Exhibit 10.29.1
Execution
Copy
$85,000,000
TRAILER BRIDGE,
INC.
9¼% SENIOR SECURED NOTES DUE
2011
PURCHASE AGREEMENT
November 16, 2004
JEFFERIES & COMPANY, INC.
FORTIS SECURITIES
LLC
c/o Jefferies & Company,
Inc.
909 Fannin Street
Suite 3100
Houston, Texas 77010
Ladies and Gentlemen:
Trailer Bridge, Inc., a Delaware
corporation (the “Company”) hereby confirms its
agreement with you, as set forth below:
1. Issuance of the Securities . Subject
to the terms and conditions herein contained, the Company proposes
to issue and sell to Jefferies & Company, Inc. and Fortis
Securities LLC (the “Initial Purchasers”) an aggregate
of $85,000,000 principal amount of its 9¼% Senior Secured
Notes due 2011 (the “Notes”). The Notes will be issued
pursuant to an indenture (the “Indenture”), to be dated
as of the Closing Date (as defined in Section 3 below), by and
between the Company and Wells Fargo Bank, National Association, as
trustee (the “Trustee”). Capitalized terms used but not
defined herein shall have the meanings set forth in the
Indenture.
The Notes will be offered and sold
to the Initial Purchasers pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as
amended (the “Act”). Upon original issuance thereof,
and until such time as the same is no longer required under the
applicable requirements of the Act, the Notes shall bear the
legends set forth in the final offering circular, dated the date
hereof (the “Final Offering Circular”). The Company has
prepared a preliminary offering circular, dated November 10, 2004
(the “Preliminary Offering Circular”), and the Final
Offering Circular relating to the offer and sale of the Notes (the
“Offering”). “Offering Circular” means, as
of any date or time referred to in this Agreement, the most recent
offering circular (whether the Preliminary Offering Circular or the
Final Offering Circular, and any amendment or supplement to either
such document), including exhibits and schedules thereto. Each
Offering Circular shall be deemed to include all of the documents
incorporated by reference therein, and any reference in this
Agreement to any amendment or supplement to an Offering Circular
shall be deemed to refer to any document filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act, as amended (the “Exchange Act”), which is
incorporated by reference in such Offering Circular.
As described in the Offering
Circular, the net proceeds from the Offering will be used by the
Company to (i) acquire all of the outstanding capital stock of the
Company’s affiliate,
Kadampanattu Corp., a Delaware corporation
(“K Corp” together with the Company, the
“Companies”) pursuant to an acquisition agreement (the
“Acquisition Agreement”), and simultaneous with the
Closing, K Corp shall be merged with and into the Company with the
Company being the surviving Company (the “Merger”),
(ii) repay all of the Company’s existing indebtedness under
the Company’s secured credit facility and, except as provided
in the Offering Circular, all of the Company’s indebtedness
owed to the Company’s affiliates and (iii) exercise options
to purchase (the “Container Purchases”) certain
high-cube 53’ containers pursuant to certain equipment
operating lease agreements by and between (i) the Company and GE
Commercial Finance Business Property, (ii) the Company and
Citicapital and (iii) the Company and La Salle National Leasing
Corporation (such Acquisition, Merger, repayments and Container
Purchases, together with the Offering and the transactions
contemplated by the Documents (as defined below), (the
“Transactions”).
The Company has agreed to secure the
Notes by granting to the Trustee for the benefit of the holders of
the Notes, a perfected first-priority lien (subject to Permitted
Collateral Liens) on certain of its assets as required pursuant to
the Indenture, and as more particularly evidenced by the vessel
mortgages, deed of covenants, assignments, pledge agreement and
other security instruments and documents listed on Exhibit A
attached hereto (the foregoing documents individually referred to
as noted on Exhibit A and collectively referred to herein as the
“Security Documents”).
2. Terms of Offering . The Initial
Purchasers have advised the Company, and the Company understands,
that the Initial Purchasers will make offers to sell (the
“Exempt Resales”) some or all of the Notes purchased by
the Initial Purchasers hereunder on the terms set forth in the
Offering Circular, as amended or supplemented, to persons (the
“Subsequent Purchasers”) whom the Initial Purchasers
(i) reasonably believe to be “qualified institutional
buyers” (“QIBs”) as defined in Rule 144A under
the Act, as such may be amended from time to time, (ii) reasonably
believe (based upon written representations made by such persons to
the Initial Purchasers) to be institutional “accredited
investors” (“Accredited Investors”) as defined in
Rule 501(a)(1), (2), (3) or (7) under the Act or (iii) reasonably
believe to be non-U.S. persons in reliance upon Regulation S under
the Act.
Holders of the Notes (including
Subsequent Purchasers) will have the registration rights set forth
in the registration rights agreement applicable to the Notes (the
“Registration Rights Agreement”), to be executed on and
dated as of the Closing Date, as such term is defined below.
Pursuant to the Registration Rights Agreement, the Company will
agree, among other things, to file with the Securities and Exchange
Commission (the “SEC”) (a) a registration statement
under the Act relating to Notes (the “Exchange Notes”),
which shall be substantially identical to the Notes (except that
the Exchange Notes shall have been registered pursuant to such
registration statement, will not be subject to restrictions on
transfer or contain additional interest provisions) to be offered
in exchange for the Notes (such offer to exchange being referred to
as the “Exchange Offer”), and/or (b) under certain
circumstances, a shelf registration statement pursuant to Rule 415
under the Act (the “Shelf Registration Statement”)
relating to the resale by certain holders of the Notes. If the
Company fails to satisfy its obligations under the Registration
Rights Agreement, it will be required to pay additional interest to
the holders of the Notes under certain circumstances.
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This Agreement, the Indenture, the
Registration Rights Agreement, the Notes, the Exchange Notes, the
Security Documents and the Acquisition Agreement are referred to
herein as the “Documents.”
3. Purchase, Sale and Delivery . On the
basis of the representations, warranties, agreements and covenants
herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to the Initial
Purchasers, and each of the Initial Purchasers agrees to purchase
from the Company, severally and not jointly, the principal amount
of the Notes set forth opposite the name of such Initial Purchaser
on Schedule I hereto, at a purchase price of 96.5% of the aggregate
principal amount thereof. Delivery to the Initial Purchasers of and
payment for the Notes shall be made at a Closing (the
“Closing”) to be held at 9:00 a.m., Houston time, on
December 1, 2004 (the “Closing Date”) at the offices of
Vinson & Elkins L.L.P., or at such other time, date or place as
shall be agreed upon by the Initial Purchasers and the
Company.
The Company shall deliver to the
Initial Purchasers one or more certificates representing the Notes
in definitive form, registered in such names and denominations as
the Initial Purchasers may request, against payment by the Initial
Purchasers of the purchase price therefor by immediately available
federal funds bank wire transfer to such bank account or accounts
as the Company shall designate to the Initial Purchasers at least
two business days prior to the Closing. The certificates
representing the Notes in definitive form shall be made available
to the Initial Purchasers for inspection at the offices of Vinson
& Elkins L.L.P. (or such other place as shall be reasonably
acceptable to the Initial Purchasers) not later than 5:00 p.m.
Houston time on the business day immediately preceding the Closing
Date. Notes to be represented by one or more definitive global
securities in book-entry form will be deposited on the Closing
Date, on behalf of the Company, with The Depository Trust Company
(“DTC”) or its designated custodian, and registered in
the name of its nominee, which is expected to be Cede &
Co.
4. Representations and Warranties . The
Company represents and warrants to the Initial Purchasers that, as
of the date hereof and as of the Closing Date:
(a) The Preliminary Offering
Circular did not, and on the date of this Agreement and on the
Closing Date, the Final Offering Circular does not and will not,
and any amendment or supplement thereto will not, contain any
untrue statement of a material fact or omit to state any material
fact (except, in the case of the Preliminary Offering Circular, for
pricing terms and other financial terms intentionally left blank)
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this Section
4(a) do not apply to statements or omissions made in reliance upon
and in conformity with information relating to the Initial
Purchasers furnished to the Company in writing by the Initial
Purchasers expressly for use in the Final Offering Circular or any
amendment or supplement thereto. No injunction or order has been
issued that either (i) asserts that any of the transactions
contemplated by this Agreement or each of the other Documents is
subject to the registration requirements of the Act, or (ii) would
prevent or suspend the issuance or sale of any of the Notes or the
use of the Preliminary Offering Circular, the Final Offering
Circular or any amendment or supplement thereto, in any
jurisdiction. Each of the Preliminary Offering Circular and the
Final Offering Circular, as of their respective dates contained,
and the Final Offering Circular, as amended or supplemented, as of
the Closing Date
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will contain, all the information specified in,
and meet the requirements of Rule 144A(d)(4) under the
Act.
(b) The documents incorporated or
deemed to be incorporated by reference in the Offering Circular at
the time they were or hereafter are filed with the SEC complied and
will comply in all material respects with the requirements of the
Exchange Act, and, when read together with the other information in
the Offering Circular, at the date of the Offering Circular and at
the Closing Date, do not and will not include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(c) The accountants who certified
the financial statements and supporting schedules included in the
Offering Circular are independent public accountants with respect
to the Company within the meaning of Regulation S-X under the
Securities Act of 1933, as amended.
(d) The Company does not own,
directly or indirectly, any shares of capital stock or any other
equity securities or has any equity interest in any corporation,
firm, company, partnership, joint venture or other
entity.
(e) Each of the Companies (i) has
been duly organized, is validly existing and in good standing under
the laws of its jurisdiction of organization or formation, (ii) has
all requisite corporate power and authority, as applicable, to
carry on its business and to own, lease and operate its properties
and assets, and (iii) is duly qualified or licensed to do business
and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of such business
or the ownership or leasing of such property requires such
qualification, except such failure to qualify is not, individually
or in the aggregate, material to the Companies.
(f) All of the issued and
outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable,
and were not issued in violation of, and are not subject to, any
preemptive or similar rights.
(g) No existing holder of securities
of the Company will be entitled to have such securities registered
under the registration statements required to be filed by the
Company with respect to the Notes pursuant to the Registration
Rights Agreement.
(h) The Company has all the
requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the other Documents
and to consummate the Transactions including, without limitation,
the power and authority to issue, sell and deliver the
Notes.
(i) The issue and sale of the Notes
by the Company, the grant and perfection of Liens in the Collateral
pursuant to the Security Documents and the compliance by the
Company with all of the provisions of the Notes, the Exchange
Notes, the Indenture, the Registration Rights Agreement, the
Security Documents and this Agreement and the consummation of the
Transactions:
(i) subject to the Company’s
receipt of the consent of the Maritime Administration of the
Department of Transportation of the United States of
America
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pursuant to the Amended and Restated
Title XI Reserve Fund and Financial Agreement, as amended, dated as
of March 30, 2004, by and between the Company and the United States
of America (the “MARAD Consent”), will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which either of the Companies is a party or by
which either of the Companies is bound or to which any of the
property or assets of either of the Companies is subject, except
for such conflicts, breaches, violations or defaults that,
individually or in the aggregate, could not reasonably be expected
to result in (A) any material adverse change in or effect on the
prospects, financial condition, stockholders’ equity, results
of operations or business of the Companies, (B) a material adverse
change in or effect on the ability of either of the Companies to
perform its obligations in all material respects under any
Document, (C) a material adverse change in or effect on the
validity of any of the Documents or the consummation of any of the
Transactions, (D) a material adverse change in or effect on the
value of the Collateral or (E) a material adverse change in or
effect on the validity or enforceability of the Security Documents
or any Lien purporting to be created thereby or any right or remedy
arising thereunder (collectively, a “Material Adverse
Effect”);
(ii) will not result in any
violation of the provisions of the certificate of incorporation or
bylaws of either of the Companies;
(iii) will not violate any law or
statute or any order, rule, regulation, judgment or decree of any
court or governmental agency or body having jurisdiction over or
applicable to either of the Companies or any of its properties or
assets, except such violations that, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect; and
(iv) will not result in the
imposition or creation of (or the obligation to create or impose) a
Lien on any assets or property of either of the Companies under any
agreement or instrument to which either of the Companies is a party
or by which either of the Companies or any of either of its
properties or assets is bound (other than as provided in the
Security Documents).
(j) This Agreement has been duly and
validly authorized, executed and delivered by the
Company.
(k) The Indenture has been duly and
validly authorized by the Company. The Indenture, when executed and
delivered by the Company, will constitute a legal, valid and
binding obligation of the Company, enforceable against the Company
in accordance with its terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors’ rights generally
and (ii) general principles of equity (whether applied by a court
of law or equity) and the discretion of the court before which any
proceeding therefor may be brought. The Indenture meets the
requirements for qualification under the Trust Indenture Act of
1939, as amended (the “TIA”). The Indenture conforms in
all material respects to the description thereof in the Offering
Circular.
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(l) The Registration Rights
Agreement has been duly and validly authorized by the Company. The
Registration Rights Agreement, when executed and delivered by the
Company, will constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms, except that (A) the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect
relating to creditors’ rights generally and (ii) general
principles of equity (whether applied by a court of law or equity)
and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state
securities laws and public policy considerations. The Registration
Rights Agreement conforms in all material respects to the
description thereof in the Offering Circular.
(m) The Notes, when issued, will be
in the form contemplated by the Indenture. The Notes have been duly
and validly authorized by the Company and when authenticated,
delivered to and paid for by the Initial Purchasers in accordance
with the terms of this Agreement and the Indenture, will have been
duly executed, issued and delivered and will be legal, valid and
binding obligations of the Company, entitled to the benefits of the
Indenture and the Registration Rights Agreement, and enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors’ rights
generally and, (ii) general principles of equity (whether applied
by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought. The Notes conform in
all material respects to the description thereof in the Offering
Circular.
(n) The Exchange Notes have been
duly and validly authorized by the Company and, when authenticated
and delivered in accordance with the terms of the Registration
Rights Agreement and the Indenture, will have been duly executed,
issued and delivered and will be legal, valid and binding
obligations of the Company, entitled to the benefits of the
Indenture and the Registration Rights Agreement, and enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors’ rights
generally and, (ii) general principles of equity (whether applied
by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought. The Exchange Notes,
when executed, authenticated and delivered, will conform in all
material respects to the description thereof in the Offering
Circular.
(o) The Security Documents have each
been duly and validly authorized by the Company and, when executed
and delivered by the Company, will constitute valid and legally
binding obligations of the Company, enforceable against the Company
in accordance with their respective terms except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors’ rights
generally and, (ii) general principles of equity (whether applied
by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought.
(p) The Acquisition Agreement has
been duly and validly authorized, executed and delivered by each of
the Companies, constitutes a legal, valid and binding obligation of
each of
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the Companies, enforceable against each of the
Companies in accordance with its terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors’ rights
generally and (ii) general principles of equity (whether applied by
a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought. The Acquisition
Agreement conforms in all material respects to the description
thereof in the Offering Circular.
(q) Neither of the Companies is in
violation of its certificate of incorporation or by-laws (the
“Charter Documents”). Neither of the Companies is (i)
in violation of any federal, state, local or foreign statute, law
(including, without limitation, common law) or ordinance, or any
judgment, decree, rule, regulation or order (collectively,
“Applicable Law”) of any federal, state, local and
other governmental authority, governmental or regulatory agency or
body, court, arbitrator or self-regulatory organization, domestic
or foreign, having jurisdiction over either of the Companies or any
of their respective assets, properties or operations (each, a
“Governmental Authority”), except for such violations
that could not reasonably be expected to result in a Material
Adverse Effect, or (ii) in breach of or default under any bond,
debenture, note or other evidence of indebtedness, indenture,
mortgage, deed of trust, lease or any other agreement or instrument
to which any of them is a party or by which any of them or their
respective property is bound (collectively, “Applicable
Agreements”), except for breaches and defaults that,
individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect. There exists no condition
that, with the passage of time or otherwise, would constitute (a) a
violation of such Charter Documents or Applicable Laws, (b) a
breach of or default under any Applicable Agreement or (c) result
in the imposition of any penalty or the acceleration of any
indebtedness that in each case could reasonably be expected to
result in a Material Adverse Effect.
(r) Neither the execution, delivery
or performance by either of the Companies of the Documents to which
it is a party, nor the consummation of the Transactions will
conflict with, violate, constitute a breach of or a default (with
the passage of time or otherwise) under, require the consent of any
person (other than the MARAD Consent and other consents already
obtained) under, result in the imposition of a Lien on any assets
of either of the Companies (except pursuant to the Documents), or
result in an acceleration of indebtedness under or pursuant to (i)
the Charter Documents, (ii) any Applicable Agreement, or (iii) any
Applicable Law, except for conflicts, violations, breaches,
defaults, consent requirements, Lien impositions or the
acceleration of indebtedness that, individually or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect. Immediately after consummation of the Transactions,
no Default or Event of Default (each, as defined in the Indenture)
will exist.
(s) No consent, approval,
authorization or order of any Governmental Authority or third party
is required for the issuance and sale by the Company of the Notes
to the Initial Purchasers, the grant and perfection of the
collateral pursuant to the provisions of the Security Documents or
the consummation by the Companies of the Transactions, except for
the MARAD Consent and the filing of a registration statement by the
Company with the SEC pursuant to the Act as required by the
Registration Rights Agreement, the filings required to perfect
Liens granted pursuant to the Security Documents, such consents,
approvals, authorizations, orders, filings, registrations or
qualifications as may be required under foreign securities laws or
state
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securities or Blue Sky laws in connection with
the purchase and distribution of the Notes by the Initial Purchaser
and any filings, qualifications or other consents or approvals
under the TIA in connection with the Exchange Notes.
(t) Except as disclosed in the
Preliminary Offering Circular, there is no action, claim, suit,
demand, hearing, notice of violation or deficiency, or proceeding,
domestic or foreign (collectively, “Proceedings”),
pending or, to the knowledge of the Company, threatened, that
either (i) seeks to restrain, enjoin, prevent the consummation of,
or otherwise challenge any of the Documents or any of the
Transactions, or (ii) individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. Neither
of the Companies is subject to any judgment, order, decree, rule or
regulation of any Governmental Authority that, individually or in
the aggregate, could reasonably be expected to have a Material
Adverse Effect.
(u) Each of the Companies possesses
all licenses, permits, certificates, consents, orders, approvals
and other authorizations from, and have made all declarations and
filings with, all Governmental Authorities, presently required or
necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as now or proposed to be
conducted as set forth in the Offering Circular
(“Permits”), except where the failure to obtain such
Permits could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Each of the Companies
has fulfilled and performed all of its obligations with respect to
such Permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights
of the holder of any such Permit except where such revocation,
termination or material impairment could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect; and neither of the Companies has received any
notice of any proceeding relating to revocation or modification of
any such Permit, except as described in the Preliminary Offering
Circular or except where such revocation or modification could not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(v) Each of the Companies has good
and marketable title to all vessels, barges, vehicles and all other
personal property owned by it, and good and indefeasible title to
all leasehold estates in real and personal property being leased by
it and, as of the Closing Date, will be free and clear of all Liens
(other than Permitted Liens (as defined in the Indenture) and other
than Liens securing the United States Government Guaranteed Ship
Financing Bonds issued pursuant to that certain indenture, as
supplemented, by and between the Company and U.S. Bank, N.A. a
National Banking Association (as successor trustee to State Street
Bank and Trust Company) dated June 23, 1997 (“U.S.
Bank”) and that certain indenture, as supplemented, by and
between the Company and U.S. Bank (as successor trustee to State
Street Bank and Trust Company) dated December 4, 1997) (the
“U.S. Ship Financing Liens”)). All Applicable
Agreements to which either of the Companies is a party or by which
it is bound are valid and enforceable and are in full force and
effect with only such exceptions as could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect.
(w) As of the Closing, and after
giving effect to the purchase of the Notes by the Initial
Purchasers, the Company will own the Collateral free and clear of
all Liens (other than Permitted Collateral Liens), and no Financing
Statements (as defined below) in respect of any property or assets
of the Company constituting Collateral will be on file in favor of
any person
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other than those in respect of Permitted
Collateral Liens and those to be terminated with respect to
existing indebtedness to be paid off as part of the
Transactions.
(x) When executed and delivered to
the Trustee at the Closing, the Security Documents will grant and
create, in favor of the Trustee for the benefit of the Secured
Parties as security for all of the Secured Obligations, a valid and
enforceable Lien in the Collateral, and when the filings, the act
of taking possession or the other acts (as the case may be)
referred to in the following sentences are made, such Liens will be
perfected first priority Liens (subject to Permitted Collateral
Liens). When delivered at the Closing, each Mortgage will be
executed and delivered, duly acknowledged and, if required for
recordation, attested and otherwise will be in recordable form. The
Fleet Mortgage will be filed for record and recorded with the
appropriate Governmental Authority in the jurisdiction in which
each relevant Vessel is flagged. Each Mortgage covering real estate
will be duly recorded with the appropriate Governmental Authority
in the jurisdiction in which the mortgaged real property is
located. The Company will also deliver at the Closing, UCC-1
financing statements, together with all schedules and exhibits to
such financing statements, in appropriate form for filing with the
Secretary of State of the State of Delaware (“UCC Financing
Statements”), covering the Collateral described therein as
being covered thereby. Each such UCC Financing Statement shall be
filed in the appropriate governmental office referred to in the
preceding sentence. With respect to titled vehicles and other
titled equipment that constitutes Collateral, the Company will also
take steps necessary under relevant law in order to perfect the
security interests of the Trustee in such titled vehicles and other
titled equipment.
(y) All Tax returns required to be
filed (taking into account all applicable extensions) by either of
the Companies have been filed and all such returns are true,
complete and correct in all material respects. All material Taxes
that are due from either of the Companies have been paid other than
those (i) currently payable without penalty or interest or (ii)
being contested in good faith and by appropriate proceedings and
for which adequate reserves have been established in accordance
with generally accepted accounting principles of the United States,
consistently applied (“GAAP”). To the knowledge of the
Company, after reasonable inquiry, there are no proposed Tax
assessments against either of the Companies that, individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect. The accruals and reserves on the books and records
of the Company in respect of any material Tax liability for any
period not finally determined are adequate to meet any assessments
of Tax for any such period. For purposes of this Agreement, the
term “Tax” and “Taxes” shall mean all
federal, state, local and foreign taxes, and other assessments of a
similar nature (whether imposed directly or through withholding),
including any interest, additions to tax, or penalties applicable
thereto.
(z) Each of the Companies owns, or
is licensed under, and has the right to use, or can acquire on
reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names (collectively, “Intellectual Property”)
necessary for the conduct of its businesses, free and clear of all
Liens. To the knowledge of the Company, no claims or notices of any
potential claim have been asserted by any person challenging the
use of any such Intellectual Property by either of the Companies or
questioning the validity or effectiveness of the Intellectual
Property or any license or agreement related thereto (other than
any claims that, if successful, could not reasonably be
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expected, individually or in the aggregate, to
have a Material Adverse Effect). To the knowledge of the Company,
the use of such Intellectual Property by either of the Companies
will not infringe on the Intellectual Property rights of any other
person.
(aa) The Company maintains a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management’s general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP, and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(bb) The financial statements and
related notes of the Company contained in the Offering Circular
(the “Financial Statements”) present fairly in all
material respects the financial position, results of operations and
cash flows of the Company, as of the respective dates and for the
respective periods to which they apply and have been prepared in
accordance with GAAP and comply as to form with the requirements of
Regulation S-X of the Act. The pro forma financial statements and
other pro forma financial information contained in the Offering
Circular (i) present fairly in all material respects the
information they purport to present, (ii) have been prepared in
accordance with the SEC’s rules and guidelines with respect
to pro forma financial statements, and (iii) have been properly
computed on the bases described therein and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate in all material respects to give effect to
the transactions and circumstances referred to therein. The
financial data set forth under “Summary Financial Data”
and “Selected Financial Data” included in the Offering
Circular has been prepared on a basis consistent with that of the
Financial Statements and present fairly in all material respects
the information they purport to present, have been prepared in all
material respects in accordance with the SEC’s rules and
guidelines, have been properly compiled in the books and records of
the Company and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate in all
material respects to give effect to the transactions and
circumstances referred to therein. No projection or forward looking
statement (within the meaning of Section 27A of the Act and Section
21E of the Exchange Act) contained in the Offering Circular has
been made without a reasonable basis or has been disclosed other
than in good faith. All other financial, statistical, and market
and industry-related data included in the Offering Circular are
fairly and accurately presented in all material respects and are
based on or derived from sources that the Company believes to be
reliable and accurate in all material respects.
(cc) Subsequent to the respective
dates as of which information is given in the Preliminary Offering
Circular, (i) the Company has not (x) incurred any liabilities,
direct or contingent, other than in the ordinary course of business
consistent with past practices of the Company, that are material,
individually or in the aggregate, to the Company, or (y) has
entered into any transactions not in the ordinary course of
business which are material with respect to the Company, (ii) there
has not been any material decrease in the capital stock or other
equity interests or any material increase in long-term indebtedness
or any material increase in short-term indebtedness of the Company,
or any payment of or declaration to pay any dividends or any other
distribution with respect to the Company, and (iii) there has not
been any material adverse change in the prospects, financial
condition, stockholders’ equity, results of operations
or
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business of either of the Companies (each of
clauses (i), (ii) and (iii), a “Material Adverse
Change”).
(dd) All indebtedness represented by
the Notes is being incurred for the purposes set forth in the
Preliminary Offering Circular under the heading “Use of
Proceeds.” On the Closing Date, the Company will be solvent.
As used in this paragraph, “solvent” means, with
respect to a particular date, that on such date the present fair
market value (present fair saleable value) of the assets of the
Company is not less than the total amount required to pay the
probable liabilities of the Company on its total existing debts and
liabilities (including contingent liabilities) as they become
absolute and matured, the Company is able to realize upon its
assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the
normal course of business, assuming the sale of the Notes as
contemplated by this Agreement and the Final Offering Circular, the
Company is not incurring debts or liabilities beyond its ability to
pay as such debts and liabilities mature, and the Company is not
engaged in any business or transaction, and is not about to engage
in any business or transaction, for which its property would
constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which
the Company is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will
be computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured
liability.
(ee) The Company has not and, to its
knowledge, no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of
the Notes, (ii) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, any of the Notes, or
(iii) except as disclosed in the Final Offering Circular, paid or
agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(ff) Without limiting any provision
herein, no registration under the Act and no qualification of the
Indenture under the TIA is required for the sale of the Notes to
the Initial Purchasers as contemplated hereby or for the Exempt
Resales, assuming (i) that the purchasers in the Exempt Resales are
QIBs or Accredited Investors or non-U.S. persons and (ii) the
accuracy of the Initial Purchasers’ representations contained
herein regarding the absence of general solicitation in connection
with the sale of the Notes to the Initial Purchasers and in the
Exempt Resales.
(gg) The Notes are eligible for
resale pursuant to Rule 144A under the Act and no other securities
of the Company are of the same class (within the meaning of Rule
144A under the Act) as the Notes and listed on a national
securities exchange registered under Section 6 of the Exchange Act,
or quoted in a U.S. automated inter-dealer quotation system. No
securities of the Company of the same class as the Notes have been
offered, issued or sold by the Company or any of its Affiliates
within the six-month period immediately prior to the date
hereof.
(hh) Neither the Company nor any of
its Affiliates or other person acting on behalf of the Company has
offered or sold the Notes by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act
or, with respect to Notes sold
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outside the United States to non-U.S. persons
(as defined in Rule 902 under the Act), by means of any directed
selling efforts within the meaning of Rule 902 under the Act, and
the Company, any Affiliate of the Company and any person acting on
behalf of the Company have complied with and will implement the
“offering restrictions” within the meaning of such Rule
902; provided, that no representation is made in this subsection
with respect to the actions of the Initial Purchasers.
(ii) Each of the Companies and each
ERISA Affiliate has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the United States
Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) with respect to each “pension
plan” (as defined in Section 3(2) of ERISA), subject to
Section 302 of ERISA which either of the Companies or any ERISA
Affiliate sponsors or maintains, or with respect to which it has
(or within the last three years had) any obligation to make
contributions, and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and the
Code. None of the Companies or any ERISA Affiliate has incurred any
unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any
such plan under Title IV of ERISA. “ERISA Affiliate”
means a corporation, trade or business that is, along with the
Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Section
414 of the Code or Section 4001 of ERISA.
(jj) Neither of the Companies is a
party to or bound by any collective bargaining agreement with any
labor organization; (ii) there is no union representation question
existing with respect to the employees of the Company, and, to the
knowledge of either of the Companies, no union organizing
activities are taking place that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect; (iii) to the Company’s knowledge, no union organizing
or decertification efforts are underway or threatened against
either of the Companies that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect; (iv) no labor strike, work stoppage, slowdown, or other
labor dispute is pending against either of the Companies, or, to
the knowledge of the Company, threatened against either of the
Companies that could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; (v) there is no
worker’s compensation liability, experience or matter that
could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect; (vi) to the knowledge of the
Company, there is no threatened or pending liability against either
of the Companies pursuant to the Worker Adjustment Retraining and
Notification Act of 1988, as amended, or any similar state or local
law that could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; (vii) there is no
employment-related charge, complaint, grievance, investigation,
unfair labor practice claim, or inquiry of any kind, pending
against either of the Companies that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect; (viii) to the knowledge of the Company, no employee or
agent of either of the Companies has committed any act or omission
giving rise to liability for any violation identified in subsection
(vi) and (vii) above, other than such acts or omissions that could
not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect; and (ix) no term or condition of
employment exists through arbitration awards, settlement
agreements, or side agreement that is contrary to the express terms
of any applicable collective bargaining agreement other than such
term or condition that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
- 12 -
(kk) None of the Transactions will
violate or result in a violation of Section 7 of the Exchange Act,
(including, without limitation, Regulation T (12 C.F.R. Part 200),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve
System).
(ll) Neither of the Companies is,
and after giving effect to the offering and sale of the Notes and
the application of the proceeds thereof as described in the Final
Offering Circular, none of them will be (i) an “investment
company” or (ii) a company “controlled” by an
“investment company” as defined in the Investment
Company Act of 1940.
(mm) Neither of the Companies has
engaged any broker, finder, commission agent or other person (other
than the Initial Purchasers) in connection with the Offering or any
of the Transactions, and neither of the Companies is under any
obligation to pay any broker’s fee or commission in
connection with such transactions (other than commissions or fees
to the Initial Purchasers).
(nn) Each of the Companies is (i) in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of the
environment or hazardous or toxic substances of wastes, pollutants
or contaminants (“Environmental Laws”), (ii) has
received and is in compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct its respective businesses and (iii) has not received notice
of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability could not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, whether or not arising from transactions
in the ordinary course of business. Neither of the Companies has
been named as a “potentially responsible party” under
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
(oo) Each of the Companies has
insurance covering its properties, operations, personnel and
business, including protection and indemnity insurance, which
insurance is in amounts and insures against such losses and risks
as are adequate to protect each of the Companies and its business
consistent with industry practice. All policies of insurance
insuring the Companies or their businesses, assets, employees,
officers and directors are in full force and effect. Each of the
Companies is in compliance with the terms of such policies and
instruments in all material respects, and there are no material
claims by either of the Companies under any such policy or
instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause. Neither of the
Companies has been refused any insurance coverage sought or applied
for, and the Company has no reason to believe that it will not be
able to renew the Companies’ existing insurance coverage as
and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a
cost that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(pp) Each of the vessels owned by
the Company (the “Company Vessels”) has been duly
registered in the name of the Company under the laws and
regulations and the flag of the
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United States and no other action is necessary
to establish and perfect such the Company’s title to and
interest in the Company Vessels as against any charterer or third
party.
(qq) Each of the vessels owned by K
Corp (the “K Corp Vessels” and together with the
Company Vessels, the “Vessels”) has been duly
registered in the name of K Corp under the laws and regulations and
the flag of the United States and no other action is necessary to
establish and perfect K Corp’s title to and interest in the K
Corp Vessels as against any charterer or third party.
(rr) At the Closing, each of the K
Corp Vessels will be duly registered in the name of the Company
under the laws and regulations and the flag of the United States
and no other action is necessary to establish and perfect the
Company’s title to and interest in the K Corp Vessels as
against any charterer or third party.
(ss) Neither of the Companies, nor,
to the Company’s knowledge, any director, officer, agent,
shareholder, employee or other person associated with or acting on
behalf of either of the Companies, has (a) used any corporate funds
for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity on behalf of either
of the Companies, (b) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from
corporate funds of either of the Companies; or (c) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment on behalf of either of the Companies.
(tt) Each of the Companies is, and
at the Closing Date will be, a citizen of the United States within
the meaning of Section 2 of the Shipping Act of 1916 for the
purpose of operating the Vessels (a “U.S. Citizen”).
Each Vessel is eligible in all respects to be documented for and to
engage in the coastwise trade of the United States.
(uu) Neither of the Companies, nor,
to the knowledge of the Company, any director, officer, agent,
employee or affiliate of either of the Companies is currently
subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department
(“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(vv) The operations of the Companies
are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving either of the Companies with respect to the Money
Laundering Laws is pending or, to the best knowledge of the
Company, threatened.
(ww) Each certificate signed by any
officer of the Company, delivered to the Initial Purchasers in
connection with the offering and sale of the Notes shall be deemed
a representation
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and warranty by the Company (and not
individually by such officer) to the Initial Purchasers with
respect to the matters covered thereby.
5. Covenants of the Company . The Company
agrees:
(a) To (i) advise the Initial
Purchasers promptly (and, if requested by the Initial Purchasers,
confirm such advice in writing) of (A) the issuance by any state
securities commission of any stop order suspending the
qualification or exemption from qualification of any of the Notes
for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or
other regulatory authority, or (B) the happening of any event
during the period re
