Indemnified Person and the obligations of each Purchaser under this Section 10 shall be in addition to any liability which such Purchaser may otherwise have to any Company Indemnified Person.  The remedies provided in this Section 10 are not exclusive and shall not limit any rights or remedies which may otherwise be available to the parties at law or in equity.

 

Section 11.           Additional Agreements.

 

(a)           Standstill.  Each Institutional Purchaser agrees that, without the approval of the Board, neither it nor its Affiliates will (i) acquire beneficial ownership measured by voting power of more than 40.0% of the issued and outstanding shares of Common Stock (including, for the avoidance of doubt, all Shares acquired by such Institutional Purchaser pursuant to this Agreement); (ii) form or participate in a "group" as defined in Section 13(d)(3) of the Exchange

 

  

27

  

Act (a "Group") with respect to the Common Stock after giving effect to which it would be deemed to beneficially own more than 40.0% of the issued and outstanding shares of Common Stock; or (iii) initiate or participate in any "freeze-out" merger or other going private transaction with respect to the Company.  Notwithstanding the foregoing, the provisions of this Section 11(a) shall terminate on the date that (A) the Company publicly announces that it plans to pursue a tender offer, merger, sale of all or substantially all of the Company's assets or any similar transaction involving the Company and its Subsidiaries taken as a whole (a "Buyout Transaction"); (B) the Board approves, recommends or accepts a Buyout Transaction proposed by any Person or Group or (C) any Person or Group, other than any Institutional Purchaser or a Group of which any Institutional Purchaser is a part, acquires beneficial ownership measured by voting power of more than 40% of the issued and outstanding Common Stock.  In the case of a termination as a result of (A), (B) or (C) above and provided the applicable Institutional Purchaser owns and continues to own in excess of the Minimum Ownership Percentage at all times following the Closing Date, the Company shall use its best efforts to cause the Board to approve each transaction in which such Institutional Purchaser shall become an "Interested Shareholder" as such term is defined in Article (K) of the Articles.

 

(i)           Notwithstanding the foregoing, the Company and each Institutional Purchaser agree and acknowledge that such Institutional Purchaser makes investments in companies and other Persons in the ordinary course of its business and, as a result of such investments, such companies and other Persons may be deemed to be an Affiliates of such Purchaser or otherwise associated with such Purchaser, that certain of such companies and Persons that may be deemed to be affiliated or associated with such Purchaser represent large institutions over which such Purchaser has no control or investment discretion and that the terms of this Section 11(a) shall not apply to such companies or Persons.

 

(b)           Stockholder Rights Plan.  With respect to any current or future stockholder rights plan, the Company agrees to exclude each Institutional Purchaser from the definition of "Acquiring Person" (or similar term), as such term is defined in such stockholder rights plan to the extent of such Institutional Purchaser's shareholdings and up to 40.0% of the issued and outstanding shares of Common Stock.

 

(c)           Board.  On the Closing Date, the Company shall cause the size of the Board to be increased by two (2) directors and shall cause one (1) individual designated by each Institutional Purchaser to fill such newly-created directorships as Class B Directors (each such director so designated, an "Institutional Purchaser Director").

 

(i)           For so long as any Institutional Purchaser (together with its Affiliates) owns at least 10% of the outstanding Common Stock (the "Minimum Ownership Percentage"), such Institutional Purchaser shall have the right to designate one (1) individual for nomination to the Board, and the Company shall nominate such individual for election to the Board; provided, that such nominee meets the criteria that are reasonably acceptable to the nominating committee of the Board.  In the event any Institutional Purchaser owns less than the Minimum Ownership Percentage at any time following the Closing, such Institutional Purchaser shall lose its right to nominate a person to the Board pursuant to this Section 11(c)(i).

 

  

28

  

 

 

(ii)           The Board has the right to block any director nominated by an Institutional Purchaser if such nominee holds, or is nominated to hold, a management position or board seat at a company that directly competes with the Company.  If, following the time when any person nominated by an Institutional Purchaser is elected to the Board, such person is appointed or elected to any such position or seat at a company that directly competes with the Company, the Institutional Purchaser shall be entitled to designate a director to fill the vacancy resulting from such person's resignation from the Board; provided, that such designee meets the criteria that are reasonably acceptable to the nominating committee of the Board.

 

(d)           Transfer of Large Block.  In the event that   an Institutional Purchaser (together with its controlled Affiliates) transfers, individually or in the aggregate, 20% or more of the voting power of the outstanding Common Stock to any one Person (including such Person's Affiliates) or any Group, the transferee or the transferees shall agree that Section 11(a) shall apply to such transferee or transferees, as the case may be.

 

Section 12.           Miscellaneous.

 

(a)           Additional Shares.  In consideration for Non-Affiliated Purchasers making available their respective capital hereunder, the Company shall pay to each Non-Affiliated Purchaser set forth on Schedule VI hereto an amount, payable in shares of Common Stock valued at the Subscription Price (the "Additional Shares"), equal to 3% of such Non-Affiliated Purchaser's Purchase Commitment set forth on Schedule I hereto (rounded to the nearest full share), and such Additional Shares shall be issued to such Non-Affiliated Purchaser at Closing; provided, that in the event this Agreement is terminated pursuant to Section 9 prior to the Closing Date in respect of such Non-Affiliated Purchaser's obligations hereunder, the Company shall nevertheless be obligated to issue to such Non-Affiliated Purchaser the Additional Shares as promptly as practicable, and in any event within five Business Days following such termination.

 

(b)           Amendments.  This Agreement may not be amended, modified or changed, in whole or in part, except by an instrument in writing signed by the Company, the Monarch Holders Majority and the Oaktree Holders Majority.

 

(c)           Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed first-class registered or certified airmail, e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when received and shall be delivered as addressed as follows:

 

If to the Company to:

 

Star Bulk Carriers Corp.

c/o Star Bulk Management Inc.

40 Agiou Konstantinou Street,

15124 Maroussi,

Athens, Greece

 

Attention: Georgia Mastagaki

Facsimile: +30 (210) 617-8378

 

  

29

  

 

With a copy to:

 

Seward & Kissel LLP

One Battery Park Plaza

New York, NY 10004

 

Attention: Robert E. Lustrin, Esq.

Facsimile: 212-480-8421

 

If to a Purchaser, to the address set forth next to such Purchaser's name on Schedule I hereto.

 

(d)           Successors.  This Agreement shall be to the benefit of and be binding upon the Purchasers and the Company and, with respect to the provisions of indemnification hereof, the several parties (in addition to the Purchasers and the Company) indemnified under the provisions of Section 10, and their respective personal representatives, successors and assigns.  Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained.

 

(e)           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.

 

(f)           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the conflict of laws provisions thereof or of any other jurisdiction.  Each of the parties hereto irrevocably and unconditionally (i) agrees that any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States of America located in the City and County of New York or the courts of the State of New York in each case located in the City and County of New York (collectively, the "Specified Courts"), (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum and (iii) submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court, as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding.  Service of any process, summons, notice or document by mail to such party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such Specified Court.  The Company has appointed Seward & Kissel LLP at c/o Robert E. Lustrin, One Battery Park Plaza, New York, New York 10004, USA as its authorized agent (the "Authorized Agent") upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated hereby which may be instituted in any Specified Court, expressly consents to the jurisdiction of any such Specified Court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto.  Such appointment shall be irrevocable.  The Company represents and warrants that the Authorized Agent has agreed to act as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may

 

  

30

  

be necessary to continue such appointment in full force and effect as aforesaid.  Service of process upon the Authorized Agent and written notice of such service to the Company shall be deemed, in every respect, effective service of process upon the Company.

 

(g)           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH OF THE PARTIES HEREBY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12(G).

 

(h)           Immunity Waiver.  The Company hereby irrevocably waives, to the fullest extent permitted by law, any immunity to jurisdiction to which it may otherwise be entitled (including, without limitation, immunity to pre-judgment attachment, post-judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or based on this Agreement.

 

(i)           Entire Agreement.  This Agreement (together with the other Transaction Agreements) sets forth the entire agreement between the Company and each Purchaser with respect to the subject matter hereof.  Any prior agreements or understandings between the Company and any Purchaser regarding the subject matter hereof, whether written or oral, are superseded by this Agreement and the other Transaction Agreements.

 

(j)           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 10 (with respect to rights to indemnification and contribution).

 

(k)           Publicity.  The Company and each of the Institutional Purchasers shall consult with each other prior to issuing any press releases (and provide each other a reasonable opportunity to review and comment upon such release prior to its public issuance) or otherwise making public announcements with respect to the transactions contemplated by this Agreement; provided, however, that in no event shall any such press release or other public announcement name any Purchaser without the consent of the Monarch Holders Majority and the Oaktree Holders Majority.  The Company shall consult with each of the Institutional Purchasers prior to making any filings (and provide each of the Institutional Purchasers a reasonable opportunity to review and comment on such filings) with any third party or any governmental entity (including any national securities exchange or interdealer quotation service) with respect to the transactions contemplated by this Agreement, except as may be required by law or by the request of any governmental entity.  Subject to the Company's foregoing obligations pursuant to this Section

 

  

31

  

12(k), nothing contained in this Section 12(k) shall be interpreted to preclude the Company from making any filing or disclosing any information in any filing, including with the Commission, that the Company acting reasonably determines is necessary or advisable; provided, however, that, if such filing names any of the Institutional Purchasers, the Company shall obtain the prior approval of the Monarch Holders Majority and the Oaktree Holders Majority, as applicable, and consider in good faith any comments either may have thereto.

 

(l)           Construction.  In the event of ambiguity or if a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any such party by virtue of the authorship of any of the provisions hereto.

 

(m)           Expense Reimbursement.  The Company shall reimburse Monarch, Oaktree and their respective Affiliates for the reasonable out-of-pocket costs, fees and expenses (including attorneys' fees and expenses) incurred by any of them in connection with the preparation and negotiation of the Transaction Agreements and the consummation of the transactions contemplated hereby and thereby up to an aggregate amount of $250,000, to be divided among Monarch, Oaktree and their respective Affiliates as determined by Monarch and Oaktree.

 

(n)           Independent Nature of Purchasers' Obligations and Rights.  The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement.  The failure or waiver of performance under this Agreement by any Purchaser shall not excuse performance by any other Purchaser.  Nothing contained herein or in any other Transaction Agreement, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a Group with respect to such obligations or the transactions contemplated by the Transaction Agreements.  Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

 

 

[Signature Page Follows]

 

 

 

  

32

  

 

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

 

 

	
STAR BULK CARRIERS CORP.

	  
	  
	  
	
By:

	  
	
Name:

	
Simos Spyrou

	
Title:

	
Chief Financial Officer

[Signature Page to Purchase Agreement]

  

  

  

OAKTREE VALUE OPPORTUNITIES FUND, L.P.

 

By: Oaktree Value Opportunities Fund GP, L.P.

Its:  General Partner

 

By: Oaktree Value Opportunities Fund GP Ltd.

Its:  General Partner

 

By: Oaktree Capital Management, L.P.

Its:  Director

 

	
By:

	  
	  	
Name:

	  	
Title:

	
By:

	  
	  	
Name:

	  	
Title:

 

 

[Signature Page to Purchase Agreement]

  

  

  

 

MONARCH ALTERNATIVE SOLUTIONS MASTER FUND LTD

MONARCH CAPITAL MASTER PARTNERS II-A LP

MONARCH CAPITAL MASTER PARTNERS II LP

MONARCH DEBT RECOVERY MASTER FUND LTD

MONARCH OPPORTUNITIES MASTER FUND LTD

P MONARCH RECOVERY LTD

 

By: Monarch Alternative Capital LP, as investment manager

	
By:

	  
	  	
Name:

	  	
Title:

[Signature Page to Purchase Agreement]

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