Agreement and Plan of Merger, dated as of April 7, 2015, by and among Genco Shipping & Trading Limited, Poseidon Merger Sub Limited and Baltic Trading Limited

Section 5.13                Litigation.  Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, as of the date of this Agreement, (a) there is no Action pending or, to the knowledge of Parent, threatened by or before any Governmental Authority, nor, to the knowledge of Parent, is there any investigation pending by any Governmental Authority, in each case, against Parent, Merger Sub or any other Subsidiary of Parent and (b) none of Parent, Merger Sub or any other Subsidiary of Parent, nor any of Parent or any of its Subsidiary’s respective assets or properties, is subject to any outstanding Order of any Governmental Authority.

 

Section 5.14                Environmental Matters.

 

(a)                 Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect:

 

(i)               Parent, each of its Subsidiaries and each of the Parent Vessels are in compliance with applicable Environmental Laws, have all Environmental Permits necessary to conduct their current operations and are in compliance with their respective Environmental Permits;

 

(ii)              Neither Parent nor any of its Subsidiaries has received any written notice, demand, letter or claim alleging that Parent or any such Subsidiary or Parent Vessel is in violation of, or liable under, any Environmental Law or that any Order has been issued against Parent or any of its Subsidiaries or otherwise with respect to any Parent Vessel which remains unresolved.  There is no Action or request for information pending, or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries or otherwise with respect to any Parent Vessel under any applicable Environmental Law;

 

(iii)            Neither Parent nor any of its Subsidiaries has entered into or agreed to any Order or is subject to any Order relating to compliance with Environmental Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials and no Action is pending or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries or otherwise with respect to any Parent Vessel under any applicable Environmental Law;

 

(iv)            Neither Parent nor any of its Subsidiaries has assumed, by Contract or operation of Law, any liability under any Environmental Law or relating to any Hazardous Materials, or is an indemnitor in connection with any threatened or asserted Action by any third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous Materials; and

 

(v)             Neither Parent nor any of its Subsidiaries has caused, and to the knowledge of Parent, no Third Party has caused, any release of or exposure to a Hazardous Material that could reasonably be expected to result in any Action affecting or

 

to require investigation or remedial action by Parent or any of its Subsidiaries under any Environmental Law.

 

(b)               This Section 5.14 contains the exclusive representations and warranties of Parent and Merger Sub with respect to environmental matters.

 

Section 5.15               Intellectual Property.

 

(a)                Section 5.15(a) of the Parent Disclosure Letter sets forth, as of the date hereof, a correct and complete list of all material Intellectual Property owned by Parent or any of its Subsidiaries (the “Parent‑Owned Intellectual Property”) that is registered or subject to an application for registration (including the jurisdictions where such Parent-Owned Intellectual Property is registered or where applications have been filed, and all registration or application numbers, as appropriate).

 

(b)                Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, all necessary registration, maintenance and renewal fees have been paid and all necessary documents have been filed with the United States Patent and Trademark Office or foreign patent and trademark office in the relevant foreign jurisdiction for the purposes of maintaining the registered Parent-Owned Intellectual Property.  No Parent-Owned Intellectual Property has been abandoned in the last 180 days, except to the extent that such abandonment would not have or would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

(c)                Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, (i) Parent and its Subsidiaries, in the aggregate, are the exclusive owners of the Parent-Owned Intellectual Property free and clear of all Liens (other than Permitted Liens), (ii) Parent and its Subsidiaries own or are licensed or otherwise possess valid rights to use all Intellectual Property necessary to conduct the business of Parent and its Subsidiaries as it is currently conducted, (iii) the conduct of the business of Parent and its Subsidiaries as it is currently conducted does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any Third Party, (iv) there are no pending or, to the knowledge of Parent, threatened claims, in writing, with respect to any of the Intellectual Property rights owned by Parent or any of its Subsidiaries and (v) to the knowledge of Parent, no Third Party is currently infringing or misappropriating Intellectual Property owned by Parent or any of its Subsidiaries.  Parent and its Subsidiaries are taking all actions that they reasonably believe are necessary to maintain and protect each material item of Intellectual Property that they own.

 

Section 5.16               Property.  Parent and its Subsidiaries have good, valid and, in the case of real property, marketable title to, or valid leasehold or sublease interests or other comparable Contract rights in or relating to, all of the real property and other tangible assets used in or necessary for the conduct of their business as currently conducted, including good and valid title to all real property and other tangible assets reflected in the latest audited financial statements included in the Parent SEC Filings as being owned by Parent and its Subsidiaries or acquired after the date thereof (other than property sold or otherwise disposed of in the ordinary course of

 

business since the date thereof), free and clear of all Liens except for Permitted Liens and Liens that have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.  Parent and its Subsidiaries are collectively the lessee of all property material to the business of Parent and its Subsidiaries which is purported to be leased by Parent and its Subsidiaries and are in possession of such properties, and each lease for such property is valid and in full force and effect without default thereunder by the lessee or the lessor, except in each case as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.  Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, all items of equipment and other tangible assets owned by or leased to Parent and its Subsidiaries are sufficient for the uses to which they are being put, are in good and safe condition and repair (ordinary wear and tear excepted), and are sufficient for the conduct of the business of Parent and its Subsidiaries in the manner in which such business is currently being conducted and is proposed to be conducted.  Section 5.16 of the Parent Disclosure Letter lists all material real property and any material interest in real property owned by Parent or any of its Subsidiaries.

 

Section 5.17               Vessels; Maritime Matters.

 

(a)                Section 5.17(a) of the Parent Disclosure Letter contains a list of all vessels owned as of the date hereof by Parent or its Subsidiaries (the “Parent Owned Vessels”) or chartered-in as of the date hereof by Parent or any of its Subsidiaries (the “Parent Leased Vessels”), including the name, registered owner, capacity (gross tonnage or deadweight tonnage, as specified therein), year built, classification society, official number, flag state, and whether such Parent Vessel is currently operating in the spot market or time chartered market, of each Parent Owned Vessel and Parent Leased Vessel.  Each Parent Vessel is operated in compliance with all applicable Maritime Guidelines and Laws, except where such failure to be in compliance would not have a Parent Material Adverse Effect.  Parent or its applicable Subsidiary is qualified to own and operate the Parent Owned Vessels under applicable Laws, including the Laws of each Parent Owned Vessel’s flag state, except where such failure to be qualified would not have a Parent Material Adverse Effect.  Each Parent Vessel is seaworthy and in good operating condition, has all national and international operating and trading certificates and endorsements, each of which is valid, that are required for the operation of such Parent Vessel in the trades and geographic areas in which it is operated, except where such failure would not have a Parent Material Adverse Effect.

 

(b)                Each Parent Vessel is classed by a classification society which is a member of the International Association of Classification Societies and is materially in class with all class and trading certificates valid through the date of this Agreement and, to the knowledge of Parent, (i) no event has occurred and no condition exists that would cause such Parent Vessel’s class to be suspended or withdrawn and (ii) is free of average damage affecting its class.

 

(c)                With respect to each of the Parent Owned Vessels, as of the date hereof, Parent or one of its Subsidiaries, as applicable, is the sole owner of each such Parent Owned Vessel and has good title to such Parent Owned Vessel, free and clear of all Liens other than

 

Permitted Liens and Liens that would not, individually or in the aggregate, have a Parent Material Adverse Effect.

 

Section 5.18               Taxes.

 

(a)                Parent and each of its Subsidiaries has filed with the appropriate Governmental Authority all Tax Returns required to be filed, taking into account any extensions of time within which to file such Tax Returns, and all such Tax Returns were complete and correct, subject in each case to such exceptions as, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.  Parent and each of its Subsidiaries has duly paid (or there has been paid on their behalf), or made adequate provisions for, all material Taxes required to be paid by them.

 

(b)                (i) There are no audits or other Actions pending with regard to any material Taxes or Tax Returns of Parent or any of its Subsidiaries, (ii) no deficiency for Taxes of Parent or any of its Subsidiaries has been claimed, proposed or assessed in writing or, to the knowledge of Parent, threatened, by any Governmental Authority, which deficiency has not yet been settled, except for such deficiencies which are being contested in good faith or with respect to which the failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect, (iii) neither Parent nor any of its Subsidiaries has waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency for any open tax year and (iv) neither Parent nor any of its Subsidiaries has entered into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of United States state or local income Tax Law or non-United States income Tax Law).

 

(c)                Since its inception, neither Parent nor any of its Subsidiaries has incurred any material liability for Taxes other than (i) in the ordinary course of business or consistent with past practice or (ii) transfer or similar Taxes arising in connection with sales of property.

 

(d)                Parent and its Subsidiaries have complied, in all material respects, with all applicable Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445, 1446 and 3402 of the Code or similar provisions under any foreign Laws) and have duly and timely withheld and have paid over to the appropriate taxing authorities all material amounts required to be so withheld and paid over on or prior to the due date thereof under all applicable Laws.

 

(e)               There are no Liens for Taxes upon any property or assets of Parent or any of its Subsidiaries except Liens for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established.

 

(f)                 Neither Parent nor any of its Subsidiaries has requested, has received or is subject to any written ruling of a Governmental Authority or has entered into any written agreement with a Governmental Authority with respect to any Taxes.

 

(g)                Except as set forth in Section 5.18(g) of the Parent Disclosure Letter, there are no Tax allocation or sharing Contracts or similar arrangements with respect to or involving Parent or any of its Subsidiaries, and after the Closing Date neither Parent nor any of its

 

Subsidiaries shall be bound by any such Tax allocation or sharing Contracts or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date.

 

(h)                Neither Parent nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Parent) or (B) has any liability for the Taxes of any Person (other than Parent or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of United States state or local Law or non-United States Law), as a transferee or successor, by Contract, or otherwise.

 

(i)                  Neither Parent nor any of its Subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

(j)                  No claim has been made by any Governmental Authority in a jurisdiction in which any of Parent or any of its Subsidiaries does not file a Tax Return that such relevant entity is subject to taxation by that jurisdiction. Neither Parent nor any of its Subsidiaries has had a permanent establishment in any country other than the country of its organization.

 

(k)                Each of Parent and its Subsidiaries has complied in all material respects with the intercompany transfer pricing provisions of each applicable Law relating to Taxes, including the contemporaneous documentation and disclosure requirements thereunder.

 

(l)                  Neither the Parent nor any of its Subsidiaries has taken or has any intention to take any action, either before or after the Closing, which could cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.

 

Section 5.19               Insurance.  Parent and its Subsidiaries are covered by valid and currently effective insurance policies issued in favor of Parent (the “Parent Insurance Policies”) that are adequate and otherwise customary for companies of similar size and financial condition.  To the knowledge of Parent, the Parent Insurance Policies are valid and enforceable and are in full force and effect and no misrepresentations were made in connection with the applications for such policies.  Except for those matters that have not had and would not reasonably be expected to have a Parent Material Adverse Effect, all premiums due thereon have been paid, and Parent and its Subsidiaries have otherwise complied with the terms and conditions of such policies.  Except for those matters that have not had and would not reasonably be expected to have a Parent Material Adverse Effect, there is no claim for coverage by Parent or any or any of its Subsidiaries pending under any of the Parent Insurance Policies that has been denied or disputed by the insurer.  Neither Parent nor any of its Subsidiaries has received any written notice from or on behalf of any insurance carrier issuing policies or binders relating to or covering Parent or any of its Subsidiaries that there will be a cancellation or nonrenewal of existing policies or binders, or that alteration of any equipment or any improvements to real estate occupied by or leased to or by Parent or any of its Subsidiaries, purchase of additional equipment, or material modification of any of the methods of doing business, will be required.

 

Section 5.20               Required Shareholder Vote.  The affirmative vote of (i) the holders of two-thirds of the voting power of the Parent Common Stock outstanding and entitled to vote at

 

the Parent Shareholder Meeting, voting together as a single class (the “Charter Amendment Approval”), as required to approve the Charter Amendment and (ii) the holders of a majority of the voting power of the Parent Common Stock represented at the Parent Shareholder Meeting (this clause (ii), the “Parent Shareholder Approval”), as required pursuant to the terms of this Agreement, are the only votes of holders of any class or series of capital stock of Parent that are necessary to approve the transactions contemplated by this Agreement.

 

Section 5.21               Brokers.  No broker, finder or investment banker (other than Houlihan Lokey Capital, Inc.) is entitled to any brokerage, finder’s or other fee or commission in connection with the Merger based upon arrangements made by or on behalf of Parent, Merger Sub or any other Subsidiary of Parent.

 

Section 5.22               Ownership of Merger Sub; No Prior Activities.

 

(a)                Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement.  All of the interests of Merger Sub are owned directly or indirectly by Parent.

 

(b)                Except for the obligations or liabilities incurred in connection with its organization and the transactions contemplated by this Agreement, Merger Sub has not, and will not have prior to the Effective Time, incurred, directly or indirectly, through any Subsidiary or Affiliate thereof, any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any Person.

 

Section 5.23               No Other Representations or Warranties.  Except for the representations and warranties contained in Article IV and in the certificate delivered pursuant to Section 7.2(c), each of Parent and Merger Sub acknowledge that neither the Company nor any of its Representatives has made, and neither Parent nor Merger Sub has relied upon, any representation or warranty, whether express or implied, with respect to the Company or any of its Subsidiaries or their respective businesses, affairs, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or with respect to the accuracy or completeness of any other information provided or made available to Parent or Merger Sub by or on behalf of the Company.

 

Section 6.1                  Conduct of Business by the Company.

 

(a)               The Company covenants and agrees that, between the date of this Agreement and the earlier to occur of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to Section 8.1 (the “Interim Period”), except as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this Agreement, as required by applicable Law, as it relates to any Company Vessel Sale (which for the avoidance of doubt is expressly

 

permitted) or as set forth in Section 6.1(a) of the Company Disclosure Letter, the Company shall, and shall cause each of its Subsidiaries to (i) conduct its business in the ordinary course and in a manner consistent with past practice and (ii) use commercially reasonable efforts to ensure that the Company and each of its Subsidiaries preserve intact their current business organizations, keep available the services of their current officers and employees, and maintain their relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees, employees, and other Persons having business relationships with the Company and each of its Subsidiaries, respectively.

 

(b)                Without limiting the foregoing, the Company covenants and agrees that, during the Interim Period, except as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this Agreement, as required by applicable Law or as set forth in Section 6.1(b) of the Company Disclosure Letter, the Company shall not, and shall not cause or permit any of its Subsidiaries to, do any of the following:

 

(i)               amend or propose to amend the Company Articles of Incorporation or Company By-Laws (or such equivalent organizational documents of any Subsidiary of the Company);

 

(ii)             split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of the Company or any of its Subsidiaries;

 

(iii)            except for dividends and distributions payable or paid to the Company and/or one or more of its wholly owned Subsidiaries by one or more of the Company’s wholly owned Subsidiaries, declare, set aside or pay any dividend on or make any other distributions (whether in cash, stock, property or otherwise) with respect to shares of capital stock of the Company or any of its Subsidiaries or other equity securities or ownership interests in the Company or any of its Subsidiaries;

 

(iv)            redeem, repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock or other equity interests of the Company or any of its Subsidiaries;

 

(v)             except in connection with any Company Vessel Sale or for transactions among the Company and one or more of its wholly owned Subsidiaries or among one or more wholly owned Subsidiaries of the Company or among the Company or one or more of its wholly owned Subsidiaries and Parent, or as otherwise contemplated in Section 6.1(b)(vi), issue, sell, pledge, dispose, encumber or grant any shares of the Company’s or any of its Subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of the Company’s or any of its Subsidiaries’ capital stock or other equity interests;

 

(vi)            grant, confer, award, or modify the terms of any options, Rights, restricted stock units, restricted stock, performance shares, equity-based compensation or other rights to acquire, or denominated in, any of the Company’s or any of its Subsidiaries’ capital stock or take any action not otherwise contemplated by this

 

Agreement to cause to be exercisable any otherwise unexercisable option under any existing stock plan of the Company or any of its Subsidiaries (except as explicitly required by the terms of any Company Restricted Stock outstanding on the date of this Agreement);

 

(vii)          acquire or agree to acquire (including by merger, consolidation or acquisition of stock or assets) any assets or property, or Entity or any division thereof, except (A) acquisitions by the Company or any of its wholly owned Subsidiaries of or from an existing wholly owned Subsidiary of the Company, (B) the acquisitions described on Section 6.1(b)(vii) of the Company Disclosure Letter, (C) acquisitions of assets or property in the ordinary course of business consistent with past practice, or (D) acquisitions for which the fair market value of the total consideration paid by the Company and its Subsidiaries does not exceed $1,000,000 individually or $5,000,000  in the aggregate, other than the purchase of bunkers in the ordinary course of business;

 

(viii)         except in connection with any Company Vessel Sale, sell, pledge, lease, dispose of or encumber any property or assets other than dispositions of property or assets (including Subsidiaries of the Company) if the fair market value of the total consideration received therefrom does not exceed $1,000,000 individually or $5,000,000  in the aggregate, other than the sale of bunkers in the ordinary course of business;

 

(ix)             incur, create or assume any Indebtedness for borrowed money or issue or amend the terms of any debt securities or assume, guarantee or endorse, or otherwise become responsible for the Indebtedness of any other Person (other than a wholly owned Subsidiary of the Company), except Indebtedness incurred in order to finance the acquisitions set forth in Section 6.1(b)(ix) of the Company Disclosure Letter, in the amounts set forth therein and in an amount not exceeding the aggregate purchase price of such acquisitions and related transaction costs;

 

(x)              make any loans, advances or capital contributions to, or investments in, any other Person (including to any of its officers, directors, employees, Affiliates, agents or consultants), other than advances made to officers, directors and employees in the ordinary course of business consistent with past practice, or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons, whether pursuant to a Company Benefit Plan or otherwise, other than by the Company or a wholly owned Subsidiary of the Company to the Company or a wholly owned Subsidiary of the Company;

 

(xi)            except in connection with any Company Vessel Sale, enter into, renew, modify, amend or, other than in accordance with the terms of any Company Material Contract, terminate, or waive, release, compromise or assign any rights or claims under, any Company Material Contract, except as would not have an adverse economic impact on the Company in excess of an aggregate of $1,000,000 per year in the case of recurring payment obligations or $5,000,000 in the aggregate in the case of any non-recurring payment obligations and would not otherwise impose or renew any material restriction on the Company or terminate, waive, release, compromise or assign any material right or claim;

 

(xii)           except in connection with any Company Vessel Sale or as permitted by Section 6.4(c), waive, release, assign any rights or claims or make any payment, direct or indirect, of any other liability of the Company or any of its Subsidiaries, in an amount in excess of $5,000,000, before the same comes due in accordance with its terms;

 

(xiii)         except as permitted by Section 6.4(c), (A) pay, discharge, satisfy, settle or compromise (1) any Action, in each case made or pending against the Company or any of its Subsidiaries, excluding relating to Taxes (which shall be subject to the restrictions set forth in Section 6.1(b)(xviii)), other than settlements that (w) do not involve the payment of money damages, (x) do not require any material actions or impose any material restrictions on the business or operations of the Company and its Subsidiaries, (y) provide for the complete release of the Company and its Subsidiaries of all claims and (z) do not provide for any admission of liability by the Company or any of its Subsidiaries and (2) any Action involving any present, former or purported holder or group of holders of the Company Common Stock other than in accordance with Section 6.4 or (B) commence any Action material to the Company and its Subsidiaries, taken as a whole, other than any Action to enforce the terms of this Agreement or any other document or agreement contemplated hereby, including the Voting and Support Agreement;

 

(xiv)         except as required pursuant to Company Benefit Plans in effect as of the date hereof, or as otherwise required by Law, (A) hire or terminate any officer or director of the Company or any of its Subsidiaries or promote or appoint any Person to a position of officer or director of the Company or any of its Subsidiaries, (B) increase the compensation, perquisites or other benefits payable or to become payable to any current or former employees, directors or officers of the Company or any of its Subsidiaries, (C) grant any severance or termination pay to, or enter into any severance agreement with, any employee, director or officer of the Company or any of its Subsidiaries, (D) enter into any employment, change of control, severance or retention agreement with any current or former employee, officer or director of the Company or any of its Subsidiaries, (E) accelerate the vesting or payment of the compensation payable or the benefits provided to or to become payable or provided to any current or former employees, directors or officers of the Company or any of its Subsidiaries or (F) establish, adopt, enter into or amend any employee benefit plan, Company Benefit Plan, collective bargaining agreement, plan, trust, fund, policy or arrangement with, or for the benefit of, any current or former directors, officers or employees or any of their beneficiaries;

 

(xv)          make any material change to its methods of accounting in effect as of the date hereof, except as required by a change in GAAP (or any interpretation thereof) or in applicable Law;

 

(xvi)         enter into any new line of business material to the Company and its Subsidiaries, taken as a whole;

 

(xvii)        fail to duly and timely file all material reports and other material documents required to be filed with all Governmental Authorities and other authorities (including the NYSE), subject to extensions permitted by Law;

 

(xviii)      make, change or rescind any material election relating to Taxes, change a material method of Tax accounting, amend any material Tax Return, settle or compromise any material United States federal, state, local or non-United States income Tax liability, audit, claim or assessment, enter into any material closing agreement related to Taxes, or knowingly surrender any right to claim any material refund, except in each case as required by Law;

 

(xix)          adopt a plan of merger, complete or partial liquidation or resolutions providing for or authorizing such merger, liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization;

 

(xx)           permit any material Company Insurance Policy to terminate or lapse without replacing such policy with comparable coverage or amend or cancel any material Company Insurance Policy;

 

(xxi)          amend, terminate, or grant any waiver of any provision of, or redeem the rights issued under, the Company Shareholder Rights Agreement, unless a Change in Company Recommendation has occurred in accordance with Section 6.6;

 

(xxii)        take, or agree to commit to take, any action that would reasonably be expected to result in any of the conditions to the Merger set forth in Article VII not being satisfied; or

 

(xxiii)       authorize, or enter into any Contract to do any of the foregoing.

 

Section 6.2                  Conduct of Business by Parent.

 

(a)                Parent covenants and agrees that, during the Interim Period, except as may be agreed in writing by the Company (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this Agreement, as it relates to any Company Vessel Sale (which for the avoidance of doubt is expressly permitted) or as set forth in Section 6.2(a) of the Parent Disclosure Letter, Parent shall, and shall cause each of its Subsidiaries to (i) conduct its business in the ordinary course and in a manner consistent with past practice and (ii) use commercially reasonable efforts to ensure that Parent and each of its Subsidiaries preserve intact their current business organizations, keep available the services of their current officers and employees, and maintain their relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees, employees, and other Persons having business relationships with Parent and each of its Subsidiaries, respectively.

 

(b)               Without limiting the foregoing, Parent covenants and agrees that, during the Interim Period, except as may be agreed in writing by the Company (which consent shall not be unreasonably withheld, delayed or conditioned) or as may be expressly required or permitted pursuant to this Agreement, Parent shall not, and shall not cause or permit any of its Subsidiaries to, do any of the following:

 

(i)               other than the Charter Amendment, amend or propose to amend the Parent Charter or the Parent Bylaws (or such equivalent organizational documents of any Subsidiary of Parent material to Parent and its Subsidiaries, considered as a whole, if such amendment would be adverse to Parent or the Company);

 

(ii)             split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of Parent or any of its Subsidiaries;

 

(iii)            except for dividends and distributions payable or paid to Parent and one or more of its wholly owned Subsidiaries by one or more wholly owned Subsidiaries of Parent, declare, set aside or pay any dividend on or make any other distributions (whether in cash, stock, property or otherwise) with respect to shares of capital stock of Parent or any of its Subsidiaries or other equity securities or ownership interests in Parent or any of its Subsidiaries; or

 

(iv)            take or fail to take any action that would, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the consummation of the Merger or the other transactions contemplated by this Agreement.

 

Section 6.3                  Access to Information.  During the Interim Period, each of the Company and Parent shall, and shall cause their respective Subsidiaries to, afford to the Representatives of the other, upon prior notice during normal business hours, reasonable access, and in a manner as does not unreasonably interfere with the business or operations of the Company and its Subsidiaries (taken as a whole) or Parent and its Subsidiaries (taken as a whole), as the case may be, to all its properties (other than for purposes of invasive testing), books, Contracts and records and, during the Interim Period, each of the Company and Parent shall (and shall cause each of their respective Subsidiaries to) make available to the other, upon the other’s reasonable request, such other information concerning its business and properties as the other Party may reasonably request from time to time.  Neither the Company nor Parent (nor any of their respective Subsidiaries) shall be required to provide access to or disclose information where such access or disclosure would, in the opinion of the Company’s or Parent’s outside counsel (as the case may be), jeopardize the protection of attorney-client privilege or contravene any Law (it being agreed that the Parties shall make reasonable and appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply).  In addition, the Company shall facilitate any meetings or discussions with Third Parties with whom the Company or any of its Subsidiaries has a material contractual relationship that requires such Third Party’s consent in connection with the transactions contemplated by this Agreement or that could reasonably be expected to materially restrict the business or operations of Parent or the Surviving Entity following the Effective Time, in each case, as reasonably requested by Parent.   No investigation on the part of Parent, the Company or their respective Representatives shall affect the representations and warranties of the other contained herein, or limit or otherwise affect the remedies available to Parent or the Company pursuant to this Agreement.

 

Section 6.4                  Notification of Certain Matters; Transaction Litigation.

 

(a)                During the Interim Period, each of the Company and Parent shall promptly notify the other in writing of any event, condition, fact, or circumstance that would make the timely satisfaction of any of the conditions set forth in Article VII impossible or unlikely or that has had or could reasonably be expected to have a Company Material Adverse Effect or Parent Material Adverse Effect, as the case may be.

 

(b)               The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of any notice or other communication received by such Party from any Governmental Authority in connection with this Agreement, the Merger or the other transactions contemplated by this Agreement, or from any Person alleging that the consent of such Person is or may be required in connection with the Merger or the other transactions contemplated by this Agreement.

 

(c)               The Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of any Actions commenced or, to the knowledge of such Party, threatened against, relating to or involving such Party or any of such Party’s Subsidiaries, respectively, which relate to this Agreement, the Merger, the Voting and Support Agreement or the other transactions contemplated by this Agreement.  The Company shall give Parent the opportunity to reasonably participate in the defense and settlement of any shareholder litigation against the Company and/or its directors relating to this Agreement and the transactions contemplated hereby, and no such settlement shall be agreed to without Parent’s prior written consent, unless such settlement involves only the payment of money and the amount of such settlement shall be fully covered by insurance proceeds (other than any retainer amount).  Parent shall give the Company the opportunity to reasonably participate in the defense and settlement of any shareholder litigation against Parent and/or its directors relating to this Agreement and the transactions contemplated hereby, and no such settlement shall be agreed to without the Company’s prior written consent, unless such settlement involves only the payment of money and the amount of such settlement shall be fully covered by insurance proceeds (other than any retainer amount).

 

(d)                No notification given to Parent or the Company pursuant to this Section 6.4 shall limit or otherwise affect any of the representations, warranties, covenants, or obligations of any Party contained in this Agreement.

 

Section 6.5                  Registration Statement; Joint Proxy Statement; Shareholder Meetings.

 

(a)            As promptly as reasonably practicable following the date hereof, (i) the Company and Parent shall jointly prepare and cause to be filed with the SEC the Joint Proxy Statement and (ii) the Company and Parent shall prepare, and Parent shall cause to be filed with the SEC, the Form S-4, which will include the Joint Proxy Statement as a prospectus.  Each of the Company and Parent shall use its reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing and keep the Form S-4 effective for so long as necessary to complete the Merger.   Each of the Company and Parent shall furnish all information concerning itself, its Affiliates and the holders of its capital stock to the other and provide such other assistance as may be reasonably requested in connection with the preparation, filing and distribution of the Form S-4 and Joint Proxy Statement.  The Form S-4 and Joint Proxy Statement shall include all information reasonably requested by a Party to be

 

included therein.  Each of the Company and Parent shall promptly notify the other upon the receipt of any comments from the SEC or any request from the SEC for amendments or supplements to the Form S-4 or Joint Proxy Statement, and shall provide the other with copies of all correspondence between it and its Representatives, on the one hand, and the SEC, on the other hand.  Each of the Company and Parent shall use its reasonable best efforts to respond as promptly as practicable to any comments from the SEC with respect to the Joint Proxy Statement, and Parent shall use its reasonable best efforts to respond as promptly as practicable to any comment from the SEC with respect to the Form S-4.  Notwithstanding the foregoing, prior to filing the Form S-4 (or any amendment or supplement thereto) or mailing the Joint Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, each of the Company and Parent (i) shall provide the other an opportunity to review and comment on such document or response (including the proposed final version of such document or response) and (ii) shall include in such document or response all comments reasonably proposed by the other.   Parent shall advise the Company, promptly after it receives notice thereof, of the time of effectiveness of the Form S-4, the issuance of any stop order relating thereto or the suspension of the qualification of the Parent Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, and Parent shall use its reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated.  Each of the Company and Parent will cause the Joint Proxy Statement to be mailed to its respective shareholders as promptly as practicable after the Form S-4 is declared effective under the Securities Act.  Parent shall also take any other action (other than qualifying to do business in any jurisdiction in which it is not now so qualified) reasonably required to be taken under the Securities Act, the Exchange Act, any applicable foreign securities Laws and the rules and regulations thereunder in connection with the issuance of Parent Common Stock in the Merger and the Charter Amendment, and the Company shall furnish all information concerning the Company and the holders of its capital stock as may be reasonably requested in connection with any such actions.

 

(b)                If at any time prior to the Effective Time any Party becomes aware of any event or circumstance which is required to be set forth in an amendment or supplement to the Form S-4 or Joint Proxy Statement, it shall promptly inform the other Parties.

 

(c)               The Company shall take all action necessary under all applicable Laws to call, give notice of, and hold a meeting of the holders of Company Common Stock and Company Class B Stock for the purpose of obtaining the Company Shareholder Approval and the Company Unaffiliated Shareholder Approval (the “Company Shareholder Meeting”) and shall not submit any other proposal to such holders in connection with the Company Shareholder Meeting (other than a proposal relating to executive compensation as may be required by Rule 14a-21(c) under the Exchange Act, and any customary procedural proposals), without the prior written consent of Parent.  The Company Shareholder Meeting shall be held (on a date selected by the Company in consultation with Parent) as promptly as practicable after the Form S-4 is declared effective under the Securities Act.  Unless a Change in Company Recommendation has occurred in accordance with Section 6.6, each of the Company and the Company Board shall use its reasonable best efforts to obtain from the Company Shareholders the Company Shareholder Approval and the Company Unaffiliated Shareholder Approval.  The Company covenants that, unless a Change in Company Recommendation has occurred in accordance with Section 6.6, (i) the Company shall, through the Company Board, recommend to the Company Shareholders

 

adoption and approval of this Agreement and approval of the Merger and (ii) the Joint Proxy Statement shall include the Company Board Recommendation.  Notwithstanding the foregoing provisions of this Section 6.5(c), if, on a date for which the Company Shareholder Meeting is scheduled, the Company has not received proxies representing a sufficient number of shares of Company Common Stock and Company Class B Stock to obtain the Company Shareholder Approval and the Company Unaffiliated Shareholder Approval, whether or not a quorum is present, the Company shall have the right to make one or more successive postponements or adjournments of the Company Shareholder Meeting; provided, that the Company Shareholder Meeting is not postponed or adjourned to a date that is more than 30 days after the date for which the Company Shareholder Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law) without Parent’s prior written consent.  Nothing contained in this Agreement shall be deemed to relieve the Company of its obligation to submit the Merger to the Company Shareholders for a vote on the approval thereof.  The Company agrees that, unless this Agreement shall have been terminated in accordance with Section 8.1, its obligations to hold the Company Shareholder Meeting pursuant to this Section 6.5(c) shall not be affected by the commencement, public proposal, public disclosure or communication to the Company of any Acquisition Proposal or by any Change in Company Recommendation.

 

(d)                Parent shall take all action necessary under all applicable Laws to call, give notice of, and hold a meeting of the holders of Parent Common Stock for the purpose of obtaining the Parent Shareholder Approval and the Charter Amendment Approval (the “Parent Shareholder Meeting”) and shall not submit any other proposal to such holders in connection with the Parent Shareholder Meeting (other than a proposal relating to executive compensation as may be required by Rule 14a-21(c) under the Exchange Act, and any customary procedural proposals), without the prior written consent of the Company.  The Parent Shareholder Meeting shall be held (on a date selected by Parent in consultation with the Company) as promptly as practicable after the Form S-4 is declared effective under the Securities Act.  Unless a Change in Parent Recommendation has occurred in accordance with Section 6.6(b)(v), each of Parent and the Parent Board shall use its reasonable best efforts to obtain from the Parent Shareholders the Parent Shareholder Approval and the Charter Amendment Approval.  Parent covenants that, unless a Change in Parent Recommendation has occurred in accordance with Section 6.6(b)(v), Parent shall, through the Parent Board, recommend to the Parent Shareholders adoption and approval of this Agreement, approval of the Merger and approval of the Charter Amendment and further covenants that the Joint Proxy Statement shall include the Parent Board Recommendation.  Notwithstanding the foregoing provisions of this Section 6.5(d), if, on a date for which the Parent Shareholder Meeting is scheduled, Parent has not received proxies representing a sufficient number of shares of Parent Common Stock to obtain the Parent Shareholder Approval, whether or not a quorum is present, Parent shall have the right to make one or more successive postponements or adjournments of the Parent Shareholder Meeting; provided, that the Parent Shareholder Meeting is not postponed or adjourned to a date that is more than 30 days after the date for which the Parent Shareholder Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law) without the Company’s prior written consent.  Nothing contained in this Agreement shall be deemed to relieve Parent of its obligation to submit the Merger and the Charter Amendment to the Parent Shareholders for a vote on the approval thereof.  Parent agrees that, unless this Agreement shall have been terminated in accordance with Section 8.1, its obligations to hold the Parent

 

Shareholder Meeting pursuant to this Section 6.5(d) shall not be affected by any Change in Parent Recommendation.

 

Section 6.6                  No Solicitation; Change in Recommendation.

 

(a)                The Company agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall cause its and its Subsidiaries’ Representatives not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or facilitate any inquiries or the making of any proposal or offer with respect to, or a transaction to effect, a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Significant Subsidiaries or any purchase or sale of 20% or more of the consolidated assets (including shares or other ownership interests of its Subsidiaries) of the Company and its Subsidiaries, taken as a whole, or any purchase or sale of, or tender or exchange offer for, the Company’s voting securities that, if consummated, would result in any Person (or the shareholders or other equity interest holders of such Person) beneficially owning securities representing 20% or more of the Company’s total voting power (or of the surviving parent entity in such transaction) or the voting power of any of its Significant Subsidiaries, but excluding in each case any Company Vessel Sale (any such proposal, offer or transaction (other than a proposal or offer made by a Party to this Agreement) being hereinafter referred to as an “Acquisition Proposal”), (ii) participate in any discussions with or provide any confidential information or data to any Person relating to an Acquisition Proposal, or engage in any negotiations concerning an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal, (iii) approve or execute or enter into any letter of intent, agreement in principle, merger agreement, asset purchase or share exchange agreement, option agreement or other similar agreement related to any Acquisition Proposal or (iv) propose or agree to do any of the foregoing.

 

(b)

(i)            Notwithstanding anything in this Agreement to the contrary, the Company (including the Company Special Committee) shall be permitted, prior to the Company Shareholder Meeting to be held pursuant to Section 6.5, and subject to compliance with the other terms of this Section 6.6 and to first entering into a confidentiality agreement having provisions that are no less favorable in the aggregate to the Company than those contained in the Confidentiality Agreement, to engage in discussions and negotiations with, or provide any nonpublic information or data to, any Person in response to an unsolicited bona fide written Acquisition Proposal by such Person first made after the date of this Agreement (that did not result from a breach of this Section 6.6) and which the Company Board concludes in good faith (acting through the Company Special Committee, if then in existence, after consultation with its outside legal counsel and financial advisors) constitutes or is reasonably likely to result in a Superior Proposal, if and only to the extent that the Company Board concludes in good faith (acting through the Company Special Committee, if then in existence, and after consultation with its outside legal counsel) that failure to do so would be inconsistent with its duties under applicable Law.  The Company shall provide Parent with a copy of

 

any written nonpublic information or data provided to a third party pursuant to the prior sentence prior to or simultaneously with furnishing such information to such third party.

 

(ii)            The Company shall notify Parent promptly (but in no event later than 36 hours) after receipt of any Acquisition Proposal, or any request for nonpublic information relating to the Company or any of its Subsidiaries by any Person that informs the Company or any of its Subsidiaries that it is considering making, or has made, an Acquisition Proposal, or any inquiry from any Person seeking to have discussions or negotiations with the Company relating to a possible Acquisition Proposal.  Such notice shall be made orally and confirmed in writing, and shall indicate the identity of the Person making the Acquisition Proposal, inquiry or request and the material terms and conditions of any inquiries, proposals or offers (including a copy thereof if in writing and any related documentation or correspondence).  The Company shall also promptly, and in any event within 36 hours, notify Parent, orally and in writing, if it enters into discussions or negotiations concerning any Acquisition Proposal or provides nonpublic information or data to any Person in accordance with this Section 6.6(b) and keep Parent informed of the status and material terms of any such proposals, offers, discussions or negotiations on a current basis, including by providing a copy of all written material documentation or correspondence relating thereto.

 

(iii)            Except as provided in Section 6.6(b)(iv) or Section 6.6(b)(v), neither the Company Board, the Parent Board, nor any committee thereof shall withhold, withdraw or modify in any manner adverse to the other Parties, or propose publicly to withhold, withdraw or modify in any manner adverse to the other Parties, the approval, recommendation or declaration of advisability by the Company Board or the Parent Board, as applicable, or any such committee thereof with respect to this Agreement or the transactions contemplated hereby, including the Charter Amendment (a “Change in Company Recommendation” or a “Change in Parent Recommendation,” respectively).

 

(iv)            Notwithstanding anything in this Agreement to the contrary, with respect to an Acquisition Proposal, the Company Board (acting through the Company Special Committee, if then in existence) may make a Change in Company Recommendation if and only if (A) an unsolicited bona fide written Acquisition Proposal (that did not result from a breach of this Section 6.6) is made to the Company by a third party, and such Acquisition Proposal is not withdrawn, (B) the Company Board has concluded in good faith (acting through the Company Special Committee, if then in existence, and after consultation with its outside legal counsel and financial advisors) that such Acquisition Proposal constitutes a Superior Proposal, (C) the Company Board has concluded in good faith (acting through the Company Special Committee, if then in existence, and after consultation with its outside legal counsel) that failure to do so would be inconsistent with its duties under applicable Law, (D) three Business Days shall have elapsed since the Company has given written notice to Parent advising Parent that the Company Board intends to take such action, which notice shall specify in reasonable detail the reasons therefor, including the material terms and conditions of any such Superior Proposal that is the basis of the proposed action, and shall include a copy of such Superior Proposal, a copy of the relevant proposed transaction agreements, if any, and a copy of any written financing commitments relating thereto and a written summary

 

of the material terms of any Superior Proposal not made in writing, including with respect to any financing commitments relating thereto (a “Notice of Recommendation Change”) (it being understood that any amendment to any material term of such Superior Proposal shall require a new Notice of Recommendation Change and a new three-Business Day period), (E) during such three-Business Day period, the Company has considered and, at the reasonable request of Parent, engaged in good faith discussions with Parent regarding, any adjustment or modification of the terms of this Agreement proposed by Parent and (F) the Company Board, following such three-Business Day period, again determines in good faith (acting through the Company Special Committee, if then in existence, and after consultation with its outside legal counsel and financial advisors, and taking into account any adjustment or modification of the terms of this Agreement proposed by Parent) that such Acquisition Proposal constitutes a Superior Proposal.

 

(v)            Notwithstanding anything in this Agreement to the contrary, the Parent Board or (in circumstances not involving or relating to an Acquisition Proposal) the Company Board (acting through the Company Special Committee, if then in existence), may make a Change in Parent Recommendation or a Change in Company Recommendation, as applicable, if and only if (A) a material fact, event, change, development or set of circumstances has occurred or arisen after the date of this Agreement (and, in connection with a Change in Company Recommendation, such fact, event, change, development or set of circumstances does not relate to an Acquisition Proposal received by the Company), (B) the Board of Directors of the Party proposing to take such action have first determined in good faith (acting through the Company Special Committee, if then in existence, in the case of the Company, and in each case after consultation with its outside legal counsel) that failure to do so would be inconsistent with its duties under applicable Law, (C) three Business Days shall have elapsed since the Party proposing to take such action has given written notice to the other Parties advising that the notifying Party intends to take such action, which notice shall specify in reasonable detail the reasons therefor, (D) during such three-Business Day period, the notifying Party has considered and, at the reasonable request of the other Parties, engaged in good faith discussions with such Parties regarding, any adjustment or modification of the terms of this Agreement proposed by the other Parties and (E) the Board of Directors of the Party proposing to take such action, following such three-Business Day period, again determines in good faith (acting through the Company Special Committee, if then in existence, in the case of the Company, and in each case after consultation with its outside legal counsel, and taking into account any adjustment or modification of the terms of this Agreement proposed by the other Parties) that failure to do so would be inconsistent with its respective duties under applicable Law.

 

(vi)            Nothing contained in this Section 6.6 shall prohibit any Party or its Subsidiaries from taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making a statement contemplated by Item 1012(a) of Regulation M-A or Rule 14d-9 promulgated under the Exchange Act, or from issuing a “stop, look and listen” statement pending disclosure of its position thereunder; provided, however, that compliance with such rules shall not in any way limit or modify the effect that any action taken pursuant to such rules has under

 

any other provision of this Agreement, including Section 8.1(c) or Section 8.1(d), as applicable; and provided, further, that any such disclosure that addresses or relates to the approval, recommendation or declaration of advisability by the Company Board or the Parent Board, as applicable, with respect to this Agreement or an Acquisition Proposal received by the Company shall be deemed to be a Change in Company Recommendation or Change in Parent Recommendation, as applicable, unless the Company Board or the Parent Board in connection with such communication publicly states that its respective recommendation with respect to this Agreement and the transactions contemplated hereby has not changed or refers to the prior recommendation of the Company Board or the Parent Board, as applicable, without disclosing any Change in Company Recommendation or Change in Parent Recommendation, as applicable.

 

(c)               The Company agrees that  it will and will cause its Subsidiaries, and its and their respective Representatives to, cease immediately and terminate any and all existing activities, discussions or negotiations with any third parties conducted heretofore with respect to any Acquisition Proposal.  The Company agrees that it will use its reasonable best efforts to promptly inform its and its Subsidiaries’ respective Representatives of the obligations undertaken in this Section 6.6.

 

(d)                Subject to Section 8.1(e), nothing in this Section 6.6 shall be interpreted as (i) creating a right of the Company or Parent to terminate this Agreement or (ii) affecting any other obligation of the Company or Parent under this Agreement.  The Company shall not submit to the vote of the Company Shareholders any Acquisition Proposal other than the Merger prior to the termination of this Agreement.

 

(e)                For purposes of this Agreement, “Superior Proposal” means an unsolicited, bona fide written Acquisition Proposal that the Company Board concludes in good faith, acting through the Company Special Committee and after consultation with its financial advisors and outside legal counsel and after taking into account all legal, financial, regulatory and other aspects of the proposal and the Person making the proposal (including any break-up fees, expense reimbursement provisions and any conditions to and expected timing of consummation), (i) is more favorable from a financial point of view to the Company Unaffiliated Shareholders than the transactions contemplated by this Agreement (taking into account any revised proposal by the Parent Board on behalf of Parent) and (ii) is reasonably capable of being consummated without undue delay; provided, that, for purposes of this definition of “Superior Proposal,” the term Acquisition Proposal shall have the meaning assigned to such term in Section 6.6(a), except that the reference to “20% or more” in the definition of “Acquisition Proposal” shall be deemed to be a reference to “a majority” and “Acquisition Proposal” shall only be deemed to refer to a transaction involving the Company.

 

Section 6.7                  Appropriate Action; Consents; Filings.

 

(a)                Upon the terms and subject to the conditions set forth in this Agreement (including Section 6.5), each of the Company and Parent shall (and shall cause each of their respective Subsidiaries and Representatives to) use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable under applicable Law or pursuant to

 

any Contract to consummate and make effective, as promptly as practicable, the Merger and the other transactions contemplated by this Agreement, including (i) the taking of all actions necessary to cause the conditions to Closing set forth in Article VII to be satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers, consents and approvals from Governmental Authorities or other Persons necessary in connection with the consummation of the Merger and the other transactions contemplated by this Agreement (including those contemplated by Section 7.2) and the making of all necessary registrations and filings (including filings with Governmental Authorities, if any) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Authority or other Persons necessary in connection with the consummation of the Merger and the other transactions contemplated by this Agreement, (iii) the defending of any Actions challenging this Agreement or the consummation of the Merger or the other transactions contemplated by this Agreement, including seeking to have any stay or temporary restraining order entered by any Governmental Authority vacated or reversed, the avoidance of each and every impediment under any antitrust, merger control, competition or trade regulation Law that may be asserted by any Governmental Authority with respect to the Merger so as to enable the Closing to occur as soon as reasonably possible and (iv) the execution and delivery of any additional instruments necessary to consummate the Merger and the other transactions contemplated by this Agreement and to fully carry out the purposes of this Agreement.

 

(b)                In connection with and without limiting the foregoing, each of Parent and the Company shall give (or shall cause their respective Subsidiaries to give) any notices to Third Parties, and Parent shall use its reasonable best efforts, and the Company shall use its reasonable best efforts to cooperate with Parent in its efforts, to obtain any Third Party consents not covered by Section 6.7(a) that are necessary, proper or advisable to consummate the Merger; provided, however, that Parent shall promptly reimburse the Company for any reasonable and documented out-of-pocket expenses and costs incurred in connection with the Company’s obligations under this Section 6.7(b).  Each of the Parties will furnish to the other Parties such necessary information and reasonable assistance as the other Parties may request in connection with the preparation of any required governmental filings or submissions with a Governmental Authority and will cooperate in responding to any inquiry from a Governmental Authority, including immediately informing the other Parties of such inquiry, consulting in advance before making any presentations or submissions to a Governmental Authority, and supplying each other Party with copies of all material correspondence, filings or communications between any Party and any Governmental Authority with respect to this Agreement and the transactions contemplated hereby.  To the extent practicable, and permitted by a Governmental Authority, each Party shall permit Representatives of the other Parties to participate in meetings (whether by telephone or in person) with such Governmental Authority.  Notwithstanding the foregoing, obtaining any approval or consent from any Third Party pursuant to this Section 6.7(b) shall not be considered a condition to the obligations of Parent and Merger Sub to consummate the Merger.

 

(c)                 Parent shall use its reasonable best efforts to cause to be obtained, and to cooperate with the Company in obtaining, as promptly as practicable, all consents and waivers required under the Company Funded Debt (or the Contracts related thereto) so that the transactions contemplated by this Agreement (including the Merger) do not cause any event of default pursuant to, or otherwise violate or contravene, the terms of the Company Funded Debt (or any Contract related thereto) (the “Debt Waivers”).  Parent agrees to provide such security

 

and assurances as to financial capability, resources and creditworthiness of the Company and/or any of its Subsidiaries following the Effective Time as may be reasonably requested by any Person from whom a Debt Waiver is required in connection with the Merger and the other transactions contemplated by this Agreement.  Without limitation to the foregoing, except as provided in Section 6.7(c) of the Parent Disclosure Letter, Parent shall execute and deliver such amendments, guarantees, indemnities and other agreements and documents, pledge such collateral, provide such information, participate in such meetings, assist in the preparation of such documents and agreements, make and cooperate in the making of such filings, and take such other action, as promptly as practicable after the date hereof, as shall be reasonably necessary or appropriate in connection with the Debt Waivers (and obtaining the same); provided, however, that neither the Company nor Parent shall be obligated to incur any out of pocket fees, costs and expenses in connection with the Debt Waivers (and obtaining the same). Notwithstanding anything to the contrary set forth in this Agreement, Parent shall promptly reimburse the Company for all reasonable and documented, out-of-pocket fees, costs and expenses incurred by the Company in connection with the Debt Waivers (and obtaining the same).

 

(d)                Notwithstanding anything to the contrary in this Agreement, in connection with obtaining any approval or consent from any Person (other than any Governmental Authority) with respect to the Merger (including the Debt Waivers, for purposes of clause (ii) only), (i) without the prior written consent of Parent, none of the Company, any of its Subsidiaries or any of the Company’s or its Subsidiaries’ Representatives, shall pay or commit to pay to such Person whose approval or consent is being solicited any cash or other consideration, make any accommodation or commitment or incur any liability or other obligation to such Person and (ii) neither the Company nor any of its Subsidiaries shall be obligated to pay or commit to pay any amount, to waive any right or benefit, incur any obligation unless in each such case it is conditioned on completion of the Merger, make any accommodation or otherwise take any action in connection with obtaining any such approval or consent.  To the extent consistent with applicable Law, the Company shall cooperate with Parent and Merger Sub with respect to accommodations that may be requested or appropriate to obtain such consents.

 

Section 6.8                  Public Announcements.  The Parties shall, to the extent reasonably practicable, consult with each other before issuing any press release or otherwise making any public statements or filings with respect to this Agreement or any of the transactions contemplated hereby, and none of the Parties shall issue any such press release or make any such public filing prior to obtaining the other Parties’ consent (which consent shall not be unreasonably withheld, conditioned or delayed).  If for any reason it is not practicable to consult with the other Parties before making any public statement with respect to this Agreement or any of the transactions contemplated hereby, then the Party making such statement shall not make a statement that is inconsistent with public statements or filings to which the other Parties had previously consented.

 

Section 6.9                  Directors’ and Officers’ Indemnification and Insurance.

 

(a)                 Parent and Merger Sub agree that all rights to indemnification, advancement of expenses and exculpation by the Company now existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the

 

Effective Time an officer or director of the Company or any of its Subsidiaries (each an “Indemnified Person”) as provided under the Company Articles of Incorporation, Company By-Laws or the Company’s indemnification Contracts or undertakings, in each case as in effect on the date of this Agreement, shall be assumed by the Surviving Entity in the Merger, without further action, at the Effective Time and shall survive the Merger and shall remain in full force and effect in accordance with their terms for a period of six years (or, in the event that any Action is pending or asserted during such six-year period, until the final disposition of such Action, if after expiration of such six-year period).

 

(b)                For six years after the Effective Time (or, in the event that any Action is pending or asserted during such six-year period, until the final disposition of such Action, if after expiration of such six-year period), to the fullest extent permitted under applicable Law, Parent and the Surviving Entity shall, jointly and severally, indemnify, defend and hold harmless each Indemnified Person against all losses, claims, damages, liabilities, fees, expenses, judgments and fines arising in whole or in part out of actions or omissions in their capacity as such occurring at or prior to the Effective Time (including in connection with the transactions contemplated by this Agreement), and shall reimburse each Indemnified Person for any documented, out-of-pocket legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such losses, claims, damages, liabilities, fees, expenses, judgments and fines as such expenses are incurred, subject to Parent and the Surviving Entity’s receipt of an undertaking by such Indemnified Person to repay such legal and other fees and expenses paid in advance if it is ultimately determined in a final and non-appealable judgment of a court of competent jurisdiction that such Indemnified Person is not entitled to be indemnified under applicable Law; provided, however, that neither Parent nor the Surviving Entity will be liable for any settlement effected without the prior written consent of Parent and the Surviving Entity (which consent shall not be unreasonably withheld, conditioned or delayed).

 

(c)               The Surviving Entity shall, and Parent shall cause the Surviving Entity to, (i) maintain in effect for a period of six years after the Effective Time, if available, the current policies of directors’ and officers’ liability insurance maintained by the Company immediately prior to the Effective Time (provided that the Surviving Entity may substitute therefor policies, of at least the same coverage and amounts and containing terms and conditions that are not less advantageous to the directors and officers of the Company and its Subsidiaries when compared to the insurance maintained by the Company as of the date hereof) or (ii) obtain as of the Effective Time “tail” insurance policies with a claims period of six years from the Effective Time with at least the same coverage and amounts and containing terms and conditions that are not less advantageous to the directors and officers of the Company and its Subsidiaries, in each case with respect to claims arising out of or relating to events which occurred before or at the Effective Time (including in connection with the transactions contemplated by this Agreement); provided, however, that in no event will the Surviving Entity be required to expend an annual premium for such coverage in excess of 300% of the last annual premium paid by the Company for such insurance prior to the date of this Agreement (the “Maximum Premium”). If such insurance coverage cannot be obtained at an annual premium equal to or less than the Maximum Premium, the Surviving Entity will obtain, and Parent will cause the Surviving Entity to obtain, that amount of directors’ and officers’ insurance (or “tail” coverage) obtainable for an annual premium equal to the Maximum Premium.  Notwithstanding anything herein to the contrary, the

 

Company shall be permitted to purchase any such “tail” insurance policy prior to the Effective Time.

 

(d)               The obligations of Parent and the Surviving Entity under this Section 6.9 shall survive the consummation of the Merger and shall not be terminated or modified in such a manner as to adversely affect any Indemnified Person to whom this Section 6.9 applies without the consent of such affected Indemnified Person (it being expressly agreed that the Indemnified Persons to whom this Section 6.9 applies shall be third party beneficiaries of this Section 6.9, each of whom may enforce the provisions of this Section 6.9).

 

(e)                 In the event Parent, the Surviving Entity or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Entity, as the case may be, shall assume all of the obligations set forth in this Section 6.9.  The agreements and covenants contained herein shall not be deemed to be exclusive of any other rights to which any Indemnified Person is entitled, whether pursuant to Law, Contract or otherwise.  Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or its Subsidiaries or their respective officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 6.9 is not prior to, or in substitution for, any such claims under any such policies.

 

Section 6.10               Merger Sub.  Parent shall take all actions necessary to (a) cause Merger Sub to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement and (b) ensure that, prior to the Effective Time, Merger Sub shall not conduct any business or make any investments other than as specifically contemplated by this Agreement, or incur or guarantee any Indebtedness.

 

Section 6.11               Section 16 Matters.  Assuming that the Company delivers to Parent, in a timely fashion prior to the Effective Time, all requisite information necessary for Parent and Merger Sub to take the actions contemplated by this Section 6.11, the Company, Parent and Merger Sub each shall take all such steps as may be necessary or appropriate to ensure that (a) any dispositions of Company Common Stock (including derivative securities related to such stock) resulting from the Merger and the other transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company immediately prior to the Effective Time are exempt under Rule 16b-3 promulgated under the Exchange Act and (b) any acquisitions of Parent Common Stock (including derivative securities related to such stock) resulting from the Merger and the other transactions contemplated by this Agreement by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Parent are exempt under Rule 16b-3 promulgated under the Exchange Act.

 

Section 6.12               Stock Exchange Listing.  Parent shall use its reasonable best efforts to cause (i) the shares of Parent Common Stock to be issued in the Merger, (ii) the shares of Parent Common Stock held by the Parent Shareholders as of the Effective Time and (iii) the shares of

 

Parent Common Stock reserved for issuance upon the exercise of any Rights to acquire Parent Common Stock outstanding at the Effective Time, to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date.

 

Section 6.13              Voting of Shares.  Parent shall vote, and shall cause each of its controlled Affiliates to vote, all shares of Company Common Stock and Company Class B Stock beneficially owned by it or any of its controlled Affiliates in favor of adoption and approval of this Agreement and approval of the Merger.  Parent agrees not to, and to cause each of its controlled Affiliates that own Company Common Stock or Company Class B Stock not to, sell, dispose, hypothecate, pledge, assign or otherwise transfer any shares of Company Common Stock or Company Class B Stock.  The Company shall vote all shares of Parent Common Stock beneficially owned by it or any of its Subsidiaries as of the record date for the Parent Shareholder Meeting in favor of adoption and approval of this Agreement and approval of the Merger and the Charter Amendment.

 

Section 6.14              Takeover Statutes.  If any Takeover Statute becomes or is deemed applicable to the Company, Parent, Merger Sub, the Merger, the Voting and Support Agreement or any other transaction contemplated by this Agreement, then each of the Company, Parent, Merger Sub and their respective board of directors shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such Takeover Statute inapplicable to the foregoing.

 

Section 6.15               Resignation of Directors. The Company shall use commercially reasonable efforts to obtain and deliver to Parent prior to the Closing Date (to be effective as of the Effective Time) the resignation of each director of the Company and each of its Subsidiaries (in each case, in their capacities as directors, and not as employees) as Parent shall request in writing not less than five days prior to the Closing Date.

 

Section 6.16               Parent Board of Directors.  Subject to receipt of the Charter Amendment Approval, Parent shall take all necessary action to cause, as of the Effective Time, the Parent Board to be increased to eight directors and to cause one of the persons named in Section 6.16 of the Parent Disclosure Letter to be added to the Parent Board to serve on the Parent Board at least until the annual meeting of the Parent Shareholders to be held in 2016.  The Parties acknowledge and agree that receipt of the Charter Amendment Approval is not a condition to the obligations of the Parties to consummate the Merger and the other transactions contemplated hereby and that, if the Charter Amendment Approval is not obtained, Parent shall have no obligation to increase the size of the Parent Board or to add any individual to the Parent Board.

 

Section 6.17               Compliance with Management Agreement.  Parent agrees that during the Interim Period, Parent shall comply with its obligations, covenants and other agreements under the Management Agreement (unless instructed otherwise in writing by the Company Special Committee), and shall not take any action in its capacity as Manager under the Management Agreement (unless instructed in writing by the Company Special Committee) that would constitute a breach or violation of the Management Agreement or that would be reasonably expected to cause the Company to breach any of its representations, warranties, covenants or agreements hereunder.

 

Section 6.18               Gain Recognition Agreement.  Parent and Surviving Entity covenant and agree to provide any information reasonably requested by a Company Shareholder that has entered into a gain recognition agreement with the IRS pursuant to section 1.367(a)-3(b)(1)(ii) of the Treasury Regulations with respect to the Merger and has notified Parent in writing that it has entered into such agreement, in order to comply with such Company Shareholder’s gain recognition agreement filing requirements under section 1.367(a)-8 of the Treasury Regulations.  Parent and Surviving Entity covenant and agree to inform any Company Shareholder of the occurrence of any events that may affect any such Company Shareholder’s gain recognition agreement, including triggering events or other gain recognition events, as provided in section 1.367(a)-8(c)(2)(iv) of the Treasury Regulations.

 

Section 6.19               Tax-Free Reorganization.   None of Parent, Merger Sub, the Company or the Surviving Entity shall, and they shall not permit any of their respective Subsidiaries to, take any action prior to or following the Effective Time that would disqualify the Merger as a “reorganization” within the meaning of Section 368(a) of the Code.

 

Section 7.1                  Conditions to the Obligations of Each Party.  The respective obligations of each Party to effect the Merger and to consummate the other transactions contemplated by this Agreement shall be subject to the satisfaction or (to the extent permitted by Law) waiver by each of the Parties, at or prior to the Effective Time, of the following conditions:

 

(a)                Shareholder Approvals.  (i) The Company shall have obtained the Company Shareholder Approval, (ii) the Company shall have obtained the Company Unaffiliated Shareholder Approval and (iii) Parent shall have obtained the Parent Shareholder Approval.

 

(b)                No Restraints.  No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the Merger illegal or otherwise restricting, preventing or prohibiting consummation of the Merger or otherwise restraining, enjoining, preventing, prohibiting or making illegal the acquisition of some or all of the shares of Company Common Stock by Parent.

 

(c)                Form S-4.  The Form S-4 shall have become effective under the Securities Act, and no stop order suspending the effectiveness of the Form S-4 shall have been issued and no proceedings for that purpose shall have been initiated or be threatened by the SEC that has not been withdrawn.

 

(d)                Listing.  (i) The shares of Parent Common Stock to be issued in the Merger, (ii) the shares of Parent Common Stock held by the Parent Shareholders as of the Effective Time and (iii) the shares of Parent Common Stock reserved for issuance upon the exercise of any Rights to acquire Parent Common Stock outstanding at the Effective Time, shall in each case have been authorized for listing on the NYSE, subject to official notice of issuance.

 

(e)                Debt Waivers.  The Debt Waivers shall have been obtained and shall be binding on the lenders under the Company Funded Debt (and the Contracts related thereto).

 

Section 7.2                  Conditions to the Obligations of Parent and Merger Sub.  The respective obligations of Parent and Merger Sub to effect the Merger and to consummate the other transactions contemplated by this Agreement are subject to the satisfaction or (to the extent permitted by Law) waiver by Parent, at or prior to the Closing, of the following additional conditions:

 

(a)                 Representations and Warranties.  Each of the representations and warranties of the Company (i) set forth in Section 4.3(a)-(c) (Capital Structure) and the first sentence of Section 4.3(d) shall be true and correct in all respects (other than any de minimis inaccuracies) as of the date of this Agreement, and as of the Closing as though made on the Closing, (ii) set forth in Section 4.1(a) (Organization and Good Standing; Subsidiaries), Section 4.2 (Authority), Section 4.21 (Takeover Statutes), Section 4.22 (Required Shareholder Vote) and Section 4.23 (Brokers) shall be true and correct (disregarding all qualifications or limitations as to “materiality,” “Company Material Adverse Effect” and words of similar import set forth therein) in all material respects as of the date of this Agreement, and as of the Closing as though made on the Closing and (iii) set forth in this Agreement, other than those described in clauses (i) and (ii) above, shall be true and correct (disregarding all qualifications or limitations as to “materiality,” “Company Material Adverse Effect” and words of similar import set forth therein) as of the date of this Agreement, and as of the Closing as though made on the Closing, except, in the case of this clause (iii), where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; provided, that in each case that representations and warranties made as of a specific date shall be required to be so true and correct (subject, in the case of the representations and warranties described in clause (ii) above and this clause (iii), to such qualifications) as of such date only.

 

(b)               Agreements and Covenants.  The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

(c)                Officer’s Certificate.  The Company shall have delivered to Parent a certificate, dated the date of the Closing and signed by its chief executive officer or another senior officer on behalf of the Company, certifying to the effect that the conditions set forth in Section 7.2(a) and Section 7.2(b) have been satisfied.

 

(d)               Absence of Material Adverse Effect.  Since the date of this Agreement, there shall not have been any event, circumstance, change, development or effect that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

 

(e)                FIRTPA Certificates. The Company shall have delivered to Parent a statement issued by the Company pursuant to sections 1.1445-2(c)(3) and 1.897-2(h) of the Treasury Regulations, certifying that the stock of the Company is not a U.S. real property interest.

 

Section 7.3                  Conditions to the Obligations of the Company.  The obligations of the Company to effect the Merger and to consummate the other transactions contemplated by this Agreement are subject to the satisfaction or (to the extent permitted by Law) waiver by the Company, at or prior to the Effective Time, of the following additional conditions:

 

(a)                Representations and Warranties.  Each of the representations and warranties of Parent and Merger Sub (i) set forth in Section 5.3(a)-(c) (Capital Structure) and the first sentence of Section 5.3(d) shall be true and correct in all respects (other than any de minimis inaccuracies) as of the date of this Agreement, and as of the Closing as though made on the Closing, (ii) set forth in Section 5.1(a), (b) and (d) (Organization and Good Standing; Subsidiaries), Section 5.2 (Authority), Section 5.20 (Required Shareholder Vote) and Section 5.21 (Brokers) shall be true and correct (disregarding all qualifications or limitations as to “materiality,” “Parent Material Adverse Effect” and words of similar import set forth therein) in all material respects as of the date of this Agreement, and as of the Closing as though made on the Closing and (iii) set forth in this Agreement, other than those described in clauses (i) and (ii) above, shall be true and correct (disregarding all qualifications or limitations as to “materiality,” “Parent Material Adverse Effect” and words of similar import set forth therein) as of the date of this Agreement, and as of the Closing as though made on the Closing, except, in the case of this clause (iii), where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect; provided, that in each case that representations and warranties made as of a specific date shall be required to be so true and correct (subject, in the case of the representations and warranties described in clause (ii) above and this clause (iii), to such qualifications) as of such date only.

 

(b)               Agreements and Covenants.  Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing Date.

 

(c)                Officer’s Certificate.  Parent shall have delivered to the Company a certificate, dated the date of the Closing and signed by its chief executive officer or another senior officer on behalf of Parent, certifying to the effect that the conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied.

 

(d)               Absence of Material Adverse Effect.  Since the date of this Agreement, there shall not have been any event, circumstance, change, development or effect that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.

 

(e)                SPA.  The closing of the transactions contemplated by the SPA shall have occurred.

 

Section 8.1                 Termination.  This Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of the Company Shareholder Approval, the Company Unaffiliated Shareholder Approval and the Parent Shareholder Approval (except as otherwise expressly noted), as follows:

 

(a)                by mutual written agreement of each of Parent and the Company; or

 

(b)                by either Parent or the Company, if:

 

(i)               the Merger shall not have been consummated on or before October 7, 2015 (the “Outside Date”); provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be available to any Party if the failure of such Party (and in the case of Parent, including the failure of Merger Sub) to perform any of its obligations under this Agreement has been a primary cause of, or resulted in, the failure of the Merger to be consummated on or before the Outside Date; or

 

(ii)             any Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order or other action shall have become final and non-appealable; provided, however, that the right to terminate this Agreement under this Section 8.1(b)(ii) shall not be available to a Party if the issuance of such final, non-appealable Order was primarily due to the failure of such Party (and in the case of Parent, including the failure of Merger Sub) to perform any of its obligations under this Agreement; or

 

(c)                 by the Company, if (i) the Parent Board shall have failed to recommend that the Parent Shareholders vote to adopt and approve this Agreement and approve the Charter Amendment, (ii) there shall have occurred a Change in Parent Recommendation, (iii) Parent shall have failed to include the Parent Board Recommendation in the Joint Proxy Statement, (iv) Parent, or any of its Subsidiaries or any Representative of Parent or any of its Subsidiaries, shall have violated, breached, or taken any action inconsistent with Section 6.6(b)(iii), or Section 6.6(b)(v) in any material respect, (v) the Parent Board or any committee thereof shall have resolved or proposed to take any action described in clauses (i) through (iv) of this sentence or (vi) the Parent Shareholder Meeting shall not have been called and held as required by Section 6.5(d); or

 

(d)                by Parent, if, (i) the Company Board shall have failed to recommend that the Company Shareholders vote to adopt and approve this Agreement, (ii) there shall have occurred a Change in Company Recommendation, (iii) the Company Board shall have approved, endorsed, or recommended any Acquisition Proposal, (iv) the Company shall have failed to include the Company Board Recommendation in the Joint Proxy Statement, (v) the Company, or any of its Subsidiaries or any Representative of the Company or any of its Subsidiaries, shall have violated, breached, or taken any action inconsistent with any of the provisions set forth in Section 6.6 in any material respect, (vi) the Company Board or any committee thereof shall have resolved or proposed to take any action described in clauses (i) through (v) of this sentence or

 

(vii) the Company Shareholder Meeting shall not have been called and held as required by Section 6.5(c); or

 

(e)              by either the Company or Parent, if there shall have been a breach by the other Party of any of the covenants or agreements or any of the representations or warranties set forth in this Agreement on the part of such other Party, which breach, either individually or in the aggregate, (i) would result in, if occurring or continuing on the Closing Date, the failure to be satisfied of the condition set forth in Section 7.2(a) or Section 7.2(b) or Section 7.3(a) or Section 7.3(b), as the case may be, and (ii) cannot be cured on or before the Outside Date or, if curable, is not cured by the breaching Party within 30 days of receipt by such breaching Party of written notice of such breach; provided, that the Party seeking to terminate this Agreement pursuant to this Section 8.1(e) shall not have such right if such Party is then in breach of any of its respective representations, warranties, covenants or agreements set forth in this Agreement such that the conditions set forth in Section 7.2(a) or Section 7.2(b) or Section 7.3(a) or Section 7.3(b), as the case may be, would not be satisfied; or

 

(f)              by Parent or the Company, if the Company Shareholder Approval or the Company Unaffiliated Shareholder Approval shall not have been obtained upon a vote taken thereon at the duly convened Company Shareholder Meeting;

 

(g)             by the Company or Parent, if the Parent Shareholder Approval shall not have been obtained upon a vote taken thereon at the duly convened Parent Shareholder Meeting; or

 

(h)             by the Company following the termination of the SPA in accordance with the terms thereof.

 

Section 8.2                  Effect of Termination.  In the event that this Agreement is terminated and the Merger and the other transactions contemplated by this Agreement are abandoned pursuant to Section 8.1, written notice thereof shall be given to the other Parties, specifying the provisions hereof pursuant to which such termination is made and describing the basis therefor in reasonable detail, and this Agreement shall forthwith become null and void and of no further force or effect whatsoever without liability on the part of any Party (or any of the respective Subsidiaries of Parent or the Company or any of the Company’s or Parent’s respective Representatives), and all rights and obligations of any Party shall cease; provided, however, that, notwithstanding anything in the foregoing to the contrary, (a) no such termination shall relieve any Party of any liability or damages (which the Parties agree shall be determined by the courts referred to in Section 9.11 and, to the extent proven, with due regard to Section 9.7, shall not necessarily be limited to reimbursement of expenses or out of pocket costs)  resulting from or arising out of fraud or any willful and material breach of this Agreement and (b) the Confidentiality Agreement, this Section 8.2, Section 8.3, Article IX and the definitions of all defined terms appearing in such sections shall survive any termination of this Agreement pursuant to Section 8.1 (and no such termination shall relieve any Party of any liability arising under Section 8.3 of this Agreement).  If this Agreement is terminated as provided herein, all filings, applications and other submissions made pursuant to this Agreement, to the extent practicable, shall be withdrawn from the Governmental Authority or other Person to which they were made.

 

Section 8.3                  Expenses.

 

(a)             Except as set forth in this Section 8.3 or as otherwise provided in this Agreement, all Expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the Party incurring such Expenses, whether or not the Merger is consummated; provided, however, that the Company and Parent shall share equally all Expenses related to the printing and filing of the Form S-4 and the printing, filing and distribution of the Joint Proxy Statement, other than attorneys’ and accountants’ fees.

 

(b)             (i) If this Agreement is terminated pursuant to Section 8.1(c), (ii) if this Agreement is terminated by the Company pursuant to Section 8.1(e), (iii) if this Agreement is terminated pursuant to Section 8.1(g) (and at such time this Agreement is not also otherwise terminable pursuant to Section 8.1(f)) or (iv) if the SPA is terminated by the Company pursuant to Section 11.1(c) thereof and this Agreement is terminated by the Company pursuant to Section 8.1(h), Parent shall pay to the Company the Company Expense Reimbursement within three Business Days after termination of this Agreement.

 

(c)             (i) If this Agreement is terminated pursuant to Section 8.1(d), (ii) if this Agreement is terminated by Parent pursuant to Section 8.1(e) or (iii) if this Agreement is terminated pursuant to Section 8.1(f) (and at such time this Agreement is not also otherwise terminable pursuant to Section 8.1(g)), the Company shall pay to Parent the Parent Expense Reimbursement within three Business Days after termination of this Agreement.

 

(d)             Each of the Parties acknowledges that (i) the agreements contained in this Section 8.3 are an integral part of the transactions contemplated by this Agreement and (ii) without these agreements, the Parties would not enter into this Agreement; accordingly, if the Company or Parent, as the case may be, fails to timely pay any amount due pursuant to this Section 8.3 and, in order to obtain such payment, either the Company or Parent, as the case may be, commences an Action that results in a judgment against the other Party for the payment of any amount set forth in this Section 8.3, such paying Party shall pay the other Party its documented, out-of-pocket costs and expenses (including reasonable fees of counsel) in connection with such Action, together with interest on such amount at the annual rate of 5% for the period from the date such payment was originally required to be made through the date such payment was actually received, or such lesser rate as is the maximum permitted by applicable Law.

 

Section 8.4                  Amendment.  Subject to compliance with applicable Law, this Agreement may be amended by mutual agreement of the Parties by action taken or authorized by their respective boards of directors (or similar governing body or entity or committees thereof) at any time before or after receipt of the Company Shareholder Approval, Company Unaffiliated Shareholder Approval and Parent Shareholder Approval and prior to the Effective Time; provided, however, that after any such shareholder approval of this Agreement, there shall not be any amendment of this Agreement that by applicable Law requires further approval or authorization by the Company Shareholders or Parent Shareholders without such further approval or authorization.  This Agreement may not be amended except by an instrument in writing signed by or on behalf of each of the Parties.

 

Section 8.5                  Waiver.  At any time prior to the Effective Time, subject to applicable Law, any Party may (a) extend the time for the performance of any obligation or other act of any other Party, (b) waive any inaccuracy in the representations and warranties of the other Parties contained herein or in any document delivered pursuant hereto and (c) subject to the proviso of Section 8.4, waive compliance with any agreement or condition contained herein.  Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby.  Notwithstanding the foregoing, no failure or delay by the Company, Parent or Merger Sub in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

Section 9.1                  Non-Survival of Representations and Warranties.  None of the representations or warranties in this Agreement or any certificate or other writing delivered pursuant to this Agreement, including any rights arising out of any breach of such representations or warranties, shall survive the Effective Time or the termination of this Agreement pursuant to Section 8.1.

 

Section 9.2                  Notices.  Any notice, request, claim, demand and other communications hereunder shall be sufficient if in writing and sent (i) by facsimile transmission (providing confirmation of transmission) or e-mail of a pdf attachment (provided that any notice received by facsimile or e-mail transmission or otherwise at the addressee’s location on any Business Day after 5:00 p.m. (Eastern time) shall be deemed to have been received at 9:00 a.m. (Eastern time) on the next Business Day) or (ii) by reliable overnight delivery service (with proof of service), hand delivery or certified or registered mail (return receipt requested and first-class postage prepaid), addressed as follows (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.2):

 

if to the Company:

 

Baltic Trading Limited

299 Park Avenue, 12th Floor

New York, New York 10171

Phone:  (646) 443-8550

Fax:  (646) 443-8555

Attention:  John Wobensmith

Email: ***@***

 

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

 

Kaye Scholer LLP

250 West 55th Street

New York, New York 10019

Phone:  212 ###-###-####

 

Email: ***@***

 

if to Parent or Merger Sub:

 

Genco Shipping & Trading Limited

299 Park Avenue, 12th Floor

New York, New York 10171

Phone:  (646) 443-8550

Fax:  (646) 443-8555

Attention:  John Wobensmith

Email: ***@***

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

 

Milbank, Tweed, Hadley & McCloy LLP

28 Liberty Street

New York, New York 10005

Phone:  (212) 530-5003

Fax:  (212) 822-5003

Attention:  David E. Zeltner, Esq.

Email: ***@***

 

Section 9.3                  Interpretation; Certain Definitions.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.  When a reference is made in this Agreement to an Article, Section, Appendix or Exhibit, such reference shall be to an Article or Section of, or an Appendix or Exhibit to, this Agreement, unless otherwise indicated.  The table of contents and headings for this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All terms defined in this Agreement shall have the defined meanings when used in any certificate or other instrument made or delivered pursuant hereto unless otherwise defined therein.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any agreement, instrument or Law defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or Law as from time to time amended, modified or supplemented, including (in the case of agreements and instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor Laws, and the rules and regulations promulgated thereunder.  References to a person are also to its successors and permitted assigns.  All references to “dollars” or “$” refer to currency of the United States of America.

 

Section 9.4                  Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any present or future Law, or public policy, (a) such term or other provision shall be fully separable, (b) this Agreement shall be construed and enforced as if such invalid, illegal or unenforceable provision had never comprised a part hereof and (c) all other terms and provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or other provision or by its severance herefrom so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible.

 

Section 9.5                  Assignment; Delegation.  Neither this Agreement nor any rights, interests or obligations hereunder shall be assigned or delegated, in whole or in part, by any of the Parties (whether by operation of Law or otherwise) without the prior written consent of the other Parties (except to the Surviving Entity). Any assignment in violation of the preceding sentence shall be void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.

 

Section 9.6                  Entire Agreement.  This Agreement (including the Company Disclosure Letter, Parent Disclosure Letter, exhibits, annexes and appendices hereto) constitutes, together with the Confidentiality Agreement, the entire agreement between the Parties with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof and thereof.

 

Section 9.7                  No Third-Party Beneficiaries.  This Agreement is not intended to and shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns, except for the provisions of Section 6.9, and, as applicable, the right of the Company, on behalf of the Company Unaffiliated Shareholders, to seek damages in accordance with Section 8.2 in the event of Parent’s or Merger Sub’s fraud or willful and material breach of this Agreement; provided, however, that it is acknowledged and agreed that neither this provision nor any other provision in this Agreement is intended to provide the Company Shareholders (or any Person not a party hereto acting on their behalf) the ability to seek (whether in its capacity as a shareholder or purporting to assert any right (derivatively or otherwise) on behalf of the Company) the enforcement of, or directly seek any remedies pursuant to, this Agreement, or otherwise create any rights in the Company Shareholders under this Agreement or otherwise, including against the Company or its directors, under any theory of law or equity, including under the applicable Laws of agency or the Laws relating to the rights and obligations of third-party beneficiaries.  For the avoidance of doubt as to the Parties’ intent, the determination of whether and how to terminate, amend, make any waiver or consent under, or enforce this Agreement, and whether and how (if applicable) to distribute any damages award to its shareholders, shall exclusively belong to the Company in its sole discretion.  The representations and warranties in this Agreement are the product of negotiations among the Parties and are for the sole benefit of the Parties.  Any inaccuracies in such representations and

 

warranties are subject to waiver by the Parties in accordance with Section 8.5 without notice or liability to any other Person.  The representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of the knowledge of any of the Parties.  Accordingly, Persons other than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.

 

Section 9.8                  Specific Performance.  The Parties agree that irreparable damage, for which monetary damages (even if available) would not be an adequate remedy, would occur in the event that the Parties do not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate the Merger and the other transactions contemplated by this Agreement) in accordance with its specified terms or otherwise breach such provisions.  Accordingly, the Parties acknowledge and agree that the Parties shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at Law or in equity.  Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that any other Party has an adequate remedy at Law or that any award of specific performance is not an appropriate remedy for any reason at Law or in equity.  Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction.

 

Section 9.9                  Counterparts.  This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by e-mail of a pdf attachment shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section 9.10               Governing Law.  This Agreement will be deemed to be made in and in all respects will be interpreted, construed and governed by and in accordance with the Laws of the State of New York without giving effect to any choice of Law or conflict of Law provision that would cause the application of the Laws of any jurisdiction other than the State of New York, except to the extent that the Laws of the Republic of the Marshall Islands are mandatorily applicable to the Merger.

 

Section 9.11               Consent to Jurisdiction.

 

(a)                Each Party hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of New York and to the jurisdiction of the United States District Court for the State of New York, for the purpose of any Action (whether based on contract, tort or otherwise) directly or indirectly arising out of or relating to this Agreement or the actions of the Parties in the negotiation, administration, performance and enforcement thereof, and each Party hereby irrevocably agrees that all claims in respect to such Action may be heard and determined exclusively in any New York state or federal court.

 

(b)                Each Party hereby (i) irrevocably consents to the service of the summons and complaint and any other process in any other Action relating to the transactions contemplated by this Agreement, on behalf of itself or its property, by personal delivery of copies of such process to such Party and nothing in this Section 9.11 shall affect the right of any Party to serve legal process in any other manner permitted by Law, (ii) consents to submit itself to the personal jurisdiction of any United States federal court located in the State of New York or any New York state court in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (iii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iv) agrees that it will not bring any Action relating to this Agreement or the transactions contemplated by this Agreement in any court other than any United States federal court located in the State of New York or any New York state court.  Each Party agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

 

Section 9.12               WAIVER OF JURY TRIAL.  EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE OUT OF OR RELATING TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.  EACH OF THE PARTIES CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.

IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.